UNIT III

ORGANIZING

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 UNIT III
ORGANIZING
DEFINITION:
Koontz and O'Donnell define the Organizing as “ the
grouping of activities necessary to attain objectives, the
assignment of each grouping to a manager with authority
necessary to supervise it and the provision for co-
ordination horizontally and vertically in the enterprise
structure“.
According to Louis A Allen, "Organizing is the process of
identifying and grouping of activities required to attain
the objectives, delegating authority, creating
responsibilities and establishing relationships for people
to work effectively.
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NATURE OF ORGANIZING
The main characteristics of an organization are as follows:
(1)Common Objectives:
 Every organisation exists to achieve some common
objectives.
 All efforts of the organization are directed towards this
goal.
(2) Specialisation or Division of Labour:
 The total work of an organisation is divided into functions
and sub-functions to get the benefits of specialisation.
(3) Authority of Structure:
 The authority and responsibility of each position is
defined in the structure.
 The chain of superior and subordinate relationships is
known as Chain of Command. 3
(4) Group of Persons:
 An organisation is basically a group of persons.
 Therefore, activity groupings and authority provisions must take
into account the limitations and customs of people.
(5) Co-ordination:
 There is a mechanism for coordinating different activities and parts
of an organisation so that it functions as an integrated whole.
(6) Communication:
 Every organisation has its own channels of communication.
 These channels are necessary for mutual understanding and
cooperation among members of an organisation.
(7) Environment:
 An organization functions in an environment comprises of
economic, social, political and legal factors.
 Therefore, it must be desired to work efficiently in a changing
environment.
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(8) Rules and regulations:
 For effective functioning of an organization, it should
have some rules and regulations.
 Such rules and regulations may be in written.

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PURPOSE OR IMPORTANCE OF ORGANIZING
Organizing activities are important for the success of an
enterprise.
A sound organizing can contribute to the success of an
organization in many of the following ways:

(1)To facilitate administration.

(2)To increase the efficiency of the management.
(3)To facilitate growth and diversification.
(4)To ensure optimum use of man and material resources.
(5)To facilitate co-ordination and communication.
(6)To permit use of Technological innovations.
(7)To simulate creativity and initiative.
(8)To facilitate the development of managerial ability.
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PROCESS OF ORGANIZING

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The Organization process involves the following steps:
a) Determination of Activities:
 The first step is to identify the work that must be done to achieve the
goal.
 The entire work is divided into different activities and again each activity
is sub-divided into various sub-activities that can be carried out by a
single individual.
 It must be ensured that no single activity is left out and no unnecessary
activity is included.
b) Grouping of Activities:
 The next step is grouping of closely related and similar activities to form
departments, divisions or sections.
 Grouping is done on the basis of 1) Functions 2) Processes 3) Locations 4)
Products 5) Customers etc.,
 Generally, grouping is done on the basis of functions in a manufacturing
industry.
 Such grouping of activities is known as Departmentation.
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c) Assignment of Duties:
 After grouping the activities, the groups are assigned to
different managers such as Production Manager, Marketing
Manager, Financial Manager, Personnel Manager etc.,
 In other words, each group of related activities is assigned to a
person most suited for it.
 The specified persons are specialized in their respective fields.
 It makes the organization to successfully achieve the objectives.

d) Delegation of Authority:
 Assignment of duties is followed by Delegation of Authority.
 It will be very difficult for a person to perform the duties
effectively, if there is no authority to do it.
 Each person has authority and also responsibility to perform
assigned duties.
 Authority without responsibility is a dangerous.
 Responsibility without authority is like an empty vessel. 9
e) Establishment of Structural Relationship:
 The relationship between various positions and channels
of communications should be clearly defined when a
group of persons works together for a common goal.
 The relationship between different departments and
different personnel must be clearly established.
 An effective communication channel between different
departments and individuals are established.
f) Co-ordination of Activities:
 In order to get the optimum performance, coordination
is necessary.
 The reason is that there must be a separate and
responsible person to see whether all the activities are
going on to accomplish the objectives of the organisation
or not. 10
ORGANIZATIONAL CHART

11
 ORGANISATION CHARTS are prepared for the purpose of
describing the organisational structure clearly.

 The following are the contents of the organization chart:

 Basic organisation structure and flow of authority.
 Authority and responsibility of various executives.
 Channel of Communication

There are various types of organisation charts:

(1)Top – Down chart or Vertical Chart:

 It shows the organisation structure in the form of a
pyramid.
 The lines of communication flow from top level to the
bottom in vertical lines.
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VERTICAL OR TOP-DOWN CHART

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(2) Horizontal Chart:
The chart in which the lines of command are flowing
horizontally instead of vertical is known as Horizontal Chart.

