Nature and purpose of organization, principles of organization, types of organization, formal and informal organization, types of organization structure, departmentation, importance and bases of departmentaion, committees, meaning and types, centralization vs decentralization of authority and responsibility, span of control, MBO and MBE (meaning only), nature and importance of staffing, process of recruitment & selection (in brief)

1. 1
Unit 3 - POM Mr.T.Somasundaram
UNIT IV
MR.T.SOMASUNDARAM
ASSISTANT PROFESSOR
DEPARTMENT OF MANAGEMENT
KRISTU JAYANTI COLLEGE,
BANGALORE.

2. UNIT IV
ORGANISING & STAFFING
Nature and purpose of organization, principles of
organization, types of organization, formal and
informal organization, types of organization structure,
departmentation, importance and bases of
departmentaion, committees, meaning and types,
centralization vs decentralization of authority and
responsibility, span of control, MBO and MBE
(meaning only), nature and importance of staffing,
process of recruitment & selection (in brief)
2
Mr.T.Somasundaram

3. ORGANIZING
Definition:
“Organizing is the process of defining
and grouping the activities of the enterprise
and establishing the authority relationships among them”.
- Haimann
“Organizing is the grouping of activities necessary to
attain objectives, the assignment of each grouping to a
manager with authority necessary to supervise it, and the
provision for co-ordination and vertically in the enterprise
structure”.
- Koontz and O’Donnel
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Mr.T.Somasundaram

4. Nature or Characteristics of Organizing:
i) Common Objectives.
ii) Specialization or Division of Labour.
iii) Authority of Structure.
iv) Group of persons.
v) Co-ordination.
vi) Communication.
vii) Environment.
viii) Rules and Regulations.
ix) Universal process.
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Mr.T.Somasundaram

5. Purpose or Importance or Advantages of Organizing:
1. Facilitate administration.
2. Increases the efficiency of management.
3. Facilitates growth and diversification.
4. Ensures optimum use of man and material resources.
5. Facilitates co-ordination and communication.
6. Permits optimum use of technological innovations.
7. Simulates creativity and initiative.
8. Increase in Specialization.
9. Facilitates development of managerial ability.
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Mr.T.Somasundaram

6. Steps in Organizing (Or) Structure and Process of
Organizing:
6
Determination
of activities /
Objectives
Enumeration of
activities /
Objectives
Grouping /
Classification of
activities
Assignment of
duties
Delegation of
Authority
Establishment of
structural
relationship
Co-ordination
of activities
Mr.T.Somasundaram

7. 1. Determination of activities:
 To identify the work that must be done to achieve the goal.
2. Enumeration of activities:
 List down the activities one by one.
3. Grouping of activities:
 Grouping similar activities to form departments, division &
sections.
 It is done based on functions, processes, location &
products.
4. Assignment of duties:
 Groups are assigned to a person most suited for it.
7

8. 5. Delegation of authority:
 Allotment of duties to specified persons is followed
by delegation of authority.
6. Establishment of structural relationship:
 Relationship should be clearly defined when persons
are working together for a common goals.
7. Co-ordination of activities:
 In order to get optimum performance.
8

9. PRINCIPLES OF ORGANIZATION
Principles:
1. Principle of Unity of objective.
2. Principle of division of work or specialization.
3. Principle of efficiency.
4. Principle of span of control.
5. Principle of scalar chain or line of authority.
6. Principle of unity of command.
7. Principle of unity of direction or co-ordination.
8. Principle of authority and responsibility.
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Mr.T.Somasundaram

10. 9. Principle of balance.
10. Principle of flexibility.
11. Principle of continuity.
12. Principle of simplicity.
13. Principle of leadership facilitation.
14. Principle of leadership facilitation.
15. Principle of stability.
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Mr.T.Somasundaram
PRINCIPLES OF ORGANIZATION

11. Types of Organization
Formal Organization:
“The formal organization is a system of well
defined jobs, each bearing a definite measure of
authority, responsibility and accountability”.
- Allen
“A formal organization typically consists of a
classical hierarchical structure in which positions,
responsibility, authority, accountability and the line
of command are clearly defined and established.
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Mr.T.Somasundaram

12. Characteristics of formal organization:
 Formal organization structure is laid down by top
management to achieve organizational goals.
 Formal organization is bound by rules, regulations
and procedures.
 Formal organization is flexible & properly planned.
 Based on principle of division of labour and
efficiency in operations.
 Concentrates more performance of jobs and not on
individuals performing.
 Coordination & control, responsibility and
accountability at all levels.
 In formal organization, coordination proceeds
according to the prescribed patter.
 Unity of command.
12

