MANAGEMENT CONCEPTS AND ORGANIZATIONAL BEHAVIOUR

UNIT -2
ORGANIZING
Organizing refers to a process consisting of a series of steps to identify and group various activities,
collect or assemble various resources and establish authority relationships with responsibility amongst
job positions. It can be mentioned as collecting and utilizing human and non-human resources to
implement plans in a highly effective and efficient manner. It is to achieve the overall plan of the
organisation. In other words, it refers to the process of arranging people to work together and
accomplish a common goal. It is a process of identifying activities to be performed, grouping these
activities into work units, assembling tasks for the various job positions, defining rules, and
establishing the authority, responsibility, and relationship amongst them.
DEFINITION OF ORGANISING
 ―ORGANISING IS A PROCESS OF DEFINING AND GROUPING THE ACTIVITIES OF THE ENTERPRISE AND
ESTABLISHING THE AUTHORITY RELATIONSHIPS AMONG THEM. IN PERFORMING THE ORGANISING

FUNCTION, THE MANAGER DEFINES, DEPARTMENTALIZES, AND ASSIGNS ACTIVITIES SO THAT

THEY CAN BE MOST EFFECTIVELY EXECUTED.‖ –THEO HAIMANN

 ―ORGANIZING IS A FUNCTION BY WHICH THE CONCERN IS ABLE TO DEFINE THE ROLE POSITIONS,
THE JOBS RELATED AND THE COORDINATION BETWEEN AUTHORITY AND RESPONSIBILITY.‖ –
CHESTER I. BARNARD
 ―ORGANIZING IS THE PROCESS OF DEFINING AND GROUPING THE ACTIVITIES OF THE ENTERPRISE
AND ESTABLISHING THE AUTHORITY RELATIONSHIPS AMONG THEM.‖ – LUTHER GULICK

IMPORTANCE OF ORGANISING
Following are the importance of organising:
1. Benefits of Specialization:
In an organisation, work is divided into units and departments. This division of work leads to
specialization in various activities of the concern. The entire philosophy of the organisation is based
on the concept of division of work into compact jobs. This leads to systematic allocation of jobs
amongst staff, which enhances productivity and reduces the workload. Division of work refers to
assigning responsibility for each organisational component to a specific individual or group. This,
in turn leads to specialization, efficiency and speed in job performance.
2. Clarity in a Working Relationship:
After identification of a job, organising also clarifies the authority and responsibility of individuals
of different departments. It is a means of creating coordination among different departments of
enterprises. It aims at creating clear-cut responsibility, and authority relationships amongst different
levels and ensuring cooperation amongst individuals and groups. Harmony of work is brought by
the high level of management. Every employee knows his superior from whom he has to take the
order, and to whom he has to report. This working relationship helps in fixing responsibility and
helps to avoid confusion.
3. Optimum Utilization of Resources:
Organising ensures the optimum utilization of human and material resources. In organising, work is
assigned as per skill and knowledge. The clarity in the job in advance of what the employees are
supposed to do avoids confusion and motivates employees to put in their best.
4. Adaption to Change:
The process of organising allows an organisation to accommodate changes in a business
environment. So the organisation structure is suitably modified and the revision of the job position
and relationships plan the way for smooth transactions. Thus, organizing provide flexibility and
stability to an organisation. It helps an organisation to survive and grow, despite people leaving and
joining. It also helps to adapt to changes in technology, new methods of work, etc.
5. Effective Administration:
Organising provides a clear description of the jobs and working relationships. It helps in effective
administration by avoiding confusion and duplication of work. Organising also reduces the
workload of the top management by delegating authority. As a result, top management is relieved
from routine work and can concentrate on the administration of the company.
6. Development of Personnel:
In the process of organising, a managerial person is trained to acquire a wide experience in diverse
activities through delegation of authority. Delegation allows manager to reduce their work by
assigning future jobs to subordinates. It also gives time to concentrate on important work. The
delegation also develops a sense of responsibility in the subordinates and motivates them to do
more challenging work.
7. Expansion and Growth:
An organisation‘s growth is totally dependent on how efficiently and smoothly it works. The
organising process creates a favorable condition for expansion and diversification of enterprise by
enabling it to deviate from existing norms and take up a new challenge. Organising allows a
business enterprise to access more job positions and departments, and even diversifies its product
lines. It helps in the expansion and growth of the business.
STEPS IN THE ORGANISING PROCESS
The steps involved in the process of organizing are as follows:

Identificati
Establishing
on and Department Assignment
Reporting
division of alization of Duty
Relationship
work
1. Identification and Division of Work:
The function of organising starts with the identification of the total work which is to be done to
achieve the organisational goal. The work is divided systematically so that each person gets a
separate task to perform. This helps to avoid unnecessary duplication and wastage of efforts and
facilitates the specialization of efforts and skills.
2. Departmentalisation:
Once the identification and division of work are done. The next step is to combine group-related
activities into units and departments. This process of grouping similar and related activities into
groups of large independent units or departments is known as departmentalisation. The grouping
may be done on the basis of function, product, customer, etc.
3. Assignment of Duty:
After grouping various activities into departments, the next step is necessary to allocate the work of
different employees. Duty should be assigned based on the knowledge, qualification, experience,
and capability of the individual. There should be a proper match between job requirements and the
capabilities of employees.
4. Establishing Reporting Relationship:
After assigning duty, the next step is to clearly define the authority and responsibility of the
employees. If two or more person is working together for a common goal, then it is necessary to
define the relationship between them in clear terms. There is a need to create a hierarchical
structure and help in coordination among various departments.
TYPES OF ORGANIZATION
Formal Organization
An organization is formal when the activities are coordinated towards a common objective. It is
basically goal oriented entity that exist the efforts of individuals. It refers to the structure of jobs &
positions with clearly defined functions, responsibilities & authorities. It has a specific set of
commends to direct employees in achieving goals.
Organization chart identifies the following aspects of formal structure
 Division of work.
 Supervisory relationships.
 Communication channels.
 Major subunits.
 Levels of management.
Advantages of formal organization
 Reduces confusion
 Ensures specialization
 Fixing of responsibility
 Help in achievement of objectives
 Provide stability to the firm
 Increase organizational efficiency
Disadvantage of Formal Organization
 Reduced Initiatives
 Lack of match between objectives
 Delay in work due to rules & regulations
 Disturbance in relations
 Problem due to informal relations
 Informal Organization
Informal Organization
Informal organizations are formed on the basis of individual relations, communication, general
knowledge etc. It is found at all levels of management It reflects human relationships Informal
organization is any human group interactions that occur spontaneously & naturally over long period
of time.
Importance of Informal organization
It serves as a very useful channel of communication in the organization.
It is very fast.
It gives support to the formal organization.
Informal organization gives psychological satisfaction of the members.
They get a platform to express their feelings.
The informal organization is sometimes just as powerful, if not more powerful , then the formal
structure.
Advantages of Informal Organization
 Cooperation
 Sense of Belongingness (Stress free)
 Fast communication
 Aid (Help or assist) on the job
Disadvantages of informal organization
 Resistance to change (sometimes management are not accepted)
 Clash (fight) in interest
 It is very much affected by the rumors
 Disturbance in relations
 Problem due to informal relations
 DIFFERENCE BETWEEN FORMAL AND INFORMAL ORGANIZATION
Basis of Difference Formal organization Informal Organization
Meaning The structure of jobs and positions, which The network of social
is created by management, is known relationships arising out of
as Formal Organization. interaction among employees
is known as Informal
Organization.
Formation It is formed deliberately as a part of the It is not formed deliberately
organisation‘s rules and policies. and is a result of social
interaction.
Authority Authority arises by virtue of position in Authority arises out of
management. personal qualities.
Behavior Behaviour is prescribed by the managers. There is no set pattern for
behaviour.
Flow of Communication takes place through formal Communication takes place
Communication channels only. through informal channels
having no fixed path.
Nature It is rigid in nature. It is flexible in nature.
Leadership Person with maximum authority is the Person who has greater
leader. acceptance by the group is
the leader.
Flow of Authority Authority flows from top to bottom. Authority can flow in all the
direction.
Stability It is more stable as it exists till the survival It is relatively less stable as
of the organisation. employees can change their
social group based on their
desire.
Purpose It is created to work systematically and It is created to provide social
achieve organisational goals. satisfaction to employees.

