TIME Module 2

TECHNOLOGICAL INNOVATION MANAGEMENT AND

ENTREPRENEURSHIP

BEC501
V SEMESTER
MODULE 2
 MODULE 2 CONTENTS

CHAPTER 1- ORGANIZING AND STAFFING

 Organization-Meaning
 Characteristics
 Process of Organizing
 Principles of Organizing
 Span of Management (meaning and importance only)
 Departmentalization-Process Departmentalization, Purpose Departmentalization
 Committees– Meaning, Types of Committees.
 Staffing-Need and Importance
 Recruitment and Selection Process

CHAPTER 2 - DIRECTING AND CONTROLLING

 Meaning of Directing
 Requirements of Effective Direction
 Giving Orders
 Motivation-Nature of Motivation
 Motivation Theories (Maslow’s Need-Hierarchy Theory and Herzberg’s Two Factor Theory)
 Communication – Meaning, Importance and Purposes of Communication
 Leadership -Meaning
 Characteristics
 Behavioral Approach of Leadership
 Coordination-Meaning
 Types
 Techniques of Coordination
 Controlling – Meaning
 Need for Control System
 Benefits of Control
 Essentials of Effective Control System
 Steps in Control Process
 CHAPTER 1 ORGANIZING AND STAFFING

1. MEANING OF ORGANIZATION
Q.: Define Organization. (1M)

 Organization - It is a rational coordination of the activities of a number of people for the achievement of some common
explicit goals, through division of labor and function and through a hierarchy of responsibility and authority.
 They involve a significant amount of conscious planning, coordination and deliberate structuring

2. CHARACTERSTICS OF AN ORGANIZATION
Some important characteristics of an organization has:

 Common Objective - A purpose, goal already indicated during planning.

 Well defined authority and responsibility - A clear concept of major duties or activities required to achieve the purpose
 Division of Work - Classification of activities into jobs
 Co-ordination - Establishment of relationships between these jobs in order to ensure coordination.

3. PROCESS OF ORGANISING
Organizing means designing the organization structures. The manager differentiates and integrates the activities in the organization.
Process of organizing can describe this differentiation and integration in terms of a seven- step procedure.

1. Consideration of objectives

 The first step in organizing is to know the objectives of the enterprise.

 Objectives determines the various activities.
 Example: The Structure of an Educational Institution is not the same as that for a Business Enterprise. Therefore,
Consideration of Objectives has the First & Foremost Role to play in the Process of Organizing.

2. Deciding organizational boundaries

 After consideration of objectives, the next step is to decide what to do inside and outside the boundaries of the organization.
 Making manufacture V/S buy choices for different goods and services.
 Making choice about strategic alliances with other firms.
 Choices have to be made to extend to different of the organization interact directly with environment.

3. Grouping of activities into departments

 To group all closely related and similar activities into departments and sections.
 Sometime different activities may be observed closely and grouped in one department.
 In addition, the activities of each Department can be further classified & placed under different sections of that Department.
 Example: In the clothing Shop, separate sections may be created for men, women, kids, etc.

4. Analyzing inter-department relations and deciding which departments will be key departments

 The contributions which each department makes downward, upward and sideways to decide its relative status.
 It is necessary to know the key departments, which renders key operations for fulfilling of goals.
 The attention of top management is focused on the minor issues raised by vocal managers known as “Decibel system”.
 Example: Company which thinks advertising is the major aspects, creates a separate advertising & Department which report
directly to the president of the organization.

5. Determining levels at which various types of decisions are to be made

 Relative importance of various departments the levels at which various major and minor decisions are to made is determined.
  Frim must decide for itself as to how much decentralization of authority and responsibility it wants to have.
 Extreme Decentralization may lead to loss of Control, on the other hand, Extreme Centralization may lead to improper
decisions, failure to take decisions at the right time, delays & complete breakdown of the morale of the employees.
 Therefore, Top Management must very carefully decide the levels of the enterprise at which various types of decisions can be
taken in order to achieve overall Objectives of the enterprise most effectively & efficiently.

6. Determining the span of management

 One has to decide on the Span of Management. i.e., the Number of Subordinates who should report directly to each
Executive.
 The Narrower the Span, the taller would be the Structure with several levels of Management. This will complicate
Communication & increase financial burden of Salaries.
 For these reasons, a Flat Structure is generally desirable. However, the Span of Management, of each Executive Position
must be tailored to meet the satisfactory working environment of the enterprise

7. Setting up a coordination mechanism

 Proper Coordination among various departments and its individuals is very important for the successful and smooth running
of the enterprise.
 As departments and individuals carry out their specialized activities.
 Therefore, effective Coordination Mechanisms are required to enable members of the Organization to keep sight of the
Organization Goals and reduce inefficiencies and conflicts.