13. Advantages of formal organization:
Conflict among workers are automatically reduced since
definite boundaries are clearly defined.
Overlapping of responsibility is easily avoided.
Ensure stable organization, motivates the employees.
Enables the people of organization to work together.
Disadvantages or criticisms of formal organization:
It does not consider the sentiments of organizational
members.
It does not consider the goals of individuals and it is
designed to achieve goals of the organization only.
It is bound by rigid rules, regulations and procedures and
this make the achievement of goals difficult.
13

14. Informal Organization:
“Informal organization refers to the relationship
between people in the organization based on personal
attitudes, emotions, prejudices, likes, dislikes etc. an
informal organization is an organization which is not
established by any formal authority, but arises from the
personal and social relations of the people”.
The Informal organization relationship exists under the
formal organization also. The informal organization give a
greater job satisfaction to the individuals and result in
maximum production.
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15. Characteristics of informal organization:
 It arises without any external cause (i.e.) Voluntarily.
 It is created based on similarity. (age, gender, place, caste,
etc.)
 There is no place in organization chart, one of parts of
total organization.
 There is no structure and definiteness to informal
organization.
 Person become members of several informal organization.
 There is no rules and traditions of informal organization
but followed.
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16. Advantages of informal organization:
 It motivates workers and also maintains stability of work.
 It fills up gaps and deficiency of formal organization.
 It fills up gap among abilities of managers.
 It encourage the executives to plan work correctly and act
accordingly.
 It is one of the useful channel of communication.
Disadvantages of informal organization:
 It function in ways that are counter productive and stand in way
of achieving organization objectives.
 Indirectly reduces effort of management to promote greater
productivity.
 Spreads rumour among workers regarding functioning of
organization unnecessarily.
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17. Difference between Formal and Informal Organization:
17
S.No Point of view Formal Organization Informal
Organization
1 Origin Created deliberately and
consciously by frames of
organization
Created
spontaneously and
naturally
2 Purpose Created for achieving
legitimate objectives of
organizations
Created by members
of organization for
social and
psychological
satisfaction
3 Nature Planned and Official Unplanned and
Unofficial
4 Size It may quite large It may be small in
size
5 Nature of groups Stable and continue for
very long period of time
Quite unstable in
nature

18. 18
S.No Point of view Formal Organization Informal
Organization
6 Number of
groups
More Less
7 Structure Definite structure,
mechanical & rational
Structureless,
impersonal &
emotional
8 Authority Authority flows from
top to bottom
Flows upward to
downwards from
horizontally
9 Communication Flows through
prescribed chain of
command
Pass through
informal channels
which don’t have
one single form
10 Control process Rigid rules and
regulations
Group norms and
values

19. Organization structure
Meaning:
It is a system that outlines how certain activities are
directed in order to achieve the goals of an organization.
It include rules, roles and responsibilities.
It determines how information flows between level within
the company.
It looks like a pyramid with a narrow top and broad bottom.
It shows the authority and responsibility relationships
between the various positions in the organization by
showing who reports to whom.
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20. Organization structure
Definition:
Organizational Structure refers to the hierarchical
arrangement of various positions in an enterprise. It defines the
relationship between various positions, departments and persons. It
defines the formal relationship into managerial hierarchy.
Importance of Organization Structure:
 It improve team work and productivity by working together.
 It determines the location of decision making.
 It stimulates creative thinking and initiative among organizational
 members.
 It facilitates growth of enterprise by increasing its capacity.
 It provides pattern of communication and coordination.
 It helps members to know about his roles.
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21. Elements of Organization structure
The seven elements to be considered while designing the
organizational structure are –
1. Work Specialization:
 Each worker is assigned a specific, repetitive task.
 Job will be breaking into small standardized tasks, which makes
people more focused and active.
 Individual employee will specialize in doing part of small task.
2. Departmentation:
 It means division of total work into individual functions and sub
functions.
 These groups are called work units, otherwise it is called
departments.
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22. 3. Chain of Command:
It is line of authority that extends from top of
organization to lowest levels.
It decides amount of authority, responsibility and
accountability at each level of chain.
4. Unity of Command:
It is a process of an employee can receiving the
command from only one superior.
It undermine authority, endanger discipline and disturb
order and stability in case of two or more superiors.
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23. 5. Span of Management:
 It refers to the no. of subordinates who can managed
effectively by superior.
 It is also called span of organization or span of supervision.
6. Centralization and Decentralization:
 Centralization refers to concentration of authority.
 Decentralization refers to dispersion of authority.
7. Formalization:
 Organizational structure is formalized or standardized for
simplicity and efficiency.
 Employees are free to proceed according to their liking, if
formalization is low & they have to behave according to set
rules and regulations.
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24. Types of Organization structure
Organization structure is primarily concerned with the allocation of
tasks and delegation of authority. The five major types of
organization structure are -
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1. Line Organization
2. Functional Structure
3. Line and Staff
Organization
4. Project Organization
5. Matrix Organization

