UNIT II

ORGANIZING

DEFINITION
According to Koontz and O'Donnell, "Organization involves the grouping of activities
necessary to accomplish goals and plans, the assignment of these activities to appropriate
departments and the provision of authority, delegation and co-ordination."

Organization involves division of work among people whose efforts must be coordinated to
achieve specific objectives and to implement pre-determined strategies.

NATURE OR CHARACTERISTICS OF ORGANIZING

From the study of the various definitions given by different management experts we get
the following information about the characteristics or nature of organization,

(1) Division of Work: Division of work is the basis of an organization. In other words, there
can be no organization without division of work. Under division of work the entire work of
business is divided into many departments .The work of every department is further sub-divided
into sub-works. In this way each individual has to do the saran work repeatedly which gradually
make that person an expert.

(2) Coordination: Under organizing different persons are assigned different works but the aim
of all these persons happens to be the some - the attainment of the objectives of the enterprise.
The nature of an organization to establish coordination among different works, departments and
posts in the enterprise.
(3) Plurality of Persons: Organization is a group of many persons who assemble to fulfill a
common purpose. A single individual cannot create an organization.

(4) Common Objectives: There are various parts of an organization with different functions to
perform but all move in the direction of achieving a general objective.

(5) Well-defined Authority and Responsibility: Under organization a chain is established

between different posts right from the top to the bottom. It is clearly specified as to what will be
the authority and responsibility of every post. In other words, every individual working in the
organization is given some authority for the efficient work performance and it is also decided
simultaneously as to what will be the responsibility of that individual in case of unsatisfactory
work performance.

(6) Organization is a Structure of Relationship: Relationship between persons working on

different posts in the organization is decided. In other words, it is decided as to who will be the
superior and who will be the subordinate.
(7) Organization is a Machine of Management: Organization is considered to be a machine of
management because the efficiency of all the functions depends on an effective organization. In
the absence of organization no function can be performed in a planned manner.
(8) Organization is a Universal Process: Organization is needed both in business and non-
business organizations. Not only this, organization will be needed where two or mom than two
people work jointly. Therefore, organization has the quality of universality.
(9) Organization is a Dynamic Process: Organization is related to people and the knowledge
and experience of the people undergo a change. The impact of this change affects the various
functions of the organizations. Thus, organization is not a process that can be decided for all
times to come but it undergoes changes according to the needs. The example in this case can be
the creation or abolition of a new post according to the need.

IMPORTANCE OR ADVANTAGES OF ORGANIZING

Organization is an instrument that defines relations among different people which helps
them to understand as in who happens to be their superior and who is their subordinate. This
information helps in fixing responsibility and developing coordination. The importance of
organization or its merits becomes clear from the following facts,

(1) Increase in Managerial Efficiency: A good and balanced organization helps the managers
to increase their efficiency. Managers, through the medium of organization, make a proper
distribution of the whole work among different people according to their ability.

(2) Proper Utilization of Resources: Through the medium of organization optimum utilization
of all the available human and material resources of an enterprise becomes possible. Work is
allotted to every individual according to his ability and capacity and conditions ant created to
enable him to utilize his ability to the maximum extent.
(3) Sound Communication Possible: Communication is essential for taking the right decision at
the right time. However, the establishment of a good communication system is possible only
through an organization. In an organization the time of communication is decided so that all the
useful information reaches the officers concerned which in turn, helps the decision-making.

(4) Facilitates Coordination: In order to attain successfully the objectives of the organization,
coordination among various activities in the organization is essential. Organization is the only
medium which makes coordination possible.
(5) Increase in Specialization: Under organization the whole work is divided into different
parts. Competent persons are appointed to handle all the sub-works and by handling a particular
work repeatedly they become specialists. This enables them to have maximum work
performance in the minimum time while the organization gets the benefit of specialization.

(6) Helpful in Expansion: A good organization helps the enterprise in facing competition. When
an enterprise starts making available good quality product at cheap rates, it increases the demand
for its products. In order to meet the increasing demand for its products, an organization has to
expand its business. On the other hand, a good organization has an element of flexibility which
far from impeding the expansion work encourages it.

ORGANIZING PROCESS

Organization is the process of establishing relationship among the members of the

enterprise. The relationships are created in terms of authority and responsibility. To organize is
to harmonize, coordinate or arrange in a logical and orderly manner. Each member in the
organization is assigned a specific responsibility or duty to perform and is granted the
corresponding authority to perform his duty. The various steps involved in this process are:
a) Determination of Objectives:

It is the first step in building up an organization. Organization is always related to certain

objectives. Therefore, it is essential for the management to identify the objectives before starting
any activity. Organization structure is built on the basis of the objectives of the enterprise. That
means, the structure of the organization can be determined by the management only after
knowing the objectives to be accomplished through the organization.

b) Enumeration of Objectives:

If the members of the group are to pool their efforts effectively, there must be proper
division of the major activities. The first step in organizing group effort is the division of the
total job into essential activities. Each job should be properly classified and grouped. This will
enable the people to know what is expected of them as members of the group and will help in
avoiding duplication of efforts. For example, the work of an industrial concern may be divided
into the following major functions – production, financing, personnel, sales, purchase, etc.

c) Classification of Activities:

The next step will be to classify activities according to similarities and common purposes
and functions and taking the human and material resources into account. Then, closely related
and similar activities are grouped into divisions and departments and the departmental activities
are further divided into sections.

d) Assignment of Duties:

Here, specific job assignments are made to different subordinates for ensuring a certainty
of work performance. Each individual should be given a specific job to do according to his
ability and made responsible for that. He should also be given the adequate authority to do the
job assigned to him. In the words of Kimball and Kimball - "Organization embraces the duties of
designating the departments and the personnel that are to carry on the work, defining their
functions and specifying the relations that are to exist between department and individuals."

e) Delegation of Authority:

Since so many individuals work in the same organization, it is the responsibility of

management to lay down structure of relationship in the organization. Authority without
responsibility is a dangerous thing and similarly responsibility without authority is an empty
vessel. Everybody should clearly know to whom he is accountable; corresponding to the
responsibility authority is delegated to the subordinates for enabling them to show work
performance. This will help in the smooth working of the enterprise by facilitating delegation of
responsibility and authority.

ORGANIZATION STRUCTURE

An organization structure is a framework that allots a particular space for a particular

department or an individual and shows its relationship to the other. An organization structure
shows the authority and responsibility relationships between the various positions in the
organization by showing who reports to whom. It is an established pattern of relationship among
the components of the organization.

Significance of Organization Structure

• Properly designed organization can help improve teamwork and productivity by providing a
framework within which the people can work together most effectively.

• Organization structure determines the location of decision-making in the organization.

• Sound organization structure stimulates creative thinking and initiative among organizational
members by providing well defined patterns of authority.

• A sound organization structure facilitates growth of enterprise by increasing its capacity to

handle increased level of authority.

• Organization structure provides the pattern of communication and coordination.

• The organization structure helps a member to know what his role is and how it relates to
other roles.

PRINCIPLES OF ORGANIZATION STRUCTURE

Modern organizational structures have evolved from several organizational theories,

which have identified certain principles as basic to any organization structure.

a) Line and Staff Relationships:

Line authority refers to the scalar chain, or to the superior-subordinate linkages, that
extend throughout the hierarchy (Koontz, O'Donnell and Weihrich). Line employees are
responsible for achieving the basic or strategic objectives of the organization, while staff plays a
supporting role to line employees and provides services. The relationship between line and staff
is crucial in organizational structure, design and efficiency. It is also an important aid to
information processing and coordination.

b) Departmentalization:

Departmentalization is a process of horizontal clustering of different types of functions

and activities on any one level of the hierarchy. Departmentalization is conventionally based on
purpose, product, process, function, personal things and place.

c) Span of Control:

This refers to the number of specialized activities or individuals supervised by one

person. Deciding the span of control is important for coordinating different types of activities
effectively.

d) De-centralization and Centralization:

De-centralization refers to decision making at lower levels in the hierarchy of authority.

In contrast, decision making in a centralized type of organizational structure is at higher levels.
The degree of centralization and de-centralization depends on the number of levels of hierarchy,
degree of coordination, specialization and span of control.

Every organizational structure contains both centralization and de-centralization, but to varying
degrees. The extent of this can be determined by identifying how much of the decision making is
concentrated at the top and how much is delegated to lower levels. Modern organizational
structures show a strong tendency towards de-centralization.
FORMAL AND INFORMAL ORGANIZATION

FORMAL ORGANIZATION

Chester I Bernard defines formal organization as -"a system of consciously coordinated activities
or forces of two or more persons. It refers to the structure of well-defined jobs, each bearing a
definite measure of authority, responsibility and accountability." The essence of formal
organization is conscious common purpose and comes into being when persons–

(i) Are able to communicate with each other

(ii)Are willing to act and

(iii) Share a purpose.

