Organizing and Staffing

Unit 2

Part 1
 Organizing

According to Chester Barnard, “Organizing is

a function by which the concern is able to
define the role positions, the jobs related and
the co-ordination between authority and
responsibility. Hence, a manager always has to
organize in order to get results.

According to - Louis A. Allen, "Organization is

the process of identifying and grouping of the
works to be performed, defining and delegating
responsibility and authority and establishing
relationships for the purpose of enabling
people to work most efficiently".
Organizing is important becoz:

It facilitates efficient management

It facilitates coordination and
communication
It facilitates growth and diversification-
It ensures optimum use of resources
It provides for optimum use of
technological innovations
It facilitates specialization
 FUNDAMENTAL CONCEPT OF ORGANIZING:

DIFFERENTIATION: It means that an

organization is composed of units that work
on specialized tasks using different work
methods and requiring employees with unique
competencies.

INTEGRATION: It means that the various units

must be put back together so that work is
coordinated.
 NATURE OF ORGANIZING

1. Group of Persons
2. Common Objectives
3. Division of Work
4. Cooperative Efforts
5. Communication
6. Central Authority
7. Rules & Regulations
8. Dynamic Element
 Group of Persons: An organization is a group of people
working together for the achievement of common objectives.
The group may be large or small. An organization is a system of
cooperative relationships of two or more persons.

 Common Objectives: Every organization has a common

objectives distinct from personal objectives of the members. The
common goal is the basis of cooperation among the members.
The objectives of the organization are usually are made explicit

 Division of Work: An organization comes into existence when

the total task is divided into the members of the group. Division
of work is necessary not only because one individual cannot do
all the work but specialization results in efficiency and
effectiveness.
 Cooperative Efforts: The members of an organization are
willing to help each other for the achievement of desired goals.
Cooperative relationships are stabilized both vertically and
horizontally among different units of the organization

 Communication: People who form an organization

communicates with each other in order to integrate or coordinate
there efforts. The structure must be such that people can perform
together efficiently.

 Central Authority: In an organization, there is a central directing

authority which controls the concerted efforts of the group. The
chain of authority- responsibility relationships is known as the
chain of command.
 Rules and Regulations: For the orderly and systematic working
of the members, rules and regulations are laid down and enforced
by the central authority.

 The Dynamic Element: An organization is not a mere

mechanical structure but a living organism arising out of the
sentiments, attitudes, and behavior of people. The people are the
material of construction that holds the structure together and
gives it vitality.
 Steps in organizing:
1.Determination of objectives - The purpose of the
organization must be identified. Objectives determine
resources and various activities which should be done to
achieve the organizational goals.
2. Identification and grouping of activities- If group
members are to pool their efforts successfully, there must be
proper division of the major activities. Each job should be
accurately classified and grouped. This will avoid duplication
of work.
3. Assignment of duties- After grouping the activities into
various jobs, as per the nature of work, Similar activities
should be placed under one department . Each individual
should be given a particular task according to his ability and
skills.
4. Establishing relationship among individuals and
group- The activities which are performed by person holding
different positions must be related. Every person in the
organization should know about his responsibility, authority
 PROCESS:

IDENTIFICATION GROUPING OF
OF ACTIVITIES ACTIVITIES

2.

1. 3.

4.

ASSIGNMENT OF DELEGATION OF
DUTIES AUTHORITY
 TYPES OF ORGANISATION
Line Organisation
 Line organisation is the simple and oldest type of organisation
followed in an organisation. Under line organisation, each
department is generally a complete self-contained unit.

 A separate person will look after the activities of the department

and he has full control over the department.
 The same level executives do not give or receive
orders amongst themselves. But they receive
orders from their immediate boss and give orders
to their subordinates. Hence, all the heads are
responsible to the general manager, the general
manager, in turn, is responsible to the shareholders
who are the owners.

 This type of organisation is followed in the army on

the same pattern. So, it is called military
organisation. Under type of organisation, the line
of authority flows from the top to bottom vertically.
So it is called line organisation.
Advantages and Disadvantages of line Organisation
 Functional organisation

 Under a line organisation a single person does not

have enough capacity and required training to
supervise all the activities efficiently.
 Under functional organisation, various specialists are
for various functions performed in an organisation.
These specialists will attend to the work which is
common to different functions of various
departments. Workers, under functional
organisation, receive instructions from various
specialists.
o The need for functional organisation arises out of:

 The complexity of modern and large-scale

organisation
 A desire to use the specialization in full
 To avoid the work-load of line managers with
complex problems and decision-making
Advantages and Disadvantages of
Functional Organisation
 Line and staff organisation

o The line officers have authority to take decisions and implement

them to achieve the objectives of the organisation.

o The line officers may be assisted by the staff officers while

framing the policies and plans and taking decisions organisation.
o The authority flows from top level to the lower
level of the organisation through the line officers
while the staff officers attached to the various
departments advise the departments. The staff
officers are not in a position to compel the line
officers to follow the advice by them. Each
department is headed by a line officer who
exercises full authority regarding the planning.
 Types of organizational structures
 Formal structures
The structure of the organization in its official state.
An organization chart is a diagram describing reporting
relationships and the formal arrangement of work positions
within an organization.
An organization chart identifies the following aspects of
formal structure:
 The division of work.
 Supervisory relationships.
 Communication channels.
 Major subunits.
 Levels of management.
 Informal structures
 A “shadow” organization made up of the unofficial, but
often critical, working relationships between
organization members.
 Potential advantages of informal structures:
 Helping people accomplish their work.
 Overcoming limits of formal structure.
 Gaining access to interpersonal networks.
 Informal learning.

