organizing - senthilmadasamy.com
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Unit – 3 B.E. Mech. Engg. MCET
Organizing
UNITIII FUNCTIONAL AREA OF ORGANISATION
Formal and informal organization –Organization Chart –Structure and Process –Departmentation by
difference strategies –Line and Staff authority –Benefits and Limitations –De-Centralization and
Delegation of Authority –Staffing –Selection Process –Techniques
The term organization is derived from the word “organism” - which means structure with parts
so integrated that their relation to each other is governed by their relation to whole.
Meaning
“Organizing is the process of identifying & groups of activities required to attain the objectives,
delegating authority, creating responsibility & establishing relationships for the people to work
effectively”.
Definition:
“Orgnisation is the process of identifying and grouping work to be performed defining and delegating
responsibility and authority and establishing relationship for the purpose of enabling people to
work most effectively together in accomplishing objectives. -ALLEN
Organization is nothing but,‘a process of Integrating and Coordinating the efforts of men and
materials for the accomplishment of a set objective’
Principles of Organizing
The organizing process can be done efficiently if the managers have certain guidelines so that they
can take decisions and can act. To organize in an effective manner, the following principles of
organization can be used by a manager.
1. Principle of Specialization
According to the principle, the whole work of a concern should be divided amongst the
subordinates on the basis of qualifications, abilities and skills. It is through division of work
specialization can be achieved which results in effective organization.
2. Principle of Functional Definition
According to this principle, all the functions in a concern should be completely and clearly
defined to the managers and subordinates. This can be done by clearly defining the duties,
responsibilities, authority and relationships of people towards each other. Clarifications in
authority-responsibility relationships helps in achieving co-ordination and thereby
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organization can take place effectively. For example, the primary functions of production,
marketing and finance and the authority responsibility relationships in these departments
shouldbe clearly defined to every person attached to that department. Clarification in the
authority-responsibility relationship helps in efficient organization.3. Principles of Span of Control/Supervision
According to this principle, span of control is a span of supervision which depicts the number
of employees that can be handled and controlled effectively by a single manager. According
to this principle, a manager should be able to handle what number of employees under him
should be decided.
Span of Control is nothing but, How many subordinates can be effectively and efficiently
monitored and controlled by a single supervisor / manager
“How many subordinates a supervisor can manager”
Span of Control / Span of Authority /Span of Supervision / Span of Management
Span of control refers to the number of immediate subordinate who report a manager.
Different level of organization level is also called span of control.
This decision can be taken by choosing either from a wide or narrow span. There are two
types of span of control:-
a. Wide span of control- It is one in which a manager can supervise and control
effectively a large group of persons at one time. The features of this span are:-
i. Less overhead cost of supervision
ii. Prompt response from the employees
iii. Better communication
iv. Better supervision
v. Better co-ordination
vi. Suitable for repetitive jobs
According to this span, one manager can effectively and efficiently handle a large
number of subordinates at one time.
b. Narrow span of control- According to this span, the work and authority is divided
amongst many subordinates and a manager doesn't supervises and control a very big
group of people under him. The manager according to a narrow span supervises a
selected number of employees at one time. The features are:-
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i. Work which requires tight control and supervision, for example, handicrafts,
ivory work, etc. which requires craftsmanship, there narrow span is more
helpful.
ii. Co-ordination is difficult to be achieved.
iii. Communication gaps can come.
iv. Messages can be distorted.
v. Specialization work can be achieved.
Advantages
Organisation with Narrow Span
Disadvantages
• Close Supervision
• Close Control
• Faster Communication between Subordinates and Supervisor
• Supervisors tend to get too involved in Subordinators work
• Many levels of Management
• High cost due to many levels
• Excessive distance between lowest levels and top levels
Factors influencing Span of Control
i. Managerial abilities- In the concerns where managers are capable, qualified
and experienced, wide span of control is always helpful.
ii. Competence of subordinates- Where the subordinates are capable and
competent and their understanding levels are proper, the subordinates tend to
very frequently visit the superiors for solving their problems. In such cases, the
manager can handle large number of employees. Hence wide span is suitable.
iii. Nature of work- If the work is of repetitive nature, wide span of supervision is
more helpful. On the other hand, if work requires mental skill or craftsmanship,
tight control and supervision is required in which narrow span is more helpful.
iv. Delegation of authority- When the work is delegated to lower levels in an
efficient and proper way, confusions are less and congeniality of the environment
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Advantages
Organisation with Wide Span
Disadvantages
• Superiors are forced to delegate
• Clear policies must be made
• Subordinates must be carefully selected
• Tendency of overloaded superiors to become decision bottlenecks
• Danger of superior’s loss of control
• Requires exceptional quality of managers
Advantages
Organisation with Wide Span
Disadvantages
• Superiors are forced to delegate
• Clear policies must be made
• Subordinates must be carefully selected
• Tendency of overloaded superiors to become decision bottlenecks
• Danger of superior’s loss of control
• Requires exceptional quality of managers
can be maintained. In such cases, wide span of control is suitable and the
supervisors can manage and control large number of sub- ordinates at one time.
v. Degree of decentralization- Decentralization is done in order to achieve
specialization in which authority is shared by many people and managers at
different levels. In such cases, a tall structure is helpful.
3. Principle of Scalar Chain
Scalar chain is a chain of command or authority which flows from top to bottom. With a chain
of authority available, wastages of resources are minimized, communication is affected,
overlapping of work is avoided and easy organization takes place. A scalar chain of command
facilitates work flow in an organization which helps in achievement of effective results. As the
authority flows from top to bottom, it clarifies the authority positions to managers at all level
and that facilitates effective organization.
4. Principle of Unity of Command
It implies one subordinate-one superior relationship. Every subordinate is answerable and
accountable to one boss at one time. This helps in avoiding communication gaps and
feedback and response is prompt. Unity of command also helps in effective combination of
resources, that is, physical, financial resources which helps in easy co-ordination and,
therefore, effective organization.
Authority Flows from Top to BottomManaging Director
↓Marketing Manager
↓Sales/ Media Manager
↓Salesmen
According to the above diagram, the Managing Director has got the highest level of authority. This
authority is shared by the Marketing Manager who shares his authority with the Sales Manager. From
this chain of hierarchy, the official chain of communication becomes clear which is helpful in
achievement of results and which provides stability to a concern. This scalar chain of command
always flow from top to bottom and it defines the authority positions of different managers at different
levels.
Elements of Organization
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• Division of work
• Grouping of activities.
• Assignment of Duties.
• Delegation of Authority
• Establishment of relationship.
Nature of Organisation
• Common Objectives
• Specialisation or division of labour
• Authority of Structure
• Group of Persons
• Coordination
• Communication
• Environment
• Rules and Regulations
Purpose / Importance of Organisation
• Facilitate Administration
• Increase the efficiency of Management
• Facilitate growth and Diversification
• Ensures optimum use of man and material resources
• Facilitates coordination and communication
• Permits optimum use of Technological Innovations
• Simulates Creativity and Initiative
• Facilitate Development of Managerial Ability
Classification of Organisation (Formal & Informal)
Organizations are basically clasified on the basis of relationships. There are two types of
organizations formed on the basis of relationships in an organization
1. Formal Organization - This is one which refers to a structure of well defined jobs each
bearing a measure of authority and responsibility. It is a conscious determination by which
people accomplish goals by adhering to the norms laid down by the structure. This kind of
organization is an arbitrary set up in which each person is responsible for his performance.
Formal organization has a formal set up to achieve pre- determined goals.
Formal Organization means, The formal organisation is a system of well defined jobs, each
bearing measure of authority, responsibility and accountability.
2. Informal Organization –
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It refers to a network of personal and social relationships which spontaneously originates
within the formal set up. Informal organizations develop relationships which are built on likes,
dislikes, feelings and emotions.
Therefore, the network of social groups based on friendships can be called as informal
organizations. There is no conscious effort made to have informal organization.
It emerges from the formal organization and it is not based on any rules and regulations as in
case of formal organization.
• As any joint personal activity without conscious joint purpose, eventhough contributing joint
results.
• Informal relationships established in the group of people playing chess during lunch time may
aid in the achievement of organisational goals.
Formal Organisation
Informal Organization
Types of informal groups:
• Social overlays
• Functional overlays
• Decision overlays
• Power overlays
• Communication overlays
Relationship between Formal and Informal Organizations
• For a concerns working both formal and informal organization are important.
• Formal organization originates from the set organizational structure and informal organization
originates from formal organization. For an efficient organization, both formal and informal
organizations are required. They are the two phase of a same concern.
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• Formal organization can work independently. But informal organization depends totally upon
the formal organization. Formal and informal organization helps in bringing efficient working
organization and smoothness in a concern. Within the formal organization, the members
undertake the assigned duties in co-operation with each other. They interact and
communicate amongst themselves. Therefore, both formal and informal organizations are
important. When several people work together for achievement of organizational goals, social
tie ups tends to built and therefore informal organization helps to secure co-operation by
which goals can be achieved smooth. Therefore, we can say that informal organization
emerges from formal organization.
Benefits of Informal Organisation
• Sense of belonging
• Safety value for emotional problem
• Aid to the job
• Breeding ground for innovation and originality
• Important channel of communication
• Social control
• Check of authority
• Self – policing
• Fills gaps in a managers abilities
• Gives the managers feedback about employees and their work experience
Limitations of Informal Organisation
• Resistance to change
• Suboptimization
• Rumor
• Group think philosophy
Organisational Chart
It is important tool for portraying net work of an organization structure.
