MANAGEMENT LEVELS

MANAGEMENT LEVELS NOTES

Introduction

Management is involved in coordinating all factors of production so that
they can contribute positively to the organizational goals. Management
is involved in utilization of human resources and other resources such
as machinery, capital, information and time in the organization. In this
chapter we will address the basic functions of a manager, skills that
effective manager requires , roles that managers have in their
organizations and various management levels and decisions made in each
of this levels.

Definition

Management is the process of achieving organizational goals through
engaging in the four major functions of planning, organizing, leading
and controlling. Another defines management as the process of working
with people and resources to accomplish organizational goals. Management
involves coordinating and overseeing the work activities of others so
that their activities are completed efficiently and effectively.
(Coulter & Robbins 2007) A more comprehensive definition of management
states that management is a process of assembling and using resources
(human, financial, material and information) in a goal directed manner
to accomplish tasks in an organization. Managers are those individuals
who bring together the money manpower materials and machinery necessary
to operate a business. They make decision and decide course of action
that the organization takes. A manager is someone who works with and
through other people by coordinating their work activities in order to
accomplish organizational goals.

Management levels

Managers’ decisions vary with their level in the organization. Each
level requires different skills too given the fact that they perform
different functions. Top management includes president, chief executive
officer, chief financial officer, and vice president (the titles may
differ among organizations). The decisions that are made by managers in
this level are strategic in nature meaning they stretch over five years
and cover the whole organization. Decisions in this level are also
unstructured and include answering questions such as should we expand?
How can we expand? (Is it through acquisition or merger or joint
ventures?) Middle level management includes position such as regional
manager and departmental heads. They are responsible for business’s
short-term decisions. Much of their work involves implementing in their
region or department what the top managers have deliberated. The
decision-making in this level is semi-structured since they have to
conform to the top management decisions. First line management
(supervisory) mostly oversees the employees who are engaged in
day-to-day production process. They deal with issues such as employee
absenteeism and customer complaints. (Madura 2007)

Management Functions

PLANNING

Planning is the function of management that involves setting objectives
and determining a course of action for achieving these objectives.
Planning requires that managers be aware of environmental conditions
facing their organization and forecast future conditions. It also
requires that managers be good decision-makers. Planning is a process
consisting of several steps. The process begins with environmental
scanning, which simply means that planners must be aware of the critical
contingencies facing their organization in terms of economic conditions,
their competitors, and their customers. Planners must then attempt to
forecast future conditions. These forecasts form the basis for planning.
Planners must establish objectives, which are statements of what needs
to be achieved and when. Planners must then identify alternative courses
of action for achieving objectives. After evaluating the various
alternatives, planners must make decisions about the best courses of
action for achieving objectives. They must then formulate necessary
steps and ensure effective implementation of plans. Finally, planners
must constantly evaluate the success of their plans and take corrective
action when necessary. There are many different types of plans and planning.

Strategic Planning
Strategic planning involves analyzing competitive opportunities and
threats, as well as the strengths and weaknesses of the organization,
and then determining how to position the organization to compete
effectively in their environment. Strategic planning has a long time
frame, often three years or more. Strategic planning generally includes
the entire organization and includes formulation of objectives.
Strategic planning is often based on the organization’s mission, which
is its fundamental reason for existence. An organization’s top
management most often conducts strategic planning.

Tactical Planning
Tactical planning is intermediate-range planning that is designed to
develop relatively concrete and specific means to implement the
strategic plan. Middle-level managers often engage in tactical planning.
Tactical planning often has a one- to three-year time horizon.

Operational Planning
Operational planning generally assumes the existence of objectives and
specifies ways to achieve them. Operational planning is short-range
planning that is designed to develop specific action steps that support
the strategic and tactical plans. Operational planning usually has a
very short time horizon, from one week to one year.

ORGANIZING

Organizing is the managerial function of arranging people and resources
to work toward a goal. The purposes of organizing include but are not
limited to determining the tasks to be performed in order to achieve
objectives, dividing tasks into specific jobs, grouping jobs into
departments, specifying reporting and authority relationships,
delegating the authority necessary for task accomplishment, and
allocating and deploying resources in a coordinated fashion.

Organizing plays a central role in the management process. Once plans
are created the manager’s task is to see that they are carried out.
Given a clear mission, core values, objectives, and strategy, the role
of organizing is to begin the process of implementation by clarifying
jobs and working relationships. It identifies who is to do what, who is
in charge of whom, and how different people and parts of the
organization relate to and work with one another. All of this, of
course, can be done in different ways. The strategic leadership
challenge is to choose the best organizational form to fit the strategy
and other situational demands.

Organizing Decisions

When organizing, managers must make decisions about the division of
labour and work specialization, departmentalization, chain of command,
span of management, centralization, and formalization. Collectively,
these decisions are often called organizational design- the process of
structuring an organization

Division of Labour or Specialization
Division of labour contributes to increased productivity and efficiency
by allowing workers to specialize and become proficient at a specific
task. This principle, coupled with technological advances, has made
possible the tremendous productivity of industrial companies during most
of the twentieth century. By the 1940s most manufacturing jobs in
developed nations were highly specialized, with workers performing
specific, standardized, and repetitive tasks. This resulted in reduced
staffing, training, and compensation costs, since highly skilled workers
were often not necessary. In addition, since employees were doing the
same task repetitively, they tended to become very good at it. Despite
the improvements in productivity made possible by the division of
labour, managers must be aware of the negative aspects of
specialization: fatigue, stress, boredom, low quality products,
absenteeism, and turnover. Such problems have led to programs geared
toward job enlargement and job enrichment.

Departmentalization

After the work to be completed is organized into identifiable jobs
through a process of dividing labour, jobs are then combined into
logical sections or departments. Doing so allows for effective
coordination of effort. There are many ways to departmentalize, each of
which has important advantages and disadvantages. One of the most common
forms is functional departmentalization, which involves grouping similar
jobs into a common department, such as accounting, sales, human
resources, and engineering. Another form is product departmentalization,
which involves organizing around an enterprise’s various product lines.
Other ways of departmentalizing include organizing by customer and by
geographic territory. In practice, most large companies use a hybrid
form of departmentalization, which means they combine one or more of the
above methods to form their organizational structure.

