MANAGEMENT & ENTREPRENEURSHIP

FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

Module-2-Organizing & Staffing

Organizing and Staffing: Meaning, Nature and Characteristics of Organization –
Process of Organization, Principles of Organization, Departmentalisation, Committees –
meaning, Types of Committees, Centralization Vs Decentralization of Authority and
Responsibility, Span of Control (Definition only), Nature and Importance of Staffing,Process
of Selection and Recruitment.
Directing and Controlling: Meaning and Nature of Directing-Leadership Styles,
Motivation Theories ,Communication – Meaning and Importance, Coordination- Meaning
and Importance, Techniques of Coordination. Controlling – Meaning, Steps in Controlling .

Meaning- Organizing

¢ The process of defining and grouping the activities of the enterprise and establishing
authority relationship amongst them.
¢ Process of determining the activities to be performed, arranging these activities to
administrative units, as well as assigning managerial authority and responsibilities to
people employed in the organization.
¢ Deciding how best to group organizational activities and resources

Definition:

¢ Heney, “ Organization is a harmonious adjustment of specialized parts for the

accomplishment of some common purpose or purposes”
¢ Mc Farland, “ An identified group of people contributing their efforts towards the
attainment of goals is called an organization”
¢ George Terry, “ Organizing is the establishing of effective behavioural relationships
among persons so that they may work together effectively and gain personal
satisfaction in doing selected tasks under given environmental conditions for the
purpose of achieving some goal or objective”

Nature and Characteristics of Organization:

¢ Two or more persons: Organisation is a form of human association for achieving

common goals. The human association consists of two or more persons.
¢ Common goals: The organisation exists to achieve some common goals. Structure
ensures the smooth achievement of goals.
¢ Cooperative efforts: Structure permits members to work in a cooperative way, without
any friction. The members combine their efforts with a view to achieve goals.
¢ Division of work: The work is divided into small parts and assigned to people working
at various levels. This ensures speedy execution of work.

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT
¢ Communication : People communicate along specified routes. Mainly downward
communication takes place in the form of superiors issuing commands, orders,
directives, etc.
¢ Rules and regulations: Rules and regulations define the territorial jurisdiction of
members. Members have to observe and implement these rules consistently.
¢ Pyramidal shape: Organisation structure takes a pyramidal shape, generally. Each
superior will have a limited number of people reporting to him, at any point of time.

Principles of Organization:

¢ Principle of objective: A common objective should be laid down for business as a

whole and an organisation should be set up to achieve that goal.
¢ Principle of specialisation: Every individual should be assigned a duty according
to his skill, education and qualification.
¢ Principle of co-ordination: To achieve the ultimate aim, there should be co-
ordination of different activities of various departments.
¢ Principle of authority and responsibility: the authority may be delegated but
responsibility lies within the man, who has been allotted the work. The authority
flows downward.
¢ Span of control: the span of control means number of subordinates to which an
officer can supervise effectively. The number of subordinates should be such that
supervisor should be able to control their work effectively.
¢ Scalar principle: this means the vertical placement of superiors starting from top
and going to the lower level. The scalar chain is a pre-requisite. Sometimes known
as the chain of command.
¢ Principle of unity of command: for making the organisation sound and clear, there
should be a unity of command from top to bottom, i.e. a person should be
answerable to one boss only. Each subordinate should have only one superior
whose command he has to obey. Multiple subordination must be avoided, for it
causes uneasiness, disorder, indiscipline and undermining of authority.
¢ Principle of exception: this states that top management should interfere only
when something goes wrong. If the things are done according to plans then there is
no need for the interference of top management.
¢ Principle of simplicity: Organisation should be simple to be easily understood by
every person. The authority, responsibility and position of every person should be
made clear to avoid confusion.
¢ Principle of Efficiency: Objectives of the enterprise should be achieved at a
minimum cost. The organisation should also provide job satisfaction to various
employees.

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

Departmentation:(Important)

Departmentation is the process of splitting an organisation into smaller manageable

subunits. Division is based on either similarities in functions or products or any other
close relationships. This dividing process results in creation of departments, divisions
or sections. A department may be defined as a workgroup which is brought together for
performing certain functions, which are similar in nature.

q Functional Departmentation:
The process of dividing organisation into smaller units is on the basis of organisation’s
major activities or functions. Hence it is called functional organisation. Each function
like Marketing, Human Resource, Finance, R&D, etc is assigned as a department and it
specialises on those related activities.
Each major function of the enterprise is grouped into a department. For eg. There may
be production, finance and marketing departments in a manufacturing company or
underwriting and claims departments in an insurance company. A sales manager in this
kind of Departmentation is responsible for the sale of all products manufactured by the
company.

