UNIT III ORGANISING

ORGANIZING

DEFINITION
According to Koontz and O'Donnell, "Organization involves the grouping of activities
necessary to accomplish goals and plans, the assignment of these activities to appropriate
departments and the provision of authority, delegation and co-ordination." Organization involves
division of work among people whose efforts must be co-ordinate to achieve specific objectives
and to implement pre-determined strategies.

3.1 NATURE OR CHARACTERISTICS OF ORGANIZING

From the study of the various definitions given by different management experts we get
the following information about the characteristics or nature of organization,

(1) Division of Work: Division of work is the basis of an organization. In other words, there can
be no organization without division of work. Under division of work the entire work of business
is divided into many departments .The work of every department is further sub-divided into sub-

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works. In this way each individual has to do the saran work repeatedly which gradually makes that
person an expert.

(2) Coordination: Under organizing different persons are assigned different works but the aim of
all these persons happens to be the some - the attainment of the objectives of the enterprise.
Organization ensures that the work of all the persons depends on each other’s work even though it
happens to be different. The work of one person starts from where the work of another person
ends. The non-completion of the work of one person affects the work of everybody. Therefore,
everybody completes his work in time and does not hinder the work of others. It is thus, clear that
it is in the nature of an organization to establish coordination among different works, departments
and posts in the enterprise.
(3) Plurality of Persons: Organization is a group of many persons who assemble to fulfill a
common purpose. A single individual cannot create an organization.

(4) Common Objectives: There are various parts of an organization with different functions to
perform but all move in the direction of achieving a general objective.

(5) Well-defined Authority and Responsibility: Under organization a chain is established

between different posts right from the top to the bottom. It is clearly specified as to what will be
the authority and responsibility of every post. In other words, every individual working in the
organization is given some authority for the efficient work performance and it is also decided
simultaneously as to what will be the responsibility of that individual in case of unsatisfactory
work performance.

(6) Organization is a Structure of Relationship: Relationship between persons working on

different posts in the organization is decided. In other words, it is decided as to who will be the
superior and who will be the subordinate. Leaving the top level post and the lowest level post
everybody is somebody's superior and somebody's subordinate. The person working on the top
level post has no superior and the person working on the lowest level post has no subordinate.

(7) Organization is a Machine of Management: Organization is considered to be a machine of

management because the efficiency of all the functions depends on an effective organization. In
the absence of organization no function can be performed in a planned manner. It is appropriate to
call organization a machine of management from another point of view. It is that machine in which

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no part can afford tube ill-fitting or non-functional. In other words, if the division of work is not
done properly or posts are not created correctly the whole system of management collapses.
(8) Organization is a Universal Process: Organization is needed both in business and non-
business organizations. Not only this, organization will be needed where two or mom than two
people work jointly. Therefore, organization has the quality of universality. (9) Organization is a
Dynamic Process: Organization is related to people and the knowledge and experience of the
people undergo a change. The impact of this change affects the various functions of the
organizations. Thus, organization is not a process that can be decided for all times to come but it
undergoes changes according to the needs. The example in this case can be the creation or abolition
of a new post according to the need.
IMPORTANCE OR ADVANTAGES OF ORGANIZING

Organization is an instrument that defines relations among different people which helps
them to understand as in who happens to be their superior and who is their subordinate. This
information helps in fixing responsibility and developing coordination. In such circumstances the
objectives of the organization can be easily achieved. That is why, it is said that Organization Is a
mechanism of management. In addition to that it helps in the other functions of management like
planning, staffing, leading, controlling, etc. The importance of organization or its merits becomes
clear from the following facts,

(1) Increase In Managerial Efficiency: A good and balanced organization helps the managers to
increase their efficiency. Managers, through the medium of organization, make a proper
distribution of the whole work among different people according to their ability.

(2) Proper Utilization of Resources: Through the medium of organization optimum utilization
of all the available human and material resources of an enterprise becomes possible. Work is
allotted to every individual according to his ability and capacity and conditions ant created to
enable him to utilize his ability to the maximum extent. For example, if an employee possesses the
knowledge of modem machinery but the modem machinery is not available in the organization, in
that case, efforts are made to make available the modem machinery.

(3) Sound Communication Possible: Communication is essential for taking the right decision at
the right time. However, the establishment of a good communication system is possible only

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through an organization. In an organization the time of communication is decided so that all the
useful information reaches the officers concerned which. in turn, helps the decision-making.

(4) Facilitates Coordination: In order to attain successfully the objectives of the organization,
coordination among various activities in the organization is essential. Organization is the only
medium which makes coordination possible. Under organization the division of work is made in
such a manner as to make all the activities complementary to each other increasing their inter-
dependence. Inter-dependence gives rise to the establishment of relations which, in turn, increases
coordination.
(5) Increase in Specialization: Under organization the whole work is divided into different parts.
Competent persons are appointed to handle all the sub-works and by handling a particular work
repeatedly they become specialists. This enables them to have maximum work performance in the
minimum time while the organization gets the benefit of specialization.

(6) Helpful in Expansion: A good organization helps the enterprise in facing competition. When
an enterprise starts making available good quality product at cheap rates, it increases the demand
for its products. In order to meet the increasing demand for its products an organization has to
expand its business. On the other hand, a good organization has an element of flexibility which far
from impeding the expansion work encourages it.

ORGANIZING PROCESS

Organization is the process of establishing relationship among the members of the

enterprise. The relationships are created in terms of authority and responsibility. To organize is
to harmonize, coordinate or arrange in a logical and orderly manner. Each member in the
organization is assigned a specific responsibility or duty to perform and is granted the
corresponding authority to perform his duty. The managerial function of organizing consists in
making a rational division of work into groups of activities and tying together the positions
representing grouping of activities so as to achieve a rational, well coordinated and orderly
structure for the accomplishment of work. According to Louis A Allen, "Organizing involves
identification and grouping the activities to be performed and dividing them among the
individuals and creating authority and responsibility relationships among them for the

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accomplishment of organizational objectives." The various steps involved in this process are:

a) Determination of Objectives:

It is the first step in building up an organization. Organization is always related to certain

objectives. Therefore, it is essential for the management to identify the objectives before starting
any activity. Organization structure is built on the basis of the objectives of the enterprise. That
means, the structure of the organization can be determined by the management only after knowing
the objectives to be accomplished through the organization. This step helps the management not
only in framing the organization structure but also in achieving the enterprise objectives with
minimum cost and efforts. Determination of objectives will consist in deciding as to why the
proposed organization is to be set up and, therefore, what will be the nature of the work to be
accomplished through the organization.

