UNIT III

ORGANIZING

DEFINITION
According to Koontz and O'Donnell, "Organization involves the grouping of activities necessary
to accomplish goals and plans, the assignment of these activities to appropriate departments and the
provision of authority, delegation and co-ordination."
Organization involves division of work among people whose efforts must be co-ordinated to achieve
specific objectives and to implement pre-determined strategies.

NATURE OR CHARACTERISTICS OF ORGANIZING

From the study of the various definitions given by different management experts we get the
following information about the characteristics or nature of organization,
(1) Division of Work: Division of work is the basis of an organization. In other words, there can be no
organization without division of work. Under division of work the entire work of business is divided into
many departments .The work of every department is further sub-divided into sub-works. In this way each
individual has to do the saran work repeatedly which gradually makes that person an expert.
(2) Coordination: Under organizing different persons are assigned different works but the aim of all
these persons happens to be the some - the attainment of the objectives of the enterprise. Organization
ensures that the work of all the persons depends on each other’s work even though it happens to be
different. The work of one person starts from where the work of another person ends. The non-completion
of the work of one person affects the work of everybody. Therefore, everybody completes his work in
time and does not hinder the work of others. It is thus, clear that it is in the nature of an organization to
establish coordination among different works, departments and posts in the enterprise.
(3) Plurality of Persons: Organization is a group of many persons who assemble to fulfill a common
purpose. A single individual cannot create an organization.
(4) Common Objectives: There are various parts of an organization with different functions to perform
but all move in the direction of achieving a general objective.
(5) Well-defined Authority and Responsibility: Under organization a chain is established between
different posts right from the top to the bottom. It is clearly specified as to what will be
the authority and responsibility of every post. In other words, every individual working in the
organization is given some authority for the efficient work performance and it is also decided
simultaneously as to what will be the responsibility of that individual in case of unsatisfactory work
performance.
(6) Organization is a Structure of Relationship: Relationship between persons working on different
posts in the organization is decided. In other words, it is decided as to who will be the superior and who
will be the subordinate. Leaving the top level post and the lowest level post everybody is somebody's
superior and somebody's subordinate. The person working on the top level post has no superior and the
person working on the lowest level post has no subordinate.
(7) Organization is a Machine of Management: Organization is considered to be a machine of
management because the efficiency of all the functions depends on an effective organization. In the
absence of organization no function can be performed in a planned manner. It is appropriate to call
organization a machine of management from another point of view. It is that machine in which no part
can afford tube ill-fitting or non-functional. In other words, if the division of work is not done properly or
posts are not created correctly the whole system of management collapses.
(8) Organization is a Universal Process: Organization is needed both in business and non-business
organizations. Not only this, organization will be needed where two or mom than two people work
jointly. Therefore, organization has the quality of universality. (9) Organization is a Dynamic Process:
Organization is related to people and the knowledge and experience of the people undergo a change. The
impact of this change affects the various functions of the organizations. Thus, organization is not a
process that can be decided for all times to come but it undergoes changes according to the needs. The
example in this case can be the creation or abolition of a new post according to the need.

IMPORTANCE OR ADVANTAGES OF ORGANIZING

Organization is an instrument that defines relations among different people which helps them to
understand as in who happens to be their superior and who is their subordinate. This information helps in
fixing responsibility and developing coordination. In such circumstances the objectives of the
organization can be easily achieved. That is why, it is said that Organization Is a mechanism of
management. In addition to that it helps in the other functions of management like planning, staffing,
leading, controlling, etc. The importance of organization or its merits becomes clear from the following
facts,
(1) Increase In Managerial Efficiency: A good and balanced organization helps the managers to
increase their efficiency. Managers, through the medium of organization, make a proper distribution of
the whole work among different people according to their ability.
(2) Proper Utilization of Resources: Through the medium of organization optimum utilization of all the
available human and material resources of an enterprise becomes possible. Work is allotted to every
individual according to his ability and capacity and conditions ant created to enable him to utilize his
ability to the maximum extent. For example, if an employee possesses the knowledge of modem
machinery but the modem machinery is not available in the organization, in that case, efforts are made to
make available the modem machinery.
(3) Sound Communication Possible: Communication is essential for taking the right decision at the
right time. However, the establishment of a good communication system is possible only through an
organization. In an organization the time of communication is decided so that all the useful information
reaches the officers concerned which. in turn, helps the decision-making.
(4) Facilitates Coordination: In order to attain successfully the objectives of the organization,
coordination among various activities in the organization is essential. Organization is the only medium
which makes coordination possible. Under organization the division of work is made in such a manner as
to make all the activities complementary to each other increasing their inter-dependence. Inter-
dependence gives rise to the establishment of relations which, in turn, increases coordination.
(5) Increase in Specialization: Under organization the whole work is divided into different parts.
Competent persons are appointed to handle all the sub-works and by handling a particular work
repeatedly they become specialists. This enables them to have maximum work performance in the
minimum time while the organization gets the benefit of specialization.
(6) Helpful in Expansion: A good organization helps the enterprise in facing competition. When an
enterprise starts making available good quality product at cheap rates, it increases the demand for its
products. In order to meet the increasing demand for its products an organization has to expand its
business. On the other hand, a good organization has an element of flexibility which far from impeding
the expansion work encourages it.
ORGANIZING PROCESS
Organization is the process of establishing relationship among the members of the enterprise. The
relationships are created in terms of authority and responsibility. To organize is to harmonize, coordinate
or arrange in a logical and orderly manner. Each member in the organization is assigned a specific
responsibility or duty to perform and is granted the corresponding authority to perform his duty. The
managerial function of organizing consists in making a rational division of work into groups of activities
and tying together the positions representing grouping of activities so as to achieve a rational, well
coordinated and orderly structure for the accomplishment of work. According to Louis A Allen,
"Organizing involves identification and grouping the activities to be performed and dividing them among
the individuals and creating authority and responsibility relationships among them for the
accomplishment of organizational objectives." The various steps involved in this process are:

a) Determination of Objectives:
It is the first step in building up an organization. Organization is always related to certain
objectives. Therefore, it is essential for the management to identify the objectives before starting any
activity. Organization structure is built on the basis of the objectives of the enterprise. That means, the
structure of the organization can be determined by the management only after knowing the objectives to
be accomplished through the organization. This step helps the management not only in framing the
organization structure but also in achieving the enterprise objectives with minimum cost and efforts.
Determination of objectives will consist in deciding as to why the proposed organization is to be set up
and, therefore, what will be the nature of the work to be accomplished through the organization.
b) Enumeration of Objectives:
If the members of the group are to pool their efforts effectively, there must be proper division of
the major activities. The first step in organizing group effort is the division of the total job into essential
activities. Each job should be properly classified and grouped. This will enable the people to know what
is expected of them as members of the group and will help in avoiding duplication of efforts. For
example, the work of an industrial concern may be divided into the following major functions –
production, financing, personnel, sales, purchase, etc.
c) Classification of Activities:
The next step will be to classify activities according to similarities and common purposes and
functions and taking the human and material resources into account. Then, closely related and similar
activities are grouped into divisions and departments and the departmental activities are further divided
into sections.
d) Assignment of Duties:
Here, specific job assignments are made to different subordinates for ensuring a certainty of work
performance. Each individual should be given a specific job to do according to his ability and made
responsible for that. He should also be given the adequate authority to do the job assigned to him. In the
words of Kimball and Kimball - "Organization embraces the duties of designating the departments and
the personnel that are to carry on the work, defining their functions and specifying the relations that are to
exist between department and individuals."

