Organization

 Provides the structure, the frame on which the

management of the enterprise is based.

 Is a social unit or human grouping deliberately

structured for the purpose of attaining specific goals.

The rational coordination of the activities of a

number of people for the achievement of some
common explicit goal
 Nature and Purpose of Organization

• Identifies tasks to be performed for achieving organizational

objectives and assigns them to individuals
• To help realize the plans made by managers
• Establishes reporting relationships
• Delegates authority & responsibility/accountability
• Optimal utilization of financial, physical, material and
human resources
• To facilitate seamless communication between individuals
and departments
• To nurture & grow the specialization of labor
 PRINCIPLES OF ORGANISATION
• Objectives
• Division of labor/Specialization
• Unity of command
• Delegation of authority
• The scalar principle
• Span of Control
• Management by Exception Principle
 PRINCIPLES OF ORGANISATION…….conti

• Unity of Direction
• Simplicity
• Efficiency
• Authority
• Responsibility
• Acceptability
• Flexibility
• Balance
 Types of organization

 Line organization
Staff organization
Line and staff organization
Committee organization
Matrix organization
Line organization
 Line organization
• Simplest form
• Authority flows from
top to bottom vertically
•Direction to subordinates
to be given by immediate
supervisor (no skipping)
•Startup enterprise/small
businesses usually follow
this type of organization
 Line Organization
Key Advantages Key Disadvantages

Clear Authority Not focused on specific skills

Encourages speedy action Rigid and inflexible

Strong Discipline Encourages dictatorial way of

working

Clear accountability Limited to small enterprises

Functional organization
 Functional organization
Based on various functions performed by the
enterprise such as.
Production
R&D
Personnel
Purchasing
Finance
Sales
 Functional organization
Key Advantages Key Disadvantages
Logical reflection of functions Coordination of the efforts of various
functions is difficult
Encourages division of labor Difficult to the management to fix
responsibility for weak performance
Facilitates mass production Responsibility of profit are at the top
only
Simplifies training Limits development of general
managers

Quality of work improved Limited to small enterprises

Tight control at top

Line and Staff organization
Line and Staff organization
 Line and Staff organization
• The line officers have authority to take
decisions and implement them to achieve
the objectives of the organization.
• The line officers may be assisted by the
staff officers while framing the policies
and plans and taking decisions
organization.
 Line and Staff organization
• Division of work and specialization takes
place in line and staff organization.
• The whole organization is divided into
different functional areas to which staff
specialists are attached.
• Power of command remains with the line
executive and staff serves only as
counselors.
 Line and Staff organization
Key Advantages Key Disadvantages
Facilitates to work faster and better Difference between line and staff officers will
defeat the very purpose of specialization

Specialization is attained Line officers may reject advice without any

reason for their action
Enables to utilize experience and advice Staff officers are not responsible if favorable
results are not obtained
Officers can take sound advice Product cost may increase due to staff salaries

New technology or procedure can be Not effective for small enterprises

introduced without any dislocation
Promotes efficient functioning of line officers

Very good opportunity is made available to

young person to get training
Matrix organization
 Matrix organization
Key Advantages Key Disadvantages
Advantages of Violates the principle of
functional and line unity of command
together
Achievement of Does not follow scalar
objectives with technical chain of commands it
specialization leads to confusion
Effective utilization of Priority conflicts in
resources resource allocation
COMMITTEES ORGANIZATION
• Committee can be defined as a group of organizational members who
discuss and develop solutions (carry out an defined objective).
• Example.
 Disinvestment Committee.
 Compensation Committee.
 Project Steering Committee.
 Promotion Committee.
 Cultural events Committee.
 Student Committee.
• The purpose of such committees is to discuss various problems and
recommend solutions to the management

• It is generally found to co-exist with line and staff type of organization

COMMITTEES ORGANIZATION
Key Advantages Key Disadvantages
Committee decisions are Delays due to heterogeneous
many times better group
Coordination among Increased administrative
departments made easy expenses
Faster communication once No decisions sometimes due
decided to no agreement between
members
Widely accepted (democratic Secrecy of decisions can’t be
process) maintained
Tight control at top Dominating nature people
influence more
 DEPARTMENTALIZATION
MEANING
• Means the process by which similar activities
of the business are grouped into units for the
purpose of facilitating smooth administration
at all levels.
• It is the process of grouping activities of
similar nature into departments.
• Aim is to take advantage of the division of
labor and specialization up to certain limit.
 DEPARTMENTALIZATION
DEFINITION
According to Koontz and O’Donnell
“Departmentation is a process of dividing the
large monolithic functional organization into
small flexible administrative units”
 NEED AND IMPORTANCE
• Specialization
• Fixation of Responsibility
• Autonomy
• Smooth Functioning
• Performance Appraisal
• Development of Managers
 DEPARTMENTALISATION (Basis)