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

Functions – Each major function of the enterprise is grouped into a department. For
[Link] may be production, finance and marketing departments in a manufacturing
company or underwriting and claims departments in an insurance company. A sales
manager in this kind of departmentation is responsible for the sale of all products
manufactured by the company.

Products Departmentation:
This form is eminently suited for a large organization manufacturing a variety of products.
Under this method, for each major product, a separate semi-autonomous department is
created and is put under the charge of a manager. Several companies in India, such as
Hindustan Unilever (manufacturing detergents, toiletries, chemicals and agro-based
products), and Johnson and Johnson (manufacturing a range of products for children and
surgical sutures) have product-based departments.

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

Customers based Departmentation – An enterprise may be divided into a number of

departments on the basis of the customers that it services. For eg. An electronics firm may
have separate departments for military, industrial and consumer customers. An
educational institution may have separate departments for day, evening and
correspondence courses to impart education to full-time students, locally employed
students and outstation students, respectively.

Regions or Territory based Departmentation – When several production or marketing

units of an organization are geographically dispersed in various locations, it is logical to
departmentalize those units on a geographical basis. The Indian Railways are

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT
departmentalized on this basis. Northern Railways, Western Railways, Southern Railways,
Eastern Railways, Central Railways, etc. are departments in this sense.

1. Time based Departmentation – In departmentation by time, activities are grouped on

the basis of timing of their performance. For eg. As a small machine shop grows in size,
its owner has the choice of adding extra shifts (thus separating identical sub-groups by
time). Generally, departmentation by time is found in the production function of the
enterprise.

¢ Process Based Departmentation

Departmentation here is done on basis of several discrete stages in the process or
technologies involved in manufacture of a product.
Advantages:
¢ More efficient flow of work activities.
Disadvantages:
¢ Can only be used with certain types of products.

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

Types of Committees:
Committee is a group of people who meet discuss and decide about actions to be taken for
organisational issues which cannot be solved by individuals. When an organisation consists
of different committees it is called committee organisation.

Types/ Classification of Committees

¢ Advisory Committees and Executive Committees – Committees vested with staff
authority are known as advisory committees. Advisory committees have only a
recommendatory role and cannot enforce implementation of their advice or
recommendation. Eg. Works committees, Sales committees, finance committees etc.
¢ Executive Committees – Committees vested with line authority are known as executive
committees. Executive committees not only take decisions but also enforce decisions
and thus perform a double role of taking a decision and ordering its execution. Eg. The
Board of directors of a company.
¢ Standing Committees and ad hoc task forces – Standing or permanent committees are
formed to deal with recurrent (problems which take place very often) organisational
problems. Eg. Finanace committee in a company, loan approval committee in a bank or
the admission committee in a college.
¢ Ad hoc task forces have a short duration. They are dissolved after the task is over, or the
problem is solved. Their members are chosen for their skills and experience.

Principles of committees:
Ø Number of members in a committee should be optimum minimum
Ø Committee objectives should be well defined
Ø Committee meetings should have an agenda and it should be circulated in advance
so that members can come prepared.
Ø The role, authority and responsibility of committee members should be well
defined.
Ø Committees should not discuss any other matter other than the subject.
Ø Meetings should start and end on time.
Ø Problems which can be solved by individuals should not be referred to a committee.
Ø Committee recommendations should be published.
Ø A committee should be dissolved if its purpose is over.

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT
Centralization Vs Decentralization:
Authority :
¢ Is a form of power
¢ Right to command
¢ Right to give orders and power to extract obedience
¢ Right to make decisions and allocate resources.

Responsibility:
Ø Is the obligation or the duty of an individual to perform
Ø Ensures people are committed to perform
Ø Acts as a means for establishing relationships between a superior and a subordinate.

CENTRALIZATION:

¢ Centralization of power to make decision at the higher levels of management

¢ Hence employees can’t act independently
¢ This results in Tall Structure

Merits:
— Taking emergency or quick decisions without any delay

— Standardized policy or procedures.

Demerits:

— No individual initiative

— Top management will be over burdened

— Widens gap between managers and employee.

