Industrial Management & Entrepreneurship Prof.

Sachin Kallannavar

Module-2
Syllabus
Organizing and Staffing: Nature and purpose of organization, Principles of organization,
Types of organization, Departmentation, Committees, Centralization Vs Decentralization of
authority and responsibility, Span of control - MBO and MBE (Meaning Only), Nature and
importance of staffing, Process of Selection & Recruitment (in brief).
Directing & Controlling: Meaning and nature of directing, Leadership styles, Motivation
Theories, Communication - Meaning and importance, Coordination - meaning and importance
and Techniques of Coordination. Meaning and steps in controlling, Essentials of a sound
control system, Methods of establishing control (in brief).

Organization
An organization is a structured process of assigning tasks, grouping activities,
delegating authority, and coordinating resources to achieve specific objectives.
It establishes the formal structure of relationships among people and resources in an
enterprise.

Nature / Characteristics of Organization

The nature of an organization highlights its essential attributes and functional role
within a business setup.

 Goal-Oriented
o Every organization is formed with the intention of achieving specific, pre-determined
goals such as profit, growth, or social service.
 Group of People
o An organization involves a structured group of individuals working together to
perform assigned tasks and achieve collective goals.
 Systematic Division of Work
o The total work is divided into manageable tasks and assigned to individuals or
departments based on specialization and skills.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

 Defined Authority-Responsibility Relationships

o Clearly establishes who reports to whom and who is responsible for what,
ensuring accountability and control.
 Coordination of Efforts
o Ensures harmonious interaction between different departments and individuals
to avoid conflicts and duplication of efforts.
 Dynamic in Nature
o An organization is flexible and adaptable to environmental changes such as market
trends, technology, and government regulations.
 Provides a Formal Structure
o Lays down a systematic framework of positions, roles, rules, and relationships
within the business.

Purpose of Organization
The purpose of organizing explains why an organization is structured and
established in a particular manner. It aims to improve operational efficiency, accountability,
and goal achievement.

 To Achieve Objectives Efficiently

o Facilitates systematic allocation of work and resources to ensure organizational
goals are accomplished productively.
 To Promote Specialization
o Divides work based on expertise, enabling better efficiency, accuracy, and speed in
task execution.
 To Define Clear Authority and Responsibility
o Helps establish a clear hierarchy and reporting relationships, preventing confusion
and conflicts.
 To Ensure Proper Coordination
o Integrates and aligns the activities of different departments and individuals towards a
common objective.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

 To Optimize Resource Utilization

o Promotes judicious use of manpower, materials, and financial resources through
planned allocation.
 To Facilitate Growth and Expansion
o A well-structured organization makes it easier to scale operations and manage
larger, more complex tasks.
 To Provide Stability and Continuity
o Ensures the business can withstand environmental changes and continue operating
smoothly over time.

Principles of Organization
The principles of organization are the fundamental guidelines that help in designing a
sound, effective, and efficient organizational structure. They ensure proper division of work,
delegation of authority, and coordination among individuals and departments, all aligned to
achieve the organizational objectives.
1. Division of Work
 The total work should be divided into specific, well-defined tasks and assigned to
individuals or departments based on their expertise and specialization.
 It improves efficiency, speed, accuracy, and productivity.

2. Authority and Responsibility

 There must be a clear delegation of authority along with matching responsibility.
 Authority empowers an individual to give orders and responsibility makes them
accountable for the task.

3. Unity of Command
 Each employee should receive orders and instructions from only one superior.
 This principle avoids confusion, conflict, overlapping of orders, and dual
accountability.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

4. Unity of Direction
 Activities having the same objective should be grouped together under one head and
one plan.
 Ensures coordinated efforts and prevents wastage of resources.

5. Scalar Chain
 Refers to a clear line of authority running from the top management to the lowest
level.
 Ensures an orderly and systematic flow of communication, instructions, and authority.

6. Span of Control
 There is a limit to the number of subordinates a manager can effectively supervise.
 Maintaining an optimum span ensures better control, supervision, and coordination.

7. Delegation of Authority
 Proper delegation involves transferring authority from higher to lower levels along
with responsibility.
 Encourages initiative, speeds up decision-making, and reduces workload at higher
levels.

8. Coordination
 All organizational activities and efforts should be integrated and aligned to achieve
common goals.
 Prevents conflicts, overlapping of work, and ensures unity of efforts.

9. Flexibility
 The organizational structure should be adaptable to changing business conditions like
technology, market trends, and competition.
 Ensures stability without resisting growth and innovation.

10. Efficiency

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

 The organizational system should ensure maximum output with minimum input.
 Avoids duplication, ensures optimum use of resources, and reduces operational costs.

11. Balance
 A balance must be maintained between centralization and decentralization, authority
and responsibility, specialization and generalization.
 Prevents over-concentration of authority or excessive delegation.

12. Continuity
 The organization should be designed in a way to ensure long-term stability and
continuous operations even in changing conditions.

