Organizing and Staffing

Nature & Purpose of Organization :

Some Definitions on Organization :

One Definition being Including all the Behavior of Participants in a

Group.

The other definition being Describe the Total System of Social & Cultural
Relations.

According to Amitai Etzioni An Organization is a Social Unit or

Human Grouping, deliberately structured for the purpose of
attaining Specific Goals.
Egs:
Corporations, Schools, Colleges, Hospitals, Temples etc are all
Organizations.
Note: But, friendship groups & families are not Organizations because they do
not involve any significant amount of Conscious Planning or deliberate structuring.
But for Practicing Managers, the term Organization implies a formalized
intentional structure of Roles or Positions.
By Intentional Structure of Roles we say, People working together must fill
certain Roles. The Roles that the people are asked to fill should be intentionally
designed to ensure that required activities are done & that activities fit together so
that people work smoothly, effectively, & efficiently in Groups.
For an Organizational Role to exist & be meaningful to people, it must
incorporate,
1) Verifiable Objectives, which are Major part of the Planning Process.
2) A clear idea of the Major duties or Activities involved &
3) An understood area of discretion or authority so that the person filling the
Role knows what he can do to accomplish Goals.

To make a Role work out more effectively, provision should be made for
supplying needed information & other tools necessary for performance in that
Role.

Organizing is considered as :
1) The identification & classification of required activities.
2) The grouping of Activities necessary to attain Objectives.
3) The assignment of each Grouping to a Manager with the delegation of
Authority necessary to supervise it &
4)
The Provision for Co-ordination horizontally on the same or similar
organizational level & vertically with corporate head quarters, division & dept etc.,
in the Organizational Structure.
This should be designed to clarify who is to do what tasks & who is
responsible for what results to remove hindrances caused by confusion &
uncertainty of assignment & to furnish Decision Making & Communications
Networks reflecting & supporting enterprise Objectives.

Purpose of Planning :
This is to aid in making Objectives meaningful & to contribute to enterprise
Objectives:
1) Principle of Unity of Objectives : An Organization Structure is effective if it
enables individuals to contribute to Enterprise Objectives.
2) Principle of Organizational Efficiency : An Organization is efficient if it is
structured to aid the accomplishment of Enterprise Objectives with a minimum of
unsought consequences for Costs.

Principles of Organization :
This is the strength & basis of Organization Structure, the thread that
makes it possible, the means by which groups of activities can be placed under
a Manager & Co-ordination of Organizational Units can be promoted. It is the tool
by which a Manager is able to exercise discretion & to create an environment for
individual performance.
Therefore, some of the most useful principles of Organizing are related to
Authority. They are highlighted as follows :
1) Scalar Principle : The clearer the line of authority from the topmost
management position in an enterprise to every subordinate position, the clearer will
be the responsibility for Decision Making & more effective will be the Organization
Communication.
2) Principle of Delegation by Results expected :
The responsibility of subordinates to their superiors for performance is
absolute, & the superiors cannot escape responsibility for the Organizational
activities of their subordinates.
3) Principle of parity of Authority & Responsibility :
The responsibility for actions cannot be greater than that implied by the
authority delegated, nor should it be less.
4) Principle of Unity of Command :
The more complete an individuals reporting relationships to a single
superior, the smaller the problem of conflicting instructions & greater the feeling of
personal responsibility for results.
5) Authority level principle :
Maintenance of intended delegation requires that decisions within the
authority of individual managers should be made by them & not be referred
upward in the Organization Structure.

Other principles of Organization related to achievement of Objectives are as

under :
6) Principle of Unity of Objectives :
An Organization Structure is effective if it enables individuals to contribute
to Enterprise Objectives.

7) Principle of Organizational Efficiency :

An Organization is efficient if it is structured to aid the accomplishment of
enterprise objectives with a minimum of unsought consequences or Costs.
8) Specialization :
Effective Organization must promote specialization. The activities of the
enterprise should be divided according to functions & assigned to persons according
to their specialization.
9) Span of Management Principle :
In each Managerial Position, there is a limit to the number of persons &
individual can effectively manage but the exact number will depend on the impact
of underlying variables. As far as possible, the span of control should be the
minimum. That means, a Manager should be asked to supervise a reasonable
number of subordinates only, say six.
10) Simplicity :
The Organization Structure should be as simple as possible & the
Organization levels should, as far as possible, be minimum. A large number of
levels of Organization means difficulty of effective communication & coordination.
11) Flexibility :
The Organization should be flexible, should be adaptable to changing
circumstances & permit expansion & replacement without dislocation & disruption
of the basic structure.
12) Balance :
There should be reasonable balance in the size of various depts, between
Centralization & Decentralization, between the principle of span of control & short
chain of command, & among all types of factors such as Human, Technical &
Financial.
13) Unity of Direction :
There should be one Objective & one plan for a group of activities having
the same Objective. Unity of Direction facilitates unification & co-ordination of
activities at various levels.
14) Personal Ability :
As people constitute an Organization, there is a need for proper selection,
placement & training of Staff. Further, the Organization Structure must ensure
Optimum use of Human Resources & encourage Management Development
Programmes.

Process of Organizing :
The various principles of Authority Delegation & of Departmentation or
Segmentation of the activities on the basis of some Homogeneity &
Integration are fundamental truths about the process of Organizing.

They deal with phases of the three primary aspects of Organizing a)

Authority b) Delegation
c) Activity Groupings & Integration.

Integration is the process of achieving unity of effort among the various

Departments or Subsystems to achieve the Objectives of the Enterprise.
The Process of Organizing involves the following Six Steps :
1) Consideration of Objectives :

The first step in Organizing is to know the Objectives of the Enterprise.

They determine the various activities which need to be performed & the
type of Organization which needs to be built for this purpose, i.e., the
Strategy of the Organization determines its Structure.

For Eg: The Structure of an Educational Institution is not the same as

that for a Business Enterprise. Therefore, Consideration of Objectives has the
First & Foremost Role to play in the Process of Organizing.
2) Grouping of Activities into Depts / Divisions/ Segments/ Subsystems :

The Second Step is to identify the activities necessary to achieve them &
to group the closely related & similar activities into divisions & depts or
Subsystems.

For Eg: The activities of a graded Cast Iron Castings Manufacturing

Enterprise may be grouped into such Depts as Pattern Shop, Moulding Shop,
Core Shop, Sand Plant, Melting Shop, QA Dept, Personnel Dept, etc.

In addition, the activities of each Dept can be further classified & placed
under the charge of different sections of that Dept. For Eg: In the Moulding
Shop, separate sections may be created for Machine Moulding, Hand
Moulding etc.
3) Identification of Key Depts :

They are activities essential for the fulfillment of the Goals. Such Key
Depts demand utmost importance.

Other Depts exist merely to serve them.

If Key Depts are not identified, Top Management very often tends to focus
its attention on Minor Issues leading to wastage of Time & Resources.

Thus Key Depts have to be identified & placed directly under the Top
Management.

For Eg: An enterprise manufacturing Soaps & Detergents can identify

advertising & sales promotion Depts as Key Depts which report directly to the
MD of the enterprise.
4)
Determining Levels at which Various Types of Decisions are to be
made :

After deciding the relative importance of various depts, the levels at

which various Major & Minor Decisions have to be taken, have to be
determined.

Each enterprise must decide on the degree of Centralization &

Decentralization of authority & responsibility it wants to have.

