UNIT III

ORGANISING
Nature and purpose – Formal and informal organization – organization chart –
organization structure – types – Line and staff authority – departmentalization –
delegation of authority – centralization and decentralization – Job Design - Human
Resource Management – HR Planning, Recruitment, selection, Training and
Development, Performance Management, Career planning and management.

INTRODUCTION

Organizing is the management functions that focus on allocating and arranging

the human and non-human resources to carry out their task successfully. It also
concerned with building, developing and maintaining working relationship.

Definition:

Mescon,Albert says that organizing is the process of establishing a structure for

the organization, so that it helps the manpower of organization to function
systematically, to fulfill the organization goal effectively.

Theo Haimann defined as the organizing is the process of defining and grouping
the activities of an enterprise and establishing the authority relationship among them.

Organization is the process by which individuals, groupsand facilities are

combined in a formal structure of tasks and authority,” said by Adam smith

Types of organization

 Line organization / military organization

 Functional organization
 Line and staff organization
  Matrix organization
 Committee organization

Principles of organization

a) Objective
b) Span of control
c) Scalar principle
d) Unity of command
e) Unity of direction
f) Responsibility and authority
g) Division of work
h) Line and staff relationship.
i) Effective communication
j) Balance and flexibility.

NATURE OF ORGANIZATION

The following are the important characteristics of organization.

(a) Specialization and division of work

The entire philosophy of organization is centered on the concepts of

specialization and division of work. The division of work is assigning responsibility for
each organizational component to a specific individual or group thereof. It becomes
specialization when the responsibility for a specific task lies with a designated expert
in that field. The efforts of the operatives are coordinated to allow the process at
hand to function correctly. Certain operatives occupy positions of management at
various points in the process to ensure coordination.

(b) Orientation towards goals

Every organization has its own purposes and objectives. Organizing is the function
employed to achieve the overall goals of the organization. Organization harmonizes the
individual goals of the employees with overall objectives of the firm.

(c) Composition of individuals and groups

Individuals form a group and the groups form an organization. Thus, organization is
the composition of individual and groups. Individuals are grouped into departments and
their work is coordinated and directed towards organizational goals.

(d) Differentiated functions

The organization divides the entire work and assigns the tasks to individuals in order
to achieve the organizational objectives; each one has to perform a different task
and tasks of one individual must be coordinated with the tasks of others. Collecting
these tasks at the final stage is called integration.

(e) Continuity

An organization is a group of people with a defined relationship in which they work

together to achieve the goals of that organization. This relationship does not come to
end after completing each task. Organization is a never ending process.

PURPOSE OF ORGANIZATION

(a) Helps to achieve organizational goal

Organization is employed to achieve the overall objectives of business firms.

Organization focuses attention of individual’s objectives towards overall objectives.

(b) Optimum use of resources

To make optimum use of resources such as men, material, money, machine and
method, it is necessary to design an organization properly. Work should be divided and
right people should be given right jobs to reduce the wastage of resources in an
organization.

(c) To perform managerial function

Planning, Organizing, Staffing, Directing and Controlling cannot be implemented

without proper organization.
(d) Facilitates growth and diversification

A good organization structure is essential for expanding business activity.

Organization structure determines the input resources needed for expansion of a
business activity similarly organization is essential for product diversification such as
establishing a new product line.

(e) Human treatment of employees

Organization has to operate for the betterment of employees and must not
encourage monotony of work due to higher degree of specialization. Now, organization
has adapted the modern concept of systems approach based on human relations
and it discards the traditional productivity and specialization approach.

FORMAL ORGANISATION

Formal organisation is a well-defined structure of authority and responsibility that

defines delegation of authority and relationships amongst various organisational
members. It works along pre-defined sets of policies, plans, procedures, schedules and
programmes. Most of the decisions in a formal organisation are based on
predetermined policies. Formal organisation is a deliberately designed structure with
formal authority, responsibility, rules, regulations and channels of communication.

Characteristics of a formal organization

 Well defined rules and regulation

 Determined objectives and policies
 Status symbol
 Limitation on the activities of the individual
 Strict observance of the principle of co-ordination
 Messages are communicated through scalar chain
 It is to best attain the objectives of the enterprise.
Advantages of Formal Organisation:

1. Systematic Working:

Formal organisation structure results in systematic and smooth functioning of an

organisation.

2. Achievement of Organisational Objectives:

Formal organisational structure is established to achieve organisational objectives.

3. No Overlapping of Work:

In formal organisation structure work is systematically divided among various

departments and employees. So there is no chance of duplication or overlapping of
work.

4. Co-ordination:

Formal organisational structure results in coordinating the activities of various

departments.

5. Creation of Chain of Command:

Formal organisational structure clearly defines superior subordinate relationship, i.e.,

who reports to whom.

6. More Emphasis on Work:

Formal organisational structure lays more emphasis on work than interpersonal

relations.

Disadvantages of Formal Organisation:

1. Delay in Action:

While following scalar chain and chain of command actions get delayed in formal
structure.

2. Ignores Social Needs of Employees:

Formal organisational structure does not give importance to psychological and social
need of employees which may lead to demotivation of employees.
3. Emphasis on Work Only:

Formal organisational structure gives importance to work only; it ignores human

relations, creativity, talents, etc.

Theories of Formal Organisation

Organisation theory is the study of organisations and people and groups working in
them. There is no unified set of organisation theory that provides insight into
organisation principles and practices. Different theories have evolved over a period of
time with different sets of assumptions and features.

Organisational theories are classified as follows:

1. Classical Theory

2. Human and Participative Theories

3. Contingency Theory

Classical Theory of Formal Organisation

It focuses on structure, design and features of the organisation like

specialization, scalar chain, departmentation, span of control, centralization /
decentralization etc. The structure is created and people are appointed to run the
various departments. It considers organisations as closed system with very little or no
interaction with the environmental forces. It emphasises on tasks more than people.

Important factors of classical theories of organisation

 Hierarchy of authority,

 Division of work,

 Specialization,

 Impersonal relations,

 Narrow span of control etc.

 (a) People work only if they are directed to work. They do not assume
responsibilities on their own.

(b) Formal plans, motivational factors and communication channels are designed to
get the work done through subordinates

(c) It achieves efficiency at the cost of social dissatisfaction.

(d) It emphasizes on division of work as a means to improve workers‟ performance.

(e) It views unity of control as the basis for achieving coordination amongst varied
activities of organisational members.

Human and Participation Theories of Formal Organisation

The classical theory of organisation was opposed in 1950‟s when the behavioral
theories emerged on the management scenario. The classical theory was criticized for
being highly mechanistic, formal and impersonal. Hawthorne experiments conducted by
Elton Mayo supported social and informal interactions amongst work groups to increase
organisational efficiency. The human theories focused on people as means to achieve
the tasks. These theories characterized a shift from task - oriented approach to people -
oriented approach for achieving the organisational goals.

Contingency Theory

Classical and Participative theories are not unrealistic. However, managers may
choose a theory which consists of features from both to adapt the organisation to its
surrounding environment. The contingency theory identifies four factors that affect
manager‟s choice of a theory.

1. Nature of people: People, who are lazy, lack responsibility, do not wish to
work on their own, prefer to be led and guided, and prefer to be governed by the
classical theory of organisations.People, who enjoy their work, wish to seek greater
responsibility, exercise self-direction show better results if managers adopt participative
theory to organizing.
 2. Type of task and technology: Classical form of organisation is preferred for
producing goods through mass production technology while participative theory is more
suitable where job-order (small scale) or continuous technology is adopted.

3. The environment : Firms which operate in dynamic environment are more

flexible in their operations and, therefore, adopt a participative theory while firms
operating in a stable environment show better results when they work according to
principles of classical organisation.

4. Degree of change and uncertainty: Change in people’s attitudes, perception

and knowledge from simple to complex shifts the organisation structure from classical to
participative.

As society moves from underdevelopment to development, managers become

educated, trained and skilled labour is available in abundant supply, the general level of
education and specialization increases and, therefore, a shift from classical to
participative organisation structure is observed.

FACTORS AFFECTING CONTINGENCY THEORY

Features Classical theory Participative theory

Nature of people Lazy, with litter or no desire Active with desire to

to assume additional assume and seek additional
responsibility responsibility

Technology Mass – Production Job-order and continuous

technology technology

Environment Stable Dynamic

Change Not observed Observed in the internal

and external environment
INFORMAL ORGANISATION

As the formal organisation grows in size, parallel existence of informal relationships

along with formal relationships becomes unavoidable. They arise because of inevitable
social and personal needs of individuals which cannot be satisfied by the principles of
formal organisations. They represent non-planned, unofficial, social interactions
amongst people working in formal structures. They arise out of common interests of
people. These organisations are not governed by formal set of principles but
nevertheless, are an important and integral part of formal organisations.

Features of informal organisation:

(1) Informal organisational structure gets created automatically without any intended
efforts of managers.

(2) Informal organisational structure is formed by the employees to get psychological

satisfaction.

(3) Informal organisational structure does not follow any fixed path of flow of
authority or communication.

(4) Source of information cannot be known under informal structure as any person
can communicate with anyone in the organisation.

(5) The existence of informal organisational structure depends on the formal

organisation structure.

Benefits of Informal Organisation

1. Promotes social and cultural values

2. Relief to top managers

3. Supplement to managers‟ capacities

4. Social satisfaction and security

5. Communication
 6. Better relationships

7. Solve work-related problems

8. Promotes creativity

9. Self-control

10. Restraint on manager’s discretion

11. Social satisfaction

12. Quick feedback to managers

Drawback of Informal Organisation

1. Spread Rumours:

According to a survey 70% of information spread through informal organisational

structure are rumors which may mislead the employees.

2. No Systematic Working:

Informal structure does not form a structure for smooth working of an organisation.

3. May Bring Negative Results:

If informal organisation opposes the policies and changes of management, then it

becomes very difficult to implement them in organisation.

4. More Emphasis to Individual Interest:

Informal structure gives more importance to satisfaction of individual interest as

compared to organisational interest.

Comparison of formal and informal organization

Sl. No. Nature Formal organization Informal Organization

1 Structure Formally structured Spontaneous reaction to

 authority-responsibility formally structured
relationships organization. No formal
structure

2 Emphasis Official authority – People and their relationship

responsibility structure

3 Power It is attached to position It is attached to person

4 Chain of The chain is respected The authority comes from

command and authority is delegated personal knowledge and skills
by the top management of group leaders and is given
by the group itself.

5 Goals Organizational goals are Individual goals may clash with

considered important organizational goals

6 Stability They are stable; not Change in members can lead

affected by incomings and to instability
out goings of
organizational members

7 Flexibility Not flexible; cannot be Highly flexible

easily changed. Members
interact with each other on
the basis of the job
positions

8 Social They arise out of formal They arise out of social norms
acceptance authority-responsibility of acceptance and recognition
structure

9 Formation They are deliberately They are created by members

created by managers to achieve their personal goals
 10 Purpose They are formed to Their objective is to achieve
(objective) achieve formal social satisfaction
organizational goals

Organization chart

The organization chart is a diagram showing graphically the relation of one

official to another, or others, of a company. It is also used to show the relation of one
department to another, or others, or of one function of an organization to another, or
others. This chart is valuable in that it enables one to visualize a complete organization,
by means of the picture it presents.

