organization Management

Unit 1. Introduction
1.1 Meaning of Organization
An organization is an entity that has a collective goal and is linked to an external environment. The word
is derived from the Greek word organon which means "organ". It is a social unit of people that
is structured and managed to meet a need or to pursue collective goals. All organizations have
a management structure that determines relationships between the different activities and
the members, and subdivides and assigns roles, responsibilities, and authority to carry out different tasks.
Organizations are usually open systems, they affect and are affected by their environment.
All organization has a group of people working together to create a surplus. In business organization, this
surplus is profit. In non-profitable organizations, it may be the satisfaction of the needs.
There are a variety of legal types of organizations, including corporations, governments, non-
governmental organizations, international organizations, armed forces, charities, not-for-profit
corporations, partnerships, cooperatives, universities, and various types of political organizations.
A hybrid organization is a body that operates in both the public sector and the private
sector simultaneously, fulfilling public duties and developing commercial market activities. A voluntary
association is an organization consisting of volunteers. Such organizations may be able to operate
without legal formalities, depending on jurisdiction, including informal clubs.
Organizations may also operate in secret and/or illegally in the case of secret societies, criminal
organizations and resistance movements.
1.2 Meaning of Management
Management in business and organizations is the function that coordinates the efforts of people to
accomplish goals and objectives using available resources efficiently and effectively. It is the process of
designing and maintaining an environment in which individuals working together in groups, efficiently
accomplish selected aims. Management comprises planning, organizing, staffing, leading or directing,
and controlling an organization to accomplish a goal. It also includes resourcing that encompasses the
deployment and manipulation of human resources, financial resources, technological resources,
and natural resources.
1.3 Levels of Management
Many managers and personnel work in an organization. However, they do not work in the same level, but
work at different levels and positions. Hierarchy of these managerial positions are known as levels of
management. Generally there are three levels of management
1. Administrative or Top Level Management
2. Executive or Middle Level Management
3. Supervisory or Lower Level Management
The levels of management in an organization is always represented by a pyramid.

Fig: Levels of Management
Top Level Management
The top level management consists of the Board of Directors (BOD) and the Chief Executive Officer (CEO).
The CEO is also known as the Managing Director (MD) or General Manager (GM). The BOD are the
representative of the shareholders, ie they are selected by the shareholders of the company. Similarly the
CEO is selected by the BOD. The top level management has maximum authority and responsibility. They
are directly responsible for the shareholders, government and the general public. So the success or
failure of an organization largely depends on the planning and decision making of the top level
management.
The main roles of the Top Level Management are
1. Determine the objectives, policies and plans of the organization.
2. Prepare long term plans and budget for the organization
3. Mobilize the available resources (financial, physical)
4. Spending much of the time in planning, organizing and decision making.
The top level management requires more conceptual skills and less technical skills.
Middle Level Management
The middle level management consists of the departmental heads (HOD), Branch Managers (BM) and the
Junior Executives. The departmental heads are the Finance Managers, Purchase Managers, etc. The
Branch Managers are the head of the branch or the local unit. The junior executives are the assistants to
the departmental heads.
The middle level management emphasizes on the following tasks.
1. Give recommendations to the top level management
2. Implement plans and policies made by the top level management
3. Coordinate the activities of all departments
4. Communicate with the top level and the low level management
5. Prepare short term plans
The middle level management requires more managerial and technical skills and less conceptual skills.

Low Level Management
The low level management consists of the foremen, supervisors and the operators. They are usually
selected by the middle level management. They are also known as the Operative Level, Supervisory Level
or the first line of management.
The low level management performs the following activities
1. Direct and mobilize the workers and the employees
2. Develop morale and motivate the employees
3. Maintain a link between the workers and the middle level management
4. Inform the workers about the decisions made by the middle and top level management
5. Report the higher management about the performance, difficulties, demands of the workers
6. Make daily, weekly and monthly plans
The low level management requires working experience, some management skills, and more technical
and communication skills.
1.4 What is management theory?
A management theory is a collection of ideas with general rules on how to manage a business or an
organization. Management theory addresses how managers and supervisors relate to their organizations
in the knowledge of its goals, the implementation of effective means to gets the goals accomplished and
how to motivate employees to perform to the highest standard.
Management theories are implemented to help organization productivity and service quality. Managers
do not use a single management theory when implementing strategies in the workplace. They commonly
use a combination of a number of theories depending on the workplace, purpose, and workforce.
1.4.1 Scientific Management Theory
The scientific management theory was forwarded by Frederick Winslow Taylor (1856-1915) who is also
known as the father of scientific management. The primary concern of the scientific management theory
was to increase productivity through greater efficiency in production and increased pay for workers,
through the application of scientific methods. The principles of scientific management emphasizes on use
of scientific methods, creating group harmony and cooperation, achieving maximum output by improving
the performance and developing the individual workers. The major goal of scientific management theory
is productivity and efficiency.
Fig: Principles of scientific management
One Best Method
Specialization
Worker Education
and Development
Management-
Labor harmony
Scientific Management
-productivity
-efficiency