ORGANIZATION STRUCTURE
An organization's structure is a system that outlines how activities are directed to achieve the
organization's goals. It defines how tasks are allocated, coordinated, and supervised, and how
information flows between levels within the company.
An organization's structure can vary depending on its size, industry, culture, and other factors. It can
be structured in many different ways, including hierarchical, divisional, or agile.
An organization's structure is essential because it:
 Determines how work is divided and coordinated
 How employees interact with each other and with management
 Provides a clear framework for decision-making and resource allocation
 Helps employees understand their duties and responsibilities, which can reduce conflicts and
increase productivity.
TYPES OF ORGANIZATIONAL STRUCTURE
The key purpose of any organizational structure is to make decision-making processes straightforward
and provide clear definitions for roles and responsibilities. However, there are many ways to achieve
that.
Let‘s look at seven common types of enterprise organizational structures to help you decide what‘s
best for your company and its various departments and teams.
1. Functional Structure
2. Divisional Structure
3. Matrix Structure
4. Team Structure
5. Network Structure
6. Hierarchical Structure
7. Flat Organization Structure
FUNCTIONAL STRUCTURE
A functional structure groups employees into different departments by work specialization. Each
department has a designated leader highly experienced in the job functions of each employee
supervised by them.
Most often, it implements a top-down (centralized) decision-making process where department
managers report to upper management. Ideally, leaders of different teams communicate regularly and
coordinate their strategies while lower-level employees have little idea of the processes taking place
outside their department.
The main challenge companies with a functional structure face is the lack of coordination between
departments. Employees may lose the larger company context when focusing on specific tasks and
failing to interact with members of other departments.
DIVISIONAL STRUCTURE
In a divisional organizational structure, the company is divided into different business units that have
complete control of their budget, resources, and strategy – essentially acting as an independent
company. Each division can have its own dedicated marketing, sales, product, and IT teams.
A divisional structure works well with large enterprises who have multi-product offerings, have
acquired or merged with multiple business entities, service many geographical regions, and serve
different industries.
Examples of companies applying a divisional structure are McDonald‘s Corporation and Disney.
These brands can‘t help but split the entire organization by location to be able to adjust their strategies
for audiences representing different markets.

MATRIX STRUCTURE
Within a matrix organizational structure, team members report to several managers at once. Wait,
what‘s the point?
Having multiple supervisors allows for company-wide interaction and faster project delivery. For
instance, when answering to functional managers and project managers, employees have a chance to
collect experience outside their team. While functional managers can help to solve job-specific issues,
project managers can bring in knowledge or talents from other departments.
If you go after a matrix organizational structure, you‘ll need to find a way to avoid authority
confusion and prevent conflicts between managers.
TEAM BASED STRUCTURE
A team-based organizational structure creates small teams focusing on delivering one product or
service – often via Scrum or tiger teams. These teams can solve problems and make decisions without
bringing in third parties.
Team members are responsible for managing their workload and have full control over the project.
Team-based organizations are distinguished by little formalization and high flexibility. This structure
works well for global organizations and manufacturers.

NETWORK STRUCTURE
A network structure goes far beyond your internal company structure. It‘s the act of joining the efforts
of two or more organizations to deliver one product or service. Typically, a network organization
outsources independent contractors or vendors to complete the work.
In a network organization, teams are built from full-time employees as well as freelance specialists –
this way, in-house workers can spend most of their time focusing on the work they specialize in. Such
an approach allows companies to adapt to market changes and obtain the skills they need quickly.
Working with individuals not integrated into your company culture results in lower formalization and
higher agility.
HIERARCHICAL STRUCTURE
A hierarchical structure is the most common type of organizational structure. This pyramid-shaped
structure follows a direct chain of command from the top (the CEO) and flows down the org chart
through individual teams and entry-level employees.
The chain of command goes from the C-suite to senior management to team leaders to lower-level
employees. The highest-level executive (typically the CEO) has the most power and authority on the
decision-making process.
On one hand, this structure enables organizations to streamline business processes, develop clear
career paths, and reduce conflicts. A company hierarchy leaves no place for challenging managers‘
authority, which can sometimes be a good thing.
On the other hand, a hierarchical structure slows down decision-making and may hurt employee
morale. Poor leadership – or even a bad CEO – can lead to the downfall of an organization with a
hierarchal structure.

Board of
Directors

CEO

X Y Z

A B C D E F

FLAT ORGANIZATION STRUCTURE

Due to its simple nature, a flat organization structure, also called a ―flatarchy‖ or a horizontal
structure, is typically used by small businesses and startups. Organizations often start with a flat
structure and then transition to a different type of org structure late in their maturity.
In a flat organizational structure, there are few middle managers between employees and top
managers. The structure requires less supervision, increases employee involvement, and boosts trust
in the workplace.
ELEMENTS OF ORGANIZATIONAL STRUCTURE DESIGN
An organizational structure is based on a range of elements, including:
WORK SPECIALIZATION
Work specializations define how responsibilities are split between employees based on the job
description. It‘s used to split projects into smaller work activities and assign digestible tasks to
individual employees. The most common results of improper specialization are low efficiency and
burnout.
DEPARTMENTALIZATION
The biggest challenge is choosing the criteria for departmentation. In many cases, it‘s no more enough
to apply functional departmentation – where employees are grouped based on the tasks they perform.
Startups often go for matrix departmentation that involves combining two types of departmentation
and takes the best out of both worlds. For instance, functional departmentation can be joined by
geographical departmentation to better serve clients in different locations.
Depart mentation to better serve clients in different locations.
CHAIN OF COMMAND
Chain of command represents a system for passing instructions and reporting within an organization.
Ideally, it distributes the power, supports knowledge sharing, and encourages employee
accountability.
The traditional chain of command makes decision-making more complex and does not allow for much
flexibility. On the contrary, modern approaches strive to enhance employee autonomy and avoid
micromanagement.
SPAN OF CONTROL
Span of control regulates the number of direct reporters managed by a single supervisor. It heavily
depends on the three aforementioned elements of organizational structure. Furthermore, to identify the
right span of control, you need to evaluate your leaders‘ capacity, workplace size, and experience
level of employees.
CENTRALIZATION AND DECENTRALIZATION
Centralization and decentralization are the concepts defining how managers, as well as employees,
give input on company goals and strategy. While centralization gives leaders the ultimate control over
decision-making processes, decentralization allows employees to impact business decisions.
FORMALIZATION
Formalization determines to which extent business processes, policies, and job descriptions are
standardized. It may regulate communication between employees and managers, workplace culture,
operational procedures, etc..
DECENTRALIZATION OF AUTHORITY
MEANING OF DECENTRALIZATION
Decentralization of authority means dispersal of authority to take decisions throughout the
Organization, up to the lower levels.
Decentralization refers to delegation of authority throughout all the levels of the organization.
Under this decision making authority is shared with lower levels and is consequently placed nearest to
the points of action. In other words decision making authority is pushed down the chain of command.
It implies reservation of some authority with the top level management and transferring rest of the
authority to the lower levels of the organization. This empowers lower levels to take decisions
regarding problems faced by them without having to go to the upper levels.
―Decentralisation refers to tire systematic effort to delegate to the lowest levels all authority except
that which can only be exercised at central points.‖ —Louis A. Allen