Organizational charts do exactly what their name suggests: Organize the roles
and positions in an organization. You may want to round out your org chart by including
the details of people or departments. Adding contact information, location, and other
notes can make the organization more efficient and eliminate confusion about who does
what. Try breaking down your org chart into manageable pieces to get started. This
way, all of the information is consistent and leads back to the highest level of the
organization. You can section off different areas of your chart with the following
categories:

 Department
 Team
 Unit
 Project
 Location
There are several limitations of organizational charts:

 If updated manually, organizational charts can very quickly become out-of-date,

especially in large organizations that changes their staff regularly.
 They only show "formal relationships" and tell nothing of the pattern of human
(social) relationships which develop. They also often do not show horizontal
relationships.
 They provide little information about the managerial style adopted (e.g.
"autocratic", "democratic" or an intermediate style)
 In some cases, an organigraph (means graphical representation of a company
structure) may be more appropriate, particularly if one wants to show non-linear,
non-hierarchical relationships in an organization.
 They often do not include customers.
Need of organization chart:

1. It assigns responsibilities to individuals

2. It helps identity control properly
3. Makes the management functions simpler
4. Serve as a framework of budgeting and scheduling
5. Helps to give sense of security
6. Outline fundamental relationships
7. Outlines basic authority
8. Serve as basic for directives
9. Helps to improve communication channels
10. It can be referred as reference document for various purposes.

Benefits of organization chart:

1. It shows organizational activities and identifies persons responsible for them

2. It indicates clear reporting relationships pointing out who is accountable to whom.
3. It identifies scope and limit at the job explaining tasks to be performed at each
position.
4. It tells about the inter – relationship of positions
5. It helps to resolve complexities within organization
6. It can be used to introduce organizational relationships to new employees.

Limitations of organizational chart

1. It does not represent human relationship between superior and subordinates

2. It can be introduce obstacles in relationships
3. It shows only formal authority relationships and omits many significant informal
and informational relationships.
4. It does not provide as to the authority existing at any point in the structure
5. For any changes in hierarchy or creation of new position results in recognizing
the chart.
Types of organizational chart

1. Hierarchical Organizational chart

2. Matrix Organizational chart
3. Flat Organizational chart

HIERARCHICAL
ORGANIZATIONAL CHART

The hierarchical
organizational chart is the most
common type. A hierarchy is
where one group or person is at
the top, while those with less
power are beneath them, in the
shape of a pyramid. Think of a
monarchy with a king or queen at
the top, or an organization with
the CEO at the top. With a
hierarchy, members typically communicate with the person they report to and anyone
who reports directly to them. This gives guidance for information flow but can also limit
your ability to effect change.

MATRIX ORGANIZATIONAL CHART

The matrix organizational chart is a rarer type and usually only seen when
individuals have more than one manager. For example, an organization could have a
team of graphic designers who all report to the head graphic designer. The graphic
designers are also working on other projects that are likely headed by a separate
project manager. In this case, the graphic designers will have two managers. This
structure can lead to increased communication and cooperation between departments,
but it can also lead to conflicts of interest.
FLAT ORGANIZATIONAL CHART

The flat organizational chart, sometimes referred to as a horizontal org chart, has
little or no levels of middle management and typically consists of two levels—the top
administrators and the workers. In companies like this, the workers have more
responsibility and are more directly involved in decision-making.
ORGANIZATION STRUCTURE

Organization structure refers to the systematic arrangement of the people

working for the organization to achieve the desired goals and objectives. It facilitates to
define authority and responsibility relationship between various positions.

The organization structure has two dimensions via horizontal and vertical. The
horizontal dimension shows the basic departmentation i.e. grouping the activities and
employees of an enterprise in to various departments. A vertical dimension shows the
hierarchy level of the organization.

Need for organization structure:

 To achieve specific goals

 To define personal identity
 Assigning responsibility and authority
 To promote division of work that leads to specialization.
 Optimum utilization of staff and resources.
 For efficient functioning

TYPES OF ORGANIZATIONAL STRUCTURES

Types of organizational structures that can be observed in the modern business

organizations.

Bureaucratic Structures

Bureaucratic structures maintain strict hierarchies when it comes to people

management. There are three types of bureaucratic structures:

1. Pre-bureaucratic structures

This type of organizations lacks the standards. Usually this type of structure can
be observed in small scale, start-up companies. Usually the structure is centralized and
there is only one key decision maker.

The communication is done in one-on-one conversations. This type of structures

is quite helpful for small organizations due to the fact that the founder has the full control
over all the decisions and operations.
2. Bureaucratic structures

These structures have a certain degree of standardization. When the

organizations grow complex and large, bureaucratic structures are required for
management. These structures are quite suitable for tall organizations.

3. Post-bureaucratic Structures

The organizations that follow post-bureaucratic structures still inherit the strict
hierarchies, but open to more modern ideas and methodologies. They follow techniques
such as total quality management (TQM), culture management, etc.

Functional Structure

The organization is divided into segments based on the functions when

managing. This allows the organization to enhance the efficiencies of these functional
groups. As an example, take a software company.

Software engineers will only staff the entire software development department.
This way, management of this functional group becomes easy and effective.

Functional structures appear to be successful in large organization that produces

high volumes of products at low costs. The low cost can be achieved by such
companies due to the efficiencies within functional groups.
 In addition to such advantages, there can be disadvantage from an
organizational perspective if the communication between the functional groups is not
effective. In this case, organization may find it difficult to achieve some organizational
objectives at the end.

Divisional Structure

These types of organizations divide the functional areas of the organization to

divisions. Each division is equipped with its own resources in order to function
independently. There can be many bases to define divisions.

Divisions can be defined based on the geographical basis, products/services

basis, or any other measurement.

As an example, take a company such as General Electrics. It can have

microwave division, turbine division, etc., and these divisions have their own marketing
teams, finance teams, etc. In that sense, each division can be considered as a micro-
company with the main organization.
Matrix Structure

When it comes to matrix structure, the organization places the employees based
on the function and the product.

The matrix structure gives the best of the both worlds of functional and divisional
structures.

In this type of an organization, the company uses teams to complete tasks. The
teams are formed based on the functions they belong to (ex: software engineers) and
product they are involved in (ex: Project A).

This way, there are many teams in this organization such as software engineers
of project A, software engineers of project B, QA engineers of project A, etc.
Flat Organizational Structure

Many small companies use a flat organizational structure, where very few levels
of management separate executives from analysts, secretaries and lower-level
employees. Flat organizations work best when a company has less than 20 employees,
especially if the company employs one or two employees per department. One
advantage of using a flat organizational structure for management is that decisions can
be made relatively quickly. The flat organizational lacks the typical bureaucracy of taller
organizational structures--those with many levels of management.

Product Organizational Structure

A product organizational structure has managers reporting to the president or

head of the company by product type. Product organizational structures are primarily
used by retail companies that have stores in various cities. However, stores in each city
may still need a local human resources or marketing department to carry out functions
locally. For example, a small department store company may have a vice president of
sporting goods, housewares and general merchandise at the corporate office. One
manager may report to each vice president. However, each manager may oversee the
work of one or more field marketing employees who travel and handle local marketing
stores in several states. These field marketing employees may work for the sporting
goods manager one week in League City, Texas, then do merchandising for the
housewares manager another week in the Sugarland, Texas, market.

Geographical Organizational Structure

The Small Business Administration is responsible for defining small businesses

in different industries. For example, in manufacturing, the SBA usually considers a
company with 500 or fewer employees a small business. Point is, small businesses are
still large enough to use a geographical organizational structure. A geographical
organizational structure is when companies decentralize the functional areas. For
example, unlike the product organizational structure, there may be a local marketing,
finance, accounting and research development person based in each region. For
example, a small consumer products food company may be large enough to place a
marketing research manager and analyst in each of six different regions. This can be
important because consumers in various areas have different tastes. Hence, a
geographical structure will enable the company to better serve the local market.

Authority

In many organizations, managers use authority by dividing it into line authority,

staff authority and functional authority. These kinds of authority differ according to the
kinds of power on which they are based.

Line Authority:

Managers with line authority are those people in the organization who are directly
responsible for achieving organizational goals. Line authority is represented by the
standard chain of command starting with the board of directors and extending down
activities of the organization that are carried out. Line authority is based primarily on
legitimate power.

Since line activities are identified in terms of the company’s goals, the activities
classified as line will differ in each organization. For example, managers at a
manufacturing company may limit line functions to production and sales, while
managers at a department store, in which buying is a key element will consider the
purchasing department as well as the sales department as line activities. When an
organization is small, all positions may be line roles

Staff Authority:

Staff authority belongs to those individuals or groups in an organization who

provide services and advice to line mangers. The concept of staff includes all elements
of the organization that are not classified as line. Advisory staffs have been used by
decision makers from emperors and kings to dictators and parliaments over the course
of recorded history.

Staff provides managers with varied types of expert help and advice. Staff
authority is based primarily on expert power. Staff offer line managers planning advice
through research, analysis and options development. Staff can also assist in policy
implementation, monitoring and control in legal and financial matters; and in the design
and operation of data processing systems.

As managers expand organizations over time, staff roles are often added to
supplement line activities. For example, partners at many law firms are adding staff
members to run the ‘business side’ of the firm. The presence of these specialists frees
lawyers to practice law, their line function.

Functional Authority:

The role of staff members – to provide advice and service to line members –
implies that staff lacks independent formal authority. In reality, staff departments,
especially those responsible for audit functions, may have formal authority over line
members within the limits of their function. The right to control activities of other
departments as they relate to specific staff responsibilities is known as functional
authority. The finance manager of Division A reports through the chain of command to
the General Manager of Division A, but is also responsible to the vice president for
finance at the corporate level. This ‘dotted line’ relationship indicates the functional
authority of specialized staff in relation to line managers.

Functional authority is common in organizations. It is necessary in carrying out

many organizational activities, both to provide or a degree of uniformly and to allow
unhindered application of expertise. Thus, it is based on both legitimate and expert
power. The skills required to manage functional authority relationships and the problem
arising from those relationships are similar to the skills required to manage dual-boss
relationships in matrix organizations.

Functional authority might be common in modern organizations, but it can be

difficult to practice. Take the case of Laura Kozol at the General Electric plant in Lynn,
Massachusetts, where jet engines are manufactured for small aircraft. As a design
engineer, Kozol has a position traditionally associated with staff authority. When Kozol
joined the plant staff, she found that engineers designed engines (staff authority)
without consulting those who actually produced the parts (line authority). Partly out of
frustration, and partly because downsizing at the plant cut out layers of management,
Kozol organized an ongoing collaborative process between engineers and production
employees. She now exercises functional authority as she works with production
employees.

LINE AND STAFF CONFLICTS:

As always, functional and decisional conflicts arise between line and staff members.
The causes may be attributed to the following reasons.

1. Line managers grudge against the staff personnel:

a) The staff authorities try to encroach upon the line managers and tell them how to
do their work

b) Lack of well-balanced advice from the staff managers

c) Staff managers are not directly accountable and sport a jealous attitude towards
line authorities
 d) Staff managers fail to see the big picture objectively and their interests are
confined to specified situations

e) Staff often tends to impose their superiority on line managers

2. Staff personnel complaints against the line managers

(a) Line managers don’t want to listen to the suggestions of the staff and make it a
point to resist new ideas

(b) Lack of authority on the part of staff managers to implement their innovative
ideas and hence the dependence on line authorities

(c) Line managers do not utilize the services of staff personnel properly and
effectively

3. The workers’ attitude

(a) The authority relationships between line and staff specialists are not clearly
defined most of the time

(b) The basic difference in attitude and perception of the line and staff managers
create difficulties for the work force in carrying out orders and instructions

DEPARTMENTALIZATION

Departmentalization is the process of breaking down an enterprise into various

departments. How jobs are grouped together is called departmentalization. A
Department is an organization unit that is headed by a manager who is responsible for
its activities. Departmentation and Division of labour are same things. However
technically both are different. Both emphasize on the use of the specialized knowledge,
but departmentation has higher management level strategic considerations while the
division of labour has a lower level operating considerations.