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ORGANIZATION STRUCTURE

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 ORGANIZATION STRUCTURE
 Organization structure is the formal pattern of
interactions and coordination designed by
management to link the tasks of individuals and
groups in achieving organisational goals.

 An organization structure should be designed to

clarify who is to do what task and who is
responsible for what results.

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 TYPES OF ORGANISATIONAL STRUCTURE
– Based on the power flow within the organization , the
organization structure may be classified as :
1. Bureaucratic or Mechanistic Structure.
2. Organic or adaptive Structure.
– Based on the formation of departments or groups,
organization structure may be classified as :
1 Functional Structure
2. Divisional Structure
3. Matrix Structure
4. Team Structure
5 Network Structure 17
1) Bureaucratic or Mechanistic Structure:
 A bureaucracy is a form of organization based on logic,
order and the legitimate use of formal authority.
 The features of Bureaucratic Structure include a clear cut
division of labour, strict hierarchy of authority, formal
rules and procedures and promotion based on
competency.
 Administrative class is responsible for coordination of
members.
 Clearly specified tasks using Division of Work principle.
 Organization is governed by written rules and regulations.
 Maintenance of proper official records of various activities
performed by the people in the organization.
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2) Organic or Adaptive Structure:
 This structure is opposite in nature to the bureaucratic
structure.
 This type of structure maintains high degree of openness
to inputs from the internal and external environments.
 The organic structure tends to work better in dynamic
environments where managers need to react quickly to
change.
 An organic structure is a management system founded on
cooperation and knowledge based authority.

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3) Functional Structure:
 The functional structure is the most popular organizational
structure in the business world.
 It groups positions into work units based on similar
activities, skills, expertise and resources.
 Production, marketing, Finance, R&D and human
resources are common groupings within a functional
structure.

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FUNCTIONAL STRUCTURE

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4) Divisional Structure:
 In divisional structure, the organization is divided into
several fairly autonomous divisions.
 These divisions are divided according to their
organizational inputs.
 Each division is headed by a manager who is responsible
for all the functions within his division.
 Each division has its own production, marketing, R&D,
Finance departments.

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DIVISIONAL STRUCTURE

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5) Matrix Structure:
 Matrix structure is a hybrid organizational form, containing
characteristics of both functional and divisional structures.
 It is a two-dimensional pattern developed to meet the
problems of growing size and complexity of undertakings.
 Such undertakings require an organizational structure
which is more flexible and technical oriented.
 It employs multiple commands.

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MATRIX STRUCTURE

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6) Team Structure:
 Team structure organizes separate functions into a group
based on one overall objective.
 These cross-functional teams are composed of members
from different departments who work together as needed
to solve problems and explore opportunities.
 Managers must be aware that how well team members
work together often depends on the quality of
interpersonal relations, group dynamics and their team
management abilities.

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7) Network Structure:
 The network structure relies on other organizations
to perform critical functions on a contractual basis.
 In other words, managers can contract specific work
to specialists.
 For example, a core company may give contract to
specialized company for the development of
software and website on their behalf, similarly the
design work, accounts & tax calculation, marketing
etc.,
 It provides flexibility and reduces overhead because
the size of staff and operations can be reduced.

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NETWORK STRUCTURE

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FORMAL AND INFORMAL ORGANIZATION

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FORMAL ORGANIZATION:
A formal organization typically consists of a classical hierarchical
structure in which position, responsibility, authority, accountability
and line of command are clearly defined and established.

Characteristic Features of Formal Organization

 It is based on the principle of division of labour and efficiency in
operations.
 Coordination among members and their control are well specified
through processes, procedures, rules etc.,
 It is flexible and properly planned.
 The responsibility and accountability at all levels of organization
should be clearly defined.
 Since the definite boundary of each worker is clearly defined, the
conflict among the workers is automatically reduced.