The formal organization is built around four key pillars. They are:

• Division of labor

• Scalar and functional processes

• Structure and

• Span of control

Characteristic Features of formal organization

• Formal organization structure is laid down by the top management to achieve organizational
goals.

• Formal organization prescribes the relationships amongst the people working in the
organization.

• The organization structures is consciously designed to enable the people of the organization
to work together for accomplishing the common objectives of the enterprise

• Organization structure concentrates on the jobs to be performed and not the individuals who
are to perform jobs.

• In a formal organization, individuals are fitted into jobs and positions and work as per the
managerial decisions. Thus, the formal relations in the organization arise from the pattern of
responsibilities that are created by the management.

• A formal organization is bound by rules, regulations and procedures.

• In a formal organization, the position, authority, responsibility and accountability of each

level are clearly defined.

• Organization structure is based on division of labor and specialization to achieve efficiency

in operations.
Advantages of formal organization

• The formal organization structure concentrates on the jobs to be performed. It, therefore, makes
everybody responsible for a given task.

• A formal organization is bound by rules, regulations and procedures. It thus ensures law and
order in the organization.

• The organization structure enables the people of the organization to work together for
accomplishing the common objectives of the enterprise

Disadvantages or criticisms of formal organization

• The formal organization does not take into consideration the sentiments of organizational
members.

• The formal organization does not consider the goals of the individuals. It is designed to achieve
the goals of the organization only.

• The formal organization is bound by rigid rules, regulations and procedures. This makes the
achievement of goals difficult.

INFORMAL ORGANIZATION

Informal organization refers to the relationship between people in the organization based on
personal attitudes, emotions, prejudices, likes, dislikes etc. an informal organization is an
organization which is not established by any formal authority, but arises from the personal and
social relations of the people. These relations are not developed according to procedures and
regulations laid down in the formal organization structure; generally large formal groups give rise
to small informal or social groups. These groups may be based on same taste, language, culture or
some other factor. These groups are not pre-planned, but they develop automatically within the
organization according to its environment.

Characteristics features of informal organization

• Informal organization is not established by any formal authority. It is unplanned and arises
spontaneously.

• Informal organizations reflect human relationships. It arises from the personal and social
relations amongst the people working in the organization.

• Formation of informal organizations is a natural process. It is not based on rules, regulations

and procedures.

• The inter-relations amongst the people in an informal organization cannot be shown in an

organization chart.

• In the case of informal organization, the people cut across formal channels of communications
and communicate amongst themselves.

Benefits of Informal organization

• It blends with the formal organization to make it more effective.

• Many things which cannot be achieved through formal organization can be achieved through
informal organization.

• The presence of informal organization in an enterprise makes the managers plan and act more
carefully.

• An informal organization has a powerful influence on productivity and job satisfaction.

DIFFERENCES BETWEEN FORMAL AND INFORMAL ORGANIZATION

Formal Organization Informal Organization

1. Formal organization is established with the explicit 1. Informal organization springs on its
aim of achieving well-defined goals. own. Its goals are ill defined and
intangible.

2. Formal organization is bound together by 2. Informal organization is characterized

authority relationships among members. A by a generalized sort of power
hierarchical structure is created, constituting top relationships. Power in informal
management, middle management and supervisory organization has bases other than
management. rational legal right.

3. Formal organization recognizes certain tasks 3. Informal organization does not have
which are to be carried out to achieve its goals. any well-defined tasks.

4. The roles and relationships of people in formal 4. In informal organization the

organization are impersonally defined relationships among people are
interpersonal.

5. In formal organization, much emphasis is placed 5. Informal organization is characterized

on efficiency, discipline, conformity, consistency and by relative freedom, spontaneity, by
control. relative freedom, spontaneity,
homeliness and warmth.

6. In formal organization, the social and 6. In informal organization the

psychological needs and interests of members of the Socio psychological needs, interests and
organization get little attention. aspirations of members get priority.

7. The communication system in formal organization 7. In informal organization, the

follows certain pre-determined patterns and paths. communication pattern is haphazard,
intricate and natural.

8. Formal organization is relatively slow to respond 8. Informal organization is dynamic and

and adapt to changing situations and realities. very vigilant. It is sensitive to its
surroundings.
Types of Formal Organisation Structures

1. Line Organisation: Line organisation is the simplest and oldest form of organisation struc-
ture. It is called as military or departmental or scalar type of organization. Under this system, au-
thority flows directly and vertically from the top of the managerial hierarchy ‘down to different
levels of managers and subordinates and down to the operative level of workers.

Advantages of Line Organization:

a. The line organization structure is very simple to understand and simple to operate.
b. Communication is fast and easy and feedback can be acted upon faster.
c. Responsibility is fixed and unified at each level and authority and accountability are clear-cut,
hence each individual knows to whom he is responsible and who is or in truth responsible to him.
d. Since it is especially useful when the company is small in size, it provides for greater control
and discipline in the organization.
e. It makes rapid decisions and effective coordination possible. So it is economic and effective.
f
Disadvantages of Line Organization:
a. It is a rigid and inflexible form of organization.
b. There is a tendency for line authority to become dictatorial.
c. It overloads the executive with pressing activities so that long-range planning and policy for-
mulation are often neglected.,
d. There is no provision for specialists and specialization, which is essential for growth and opti-
misation.
e. Different departments may be much interested in their self-interests, rather than overall organi-
zational interests and welfare.

2. Line and Staff Organisation

In an organization, the line authority flows from top to bottom and the staff authority is
exercised by the specialists over the line managers who advise them on important matters. These
specialists stand ready with their specialty to serve line mangers as and when their services are
called for, to collect information and to give help which will enable the line officials to carry out
their activities better. The staff officers do not have any power of command in the organization
as they are employed to provide expert advice to the line officers. The 'line' maintains discipline
and stability; the 'staff' provides expert information. The line gets out the production, the staffs
carries on the research, planning, scheduling, establishing of standards and recording of
performance.

Features of line and staff organization

• Under this system, there are line officers who have authority and command over the
subordinates and are accountable for the tasks entrusted to them. The staff officers are
specialists who offer expert advice to the line officers to perform their tasks efficiently.

• Under this system, the staff officers prepare the plans and give advice to the line officers and
the line officers execute the plan with the help of workers.

• The line and staff organization is based on the principle of specialization.

Advantages

• It brings expert knowledge to bear upon management and operating problems. Thus, the
line managers get the benefit of specialized knowledge of staff specialists at various
levels.

• The expert advice and guidance given by the staff officers to the line officers benefit the
entire organization.

• As the staff officers look after the detailed analysis of each important managerial activity,
it relieves the line managers of the botheration of concentrating on specialized functions.

• Staff specialists help the line managers in taking better decisions by providing expert
advice. Therefore, there will be sound managerial decisions under this system.

Disadvantages
 • Unless the duties and responsibilities of the staff members are clearly indicated by charts
and manuals, there may be considerable confusion throughout the organization as to the
functions and positions of staff members with relation to the line supervisors.

• There is generally a conflict between the line and staff executives. The line managers feel
that staff specialists do not always give right type of advice, and staff officials generally
complain that their advice is not properly attended to.

• The staff experts may be ineffective because they do not get the authority to implement
their recommendations.

3. Functional Organisation:
The functional organisation was evolved by F.W. Taylor while he was working as a foreman. He
suggested eight foremen, four in factory and four in planning division as under.
Factory Division:
(i) The gang boss,
(ii) The speed boss,
(iii) The inspector, and
(iv) The maintenance or repair boss.
Planning Division:
(i) Route Clerk,
(ii) Instruction card clerk,
(iii) Time and cost clerk, and
(iv) The shop disciplinarian.
He evolved his functional organisation system, which consists in “so dividing the work of man-
agement that each man, from the assistant superintendent down, shall have as few functions as
possible to perform.”
According to Terry, “Functional organisation refers to the organisation which is divided into a
number of functions such as finance, production, sales, personnel, office and research and devel-
opment and each of functions are performed by an expert”. Line authority, staff authority and
functional authority as a third type of authority are in this type of organisation.
Features of Functional Organisation:
a. Each worker receives instructions not only from one superior, but also from a group of special-
ists.
b. Three types of authority relationships are in the functional organisation such as line authority,
staff authority and functional authority.
c. Staff specialists are given the authority to decide and do things in a limited way.
d. The scope of the work is kept limited but the area of authority is left unlimited.
e. There is a grouping of activities of the enterprise into certain major functional departments.
Advantages of Functional Organisation:
a. Each manager is an expert in his field. He has to perform a limited number of functions. So
complete specialisation will be in functional organisation.
b. The greater degree of specialisation leads the improvement in the quality of product.
c. Since the job requirements are definite and tangible, organisation can achieve the intensive
utilisation of the principle of specialisation of labour at the managerial level.
d. Specialisation will lead for mass production and standardisation.
e. Since experts get sufficient time for creative thinking, planning and supervision are made effi-
cient.
f. It increases the work satisfaction for specialists who presumably do what they like to do.
Disadvantages of Functional Organisation:
a. Since there is no direct boss or controller of the workers, co-ordination is hard to achieve.
b. Since workers are under different bosses, discipline is hard to achieve. As results there will be
low morale on the part of the workers.
c. The non-supervisory employees are uncertain as to whom they should turn for advice and aid
when problem call for analysis.
d. Due to that control is divided, action cannot be taken immediately.
e. Since there will be many foreman of equal rank in the same department, the conflicts of lead-
ership may arise.