Principle Explanation

Division of Work Specializing tasks improves efficiency

Authority and Responsibility Equal authority and accountability

Unity of Command Single superior for each employee

Unity of Direction Similar activities under one head

Scalar Chain Clear line of authority from top to bottom

Span of Control Optimum number of subordinates per manager

Delegation of Authority Distributing authority down the hierarchy

Coordination Integrating all efforts towards common goals

Flexibility Adaptable to future changes

Efficiency Maximum output with minimum input

Balance Equilibrium in organizational elements

Continuity Stability in operations over time

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Types of Organization

An organization structure is the framework that defines how tasks are divided, coordinated,
and supervised to achieve objectives. Broadly, it is classified into Formal and Informal
organizations, and within formal structures, there are several types.

1. Formal Organization

Created intentionally by management to achieve specific goals

 Clearly defined authority, responsibility, and communication channels.

 Work is systematically divided.
 Examples: company, school, hospital.

2. Informal Organization

 Spontaneously formed through personal relationships and social interactions.

 No official authority, but influences behavior and decision-making.
 Examples: friend groups within office, employee unions.

3. Major Types of Organization Structure

A. Line Organization

 Oldest & simplest form.

 Authority flows directly from top to bottom.
 Every subordinate report to one superior.
 Advantages: Simple, quick decisions, clear authority.
 Disadvantages: Overburden on top managers, lack of specialization.
 Suitable for: Small organizations, army, police.

B. Functional Organization

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

 Introduced by F.W. Taylor.

 Work is divided based on specialization (functions like production, marketing, finance).
 Employees report to multiple specialists.
 Advantages: Expertise, efficiency, skill development.
 Disadvantages: Confusion due to multiple bosses, conflicts possible.
 Suitable for: Large organizations with technical work.

C. Line and Staff Organization

 A combination of line and functional.

 Line officers have authority, while staff officers provide expert advice.
 Advantages: Balanced authority & expertise, better decision-making.
 Disadvantages: Conflicts between line & staff, higher cost.
 Suitable for: Medium and large organizations.

D. Committee Organization

 Decisions are taken by a group of people instead of one individual.

 Committees may be advisory, executive, or both.
 Advantages: Collective wisdom, democratic.
 Disadvantages: Time-consuming, risk of indecision.
 Suitable for: Policy making, coordination.

E. Project / Matrix Organization

 Combines functional and project-based structures.

 Employees report to both functional head and project manager.
 Advantages: Flexibility, innovation, efficient use of resources.
 Disadvantages: Dual authority, conflicts possible.
 Suitable for: R&D, construction, aerospace, IT companies.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Departmentation
Departmentation is the process of dividing an organization into different parts or
departments based on certain criteria such as functions, products, geography, or customers.
Each department is responsible for carrying out specific tasks and activities, which makes the
management process systematic, organized, and efficient.

Definition: “Departmentation is the process of grouping activities into manageable units for the
purpose of administration.”

Need / Importance of Departmentation

 Specialization: Encourages division of labor and development of expertise within
departments.
 Operational Efficiency: Simplifies management by grouping similar activities together.
 Clear Authority-Responsibility Relationship: Defines roles, reporting relationships,
and accountability.
 Coordination and Control: Improves coordination within departments and facilitates
better control.
 Organizational Growth: Enables effective management of large and diversified
organizations.
 Flexibility and Adaptability: Easier to adjust individual departments to changing
business needs.

Types of Departmentation
Organizations can choose different criteria to group their activities into departments:

1. Functional Departmentation
 Groups activities based on functions performed like production, marketing, finance,
human resources.
 Example: Marketing Department, Finance Department.
 Merits: Specialization, operational efficiency.
 Demerits: Poor inter-departmental coordination.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

2. Product/Manufacturing Departmentation
 Activities are grouped based on products or product lines.
 Example: TV Division, Refrigerator Division in an electronics company.
 Merits: Better focus on product performance.
 Demerits: Duplication of resources.

3. Geographical / Territorial Departmentation

 Grouping based on regions, territories, or geographical areas.
 � Example: North Zone Office, South Zone Office.
 Merits: Better local decision-making.
 Demerits: Higher operational costs.

4. Customer Departmentation
 Grouping based on types of customers served.
 Example: Government Client Division, Corporate Client Division.
 Merits: Better customer service.
 Demerits: Possible resource duplication.

5. Process / Equipment Departmentation

 Based on production processes or equipment used.
 Example: Forging Department, Casting Department in a manufacturing plant.
 Merits: Efficient use of equipment and specialization.
 Demerits: Limited to manufacturing industries.

6. Matrix Departmentation (Hybrid Form)

 A combination of two or more Departmentation types, like functional and product.
 Example: Project teams drawn from different functional areas.
 Merits: Flexible and adaptable.
 Demerits: Complex authority structure.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Committees
A committee is a formal group of people appointed or elected to perform a specific
task, take decisions, or provide recommendations on particular issues within an organization.
Committees enable collective decision-making, problem-solving, and coordination of
organizational activities.

Definition: “A committee is a group of persons entrusted with the responsibility to deliberate on

certain matters and give decisions or recommendations.”

Features / Characteristics of Committees

 Group of People: Consists of two or more individuals.
 Delegated Authority: Acts within the powers and duties assigned by higher
management.
 Specific Purpose: Formed to address particular issues or tasks.
 Collective Decision Making: Decisions are made after discussion and agreement among
members.
 Formal Structure: Operates with well-defined procedures, authority, and
responsibilities.
 Temporary or Permanent: Can be dissolved after achieving its purpose or can be a
standing (permanent) committee.