An organization is centralized when decision-making authority is retained by higher management

levels whereas it is decentralized when such authority is systematically delegated at all levels and in
all departments of a firm.
Complete centralization would imply concentration of all decision making functions at the apex of
the management hierarchy. Such a scenario would obviate the need for a management hierarchy.
Complete decentralization would imply the delegation of all decision making functions to the lower
level of the hierarchy and this would obviate the need for higher managerial positions.
Both the scenarios are unrealistic. An organization can never be completely centralized or
decentralized. As it grows in size and complexity, there is a tendency to move towards decentralized
decision making. This is because in large organizations those employees who are directly and closely
involved with certain operations tend to have more knowledge about them than the top management
which may only be indirectly associated with individual operations.
IMPORTANCE OF DECENTRALIZATION
1. Develops initiative among subordinates
• Decentralization helps to promote self-reliance and confidence amongst the subordinates.
• Because when lower managerial levels are given freedom to take their own decisions, they learn to
depend on their own judgment & feel constantly challenged to develop solutions for the problems
they encounter.
• It also helps to identify those executives who have the necessary potential to become dynamic
leaders.
2. Develops managerial talent for the future
• Decentralization gives the employees a chance to prove their abilities. They learn how to decide and
develop managerial skills.
• It also helps to create a reservoir of qualified manpower who have the necessary potential to become
dynamic leaders and who can be considered to fill up more challenging positions.
• Thus, it is a means of management education as well as an opportunity for trained manpower to use
its talent in real life situations.
3. Quick decision making
• Under decentralization, authority to make decisions is placed in the hands of those who are well
aware of the realities of the situation and are responsible for executing the decisions.
• As a result more accurate and faster decisions can be taken. There are also lesser chances of
information getting distorted because it does not have to go through long channels.
4. Relief to top management
• Decentralisation helps to reduce the workload of the top executives. They can devote greater time
and attention to important policy matters by decentralizing authority for routine operational decisions.
• It reduces the need for direct supervision by the superior over the subordinates.
5. Facilitates growth
• Decentralisation facilitates the growth and diversification of the enterprise. Each department or
product division is given sufficient autonomy for innovations and creativity.
• Also a sense of competition can be created among different departments or divisions and the top
management can extend overall leadership over a giant enterprise.
6. Better control
• Managers at all levels have adequate authority to make changes in work assignment, to change
production schedules, to recommend supervision and to take disciplinary actions.
Therefore more effective supervision can be exercised.
• Control can be made effective by the evaluating the performance of each decentralized unit in the
light of clear and pre-determined standards.
Advantages of Decentralization
 Reduces the burden on top executives
 Facilitates diversification
 Executive Development
 It promotes motivation
 Better control and supervision
Disadvantages of Decentralisation
 Uniform policies not Followed
 Problem of Co-Ordination
STAFFING
Staffing is the process of hiring eligible candidates in the organization or company for specific
positions. In management, the meaning of staffing is an operation of recruiting the employees by
evaluating their skills, knowledge and then offering them specific job roles accordingly.
Therefore it is very important that each and every person should get right position in the organization
so as to get the right job, according to their ability, talent, aptitude, and specializations so that it will
help the organization to achieve the pre-set goals in the proper way by the 100% contribution of
manpower. Thus it can be said that it is staffing is an essential function of every business
organization.
Functions of Staffing
1. The first and foremost function of staffing is to obtain qualified personnel for different jobs
position in the organization.
2. In staffing, the right person is recruited for the right jobs, therefore it leads to maximum
productivity and higher performance.
3. It helps in promoting the optimum utilization of human resource through various aspects.
4. Job satisfaction and morale of the workers increases through the recruitment of the right person.
5. Staffing helps to ensure better utilization of human resources.
6. It ensures the continuity and growth of the organization, through development managers.
STEPS IN STAFFING PROCESS
The staffing process starts with finding the right talent and ends with the transfer of employees. The
main purpose is to ensure that the organization misses nothing in terms of talent and skills. There are
11 steps involved in the staffing process:
1. Manpower planning and job analysis
Manpower planning refers to the measurement of workforce required in an organization. The first step
in staffing helps identify the requirements of business to properly determine the number of employees,
the skills, and qualifications required. Job analysis is the process of collecting information related to a
job. It includes skills, responsibilities, roles, and other requirements. Job analysis helps determine the
talent required so as to match it with the business requirements.
2. Recruitment
After planning the manpower and conducting job analysis, recruitment is the second step in staffing.
Once the organization has determined the skills and knowledge required to perform certain roles, the
recruitment process begins. This process involves advertising for open positions within the
organization through various media. After receiving enough job applications, the organization
evaluates them based on the eligibility criteria set in the first step.
3. Selection
After evaluating the job applicants against eligibility, the selection process screens employees and
identifies the ones who are most suitable for specific jobs. This is a crucial step as selecting the set of
skills that do not match the vacant positions can lead to unproductivity and low job satisfaction. In the
staffing process, it is important to eliminate those that are unsuitable and appear unpromising.
4. Orientation and placement
Once the suitable candidates are selected, employees are made familiar with each other, their teams,
the organization, and the work they will be performing. After this, the right employees are placed in
the right positions.
5. Remuneration
Remuneration refers to the compensation given to the employees in exchange for the work done.
Remuneration is usually decided at the time of interview or selection process. It‘s predetermined but
can be negotiated as well, according to the type of work and experience of the employee hired.
6. Training
Training is a primary part of the staffing process. The main objective of training is to help employees
learn new skills and develop knowledge. Organizations design training programs after a TNA
(Training Needs Analysis) to make sure that the employees keep up with any new requirements.
7. Performance evaluation
Employees get to their work after they have been placed and trained. Their work performance is
evaluated based on their attitude, behavior, and work done. Such assessments aim to determine the
success of the recruitment process and if the employee needs further improvement or had been placed
wrongly. The performance evaluation step in the staffing process serves as the base for designing
training/development programs, promotions, appraisals, etc.
8. Development
After the performance of an employee is evaluated, the organization determines if there‘s a need for
improving the existing skills and competencies. It aims to better equip the employees to perform their
current roles or adapt to the changing business requirements. This also helps employees advance in
their careers by leveling up their skills and knowledge.
9. Appraisal
Performance evaluations also determine if an employee is eligible for appraisal. Appraisals aim to
show how well an employee has performed in a specific period and how his knowledge, aptitude, and
other qualities gave value to the success of an operation.
10. Promotion
If an employee shows growth and improvement beyond what was expected of them, they are likely