Extreme Decentralization may lead to loss of Control, on the other

hand, Extreme Centralization may lead to improper decisions, failure

to take decisions at the right time, delays & complete breakdown of the
morale of the employees.

Therefore, Top Management must very carefully decide the levels of the
enterprise at which various types of decisions can be taken in order to
achieve overall Objectives of the enterprise most effectively & efficiently.
5) Deciding the Span of Management :

One has to decide on the Span of Management. i.e., the Number of

Subordinates who should report directly to each Executive.

The Narrower the Span, the taller would be the Structure with several
levels of Management. This will complicate Communication & increase
financial burden of Salaries.

For these reasons, a Flat Structure is generally desirable. However, the

Span of Management, of each Executive Position must be tailored to meet the
satisfactory working environment of the enterprise.
6) Setting up a Coordination Mechanism :

Proper Coordination among various depts & its individuals is very

important for the successful & smooth running of the enterprise.

As individuals & depts carry out their specialized activities, the overall
goals of the Organization may become submerged or conflicts among
Organization members may develop.

Therefore, effective Coordination Mechanisms are reqd to enable members

of the Organization to keep sight of the Organization Goals & reduce
inefficiencies & conflicts.
Peter F Druckers Process of Organizing :

Activities Analysis :
A thorough & careful activities analysis clarifies as to what work has to be
performed, what kinds of work belong together, & what emphasis each activity is to
be given in the Organization Structure.

Decision Analysis :
Second Step involves Decision Analysis. Although, it is important for any one
to anticipate the contents of the future decisions, one can predict their kind &
decide their places so that when they arise in future, they need no go looking for
a Home.

Relations Analysis :
In the final step, an analysis should be made of various relationships
between the tasks of a Manager & those of his subordinates, peers & superiors.
Traditionally, only downward relationships of a Manager are analyzed. But,
this done not give a complete picture of his contribution to the total Organization.
This can be obtained only by analyzing his Horizontal & upward relations also.

Types of Organization :

Organizations can be of 2 Types as given below :

1) Formal Organization.
2) Informal Organization.
Both types are found in the Organization shown below :
1) Formal Organization :

There are various Levels in any Organization, right from President or

Chairman or Managing Director or Chief Executive Officer at the top to
Foremen/Supervisors down the line.

Formal means the Intentional Structure of Roles in a Formally

Organized Enterprise.

This doesnt mean there is anything inherently inflexible. If a Manager

is to organize well, the structure must furnish an environment in which
individual performance, both present & future contributes most effectively to
Group Goals.

Formal Organizations should be flexible, there should be room for

advantageous utilization of creative talents for recognition of individual likes
& capacities in the most formal of Organizations. Yet, individual efforts in a
Group situation should be directed towards Group & Organization Goals.
2) Informal Organization :

Such an Organization is a Joint Personal Activity without conscious joint

purpose, even though contributing to joint results.

Thus, the Informal Relationships established in the Group of people during

morning Tea Break or Playing Cricket in the Evening etc., may aid in the
achievement of Organization Goals.

It may be easier to ask for help in an Organization Problem from someone

you know personally, even if he may be in a different section, than by passing
thro the Organization Structure.

Definition : A Network of Personal & Social Relations not established or

required by the formal organization but arising spontaneously as people
associate with one another. Thus, relationships not appearing on the
Organization Chart might include Evening Cricket Team & Morning Tea
Regulars.
Organizational Division The Department.

The Word Dept indicates a distinct area, division or branch of an

Organization over which a Manager has authority for the performance of
specified activities.

Dept could be the Manufacturing Division, Sales Division, R&D division

etc.

Each Division is generally headed by a VP or a Manager. These

designations may change from one Organization to the other.

Organization levels & Span of Management :

Span Of Control :
Meaning of Span of Control & its importance :
The term Span of Management is also referred to as Span of Control, Span
of Supervision, Span of Authority, Span of Responsibility.

This indicates the Number of Subordinates who report directly to a

Manager.

While the purpose of Management is to make Human Cooperation more

effective, the Reasons for levels of Management is the Limitations of the Span
of Management.

In other words, the Organization Levels exist because there is a limit to

the number of persons a Manager can supervise effectively.

This limit to the Number of Persons a Manager can supervise

effectively varies depending on the Situations & Types of
Organization. This is called as Span of Control or Span of
Management.
Reasons for deciding an Appropriate Span of Control in an
Organization :
There are 2 Possible Reasons :
1) This affects the efficient utilization of Managers & the effective performance
of their Subordinates. When the Span of Control is too Wide, Managers are
overstraining themselves & also, their Subordinates are receiving very little
guidance from their Managers.
This also means Managers have very little Control on their
Subordinates.
2) There is a Relationship between Span of Control & Organizational Structure.
A Narrow Span of Control results in a Tall Organization with many
Levels of Supervision between Top Level Management & Lowest
Organizational Level.
This creates Ineffective Communication Problems & also increases the
Financial Burden on the Organization. There is also a Burden of finding suitable
experienced personnel at different levels.
On the other hand, a Wide Span of Control for the same number of
Employees, means a Flat Organization with fewer Management Levels
between Top & Bottom Levels.
Relationships between Span of Control & Organizational Levels :
In the figure shown above, the Relationships between Span of Control &
Organization Levels are shown. A Wide Span of Control is associated with Few
Organization Levels; a Narrow Span contains Many Levels.
Advantages & Disadvantages of Narrow & Wide Spans of Control :

Advantages of Organizations with Narrow Spans :

1) Managers have Close Supervision on their Subordinates.
2) Therefore, Close & effective Control on them.
3) There is a Clear Cut Fast Communication between Subordinates & their
Superiors & therefore Communication is not diluted.
Disadvantages of Narrow Organization Spans :
1) Superiors tend to get too involved in Subordinates Work.
2) There are many Levels of Management.
3)
Financial Burden of the Organization increases due to high costs
because of many levels in the Organization.
4) There is an Excessive Distance between Lowest Level & Top Level.
Advantages of Organizations with Wide Spans :

Superiors are forced to delegate authority & responsibility to

their Subordinates.

Organization makes clear policies.

Subordinates are very carefully selected.

Disadvantages of Wide Span Organizations :

There is a tendency of Overloaded & Stressed Superiors to become

Decision Bottlenecks.

There is a tendency of Superiors loss of Control on his Subordinates.

This requires Managers with Superior & Exceptional Qualities.

Deciding on the Span :

In every Organization, it must be decided how many subordinates a

Superior can manage effectively & efficiently.

According to Research, the Number is usually about, 4 to 8 Subordinates

at the Upper levels, & 8 to 15 or more at the Lower Levels.

According to another Study, the ideal number of Subordinates for all

Superior Authorities is to be 4, while at Lowest Levels in the Organization,
what is delegated is Responsibility for the Performance of Specific Tasks & not
for the Supervision of Others, the Max Number being 8 to 12. Other
Management Experts find that Manager may be able to manage as many as
20 to 30 Subordinates.
Summary :

Studies on several Well Managed Companies have shown widely varying

Spans & that merely counting the Numbers in the existing Spans is not
enough to establish what a Span ought to be.

This is true even if it could be assumed that each Company has reached
the best Number thro Trial & Error.