b) Enumeration of Objectives:

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If the members of the group are to pool their efforts effectively, there must be proper
division of the major activities. The first step in organizing group effort is the division of the total
job into essential activities. Each job should be properly classified and grouped. This will enable
the people to know what is expected of them as members of the group and will help in avoiding
duplication of efforts. For example, the work of an industrial concern may be divided into the
following major functions – production, financing, personnel, sales, purchase, etc.

c) Classification of Activities:

The next step will be to classify activities according to similarities and common purposes
and functions and taking the human and material resources into account. Then, closely related and
similar activities are grouped into divisions and departments and the departmental activities are
further divided into sections.

d) Assignment of Duties:

Here, specific job assignments are made to different subordinates for ensuring a certainty
of work performance. Each individual should be given a specific job to do according to his ability
and made responsible for that. He should also be given the adequate authority to do the job assigned
to him. In the words of Kimball and Kimball - "Organization embraces the duties of designating
the departments and the personnel that are to carry on the work, defining their functions and
specifying the relations that are to exist between department and individuals."

e) Delegation of Authority:
Since so many individuals work in the same organization, it is the responsibility of
management to lay down structure of relationship in the organization. Authority without
responsibility is a dangerous thing and similarly responsibility without authority is an empty
vessel. Everybody should clearly know to whom he is accountable; corresponding to the
responsibility authority is delegated to the subordinates for enabling them to show work
performance. This will help in the smooth working of the enterprise by facilitating delegation of
responsibility and authority.

3.2 ORGANIZATION STRUCTURE

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An organization structure is a framework that allots a particular space for a particular department
or an individual and shows its relationship to the other. An organization structure shows the
authority and responsibility relationships between the various positions in the organization by
showing who reports to whom.

It is an established pattern of relationship among the components of the organization. March and
Simon have stated that-"Organization structure consists simply of those aspects of pattern of
behavior in the organization that are relatively stable and change only slowly." The structure of
an organization is generally shown on an organization chart. It shows the authority and
responsibility relationships between various positions in the organization while designing the
organization structure, due attention should be given to the principles of sound organization.

Significance of Organization Structure

• Properly designed organization can help improve teamwork and productivity by providing a
framework within which the people can work together most effectively.

• Organization structure determines the location of decision-making in the organization.

• Sound organization structure stimulates creative thinking and initiative among organizational
members by providing well defined patterns of authority.

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• A sound organization structure facilitates growth of enterprise by increasing its capacity to

handle increased level of authority.

• Organization structure provides the pattern of communication and coordination.

• The organization structure helps a member to know what his role is and how it relates to other
roles.

PRINCIPLES OF ORGANIZATION STRUCTURE

Modern organizational structures have evolved from several organizational theories, which
have identified certain principles as basic to any organization structure.

a) Line and Staff Relationships:

Line authority refers to the scalar chain, or to the superior-subordinate linkages, that extend
throughout the hierarchy (Koontz, O'Donnell and Weihrich). Line employees are responsible for
achieving the basic or strategic objectives of the organization, while staff plays a supporting role
to line employees and provides services. The relationship between line and staff is crucial in
organizational structure, design and efficiency. It is also an important aid to information processing
and coordination.

b) Departmentalization:

Departmentalization is a process of horizontal clustering of different types of functions and

activities on any one level of the hierarchy. Departmentalization is conventionally based on
purpose, product, process, function, personal things and place.

c) Span of Control:

This refers to the number of specialized activities or individuals supervised by one person.
Deciding the span of control is important for coordinating different types of activities effectively.

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d) De-centralization and Centralization:

De-centralization refers to decision making at lower levels in the hierarchy of authority. In

contrast, decision making in a centralized type of organizational structure is at higher levels. The
degree of centralization and de-centralization depends on the number of levels of hierarchy, degree
of coordination, specialization and span of control.

Every organizational structure contains both centralization and de-centralization, but to varying
degrees. The extent of this can be determined by identifying how much of the decision making is
concentrated at the top and how much is delegated to lower levels. Modern organizational
structures show a strong tendency towards de-centralization.

FORMAL AND INFORMAL ORGANIZATION

The formal organization refers to the structure of jobs and positions with clearly defined
functions and relationships as prescribed by the top management. This type of organization is built
by the management to realize objectives of an enterprise and is bound by rules, systems and
procedures. Everybody is assigned a certain responsibility for the performance of the given task
and given the required amount of authority for carrying it out. Informal organization, which does
not appear on the organization chart, supplements the formal organization in achieving
organizational goals effectively and efficiently. The working of informal groups and leaders is not
as simple as it may appear to be. Therefore, it is obligatory for every manager to study thoroughly
the working pattern of informal relationships in the organization and to use them for achieving
organizational objectives.

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FORMAL ORGANIZATION

Chester I Bernard defines formal organization as -"a system of consciously coordinated activities
or forces of two or more persons. It refers to the structure of well-defined jobs, each bearing a
definite measure of authority, responsibility and accountability." The essence of formal
organization is conscious common purpose and comes into being when persons–

(i) Are able to communicate with each other

(ii)Are willing to act and

(iii) Share a purpose.

• Division of labor

• Scalar and functional processes

• Structure and

• Span of control

Thus, a formal organization is one resulting from planning where the pattern of structure has
already been determined by the top management.

Characteristic Features of formal organization

• Formal organization structure is laid down by the top management to achieve organizational
goals.

• Formal organization prescribes the relationships amongst the people working in the
organization.

• The organization structures is consciously designed to enable the people of the organization to
work together for accomplishing the common objectives of the enterprise

• Organization structure concentrates on the jobs to be performed and not the individuals who
are to perform jobs.

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• In a formal organization, individuals are fitted into jobs and positions and work as per the
managerial decisions. Thus, the formal relations in the organization arise from the pattern of
responsibilities that are created by the management.

• A formal organization is bound by rules, regulations and procedures.

• In a formal organization, the position, authority, responsibility and accountability of each level
are clearly defined.

• Organization structure is based on division of labor and specialization to achieve efficiency in

operations.

• A formal organization is deliberately impersonal. The organization does not take into
consideration the sentiments of organizational members.