 Example: an employee instead of reaching out to manager for

problem, may take help of his colleague, or employee may have
direct relationship with people from other departments that
facilitates quick communication.
 Potential disadvantages of informal structures:

 May work against best interests of entire

organization.
 Susceptibility to rumor.
 May carry inaccurate information.
 May breed resistance to change.
 Diversion of work efforts from important objectives.
 Feeling of alienation by outsiders.
The major types of organization structures
 Functional structures

 People with similar skills and performing similar

tasks are grouped together into formal work units.
 Members work in their functional areas of expertise.
 Are not limited to businesses.
 Work well for small organizations producing few
products or services.
Functional structures in a business, branch bank,
and community hospital.
 Potential advantages of functional structures:

 Economies of scale.
 Task assignments consistent with expertise and training.
 High-quality technical problem solving,
 In-depth training and skill development.
 Clear career paths within functions.

 Potential disadvantages of functional structures:

 Difficulties in pinpointing responsibilities.
 Functional chimneys problem.
 Sense of cooperation and common purpose break down.
 Narrow view of performance objectives.
 Excessive upward referral of decisions.
 Divisional structures

 Group together people who work on the same

product or process, serve similar customers, and/or
are located in the same area or geographical region.

 Common in complex organizations.

 Avoidproblems associated with functional

structures.
Divisional structures based on product, geography,
customer, and process.
 Potential advantages of divisional structures:

 More flexibility in responding to environmental

changes.
 Improved coordination.
 Clear points of responsibility.
 Expertise focused on specific customers, products,
and regions.
 Greater ease in restructuring.

 Potential disadvantages of divisional

structures:
 Duplication of resources and efforts across
divisions.
 Competition and poor coordination across divisions.
 Emphasis on divisional goals at expense of
organizational goals.
 Types of divisional structures and how they
group job and activities:

Product structures focus on a single product or

service.
Geographical structures focus on the same
location or geographical region.
Customer structures focus on the same
customers or clients.
Process structures focus on the same
processes.
Matrix structure

Combines functional and divisional structures to

gain advantages and minimize disadvantages of
each.
Used in:
 Manufacturing
 Service industries
 Professional fields
 Non-profit sector
 Multi-national corporations
Matrix structure in a small business firm.
 Potential advantages of matrix structures:

Better cooperation across functions.

Improved decision making.
Increased flexibility in restructuring.
Better customer service.
Better performance accountability.
Improved strategic management.
Potential disadvantages of matrix structures:

Two-boss system is susceptible to power

struggles.
Two-boss system can create task confusion and

conflict in work priorities.

Team meetings are time consuming.
Team may develop “groupitis.” strong team
loyalties that could lead to less focus on organizational goals.
Increased costs due to adding team leers to
structure.

33
Organizing viewed in relationship with the other
management functions.
Difference between authority and power
 Authority Vs Power

AUTHORITY POWER
 Authority is the power to  Power is the ability to get
enforce law, to take command the things done by others.
and to expect obedience from The principle of power is to
those without any authority. punish or reward.
 E.g. a professor has an  E.g. an armed robber has a
authority over his pupils but
no power. power but no authority.
 It is the skill of getting people
 In short, it is the ability to
to willingly do your will force someone to do your
because of your personal will even if they would
influence. choose not to.
 Those who have authority also  Power and responsibility do
have responsibility to not go hand in hand
discharge.  It can go in any direction
 Flows downward.
 WHAT IS AUTHORITY

Authority is a legitimate right to make decisions to

carry out decisions and to direct others. Managers expect to
have the authority to assign work, hire or fire employees and
the allotment of money. Organizations have a formal authority
system that depicts the authority relationship between the
people and their work.

E.g. in case of line organization, superior has an authority over

his subordinates. In case of line and staff, the staff has authority
over the subordinates but they work with the line managers.
Functional authority allows managers to direct specific
processes or policies in other departments.
 DELEGATION OF AUTHORITY

 Delegation is process in which a superior assigns

some of the tasks within his jurisdiction to his
subordinate. It enables a manager to concentrate
more on some important matters.

 Elements in delegation:
1. Assignment of responsibility to the subordinate.
2. Granting of authority to the subordinate
3. Subordinate becomes responsible to his superior
although the overall responsibility vests in hand of
superior.
 WHAT IS RESPONSIBILITY

 Responsibility is the obligation to accomplish the goals related

to the position and the organization. In order to enable the
subordinate do his duty well, it is the duty of a superior to tell him
what is expected of him.