It shows the main portion, nature of relationship between levels of management.
“It is diagrammatic form which shows important aspects of an organization, including the
major function and their respective relationship, the channels of supervision and the relative
authority of each employees who is incharge of each respective functions.”
-FEORGE TERRYAccording to J. Batty,
“An Organisation Chart is a diagrammatic representation of the framework or structure of an
Organisation”
Contents Organisational Chart
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• Basic Organisation Structure and Flow of Authority
• Relationship between line and staff personnel
• Names of components of organization
• Position of various office personnel
• Channel of Communication
• Requirements of Management Development
• Total No. of persons working in an organization
• Ways of promotion and salary particulars
•Types of charts
1. Vertical chart
2. Horizontal chart
3. Circular chart / Concentric Chart
4. Tree chart
i) Vertical Chart
The traditional or conventional vertical chart shows the position of the chief executive at the
top of a pyramid form, from where the authority flows downward. The managers towards the
top of the pyramid have more authority than those who are towards the bottom.
The horizontal chart originates from its left and proceeds to the right, depicting the chief
executive’s position at the extreme left and placing the successively lower managerial
positions towards the right end.
The circular or concentric chart places and shows the chief executives position at its center
and other middle and lower level managerial position radiate from the center in concentric
circles, the lowest managerial positions being placed on the outermost circle.
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Merits of Organisational Chart :
1. Clarity in relationship
2. Easy to understand at a glance
3. Familiarizing new employees
4. Helps in formulating training programme
5. Helps to organizational change
6. It serves as a better method of visualizing the tone and character of an Organisation.
Limitations
• Likely to be outdated
• Rigidity
• It shows only relationships
• Shifting of responsibility to somebody else
• Does not show extents of authority or responsibility.
• It may go against teamsprit
• It ignores the informal aspects of orgnisation.
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Horizontal Organisation ChartVertical Chart
Organisation Structure and Process
Types of Organizational Structures
An organizational structure defines how jobs and tasks are formally divided, grouped and coordinated.
The type of organizational structure would depend upon the type of organization itself and its
philosophy of operations. Basically the structure can be mechanistic or organic in nature or a
combination of thereof. However, most organizational structures are still designed along mechanistic
or classical lines.
Key Elements for Proper Organizational Structure
Work Specialization: To what degree are articles subdivided into separate jobs?
Departmentalization: On what basis jobs will be grouped?
Chain of Command: To whom will individuals and groups report?
Span of Control: Up to how many individuals can a manager efficiently direct?
Centralization vs Decentralization: Who will be the sole maker of decisions?
Formalization: To what degree will there be rules and regulations to direct employees and
managers?
Some of the most common organization structures are:
Line Organization
Line organization is the simplest form of organization and is most common among small companies.
The authority is embedded in the hierarchical structure and it flows in a direct line from the top of the
managerial hierarchy down to different levels of managers and subordinates and further down to the
operative levels of workers. It clearly identifies authority, responsibility and accountability at each
level.
These relationships in the hierarchy connect the position and tasks of each level with those above and
below it. There is clear unity of command so that the person at each level is reasonably independent
of any other person at the same level and is responsible only to the person above him. The line
personnel are directly involved in achieving the objectives of the company.
Because of the small size of the company, the line structure is simple and the authority and
responsibility are clear-cut, easily assignable and traceable. It is easy to develop a sense of belonging
to the organization, communication is fast and easy and feedback from the employees can be acted
upon faster.
The discipline among employees can be maintained easily and effective control can be easily
exercised. If the president and other superiors are benevolent in nature, then the employees tend to
consider the organization as a family and tend to be closer to each other that is highly beneficial to the
organization.
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On the other hand, it is a rigid form of organization and there is a tendency for line authority to
become dictatorial that may be resented by the employees. Also, there is no provision for specialists
and specialization that is essential for growth and optimization and hence for growing companies,
pure line type of structure becomes ineffective.
The line organization can be a pure line type or departmental line type. In the pure line type set-up, all
similar activities are performed at any one level. Each group of activities is self contained and is
independent of other units and is able to perform the assigned duties without the assistance of others.
In a departmental line type of organization, also known as functional structure, the respective workers
and supervisors are grouped on a functional basis such as finance, production and marketing, and so
on.
Line and Staff Organization
In this type of organization, the functional specialists are added to the line, thus giving the line the
advantages of specialists. This type of organization is most common in our business economy and
especially among large enterprises. Staff is basically advisory in nature and usually does not possess
and command authority over line mangers. The staff consists of two types:
General Staff: This group has a general background that is usually similar to executives and serves
as assistants to top management. They are not specialists and generally have no authority or
responsibility of their own. They may be known as special assistants, assistant managers or in a
college setting as deputy chairpersons.
Specialized Staff: Unlike the general staff who generally assist only one line executive, the
specialized staff provides expert staff advice and service to all employees on a company wide basis.
This group has a specialized background in some functional area and it could serve in any of the
following capacities:
(a) Advisory Capacity: The primary purpose of this group is to render specialized advice and
assistance to management when needed. Some typical areas covered by advisory staff are legal,
public relations and economic development.
(b) Service Capacity: This group provides a service that is useful to the organization as a whole and
not just to any specific division or function. An example would be the personnel department serving
the enterprise by procuring the needed personnel for all departments. Other areas of service include
research and development, purchasing, statistical analysis, insurance problems and so on.
(c) Control Capacity: This group includes quality control staff who may have the authority to control
the quality and enforce standards.
The line and staff type of organization uses the expertise of specialists without diluting the unity of
command. With the advice of these specialists, the line managers also become more scientific and
tend to develop a sense of objective analysis of business problems. According to Soltonstoff, a staff
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member may serve as a coach, diagnostician, policy planner, coordinator, trainer, strategist, and so
on.
The line and staff type of organization is widely used and is advantageous to the extent that the
specialized advice improves the quality of decisions resulting in operational economics. Also, since
line managers are generally occupied with their day-to-day current operations, they do not have the
time or the background for future planning and policy formulation. Staff specialists are conceptually
oriented towards looking ahead and have the time to do strategic planning and analyze the possible
effects of expected future events.
Its main disadvantages are the confusion and conflict that arises between line and staff, the high cost
that is associated with hiring specialists and the tendency of staff personnel to build their own image
and worth, that is sometimes at the cost of undermining the authority and responsibility of line
executives.
Functional Organization
One of the disadvantages of the line organization is that the line executives lack specialization.
Additionally, a line manager cannot be a specialist in all areas. In the line and staff type of
organization, the staff specialist does not have the authority to enforce his recommendations. The
functional organizational concept, originated with Fredrick W. Taylor and it permits a specialist in a
given area to enforce his directive within the clearly defined scope of his authority.
A functional manager can make decisions and issue orders to the persons in divisions other than his
own, with a right to enforce his advice. Some good examples of specialists who have been given
functional authority in some organizations are in the areas of quality control, safety and labor
relations.
The functional organization features separate hierarchies for each function creating a larger scale
version of functional departments. Functional departmentalization is the basis for grouping together
jobs that relate to a single organizational function or specialized skill such as marketing, finance,
production, and so on. The chain of command in each function leads to a functional head who in turn
reports to the top manager.
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The functional design enhances operational efficiency as well as improvement in the quality of the
product because of specialists being involved in each functional area and also because resources are
allocated by function rather than being duplicated or diffused throughout the organization .
One of the main disadvantages of the functional design is that it encourages narrow specialization
rather than general management skills so that the functional managers are not well prepared for top
executive positions. Also, functional units may be so concerned with their own areas that they may be
less responsive to overall organizational needs.
Divisional Organization
The divisional or departmental organization involves grouping of people or activities with similar
characteristics into a single department or unit. Also known as self-contained structures, these
departments operate as if these were small organizations under a large organizational umbrella,
meeting divisional goals as prescribed by organizational policies and plans.
The decisions are generally decentralized so that the departments guide their own activities. This
facilitates communication, coordination and control, thus contributing to the organizational success.
Also, because the units are independent and semi-autonomous, it provides satisfaction to the
managers that in turn improves efficiency and effectiveness.
This division and concentration of related activities into integrated units is categorized on the following
basis:
Departmentalization by Product. In this case, the units are formed according to the type of product
and it is more useful in multi-line corporations where product expansion and diversification, and
manufacturing and marketing characteristics of the product are of primary concern. The general
policies are decided upon by the top management within the philosophical guidelines of the
organization.
Departmentalization by Customers. This type of departmentalization is used by those organizations
that deal differently with different types of customers. Thus, the customers are the key to the way the
activities are grouped. Many banks have priority services for customers who deposit a given amount
of money with the bank for a given period of time. Similarly, business customers get better attention in
the banks than other individuals.
Departmentalization by Area. If an organization serves different geographical areas, the division
may be based upon geographical basis. Such divisions are specially useful for large scale enterprises
that are geographically spread out such as banking, insurance, chain department stores or a product
that is nationally distributed.
Departmentalization by Time. Hospitals and other public utility companies such as telephone
company that work around the clock are generally departmentalized on the basis of time shifts. For
example, the telephone company may have a day shift, on evening shift and a night shift, and for
each shift a different department may exist, even though they are all alike in terms of objectives.