Types of Committees
Type Description Example
Provides advice and recommendations but Advisory Board for
Advisory Committee
does not make decisions. Policy Draft
Executive / Decision- Has decision-making authority within the Tender Evaluation
Making Committee delegated scope. Committee
Standing / Permanent Constituted for long-term or permanent Quality Control
Committee issues. Committee
Temporary / Ad Hoc Formed for a specific purpose and disbanded Project Launch
Committee after task completion. Committee

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Line and Staff Comprises both line executives and staff Industrial Safety
Committee specialists. Committee

Advantages of Committees
 Collective Wisdom: Combines the knowledge and experience of multiple people.
 Democratic Decision Making: Encourages discussion, debate, and consensus.
 Balanced Decisions: Reduces the chance of biased or one-sided decisions.
 Coordination: Ensures coordination among different departments or interest groups.
 Employee Participation: Enhances morale and motivation through involvement in
decision-making.
 Better Implementation: Collective decisions are more readily accepted and executed.

Limitations of Committees
 Time-Consuming: Decision-making may be delayed due to prolonged discussions.
 High Costs: Requires administrative arrangements, allowances, and documentation.
 Possibility of Conflict: Differences of opinion can lead to conflicts or deadlocks.
 Lack of Accountability: Shared responsibility may dilute individual accountability.
 Inefficiency in Emergencies: Not suitable for quick or urgent decisions.

Centralization Vs Decentralization of Authority & Responsibility

 Authority: The power to take decisions and issue orders.

 Responsibility: The obligation to perform assigned tasks and be accountable for results.

The way authority and responsibility are distributed within an organization determines whether it
is centralized or decentralized.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Centralization
Centralization refers to the concentration of decision-making authority at the top
management level. Subordinates execute orders but have limited or no decision-making
power.

Features:
 Decision-making authority lies primarily with top executives.
 Lower-level managers and employees have minimal autonomy.
 Uniform policies and procedures throughout the organization.
 Strong control and supervision by top management.

Merits:
 Quick and consistent decision-making.
 Better control and coordination.
 Clear authority-responsibility relationships.
 Uniform implementation of policies.

Demerits:
 Delays in decision-making for local or routine matters.
 Overburdening of top management.
 Lack of initiative and motivation at lower levels.
 Less adaptability to local situations.

Decentralization
Decentralization is the systematic delegation of authority and responsibility to lower
levels of management. Decisions are made at various points in the organization, closer to the
point of action.

Features:
 Decision-making authority is distributed among various levels.
 Lower-level managers enjoy autonomy within defined limits.
 Localized decision-making based on situational needs.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

 Top management retains control over strategic and critical issues.

Merits:
 Faster decision-making at operational levels.
 Reduces burden on top management.
 Encourages initiative, leadership, and motivation among subordinates.
 Greater flexibility and adaptability.

Demerits:
 Possible lack of uniformity in decisions.
 Risk of misuse of authority.
 Difficulty in maintaining coordination.
 Higher operating costs due to duplication of efforts.

Basis Centralization Decentralization

Concentration of authority at top Distribution of authority to lower
Meaning
level levels
Decision-making Top management only Various levels of management
Flexibility Less flexible Highly flexible and adaptive
Fast, as decisions are made
Speed of Decisions Slow, as decisions flow from top
locally
Employee
Low, limited participation High, greater involvement
Motivation
Difficult due to multiple decision
Coordination Easier due to central control
centers
Higher, due to possible
Cost Lower administrative costs
duplication of activities
Large, geographically spread
Suitability Small, stable organizations
organizations

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Span of Control
Span of Control (also called Span of Management) refers to the number of
subordinates that a manager can effectively and efficiently supervise or control directly.
It determines the structure, levels, and efficiency of an organization’s hierarchy.

Definition: “Span of control is the number of subordinates who report directly to a manager.”

Types of Span of Control

1. Narrow Span of Control
 A manager supervises a small number of subordinates.
 Results in more levels of management and a taller organizational structure.

Merits:
 Close supervision and better control.
 Quick feedback and guidance.

Demerits:
 Expensive due to more managerial positions.
 Slower communication.

2. Wide Span of Control

 A manager supervises a larger number of subordinates.
 Leads to fewer management levels and a flatter organizational structure.

Merits:
 Cost-effective, fewer managerial levels.
 Faster decision-making and communication.

Demerits:
 Risk of overburdening managers.
 Reduced personal attention to subordinates.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Factors Influencing Span of Control

Several factors determine whether an organization should adopt a wide or narrow span:
Factor Influence on Span
Competence of Manager More capable managers can handle a wider span.
Competence of Subordinates Experienced and trained subordinates require less supervision.
Nature of Work Routine and similar tasks allow a wider span.
Geographical Dispersion If subordinates are widely scattered, span narrows.
Top levels require narrower span; lower levels can have wider
Level of Management
span.
Communication Techniques Advanced technology and systems can support wider span.
Degree of Delegation More delegation enables a wider span of control.

Advantages of an Optimum Span of Control

 Ensures effective supervision and control.
 Facilitates quick communication and decision-making.
 Improves coordination between managers and subordinates.
 Maintains employee morale and motivation.
 Enhances organizational efficiency.