eligible for promotion. It is the process of upgrading an employee to a higher or better position within
the organization. It is also linked to increased incentives, higher compensation, and other extra
benefits.
11. Transfer
The last step in the staffing process is transfer. In transfer, the employee performs in the same position
but is shifted to another business unit or a different department. There will be no change in the
compensation structure. Transfers are mostly undertaken to meet sudden or urgent organizational
needs. Sometimes, they also aim to let employees develop their skills and knowledge. They can be
temporary or long-term, depending on the need. This process has to be evaluated periodically to meet
the staffing needs.
RECRUITMENT
Recruitment is a positive process of searching for prospective employees and stimulating them to
apply for the jobs in the organization. When more persons apply for jobs then there will be a scope for
recruiting better persons.
The job-seekers too, on the other hand, are in search of organisations offering them employment.
Recruitment is a linkage activity bringing together those with jobs and those seeking jobs. In simple
words, the term recruitment refers to discovering the source from where potential employees may be
selected. The scientific recruitment process leads to higher productivity, better wages, high morale,
reduction in labor turnover and enhanced reputation. It stimulates people to apply for jobs; hence it is
a positive process.
Recruitment is concerned with reaching out, attracting, and ensuring a supply of qualified personnel
and making out selection of requisite manpower both in their quantitative and qualitative aspect. It is
the development and maintenance of adequate man- power resources. This is the first stage of the
process of selection and is completed with placement.
Definition
According to Edwin B. Flippo, ―It is a process of searching for prospective employees and
stimulating and encouraging them to apply for jobs in an organisation.‖ He further elaborates it,
terming it both negative and positive.
Steps of Recruiting Process
1. Identify company needs
The internal or external recruiters are required to identify what the organisation seeks in potential
candidates, such as the exact qualifications, skills and experiences. They may talk with the department
manager to get detailed information about the position and its requirements. That can enable them to
narrow their search for candidates and shortlist the right people for the available job positions.
2. Create a recruitment plan
By having a recruitment plan in place, it may be possible to speed up the recruitment process. The
recruitment plan outlines the entire process of finding candidates and interviewing and selecting them.
It may be necessary to alter an existing recruitment plan or create a new one for every new job
opening. Different positions may require separate plans.
3. Draft a job description
Drafting a job description is a necessary part of the recruiting process to advertise available positions.
The recruiter may consult the department manager about the responsibilities of the open positions,
review other similar jobs in the organisation and use the information to write an accurate job
description. It is required to inform potential candidates about the organisation's requirements and the
work duties they are required to perform if they get the job.
4. Advertise the open position
The purpose of advertising available positions is to attract potential candidates and receive as many
job applications as possible. The recruiters may post the job advertisements on the company website,
online job sites, professional networks and social media. They may notify employees internally about
job openings and invite them to apply for them.
5. Analyse the candidates
After receiving applications in response to their job advertisements, the recruiters are required to sift
through them and select those that match the job requirements. Many recruiters create a list of the job
requirements and use it as a reference when short-listing resumes. It can be time consuming and
expensive to interview every applicant, and so the recruiters are required to choose only a select few
who seem like the best fit and invite them for a job interview.
6. Interview candidates
Depending on the organisation's requirements, resources and the number of applicants they get, the
recruiters may organise single-phase interviews or multiple phase interviews. Single-phase interviews
are usual in smaller organisations that have fewer applicants and require to make quick hiring
decisions. Large organisations are more likely to have multiple phase interviews that involve
screening applicants in progressive rounds. Only the best candidates can advance to the final
interview round.
7. Close the process
The interview process ends with the recruiters making the final selection and informing the selected
candidates that they have got the job. The recruiters may also send messages of regret to those not
selected. They may put them on a list for contacting them in the future in case of new job openings.
After the hiring process, they are also required to remove the job advertisements for the filled
positions.
SELECTION
The selection process can be defined as shortlisting the right candidates with the required
qualifications to fill the vacancies in an organization. The process varies from company to company
hence need to be understood what type of process suits accordingly.
The Selection Process is quite a lengthy and complex process as it involves a series of steps before
making a final decision.
Definition:
According to Dale Yoder, ―Selection is the process in which candidates for employment are divided
into two classes-those who are to be offered employment and those who are not‖.
According to Thomas Stone, ―Selection is the process of differentiating between applicants in order
to identify (and hire) those with a greater likelihood of success in a job‖.
The selection procedure is concerned with securing relevant information about an applicant. This
information is secured in a number of steps or stages. The objective of selection process is to
determine whether an applicant meets the qualification for a specific job and to choose the applicant
who is most likely to perform well in that job. Selection is a long process, commencing from the
preliminary interview of the applicants and ending with the contract of employment (sometimes).
Selection is the process of carefully screening the candidates who offer themselves for appointment so
as to choose the most suitable persons for the jobs that are to be filled. It is the process of matching
the qualifications of candidates with the requirements of jobs to be filled.
PRINCIPLES OF SELECTION
1. Policy of recruitment in accordance with the object of enterprise: The recruitment policy of the
must be in accordance with the pre-determined objectives of the enterprise so that help in the
achievement of objectives of the enterprise.
2. Observation of government rules and regulations: Before formulation the policy of the
recruitment and selection for the enterprise, Government rules and regulations of selection must be
thoroughly understood and followed, especially either reference to the rules of reservation that no
legal complication may arise at later stage after the recruitment is made.
3. Recruitment by a Committee: The right to recruit the workers and employees must be assigned to
a committee of capable, efficient, experienced, senior and responsible officers of the company. Entire
work of the process of recruitment must be performed by a committee and not by any individual
officer so that fair selection may be assured.
4. Clear Policy of Recruitment: The policy of recruitment must be definite and clear so that it may
easy be implement without facing any complications.
5. Flexibility: The recruitment policy must be flexible so that necessary changes may be made in it
according to the need of the enterprise.
6. Impartiality: The recruitment policy must be such that fair selection maybe assured. Only the best
and capable candidate must be selected only on the basis of merit.
7. Job Security: Security of job must be assured to every worker and employee of the enterprise right
at the time of his appointment so that he may contribute his efforts to the achievement of
organizational objectives.
8. Opportunity of Development to the Employees: The selection policy of the enterprise must be
prepared in the manner that it may provide challenging opportunities to the employees of the
enterprise based on their ability and performance. It will always pursue them to do more and better to
best the work.
SELECTION PROCESS
Although the specifics differ according to each organization and position, the selection process
happens in a series of steps that candidates move through.