 Manager at whatever level of the organization have the same

basic responsibilities when it comes to managing the workforce i.e.
direct employees toward objectives, oversee the work effort of
employees, deal with the immediate problems and report the
progress of work to superiors.
 WHAT IS ACCOUNTABILITY

It is the obligation to carry out responsibility and exercise

authority in terms of performance standards.

When a subordinate is given an assignment and is granted

necessary authority to complete it, the final phase is holding the
subordinate responsible for results.

However, the extent of accountability depends upon the authority

and responsibility delegated. A person cannot be held answerable
to the acts not assigned to him by his superior. For effective
accountability, performance standards be communicated in
advance to the subordinate and he must accept it.
 DECENTRALIZATION

Decentralization is a systematic delegation of

authority at all levels of management and in all of the
organization. In a decentralization concern, authority
is retained by the top management for taking major
decisions and framing policies concerning the whole
concern only. Rest of the authority may be delegated
to the middle level and lower level of management. In
other words, it is the diffusion of authority in a
planned way.
 REASONS FOR DECENTRALIZATION

 Better access to local information: Local managers

know better about the local conditions like strength
and nature of local competition, local labour work
force etc.
 More timely response: In centralized form
information sent to head office and results awaited. In
decentralized local managers can quickly respond to
customers demands.
 Focus on central management: Central
management gets free to concentrate on more
important issues.
 Training and evaluation of segment managers: it
gives a chance to senior managers to evaluate the
capabilities of subordinate managers.

 Motivation of segment managers: self esteem and

self actualization needs of the segment managers get
satisfied. Greater responsibility supplies them more
satisfaction and motivate them to exert greater effort.
 What Is Staffing

Staffing is the process of finding the right worker with

appropriate qualifications or experience and
recruiting them to fill a job position or role.
Staffing is the process of attracting, recruiting
(based on their skills and knowledge) , selecting,
placing, appraising, remunerating, developing, and
retaining the best workforce.
In Human resource management (HRM), staffing
is the management function devoted to
acquiring, training, appraising, and
compensating employees
 In staffing, the right person is recruited for the right
jobs, therefore it leads to maximum productivity and
higher performance.
 Functions of Staffing

The first and foremost function of staffing is to obtain

qualified personnel for different jobs position in the
organization.
In staffing, the right person is recruited for the right
jobs, therefore it leads to maximum productivity and
higher performance.
It helps in promoting the optimum utilization of human
resource through various aspects.
Job satisfaction and morale of the workers increases
through the recruitment of the right person.
Staffing helps to ensure better utilization of human
resources.
It ensures the continuity and growth of the
organization, through development managers.
Nature of
Features ofstaffing
Staffing
 Staffing is an important managerial function.
 Staffing is a pervasive activity.
 Staffing is a continuous activity.
 The basis of staffing function is efficient

management of personnel.
 Staffing helps in placing right men at the right

job.
 Staffing is performed by all managers .

48
Types of Staffing

“The Right Stuff”: Contract

Employment/Short-Term Staffing. This
strategy is generally used when demand
exceeds the number of core positions
needed to accommodate minimum
production goals.
“Lets Go Shopping”: Contract-to-Hire. It's
kind of like buying a new car.
“Busy Business”: Direct Placement Hire.
 Proper staffing ensures the following benefits to the
organisation:

1. Filling the roles by obtaining competent personnel:

Staffing function is needed to fill the job position. There will be
no use of job position unless and until these are occupied by
employees and it is through staffing function only that
employees are appointed to fill the vacant job.
2. Placing Right person at the right job:
Staffing ensures higher performance by placing right person
on the right job by proper recruitment and selection.
Employees are given a place according to their
qualifications.
3. Growth of Enterprise: By appointing efficient staff,
staffing ensures continuous survival and growth of the
enterprise. As organisation grows with the efforts of its
employees only.
4. Optimum utilization of Human Resources:
Through manpower planning and job analysis we can find out the
number of employees and type of employees required in the
organisation. So there are no chances of over manning and
shortage or underutilization of personnel.
5. Helps in competing:
Two organisations can easily acquire same type of physical and
financial resources but what helps organisation to win over the
other is the efficient staff. The organisation with efficient staff can
easily win over its competitors.
6. Improves job satisfaction and morale of the employees:
Staffing function does not end only with appointment of employees.
It includes training, promotion, compensation etc. All these
activities help in motivating the employees and boost up the
morale of the employees.
7. Key to effectiveness of other functions: No other function of
management can be carried out without efficient staffing function
because all the functions are performed by human beings and
human beings join the organisation by staffing function only.
RECRUITMENT AND
SELECTION
 Recruitment is the process of finding candidates for the
vacant position and encouraging them to apply for it.
Selection means choosing the best candidate from the pool of
applicants and offering them the job. Recruitment is a positive
process aimed at attracting more and more job seekers to apply
 What is placement ?
• Placement is the process of assigning a specific job to each
one of the selected candidates.