That might prove only that underlying conditions vary for different
Companies.
Factors Governing Effective Span of Control :
The Number of Subordinates a Manager can effectively depends on Various
factors discussed below :

Apart from such personal capacities as Comprehending Quickly, getting

along with people & commanding Loyalty & Respect, the most important
determinant is a Managers ability to reduce the time he spends with his
Subordinates.

This ability naturally varies with Managers & their jobs, but several factors
materially influence the number & frequency of such contacts & therefore the
Span of Control.

The appropriate Span of Control, therefore, must be determined

by the Specifics of the Managers particular situation. They are given
below :
1) Subordinate Training.
2) Competency of the Manager.
3) Competency of the employees.
4) Nature of Work.
5) Delegation of Authority & Responsibility.
6) Communication Technique.
7) Clarity of Plans.
8) Use of Objective Standards.
9) Geographic Location.
10) Levels of Management.
11) Economic Considerations &
12) Other Factors.
1) Subordinate Training :

Proper Training of Subordinates for their job leads to the fewer number of
necessary Superior Subordinate Relationships.

Also, well trained Subordinates require not only less of Managers time but
also less contact with their Managers , thus allowing a Larger Span of
Control.
2) Competency of the Manager :

A Manager who is Competent & Well trained can effectively Supervise

more Subordinates than one who is not !

Therefore, in Planning an Organization, the Span of Control should be

based on Managers Average Competency Level.
3) Competency of the Employees :

If the Employees are Competent, & possess necessary skill & Motivation to
perform the Task assigned, Less Control & Supervision from the
Manager is reqd & a wider Span of Control can be employed.

If, Incompetent Employees are there, they demand more of the

Managers time in Supervision & Control, a Narrow Span of Control
will have to be forced in.
4) Nature of Work :

If Employees are carrying out, similar repetitive jobs, the Span of Control
can be widened.

However, if their Jobs keep changing frequently, more of Managers time is

reqd in Supervision & Control, & hence again forcing Narrow Span of
Control.
5) Delegation of Authority & Responsibility :
If the Authority & Responsibility of each employee are properly defined
& delegated, they need not meet their Superiors very often for guidance &
Instructions.
This helps the Superior to manage a large number of Subordinates.
6) Communication Techniques :
The effectiveness with which communication Techniques are used also
influences the Span of Control.
An Ability to communicate plans & instructions clearly & concisely tends to
increase a Managers Span.
The Subordinates Job is greatly facilitated by Superiors who can
express themselves.
On the Other Hand, if clarity is lacking in Communication about what is
reqd to be carried out, Subordinates will make frequent visits to the Superiors
for seeking Clarifications, therefore a Narrow Span of Control becomes
necessary.
7) Clarity of Plans :
Much of the Character of a Subordinates Job is defined by the plans to be
put into effect.
If Plans are well defined & if the Authority to undertake them has been
delegated, & if the Subordinate understands what is expected of him, little of
Supervisors time is reqd & hence, Span of Control is much larger. Such is
the case with a Production Supervisor responsible for largely
Repetitive Jobs.
On the other hand, if plans cannot be accurately drawn, & subordinates do
much of their own Planning, they may require considerable guidance from
their Superiors, thereby, requiring a Narrow Span of Control.
8) Use of Objective Standards :
A Manager must find out, either by personal observation or thro use of
Objective Standards, whether, Subordinates are following Plans. Obviously,
good Objective Standards, revealing with ease, any deviations from Plans,
enables Managers to avoid many time consuming contacts.
But, Direct Attention under exceptional cases will be reqd, which may be
Critical to the Organizations Success.
9) Geographic Location :
An Office Manager who has 30 Employees, all located in One Place ,may be
able to Supervise them very well.
On the Other Hand, a VP Marketing who has 30 Marketing Managers
located at different places in the Country would find direct supervision
difficult.

 10) Levels of Management :

Span of Management also varies with each level in the Organization.

Gerald G. Fisch has divided the Management Hierarchy for this purpose
into 4 Basic Groups : 1) Super Managers 2) General Managers 3) Middle
Managers 4) Supervisors.

The Max Span of Management of Super Managers, whose functions involve

only Broad Policy Control rather than Direct Supervision, can be 50
Subordinates.

But, for General Managers who are more closely involved with their
Subordinates, than Super Managers, the Span of Control has to be
comparatively narrow, say 9 to 10 Subordinates only.

For Middle Level Managers, the appropriate Span of Control depends on

the precise mix of Executive & Operative Supervision than their specific Jobs
require. It can be 40 to 50 Subordinates.

For Supervisory Level whose Job is of a Routine Nature, the Span of Control
is normally quite Wide, say up to 100 Subordinates.
11) Economic Considerations :

Economic Considerations also affect choice of Span. Smaller Spans means

a Large No of Managers with added Salaries & other Costs they entail.

But Wide Spans also involve extra costs due to inefficiencies that result
from decreased Managerial Leadership.

Hence, an Economic Balance has to be struck between Costs Saving that

result from the largest possible Span & the added Costs that an Organization
begins to incur as the Span grows too Wide.
12) Other Factors :

Simple Tasks may allow for a Wider Span than Tasks which are Complex &
include a Great Variety of Activities.

A Wider Span of Control can also result from the +ve attitude of
Subordinates toward assumption of responsibility, as well as their willingness
to take reasonable risks.

Similarly, with more mature Subordinates, the Superior may delegate more
Authority thus Widening the Span.

Departmentation :
The Horizontal Differentiation of Tasks or Activities into discrete
segments is called Departmentation.

The limitation on the Number of Subordinates that can be directly

managed would restrict the size of the enterprises if it were not for the tool
of Departmentation.

Grouping of activities & people into depts makes it possible to expand

Organization & to manage it effectively & efficiently.

Departmentation is thus the Key in building up an effective & efficient

Organization.

The basic aim is to take advantage of the division of Labor &

Specialization.

Depts however differ with respect to the basic patterns used to group the
activities.

There are several bases for Departmentation, each of which is suitable for
particular Organizations, strategies & purposes.

It can be emphasized there is no single best way of

Departmentizing that is applicable to all Organizations or to all
situations.

The pattern used will depend on given situations & on what Managers
believe will give the best results for them in the situation they face.
The various bases of Departmentation :
1) Departmentation by Enterprise Functions :
Functional Departmentation is the most widely employed basis for
Organizing Activities & is present in almost every Enterprise at some level in the
Organization Structure.
Each Major function of the enterprise is grouped into a Dept.
For Eg : A typical Manufacturing Company will have Production, Engineering,
Marketing, Finance & Personnel Depts. A typical Manufacturing Unit representing
such Functional Depts is shown below :

Advantages : ( Function based Departmentation)

It is logical & time proven.
The Power & prestige of the basic activities of the enterprise are
maintained by the Top Managers. The identity of various functions is
maintained.
Functional Departmentation follows the principle of Occupational
Specialization & thereby facilitates efficiency in utilization of people.
It simplifies training.
It furnishes a means of tight control at the Top, as the Top Managers are
responsible for end results.
Disadvantages :
This may tend to de-emphasize over all Enterprise Objectives.
Over specializes & narrows view points of Key Personnel.
People develop attitudes & other behavioral patterns involving loyalty to
their Functional Depts & not to the enterprise as a whole & this tends to
reduce Co-ordination between Functions.
Responsibility for profits is at the Top only. In small Enterprises, this may
be acceptable, but in large Enterprises the burden becomes too heavy for the
person to bear.