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Project Organization
These are temporary organizational structures formed for specific projects for a specific period of time
and once the goal is achieved, these are dismantled. For example, the goal of an organization may be
to develop a new automobile. For this project, the specialists from different functional departments will
be drawn to work together.
These functional departments are production, engineering, quality control marketing research, etc.
When the project is completed, these specialists go back to their respective duties. These specialists
are basically selected on the basis of task related skills and technical expertise rather than decision-
making experience or planning ability.
These structures are very useful when:
1. The project is clearly defined in terms of objectives to be achieved and the target date for the
completion of the project is set. An example would be the project of building a new airport.
2. The project is separate and unique and not a part of the daily work routine of the organization.
3. There must be different types of activities that require skills and specialization and these must be
coordinated to achieve the desired goal.
4. The project must be temporary in nature and not extend into other related projects.
Line and Staff Organization
Line and staff organization is a modification of line organization and it is more complex than line
organization. According to this administrative organization, specialized and supportive activities are
attached to the line of command by appointing staff supervisors and staff specialists who are attached
to the line authority. The power of command always remains with the line executives and staff
supervisors guide, advice and council the line executives. Personal Secretary to the Managing
Director is a staff official.
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MANAGING DIRECTOR
↓ ↓ ↓
Production Manager Marketing Manager Finance Manager
↓ ↓ ↓
Plant Supervisor Market Supervisor Chief Assisstant
↓ ↓ ↓
Foreman Salesman Accountant
Features of Line and Staff Organization
1. There are two types of staff :
a. Staff Assistants- P.A. to Managing Director, Secretary to Marketing Manager.
b. Staff Supervisor- Operation Control Manager, Quality Controller, PRO
2. Line and Staff Organization is a compromise of line organization. It is more complex than line
concern.
3. Division of work and specialization takes place in line and staff organization.
4. The whole organization is divided into different functional areas to which staff specialists are
attached.
5. Efficiency can be achieved through the features of specialization.
6. There are two lines of authority which flow at one time in a concern :
a. Line Authority
b. Staff Authority
7. Power of command remains with the line executive and staff serves only as counselors.
Merits of Line and Staff Organization
1. Relief to line of executives- In a line and staff organization, the advice and counseling which
is provided to the line executives divides the work between the two. The line executive can
concentrate on the execution of plans and they get relieved of dividing their attention to many
areas.
2. Expert advice- The line and staff organization facilitates expert advice to the line executive at
the time of need. The planning and investigation which is related to different matters can be
done by the staff specialist and line officers can concentrate on execution of plans.
3. Benefit of Specialization- Line and staff through division of whole concern into two types of
authority divides the enterprise into parts and functional areas. This way every officer or
official can concentrate in its own area.
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4. Better co-ordination- Line and staff organization through specialization is able to provide
better decision making and concentration remains in few hands. This feature helps in bringing
co-ordination in work as every official is concentrating in their own area.
5. Benefits of Research and Development- Through the advice of specialized staff, the line
executives, the line executives get time to execute plans by taking productive decisions which
are helpful for a concern. This gives a wide scope to the line executive to bring innovations
and go for research work in those areas. This is possible due to the presence of staff
specialists.
6. Training- Due to the presence of staff specialists and their expert advice serves as ground for
training to line officials. Line executives can give due concentration to their decision making.
This in itself is a training ground for them.
7. Balanced decisions- The factor of specialization which is achieved by line staff helps in
bringing co-ordination. This relationship automatically ends up the line official to take better
and balanced decision.
8. Unity of action- Unity of action is a result of unified control. Control and its effectivity take
place when co-ordination is present in the concern. In the line and staff authority all the
officials have got independence to make decisions. This serves as effective control in the
whole enterprise.
Demerits of Line and Staff Organization
1. Lack of understanding- In a line and staff organization, there are two authority flowing at
one time. This results in the confusion between the two. As a result, the workers are not able
to understand as to who is their commanding authority. Hence the problem of understanding
can be a hurdle in effective running.
2. Lack of sound advice- The line official get used to the expertise advice of the staff. At times
the staff specialist also provide wrong decisions which the line executive have to consider.
This can affect the efficient running of the enterprise.
3. Line and staff conflicts- Line and staff are two authorities which are flowing at the same
time. The factors of designations, status influence sentiments which are related to their
relation, can pose a distress on the minds of the employees. This leads to minimizing of co-
ordination which hampers a concern’s working.
4. Costly- In line and staff concern, the concerns have to maintain the high remuneration of staff
specialist. This proves to be costly for a concern with limited finance.
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5. Assumption of authority- The power of concern is with the line official but the staff dislikes it
as they are the one more in mental work.
6. Staff steals the show- In a line and staff concern, the higher returns are considered to be a
product of staff advice and counseling. The line officials feel dissatisfied and a feeling of
distress enters a concern. The satisfaction of line officials is very important for effective
results.
Departmentalization by different Categories
Meaning of Departmentation
First task in designing an organization structure is the identification of activities and to
group them properly. The process of grouping activities is commonly known as
departmentation.
Departmentalization which is the basis for grouping positions into departments and
departments into the total Organisation
Need and Importance of Departmentation
The basic need for departmentation arises because of specialization of work and the
limitation on the number of subordinates controlled by a superior.
1. Advantages of specialization :
Thus if the managerial function is conceived as a set of activities facilitating the work of
organization, these activities can be carried out more efficiently and effectively through the
division of work leading to a specialization of managerial function.
2. Fixation of responsibility
Departmentation helps in fixing the responsibility and consequently accountability for the
results.
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3. Developed of managers
Departmentation helps in the development of managers.
4. Facility in Appraisal
Managerial performance can be measured when the area of activities can be specified and
standards in respect of these can fixed. Depertmentation provides helps in both these areas.
5. Feeling of Autonomy :
Deprtmentation provides motivation by developing feeling of autonomy to the extent
possible. There are several bases of departmentation. The more commonly used bases are
function, produt, territory, process, customer, time etc. Some of these bases are internal-
operation – oriented like function, process, time while others like product, territory and
customer are output-oriented.
Types of departmentation
Departmentation by
i. Simple numbers (it is using in army)
ii. By time (shift wise – day, day-night, night)
iii. Be enterprise function
iv. By territory / geography
v. Customer departmentation
vi. Process / equipment departmentation
vii. By product
viii. Matrix organisation
iii) Functional Departmentation
The grouping of common or homogeneous activities to form an organization unit is
known as functional departmentation. Functional departmentation is the most widely used
basis for organizing activities and is present almost in every large organization at some level.
Functional departmentation is most commonly used because it offers certain
advantages which include advantages of specialization, ensuring performance of activities
necessary for the achievement of organizational objectives, elimination of un-necessary
activities, easier control over functions, easier way for pinpointing training need of the
managers and maintaining the relative importance of functions in the organization.
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iv) Territory – Wise Departmentation
Territorial or geographical departmentation is specially useful to large-sized
organizations having activities which are physically or geographically spread such as
banking, insurance, transportation etc., Territorial departmentatin provides certain efficiency
in operation. Local factors such as customers, culture, styles, preferences etc., always affect
organizational functioning.
v.) Customer – Wise Departmentation
Customer based departmentation is basically market – oriented in which departments are
created around the markets served or around marketing channels. The basic idea of this
departmentation is to provide services to clearly identified groups of customers. Each group
of customers has different purchase behavior, payment schedule, demand pattern etc.,
Therefore they can be attracted to the organization’s business by satisfying them by
providing services, payment schedule demand pattern etc.
vi) Production Processes – Wise Departmentation
In process departmentation, processes involved in production or various types of
equipments used are taken as basis for departmentation. When the production activities
involve the use of several distinctive processes, these can be used as the base for grouping
of activities. Such activities may be textiles, oil production etc., The process are set in such a
way that a series of operations is feasible making operations economic. It provides
advantages of specialization required at each level of total processes, maintenance of plant
can be done in better way, and manpower can be utilized effectively.
vii) Product Wise Departmentation
Product departmentation involves the grouping together of all actibities necessary to
manufacture a product or product line. Product departmentation is preferred for product
expansion and diversification when manufacturing and marketing characteristics of each
product are of primary concern. Product departmentation offers several advantages places
attention to product lines, reduces problems of coordination for different products, provides
opportunities for further diversification and expansion of organization and provides product
specialization necessary for managers specially when each product is different from other.
Dr.A. Senthil Kumar, IQAC, MCET 19
viii) Matrix Organization
A matrix structure is, in a sense, a combination and interaction of project and
functional structures and is suggested to overcome the problems associated with project and
functional structures individually. The key features of a matrix structure are that the
functional and project lines of authority are super-imposed with each other and are shared
by both functional and project managers.
The project managers are generally responsible for overall direction and integration
of activities and resources related to the project. They are responsible for accomplishing
work on schedule and within the prescribed budget. They are also responsible for integrating
the efforts of all functional managers to accomplish the project and directing and evaluating
project activity. The functional managers are concerned with the operational aspects of the
project. The functional structure is primarily responsible for:
1. Providing technical guidance for the project.
2. Providing functional staff that is highly skilled and specialized.
3. Completing the project within prescribed technical specifications.
Greiner sees matrix organization, in which cross-functional teams are used, as a
response to growing complexity associated with the organizational growth. These
complexities, both internal(size, technology) as well as external (markets, competitors),
create problems of information processing and communication that are best dealt by matrix
type of organization.