• The authority and responsibility relationships created by the organization structure are to be
honored by everyone.

• In a formal organization, coordination proceeds according to the prescribed pattern.

Advantages of formal organization

• The formal organization structure concentrates on the jobs to be performed. It, therefore, makes
everybody responsible for a given task.

• A formal organization is bound by rules, regulations and procedures. It thus ensures law and
order in the organization.

• The organization structure enables the people of the organization to work together for
accomplishing the common objectives of the enterprise
Disadvantages or criticisms of formal organization
• The formal organization does not take into consideration the sentiments of organizational
members.

• The formal organization does not consider the goals of the individuals. It is designed to achieve
the goals of the organization only.

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• The formal organization is bound by rigid rules, regulations and procedures. This makes the
achievement of goals difficult.

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. These relations are not developed according to procedures and
regulations laid down in the formal organization structure; generally large formal groups give rise
to small informal or social groups. These groups may be based on same taste, language, culture or
some other factor. These groups are not pre-planned, but they develop automatically within the
organization according to its environment.

Characteristics features of informal organization

• Informal organization is not established by any formal authority. It is unplanned and arises
spontaneously.

• Informal organizations reflect human relationships. It arises from the personal and social
relations amongst the people working in the organization.

• Formation of informal organizations is a natural process. It is not based on rules, regulations

and procedures.

• The inter-relations amongst the people in an informal organization cannot be shown in an

organization chart.

• In the case of informal organization, the people cut across formal channels of communications
and communicate amongst themselves.

• The membership of informal organizations is voluntary. It arises spontaneously and not by

deliberate or conscious efforts.

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• Membership of informal groups can be overlapping as a person may be member of a number

of informal groups.

• Informal organizations are based on common taste, problem, language, religion, culture, etc. it
is influenced by the personal attitudes, emotions, whims, likes and dislikes etc. of the people
in the organization.

Benefits of Informal organization

• It blends with the formal organization to make it more effective.

• Many things which cannot be achieved through formal organization can be achieved through
informal organization.

• The presence of informal organization in an enterprise makes the managers plan and act more
carefully.

• Informal organization acts as a means by which the workers achieve a sense of security and
belonging. It provides social satisfaction to group members.

• An informal organization has a powerful influence on productivity and job satisfaction.

• The informal leader lightens the burden of the formal manager and tries to fill in the gaps in
the manager's ability.

• Informal organization helps the group members to attain specific personal objectives.

• Informal organization is the best means of employee communication. It is very fast.

• Informal organization gives psychological satisfaction to the members. It acts as a safety

valve for the emotional problems and frustrations of the workers of the organization because
they get a platform to express their feelings.

• It serves as an agency for social control of human behavior.

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DIFFERENCES BETWEEN FORMAL AND INFORMAL ORGANIZATION

Formal Organization Informal Organization

1. Formal organization is established with the explicit 1. Informal organization springs on its
aim of achieving well-defined goals. own. Its goals are ill defined and
intangible.

2. Formal organization is bound together by 2. Informal organization is characterized

authority relationships among members. A by a generalized sort of power
hierarchical structure is created, constituting top relationships. Power in informal
management, middle management and supervisory organization has bases other than
management. rational legal right.

3. Formal organization recognizes certain tasks 3. Informal organization does not have
which are to be carried out to achieve its goals. any well-defined tasks.

4. The roles and relationships of people in formal 4. In informal organization the

organization are impersonally defined relationships among people are
interpersonal.

5. In formal organization, much emphasis is placed 5. Informal organization is characterized

on efficiency, discipline, conformity, consistency and by relative freedom, spontaneity, by
control. relative freedom, spontaneity,
homeliness and warmth.

6. In formal organization, the social and 6. In informal organization the

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psychological needs and interests of members of the sociopsychological needs, interests and
organization get little attention. aspirations of members get priority.

7. The communication system in formal organization 7. In informal organization, the

follows certain pre-determined patterns and paths. communication pattern is haphazard,
intricate and natural.

8. Formal organization is relatively slow to respond 8. Informal organization is dynamic and

and adapt to changing situations and realities. very vigilant. It is sensitive to its
surroundings.

3.3 LINE AND STAFF AUTHORITY

In an organization, the line authority flows from top to bottom and the staff authority is
exercised by the specialists over the line managers who advise them on important matters. These
specialists stand ready with their specialty to serve line mangers as and when their services are
called for, to collect information and to give help which will enable the line officials to carry out
their activities better. The staff officers do not have any power of command in the organization as
they are employed to provide expert advice to the line officers. The 'line' maintains discipline and
stability; the 'staff' provides expert information. The line gets out the production, the staffs carries
on the research, planning, scheduling, establishing of standards and recording of performance. The
authority by which the staff performs these functions is delegated by the line and the performance
must be acceptable to the line before action is taken. The following figure depicts the line and staff
authority:

Types of Staff
The staff position established as a measure of support for the line managers may take the following
forms:

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1. Personal Staff: Here the staff official is attached as a personal assistant or adviser to the line
manager. For example, Assistant to managing director.

2. Specialized Staff: Such staff acts as the fountainhead of expertise in specialized areas like R &
D, personnel, accounting etc.

3. General Staff: This category of staff consists of a set of experts in different areas who are meant
to advise and assist the top management on matters called for expertise. For example, Financial
advisor, technical advisor etc.

Features of line and staff organization

• Under this system, there are line officers who have authority and command over the
subordinates and are accountable for the tasks entrusted to them. The staff officers are
specialists who offer expert advice to the line officers to perform their tasks efficiently.

• Under this system, the staff officers prepare the plans and give advice to the line officers and
the line officers execute the plan with the help of workers.

• The line and staff organization is based on the principle of specialization.

Advantages

• It brings expert knowledge to bear upon management and operating problems. Thus, the
line managers get the benefit of specialized knowledge of staff specialists at various levels.

• The expert advice and guidance given by the staff officers to the line officers benefit the
entire organization.

• As the staff officers look after the detailed analysis of each important managerial activity,
it relieves the line managers of the botheration of concentrating on specialized functions.

• Staff specialists help the line managers in taking better decisions by providing expert
advice. Therefore, there will be sound managerial decisions under this system.

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• It makes possible the principle of undivided responsibility and authority, and at the same
time permits staff specialization. Thus, the organization takes advantage of functional
organization while maintaining the unity of command.