Functional Departmentation makes it difficult to adapt quickly to

environmental changes.
It limits development of General Managers.
2) Departmentation by Products :
This method is ideally suited for Large Organizations manufacturing
various different Products.
In this method, a separate Semi Autonomous Dept is created for each
Product & is put under the Charge of a VP or, a Manager is made responsible
for achieving Set Goals.
Within each Dept, all the needed Production, Engineering, Personnel,
Marketing & other facilities are grouped.
This method is ideal when an Organization grows to a very Large Size &
the usual method of Functional Departmentation creates Operational
Problems.
For Eg: An Automobiles Manufacturing Company has 3 Products say : 1)
Tractors 2) LCV & 3) Luxury Cars etc. The Company may create 3 Different
for these Products, each headed by a VP for efficient & effective running of
the Organization.
Advantages :
It facilitates use of specialized Capital (eg : A person may be extremely
good in Marketing Luxury Cars or LCV & his Services may be used in these
areas.)
Relieves Top Management of Operating Task Responsibility, therefore it
can better concentrate on such centralized activities like Finance, R & D, &
Control.
This enables the Top Management to Compare the performance
of different Products & take the Policy Decisions about those
Products which are not performing at expected levels.
In this form, since Responsibility for Performance of each Product is
entrusted to a particular Dept Head, he is well stimulated for improving
his performance.
Here, those who Work within the Dept derive greater satisfaction
from identification with a recognizable Goal.
Disadvantages :
This form results in Duplication of Facilities & Staff.
Extra expenditure is incurred in maintaining a Sales Force for each Product
Line.
Employment of a Large No of Management Personnel is reqd.
Plant & Machineries in each Dept may not be used fully.
3) Customer Departmentation :
An enterprise may be divided into a Number of Depts on the basis of the
Customer that it serves.

In this form, the Customers are the Key to the way the activities are
grouped when each of the different things an enterprise does for
them is managed by one Dept Head for that particular activity/thing.
Advantages :
Encourages Concentration on Customer Needs.
Gives Customers feeling that they have an understanding Supplier.
This form helps to develop Expertise in Customer Area.
Disadvantages :
It may result in Under Utilization of resources & facilities in some Depts.
There may be duplication of Services.
Requires Managers & Staff Experts in Customers Problems.
4) Departmentation by Territory or Geography or Regions :
It is based on Territory or Region which is Very Common in Enterprises
that operate over Wide Geographic Areas.
For Eg: Used widely in Automobile Assembling, Chain Retailing,
Wholesaling & Oil Retailing. i.e., Big Bazaar, Wal Mart in USA,
departments based on Region Western Railways, Southern Railways etc.
Here, it is important that activities in a given area or region be
grouped & assigned to a GM, when this type of Departmentation is
adapted.
Advantages :
It motivates each regional head to achieve high performance.
Places responsibility at a Lower Level.
Places emphasis on Local Markets & problems.
It improves Coordination in a Region.
It enables better face to face communication with the local interests. Takes
advantage of economics of Local Operations such as Raw Materials
availability, Cheap Labor, Market etc.
It enables Organization to compare Regional Performances &
invest more in Profitable Areas & withdraw Resources from
Unprofitable Ones. This promotes spirit of
healthy competition
between the Regions.
Disadvantages :

It requires more people with GM capabilities.

It increases problem of Top Management Control.

5) Departmentation by Time :

One of the Oldest form of Departmentation generally used at Lower

Levels of Organization, i.e., Grouping based on Time. The use of Shifts is
Common in many enterprises where for Economic, Technological or other
reasons, the normal day will not suffice.

Egs: Hospitals, Machine Shops, Forging Shops, Press Shops working in 3

Shifts for Economic Reasons. This is also true for Chemical Industries, Blast
Furnaces, Steel Melting Furnaces etc where processes cannot be interrupted. These
industries work in 3 Shifts.
Advantages :

Services may be rendered that go beyond the typical 8 Hours a Day, often
extending to 24 Hours a Day.

It is possible to use processes that cannot be interrupted, those that

require a Continuous Cycle.

Expensive Capital Investment on Plant & Machinery can be used more than
8 Hours a Day when Workers in all the 3 Shifts use the same Machines. This
is a very important Economic Consideration.
Disadvantages :

Supervision may lack during Night Shift.

There is a fatigue factor ; it is difficult for most people to switch, for

instance, from a Day Shift to a Night Shift & Vice Versa.

Having Several Shifts may cause problems in Communication &

Coordination.

In a factory, the night shift people may not clean up the machines to be
used by the day shift people.

Efficiency of the people have generally been found to be quite low between
12:00 AM to 8:00 AM.
6) Process or Equipment Departmentation :

This is done on the basis of several discrete processes or technologies

involved in the manufacture of a Product.

In this kind of Departmentation, the necessary Resources are brought in to

do the particular Job.

Eg: This can be explained by means of a Cast Iron Foundry manufacturing

Graded cast Iron Castings. There are so many processes involved such as
Moulding, Core Making, Melting, Sand Preparation, Fettling etc. The Block
Diagram of a Typical Enterprise is shown below :
Advantages :

It achieves Economic Advantages.

Follows principle of Specialization each Dept is engaged in doing a

special type of work, therefore utilizing special skills of the people & increases
Operational Efficiency.

Ideally suited for manufacturing enterprises using a Number of

Intermediate Processes to manufacture their Products.
Disadvantages :

It does not provide a good training ground for overall development of

Managerial Talent.

Coordination of different Depts is difficult & some times, it may

lead to Production Bottle Necks.

Responsibility for Profit is at the Top.

7) Matrix Organization or Combined Base :

It is quite typical to find an enterprise having a different base of

Departmentation at different levels.

For Eg: An enterprise Manufacturing Consumer Durables viz., Refrigerators,

Washing Machines & TV s may follow Product as the Base at the Top level,
Region as the base at the Intermediate level & Function as the base at the
Bottom Level.
This is represented in Block Diagram given below :
Matrix Organization in an Engineering Dept :

Another kind of Departmentation is Matrix or Grid Organization or Project

or Product Management.

The essence of Matrix Organization normally is the combining of Functional

& Product Patterns of Departmentation in the same Organization Structure.

In the figure given below, there are Functional Managers In Charge of

Engineering Functions & an Overlay of Project Managers responsible for the
end products.

Functional Depts are a permanent feature of the Matrix Organization.

They retain Authority for Overall Operation of their Respective Depts.

Product Depts or Project Teams, on the other hand, are created as the
need for them arises.

Members of a Project Team are grouped from the various functional depts
& are placed under the direction of a Project Manager.

The Manager for each Project is responsible & accountable for its
success; thus, he has the authority over the other team members for the
duration of the Project.

This temporary authority is shown by the dotted lines as shown in fig.

above.

On Completion of the Project, the members of the Team including the

Project Manager revert back to their respective Depts until the next
assignment to a New Project.

This type of Organization is frequently found in Construction Projects,

Designing & Launching Weather Satellites, in Management Consulting Firms,
where Experts work together on a Specific Project for a fixed period.
Advantages :

Oriented towards End Result.

In this Organization, Professional Identification of the Individuals are

maintained.

It pinpoints Product Profit Responsibility.

Disadvantages :


Conflict in Organization Authority exists.

Possibility of disunity of Command exists.

Requires Manager to be good at Human Relations.

Matrix Organization requires many Time Consuming Meetings.