• Functional
• Product
• Territory & Geographical
• Process
• Customer
• Time
FUNCTIONAL DEPARTMENTATION

• Each major function of the company is

grouped into separate departments such as
Production department, Marketing
Department, Finance Department and
Personnel Department. This is known as
Departmentation by Functions.
• Sales manager will be responsible for all
products manufactured by the company.
FUNCTIONAL DEPARTMENTATION
FUNCTIONAL DEPARTMENTATION
Key Advantages Key Disadvantages
Simple form for small It fosters sub-goal loyalties
enterprises which (employees focus on their
manufacture only a single or functional goals that may be
a limited number of closely part of the whole objective)
related products
Promotes excellence in Not good for overall
performance in their specific development of managers
expertise
Promotes Economies of Accountability for failures
scale (which function to blame?)
PRODUCT DEPARTMENTATION
• Under this, for each major product, a
separate self contained department is
created. Within each department, all the
needed manufacturing, engineering,
marketing, manpower and other facilities
are assembled
• Head of each department is made
responsible for profits
PRODUCT DEPARTMENTATION

Example 1 Example 2
PRODUCT DEPARTMENTATION
Key Advantages Key Disadvantages
Continuous and undivided There is duplication of staff and
attention to product facilities. Sales force is maintained
for each product lines. More
number of managers needed as
well
Enables top management to
compare performance of different
products and make appropriate
investment decisions
Better Accountability (managers
are motivated)
Better Performance Evaluation
 TERRITORIAL / GEOGRAPHICAL
DEPARTMENTATION
• When several marketing or production
units of an organization are
geographically dispersed in various
locations, it is logical to departmentalize
those units on a geographical basis
• •E.g. Hotel Chain, Banking , Insurance ,
Transportation companies (Railways)
TERRITORIAL / GEOGRAPHICAL
DEPARTMENTATION
Key Advantages Key Disadvantages
Motivates each regional head to Gives rise to duplication of
achieve high performance various activities
Regional head can adapt to his Regional units may be engrossed
local situation and customer need in competition (may forget overall
with speed and accuracy. interest of the organization)
Advantage of locational factors
(raw material, labor etc.)
Valuable top management training
and experience to middle level
executives
Enables comparison on regional
basis
TERRITORIAL / GEOGRAPHICAL
DEPARTMENTATION
PROCESS DEPARTMENTATION
• In process departmentation, process
involved in production or various
type of equipments used are taken as
basis for departmentation
• Various processes can be used as the
base of grouping of activities
PROCESS DEPARTMENTATION
PROCESS DEPARTMENTATION
Key Advantages Key Disadvantages
Facilitates efficient use of Workers are focused on their
equipments process area

Suitable for products that have No training ground for overall

many number of processes to build development involving all aspects
of product
When process is sequential
,Breakdown in one department can
lead to delays
Extra coordination needed for
inter departmental issues
CUSTOMER DEPARTMENTALIZATION

• Here activities are grouped

according to the types of
customers
• E.g. A large Readymade Garment
Store may have separate
department each for women , men
& children
CUSTOMER DEPARTMENTALIZATION
TIME DEPARTMENTALIZATION

• In some organizations, where work is

performed throughout the Day & Night,
the work can be divided into Shifts
• E.g. Call Centre, Medicals Stores etc.
 MERITS OF DEPARTMENTATION
• Clear Division of Activities
• Increase in Efficiency
• Proper Control
• Development of Capable Members
• Knowledge of Departmental Costs
DEMERITS OF DEPARTMENTATION