• It is based upon planned specialization.

• Line and staff organization has greater flexibility, in the sense that new specialized
activities can be added to the line activities without disturbing the line procedure.

Disadvantages

• Unless the duties and responsibilities of the staff members are clearly indicated by charts
and manuals, there may be considerable confusion throughout the organization as to the
functions and positions of staff members with relation to the line supervisors.

• There is generally a conflict between the line and staff executives. The line managers feel
that staff specialists do not always give right type of advice, and staff officials generally
complain that their advice is not properly attended to.

• Line managers sometimes may resent the activities of staff members, feeling that prestige
and influence of line managers suffer from the presence of the specialists.

• The staff experts may be ineffective because they do not get the authority to implement
their recommendations.

• This type of organization requires the appointment of large number of staff officers or
experts in addition to the line officers. As a result, this system becomes quite expensive.

• Although expert information and advice are available, they reach the workers through the
officers and thus run the risk of misunderstanding and misinterpretation.

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• Since staff managers are not accountable for the results, they may not be performing their
duties well.

• Line mangers deal with problems in a more practical manner. But staff officials who are
specialists in their fields tend to be more theoretical. This may hamper coordination in the
organization.

3.4 DEPARTMENTATION BY DIFFERENT STRATEGIES

DEPARTMENTATION refers to the process of grouping activities into departments.

Departmentation is the process of grouping of work activities into departments, divisions, and
other homogenous units.

Key Factors in Departmentation

• It should facilitate control.

• It should ensure proper coordination.

• It should take into consideration the benefits of specialization.

• It should not result in excess cost.

• It should give due consideration to Human Aspects.

Departmentation takes place in various patterns like departmentation by functions, products,

customers, geographic location, process, and its combinations.

a) FUNCTIONAL DEPARTMENTATION

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Functional departmentation is the process of grouping activities by functions performed. Activities

can be grouped according to function (work being done) to pursue economies of scale by placing
employees with shared skills and knowledge into departments for example human resources,
finance, production, and marketing. Functional departmentation can be used in all types of
organizations.

Advantages:

• Advantage of specialization

• Easy control over functions

• Pinpointing training needs of manager

• It is very simple process of grouping activities.

• Lack of responsibility for the end result

• Overspecialization or lack of general management

• It leads to increase conflicts and coordination problems among departments.

b) PRODUCT DEPARTMENTATION

Product departmentation is the process of grouping activities by product line. Tasks can
also be grouped according to a specific product or service, thus placing all activities related to the
product or the service under one manager. Each major product area in the corporation is under the

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authority of a senior manager who is specialist in, and is responsible for, everything related to the
product line. Dabur India Limited is the India’s largest Ayurvedic medicine manufacturer is an
example of company that uses product departmentation. Its structure is based on its varied product
lines which include Home care, Health care, Personal care and Foods.

Advantages

• It ensures better customer service

• Unprofitable products may be easily determined

• It assists in development of all around managerial talent

• Makes control effective

• It is flexible and new product line can be added easily.

Disadvantages

• It is expensive as duplication of service functions occurs in various product divisions

• Customers and dealers have to deal with different persons for complaint and information
of different products.

c) CUSTOMER DEPARTMENTATION

Customer departmentation is the process of grouping activities on the basis of common

customers or types of customers. Jobs may be grouped according to the type of customer served

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by the organization. The assumption is that customers in each department have a common set of
problems and needs that can best be met by specialists. UCO is the one of the largest commercial
banks of India is an example of company that uses customer departmentation. Its structure is based
on various services which includes Home loans, Business loans, Vehicle loans and Educational
loans.

Advantages

• It focused on customers who are ultimate suppliers of money

• Better service to customer having different needs and tastes

• Development in general managerial skills

Disadvantages

• Sales being the exclusive field of its application, co-ordination may appear difficult
between sales function and other enterprise functions.

• Specialized sales staff may become idle with the downward movement of sales to any
specified group of customers.

d) GEOGRAPHIC DEPARTMENTATION

Geographic departmentation is the process of grouping activities on the basis of territory.

If an organization's customers are geographically dispersed, it can group jobs based on geography.
For example, the organization structure of Coca-Cola Ltd has reflected the company’s operation

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in various geographic areas such as Central North American group, Western North American
group, Eastern North American group and European group

Advantages

• Help to cater to the needs of local people more satisfactorily.

• It facilitates effective control

• Assists in development of all-round managerial skills

Disadvantages

• Communication problem between head office and regional office due to lack of means of
communication at some location

• Coordination between various divisions may become difficult.

• Distance between policy framers and executors

• It leads to duplication of activities which may cost higher.

e) PROCESS DEPARTMENTATION

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Geographic departmentation is the process of grouping activities on the basis of product or

service or customer flow. Because each process requires different skills, process departmentation
allows homogenous activities to be categorized. For example, Bowater Thunder Bay, a Canadian
company that harvests trees and processes wood into newsprint and pulp. Bowater has three
divisions namely tree cutting, chemical processing, and finishing (which makes newsprint).

Departmentation by process: -

Advantages

• Oriented towards end result.

• Professional identification is maintained.

• Pinpoints product-profit responsibility.

Disadvantage

• Conflict in organization authority exists.

• Possibility of disunity of command.

• Requires managers effective in human relation

f) MARTIX DEPARTMENTATION

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In actual practice, no single pattern of grouping activities is applied in the organization

structure with all its levels. Different bases are used in different segments of the enterprise.
Composite or hybrid method forms the common basis for classifying activities rather than one
particular method,. One of the mixed forms of organization is referred to as matrix or grid
organization’s According to the situations, the patterns of Organizing varies from case to case. The
form of structure must reflect the tasks, goals and technology if the originations the type of people
employed and the environmental conditions that it faces. It is not unusual to see firms that utilize
the function and project organization combination. The same is true for process and project as well
as other combinations. For instance, a large hospital could have an accounting department, surgery
department, marketing department, and a satellite center project team that make up its
organizational structure.

Advantages

• Efficiently manage large, complex tasks

• Effectively carry out large, complex tasks

Disadvantages

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• Requires high levels of coordination

• Conflict between bosses

• Requires high levels of management skills

SPAN OF CONTROL
Span of Control means the number of subordinates that can be managed efficiently and effectively
by a superior in an organization. It suggests how the relations are designed between a superior and
a subordinate in an organization.