Types of Departmentalization

There are five common forms of departmentalization

 1) Functional Departmentalization
2) Geographical Departmentalization
3) Product Departmentalization
4) Process Departmentalization
5) Customer Departmentalization

FUNCTIONAL DEPARTMENTALIZATION

It groups jobs according to function.

Functional departmentalization defines departments by the functions each one

performs such as accounting or purchasing. Every Organization must perform certain
jobs in order to do its work. For example, Manufacturing, Production, R & D, Purchasing
etc. Same kinds of jobs are grouped together in departments. This kind of
departmentalization includes persons with same knowledge or skills (like Accounting
Department having persons of commerce, Marketing Department having MBA persons).
As in department people with same skill and knowledge are there. Their focus becomes
narrow and they cannot appreciate each other’s work in the same department

Advantages

 It is most logical and natural form of departmentalization.

  It brings about specialization which makes optimum utilization of human
resources.

 It lays emphasis on each and every activity.

 It enables top management to exercise control over a number of functions.

 It facilitates delegation of authority and therefore, reduces the work burden of top
manager.

 It eliminates the duplication of effort which brings efficiency.

Disadvantages

 There may be conflict between departments as the responsibilities are inter

dependent.

 There may be difficulty in coordinating the activities of different departments.

 There is over emphasis on specialization.

 It maximizes supervision cost.

 It is non-responsive to environmental changes.

 It does not promote innovation and creativity.

GEOGRAPHICAL DEPARTMENTALIZATION

It groups jobs according to geographic region.

Geographical departmentalization is an arrangement of departments according to

geographic area or territory. It divides works well for international business.
Geographical Departmentalization is beneficial when Organization are spread over a
wide area. Even each part or areas have different requirement or interests. For
example, marketing a product in Western Europe may have different requirements than
marketing the same product in Southeast Asia. Market area is broken up into sales
territories like Northern, Southern, West, East. The Salesman appointed for each
territory report to their regional or territorial manager. These manager again reports to
the sales manager who is head of the sales department.
Advantages:

 It helps to achieve local operations.

 It facilitates the expansion of business into various regions.

 It considers the environmental changes.

 There is better coordination of activities through the setting up of regional

divisions.

 It can meet the local demands more effectively.

Disadvantages:

 There may be a problem of integration of various regional offices.

 There is the possibility of duplication of physical facilities.

 It is more difficult to maintain central control over regional departments.

 There may be lack of skilled and efficient persons to take charge of regional
departments.

PRODUCT DEPARTMENTALIZATION

It groups jobs by product line.

Companies may have multiple products. Like Maruti is producing Alto, Zen, Swift.
Large companies are often organized according to the product. All common activities
required to produce and market a product are grouped together. Major disadvantages
are duplication of resources. Each product requires most of the same functional areas
such as finance, marketing, production etc. For example, Samsung manufactures
Phones, T.V., and Tablet etc. For each product, they have same functional department
like marketing, production etc. Thus, it is duplication of functions. Product
Departmentalization has become important for large complex organization.

Advantages

 It is suitable for the organization having various lines of products or services. It

brings about specialization in a product or service which makes optimum
utilization of human resources.

 It directs attention toward specific product line and service.

 It facilitates to monitor and evaluate the performance of each production or

service department.

 Product/service managers can be held accountable for the profitability of each

product/service.

 It permits maximum use of specialized production/services facilities.

Disadvantages

 There may be conflict between production/service and other departments as the

responsibilities are inter dependent.
  There may be under utilization of plant capacity if the demand of the
product/service is not sufficient.

 It creates the problem of effective control over production divisions by the top
management.

 It maximizes administrative cost.

 The product/service manager may ignore overall objective of the organization.

PROCESS DEPARTMENTALIZATION:

It groups Jobs on the Basis of Product or Customer Flow.

Departmentalization is done on the basis of processing. In manufacturing

organizations, the location of manufacturing plant or department can be at different
location due to cost of raw material and even labour charges. Even departmentalization
can be done depending on the types of machines required. The similar types of
machines can be kept at one place e.g. all lathes, all drilling machines, all shapers etc.
Activities are grouped into separate sections, each kept at one place.

Advantages

 There is proper division of work into different processes.

 It facilitates coordination by grouping products.

 It ensures effective utilization of specialized skills and equipments.

  It provides full responsibility to process head to complete process activities which
improves product efficiency.

 It helps to make appropriate use of resources and facilities.

Disadvantages

 It is appropriate only for manufacturing organizations.

 The technical problem is one process may create problem for the whole
process.

 There is possibility of conflict among managers of different process.

 It is more difficult to maintain coordination among different process.

CUSTOMER DEPARTMENTALIZATION

It groups Jobs on the Basis of specific And Unique Customers

Customer divisions are divisions set up to service particular types of clients or

customers. Some companies or organization divides the different units based on
customers or markets. For example, any PC manufacturing company like HP has
different divisions like Consumer PC, Commercial PC, and Workstations etc. Nokia
previously had three divisions like Consumer Phone, Business Phone & Smart Phone.
Recently Nokia had changed their departmentalization from customer to process base.
Now
there are only two divisions: Hardware and Software base departmentalization. They
will also sell their software to other mobile company. Another example is an educational
institution offers regular and extension courses to cater to the needs of different
students groups.

Advantages

 It is suitable for the organization dealing with various types of customers.

 Management can concentrate on clearly identified and potential customers.

 It considers the environmental changes.

 Special attention can be given to the taste and preference of customers.

 It provides the benefit of specialization.

Disadvantages

 It may be difficult to maintain coordination.

 There may be under utilization of facilities especially during the period of low
demand.

 There may be possibility of duplication of activities.

 There is possibility of conflict between departments due to over emphasis of own

department by departmental managers.

 Over emphasis of on customers may lead to wastage of resources.

 It is costly method of departmentalization.

Departmentalization by Time

Time is also a basis of departmentalization in may organization, especially, those

that involve in public utility, production or service. Generally, hospitals, hotels,
telecommunication and other public utility organization which work around the clock
from departments on the basis of time shift such as day, evening and night shifts.
Therefore, a separate department is created on the basis of shift and a departmental
head of appointed for each shift to maintain control the activities of concerned shift.
Advantages

 There is proper division of works into different shifts.

 It facilitates coordination by grouping members into shifts.

 It ensures effective utilization of specialized skills and equipments.

 It provides full responsibility to the shift head to complete activities which

improves product/service efficiency.

 It helps in the appropriate use of resources and facilities.

Disadvantages

 It is appropriate only for public utility enterprise where the work is round the
clock.

 The technical problem is one shift may create problems for the entire shift.

 There is possibility of conflict among managers of different shifts.

 It is more difficult to maintain coordination among different shift mangers.

 The responsibility of total profit cannot be assigned to a shift department.

DELEGATION OF AUTHORITY

Delegation of Authority means division of authority and powers downwards to the

subordinate. Delegation is about entrusting someone else to do parts of your job.
Delegation of authority can be defined as subdivision and sub-allocation of powers to
the subordinates in order to achieve effective results.

Importance of Delegation:

1. Effective management:

In the delegation process managers pass routine work to the subordinates. So

they are free to concentrate on other important matters. The main job of managers is to
get the work done effectively and by delegating the authorities and responsibilities
managers can get the work done effectively and efficiently from the subordinates.
2. Employees’ Development:

As a result of delegation employees get more opportunities to utilise their talents.

It allows them to develop those skills which help them to perform complex task.
Delegation help in making better future managers by giving them chance to use their
skills, gain experience of work related to higher job position.

3. Motivation of employees:

In the delegation when the manager is sharing his responsibilities and authority
with the subordinates it motivates the subordinates as they develop the feeling of
belongingness and trust which is shown to them by their superiors. Some employees
can be motivated by such kind of non-financial incentives.

4. Facilitates organisational growth:

In the process of delegation when the managers are passing their responsibility
and authority to the subordinates they keep in mind the qualification and capability of all
the subordinates. This leads to division of work and specialisation which is very
important for organisational growth.

5. Basis of Management Hierarchy:

Delegation establishes superior-subordinate relationship which is the base for

hierarchy of managers. The extent of power delegated to subordinates decides who will
report to whom, and the power at each job position forms the Management Hierarchy.

6. Better Coordination:

In delegation systematically responsibility and authority is divided and employees

are made answerable for non-completion of task. This systematic division of work gives
clear pictures of work to everyone and there is no duplication of work clarity in duties
assigned and reporting relationship brings effective coordination in the organisation.

7. Reduces the work load of managers:

In the process of delegation, the managers are allowed to share their

responsibilities and work with the subordinates which help the managers to reduce their
work load. With the process of delegation the managers can pass all their routine work
to the subordinates and concentrate on important work. Without delegation managers
will be overburdened with the work.

8. Basis of superior-subordinate relationship:

In the delegation process only two parties are involved that is superior and
subordinate. If superiors share or pass their responsibilities and authorities to the
subordinates it indicates good relationship between the superior and subordinate
because superiors will transfer their responsibility and authority to their subordinates
only when they have trust in them. So delegation improves the relations between
superiors and subordinates.

Elements of Delegation/Process of Delegation:

There are three elements of delegation:

1) Responsibility
2) Authority
3) Accountability

1. Responsibility:

Responsibility means the work assigned to an individual. It includes all the

physical and mental activities to be performed by the employees at a particular job
position. The process of delegation begins when manager passes on some of his
responsibilities to his subordinates which mean responsibility can be delegated.

Features of Responsibility:

 Responsibility is the obligation of a subordinate to properly perform the

assigned duty.
 It arises from superior subordinate relationship because subordinate is bound
to perform the duty assigned by his superior.
 Responsibility flows upward because subordinate will always be responsible
to his superior.
2. Authority:

Authority means power to take decision. To carry on the responsibilities every

employee need to have some authority. So, when managers are passing their
responsibilities to the subordinates, they also pass some of the authority to the
subordinates. The delegating authority is the second step of organising process. While
sharing the authority managers keep in mind that the authority matching to the
responsibility should only be delegated. They shall not pass all their authority to their
subordinates.

Features of Authority:

 Authority refers to right to take decision due to your managerial position.

 Authority determines superior subordinate relationship. As subordinate
communicates his decisions to subordinate expecting compliance from him as
per his directions.
 Authority is restricted by law and rules and regulations of the organisation.
 Authority arises from the scalar chain which links various job positions.
 Authority flows upward as we go higher up in management hierarchy the
scope of authority increases.
 Authority must be equal to Responsibility i.e.,Authority = Responsibility

3. Accountability:

To make sure that the employees or subordinates perform their responsibilities in

their expected manner, the accountability is created. Accountability means subordinates
will be answerable for the non-completion of the task; creating accountability is the third
and final step of delegation process.

The accountability cannot be passed or delegated. It can only be shared with the
subordinates which means even after delegating responsibility and authority the
managers will be accountable for non-completion of task.

If the production manager is given the target of producing 20 machines in one

month’s time and he divided this target between four foremen working under him, i.e., 5
machines to be produced by each foreman but one foreman could not achieve the
target and at the end of the month only 17 machines are manufactured, then production
manager will be held accountable for non-completion of target as accountability cannot
be transferred or shared: it is an absolute term.

Features of Accountability:

 Accountability refers to answerable for the final output.

 It cannot be delegated or passed.
 It enforced through regular feedback on the extent of work accomplished.
 If flows upward, i.e., subordinate will be accountable to his superior.