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INFORMAL ORGANIZATION
 Informal organization is an organization which establishes
the relationship on the basis of member’s interaction,
communication, personal likings and dislikings and social
contacts within as well as outside the organization.
 It arises naturally on the basis of friendship or some
common interest which may or may not be related to work.
 For example, the typists working in different departments
may form informal group due to similarity of work.
 Common language, common hobby, common habits may
also lead to informal organization.

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Characteristics Features of Informal Organization :
 It arises without any external cause. i.e,
Voluntarily. It is a natural outcome at the work
place.
 It is created on the basis of some similarity among
the members. The basis of similarity may be age,
gender, place of birth, caste, religion,
likings/dislikings etc.,
 A person may become member of several
informal organization at the same time.
 The rules and traditions of informal organization
are not written but they are commonly followed.
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LINE AND STAFF AUTHORITY

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 LINE AND STAFF AUTHORITY
 There are two approaches to understand line and staff authority;
1. FUNCTIONAL APPROACH
2. AUTHORITY APPROACH
 According to Functional Approach, functions of an organisation are
classified into :
1. LINE FUNCTION
2. STAFF FUNCTION
 LINE FUNCTIONS are those that are related directly with the
attainment of the organizational objectives.
 STAFF FUNCTIONS are those help line functions in attaining the
objectives.
 According to Louis Allen “ Line Functions are those which have direct
responsibility for accomplishing the objectives of the enterprise and
staff functions refer to those elements of the organization that help
the line function to work most effectively in accomplishing the
primary objectives of the enterprise”.
 Production and Sales are the line function and Financing, personnel
and accounting are staff functions in manufacturing organizations.34
 According to Authority Approach, Authority of an
organisation are classified into :
1. LINE AUTHORITY
2. STAFF AUTHORITY
LINE AUTHORITY
• The line authority represents the structure in a direct
vertical relationship through which authority flows.
• Line authority exists between superior and his subordinate.
• Line authority is the direct authority which a superior
exercises over a number of subordinates to carry out orders
and instructions.
• Line authority ensures excellent discipline in the enterprise
because every individual knows whom he is responsible.
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 STAFF AUTHORITY
• Staff authority is exercised by a man over a
line personnel.
• Staff authority refers to those elements of
the organization which help the line to work
more effectively in accomplishing the
primary objectives of the enterprise.
• The nature of Staff authority is advisory.
• The function of staff authority is to
investigate and give advice to line
managers. 36
LINE AND STAFF AUTHORITY RELATIONSHIPS

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DEPARTMENTATION BY DIFFERENT STRATEGIES

38
 DEPARTMENTATION BY DIFFERENT STRATEGIES
 Departmentation means the process of grouping of
similar activities of the business into departments,
divisions or other homogenous units.
 It is used for the purpose of facilitating a smooth
administration at all levels.
 Koontz and O’Donnell defined, “ A departmentation is a
process of dividing the large monolithic functional
orgnaization into small and flexible administrative units”.
 Departmentation involves grouping of people or
activities with similar characteristics into a single
department or unit.
 It facilitates communication, coordination and control,
thus contributing to organizational success.
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 DEPARTMENTATION BY DIFFERENT
STRATEGIES
1. Departmentation by Numbers.
2. Departmentation by Time.
3. Departmentation by Enterprise Functions.
4. Departmentation by Territory or Geography.
5. Departmentation by Customers.
6. Departmentation by Equipment or Process.
7. Departmentation by Product or service.

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1. DEPARTMENTATION BY NUMBERS
• Departments are created on the basis of
number of persons.
• For example, in the army soldiers are
grouped into squads, battalions,
companies, brigades and regiments on the
basis of the number prescribed for each
unit.
• In a manufacturing unit, this basis may be
followed at the lower level of hierarchy.
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 2. DEPARTMENTATION BY TIME
• The business activities are grouped
together on the basis of the time of
performance.
• For example, manufacturing units working
in three shifts of eight hour each per day
may group the activities in shift wise.
• Service can be rendered around the clock.
• The basic idea is to get the advantages of
people specialized to work in a particular
shift. 42
3. DEPARTMENTATION BY ENTERPRISE FUNCTION
 The most commonly followed basis is departmentation by
enterprise function.
 The activities are grouped on the basis of functions which
are to be performed .
 Each department head is responsible for the respective
departments.
 For example, all problems in the marketing of the product
is the responsibility of marketing manager, who has under
him, specialists in this area.
 It is the most logical, scientific, time proven and natural
method of departmentation.
 Due weightage and prestige are given to the departmental
managers and they are respected by top management
people. 43
DEPARTMENTATION BY ENTERPRISE FUNCTION