25. 1. Line Organization:
 It is the oldest type of organization structure.
 It has unbroken vertical line through authority flows from top to
the bottom of organization.
 Every manager exercises direct authority to his subordinates.
 This is hierarchical arrangement of authority and no separate
supportive or service units.
(E.g.) Manufacturing manager himself has to arrange for
recruitment, selection and training of workers for production
department.
Line Organization is of two types –
a) Pure Line Organization
b) Departmental Line Organization
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26. a. Pure Line Organization:
 In pure line organization, all persons at a given level perform
same type of work.
 The divisions are solely for purpose of control and direction.
 Departmental divisions are made only for sake of convenience
and control.
 All workers perform the same type of work.
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27. b. Departmental Line Organization:
 It divides the enterprise into different departments which are
convenient for control purposes.
 Unity of control and line of authority flows from top to bottom.
 Different departments are put under control of departmental
managers, where they get orders directly from General Manager.
 Every department has its own line of organization.
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28. Line organization is suitable in following cases -
i) Where business is carried on a small scale and few
subordinates are employed.
ii) Where the work is largely of routine nature and
methods of operation are simple.
iii) Where continuous processes are employed.
(E.g.) Sugar industry.
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29. Advantages:
 Simplicity
 Identification of Authority &
Responsibility
 Cordination
 Orderly Communication
 Economical
 Quick Decisions
 Unity of Command
 Executive Development
Disadvantages:
 Lack of specialisation
 Overloading
 Lack of initiative
 Instability
 Autocratic approach

30. 2. Functional Organization Structure:
 Functional organization is based on concept of ‘Functional
Foremanship’suggested by F.W. Taylor.
 As organization grows in size, line organization provides
inadequate and it becomes necessary to introduce
specialization.
 It is divided into no. of functional areas and each function
managed by expert in that area.
 Every operating executive receives orders from several
functional specialists within a functional department.
(E.g.) Purchase department handles purchases for all
departments. Personnel manager will decide queries related
to salary, promotions, etc.
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31. Functional Organization Structure
31

32. Advantages:
Specialization
Reduction or workload
Easier staffing
Higher efficiency
Scope for expansion
Disadvantages:
Double command
Complexity
Delay in decision-
making
Lack of co-ordination
Expensive

33. 3. Line and Staff Organization:
 Line and Staff organization is a combination of line and
functional structure.
 Line authority flows in a vertical line as in line organization
and staff specialists don’t have power of command over
subordinates in other departments.
 Staff positions are created to support the line managers.
 Staff specialist, has line authority over subordinates in his
own department.
(E.g.) Chief Accountant has command authority over
accountants and clerks in accounts department, but he has
only advisory relationship with other departments.
33

34. Line and Staff Organization
34

35. Advantages:
Expert Advice
Relief to top executives
Quality decisions
Flexibility
Disadvantages:
Line staff conflicts
Confusion
Ineffective staff
Expensive

36. 4. Project Organization Structure:
A project organization is one in which a project
structure is created as a separate unit or division
with a permanent functional structure.
It has workers from various functional departments
who work under overall leadership, control and co-
ordination of a project manager.
Team of specialists and workers from different
functional areas to work on project.
Project team functions under overall control and
leadership of project manager.
36

37. Project Organization Structure
37

38. Advantages:
Concentrated attention on project work
Advantages of team specialization
Timely completion of the project.
Disadvantages:
Problem pf co-ordination
Unclearly defined relationships
Feeling of insecurity among personnel

39. 5. Matrix Organization Structure:
 Matrix structure is a hybrid organizational form consists both
project and functional structures.
 It has dimensional pattern to meet problems of growing size and
complexity of undertakings.
 In project structure, separate groups are created for managing
and completing responsibility assigned to one project manager.
(suitable for small no. of projects).
 In matrix structure, responsibility are shared with others in
organization. (suitable for large no. of projects).
“Matrix organization is any organization that
employs multiple command structure but also related support
mechanism and an associated organizational culture and
behaviour pattern”.
39

40. 40
Unit 3 - POM Mr.T.Somasundaram
Matrix Organization Structure

41. Advantages:
Best utilization of organizational resources.
Flexible Structure.
Development of Personnel.
High motivation and morale of employees.
Disadvantages:
Confusion caused by double line of command.
Phenomenon of friction and passing the buck.
Conflicts over division of authority and sharing of
resources.