Factors Affecting Span of control:

a) Capacity of Superior:

Different ability and capacity of leadership, communication affects management of

subordinates.

b) Capacity of Subordinates:

Efficient and trained subordinates affect the degree of span of management.

c) Nature of Work:

Different types of work require different patterns of management.

d) Degree of Centralization or Decentralization:

Degree of centralization or decentralization affects the span of management by affecting

the degree of involvement of the superior in decision making.

e) Degree of Planning:

Plans which can provide rules, procedures in doing the work higher would be the degree
of span of management.

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f) Communication Techniques:

Pattern of communication, its means, and media affect the time requirement in managing
subordinates and consequently span of management.

g) Use of Staff Assistance:

Use of Staff assistance in reducing the work load of managers enables them to manage
more number of subordinates.

h) Supervision of others:

If subordinate receives supervision form several other personnel besides his direct
supervisor. In such a case, the work load of direct superior is reduced and he can supervise
more number of persons.

Span of control is of two types:

1. Narrow span of control: Narrow Span of control means a single manager or supervisor
oversees few subordinates. This gives rise to a tall organizational structure.

Advantages:

• Close supervision

• Close control of subordinates

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• Fast communication

Disadvantages:

• Too much control

• Many levels of management

• High costs

• Excessive distance between lowest level and highest level

2. Wide span of control: Wide span of control means a single manager or supervisor oversees a
large number of subordinates. This gives rise to a flat organizational structure.

Advantages:

• More Delegation of Authority

• Development of Managers

• Clear policies

Disadvantages:

• Overloaded supervisors

• Danger of superiors loss of control

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• Requirement of highly trained managerial personnel

• Block in decision making

3.5 CENTRALIZATION AND DECENTRALIZATION

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.

Advantages of Centralization

• Provide Power and prestige for manager

• Promote uniformity of policies, practices and decisions

• Minimal extensive controlling procedures and practices

• Minimize duplication of function

Disadvantages of Centralization

• Neglected functions for mid. Level, and less motivated beside personnel.

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• Nursing supervisor functions as a link officer between nursing director and first-line
management.
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.

Three Forms of decentralization

• De-concentration. The weakest form of decentralization. Decision making authority is

redistributed to lower or regional levels of the same central organization.

• Delegation. A more extensive form of decentralization. Through delegation the

responsibility for decision-making are transferred to semi-autonomous organizations not
wholly controlled by the central organization, but ultimately accountable to it.

• Devolution. A third type of decentralization is devolution. The authority for decision-

making is transferred completely to autonomous organizational units.

Advantages of Decentralization

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• 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 of Decentralization

• 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

Centralization and Decentralization are two opposite ways to transfer decision-making power and
to change the organizational structure of organizations accordingly.

There must be a good balance between centralization and decentralization of authority and power.
Extreme centralization and decentralization must be avoided.

3.6 DELEGATION OF AUTHORITY

A manager alone cannot perform all the tasks assigned to him. In order to meet the targets,
the manager should delegate authority. Delegation of Authority means division of authority and
powers downwards to the subordinate. Delegation is about entrusting someone else to do parts of
your job. Delegation of authority can be defined as subdivision and sub-allocation of powers to
the subordinates in order to achieve effective results. Elements of Delegation

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1. Authority - in context of a business organization, authority can be defined as the power and
right of a person to use and allocate the resources efficiently, to take decisions and to give
orders so as to achieve the organizational objectives. Authority must be well- defined. All
people who have the authority should know what is the scope of their authority is and they
shouldn’t misutilize it. Authority is the right to give commands, orders and get the things done.
The top level management has greatest authority. Authority always flows from top to bottom.
It explains how a superior gets work done from his subordinate by clearly explaining what is
expected of him and how he should go about it. Authority should be accompanied with an
equal amount of responsibility. Delegating the authority to someone else doesn’t imply
escaping from accountability. Accountability still rest with the person having the utmost
authority.

2. Responsibility - is the duty of the person to complete the task assigned to him. A person who
is given the responsibility should ensure that he accomplishes the tasks assigned to him. If the
tasks for which he was held responsible are not completed, then he should not give explanations
or excuses. Responsibility without adequate authority leads to discontent and dissatisfaction

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among the person. Responsibility flows from bottom to top. The middle level and lower level
management holds more responsibility. The person held responsible for a job is answerable for
it. If he performs the tasks assigned as expected, he is bound for praises. While if he doesn’t
accomplish tasks assigned as expected, then also he is answerable for that.

3. Accountability - means giving explanations for any variance in the actual performance
from the expectations set. Accountability cannot be delegated. For example, if ’A’ is given a
task with sufficient authority, and ’A’ delegates this task to B and asks him to ensure that task
is done well, responsibility rest with ’B’, but accountability still rest with ’A’. The top level
management is most accountable. Being accountable means being innovative as the person
will think beyond his scope of job. Accountability, in short, means being answerable for the
end result. Accountability can’t be escaped. It arises from responsibility.

DELEGATION PROCESS
The steps involved in delegation are given below

1. Allocation of duties – The delegator first tries to define the task and duties to the
subordinate. He also has to define the result expected from the subordinates. Clarity of duty
as well as result expected has to be the first step in delegation.

2. Granting of authority – Subdivision of authority takes place when a superior divides and
shares his authority with the subordinate. It is for this reason; every subordinate should be
given enough independence to carry the task given to him by his superiors. The managers

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at all levels delegate authority and power which is attached to their job positions. The
subdivision of powers is very important to get effective results.
3. Assigning of Responsibility and Accountability – The delegation process does not end
once powers are granted to the subordinates. They at the same time have to be obligatory
towards the duties assigned to them. Responsibility is said to be the factor or obligation of
an individual to carry out his duties in best of his ability as per the directions of superior.
Therefore, it is that which gives effectiveness to authority. At the same time, responsibility
is absolute and cannot be shifted.
4. Creation of accountability – Accountability, on the others hand, is the obligation of the
individual to carry out his duties as per the standards of performance. Therefore, it is said
that authority is delegated, responsibility is created and accountability is imposed.
Accountability arises out of responsibility and responsibility arises out of authority.
Therefore, it becomes important that with every authority position an equal and opposite
responsibility should be attached.
Therefore every manager, i.e., the delegator has to follow a system to finish up the delegation
process. Equally important is the delegate’s role which means his responsibility and accountability
is attached with the authority over to here.