Management by Objectives (MBO)

Management by Objectives (MBO) is a strategic management technique where managers

and subordinates jointly set goals and objectives, and performance is periodically reviewed
against these set objectives. It promotes participative goal setting and self-direction.

Definition: “MBO is a process where superior and subordinate managers jointly identify
objectives, define individual responsibilities, and use these objectives as performance evaluation
standards.”

Key Features
 Participative goal setting by managers and employees.
 Clear, measurable, and time-bound objectives.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

 Continuous monitoring of performance.

 Regular feedback and performance appraisal.
 Focus on results rather than activities.

Process of MBO
1. Define organizational objectives.
2. Set departmental and individual goals.
3. Develop action plans.
4. Monitor progress regularly.
5. Evaluate performance and provide feedback.

Advantages
 Improves employee motivation through involvement.
 Clarifies roles, responsibilities, and expectations.
 Enhances communication between managers and staff.
 Aligns individual goals with organizational objectives.
 Improves performance through continuous review.

Disadvantages
 Time-consuming and resource-intensive.
 Not suitable for crisis management situations.
 Requires training and commitment at all levels.
 Difficult to set quantitative objectives for all roles.

Management by Exception (MBE)

Management by Exception (MBE) is a management technique where managers focus
their attention only on significant deviations from planned performance.
Routine decisions are handled by subordinates, while exceptional issues requiring higher-level
attention are escalated.

Definition: “MBE is a policy by which management concentrates its attention on significant

deviations from expected results or standards and ignores minor variations.”

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Key Features
 Focuses managerial time on critical issues.
 Routine matters are handled at lower levels.
 Ensures efficient use of managerial talent.
 Promotes faster and better decision-making on exceptions.

Process of MBE
1. Set performance standards.
2. Measure actual performance.
3. Compare results with standards.
4. Identify significant deviations.
5. Take corrective action where necessary.

Advantages
 Saves time and effort for top management.
 Encourages delegation and empowerment.
 Promotes prompt corrective actions on critical issues.
 Improves organizational control.

Disadvantages
 Over-reliance may ignore minor but cumulative problems.
 Requires well-defined standards and reporting systems.
 Success depends on accurate and timely data.

Aspect MBO (Management by Objectives) MBE (Management by Exception)

Focus on significant deviations from
Meaning Joint goal setting and review process
norms
Managing only exceptional or critical
Focus Achieving set objectives
issues
Approach Participative, proactive Selective, reactive

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Control Continuous, through feedback Intermittent, based on deviations

Motivation, clarity, better Saves managerial time, fast problem
Advantages
communication resolution
Time-consuming, requires
Disadvantages Risk of ignoring minor issues
commitment
Best Suited Developmental, long-term goal Routine operations with occasional
For management exceptions

Nature and Importance of Staffing

Staffing is the management function of recruiting, selecting, training, developing,
appraising, and retaining the right people for the right jobs at the right time.
It ensures that the organization has an adequate and competent workforce to achieve its
objectives efficiently.

Nature / Characteristics of Staffing

1. Continuous Process
 Staffing is not a one-time activity; it continues as long as an organization exists.
 New positions arise, vacancies occur, and business needs change, making staffing an
ongoing function.

2. Human-Centric Function
 Staffing deals with managing people, the most valuable organizational resource.
 It requires understanding of human behavior, motivation, skills, and potential.

3. Involves Multiple Sub-functions

 Staffing includes several activities such as manpower planning, recruitment, selection,
placement, training, promotion, performance appraisal, and compensation.

4. Goal-Oriented
 The primary aim of staffing is to acquire and retain competent employees so that
organizational objectives can be achieved efficiently.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

5. Universal Function
 Staffing is essential in all types of organizations — big or small, public or private,
manufacturing or service-based.

6. Ensures Optimum Utilization of Human Resources

 Staffing ensures that the right person is appointed for the right job, preventing under-
utilization or wastage of talent.

Importance of Staffing
1. Ensures Competent Workforce
 Staffing ensures that the organization has skilled, capable, and suitable personnel for
every role, which enhances overall productivity and performance.

2. Improves Organizational Efficiency

 Efficient staffing leads to better employee-job matching, optimum manpower utilization,
and reduction in operational costs.

3. Facilitates Growth and Expansion

 Through systematic manpower planning and career development, staffing prepares the
organization for growth, diversification, and expansion.

4. Develops Future Leaders

 Staffing involves training, promotion, and performance appraisals that help identify
and develop future managers and leaders within the organization.

5. Boosts Employee Morale

 When people are placed in jobs that match their skills and offered opportunities for
growth, it improves job satisfaction, morale, and loyalty.

6. Promotes Optimum Utilization of Human Resources

 Staffing ensures neither overstaffing nor understaffing, reducing wastage of manpower
and improving operational efficiency.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Process of Recruitment and Selection

 Recruitment is the process of identifying, attracting, and encouraging potential
candidates to apply for job vacancies in an organization.
 Selection is the process of choosing the most suitable candidate from among the
applicants through a systematic assessment of their qualifications, skills, and suitability
for the job.

Process of Recruitment
Recruitment is the preliminary stage of staffing, focused on generating a pool of
qualified candidates.