4. PRINCIPLES OF ORGANIZATION
1. Objectives: the objective of the enterprise influences the organization structure hence it should be clear and well defined.

2. Specialization: the activities of the enterprise must be grouped according to the functions and assigned to persons according to their
specialization.

3. Span of control: The span of control should be the minimum. That means, a Manager should be asked to supervise a reasonable
number of subordinates.

4. Management by exception principle: As the managers at higher level has very less time only exceptionally complex problems
should be referred to them and day-to-day routine problems should be handled by the subordinates at the lower levels.

5. Scalar Principle: This principle is known as “Chain of Command”. The line of authority from the top management to first-line
management must be clearly defined. The principle simply states that an organization is a hierarchy.

6. Unity of command: Each subordinate should have only one superior whose command has to obeyed. Multiple subordinates must
be avoided.

7. Delegation: Proper authority should be delegated at the lower levels of organization also. The authority delegation should be equal
to responsibility. Each manager should have enough authority to accomplish the task assigned.

8. Responsibility: The supervisor should be held responsible for the acts of his subordinates. No supervisor should be allowed to
avoid responsibility.

9. Authority: The authority is the tool by which manager is able to accomplish the desired objectives. Hence authority of each
manager should be clear.

10. Efficiency: The organization structure should enable the enterprise to function effectively and accomplish its objectives with
lowest possible cost.

11. Simplicity: The Organization Structure should be as simple as possible and the Organization levels should, as far as possible, be
minimum. A large number of levels of Organization means difficulty of effective communication and coordination.
12. Flexibility: The Organization should be flexible, should be adaptable to changing circumstances and permit expansion,
replacement without dislocation and disruption of the basic structure.

13. Balance: There should be reasonable balance in the size of various departments between Centralization and Decentralization,
between the principle of span of control and short chain of command, and among all types of factors such as Human, Technical and
Financial.

14. Unity of Direction: There should be one Objective and one plan for a group of activities having the same Objective. Unity of
Direction facilitates coordination of activities at various levels.

15. Personal Ability: As people constitute an organization, there is a need for proper selection, placement and training of staff.
further, the organization structure must ensure optimum use of human resources and encourage management development programs.

16. Acceptability: The structure of the organization should be acceptable to the people. 2 things generally happen if people oppose the
structure: It is modified gradually by people or it is used inefficiently.

5. SPAN OF MANAGEMENT OR MEANING AND IMPORTANCE

 Span of Management is also referred as Span of Control.
 This indicates the number of subordinates who report directly to a manager.
 This determines the effective utilization of the managers and also the effective performance of their subordinates
 If the span is wider than the manager gets overstrained and the subordinates won’t get the proper guidance
 If the span is narrow, then the manager is underutilized and the subordinates will be over controlled.
 Example for span of management which explains, decreasing the span of management increases the number of levels.
Suppose a sales manager has 16 salesmen reporting directly to him, the span of management is 16.
 To reduce the span, consider there are 4 sales Assistant Sales Manager under 1 Sales Manager and each Assistant Sales
Manager will supervise 4 salesmen, the span of management is 4.
 By adding levels of management, communication between sales manager and salesmen should pass through 4 additional
assistant sales manager.
6. DEPARTMENTALISATION / DEPARTMENTATION
 Departmentalization refers to dividing people into group or department based of criterion.
 There are 2 categories in departmentalization: Process departmentalization, Purpose departmentalization.

PROCESS DEPARTMENTALISATION

There are 2 classifications for dividing work by process:

1. Departmentalization by Business or organisational Functions:

 Functional Departmentalization is done on the basis of organizing activities and is present in almost every Enterprise at some
level in the organization structure.
 Example: Each Major function of the enterprise is grouped into a Departments like production, sales, finance and HR.

Advantages:

1. It is simple form of grouping activities for small organization.

2. It promotes excellence in performance because of experts in the specific domain.

3. It promotes economies of scale, like producing all product in one plant.

Disadvantages:

1. Many times it is not easy to make clear breaks between each department.

2. It sometimes combines dissimilar jobs in single department.

3. Each manager thinks about his department goals and does not think in terms of company as a whole.

4. It does not provide good training ground for the overall development of a manager.

5. It is not suitable for the organization with larger size.

2. Departmentalization by Technology

 Technology Departmentalization is done on the basis of several discrete stages in the process or technologies involved in the
manufacture of a product.
 This process used when work that would be done in several different locations in an enterprise is done in one place because
of the usage of special equipment.
 Example: Production of vegetable oil have separate departments like: crushing, refining and finishing.