42. Departmentation
Definition:
“A departmentation is a process of dividing the large
monolithic functional organization into small and flexible
administrative units”. - Knootz & O’Donnell
“Departmentation means the process of grouping of
similar activities of the business into department, division
or other homogeneous units. It is used for the purpose of
facilitating smooth administration at all levels”.
“A department is a distinct area, division or branch of
an enterprise over which a manager has authority for the
performance of specific activities”.
42

43. Importance of Departmentation:
1. Specification – it helps to grow specification in various
activities which leads to improving the efficiency.
2. Feeling of autonomy – gives independent charges to
managers and increases their responsibilities and
efficiency.
3. Fixation of responsibility – responsibilities of work
defined precisely and accurately fixed.
4. Development of Management – it perform specialized
functions and develop for higher positions and facilities
development of managerial personnel by providing
opportunities.
43

44. 5. Facility in Appraisal – managers perform specified
jobs and facilitates administrative control as standards
of performance for each department.
6. Budget Preparation – it makes the preparation of
budget for departments easier as well as for
organization.
7. Proper Supervision – authority for making decisions
is diffused to managers of departments and works are
assigned to each individual department wise,
supervision and control become easier.
44

45. Bases or Types of Departmentation
Types of Departmentation:
1. Departmentation by numbers.
2. Departmentation by time.
3. Departmentation by Enterprise function.
4. Departmentation by territory or Geography.
5. Departmentation by customers.
6. Departmentation by equipment or process.
7. Departmentation by product or service.
45

46. 1. Departmentation by numbers:
 It is created on basis of number of persons forming the
department.
 Each group is controlled by supervisor or an executive.
(E.g.) Army soldiers are grouped into squads, companies, brigades
and regiments on basis of number prescribed for each unit.
 In manufacturing unit, this basis is followed at lower level of
hierarchy.
Disadvantages:
 It requires more specialized and different skills person in
advanced technology world.
 Specialized person in groups are frequently more efficient than
those based on numbers.
 It is useful at lower level of organization structure.
46

47. 2. Departmentation by Time:
 Business activities are grouped together on the basis of time of
performance.
(E.g.) Manufacturing unit working in three shifts of eight hours each per day
may group the activities shift wise and having separate department for each
shift.
Advantages:
 Service rendered around the clock basis.
 It is possible to use processes that can’t be interrupted.
 Expensive capital equipment can be used (i.e.) 24 hrs/day.
 Part time work for the students those studying during the day.
Disadvantages:
 Supervising may be lacking during night shift.
 Difficult to switch from a day shift to night shift.
 Create problems in coordination and communication.
 Overtime rates can increase the cost of product.
47

48. 3. Departmentation by Enterprise function:
 It is based on activities grouped on basis of functions
which to be performed.
48
President
Vice - President
Managing director
Marketing dept Finance dept
Personal dept
Production dept
•Market
research
• Market
planning
•Sales
administration
•Advertising
•Production
planning
• Production
engineering
•Purchasing
•Tooling
• Repairs
• Recruitment
& selection
• Training
•Labour
•Financial
planning
• Budgets
•General
accounting
•Cost
accounting

49. Advantages:
 It is logical, scientific & time proven, natural method.
 It provides specialization of work which makes maximum utilization
of resources.
 There is proper performance control & facilitates delegation of
authority.
 It facilitates coordination activity with department.
 It eliminates duplication of costs & effective control over a function.
Disadvantages:
 Due to overspecialization, it is difficult to handle problems.
 It discourage communication across functions.
 It increases work load & responsibility of departmental heads.
 It doesn’t offer any scope for training for overall development.
 It grows in size to justify their costs.
 It is difficulties in coordinating the activities of different department.
49

50. 4. Departmentation by Territory or Geography:
 It operates in different geographical areas, each with distinct needs to
create departments alone geographical lines.
 It is grouped in area – wise and incharge of one person and it helps to
increase sales.
 It is used for large scale enterprise which are geographically spread
out like Banking, Insurance, transport, etc.
50
President
Managing director
Northern
region
Eastern
region
Central
region
Western
region
Southern
region

51. Advantages:
 It places responsibility at a lower level & improves coordination.
 The sales increased with help of intimate knowledge.
 It reduces cost of operation and gains saving in time.
 The area manager can specialize in peculiar problems.
 It gives better coordination of activities in regional offices.
 It provide opportunities to managers to improve their skill.
 It facilitates expansion of business.
Disadvantages:
 There is lack of communication due to geographical distance.
 It increase no. of personnel & leads to high operational cost.
 It has friction between regional managers.
 Coordination & control of head office is less effective.
 Duplication of physical facilities due to high operation cost.
 Small business unit can’t manage high operation cost.
51

52. 5. Departmentation by Customers:
 It is preferred when the needs of customers are different in nature.
 This is market oriented where departments are created to serve market
or marketing channels.
(E.g.) bank divided into loan section, corporate banking, agricultural
banking, mortgage loans, etc.
52
Branch Manager
Manager
corporative
loans
Manager
personal
loans
Manager
business
loans
Manager
agricultural
loans
Manager
housing
loans