Chain of Command
The chain of command is a line of authority extending from the top to
the bottom of the organizational structure. Classic principles of
organizing emphasize that one must be aware of the need to define the
extent of managers’ responsibility and authority by specifying their
place in the chain of command. Another principle of organizing related
to the chain of command is called the unity of command, which states
that a person should have only one superior to whom he or she must report.

Span of Management

The span of management, often called the span of control, is the number
of individuals who are directly responsible to a particular manager. A
classic principle of organizing suggests that there are definite limits
to the number of subordinates one manager can supervise effectively.
When organizing, managers must keep these limits in mind. Wide spans of
management lead to flatter organizational structures with fewer layers
of management, and are thus considered more efficient. However, if spans
become too wide managers may not be able to provide adequate direction
to subordinates. Narrow spans of management lead to tall organizational
structures with many layers of management. Although narrower spans of
management allow for closer supervision of subordinates they have many
drawbacks, including cost, communication problems, and difficulty in
developing the initiative and autonomy of subordinates. In general, the
trend is toward wider spans of management, with an accompanying decrease
in management hierarchy. Technological advances in information
processing and communication have made wider spans of management more
feasible.

Degree of Centralization

Another organizing decision is the degree of centralization in the
organizational structure. If decision-making authority in an
organization is highly centralized, then most major decisions are made
at the upper levels of the structure. Conversely, if decision-making
authority is decentralized, important decisions are often made at lower
levels of the hierarchy. The degree of centralization that is
appropriate for a given organization depends upon many factors,
including the nature of the environmental conditions that face the
enterprise, the characteristics and abilities of lower-level employees,
and the size of the enterprise. Many organizations are favouring a
greater degree of decentralization of their decision-making authority.

Formalization

The degree of formalization in an enterprise refers to the degree to
which there are standardized rules and procedures governing the
activities of employees. A company with a high degree of formalization
is characterized by detailed job descriptions and clearly defined
policies and procedures covering a wide variety of employee behaviours.
Conversely, a company with a low level of formalization is characterized
by nonstructured jobs and fewer explicit policies and procedures. As
companies grow larger, a certain amount of formalization is inevitable.
Employees require some direction in their job responsibilities and in the procedures required for consistency within the organization’s production schema. When organizing, however, managers should be aware of the costs of excessive formalization, which may include stifling employee creativity and innovation as well as slowing the organization’s
responsiveness to critical issues and problems.

Factors Affecting Organizing Decisions

There is no standard formula for the best way to organize an enterprise.
Several factors have been shown to influence organizing decisions. Among
the most important of these factors are strategy, size, environmental
conditions, and technology.

Strategy

Managers organize in order to achieve the objectives of the enterprise
for which they work. Thus, the strategy of the enterprise affects
organizing decisions. Changes in strategy frequently necessitate changes
in the way the enterprise is organized.

Size

Small enterprises tend to exhibit less formalization, centralization,
and complexity in their organizational structure. Nevertheless,
enterprises of the same size may be organized quite differently because
of differences in strategy, environmental conditions, and technology.

Environmental Conditions
The key factor in the external environment that is relevant to
organizing is uncertainty. Some enterprises face competitive
environments that change rapidly and are quite complex, while others
face relatively stable conditions. Generally, turbulent environments
call for organizing decisions that lead to less formalization and
centralization in the organizational structure.

Technology

The processes by which an enterprise transforms inputs into outputs may
also affect organizing decisions. Some research suggests that organizing
decisions that lead to high degrees of formalization, centralization,
and work specialization are more appropriate for routine technologies
and that the converse is true for non-routine technologies.

Organization structure

Organizational structure – is the formal system of task and reporting
relationships that controls, coordinates, and motivates employees so
that they cooperate to achieve an organization’s goals. Organizational
design – is the process by which managers select and manage various
dimensions and components of organizational structure and culture so
that an organization can achieve its goals.

Structure and culture affect:

Behaviour
Motivation
Performance
Teamwork and cooperation
Inter-group and Interdepartmental relationships

What bearing does organizational design have on organizational behaviour?
The way a structure or culture is designed or evolves over time affects
the way people and groups behave within the organization.
Once an organization decides how it wants its members to behave, what
attitudes it wants to encourage, and what it wants its members to
accomplish, it can then design its structure and encourage the
development of the cultural values and norm to obtain these desired
attitudes, behaviours, and goals.

How does an organization determine which attitudes and behaviours to
encourage? An organization bases these design decisions on the
contingencies it faces (a contingency is any event that might possibly
occur and thus must be taken into account in planning).
The three major contingencies that determine what kind of structure and
culture an organization designs:

Organization’s environment
Technology an organization uses
Organization’s strategy.

In developing an organizational structure, managers must decide how to
differentiate and group an organization’s activities by function and
division in a way that achieves organizational goals effectively.’ The
result of this process can be most easily seen in an organizational
chart that shows the relationship between an organization’s functions
and divisions.

Types of Organizational Structures

Functional Structure

Functional structure groups people together because they hold similar
positions in an organization, perform a similar set of tasks, or use the
same kind of skills. This division of labour and specialization allows
an organization to become more effective.

Advantages of a Functional Structure

Coordination Advantages

Easy communication among specialists – People grouped together according
to similarities in their positions can easily communicate and share
information with each other.

Quick decisions – People who approach problems from the same
perspective can often make decisions more quickly and effectively
than can people whose perspectives differ.
Learning – Makes it easier for people to learn from one another’s
experiences.

Thus a functional structure helps employees improve their skills and
abilities and thereby enhances individual and organizational performance.