Decentralization:

¢ Dispersal of decision making authority

¢ Delegating power or authority to middle and lower level managers

¢ Degree to which lower level employees provide input increases or actually they make
decisions

¢ Results in Flat Structure

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

Merits:

— Reduces burden

— Increases flexibility and involvement from employees

Demerits:

— Increases administrative cost

— Difficult in controlling.

Span of Control:

} Determining how many people will report to each manager

ü The number of employees a manager can efficiently and effectively manage

ü A manager must deal with 3 kinds of interactions with and among subordinates;

¢ Direct: manager’s one to one relationship with each subordinate

¢ Cross: among subordinates

¢ Group: between groups of subordinates

Narrow Span of Control:

¢ Few subordinates per manager

¢ More managers are required in this type.

¢ This results in Tall structure of the Organization

Merits:

Ø Personal contact between managers and subordinates

Ø Effective control and close supervision

Ø Develops good human relations in organization

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT
Demerits:

Ø Expensive as larger no of managers are involved

Ø Creates communication problems; because of increased no of people through whom

information must pass.

Wide Span Of Control:

Ø Many subordinates per manager

Ø Less supervisors are requires

Ø Results in Flat organization structure

Ø This is preferable if workers are well trained and competitive

Merits:

Reduces cost of supervision as few managers are required

Easy communication process

Better coordination between manager and subordinates as few managers supervise

them

Demerits:

• More administration and supervisory responsibility of managers

• Effective control can not be assured

• Requires talented managers

• Managers won’t have time to provide support and leadership

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

Staffing:

¢ Staffing is defined as the process of filling positions in the organization with

adequate and qualified personnel.

It includes several sub-function listed below:

¢ Recruitment, or getting applicants for the jobs as they open up.

¢ Selection of the best qualified from those who seek the jobs.

¢ Training those who need further instructions to perform their work effectively or to
qualify for promotions.

¢ Performance appraisal, since it serves as the basis for job change or promotion, and

¢ Administration of compensation plans, since it is an important factor in both getting

and holding qualified people.

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

Nature of Staffing Function

¢ Staffing is an important managerial function- Staffing function is the most important

mangerial act along with planning, organizing, directing and controlling. The
operations of these four functions depend upon the manpower which is available
through staffing function.

¢ Staffing is a pervasive activity- As staffing function is carried out by all mangers and
in all types of concerns where business activities are carried out.

¢ Staffing is a continuous activity- This is because staffing function continues

throughout the life of an organization due to the transfers and promotions that take
place.

¢ The basis of staffing function is efficient management of personnels- Human

resources can be efficiently managed by a system or proper procedure, that is,
recruitment, selection, placement, training and development, providing
remuneration, etc.

¢ Staffing helps in placing right men at the right job. It can be done effectively through
proper recruitment procedures and then finally selecting the most suitable
candidate as per the job requirements.

Importance:

¢ It helps in discovering talented and competent workers and developing them to

move up the corporate ladder.

¢ It ensures greater production by putting the right man in the right job.

¢ It helps to avoid a sudden disruption of an enterprise’s production run by indicating

shortages of personnel, if any, in advance.

¢ It helps to prevent under-utilisation of personnel through overmanning and the

resultant high labour cost and low profit margins.

¢ It provides information to management for the internal succession of managerial

personnel in the event of an unanticipated turnover.

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

Steps in Recruitment Process: (Important)

1. Recruitment Planning
Recruitment planning is the first step of the recruitment process, where the vacant
positions are analyzed and described. It includes job specifications and its nature,
experience, qualifications and skills required for the job, etc.

A structured recruitment plan is mandatory to attract potential candidates from a pool of

candidates. The potential candidates should be qualified, experienced with a capability to
take the responsibilities required to achieve the objectives of the organization.

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

1. Identifying Vacancy:
The first and foremost process of recruitment plan is identifying the vacancy. This process
begins with receiving the requisition for recruitments from different department of the
organization to the HR Department, which contains −

Ø Number of posts to be filled

Ø Number of positions
Ø Duties and responsibilities to be performed
Ø Qualification and experience required

• Job Analysis

Job analysis is a process of identifying, analyzing, and determining the duties,

responsibilities, skills, abilities, and work environment of a specific job. These factors help
in identifying what a job demands and what an employee must possess in performing a
job productively.

Job analysis helps in understanding what tasks are important and how to perform them.

The immediate products of job analysis are job descriptions and job specifications.

Ø Job Description

Job description provides information about the scope of job roles, responsibilities and the
positioning of the job in the organization. This data gives the employer and the
organization a clear idea of what an employee must do to meet the requirement of his job
responsibilities.