3.7 STAFFING

Staffing involves filling the positions needed in the organization structure by appointing
competent and qualified persons for the job.

The staffing process encompasses man power planning, recruitment, selection, and training.

a) Manpower requirements:

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

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which they are suited for the achievement of goals of the organization. The primary function of
man power planning is to analyze and evaluate the human resources available in the organization,
and to determine how to obtain the kinds of personnel needed to staff positions ranging from
assembly line workers to chief executives.

b) Recruitment:

Recruitment is the process of finding and attempting to attract job candidates who are
capable of effectively filling job vacancies.

Job descriptions and job specifications are important in the recruiting process because they specify
the nature of the job and the qualifications required of job candidates.

c) Selection:

Selecting a suitable candidate can be the biggest challenge for any organization. The
success of an organization largely depends on its staff. Selection of the right candidate builds the
foundation of any organization's success and helps in reducing turnovers.

d) Training and Development:

Training and Development is a planned effort to facilitate employee learning of job-related

behaviors in order to improve employee performance. Experts sometimes distinguish between the
terms “training” and “development”; “training” denotes efforts to increase employee skills on
present jobs, while “development” refers to efforts oriented toward improvements relevant to
future jobs. In practice, though, the distinction is often blurred (mainly because upgrading skills in
present jobs usually improves performance in future jobs).

RECRUITMENT PROCESS

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Recruitment is the process of finding and attempting to attract job candidates who are capable
of effectively filling job vacancies. The recruitment process consists of the following steps

• Identification of vacancy

• Preparation of job description and job specification

• Selection of sources

• Advertising the vacancy

• Managing the response

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a) Identification of vacancy:

The recruitment process begins with the human resource department receiving requisitions for
recruitment from any department of the company. These contain:

• Posts to be filled

• Number of persons

• Duties to be performed

• Qualifications required

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b) Preparation of job description and job specification:

A job description is a list of the general tasks, or functions, and responsibilities of a position.
It may often include to whom the position reports, specifications such as the qualifications or skills
needed by the person in the job, or a salary range. A job specification describes the knowledge,
skills, education, experience, and abilities you believe are essential to performing a particular job.

c) Selection of sources:

Every organization has the option of choosing the candidates for its recruitment processes
from two kinds of sources: internal and external sources. The sources within the organization itself
(like transfer of employees from one department to other, promotions) to fill a position are known
as the internal sources of recruitment. Recruitment candidates from all the other sources (like
outsourcing agencies etc.) are known as the external sources of the recruitment.

d) Advertising the vacancy:

After choosing the appropriate sources, the vacancy is communicated to the candidates by
means of a suitable media such as television, radio, newspaper, internet, direct mail etc.

e) Managing the response:

After receiving an adequate number of responses from job seekers, the sieving process of
the resumes begins. This is a very essential step of the recruitment selection process, because
selecting the correct resumes that match the job profile, is very important. Naturally, it has to be
done rather competently by a person who understands all the responsibilities associated with the
designation in its entirety. Candidates with the given skill set are then chosen and further called
for interview. Also, the applications of candidates that do not match the present nature of the
position but may be considered for future requirements are filed separately and preserved.

The recruitment process is immediately followed by the selection process.

JOB ANALYSIS

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Job Analysis is the process of describing and recording aspects of jobs and specifying the
skills and other requirements necessary to perform the job. The outputs of job analysis are

a) Job description

b) Job specification

Job Description

A job description (JD) is a written statement of what the job holder does, how it is done, under
what conditions it is done and why it is done. It describes what the job is all about, throwing light
on job content, environment and conditions of employment. It is descriptive in nature and defines
the purpose and scope of a job. The main purpose of writing a job description is to differentiate
the job from other jobs and state its outer limits.

Contents

A job description usually covers the following information:

♣ Job title: Tells about the job title, code number and the department where it is done.

♣ Job summary: A brief write-up about what the job is all about.

♣ Job activities: A description of the tasks done, facilities used, extent of supervisory help,
etc.

♣ Working conditions: The physical environment of job in terms of heat, light, noise and
other hazards.

♣ Social environment: Size of work group and interpersonal interactions required to do the
job.

Job Specification

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Job specification summarizes the human characteristics needed for satisfactory job completion. It
tries to describe the key qualifications someone needs to perform the job successfully. It spells out
the important attributes of a person in terms of education, experience, skills, knowledge and
abilities (SKAs) to perform a particular job. The job specification is a logical outgrowth of a job
description. For each job description, it is desirable to have a job specification. This helps the
organization to find what kinds of persons are needed to take up specific jobs.

Contents

A job specification usually covers the following information:

• Education

• Experience

• Skill, Knowledge, Abilities

• Work Orientation Factors

• Age

SELECTION PROCESS

Selecting a suitable candidate can be the biggest challenge for any organisation. The
success of an organization largely depends on its staff. Selection of the right candidate builds the
foundation of any organization's success and helps in reducing turnovers.

Though there is no fool proof selection procedure that will ensure low turnover and high profits,
the following steps generally make up the selection process-

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a) Initial Screening

This is generally the starting point of any employee selection process. Initial Screening eliminates
unqualified applicants and helps save time. Applications received from various sources are
scrutinized and irrelevant ones are discarded.

b) Preliminary Interview

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

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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.

c) Filling Application Form

An candidate who passes the preliminary interview and is found to be eligible for the job is asked
to fill in a formal application form. Such a form is designed in a way that it records the personal
as well professional details of the candidates such as age, qualifications, reason for leaving
previous job, experience, etc.

d) Personal Interview

Most employers believe that the personal interview is very important. It helps them in obtaining
more information about the prospective employee. It also helps them in interacting with the
candidate and judging his communication abilities, his ease of handling pressure etc. In some
Companies, the selection process comprises only of the Interview.

e) References check

Most application forms include a section that requires prospective candidates to put down names
of a few references. References can be classified into - former employer, former customers,
business references, reputable persons. Such references are contacted to get a feedback on the
person in question including his behavior, skills, conduct etc.

f) Background Verification

A background check is a review of a person's commercial, criminal and (occasionally) financial

records. Employers often perform background checks on employers or candidates for employment
to confirm information given in a job application, verify a person's identity, or ensure that the
individual does not have a history of criminal activity, etc., that could be an issue upon
employment.