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4. DEPARTMENTATION BY TERRITORY OR GEOGRAPHY

• When an organization operates in different

geographical areas, each with distinct needs,
it is desirable to create the departments along
geographical lines.
• The business activities are grouped in area-
wise and each area is in-charge of a single
person.
• It will help the business unit to increase the
sales because the local person is familiar with
the local language, the culture and the
preferences of customers.
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DEPARTMENTATION BY TERRITORY OR GEOGRAPHY

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 5.DEPARTMENTATION BY CUSTOMERS
 This type of departmentation is preferred when
the needs of customers are different in nature.
 Some big organization is providing special
services to different types of customer.
 For example, a bank may divide its loan section
into number of heads, such as corporate
banking, institutional banking, agricultural
banking, real estate and mortgage loans etc.,
 Each department specialists is serving a
particular group of customers.
 It facilitates the concentration on customer
needs and satisfaction.
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DEPARTMENTATION BY CUSTOMERS

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6. DEPARTMENTATION BY PROCESS OR EQUIPMENT
 Under this type of departmentation, activities
are grouped on the basis of production
processes or equipment involved.
 For example, a textile mill has many
departments such as ginning, spinning,
weaving, dyeing and printing, packing and
sales etc.,
 It provides an effective utilization of
specialized equipment and special skills.

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DEPARTMENTATION BY PROCESS OR EQUIPMENT

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 7. DEPARTMENTATION BY PRODUCT OR SERVICE
 In this case, the units are formed according to the
type of product.
 It is more useful in multi-line corporations where
product expansion and diversification, manufacturing
and marketing characteristics of the product are of
primary concern.
 Each department head is responsible for
manufacturing a product they make.
 For example, HINDUSTAN MOTORS LTD., has
diversified product line, such as HEAVY ENGINEERING
DIVISION, EARTH MOVING DIVISION,AUTOMOBILE
DIVISION and POWER PRODUCTS DIVISION.
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DEPARTMENTATION BY PRODUCT OR SERVICE

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SPAN OF CONTROL

53
 SPAN OF CONTROL
Span of Control means the number of
people managed effectively by a single
superior in an organization.
The span of control is the number of
subordinates for whom a manager is
directly responsible.
It suggests how the relations are
designed between a superior and a
subordinate in an organization.
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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
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NARROW SPAN OF CONTROL

56
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
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WIDE SPAN OF CONTROL

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FACTORS DETERMINING THE EFFECTIVE SPAN:
1.Capacity of Superior:
 Each Manager has different capacity in respect of
such factors as communication, leadership,
decision making, control etc, affecting
management of subordinates
 Managers having more capacity may supervise
more subordinates than those who are having
less capacity.
2.Capacity of Subordinates :
 Subordinates who are trained, developed and
experienced need little supervision in discharging
their duties. 59
3. Nature of Work:
 If the subordinates are involved in simple and
repetitive activities, then it is possible for the
manager to supervise more subordinates.
 But if the work is not similar in nature, span
has to be narrow since the situation would be
more complex.
4. Types of Technology :
 Firm using mass production and assembly line
technology can have wider span than
employing batch or process production
systems.
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5. Delegation of Authority:
 If a manager clearly delegates authority to undertake
a well defined task, a well trained subordinates can
get it done with the minimum of manager’s time and
attention.
 But if the subordinates task are not clearly defined,
either the task will not be performed or the managers
will have to spend more time for supervising and
guiding the subordinates.
6. Clarity of Plans:
 If the degree of plan is higher, particularly standing
plans clearly provide rules, regulations, procedures,
method etc, in doing the work and then the degree of
span would be higher.
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7. Communication Technique:
 If the communication is oral it requires more time
and energy on the part of both superior and
subordinates.
 If we use electronic and other modern devices, it
will save a lot of time and ultimately, span can be
increased.
8. Using of Objective Standards:
 If the supervisors are using standards in an
organisation to find out errors and faults in the
performance of work, then there is no need to
spend more time in watching the performance of
the subordinates to such cases. In such cases, span
can be wider. 62
9. Geographical Closeness of Employees:
 The closer the subordinates are in
physical location, the easier will be for the
supervisor to manage more employees.