Dr.A. Senthil Kumar, IQAC, MCET 20
Matrix organizational design is most useful when there is pressure for shared
resources. For example, a company may need eight product groups, yet have the resources
only to hire four marketing specialists. The matrix provides a convenient way for the eight
groups to share the skills of the four specialists .
Each matrix contains three unique sets of role relationships: (1) the top manager or
Chief Executive Officer who is the head and balances the dual chains of command; (2) the
managers of functional and project (or product) departments who share subordinates; and
(3) the specialists who report to both the respective functional manager and project
manager.
An important aspect of the matrix structure is that each person working on the project
has two supervisors – the project manager and the functional manager.
Choice of Bases for Departmentation
The selection of bases for departemntation involves a consideration of the relative
advantages of each base for the organization. Ideally speaking, a suitable basis of
departmentation is one which facilitates the performance of organizational functions
efficiently and effectively so that its objective are achieved.
1. Specialization:
The basis of departmentation should reflect the specialization in performing the work.
2. Coordination:
Coordination involves that all the related activities are performed in a way that theirperformance is synchronized so that each activity contributes to others.
3. Economy
A balance should be maintained between the cost of creating a department and itscontribution. The existence of a department is desirable only when it contributesmore than its cost.
4. Focus on Result
Those activities which contribute to the achievement to these results should be givenproper attention.
5. Local Conditions :
Local requirements of the organization should also the taken into account whilecreating departments.
6. Human Considerations :
Dr.A. Senthil Kumar, IQAC, MCET 21
Line and Staff Authority – Benefits and Limitations
Authority & Power
Power is the ability to influence others
Power is much broader concept than authority.
Power is the ability of individuals or groups to induce or influence the beliefs or actions of
other persons or groups
Authority is the right to exercise power
Authority is the legal right to command actions by others and to enforce compliance.
Authority may also be defined as the degree of discretion in organizational position conferring
on persons occupying these positions the right to use their judgment in decision making.
Top To Down Authority
Shareholder
Board of Directors
Chief Executives
Managers
Supervisors
Workers
There are five bases /sources or kind of power:
1- Legitimate Power The official position of a person is an organization is known as legitimate power. For example:
A major in army has power over Captain and subordinate. A leader elected by ruling party.
2 - Reward PowerPower arises from ability of some people to grant reward. Reward is known as reward power. University Professors have considerable reward. They can grant or withhold high grades
3- Coercive PowerA person’s ability to create fear in other individuals and is based on subordinates expectation
that punishment will be received for not completing work. It is closely related to reward power and normally arising from legitimate.
Eg: withholding a merit increase.
4 - Expert PowerPower may also come from the expertness of a person or a group. This power of knowledge. Physician lowers, & University Professors may have considerable
influence for their special knowledge.
Dr.A. Senthil Kumar, IQAC, MCET 22
5 - Referent PowerThis is the power of admiring high esteemed leader by individuals.
Eg: Gandhiji. His ideas & his ability strongly influenced the behaviour of many people.
6- Decision Making Power This power arises from the power of positions. When people speak of authority in managerial setting, they are usually referring to the
decision making power.
Line and Staff Authority
Line authority gives a superior a line of authority over subordinates.
It exists in all organizations.
Line authority can also be defined as the superior – subordinate authority relationship where
by a superior makes decision and tells them to a subordinate who is turn makes decision and
on from a line from top to low level of organization structure.
It is directly from superior to his subordinate
Staff Concept
The nature of the staff relationship is advisory.
The function of people in pure staff capacity is to investigate research and give advice to line managers.
In other words, staff functions are those that help the line persons work more effectively in accomplishing the objectives
Nature of Line and Staff Relationships
In the line and staff Organisation, line executives and staff (specialists) are combined
together.
The line executives are 'doers' whereas staff refers to experts and act as 'thinkers'.
The Nature of Staff relationship is advisory.
Pure Staff Capacity is to investigate, research and give advice to the line managers.
Limitations of staff authority.
a) danger of undermining staff authority
b) lack of staff responsibility
c) thinking in a vacuum
d) managerial problem (deny the importance of maintaining the unity of
command)
Dr.A. Senthil Kumar, IQAC, MCET 23
Functional Authority
It is the right which is delegated to an individual or a department to control specified processes,
practices, policies or other matters relating to activities undertaken by persons in other
departments.
Ex. A Company controller is ordinarily given functional authority to prescribe the system of
accounting throughout the company.
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1. Line functions are those that have direct impact on the accomplishment of the objectives of the enterprise
Eg:
Production & Sales are line functions
1. Staff Functions are those that help the line persons work most effectively in accomplishing the objectives
Eg. Purchasing,Accounting,PersonnelPlant Maintenance and Quality Control are staff
functions
Line Functions
Staff Functions
Vs
Accounting Personnel Purchasing Public Relations
Procedures Procedures Procedures Procedures
Line authority of the president
Authority after Delegation
Finance
Manager
Personnel
Manager
Purchase
Manager
Public Relations
Manager
Finance
Manager
Finance
Manager
Finance
Manager
Delegation of Functional authority from line authority of the PresidentNormal Line Relationship
Merits and Demerits of Decentralization of Authority.
Centralization means that decision authority is located near the top of the organization
Decision authority is pushed downward to lower organization levels is called
Decentralisation
Merit of Decentralisation
1) Relieves top management burden and forces upper level managers to let go
2) encourages decision making and assumption of authority and responsibility
3) give managers more freedom and independence in decisionale
4) make comparison of different organizational units possible
5) facilitates setting up of profit centres
6) facilitates product diversification
7) promote development of general managers
8) aids in adaptation to fast – changing environment
Demerit of Decentralisation
1) More difficult to have a uniform policy
2) increased complexity of coordination
3) loss of some control by upper level managers
4) limited by inadequate control techniques
5) constrained by inadequate planning and control systems
6) limited availability of qualified managers
7) considerable expenses for training managers
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Making decentralization more effective:
1) Centralized top policy
2) Appreciation of concept of decentralization
3) Development of Managers
4) Competition among units
5) Open Communication
6) Effective Co-operation
Delegation of Authority - Meaning, Importance and its Principles
A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the
manager should delegate authority. Delegation of Authority means division of authority and powers
downwards to the subordinate. Delegation is about entrusting someone else to do parts of your job.
Delegation of authority can be defined as subdivision and sub-allocation of powers to the
subordinates in order to achieve effective results.
Elements of Delegation
1. Authority - in context of a business organization, authority can be defined as the power and
right of a person to use and allocate the resources efficiently, to take decisions and to give
orders so as to achieve the organizational objectives. Authority must be well- defined. All
people who have the authority should know what is the scope of their authority is and they
shouldn’t misutilize it. Authority is the right to give commands, orders and get the things done.
The top level management has greatest authority. Authority always flows from top to bottom.
It explains how a superior gets work done from his subordinate by clearly explaining what is
expected of him and how he should go about it. Authority should be accompanied with an
equal amount of responsibility. Delegating the authority to someone else doesn’t imply
escaping from accountability. Accountability still rest with the person having the utmost
authority.
2. Responsibility - is the duty of the person to complete the task assigned to him. A person
who is given the responsibility should ensure that he accomplishes the tasks assigned to him.
If the tasks for which he was held responsible are not completed, then he should not give
explanations or excuses. Responsibility without adequate authority leads to discontent and
dissatisfaction among the person. Responsibility flows from bottom to top. The middle level
and lower level management holds more responsibility. The person held responsible for a job
is answerable for it. If he performs the tasks assigned as expected, he is bound for praises.
While if he doesn’t accomplish tasks assigned as expected, then also he is answerable for
that.
3. Accountability - means giving explanations for any variance in the actual performance from
the expectations set. Accountability can not be delegated. For example, if ’A’ is given a task
with sufficient authority, and ’A’ delegates this task to B and asks him to ensure that task is
done well, responsibility rest with ’B’, but accountability still rest with ’A’. The top level
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management is most accountable. Being accountable means being innovative as the person
will think beyond his scope of job. Accountability, in short, means being answerable for the
end result. Accountability can’t be escaped. It arises from responsibility.
For achieving delegation, a manager has to work in a system and has to perform following steps : -
1. Assignment of tasks and duties
2. Granting of authority
3. Creating responsibility and accountability
Delegation of authority is the base of superior-subordinate relationship, it involves following steps:-
1. Assignment of Duties - The delegator first tries to define the task and duties to the
subordinate. He also has to define the result expected from the subordinates. Clarity of duty
as well as result expected has to be the first step in delegation.
2. Granting of authority - Subdivision of authority takes place when a superior divides and
shares his authority with the subordinate. It is for this reason, every subordinate should be
given enough independence to carry the task given to him by his superiors. The managers at
all levels delegate authority and power which is attached to their job positions. The
subdivision of powers is very important to get effective results.
3. Creating Responsibility and Accountability - The delegation process does not end once
powers are granted to the subordinates. They at the same time have to be obligatory towards
the duties assigned to them. Responsibility is said to be the factor or obligation of an
individual to carry out his duties in best of his ability as per the directions of superior.
Responsibility is very important. Therefore, it is that which gives effectiveness to authority. At
the same time, responsibility is absolute and cannot be shifted. Accountability, on the others
hand, is the obligation of the individual to carry out his duties as per the standards of
performance. Therefore, it is said that authority is delegated, responsibility is created and
accountability is imposed. Accountability arises out of responsibility and responsibility arises
out of authority. Therefore, it becomes important that with every authority position an equal
and opposite responsibility should be attached.