4. Project Organisation: This organisational structure are temporarily formed for specific
projects for a specific period of time, for the project of achieving the goal of developing new
product, the specialists from different functional departments such as production, engineering,
quality control, marketing research etc., will be drawn to work together. These specialists go
back to their respective duties as soon as the project is completed.
Really, the project organisation is set-up with the object of overcoming the major weakness of
the functional organisation, such as absence of unity of command, delay in decision-making, and
lack of coordination.
The project organization chart may be shown as follows:

Advantages of Project Organisation:

a. It is a remarkable illustration of relationship between environment, strategy and structure.
b. The grouping of activities on the basis of each project results in introduction of new authority
patterns.
c. Since the specialists from different departments is drawn to work together under the project or-
ganisation it helps to coordination.
d. It makes for meaningful control and fixation of individual responsibility.
Disadvantages of Project Organisation:
a. The uncertainty may be attributed to the diverse backgrounds of the professional who are de-
puted to the project.
b. The project manager finds it difficult to motivate and control the staff in a traditional way in
the absence of well-defined areas of responsibility lines of communication and criteria to judge
performance.
c. Delay in completion of the project may occur.
d. Effective project management may also be hindered by the top management who may not be
wholly are of the problems at the project centre.
5. Matrix Organisation:
Matrix structure is, in a sense, a combination and interaction of project and functional structures
and is suggested to overcome the problems associated with project and functional structures indi-
vidually. The key features of a matrix structure are that the functional and project lines of author-
ity are super-imposed with each other and are shared by both functional and project managers.
The project managers are generally responsible for overall direction and integration of activities
and resources related to the project. They are responsible for accomplishing work on schedule
and within the prescribed budget. They are also responsible for integrating the efforts of all func -
tional managers to accomplish the project and directing and evaluating project activity. The func-
tional managers are concerned with the operational aspects of the project. The functional struc-
ture is primarily responsible for:
1. Providing technical guidance for the project.
2. Providing functional staff that is highly skilled and specialized.
3. Completing the project within prescribed technical specifications.
Advantages of Matrix Organisation:
1. Since there is both vertical and horizontal communication it increases the coordination and
this coordination leads to greater and more effective control over operations.
2. Since the matrix organisation is handling a number of projects, available resources will be
used fully.
3. It focuses the organisational resources on the specified projects, thus enabling better planning
and control.
4. It is highly flexible as regards adherence to rules, procedures etc. Here experience is the best
guide to establishing rules and procedures.
5. As any department or division has to harness its effort towards accomplishment of a single
project, employees are effectively motivated.
Disadvantages of Matrix Organisation:
1. Since, there is more than one supervisor for each worker, it causes confusion and conflicts and
reduce effective control.
2. There is continuous communication both vertically as well horizontally, which increases paper
work and costs.
3. It is difficult to achieve a balance below on the projects technical and administrative aspects.
• Since staff managers are not accountable for the results, they may not be performing their
duties well.

• Line mangers deal with problems in a more practical manner. But staff officials who are
specialists in their fields tend to be more theoretical. This may hamper coordination in the
organization.
CENTRALIZATION AND DECENTRALIZATION

Meaning of Centralization
Centralization is a form of organizational structure where the decision making capability rests
with the top management. A couple of hand-picked members are entitled to create strategies, de-
termine the goals and objectives based on which an organization will function.
In a centralized organization, the top management sets rules and procedures which are then com -
municated to the lower-level employees, who are expected to carry out the same without ques-
tioning the authority.
The advantage of such a structure is, it allows employees to have a well-defined framework
within which all work needs to carried out.
The disadvantage of such a structure is that it increases the time taken to arrive at a decision. As
decision-making authority lies with selected people from top management, it may result in biased
decision making.

Meaning of Decentralization
Decentralization is another form of organizational structure that functions by delegating deci-
sion-making capabilities to multiple teams across geographies.
In such an organization, most of the planning, strategy and decision to implement them are taken
by the people in the middle and lower level of management.
The advantage of decentralization is that the employees are empowered to make their own deci-
sions that will benefit the organization, which results in a high level of employee satisfaction and
boosts the productivity of an organization.
Decentralization enables low-level employees to gain leadership skills, which can contribute to
the growth of the organization in the long run.
Difference between centralization and decentralization

Decentralization Centralization

Definition

Decision-making capabilities delegated across multiple Decision-making capability rests with the top
levels management

Flow of Information

Open and free Vertical

Ideal for

Decentralization is ideal for large-sized organizations Centralization is ideal for small-sized

organizations
Decision-making speed

Significantly faster Comparatively slow

People Involved

In decentralization, a higher number of people from In centralization, only a few handpicked people
each level are involved in the decision-making process are involved in the decision-making process

Employee Motivation

Highly motivated employee Demotivated employee

Conflict in Decision

Most likely to occur Least likely to occur

Burden

The burden gets shared among many levels Only one group is carrying the burden

Stability

Subject to instability due to multiple conflicting Relatively stable as decisions are made by a
decisions central authority sharing a common ideology

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

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

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

• Clear chain of command

• Focused vision

• Decreased expenses

• Fast execution of choices/decisions

Disadvantages of Centralization
• Neglected functions for middle level and less motivated beside personnel.
• Delay decision making
•

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

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

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

STAFFING

Staffing involves filling the positions needed in the organization structure by

appointing competent and qualified persons for the job.

The staffing process encompasses man power planning, recruitment, selection, and
training.

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

b) Recruitment:

Recruitment is the process of finding and attempting to attract job candidates who
are capable of effectively filling job vacancies.

Job descriptions and job specifications are important in the recruiting process because
they specify the nature of the job and the qualifications required of job candidates.

c) Selection:

Selecting a suitable candidate can be the biggest challenge for any organization.
The success of an organization largely depends on its staff. Selection of the right
candidate builds the foundation of any organization's success and helps in reducing
turnovers.

d) Training and Development:

Training and Development is a planned effort to facilitate employee learning of

job-related behaviors in order to improve employee performance. Experts sometimes
distinguish between the terms “training” and “development”; “training” denotes efforts to
increase employee skills on present jobs, while “development” refers to efforts oriented
toward improvements relevant to future jobs.

RECRUITMENT PROCESS

Recruitment is the process of finding and attempting to attract job candidates who are
capable of effectively filling job vacancies. The recruitment process consists of the
following steps:
a) Identification of vacancy:

The recruitment process begins with the human resource department receiving
requisitions for recruitment from any department of the company. These contain:

• Posts to be filled

• Number of persons

• Duties to be performed

• Qualifications required

b) Preparation of job description and job specification:

A job description is a list of the general tasks, or functions, and responsibilities of a

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

c) Selection of sources:

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

d) Advertising the vacancy:

After choosing the appropriate sources, the vacancy is communicated to the

candidates by means of a suitable media such as television, radio, newspaper, internet,
direct mail etc.

e) Managing the response:

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

Sources of Recruitment

Recruitment involves searching for the right candidates and motivating them to apply for
the openings in the organization. Here sources of recruitment are two types i.e., internal
sources and external sources.

Internal Sources

1. Transfers
The employees of the organization are transferred to the similar jobs of other depart-
ments. It may not involve a change in salary, responsibility, and position of the job.
Transfers help in reducing the boredom and monotony of the employees or it may be
used to fill the vacancies with suitable internal candidates.

2. Promotions
Promotions involve vacancies of the organization are filled by promoting the skilled em-
ployees to the suitable jobs and it can motivate the employees by giving higher positions,
increased salary, status, and responsibility. Promotions can help in reducing employee
turnover by creating the hope of getting higher positions.