A job description provides information on the following elements −

• Job Title / Job Identification / Organization Position

• Job Location
• Summary of Job

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

• Job Duties
• Machines, Materials and Equipment
• Process of Supervision
• Working Conditions
• Health Hazards
Ø Job Specification
Job specification focuses on the specifications of the candidate, whom the HR team is going
to hire. The first step in job specification is preparing the list of all jobs in the organization
and its locations. The second step is to generate the information of each job.

This information about each job in an organization is as follows −

• Physical specifications
• Mental specifications
• Physical features
• Emotional specifications
• Behavioral specifications
Ø A job specification document provides information on the following elements −

• Qualification
• Experiences
• Training and development
• Skills requirements
• Work responsibilities
• Emotional characteristics
• Planning of career

2. Job Evaluation
Job evaluation is a comparative process of analyzing, assessing, and determining the
relative value/worth of a job in relation to the other jobs in an organization.

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

The main objective of job evaluation is to analyze and determine which job commands
how much pay. There are several methods such as job grading, job classifications, job
ranking, etc., which are involved in job evaluation. Job evaluation forms the basis for
salary and wage negotiations.

2. Recruitment Strategy
Recruitment strategy is the second step of the recruitment process, where a strategy is
prepared for hiring the resources. After completing the preparation of job descriptions
and job specifications, the next step is to decide which strategy to adopt for recruiting the
potential candidates for the organization.

While preparing a recruitment strategy, the HR team considers the following points −

• Make or buy employees

• Types of recruitment
• Geographical area
• Recruitment sources

3. Searching the Right Candidates

Searching is the process of recruitment where the resources are sourced depending upon
the requirement of the job. After the recruitment strategy is done, the searching of
candidates will be initialized. This process consists of two steps −

• Source activation − Once the line manager verifies and permits the existence of the
vacancy, the search for candidates starts.

• Selling − Here, the organization selects the media through which the
communication of vacancies reaches the prospective candidates.

Searching involves attracting the job seekers to the vacancies. The sources are broadly
divided into two categories: Internal Sources and External Sources.

Internal Sources
Internal sources of recruitment refer to hiring employees within the organization through
−

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

• Promotions
• Transfers
• Former Employees
• Internal Advertisements (Job Posting)
• Employee Referrals
• Previous Applicants
External Sources
External sources of recruitment refer to hiring employees outside the organization
through −

• Direct Recruitment
• Employment Exchanges
• Employment Agencies
• Advertisements
• Professional Associations
• Campus Recruitment
• Word of Mouth

4. Screening / Shortlisting
Screening starts after completion of the process of sourcing the candidates. Screening is
the process of filtering the applications of the candidates for further selection process.

Screening is an integral part of recruitment process that helps in removing unqualified or

irrelevant candidates, which were received through sourcing. The screening process of
recruitment consists of three steps −

Ø Reviewing of Resumes and Cover Letters

Ø Conducting Telephonic or Video Interview
Ø Identifying the top candidates
Identifying the top candidates is the final step of screening the resumes/candidates. In this
process, the cream/top layer of resumes are shortlisted, which makes it easy for the hiring
manager to take a decision. This process has the following three outcomes −

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

} Shortlisting 5 to 10 resumes for review by the hiring managers

} Providing insights and recommendations to the hiring manager
} Helps the hiring managers to take a decision in hiring the right candidate

5. Evaluation and Control

Evaluation and control is the last stage in the process of recruitment. In this process, the
effectiveness and the validity of the process and methods are assessed. Recruitment is a
costly process, hence it is important that the performance of the recruitment process is
thoroughly evaluated.

The costs incurred in the recruitment process are to be evaluated and controlled
effectively. These include the following −

} Salaries to the Recruiters

} Advertisements cost
} Administrative expenses and Recruitment overheads
} Overtime and Outstanding costs, while the vacancies remain unfilled
} Cost incurred in recruiting suitable candidates for the final selection process
} Time spent by the Management and the Professionals in preparing job description,
job specifications, and conducting interviews.