Application

Screening & Pre- Selection

Interview

Assessment

Reference & Background check

Decision

Job offer & Contract

1. Application
Once you‘ve published a job advert, candidates begin to apply. That‘s the first step in your selection
process. However, the number, quality, and diversity of applications will vary.
2. Screening & pre -selection
The goal of the initial screening phase is to reduce the pool of candidates from a large number to a
manageable group of between 3-10 people who are eligible for an interview.
3. Interview
The third step in the candidate selection process funnel is the most visible one, the job interview. Its
purpose is to assess how well-suited candidates are for the role and gain insight into their verbal
fluency and sociability.
A job interview involves the candidate being asked questions by the direct manager or the recruiter
(or both). It provides the structure for posing job-related questions to the candidate and presents the
opportunity to sell the job to them.
4. Assessment
While screening and pre-employment assessments can roughly weed out the least suitable candidates,
a full assessment is usually more accurate.
Commonly used assessments are a General Mental Ability (GMA) test (also known as an IQ test) and
a Five-Factor Model of Personality test. Higher IQ is associated with faster learning and higher top
performance. While these assessments can be a part of your pre-selection process, many organizations
choose to conduct them in later stages of the hiring process.
5. References and background check
By this point, you have reduced the long list of applicants down to one to three candidates. Reference
checking is the essential next step in the candidate selection process.
Ask the candidate to provide references. Reference checks confirm the accuracy of what a candidate
has told you and your impressions of them. If, during the interview, you have doubts about a certain
competency or skill, the reference check is an excellent way to gather more information from a
different perspective.
6. Decision
The next selection process step is deciding on a candidate with the greatest potential for the
organization. Pre-defined criteria by which every candidate is rated during the selection process will
reveal the best candidate.
Usually, the hiring manager makes the final decision. It may also involve input from other managers
and colleagues. Sometimes, the optimal choice is someone less qualified at the moment but who is
committed to growing and staying with the organization for a long time.
7. Job offer & contract
Once the decision is made, the selection process has one last phase. The chosen candidate still needs
to accept the offer. At this point, you should have gleaned enough information from the various
screenings and job interviews to have some confidence that the candidate is likely to accept the job.
The offer is then made to the candidate. You can send an offer letter outlining the main job details and
employment conditions. If they accept the offer, you can proceed to issue a formal employment
contract. Once that is signed by all parties are the selection process steps complete.
DIFFERENCE BETWEEN RECRUITMENT AND SELECTION
Basis of Recruitment Selection
Difference
Definition Process of searching candidates for the Process of choosing the best candidate
open role for the open role
Factor Advertise the vacant position Fill the vacant position
Objective Invite more candidates to apply Reject unsuitable candidates to choose
the best one
 Approach Positive approach where candidates are Negative approach where unsuitable
encouraged to apply candidates are weeded out
Order Performed before selection Performed after recruitment
Relationship No contractual relation exists Contractual relation exists
Duration/Time Short process (less time-consuming) Elaborate process (more time-
consuming)
Cost Economical Expensive
effectiveness
PLACEMENT
When the candidate is selected for a particular post and when he reports to duty, the organization has
to place him or her in the job for which he or she is selected which is being done through placement.
Placement is the act of offering the job to a finally selected candidate. It is the act of finally assigning
the rank and responsibility to an employee, identifying him with a particular job.
A well placed employee will be an asset to the organization. Proper placement makes the employee
happy and reduces absenteeism and labour turnover. Proper placement increases morale and
efficiency of the employees and builds a good relation with the employer.
Increased production, improved quality of the product, regularity in work and attendance indicate
proper placement of an employee. It should be noted that, supervisor or an executive should always
keep a watch on newly recruited employee to ensure whether an employee is properly placed or mis-
placed.
DEFINITION
―Placement is the determination of the job to which an accepted candidate is to be assigned and his
assignment to that job. It is a matching of what the supervisor has reason to think he can do with the
job demands (job requirements) and it is matching of what he imposes (in strain, working conditions
etc.) and what he offers (in the form of payroll companionship with others, promotional possibilities
etc.).‘‘ -PIGORS and MYRES
Right placement of workers can have the following advantages:
1. Reduced labor turnover rate.
2. Reduced absenteeism rate.
3. Increased safety of workers and lower accidents.
4. Increased morale of workers.
5. Better human relations in the organizations
PRINCIPLES
1. Job Requirements: An employee should be placed on the job according to the requirements of the
job such as physical and mental ability, eyesight, hearing, stress etc. The job shouldn‘t be adjusted
according to the qualification and abilities of the employees. Job placement profile charts can be used
to match the worker‘s physical and mental abilities with the job requirements. This profile chart
displays an evaluation of both job requirements and worker abilities for key features of the job so that
the management can easily determine how well worker fits a job.
2. Suitable Qualifications: The job should be offered to only that person who is suitably qualified.
Over qualified and under qualified persons might create problems for the organisation in the long run.
3. Adequate Information to the Job Incumbent: The employee should be provided with the
complete information and facts relating to the job, including the working conditions prevailing in the
firm. He should also be made known to the rewards associated with the performance levels.
4. Commitment and Loyalty: While placing the new employee, an effort should be made to develop
a sense of commitment, loyalty and cooperation in his mind so that he may realize his responsibilities
better towards the job, the organization and his associates.
5. Flexibility: The placement in the initial period may be temporary as changes are likely after the
completion of training. The employee may be later transferred to the job where he can do better
justice.
PROCESS OF PLACEMENT