3. Demotions
Depending on the performance of the employees of the organizations, sometimes man-
agers have to take decisions regarding lowering the positions of few employees of the or-
ganization. These employees can act as a source of recruitment to the lower positions.

4. Employees of the organization

Employees of the organization communicate or inform about the vacant positions of the
organization to their friends and relatives. In many organizations, they allowed referring
potential candidates for the suitable vacancies.

5. Retired employees
If the organizations do not find the right persons to fulfil the key managerial positions
then they call back the retired employees for achieving the objectives.
6. Retrenched Employees:
7. Relatives or dependents of deceased employees

Advantages of internal sources recruitment

 When the existed employees are given a chance to get the higher positions of
the organization then the employee loyalty increases towards the organization.
 It highly motivates the employees and helps in maximizing the job satisfac-
tion.
 Existed employees of the organization are well known about the organization
culture.
 Internal sources of recruitment highly reduce efforts and cost.
 It helps in reducing the employee turnover.
 It creates a scope to get a competitive advantage by recruiting the skilled em-
ployees for the higher positions.
 It helps in maximizing job security and job satisfaction
 Transfers from one department to another department helps in eliminating
boredom and monotony in employees.
 It helps in reducing the efforts of induction programs.

Disadvantages of internal sources of recruitment

 Internal sources of recruitment reduce the scope of finding skilled and more
efficient people.
 The introduction of new methods and strategies may not always possible with
this approach.
 Losing more efficient persons from the external environment becomes a com-
petitive advantage to the competitors.
 This approach is not suitable for all the organizations

External sources of recruitment

External sources of recruitment involve motivating the skilled and more efficient candid-
ates external to the organization to apply for the vacant positions in the organization. Job
openings are informed to the external environment by using various methods such as ad-
vertisements, campus recruitment, employment exchanges, walk in interviews, organiza-
tional websites, job fairs, and job portals.

1. Advertisements
To find the skilled and more efficient manpower giving advertisement for the vacant job
position is the better way. Advertisements help in attracting the right candidates and in
maximizing brand image. Advertisements may be given in print media or electronic me-
dia, it gives better results and it is cheaper than approaching third parties.

2. Job portals
With the growing technology and internet usage, job portals are playing a major role in
finding right candidates for right jobs. Job portals can inform up to date job alerts to the
candidates and offer attractive benefits and packages to the employers. The tools and
techniques used by the job portals highly reduce the efforts in finding the skilled candid-
ates.

3. Company’s websites
With the increase in business operations and globalization, the need for human resources
is also increasing day by day. To face a severe competition and to reduce the cost during
the long run, many companies are setting up their own websites for finding and attracting
candidates with competitive skills.

4. Social networking sites

Communicating about vacant positions of the organization through social networking
sites help in motivation and attracting the highly skilled and more efficient candidates to
apply for the jobs.

5. Placement agencies
Approaching placement agencies reduces the time and efforts to find the right candidates
from the pool of skilled candidates. They use various tools and techniques to filter the re -
sumes and they send it to the companies for further processing. The main drawback of
this method is commission basis on hiring the candidates.

6. Job fairs and walk in interviews

Walk in interviews and job fairs are declared and conducted by companies to find the
skilled candidates. Following this method highly reduces efforts in finding more efficient
human resources for the bulk requirement.

7. Campus interviews
This is an easy and economical method helps in finding eligible candidates, through this
method organization can find energetic and more competitive candidates for suitable va-
cancies, this method is beneficial for both the candidates and companies.
8. Employment Exchange

SELECTION PROCESS

Selecting a suitable candidate can be the biggest challenge for any organization.
The success of an organization largely depends on its staff. Selection of the right
candidate builds the foundation of any organization's success and helps in reducing
turnovers.

Though there is no fool proof selection procedure that will ensure low turnover and high
profits, the following steps generally make up the selection process-

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

b) Preliminary Interview:

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

c) Filling Application Form

A candidate who passes the preliminary interview and is found to be eligible for the job is
asked to fill in a formal application form. Such a form is designed in a way that it records
the personal as well professional details of the candidates such as age, qualifications,
reason for leaving previous job, experience, etc.

d) Personal Interview

Most employers believe that the personal interview is very important. It helps them in
obtaining more information about the prospective employee. It also helps them in
interacting with the candidate and judging his communication abilities, his ease of
handling pressure etc. In some Companies, the selection process comprises only of the
Interview.

e) References check

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

f) Background Verification

A background check is a review of a person's commercial, criminal and (occasionally)

financial records. Employers often perform background checks on employers or
candidates for employment to confirm information given in a job application, verify a
person's identity, or ensure that the individual does not have a history of criminal activity,
etc., that could be an issue upon employment.

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

h) Physical Examination

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

i) Job Offer

A candidate who clears all the steps is finally considered right for a particular job and is
presented with the job offer. An applicant can be dropped at any given stage if considered
unfit for the job.
TRAINING AND DEVELOPMENT

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

improves the employee's performance on the current job and prepares them for an
intended job. Purpose of Training:

1) To improve Productivity: Training leads to increased operational productivity and

increased company profit.

2) To improve Quality: Better trained workers are less likely to make operational
mistakes.

3) To improve Organizational Climate: Training leads to improved production and

product quality which enhances financial incentives. This in turn increases the overall
morale of the organization.

4) To increase Health and Safety: Proper training prevents industrial accidents.

5) Personal Growth: Training gives employees a wider awareness, an enlarged skill base
and that leads to enhanced personal growth.

Steps in Training Process:

Analyze: The first step in developing a training program is to identify and assess needs.
Employee training needs may already be established in the organization’s strategic,
human resources or individual development plans. In this step training needs assessment
is conducted to identify the objectives of training programme.

• Organizational Analysis: Allocation of resources that relate to organizational goal.

• Task Analysis: Determination of a specific Knowledge, skills and attitude
required for a particular task.
• Person Analysis: Knowledge, attitude and skill one must possess for attainment of
organizational objectives

Design: The design stage is when it all starts to come to life. By relying on the informa-
tion we have discovered in the first stage, the analysis, we take the first steps towards cre-
ating our training program. This includes training methods, duration, and structure, so all
of the assessments done previously.

The design stage is also when we create the prototype of our courses and create a general
scheme for the training. In this step, we will have to set the learning objectives, exercises,
content, subject matter analysis, lesson planning, instruments, and media selection.

Development: The development stage is the stage when we start creating everything. By
relying on the prototype we have previously designed, we begin to develop the course
content. Programmers develop the technologies, content creators do the content, etc. This
is the most important phase of training development, so this is where most of the work is
done.

Implementation: The implementation phase develops procedures for training facilitators

and learners. Training facilitators cover the course curriculum, learning outcomes, a
method of delivery, and testing procedures. The implementation phase is where the train-
ing program comes to life. Organizations need to decide whether training will be de-
livered in-house or externally coordinated. Program implementation includes the schedul-
ing of training activities and organization of any related resources (facilities, equipment,
etc.).

Evaluation: As mentioned in the last segment, the training program should be continually
monitored. At the end, the entire program should be evaluated to determine if it was suc-
cessful and met training objectives. Feedback should be obtained from all stakeholders to
determine program and instructor effectiveness and also knowledge or skill acquisition.

TRAINING METHODS
Training methods can be broadly classified as on-the-job training and off-the-job training
a) On-the-job training
Under these methods new or inexperienced employees learn through observing peers or
managers performing the job and trying to imitate their behaviour. These methods do not
cost much and are less disruptive as employees are always on the job, training is given on
the same machines and experience would be on already approved standards, and above
all the trainee is learning while earning. Some of the commonly used methods are:

1. Coaching:
Coaching is a one-to-one training. It helps in quickly identifying the weak areas and tries
to focus on them. It also offers the benefit of transferring theory learning to practice. The
biggest problem is that it perpetrates the existing practices and styles. In India most of the
scooter mechanics are trained only through this method.

2. Mentoring:

The focus in this training is on the development of attitude. It is used for managerial em-
ployees. Mentoring is always done by a senior inside person. It is also one-to- one inter-
action, like coaching.

3. Job Rotation:
It is the process of training employees by rotating them through a series of related jobs.
Rotation not only makes a person well acquainted with different jobs, but it also allevi-
ates boredom and allows to develop rapport with a number of people. Rotation must be
logical.

4. Job Instructional Technique (JIT):

It is a Step by step (structured) on the job training method in which a suitable trainer (a)
prepares a trainee with an overview of the job, its purpose, and the results desired, (b)
demonstrates the task or the skill to the trainee, (c) allows the trainee to show the demon -
stration on his or her own.