Differences between Authority and Responsibility

Authority Responsibility

It is the legal right of a person or It is the obligation of subordinate to perform the

a superior to command his work assigned to him.
subordinates.

Authority is attached to the Responsibility arises out of superior-subordinate

position of a superior in relationship in which subordinate agrees to carry
concern. out duty given to him.

Authority can be delegated by a Responsibility cannot be shifted and is absolute

superior to a subordinate

It flows from top to bottom. It flows from bottom to top.

“Centralization” is the systematic and consistent reservation of authority at central points
in the organization.

The implication of centralization can be

 Reservation of operation at lower level at the directions of the top level.

 Reservation of operating authority with the middle level managers.
 Reservation of decision making power at top level.

Advantage of Centralized Organizational Structure •

 Reduced cost
 Uniformity in action
 Personal leadership
 Flexibility
 Improved quality of work
 Better co-ordination

Disadvantage of Centralized Organizational Structure

 Delay in work
 Remote control
 No loyalty
 No Secrecy
 No special attention

FACTORS INFLUENCING CENTRALIZATION

 Size and dispersal of operation

 Level of diversity of product-lines
  Nature of growth
 Nature of Business
 Quality of Executives
 Management by Exception
 Effective Control System

Decentralization” is a systematic delegation of authority at all levels of management and

in all of the organization.

 Everything that increasing the role of subordinates is decentralization and that

decreases the role is centralization”
 Authority in retained by the top management for taking major decisions.
 Decentralization pattern is wider is scope.

Advantage of De Centralized Organizational Structure

 Distribution of burden of top executive

 Increased motivation and morale
 Greater efficiency and output
 Diversification of Activities
 Better Co-ordination
 Maintenance of Secrecy
 Facilitate effective control and quick decision
Disadvantage of De Centralized Organizational Structure

 More cost
 No specialization
 Need more specialists
 No uniform action
 No equitable distribution of work
 Control Systems
 Types of Business
 Branches of organization
 Type of organization

FACTORS AFFECTING DECENTRALIZATION

 Size of the organization – large or small

 Cost and Importance of decisions
 Uniformity
 History of organization
 Management Philosophy
 Availability of efficient managers
 Type of business
 Branches of organization
 Centralization Decentralization

 Environment is stable  Environment is complex, uncertain.

 Lower-level managers are not  Lower-level managers are capable

as capable or experienced at and experienced at making
making decisions as upper-level decisions.
managers.

 Lower-level managers do not

 Lower-level managers want a
want to have say in decisions voice in decisions.
 Decisions are significant.  Decisions are relatively minor.
 Organization is facing a crisis or  Corporate culture is open to
the risk of company failure. allowing managers to have a say
in what happens.

 Company is large.  Company is geographically single.

 Effective implementation of  Effective implementation of

company strategies depends on company strategies depends on
managers retaining say over managers having involvement and
what happens. flexibility to make decisions

JOB ANALYSIS

Job Analysis is a systematic exploration, study and recording the responsibilities,

duties, skills, accountabilities, work environment and ability requirements of a specific
job.

Job design

Job design follows job analysis i.e. it is the next step after job analysis. It aims at
outlining and organizing tasks, duties and responsibilities into a single unit of work for
the achievement of objectives.
 There are various steps involved in job design that follow a logical sequence,
those that were mentioned earlier on. The sequence is as follows:

 What tasks are required to e done or what tasks is part of the job?
 How are the tasks performed?
 What amount are tasks are required to be done?
 What is the sequence of performing these tasks?

All these questions are aimed at arriving upon a clear definition of a specific job
and thereby make it less risky for the one performing the same. A well defined job
encourages feeling of achievement among the employees and a sense of high self
esteem.

The whole process of job design is aimed to address various problems within the
organizational setup, those that pertain to ones description of a job and the associated
relationships. More specifically the following areas are fine tuned:

 Checking the work overload.

 Checking upon the work under load.
 Ensuring tasks are not repetitive in nature.
 Ensuring that employees don not remain isolated.
 Defining working hours clearly.
 Defining the work processes clearly.

Benefits of Job Design

The following are the benefits of a good job design:

1. Employee Input: A good job design enables a good job feedback.

Employees have the option to vary tasks as per their personal and social
needs, habits and circumstances in the workplace.
2. Employee Training: Training is an integral part of job design. Contrary to
the philosophy of “leave them alone’ job design lays due emphasis on
training people so that are well aware of what their job demands and how
it is to be done.
 3. Work / Rest Schedules: Job design offers good work and rest schedule
by clearly defining the number of hours an individual has to spend in
his/her job.
4. Adjustments: A good job designs allows for adjustments for physically
demanding jobs by minimizing the energy spent doing the job and by
aligning the manpower requirements for the same.

Job design is a continuous and ever evolving process that is aimed at helping
employees make adjustments with the changes in the workplace. The end goal is
reducing dissatisfaction, enhancing motivation and employee engagement at the
workplace.

Approaches to Job Design

There are various methods or approaches to do the job design. The important
ones are discussed below

Human Approach

The human approach of job design laid emphasis on designing a job around the
people or employees and not around the organizational processes. In other words it
recognizes the need of designing jobs that are rewarding (financially and otherwise) and
interesting at the same time.

According to this approach jobs should satisfy an individual’s need for

recognition, respect, growth and responsibility.

Herzberg classified these factors into two categories –

1. The hygiene factors

2. The motivators.

Motivators include factors like achievement, work nature, responsibility, learning

and growth etc that can motivate an individual to perform better at the work place.
 Hygiene factor on the other hand include things like working conditions,
organizational policies, salary etc that may not motivate directly but the absence of
which can lead to dissatisfaction at the work place.

Engineering Approach

The engineering approach was devised by FW Taylors. They introduced the idea
of the task that gained prominence in due course of time. According to this approach the
work or task of each employee is planned by the management a day in advance. The
instructions for the same are sent to each employee describing the tasks undertaken in
detail. The details include things like what, how and when of the task along with the time
deadlines.

The approach is based on the application of scientific principles to job design.

Work, according to this approach should be scientifically analyzed and fragmented into
logical tasks.

The Job Characteristics Approach

The job characteristics approach was popularized by Hackman and Oldham.

According to this approach there is a direct relationship between job satisfaction and
rewards. They said that employees will be their productive best and committed when
they are rewarded appropriately for their work. They laid down five core dimensions that
can be used to describe any job - skill variety, task identity, task significance, autonomy
and feedback.

1. Skill variety: The employees must be able to utilize all their skills and
develop new skills while dealing with a job.
2. Task Identity: The extent to which an identifiable task or piece or work is
required to be done for completion of the job.
3. Task Significance: How important is the job to the other people, what
impact does it create on their lives?
 4. Autonomy: Does the job offer freedom and independence to the
individual performing the same.
5. Feedback: Is feedback necessary for improving performance.

These are different approaches but all of them point to more or less the same
factors that need to be taken into consideration like interest, efficiency, productivity,
motivation etc. All these are crucial to effective job design.

Issues in Job Design

As we know, job design is a systematic organization of job-related tasks,

responsibilities, functions and duties. It is a continuous process of integration of content
related to job in order to achieve certain objectives. The process plays a vital role as it
affects the productivity of employees and organizations. However, there are a number
of existing issues emerged recently while designing the jobs in organizations. These are
alternative work patterns that are equally effective in handling organization’s functions.
 Telecommuting / Work from Home: Telecommuting or work from home is
considered as the best alternative of working from the actual office. By using
computer networks, fax machines, telephones and internet connection, employees
can communicate and perform the job from home. It eliminates the need of coming to
office everyday and offers employees the convenience to work at the comfort of their
home.
Though there are lots of advantages associated with this working style but it
suffers from many limitations. It allows employees to stay at home and manage their
job tasks and functions without actually being present in the office but it doesn’t allow
them to communicate with other employees and establishing relationships with them.
They only deal with machines whole day, thus lose creativity. Moreover, it is a great
hindrance in their way as it does not allow skill upgradation.

 Job Sharing: It is the second most preferable alternative of traditional working styles
where two or more individuals share the responsibilities of a full time job. They divide
the tasks, responsibilities and compensation according to their mutual consent. This
option is generally used by women who are on maternity leave or have family and
kids to look after but want to continue their job. These days, organizations are open
to this kind of working style where two or more individuals can share a job.

 Flexi-Working Hours: These days, organizations allow their employees to work

according to the timings that suit them best. There are 3-4 working schedules and
individuals can choose any one of them depending upon their availability. Employees
can work in early hours as well as night hours. This is good for those individuals who
have colleges or some other engagements during the day or specific hours of the
day. The best part is that unlike telecommuting, flexi-timings give them chance to
communicate with other employees too.
 Alternative Work-Patterns: Companies these days allow their employees to work on
alternate months or seasons. Though the concept is not that common in India but can
be seen in European and American world of work. They also have the option of
working two to three full days and can relax after that.
According to the latest concept, employees can work for fixed number of hours
and then can attend to their personal needs during the left days.

 Techno stress: It is the latest technology to keep a check on employees’

performance even when they choose to work from home. Because of the introduction
of new machines, there performance can be electronically monitored even when they
are not aware of it.

 Task Revision: Task revision is nothing but modification of existing work design by
reducing or adding the new job duties and responsibilities to a specific job.

FACTORS AFFECTING JOB DESIGN

A well defined job will make the job interesting and satisfying for the employee.
The result is increased performance and productivity. If a job fails to appear compelling
or interesting and leads to employee dissatisfaction, it means the job has to be
redesigned based upon the feedback from the employees.

Broadly speaking the various factors that affect a job design can classified under
three heads. They are:

1. Organizational Factors
2. Environmental Factors
3. Behavioural Factors

Organizational Factors

Organizational factors that affect job design can be work nature or

characteristics, work flow, organizational practices and ergonomics.
  Work Nature: There are various elements of a job and job design is required
to classify various tasks into a job or a coherent set of jobs. The various tasks
may be planning, executing, monitoring, controlling etc and all these are to be
taken into consideration while designing a job.
 Ergonomics: Ergonomics aims at designing jobs in such a way that the
physical abilities and individual traits of employees are taken into
consideration so as to ensure efficiency and productivity.
 Workflow: Product and service type often determines the sequence of work
flow. A balance is required between various product or service processes and
a job design ensures this.
 Culture: Organizational culture determines the way tasks are carried out at
the work places. Practices are methods or standards laid out for carrying out
a certain task. These practices often affect the job design especially when the
practices are not aligned to the interests of the unions.

Environmental Factors

Environmental factors affect the job design to a considerable extent. These

factors include both the internal as well as external factors. They include factors like
employee skills and abilities, their availability, and their socio economic and cultural
prospects.

 Employee availability and abilities: Employee skills, abilities and time of

availability play a crucial role while designing of the jobs. The above
mentioned factors of employees who will actually perform the job are taken
into consideration. Designing a job that is more demanding and above their
skill set will lead to decreased productivity and employee satisfaction.
 Socio economic and cultural expectations: Jobs are nowadays becoming
more employee centered rather than process centered. They are therefore
designed keeping the employees into consideration. In addition the literacy
level among the employees is also on the rise. They now demand jobs that
are to their liking and competency and which they can perform the best.
Behavioural Factors

Behavioural factors or human factors are those that pertain to the human need
and that need to be satisfied for ensuring productivity at workplace. They include the
elements like autonomy, diversity, feedback etc. A brief explanation of some is given
below:

 Autonomy: Employees should work in an open environment rather than one

that contains fear. It promotes creativity, independence and leads to
increased efficiency.
 Feedback: Feedback should be an integral part of work. Each employee
should receive proper feedback about his work performance.
 Diversity: Repetitive jobs often make work monotonous which leads to
boredom. A job should carry sufficient diversity and variety so that it remains
as interesting with every passing day. Job variety / diversity should be given
due importance while designing a job.
 Use of Skills and abilities: Jobs should be employee rather than process
centered. Though due emphasis needs to be given to the latter but jobs
should be designed in a manner such that an employee is able to make full
use of his abilities and perform the job effectively.