Scientific Management emphasizes more on planning, specialization, standardization and incentive
system to improve productivity and efficiency. Focus is towards individual worker and
rewards/punishment is based on performance.
The scientific management is based on the following principles:
1. One best Method: There is always one best method of performing each jobs. The management of
an organization should take time and difficulty into considerations to find the best method of
performing each element of the job. There should be no place for guesses or the rule of thumb
and scientific method should be used to d(]vAšZA^}vAšAÁÇ_XAdZŒAZ}µoAo}AA
standardization in doing the job.
2. Specialization: There should be division of work for specialization. Workers should specialize in a
particular job to achieve the highest level of efficiency.
3. Worker Education and Development: Workers are like machine and machines work best when
well-maintained and lubricated. Properly trained and developed workers produce the best result.
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4. Management-Labor harmony: Management and labor should have harmony and cooperation in
their relations and should have common interest towards productivity. Organization should
introduce bonuses and make sure that rising profits has benefits to all involved in the
organization.
Contributions of Scientific Management Theory
1. It promotes mass production.
2. It facilitated job design through specialization and standardization of work.
3. It gave importance to proper selection, training and compensation of workers for improving
efficiency.
4. It introduced rational method to solve management problems. It replaced the rule of thumb
approach of doing work by scientific method.
5. It laid foundation of the modern management theory.
Limitations of Scientific Management Theory
1. It is mechanistic. It has less application in dynamic and complex organizations.
2. It neglects the human aspects and too much emphasis is given to the economic nature of men.
Workers are treated like machines and money is used as a motivator.
3. There is no one best method of doing job in all work situations. Situations should determine the
method of doing the job.
4. Work becomes monotonous and boring as emphasis is on higher productivity.
5. It is mainly applicable to labor intensive work
6. It does not favor group work. It only focusses on efficiency of individual workers
1.4.2 Behavioral Management Theory
The behavioral management theory is also called the human relations theory because it addresses the
human dimension of work. This theory believes that a better understanding of human behavior at work,
such as motivation, conflict, expectations, and group dynamics, always improve productivity.
The behavioral theory views employees as individuals, resources, and assets to be developed and worked
with v not as machines, as in the earlier theories.

Elton Mayo, F.J. Roethlisberger and the Hawthorne studies (for behavioral approach to management)
Elton Mayo's contributions came as part of the Hawthorne studies, a series of experiments that rigorously
applied classical management theory only to reveal its shortcomings. The Hawthorne experiments
consisted of two studies conducted at the Hawthorne Works of the Western Electric Company in Chicago
from 1924 to 1932. The first study was conducted by a group of engineers seeking to determine the
relationship of lighting levels to worker productivity. Surprisingly enough, they discovered that worker
productivity increased as the lighting levels decreased v that is, until the employees were unable to see
what they were doing, after which performance naturally declined.
A few years later, a second group of experiments began. Harvard researchers Mayo and F. J.
Roethlisberger supervised a group of five women in a bank wiring room. They gave the women special
privileges, such as the right to leave their workstations without permission, take rest periods, enjoy free
lunches, and have variations in pay levels and workdays. This experiment also resulted in significantly
increased rates of productivity.
In this case, Mayo and Roethlisberger concluded that the increase in productivity resulted from the
supervisory arrangement rather than the changes in lighting or other associated worker benefits.
Because the experimenters became the primary supervisors of the employees, the intense interest they
displayed for the workers was the basis for the increased motivation and resulting productivity.
Essentially, the experimenters became a part of the study and influenced its outcome. This is the origin of
the term Hawthorne effect, which describes the special attention researchers give to a study's subjects
and the impact that attention has on the study's findings.
The general conclusion from the Hawthorne studies was that human relations and the social needs of
workers are crucial aspects of business management. This principle of human motivation helped
revolutionize the behavioral theories and practices of management.
Contributions of Behavioral Management Theory
1. This theory shifted the focus of management to the human side of organization. The
rational man of scientific management became the social man.
2. This theory stated that social setting and groups are important for productivity.
3. It emphasized employee satisfaction as a key determinant of performance
Limitations of Behavioral Management Theory
1. This theory gave overemphasis on the human variable. They even restricted the scope of
management
2. Financial rewards were ignored for symbolic rewards which may not be always effective
3. Informal groups always do not make the task pleasant. They only make the worker[s day
pleasant.