Collection of Data

Evaluation

Allocation of Data

Controlling of Data

Step 1: Collection of Data

The very first step in the process of employee placement is gathering employee data to identify the
skills, qualifications, and abilities of the existing workforce.
Step 2: Evaluation
After data gathering of employees is completed, the next step comes into the picture which is
evaluating employee competencies to define what kind of job every employee fits best.
Step 3: Allocation/Placing
This step deals with the activity of allocating employees to relevant and best-finding Jobs.
Step 4: Control
The last step in employee placement is controlling. In this step monitoring and measuring the
performance of employees at their workplaces is done.
In most companies, the process of employee placement is typically managed and documented under
an employee placement policy. This policy defines standards and requirements for employee
qualifications and job assignments. It provides the management with a set of guidelines to follow
when choosing and assigning employees to the right positions and roles in the company.
IMPORTANCE OF PLACEMENT
1) Reduces Labour Turnover and Absenteeism
A proper placement of employee results reduces absenteeism and employee turnover leads to better
utilisation of machines, equipment and materials and thus, keeps the employee satisfied.
2) Improves Efficiency of Employee
Proper placement enhances employee efficiency, leading to better results, effective interpersonal
relationships, high morale, consistent attendance, and a reduction in mistakes.
3) Gives Motivation
Proper placement keeps the employee motivated by matching their skills to requirements and better
motivation results in better performance.
4) Keeps Employees Satisfied
The purpose of placement is to fit square pegs into square holes so that the efficiency of work is high
and the employees get personal satisfaction. When assigning jobs to new employees, it‘s important to
consider both the organization‘s requirements and the needs of the employees.
5) Improves Employee Morale
Proper placement helps to improve employee morale. If a candidate adapts to the job and continues to
perform as expected, it might mean that the candidate is properly placed.
TRAINING & DEVELOPMENT
It is concerned with developing a particular skill to a desired standard by instruction and practice.
Training is a highly useful tool that can bring an employee into a position where they can do their job
correctly, effectively, and conscientiously. Training is the act of increasing the knowledge and skill of
an employee for doing a particular job.
It is true in many organizations that before an employee is fitted into a harmonious working
relationship with other employees, he is given adequate training. Training is the act of increasing the
knowledge & skills of an employee for performing a particular job. A trainee learns new habits,
refined skills and useful knowledge during the training that helps him improve performance. It is a
systematic procedure for transferring technical knowhow to the employees.
According to Edwin B. Flippo. ―Training is the act of increasing the knowledge & skills of an
employee for doing particular job.‖
According to deal B. Beach ―the organized procedure by which people learn knowledge and skill for a
definite purpose‖.
Thus training refers to the teaching and learning activities directed at helping employees acquire &
apply the knowledge skills, abilities & attitudes needed by a particular job & organization.
CHARACTERISTICS or NATURE OF TRAINING
1. Training is an act of increasing the knowledge, skills of an employee for doing a particular job.
2. Training is a continuous process.
3. It involves changing of skills, knowledge, attitudes or social behavior.
4. It is learning process & experience.
5. It seeks relatively permanent change in an individual that will improve.
6. Training is an aid to self development.
7. Essential part of management development.
8. Focus attention on the current job and it is job specific & addresses particular performance defeats
or problems.
9. Concentrates on individual employees.
10. Training complement selection if well qualified candidates are selected, there will be less need of
training inside the organization.
NEEDS & OBJECTS OF TRAINING
Training is needed to serve the following purpose
1. Job requirements–Newly recruited employee require training so as to perform their tasks
effectively.
2. Promotion- Training is necessary to prepare existing employees for higher level jobs.
3. Transfers-Training is necessary to when a person moves from one job to another job. After
training the employee can change job quickly, improve his performance levels & achieve career goals
compatibly.
4. Technological changes-Technology is chaining very fast. New jobs require new skills. No
organization can miss the advantages of latest technology without well trained employees.
5. Increasing competition-Due to economic liberalization & globalization the firms are experiencing
& expansion & diversification of business & products. The kin competition has increased
uncertainties & complexities in the market. Thus, in order to face such challenges the firms has to
improve their capabilities.
TYPES OF TRAINING OR APPROACHES OF TRAINING
1. Orientation Training – It is also known as pre job induction training. This training provides new
employees with information about company policies, history, procedure pay & benefits, conditions of
employment etc. This training adjusts newly appointed employees to the work environment.
2. Skills training – This type of training is most common in organizations. The need for training in
basic skills such as reading, writing, computing, peaking, listing problem solving, leading etc. is
identified through assessment.
3. Refresher Training – Rapid changes in technology may force companies to go in for this king of
training organizing short term courses which incorporate the latest knowledge developments in a
particular field, the company may keep its employee up to date and ready to take emerging
challenges.
4. Cross functional training- Involves training employees to perform operations in areas other than
their assigned jobs. There are many approaches to cross functional training job rotation can be used
to provide a manager in one functional area with a broader perspective than they would otherwise
have departments can exchange personnel for a certain period so that each employee how other
departments are functioning.
5. Training for promotion- employees of high potential are selected & they are given training before
promotion. This training is provided when vacant posts are filled up by internal recruitment i.e. by
promotion.
6. Safety Training- This training is being provided to minimize accidents & damage to machinery. It
involves instruction in use of machinery & safety devices.
7. Apprentice Training- It is used to prepare employees for a variety of skilled occupations & crafts
for examples it is provided to tailor electrotyper, machinist, printing pressman, designer etc.
8. Internship training- It refers to joint programme of training educational institutions & business
corporate selected students carry on regular school studies for period ranging from 3 to 12 months &
then work in the factory or office for a designed period of time.
9. Remedial Training- This training has the object to overcome he short coming in the behavior and
performance of old employees. Such employees are indentified and correct work methods and
procedures are taught to them.
10. Diversity Training- Considers all of the diverse dimension in the work place, such gender, age,
disability, lifestyle, culture education, idea etc. while designing a training programme. It concentrates
on awareness building & skills building.
11. Job Training- This training is a conducted with a well increase the knowledge & skills of an
employee for improving job performance.
12. Creative Training- Involves employees to ink unconventionally, go out of the box & levies
unexpected solutions.
LEARNING DIMENSION TRAINING DEVELOPMENT
Focus Current job Current and future job
Scope Individual employee Work group or organization
Goal Fix current skill deficit Prepare for future work
Demands
Initiated by Management The individual
Content Specific job related General information
Information
Time-frame Immediate Long term
TRAINING METHODS
Training methods are usually classified by the location of instruction. On the job training is provided
when the workers are taught relevant knowledge, skills and abilities at the actual workplace; off-the-
job training, on the other hand, requires that trainees learn at a location other the real work sot. Some
of the widely used training methods are listed below.
ON THE JOB TRAINING METHODS:
1. Job instruction Training (JIT)
The JIT method (developed during World War II) is a four-step instructional process involving
preparation, presentation, performance try out and follow up. It is used primarily to teach workers
how to do their current jobs. A trainer, supervisor or co-worker acts as the coach. The four steps
followed in the JIT methods are:
1. The trainee receives an overview of the job, its purpose and its desired outcomes, with a clear
focus on the relevance of training.
2. The trainer demonstrates the job in order to give the employee a model to copy. The trainer shows
a right way to handle the job.
3. Next, the employee is permitted to copy the trainer‘s way. Demonstrations by the trainer and
practice by the trainee are repeated until the trainee masters the right way to handle the job.
4. Finally, the employee does the job independently without supervision.
2. Coaching
Coaching is a kind of daily training and feedback given to employees by immediate supervisors. It
involves a continuous process of learning by doing. It may be defined as an informal, unplanned
training and development activity provided by supervisors and peers. In coaching, the supervisor
explains things and answer questions; he throws light on why things are done the way they are; he
offers a model for trainees o copy; conducts lot of decision making meetings with trainees; procedures
are agreed upon and the trainee is given enough authority to make decisions and even commit
mistakes. Of course, coaching can be a taxing job in that the coach may not possess requisite skills to
guide the learner in a systematic way. Sometimes, doing a full day‘s work may be more important
than putting the learner on track.
3. Mentoring:
Mentoring is a relationship in which a senior manager in an organization assumes the responsibility
for grooming a junior person. Technical, interpersonal and political skills are generally conveyed in
such a relationship from the more experienced person. A mentor I a teacher, spouse, counselor,
developer of skills and intellect, host, guide, exemplar and most importantly, supporter and facilitator
in the realization of the vision the young person (protégé) has about the kind of life he wants a an
adult. The main objective is to help employees attain physiological maturity and effectiveness and get
integrated with the organization. In a work situation, such mentoring can take place at both formal and
informal levels, depending on the prevailing work culture and the commitment from the top
management. Formal mentoring can be very faithful, if management invests tie and money in such
relationship building experiences.
4. Job Rotation
This kind of training involves the moment of trainee from one job to another. This helps him to have a
general understanding of how the organization functions. The purpose of the job rotation is to provide
trainees with a larger organizational perspective and a greater understanding of different functional
area as well as a better sense of their own career objectives and interest. Apart from relieving
boredom, job rotation allows trainees to build rapport with a wide range of individuals within the
organization, facilitating future cooperation among departments. The cross-trained personnel offer a