e) Delegation of Authority:
Since so many individuals work in the same organization, it is the responsibility of management
to lay down structure of relationship in the organization. Authority without responsibility is a dangerous
thing and similarly responsibility without authority is an empty vessel. Everybody should clearly know to
whom he is accountable; corresponding to the responsibility authority is delegated to the subordinates for
enabling them to show work performance. This will help in the smooth working of the enterprise by
facilitating delegation of responsibility and authority.
ORGANIZATION STRUCTURE
An organization structure is a framework that allots a particular space for a particular department
or an individual and shows its relationship to the other. An organization structure shows the authority and
responsibility relationships between the various positions in the organization by showing who reports to
whom. It is an established pattern of relationship among the components of the organization.

March and Simon have stated that-"Organization structure consists simply of those aspects of pattern of
behavior in the organization that are relatively stable and change only slowly." The structure of an
organization is generally shown on an organization chart. It shows the authority and responsibility
relationships between various positions in the organization while designing the organization structure, due
attention should be given to the principles of sound organization.

Significance of Organization Structure

• Properly designed organization can help improve teamwork and productivity by providing a
framework within which the people can work together most effectively.
• Organization structure determines the location of decision-making in the organization.
• Sound organization structure stimulates creative thinking and initiative among organizational
members by providing well defined patterns of authority.
• A sound organization structure facilitates growth of enterprise by increasing its capacity to handle
increased level of authority.
• Organization structure provides the pattern of communication and coordination.
• The organization structure helps a member to know what his role is and how it relates to other roles.

PRINCIPLES OF ORGANIZATION STRUCTURE

Modern organizational structures have evolved from several organizational theories, which have
identified certain principles as basic to any organization structure.
a) Line and Staff Relationships:
Line authority refers to the scalar chain, or to the superior-subordinate linkages, that extend
throughout the hierarchy (Koontz, O'Donnell and Weihrich). Line employees are responsible for
achieving the basic or strategic objectives of the organization, while staff plays a supporting role to line
employees and provides services. The relationship between line and staff
is crucial in organizational structure, design and efficiency. It is also an important aid to information
processing and coordination.
b) Departmentalization:
Departmentalization is a process of horizontal clustering of different types of functions and
activities on any one level of the hierarchy. Departmentalization is conventionally based on purpose,
product, process, function, personal things and place.
c) Span of Control:
This refers to the number of specialized activities or individuals supervised by one person.
Deciding the span of control is important for coordinating different types of activities effectively.
d) De-centralization and Centralization:
De-centralization refers to decision making at lower levels in the hierarchy of authority. In
contrast, decision making in a centralized type of organizational structure is at higher levels. The degree
of centralization and de-centralization depends on the number of levels of hierarchy, degree of
coordination, specialization and span of control.
Every organizational structure contains both centralization and de-centralization, but to varying degrees.
The extent of this can be determined by identifying how much of the decision making is concentrated at
the top and how much is delegated to lower levels. Modern organizational structures show a strong
tendency towards de-centralization.
FORMAL AND INFORMAL ORGANIZATION
The formal organization refers to the structure of jobs and positions with clearly defined functions
and relationships as prescribed by the top management. This type of organization is built by the
management to realize objectives of an enterprise and is bound by rules, systems and procedures.
Everybody is assigned a certain responsibility for the performance of the given task and given the
required amount of authority for carrying it out. Informal organization, which does not appear on the
organization chart, supplements the formal organization in achieving organizational goals effectively and
efficiently. The working of informal groups and leaders is not as simple as it may appear to be. Therefore,
it is obligatory for every manager to study thoroughly the working pattern of informal relationships in the
organization and to use them for achieving organizational objectives.
ORMAL ORGANIZATION

Chester I Bernard defines formal organization as -"a system of consciously coordinated activities or
forces of two or more persons. It refers to the structure of well-defined jobs, each bearing a definite
measure of authority, responsibility and accountability." The essence of formal organization is conscious
common purpose and comes into being when persons–
(i) Are able to communicate with each other
(ii) Are willing to act and
(iii) Share a purpose.
The formal organization is built around four key pillars. They are:
• Division of labor
• Scalar and functional processes
• Structure and
• Span of control
Thus, a formal organization is one resulting from planning where the pattern of structure has already been
determined by the top management.
Characteristic Features of formal organization
• Formal organization structure is laid down by the top management to achieve organizational goals.
• Formal organization prescribes the relationships amongst the people working in the organization.
• The organization structures is consciously designed to enable the people of the organization to work
together for accomplishing the common objectives of the enterprise
• Organization structure concentrates on the jobs to be performed and not the individuals who are to
perform jobs.
• In a formal organization, individuals are fitted into jobs and positions and work as per the managerial
decisions. Thus, the formal relations in the organization arise from the pattern of responsibilities that
are created by the management.
• A formal organization is bound by rules, regulations and procedures.
• In a formal organization, the position, authority, responsibility and accountability of each level are
clearly defined.
• Organization structure is based on division of labor and specialization to achieve efficiency in
operations.
• A formal organization is deliberately impersonal. The organization does not take into consideration
the sentiments of organizational members.
• The authority and responsibility relationships created by the organization structure are to be honored
by everyone.
• In a formal organization, coordination proceeds according to the prescribed pattern.

Advantages of formal organization

• The formal organization structure concentrates on the jobs to be performed. It, therefore, makes
everybody responsible for a given task.
• A formal organization is bound by rules, regulations and procedures. It thus ensures law and order in
the organization.
• The organization structure enables the people of the organization to work together for accomplishing
the common objectives of the enterprise
Disadvantages or criticisms of formal organization
• The formal organization does not take into consideration the sentiments of organizational members.
• The formal organization does not consider the goals of the individuals. It is designed to achieve the
goals of the organization only.
• The formal organization is bound by rigid rules, regulations and procedures. This makes the
achievement of goals difficult.