1.4.3 Contingency Theory of Management
Contingency theory is a class of behavioral theory that claims that there is no best way to organize a
corporation, to lead a company, or to make decisions. Instead, the optimal course of action is contingent
(dependent) upon the internal and external situation. A contingent leader effectively applies their own
style of leadership to the right situation.
This theory states that leadership styles, organization structure, job design, motivational approach,
control system and management of change and conflict should be situation specific.
Some of the contingency variables that determine the management approach and practice are
a. Organization Size: Number of people in an organization
b. Technology
c. Uncertainty: caused by environmental, political and economic changes
d. Individual differences among employees
e. Type of work being done
Contributions of Contingency Theory of Management
1. It is an integrative approach and has practical application. Situations are regarded important for
managerial decisions.
2. It is widely used in modern management practice
Limitations of contingency theory of management
1. This theory is complex and it is difficult to identify relevant contingency variables and their
relationships
2. Every situation is unique and managers may not be able to analyze each and every situations
3. This theory is not applicable for all types of managerial issues
1.4.4 Systems Theory of Management
A system is a goal oriented and composed of interrelated parts that interact with each other and function
as a whole. The systems theory views the organization as a unified whole composed of interacting and
interrelated subsystems. Activity in one part of the organization affects the activities in other parts. The
subsystems of an organization subsystem are:
a. People Subsystem: they are the human resources working in the organization
b. Technology Subsystem: they are equipment, methods, processes and skills
c. Structure Subsystem: they are differentiation of activities and integration of efforts
d. Management Subsystem: they coordinate resources and relate the organization with the
environment
This theory views organization as an input-output system and is one of the recent developments of
management theory. The key features of system theory of management are
a. Goal directed
b. Subsystems: they are parts that interact and interrelated
c. Open or closed: system can be open or closed. Open system interact with the environment while
closed system doesn[t have an environment
d. Synergy: system thinking means that the whole is greater than the sum of its parts (2+2=5). It
leads to synergy which means working together produces more than working alone
e. Boundary: every system has a boundary that separates it from the environment.

f. Flow: a system has flows of information, materials and resources. They enter as inputs from
environment, goes through transformation processes and go back to environment as outputs
g. Feedback: it is getting information about the actual performance. It is the key to system control
and system corrections are always based on feedbacks.
h. Entropy: it is a process of system decline. This happens when organizations fail to make
corrections based on environmental feedback.
Environment
Fig: System view of an organization
1.5 Ownership
Ownership of property may be private, collective or common and property may be of objects, land, real
estate, intellectual property or people. Determining ownerships involves determining who has certain
rights and duties over the property. These right and duties can be separated and held by different parties.
Some of the types of ownership are
a. State ownership: assets that a state or certain state agency has jurisdiction over in terms of its
use. It can be
- government ownership: assets belonging to a body of government. (government offices, land,
vehicles etc)
- public ownership: assets owned by government that are available for public use (roads, lakes,
bridges, parks etc)
b. Personal Ownership: assets and properties belonging to an individual
c. Common Ownership: assets and property that are held in common by all members of society.
(samaj ghars, guthi lands)
d. Collective Ownership: Assets and properties that belong to a collective body of people who
control their use and collect the proceeds of their operation. It can be
- private ownership: has a collective group of owners also known as shareholders who own a
property that is used by employees for the purpose of generating a profit
- cooperative ownership: property that is owned by those who operate and use it. (cooperatives,
community forests etc)
Inputs:
Human
Financial
Physical
Information
Transformation
Technology
Operations
Management
Control
Outputs:
Product
Profit/Loss
information
Employee Behavior
Feedback