great amount of flexibility for organizations when transfers, promotions or replacements become
inevitable.
5. Apprenticeship Training
Most craft workers such as plumbers and carpenters are trained through formal apprenticeship
programmes. Apprentices are trainees who spend a prescribed amount of time working with an
experienced guide, coach or trainer. Assistantship and internships are similar to apprenticeships
because they also demand high levels of participation from the trainee. An internship is a kind of on-
the job training that usually combines job training with classroom instruction in trade schools,
colleges or universities. Coaching, as explained above, is similar to apprenticeship because the coach
attempts to provide a model for the trainee to copy. One important disadvantage of the apprenticeship
methods is the uniform period of training offered to trainees. People have different abilities and learn
at varied rates. Those who learn fast may quite the programme in frustration. Slow learners may need
additional training time. It is also likely that in these days of rapid changes in technology, old skills
may get outdated quickly. Trainees who spend years learning specific skills may find, upon
completion of their programmes, that the job skills they acquired are no longer appropriate.
OFF-THE-JOB METHODS
Under this method of training, the trainee is separated from the job situation and his attention is
focused upon learning the material related to his future job performance. Since the trainee is not
distracted by job requirements, he can focus his entire concentration on learning the job rather than
spending his tie in performing it. There is an opportunity for freedom of expression for the trainees.
Off-the-job training methods are as follows:
a. Vestibule training: In this method, actual work conditions are simulated in a classroom. Material,
fifes and equipment – those that are used in actual job performance are also used in the training. This
type of training s commonly used for training personnel for clerical and semi-skilled jobs. The
duration of this training ranges from a few days to a few weeks. Theory can be related to practice in
this method.
b. Role playing: It is defined as a method of human interaction that involves realistic behavior in
imaginary situations. This method of training involves action, doing and practice. The participants
play the role of certain characters, such as the production manager, mechanical engineer,
superintendents, maintenance engineers, quality control inspectors, foreman, workers and the like.
Method is mostly used for developing interpersonal interactions and relations.
c. Lecture method: The lecture is a traditional and direct method of instruction. The instructor
organizes the material and gives in to a group of trainees in the form of a talk. To be effective, the
lecture must motivate and create interest among the trainees. An advantage of lecture method is that
it is direct and can be used for a large group of trainees. Thus, costs and time involved are reduced.
The major limitation of the lecture method is that it does not provide for transfer of training
effectively.
d. Conference/discussion approach: In this method, the trainer delivers a lecture and involves the
trainee in a discussion so that his doubt the job gets clarified. When big organizations use this method,
the trainees uses audio-visual aids such as black boards, mockups and slides; in some cases the
lectures are videotaped or audio taped. Even the trainee‘s presentation can be taped for self
confrontation and self-assessment.
The conference is thus, group-centered approach where there is a classification of ideas,
communication of procedures and standards to the trainees. Those individuals who have a general
educational background and whatever specific skills are required such as typing, shorthand, office
equipment operation, filing, indexing, recording etc. may ne provided with specific instructions to
handle their respective jobs.
e. Programmed instruction: This method has become popular in recent years. The subject matter to
be learned is presented in a series of carefully planned sequential units. These units are arranged
from simple to more complex levels of instruction. The trainee goes through these units by answering
questions or filing the blanks. This method is thus, expensive and time-consuming.
DIRECTING
Directing is the heart of management function. All other functions of management such as planning,
organizing, and staffing have no importance without directing. Leadership, motivation, supervision,
communication are various aspects of directing.
Directing refers to a process or technique of instructing, guiding, inspiring, counselling, overseeing
and leading people towards the accomplishment of organizational goals. It is a continuous managerial
process that goes on throughout the life of the organization. Main characteristics of Directing are as
follows:
1. Initiates Action
A directing function is performed by the managers along with planning, staffing, organizing and
controlling in order to discharge their duties in the organization. While other functions prepare a
platform for action, directing initiates action.
2. Pervasive Function
Directing takes place at every level of the organization. Wherever there is a superior-subordinate
relationship, directing exists as every manager provides guidance and inspiration to his subordinates.
3. Continuous Activity
It is a continuous function as it continues throughout the life of organization irrespective of the
changes in the managers or employees.
4. Descending Order of Hierarchy
Directing flows from a top level of management to the bottom level. Every manager exercises this
function on his immediate subordinate.
5. Human Factor
Since all employees are different and behave differently in different situations, it becomes important
for the managers to tackle the situations appropriately. Thus, directing is a significant function that
gets the work done by the employees and increases the growth of the organization.
Principles of Directing
1. Maximum Individual Contribution
One of the main principles of directing is the contribution of individuals. Management should adopt
such directing policies that motivate the employees to contribute their maximum potential for the
attainment of organizational goals.
2. Harmony of Objectives
Sometimes there is a conflict between the organizational objectives and individual objectives. For
example, the organization wants profits to increase and to retain its major share, whereas, the
employees may perceive that they should get a major share as a bonus as they have worked really
hard for it.
Here, directing has an important role to play in establishing harmony and coordination between the
objectives of both the parties.
3. Unity of Command
This principle states that a subordinate should receive instructions from only one superior at a time. If
he receives instructions from more than one superiors at the same time, it will create confusion,
conflict, and disorder in the organization and also he will not be able to prioritize his work.
4. Appropriate Direction Technique
Among the principles of directing, this one states that appropriate direction techniques should be used
to supervise, lead, communicate and motivate the employees based on their needs, capabilities,
attitudes and other situational variables.
5. Managerial Communication
According to this principle, it should be seen that the instructions are clearly conveyed to the
employees and it should be ensured that they have understood the same meaning as was intended to
be communicated.
6. Use of Informal Organization
Within every formal organization, there exists an informal group or organization. The manager should
identify those groups and use them to communicate information. There should be a free flow of
information among the seniors and the subordinates as an effective exchange of information are really
important for the growth of an organization.
7. Leadership
Managers should possess a good leadership quality to influence the subordinates and make them work
according to their wish. It is one of the important principles of directing.
8. Follow Through
As per this principle, managers are required to monitor the extent to which the policies, procedures,
and instructions are followed by the subordinates. If there is any problem in implementation, then the
suitable modifications can be made.
CONTROLLING
One of the most essential qualities required in a manager is that he should command the respect of his
team. This allows him to direct and control their actions. In fact controlling is one of his more
important functions.
Controlling is one of the important functions of a manager. In order to seek planned results from the
subordinates, a manager needs to exercise effective control over the activities of the subordinates. In
other words, the meaning of controlling function can be defined as ensuring that activities in an
organization are performed as per the plans. Controlling also ensures that an organization‘s resources
are being used effectively & efficiently for the achievement of predetermined goals.
 Controlling is a goal-oriented function.
 It is a primary function of every manager.
 Controlling the function of a manager is a pervasive function.
DEFINITIONS OF CONTROLLING:
―Managerial Control implies the measurement of accomplishment against the standard and the
correction of deviations to assure attainment of objectives according to plans.‖ – Koontz and O’
Donnell
―Control is the process of bringing about conformity of performance with planned action.‖ – Dale
Henning
IMPORTANCE OF CONTROLLING
After the meaning of control, let us see its importance. Control is an indispensable function of
management without which the controlling function in an organization cannot be accomplished and
the best of plans which can be executed can go away. A good control system helps an organization in
the following ways:
1. Accomplishing Organizational Goals
The controlling function is an accomplishment of measures that further makes progress towards the
organizational goals & brings to light the deviations, & indicates corrective action. Therefore it helps
in guiding the organizational goals which can be achieved by performing a controlling function.
2. Judging Accuracy of Standards
A good control system enables management to verify whether the standards set are accurate &
objective. The efficient control system also helps in keeping careful and progress check on the
changes which help in taking the major place in the organization & in the environment and also helps
to review & revise the standards in light of such changes.
3. Making efficient use of Resources
Another important function of controlling is that in this, each activity is performed in such manner so
an in accordance with predetermined standards & norms so as to ensure that the resources are used in
the most effective & efficient manner for the further availability of resources.
4. Improving Employee Motivation
Another important function is that controlling help in accommodating a good control system which
ensures that each employee knows well in advance what they expect & what are the standards of
performance on the basis of which they will be appraised. Therefore it helps in motivating and
increasing their potential so to make them & helps them to give better performance.
5. Ensuring Order & Discipline
Controlling creates an atmosphere of order & discipline in the organization which helps to minimize
dishonest behavior on the part of the employees. It keeps a close check on the activities of employees
and the company can be able to track and find out the dishonest employees by using computer
monitoring as a part of their control system.
6. Facilitating Coordination in Action
The last important function of controlling is that each department & employee is governed by such
pre-determined standards and goals which are well versed and coordinated with one another. This
ensures that overall organizational objectives are accomplished in an overall manner.
PROCESS OF CONTROLLING