53. Advantages:
 It facilitates concentration on customer needs and satisfaction.
 Types of customers satisfied through specialized staff.
 It develop specialization among staff members.
 It helps to get feel of market dynamics based on preferences of
customers, competitors, etc.
Disadvantages:
 It requires managers & staff expert in customers problems.
 Duplication of activities.
 Underutilization of facilities and manpower during low demand.
 Grouping of customers & their definition become difficult.
 Production activities can’t be organized under methods of
departmentation.
 Some group of customers may expand and flourish or disappear.
53

54. 6. Departmentation by Process or Equipment:
 Activities are grouped on basis of production processes or equipment
involved.
 The main objective of this type is to achieve efficiency & economy.
(E.g.) Textile mill have departments like spinning, ginning, wearing,
dyeing & printing, packing, sales, etc.
54
President
General Manager
Ginning
Dying and
printing
Weaving
Spinning
Packing
and Sales

55. Advantages:
 It uses specialized technology.
 It provides utilization of specialized equipment & special skill.
 There is no duplication of activities.
 Economy in operation due to location of similar type of machines.
 No interruption of departments or process.
 Specialization & division of labour is followed.
Disadvantages:
 Coordination is difficult.
 Department doesn’t focus their efforts on costs and its reduction.
 Specialists are essential to each process.
 No training to staff members & lack of overall development.
 Separate rooms for operations & other facilities to all process.
 Conflict arise among managers of different processes.
55

56. 7. Departmentation by Product or Service:
 It is formed according to type of product & used in multi-line
corporations (product expansion, diversification, manufacturing, etc).
(E.g.) Hindustan Lever limited have separate division based on product
lines (various products).
56
General Manager
Heavy
Engineering
division Power products
division
Automobile
Earth moving
equipment
division
Finance Sales
Production Personal
Finance Sales
Production Personal
Finance Sales
Production Personal
Sales
Production
Personal

57. Advantages:
 Attention on product line which facilitates product expansion &
diversification.
 Maximum utilization of personal efficiency of workers.
 Improves coordination of functional activities.
 Quick response to changes in environment.
 It provides excellent training ground to managers.
 Better services provided to customers, performance of product is
evaluated.
 Easy for expansion & diversification of activities.
 Possibility for gaining economy in manufacturing.
Disadvantages:
 Possibility of duplication of work, requires more person.
 Creates problem of effective control over product divisions.
 Machines & equipment may not fully utilized.
 Requires additional cost for maintaining a sales personnel.
57

58. Committees
Meaning:
 Committees are formal bodies with a definite structure in
the organization.
 It may review budgets, formulate plans for new products or
make policy decisions.
 Committee have power to make recommendations and
suggestions.
Definition:
“A Committee is a body of persons appointed or elected to
meet on an organized basis for consideration of matters
brought before it.”
58

59. Objectives of Committee:
To have consultation with various persons to secure
their view-points on different aspects of business.
To give participation to various groups of people.
To secure cooperation of different departments.
To coordinate the functioning of different
departments and individuals by bringing about unity
of direction.
To avoid the concentration of too much authority in
a single individual.
59

60. Features of Committee:
 It is a group of person performing a group task with the
object of solving certain problems.
 Committee may formulate plans, make policy decisions or
review the performance of certain units.
 There is no limitation on maximum no. of persons.
 It can deliberate only on matters that brought before it.
 It may be constituted at any level of organization and its
members can drawn from any level or function.
 A person can be member of more than one committee at the
same time.
60

61. Types of Committee:
1. Line and Staff Committees:
 If committee is vested with authority and responsibility to
decide and whose decision is implemented invariably, is
known as a line committee.
(E.g.) Board of Directors is a line committee of the
representatives of its members, which is authorized to take and
implement policy decisions.
 If committee is appointed merely to counsel and advise, is
known as staff committee.
(E.g.) committee composed of heads of various departments
may meet at periodical intervals to counsel the chief executive.
61

62. 2. Formal and Informal Committees:
 When a committee is constituted as a part of organization
structure and has clear-cut jurisdiction is known as formal
committee.
 Informal committee is formed to advise on certain complicated
matters, management doesn’t want to set up formal committee
and don’t form part of organization structure.
3. Standing and Ad hoc Committees:
 Formal committees, which are of permanent character are
known as standing committees.
 Adhoc committees are temporary bodies, which may be forma
or informal.
 This committee is appointed to deal some special problem and
stops functioning after its job over.
62

63. 4. Executive Committees:
It is a committee, which has power to administer the
affairs of the business.
5. Coordinating Committees:
Committee is generally constituted to coordinate the
functioning of different departments.
It is representatives of different department who
meet periodically to discuss their common problems.
63

64. Advantages Disadvantages
The knowledge and experience of
the individuals can be pooled
together.
Constitution of a committee may
be costly both in terms of time
and money.
It is useful for coordinating the
activities among various
organizational units.
The decision making process in a
committee is slow.
Committees are often used to give
representation to various interest
groups.
Many times committee meeting
result into indecision.
Committees are useful for
transmission and sharing of
information.
Many managers try to impose
their own personal decisions
through committees.
It can be used to consolidate broken
authority.
It can be used as a tool of
management development.