5. Apprenticeship:
Apprenticeship is a system of training a new generation of practitioners of a skill. This
method of training is in vogue in those trades, crafts and technical fields in which a long
period is required for gaining proficiency. The trainees serve as apprentices to experts for
long periods. They have to work in direct association with and also under the direct su-
pervision of their masters.

6. Understudy:
In this method, a superior gives training to a subordinate as his understudy like an assist-
ant to a manager or director (in a film). The subordinate learns through experience and
observation by participating in handling day to day problems. Basic purpose is to prepare
subordinate for assuming the full responsibilities and duties.

b) Off-the-job training
This occurs when workers are taken away from their place of work to be trained. This
may take place at training agency or local college, although many larger firms also have
their own training centres. Training can take the form of lectures or self-study and can be
used to develop more general skills and knowledge that can be used in a variety of
situations. The various types of off-the-job training are

(i) Instructor presentation: The trainer orally presents new information to the trainees,
usually through lecture. Instructor presentation may include classroom lecture, seminar,
workshop, and the like.
(ii)Group discussion: The trainer leads the group of trainees in discussing a topic.

(iii) Demonstration: The trainer shows the correct steps for completing a task, or shows
an example of a correctly completed task.

(iv) Assigned reading: The trainer gives the trainees reading assignments that provide
new information.

(v) In basket Exercise: The trainer assigns problems to be solved either on paper or in
real situations related to the topic of the training activity.

(vi) Case study: The trainer gives the trainees information about a situation and directs
them to come to a decision or solve a problem concerning the situation.

(vii)Role play: Trainees act out a real-life situation in an instructional setting.

(viii)Field visit and study tour: Trainees are given the opportunity to observe and interact
with the problem being solved or skill being learned.

(ix) Simulation

(x) Vestibule training

(xi) Management Games

Development

Development has a broader meaning. Its aim is to grow or improve the overall personal-
ity of an individual. It is continuous process and is on the initiative from individual.
Development is to meet an individual’s future needs. Efforts towards development of-
ten depend on personal drive and ambition. It helps individual in the progress to-
wards maturity and actualisation of their potential capacities. Development is
whole process by which employee learns, grows, improves his abilities to per-
form variety of roles within and outside the organization. He acquires socially desir-
able attitudes and values.
Difference between Training and Development
Training Development
Short term process. Long term process.

Knowledge and skills for a specific pur- For overall development.

pose.
Primary related to technical skills learn- Related to managerial, behavioral and at-
ing. titude development.

Training is a reactive process to meet Development is a reactive to meet future

current need. needs.

From management management-external From individual himself-internal motiva-

motivation. tion.

Develops specific job related skills. Develops total personality.

Training is for non-managerial person- Development is for managerial person-

nel. nel.

Induction, Orientation and Placement

Induction, Orientation and Placement: Induction means introducing a new worker to his job,
his co-workers and basic objectives and policies of the organization. This kind of initiation is
helpful for an employee in settling himself to his new job. This can be achieved by supplying the
new employee all relevant information about his job and the organization through printed / writ-
ten document (staff manual) and verbal explanation by his immediate superior / supervisor.

The induction and orientation programmes are meant for any person at any level while
appointed because the newly appointed persons are not expected to perform the jobs with much
efficiency. They must get acclimatized to new work environment of the library.

a) Purpose of Induction and Orientation Programme: The purpose of induction and orienta-
tion programme is-

i) To be acquainted with the objective, function, general policies and services of the library.
ii) To create a sense of belonging to the institution.

iii) To gain confidence in the particular department in which he /she shall have to work.

iv) To gain acclimatized or confidence in the new work environment.

v) To understand his/her own responsibilities.

vi) To motivate them to give their best.

The above purposes are achieved by a well designed orientation programme. First of all
the new comers have been provided information in general about the library and the parent insti-
tution, the objectives, goals, functions and activities of the library. They should know rules and
regulations of the library, manner of working in the library. They should also know the organiza-
tional chart and hierarchy order of management, their respective duties and responsibilities and
their specific rules in the work situation. The programme should include the library’s activities,
services rendered, past achievement, relationship with other libraries and plans and programs for
future development and the like. A special preference should be given to the particular depart-
ment, in which the newly recruited persons shall have to work. They should also make a tour to
the library to be introduced with other staff, to be acquainted with the library procedures.

b) Placement: After induction and orientation the jobs to be performed by the newly appointed
members are handed over. Placement implies the assigning or a right job to the right person.
Proper placement is instrumental in increasing output. It avoids wastage of human energy which
may occur by absenteeism or accident. On the other hand a misplaced employee is a liability to
the institution. He may cause serous damage to machinery and other equipment.

Controlling

Controlling consists of verifying whether everything occurs in conformities with the

plans adopted, instructions issued and principles established. Controlling ensures that
there is effective and efficient utilization of organizational resources so as to achieve the
planned goals. Controlling measures the deviation of actual performance from the stan-
dard performance, discovers the causes of such deviations and helps in taking corrective
actions

According to Brech, “Controlling is a systematic exercise which is called as a process of

checking actual performance against the standards or plans with a view to ensure ade-
quate progress and also recording such experience as is gained as a contribution to possi-
ble future needs.”

According to Donnell, “Just as a navigator continually takes reading to ensure whether he

is relative to a planned action, so should a business manager continually take reading to
assure himself that his enterprise is on right course.”
Controlling has got two basic purposes

1. It facilitates co-ordination
2. It helps in planning

Features of Controlling Function

Following are the characteristics of controlling function of management-

1. Controlling is an end function- A function which comes once the performances

are made in conformities with plans.
2. Controlling is a pervasive function- which means it is performed by managers at
all levels and in all type of concerns.
3. Controlling is forward looking- because effective control is not possible without
past being controlled. Controlling always look to future so that follow-up can be
made whenever required.
4. Controlling is a dynamic process- since controlling requires taking reviewal
methods, changes have to be made wherever possible.
5. Controlling is related with planning- Planning and Controlling are two insepa-
rable functions of management. Without planning, controlling is a meaningless
exercise and without controlling, planning is useless. Planning presupposes con-
trolling and controlling succeeds planning.
6. Control is a continuous activity: It does not stop anywhere. According to
Koontz and O’Donnell “Just as the navigator continually takes readings to ascer-
tain the right course so should be the business manager continually take readings
to assure himself that his enterprise or department is of the course.”

Importance of controlling
1) Accomplishing organizational goals
The process of controlling helps in accomplishing organizational goals or objectives. The
controlling guides the activities of subordinates in achieving the goals. It ensures the use
of human and material resources in the best possible manner so that there may be pre-de-
termined objectives of the organization.
2) Judging accuracy of the standards
A manager compares the actual work performance with the standards while performing
the function of controlling. He tries to find out whether the accuracy of the standards is
not more or less than the general standards. In case of the needs, they are redefined.
3) Improves efficiency
The organization sets the goal for future which is not certain. So, controlling is the way
which focuses on uncertainty and to attain the goals. Regular control shows the deviation
in plan and actual achievement which helps to keep the staffs on the right track.
4) Improve employee motivation
Motivation is defined as the process of inspiring someone for doing something. Control-
ling makes all the employees to work with complete dedication as they know that their
work performance will be evaluated. Their identity will be established if the progress re-
port is satisfactory in the organization.
5) Ensuring order and discipline
The implementation of controlling help to check all the undesirable activities like theft,
corruption, delay in work and uncooperative attitude. Controlling ensures order and disci-
pline, Ensuring order and discipline is also one of the importance of controlling.
6) Facilitate coordination
A good control system facilitates coordination among the departments and employees.
Controlling facilitates coordination by providing the unity of direction. Controlling helps
to secure co-ordination by avoiding the overlapping and duplication of works and
promptly correcting the deviations.
7) Guides in achieving goals
The process of control provides standards or norms for appraisal and management of ac-
tual performance. The essence of control is adherence to planning. It provides feedback
information for taking remedial actions. Through, controlling managers keep the organi-
zation on the right track and ensure attainment of planned goals.
8) Simplifies supervision
Controlling helps to simplify the task of the supervisor by printing out significant devia-
tions from the standards of performance. It keeps the subordinates under check and facili-
tates to maintain and develop the discipline among them. Controlling helps to check and
supervise the activity of the organization. Controlling makes the process of supervision
easier.
9) Effective delegation of authority
The effective delegation of authority helps in the proper system of controlling. The dele-
gation of authority will be meaningless without the adequate system of controlling.
Therefore, management must develop the proper technique of controlling in the organiza-
tion.
10) Corrective action
When the results do not match the objectives then corrective actions need to be taken to
correct the weakness and problems. Since the corrective action is the essence of control-
ling. It is also one of the importance of controlling.
11) Smooth operation of the organization
The controlling is the means for implementing the activities of the organization. So, the
controlling system is required for the smooth operation of the organization. Controlling
helps to correct significant deviations and smoothens the overall performance.
13) Cost
Control ensures organizational efficiency and effectiveness. The Proper control system
can make significant contribution to the reduction of operational costs as well as to the
maximization of output. They eliminate waste and duplication of effort while lowering
labor costs and increasing output quantity.
14) Better planning
Planning and controlling are the important managerial functions. Control is the only
means to ensure that plans are being implemented in the real sense. It also provides infor -
mation on the basis of which better plans can be formulated in future. Without controlling
planning is meaningless.
The controlling helps to find out whether the production is being carried out with the or-
ders received. If not, the causes of deviation are found out and corrective action is initi -
ated in the organization. Therefore, the coordination between both the departments is es-
tablished for proper functioning of the organization.
Types of Control