10.Direction and Co-ordination:

 The span of control would also be
determined by the degree of coordination
required, both within the unit and with
other units of other divisions.
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CENTRALIZATION AND DECENTRALIZATION

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 CENTRALIZATION AND DECENTRALIZATION
 Centralisation and Decentralisation refer to the location of
decision-making authority in an organisation.
 ‘Centralisation’ means that the authority for most decisions
is concentrated at the top of the managerial hierarchy .
 ‘Decentralisation’ requires authority to be dispersed by
extension and delegation through all levels of the
management.
 Louis A.Allen has defined both the term as “ Centralisation
is the systematic and consistent reservation of authority at
central points within an organisation. Decentralisation
applies to the systematic delegation of authority in an
organisation-wide context”. 65
 Advantages of Decentralization:
 It reduces the burden of management so that it can focus more
attention on strategic management.
 It encourages decision making and assumption of authority and
responsibility.
 It encourages the development of superiors by providing them
opportunities to take more responsibility.
 It enables the department staff members to complete work early.
Disadvantages of Decentralization:
 If it is not followed properly, decentralisation will create chaos in
the organisation in the absence of proper control.
 There is an increase in complexity of coordination for
decentralised organisational units.
 It requires a high degree of self-motivation and self-control
because of autonomy given to managers.
 There is a possibility of duplication of work.
• 66
DELEGATION OF AUTHORITY

67
 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”.

Dougcas C. Basil
“ Delegation consists of granting authority or the rights to decision-
making in certain defined areas and charging the subordinates with
responsibility for carrying through an assigned task”.

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IMPORTANCE OF DELEGATION:
1. It relives the manager from his heavy workload by means of
dividing the work and sharing the responsibility with his
subordinates.
2. It leads to a better and quick decisions in the organisation because
the authority has been distributed to so many people and each
person who has been delegated the authority is capable enough to
take the decision himself.
3. Delegation enables the manager to obtain the specialised
knowledge and expertise of subordinates.
4. Delegation helps to maintain healthy relationship between the
executives and his subordinates by clearly defining the authority
and responsibility of subordinates.
5. Delegation of authority has been widely recognised as an art of
getting things done in the possible manner.
6. Delegation enables a person not only to discharge his
responsibility but also to discharge it effectively and economically.
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DELEGATION PROCESS

70
 DELEGATION PROCESS
1. Determination of results expected
2. Assignment of duties
3. Delegation of authority
4. Creation of obligation or accountability

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DELEGATION PROCESS
The steps involved in delegation are given below:
1. Determination of results expected:
 The delegator has to define the result expected from his
subordinates for the achievement of organisational
objectives.

2. Assignment of duties:
 The superior should clearly define the functions of each
subordinate.
 During assignment, the superior must ensure that the
subordinate understands and accepts their duties.
 The subordinates will be given necessary assistance and
training for the new assignment.
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3. Delegation of authority:
 After assigning the duties, there will be a need for authority to
accomplish it.
 Adequate authority must be granted to the subordinate so that they
can perform their duties.
 The subordinates can make and implement decisions regarding
procurement of resources and supervision of activities that are
relevant to the duties assigned to them.
4. Creation of obligation or accountability:
 Delegation does not end with just assigning the duties and granting
the authority.
 The superior has to create an obligation on the part of the
subordinate to perform.
 The subordinate is answerable to his immediate senior.
 The person assigned the task is morally responsible to do his best.
 Accountability is created by asking the subordinate to submit
performance report from time to time.
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HUMAN RESOURCE MANAGEMENT OR STAFFING

74
 STAFFING
Staffing involves filling the positions needed in the
organization structure by appointing competent and
qualified persons for the job.
Management of staffing has become more complex task on
account of the following developments:
1. Massive increase in the number of employees.
2. Technological innovations that require more skilled and
experienced staff.
3. Changing employee roles and values.
4. Widening the functions of Management.
5. Effective attainment of organisational goals.
6. Effective utilization of skill and potential of the work force.
7. Provision of job satisfaction to employees.
8. Development and maintenance of quality of work life.
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Scope of Human Resource Management
• The scope of human resource management refers to
all the activities that come under the banner of
human resource management.
1) Human Resource Planning
2) Job Analysis and Design
3) Recruitment and Selection
4) Orientation and Induction
5) Training and Development
6) Performance Appraisal
7) Compensation Planning and Remuneration
8) Motivation, welfare, health and safety
9) Industrial relations 76
Factors Affecting Human Resource Management
Staffing is basically a dynamic process and it
is affected by a variety of factors both
External and Internal.
I. External Factors:
a) Political Factors
b) Economic Factors
c) Socio – Cultural Factors
d) Legal Factors
e) Customers