Steps in Recruitment:
1. Manpower Planning
 Determining the number and types of employees needed based on future organizational
requirements.

2. Job Analysis
 Preparing job descriptions (details of duties and responsibilities) and job specifications
(qualifications, skills, and experience required).

3. Identifying Recruitment Sources

 Selecting sources for attracting candidates:
o Internal Sources: Promotions, transfers, employee referrals.
o External Sources: Advertisements, employment exchanges, recruitment agencies,
campus recruitment.

4. Inviting Applications
 Issuing job advertisements and inviting applications through selected channels.

5. Receiving and Screening Applications

 Collecting and initially short listing applications based on eligibility criteria.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Process of Selection
Selection is a systematic and rigorous process of short listing and appointing the right
candidate from the pool generated by recruitment.

Steps in Selection:
1. Preliminary Screening
 Initial scrutiny of applications to filter out unqualified candidates.

2. Application Blank / Form

 Candidates fill a detailed application form providing personal, educational, and work
experience details.

3. Written Test
 Conducted to assess technical knowledge, aptitude, reasoning, or language skills as
per job requirements.

4. Interview
 Personal interaction to evaluate the candidate’s communication, attitude, confidence,
and suitability for the job.

5. Group Discussion (if applicable)

 Assessing leadership, teamwork, reasoning, and communication skills.

6. Reference and Background Check

 Verifying candidates past employment records, character, and credentials.

7. Medical Examination
 Ensuring the candidate’s physical fitness and health compatibility with the job.

8. Final Selection and Appointment

 Issuing the appointment letter and explaining terms of employment to the selected
candidate.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Directing and Controlling

Meaning of Directing

Directing is the managerial function that involves guiding, supervising, motivating, and
leading subordinates to achieve organizational objectives. It is the action-oriented function of
management that initiates and drives all other managerial activities by ensuring that people
work efficiently towards planned goals.

Definitions: “Directing is the process of instructing, guiding, motivating, and leading people in
the organization to achieve its objectives.”

It involves issuing orders and instructions, providing leadership, and ensuring effective
communication within the organization.

Nature / Characteristics of Directing

1. Continuous Function
 Directing is a never-ending, ongoing activity that continues throughout the life of an
organization.
 Managers must constantly guide, supervise, and motivate employees in all situations.

2. Pervasive Function
 Directing is required at all levels and in all departments of an organization.
 Every manager, whether at the top, middle, or lower level, performs the directing
function.

3. Executive Function
 Directing is performed exclusively by managers and leaders at various levels of
management.
 It involves taking decisions, issuing instructions, supervising activities, and
motivating employees.

4. Human-Centric Function

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

 Directing deals directly with managing people, understanding human behavior,

needs, and emotions.
 It aims to create a motivating and productive work environment.

5. Initiates Action
 Unlike other management functions like planning or organizing, directing is action-
oriented.
 It activates plans and organizational structures by initiating actual work
performance.

6. Integrates Efforts
 Through effective communication, leadership, and supervision, directing ensures that
individual efforts are aligned towards achieving common goals.
 It integrates personal objectives with organizational objectives.

Leadership Styles
A leadership style refers to the behavioral pattern and approach a leader adopts to
influence, guide, and direct subordinates in achieving organizational goals.
It defines how a leader makes decisions, communicates, and exercises authority.

Types of Leadership Styles

Leadership styles are generally classified into the following major categories:

1. Autocratic or Authoritarian Leadership

The leader retains full control of decision-making and expects strict compliance from
subordinates.

Characteristics:
 Leader takes decisions alone without consulting subordinates.
 Complete authority and control over work and procedures.
 Strict supervision and clear, one-way communication.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Advantages:
 Quick decision-making.
 Suitable in crisis or emergency situations.
 Clear responsibilities and accountability.

Disadvantages:
 Low employee morale.
 No participation or creativity from subordinates.
 Can cause resentment and high employee turnover.

2. Democratic or Participative Leadership

The leader involves subordinates in decision-making and encourages open communication
and feedback.

Characteristics:
 Decisions are taken after consulting team members.
 Encourages participation and two-way communication.
 Focus on employee welfare, motivation, and creativity.

Advantages:
 Boosts morale and job satisfaction.
 Encourages creativity and innovation.
 Better quality decisions through group inputs.

Disadvantages:
 Slower decision-making process.
 May lead to indecisiveness if over-consulted.

3. Laissez-Faire or Free-Rein Leadership

The leader provides complete freedom to subordinates to make decisions and carry out
their tasks independently.

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Characteristics:
 Minimal interference from the leader.
 Delegates’ decision-making authority to subordinates.
 Employees work according to their own plans and methods.

Advantages:
 Encourages innovation and individual responsibility.
 High job satisfaction for self-motivated and experienced employees.

Disadvantages:
 Lack of direction and coordination.
 Can result in confusion and inefficiency if subordinates are unskilled or inexperienced.

4. Paternalistic Leadership
The leader acts as a father figure, taking care of employees’ needs and welfare while
exercising authority.

Characteristics:
 Leader takes decisions in the best interest of employees.
 Friendly and caring approach, but maintains control.
 Rewards loyalty and punishes disobedience.

Advantages:
 Builds loyalty and trust.
 Good employee-employer relations.