1. Feed forward Control: Feed forward control focuses on the regulation of inputs (hu-
man, material, and financial resources that flow into the organization) to ensure that they
meet the standards necessary for the transformation process. Feed forward controls are
desirable because they allow management to prevent problems rather than having to cure
them later. However these controls require timely and accurate information that is often
difficult to obtain or develop.

2. Concurrent Control: Concurrent control takes place while an activity is in progress. It

involves the regulation of ongoing activities that are part of transformation process to en-
sure that they conform to organizational standards. Concurrent control is designed to en-
sure that the work activities of the employees produce the correct results. Since concur-
rent control involves regulating ongoing tasks, it requires a thorough understanding of the
specific tasks involved and their relationship to the desired end product. Concurrent con-
trol often involves checkpoints at which determinations are made about whether to con-
tinue progress, take corrective action, or stop work altogether on the tasks, products or
services.

3. Feedback Control: Feedback control focuses on the outputs of the organization after
transformation is complete. It fulfills a number of important functions. It often is used
when feed forward and concurrent controls are not feasible or are too costly. Sometimes,
feedback is the only viable type of control available. Further feedback control has two ad-
vantages over feed forward and concurrent control. The first advantage is that it provides
management with meaningful information on how effective its planning effort was. If
feedback indicates little variance between standard and actual performance, this is evi-
dence that planning was generally on target. If the deviation is great then management
can use this information when formulating new plans to make them more effective. The
second advantage of the feedback control is that it can enhance employees motivation.
The major drawback of this type of control is that, the time the management has the in-
formation and if there is a significant delay, the damage is already done. But for many ac-
tivities, feedback control fulfils a number of important functions.
Feed forward, concurrent, and feedback control methods are not mutually exclusive.
Rather, they usually are combined into a multiple control system. Management normally
design control systems to define standards of performance and acquire information feed-
back at strategic control points.

Process of Controlling

Controlling as a management function involves following steps:

1. Establishment of standards- Standards are the plans or the targets which have to
be achieved in the course of business function. They can also be called as the cri-
terions for judging the performance. Standards generally are classified into two-
 a. Measurable or tangible - Those standards which can be measured and ex-
pressed are called as measurable standards. They can be in form of cost,
output, expenditure, time, profit, etc.
b. Non-measurable or intangible- There are standards which cannot be mea-
sured monetarily. For example- performance of a manager, deviation of
workers, their attitudes towards a concern. These are called as intangible
standards.

Controlling becomes easy through establishment of these standards because con-

trolling is exercised on the basis of these standards.

2. Measurement of performance- The second major step in controlling is to mea-

sure the performance. Finding out deviations becomes easy through measuring the
actual performance. Performance levels are sometimes easy to measure and some-
times difficult. Measurement of tangible standards is easy as it can be expressed
in units, cost, money terms, etc. Quantitative measurement becomes difficult
when performance of manager has to be measured. Performance of a manager
cannot be measured in quantities. It can be measured only by-
a. Attitude of the workers,
b. Their morale to work,
c. The development in the attitudes regarding the physical environment, and
d. Their communication with the superiors.

It is also sometimes done through various reports like weekly, monthly, quarterly,
yearly reports.

3. Comparison of actual and standard performance- Comparison of actual per-

formance with the planned targets is very important. Deviation can be defined as
the gap between actual performance and the planned targets. The manager has to
find out two things here- extent of deviation and cause of deviation. Extent of de-
viation means that the manager has to find out whether the deviation is positive or
negative or whether the actual performance is in conformity with the planned per-
formance. The managers have to exercise control by exception. He has to find out
those deviations which are critical and important for business. Minor deviations
have to be ignored. Major deviations like replacement of machinery, appointment
of workers, quality of raw material, rate of profits, etc. should be looked upon
consciously. Therefore it is said, “ If a manager controls everything, he ends up
controlling nothing.” For example, if stationery charges increase by a minor 5 to
10%, it can be called as a minor deviation. On the other hand, if monthly produc-
tion decreases continuously, it is called as major deviation.

Once the deviation is identified, a manager has to think about various cause which
has led to deviation. The causes can be-

a. Erroneous planning,
b. Co-ordination loosens,
c. Implementation of plans is defective, and
 d. Supervision and communication is ineffective, etc.

4. Taking remedial actions- Once the causes and extent of deviations are known,
the manager has to detect those errors and take remedial measures for it. There are
two alternatives here-
a. Taking corrective measures for deviations which have occurred; and
b. After taking the corrective measures, if the actual performance is not in
conformity with plans, the manager can revise the targets. It is here the
controlling process comes to an end. Follow up is an important step be-
cause it is only through taking corrective measures, a manager can exer-
cise controlling.

Requirements of effective control system

In order to ensure that the control system is effective and serves its purpose, it must meet
the following requirements.

(a) Simple: It should be simple and easily understandable.

(b) Clear objectives: Objectives should be clearly and specifically laid down and ex-
pressed in quantitative terms leaving no scope for subjective interpretation.

(c) Appropriate: It should be appropriate to suit the requirements of the organisation.

Control system for a manufacturing concern is to be different from that of a trading or
service organisation.

(d) Flexible: It should be flexible and responsive to changing requirements of the organi-
sation and be adaptable to the new developments.

(e) Forward looking: The control system should be directed towards future. It should in-
dicate the steps to be taken in future so that the deviations do not continue and reduced to
the minimum.

(f) Concentrate on exceptions: An effective and economical control system must focus at-
tention on factors critical to performance. The significant deviations from the standard,
whether positive or negative should be brought to the knowledge of the management. If
we try to control every small aspect, the system is likely to create problems rather than
ensuring planned performance, and may prove costly.

(g) Efficient control techniques: The control techniques are considered efficient if they
help in detecting the derivations at an early stage and help in achieving the desired re-
sults. There are various techniques or methods that are used for the purpose of control.
The traditional ones are budgetary control and standard costing etc. Now-adays, there are
a number of techniques used in different organisations more effectively. Some of these
techniques are Break Even Analysis, Programme Evaluation and Review Technique
(PERT), Critical Path Method (CPM), Statistical Quality Control (SQC) and Manage-
ment Audit etc.

Techniques of Control or Control Systems

There are two types of Control techniques or systems: Traditional and Modern.

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
 Quality Control

1. Personal Observation

This is the most traditional method of control. Personal observation is one of those tech-
niques 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 ob-
served personally on their job. However, it is a very time-consuming exercise & cannot ef-
fectively 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, ta-
bles, 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 for-
mula:

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 oper-
ations 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 fu-
ture period of time for the purpose of obtaining a given objective. It is also a statement
which reflects the policy of that particular period

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 quan-

tity 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 re-
finement of products & processes

5. Quality Control

Quality control ensures that defects and errors are prevented and finally removed from
the process or product. Therefore, quality control should include; planning, designing,
implementation, gaps identification and improvisation. If organization can implement a
stringent quality control than following benefits are possible:
Statistical Quality tools can broadly be classified into following categories:

1. Acceptance sampling is an important part of quality control wherein quality of prod-

ucts is assessed post production. Acceptance sampling is done on sample’s post produc-
tion to check for quality parameters as decided by the organization covering both at-
tributes as well as variables. If the sample does not meet the required parameters of qual-
ity than that given lot is rejected, and further analysis is done to identify the source and
rectify the defects. Acceptance sampling is done on the basis of inspection, which in-
cludes physical verification of color, size, shape, etc.

2. Statistical process control helps in confirming whether the current process is fall-
ing within pre-determined parameters.