Motivation Advantages

Facilitates performance evaluation for supervisor – Supervisors are
in a good position to monitor individual performance, reward high
performance, and discourage social loafing. Functional supervisors
find monitoring easy because they usually possess high levels of
skill in the particular function.
Facilitates performance evaluation for peers – Allows group members
to monitor and control one another’s behaviour and performance levels.
Creates teamwork – Can also lead to the development of norms,
values, and group cohesiveness that promote high performance.
Creates a career ladder – Functional managers and supervisors are
typically workers who have been promoted because of their superior
performance.

Disadvantages of a Functional Structure

Serving needs of all products – When the range of products or
services that a company produces increases, the various functions
can have difficulty
Coordination – As organizations attract customer with different
needs, they may find it hard to service these different needs by
using a single set of functions.
Serving needs of all regions – As companies grow, they often expand
their operations nationally, and servicing the needs of different
regional customers by using a single se of manufacturing, sales, or
purchasing functions becomes very
difficult.

Divisional Structures: Product, Market, and Geographic
A divisional structure that overlays functional groupings allow an
organization to coordinate inter-group relationships more effectively
than does a functional structure

Product Structure

Each product division contains the functions necessary to that service
the specific goods or services it produces.

What are the advantages of a product structure?
It increases the division of labour so that the number similar products
can be increased (such as a wider variety of appliances like stoves, or
ovens) expand into new markets and produce totally new kinds of products
(such as when an appliance maker starts to produce computers or air planes).

Market Structure
Market Structure – Group functions into divisions that can be responsive
to the needs of particular types of customers.

Geographic Structure
An organization facing the problem of controlling its activities on a
national or international level is likely to use a geographic structure
and group functions into regional divisions to service customers in
different geographic areas. Each geographic division has access to a
full set of the functions it needs to provide its goods and services.

Advantages of a Divisional Structure

Coordination Advantages

Quality products and customer service – Functions are able to focus
their activities on a specific kind of good, service, or customer.
This narrow focus helps a division to create high-quality products
and provide high-quality customer service.
Facilitates communication – between functions improve decision
making, thereby increasing performance.
Customized management and problem solving – A geographic structure
puts managers closer to the scene of operations than are managers at
central headquarters. Regional managers are well positioned to be
responsive to local situations such as the needs of regional
customers and to fluctuations in resources. Thus regional divisions
are often able to find solutions to region specific problems and to
use available resources more effectively than are managers at
corporate headquarters.
Facilitates teamwork – People are sometimes able to pool their
skills and knowledge and brainstorm new ideas for products or
improved customer service.
Facilitates decision making – As divisions develop a common identity
and approach to solving problems, their cohesiveness in- creases,
and the result is improved decision making.

Motivation Advantages

Clear connection between performance and reward – A divisional
structure makes it relatively easy for organizations to evaluate and
reward the performance of individual divisions and their managers
and to assign rewards in a way that is closely linked to their
performance. Corporate managers can also evaluate one regional
operation against another and thus share ideas between regions and
find ways to improve performance.
Customized service – regional managers and employees are close to
their customers and may develop personal relationships with
them-relationships that may give those managers and employees extra
incentive to perform well.
Identification with division – employees’ close identification with
their division can increase their commitment, loyalty, and job
satisfaction.

Disadvantages of a Divisional Structure

High operating and managing costs – because each division has its
own set of functions, operating costs- the costs associated with
managing an organization-increase. The number of managers in an
organization, for example, increases, because each division has its
own set of sales managers, manufacturing managers, and so on. There
is also a completely new level of management, the corporate level,
to pay for.
Poor communication between divisions – Divisional structures
normally have more managers and more levels of management than
functional structures have, communications problems can arise as
various managers at various levels in various divisions attempt to
coordinate their activities.
Conflicts among divisions – divisions may start to compete for
organizational resources and may start to pursue divisional goals
and objectives at the expense of organizational ones.

Matrix Structure

A complex form of differentiation that some organizations use to control
their activities results in the matrix structure, which simultaneously
groups people in two ways- by the function of which they are a member
and by the product team on which they are currently working In practice,
the employees who are members of the product teams in a matrix structure
have two bosses-a functional boss and a product boss.

Coordination Advantages

Facilitates rapid product development
Maximizes communication and cooperation between team members
Facilitates innovation and creativity
Facilitates face-to-face problem solving (through teams)
Provides a work setting in which managers with different functional
expertise can cooperate to solve non-programmed decision-making
problems.
Facilitates frequent changes of membership in product teams

Motivation Advantages
The matrix structure provides a work setting in which such employees are
given the freedom and autonomy to take responsibility for their work
activities.

Disadvantages of a Matrix Structure

Increase role conflict and role ambiguity- Two bosses making
conflicting demands on a two-boss employee cause role conflict.
Reporting relationships in the matrix makes employees vulnerable to
role ambiguity.
High levels of work stress- Conflict and ambiguity can increase
feelings of stress. Difficulty employees have in demonstrating their
personal contributions to team performance because they move so
often from one team to another.
Limited opportunities for promotion- because most movement is
lateral, from team to team, not vertical to upper management positions.

The extent of these problems explains why matrix structures are used
only by companies that depend on rapid product development for their
survival and that manufacture products designed to meet specific
customer needs. Matrix structures are especially common in high-tech and
biotechnology companies.

STAFFING
The managerial function of staffing involves manning the organization
structure through proper and effective selection, appraisal and
development of the personnel to fill the roles assigned to the
employers/workforce. According to Theo Haimann, “Staffing pertains to
recruitment, selection, development and compensation of subordinates.”