Therefore every manager,i.e.,the delegator has to follow a system to finish up the delegation process.
Equally important is the delegatee’s role which means his responsibility and accountability is attached
with the authority over to here.
Relationship between Authority and Responsibility
Authority is the legal right of person or superior to command his subordinates while accountability is
the obligation of individual to carry out his duties as per standards of performance Authority flows from
the superiors to subordinates,in which orders and instructions are given to subordinates to complete
the task. It is only through authority, a manager exercises control. In a way through exercising the
control the superior is demanding accountability from subordinates. If the marketing manager directs
the sales supervisor for 50 units of sale to be undertaken in a month. If the above standards are not
Dr.A. Senthil Kumar, IQAC, MCET 27
accomplished, it is the marketing manager who will be accountable to the chief executive officer.
Therefore, we can say that authority flows from top to bottom and responsibility flows from bottom to
top. Accountability is a result of responsibility and responsibility is result of authority. Therefore, for
every authority an equal accountability is attached.
Differences between Authority and Responsibility
Authority Responsibility
It is the legal right of a person
or a superior to command his
subordinates.
It is the obligation of subordinate to perform
the work assigned to him.
Authority is attached to the
position of a superior in
concern.
Responsibility arises out of superior-
subordinate relationship in which subordinate
agrees to carry out duty given to him.
Authority can be delegated by
a superior to a subordinate
Responsibility cannot be shifted and is
absolute
It flows from top to bottom. It flows from bottom to top.
Importance of Delegation
Delegation of authority is a process in which the authority and powers are divided and shared
amongst the subordinates. When the work of a manager gets beyond his capacity, there should be
some system of sharing the work. This is how delegation of authority becomes an important tool in
organization function. Through delegation, a manager, in fact, is multiplying himself by
dividing/multiplying his work with the subordinates. The importance of delegation can be justified by -
1. Through delegation, a manager is able to divide the work and allocate it to the subordinates.
This helps in reducing his work load so that he can work on important areas such as -
planning, business analysis etc.
2. With the reduction of load on superior, he can concentrate his energy on important and critical
issues of concern. This way he is able to bring effectiveness in his work as well in the work
unit. This effectivity helps a manager to prove his ability and skills in the best manner.
3. Delegation of authority is the ground on which the superior-subordinate relationship stands.
An organization functions as the authority flows from top level to bottom. This in fact shows
that through delegation, the superior-subordinate relationship become meaningful. The flow of
authority is from top to bottom which is a way of achieving results.
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4. Delegation of authority in a way gives enough room and space to the subordinates to flourish
their abilities and skill. Through delegating powers, the subordinates get a feeling of
importance. They get motivated to work and this motivation provides appropriate results to a
concern. Job satisfaction is an important criterion to bring stability and soundness in the
relationship between superior and subordinates. Delegation also helps in breaking the
monotony of the subordinates so that they can be more creative and efficient. Delegation of
authority is not only helpful to the subordinates but it also helps the managers to develop their
talents and skills. Since the manager get enough time through delegation to concentrate on
important issues, their decision-making gets strong and in a way they can flourish the talents
which are required in a manager. Through granting powers and getting the work done, helps
the manager to attain communication skills, supervision and guidance, effective motivation
and the leadership traits are flourished. Therefore it is only through delegation, a manager
can be tested on his traits.
5. Delegation of authority is help to both superior and subordinates. This, in a way, gives stability
to a concern’s working. With effective results, a concern can think of creating more
departments and divisions flow working. This will require creation of more managers which
can be fulfilled by shifting the experienced, skilled managers to these positions. This helps in
both virtual as well as horizontal growth which is very important for a concern’s stability.
Therefore, from the above points, we can justify that delegation is not just a process but it is a way by
which manager multiples himself and is able to bring stability, ability and soundness to a concern.
Principles of Delegation
There are a few guidelines in form of principles which can be a help to the manager to process of
delegation. The principles of delegation are as follows: -
1. Principle of result excepted- suggests that every manager before delegating the powers to
the subordinate should be able to clearly define the goals as well as results expected from
them. The goals and targets should be completely and clearly defined and the standards of
performance should also be notified clearly. For example, a marketing manager explains the
salesmen regarding the units of sale to take place in a particular day, say ten units a day
have to be the target sales. While a marketing manger provides these guidelines of sales,
mentioning the target sales is very important so that the salesman can perform his duty
efficiently with a clear set of mind.
2. Principle of Parity of Authority and Responsibility- According to this principle, the
manager should keep a balance between authority and responsibility. Both of them should go
hand in hand.According to this principle, if a subordinate is given a responsibility to perform a task, then at
the same time he should be given enough independence and power to carry out that task
effectively. This principle also does not provide excessive authority to the subordinate which
at times can be misused by him. The authority should be given in such a way which matches
the task given to him. Therefore, there should be no degree of disparity between the two.
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3. Principle of absolute responsibility- This says that the authority can be delegated but
responsibility cannot be delegated by managers to his subordinates which means
responsibility is fixed. The manager at every level, no matter what is his authority, is always
responsible to his superior for carrying out his task by delegating the powers. It does not
means that he can escape from his responsibility. He will always remain responsible till the
completion of task. Every superior is responsible for the acts of their subordinates and are
accountable to their superior therefore the superiors cannot pass the blame to the
subordinates even if he has delegated certain powers to subordinates example if the
production manager has been given a work and the machine breaks down. If repairmen is not
able to get repair work done, production manager will be responsible to CEO if their
production is not completed.
4. Principle of Authority level- This principle suggests that a manager should exercise his
authority within the jurisdiction / framework given. The manager should be forced to consult
their superiors with those matters of which the authority is not given that means before a
manager takes any important decision, he should make sure that he has the authority to do
that on the other hand, subordinate should also not frequently go with regards to their
complaints as well as suggestions to their superior if they are not asked to do. This principle
emphasizes on the degree of authority and the level upto which it has to be maintained.
Centralization and Decentralization
Centralization is said to be a process where the concentration of decision making is in a few hands.
All the important decision and actions at the lower level, all subjects and actions at the lower level are
subject to the approval of top management. According to Allen, “Centralization” is the systematic and
consistent reservation of authority at central points in the organization. The implication of
centralization can be :-
1. Reservation of decision making power at top level.
2. Reservation of operating authority with the middle level managers.
3. Reservation of operation at lower level at the directions of the top level.
Under centralization, the important and key decisions are taken by the top management and the other
levels are into implementations as per the directions of top level. For example, in a business concern,
the father & son being the owners decide about the important matters and all the rest of functionslike product, finance, marketing, personnel, are carried out by the department heads and they have to
act as per instruction and orders of the two people. Therefore in this case, decision making power
remain in the hands of father & son.
On the other hand, Decentralization is a systematic delegation of authority at all levels of
management and in all of the organization. In a decentralization concern, authority in retained by the
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top management for taking major decisions and framing policies concerning the whole concern. Rest
of the authority may be delegated to the middle level and lower level of management.
The degree of centralization and decentralization will depend upon the amount of authority
delegated to the lowest level. According to Allen, “Decentralization refers to the systematic effort to
delegate to the lowest level of authority except that which can be controlled and exercised at central
points.
Decentralization is not the same as delegation. In fact, decentralization is all extension of delegation.
Decentralization pattern is wider is scope and the authorities are diffused to the lowest most level of
management. Delegation of authority is a complete process and takes place from one person to
another. While decentralization is complete only when fullest possible delegation has taken place. For
example, the general manager of a company is responsible for receiving the leave application for the
whole of the concern. The general manager delegates this work to the personnel manager who is now
responsible for receiving the leave applicants. In this situation delegation of authority has taken place.
On the other hand, on the request of the personnel manager, if the general manager delegates this
power to all the departmental heads at all level, in this situation decentralization has taken place.
There is a saying that “Everything that increasing the role of subordinates is decentralization and that
decreases the role is centralization”. Decentralization is wider in scope and the subordinate’s
responsibility increase in this case. On the other hand, in delegation the managers remain answerable
even for the acts of subordinates to their superiors.
Implications of Decentralization
1. There is less burden on the Chief Executive as in the case of centralization.
2. In decentralization, the subordinates get a chance to decide and act independently which
develops skills and capabilities. This way the organization is able to process reserve of talents
in it.
3. In decentralization, diversification and horizontal can be easily implanted.
4. In decentralization, concern diversification of activities can place effectively since there is
more scope for creating new departments. Therefore, diversification growth is of a degree.
5. In decentralization structure, operations can be coordinated at divisional level which is not
possible in the centralization set up.
6. In the case of decentralization structure, there is greater motivation and morale of the
employees since they get more independence to act and decide.
7. In a decentralization structure, co-ordination to some extent is difficult to maintain as there are
lot many department divisions and authority is delegated to maximum possible extent, i.e., to
the bottom most level delegation reaches. Centralization and decentralization are the
categories by which the pattern of authority relationships became clear. The degree of
centralization and de-centralization can be affected by many factors like nature of operation,
volume of profits, number of departments, size of a concern, etc. The larger the size of a
concern, a decentralization set up is suitable in it.
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Decentralization and Delegation of Authority
Basis Delegation Decentralization
MeaningManagers delegate some of their function and authority to their subordinates.
Right to take decisions is shared by top management and other level of management.