• In very simple words placement means sending the newly

employed person to some department for work. It also
implies assigning a specific rank and responsibility to an
individual.

• It implies matching the requirements of a job with the

qualifications of the candidate.

• In the words of Pigors and Myers, “Placement is the

determination of the job to which an accepted candidate is to
be assigned and his assignment to that job.
PLACEMENT
Advantages of placement

 Increased production,
 Improved quality of the product,
 Regularity in work and attendance
 Indicate proper placement of an employee.
 Clarifies expectations.

 A person can contribute as per the predetermined

objectives. Right placement improves employee
morale, and the employee contributes more; lower
absenteeism enables achieving delivery targets;
reduced manpower attrition and turnover makes
the recruitment cell, cost- and time-efficient.
 Importance of placement
 If the employees are properly placed, they will enjoy their work and
organisation will not have to suffer the problem of employee
turnover.
 If employees don’t like their work, they start making excuses from
the job and remain absent. Effective placement will keep the
absenteeism rate low.
 Morale of workers increases because they get the work of their
choice, if correctly placed.
 Workers will work attentively and safety of workers will be ensured
and lesser accidents will happen.
 Workers will be satisfied with their jobs and there will be no reasons
for disputes, so human relations will improve.
 Through proper placement, misfit between the job and person can
be avoided.
 Efficient and effective performance of individual tasks will ensure
the achievement of organizational goals.
 Productivity i.e., ratio of output to input increases as wastage and
abnormal losses decrease.
 Placement – Top 4 Principles Followed while Making
Placement of an Employee

(i) Job requirement – Man should be placed on

the job according to the requirement of the job
rather than qualification and requirement of
the man.
(ii) Qualification – The job offered should
match with the qualification possessed by an
employee.
(iii) Information – All the information relating to
the job should be given to the employees along
with the prevailing working conditions. They
should also be made known that they have to
pay penalty for wrong doing.
(iv) Loyalty and Co-operation – Every effort
 A New Employee Joins an Organisation – Guidelines to
Managers:
 1. Create a positive first impression- pay attention to reception,
workplace, stationery, documents etc.
 2. Prepare a write-up on the new employee with photograph, put
it up in the Notice Board and mail it to all employees
 3. Introduce the new employees to key managers in the
organisation
 4. Let him meet other employees in his department
 5.Provide an opportunity to him to work with senior employees
to understand organisational culture. The organisational culture
denotes the personality of the organisation- unwritten code of
conduct and norms, interaction among members, the values
which are shared and practiced by people through generations.
Organisational culture may be expressed in many ways and
include ceremonies, celebrations, rites, rituals, behavioural
norms, language, jargons, beliefs and values.
 6. Let the new employee feel that his first day in the office is a
memorable one.
 5 Major Problems Faced by Personnel Manager in
Placement of New Employees

Problem # 1. Employees Expectations:

Problem # 2. Job Expectations:
Problem # 3. Technological Change:
Problem # 4. Changes in Organizational
Structure:
Problem # 5. Social and Psychological Factors
Concept Of Training & Development
TRAINING DEVELOPMENT
 Definition- Training
Training and development refers to educational activities
within a company created to enhance the knowledge and skills
of employees while providing information and instruction on
how to better perform specific tasks.

Training is the formal and systematic modification of behavior

through learning which occurs as a result of education,
instruction, development and planned experience.
• Its a short term process.
• Refers to instruction in technical and mechanical problems
• Targeted in most cases for non-managerial personnel
• Specific job related purpose
Advances in technology have given
employers and human resources
representatives more development training
methods than ever. Whether your company
is exploring newer training methods or
clinging to the more traditional mediums,
it's important to keep in mind that
everyone learns differently. In fact, there
are three major learning styles:

Visual: Learning by seeing or watching

Auditory: Learning by hearing information
Kinaesthetic: Learning through action, or
by doing
 Types of training
 1. Basic Literacy Skills Training

School graduates fail to possess basic skills that are indispensable to perform in today’s
workplace. “Workplace Literacy and Basic Skills” are the skills that are required by the
employees at workplace. These skills help the employees in fully participating and
engaging with the company. Thus, these include reading, writing, thinking skills, document
use, computer use, numeracy, continuous learning and working with others.

 2. Technical Training

Technical training has become indispensable due to innovation in technology and coming of
new structural design in corporate across the globe. These training efforts are inclined to
upgrade and improve technical skills of employees.
Thus, these exponential technologies have resulted into newer job roles across sectors such
as: IT, business process management, automotive, retail, textiles and apparel and banking,
financial services and insurance.
These job roles include data architects, digital marketers, machine learning specialists, web
and app developers, blockchain architects etc.
 3. Soft Skills Training
It is not possible to know with certainty as to how
much poor communication costs to a business. But
estimates reveal that billions of dollars are incurred every
year as cost of poor communication. Poor communication
could includes:
 Badly written emails
 Improper reading and listening to instructions
 Unread documents owing to poor design
 Presenting misleading information as a result of haste
 Careless Proofreading
 Losses caused by such poor communication are huge and
inevitable. These result in loss of business, decreased
productivity and increased inefficiency. Thus,
the performance of employees to a greater extent
depends on their ability to interact with their coworkers as
well as the management.
4. Safety Training
Safety training is a way by which a company provides its
workforce with requisite skills and knowledge. This
training is given to enable the employees to carry their
work in a safe manner. A well developed safety program
includes directions and procedures for the employees.
These guidelines help them to spot danger and adopt
necessary measures to cope with them.
Thus, safety training aims to minimize incidents, increase
awareness and ensure that employees stay safe, happy
and efficient.