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
 MIS
 Management audit
 PERT & CPM
 Bureaucratic and Clan Control
 Balanced Score Card

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 in-
cludes 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. Management Information System (MIS)

In order to control the organisation properly the management needs accurate information.
They need information about the internal working of the organisation and also about the ex-
ternal environment. Information is collected continuously to identify problems and find out
solutions. MIS collects data, processes it and provides it to the managers. MIS may be man-
ual or computerised. With MIS, managers can delegate authority to subordinates without
losing control.

4. Management Audit

Management audit refers to a systematic appraisal of the overall performance of the man-
agement 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 (programme evaluation & review technique) & CPM (critical path method) are im-
portant network techniques useful in planning & controlling. These techniques, therefore,
help in performing various functions of management like planning; scheduling & imple-
menting time-bound projects involving the performance of a variety of complex, diverse &
interrelated activities.

6. Bureaucratic Control and Clan Control

Bureaucratic control is the use of rules, policies, hierarchy of authority, written documenta-
tion, reward systems, and other formal mechanisms to influence employee behavior and as-
sess performance. Bureaucratic control can be used when behavior can be controlled with
market or price mechanisms.

Clan Control

Clan control represents cultural values almost the opposite of bureaucratic control. Clan
control relies on values, beliefs, corporate culture, shared norms, and informal relationships
to regulate employee behaviors and facilitate the reaching of organizational goals.
Organization that use clan control require trust among their employees. Given minimal di-
rection and standards, employees are assumed to perform well - indeed, they participate in
setting standards and designing the control systems.

7. Balanced Scorecard
The balanced scorecard is a new management concept which helps managers at all levels
monitor results in their key areas. The scope of the balanced score card measures to in-
clude four areas:
 financial performance,
 customer knowledge,
 internal business processes,
 learning and growth.

The balance scorecard is used as a strategic planning and a management technique. This
is widely used in many organizations, regardless of their scale, to align the organiza-
tion's performance to its vision and objectives.
The scorecard is also used as a tool, which improves the communication and feedback
process between the employees and management and to monitor performance of the or-
ganizational objectives.

Co-ordination
Co-ordination is the unification and integration of the efforts of group members and to
provide unity of action in the achievement of common goals. It is a hidden force which
binds all the other functions of management. No function of management can be effi-
ciently performed unless the activities under the function are coordinated. Coordination is
helpful in achieving the objectives of the organization. Coordination is a process and it is
not fixed. Individual activities are not applied in coordination, it prefers group activities.
The managers have to make special efforts for coordination. Coordination does not come
automatically. Coordination leads to unity of action. It is essential at every level of man-
agement in order to achieve the organizational goal.

Coordination is a process of binding the activities of various departments and persons in

the organization so that the desired goal can be easily achieved. Management achieves its
basic functions of planning, organizing, staffing, directing and controlling through co-or-
dination. No function of management can be efficiently performed unless the activities
under the functions are coordinated. It is essential at every level of management in order
to achieve the organizational goal.

Features of Co-ordination:
1. Co-ordination is concerned with the integration of group efforts and not individual ef-
fort:
It involves the orderly arrangement of the activities of a group of people. However, indi-
vidual performance is related to the group performance. Co-ordination makes the individ-
ual efforts integrated with the total process.
2. Co-ordination is the concerted efforts of requisite quality and quantity given at the
proper time:
In other words, co-ordination denotes co-operation i.e. collective efforts, plus time ele-
ment and direction element. According to Haimann : “Co-ordination is the orderly syn-
chronization of efforts of the subordinates to provide the proper amount, timing and
quality of execution so that their unified efforts lead to the stated objective, namely
the common purpose of the enterprise.”
3. Co-ordination is a continuous and dynamic process:
It is a continuous concept in the sense that it is achieved through the performance of func-
tions. And it is dynamic in nature because the functions themselves are dynamic and may
change over the period of time.
4. Co-ordination has three important elements, namely, balancing, timing and inte-
grating:
Co-ordination of different activities becomes possible only when different duties are per-
formed in the right time and in the right quantity.
5. The task of co-ordination and co-operation do not mean the same thing:
Cooperation simply means that two or more persons are associated voluntarily in the per -
formance of some work through collective efforts. But it has no bearing with time, efforts
and direction-dimensions in group efforts. In contrast, co-ordination implies application
of requisite amount of group efforts in the right time at the right direction through delib-
erate executive action.
6. Co-ordination is the responsibility of every manager:
Co-ordination is the responsibility of every manager in the organization, because he tries
to synchronize the efforts of his subordinates with others.
7. Co-ordination may be internal or external:
Co-ordination, as a blending factor of all activities and efforts, is to be exercised both
within and outside the enterprise. That is to say, co-ordination may be internal and exter-
nal. Internal co-ordination means the co-ordination of activities between the employees,
between the departments and managers at different levels inside the enterprise. External
coordination refers to the coordination between the external stakeholders such as in-
vestors, government, suppliers and distributors and the organization.
8. Co-ordination may be horizontal and vertical:
Horizontal co-ordination refers to co-ordination between the horizontal departments of
the same level in the managerial hierarchy.
On the other hand, vertical co-ordination takes place between the various links of the dif-
ferent levels of the organization. For example, take the case of production department
where we have the works manager and under him the superintendent and then the fore-
man, and, lastly, the workmen.

Importance of Co-ordination
1. Co-ordination is necessary to ensure harmonious and smooth working of an en-
terprise with its several departments, divisions or subdivisions:
2. Co-ordination ensures unity in direction in the midst of diversified activities:
By bringing together the different divisions and parts into oneness of the enterprise, co-
ordination enables the management authority to see the enterprise as one unified whole
from its different segments.
3. Co-ordination removes the conflict between personal interest of the employees
and general interest of the organization:
4. Co-ordination can produce something greater out of the collective efforts of the
individuals:
Properly co-ordinated group efforts achieve a greater result than what is possible from the
isolated efforts of the individuals.
5. Co-ordination provides a balance between the people of different capacities and
abilities:
It compensates the shortcomings of one by the strength of the other.
6. Co-ordination reconciles the impact of internal and external forces in the organi-
zation and ensures smooth running of affairs:
Internally, it combines the various resources of the business—money, materials, machin-
ery and methods—for the attainment of common goals of the organization. Externally,
the environment is made more favourable to the business by giving due consideration to
customers, employees, financiers and the government. In this manner, co-ordination helps
in producing better results and becomes the essence of management.
7. Co-ordination ensures voluntary co-operation of the different members of the
group:
Besides simplification of the organization process, co-ordination harmonizes and inte-
grates the different programmes and policies of the business. Well-planned methods of
co-ordination not only strengthen supervision but ensures voluntary co-operation of the
different members of the group.
8. Co-ordination is a basic element in all effective organizations and is said to be the
first principle in organization:

Principles of Co-ordiation

1. Direct Contact:
Co-ordination should be attained by direct contact with the parties concerned. Direct per-
sonal communications bring about agreement on methods, actions and ultimate achieve-
ment. It also eliminates Red-tapism and ensures prompt action. Direct contact is an effec -
tive means of co-ordination.
2. Early Beginning:
Co-ordination can be achieved more readily at the initial stages of planning and policy-
making. Therefore, direct contact must begin in the very early stages of the process.
3. Continuity:
Co-ordination must be maintained as a continuous process. It starts from planning and
ends when the objective is accomplished. Whenever there is division and distribution of
functions among the managers and departments, co-ordination is necessary.
4. Reciprocal Relationship:
Co-ordination should be regarded as a reciprocal relating to all factors in a situation, viz.
production, sales, finance, men, and management. For example, when ‘P’ works with ‘Q’
and ‘Q’ in turn, works with ‘R’ and ‘S’ each of the four finds himself influenced by the
others.
5. Pervasiveness:
Co-ordination is an all-embracing activity in every management function. It is required in
all the activities at every level of the organisation. It is to be exercised both within and
outside the organisation.
6. Leadership:
Leadership is the most effective instrument of co-ordination. A leader in a group is the
coordinator of the group activities. He harmonizes all efforts of persons in the group. A
manager does not himself produce anything nor does he sell anything in the market.
7. Timing:
Timing is an important element of co-ordination. This principle points out that all func-
tions in the enterprise are to be done at the same time and at the same speed.
8. Balancing:
This principle refers to the quantitative element of co-ordination. It means that all works
are to be done in right quantity. For instance, if a department produces half, another one-
third and the third the full quantity, their activities cannot be balanced. They have to per -
form their job in right quantity for achieving co-ordination of their jobs.
9. Integrating:
All activities, decisions and opinions are to be integrated to achieve the enterprise objec-
tive.