Scope
Scope of delegation is limited as superior delegates the powers to the subordinates on individual bases.
Scope is wide as the decision making is shared by the subordinates also.
ResponsibilityResponsibility remains of the managers and cannot be delegated
Responsibility is also delegated to subordinates.
Freedom of Work
Freedom is not given to the subordinates as they have to workas per the instructions of their superiors.
Freedom to work can be maintained by subordinates as they are free to take decisionand to implement it.
Nature It is a routine function It is an important decision of an enterprise.
Need on purpose
Delegation is important in all concerns whether big or small. Noenterprises can work without delegation.
Decentralization becomes more important in large concerns and it depends upon the decision made by the enterprise, it is not compulsory.
Grant of Authority
The authority is granted by one individual to another.
It is a systematic act which takes place at all levels and at all functions in a concern.
Grant of Responsibility
Responsibility cannot be delegated
Authority with responsibility is delegated to subordinates.
DegreeDegree of delegation varies from concern to concern and department to department.
Decentralization is total by nature. It spreads throughout the organization i.e. at all levels and all functions
ProcessDelegation is a process which explains superior subordinates relationship
It is an outcome which explains relationship between top management and all other departments.
EssentialityDelegation is essential of all kindsof concerns
Decentralization is a decisions function by nature.
SignificanceDelegation is essential for creating the organization
Decentralization is an optional policy at the discretion of top management.
WithdrawalDelegated authority can be taken back.
It is considered as a general policy of top management and is applicable to all departments.
Freedom of Action
Very little freedom to the subordinates
Considerable freedom
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Decentralization can be called as extension of delegation. When delegation of authority is done to the
fullest possible extent, it gives use to decentralization.
Staffing
It is defined as “Filling, and keeping filled, positions in the organisation structure”
It includes :
─ Identifying workforce requirements
─ Inventorying the people available
─ Recruiting
─ Selecting
─ Placing
─ Promoting
─ Appraising
─ Planning the careers of
─ Compensation
─ Training (Or) otherwise developing both candidates
Staffing Function of Management
The managerial function of staffing involves manning the organization structure through proper and
effective selection, appraisal and development of the personnels to fill the roles assigned to the
employers/workforce.
According to Theo Haimann, “Staffing pertains to recruitment, selection, development and
compensation of subordinates.”
Nature of Staffing Function
1. 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.
2. 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.
3. 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.
4. 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.
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5. 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.
6. Staffing is performed by all managers depending upon the nature of business, size of the
company, qualifications and skills of managers,etc. In small companies, the top management
generally performs this function. In medium and small scale enterprise, it is performed
especially by the personnel department of that concern.
Staffing Process - Steps involved in Staffing
1. Manpower requirements- The very first step in staffing is to plan the manpower inventory
required by a concern in order to match them with the job requirements and demands.
Therefore, it involves forecasting and determining the future manpower needs of the concern.
2. Recruitment- Once the requirements are notified, the concern invites and solicits applications
according to the invitations made to the desirable candidates.
3. Selection- This is the screening step of staffing in which the solicited applications are
screened out and suitable candidates are appointed as per the requirements.
4. Orientation and Placement- Once screening takes place, the appointed candidates are
made familiar to the work units and work environment through the orientation programmes.
placement takes place by putting right man on the right job.
5. Training and Development- Training is a part of incentives given to the workers in order to
develop and grow them within the concern. Training is generally given according to the nature
of activities and scope of expansion in it. Along with it, the workers are developed by
providing them extra benefits of indepth knowledge of their functional areas. Development
also includes giving them key and important jobsas a test or examination in order to analyse
their performances.
6. Remuneration- It is a kind of compensation provided monetarily to the employees for their
work performances. This is given according to the nature of job- skilled or unskilled, physical
or mental, etc. Remuneration forms an important monetary incentive for the employees.
7. Performance Evaluation- In order to keep a track or record of the behaviour, attitudes as
well as opinions of the workers towards their jobs. For this regular assessment is done to
evaluate and supervise different work units in a concern. It is basically concerning to know the
development cycle and growth patterns of the employeesin a concern.
8. Promotion and transfer- Promotion is said to be a non- monetary incentive in which the
worker is shifted from a higher job demanding bigger responsibilities as well as shifting the
workers and transferring them to different work units and branches of the same organization.
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Types of Recruitment
Recruitment is of 2 types
1. Internal Recruitment - is a recruitment which takes place within the concern or organization.
Internal sources of recruitment are readily available to an organization. Internal sources are
primarily three - Transfers, promotions and Re-employment of ex-employees. Re-
employment of ex-employees is one of the internal sources of recruitment in which
employees can be invited and appointed to fill vacancies in the concern. There are situations
when ex-employees provide unsolicited applications also.
Internal recruitment may lead to increase in employee’s productivity as their motivation level
increases. It also saves time, money and efforts. But a drawback of internal recruitment is
that it refrains the organization from new blood. Also, not all the manpower requirements can
be met through internal recruitment. Hiring from outside has to be done.Internal sources are primarily 3
a. Transfers
b. Promotions (through Internal Job Postings) and
c. Re-employment of ex-employees - Re-employment of ex-employees is one of the internal
sources of recruitment in which employees can be invited and appointed to fill vacancies in
the concern. There are situations when ex-employees provide unsolicited applications also.
2. External Recruitment - External sources of recruitment have to be solicited from outside the
organization. External sources are external to a concern. But it involves lot of time and
money. The external sources of recruitment include - Employment at factory gate,
advertisements, employment exchanges, employment agencies, educational institutes, labour
contractors, recommendations etc.
a. Employment at Factory Level - This a source of external recruitment in which the
applications for vacancies are presented on bulletin boards outside the Factory or at
the Gate. This kind of recruitment is applicable generally where factory workers are to
be appointed. There are people who keep on soliciting jobs from one place to
another. These applicants are called as unsolicited applicants. These types of
workers apply on their own for their job. For this kind of recruitment workers have a
tendency to shift from one factory to another and therefore they are called as “badli”
workers.
b. Advertisement - It is an external source which has got an important place in
recruitment procedure. The biggest advantage of advertisement is that it covers a
wide area of market and scattered applicants can get information from
advertisements. Medium used is Newspapers and Television.
c. Employment Exchanges - There are certain Employment exchanges which are run
by government. Most of the government undertakings and concerns employ people
Dr.A. Senthil Kumar, IQAC, MCET 35
through such exchanges. Now-a-days recruitment in government agencies has
become compulsory through employment exchange.
d. Employment Agencies - There are certain professional organizations which look
towards recruitment and employment of people, i.e. these private agencies run by
private individuals supply required manpower to needy concerns.
e. Educational Institutions - There are certain professional Institutions which serves
as an external source for recruiting fresh graduates from these institutes. This kind of
recruitment done through such educational institutions, is called as Campus
Recruitment. They have special recruitment cells which helps in providing jobs to
fresh candidates.
f. Recommendations - There are certain people who have experience in a particular
area. They enjoy goodwill and a stand in the company. There are certain vacancies
which are filled by recommendations of such people. The biggest drawback of this
source is that the company has to rely totally on such people which can later on prove
to be inefficient.
g. Labour Contractors - These are the specialist people who supply manpower to the
Factory or Manufacturing plants. Through these contractors, workers are appointed
on contract basis, i.e. for a particular time period. Under conditions when these
contractors leave the organization, such people who are appointed have to also leave
the concern.
Employee Selection Process
Defined as “It is a process, employers assess applicants characteristics in an attempt to
determine the “fit” between the job and applicant characteristics”
“Matching the person with job”
Selection is the process of choosing from among candidates, from within the organisation or
from the outside, the most suitable person for the current position or for future position
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Basic HRM includes:
Job Analysis Job Description Job Specification
A systematic process of gathering and interpreting information about the essential duties, tasks and responsibility of a job.
Which is a clear & concise summary of the specific tasks, duties and responsibilities
Which outlines the knowledge, skills, education, physical abilities & other characteristicsneeded to adequately perform the job.
It helps the organisation recruit the right kind of people & match them to appropriate jobs
Employee Selection is the process of putting right men on right job. It is a procedure of matching
organizational requirements with the skills and qualifications of people. Effective selection can be
done only when there is effective matching. By selecting best candidate for the required job, the
organization will get quality performance of employees. Moreover, organization will face less of
absenteeism and employee turnover problems. By selecting right candidate for the required job,
organization will also save time and money. Proper screening of candidates takes place during
selection procedure. All the potential candidates who apply for the given job are tested.
But selection must be differentiated from recruitment, though these are two phases of employment
process. Recruitment is considered to be a positive process as it motivates more of candidates to
apply for the job. It creates a pool of applicants. It is just sourcing of data. While selection is a
negative process as the inappropriate candidates are rejected here. Recruitment precedes selection
in staffing process. Selection involves choosing the best candidate with best abilities, skills and
knowledge for the required job.
The Employee selection Process takes place in following order-
1. Preliminary Interviews- It is used to eliminate those candidates who do not meet the
minimum eligiblity criteria laid down by the organization. The skills, academic and family
background, competencies and interests of the candidate are examined during preliminary
interview. Preliminary interviews are less formalized and planned than the final interviews.
The candidates are given a brief up about the company and the job profile; and it is also
examined how much the candidate knows about the company. Preliminary interviews are also
called screening interviews.