77
 II .Internal factors:
a) Organizational Business Plan
b) Size of Organization
c) Organizational Image
d) Change in Employee Roles
e) Education

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JOB ANALYSIS

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80
 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 showing job title, task,
duties and responsibilities involved in a job.
 It also prescribes the working conditions, hazards, stress that it can
produce and the relationship with other jobs.
 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.

81
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.

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JOB SPECIFICATION :
 Job specification is a statement of the minimum acceptable human
qualities necessary to perform a job properly.
 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 to perform a particular job.
 For each job description, it is desirable to have a job specification.
 This helps the organization to find what kind of persons are needed to
take up specific jobs.
A job specification usually covers the following information:
• Education
• Experience
• Skill, Knowledge, Abilities
• Work Orientation Factors
• Age
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 JOB DESIGN
• The job design is usually broad enough to
accommodate people’s needs and desires.
• It may be especially appropriate to design jobs
for exceptional persons in order to utilize their
potential.
• The following techniques are used for
designing jobs:
1.Job Enlargement
2.Job Rotation
3.Job Enrichment
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1. Job Enlargement:
 Job Enlargement is the horizontal expansion of a job.
 It involves the addition of tasks at the same level of skill
and responsibility.
2. Job Rotation:
 Job rotation refers the movement of an employee from one
job to another.
 An employee who works on a routine job is affected from
boredom and monotony.
3. Job Enrichment:
 Job Enrichment is an attempt to motivate employees by
giving them increased responsibility and variety in their
jobs.
 Employee receives a greater sense of accomplishment as
well as more authority and responsibility. 85
 HR PLANNING
• Manpower planning is also known as Human Resource
Planning.
• Manpower planning or HR planning is the process including
forecasting, developing, implementing and controlling, by
which a firm ensures that it has the right number of people
and right kind of people, at the right place, at the right time,
doing things for which they are economically most suitable.
• Leap and Crino have defined HR planning as “ Human
Resource planning includes the estimation of how many
qualified people are necessary to carry out the assigned
activities, how many people will be available, and what, if
anything must be done to ensure that personnel supply
equals personnel demand at the appropriate point in future”.
86
 HR PLANNING PROCESS
1. Forecasting Manpower Requirement.
2. Preparing Manpower Inventory:
Total human resources is classified as Managerial and
Non- managerial personnel. Skills inventory is related
to Non-managerial personnel and management
Inventory is related to managerial personnel.
Skills Inventory: Employee's personal data, education,
experience, training ,special achievements, salary and
job history.
Management Inventory: Strength and weakness,
work history etc.,
3. Identification of Manpower gap. 87
RECRUITMENT

88
 RECRUITMENT
Recruitment is the process of finding and attracting capable
applicants for employment.
B. Flippo defines recruitment as “ The process of searching
for prospective employees and stimulating them to apply for
jobs in the organisation”.
Sources of Recruitment:
 INTERNAL SOURCE
 EXTERNAL SOURCE
INTERNAL SOURCE:
1. Present permanent employees
2. Present temporary / casual employees
3. Retired employees
4. Dependents of deceased, disable, retired and present
employees.
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EXTERNAL SOURCES:
a) Education and Training Institute:
Organisations seeking to recruit the candidates from this
source can directly contact the institute and stimulate the
candidate to apply for jobs.
b) Private Employment Agencies:
These agencies are experts in providing their employer
clients. They charge a little fee from their clients.
c) Public Employment Exchange:
Public employment agencies is set up by the Government.
d) Data Bank:
The Management can collect the bio-data of the candidates
from different sources like employment exchange and feed
into the computer and the company can get the particular as
and when it needs to recruit.
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e) Casual Application:
Candidate apply casually for jobs through mail or
handover the applications in personnel department of the
organisation.
f) Trade Unions:
Unemployed persons approach trade union leaders for
getting suitable employment due to the latter’s intimacy
with management.
This method is used to satisfy the trade union Leaders.