 5. Quality Training: Quality training refers to familiarizing

employees with the means of preventing, detecting, and
eliminating non-quality items, usually in an organisation that
produces a product.
 Development
 Development activities are strategies to gain knowledge, skills, or abilities.
These are specific actions, relationships, tasks, or programs for employees.

 Development is any learning activity, which is directed towards future needs

rather than present needs, and which is concerned more with career growth than
immediate performance.

Employee development is a process of improving employees' existing competencies

and skills and developing newer ones to support the organization’s goals.

•• It is a long term educational process.

•• Refers to philosophical and theoretical educational concepts
•• Managerial personnel
•• General knowledge purpose
 What has employee development done?

 It has avoided the costly (and sometimes protracted)

process of hiring a replacement for an outgoing employee
 It has preserved a lot of “sunk capital” already invested in
that employee in terms of his/her organizational
experience and expertise
 It allows HR professionals and L&D experts to build upon
(rather than build from scratch) organization culture
(different from technical experience and expertise) already
inculcated into that employee
 All-in-all, further developing an employee results in getting
human assets up and running, to organizational standards,
much more efficiently than onboarding or indoctrination
training of freshly hired employees would.
 Benefits of training and development?

Employee training and development

increases job satisfaction and morale among
employees.
Reduces employee turnover.
Increases employee motivation.
Increases efficiencies in processes, resulting
in financial gain.
Increases capacity to adopt new technologies
and methods.
Increases innovation in strategies and
products.
Effective employee development methods

Training
Task/job rotations
Coaching
Mentoring
Workshops/Committees/Working-Groups
Simulations
Conferences
On-the-job training
Self-study
The 7 key employee development areas of improvement
are:
Flexibility
Communication skills
Conflict Resolution, tactfulness, and work
ethic
Leadership Skills
Organizational Skills
Creativity Skills
Stress Management
 Benefits and importance of employee development
1. Performance Improvement
2. Better handle unexpected situations
3. Learning culture inside an organization help
attract new employees and improve loyalty
4. Save money via retaining employees
5. Help grow potentially good employees into
great leaders
6. Improve employee engagement and
motivation with good training
7. This gives the company flexibility to expand,
innovate and compete more robustly within its
niche
 What is the best practice for training and development of
employees?
 Some of the best practices for training and development of
employees are -
 Align training with management’s operating goals
- Management always has operating goals like better
performance, productivity, quality, or customer satisfaction, to
name a few. Once you know the goals, you can design targeted
programs.
 Survey your employees first - The best source of information
about organisational performance and needs are the current
employees. They know a lot about what’s going on and what, if
anything, should be changed.
 Consider different learning styles and methods - While
creating learning content and courses for your L&D staff, keep in
mind that they’ll each have different learning styles and methods
too, the same way the rest of the employees do. Make sure you
have learning materials available for each type of learning style.
 Measure results - Successful companies measure outcomes to
make sure they continue to get the biggest
Directing and Controlling

UNIT 2( PART 2)
DIRECTING
Directing is said to be a process in
which the managers instruct, guide and
oversee the performance of the workers
to achieve predetermined goals.
Directing initiates action and it is from
here actual work starts. Direction is said
to be consisting of human factors. In
simple words, it can be described as
providing guidance to workers is doing
work.
In field of management, direction is said
to be all those activities which are
“Directing consists of process or technique
by which instruction can be issued and
operations can be carried out as originally
planned”
Directing means giving instructions,
guiding, counselling, motivating and leading
the staff in an organisation in doing work to
achieve Organisational goals.
Directing is a continuous process initiated
at top level and flows to the bottom through
organisational hierarchy.
 Characteristics of Directing
 1. Pervasive Function - Directing is required at all levels of
organization. Every manager provides guidance and
inspiration to his subordinates.

2. Continuous Activity - Direction is a continuous activity as

it continuous throughout the life of organization.

3. Human Factor - Directing function is related to

subordinates and therefore it is related to human factor. Since
human factor is complex and behaviour is unpredictable,
direction function becomes important.

4. Creative Activity - Direction function helps in converting

plans into performance. Without this function, people become
inactive and physical resources are meaningless.
5. Executive Function - Direction function is
carried out by all managers and executives at all
levels throughout the working of an enterprise, a
subordinate receives instructions from his superior
only.