• Decentralization
• Difficulty in Selection of Managers
• Difficulty in Managerial Training
• Uneconomical System
• Not Suitable for Small Enterprises
 SPAN OF CONTROL
• What is the Span of Control?
–The number of people who report to one
manager in a hierarchy
–The more people under the control of one
manager - the wider the span of control
–Less means a narrower span of control
• Example below shows a span of control of 4
for the Marketing Manager
SPAN OF CONTROL
 FACTORS AFFECTING SPAN OF
MANAGEMENT
• Ability of the Manager
• Ability of the Employees
• Type of Work
• Well Defined Authority and Responsibility
• Sophisticated Information & Control System
• Geographic Location
• Levels of Management
• Economic Considerations
FACTORS AFFECTING SPAN OF
MANAGEMENT
V. A. GRAICUNAS made significant
contribution to span of management theory
• Direct One to One Relationships
• Direct group relationships
• Cross relationships
 Types of Span of Control
• Wide Span of Control (Flat Organization - large
number of employees reporting to one supervisor)
• Narrow Span of Control (Tall organization – a small
number of employees report to a supervisor,
necessitating a larger number of supervisors)
WIDE SPAN AND NARROW SPAN
OF CONTROL
 WIDE SPAN OF CONTROL (FLAT
ORGANIZATION)
Key Advantages Key Disadvantages

Economical as few managers Quality of performance and

are needed productivity suffers

Less number of levels so Requires managers of high

better coordination and caliber which are difficult to
communication find
NARROW SPAN OF CONTROLL
Key Advantages Key Disadvantages
Enables personal contact Increased cost of
between managers and supervision (more
subordinates managers needed)
High control and close Communication difficult
supervision is enabled due to many levels
Manager can utilize spare
time for other important
issues
CENTRALIZATION AND DECENTRALIZATION

• Centralization is the degree to which decision making takes place

at upper levels of the organization. If top managers make key
decisions with little input from below, then the organization is
more centralized
• On the other hand, the more that lower-level employees provide
input or actually make decisions, the more decentralization there
is
• Keep in mind that centralization-decentralization is relative, not
absolute
CENTRALIZED ORGANIZED
STRUCTURE
DECENTRALIZED ORGANIZED
STRUCTURE
 CHARACTERISTICS OF CENTRALIZATION

• Almost all the authority to take decision

is kept reserved at the top level.
• Role of subordinates is to implement
decisions
ADVANTAGES OF CENTRALIZATION
• Duplication of functions is minimized

• High qualified specialists can be utilized

• Decision making is concentrated

 DISADVANTAGE OF CENTRALIZATION

• Delay in work
• Remote control
• No special attention
• Problem of Communication
• Excessive work load for top executives
 CHARACTERICS OF DECENTRALIZATION

• Extended form of delegation

• Gives importance to the role of subordinates
• Reduces the work-load of the managers in the
top hierarchy
• Decisions are taken by those employees who
implement them.
 CHARACTERICS OF
DECENTRALIZATION
• Decentralization is a systematic delegation of authority at
all levels of management and in all of the organization.
• “Everything that increasing the role of subordinates is
decentralization and that decreases the role is
centralization”
• Authority in retained by the top management for taking
major decisions
• Less burden on the Chief Executive as in the case of
centralization
• Subordinates get a chance to decide and act independently
• Operations can be coordinated at divisional level
ADVANTAGES OF DECENTRALIZATION

• Relieves the Top Executives of Excessive

Workload.
• Quicker and better decisions
• Improvement in Industrial Relations
• Expansion of Market
• Increase in Initiative
• Reduces problem of Communication
 DISADVANTAGES OF
DECENTRALIZATION
• Dependence on the ability of subordinates
• Lack of cooperation
• Lack of uniformity of decision
• Costly set- up
• Lack of control
 FACTORS AFFECTING DECENTRALIZATION

• Size of the Organization

• History & Age of the Organization
• Philosophy of Top Management
• Abilities of Lower Level Managers
• Strategy and the Organization's Environment
• Nature of Management Functions
• Available Controls
• Costliness and Significance of decisions
 AUTHORITY

•The formal rights of a manager to

manage in the organizational
position, not the person.
•Provides the manager with
positional power
• Authority is accepted by the
subordinates
•Authority flow from the top,
down.
 AUTHORITY
• It is the key to the managerial job
• It gives legitimate power to the manager or
supervisor to give directives to subordinates
• It is limited in scope by both internal and
external factors
 TYPES OF AUTHORITY
• Line Authority
• Staff Authority
 LINE AUTHORITY
• The chain of command in the organizational
structure that flows major decision making
power
• The officially sanctioned ability to issue orders
to subordinate employees within an
organization
 STAFF AUTHORITY
Staff authority consists of the right to advise or
assist those who possess line authority as well
as other staff personnel
AUTHORITY EXAMPLES
Issue Commands
Decision on capital investments
Decision on purchases
Performance Appraisals
Permission of Leaves Promotion,
Transfers Hiring,
Lay Off Meeting Convener
 RESPONSIBILITY
• The duty to perform the task the employee
has been assigned.
• Responsibility and Authority are delegated
together and make the employee accountable
to superiors
 RESPONSIBILITY
• Own up to your actions; admit to making
mistakes
• Stop blaming others or making
excuses!
• Be accountable
EXAMPLES OF RESPONSIBILITY
Oblige Commands from Manager Do the Assigned Duties on
time, with quality
AUTHORITY & RESPONSIBILITY (MUST BE EQUAL)