INFORMAL ORGANIZATION
Informal organization refers to the relationship between people in the organization based on
personal attitudes, emotions, prejudices, likes, dislikes etc. an informal organization is an organization
which is not established by any formal authority, but arises from the personal and social relations of the
people. These relations are not developed according to procedures and regulations laid down in the formal
organization structure; generally large formal groups give rise to small informal or social groups. These
groups may be based on same taste, language, culture or some other factor. These groups are not pre-
planned, but they develop automatically within the organization according to its environment.
Characteristics features of informal organization
• Informal organization is not established by any formal authority. It is unplanned and arises
spontaneously.
• Informal organizations reflect human relationships. It arises from the personal and social relations
amongst the people working in the organization.
• Formation of informal organizations is a natural process. It is not based on rules, regulations and
procedures.
• The inter-relations amongst the people in an informal organization cannot be shown in an
organization chart.
• In the case of informal organization, the people cut across formal channels of communications and
communicate amongst themselves.
• The membership of informal organizations is voluntary. It arises spontaneously and not by deliberate
or conscious efforts.
• Membership of informal groups can be overlapping as a person may be member of a number of
informal groups.
• Informal organizations are based on common taste, problem, language, religion, culture, etc. it is
influenced by the personal attitudes, emotions, whims, likes and dislikes etc. of the people in the
organization.
Benefits of Informal organization
• It blends with the formal organization to make it more effective.
• Many things which cannot be achieved through formal organization can be achieved through informal
organization.
• The presence of informal organization in an enterprise makes the managers plan and act more
carefully.
• Informal organization acts as a means by which the workers achieve a sense of security and
belonging. It provides social satisfaction to group members.
• An informal organization has a powerful influence on productivity and job satisfaction.
• The informal leader lightens the burden of the formal manager and tries to fill in the gaps in the
manager's ability.
• Informal organization helps the group members to attain specific personal objectives.
• Informal organization is the best means of employee communication. It is very fast.
• Informal organization gives psychological satisfaction to the members. It acts as a safety valve for the
emotional problems and frustrations of the workers of the organization because they get a platform to
express their feelings.
• It serves as an agency for social control of human behavior.

DIFFERENCES BETWEEN FORMAL AND INFORMAL ORGANIZATION

Formal Organization Informal Organization
1. Formal organization is established with the explicit 1. Informal organization springs on its
aim of achieving well-defined goals. own. Its goals are ill defined and
intangible.
2. Formal organization is bound together by 2. Informal organization is characterized
authority relationships among members. A by a generalized sort of power
hierarchical structure is created, constituting top relationships. Power in informal
management, middle management and supervisory organization has bases other than
management. rational legal right.
3. Formal organization recognizes certain tasks 3. Informal organization does not have
which are to be carried out to achieve its goals. any well-defined tasks.
4. The roles and relationships of people in formal 4. In informal organization the
organization are impersonally defined relationships among people are
interpersonal.
5. In formal organization, much emphasis is placed 5. Informal organization is characterized
on efficiency, discipline, conformity, consistency and by relative freedom, spontaneity, by
control. relative freedom, spontaneity,
homeliness and warmth.
6. In formal organization, the social and 6. In informal organization the
psychological needs and interests of members of the sociopsychological needs, interests and
organization get little attention. aspirations of members get priority.
7. The communication system in formal organization 7. In informal organization, the
follows certain pre-determined patterns and paths. communication pattern is haphazard,
intricate and natural.
8. Formal organization is relatively slow to respond 8. Informal organization is dynamic and
and adapt to changing situations and realities. very vigilant. It is sensitive to its
surroundings.
LINE AND STAFF AUTHORITY
In an organization, the line authority flows from top to bottom and the staff authority is exercised
by the specialists over the line managers who advise them on important matters. These specialists stand
ready with their specialty to serve line mangers as and when their services are called for, to collect
information and to give help which will enable the line officials to carry out their activities better. The
staff officers do not have any power of command in the organization as they are employed to provide
expert advice to the line officers. The 'line' maintains discipline and stability; the 'staff' provides expert
information. The line gets out the production, the staffs carries on the research, planning, scheduling,
establishing of standards and recording of performance. The authority by which the staff performs these
functions is delegated by the line and the performance must be acceptable to the line before action is
taken. The following figure depicts the line and staff authority:
Types of Staff
The staff position established as a measure of support for the line managers may take the following forms:
1. Personal Staff: Here the staff official is attached as a personal assistant or adviser to the line manager.
For example, Assistant to managing director.
2. Specialized Staff: Such staff acts as the fountainhead of expertise in specialized areas like R & D,
personnel, accounting etc.
3. General Staff: This category of staff consists of a set of experts in different areas who are meant to
advise and assist the top management on matters called for expertise. For example, Financial advisor,
technical advisor etc.
Features of line and staff organization
• Under this system, there are line officers who have authority and command over the subordinates and
are accountable for the tasks entrusted to them. The staff officers are specialists who offer expert
advice to the line officers to perform their tasks efficiently.
• Under this system, the staff officers prepare the plans and give advice to the line officers and the line
officers execute the plan with the help of workers.
• The line and staff organization is based on the principle of specialization.

Advantages
• It brings expert knowledge to bear upon management and operating problems. Thus, the line
managers get the benefit of specialized knowledge of staff specialists at various levels.
• The expert advice and guidance given by the staff officers to the line officers benefit the entire
organization.
 • As the staff officers look after the detailed analysis of each important managerial activity, it
relieves the line managers of the botheration of concentrating on specialized functions.
• Staff specialists help the line managers in taking better decisions by providing expert advice.
Therefore, there will be sound managerial decisions under this system.
• It makes possible the principle of undivided responsibility and authority, and at the same time
permits staff specialization. Thus, the organization takes advantage of functional organization
while maintaining the unity of command.
• It is based upon planned specialization.
• Line and staff organization has greater flexibility, in the sense that new specialized activities can
be added to the line activities without disturbing the line procedure.