Nature of Staffing Function

Staffing is an important managerial function- Staffing function is
the most important managerial act along with planning, organizing,
directing and controlling. The operations of these four functions
depend upon the manpower
which is available through staffing function.
Staffing is a pervasive activity- As staffing function is carried
out by all mangers and in all types of concerns where business
activities are carried out.
Staffing is a continuous activity- This is because staffing function
continues throughout the life of an organization due to the
transfers and promotions that take place.
The basis of staffing function is efficient management of personnel-
Human resources can be efficiently managed by a system or proper
procedure, that is, recruitment, selection, placement, training and
development, providing remuneration, etc.
Staffing helps in placing right men at the right job. It can be done
effectively through proper recruitment procedures and then finally
selecting the most suitable candidate as per the job requirements.
Staffing is performed by all managers depending upon the nature of
business, size of the company, qualifications and skills of managers
etc. In small companies, the Staffing Process – Steps involved in
Staffing

Manpower requirements- The very first step in staffing is to plan the
manpower inventory required by a concern in order to match them with the
job requirements and demands. Therefore, it involves forecasting and
determining the future manpower needs
of the concern.

Recruitment- Once the requirements are notified, the concern invites and
solicits applications according to the invitations made to the desirable
candidates.

Selection- This is the screening step of staffing in which the solicited
applications are screened out and suitable candidates are appointed as
per the requirements.

Orientation and Placement- Once screening takes place, the appointed
candidates are made familiar to the work units and work environment
through the orientation programmes. Placement takes place by putting
right man on the right job.

Training and Development- Training is a part of incentives given to the
workers in order to develop and grow them within the concern. Training
is generally given according to the nature of activities and scope of
expansion in it. Along with it, the workers are developed by providing
them extra benefits of in-depth knowledge of their functional areas.
Development also includes giving them key and important jobs as a test
or examination in order to analyze their performances.

Remuneration- It is a kind of compensation provided monetarily to the
employees for their work performances. This is given according to the
nature of job- skilled or unskilled, physical or mental, etc.
Remuneration forms an important monetary incentive for the employees.

Performance Evaluation- In order to keep a track or record of the
behaviour, attitudes as well as opinions of the workers towards their
jobs, regular assessment is done to evaluate and supervise different
work units in a concern. It is basically concerning to know the
development cycle and growth patterns of the employees in a concern.

Promotion and transfer-Promotion is said to be a non- monetary incentive
in which the worker is shifted from a higher job demanding bigger
responsibilities as well as shifting the workers and transferring them
to different work units and branches of the same organization.

Manpower Planning
Manpower Planning which is also called as Human Resource Planning
consists of putting right number of people, right kind of people at the
right place, right time, doing the right things for which they are
suited for the achievement of goals of the organization. Human Resource
Planning has got an important place in the arena of industrialization.
Human Resource Planning has to be a systems approach and is carried out
in a set procedure. The procedure is as follows:

Analyzing the current manpower inventory
Making future manpower forecasts
Developing employment programmes
Design training programmes

Analyzing the current manpower inventory- Before a manager makes
forecast of future manpower, the current manpower status has to be
analyzed. For this the following things have to be noted-

Type of organization
Number of departments
Number and quantity of such departments
Employees in these work units

Once these factors are registered by a manager, he goes for the future
forecasting. Making future manpower forecasts- Once the factors
affecting the future manpower forecasts are known, planning can be done
for the future manpower requirements in several work units. The Manpower
forecasting techniques commonly employed by the organizations are as
follows:

Expert Forecasts: This includes informal decisions, formal expert
surveys and Delphi technique.
Trend Analysis: Manpower needs can be projected through
extrapolation (projecting past trends), indexation (using base year
as basis), and statistical analysis (central tendency measure).
Work Load Analysis: It is dependent upon the nature of work load in
a department, in a branch or in a division.
Work Force Analysis: Whenever production and time period has to be
analyzed, due allowances have to be made for getting net manpower
requirements.
Other methods: Several Mathematical models, with the aid of
computers are used to forecast manpower needs, like budget and
planning analysis, regression, new venture analysis.

Developing employment programmes- Once the current inventory is compared
with future forecasts, the employment programmes can be framed and
developed accordingly, which will include recruitment, selection
procedures and placement plans.

Design training programmes- These will be based upon extent of
diversification, expansion plans, development programmes etc. Training
programmes depend upon the extent of improvement in technology and
advancement to take place. It is also done to
improve upon the skills, capabilities, knowledge of the workers.

Importance of Manpower Planning

Key to managerial functions- The four managerial functions, i.e.,
planning, organizing, directing and controlling are based upon the
manpower. Human
Efficient utilization- Efficient management of personnel’s becomes
an important function in the industrialization world of today.
Setting of large scale enterprises requires management of large
scale manpower. It can be effectively done through staffing function.
Motivation- Staffing function not only includes putting right men on
right job, but it also comprises of motivational programmes, i.e.,
incentive plans to be framed for further participation and
employment of employees in a concern. Therefore, all types of
incentive plans become an integral part of staffing function.
Better human relations- A concern can stabilize itself if human
relations develop and are strong. Human relations become strong
trough effective control, clear communication, effective supervision
and leadership in a concern. Staffing function also looks after
training and development of the work force which leads to
co-operation and better human relations.
Higher productivity- Productivity level increases when resources are
utilized in best possible manner. Higher productivity is a result of
minimum wastage of time, money, efforts and energies. This is
possible through the staffing and it’s related activities (
Performance appraisal, training and development, remuneration)

Need of Manpower Planning

Manpower Planning is a two-phased process because manpower planning not
only analyses the current human resources but also makes manpower
forecasts and thereby draw employment programmes. Manpower Planning is
advantageous to firm in following manner:

Shortages and surpluses can be identified so that quick action can
be taken wherever required.
All the recruitment and selection programmes are based on manpower
planning.
It also helps to reduce the labour cost as excess staff can be
identified and thereby overstaffing can be avoided.
It also helps to identify the available talents in a concern and
accordingly training programmes can be chalked out to develop those
talents.
It helps in growth and diversification of business. Through manpower
planning, human resources can be readily available and they can be
utilized in best manner.
It helps the organization to realize the importance of manpower
management which ultimately helps in the stability of a concern.