Human resources management

Human resources management (HRM) is a management function concerned with

hiring, motivating and maintaining people in an organization. It focuses on people in
organizations. Human resource management is designing management systems to
ensure that human talent is used effectively and efficiently to accomplish organizational
goals.

According to the Invancevich and Glueck, “HRM is concerned with the most effective
use of people to achieve organizational and individual goals. It is the way of managing
people at work, so that they give their best to the organization”.
According to Dessler (2008) the policies and practices involved in carrying out the
“people” or human resource aspects of a management position, including recruiting,
screening, training, rewarding, and appraising comprises of HRM.

The following constitute of HRM

1. HRM Involves the Application of Management Functions and Principles. The

functions and principles are applied to acquiring, developing, maintaining and
providing remuneration to employees in organization.
2. Decision Relating to Employees must be integrated. Decisions on different
aspects of employees must be consistent with other human resource (HR)
decisions.
3. Decisions Made Influence the Effectiveness of an Organization. Effectiveness of
an organization will result in betterment of services to customers in the form of
high quality products supplied at reasonable costs.
4. HRM Functions are not confined to Business Establishments Only but applicable
to non business organizations such as education, health care, recreation and
like.

Meaning Human Resource Planning:

Human resource is the most important asset of an organization. Human resources

planning are the important managerial function. It ensures the right type of people, in
the right number, at the right time and place, who are trained and motivated to do the
right kind of work at the right time, there is generally a shortage of suitable persons.

In order to cope human resource requirements, an enterprise will have to plan in

advance its needs and the sources. The terms human resource planning and manpower
planning are generally used interchangeably. Human resource planning is not a
substitute for manpower planning. Rather the latter is a part of the former i.e.,
manpower planning is integrated with human resource planning.
Definition Human Resource Planning:

According to E.W. Vetter, human resource planning is “the process by which a

management determines how an organization should make from its current manpower
position to its desired manpower position.

Dale S. Beach has defined it as “a process of determining and assuring that the
organization will have an adequate number of qualified persons available at the proper
times, performing jobs which meet the needs of the enterprise and which provide
satisfaction for the individuals involved.”

In the words of Leon C. Megginson, human resource planning is “an integration

approach to performing the planning aspects of the personnel function in order to have
a sufficient supply of adequately developed and motivated people to perform the duties
and tasks required to meet organizational objectives and satisfy the individual’s needs
and goals of organizational members.”

Features of Human Resource Planning:

1. Well Defined Objectives:

Enterprise’s objectives and goals in its strategic planning and operating planning may
form the objectives of human resource planning. Human resource needs are planned on
the basis of company’s goals. Besides, human resource planning has its own objectives
like developing human resources, updating technical expertise, career planning of
individual executives and people, ensuring better commitment of people and so on.

2. Determining Human Resource Reeds:

Human resource plan must incorporate the human resource needs of the enterprise.
The thinking will have to be done in advance so that the persons are available at a time
when they are required. For this purpose, an enterprise will have to undertake
recruiting, selecting and training process also.
3. Keeping Manpower Inventory:

It includes the inventory of present manpower in the organisation. The executive should
know the persons who will be available to him for undertaking higher responsibilities in
the near future.

4. Adjusting Demand and Supply:

Manpower needs have to be planned well in advance as suitable persons are available
in future. If sufficient persons will not be available in future then efforts should be .made
to start recruitment process well in advance. The demand and supply of personnel
should be planned in advance.

5. Creating Proper Work Environment:

Besides estimating and employing personnel, human resource planning also ensures
that working conditions are created. Employees should like to work in the organization
and they should get proper job satisfaction.

Recruitment

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

 To attract those applicants who are best qualified to fill the vacancies.
 Effective selection depends on effective recruitment.

Job analysis

 Analyzing the environment (nature of competition, customers etc.…) in which

employees work
 Determining duties and responsibilities to be discharged
  Observing and recording the various tasks of the job as they are actually
performed

Job analysis is often done through interviews, direct observation or by using a

questionnaire that is completed by the person current holding the job and his immediate
supervisor. It forms the basis for job description and job specifications.

Systematic job analysis

 Functional job analysis (FJA)

 The data, people and jobs pertaining to
Input and job activities individual’s job.
 Method and techniques that the individual
uses of the job
 Tools and equipment used by the worker

Output and job performance  Products and services produced by the

worker

Components of job analysis

Position analysis questionnaire (PAQ)

(a) The source of information that are critical to job performance

(b) Information processing and decision making critical to job performance
(c) The amount of physical activities and skill required for the job
(d) Physical working conditions and reactions of individuals to those conditions
(e) Other characteristics of the job, such as work schedules and work
responsibilities.

Sources of Recruitment

 Internal Recruitment
 External Recruitment

Comparison of Internal & External Recruitment

Sl. No. Criteria Internal Recruitment External Recruitment

1 Familiarity of candidate with Influx of new ideas

organisation’s policies,
procedures and culture
Candidates who are culture
recruited from competitors
provide valuable information

2 Available information and Candidates who are recruited

Advantages observation by superiors from competitors provide
facilitates easier selection. valuable information about
competitors moves and
strategies

3 Selection and socialisation Facilitates recruitment of

of job incumbents involves candidates with deserve skills
less time and money and expertise and vast
experience
4 Enhances employee morale
by offering opportunities for
upward mobility.

5 Prevents high – quality

employees from leaving the
Organisation.

1 Lack of new ideas Lack of reliable information

increases the probability of
committing mistakes in
selection.

2 Need for expensive Expensive process.

training programs
Disadvantages
3 Can breed nepotism and Orientation process may
political operations consume a lot of time.

4 Leads to “Ripple Effect” Raises offense among hopeful

internal candidates.

5 May leave unsuccessful

contestants angry

External Recruitment process

 Advertising
 Educational Institutions
 Employment Agencies
 Voluntary Applicants
  Referrals by Current Employees

Selection processes

The selection process refers to the steps involved in choosing people who have
the right qualifications to fill a current or future job opening. Usually, managers and
supervisors will be ultimately responsible for the hiring of individuals, but the role of
human resource management (HRM) is to define and guide managers in this process.
Similar to the recruitment process, the selection process is expensive. The time for all
involved in the hiring process to review resumes, weight the applications, and interview
the best candidates takes away time (and costs money) that those individuals could
spend on other activities. In addition, there are the costs of testing candidates and
bringing them in from out of town for interviews.

The selection process consists of five distinct aspects:

1. Criteria development. The first aspect to selection is planning the interview

process, which includes criteria development. Criteria development means
determining which sources of information will be used and how those sources will
be scored during the interview. The criteria should be related directly to the job
analysis and the job specifications. In fact, some aspects of the job analysis and
job specifications may be the actual criteria. In addition to this, include things like
personality or cultural fit, which would also be part of criteria development. This
process usually involves discussing which skills, abilities, and personal
characteristics are required to be successful at any given job. By developing the
criteria before reviewing any resumes, the HR manager or manager can be sure
he or she is being fair in selecting people to interview. Some organizations may
need to develop an application or a biographical information sheet. Most of these
are completed online and should include information about the candidate,
education, and previous job experience.

2. Application and resume review. Once the criteria have been developed,
applications can be reviewed. People have different methods of going through this
 process, but there are also computer programs that can search for keywords in
resumes and narrow down the number of resumes that must be looked at and
reviewed.

3. Interviewing. After the HR manager and/or manager have determined which

applications meet the minimum criteria, he or she must select those people to be
interviewed. Most people do not have time to review twenty or thirty candidates, so
the field is sometimes narrowed even further with a phone interview.

4. Test administration. Any number of tests may be administered before a hiring

decision is made. These include drug tests, physical tests, personality tests, and
cognitive tests. Some organizations also perform reference checks, credit report
checks, and background checks. Once the field of candidates has been narrowed
down, tests can be administered.

5. Making the offer. The last step in the selection process is to offer a position to the
chosen candidate. Development of an offer via e-mail or letter is sometimes a
more formal part of this process. Compensation and benefits will be defined in an
offer.

OBJECTIVE OF HRM

The primary objective of HRM is to ensure the availability of competent and

willing workforce to an organization. The specific objectives include the following:

1. Human capital : assisting the organization in obtaining the right number and types of
employees to fulfill its strategic and operational goals

2. Developing organizational climate: helping to create a climate in which employees

are encouraged to develop and utilize their skills to the fullest and to employ the
skills and abilities of the workforce efficiently

3. Helping to maintain performance standards and increase productivity through

effective job design; providing adequate orientation, training and development;
 providing performance-related feedback; and ensuring effective two-way
communication.

4. Helping to establish and maintain a harmonious employer/employee relationship

5. Helping to create and maintain a safe and healthy work environment

6. Developing programs to meet the economic, psychological, and social needs of the
employees and helping the organization to retain the productive employees

7. Ensuring that the organization is in compliance with provincial/territorial and federal

laws affecting the workplace (such as human rights, employment equity,
occupational health and safety, employment standards, and labour relations
legislation). To help the organization to reach its goals

8. To provide organization with well-trained and well-motivated employees

9. To increase the employees satisfaction and self-actualization

10. To develop and maintain the quality of work life

11. To communicate HR policies to all employees.

12. To help maintain ethical polices and behavior.

TRAINING AND DEVELOPMENT

Training and development is a function of human resource management

concerned with organizational activity aimed at bettering the performance of individuals
and groups in organizational settings. It has been known by several names, including
"Human Resource Development", "Human Capital Development" and "Learning and
Development". These definitions, of course, are viewed within the context of
organizational learning rather than other contexts (e.g. personal) of training and
development.

Activities of Training and development

1) Training

2) Education
 3) Development.

Training: This activity is both focused upon, and evaluated against, the job that
an individual currently holds.

Education: This activity focuses upon the jobs that an individual may potentially
hold in the future, and is evaluated against those jobs.

Development: This activity focuses upon the activities that the organization
employing the individual, or that the individual is part of, may partake in the future, and
is almost impossible to evaluate.

The need for Training and Development

Training is necessary for the individual development and progress of the

employee. We also require training update employees of the market trends, the change
in the employment policies and other things.

The following are the two biggest factors that contribute to the increased need to
training and development in organizations:

1. Change: The word change encapsulates almost everything. It is one of the biggest
factors that contribute to the need of training and development. There is in fact a
direct relationship between the two. Change leads to the need for training and
development and training and development leads to individual and organizational
change, and the cycle goes on and on. More specifically it is the technology that is
driving the need; changing the way how businesses function, compete and deliver.

2. Development: It is again one the strong reasons for training and development
becoming all the more important. Money is not the sole motivator at work and this is
especially very true for the 21st century. People who work with organisations seek
more than just employment out of their work; they look at holistic development of
self. Spirituality and self awareness for example are gaining momentum world over.
People seek happiness at jobs which may not be possible unless an individual is
aware of the self.
Method of Training and Development

1. Classroom Lecture Method:

This is the most commonly used, simple, cost effective and conventional method. It
is time saving because it covers maximum number of people in a short period of
time. It involves a speech by the instructor with very limited discussions. Clear and
direct methods of presentation. Weaknesses of the method are that, lecture time is
more than the normal human attention span of fifteen minutes and the contents of
the lecture could be easily forgotten. Since the method does not provide for active
participation on the part of the trainees, the extent of take-home learning is not to be
known clearly. Moreover, lecture might be useful only if the presentation is made
skillfully. While lecture is a useful method in so far as information dissemination is
the objective, it has not been highly successful in modifying human behavior or in
building commitments in the audience’s minds. An improvisation of this method is
the lecture-cum-demonstration method in which the lecturer reemphasizes a skill or
information by displaying the same in action.