Techniques of Coordination
Managers use a variety of techniques for achieving coordination. The main techniques for
effective coordination are as follows:
1. Sound Planning
Coordination facilitates sound planning in the organization. The plan, policies, and com-
prehensive programs prefer coordination of activities and individuals. Standard proce-
dures and rules create uniformity in repetitive operations. Thus, coordination is regarded
as an essential element for sound planning
2. Sound Organizational Structure
A sound organizational structure contributes to effective coordination. It clearly defines
the authority relationship which provides an effective means of integrating the activities
of different departments. It clearly defines the authority relationships which provide an
effective means of integrating the activities of different units. A sound organizational
structure has the clear meaning of authority.
3. Clearly defined Objectives
The goal of the organization must be clearly defined. The individual in the organization
should understand the overall objectives. The contribution of their jobs helps to attain the
overall objectives. For achieving proper coordination, there must be unity of purpose.
4. Maintaining Co-operation
Co-operation is the result of maintaining good relationship among the people in the orga-
nization. It depends on sound policies and procedures. Informal contacts should be en-
couraged to supplement formal communication. The coordination is more effective and
long lasting when the organization achieves the voluntary co-operation of employees.
5. Formation of Committees
A committee is a group of a person entrusted with functions collectively as a group. The
decisions of committee are easy to be implemented as all who are represented are bound
to follow committee decisions. It promotes coordination through better and free inter-
change of ideas, feelings, and opinions. All who are represented on the committee are
bound to follow the committee decisions.
6. Comprehensive Policies and Programs
Coordination becomes very easy if there are well-defined and comprehensive policies
and programs. This brings uniformity in action because everyone understands the policies
and programs in the same sense. These are also good tools for coordination as they pro-
vide the timetable, schedules etc.
7. Voluntary Cooperation
Coordination is more effective and long lasting when it is achieved through the voluntary
cooperation of employees. Cooperation is the result of harmonious relations among the
people of the organizations. Informal contacts should be encouraged to supplement for-
mal communication. Voluntary co-operation can be developed among the employees by
encouraging them through contacts and communications.
8. Effective Communication
A good communication system contributes to effective coordination by promoting mutual
understanding and cooperation among various individuals. The communication should be
direct as far as possible to avoid any misunderstanding through misinterpretations. When
the different functional groups are represented in the decision-making process the coordi-
nation becomes easier. Coordination is impossible without effective communication.
9. Simplified Organization
A simple and sound organization is an important means of coordination. The organization
structure of a line of authority and responsibility from top to the bottom should be clearly
defined. The definition of authority and responsibility of each department and individual
helps to avoid conflicts.
10. Effective Leadership and Supervision
Effective leadership facilitates coordination efforts in the planning and the execution
stage. The activities of the subordinates can be continuously guided by a good leader in
the right direction. It can inspire to pull them together for the accomplishment of the
common objectives. Sound leadership can persuade subordinates to have an identity of
interests. It also helps to adopt a common outlook. The effective leadership reduces the
dependence on such formal means of coordination.
11. Staff Meetings or Conferences
The Meeting and conference provided to the staffs is a platform for discussion and solu-
tion of various problems faced by the departments. Staff meetings and conferences may
be highly effective in the promotion of coordination. It helps to learn new things. It pro-
vides the subordinates an opportunity to bring up the problems.
12. Chain of Command
The Chain of command is one of the most important methods of coordination. The
supreme coordinating power in an organization is the authority. The exercise of authority
through the chain of command or hierarchy is the traditional means of coordination. The
different parts of an organization are brought together through the chain of command. It
also relates them to a central authority.
13. Incentives
Incentives refer to something that encourages someone to do something. In the coordina-
tion, incentives may be used to rebate the interest and to reduce conflicts. For instance,
profit helps in promoting team spirit and cooperation between employers and workers.

Difference between Coordination and Cooperation:

Basis Coordination Cooperation

1. Meaning Coordination is an or- Cooperation is a

derly arrangement of voluntary effort of
group efforts to main- individuals to help
tain harmony among one other.
individual efforts to-
ward accomplishment
of common goals.

2. Nature Coordination is a sys- Cooperation is an

tem evolved deliber- effort that arises
ately by the managers out of informal re-
lations.

3. Need Coordination is the Cooperation is a

essence of manage- voluntary act that
ment and essential arises out of in-
for achievement of formal relations
common goals of an with the desire to
organisation. work together.

4. Managerial Coordination is impli- Cooperation is a

function cit and inherent in all voluntary effort of
functions of an organ- individuals to work
ization; hence it is together with the
also known as essence intention of help-
 of management. ing one other.

5. Relations Can be achieved Arises out of in-

through both formal formal relations
and informal rela- only
tions.

6. Scope Wider scope as it in- Narrow scope

cludes cooperation. though it helps to
establish coordina-
tion.

Coordination: The Essence of Management:

Coordination brings unity of action and integrates different activities of organization. Co-
ordination 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 differ-
ent 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, be-
tween orders, instructions, guidelines and suggestions etc.
(v) In controlling function coordination is required between standards and actual perfor-
mance.

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 depart-
ments 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.
Coordination is required in all the functional areas of an organization:

There should be proper co-ordination among Production, Marketing, HR and Finance

Department of the organization for the effective and efficient accomplishment of the
organizational goals.

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 is said to be
the heart of management process. Planning, organizing, staffing have got no importance
if direction function does not take place.

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 activi-
ties which are designed to encourage the subordinates to work effectively and efficiently.
According to Human, “Directing consists of process or technique by which instruction
can be issued and operations can be carried out as originally planned” Therefore, Direct-
ing is the function of guiding, inspiring, overseeing and instructing people towards ac-
complishment of organizational goals.

Direction has got following characteristics:

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 through-
out 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 unpre-
dictable, direction function becomes important.
 4. Creative Activity - Direction function helps in converting plans into perfor-
mance. Without this function, people become inactive and physical resources are
meaningless.
5. Executive Function - Direction function is carried out by all managers and exec-
utives 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 peo-
ple’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 be-
haviour.

Importance of Directing

1. Initiates Action

Each and every action in an organization is initiated only through directing. The managers
direct the subordinates about what to do, how to do when to do and also see to it that their
instructions are properly followed.

2. Integrates Efforts

Directing integrates the efforts of all the employees and departments through persuasive
leadership and effective communication towards the accomplishment of organizational
goals.

3. Motivates Employees

A manager identifies the potential and abilities of its subordinates and helps them to give
their best. He also motivates them by offering them financial and non-financial incentives to
improve their performance.

4. Provides Stability

Stability is significant in the growth of any organization. Effective directing develops co-op-
eration and commitment among the employees and creates a balance among various depart-
ments and groups.

5. Coping up with the Changes

Employees have a tendency to resist any kind of change in the organization. But, adapting
the environmental changes is necessary for the growth of the organization. A manager
through motivation, proper communication and leadership can make the employees under-
stand the nature and contents of change and also the positive aftermaths of the change. This
will help in a smooth adaptation of the changes without any friction between the manage-
ment and employees.

6. Effective Utilization of Resources

It involves defining the duties and responsibilities of every subordinate clearly thereby
avoiding wastages, duplication of efforts, etc. and utilizing the resources of men, machine,
materials, and money in the maximum possible way. It helps in reducing costs and increas-
ing profits.

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 maxi-
mum potential for the attainment of organizational goals.

2. Harmony of Objectives

Sometimes there is a conflict between the organizational objectives and individual objec-
tives. 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 be-
tween 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 superior at the same time, it will cre-
ate confusion, conflict, and disorder in the organization and also he will not be able to priori-
tize 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 in-
tended to be communicated.

6. Use of Informal Organization

Within every formal organization, there exists an informal group or organization. The man-
ager 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 ex-
change 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, pro-
cedures, and instructions are followed by the subordinates. If there is any problem in imple-
mentation, then the suitable modifications can be made.

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 man -
ager to identify and isolate the problems that call for decision and action, and avoid or ig-
nore or pay less attention to less critical problems which better be handled by his subordi-
nates.
Under this system the manager should receive only condensed, summarized and invari-
able comparative reports covering all the elements, and he should have all the exceptions
to the past averages or standards pointed out, both the good and the bad exceptions.
This gives him a full view of the progress in a few minutes of time. Thus by using the ex-
perience in a systematic way (i.e., having the knowledge of past attainments), a careful
analysis is made with reference to existing records and standards of performances.
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.
8. It prevents management from over managing.

Limitations of Management by Exception:

Management by exception is not a solution to all management problems; it has its limita-
tions as well.
Some of them are:
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.