Advantages:

1. It facilitates the use of heavy and costly equipment’s in an effective manner.

2. It follows the principles of specialization where each department follows the special type of works.

3. It is suitable for the organizations having number of processes in manufacturing the product.

Disadvantages:

 Workers tends to feel less responsible for the whole product.

 It does not provide good training ground.
 When technology is sequential, the breakdown of one department slowdowns the work of all the other departments.
 It is difficult to compare the performance of different technology based department.
PURPOSE DEPARTMENTALISATION

There are 5 external ways in which work can be departmentalized by purpose: Product, Customers, Regions, Territory or Location,
Division, and Time.

I. PRODUCT DEPARMENTALISATION
 Under this method for each major product, a separate department is created and separate manager will handle each
department.
 Product departmentalization is defined as “Grouping activities based on products or product lines” which is suitable for large
organizations.
 This is evident when an organization is diversified and each product need different raw materials, technology, marketing
methods.
 Within each department all the needed manufacturing, engineering, marketing, manpower and other facilities are assembled.
 Example: Hindustan Lever manufactures detergents, soaps, chemicals and agro-based products.

ADVANTAGES

 Leads to continuous and undivided attention

 Helps top manager to compare performance of different products and act accordingly
 Product performance can be measured
 Department works with a clear goal

DISADVANTAGES

 Duplication of staffs and facilities

 The department may divert from overall organizational goal

II. CUSTOMERS DEPARMENTALISATION

 An enterprise may be divided into number of departments on the basis of customer’s service.
 Ex: Educational Institutes to impart quality education: Day college (Full time), Evening college (Employed students),
Correspondence (Outstation students)

ADVANTAGE

 It ensures full customers satisfaction

DISADVANTAGE

 It results in under-utilization of resources in some department

 There may be duplication of facilities

III. REGIONS, TERRITORY OR LOCATION DEPARMENTALISATION

 It is most suitable for organizations which are dispersed over the globe in various locations.
 Many government organizations prefer this type as they can provide similar and adoptive services to the regions
 Ex: Railways – Southern railways, Northern railways, Western railways, and Eastern railways.

ADVANTAGES

 Places responsibility even at the lower level

 Emphasizes local markets and problems
 Can take locational advantages like availability of raw material
 It affords top management training
 Can invest in a region with better profit

DISADVANTAGES
  Increases problem for top management to exercise control.
 Unity of direction may be lost.

IV. DIVISION DEPARMENTALISATION

 Multi-product company segment themselves into several independent centers on the basis of product, territory or customers,
this is called as Divisions or Free-Form organizations.
 Each division is free to handle and operate their division within the framework of general company – wide policies.
 Example: Samsung, Apple, Microsoft.

V. TIME DEPARMENTALISATION
 Activities are grouped on the basis of timing of their performance.
 Example: Small company expansion – owner or manager has 2 choices – extra shift or renting more shops

COMBINED BASE
 There are typically different bases for departmentalization for dealing with specific problems.
 The 2 important combined base structures are: 1. Combined based organization 2. Matrix organization.

1. COMBINED BASE ORGANIZATION

 Consider an organization manufacturing agricultural machinery may follow 3 different levels like Primary level, Intermediate
level and Ultimate level.
 The primary level is the level immediately below the chief executive which is “Product” as the base like tractor department,
appliance department, generator department etc.
 Intermediate level is “Territory” as the base which comprise of region like Eastern plant, Southern plant and Western plant.
 Ultimate level is “Function” as the base which mainly includes the functionalities like production, sales, finance, etc.

2. MATRIX ORGANIZATION

 Another form of combined base organization which is popular nowadays is “Matrix Organization”.
 It is also called as Grid or Lattice pattern organization.
 It is a form of organization where 2 types of departmentalization – Functional and Product exist simultaneously as shown in
figure 3.
  Functional departmentalization consists of General manager which is permanent fixture of the matrix organization, they hold
the complete authority for the overall operation of their respective units.
 Product departmentalization consists of Project managers are created as the need for them arises hence they are temporary
fixture of the matrix organization.
 Members of a project team are borrowed from the functional departments and are placed under the direction of project
manager.
 On the completion of the project the member of the team including the project manager revert to their respective department
until next assignment.
 The solid line is Functional departmentalization which are permanent and the dotted lines is Product departmentalization
which are temporary.

ADVANTAGES

 Combination of all necessary inputs at one place reduces problem of communication and coordination.
 Flexibility in organization resources helps in innovation.
 Stress on optimization of total project eliminates chances of sub-optimization of goals.
 Change of project to employee promotes intellectual growth.