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g) Final Interview

Final interview is a process in which a potential employee is evaluated by an employer for

prospective employment in their organization. During this process, the employer hopes to

determine whether or not the applicant is suitable for the job. Different types of tests are conducted
to evaluate the capabilities of an applicant, his behavior, special qualities etc. Separate tests are
conducted for various types of jobs.

h) Physical Examination

If all goes well, then at this stage, a physical examination is conducted to make sure that the
candidate has sound health and does not suffer from any serious ailment.

i) Job Offer
A candidate who clears all the steps is finally considered right for a particular job and is presented
with the job offer. An applicant can be dropped at any given stage if considered unfit for the job.

Employee Induction / Orientation

Orientation or induction is the process of introducing new employees to an organization, to their
specific jobs & departments, and in some instances, to their community.

Purposes of Orientation
Orientation isn't a nicety! It is used for the following purposes:
1. To Reduce Startup-Costs:

Proper orientation can help the employee get "up to speed" much more quickly, thereby
reducing the costs associated with learning the job.

2. To Reduce Anxiety:

Any employee, when put into a new, strange situation, will experience anxiety that can
impede his or her ability to learn to do the job. Proper orientation helps to reduce anxiety that

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results from entering into an unknown situation, and helps provide guidelines for behaviour and
conduct, so the employee doesn't have to experience the stress of guessing.

3. To Reduce Employee Turnover:

Employee turnover increases as employees feel they are not valued, or are put in positions
where they can't possibly do their jobs. Orientation shows that the organization values the
employee, and helps provide tools necessary for succeeding in the job.

4. To Save Time for Supervisor & Co-Workers:

Simply put, the better the initial orientation, the less likely supervisors and co-workers will
have to spend time teaching the employee.

5. To Develop Realistic Job Expectations, Positive Attitudes and Job Satisfaction:

It is important that employees learn early on what is expected of them, and what to expect
from others, in addition to learning about the values and attitudes of the organization. While people
can learn from experience, they will make many mistakes that are unnecessary and potentially
damaging.

An orientation program principally conveys 3 types of information, namely:

a) General information about the daily work routine to be followed

b) A review of the organization’s history, founders, objectives, operations & products or services,
as well as how the employee’s job contributes to the organization’s needs.

c) A detailed presentation of the organization’s policies, work rules & employee benefits.

Two Kinds of Orientation

There are two related kinds of orientation. The first we will call Overview Orientation, and deals
with the basic information an employee will need to understand the broader system he or she works
in.

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Overview Orientation includes helping employees understand:

• Management in general

• Department and the branch

• Important policies

• General procedures (non-job specific)

• Information about compensation

• Accident prevention measures

• Employee and union issues (rights, responsibilities)

• Physical facilities

Often, Overview Orientation can be conducted by the personnel department with a little help from
the branch manager or immediate supervisor, since much of the content is generic in nature.

The second kind of orientation is called Job-Specific Orientation, and is the process that is used to
help employees understand:

• Function of the organization,

• Responsibilities,

• Expectations,

• Duties

• Policies, procedures, rules and regulations

• Layout of workplace
• Introduction to co-workers and other people in the broader organization.

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Job specific orientation is best conducted by the immediate supervisor, and/or manager, since
much of the content will be specific to the individual. Often the orientation process will be ongoing,
with supervisors and co-workers supplying coaching.

3.8 CARRER DEVELOPMENT

Career development not only improves job performance but also brings about the
growth of the personality. Individuals not only mature regarding their potential capacities but
also become better individuals.

Purpose of development

Management development attempts to improve managerial performance by imparting

• Knowledge

• Changing attitudes

• Increasing skills

The major objective of development is managerial effectiveness through a planned and a deliberate
process of learning. This provides for a planned growth of managers to meet the future
organizational needs.

Development Process:

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The development process consists of the following steps

1. Setting Development Objectives:

It develops a framework from which executive need can be determined.

2. Ascertaining Development Needs:

It aims at organizational planning & forecast the present and future growth.

3. Determining Development Needs:

This consists of

• Appraisal of present management talent

• Management Manpower Inventory

The above two processes will determine the skill deficiencies that are relative to the future
needs of the organization.

4. Conducting Development Programs:

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It is carried out on the basis of needs of different individuals, differences in their attitudes and
behavior, also their physical, intellectual and emotional qualities. Thus a comprehensive and
well conceived program is prepared depending on the organizational needs and the time & cost
involved.

5. Program Evaluation:

It is an attempt to assess the value of training in order to achieve organizational objectives.

TRAINING
Training is a process of learning a sequence of programmed behaviour. It improves the
employee's performance on the current job and prepares them for an intended job. Purpose of
Training:

1) To improve Productivity: Training leads to increased operational productivity and increased

company profit.

2) To improve Quality: Better trained workers are less likely to make operational mistakes.

3) To improve Organizational Climate: Training leads to improved production and product quality
which enhances financial incentives. This in turn increases the overall morale of the organization.

4) To increase Health and Safety: Proper training prevents industrial accidents.

5) Personal Growth: Training gives employees a wider awareness, an enlarged skill base and that
leads to enhanced personal growth.
Steps in Training Process:

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1) Identifying Training needs: A training program is designed to assist in providing solutions for
specific operational problems or to improve performance of a trainee.

• Organizational determination and Analysis: Allocation of resources that relate to

organizational goal.

• Operational Analysis: Determination of a specific employee behavior required for a

particular task.

• Man Analysis: Knowledge, attitude and skill one must possess for attainment of
organizational objectives

2) Getting ready for the job: The trainer has to be prepared for the job. And also who needs to be
trained - the newcomer or the existing employee or the supervisory staff.

Preparation of the learner:

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• Putting the learner at ease

• Stating the importance and ingredients of the job

• Creating interest

• Placing the learner as close to his normal working position

• Familiarizing him with the equipment, materials and trade terms

3) Presentation of Operation and Knowledge: The trainer should clearly tell, show, illustrate and
question in order to convey the new knowledge and operations. The trainee should be encouraged
to ask questions in order to indicate that he really knows and understands the job.

4) Performance Try out: The trainee is asked to go through the job several times. This gradually
builds up his skill, speed and confidence.