Disadvantages:
 Can limit employee initiative.
 Risk of favoritism and dependency culture.

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Decision- Employee
Style Communication Best Suited For
making Involvement
Autocratic Leader alone One-way None Crisis, military
Democratic Jointly Two-way High Creative industries
Laissez-Faire Subordinates Minimal Maximum R&D, expert teams
Paternalistic Leader alone One-way / limited Moderate Traditional setups

Motivation Theories
Motivation is the process of stimulating people to take desired actions and sustain
their efforts to achieve organizational and personal goals. It is an internal psychological drive
that directs behavior towards achieving objectives.

Major Theories of Motivation

Management scholars have developed several theories to explain what motivates people at work.
The important ones are:

1. Maslow’s Hierarchy of Needs Theory (1943)

Proposed by: Abraham Maslow

Idea: Human needs are arranged in a hierarchy of five levels, and people are motivated to fulfill
lower-level needs first before moving to higher levels.

Hierarchy Levels:
1. Physiological Needs ➝ Basic survival needs: food, water, shelter, and clothing.
2. Safety Needs ➝ Security, protection, stability, and safe working conditions.
3. Social Needs ➝ Belongingness, love, friendship, teamwork.
4. Esteem Needs ➝ Respect, recognition, status, achievement.
5. Self-Actualization Needs ➝ Realizing personal potential, creativity, personal growth.

Key Point: Once a lower-level need is satisfied, it ceases to be a motivator.

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2. Herzberg’s Two-Factor Theory (1959)

Proposed by: Frederick Herzberg

Idea: Job satisfaction and dissatisfaction arise from two different sets of factors:

A. Hygiene Factors (Dissatisfiers)

 Salary, company policies, supervision, job security, working conditions.
 Their absence causes dissatisfaction but their presence doesn’t motivate — they only
prevent dissatisfaction.

B. Motivational Factors (Satisfiers)

 Achievement, recognition, responsibility, advancement, personal growth.
 Their presence motivates employees and improves performance.

Key Point: Only motivational factors truly encourage better performance.

3. McGregor’s Theory X and Theory Y (1960)

Proposed by: Douglas McGregor

Idea: There are two contrasting views of human nature at work:

Theory X (Traditional View)

 People inherently dislike work.
 Must be coerced, controlled, and threatened.
 Prefer to be directed, avoid responsibility.

Theory Y (Modern View)

 Work is natural and enjoyable.
 People seek responsibility.
 Capable of self-direction and creativity if properly motivated.

Key Point: Modern management favors Theory Y assumptions.

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4. McClelland’s Theory of Needs (1961)

Proposed by: David McClelland

Idea: Individuals are motivated by three primary needs:

1. Need for Achievement (nAch) ➝ Desire to excel, set and accomplish challenging goals.
2. Need for Power (nPow) ➝ Desire to control others, be influential.
3. Need for Affiliation (nAff) ➝ Desire for friendly, close interpersonal relationships.

Key Point: Different people are motivated by different needs depending on their personal traits
and situations.

Theory Key Idea Focus Areas

Maslow’s Need Needs arranged from physiological to
Five-level hierarchy
Hierarchy self-actualization
Herzberg’s Two- Hygiene factors prevent dissatisfaction; Job environment and job
Factor motivators boost satisfaction content
Theory X — Negative view of Manager’s assumptions about
McGregor’s X & Y
workers, Theory Y — Positive view people
McClelland’s Needs People driven by need for
Individual personality needs
Theory achievement, power, affiliation

Communication — Meaning and Importance

Meaning of Communication
Communication is the process of exchanging information, ideas, thoughts, opinions,
and emotions between individuals or groups to achieve mutual understanding.
It involves a sender, a message, a medium, and a receiver, ensuring that intended information
is effectively conveyed and understood.

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Definition: “Communication is the process of transmitting information and understanding from

one person to another.”

It is a two-way process essential for coordination, decision-making, leadership, and motivation

in organizations.

Importance of Communication
1. Facilitates Planning and Decision-Making
 Effective communication is essential for formulating plans, policies, and strategies.
 Helps managers convey goals and gather feedback for better decision-making.

2. Ensures Coordination
 Communication acts as a link between different departments and levels in an
organization.
 Ensures that individual efforts are properly coordinated towards organizational
objectives.

3. Promotes Leadership and Motivation

 Managers guide, instruct, and inspire employees through effective communication.
 Helps in resolving conflicts, addressing concerns, and keeping employees motivated.

4. Aids in Employee Development

 Through communication, employees receive guidance, training, and feedback about
their performance.
 Encourages continuous learning and professional growth.

5. Facilitates Control
 Managers use communication to set performance standards, monitor activities, and
issue corrective instructions.
 Ensures that actual performance aligns with organizational expectations.

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6. Builds Healthy Organizational Relations

 Encourages openness, trust, and understanding among employees and management.
 Promotes a positive work culture and reduces misunderstandings and conflicts.

Coordination — Meaning and Importance

Meaning of Coordination
Coordination is the systematic arrangement and alignment of group efforts and
activities to achieve organizational objectives harmoniously and efficiently.
It ensures that the activities of different departments, divisions, and individuals are
synchronized and directed towards a common goal.