Unit 2: Organization
2.1 Meaning of organization
Organizations are human associations usually established to achieve goals through the extensive use of
technology and collective effort. Organizations are complex which operate in an ever changing
environment and have a structure to coordinate efforts. In other words it can be defined as a system
composed of people, structure and technology for achieving common goals in a dynamic environment.
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u}ŒA‰Œ}v_
There exist the following types of organizations
SN Type Owner Motive Examples
1 Business Individual/Group Profit Departmental Stores, Clothing,
Real Estate
2 Service Individual/Group Profit/Service Hospitals, Schools, Colleges
3 Government Country/State Public Welfare Local Government, Ministries,
Police, CDO
4 Mutual
Benefits
Members of a Group Welfare to
members
Clubs, Political Parties,
Exclusive Societies
5 International International
Agency/Government
Public Welfare INGOs, SAARC, UN
2.2 Characteristics of organization
1. Goal Oriented
Goals can be single or multiple. (profit, survival, service, welfare, efficiency)
2. Collection of People
It is a human association and they establish goals
3. Structure
Defines jobs and relationships. It involves differentiation of activities and integration of efforts
4. Technology
To transform inputs into output
5. Continuity
To provide stability
6. Environment
Exist in dynamic environment and environment may be political, economic, socio-cultural and
technological

2.3 Principles of organization
1. Unity of objectives: Organizational goals, departmental goals, and individual goals must be clearly
defined. All goals and objectives must have uniformity. When there is contradiction among different level
of goals, ]ŒAP}oAv[šAAZ]ÀXAdZŒ(}ŒUAµv]šÇA}(A}iš]ÀA]AvŒÇ.
2. Specialization: Sound and effective organization believes on specialization. The term specialization is
related to work and employees. When an employee takes special type of knowledge and skill in any area,
it is known as specialization. Modern business organization needs the specialization, skill and knowledge
by this desired sector of economy and thus, efficiency would be established.
3. Coordination: In an organization, many equipment, tools and methods are used. Coordination can be
obtained by group effort that emphasize on unity of action. Therefore, coordination facilitates in several
management concepts.
4. Authority: Authority is the kind of right and power through which it guides and directs the actions of
others so that the organizational goals can be achieved. It is also related with decision making. It is
provided to a particular position, not to the person, because authority is given by an institution and
therefore it is legal. It generally flows from higher level to lowest level of management. There should be
unbroken line of authority.
5. Responsibility: Authentic body of an organization is top level management, top level management
direct the subordinates. Departmental managers and other personnel take the direction from top level
management to perform the task. Authority is necessary to perform the work .only authority is not
provided to the people but obligation is also provided. So the obligation to perform the duties and task is
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6. Delegation: Process of transferring authority and creation of responsibility between superior and
subordinates to accomplish a certain task is called delegation of authority. Authority is only delegated,
not responsibilities in all levels of management. The authority delegated should be equal to responsibility
7. Efficiency: In enterprise different resources are used. Therese resources must be used in effective
manner. When the organization fulfill the objectives with minimum cost, it is effective. Organization must
always concentrate on efficiency.
8. Unity of command: subordinates should receive orders from single superior at a time and all
subordinates should be accountable to that superior. More superior leads to confusion, delay and so on.
9. Span of control: unlimited subordinates can[t be supervised by manager, this principle thus helps to
determine numerical limit if subordinates to be supervised by a manager. This improves efficiency.
10. Balance: the functional activities their establishment and other performances should be balanced
properly. Authority, centralization, decentralization must be balance equally. This is very challenging job
but efficient management must keep it.
11. Communication: Communication is the process of transformation of information from one person to
another of different levels. It involves the systematic and continuous process of telling, listening and
understanding opinions ideas, feelings, information, views etc, in flow of information. Effective
communication is important
12. Personal ability: for sound organization, human resources is important. Employees must be capable.
Able employees can perform higher. Mainly training and development programs must be encouraged to
develop the skill in the employees
13. Flexibility: organizational structure must be flexible considering the environmental dynamism.
Sometimes, dramatically change may occur in the organization and in that condition, organization should
be ready to accept the change