5) Follow-up: This evaluates the effectiveness of the entire training effort

TRAINING METHODS

Training methods can be broadly classified as on-the-job training and off-the-job taining

a) On-the-job training

On the job training occurs when workers pick up skills whilst working along side experienced
workers at their place of work. For example this could be the actual assembly line or offices where
the employee works. New workers may simply “shadow” or observe fellow employees to begin
with and are often given instruction manuals or interactive training programmes to work through.

b) Off-the-job training

This occurs when workers are taken away from their place of work to be trained. This may take
place at training agency or Local College, although many larger firms also have their own training

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centers. Training can take the form of lectures or self-study and can be used to develop more
general skills and knowledge that can be used in a variety of situations. The various types of off-
the-job training are

(i) Instructor presentation: The trainer orally presents new information to the trainees, usually
through lecture. Instructor presentation may include classroom lecture, seminar, workshop, and
the like.
(ii)Group discussion: The trainer leads the group of trainees in discussing a topic.

(iii) Demonstration: The trainer shows the correct steps for completing a task, or shows an example
of a correctly completed task.

(iv) Assigned reading: The trainer gives the trainees reading assignments that provide new
information.

(v) Exercise: The trainer assigns problems to be solved either on paper or in real situations related
to the topic of the training activity.

(vi) Case study: The trainer gives the trainees information about a situation and directs them to
come to a decision or solve a problem concerning the situation.

(vii)Role play: Trainees act out a real-life situation in an instructional setting.

(viii)Field visit and study tour: Trainees are given the opportunity to observe and interact with the
problem being solved or skill being learned.

3.9 CAREER STAGES

What people want from their careers also varies according to the stage of one's career. What
may have been important in an early stage may not be important in a later one. Four distinct career
stages have been identified: trial, establishment/advancement, mid-career, and late career. Each
stage represents different career needs and interests of the individual

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a) Trial stage: The trial stage begins with an individual's exploration of career-related matters and
ends usually at about age 25 with a commitment on the part of the individual to a particular
occupation. Until the decision is made to settle down, the individual may try a number of jobs and
a number of organizations. Unfortunately for many organizations, this trial and exploration stage
results in high level of turnover among new employees. Employees in this stage need opportunities
for self-exploration and a variety of job activities or assignments.

b) Establishment Stage: The establishment/advancement stage tends to occur between ages

25 and 44. In this stage, the individual has made his or her career choice and is concerned with
achievement, performance, and advancement. This stage is marked by high employee productivity
and career growth, as the individual is motivated to succeed in the organization and in his or her
chosen occupation. Opportunities for job challenge and use of special competencies are desired in
this stage. The employee strives for creativity and innovation

through new job assignments. Employees also need a certain degree of autonomy in this stage so
that they can experience feelings of individual achievement and personal success.

c) Mid Career Crisis Sub Stage: The period occurring between the mid-thirties and mid-forties
during which people often make a major reassessment of their progress relative to their original
career ambitions and goals.

d) Maintenance stage: The mid-career stage, which occurs roughly between the ages 45 and 64,
has also been referred to as the maintenance stage. This stage is typified by a continuation of
established patterns of work behavior. The person is no longer trying to establish a place for
himself or herself in the organization, but seeks to maintain his or her position. This stage is viewed
as a mid-career plateau in which little new ground is broken. The individual in this stage may need
some technical updating in his or her field. The employee should be encouraged to develop new
job skills in order to avoid early stagnation and decline.

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e) Late-career stage: In this stage the career lessens in importance and the employee plans for
retirement and seeks to develop a sense of identity outside the work environment.

PERFORMANCE APPRAISAL

Performance appraisal is the process of obtaining, analyzing and recording information

about the relative worth of an employee. The focus of the performance appraisal is measuring and
improving the actual performance of the employee and also the future potential of the employee.
Its aim is to measure what an employee does.

Objectives of Performance appraisal:

• To review the performance of the employees over a given period of time.

• To judge the gap between the actual and the desired performance.

• To help the management in exercising organizational control.

• Helps to strengthen the relationship and communication between superior – subordinates and
management – employees.

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• To diagnose the strengths and weaknesses of the individuals so as to identify the training and
development needs of the future.

• To provide feedback to the employees regarding their past performance.

• Provide information to assist in the other personal decisions in the organization.

• Provide clarity of the expectations and responsibilities of the functions to be performed by the
employees.

• To judge the effectiveness of the other human resource functions of the organization such as
recruitment, selection, training and development.

• To reduce the grievances of the employees.

Process of performance appraisal:

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a) Establishing performance standards:

The first step in the process of performance appraisal is the setting up of the standards
which will be used to as the base to compare the actual performance of the employees. This step
requires setting the criteria to judge the performance of the employees as successful or
unsuccessful and the degrees of their contribution to the organizational goals and objectives. The
standards set should be clear, easily understandable and in measurable terms.

In case the performance of the employee cannot be measured, great care should be taken to
describe the standards.

b) Communicating the standards:

After establishing the standards, it is the responsibility of the management to communicate

the standards to all the employees of the organization.

The employees should be informed and the standards should be clearly explained to the. This will
help them to understand their roles and to know what exactly is expected from them. The standards
should also be communicated to the appraisers or the evaluators and if required, the standards can
also be modified at this stage itself according to the relevant feedback from the employees or the
evaluators.

c) Measuring the actual performance:

The most difficult part of the Performance appraisal process is measuring the actual
performance of the employees that is the work done by the employees during the specified period
of time. It is a continuous process which involves monitoring the performance throughout the year.
This stage requires the careful selection of the appropriate techniques of measurement, taking care
that personal bias does not affect the outcome of the process and providing assistance rather than
interfering in an employees work.

d) Comparing the actual with the desired performance:

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The actual performance is compared with the desired or the standard performance. The
comparison tells the deviations in the performance of the employees from the standards set. The
result can show the actual performance being more than the desired performance or, the actual
performance being less than the desired performance depicting a negative deviation in the
organizational performance. It includes recalling, evaluating and analysis of data related to the
employees’ performance.

e) Discussing results:

The result of the appraisal is communicated and discussed with the employees on one-
to-one basis. The focus of this discussion is on communication and listening. The results, the
problems and the possible solutions are discussed with the aim of problem solving and reaching
consensus. The feedback should be given with a positive attitude as this can have an effect on the
employees’ future performance. The purpose of the meeting should be to solve the problems faced
and motivate the employees to perform better.

f) Decision making:

The last step of the process is to take decisions which can be taken either to improve the
performance of the employees, take the required corrective actions, or the related HR decisions
like rewards, promotions, demotions, transfers etc.

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