2. Group Discussion Method:

It is a method used to knowledge and attitudinal development of trainees. In this

method, sets of people examine several empirical studies to find out commonalities
to derive the underlying general principles. They then combine their ideas and focus
their attention on a given problem at a time, speaking from multiple points of view
within a group. An instructor is optional, while a leader is necessary in this method.
The various advantages of the method are

 More ideas can be generated from each session. Moreover

 Each member gets an opportunity to present one’s own ideas and get
feedback from members of the same group.
 Peer pressure and commitments made to groups serve to ensure adherence
to decisions jointly taken in the group.
 As a precaution, care must be taken to secure the participation of all members and
make sure that a few members do not pre-determine the course of discussions or
dominate the whole proceedings.

3. Simulation Exercises Method:

Simulators are a group of training devices of varying degrees of complexity that

model the real world. They range from simple paper mock-ups of mechanical
devices to computerized creations of total environments. In fact, some argue that
case-study, role-play and a host of other methods can be brought under the
category of simulation.

The advantage of simulation methods is

 They improve the possibility of learning without damaging the equipments or

human life or facing the numerous risks involved in actual performance.

For example, most of traffic rules, signals and procedures of driving could be taught
in a park that resembles main road or through a video game featuring car or two
wheeler driving. Piloting planes are taught using more complex simulations. The
methods are indirect but could also be expensive. The method calls for a certain
level of grasp and information processing capability and transfer of learning on the
part of the trainees.

4. Role Playing Method:

Role is a set of expectations around a given position and is determined by the role
partners. Roles are always reciprocal and described in pairs such as

 Trainer-trainee,
 Buyer-seller, and
 Interviewer-interviewee and so on.

Playing roles would entail practical problems like

 Inter-role conflicts
 Intra-role dilemmas
 Role overloads
  Role under loads.

As a result of these hurdles, role confusion develops. In order to be trained to

perform roles, trainees must attain role clarity. This may involve negotiation among
the role senders and role receivers with regard to their expectations with counter
expectations upon one another.

Participants in role-play method are required to respond to specific problems and

expectations of people that they might actually encounter in their jobs.

Role-playing is often used to teach such skills as interviewing, negotiating,

grievance handling, performance appraisal, and buying and selling and effective
communication. It promotes healthy human relations skills among people.

5. Case Study Method:

Case study can be interest creating and thought stimulating for the participants. It
helps to develop analytical, reasoning and problem-solving skills of the participants.
As it shows and reduces gaps in understanding, a holistic understanding of reality is
made possible through case study method. It also helps to reemphasize messages
provided during lectures, group discussions and other methods. The disadvantage of
the method might be the difficulty in drawing adequate number of stimulating cases
that actually represent the real life situations of the trainees.

6. Sensitivity Training or T Group Training or Laboratory training Method:

T-groups are concerned with the real problems existing within the group itself.
People are helped to become more responsive to others’ sensitivities and work more
harmoniously and responsibly together by encouraging them to interact freely and
actively. The members are enabled to recognize group dynamics and diagnose
human relationship problems. The participants are encouraged to communicate
thoughts and feelings with each other in an open, unstructured, warm and honest
manner than is typically done in the usual work or social situation. A beneficial
outcome of the method is that participants find better means of behavior for effective
interpersonal relationships without the aid of power or authority over others. The
method has to be used carefully as people may resent negative feedback and show
 anger in response. People have to be first prepared well to accept criticism in a
constructive manner so that conflicts could be managed properly.

7. Management Games Method:

Games are used as a training tool, than as mere pastimes or amusement. Trainees
are divided into teams and are given common tasks on which they would be
competing to arrive at decisions, and then jointly implementing and evaluating the
decisions taken with regard to the games.

For example, blocks of wood would be supplied to every team and one of the
members would be blind-folded with a piece of cloth. The person would have to
arrange the blocks one above the other, as per the instructions and guidance of the
other members. As they set on to reach greater target heights, the rewards would
also grow exponentially. This game is used to bring out the nuances of teamwork,
leadership styles and communication patterns exhibited by the members while
playing the game. The demerits of the method are that, at times, games might result
in lack of seriousness in some trainees and that the learning is indirect and slow. But
it helps to convey messages in a non-threatening and fun-filled manner.

8. Outward Bound Training (OBT) Method:

As part of OBT, managers and other staff members meet and cohabitate as teams
at unfamiliar wilderness out of the workplace and away from the hustles and bustles
of daily life, where they would live in cabins or tents for a certain number of days.
They test their survival skills and learn about their own personality and hidden
potentials for creativity, cooperation and leadership. Participants get opportunities to
learn their limits and capabilities. Participants irrespective of their official position and
seniority would have to learn to be natural in their behavior and get rid of masks
worn in an office situation. It is an expensive method and the learning might not be
transferable to others or to other situations.

9. In-basket Training (IBT) Method:

IBT is a method where the trainee is required to examine a basket full of papers and
files relating to his area of work and make recommendations on problems contained
 in them. This method is meant for trainees in a managerial level to improve their
decision-making and problem-solving abilities. This is a form of simulation training
designed around day to- day business situations and hence is transferable to the job
experiences. The participant is usually asked to establish priorities for and then
handle a number of office papers, such as memoranda, reports, telephone
messages and emails that would typically cross a manager’s desk. The method has
at least two main stages. At the outset, the participant starts by working through the
case within a specified time limit all by himself without discussing the details with
anyone. Subsequently, other participants analyze and discuss the questions of
who’s, which’s, how’s, what’s, where’s, why’s and when’s of each decision or step.
The merits of this method include the best of traditional case study at the same time
combining the refinements to allow greater flexibility, realism and involvement.

The emphasis here is to understand things thoroughly, which is an opportunity too

rarely presented during busy working days. It is done in a permissive atmosphere of
experimenting and learning, rather than within the confines of a boss subordinate
relationship.

10. Vestibule Training Method:

This kind of training takes place away from the production area on equipment that
closely resembles the actual ones used on the job. It is a type of off-the-job training
in which employees get training in a realistic job setting but in a location different
from the one in which they would be working.

For example, a group of lathes may be located in a training center where the
trainees will be instructed in their use. The method is used frequently for training
typists and bank tellers, among others. The word ‘vestibule’ means entrance. Thus
vestibule training serves to facilitate full-fledged entry into job. A primary advantage
of vestibule training is that it removes the employee from the pressure of having to
produce while learning. Disturbance of production or supervisor during training is
minimized. The disadvantages include the extra investment on equipment and
additional persons to be employed as trainers.
11. Apprenticeship Training Method:

It combines classroom instructions with on-the-job training. It is a method in which

trainees at a novice stage called ‘apprentices’, work under the guidance of skilled,
licensed instructor and receive lower pay than workers. The method is a combination
of education and employment and is aimed at preparing workforce with certain levels
of qualification to meet the growing needs of the industry. The method develops
special skills like mechanical, electronic, tailoring, etc. Apprenticeship is traditionally
used in skilled jobs, such as those of plumber, carpenter, machinist and printer. The
extensive nature of the training assures quality outputs, though time consumed is
long. Employees recruited from the apprenticeship program are expected to hit the
ground running, implying that they would have to start performing with efficiency. But
uniform duration of apprenticeship training does not permit slow learners to reach
the levels of mastery like others.

12. Work shadowing Method:

This training method is chosen while preparing a second-line leader to take up the
role of the headship, in which case, the candidate could not benefit by sending them
to any other formal training program. The best way to be trained for a future
executive position would be through direct participant observation of the crucial
events that take place in the present incumbent’s work life. The trainees are made to
remain in the company of the role model whose work is to be learnt by the trainees.
Trainees learn the intricacies of a job of high level, by physically being in the
presence of the job-holder. Closely following the styles of working permits greater
degree of learning besides helping the trainee to imbibe the values and principles
adhered to by the model. Yet, care needs to be taken to avoid situations wherein
trainees are not warmly welcomed and are seen by supervisors in the department as
obstacles to their routines.

13. Programmed Instruction Method (PIM):

PIM provides instruction without the face-to-face intervention of an instructor. To

ensure a sequential approach to learning, instructions are designed in such a way
that all future learning depends on acquisition and retention of previous learning.
 With this method, information is broken down into small portions called ‘frames’. The
learner reads each frame in sequence and responds to questions designed to verify
learning. Based on the answers given by the trainees they are provided with
immediate feedback on response accuracy. If the learners have got all the answers
right, they proceed to the next frame. If not they repeat the frame. Primary features
of this approach are immediate reinforcement and the ability of learners to proceed
at their own pace. Programmed instructions may be presented in a book or in
computers.

14. Large Scale Interactive Events (LSIE) Method:

The method has a lot of unique advantages when compared to other methods. First,
this method stresses upon the sharing of expertise by all the participants, unlike
other methods where the instructor supplies most of the inputs and might even look
down upon trainees as people who are ignorant or unskilled in the topic being
covered. LSIE is based on the belief that all the participants, by virtue of being in
their job for a certain period of time, possess some degree of expertise that need to
be shared and combined with that of others.

Second advantage is that this method transcends the limitation of other methods in
terms of the number of people who could be trained per batch. The major advantage
of this method is that a group as large as 300 – 400 members could be trained
simultaneously without losing the effectiveness of other training methods. The third
advantage is the use of group processes. While the trainer limits his role with a brief
but inspiring presentation to stimulate thinking of the participant, the methods paves
way for active involvement of all the participants who are assigned various roles
such as sub-group leader, recorder, summarizer, presenter etc. A fourth advantage
of the LSIE is that the group emphasizes on extensive on-the-spot documentation of
viewpoints expressed by people. Finally, the method culminates in the entire large
group addressing to the common issues. At this stage, priority is to be set on areas
of intervention and a plan of action is drawn and accepted based on voting by
members, thereby building commitment of all the participants to implement the
 agreed upon plans. A disadvantage of the method could be that it requires a lot of
volunteers to assist the proceedings.

15. Personal Coaching Method:

It is an on-the-job approach in which a manager has the opportunity to teach an

employee, usually his immediate subordinate, on a one-to-one basis. Coaching is
helping self and others gain new perspectives their intentions and behaviors, to
understand what’s possible and how to access inner resources such as motivation,
commitment, passion, etc. as a coach, the supervisor gently confronts employees
with their shortcomings and makes suggestions for corrective actions. The
supervisor is also alert to encouraging good performance. Coaching is considered to
be one of the most effective management development techniques. Constant
guidance makes the trainee learn quickly.

16. Mentoring Method:

Mentoring is an on-the-job approach to training in which the trainee is given an

opportunity to learn on a one-to-one basis from more experienced members of the
organization. The mentor is usually an older, experienced executive who serves as a
host, friend, confidant and advisor to a new member of the firm. The mentor is given
the charge of protecting and responsibility of helping the new employee. The
relationship may be formally planned or it may develop informally. For mentoring to
be productive, the parties’ interests must be compatible and they must understand
each other’s learning styles and personalities. If mentors form overly strong bonds
with trainees, unwarranted favoritism might result. A highly successful mentor-
protégé relationship might create feelings of jealousy among other colleagues who
are not able to show equally good results out of the mentoring process.