Definition: “Coordination is the orderly arrangement of group efforts to provide unity of action
in the pursuit of a common objective.”

It is often described as the essence of management, because without coordination,

organizational efforts can become fragmented, inefficient, and counterproductive.

Importance of Coordination
1. Ensures Unity of Action
 Integrates the actions of individuals, departments, and functions so they work towards
shared objectives.
 Prevents overlapping or contradictory efforts within an organization.

2. Promotes Efficient Resource Utilization

 Avoids duplication of efforts and wastage of resources.
 Ensures optimal use of financial, human, and material resources by aligning them
effectively.

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3. Facilitates Smooth Working

 Ensures that different departments or teams work in harmony without conflicts or
delays.
 Helps in maintaining a steady workflow and operational efficiency.

4. Improves Organizational Effectiveness

 Enhances the overall performance and productivity of the organization.
 Ensures that departmental and individual goals are aligned with organizational objectives.

5. Helps in Conflict Resolution

 Effective coordination reduces misunderstandings, clashes, and rivalry among
departments or employees.
 Ensures clarity of roles and responsibilities, fostering a cooperative environment.

6. Essential for Large and Complex Organizations

 In large organizations with diverse operations and geographical spread, coordination
ensures unity and control.
 Helps manage multiple business units or projects effectively.

Techniques of Coordination
Coordination techniques are the methods, practices, and tools used by management
to harmonize individual and group efforts within an organization.
They help in integrating diverse activities, resolving conflicts, and achieving unity of action.

The following are commonly used techniques of coordination in organizations:

1. Sound Planning
 A well-structured, comprehensive, and realistic plan is the foundation for effective
coordination.
 Clearly defines objectives, responsibilities, timelines, and resources for various
departments and individuals.

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 Example: Annual business plans with department-wise goals and deadlines.

2. Effective Communication
 Ensures clear, timely, and accurate exchange of information among all levels and
departments.
 Facilitates understanding of organizational goals, policies, procedures, and
performance expectations.
 Example: Regular meetings, circulars, emails, and reporting systems.

3. Effective Leadership
 A good leader promotes coordination by guiding, motivating, and influencing
subordinates to work together harmoniously.
 Helps resolve conflicts and align individual goals with organizational objectives.
 Example: A team leader ensuring consensus on project strategies.

4. Chain of Command (Scalar Chain)

 The formal line of authority and reporting relationships ensures smooth
communication and coordination.
 Clarifies who reports to whom and maintains discipline and accountability.
 Example: An engineer reporting to a project manager, who reports to a general manager.

5. Supervision and Control

 Through supervision, managers direct and monitor employees’ activities to ensure
alignment with plans.
 Regular control mechanisms like performance reviews and audits help maintain
coordination.
 Example: Daily work reports, weekly reviews, or operational audits.

6. Group Meetings and Conferences

 Regular meetings encourage exchange of ideas, clarification of doubts, and joint
decision-making.
 Enhances understanding, reduces misunderstandings, and fosters unity.

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 Example: Monthly cross-functional coordination meetings.

7. Liaison Officers or Committees

 Appointing liaison officers or forming committees to coordinate between different
departments or units.
 Helps in interdepartmental coordination, decision-making, and problem-solving.
 Example: A project coordination committee for a multi-departmental project.

8. Organizational Policies and Procedures

 Standardized policies, rules, and procedures guide employees and departments
uniformly.
 Minimizes conflicts and promotes consistent work practices.
 Example: HR policy manual, procurement procedures.

Meaning and Steps in Controlling

Meaning of Controlling
Controlling is the managerial function of monitoring, comparing, and correcting
organizational performance to ensure that the actual results conform to planned objectives.
It involves setting standards, measuring actual performance, identifying deviations, and taking
corrective actions when necessary.

Definition: “Controlling is the process of ensuring that actual activities conform to planned
activities.”

It ensures that organizational activities are directed towards achieving set goals effectively
and efficiently.

Steps in Controlling Process

The controlling function follows a systematic process involving the following key steps:

1. Setting Performance Standards

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 The first step is to define clear, specific, measurable, and achievable performance
standards.
 These standards act as benchmarks or criteria against which actual performance will be
compared.

Examples:
 Production targets
 Quality standards
 Sales quotas
 Cost limits

2. Measuring Actual Performance

 After establishing standards, the next step is to measure actual performance of
employees, processes, or operations.
 This is done through observation, reports, records, inspections, and feedback
systems.

Examples:
 Production reports
 Financial statements
 Employee performance appraisals

3. Comparing Actual Performance with Standards

 In this step, the measured performance is compared with the established standards to
identify deviations.
 The extent and causes of deviations are analyzed.

Types of Deviations:
 Positive deviation: Actual performance exceeds standards.
 Negative deviation: Actual performance falls short of standards.

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4. Analyzing Causes of Deviations

 If significant deviations are observed, their underlying causes are analyzed.
 This may involve examining internal factors (like manpower, machinery, materials)
or external factors (like market conditions or legal changes).

Purpose: To decide whether corrective action is needed and what kind of corrective measures
should be implemented.

5. Taking Corrective Action

 The final step involves initiating appropriate corrective actions to rectify deviations
and prevent their recurrence in the future.
 Corrective actions might include process changes, employee training, resource
adjustments, or revised plans.