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

STEPS FOLLOWED IN SELECTION PROCESS

ü Application blank – In this form, the applicant gives relevant personal data such as his
qualification, specialization, experience, firms in which he has worked etc.
ü Initial interview of the candidate – Means of evaluating the appearance of the candidate.
It is also used for establishing a friendly relationship between the candidate and the
company and for obtaining additional information.
ü Employment tests – Certain tests such as Aptitude test, Personality test, Interest test,
Intelligence test by which a candidate’s particular traits or abilities, his likes or dislikes,
his intelligence, his capacity to learn etc can be estimated.
ü Checking references – The employer would like to get some important personal details
about the candidate, such as his character, past history, background etc. verified from
the people mentioned in the application.
ü Physical or medical examination – The objective is to check the physical fitness of the
applicant for the job applied for.
ü Final interview – In this interview, the selected candidates are given an idea about their
future prospects within the organization.
ü Placement – Process of placing the right man on the right job. A worker should be
placed on a position where there is a full use of his strengths and all his weaknesses
become irrelevant. A misplaced person is always a frustrated individual.
ü Induction (Orientation) – Process of acclimatizing a new employee to the new social
setting of his work. This should take into account two major objects: i) familiarizing the
new employee with his new surroundings, and company rules and regulations; and ii)
developing in him a favorable attitude towards the company.

Directing

Meaning :

Directing means giving instructions, guiding, counseling, motivating and leading the staff
in an organization in doing work to achieve Organizational goals.

According to Haimann, ―Directing consists of the process and techniques utilized in

issuing instructions and making certain that operations are carried on as originally
planned.
According to Koontz and O‘Donnell, ―Direction is the interpersonal aspect of managing by
which subordinates are led to understand and contribute effectively and efficiently to the
attainment of enterprise objectives .

Nature of Directing:

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

} Harmony of Objectives – An organisation functions best when the goals of its members
are in complete harmony with and complementary to the goals of the organisation.

} Unity of Command –This principle implies that the subordinates should receive orders
and instructions from one superior only. The violation of this principle may lead to
conflicting orders, divided loyalties and decreased personal responsibility for results.

} Direct Supervision – Every superior must maintain direct face-to-face contact with his
subordinates. Direct supervision boosts the morale of employees, increases their
loyalty and provides them with immediate feedback on how well they are doing.

} Efficient Communication – It is through communication that the superior gives orders,

allocrates jobs, explains duties and ensures performance. Efficient communication not
only enables the superior to know how his subordinates feel but also helps the
subordinates to know how the company feels on a number of issues concerning them.

} Follow-through – The manager should follow through the whole performance of his
subordinates not merely to keep a check on their activities but to help them in their
act, to show them where their deficiency, if any, lies and to revise their direction if it
needs revision, and so on.

Leadership:

ü According to Peter Drucker, “ Leadership is the lifting of man’s visions to higher

sights, the raising of man’s performance to a higher standard, the building of man’s
personality beyond its normal limitations.

} Leadership is the ability to persuade others to seek defined objectives

enthusiastically.

} Leadership is defined as the ability to influence people towards accomplishment of

goals. It is the ability to influence behavior of others and direct them towards
achievement of group behavior of others and direct them towards achievement of
group or organisational goals.

CHARACTERISTICS OF LEADERSHIP
ü Leadership implies the existence of followers.
ü Leadership involves a community of interest between the leader and his followers.

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT
ü Leadership involves an unequal distribution of authority among leaders and group
members.
ü Leadership implies that leader can influence their followers or subordinates in
addition to being able to give their followers or subordinates legitimate directions.

LEADERSHIP STYLES :

¢ Autocratic Leadership – In this type of leadership, the leader alone determines

policies and makes plans. He tells orders what to do and how to do it. He demands strict
obedience and relies on power. The formula used by him is ―Do what I say or else …”
meaning thereby that an employee will be punished if he does not follow orders.
¢ Democratic Leadership – In this type of leadership (also known as participative or
person-oriented leadership), the entire group is involved in and accepts responsibility
for goal setting and achievement. Subordinates have considerable freedom of action.
The leader shows greater concern for his people than for high production. A part of the
leader‘s task is to encourage and reinforce constructive inter-relationships among
members and to reduce intra-group conflict and tensions.
¢ Free Rein – In this type of leadership, the leader exercises absolutely no control. He
only provides information, materials and facilities to his men to enable them to
accomplish group objectives. This type can be a disaster if the leader does not know
well the competence and integrity of his people and their ability to handle this kind of
freedom.

Motivation:

} Motivation is the process of stimulating people to action to accomplish desired goals.

Motivation represents inner drive within an individual which directs him to behave in
specific way.
} Motivation is the process of challenging a person’s inner drives so that he wants to
accomplish the goals of the organisation.
} The three key elements of motivation are:
} Energy
} Direction
} Persistence.