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SELECTION PROCESS

92
 SELECTION PROCESS
• Steps in Scientific Selection Process:
a)Screening of Applications
b)Selection Tests
c) Preliminary Interview
d)Reference Check
e)Medical Examination
f) Final Interview
g)Approved by Appropriate Authority
h)Placement
93
 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.
The following steps generally make up the selection process:
a) Screening of Applications:
 The received applications in the organization have variety of
information about the applicants, such as their personal bio-
data, achievements, experience etc.,
 Such information is used to screen the applicants who are
found to be qualified for the consideration of employment.
 Based on the screening of applications, only those candidates
are called for further selection process.
94
b) Selection Tests:
 Generally tests are to measure the intelligence, aptitude, physical
and mental abilities of an individual applicant.
 The many types of tests conducted are Aptitude Test, Technical
test etc.,
 These tests are more helpful in rejecting some undesirables.

c) 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.
 The candidates are given a brief 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.
95
d) 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 of the person
in question including his behaviour, skills, conduct etc.

e) Medical Examination:
 Certain jobs require certain physical qualities, such as clear
vision, perfect hearing, clear tone, tolerance of hard working
conditions etc.,
 It reveals whether the candidate is fit for job.

96
f) Final Interview
 Final interview is the most essential step in the process of
selection.
 Its purpose is to cross check the information already obtained
and to collect additional information about the candidate.
 The types of interview are:
i. Informal Interview
ii. Formal Interview
iii. Planned Interview
iv. Depth Interview
v. Stress Interview
vi. Group Interview
vii.Panel Interview

97
g) Approved by Appropriate Authority:
 On the basis of the above steps, suitable candidates are
recommended for the selection by selection committee or
personnel department.
 Thus for top level manager, the board of directors are approving
authority.
 For lower levels, the functional heads may be approving authority.
 When the approval is received, the candidates are informed about
their selection and asked to report on duty to specified persons.
h) Placement:
 After all the formalities completed, the candidates are placed in
their jobs initially on probation basis.
 During probation period, they are observed keenly and when they
complete this period successfully, they will become the permanent
employees of the organization.

98
Employee Induction / Orientation

99
 Employee Induction / Orientation
Orientation or induction refers the activities involved
in introducing the new employees to the organization
and its policies, procedures, rules and regulations. It
provides the foundation for the new employee to start
working efficiently and comfortably on the new job.
Objectives of Orientation:
 Developing expectations about the organization
 Reducing the amount of stress and anxiety of the new
employee.
 Strengthening the relationship between new
employees his superior and peers.
 Reducing employee turnover.

100
 Orientation Programme provides the
following information:
1.Organization Structure
2.Types of department and units.
3.Rules and regulations of the organization.
4.Safety measures to prevent accidents.
5.Employee’s facilities and sources.
6.Grievance procedure.
7.Personnel department rules and practices.

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102
 TRAINING
Flippo has defined training as “Training is the act of increasing the
knowledge and skills of an employee for doing a particular job”.
 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.
Need for Training:
1. To prepare existing employees for higher-level jobs.
2. To shift a person from one job to another job.
3. To make employee mobile and versatile.
4. To provide a sense of security and self confidence to employees.
5. To bridge the gap between what the employee has and what the job
demands.

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TRAINING METHODS

104
TRAINING METHODS
Training methods are means of attaining the desired objectives in
a learning situation.
These methods can be grouped into two categories.
 On the Job Training
 Off the job Training