DISADVANTAGES

 It interrupts the unity of command.

 It causes interpersonal conflicts.
 The employee needs to work under 2 bosses - Functional manager and project manager.

CHOICE OF A SUITABLE BASE

Factors that are considered for suitable base selection are as follows:

1. Specialization: The base should ensure maximum specialization of skill and efforts. Question asked in specialization will be like:
How will the choice affect differentiation among specialists?

2. Coordination: The base should ensure proper coordination and control of the activities of different departments. Question asked in
coordination will be like: Which base provides the best hope of obtaining the required control and coordination?
3. Economy: All the departmentalization used, its benefits should always be more than its cost. Question asked in Economy will be
like: Which base provides efficient utilization of machinery?

4. Whole task: Organization should be broken down so that each department has a “Whole task”. Nature of task are may be like, in
Technological departmentalization - weaving and spinning in textile work, Time departmentalization – work based on shifts.

7. COMMITTEES
 COMMITTEE DEFINITION: It is a group of people who have been formally assigned some task or some problem for
their decision and implementation.
 Committees are setup for group participants when they have:
o Recurring problem arises in the same group or
o Major problem that can be resolved after series of discussion with the group
 The new pattern of management is proposed by Likert which replaced the one-to-one relationship characteristics with “Inter-
locking groups” approach.
 Under this approach, each unit head and his subordinates would work as a decision-making committee.
 Each unit head will serve as a “Chief” for the level below him and as a subordinate for the level above him, he will be like a
linking pin function as shown in figure 4.

 Committees are classified into 2 main categories: Advisory committee and Executive committee.
 Advisory committee is vested with only staff authority, they can only give advice and cannot enforce the implementation.
Examples are: Sales committee, finance committee.
 Executive committee is vested with line authority they not only take decisions but also enforce its implementation.
Examples are: Board of Directors, CEO.
 Committee can also be classified as Standing committee and ad hoc forces.
 Standing committee are permanent committee deals with recurrent organizational problem and members are chosen because
of their tittle or position, instead of individual qualifications or skills
 Ex: finance committee in a company, loan approval company in a bank, admission company in a college.
 Ad hoc force are short term forces that dissolve after the task is over. The members are chosen for their skills and experience

ADVANTAGES

 Committees consist of all department heads as a member which promotes better understanding between each other.
 Committee provides forum for sharing knowledge and experience to all.
 Committee provides opportunity for participants in decision-making.
  Committee promotes transmitting ideas, and information to the all.
 Committee decisions are based on facts and are unbiased.

DISADVANATGES

 No members will be held responsible in the committee if any wrong decisions are passed.
 A huge amount is spent in setting meetings and allowance to members.
 Decisions are made though certain compromises among the members.
 Secrecy maintenance is difficult.

SUGGESTIONS FOR MAKING COMMITTEES EFFECTIVE

To overcome the limitations following suggestions will be carried out:

1. The number of members in the committee should not be very large.

2. The committee’s authority should be carefully spelled out, and its activities correctly choose and closely defined.

3. The members of committee should enjoy equal form of status.

4. The members should give importance to organizational goal rather than departmental goal.

5. The chairman of the committee should plan and conducting meeting fairly.

6. It is useful to take careful minutes of meeting, circular them for draft for corrections and then have a final copy.

7. The work of the committee should be periodically reviewed to determine if it works effectively.

8. It is important to know whether the committee benefits are worth its cost.

8. STAFFING
 It is the process of filling and keeping filled positions in an organization.
 It includes several sub-functions:
o Recruitment-getting applicants for the jobs as they open up.
o Selection of the best qualified from those who seek the jobs.
o Transfers and promotions.
o Training to improve the effectivity of the jobs.

9. IMPORTANCE AND NEED FOR PROPER STAFFING

 It helps to search the talented and competent people.
 It ensures improved productivity by matching people with job.
 It helps to avoid disruption of work due to shortage of personnel.
 It helps to prevent under-utilization of personnel or overburdening of human resource.

10. RECRUITMENT
 It is the process of attracting candidates to fill the positions in the organization structure.
 Once the requirement of manpower is known, the recruitment process starts.

SOURCES OF RECRUITMENT

 The source of recruitment can be classified in 2 main categories: Internal and External.
 Internal sources refer to present working force in the company.
 External sources refer to vacancies to be filled by external people. Most commonly used external sources are:
 1. Re-employing former employees – Former employees who have been laid off or have left the company for
personal reason may be re-employed. These people may require less initial training.

2. Friends and relatives of present employees – Company with good personnel relation encourage their employees to
recommend their friends and relatives.