Obstacles in Manpower Planning
Following are the main obstacles that organizations face in the process
of manpower planning:

Under Utilization of Manpower: The biggest obstacle in case of
manpower planning is the fact that the industries in general are not
making optimum use of their manpower and once manpower planning
begins, it encounters heavy odds in
stepping up the utilization.
Degree of Absenteeism: Absenteeism is quite high and has been
increasing since last few years.
Lack of Education and Skilled Labour: The extent of illiteracy and
the slow pace of development of the skilled categories account for
low productivity in employees. Low productivity has implications for
manpower planning.
Manpower Control and Review:

Any increase in manpower is considered at
the top level of management
On the basis of manpower plans, personnel budgets are prepared.
These act as control mechanisms to keep the manpower under certain
broadly defined limits.
The productivity of any organization is usually calculated using the
formula:
Productivity = Output / Input
But a rough index of employee productivity is calculated as follows:
Employee Productivity = Total Production / Total no. of employees
Exit Interviews, the rate of turnover and rate of absenteeism are
source of vital information on the satisfaction level of manpower.
For conservation of Human Resources and better utilization of men
studying these conditions, manpower control would have to take into
account the data to make meaningful analysis.
Extent of Overtime: The amount of overtime paid may be due to real
shortage of men, ineffective management or improper utilization of
manpower. Manpower control would require a careful study of overtime
statistics.

Types of Recruitment

Recruitment is of 2 types

Internal Recruitment – is a recruitment which takes place within the
concern or organization. Internal sources of recruitment are readily
available to an organization. Internal sources are primarily three –
Transfers, promotions and Reemployment of ex-employees. Re-employment of
ex-employees is one of the internal sources of recruitment in which
employees can be invited and appointed to fill vacancies in the concern.
There are situations when ex-employees provide unsolicited applications
also. Internal recruitment may lead to increase in employee’s
productivity as their motivation level increases. It also saves time,
money and efforts. But a drawback of internal recruitment is that it
restrains the organization from new blood. Also, not all the manpower
requirements can be met through internal recruitment. Hiring from
outside has to be done.
Internal sources are primarily 3:

Transfers
Promotions (through Internal Job Postings) and
Re-employment of ex-employees – Re-employment of ex-employees is one
of the internal sources of recruitment in which employees can be
invited and appointed to fill vacancies in the concern. There are
situations when ex-employees provide unsolicited applications also.

External Recruitment – External sources of recruitment have to be
solicited fromoutside the organization. External sources are external to
a concern. But it involves lot of time and money .The external sources
of recruitment include – Employment at factory gate, advertisements,
employment exchanges, employment agencies, educational institutes,
labour contractors, recommendations etc.

Employment at Factory Level – This a source of external recruitment
in which the applications for vacancies are presented on bulletin boards
outside the Factory or at the Gate. This kind of recruitment is
applicable generally where factory workers are to be appointed. There
are people who keep on soliciting jobs from one place to another. These
applicants are called as unsolicited applicants. These types of workers
apply on their own for their job. For this kind of recruitment workers
have a tendency to shift from one factory to another.
Advertisement – It is an external source which has got an important
place in recruitment procedure. The biggest advantage of advertisement
is that it covers a wide area of market and scattered applicants can get
information from advertisements. Medium used is Newspapers and Television.
Employment Exchanges – There are certain Employment exchanges which
are run by government. Most of the government undertakings and concerns
employ people through such exchanges. Now-a-days recruitment in
government agencies has become compulsory through employment exchange.
Employment Agencies – There are certain professional organizations which look towards recruitment
and employment of people, i.e. these private agencies run by private
individuals supply required manpower to needy concerns.
Educational Institutions

There are certain professional
Institutions which serve as an external source for recruiting fresh
graduates from these institutes. This kind of recruitment done through
such educational

Recommendations There are certain people who have experience in a
particular area. They enjoy goodwill and a stand in the company. There
are certain vacancies which are filled by recommendations of such
people. The biggest drawback of this source is that the company has to
rely totally on such people which can later on prove to be inefficient.
Labour Contractors – These are the specialist people who supply
manpower to the Factory or Manufacturing plants. Through these
contractors, workers are appointed on contract basis, i.e. for a
particular time period. Under conditions when these contractors leave
the organization, such people who are appointed have to also leave the
concern.

Employee Selection Process

It is a procedure of matching organizational requirements with the
skills and qualifications of people. Effective selection can be done
only when there is effective matching. By selecting best candidate for
the required job, the organization will get quality performance of
employees. Moreover, organization will face less of absenteeism and
employee turnover problems. By selecting right candidate for the
required job, organization will also save time and money. Proper
screening of candidates takes place during selection procedure. All the
potential candidates who apply for the given job are tested.

But selection must be differentiated from recruitment, though these are
two phases of employment process. Recruitment is considered to be a
positive process as it motivates more of candidates to apply for the
job. It creates a pool of applicants. It is just sourcing of data. While
selection is a negative process as the inappropriate candidates are
rejected here. Recruitment precedes selection in staffing process.
Selection involves choosing the best candidate with best abilities,
skills and knowledge for the required job. The Employee selection
Process takes place in following orderi)

Preliminary Interviews- It is used to eliminate those candidates who do
not meet the minimum eligibility criteria laid down by the organization.
The skills, academic and family background, competencies and interests
of the candidate are examined during preliminary interview. Preliminary
interviews are less formalized and planned than the final interviews.
The candidates are given a brief up about the company and the job
profile; and it is also examined how much the candidate knows about the
company. Preliminary interviews are also called screening interviews.

– The candidates who clear the preliminary interview are required to
fill application blank. It contains data record of the candidates such
as details about age, qualifications, reason for leaving previous job,
experience, etc.

Written Tests– Various written tests conducted during selection
procedure are aptitude test, intelligence test, reasoning test,
personality test, etc. These tests are used to objectively assess the
potential candidate. They should not be biased.

Employment Interviews– It is a one to one interaction between the
interviewer and the potential candidate. It is used to find whether the
candidate is best suited for the required job or not. But such
interviews consume time and money both.
Moreover the competencies of the candidate cannot be judged. Such
interviews may be biased at times. Such interviews should be conducted
properly. No distractions should be there in room. There should be an
honest communication between candidate and interviewer.