6. Delegate Function - Direction is supposed to

be a function dealing with human beings. Human
behaviour is unpredictable by nature and
conditioning the people’s behaviour towards the
goals of the enterprise is what the executive does
in this function. Therefore, it is termed as having
delicacy in it to tackle human behaviour.
Principles of Directing
Harmony of objectives
Maximum individual contribution
Unity of command
Appropriate techniques
Direct supervision
Managerial communication
 Elements of Directing
Supervision
• Motivation
• Leadership
• Communication
(i) Supervision- implies overseeing the work of
subordinates by their superiors. It is the act of
watching & directing work & workers.
(ii) Motivation- means inspiring, stimulating or
encouraging the sub-ordinates with zeal to
work. Positive, negative, monetary, non-
monetary incentives may be used for this
purpose.
ion
(iii) Leadership- may be defined as a
process by which manager guides and
influences the work of subordinates in
desired direction.

(iv) Communications- is the process of

passing information, experience, opinion
etc from one person to another. It is a
bridge of understanding.
Coordination
Coordination is the synchronization and
integration of activities, responsibilities
and command and control structures to
ensure that the resources are used most
efficiently in pursuit of the specified
objectives.
In simple words, Coordination is the way
through which people can be made to
work together and to cooperate with
each other to attain the final aims of the
organization.
IMPORTANCE OF COORDINATION
1. Better accomplishment: it avoids the
duplication of efforts.
2. Economy and efficiency: by avoiding
wastage of resources and duplication
of efforts.
3. High morale: in organizing and staffing
it leads to job satisfaction of
employees.
4. Better human relations: because the
authority responsibility relationships
are clear
5. Integration of goals: it brings unity of
COORDINATION -THE ESSENCE OF
MANAGING
1. Planning and coordination: various types of plans like
objectives, policies, strategies and programs serve as means of
coordinating the activities of an enterprise.
2. Organizing and coordination: when authority is delegated
coordination is the last thing which a manager looks for from
different managers.
3. Staffing and coordination: coordination between the job
requirement and the personnel appointed.
4. Directing and coordination: To ensure smooth directing of
subordinates, supervision, motivation, leadership and
communication require proper coordination.
5. Controlling and coordination: a manager keeps on monitoring
the performance is it is as per the desired standards or not. If
the performance does not match the required standards, the
manager will take remedial steps. By this way he will achieve
coordination.
Difficulties In Coordination
Uncertain features such as natural phenomena like
rains, floods, droughts or abnormal changes in the
behaviour of subordinates poses a great challenge to
effective coordination.
The confused and conflicting ideas of the managers
act as a constraint.
Lack of administrative skills and adequate knowledge
of necessary techniques by the managers.
Lack of orderly method of developing and adopting
new ideas and programmes act as a constraint for
effective coordination.
A vast number of variables due to the incompleteness
of human knowledge limit the degree of coordination
 Effective coordination techniques
1. Well defined objectives : unity of purpose is must for
achieving proper coordination.
2. Effective chain of command : clear cut authority
responsibility relationships help in reducing the conflicts.
3. Precise programmes and policies : it brings uniformity in
action.
4. Effective communication : quick communication helps in
synchronizing the other activities to be performed.
5. Effective leadership: it helps coordination both at the
planning and implementation stage.
6. Cooperation: the individuals in an organization must be
willing to help each other voluntarily.
7. Committees: it includes the advisors who try to integrate
the views of different groups in an organization.
CONTROLLING
Control refers to a systematic process
of regulating organizational activities to
make them consistent with the
expectations established in plans,
targets and standards of performance.
Effectively controlling an organization
requires the information about
performance standards and actual
performance, as well as actions taken to
correct any deviations from the
standards.
 FEATURES OF CONTROL
1. Managerial function: it’s a follow up action to other functions
of management.
2. Forward looking: it’s a corrective function related to future
events only as past can’t be controlled. It aims at minimizing
losses, wastages and deviations from standards.
3. Review of past events: the deviations in the past are revealed
by the control process. Its called feedback information. Thus,
it facilitates the reasons for poor performance.
4. Action oriented: It is only action which adjusts performance
to predetermined standards whenever deviations occur.
5. Continuous process: it involves constant analysis of
standards, policies, procedures etc. a manager needs to
perform this function with other functions.
6. Dynamic process: control results in corrective actions which
may lead to a change in the performance of other functions
of management.
 Tools and techniques of
controlling
 Control is a fundamental managerial function. Managerial control
regulates the organizational activities. It compares the
actual performance and expected organizational standards and
goals. For deviation in performance between the actual and
expected performance, it ensures that necessary corrective action
is taken.
 There are various techniques of managerial control which can be
classified into two broad categories –