Motivational Theories:

Maslow’s Theory of Motivation – Maslow’s Hierarchy of Needs Theory:

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

According to Abraham Maslow, motivation of individual depends on his or her

individual needs. These needs operate along a hierarchy and once a lower need is
satisfied, individuals would like to satisfy next higher level need in the hierarchy.

Need Description Job Related factors which can

satisfy the need

Physiological Food, shelter, clothing, water, air etc. Job with pay
Needs

Security Needs Security from physical and emotional Job security, insurance,
threats retirement benefits.

Social Needs Love, affection, belongingness etc Good colleagues, informal work
groups, good quality supervision
etc.

Esteem Needs Status, prestige, recognition etc. Job title, designation, recognition,
responsibility

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Self actualisation Realization of life time ambitions Reaching a position one is

Needs capable of.

} Physiological needs are those which arise out of the basic physiology of life, for
example, the need for food, water, air etc.
} Security needs are the needs to feel free from economic threat and physical
harm.
} Social needs are needs to associate with other people and be accepted by them:
to love and be loved.
} Esteem needs are those which relate to respect and prestige. A need for
dominance may be thought of as one of the egoistic needs.
} Self-fulfillment needs are needs for realising one’s potential. These include the
need for realising one’s capabilities to the fullest-for accomplishing what one is
capable of accomplishing, a musician must make music, a poet must write if he is
to be ultimately happy.
} Abraham Maslow sought to explain why people are driven by particular needs at
particular times. According to Maslow, human needs are arranged in a hierarchy,
from the most pressing to the least pressing. In their order of importance, they
are physiological needs, safety needs, social needs, esteem needs and self
actualization needs. People will try to satisfy their most important needs first.
When a person succeeds in satisfying an important need, that need will cease
being a current motivator, and the person will try to satisfy the next-most
important need. For example, a starving man (need 1) will not take an interest in
Yoga, Meditation (need 5), nor in how he is viewed by others (need 3 or 4), nor
even in whether he is breathing clean air (need 2), But when he has enough food
and water, the next most important need will become salient.

Herzberg’s Two-Factor Theory:

} According to Herzberg, the absence of certain job factors tend to make workers
dissatisfied. However, the presence of these same factors in themselves does not
produce high levels of motivation. They merely help avoid dissatisfaction and the
problems it creates, such as absenteeism, turnover and grievances. Herzberg called
these factors maintenance or hygiene factors since they are necessary to maintain a
reasonable level of satisfaction. Ten maintenance factors, namely:
} Fair company policies and administration.
} A supervisor who knows the work.
} A good relationship with one’s supervisor.
} A good relationship with one’s peers.
} A good relationship with one’s subordinates.
} A fair salary.
} Job security
} Personal life
} Good working conditions

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT
} Status
To build high levels of motivation, a different set of factors is necessary. However, if these
factors are not present, they do not in themselves lead to strong dissatisfaction. Herzberg
called these the motivators or satisfiers. These are six in number:
} Opportunity to accomplish something significant
} Recognition for significant accomplishments.
} Chance for advancement.
} Opportunity to grow and develop on the job.
} Chance for increased responsibility.
} The job itself.
In the absence of maintenance factors, workers may feel dissatisfied. There may be more
absences, more quits and more grievances in union organisations. But the presence of these
factors does not motivate them. Similarly, in the presence of motivators, workers may feel
motivated but their absence does not make them dissatisfied.

Theory X and Theory Y:

} According to Douglas McGregor managers hold two sets of assumptions about their
subordinates. Mangers assume that their subordinates belong to either of two
categories called category X and category Y.

Theory X assumptions Theory Y assumptions

1. Employees inherently dislike work 1. Employees like work just like play and
and will try to avoid it. rest.

2. Since employees dislike work and try 2. People are capable of exercising self
to avoid it, they must be threatened with direction and self control if they are
punishment to get the work done and committed to work.
they must be closely monitored and
controlled.

3. Employees do not like to take 3. Employees at all levels are capable of

responsibilities and always like to seek taking up any responsibility.
formal direction.