17. Job Rotation Method:

This method of training involves the shifting of trainees from one job to another so as
to widen their exposure and enable them to obtain a general understanding of the
totality of the organization. Besides helping them to overcome boredom, job rotation
permits direct interaction with a large number of individuals within the organization,
 thereby facilitating future working relationships. The method should be used at
sufficient gaps to permit the development of a strong degree of expertise in the
trainee in an assigned position. Care should be taken by the organization to ensure
that work efficiency does not suffer when a few trainees are rotate into new jobs
where they would be taking time to learn and perform. There could be some
disadvantages of using the method of Job Rotation.

Trainees have to be prepared to face contrasting styles of operation and standards

that vary according to superiors. Some trainees might feel more like visiting casual
observers in the departments than being a part of the workforce, which would negate
the purpose of job rotation. Employees who are looking for more challenging
assignments might feel frustrated when asked to perform different kinds of simple
jobs at the same level.

18. Computer-Based Training (CBT) Method:

CBT is a technology-driven training method that takes full advantage of the speed,
memory and data manipulation capabilities of the computer for greater flexibility of
instruction. It involves the trainee sitting in front of a computer terminal rather than
listening to an instructor. Learning is enhanced through presentations combining
automation, stereophonic sound, full motion video and graphics. Increased speed
and decreased dependence on instructor are the strengths of this method.
Computer-Managed Instructions (CMI) is a system that automatically generates and
scores tests, tracks trainees’ performance and prescribes activities for students. An
orderly, step-by-step manner is possible by using this method. As additional
advantages, CBT allows reuse of the program for any number of time and allows for
varying time for fast and slow learners.

But CBT method cannot reduce the learner’s anxiety and fear, which can be done
only by a trained instructor. CBT is well suited for teaching facts but is less useful for
teaching human skills or changing attitudes.
19. Behavior Modeling Method:

This method involves emulation of behavior from a reference group or a role model
whose behavior is shown live before the trainees or by using videotapes or Compact
discs (VCD). The method entails recording and producing events or situations with
clear descriptions in order to cover certain subjects. The footage could be viewed,
reviewed and discussed to enhance learning quality. The advantages of using this
method are many. Many events and discussions can be put on one tape or CD. It is
a handy method for small firms that cannot afford more expensive approaches. It is
particularly helpful for first-line supervisors.

Observing a powerful model in the audiovisual form could help learn activities like
mediating during conflict situations, handling customer complaints and grievances.
The challenges involved in using the method include the high level of one-time
production costs in the initial stage. Moreover, projectors and other expensive
gadgets would be required along with continuous power supply.

20. Internship Method:

Internships involve placing young college and university students in temporary jobs
in which they can earn while they learn, with no obligations towards any regular
employment from the side of the employer or from the trainee. Such an arrangement
enables to provide a fresher the much-needed exposure to an organization and also
to determine the person organization fit. Students divide their attention between
academic activities and practical work assignments, which help them to internalize
the theory and practices. However, care must be taken to prevent the whole process
from getting reduced to the fulfillment of merely an academic requirement rather
than being treated as a stepping-stone towards an illustrious career.

21. Development Centre Method:

This method is designed based on the structure, styles and contents of assessment
centres used to assess the potential of an individual to meet the demands of a
higher-level managerial position. Multiple facilitators observe the members
 performing multiple tasks according to multiple criteria, using multiple methods.
However, the difference in development centers is that they focus their attention on
helping to improve the potential of the persons participating in the sessions. This
method of training is found effective in building leadership, decision-making, goal
setting and counseling skills in experienced trainees.

PERFORMANCE MANAGEMENT

Performance management is the process of creating a work environment or

setting in which people are enabled to perform to the best of their abilities. Performance
management is a whole work system that begins when a job is defined as needed. It
ends when an employee leaves your organization.

A performance management system includes the following actions.

 Developing clear job descriptions and employee performance plans which

includes the key result areas (KRA') and performance indicators.
 Selection of right set of people by implementing an appropriate selection
process.
 Negotiating requirements and performance standards for measuring the
outcome and overall productivity against the predefined benchmarks.
 Providing continuous coaching and feedback during the period of delivery of
performance.
 Identifying the training and development needs by measuring the outcomes
achieved against the set standards and implementing effective development
programs for improvement.
 Holding quarterly performance development discussions and evaluating
employee performance on the basis of performance plans.
 Designing effective compensation and reward systems for recognizing those
employees who excel in their jobs by achieving the set standards in
accordance with the performance plans or rather exceed the performance
benchmarks.
  Providing promotional/career development support and guidance to the
employees.
 Performing exit interviews for understanding the cause of employee
discontentment and thereafter exit from an organization.

The major objectives of performance management are discussed below:

 To enable the employees towards achievement of superior standards of work

performance.
 To help the employees in identifying the knowledge and skills required for
performing the job efficiently as this would drive their focus towards
performing the right task in the right way.
 Boosting the performance of the employees by encouraging employee
empowerment, motivation and implementation of an effective reward
mechanism.
 Promoting a two way system of communication between the supervisors and
the employees for clarifying expectations about the roles and accountabilities,
communicating the functional and organizational goals, providing a regular
and a transparent feedback for improving employee performance and
continuous coaching.
 Identifying the barriers to effective performance and resolving those barriers
through constant monitoring, coaching and development interventions.
 Creating a basis for several administrative decisions strategic planning,
succession planning, promotions and performance based payment.
 Promoting personal growth and advancement in the career of the employees
by helping them in acquiring the desired knowledge and skills.

The performance management process evolved in several phases.

 First Phase: The origin of performance management can be traced in the

early 1960’s when the performance appraisal systems were in practice.
During this period, Annual Confidential Reports (ACR’s) which was also
 known as Employee service Records were maintained for controlling the
behaviors of the employees and these reports provided substantial
information on the performance of the employees.
Any negative comment or a remark in the ESR or ACR used to adversely
affect the prospects of career growth of an employee. The assessments were
usually done for ten traits on a five or a ten point rating scale basis. These
traits were job knowledge, sincerity, dynamism, punctuality, leadership,
loyalty, etc. The remarks of these reports were never communicated to the
employees and strict confidentiality was maintained in the entire process. The
employees used to remain in absolute darkness due to the absence of a
transparent mechanism of feedback and communication. This system had
suffered from many drawbacks.
 Second Phase: This phase continued from late 1960’s till early 1970’s, and
the key hallmark of this phase was that whatever adverse remarks were
incorporated in the performance reports were communicated to the
employees so that they could take corrective actions for overcoming such
deficiencies. In this process of appraising the performance, the reviewing
officer used to enjoy a discretionary power of overruling the ratings given by
the reporting officer. The employees usually used to get a formal written
communication on their identified areas of improvements if the rating for any
specific trait used to be below 33%.
 Third Phase: In this phase the term ACR was replaced by performance
appraisal. One of the key changes that were introduced in this stage was that
the employees were permitted to describe their accomplishments in the
confidential performance reports. The employees were allowed to describe
their accomplishments in the self appraisal forms in the end of a year.
Besides inclusion of the traits in the rating scale, several new components
were considered by many organizations which could measure the productivity
and performance of an employee in quantifiable terms such as targets
achieved, etc. Certain organizations also introduced a new section on training
needs in the appraisal form. However, the confidentiality element was still
 being maintained and the entire process continued to be control oriented
instead of being development oriented.
 Fourth Phase: This phase started in mid 1970’s and its origin was in India as
great business tycoons like Larsen & Toubro, followed by State Bank of India
and many others introduced appreciable reforms in this field.
In this phase, the appraisal process was more development driven, target
based (performance based), participative and open instead of being treated
as a confidential process. The system focused on performance planning,
review and development of an employee by following a methodical approach.
In the entire process, the appraise (employee) and the reporting officer
mutually decided upon the key result areas in the beginning of a year and
reviewed it after every six months. In the review period various issues such as
factors affecting the performance, training needs of an employee, newer
targets and also the ratings were discussed with the appraisee in a
collaborative environment.
This phase was a welcoming change in the area of performance
management and many organizations introduced a new HR department for
taking care of the developmental issues of the organization.
 Fifth Phase: This phase was characterized by maturity in approach of
handling people’s issues. It was more performance driven and emphasis was
on development, planning and improvement. Utmost importance was given to
culture building, team appraisals and quality circles were established for
assessing the improvement in the overall employee productivity.

Any effective performance management system includes the following

components:

 Performance Planning: Performance planning is the first crucial component

of any performance management process which forms the basis of
performance appraisals. Performance planning is jointly done by the appraise
and also the reviewed in the beginning of a performance session. During this
 period, the employees decide upon the targets and the key performance
areas which can be performed over a year within the performance budget.,
which is finalized after a mutual agreement between the reporting officer and
the employee.
 Performance Appraisal and Reviewing: The appraisals are normally
performed twice in a year in an organization in the form of mid reviews and
annual reviews which is held in the end of the financial year. In this process,
the appraisee first offers the self filled up ratings in the self appraisal form and
also describes his/her achievements over a period of time in quantifiable
terms. After the self appraisal, the final ratings are provided by the appraiser
for the quantifiable and measurable achievements of the employee being
appraised. The entire process of review seeks an active participation of both
the employee and the appraiser for analyzing the causes of loopholes in the
performance and how it can be overcome. This has been discussed in the
performance feedback section.
 Feedback on the Performance followed by personal counseling and
performance facilitation: Feedback and counseling is given a lot of
importance in the performance management process. This is the stage in
which the employee acquires awareness from the appraiser about the areas
of improvements and also information on whether the employee is
contributing the expected levels of performance or not. The employee
receives an open and a very transparent feedback and along with this the
training and development needs of the employee is also identified. The
appraiser adopts all the possible steps to ensure that the employee meets the
expected outcomes for an organization through effective personal counseling
and guidance, mentoring and representing the employee in training
programmes which develop the competencies and improve the overall
productivity.
 Rewarding good performance: This is a very vital component as it will
determine the work motivation of an employee. During this stage, an
employee is publicly recognized for good performance and is rewarded. This
 stage is very sensitive for an employee as this may have a direct influence on
the self esteem and achievement orientation. Any contributions duly
recognized by an organization helps an employee in coping up with the
failures successfully and satisfies the need for affection.
 Performance Improvement Plans: In this stage, fresh set of goals are
established for an employee and new deadline is provided for accomplishing
those objectives. The employee is clearly communicated about the areas in
which the employee is expected to improve and a stipulated deadline is also
assigned within which the employee must show this improvement. This plan
is jointly developed by the appraisee and the appraiser and is mutually
approved.
 Potential Appraisal: Potential appraisal forms a basis for both lateral and
vertical movement of employees. By implementing competency mapping and
various assessment techniques, potential appraisal is performed. Potential
appraisal provides crucial inputs for succession planning and job rotation.
 An effectively implemented performance management system can benefit the
organization, managers and employees in several ways as depicted in the table given
below:

Organization’s Benefits Improved organizational performance, employee retention

and loyalty, improved productivity, overcoming the barriers to
communication, clear accountabilities, and cost advantages.

Manager’s Benefits Saves time and reduces conflicts, ensures efficiency and
consistency in performance.

Employee’s Benefits Clarifies expectations of the employees, self assessment

opportunities clarifies the job accountabilities and contributes
to improved performance, clearly defines career paths and
promotes job satisfaction.