Disadvantages
• Unless the duties and responsibilities of the staff members are clearly indicated by charts and
manuals, there may be considerable confusion throughout the organization as to the functions and
positions of staff members with relation to the line supervisors.
• There is generally a conflict between the line and staff executives. The line managers feel that
staff specialists do not always give right type of advice, and staff officials generally complain that
their advice is not properly attended to.
• Line managers sometimes may resent the activities of staff members, feeling that prestige and
influence of line managers suffer from the presence of the specialists.
• The staff experts may be ineffective because they do not get the authority to implement their
recommendations.
• This type of organization requires the appointment of large number of staff officers or experts in
addition to the line officers. As a result, this system becomes quite expensive.
• Although expert information and advice are available, they reach the workers through the officers
and thus run the risk of misunderstanding and misinterpretation.
 • Since staff managers are not accountable for the results, they may not be performing their duties
well.
• Line mangers deal with problems in a more practical manner. But staff officials who are
specialists in their fields tend to be more theoretical. This may hamper coordination in the
organization.

DEPARTMENTATION BY DIFFERENT STRATEGIES

DEPARTMENTATION refers to the process of grouping activities into departments.
Departmentation is the process of grouping of work activities into departments, divisions, and other
homogenous units.

Key Factors in Departmentation

• It should facilitate control.
• It should ensure proper coordination.
• It should take into consideration the benefits of specialization.
• It should not result in excess cost.
• It should give due consideration to Human Aspects.

Departmentation takes place in various patterns like departmentation by functions, products, customers,
geographic location, process, and its combinations.

a) FUNCTIONAL DEPARTMENTATION
Functional departmentation is the process of grouping activities by functions performed. Activities can be
grouped according to function (work being done) to pursue economies of scale by placing employees with
shared skills and knowledge into departments for example human resources, finance, production, and
marketing. Functional departmentation can be used in all types of organizations.
Advantages:
• Advantage of specialization
• Easy control over functions
• Pinpointing training needs of manager
• It is very simple process of grouping activities.
Disadvantages:
• Lack of responsibility for the end result
• Overspecialization or lack of general management
• It leads to increase conflicts and coordination problems among departments.

b) PRODUCT DEPARTMENTATION

Product departmentation is the process of grouping activities by product line. Tasks can also be
grouped according to a specific product or service, thus placing all activities related to the product or the
service under one manager. Each major product area in the corporation is under the authority of a senior
manager who is specialist in, and is responsible for, everything related to the product line. Dabur India
Limited is the India’s largest Ayurvedic medicine manufacturer is an example of company that uses
product departmentation. Its structure is based on its varied product lines which include Home care,
Health care, Personal care and Foods.
Advantages
• It ensures better customer service
• Unprofitable products may be easily determined
• It assists in development of all around managerial talent
• Makes control effective
• It is flexible and new product line can be added easily.
Disadvantages
• It is expensive as duplication of service functions occurs in various product divisions
• Customers and dealers have to deal with different persons for complaint and information of
different products.

c) CUSTOMER DEPARTMENTATION

Customer departmentation is the process of grouping activities on the basis of common customers
or types of customers. Jobs may be grouped according to the type of customer served by the organization.
The assumption is that customers in each department have a common set of problems and needs that can
best be met by specialists. UCO is the one of the largest commercial banks of India is an example of
company that uses customer departmentation. Its structure is based on various services which includes
Home loans, Business loans, Vehicle loans and Educational loans.
Advantages
• It focused on customers who are ultimate suppliers of money
• Better service to customer having different needs and tastes
• Development in general managerial skills
Disadvantages
• Sales being the exclusive field of its application, co-ordination may appear difficult between sales
function and other enterprise functions.
• Specialized sales staff may become idle with the downward movement of sales to any specified
group of customers.

d) GEOGRAPHIC DEPARTMENTATION

Geographic departmentation is the process of grouping activities on the basis of territory. If an

organization's customers are geographically dispersed, it can group jobs based on geography. For
example, the organization structure of Coca-Cola Ltd has reflected the company’s operation in various
geographic areas such as Central North American group, Western North American group, Eastern North
American group and European group
Advantages
• Help to cater to the needs of local people more satisfactorily.
• It facilitates effective control
• Assists in development of all-round managerial skills
Disadvantages
• Communication problem between head office and regional office due to lack of means of
communication at some location
• Coordination between various divisions may become difficult.
• Distance between policy framers and executors
• It leads to duplication of activities which may cost higher.
e) PROCESS DEPARTMENTATION

Geographic departmentation is the process of grouping activities on the basis of product or

service or customer flow. Because each process requires different skills, process departmentation allows
homogenous activities to be categorized. For example, Bowater Thunder Bay, a Canadian company that
harvests trees and processes wood into newsprint and pulp. Bowater has three divisions namely tree
cutting, chemical processing, and finishing (which makes newsprint).

Departmentation by process: -
Advantages
• Oriented towards end result.
• Professional identification is maintained.
• Pinpoints product-profit responsibility.
Disadvantage
• Conflict in organization authority exists.
• Possibility of disunity of command.
• Requires managers effective in human relation
f) MARTIX DEPARTMENTATION

In actual practice, no single pattern of grouping activities is applied in the organization structure
with all its levels. Different bases are used in different segments of the enterprise. Composite or hybrid
method forms the common basis for classifying activities rather than one particular method,. One of the
mixed forms of organization is referred to as matrix or grid organization’s According to the situations, the
patterns of Organizing varies from case to case. The form of structure must reflect the tasks, goals and
technology if the originations the type of people employed and the environmental conditions that it faces.
It is not unusual to see firms that utilize the function and project organization combination. The same is
true for process and project as well as other combinations. For instance, a large hospital could have an
accounting department, surgery department, marketing department, and a satellite center project team that
make up its organizational structure.
Advantages
• Efficiently manage large, complex tasks
• Effectively carry out large, complex tasks
Disadvantages
• Requires high levels of coordination
• Conflict between bosses
• Requires high levels of management skills
SPAN OF CONTROL

Span of Control means the number of subordinates that can be managed efficiently and effectively by a
superior in an organization. It suggests how the relations are designed between a superior and a
subordinate in an organization.

Factors Affecting Span of control:

a) Capacity of Superior:
Different ability and capacity of leadership, communication affect management of subordinates.
b) Capacity of Subordinates:
Efficient and trained subordinates affects the degree of span of management.
c) Nature of Work:
Different types of work require different patterns of management.
d) Degree of Centralization or Decentralization:
Degree of centralization or decentralization affects the span of management by affecting the
degree of involvement of the superior in decision making.
e) Degree of Planning:
Plans which can provide rules, procedures in doing the work higher would be the degree of span
of management.
f) Communication Techniques:
Pattern of communication, its means, and media affect the time requirement in managing
subordinates and consequently span of management.
g) Use of Staff Assistance:
Use of Staff assistance in reducing the work load of managers enables them to manage more
number of subordinates.
h) Supervision of others:
If subordinate receives supervision form several other personnel besides his direct supervisor. In
such a case, the work load of direct superior is reduced and he can supervise more number of
persons.