Useful Tips for making Matrix Organization Effective :
1) Define clearly the Objectives of the Project or Task.
2) Clarify the Roles, Authorities & Responsibilities of Managers & Team Members.
3) Ensure that influence is based on Knowledge & Information than on
Rank.
4) Balance Power of Functional & Project Managers.
5) Select experienced Manager for the Project who can provide leadership.
6) Reward Project Managers & Team Members fairly etc.
Choosing Pattern of Departmentation :

Departmentation is not an End in Itself, but it is simply a Method of

arranging activities to facilitate the accomplishment of Organization
Objectives.

There is no one best way of Departmentising applicable to all

Organizations & all situations.

They must decide what is Best Looking at the situation they face - Jobs to
be done, the way they should be done, the people involved & their
personalities, the Technology employed in the Dept, whether the Users are
being served, the other Internal & External Factors in the situation. However,
some factors are given below :
1) Specialization :
The base of Departmentation should ensure Maximum Specialization of
Skill & Effort. The points to be considered for this purpose are :
a) Which approach permits the max use of Special Technical Knowledge.
b) How will the Choice affect the differentiation among Specialists.
c)
Will it allow necessary differences in View Points to develop so that
specialized Tasks can be performed effectively.
2) Coordination :
The base of Departmentation should ensure Proper Coordination & Control of
the Activities of Different Depts. The Points to be considered for this purpose are :
a) Which base provides the best hope of achieving reqd Control &
Coordination.
b) Will a particular base increase problems of achieving integration or reduce
them.
c)
How will the Decision affect the ability of Organization Members to
communicate with each other, resolve conflicts & reach necessary Joint Decisions.
3) Economy :

The expenditure involved in introducing Departmentation is also an

important point to be considered. Benefits of Departmentation should always be
higher than the Costs. Points to be considered here are :
a) Which base provides the most efficient utilization of Plant & Machinery.
b) What is the financial burden involved in following a particular base etc.
4) Whole Task :
The Organization should be so divided that each Dept has a Whole Task, this
Wholeness may be achieved either by Technological Departmentation or by
Regional Departmentation or by Time Departmentation or by Combination of these.
Thus, in each Case, Managers of Different Depts have a realistic
accountability & those who work within the Depts derive satisfaction from
identification with a Recognizable Goal.
Committees :

It is a Group of People who have been formally assigned some

specific task or some problem for their decision & or implementation.

In Modern Business Enterprises, use of Committees is very common in all

areas of Management & Administration.

The use of Committees is due not only to the Democratic Tradition but also
to a growing emphasis on Group Management & Group Participation in
Organizations.
Committees are broadly classified into 2 Groups as under :
1) Advisory Committees &
2) Executive Committees.
1) Advisory Committees :

When Committees are vested with Staff Authority, they are known as
Advisory Committee.

They have only a Recommendatory Role & cannot enforce

implementation of their advice.

Some of the usual advisory committees formed in Business Enterprises

are : a) Works Committees
b) Sales Committees
c) Finance
Committees
d) Workers Welfare Committees etc.
2) Executive Committees :

Whenever Committees are vested with Line Authority, they are

called as Executive Committees.

These Committees not only take Decisions but also enforce Decisions &
thus perform a Double Role of taking a Decision & its implementation. The
Board of Directors of a Company is an Example of an Executive
Committee.
Advantages of a Committee :

When Committees consist of all Departmental Heads as Members, people

get an Opportunity to have a better understanding of the Problems of each
other & Coordinate effectively to achieve Organizational Goals.

It is a forum for the Pooling of Knowledge & experience of many persons

of different skills, ages, & backgrounds. This leads to taking improved Quality
Decisions.

Committees provide an Opportunity for many persons to participate in

the Decision Making Process.
Contd .

More appropriate decisions or solutions are likely to emerge for a given

problem by a group of people, (group decision making) rather than
individuals.

They are an excellent means of transmitting information & ideas, both

Upward & Downward.

By exposing members to different issues & view points. They contribute

indirectly to their Training & Development.

They are impersonal in action & hence their decisions are generally
unbiased & are based on facts.
Drawbacks of Committees :

One of the best administrative procedures to delay action is to

refer the matter to a Committee. Almost without exception, it takes
longer time to get action from a Committee than from an individual Manager.

For wrong Decisions, no members of the Committee can be individually

held responsible & members therefore may no apply their mind seriously.

A huge amount of time & money is spent in convening such meetings &
giving allowance to the members. Therefore, Committees increase the
Financial Burden on the Organization.

Members of Coordinating Committees frequently regard

themselves as appointed to protect the interests of their Depts
rather than to find the most appropriate solution to the problem in Question.

Decisions are generally arrived at on the Basis of some Compromise

among members. Hence, not always the Best Decisions.

As Committees consist of a large number of persons, it is difficult to

maintain secrecy regarding the Decisions taken at the Committee Meetings.
Guidelines for making Committees more effective :
Some of the disadvantages of Committees can be overcome by applying
the following guidelines for more effective working of the Committee. They are as
given below :
a) Authority.
b) Size.
c) Membership.
d) Subject Matters.
e) Chairperson.
f) Minutes &
g) Cost effectiveness.

They are as explained below :

1) Authority : The Committees Authority should be spelled out so that
members know whether their responsibility is to make decisions, make
recommendations, or merely deliberate & give the Chairperson some insights into
the problem under discussion.
2) Size :
Size of the Committee is very important. As a general rule, a Committee
should be large enough to promote deliberation & include the breadth of expertise
reqd for the Job.
It should not be too large so as to waste time or foster indecision. The
Optimum Size is 5 to 6 members & the members chosen should possess adequate
skills & knowledge to deal with the problem referred to the Committee.
3) Membership :
It must be selected carefully. If a Committee is to be successful, the
members must be representative of the interests they are intended to serve.
They must also possess the reqd authority & be able to perform well in a
Group.
Finally, members should have the capacity to communicate well &
reach Group Decisions by integrated Group Thinking rather than
inappropriate Compromise.
4) Subject Matter :
This should be carefully selected. Committee work should be limited to
Subject Matter than can be handled in a GD.
It could be more effective if an Agenda & relevant information are circulated
well in Advance so that the members can study the Subject & come prepared for
the Meeting.
5) Chairperson :
The selection of this person is extremely important for Effective
Communication.
Such a person can avoid the Wastes & Drawbacks of Committees by
planning the Meeting, preparing the Agenda, seeing the results of Research are
made available to the members in Advance, formulating definite proposals for
discussion or action & conducting the meeting efficiently.
He sets the tone of the Meeting, integrates the ideas & keeps the discussion
from Wandering.
6) Minutes :
Sometimes, individuals leave the meeting with varying interpretations as to
what was discussed & agreed upon.
This can be avoided by taking careful minutes of the meeting & circulating
them in Draft form for correction or modification before the final copy is approved
by the Committee.
7) Cost Effectiveness :

The Committee must be worth its Costs. It may be difficult to count the
benefits, especially such Intangible Factors such as Morale, enhanced status of
Committee members, & the Committees value as a training device to enhance
Team Work.
But the Committee can be justified only if the Costs are Offset by Tangible &
Intangible Benefits.

Centralization versus Decentralization of Authority &

Responsibility :
Meaning of Decentralization :
Organization Authority is merely the discretion conferred on people to use
their judgement to make decisions & issue instructions.
It is the tendency to disperse decision making authority in an
Organized Structure.
It is a fundamental aspect of delegation, to the extent the authority is not
delegated ; it is Centralized.