65. Centralization and Decentralization
Definition - Centralization:
“It is the process of transferring and assigning decision-making
authority to higher levels of an organizational hierarchy. The span of
control of top managers is relatively broad, and there are relatively
many tiers in the organization.
Characteristics:
• Philosophy / emphasis on: top-down control, leadership, vision,
strategy.
• Decision-making: strong, authoritarian, visionary, charismatic.
• Organizational change: shaped by top, vision of leader.
• Execution: decisive, fast, coordinated. Able to respond quickly to
major issues and changes.
• Uniformity: Low risk of dissent or conflicts between parts of the
organization.
65

66. Advantages:
• Provide Power and prestige for manager
• Promote uniformity of policies, practices and decisions
• Minimal extensive controlling procedures and practices
• Minimize duplication of function
Disadvantages:
• Neglected functions for mid. Level, and less motivated
beside personnel.
• Nursing supervisor functions as a link officer between
nursing director and first-line management.
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Unit 3 - POM Mr.T.Somasundaram

67. Definition - Decentralization:
“It is the process of transferring and assigning decision-making
authority to lower levels of an organizational hierarchy. The span of
control of top managers is relatively small, and there are relatively
few tears in the organization, because there is more autonomy in the
lower ranks.
Characteristics:
• Philosophy / emphasis on: bottom-up, political, cultural and learning
dynamics.
• Decision-making: democratic, participative, detailed.
• Organizational change: emerging from interactions, organizational
dynamics.
• Execution: evolutionary, emergent. Flexible to adapt to minor issues
and changes.
• Participation, accountability: Low risk of not-invented-here behavior.
67

68. Advantages:
• Raise morale and promote interpersonal relationships
• Relieve from the daily administration
• Bring decision-making close to action
• Develop Second-line managers
• Promote employee’s enthusiasm and coordination
• Facilitate actions by lower-level managers
Disadvantages:
• Top-level administration may feel it would decrease their status
• Managers may not permit full and maximum utilization of highly
qualified personnel
• Increased costs. It requires more managers and large staff
• It may lead to overlapping and duplication of effort
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Unit 3 - POM Mr.T.Somasundaram

69. Centralization Decentralization
Unification of powers and authorities, in
the hands of high-level management
Dispersal of powers and authorities by
the top level to the functional level
management.
It is the systematic and consistent
concentration of authority at central
points.
It is the systematic delegation of
authority in an organization
Centralization is best for a small sized
organization
Large sized organization should
practice decentralization.
Formal communication exists in the
centralized organization
Communication stretches in all
directions.
In centralization due to the concentration
of powers in the hands of a single person,
the decision takes time.
On the contrary, decentralization proves
better regarding decision making as the
decisions are taken much closer to the
actions
There are full leadership and
coordination in Centralization
Decentralization shares the burden of
the top level managers.
Lies with the top management.
Multiple persons have the power of
decision making.

70. Span of Control
Definition:
“Span of management means the number of people
managed effectively by a single superior in an organization. It is
also known as “Span of Control”, “Span of Supervision”, “Span
of Authority”, “Span of responsibility”.
“It is better term because control and supervision are
elements of management”.
 Ideal no. of subordinates is four in case of higher level & 8 – 12
in case of bottom level (L.Urwick).
 20 to 30 subordinates can manage effectively by manager
(J.C.Worthy).
 Span of control is related to degree of responsibility (Hamilton).
 6 subordinates in bottom level & 3 in top level is appropriate.
70

71. Factors determining an effective span:
i) Capacity of superior:
 Capacity factors like communication, leadership, decision
making, control, etc affect managing subordinates.
ii) Capacity of subordinates:
 Subordinates who are trained, developed & experienced
need supervision to do their duties.
iii) Nature of work:
 If activities is simple & repetitive, it is possible for manager
to supervise more subordinates.
 Rate of change of work affects the span.
71

72. iv) Type of technology:
 There will be wide span if the firm using mass production &
assembly line technology. Woodward suggested average
span:
1. Mass production and assembly line – 49 persons.
2. Unit or small batch production – 23 persons.
v) Delegation of authority:
 Inadequate or unclear authority delegation.
 If task is clearly delegated to subordinates, then the task will
be performed well.
vi) Clarity of plans:
 If plan is higher (rules, procedures, methods, etc), then
degree of span will be higher.
72