4. Employees place job security above all 4. Decision making ability is widely
and display very little ambition. spread across population and people at

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

lower level are capable of making

creative decisions.
McGregor proposed that theory X and theory Y are important tools in understanding
human behaviour at work and designing work environment. Two sets of assumptions are
applicable in all situations. But theory X is more applicable to unskilled and uneducated
lower level employees who may be working for satisfaction lower level needs. Theory Y is
applicable to educated, skilled and professional employee who are capable of taking up
responsibility. However they can be exceptions. to McClelland, the three important needs
are the need for affiliation, the need for power and the need for achievement. The need for
affiliation reflects a desire to interact socially with people. A person with a high need for
affiliation is concerned about the quality of an important personal relationship. Thus, social
relationships take precedence over task accomplishment for such a person.
} A person who has a high need for power concentrates on obtaining and exercising
power and authority. The person is concerned with influencing others and winning
arguments.
} A person who has a high need for achievement has three distinct characteristics. These
are:
} Preference for setting moderately difficult but potentially achievable goals.
} Doing most things himself rather than getting them done by others. He wants to take
personal responsibility for his success or failure and does not want to hold others or
chance responsible for it.
} Seeking situations where concrete feedback is possible.
} If the needs of employees can be accurately measured, organisations can improve the
selection and placement processes. For eg. An employee or recruit with a high need for
achievement could be placed in a position that would enable the person to achieve.

Communication:

• Communication – Latin word ‘communis’ means common.

• According to Allen Louis-Communication is the sum of all the things, a person does
when he wants to create an understanding in the mind of another. It involves a
systematic and continuous process of telling, listening and understanding.
• According to George Terry -Communication is an exchange of facts, ideas, opinions
or emotions, by two or more persons.
• Communication is the process of transmission of information or message from one
person to another. It involves exchange of information, facts, ideas, feelings etc
between two or more individuals.

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

Ø The goal of communication is to convey information—and the understanding of that

information—from one person or group to another person or group. This
communication process is divided into three basic components:
Ø A sender transmits a message through a channel to the receiver.
Ø The sender first develops an idea, which is composed into a message and then
transmitted to the other party, who interprets the message and receives meaning.
Ø Developing a message is known as encoding. Interpreting the message is referred to
as decoding.
Ø Channel: sender has to choose medium/ways through which message is to be
transferred to receiver (oral, written, electronic, code language) is known as channel
of communication in the process.

Communication according to organisational structure:

} Formal Channel of Communication – Means of communication that is formally

controlled by managers or people occupying positions in an [Link]
ensures that the information flows orderly, in a timely and accurate manner. Any
information, decision, memo or reminder etc. will also follow this path.
} Informal Channel of communication- Side by side with the formal channel of
communication every organization has an equally effective channel of
communication namely that is the informal channel. Given the name ‘grapevine’
precisely because it runs in horizontal, vertical and diagonal directions. It flows
around water coolers, down hallways, through lunch rooms and wherever people
get together in groups.

Communication according to Direction/ Dimension of expression:

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT
Communication is multidimensional or multidirectional. There are various directions in
which it flows.
Vertical Communication:
} Downward Communication: Communication which flows from supervisor to the
subordinate is known as downward communication. They include orders, rules,
instructions etc. their nature is directive.
} Upward Communication: this is just reverse of the downward communication. It
flows from subordinate to supervisor. Each communication includes reactions
and suggestions from workers, their grievances etc. the contents of the upward
communication are reports, suggestions, reaction, statements and proposals
prepared for submissions to the supervisor.

Lateral or horizontal communication:

When communication takes place between two or more persons who are
subordinates working under the same person, or those who are working at the
same level, it is called lateral or horizontal communication. A good example of
this kind of communication is that between functional managers. They are
serving the organisation in different capacities but their goals are common and
their interaction is necessary to maintain co-ordination.
The best example of lateral communication can be seen in the interaction of
production and marketing departments. Strategies of marketing cannot be
fruitful unless plans are communicated to the production department. The
Marketing Manager has to be in constant touch with the Production Manager, in
order to meet customer orders as per schedule.

Communication according to the way of expression:

} Oral communication: in this type of communication both parties to the process of

communication exchange their ideas orally either face to face or through devices
like phone, intercoms etc, meetings, conference, lecturers, interviews etc.
} Written communication: in this type of communication, written words, graphs,
diagrams, pictures etc are used. They may take forms of circulars, rules, manuals,
reports, memos etc.

Coordination:

} Coordination is the management of interdependence in work situations.

} Coordination can be defined as the orderly synchronization or fitting together of the
interdependent efforts of individuals, in order to attain a common goal.
} Coordination deals with the task of blending efforts in order to ensure the successful
attainment of an objective. It is accomplished by means of planning, organizing and
controlling.