Delegation of Authority & hence Decentralization is necessary for an

Organization to exist.
Just as no one person in an enterprise, can do all the tasks necessary
for accomplishing a group purpose, so it is impossible, as an enterprise
grows, for one person to exercise all the authority for making
decisions.
There is a limit to the No of Persons Managers can effectively supervise &
make decisions for.
Once this limit exceeds, Authority must be delegated to Subordinates,
who will take decisions within the area of the assigned duties.
Decentralization implies more than delegation. It reflects the philosophy of
the Organization & Management.
It requires careful selection of which decisions to be taken at
lower levels of the Organization Structure & which to be taken at the
Top levels.
It also requires specific policy making to guide the decision making, proper
selection & training of people & adequate control.
A policy of Decentralization affects all areas of Management & can be seen
as an essential element of a Managerial System. In fact, without it, Managers
wouldnt be able to use their discretion to handle the ever - changing
situations they face.
Every enterprise has to decide as to how much decision making
authority should be centralized in the hands of the President & the
VP (Top Levels) & how much should be delegated to the Managers at
the Lower Levels.

In a Centralized set up, the Decision making Authority is

concentrated in a few people at the Top, in a Decentralized Set up, it
is delegated to the Lower Levels where the actual work is performed.

Following are the criteria to measure the extent of Decentralization

in an Enterprise.
Decentralization is greater :
1) When, the greater is the number of decisions made at Lower Levels.
2) When the more important are the decisions made at Lower Levels.
3)
When more is the number of areas in which decisions can be made at
Lower Levels &
4) When fewer are the people to be consulted & less is the checking reqd from
the Top Levels on the Decisions made at the Lower Levels.
Definition on Decentralization :
Everything that goes to increase the importance of the
Subordinates Role is Decentralization & everything that goes to reduce it
is Centralization.
The terms Centralization & Decentralization are not absolute but are
relative. Absolute Centralization is not possible, except in a One Man Enterprise.
Consequently, we can say that Decentralization Characterizes all Organizations.

Similarly, there cannot be absolute Decentralization of Authority

because the Manager cannot delegate all his authority without
surrendering his position as a Manager.

Meaning of Centralization :
It has several meanings :
1) Centralization of Performance :
Pertains to Geographic Concentration ; it characterizes, for Eg : a Company
operating in a single location.
2) Departmental Centralization :
Refers to Concentration of specalized activities in one Dept. For Eg : Repairs
& Maintenance for an entire plant may be carried out by a Single Dept.
3) Centralization as an aspect of Management :
It is the tendency to Restrict Delegation of decision making. A high
degree of authority is held at or near the Top by Managers in the Organizational
Hierarchy. We are concerned with this aspect of Centralization & Decentralization of
Authority & Responsibility.

Delegation of Authority :
Authority is delegated when a Superior gives a Subordinate
discretion to make Decisions. The process of delegation involves :
1) Determining the results expected from a position.

2) Assigning Tasks to a position.

3) Delegating Authority for accomplishing these tasks.
4) holding the person in that position responsible for the accomplishment of
tasks.

In practice, it is impossible to split this process, since expecting a person

to accomplish goals without giving him the Authority to achieve them is
unfair, as is delegating authority without knowing the end results for which it
is used.

Moreover, since the superiors responsibility cannot be delegated, a

Superior has no practical alternative but to hold subordinates responsible for
completing their tasks.
Distinction between Delegation & Decentralization :
They appear to be the same, but in reality they mean different things. The
Major differences are given below :
1)
Delegation is a process, while Decentralization is the end result (Outcome)
of the Delegation & Dispersal of Authority. Delegation mainly refers to granting of
Authority & the creation of responsibility as between one individual & another;
Decentralization is the situation which exists as a result of the systematic
delegation of Authority throughout the Organization.
2)
In Delegation, a Superior continues to be responsible for the work
delegated to his Subordinates, while in Decentralization, the Superior is
relieved from his responsibility for the work Decentralized & Subordinate
becomes liable (responsible) for that.
3)
Delegation is Vital & essential to the Management Process. Only thro
Delegation, Subordinates can be involved in the Organization & the Management
can get things done. Decentralization is Optional, in the sense, that it may or may
not be done as a Systematic policy.
Advantages of Decentralization :

Relieves Top Management of some burden of Decision Making & forces

upper level managers to let go. (giving freedom to the Lower Level
Mgrs to take independent Decisions.)

Reduces problems of Communication & hence enables Top Managers to

take timely decisions on all important issues, thus, enhancing the efficiency
of the Organization.

Encourages Decision Making & assumption of Authority & responsibility.

Gives Managers more freedom & independence in Decision

Making.

Promotes establishment & use of broad controls which may increase

Motivation.

Makes comparison of performance of different Organizational units

possible.

Facilitates setting up of Profit Centers.

Facilitates Product Diversification.

Promotes development of more capable Managers. Because,

Managers in a Decentralized structure often have to adapt to & deal with
difficult situations, they are assumed to be excellently trained for Promotions
into positions of greater authority & responsibility. Decentralization aids in
adaptation to fast changing environment.

Limitations of Decentralization :

Makes it more difficult to have a Uniform Policy.

Increases Complexity of Coordination of Decentralized Organizational

Units.

May result in loss of some control by Upper-Level Managers.

May be limited by inadequate Control Techniques.

May be constrained by inadequate Planning & control systems.

Can be limited by the availability of qualified & capable Managers.

Involves considerable expenses for Training Managers.

May not be favored by Economics of Scale of some Operations.

The Extent of Decentralization :

To avoid problems, any program for decentralization of Authority &

Responsibility must consider thoroughly the Advantages & the Limitations of
Decentralization.

Strong forces in the Organization favor the practice of Decentralization.

But, at the same time, extensive Decentralization is not to be blindly
undertaken.

Perhaps, One Major Problem of Decentralization is loss of Control. No

enterprise can Decentralize to the extent that its very existence is
threatened & the achievement of its Goals is frustrated.

If Organizational Disintegration is to be avoided, Decentralization must

be tempered with selective Centralization in certain major policy
areas.

An enterprise with well balanced Decentralization will probably centralize

decisions at the Top on such things as given below :
1) Financing.
2) Overall Profit Goals & Budgeting.
3) Major Facilities & other Capital Expenditures.
4) Important New Product Programs.
5) Major Marketing Strategies.
6) Basic Personnel Policies.
7) Development & Compensation of Managerial Personnel.

A Well Organized enterprise always tries to balance between

Centralization & Decentralization. In, such an Organization, Authority is
retained at the very Top for Major Policy & Program Decisions on
matters affecting the Soundness & Success of the entire Company.

Thro Decentralization, however, once the Major Programs & Policy

Decisions have been made at the Top, many Decisions involving their
execution are made at the Lower Levels in Various Depts of the
Organization.

Management by Objectives (MBO) :

Introduction :
They are the End Points, towards which enterprises activities are aimed.
MBO is the philosophy of Management that emphasizes the Development of
Mutual Objectives by Managers & their Subordinates & the use of these
Objectives as the primary bases of Motivation, Evaluation & Control
Efforts.
The Management process begins with a Mission Statement &
Setting up of Organizational Objectives. Objectives give meaning & purpose to
the Organization. Without Objectives, without something to achieve,
Organization would be Purposeless & Chaotic.
Good Management, therefore, is always Management by Objectives.
Objectives determine the Scope of Future Events.
They provide the Spotlight on the Routes over which activities, are
Organized. They serve as Reference Points to Concentrate Resources &
Efforts. They determine what Action to take today to obtain Results
Tomorrow.
Mission :

Very Reason & Justification for the existence of the enterprise.