Subordinates must have enough authority to

undertake all the duties assigned to him
Hiring/Investments/Promotions etc.
If (Authority > Responsibility): Misuse If
(Responsibility > Authority): Frustration
MBO AND MBE
 MBO
• Management By Objectives (MBO) can be
defined as a process whereby the employees
and the superiors come together to identify
common objectives
• The employees set their objectives to be
achieved, the standards to be taken as the
criteria for measurement of their performance
and contribution and deciding the course of
action to be followed
 MBO

• Establishment of effectiveness areas & effectiveness

standards for managerial positions and periodic conversion
of these into measurable time-bound objectives, linked
horizontally and vertically and with future planning
• Management by Objectives (MBO) is a process of agreeing
upon objectives within an organization so that management
and employees agree to the objectives and understand what
they are in the organization.

• The term "management by objectives" was first popularized

by Peter D in 1954 in the book 'The Practice of
Management'
 MANAGEMENT BY OBJECTIVES (MBO)

• Setting Objectives
• Tracking Progress
• Evaluating Results
 MANAGEMENT BY OBJECTIVES (MBO)

The objectives must meet the following req

• Work in the same direction for achieving
company’s task
• Objectives clearly define and communicate to all
• Flexible for making adjustments
• SMART
• Specific /Measurable /Achievable /Relevant/
Time Bound
 ADVANTAGES OF MBO
• It leads to better understanding between
supervisors and subordinates
• It prevents waste efforts and unnessacary
expenditure
• It coordinates the effect of various department
of an organization
• It is a powerful tool for the management to
achieve a higher productivity
 DISADVANTAGES
• The development of objectives can be time
consuming, leaving both managers and
employees less time in which to do their actual
work
 MANAGEMENT BY EXCEPTION(MBE)

This principle tells that only unusual or

exceptional items of major deviations in daily
activates should be brought to the notice of the
mangers
 ADVANTAGES OF MBE
• Much of the managers time is saved
• Managers finds more time and feel
comfortable to think and improve the
organization
• Subordinates feel free and take responsibility
of the work.
 DISADVANTAGES OF MBE
• There is a possibility of misuse the authority
by the subordinates
 STAFFING
Nature and importance of Staffing
Process of Selection & Recruitment (in brief)
 STAFFING
• It is important to have a good organization
structure but it is even more important to fill the
jobs with right people
• Company may be successful that may not be best
but it will never be able to get off the ground if
the people who run it and those who do the actual
work are incapable
• Filling and keeping the positions provided by
organization structure filled with right people is
the staffing phase of management
 STAFFING
• Filling and keeping filled, positions in the
organizational structure.
• Staffing is the process of acquiring, deploying,
and retaining a workforce of sufficient quantity
and quality to create positive impacts on the
organization's effectiveness
 STAFFING
• It is concerned with the Human resources of
the enterprise.
• It is concerned with acquiring, developing,
utilizing, and maintaining human resources.
• It is a process of matching jobs with
individuals to ensure right man for the right
job.
 NATURE OF STAFFING
• Staffing is an important managerial function
• Staffing is a continuous activity
• Staffing helps in placing right men at the right
job
• Staffing is performed by all managers
 IMPORTANCE OF STAFFING
• Discovering and obtaining competent
employees for various job
• Improve the quantity and quality of output by
putting right man for right job
• Improves job satisfaction of employees
• Fulfill the future aspects
• It avoids sudden disruption of the production
due to shortage of workers
 ELEMENTS OF STAFFING
• While carrying out the staffing function, the
management should ensure that right people are
engaged for a job –
• Proper placement of people
• Proper positioning and fixation of salaries
• Providing necessary training for the people to
carry out the job
• Good promotional policies and retirement
schemes
• Recruitment and selection
 STAFFING PROCESS
• Manpower Planning
• Recruitment
• Selection
• Orientation and Placement
• Training and Development
• Remuneration
• Performance Evaluation
• Promotion and transfer
 RECRUITMENT
Recruitment forms the first stage in the process,
which continues with selection of the candidate.
Recruitment makes it possible to acquire the
number and type of people necessary to ensure
the continued operation of the organization
Meaning and Definition:
• In simple terms Recruitment is understood as a
process for searching and obtaining applicants for
jobs, from among the available resources
SOURCES OF RECRUITMENT
• The sources of recruitment may broadly be
divided into various categories: internal
sources and external sources and third party
INTERNAL RECRUITMENT
Internal is a recruitment which takes place
within the concern or organization. Internal
sources of recruitment are readily available to
an organization.
a)Transfers
b)Promotions
c)Re-employment of ex-employees
 EXTERNAL RECRUITMENT
External sources of recruitment have to be
solicited from outside the organization. But it
involves lot of time and money.
• Employment at factory level
• Advertisement
• Employment exchanges
• Employment agencies
• Educational Institutions
• Recommendations
• Labor contractors
DIFFERENCE BETWEEN INTERNAL
SOURCES AND EXTERNA SOURCES
INTERNAL SOURCES EXTERNAL SOURCES
Transfers Outsourcing
Promotions Walk-in Interviews
Employee referrals Job portals (monster.com,
naukri.com)
Lay-off University or institute campus
Extension of services Public Employment exchange
Informal Search Labour contractors
Internships
Employment Agencies/
Consultancies
Company Website
Advertisement
Tele recruiting
Linked-In
Facebook, Twitter
 SELECTION
• Selection is the process of picking individuals
who have relevant qualifications to fill jobs in
an organization.
• Selection is much more than just choosing the
best candidate. It is an attempt to strike a
happy balance between what the applicant can
and wants to do and what the organization
requires.
STEPS IN THE SELECTION PROCESS
 SELECTION PROCESS
RECEPTION
• A warm, friendly reception is extended to candidates with a view to create
a favorable impression. Employment possibilities are also communicated
honestly and clearly