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

Importance of Coordination:

} Unity in diversity: organisations are made up of people and people do have their
own individual interests. Hence good coordination ensures that people works
towards common goal rather than their own personal interests.
} Specialization: the splitting of work into smaller and smaller units through division
of work creates the need for coordination among many individuals who need to
complete the full task.
} Teamwork: employees work in form of teams to complete a project or activity
undertaken by the organisation. Hence individual efforts has to be synchronized to
obtain overall outcome of the team. This in turn creates a sense of shared vision
among the team.
} Communication: effective communication is very much essential for coordination.
Communication ensures harmonious relations among the individuals and different
departments.
} Recognition of goals: defining clear objectives ensures clarity of role and
responsibility among individuals resulting in better coordination.
} Interdependency: organisation are made up of various units and departments,
which are interdependent. For example, Marketing department depends on
production department for timely supply of products and services to customers.
Coordination function ensures that this interdependence needs are met by ensuring
good relations among all departments.

Techniques of Coordination:

1. Rules, Procedures, and Policies – Common device to coordinate sub-units in the

performance of their repetitive activities. Standard policies, procedures and rules
are laid down to cover all possible situations.
2. Planning – Under planning targets of each department, coordinate with the targets
of all other departments. For eg. By fixing the target of 10000 units of additional
production and sales for the production and sales departments respectively, the
head of the organization can be fairly sure that the work of the two departments
would be coordinated since their target so demand.
3. Hierarchy – By putting interdependent units under one boss, some coordination
among their activities is ensured.
4. Direct Contact - In order to prevent top executives from becoming overloaded with
problems, as many problems as possible are resolved by the affected employees at
lower levels.
5. Task force – This is a temporary group made up of representatives from those
departments which are facing a problem. It exists only as long as the problem lasts.
6. Incentives- incentives like profit sharing ensures that people work towards common
objectives and they motivate them to work with each other for timely completion of
tasks.

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT
7. Committees – As certain decisions consistently arise the task forces become
permanent. These groups are labeled committees. This device greatly eases the
rigidity of the hierarchical structure, promotes effective communication and
understanding of ideas, encourages the acceptance of the commitment to policies
and makes their implementation more effective.
8. Induction – The device familiarizes the new employee with the organization's rules
and regulations, its dominant norms of behavior, values and beliefs, and integrates
his personal goals with the organisational goals.
9. Liaison Departments – In some cases where there is a large volume of contact
between two departments, a liaison department evolves to handle the transactions.
This typically occurs between sales and production departments.
10. Workflow – A workflow is the sequence of steps by which the organization acquires
inputs and transforms them into outputs and exports these to the environment. It
helps in coordination.

Controlling:

} Control is checking current performance against predetermined standards contained in

the plans, with a view to ensuring adequate progress and satisfactory performance.
} George Terry: “controlling is determining what is being accomplished that is evaluating
the performance, and if necessary, applying correct measures so that the performance
takes place according to plans”.

Steps in a Control Process:

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FACULTY-Prof Mahak Balani, Dept. of MBA, AIT

Step 1. Establishing standards:

Control standard is a target against which subsequent performance will be compared

Some key areas in all business organizations are: profitability, market position,
productivity and personnel development.
} It should be defined as far as possible in quantitative terms. For eg. “overheads must be
reduced by 12%”.
} Standards need to be flexible in order to adapt to changing conditions.
} It should be consistent with organizational goals.

Step 2: Measuring performance:

¨ Performance measurement is a constant and ongoing activity

¨ Performance measures must be valid.
¨ Daily, weekly and monthly sales numbers measure sales performance
¨ Product quality or units produced or unit cost measure production performance
¨ Quality or quantity of output measure employees performance.

Step 3: Comparing performance against standards:

¢ Measured performance will be compared against established standards

¢ Performance may be higher than, lower than or identical [equal] to the standard
¢ If performance is lower than expected manager has to decide how much deviation from
standard can be allowed before taking remedial action
¢ Comparison is mainly based on the importance and complexity of the activity.

Step 4: Corrective action:

q Courses of Action
q “Doing nothing” – maintaining status quo
q Only if deviation is judged to be insignificant.
q Correcting actual (current) performance or deviation
q Immediate corrective action to correct the problem at once.
q Basic corrective action to locate and to correct the source of the deviation.
q Corrective Actions
q Change strategy, structure, compensation scheme, or training programs; redesign
jobs; or fire employees

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