Clearly defined goals, regular assessments of individual performance and the

company wide requirements can be helpful in defining the corporate competencies and
the major skill gaps which may in turn serve as a useful input for designing the training
and development plans for the employees. A sound performance management system
can serve two crucial objectives:

Evaluation Objectives

 By evaluating the readiness of the employees for taking up higher

responsibilities.
 By providing a feedback to the employees on their current competencies and
the need for improvement.
 By linking the performance with scope of promotions, incentives, rewards and
career development.
Developmental Objectives

The developmental objective is fulfilled by defining the training requirements of

the employees based on the results of the reviews and diagnosis of the individual and
organizational competencies. Coaching and counseling helps in winning the confidence
of the employees and in improving their performance, besides strengthening the
relationship between the superior and the subordinate.

In a nutshell, performance management serves as an important tool for realizing

organizational goals by implementing competitive HRM strategies. It helps in aligning
and integrating the objectives with the KPI’s in an organization both vertically and
horizontally across all job categories and the levels and thus helps in driving all the
activities right from the bottom level towards one single goal.

CAREER PLANNING IN AN ORGANIZATION

Career planning is the process by which one selects career goals and the path to
these goals. The major focus of career planning is on assisting the employees achieve
a better match between personal goals and the opportunities that are realistically
available in the organization.

Career planning is not an event or end in itself, but a continuous process of

developing human resources for achieving optimum results. It must, however, be noted
that individual and organizational careers are not separate and distinct. A person who is
not able to translate his career plan into action within the organization may probably quit
the job, if he has a choice. Organizations, therefore, should help employees in career
planning so that both can satisfy each other’s needs.

Career Planning vs. Human Resource Planning

Human Resource planning is the process of analyzing and estimating the need
for and availability of employees. Through Human Resource planning, the Personnel
Department is able to prepare a summary of skills and potentials available within the
organization.
 Career planning assists in finding those employees who could be groomed for
higher level positions, on the strength of their performance.

Human Resource planning gives valuable information about the availability of

human resources for expansion, growth, etc. (expansion of facilities, construction of a
new plant, opening a new branch, launching a new product, etc.). On the other hand,
career planning only gives us a picture of who could succeed in case any major
developments leading to retirement, death, resignation of existing employees.

Human Resource planning is tied to the overall strategic planning efforts of the
organization. There cannot be an effective manpower planning, if career planning is not
carried out properly.

Need for Career Planning

Every employee has a desire to grow and scale new heights in his workplace
continuously. If there are enough opportunities, he can pursue his career goals and
exploit his potential fully. He feels highly motivated when the organization shows him a
clear path as to how he can meet his personal ambitions while trying to realize
corporate goals.

Unfortunately, as pointed out by John Leach, organizations do not pay adequate

attention to this aspect in actual practice for a variety of reasons. The demands of
employees are not matched with organizational needs; no effort is made to show how
the employees can grow within certain limits, what happens to an employee five years
down the line if he does well, whether the organization is trying to offer mere jobs or
long-lasting careers, etc. When recognition does not come in time for meritorious
performance and a certain amount of confusion prevails in the minds of employees
whether they are ‘in’ with a chance to grow or not, they look for greener pastures
outside. Key executives leave in frustration and the organization suffers badly when
turnover figures rise. Any recruitment effort made in panic to fill the vacancies is not
going to be effective. So, the absence of a career plan is going to make a big difference
to both the employees and the organization. Employees do not get right breaks at a
right time; their morale will be low and they are always on their toes trying to find escape
routes.
 Organizations are not going to benefit from high employee turnover. New
employees mean additional selection and training costs. Bridging the gaps through
short-term replacements is not going to pay in terms of productivity. Organizations,
therefore, try to put their career plans in place and educate employees about the
opportunities that exist internally for talented people. Without such a progressive
outlook, organizations cannot prosper.

Objectives

Career planning seeks to meet the following objectives:

 Attract and retain talent by offering careers, not jobs.

 Use human resources effectively and achieve greater productivity.
 Reduce employee turnover.
 Improve employee morale and motivation.
 Meet the immediate and future human resource needs of the organization on
a timely basis

Career Planning Process

The career planning process involves the following steps:

1. Identifying individual needs and aspirations:

Most individuals do not have a clear cut idea about their career aspirations,
anchors and goals. The human resource professionals must, therefore, help an
employee by providing as much information as possible showing what kind of work
would suit the employee most, taking his skills, experience, and aptitude into account.
Such assistance is extended through workshops/seminars while the employees are
subjected to psychological testing, simulation exercises, etc. The basic purpose of such
an exercise is to help an employee form a clear view about what he should do to build
his career within the company. Workshops and seminars increase employee interest by
showing the value of career planning. They help employees set career goals, identify
career paths and uncover specific career development activities (discussed later).
These individual efforts may be supplemented by printed or taped information. To assist
employees in a better way, organizations construct a data bank consisting of
information on the career histories, skill evaluations and career preferences of its
employees (known as skill or talent inventory).

2. Analyzing career opportunities:

Once career needs and aspirations of employees are known, the organization
has to provide career paths for each position. Career paths show career progression
possibilities clearly. They indicate the various positions that one could hold over a
period of time, if one is able to perform well. Career paths change over time, of course,
in tune with employee’s needs and organizational requirements. While outlining career
paths, the claims of experienced persons lacking professional degrees and that of
young recruits with excellent degrees but without experience need to be balanced
properly.

3. Aligning needs and opportunities:

After employees have identified their needs and have realized the existence of
career opportunities the remaining problem is one of alignment. This process consists of
two steps: first, identify the potential of employees and then undertake career
development

programmers (discussed later on elaborately) with a view to align employee

needs and organizational opportunities. Through performance appraisal, the potential of
employees can be assessed to some extent. Such an appraisal would help reveal
employees who need further training, employees who can take up added
responsibilities, etc. After identifying the potential of employees certain developmental
techniques such as special assignments, planned position rotation, supervisory
coaching, job enrichment, understudy programs can be undertaken to update employee
knowledge and skills.

4. Action plans and periodic review:

The matching process would uncover gaps. These need to be bridged through
individual career development efforts and organization supported efforts from time to
time. After initiating these steps, it is necessary to review the whole thing every now and
then. This will help the employee know in which direction he is moving, what changes
are likely to take place, what kind of skills are needed to face new and emerging
organizational challenges. From an organizational standpoint also, it is necessary to find
out how employees are doing, what are their goals and aspirations, whether the career
paths are in tune with individual needs and serve the overall corporate objectives, etc.

CAREER PLANNING MODELS

There are many models one may use while career planning. The two main models are

1. The SODI Career Planning Model

Given the complexity of career development and the fluidity of the world of work, we
need to be able to navigate our career paths with purpose and clarity.

Law and Watts (1977) devised a simple model of career education which has stood
the test of time. This model has been changed slightly to become a career planning,
rather than a career education model and named the SODI model where the last
element is ‘implementation’ rather than ‘transition learning’, and ‘decision learning’
becomes ‘decision making and planning’.

The model encapsulates four concepts which are:

Self-awareness – individual having knowledge about and understanding of their own
personal development. Self-awareness in a careers context involves an understanding
of kind of personal resources (both actual and potential) they bring to world.

Opportunity awareness – an understanding of the general structures of the world of

work, including career possibilities and alternative pathways.

Decision making and planning – an understanding of how to make career decisions,

and being aware of pressures, influences, styles, consequences and goal setting.

Implementing plans – having the appropriate skill level in a range of areas to be able
to translate job and career planning into reality

2. Waterloo University Model

CAREER MANAGEMENT

Career management is the combination of structured planning and the active

management choice of one's own professional career.

The outcome of successful career management should include personal

fulfillment, work/life balance, goal achievement and financial security.

A career includes all types of employment ranging from semi-skilled through

skilled, and semi professional to professional. Careers have often been restricted to an
employment commitment to a single trade skill, profession or business firm for the entire
working life of a person. In recent years, however, a career now includes changes or
modifications in employment during the foreseeable future.

The following classification system with minor variations is widely used:

1. Development of overall goals and objectives

2. Development of a strategy (a general means to accomplish the selected
goals/objectives)
3. Development of the specific means (policies, rules, procedures and activities) to
implement the strategy, and
4. Systematic evaluation of the progress toward the achievement of the selected
goals/objectives to modify the strategy, if necessary.

Career management is the process through which employees:

 Become aware of their own interests, values, strengths, and weaknesses

 Obtain information about job opportunities within the company
 Identify career goals
 Establish action plans to achieve career goals

Why Is Career Management Important?

From the company’s perspective

 The failure to motivate employees to plan their careers can result in:

 A shortage of employees to fill open positions

 Lower employee commitment
 Inappropriate use of duty allocated for training and development programs

From the employees’ perspective

Lack of career management can result in:

 Frustration
 Feelings of not being valued by the company
 Being unable to find suitable employment should a job change be necessary
due to mergers, acquisitions, restructuring, or downsizing

Career Motivation

Career motivation refers to:

 Employees’ energy to invest in their careers

 Their awareness of the direction they want their careers to take
 The ability to maintain energy and direction despite barriers they may encounter

Career motivation has three aspects:

 Career resilience
o The extents to which employees are able to cope with problems affect
their work
 Career insight
o How much employees know about their interests, skill strengths, and
weaknesses
o The awareness of how these perceptions relate to their career goals
 Career identity
 o The degree to which employees define their personal values according to
their work

Types of career

 Traditional Career
o Sequence of positions held within an occupation
o Context of mobility is within an organization
o Characteristic of the employee
 Protean Career
o Frequently changing based on changes in the person and changes in the
work environment
o Employees take major responsibility for managing their careers
o Based on self-direction with the goal of psychological success in one’s
work

Comparison of Traditional Career and Protean Career:

Dimension Traditional Career Protean Career

Goal Promotion Psychological success

Salary increase

Psychological contract Security for commitment Employability for flexibility

Mobility Vertical Lateral

Responsibility for Company Employee

Management

Pattern Linear and expert Spiral and transitory

Expertise Know how Learn how

Development Heavy reliance on formal Greater reliance on
training relationships and job
experiences

Career Management Process:

 Self-Assessment
o Use of information by employees to determine their career interests,
values, aptitudes, and behavioral tendencies
o Often involves psychological tests
 Reality Check
o Information employees receive about how the company evaluates their
skills and knowledge and where they fit into company plans
 Goal Setting
o The process of employees developing short- and long- term career
objectives
o Usually discussed with the manager and written into a development plan
 Action Planning
o Employees determining how they will achieve their short- and long-term
career goals

Employees’ Role in career management

o Take the initiative to ask for feedback from managers and peers
regarding their skill strengths and weaknesses
 o Identify their stage of career development and development needs
o Seek challenges by gaining exposure to a range of learning opportunities
o Interact with employees from different work groups inside and outside the
company
o Create visibility through good performance

Managers’ Role in Career Management

Roles Responsibilities

Coach o Probe problems, interests, values,

needs Listen

o Clarify concerns

o Define concerns

Appraiser o Give feedback

o Clarify company standards

o Clarify job responsibilities

o Clarify company needs

Advisor o Generate options, experiences, and

relationships

o Assist in goal setting

o Provide recommendations

Referral agent o Link to career management

resources

o Follow up on career management

plan
HR Manager’s Role in Career Management

 Provide information or advice about training and development opportunities

 Provide specialized services such as testing to determine employees’ values,
interests, and skills
 Help prepare employees for job searches
 Offer counseling on career-related problems

Company’s Role in Career Management

 Companies are responsible for providing employees with the resources needed
to be successful in career planning:
o Career workshops
o Information on career and job opportunities
o Career planning workbooks
o Career counseling
o Career paths

Evaluating of career management system

 Career management systems need to be evaluated to ensure that they are

meeting the needs of employee and the business
o Two types of outcomes
 Reactions of the customers (employees and manager) who use the
career management system
 Reactions career management system

 Evaluation of a career management system should be based on its objectives.