Span of control is of two types:

1. Narrow span of control: Narrow Span of control means a single manager or supervisor
oversees few subordinates. This gives rise to a tall organizational structure.
Advantages:
• Close supervision
• Close control of subordinates
• Fast communication
Disadvantages:
• Too much control
• Many levels of management
• High costs
• Excessive distance between lowest level and highest level

2. Wide span of control: Wide span of control means a single manager or supervisor oversees a large
number of subordinates. This gives rise to a flat organizational structure.

Advantages:
• More Delegation of Authority
• Development of Managers
• Clear policies
Disadvantages:
• Overloaded supervisors
 • Danger of superiors loss of control
• Requirement of highly trained managerial personnel
• Block in decision making

CENTRALIZATION AND DECENTRALIZATION

CENTRALIZATION:
It is the process of transferring and assigning decision-making authority to higher levels of an
organizational hierarchy. The span of control of top managers is relatively broad, and there are relatively
many tiers in the organization.

Characteristics
• Philosophy / emphasis on: top-down control, leadership, vision, strategy.
• Decision-making: strong, authoritarian, visionary, charismatic.
• Organizational change: shaped by top, vision of leader.
• Execution: decisive, fast, coordinated. Able to respond quickly to major issues and changes.
• Uniformity. Low risk of dissent or conflicts between parts of the organization.

Advantages of Centralization
• Provide Power and prestige for manager
• Promote uniformity of policies, practices and decisions
• Minimal extensive controlling procedures and practices
• Minimize duplication of function

Disadvantages of Centralization
• Neglected functions for mid. Level, and less motivated beside personnel.
• Nursing supervisor functions as a link officer between nursing director and first-line management.

DECENTRALIZATION:
It is the process of transferring and assigning decision-making authority to lower levels of an
organizational hierarchy. The span of control of top managers is relatively small, and there are relatively
few tears in the organization, because there is more autonomy in the lower ranks.
Characteristics
• Philosophy / emphasis on: bottom-up, political, cultural and learning dynamics.
• Decision-making: democratic, participative, detailed.
• Organizational change: emerging from interactions, organizational dynamics.
• Execution: evolutionary, emergent. Flexible to adapt to minor issues and changes.
• Participation, accountability. Low risk of not-invented-here behavior.

Three Forms of decentralization

• De-concentration. The weakest form of decentralization. Decision making authority is
redistributed to lower or regional levels of the same central organization.
• Delegation. A more extensive form of decentralization. Through delegation the responsibility for
decision-making are transferred to semi-autonomous organizations not wholly controlled by the
central organization, but ultimately accountable to it.
• Devolution. A third type of decentralization is devolution. The authority for decision-making is
transferred completely to autonomous organizational units.

Advantages of Decentralization
• Raise morale and promote interpersonal relationships
• Relieve from the daily administration
• Bring decision-making close to action
• Develop Second-line managers
• Promote employee’s enthusiasm and coordination
• Facilitate actions by lower-level managers

Disadvantages of Decentralization
• Top-level administration may feel it would decrease their status
• Managers may not permit full and maximum utilization of highly qualified personnel
• Increased costs. It requires more managers and large staff
• It may lead to overlapping and duplication of effort

Centralization and Decentralization are two opposite ways to transfer decision-making power
and to change the organizational structure of organizations accordingly.
There must be a good balance between centralization and decentralization of authority and power.
Extreme centralization and decentralization must be avoided.

DELEGATION OF AUTHORITY
A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the
manager should delegate authority. Delegation of Authority means division of authority and powers
downwards to the subordinate. Delegation is about entrusting someone else to do parts of your job.
Delegation of authority can be defined as subdivision and sub-allocation of powers to the subordinates in
order to achieve effective results.
Elements of Delegation
1. Authority - in context of a business organization, authority can be defined as the power and right of a
person to use and allocate the resources efficiently, to take decisions and to give orders so as to
achieve the organizational objectives. Authority must be well- defined. All people who have the
authority should know what is the scope of their authority is and they shouldn’t misutilize it.
Authority is the right to give commands, orders and get the things done. The top level management
has greatest authority. Authority always flows from top to bottom. It explains how a superior gets
work done from his subordinate by clearly explaining what is expected of him and how he should go
about it. Authority should be accompanied with an equal amount of responsibility. Delegating the
authority to someone else doesn’t imply escaping from accountability. Accountability still rest with
the person having the utmost authority.
2. Responsibility - is the duty of the person to complete the task assigned to him. A person who is given
the responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for which
he was held responsible are not completed, then he should not give explanations or excuses.
Responsibility without adequate authority leads to discontent and dissatisfaction among the person.
Responsibility flows from bottom to top. The middle level and lower level management holds more
responsibility. The person held responsible for a job is answerable for it. If he performs the tasks
assigned as expected, he is bound for praises. While if he doesn’t accomplish tasks assigned as
expected, then also he is answerable for that.
3. Accountability - means giving explanations for any variance in the actual performance from the
expectations set. Accountability cannot be delegated. For example, if ’A’ is given a task with
sufficient authority, and ’A’ delegates this task to B and asks him to ensure that task is done well,
responsibility rest with ’B’, but accountability still rest with ’A’. The top level
 management is most accountable. Being accountable means being innovative as the person will think
beyond his scope of job. Accountability ,in short, means being answerable for the end result.
Accountability can’t be escaped. It arises from responsibility.

DELEGATION PROCESS
The steps involved in delegation are given below

1. Allocation of duties – The delegator first tries to define the task and duties to the subordinate. He
also has to define the result expected from the subordinates. Clarity of duty as well as result
expected has to be the first step in delegation.
2. Granting of authority – Subdivision of authority takes place when a superior divides and shares
his authority with the subordinate. It is for this reason; every subordinate should be given enough
independence to carry the task given to him by his superiors. The managers at all levels delegate
authority and power which is attached to their job positions. The subdivision of powers is very
important to get effective results.
3. Assigning of Responsibility and Accountability – The delegation process does not end once
powers are granted to the subordinates. They at the same time have to be obligatory towards the
duties assigned to them. Responsibility is said to be the factor or obligation of an individual to
carry out his duties in best of his ability as per the directions of superior. Therefore, it is that
which gives effectiveness to authority. At the same time, responsibility is absolute and cannot be
shifted.
 4. Creation of accountability – Accountability, on the others hand, is the obligation of the
individual to carry out his duties as per the standards of performance. Therefore, it is said that
authority is delegated, responsibility is created and accountability is imposed. Accountability
arises out of responsibility and responsibility arises out of authority. Therefore, it becomes
important that with every authority position an equal and opposite responsibility should be
attached.