a) On-the-job training
On the job training{OJT) is the most common form of training for
any person in the organization. The basic theme of OJT is ‘to learn
by doing itself’. The trainee learns while he is actually engaged in
doing a job. Some of the commonly used methods are:
 Job Rotation
 Apprenticeship and coaching
 Committee assignment.
 Experience
 Temporary Promotions
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b) Off-the-job training
 Off-the job training methods are conducted
separately from the job environment.
 Study material is supplied.
 There is full concentration on learning rather than
performing.
 Important off –the-job training methods include:
Lecture
Conference and seminars
Role-Play
Case studies
Programmed instructions
Business game
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 STEPS IN TRAINING PROGRAMME
1. Identifying training needs.
2. Establish specific objectives.
3. Select appropriate methods.
4. Acquire training resources and prepare
schedule.
5. Find a trainer.
6. Implement programs.
7. Evaluate program.
8. Feedback. 107
 PERFORMANCE APPRAISAL
“Performance appraisal or merit rating is one of the
oldest and most universal practices of management”.
 It refers to all the formal procedures used in working
organization to evaluate the personalities, contributions
and potentials of group members.
 Performance appraisal is the process of obtaining,
analyzing and recording information about the relative
worth of an employee.
 It is a systematic and objective way of judging the
relative worth of an employee in performing his/her task.
 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. 108
Objectives of Performance Appraisal:
To improve the management development
To improve employees performance
To find out individual potential identification
To plan for work force
To improve the effective communication
To facilitate fair and equitable compensation
based on performance
To help the superiors to have a proper
understanding about their subordinates

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 Performance Appraisal Process
1. Performance standards are established based on
job.
2. The standards are informed to all employees
and appraisers.
3. Employee performance can be measured by the
appraisers through observations, records and
reports.
4. Comparing the actual performance of other
employees and previous performance of the
employee and others gives an idea where the
employee stands.
110
5. Comparing the actual performance with the
standards and finding out the deviations.
Deviations may be positive or negative.
6.Appraisers or managers discuss with the
employees about the reason for positive or
negative deviations.
7.Appraisers consider the internal and external
factors and suggest necessary changes in
standards.
8.Follow up the performance appraisal report. It
is for guiding, directing, coaching and training
the employee. 111
CARRER PLANNING AND
MANAGEMENT

112
 CAREER PLANNING AND DEVELOPMENT
• Career is a series of jobs or positions held
throughout an individual’s working life time.
• Career consists of a series of properly sequenced
role experience leading to an increased level of
responsibility, status, power and rewards.
• Edwin B. Flippo defined “a career as a sequence
of separate but related work activities that
provide continuity, order and meaning in a
person’s life”.

113
 CAREER MANAGEMENT
• Career management is a lifelong, self-monitored
process of career planning that involves choosing
and setting personal goals and formulating
strategies for achieving them.
• Career management is a process for enabling
employees to better understand and develop their
career skills and interests and to use these skills and
interests most effectively both within the company
and after they leave the firm.
• Career management has two essential components:
1. CAREER PLANNING
2. CAREER DEVELOPMENT 114
1. CAREER PLANNING:
Career Planning can be described as “ the
process by which employees obtain the
knowledge about themselves ( their values,
personality, preferences, interests, abilities
etc.,) and information about the working
environment and then making an effort to
achieve a proper match”.
2. CAREER DEVELOPMENT:
Career Development can be defined as an “
Ongoing process by which individual progress
through a series of stages each of which is
characterized by a relatively unique set of
issues, themes or tasks”. 115
CAREER STAGES

116
 CAREER STAGES
 John van Maanen and Edgar.H have identified five career stages every
individual comes across during his/her career.
 They are ;
 EXPLORATION STAGE ( FROM 15 TO 25 YEARS)
 ESTABLISHMENT STAGE ( FROM ABOVE 25 TO 35 YEARS)
 MID-CAREER OR ADVANCEMENT STAGE (FROM 35 TO 45 YEARS)
 LATE-CAREER OR MAINTENANCE STAGE ( FROM ABOVE 45 TO 65 YEARS)
 DECLINE OR DISENGAGEMENT STAGE (FROM ABOVE 65 YEARS ONWARDS)
a) Exploration stage:
 The exploration 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.
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b) Establishment Stage:
 The establishment/advancement stage tends to occur between
ages 25 and 35.
 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.
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c) Mid Career or Advancement Stage:
 The period occurring from 35 to 45 years during which
people often make a major reassessment of their
progress relative to their original career ambitions and
goals.
d) Late career or Maintenance stage:
 The maintenance stage, which occurs roughly between
the ages 45 and 65.
 This stage is maintained by a continuation of established
patterns of work behaviour.
 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.

119
e) Decline or Disengagement stage:
 The final stage in one’s career is difficult for
everyone but it is hardest for those who have had
continued successes in the earlier stages.
 After several decades of continuous achievements
and high levels of performance, the time has
come for retirement.
 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.

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