Medical examination– Medical tests are conducted to ensure physical
fitness of the potential employee. It will decrease chances of employee
absenteeism.

Appointment Letter– A reference check is made about the candidate
selected and then finally he is appointed by giving a formal appointment
letter.

Orientation and Placement
Once the candidates are selected for the required job, they have to be
fitted as per the qualifications. Placement is said to be the process of
fitting the selected person at the right job or place i.e. fitting
square pegs in square holes and round pegs in round holes.
Once he is fitted into the job, he is given the activities he has to
perform and also told about his duties. The freshly appointed candidates
are then given orientation in order to familiarize and introduce the
company to him. Generally the information given during the orientation
programme includes) Employee’s layout

Type of organizational structure
Departmental goals
Organizational layout
General rules and regulations
Standing Orders
Grievance system or procedure

During Orientation employees are made aware about the mission and vision of the organization, the nature of operation of the organization, policies and programmes of the organization. The main aim of conducting Orientation is to build up confidence, morale and trust of the employee in the new organization, so that he becomes a productive and an efficient employee of the organization and contributes to the organizational success.

The nature of Orientation program varies with the organizational size,
i.e., smaller the organization the more informal is the Orientation and
larger the organization more formalized is the Orientation programme.
Proper Placement of employees will lower the chances of employee’s
absenteeism. The employees will be more satisfied and contended with
their work.

Training of Employees
Training of employees takes place after orientation takes place.
Training is the process of enhancing the skills, capabilities and
knowledge of employees for doing a particular job. Training process
moulds the thinking of employees and leads to quality performance of
employees. It is continuous and never ending in nature.

Importance of Training

Training is crucial for organizational development and success. It is
fruitful to both employers and employees of an organization. An employee
will become more efficient and productive if he is trained well.
Training is given on four basic grounds:

New candidates who join an organization are given training. This
training familiarizes them with the organizational mission, vision,
rules and regulations and the working conditions.
The existing employees are trained to refresh and enhance their
knowledge.
If any updating and amendments take place in technology, training is
given to cope up with those changes. For instance, purchasing new
equipment, changes in
When promotion and career growth becomes important. Training is
given so that employees are prepared to share the responsibilities
of the higher level job.

The benefits of training can be summed up as:

Improves morale of employees- Training helps the employee to get job
security and job satisfaction. The more satisfied the employee is
and the greater is his morale, the more he will contribute to
organizational success and the lesser will be employee absenteeism
and turnover.
Less supervision- A well trained employee will be well acquainted
with the job and will need less of supervision. Thus, there will be
less wastage of time and efforts.
Fewer accidents- Errors are likely to occur if the employees lack
knowledge and skills required for doing a particular job. The more
trained an employee is, the less are the chances of committing
accidents in job and the more proficient the employee becomes.
Chances of promotion- Employees acquire skills and efficiency during
training. They become more eligible for promotion. They become an
asset for the organization.
Increased productivity- Training improves efficiency and
productivity of employees. Well trained employees show both quantity
and quality performance. There is less wastage of time, money and
resources if employees are properly trained.

Ways/Methods of Training
Training is generally imparted in two ways:

On the job training- On the job training methods are those which are
given to the employees within the everyday working of a concern. It
is a simple and cost effective training method. The proficient as
well as semi- proficient employees can be well trained by using such
training method. The employees are trained in
Off the job training- Off the job training methods are those in
which training is provided away from the actual working condition.
It is generally used in case of new employees. Instances of off the
job training methods are workshops,
seminars, conferences, etc. Such method is costly and is effective
if and only if large number of employees have to be trained within a
short time period. Off the job training is also called as vestibule
training i.e., the employees are trained in a
separate area( may be a hall, entrance, reception area etc. known as
a vestibule) where the actual working conditions are duplicated.

Employee Remuneration

Employee Remuneration refers to the reward or compensation given to the
employees for their work performances. Remuneration provides basic
attraction to a employee to perform job efficiently and effectively.
Remuneration leads to employee motivation.
Salaries constitute an important source of income for employees and
determine their standard of living. Salaries affect the employee’s
productivity and work performance. Thus the amount and method of
remuneration are very important for both management and employees.

There are mainly two types of Employee Remuneration

Time Rate Method
Piece Rate Method

Time Rate Method: Under time rate system, remuneration is directly
linked with the time spent or devoted by an employee on the job. The
employees are paid a fixed pre-decided amount hourly, daily, weekly or
monthly irrespective of their output. It is a very simple method of
remuneration. It leads to minimum wastage of resources and lesser
chances of accidents. Time Rate method leads to quality output and this
method is very beneficial to new employees as they can learn their work
without any reduction in their salaries. This method encourages
employees’ unity as employees of a particular group/cadre get equal
salaries.

There are some drawbacks of Time Rate Method, such as, it leads to tight
supervision, indefinite employee cost, lesser efficiency of employees as
there is no distinction made between efficient and inefficient
employees, and lesser morale of employees. Time rate system is more
suitable where the work is non-repetitive in nature and emphasis is more
on quality output rather than quantity output.

Piece Rate Method: It is a method of compensation in which remuneration
is paid on the basis of units or pieces produced by an employee. In this
system emphasis is more on quantity output rather than quality output.
Under this system the determination of employee cost per unit is not
difficult because salaries differ with output. There is less supervision
required under this method and hence the cost per unit of production is
low. This system improves the morale of the employees as the salaries
are directly related with their work efforts. There is greater
work-efficiency in this method.

There are some drawbacks of this method, such as; it is not easily
computable, leads to deterioration in work quality, wastage of
resources, lesser unity of employees, higher cost of production and
insecurity among the employees. Piece rate system is more suitable where
the nature of work is repetitive and quantity is emphasized more than
quality.