Traditional techniques
Modern techniques
Traditional Techniques of Managerial
Control
Traditional techniques are those which have
been used by the companies for a long
time now. These include:
• Personal observation
• Statistical reports
• Break-even analysis
• Budgetary control
Budget and budgetary control system: a
budget is a plan or programme of future
action which is prepared on the basis of
estimates or forecasts made for coming
operating period. It anticipates income
for a given period and the costs to be
incurred in order to get this income.
A budget which is prepared for the
organization as a whole is known as
master budget. Budget prepared for
certain functional areas such as sales,
distribution, production and finance is
1. Personal Observation
This is the most traditional method of control.
Personal observation is one of those techniques
which enables the manager to collect the
information as first-hand information.
It also creates a phenomenon of psychological
pressure on the employees to perform in such a
manner so as to achieve well their objectives as
they are aware that they are being observed
personally on their job. However, it is a very
time-consuming exercise & cannot effectively
be used for all kinds of jobs.
Statistical Reports
Statistical reports can be defined as an overall
analysis of reports and data which is used in the
form of averages, percentage, ratios, correlation,
etc., present useful information to the managers
regarding the performance of the organization in
various areas.
This type of useful information when presented in
the various forms like charts, graphs, tables, etc.,
enables the managers to read them more easily &
allow a comparison to be made with performance
in previous periods & also with the benchmarks.
 3. Break-even Analysis
 Breakeven analysis is a technique used by
managers to study the relationship between costs,
volume & profits. It determines the overall picture
of probable profit & losses at different levels of
activity while analyzing the overall position.
 The sales volume at which there is no profit, no
loss is known as the breakeven point. There is no
profit or no loss. Breakeven point can be calculated
with the help of the following formula:
 Breakeven point = Fixed Costs/Selling price per
unit – variable costs per unit
Budgetary control
It is a system of controlling costs which includes
the preparation of budgets, coordinating the
departments and establishing the responsibilities,
comparing actual performance with the budgeted
and acting upon results to achieve maximum
profitability. It is an intelligent consideration of
future events. It clarifies objectives, helps in the
best utilization of resources and is helpful in the
control of performance and costs.
Zero base budgeting: it was introduced for the first
time in preparing the divisional budgets in 1971 in
USA. Under this each manager has to justify the
entire budget in detail from zero base.
 Some of the types of budgets prepared by an organisation are
as follows,
 Sales budget: A statement of what an organization expects to
sell in terms of quantity as well as value
 Production budget: A statement of what an organization plans
to produce in the budgeted period
 Material budget: A statement of estimated quantity & cost of
materials required for production
 Cash budget: Anticipated cash inflows & outflows for the
budgeted period
 Capital budget: Estimated spending on major long-term assets
like a new factory or major equipment
 Research & development budget: Estimated spending for the
development or refinement of products & processes
Zero base budgeting
 In this rapidly changing environment goals
continuously keep on changing. The goals need
to be redefined in a logical manner. The past
year financial allocations may not serve any
purpose. It calls for a new allocation of
resources. All the proposals are drawn from the
scratch.
 Basic steps in ZBB:
1. Identification of decision units
2. Analysis of decision units
3. Evaluation and ranking of all decision units
4. Allocation of resources to each unit
Modern Techniques of Managerial Control
 Modern techniques of controlling are those which are
of recent origin & are comparatively new in
management literature. These techniques provide a
refreshingly new thinking on the ways in which
various aspects of an organization can be controlled.
These include:
 Return on investment
 Ratio analysis
 Responsibility accounting
 Management audit
 PERT & CPM
 Total Quality management (TQM)
 Six Sigma
1. Return on Investment
 Return on investment (ROI) can be defined as one of
the important and useful techniques. It provides the
basics and guides for measuring whether or not
invested capital has been used effectively for
generating a reasonable amount of return. ROI can be
used to measure the overall performance of an
organization or of its individual departments or
divisions. It can be calculated as under-