2. Application blanks- The candidates who clear the preliminary interview are required to fill
application blank. It contains data record of the candidates such as details about age,
qualifications, reason for leaving previous job, experience, etc.
3. Written Tests- Various written tests conducted during selection procedure are aptitude test,
intelligence test, reasoning test, personality test, etc. These tests are used to objectively
assess the potential candidate. They should not be biased.
4. Employment Interviews- It is a one to one interaction between the interviewer and the
potential candidate. It is used to find whether the candidate is best suited for the required job
or not. But such interviews consume time and money both. Moreover the competencies of the
candidate cannot be judged. Such interviews may be biased at times. Such interviews should
be conducted properly. No distractions should be there in room. There should be an honest
communication between candidate and interviewer.
5. Medical examination- Medical tests are conducted to ensure physical fitness of the potential
employee. It will decrease chances of employee absenteeism.
6. Appointment Letter- A reference check is made about the candidate selected and then
finally he is appointed by giving a formal appointment letter.
Orientation and Placement
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Once the candidates are selected for the required job, they have to be fitted as per the qualifications.
Placement is said to be the process of fitting the selected person at the right job or place, i.e. fitting
square pegs in square holes and round pegs in round holes. Once he is fitted into the job, he is given
the activities he has to perform and also told about his duties. The freshly appointed candidates are
then given orientation in order to familiarize and introduce the company to him. Generally the
information given during the orientation programme includes-
Employee’s layout
Type of organizational structure
Departmental goals
Organizational layout
General rules and regulations
Standing Orders
Grievance system or procedure
In short, during Orientation employees are made aware about the mission and vision of the
organization, the nature of operation of the organization, policies and programmes of the organization.
The main aim of conducting Orientation is to build up confidence, morale and trust of the employee in
the new organization, so that he becomes a productive and an efficient employee of the organization
and contributes to the organizational success.
The nature of Orientation program varies with the organizational size, i.e., smaller the organization the
more informal is the Orientation and larger the organization more formalized is the Orientation
programme.
Proper Placement of employees will lower the chances of employee’s absenteeism. The employees
will be more satisfied and contended with their work.
Training of Employees - Need and Importance of Training
Training of employees takes place after orientation takes place. Training is the process of enhancing
the skills, capabilities and knowledge of employees for doing a particular job. Training process moulds
the thinking of employees and leads to quality performance of employees. It is continuous and never
ending in nature.
Importance of Training
Training is crucial for organizational development and success. It is fruitful to both employers and
employees of an organization. An employee will become more efficient and productive if he is trained
well.
Training is given on four basic grounds:
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1. New candidates who join an organization are given training. This training familiarize them with
the organizational mission, vision, rules and regulations and the working conditions.
2. The existing employees are trained to refresh and enhance their knowledge.
3. If any updations and amendments take place in technology, training is given to cope up with
those changes. For instance, purchasing a new equipment, changes in technique of
production, computer implantment. The employees are trained about use of new equipments
and work methods.
4. When promotion and career growth becomes important. Training is given so that employees
are prepared to share the responsibilities of the higher level job.
The benefits of training can be summed up as:
1. Improves morale of employees- Training helps the employee to get job security and job
satisfaction. The more satisfied the employee is and the greater is his morale, the more he
will contribute to organizational success and the lesser will be employee absenteeism and
turnover.
2. Less supervision- A well trained employee will be well acquainted with the job and will need
less of supervision. Thus, there will be less wastage of time and efforts.
3. Fewer accidents- Errors are likely to occur if the employees lack knowledge and skills
required for doing a particular job. The more trained an employee is, the less are the chances
of committing accidents in job and the more proficient the employee becomes.
4. Chances of promotion- Employees acquire skills and efficiency during training. They
become more eligible for promotion. They become an asset for the organization.
5. Increased productivity- Training improves efficiency and productivity of employees. Well
trained employees show both quantity and quality performance. There is less wastage of
time, money and resources if employees are properly trained.
Ways/Methods of Training
Training is generally imparted in two ways:
1. On the job training- On the job training methods are those which are given to the employees
within the everyday working of a concern. It is a simple and cost-effective training method.
The inproficient as well as semi- proficient employees can be well trained by using such
training method. The employees are trained in actual working scenario. The motto of such
training is “learning by doing.” Instances of such on-job training methods are job-rotation,
coaching, temporary promotions, etc.
2. Off the job training- Off the job training methods are those in which training is provided away
from the actual working condition. It is generally used in case of new employees. Instances of
off the job training methods are workshops, seminars, conferences, etc. Such method is
costly and is effective if and only if large number of employees have to be trained within a
short time period. Off the job training is also called as vestibule training,i.e., the employees
are trained in a separate area( may be a hall, entrance, reception area,etc. known as a
vestibule) where the actual working conditions are duplicated.
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Employee Remuneration
Employee Remuneration refers to the reward or compensation given to the employees for their work
performances. Remuneration provides basic attraction to a employee to perform job efficiently and
effectively. Remuneration leads to employee motivation. Salaries constitutes an important source of
income for employees and determine their standard of living. Salaries effect the employees
productivity and work performance. Thus the amount and method of remuneration are very important
for both management and employees.
There are mainly two types of Employee Remuneration
1. Time Rate Method
2. Piece Rate Method
These methods of employee remuneration are explained below in detail
Methods of Employee Remuneration
1. Time Rate Method: Under time rate system, remuneration is directly linked with the time
spent or devoted by an employee on the job. The employees are paid a fixed pre-decided
amount hourly, daily, weekly or monthly irrespective of their output. It is a very simple method
of remuneration. It leads to minimum wastage of resources and lesser chances of accidents.
Time Rate method leads to quality output and this method is very beneficial to new
employees as they can learn their work without any reduction in their salaries. This method
encourages employees unity as employees of a particular group/cadre get equal salaries.
There are some drawbacks of Time Rate Method, such as, it leads to tight supervision,
indefinite employee cost, lesser efficiency of employees as there is no distinction made
between efficient and inefficient employees, and lesser morale of employees.
Time rate system is more suitable where the work is non-repetitive in nature and emphasis is
more on quality output rather than quantity output.
2. Piece Rate Method: It is a method of compensation in which remuneration is paid on the
basis of units or pieces produced by an employee. In this system emphasis is more on
quantity output rather than quality output. Under this system the determination of employee
cost per unit is not difficult because salaries differ with output. There is less supervision
required under this method and hence the per unit cost of production is low. This system
improves the morale of the employees as the salaries are directly related with their work
efforts. There is greater work-efficiency in this method.
There are some drawbacks of this method, such as, it is not easily computable, leads to
deterioration in work quality, wastage of resources, lesser unity of employees, higher cost of
production and insecurity among the employees.
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Piece rate system is more suitable where the nature of work is repetitive and quantity is
emphasized more than quality.
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Performance and Potential Appraisal - Methods of Performance Appraisal
The performance appraisal methods may be classified into three categories, as shown in Figure
below.
Figure: Performance Appraisal Methods
Individual Evaluation Methods
Under the individual evaluation methods of merit rating, employees are evaluated one at a time
without comparing them with other employees in the organization.
(a) Confidential report: It is mostly used in government organizations. It is a descriptive report
prepared, generally at the end of every year, by the employee's immediate superior. The report
highlights the strengths and weaknesses of the subordinate. The report is not databased. The
impressions of the superior about the subordinate are merely recorded there. It does not offer any
feedback to the appraisee. The appraisee is not very sure about why his ratings have fallen despite
his best efforts, why others are rated high when compared to him, how to rectify his mistakes, if any;
on what basis he is going to be evaluated next year, etc. Since the report is generally not made public
and hence no feedback is available, the subjective analysis of the superior is likely to be hotly
contested. In recent years, due to pressure from courts and trade unions, the details of a negative
confidential report are given to the appraisee.
(b) Essay evaluation: Under this method, the rater is asked to express the strong as well as
weak points of the employee's behavior. This technique is normally used with a combination of the
graphic rating scale because the rater can elaborately present the scale by substantiating an
explanation for his rating. While preparing the essay on the employee, the rater considers the
following factors: (i) Job knowledge and potential of the employee; (ii) Employee's understanding of
the company's programmes, policies, objectives, etc.; (iii) The employee's relations with co-workers
and superiors; (iv) The employee's general planning, organizing and controlling ability; (v) The
attitudes and perceptions of the employee, in general.
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Essay evaluation is a non-quantitative technique. This method is advantageous in at least one sense,
i.e., the essay provides a good deal of information about the employee and also reveals more about
the evaluator. The essay evaluation method however, suffers from the following limitations:
It is highly subjective; the supervisor may write a biased essay. The employees who are
sycophants will be evaluated more favorably then other employees.
Some evaluators may be poor in writing essays on employee performance. Others may be
superficial in explanation and use flowery language which may not reflect the actual
performance of the employee. It is very difficult to find effective writers nowadays.
The appraiser is required to find time to prepare the essay. A busy appraiser may write the
essay hurriedly without properly assessing the actual performance of the worker. On the other
hand, appraiser takes a long time, this becomes uneconomical from the view point of the firm,
because the time of the evaluator (supervisor) is costly.
(c) Critical incident technique: Under this method, the manager prepares lists of statements of
very effective and ineffective behavior of an employee. These critical incidents or events represent the
outstanding or poor behavior of employees on the job. The manager maintains logs on each
employee, whereby he periodically records critical incidents of the workers behavior. At the end of the
rating period, these recorded critical incidents are used in the evaluation of the workers' performance.