DIRECTING

Directing is said to be a process in which the managers instruct, guide
and oversee the performance of the workers to achieve predetermined
goals. Directing is said to be the heart of management process.
Planning, organizing, staffing have no importance if direction function
does not take place. Directing initiates action and it is from here
actual work starts. Direction is said to be consisting of human factors.
In simple words, it can be described as providing guidance to workers is
doing work. In field of management, direction is said to be all those
activities which are designed to encourage the subordinates to work
effectively and efficiently. According to Human, “Directing consists of
process or technique by which instruction can be issued and operations
can be carried out as originally planned”

Therefore, Directing is the function of guiding, inspiring, overseeing
and instructing people towards accomplishment of organizational goals.

Direction has got following characteristics:

Pervasive Function – Directing is required at all levels of
organization. Every manager provides guidance and inspiration to his
subordinates.
Continuous Activity – Direction is a continuous activity as it
continuous throughout the life of organization.
Human Factor – Directing function is related to subordinates and
therefore it is related to human factor. Since human factor is
complex and behaviour is unpredictable, direction function becomes
important.
Creative Activity – Direction function helps in converting plans
into performance. Without this function, people become inactive and
physical resources are meaningless.
Executive Function – Direction function is carried out by all
managers and executives at all levels throughout the working of an
enterprise; a subordinate receives instructions from his superior only.
Delegate Function – Direction is supposed to be a function dealing
with human beings. Human behaviour is unpredictable by nature and
conditioning the people’s behaviour towards the goals of the
enterprise is what the executive does in this function. Therefore,
it is termed as having delicacy in it to tackle human behaviour.

Importance of Directing Function
Directing or Direction function is said to be the heart of management of
process and therefore, is the central point around which accomplishment
of goals take place. A few philosophers call Direction as “Life spark of
an enterprise”. It is also called as on actuating function of management
because it is through direction that the operation of an enterprise
actually starts. Being the central character of enterprise, it provides
many benefits to a concern which are as follows:-

It Initiates Actions – Directions is the function which is the
starting point of the work performance of subordinates. It is from
this function the action takes place, subordinates understand their
jobs and do according to the instructions laid. Whatever are plans
laid, can be implemented only once the actual work starts. It is
there that direction becomes beneficial.
It Ingrates Efforts – Through direction, the superiors are able to
guide, inspire and instruct the subordinates to work. For this,
efforts of every individual towards accomplishment of goals are
required. It is through direction the efforts of every department
can be related and integrated with others. This can be done through
persuasive leadership and effective communication. Integration of
efforts bring effectiveness and stability in a concern.
Means of Motivation – Direction function helps in achievement of
goals. A manager makes use of the element of motivation here to
improve the performances of subordinates. This can be done by
providing incentives or compensation, whether monetary or non –
monetary, which serves as a “Morale booster” to the subordinates
Motivation is also helpful for the subordinates to give the best of
their abilities which ultimately helps in growth.
It Provides Stability – Stability and balance in concern becomes
very important for long term sun survival in the market. This can be
brought upon by the managers with the help of four tools or elements
of direction function – judicious blend of persuasive leadership,
effective communication, strict supervision and efficient
motivation. Stability is very important since that is an index of
growth of an enterprise. Therefore a manager can use of all the four
traits in him so that performance standards can be maintained.
Coping up with the changes – It is a human behaviour that human
beings show resistance to change. Adaptability with changing
environment helps in sustaining planned growth and becoming a market
leader. It is directing function which is of use to meet with
changes in environment, both internal as external. Effective
communication helps in coping up with the changes. It is the role of
manager here to communicate the nature and contents of changes very
clearly to the subordinates. This helps in clarifications, easy
adoption and smooth running of an
Efficient Utilization of Resources – Direction finance helps in
clarifying the role of every subordinate towards his work. The
resources can be utilized properly only when less of wastages,
duplication of efforts, overlapping of performances, etc. don’t take
place. Through direction, the role of subordinates become clear as
manager makes use of his supervisory, the guidance, the instructions
and motivation skill to inspire the subordinates. This helps in
maximum possible utilization of resources of men, machine, materials
and money which helps in reducing costs and increasing profits.

Functions of a Supervisor
Supervisor, being the manager in a direct contact with the operatives,
has got multifarious function to perform. The objective behind
performance of these functions is to bring stability and soundness in
the organization which can be secured through increase in profits which
is an end result of higher productivity. Therefore, a supervisor should
be concerned with performing the following functions –

Planning and Organizing – Supervisor’s basic role is to plan the
daily work schedule of the workers by guiding them the nature of
their work and also dividing the work amongst the workers according
to their interests, aptitudes, skills and interests.
Provision of working conditions – A supervisor plays an important
role in the physical setting of the factory and in arranging the
physical resources at right place. This involves providing proper
sitting place, ventilation, lighting, waterfacilities etc. to
workers. His main responsibility is here to provide healthy and
hygienic condition to the workers.
Leadership and Guidance – A supervisor is the leader of workers
under him. He leads the workers and influences them to work their
best. He also guides the workers by fixing production targets and by
providing them instruction and
guidelines to achieve those targets.
Motivation – A supervisor plays an important role by providing
different incentives to workers to perform better. There are
different monetary and nonmonetary incentives which can inspire the
workers to work better.
Controlling – Controlling is an important function performed by
supervisor. This will involve
Recording the actual performance against the time schedule.
Checking of progress of work.
Finding out deviations if any and making solutions
If not independently solved, reporting it to top management.
Linking Pin – A supervisor proves to be a linking pin between
management and workers. He communicates the policies of management
to workers also passes instructions to them on behalf of management.
On the other hand, he has a close contact with the workers and
therefore can interpret the problems, complaints, suggestions, etc
to the management. In this way, he communicates workers problems and
brings it to the notice of management.
Grievance Handling – The supervisor can handle the grievances of the
workers effectively for this he has to do the following things :-
He can be in direct touch with workers.
By winning the confidence of the workers by solving their problems.
By taking worker problems on humanitarian grounds.
If he cannot tackle it independently, he can take the help and advice of
management to solve it.
Reporting – A supervisor has got an important role to report about
the cost, quality and any such output which can be responsible for
increasing productivity. Factors like cost, output, performance,
quality, etc can be reported continually to the
management.
Introducing new work methods – The supervisor here has to be
conscious about the environment of market and competition present.
Therefore he can innovate the techniques of production. He can shift
the workers into fresh schedules whenever
possible. He can also try this best to keep on changing and
improving to the physical environment around the workers. This will
result in
Higher productivity,
High Morale of Workers,
Satisfying working condition,
Improving human relations,
Higher Profits, and
High Stability
Enforcing Discipline – A supervisor can undertake many steps to
maintain discipline in the concern by regulating checks and
measures, strictness in orders and instructions, keeping an account
of general discipline of factory, implementing penalties and
punishments for the indiscipline workers. All these above steps help
in improving the overall discipline of the factory.