3. Applicants at the gate – Unemployed persons who calls at the gates of the company are interviewed and those
who found suitable for existing vacant position are selected.

4. College and technical institutions – Many big companies remain in touch with the colleges and technical institutes
from where young and talented persons may be recruited.

5. Employment exchange - Employment exchange is an office setup by the government for bringing together those
who are search of job and those employers who are looking for workers. Those who found suitable for existing
vacant position are selected.

6. Advertisements – Advertising the vacancy in leading papers may also helpful for searching workers.

7. Labour unions – In company with strong labour union, person is recommended for appointment by their labour
union.

INTERNAL VS EXTERNAL SORUCES OF RECRUITMENT

 From the point of impact on motivation, external sources are not desirable, when there are adequate and qualified person’s
already inside the organization.
 If management wants his workers to improve prospects by participating effectively inside the organization program, it is
desirable to follow a policy of recruitment from within. Outside workers will have lack of knowledge of products and cannot
participate effectively.
 On the other hand, internal candidates are too advanced in age, it may become it may be difficult for the management to
recover outside sources of recruitment.

INTERNAL RECRUITMENT ADVANTAGES AND DISADVATAGES

ADVANTAGES

 A sense of security develops among the employee.

 Employee remains loyal to the organization.
 People recruited within does not require induction program.
 Labour turnover is reduced.
 People are motivated and become efficient.

DISADVANTAGES

 Limits the choice of selection to few candidates.

 It may encourage favoritism.

EXTERNAL RECRUITMENT ADVANTAGES AND DISADVATAGES

ADVANTAGES

 New workers bring fresh ideas.

 Field of choice becomes wide.

DISADVANTAGES

 Present employee may lose their sense of security and become disloyal.
 There will be loss in employee-employee relationship.
11. SELECTION PROCEDURE
There are several Steps in selection procedure:

1. Application blank

 Filling the “application blank” by the candidates is the first step in the process of selection.
 In this the candidate gives details about his qualification, specialization, experience, etc.

2. Initial interview of the candidate

 This is done to clarify the information already furnished in application blank and also to create a friendly environment for the
candidates.
 The interview must be properly planned and the interviews from different specialization must make applicant feel ease.

3. Employment tests

 To test further abilities of the candidates, some tests are conducted in this step.
 These tests determine candidate’s particular traits, attitude, likes, dislikes, intelligence and capacity to learn.
 There are several types of tests that can be listed as follows:

1. Aptitude tests – This test measures the applicant’s capacity to learn the skill required for a job.

2. Interest tests – This is the test used to find out the type of work in which the candidates have an interest. Ex: Sales
job, Marketing job.

3. Intelligence test – This test is used to find out the candidate’s intelligence. By this test candidate’s mental
alertness, reasoning ability, power of understanding can be judged. Ex: Reading and summarizing the paragraph in
the allotted time, writing 10 to 15 words that begins with the same letter.

4. Performance test – This is the test used to measure the candidate’s level of knowledge and skill in the particular
job in which appointed.

5. Personality test – It is used to measure those characteristics of the candidates which constitutes his personality.
Ex: Self-confidence, judgment, temperament, originality, etc.

4. Checking reference

 If the candidate is found satisfactory, then it is very important to get his personal background, history, character, etc. For this
the candidate’s friends, previous employer can be contacted.
 With the increase in the percentage of fake resumes, seeking help from the external screening agencies which is used for
verification of educational and professional qualifications, pre- employment status and past criminal records of job applicant.

5. Physical or medical examination

 It is done to check the physical fitness of the candidates for the job.
 To prevent the unwarranted claims by the candidates.
 To prevent communicable diseases entering the company.

6. Final interview

 This is just an informal interview wherein the candidate will be intimated about his selection and briefed about his future
prospects in the company.
 QUESTION BANK MODULE 2 CHAPTER 1
1. Explain span of management concepts and its importance. (5M – Feb 2023, 10M – Aug 2022, 6M – Feb 2021) *****

2. Define committee. Explain different types of committees. (5M – Feb 2023)

3. What is recruitment? Explain steps in selection process. (10M – Feb 2023, 10M – Mar 2022) *****

4. Explain different sources of recruitment. (10M – Aug 2022, 10M – July 2023) *****

5. Define organization. Explain principles of organization. (10M – Feb 2021, 10M – Mar 2022) *****

6. List the characteristics of organization. (4M)

7. Explain 5 external ways in which work can be departmentalized by purpose. (Product, Customers, Regions, Territory or Location,
Division, and Time)

8. Explain the typical matrix organization or Grid or Lattice pattern organization. ***