Therefore every manager, i.e., the delegator has to follow a system to finish up the delegation process.
Equally important is the delegatee’s role which means his responsibility and accountability is attached
with the authority over to here.

STAFFING
Staffing involves filling the positions needed in the organization structure by appointing
competent and qualified persons for the job.
The staffing process encompasses man power planning, recruitment, selection, and training.

a) Manpower requirements:
Manpower Planning which is also called as Human Resource Planning consists of putting right
number of people, right kind of people at the right place, right time, doing the right things for which they
are suited for the achievement of goals of the organization. The primary function of man power planning
is to analyze and evaluate the human resources available in the organization, and to determine how to
obtain the kinds of personnel needed to staff positions ranging from assembly line workers to chief
executives.

b) Recruitment:
Recruitment is the process of finding and attempting to attract job candidates who are capable of
effectively filling job vacancies.
Job descriptions and job specifications are important in the recruiting process because they specify the
nature of the job and the qualifications required of job candidates.
c) Selection:
Selecting a suitable candidate can be the biggest challenge for any organization. The success of
an organization largely depends on its staff. Selection of the right candidate builds the foundation of any
organization's success and helps in reducing turnovers.

d) Training and Development:

Training and Development is a planned effort to facilitate employee learning of job-related
behaviors in order to improve employee performance. Experts sometimes distinguish between the terms
“training” and “development”; “training” denotes efforts to increase employee skills on present jobs,
while “development” refers to efforts oriented toward improvements relevant to future jobs. In practice,
though, the distinction is often blurred (mainly because upgrading skills in present jobs usually improves
performance in future jobs).

RECRUITMENT PROCESS
Recruitment is the process of finding and attempting to attract job candidates who are capable of
effectively filling job vacancies. The recruitment process consists of the following steps
• Identification of vacancy
• Preparation of job description and job specification
• Selection of sources
• Advertising the vacancy
• Managing the response
a) Identification of vacancy:
The recruitment process begins with the human resource department receiving requisitions for recruitment
from any department of the company. These contain:
• Posts to be filled
• Number of persons
• Duties to be performed
• Qualifications required

b) Preparation of job description and job specification:

A job description is a list of the general tasks, or functions, and responsibilities of a position. It may
often include to whom the position reports, specifications such as the qualifications or skills needed by
the person in the job, or a salary range. A job specification describes the
knowledge, skills, education, experience, and abilities you believe are essential to performing a particular
job.

c) Selection of sources:
Every organization has the option of choosing the candidates for its recruitment processes from
two kinds of sources: internal and external sources. The sources within the organization itself (like
transfer of employees from one department to other, promotions) to fill a position are known as the
internal sources of recruitment. Recruitment candidates from all the other sources (like outsourcing
agencies etc.) are known as the external sources of the recruitment.

d) Advertising the vacancy:

After choosing the appropriate sources, the vacancy is communicated to the candidates by means
of a suitable media such as television, radio, newspaper, internet, direct mail etc.

e) Managing the response:

After receiving an adequate number of responses from job seekers, the sieving process of the
resumes begins. This is a very essential step of the recruitment selection process, because selecting the
correct resumes that match the job profile, is very important. Naturally, it has to be done rather
competently by a person who understands all the responsibilities associated with the designation in its
entirety. Candidates with the given skill set are then chosen and further called for interview. Also, the
applications of candidates that do not match the present nature of the position but may be considered for
future requirements are filed separately and preserved.
The recruitment process is immediately followed by the selection process.

JOB ANALYSIS
Job Analysis is the process of describing and recording aspects of jobs and specifying the skills
and other requirements necessary to perform the job.
The outputs of job analysis are
a) Job description
b) Job specification
Job Description
A job description (JD) is a written statement of what the job holder does, how it is done, under what
conditions it is done and why it is done. It describes what the job is all about, throwing light on job
content, environment and conditions of employment. It is descriptive in nature and defines the purpose
and scope of a job. The main purpose of writing a job description is to differentiate the job from other
jobs and state its outer limits.
Contents
A job description usually covers the following information:
♣ Job title: Tells about the job title, code number and the department where it is done.
♣ Job summary: A brief write-up about what the job is all about.
♣ Job activities: A description of the tasks done, facilities used, extent of supervisory help, etc.
♣ Working conditions: The physical environment of job in terms of heat, light, noise and other
hazards.
♣ Social environment: Size of work group and interpersonal interactions required to do the job.

Job Specification
Job specification summarizes the human characteristics needed for satisfactory job completion. It tries to
describe the key qualifications someone needs to perform the job successfully. It spells out the important
attributes of a person in terms of education, experience, skills, knowledge and abilities (SKAs) to perform
a particular job. The job specification is a logical outgrowth of a job description. For each job description,
it is desirable to have a job specification. This helps the organization to find what kinds of persons are
needed to take up specific jobs.
Contents
A job specification usually covers the following information:
• Education
• Experience
• Skill, Knowledge, Abilities
• Work Orientation Factors
• Age
SELECTION PROCESS
Selecting a suitable candidate can be the biggest challenge for any organisation. The success of an
organization largely depends on its staff. Selection of the right candidate builds the foundation of any
organization's success and helps in reducing turnovers.
Though there is no fool proof selection procedure that will ensure low turnover and high profits, the
following steps generally make up the selection process-

a) Initial Screening
This is generally the starting point of any employee selection process. Initial Screening eliminates
unqualified applicants and helps save time. Applications received from various sources are scrutinized
and irrelevant ones are discarded.

b) Preliminary Interview
It is used to eliminate those candidates who do not meet the minimum eligibility criteria laid down by the
organization. The skills, academic and family background, competencies and interests of the candidate are
examined during preliminary interview. Preliminary interviews are less formalized and planned than the
final interviews. The candidates are given a brief up about the company and the job profile; and it is also
examined how much the candidate knows about the company. Preliminary interviews are also called
screening interviews.

c) Filling Application Form

An candidate who passes the preliminary interview and is found to be eligible for the job is asked to fill in
a formal application form. Such a form is designed in a way that it records the personal as well
professional details of the candidates such as age, qualifications, reason for leaving previous job,
experience, etc.
d) Personal Interview
Most employers believe that the personal interview is very important. It helps them in obtaining more
information about the prospective employee. It also helps them in interacting with the candidate and
judging his communication abilities, his ease of handling pressure etc. In some Companies, the selection
process comprises only of the Interview.