An example of a good critical incident of a sales assistant is the following:
July 20 – The sales clerk patiently attended to the customers complaint. He is polite, prompt,
enthusiastic in solving the customers' problem.
On the other hand the bad critical incident may appear as under:
July 20 – The sales assistant stayed 45 minutes over on his break during the busiest part of the day.
He failed to answer the store manager's call thrice. He is lazy, negligent, stubborn and uninterested in
work.
This method provides an objective basis for conducting a thorough discussion of an employee's
performance. This method avoids recency bias (most recent incidents get too much emphasis). This
method suffers however from the following limitations:
Negative incidents may be more noticeable than positive incidents.
The supervisors have a tendency to unload a series of complaints about incidents during an
annual performance review session.
It results in very close supervision which may not be liked by the employee.
The recording of incidents may be a chore for the manager concerned, who may be too busy
or forget to do it.
Most frequently, the critical incidents technique of evaluation is applied to evaluate the performance
of superiors rather than of peers of subordinates.
(d) Checklists and weighted checklists: Another simple type of individual evaluation method is
the checklist. A checklist represents, in its simplest form, a set of objectives or descriptive statements
about the employee and his behavior. If the rater believes strongly that the employee possesses a
particular listed trait, he checks the item; otherwise, he leaves the item blank. A more recent variation
of the checklist method is the weighted list. Under this, the value of each question may be weighted
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equally or certain questions may be weighted more heavily than others. The following are some of the
sample questions in the checklist.
Is the employee really interested in the task assigned? Yes/No
Is he respected by his colleagues (co-workers) Yes/No
Does he give respect to his superiors? Yes/No
Does he follow instructions properly? Yes/No
Does he make mistakes frequently? Yes/No
A rating score from the checklist helps the manager in evaluation of the performance of the
employee. The checklist method has a serious limitation. The rater may be biased in distinguishing
the positive and negative questions. He may assign biased weights to the questions. Another
limitation could be that this method is expensive and time consuming. Finally, it becomes difficult for
the manager to assemble, analyze and weigh a number of statements about the employee's
characteristics, contributions and behaviors. In spite of these limitations, the checklist method is most
frequently used in the employee's performance evaluation.
(e) Graphic rating scale: Perhaps the most commonly used method of performance evaluation
is the graphic rating scale. Of course, it is also one of the oldest methods of evaluation in use. Under
this method, a printed form, as shown below, is used to evaluate the performance of an employee. A
variety of traits may be used in these types of rating devices, the most common being the quantity and
quality of work. The rating scales can also be adapted by including traits that the company considers
important for effectiveness on the job. A model of a graphic rating scale is given below.
Table: Typical Graphic Rating Scale
Employee Name................... Job title .................
Department ......................... Rate ...............
Data ..................................
Quantity of work: Volume of workunder normal working conditions
Unsatisfactory Fair Satisfactory Good Outstanding
Quality of work: Neatness,thoroughness and accuracy ofwork Knowledge of job
A clear understanding of thefactors connected with the job
Attitude: Exhibits enthusiasm andcooperativeness on the job
Dependability: Conscientious,thorough, reliable, accurate, withrespect to attendance, reliefs,lunch breaks, etc.
Cooperation: Willingness andability to work with others toproduce desired goals.
From the graphic rating scales, excerpts can be obtained about the performance standards of
employees. For instance, if the employee has serious gaps in technical-professional knowledge
(knows only rudimentary phases of job); lacks the knowledge to bring about an increase in
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productivity; is reluctant to make decisions on his own (on even when he makes decisions they are
unreliable and substandard); declines to accept responsibility; fails to plan ahead effectively; wastes
and misuses resources; etc., then it can safely be inferred that the standards of the performance of
the employee are dismal and disappointing.
The rating scale is the most common method of evaluation of an employee's performance today. One
positive point in favor of the rating scale is that it is easy to understand, easy to use and permits a
statistical tabulation of scores of employees. When ratings are objective in nature they can be
effectively used as evaluators. The graphic rating scale may however suffer from a long standing
disadvantage, i.e., it may be arbitrary and the rating may be subjective. Another pitfall is that each
characteristic is equally important in evaluation of the employee's performance and so on.
(f) Behaviorally anchored rating scales: Also known as the behavioral expectations scale,
this method represents the latest innovation in performance appraisal. It is a combination of the rating
scale and critical incident techniques of employee performance evaluation. The critical incidents serve
as anchor statements on a scale and the rating form usually contains six to eight specifically defined
performance dimensions. The following chart represents an example of a sales trainee's competence
and a behaviorally anchored rating scale.
Table: An Example of Behaviorally Anchored Rating Scale (BARS)
Performance Points BehaviorExtremely good 7 Can expect trainee to make valuable suggestions for increased
sales and to have positive relationships with customers all over
the country.Good 6 Can expect to initiate creative ideas for improved sales.Above average 5 Can expect to keep in touch with the customers throughout the
year.Average 4 Can manage, with difficulty, to deliver the goods in time.Below average 3 Can expect to unload the trucks when asked by the supervisor.Poor 2 Can expect to inform only a part of the customers.Extremely poor 1 Can expect to take extended coffee breaks and roam around
purposelessly.
(g) Forced choice method: This method was developed to eliminate bias and the
preponderance of high ratings that might occur in some organizations. The primary purpose of the
forced choice method is to correct the tendency of a rater to give consistently high or low ratings to all
the employees. This method makes use of several sets of pair phrases, two of which may be positive
and two negative and the rater is asked to indicate which of the four phrases is the most and least
descriptive of a particular worker. Actually, the statement items are grounded in such a way that the
rater cannot easily judge which statements apply to the most effective employee. The following box is
a classic illustration of the forced choice items in organizations.
Table: Forced Choice Items
1. Least Most
A Does not anticipate difficulties A
B Grasps explanations easily and quickly B
C Does not waste time CDr.A. Senthil Kumar, IQAC, MCET 45
D Very easy to talk to D
2. Least Most
A Can be a leader A
B Wastes time on unproductive things B
C At all times, cool and calm C
D Smart worker D
The favorable qualities earn a plus credit and the unfavorable ones earn the reverse. The worker gets
over plus when the positive factors override the negative ones or when one of the negative phrases is
checked as being insignificantly rated.
They overall objectivity is increased by using this method in evaluation of employee's performance,
because the rater does not know how high or low he is evaluating the individual as he has no access
to the scoring key. This method, however, has a strong limitation. In the preparation of sets of phrases
trained technicians are needed and as such the method becomes very expensive. Further, managers
may feel frustrated rating the employees ‘in the dark'. Finally, the results of the forced choice method
may not be useful for training employees because the rater himself does not know how he is
evaluating the worker. In spite of these limitations, the forced choice techniques is quite popular.
(h) Management by Objectives (MBO): MBO represents a modern method of evaluating the
performance of personnel. Thoughtful managers have become increasingly aware that the traditional
performance evaluation systems are characterized by somewhat antagonistic judgments on the part
of the rater. There is a growing feeling nowadays that it is better to make the superior work with
subordinates in fixing goals. This would inevitably enable subordinates to exercise self-control over
their performance behaviors. The concept of management by objectives is actually the outcome of the
pioneering works of Drucker, McGregor and Odiorne in management science. Management by
objectives can be described as “a process whereby the superior and subordinate managers of an
organization jointly identify its common goals, define each individuals' major areas of responsibility in
terms of results expected of him and use these measures as guides for operating the unit and
assessing the contributions of each of its members”. MBO thus represents more than an evaluation
programme and process. Practicing management scientists and pedagogues view it as a philosophy
of managerial practice; it is a method by which managers and subordinates plan, organize, control,
communicate and debate.
Features
MBO emphasizes participatively set goals that are tangible, verifiable and measurable.
MBO focuses attention on what must be accomplished (goals) rather than how it is to be
accomplished (methods).
MBO, by concentrating on key result areas translates the abstract philosophy of management
into concrete phraseology. The technique can be put to general use (non-specialist
technique). Further it is “a dynamic system which seeks to integrate the company's need to
clarify and achieve its profit and growth targets with the manager's need to contribute and
develop himself”.
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MBO is a systematic and rational technique that allows management to attain maximum
results from available resources by focusing on achievable goals. It allows the subordinate
plenty of room to make creative decisions on his own.
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Work specialization - Sometimes called Division of Labour – “is the degree to which
organizational tasks are subdivided into separate jobs.”
Chain of Command - Is an unbroken line of authority that links all persons in an
organisation and shows who report to whom.
Responsibility - is the duty to perform the task or activity as assigned.
Accountability – means that the people with authority and responsibility are subject
to reporting and justifying task outcomes to those above them in the chain of
command.
Delegation is the process managers use to transfer authority and responsibility to
position below them in the hierarchy.
Line authority - means that people in management positions have format authority
to direct and control immediate subordinates
Staff authority is narrower and includes the right to advise, recommend, and
counsel in the staff specialists’ area of expertise.
Span of management is the number of employees reporting to a supervisor
Span of management Sometimes called Span of control, this characteristic of
structure determines how closely a supervisor can monitor subordinates.
Departmentalization, which is the basis for grouping positions into departments and
departments into the total organisation.
Centralization means that decision authority is located near the top of the
organization
Decision authority is pushed downward to lower organization levels is called
Decentralization.
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