It is usually expressed in terms of the benefits the Firm provides to its

Customers.

An Organizations Mission Statement states what it is, why it exists, & the
unique contribution it can make.

Mission Statements are characterized by the following (given below) :

1) Customer Oriented :
The purpose of a Business according to Peter F Drucker is to create a
Customer . Mission Statements, therefore, are directed at serving the Customers
in useful way.
2) Future Oriented :
Mission Statements must be indicative of what the Business is going to be
in the years to come. The Statement must be Valid for at least some years to come.
3) Dynamic :
The Concept of Mission is Dynamic & not a Static One. It must strike a
Happy Balance between the Narrow & Broad Ways of doing things in the Years
ahead ; between the present requirements & future expectations.

It is worth remembering that the future of a Business is usually determined

by the way it defines its Business Today.
Example of a Mission Statement :
Name of the Company : The Tata Group
Mission Statement : At the Tata Group, our purpose is to improve the
quality of life of the communities we serve. We do this thro Leadership, in Sectors of
Leadership, in Sectors of National Economic Significance to which the Group brings
in a Unique Set of Capabilities. This requires us to grow aggressively in focused
areas of Business.
Our Heritage of returning to Society what we earn, evokes confidence & trust
among Consumers, Employees, Shareholders & the Community. This heritage will be
continuously enriched by formalizing the high standards of behavior expected from
employees & the company etc.
Objectives & Goals :
The terms Objective & Goal indicate end results to be sought &
accomplished. Both of them have Value Orientations & indicate conditions
considered necessary to improve the Overall Performance of the Organization.
Three important definitions of Objectives are given below :
1) Objectives are Goals established to guide the efforts of the Company & each
of its Components.
2)
An Organizational Goal is a desired state of affairs which the Organization
attempts to realize.
3) They indicate the End Point of a Management Programme.
MBO

MBO also called Appraisal by Result, Planning by Objectives, Goal

Management, Work Planning & Review, Joint Target Setting etc is an
overall philosophy of management that concentrates on measurable goals &
end results.

It provides Systematic & Rational Approach to Management &

helps prevent Management by Crisis.
MBO is based on the assumption that people perform better when they
know what is expected of them & can relate their Personal Goals to the
Organizational Objectives.

It also assumes that people are interested in the Goal Setting Process
& in evaluating their own performance against the Target.

MBO is a Process where the Superior & Subordinate Managers of

an Organization jointly identify
its Common Goals, define each
Individuals Major areas of Responsibility in terms of results expected of him,
& use these measures as Guides for operating the Unit & assessing the
Contribution of each of its Members.

 Features of MBO :

It emphasizes participation in Setting Goals that are Tangible,

Verifiable & Measurable.

It focuses attention on what must be accomplished (Goals) rather than

how to accomplish it !

MBO, by concentrating on Key Result Areas translates the abstract

philosophy of Management in an attempt to concretize it. Further, it is A
Dynamic System which seeks to integrate the Companys need to achieve its
Profit & Sales Growth with the Managers need to contribute & develop
himself.

MBO is a Systematic & Rational Technique that allows Management to

attain Maximum Results from available Resources by focusing on Achievable
Goals. It allows the Subordinates with plenty of room to be more creative in
their Decision Making.
Management by Exception (MBE):
Introduction :
Control is an essential part of every Organization. It is a Process of
Comparing Actual Performance with established Standards, for the purpose of
taking Action to Correct Deviations.
It is only thro this Process of Control, that Management is able to maintain
the Equilibrium between Ends & Means, Output & Effort. In a Large,
Multi - Product, Multi -Plant & Multi Location Organization, it is impossible
to check everything & initiate timely, remedial steps whenever things go off the
track. Managers therefore, focus attention on Key or Critical Areas which have a
Significant Bearing on the performance of Various Depts in an Organization. One
of the Ways that have been found to be relevant in this regard is Management by
Exception (MBE).
MBE
MBE tries to focus attention on exceptionally serious deviations
from the Plans & Standards.
According to this principle, a Manager should give more attention to unusual
or exceptional items only.
Only very important deviations from Established Standards should be brought
to the Notice of Management.
If the Actual Performance is within an acceptable range of deviation from the
Standard (Say 5%), it need not be reported to Management, as no Remedial Action
is reqd.
However, in Case of Major Deviation from the Standard, the Matter has to
receive the immediate attention of the Management on priority basis. The
principle highlights the importance of the Statement that, if you want to
Control everything, you will end up Controlling Nothing.

So better focus on Key Deviations & leave the minor ones to be taken care of
by the Lower Levels. That is, the Top Management must focus on Important issues
& leave the routine things to people at Lower Levels.
The importance of MBE stems from the enormous size of Business & the
Consequences of Complexity in Operations. It is a Very Effective Approach in
Controlling Modern Organizations.

1)
2)
3)
4)
5)
6)
7)

MBE offers the Following Benefits :

It saves Time.
It identifies Critical Problem Areas.
It stimulates Communication.
Reduces Frequency of Decision Making.
It leads to Concentration of efforts on Important things.
Makes use of more Knowledge & Data.
It is necessary in Big Organizations.

Nature & Importance of Staffing :

Introduction :
People are very Vital for the effective Operation of an Enterprise.
All managers often say, Our people are our most important Asset.
The Managerial function of Staffing is defined as filling & keeping filled,
various positions, in the Organization Structure. This includes identifying Work Force
requirements, inventorying the People available, & Recruiting, Selecting, Placing,
Promoting, Appraising, Planning the Careers of, Compensating & Training or
otherwise developing both Candidates & Current Job Holders to accomplish their
tasks effectively & efficiently etc.
It is therefore, clear that Staffing must be closely linked to Organizing,
that is, to the setting up of Intentional Structures of Roles & Positions.
All Managers have a Responsibility for Staffing. The board of Directors
performs the Staffing
Function by selecting the Chief Executive. The Chief
Executive in turn, discharges this Function by selecting Managers for different
Depts, viz; Production, Marketing, Finance etc. The Managers do likewise when they
select their Subordinates. Even the Foremen or Supervisors have a Staffing
Responsibility when they Recruit & Select Workers.
Importance & Need for Proper Staffing :

Direct Labor Costs account for nearly 15 to 20 % Cost of Production in a

Manufacturing Enterprise. Therefore, a Business Enterprise needs Right Kind
of People at Various Important Positions in the Organization Structure to
manage the affairs of the enterprise efficiently & successfully.

There are a Number of Advantages of Proper & efficient Staffing. They

are described below Advantages of Staffing :

Helps in choosing the right kind of Personnel for different important

positions in the Organizational Structure.
Helps in identifying Talented & Competent People, grooming them,
develop them to help move up the Organization Ladder.
Ensures higher Productivity by placing the Right Man in the Right Job.
Helps to avoid disruption of Production Schedules due to shortage of
personnel by proper indication in Advance.
Helps to prevent Under Utilization of personnel thro Over manning & the
Resultant High Labor Costs & Low Profit Margins.
It provides Information to Management for the Internal
Promotion of Managerial Personnel in the event of an Unanticipated
Staff Turnover.