e) References check
Most application forms include a section that requires prospective candidates to put down names of a few
references. References can be classified into - former employer, former customers, business references,
reputable persons. Such references are contacted to get a feedback on the person in question including his
behaviour, skills, conduct etc.

f) Background Verification
A background check is a review of a person's commercial, criminal and (occasionally) financial records.
Employers often perform background checks on employers or candidates for employment to confirm
information given in a job application, verify a person's identity, or ensure that the individual does not
have a history of criminal activity, etc., that could be an issue upon employment.

g) Final Interview
Final interview is a process in which a potential employee is evaluated by an employer for prospective
employment in their organization. During this process, the employer hopes to
determine whether or not the applicant is suitable for the job. Different types of tests are conducted to
evaluate the capabilities of an applicant, his behaviour, special qualities etc. Separate tests are conducted
for various types of jobs.

h) Physical Examination
If all goes well, then at this stage, a physical examination is conducted to make sure that the candidate has
sound health and does not suffer from any serious ailment.

i) Job Offer
A candidate who clears all the steps is finally considered right for a particular job and is presented with
the job offer. An applicant can be dropped at any given stage if considered unfit for the job.
Employee Induction / Orientation

Orientation or induction is the process of introducing new employees to an organization, to their specific
jobs & departments, and in some instances, to their community.

Purposes of Orientation
Orientation isn't a nicety! It is used for the following purposes: 1.
To Reduce Startup-Costs:
Proper orientation can help the employee get "up to speed" much more quickly, thereby reducing
the costs associated with learning the job.
2. To Reduce Anxiety:
Any employee, when put into a new, strange situation, will experience anxiety that can impede
his or her ability to learn to do the job. Proper orientation helps to reduce anxiety that results from
entering into an unknown situation, and helps provide guidelines for behaviour and conduct, so the
employee doesn't have to experience the stress of guessing.
3. To Reduce Employee Turnover:
Employee turnover increases as employees feel they are not valued, or are put in positions where
they can't possibly do their jobs. Orientation shows that the organization values the employee, and helps
provide tools necessary for succeeding in the job.
4. To Save Time for Supervisor & Co-Workers:
 Simply put, the better the initial orientation, the less likely supervisors and co-workers will have
to spend time teaching the employee.
5. To Develop Realistic Job Expectations, Positive Attitudes and Job Satisfaction:
It is important that employees learn early on what is expected of them, and what to expect from
others, in addition to learning about the values and attitudes of the organization. While people can learn
from experience, they will make many mistakes that are unnecessary and potentially damaging.

An orientation program principally conveys 3 types of information, namely:

a) General information about the daily work routine to be followed
b) A review of the organization’s history, founders, objectives, operations & products or services, as
well as how the employee’s job contributes to the organization’s needs.
c) A detailed presentation of the organization’s policies, work rules & employee benefits.

Two Kinds of Orientation

There are two related kinds of orientation. The first we will call Overview Orientation, and deals with the
basic information an employee will need to understand the broader system he or she works in.
Overview Orientation includes helping employees understand:
• Management in general
• Department and the branch
• Important policies
• General procedures (non-job specific)
• Information about compensation
• Accident prevention measures
• Employee and union issues (rights, responsibilities)
• Physical facilities
Often, Overview Orientation can be conducted by the personnel department with a little help from the
branch manager or immediate supervisor, since much of the content is generic in nature.
The second kind of orientation is called Job-Specific Orientation, and is the process that is used to help
employees understand:
• Function of the organization,
• Responsibilities,
 • Expectations,
• Duties
• Policies, procedures, rules and regulations
• Layout of workplace
• Introduction to co-workers and other people in the broader organization.

Job specific orientation is best conducted by the immediate supervisor, and/or manager, since much of the
content will be specific to the individual. Often the orientation process will be ongoing, with supervisors
and co-workers supplying coaching.

CARRER DEVELOPMENT
Career development not only improves job performance but also brings about the growth of the
personality. Individuals not only mature regarding their potential capacities but also become better
individuals.
Purpose of development
Management development attempts to improve managerial performance by imparting
• Knowledge
• Changing attitudes
• Increasing skills
The major objective of development is managerial effectiveness through a planned and a deliberate
process of learning. This provides for a planned growth of managers to meet the future organizational
needs.
Development Process:

The development process consists of the following steps

1. Setting Development Objectives:
It develops a framework from which executive need can be determined.
2. Ascertaining Development Needs:
It aims at organizational planning & forecast the present and future growth.
3. Determining Development Needs:
This consists of
• Appraisal of present management talent
• Management Manpower Inventory
The above two processes will determine the skill deficiencies that are relative to the future needs of
the organization.
4. Conducting Development Programs:
It is carried out on the basis of needs of different individuals, differences in their attitudes and
behavior, also their physical, intellectual and emotional qualities. Thus a comprehensive and well
conceived program is prepared depending on the organizational needs and the time & cost involved.
5. Program Evaluation:
It is an attempt to assess the value of training in order to achieve organizational objectives.

TRAINING

Training is a process of learning a sequence of programmed behaviour. It improves the

employee's performance on the current job and prepares them for an intended job.
Purpose of Training:
1) To improve Productivity: Training leads to increased operational productivity and increased company
profit.
2) To improve Quality: Better trained workers are less likely to make operational mistakes.
3) To improve Organizational Climate: Training leads to improved production and product quality which
enhances financial incentives. This in turn increases the overall morale of the organization.
4) To increase Health and Safety: Proper training prevents industrial accidents.
5) Personal Growth: Training gives employees a wider awareness, an enlarged skill base and that leads to
enhanced personal growth.

Steps in Training Process:

Identifying Training needs: A training program is designed to assist in providing solutions for specific
operational problems or to improve performance of a trainee.
• Organizational determination and Analysis: Allocation of resources that relate to organizational
goal.
• Operational Analysis: Determination of a specific employee behaviour required for a particular
task.
Man Analysis: Knowledge, attitude and skill one must possess for attainment of organizational
objectives
1) Getting ready for the job: The trainer has to be prepared for the job. And also who needs to be trained -
the newcomer or the existing employee or the supervisory staff.
Preparation of the learner:
• Putting the learner at ease
• Stating the importance and ingredients of the job
• Creating interest
• Placing the learner as close to his normal working position
• Familiarizing him with the equipment, materials and trade terms
2) Presentation of Operation and Knowledge: The trainer should clearly tell, show, illustrate and question
in order to convey the new knowledge and operations. The trainee should be encouraged to ask questions
in order to indicate that he really knows and understands the job.
3) Performance Try out: The trainee is asked to go through the job several times. This gradually builds up
his skill, speed and confidence.
4) Follow-up: This evaluates the effectiveness of the entire training effort
TRAINING METHODS
Training methods can be broadly classified as on-the-job training and off-the-job taining
a) On-the-job training
On the job training occurs when workers pick up skills whilst working along side experienced workers at
their place of work. For example this could be the actual assembly line or offices where the employee
works. New workers may simply “shadow” or observe fellow employees to begin with and are often
given instruction manuals or interactive training programmes to work through.
b) Off-the-job training
This occurs when workers are taken away from their place of work to be trained. This may take place at
training agency or local college, although many larger firms also have their own training centres. Training
can take the form of lectures or self-study and can be used to develop more general skills and knowledge
that can be used in a variety of situations.
The various types of off-the-job training are
(i) Instructor presentation: The trainer orally presents new information to the trainees, usually through
lecture. Instructor presentation may include classroom lecture, seminar, workshop, and the like.
(ii) Group discussion: The trainer leads the group of trainees in discussing a topic.
(iii) Demonstration: The trainer shows the correct steps for completing a task, or shows an example of a
correctly completed task.
(iv) Assigned reading: The trainer gives the trainees reading assignments that provide new information.
(v) Exercise: The trainer assigns problems to be solved either on paper or in real situations related to the
topic of the training activity.
(vi) Case study: The trainer gives the trainees information about a situation and directs them to come to a
decision or solve a problem concerning the situation.
(vii) Role play: Trainees act out a real-life situation in an instructional setting.
(viii) Field visit and study tour: Trainees are given the opportunity to observe and interact with the
problem being solved or skill being learned.

CAREER STAGES
What people want from their careers also varies according to the stage of one's career. What may
have been important in an early stage may not be important in a later one. Four distinct career stages have
been identified: trial, establishment/advancement, mid-career, and late career. Each stage represents
different career needs and interests of the individual
a) Trial stage: The trial stage begins with an individual's exploration of career-related matters and ends
usually at about age 25 with a commitment on the part of the individual to a particular occupation. Until
the decision is made to settle down, the individual may try a number of jobs and a number of
organizations. Unfortunately for many organizations, this trial and exploration stage results in high level
of turnover among new employees. Employees in this stage need opportunities for self-exploration and a
variety of job activities or assignments.

b) Establishment Stage: The establishment/advancement stage tends to occur between ages 25 and 44.
In this stage, the individual has made his or her career choice and is concerned with achievement,
performance, and advancement. This stage is marked by high employee productivity and career growth,
as the individual is motivated to succeed in the organization and in his or her chosen occupation.
Opportunities for job challenge and use of special competencies are desired in this stage. The employee
strives for creativity and innovation
through new job assignments. Employees also need a certain degree of autonomy in this stage
so that they can experience feelings of individual achievement and personal success.

c) Mid Career Crisis Sub Stage: The period occurring between the mid-thirties and mid-forties during
which people often make a major reassessment of their progress relative to their original career ambitions
and goals.

d) Maintenance stage: The mid-career stage, which occurs roughly between the ages 45 and 64, has also
been referred to as the maintenance stage. This stage is typified by a continuation of established patterns
of work behavior. The person is no longer trying to establish a place for himself or herself in the
organization, but seeks to maintain his or her position. This stage is viewed as a mid-career plateau in
which little new ground is broken. The individual in this stage may need some technical updating in his or
her field. The employee should be encouraged to develop new job skills in order to avoid early stagnation
and decline.

e) Late-career stage: In this stage the career lessens in importance and the employee plans for retirement
and seeks to develop a sense of identity outside the work environment.

PERFORMANCE APPRAISAL
Performance appraisal is the process of obtaining, analyzing and recording information about the
relative worth of an employee. The focus of the performance appraisal is measuring and improving the
actual performance of the employee and also the future potential of the employee. Its aim is to measure
what an employee does.

Objectives of Performance appraisal:

• To review the performance of the employees over a given period of time.
• To judge the gap between the actual and the desired performance.
• To help the management in exercising organizational control.
• Helps to strengthen the relationship and communication between superior – subordinates and
management – employees.
• To diagnose the strengths and weaknesses of the individuals so as to identify the training and
development needs of the future.
• To provide feedback to the employees regarding their past performance.
• Provide information to assist in the other personal decisions in the organization.

• Provide clarity of the expectations and responsibilities of the functions to be performed by the
employees.
• To judge the effectiveness of the other human resource functions of the organization such as
recruitment, selection, training and development.
• To reduce the grievances of the employees.

Process of performance appraisal:

a) Establishing performance standards:
The first step in the process of performance appraisal is the setting up of the standards
which will be used to as the base to compare the actual performance of the employees. This step
requires setting the criteria to judge the performance of the employees as successful or unsuccessful
and the degrees of their contribution to the organizational goals and objectives. The standards set
should be clear, easily understandable and in measurable terms.
In case the performance of the employee cannot be measured, great care should be taken to describe
the standards.

b) Communicating the standards:

After establishing the standards, it is the responsibility of the management to communicate
the standards to all the employees of the organization.
The employees should be informed and the standards should be clearly explained to the. This will
help them to understand their roles and to know what exactly is expected from them. The standards
should also be communicated to the appraisers or the evaluators and if required, the standards can also
be modified at this stage itself according to the relevant feedback from the employees or the
evaluators.

c) Measuring the actual performance:

The most difficult part of the Performance appraisal process is measuring the actual
performance of the employees that is the work done by the employees during the specified period of
time. It is a continuous process which involves monitoring the performance throughout the year. This
stage requires the careful selection of the appropriate techniques of measurement, taking care that
personal bias does not affect the outcome of the process and providing assistance rather than
interfering in an employees work.

d) Comparing the actual with the desired performance:

The actual performance is compared with the desired or the standard performance. The
comparison tells the deviations in the performance of the employees from the standards set. The result
can show the actual performance being more than the desired performance or, the actual performance
being less than the desired performance depicting a negative deviation in the organizational
performance. It includes recalling, evaluating and analysis of data related to the employees’
performance.

e) Discussing results:
The result of the appraisal is communicated and discussed with the employees on one-to-
one basis. The focus of this discussion is on communication and listening. The results, the problems
and the possible solutions are discussed with the aim of problem solving and reaching consensus. The
feedback should be given with a positive attitude as this can have an
effect on the employees’ future performance. The purpose of the meeting should be to solve the
problems faced and motivate the employees to perform better.

f) Decision making:
The last step of the process is to take decisions which can be taken either to improve the
performance of the employees, take the required corrective actions, or the related HR decisions like
rewards, promotions, demotions, transfers etc.