Examples:
 Increasing machine hours
 Revising targets
 Hiring additional staff
 Modifying quality control procedures

Essentials of a Sound Control System

A control system in management is the framework and process used by an organization
to monitor actual performance, compare it with planned objectives, and take corrective
actions when deviations occur.

A sound control system ensures that organizational activities are regulated effectively,
efficiently, and economically for achieving desired goals.

Essentials / Characteristics of a Good Control System

A sound and effective control system should possess the following essentials:

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1. Suitability to Organizational Needs

 The control system must be designed to meet the specific objectives, size, nature, and
structure of the organization.
 Controls should focus on key result areas (KRAs) rather than minor details.
 Example: Financial control systems for banks, quality control for manufacturing firms.

2. Simplicity and Clarity

 A good control system should be simple to understand and easy to operate.
 The procedures, reporting systems, and corrective mechanisms must be clearly defined
and communicated.
 Advantage: Avoids confusion and delays in decision-making.

3. Flexibility
 The control system should be adaptable to changes in the internal and external
environment.
 It must allow for modifications in standards and control procedures as situations evolve.
 Example: Adjusting production targets during market demand fluctuations.

4. Promptness / Timeliness
 A sound control system should provide timely and accurate information to managers.
 Quick reporting and feedback enable immediate corrective actions, preventing serious
issues.
 Example: Daily production reports in a factory.

5. Focus on Strategic / Key Areas

 Controls should concentrate on critical and strategic areas where deviations can
significantly impact organizational performance.
 Avoid excessive controls over minor activities.
 Example: Cost control in a high-volume manufacturing business.

6. Economical

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 The control system should be cost-effective and its benefits should outweigh the costs
involved in implementation and maintenance.
 Avoid unnecessary paperwork or elaborate procedures.
 Example: Simple online dashboards for performance tracking.

7. Accuracy
 A good control system should provide accurate, reliable, and factual data.
 Decisions based on wrong or incomplete data can be harmful.
 Example: Financial audits and verified sales reports.

8. Objectivity
 Control measures and performance standards should be clear, unbiased, and
measurable.
 Subjective assessments can lead to favoritism and conflicts.
 Example: Performance measured against quantifiable targets like units produced or sales
achieved.

9. Motivating and Corrective

 A sound control system should not just detect faults but also encourage better
performance.
 It must provide constructive feedback and suggest practical, positive corrective actions.
 Example: Rewarding departments for meeting cost control targets.

Methods of Establishing Controls

Methods of establishing controls refer to the different techniques and approaches used
by managers to monitor, evaluate, and regulate organizational performance to ensure that
actual results align with planned objectives.
These methods help in measuring performance, identifying deviations, and
implementing corrective actions effectively. The following are the most widely used methods
of control in organizations:

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1. Budgetary Control
 Involves preparing budgets for different departments or activities and comparing
actual performance with budgeted targets.
 Deviations are analyzed, and corrective measures are taken.

Examples:
 Production budget
 Sales budget
 Cash budget

Advantage: Helps in cost control and financial planning.

2. Financial Control
 Focuses on controlling the financial resources of the organization through analysis of
financial statements, cost records, and ratios.
 Common tools:
o Balance sheets
o Profit & Loss accounts
o Financial ratios (liquidity, profitability)

Advantage: Ensures financial stability and cost-effectiveness.

3. Cost Control
 Involves controlling the cost of production and operations by setting cost standards and
comparing actual costs with those standards.
 Helps to reduce wastage, improve efficiency, and increase profitability.

Methods used:
 Standard costing
 Marginal costing
 Break-even analysis

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4. Production Control
 Regulates the manufacturing process and ensures timely and efficient production as
per planned schedules.
 Involves setting production targets, tracking work progress, and adjusting processes to
meet deadlines.

Advantage: Reduces idle time and optimizes resource utilization.

5. Quality Control
 Focuses on maintaining the quality of products and services by setting quality
standards and inspecting output.
 Deviations in product quality are identified and corrected.

Techniques used:
 Inspection
 Statistical Quality Control (SQC)
 Six Sigma

Advantage: Improves customer satisfaction and reduces defective production.

6. Inventory Control
 Maintains optimum inventory levels of raw materials, work-in-progress, and finished
goods to avoid overstocking or stockouts.
 Uses techniques like:
o Economic Order Quantity (EOQ)
o ABC Analysis
o Just-In-Time (JIT)

Advantage: Minimizes holding costs and ensures smooth operations.

7. Internal Audit
 A continuous, independent review of operations and records by an internal audit team
to detect errors, fraud, and inefficiencies.

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 Ensures compliance with policies, procedures, and standards.

Advantage: Promotes accountability and operational efficiency.

8. Break-Even Analysis
 A cost-volume-profit (CVP) analysis technique used to determine the level of output at
which total revenue equals total cost (break-even point).
 Helps in decision-making related to pricing, production levels, and cost control.

Advantage: Identifies risk areas and profitability thresholds.

9. Management Information System (MIS)

 A computerized system that collects, processes, and presents relevant data to managers
for decision-making and control.
 Provides timely, accurate, and reliable information.

Advantage: Improves decision-making speed and accuracy.

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