 Net income before or after tax may be used for

making comparisons. Total investment includes both
working as well as fixed capital invested in the
business.
Ratio Analysis
The most commonly used ratios used by
organizations can be classified into the
following categories:
Liquidity ratios
Solvency ratios
Profitability ratios
Turnover ratios
3. Responsibility Accounting
Responsibility accounting can be defined as a
system of accounting in which overall involvement
of different sections, divisions & departments of an
organization are set up as ‘Responsibility centers’.
The head of the center is responsible for achieving
the target set for his center. Responsibility centers
may be of the following types:
Cost center
Revenue center
Profit center
Investment center
4. Management Audit
Management audit refers to a systematic
appraisal of the overall performance of the
management of an organization. The
purpose is to review the efficiency &n
effectiveness of management & to improve
its performance in future periods.
 PERT & CPM
 PERT (programmed evaluation & review technique)
& CPM (critical path method) are important network
techniques useful in planning & controlling. These
techniques, therefore, help in performing various
functions of management like planning; scheduling
& implementing time-bound projects involving the
performance of a variety of complex, diverse &
interrelated activities.
 Therefore, these techniques are so interrelated and
deal with such factors as time scheduling &
resources allocation for these activities.
Total Quality Management (TQM)
 A core definition of total quality management (TQM)
describes a management approach to long-term success
through customer satisfaction. In a TQM effort, all
members of an organization participate in improving
processes, products, services, and the culture in which they
work.
 The total quality management became attractive to the US
managers as it had been successfully implemented by the
Japanese companies such as Toyota, Canon and Honda.
The TQM philosophy focuses on teamwork, increasing
customer satisfaction and lowering the costs. Major TQM
techniques involve the use of techniques like quality
circles, benchmarking, six sigma principles, reduced cycle
time and continuous improvement.
Quality circles
A quality circle or quality control circle is a group of
workers who do the same or similar work, who meet
regularly to identify, analyze and solve work-related
problems. It consists of minimum three and maximum
twelve members in number. Circle members are free to
collect data and take surveys. The reason for promoting
quality circles is that these people know the day to day
tasks and problems and can easily recommendations.
Benchmarking
 Benchmarking is defined as the process of measuring
products, services, and processes against toughest
competitors or recognizing the industry leaders in one or
more aspects of their operations, to identify the areas of
improvement.
 It is the continuous process of measuring products, services
and practices against the Of course, only those companies
be selected whose methods are compatible.
 There are four main types of benchmarking: internal,
external, performance, and practice.
 Six sigma
It was first introduced by Motorola in 1980s. It is based on Greek
letter ‘sigma’ which means how far something deviates from
perfection. It is a highly ambitious quality standard that
specifies not more than 3.4 defects per million parts i.e.
99.9997 percent accuracy. Now it has become a generic term
which indicates higher quality and lower costs.
Hundreds of companies like General Electric, Honda, American
Express, Ford, TCS, tata Steel, Sony, Hitachi, Motorola have
been using six sigma programs.
 Management by exception
 It is a system of identification and communication that signals
the manager as to when and where his attention is needed.
 The main object of this system is to enable the manager to
identify and isolate the problems that call for decision and action,
and avoid or ignore or pay less attention to less critical problems
which better be handled by his subordinates.
 Under this system the manager should receive only condensed,
summarized and invariable comparative reports covering all the
elements, and he should have all the exceptions to the past
averages or standards pointed out, both the specially good and the
specially bad exceptions.
Management by Exception
 System of Management by
Exception:
 I Phase: Measurement Phase:
 In this phase, facts of operational situation are collected and assessed, i.e., use
of performance of its whole range inputs such as efforts contributing to the
goals of the organisation; its productivity, money flow, effectiveness of
financial resources being used to produce goods, services and profits;
availability and wastage of material and its economy from its purchase
through processing and storing to delivery for finished products utilization,
capability and productivity of the machines.

 The information about all these factors are utilized by way of quantitative
measurements like using time standards, balance sheet data, inventory data,
inspection results of finished products, inventory accumulation for sales,
current assets, equipment utilization data.
II Phase: Projection Phase

 In this phase, analysis of those measurements which are

meaningful to the objectives of the organisation for future
outlook or expectations is carried out. Past and present data
are projected by using the statistical concept like probability,
standard deviation, confidence, correlation, sample size,
significance etc.

 Examine the potential effect of changes expected as per

forecast. Then the projections are modified by the forecasts to
decide the ‘goals’. At this stage complete planning is
thoroughly looked at from the angle of existing policies and
procedures, organisation structure, adequacy and capability of
the existing staff and equip­ment. If need arises necessary
changes are made.
 III Phase: Selection Phase:
 In this phase, those vital and economical available measures are
selected, which will best indicate the progress towards its
objectives. Thus the criteria are selected, which the management
would like to use to follow the progress or performance to­wards
predicted objectives.
 IV Phase: Observation Phase:
 In this phase, current status of performance is periodically
observed and measured. The system should be reliable, automatic
and adequate. Adequate means that observations should neither
be too less nor too more, and only necessary information at
desired frequency is obtained.
 V Phase: Comparison Phase:
 In this phase, comparison is made between the actual and
expected performance and progress in order to identify the
exception, analyze causes and report the need for action to the
appropriate authority about the exceptions that required priority
of attention.

 VI Phase: Action Phase:

 This is the phase, where decisions are taken and implemented
with a view to bring the performance to the desired level or
adjust in anticipations to reflect changing conditions or take full
advantage of better performance or opportunity.
 Thus the Management by Exception
compromise as systematic approach of
handling the management problems and free
the manager from the demands of routine
work, which enables him to devote more time
for creative efforts directed towards “improving
the overall efficiency of the organisation”. This
also provides necessary information readily
available, for taking timely and qualitative
decisions, which would require lot of time.
 Advantages of Management by Exception:
 1. It saves time. Manager attends to real problems at a particular point
of time.
 2. Concentrated efforts are possible, as this system enables the
manager to decide when and where he should pay his attention. It
identifies crisis and critical problems.
 3. Lesser number of decisions is required to be taken, which enables
the manager to go into detail.
 4. This enables to increase span of control and increase the activities
for a manager.
 5. Use of past trends, history and available data can be made fully.
 6. It alarms the management about the good opportunities as well as
difficulties.
 7. Qualitative and quantitative yardsticks are provided for judging the
current position.
Limitations of Management by Exception:
1. It requires a comprehensive observing and
reporting system.
2. It increases paper work.
3. The system is silent till the problem becomes
critical.
4. Some important factors, like human behaviour,
are difficult to measure.