73. vii) Communication technique:
 Oral, face – to – face communication requires more time &
energy on both sides.
 Electronic & other devices will save lot of time and span.
viii) Using of objective standards:
 Use standards to find out errors and faults in performance
of work, then no need to spend more time in watching
performance of subordinates.
ix) Geographical closeness of employees:
 Closer the subordinates in physical location, it is easier for
supervisor to manage more employees.
x) Direction and Co-ordination:
 It needs degree of co-ordination both within the unit and
other units. 73

74. Types of Span of Control:
1. Narrow Span (Tall structure):
 Few no. of subordinates managed by a superior.
 Higher level management adopt narrow span (planning, policy
making).
 It implies 3 to 7 subordinates.
Advantages:
• Close supervision
• Close control of subordinates
• Fast communication
Disadvantages:
• Too much control
• Many levels of management
• High costs
• Excessive distance between lowest level and highest level
74

75. 2. Wide Span (Flat structure):
 Large no. of subordinates managed by a superior.
 Middle level management adopt wide span.
 It implies decentralized or loosely controlled.
Advantages:
• More Delegation of Authority
• Development of Managers
• Clear policies
Disadvantages:
• Overloaded supervisors
• Danger of superiors loss of control
• Requirement of highly trained managerial personnel
• Block in decision making
75

76. Management By Objective (MBO)
Definition:
“MBO can be defined as a management model that attempts
to devise a common objective that is acceptable for both the
management and employees, which will improve the overall
performance of the organization”.
Benefits:
 Motivation – it raises job satisfaction & commitment.
 Clarity of objectives – goals are better understood across the
organization.
 Better Communication – it aids in better relationship between
them and helps coordination.
 Drive to achieve – more urge to achieve the objectives.
 Objectives can set at all levels and for all functions.
76

77. Management By Exception (MBE)
Definition:
“MBE can be defined as a management model that provides
the objectives for employees and only concentrate on significant
deviations from the set objectives or task which will reduce the
energy and time lost on unnecessary monitoring and evaluation
procedures”.
Benefits:
 Managers don’t have to overlook all monitoring procedures and
they can concentrate on their core responsibilities.
 It saves precious time and energy of management.
 Problematic issues can be identified more rapidly.
 Employees are given a task and less supervised and indirectly
motivated by self-driven approach to attain goals.
77

78. Staffing
Meaning:
Staffing follows the planning and organizing function.
Staffing is a continuous process and perform function at all
times.
It includes recruitment, selection, training, development,
transfer, promotion and compensation of personnel.
Definition:
“Staffing is defined as the process involved in
identifying, assessing, placing, evaluating and directing
individuals at work”. - S.Benjamin
78

79. Nature of Staffing:
1. Critical Managerial Function:
 It is most critical managerial function along with planning,
organizing, directing and controlling.
 It depends on workforce.
2. Recurring and Continuous activity:
 It is responsibility of all managers working in all capacities and in all
departments of business.
 It continues throughout the lifecycle.
3. Based on Efficient Management of Personnel:
 HR are managed through system of staffing functions, which should
be fair, dynamic and efficient.
4. Hiring the Right people:
 This is done through a rigorous recruitment process and selecting
most appropriate candidate for suitable job.
79

80. Role of Staffing:
 Massive increase in no. of employees.
 Technical innovations require more skilled and experienced
staff.
 Changing employees role and values.
 Increasing the percentage of women employees.
 Widening the function of management.
 Effective attainment of organization goals.
 Effective utilization of skills and potential of work force.
 Provision of job satisfaction to employees.
 Development and maintenance of quality or work life.
80

81. Importance of Staffing:
Maintenance of a satisfactory and satisfied work –
force.
Preparations for human resource in advance.
Best realization of enterprise objectives.
Best utilization of the human factors.
Job satisfaction.
Development of personnel.
Healthy personnel relations.
81

82. Recruitment and selection
Definition - Recruitment:
“Recruitment is defined as a process to discover the sources of
manpower to meet the requirements of the staffing schedule and to
employ effective measures for attracting that manpower in adequate
numbers to facilitate effective selection of an efficient work force”.
“The process of searching for prospective employees and
stimulating them to apply for jobs in the organization”. - B.Flippo
Sources of Recruitment:
1. Internal sources:
* present permanent employees.
* present temporary / Casual employees
* retired employees
* dependents of deceased, disabled, retired and present
employees.
82