Step 1 •Establishment of standards

Step 2 •Measurement of actual performance

Step 3 •Comparison of actual performance with the standards

Step 4 •Taking corrective actions

 Establishing standards: This means setting up of the target which needs to be achieved to meet
organisational goals eventually. Standards indicate the criteria of performance.
Control standards are categorized as quantitative and qualitative standards. Quantitative standards
are expressed in terms of money. Qualitative standards, on the other hand, includes intangible
items.
 Measurement of actual performance: The actual performance of the employee is measured
against the target. With the increasing levels of management, the measurement of performance
becomes difficult.
 Comparison of actual performance with the standard: This compares the degree of difference
between the actual performance and the standard.
 Taking corrective actions: It is initiated by the manager who corrects any defects in actual
performance.
Controlling process thus regulates companies‘ activities so that actual performance conforms to the
standard plan. An effective control system enables managers to avoid circumstances which cause the
company‘s loss.
TYPES OF CONTROL
There are three types of control viz.
 Feedback Control: This process involves collecting information about a finished task, assessing
that information and improvising the same type of tasks in the future.
 Concurrent control: It is also called real-time control. It checks any problem and examines it to
take action before any loss is incurred. Example: control chart.
 Predictive/ feedforward control: This type of control helps to foresee problem ahead of
occurrence. Therefore action can be taken before such a circumstance arises.
In an ever-changing and complex environment, controlling forms an integral part of the organization.
COORDINATION
Coordination can be defined as ―Synchronization of efforts from the stand-point of time and the
sequence of execution‖. In general coordination means bringing together the activities and resources
of organisation and bringing harmony in them.
Coordination is the base or primary function of every manager because various departments of an
organisation are working independently and there is need to relate and integrate their activities.
COORDINATION: THE ESSENCE OF MANAGEMENT:
Coordination brings unity of action and integrates different activities of organization. Coordination is
considered as the essence of management because of following reasons:
1. Coordination is needed to perform all the functions of management:
(i) In planning coordination is required between main plan and supportive plans of different
departments.
(ii) In organising coordination is required between different resources of an organization and also
between authority responsibility and accountability.
(iii) In staffing coordination is required between skill of a person and job assigned to him, between
efficiency and compensation etc.
(iv)In directing function coordination is required between superior and subordinates, between orders,
instructions, guidelines and suggestions etc.
(v) In controlling function coordination is required between standards and actual performance.

Planning

Controlling Organizing

Coordination

Directing Staffing

2. Coordination is required at all the levels:

(i) Top level requires coordination to integrate all the activities of organisation and lead the efforts of
all the individuals in one common direction.
(ii) Coordination is required at middle level to balance the activities of different departments so that
these can work as a part of one organisation only.
(iii) Lower level requires coordination to integrate the activities of workers towards achievement of
organisational objectives.
3. Coordination is the most important function of an organization:
Any company which fails to coordinate its activities cannot survive and run successfully for a long
period of time.
For example, Allwyn Company, established in 1942, was the first company to produce a double-
decker bus. It was running successfully as a leading electronic industry, especially in refrigeration
industry. By the end of 1980 the company faced the problem of coordination. There was lack of
balance and integration of different activities; as a result the company started facing huge losses and
by 1993 company had an accumulated loss of Rs. 168 crore. Company failed to balance its
departmental activities and product folios.
DIFFERENT CONTROL TECHNIQUES
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
namely-
 Traditional techniques
 Modern techniques
 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
1. Personal Observation
This is the most traditional method of control. Personal observation is one of those techniques which
enable 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.
2. 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
4. Budgetary Control
Budgetary control can be defined as such technique of managerial control in which all operations
which are necessary to be performed are executed in such a manner so as to perform and plan in
advance in the form of budgets & actual results are compared with budgetary standards.
Therefore, the budget can be defined as a quantitative statement prepared for a definite future period
of time for the purpose of obtaining a given objective. It is also a statement which reflects the policy
of that particular period. The common types of budgets used by an organization.
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
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
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.
2. 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.
5. 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.
MANAGEMENT BY EXCEPTION
Management by exception means looking at the financial and operations result of any business
enterprise. The aim is to point out the significant differences between the expected and budgeted
amounts. It happens when the company controller alerts the management of expenses that are beyond
the desired amounts. It helps to differentiate the roles of the lower-level manager from the senior
ones.
Company managers use budget reports, production schedules, and revenue reports to know about
performance and meet their goals. Some of the goals could be to complete production in a shorter
period or produce different products with no added expenses. It is the kind of information managers
use to manage the company.
HOW DOES MANAGEMENT BY EXCEPTION WORK
Management by exception occurs in four steps:
 You need to come up with objectives and define the way the business should work.
 Performance assessment is crucial to know the strength, weaknesses, and keep the performance
on track.
 Analyze the entire work and records to have an idea where the performance will deviate from the
objectives.
 The last step is to investigate and solve all the exceptions; it may sound easy but need a strategy
to execute the plan.
PRINCIPLES OF MANAGEMENT BY EXCEPTION
Management by exception is characterized by several principles, including:
1. Delegate authority
Management by exception works through the delegation of lower-priority tasks. Lower-level
managers must be granted authority to make decisions so management can concentrate on exceptional
items. Employees must also be empowered to handle more routine issues and help monitor
productivity.
2. Apply a systematic approach
There should be clear and achievable standards to measure the deviations. All must adequately follow
organizational policies. Managers and employees work together to monitor company activity. This
ensures they notice any issue that may arise and work to create solutions for these problems.
Employees and managers alike must consider the organizational structure of their company to decide
who to alert about the deviation.
3. Develop a professional growth
By setting a standard for company productivity and allowing professionals to address minor problems
independently of supervision, management by exception encourages professional growth. Employees
must be provided with training to handle all the issues under them. Their development should be made
for better results. The standard of productivity may also allow employees who are performing below
this standard to understand and visualize how to increase their work potential.
4. Foster productivity
Businesses that practice management by exception aim to foster an efficient and productive workplace
where leadership promotes their employees. Management by exception helps companies achieve this
by ensuring upper-level professionals focus on the company's development, while other professionals
help achieve the daily operation goals.
5. Promote co-partnership
When deciding on a standard of workplace production norms, companies also establish company
goals. Co-partnership means that all the managers and workers should work together to achieve these
organizational goals and objectives. Each employee works to achieve these goals by upholding
company standards.
6. Implement analysis
Managers and employees use analysis principles and skills to monitor company activity. This allows
professionals to ensure company standards and notice any issues that may arise. Managers also use
analysis to create solutions for these problems.