CONTROLLING
Controlling consists of verifying whether everything occurs in
conformities with the plans adopted, instructions issued and principles
established. Controlling ensures that there is effective and efficient
utilization of organizational resources so as to achieve the planned
goals. Controlling measures the deviation of actual performance from the
standard performance, discovers the causes of such deviations and helps
in taking corrective actions According to Brech, “Controlling is a
systematic exercise which is called as a process of checking actual
performance against the standards or plans with a view to ensure
adequate progress and also recording such experience as is gained as a
contribution to possible future needs.”

According to Donnell, “Just as a navigator continually takes reading to
ensure whether he is relative to a planned action, so should a business
manager continually take reading to assure himself that his enterprise
is on right course.”
Controlling has got two basic purposes

It facilitates co-ordination
It helps in planning

Features of Controlling Function
Following are the characteristics of controlling function of management

Controlling is an end function- A function which comes once the
performances are made in conformities with plans.
Controlling is a pervasive function- which means it is performed by
managers at all levels and in all type of concerns.
Controlling is forward looking- because effective control is not
possible without past being controlled. Controlling always look to
future so that follow-up can be made whenever required.
Controlling is a dynamic process- since controlling requires taking
review methods, changes have to be made wherever possible.
Controlling is related with planning- Planning and Controlling are
two inseparable functions of management. Without planning,
controlling is a meaningless exercise and without controlling,
planning is useless. Planning presupposes controlling and
controlling succeeds planning.

Process of Controlling
Controlling as a management function involves following steps:

Establishment of standards- Standards are the plans or the targets which
have to be achieved in the course of business function. They can also be
called as the criterions for judging the performance. Standards
generally are classified into two

Measurable or tangible – Those standards which can be measured and
expressed are called as measurable standards. They can be in form of
cost, output, expenditure, time, profit, etc.
Non-measurable or intangible- There are standards which cannot be
measured monetarily. For example- performance of a manager,
deviation Controlling becomes easy through establishment of these
standards because controlling is exercised on the basis of these
standards.

Measurement of performance- The second major step in controlling is to
measure the performance. Finding out deviations becomes easy through
measuring the actual performance. Performance levels are sometimes easy
to measure and sometimes difficult. Measurement of tangible standards is
easy as it can be expressed in units, cost, money terms, etc.
Quantitative measurement becomes difficult when performance of manager
has to be measured. Performance of a manager cannot be measured in
quantities. It can be measured only by

Attitude of the workers,
Their morale to work,
The development in the attitudes regarding the physical environment, and
Their communication with the superiors.
It is also sometimes done through various reports like weekly,
monthly, quarterly, yearly reports.

Comparison of actual and standard performance- Comparison of actual
performance with the planned targets is very important. Deviation can be
defined as the gap between actual performance and the planned targets.
The manager has to find out two things here- extent of deviation and
cause of deviation. Extent of deviation means that the manager has to
find out whether the deviation is positive or negative or whether the
actual performance is in conformity with the planned performance. The
managers have to exercise control by exception. He has to find out those
deviations which are critical and important for business. Minor
deviations have to be ignored. Major deviations like replacement of
machinery, appointment of workers, quality of raw material, rate of
profits, etc. should be looked upon consciously. Therefore it is said,
“If a manager controls everything, he ends up controlling nothing.” For
example, if stationery charges increase by a Once the deviation is
identified, a manager has to think about various causes which have led
to deviation. The causes can be

Erroneous planning,
Co-ordination loosens,
Implementation of plans is defective, and
Supervision and communication is ineffective, etc.

Taking remedial actions- Once the causes and extent of deviations are
known, the manager has to detect those errors and take remedial measures
for it. There are two alternatives here

Taking corrective measures for deviations which have occurred; and
After taking the corrective measures, if the actual performance is
not in conformity with plans, the manager can revise the targets. It
is here the controlling process comes to an end. Follow up is an
important step because it is only through taking corrective
measures, a manager can exercise controlling.

Relationship between planning and controlling
Planning and controlling are two separate functions of management, yet
they are closely related. The scopes of activities if both are
overlapping to each other. Without the basis of planning, controlling
activities becomes baseless and without controlling, planning becomes a
meaningless exercise. In absence of controlling, no purpose can be
served by. Therefore, planning and controlling reinforce each other.
According to Billy Goetz, “Relationship between the two can be
summarized in the following points

Planning precedes controlling and controlling succeeds planning.
Planning and controlling are inseparable functions of management.
Activities are put on rails by planning and they are kept at right
place through controlling.
The process of planning and controlling works on Systems Approach
which is as follows :
Planning → Results → Corrective Action
Planning and controlling are integral parts of an organization as
both are important for smooth running of an enterprise.
Planning and controlling reinforce each other. Each drives the other
function of management.

In the present dynamic environment which affects the organization, the
strong relationship between the two is very critical and important. In
the present day environment, it is quite likely that planning fails due
to some unforeseen events. There controlling comes to the rescue. Once
controlling is done effectively, it gives us stimulus to make better
plans. Therefore, planning and controlling are inseparable functions of
a business enterprise.