83. Merits of Internal sources:
 It is used as a technique of motivation.
 The morale of employees can be improved.
 The economic needs for promotion, higher income.
 Trade unions can be satisfied.
 Employees become loyal to enterprise.
 Industrial peace is ensured.
2. External sources:
a) Educational and Training Institutes:
 Universities & institutions provide facilities for campus recruitment
and selection.
 Organizations recruit the candidates directly from this source to apply
for jobs.
 Organizations use this source for function of selection and
recruitment.
83

84. b) Private Employment Agencies:
 Agencies are experts in providing employer clients.
 Charge a little fee from their clients & serve as brokers between
employer and employees.
c) Public Employment exchange:
 It is set by government & provide information about vacancies to
candidates.
d) Data banks:
 Collect bio data of candidates from different sources and feed in to
computer.
e) Casual applicants:
 Applying casually for jobs through mail of hand over the application
to personnel department.
f) Trade Unions:
 Approaching trade union leaders for getting suitable employment due
to latter’s intimacy with management.
84

85. Merits of External sources:
 Suitable candidates with knowledge, talent, skills, etc.
 Cost of employees cam minimized due to selecting from this
source.
 Latest knowledge, skills and creative talent.
Recruitment Process:
a) Identification of vacancy (posts to be filled, no. of persons,
duties).
b) Preparation of job description and job specification (tasks,
responsibilities, etc).
c) Selection of sources (internal & external sources).
d) Advertising the vacancy (television, radio, newspaper, internet,
etc).
e) Managing the response (receiving response from job seekers,
sieving process of resumes & call for interview).
85

86. Definition – Selection:
Selection is the process that enables the enterprise to pick up the
candidates with the required qualifications, training and skill for the
job after careful screening and rejecting the undesirables at each
successive step”.
Steps in Selection Process:
a) Screening of Applications:
 Screening the personal bio data, experience, etc to found to be
qualified for consideration of employment.
b) Selection tests:
 To measure the intelligence, ability, aptitude, physical and mental
abilities of applicant (personality test, aptitude test, etc).
c) Preliminary interview:
 It is a short interview to size up the candidate & useful for eliminating
undesirable and unsuitable candidates.
86

87. d) Reference check:
 Persons named in application form are contacted to cross check the
candidate’s character, performance and behaviour.
e) Medical examination:
 Physical qualities like clear vision, perfect hearing, clear tone,
tolerance of hard working conditions etc.
f) Final Interview:
 It is essential step in process of selection & to cross check the
information already obtained & to collect additional information
about candidate.
i) Informal interview ii) Formal interview
iii) Planned interview iv) Depth interview
v) Patterned interview vi) Stress interview
vii) Group interview viii) Panel interview
87

88. g) Approved by appropriate authority:
 Suitable candidates are recommended for selection by selection
committee and asked to report duty to specified person.
h) Placement or Job offer:
 After all formalities, the candidates are placed on their jobs on
probation basis.
Interview:
It is widely used technique for selection of employee.
Types of Interview:
1. Preliminary Interview:
 Exchange of information between candidate and manager about their
job nature, salary, working conditions, etc.
a) Informal interview:
 It is conducted at any place by any person to get basic & job related
information. (E.g.) unemployed candidate meet the manager to
enquire about vacancies in organization.
88

89. b) Unstructured interview:
 Candidate is given freedom to tell bout himself & his family,
etc.
(E.g.) Tell me about your last job.
2. Core Interview:
a) Background Information Interview:
 To collect the information which is not available in application.
(E.g.) family, like, dislikes, etc.
b) Formal and Structured interview:
 All the formalities procedures like time, opening & closing,
intimating the candidates officially. (E.g.) What is your strength
& weakness? Why do you want to change your job?
c) Stress Interview:
 To create situations of stress to find out whether applicant can
perform well in critical situation. (i.e.) emotional strain. 89

90. d) Group Interview:
 Candidate brought together in the room & interviewed by many
experts.
e) Panel Interview:
 There are several interviewers & panel of experts interviews
candidate and judge his performance based on different factor.
f) Depth Interview:
 Candidate’s knowledge and skills examined in this interview
and put minimum constraints on applicant.
3. Decision – making Interview:
 Interviewer examines the interest of candidate in job, career
planning, promotional opportunities, salary, allowances,
promotions, etc.
 Finally top management make decision of candidate
performance.
90

91. Tests:
It is a instrument to measure selected psychological factors.
1. Aptitude test:
 It is used for measuring human performance characteristics
related to possible development of proficiency on specific jobs.
2. Intelligence test:
 It measure the capacity of comprehension, reasoning, verbal
comprehension, numbers, memory, etc.
3. Psychomotor test:
 To find out physical strength, proper co-ordination between
finger and eye for some operations.
4. Personality test:
 To find out personal traits and interests of individuals.
(personal skill, leadership quality, self – confidence, patience &
ambition, etc.) 91

92. 92

93. 93