SCREENING INTERVIEW

• The HR department tries to screen out the obvious misfits through this
courtesy interview. A prescribed application form is given to candidates
who are found to be suitable.
APPLICATION BANK

• It is a printed form completed by job aspirants detailing their educational

background, previous work history and certain personal data
CONTENTS OF APPLICATION BANK
• Personal data (address, identification marks)
• Marital data (single or married, children, dependents)
• Physical data (height, weight, health condition)
• Educational data (levels of formal education, marks,
distinctions)
• Employment data (past experience, promotions, nature of
duties, reasons for leaving previous jobs, salary drawn,
etc.)
• Extra-curricular activities data (sports/games, NSS, NCC,
prizes won, leisure-time activities)
• References (names of two or more people who certify the
suitability of an applicant to the advertised position)
 SELECTION TEST
Different types of selection tests may be
administrated, depending on the job and the
company. Generally tests are used to determine
the applicant’s ability, aptitude, and personality
 TESTS
• Primary aim of testing is to obtain data about
applicants that help predict their probable success
as managers.
Some of the commonly used tests-
 Intelligence Tests
 Psychological Tests
 Aptitude Tests
 Interest Tests
 Knowledge Tests
 Personality tests
 INTERVIEWS
• Every manager hired or promoted by a
company is interviewed by one or more
people.
• Techniques used to improve the interviewing
process-
-Interviewer-What to look for?
-Should be prepared to ask the right questions
 MEDICAL EXAMINATION
• To check the physical fitness for the job
concerned .
• To protect the organization from infectious
disease
 REFERENCE CHECKING
• Contacting previous employers of a job
applicant to determine his or her job history.
Reference check may also include checking
with school(s) or college(s) attended by the
applicant to verify educational qualifications.
 BASIS RECRUITMENT SELECTION
Recruitment is the process of searching the selection involves the series of
candidates for employment and stimulating them steps by which the candidates
Meaning to apply for jobs in the organization are screened for choosing the
most suitable persons for
vacant posts.
to create a talent pool of candidates to enable the to choose the right candidate to
selection of fill the various positions in the
Purpose best candidates for the organization, by organization
attracting more and more employees to apply in
the organization
Recruitment is a positive process i.e. selection is a negative process
Process encouraging more and more employees to apply as it involves rejection of the
unsuitable candidates
There is no contract of recruitment established selection results in a contract
in recruitment of service between the
Contract
employer and the selected
employee.
Recruitment is not expensive. It mostly involves Selection is very costly. This is
only advertisement cost because a lot of money is spent
on conducting different types
of tests, interviews, medical
examinations, etc. Similarly,
Cost Factor the experts who conduct
selection procedure are paid
very high fees. This makes
selection a very costly process