The Function of Staffing :

The Function of Staffing involves Proper Manpower Planning .
Manpower Planning includes Forecasting, Developing & Controlling is the
Process by which an Enterprise ensures that it has the Right Number of People
& the Right Kind of People at the Right Time doing work for which they are
Economically most useful.
The Managerial Function of Staffing & in turn Manpower Planning relates to
the Total Management System as depicted in Figure Given Below :
As Shown in the Figure, Enterprise Plans become the basis for Organization
Plans.
The Present & Projected Organization Structure determines the Number &
Kinds of Managers required. These demand for Managers are compared with the
available talent through the Management Inventory. On the basis of this Analysis,
External & Internal Sources are utilized in the process of Recruitment, Selection,
Placement, Promotion & Separation.
Other essential aspects of Staffing are Appraisal, Career Strategy & Training
& Development of Managers.
Important Points in Staffing :
1) Staffing affects Leading & Controlling.
2)
Well trained Managers creates an environment in which people, working
together in Groups, can Achieve enterprise Objectives, at the same time accomplish
Personal Goals. It facilitates Leading.
3)
Similarly selecting Quality Managers affects Controlling ( it assists Controlling
) by preventing any undesirable deviation from becoming Major Problems.
4)
Staffing requires an Open System Approach. It is carried within the
Enterprise, which in turn is linked to the External Environment.
5)
Therefore, Internal Factors of the Enterprise, such as Personnel
Policies, the Organizational Climate, & the Reward System must be taken
into Account.

6)
It is certain that without adequate Rewards, it is not possible to attract
& keep Quality Managers.
7)
The External Fast Changing Environment is also equally important.
High Technology demands Well Trained, Well Educated & Highly Skilled Managers.
Inability to meet this Demand for such Managers may prevent an
Enterprise from growing at the Desired Rate.

Process of Selection & Recruitment :

What is Recruitment :
The Process of Recruitment starts after Estimating the Manpower
Requirements for Various Positions in the Organization Structure.
It can be defined as the Process of Identifying the Sources for
Prospective Candidates & to Stimulate them to Apply for the Jobs.
In other words, Recruitment is the Process of Attracting Potential
Employees to the Company.
The Management should have a Proper Plan of Recruiting the Number &
Qualification of Personnel required & also the Time Frame when it is needed.
The Process of Recruitment & the Cost involved in it depends on the Size of
the Enterprise & the Type of the Persons to be recruited.
Sources of Recruitment :
They can be both Internal & External. Internal Sources refer to Present
Working Force of the Company. Vacancies other than at the Lowest Level may
be filled by selecting Competent Individuals from amongst the Existing Employees
of the Organization.
External Sources of Recruitment are as Follows :

Re-Employing Former Employees.

Friends & Relatives of Present Employees.

Applicants at the Gate.

Educational Institutions Tech, Management & the Others.

Employment Exchanges.

Advertising for Vacancies in Leading Newspapers.

1)
Re-Employing Former Employees :
Those Employees who have been laid off or have left for Personal Reasons
may be employed. Such Employees may require very Less Training compared to the
New People to the Company.
2) Friends & Relatives of Present Employees :
Some Companies encourage their Existing Employees to recommend their
Friends & Relatives for appointment to fill the Existing Vacancies.
3)

Applicants at the Gate :

Unemployed Persons who call at the Gate of the Enterprise are considered,
after Proper Selection Process, for filling up different Vacancies in the Organization.
4) Educational Institutions Technical, Management & Others :
Many Big Enterprises remain in touch with Leading Technical, Management,
& Other Colleges & Young, Talented Candidates are Recruited from Campus
Selection Process.
5) Employment Exchanges :
They also serve as an Important Source of Recruitment for a Number of
Business Enterprises.
6) Advertising for Vacancies in Leading News Papers :
This is a Very Important Source for many of the Bigger Enterprises requiring
the Services of Persons possessing Certain Special Skills & Qualifications. Small
Enterprises generally resort to Advertising for Vacancies in Classified Columns in
Leading Newspapers.

SELECTION :
Under Recruitment, the enterprise identifies the Sources for prospective
candidates & encourages them to apply for Various Openings in the Organization
Structure.
Under Selection, Candidates are evaluated with respect to their
qualifications & the Job requirements & those who do not satisfy the requirements
are Rejected.
There are some Variations of the Specific Steps in the Selection Process.
For Eg : The Interview of a Candidate for a First Level Supervisory Position may be
relatively simple when compared with the Rigorous Interviews for Top Level
Managers. However, the Following Steps are indicative of the Typical
Selection Process :
1) The Selection Criteria : They are usually established on the Basis of Current
& Sometimes Future Job Requirements. These Criteria include Educational
Qualification, Knowledge, Skills & Experience.
2)
Application Form : Candidates are reqd to complete an Application Form. In
this form, the Applicant gives relevant Personal Data such as his Qualification,
Specialization, Experience, Firms in which they have worked etc. The Application
Forms are carefully scrutinized to decide the suitable applicants to be called for
Interview.
3) Screening Interview : Those who are selected for Interview on the basis of
particulars furnished in the application form are called for initial screening interview
to identify the more promising candidates. The Interview is the most important
means of evaluating the poise or appearance of the Candidate.
It is also used for obtaining additional information or
clarification given in the Application Form & also to Check References.
4)
Employment Tests : For Further Assessment of Candidates Nature &
Abilities, some Tests are conducted in the Selection Process.

The Primary aim of Testing is to obtain Data about Applicants that help
predict their Probable Success as Managers.
Some of the Advantages from Testing include finding the Best Person
for the Job, obtaining a High Degree of Job Satisfaction for the Applicant &
reducing Staff Turnover. The most Commonly used Tests can be classified as
follows :
i)
Intelligence Tests : They are designed to measure Mental Capacity & to
Test Memory, Speed of Thought, & Ability to see Relationships in Complex Problem
Situations.
ii)
Proficiency & Aptitude Tests : They are designed to Discover interests,
Existing Skills & Potential for Acquiring Skills.
iii) Vocational Tests : They are designed to show a Candidates most suitable
Occupation or the areas in which the Candidates Interests match the interests of
the People working in that Occupation.
iv)
Personality Tests : They are designed to reveal Candidates Personal
Characteristics & the way Candidates may interact with others, thereby giving a
measure of Leadership Potential.
5)
Group Discussion : Candidates found satisfactory in the Screening
Interview & Employment Tests are further short listed for GD Test. Many Companies
conduct this test to assess the Candidates Communication & Presentation Skills,
Interpersonal Skills, Leadership Qualities & ability to pull on in Team Work.
6)
Checking References : If a Candidate has been found satisfactory in the
GD, the Employer would like to get some important Personal Data about the
Candidate, such as his Character, Past History, Background etc., verified from the
people referred to in the Application Form.
7)
Physical or Medical Examination : A Physical Examination of the
Candidate is carried out to check the Physical Fitness of the Applicant for the
Position/Job applied for.
8)
Final Interview : This is conducted for those who are ultimately selected
for Employment. In this Interview, the selected candidates are given idea about
their future prospects within the Organization.
9) Appointment Order : Appointment Orders are given to the finally Selected
Candidates giving the Position Offered, Scale of Pay and, Terms & Conditions of
Employment.