14. Simplicity: this principles emphasizes the simplicity of organizational structure, the structure if
organization should be simple with minimum number of levels do that its member an understand duties
and authorities.
15. Division of Work: An organization always have work divided between different departments. Division
of work makes it easy and achievable in the given time period.
2.4 Formal Organization
Formal Organization is an intentional structure established by an individual or a group of people under
the legal provisions and includes roles and responsibilities in a fully organized enterprise. A manager can
well organize the activities, if the structure and environment of an organization is formally furnished.
Formal organization must be flexible and there should always be some room for discretion, for the
advantageous utilization of creative talents and for recognition of individual likes and capacities. But still
individual effort in a group situation must be channeled towards group and organization goals.
Characteristics of Formal Organization
κ Well defined rules and regulation
κ Determined objectives and policies
κ Status symbol
κ Limitation on the activities of the individual
κ Strict observance of the principle of co-ordination
κ Messages are communicated through scalar chain
κ Best to attain the objectives of the enterprise.
2.5 Informal Organization
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established or required by the formal organization but formed as people associate with one another.
Characteristics of Informal Organization
κ constantly evolving and diminishing
κ dynamic and responsive
κ excellent at motivating people
κ requires insider knowledge to be seen
κ treats people as per the individuals[ likes and capacities
κ collective decision making

2.6 Organization Chart
An organizational chart is a diagram that shows the structure of an organization and the relationships
and relative ranks of its parts, positions and the jobs.
The organization chart is a diagram showing graphically the relation of one official to another, or others,
of a company. It is also used to show the relation of one department to another, or of one function of an
organization to another. This chart is valuable in that it enables one to visualize a complete organization,
by means of the picture it presents.
A company's organizational chart typically illustrates relations between people within an organization.
Such relations might include managers to sub-workers, directors to managing directors, chief executive
officer to various departments, and so forth. When an organization chart grows too large it can be split
into smaller charts for separate departments within the organization. The different types of organization
charts include:
κ Hierarchical
κ Matrix
κ Flat
A hierarchical organization is an organizational structure where every entity in the organization, except
one, is subordinate to a single other entity. This arrangement is a form of a hierarchy and in an
organization, the hierarchy usually consists of a singular or group of power at the top with subsequent
levels of power under them. This is the dominant mode of organization among large organizations;
mostly corporations, governments, and business organizations are hierarchical organizations with
different levels of management andauthority.
Matrix management is the practice of managing individuals with more than one reporting line, but it is
also commonly used to describe managing cross functional, cross business group and other forms of
working that cross the traditional vertical business units.
A flat organization (also known as horizontal organization) is an organization structure with few or no
levels of middle managementbetween staff and executives. The idea is that well-trained workers will be
more productive when they are more directly involved in the decision making process, rather than closely
supervised by many layers of management.

2.7 Types of Organization Structure
2.7.1 Line
A line organization is an organizational structure in which authority rests with the top management and
flows in a chain of command to the last person in the organizational hierarchy. It is sometimes called the
traditional organizational structure. In a line organization, top management has complete control, and
the chain of command is clear and simple. Examples of line organizations are small businesses in which
the top manager, often the owner, is positioned at the top of the organizational structure and has clear
lines of distinction between him and his subordinates.
A line position is directly involved in the day-to-day operations of the organization, such as producing or
selling a product or service. Line positions are occupied by line personnel and line managers. Line
personnel carry out the primary activities of a business and are considered essential to the basic
functioning of the organization.
2.7.2 Line and Staff
A staff function supports the organization with specialized advisory and support functions. For
example, human resources , accounting, public relations and the legal department are generally
considered to be staff functions. Staff positions serve the organization by indirectly supporting line
functions. Staff positions consist of staff personnel and staff managers. Staff personnel use their technical
expertise to assist line personnel and aid top management in various business activities. Staff managers
provide support, advice, and knowledge to other individuals in the chain of command.
The line-and-staff organization combines the line organization with staff departments that support and
advise line departments. Most medium and large-sized firms uses line-and-staff organizational structures.
The distinguishing characteristic between simple line organizations and line-and-staff organizations is the
multiple layers of management within line-and-staff organizations.
An advantage of a line-and-staff organization is the availability of technical specialists. Staff experts in
specific areas are incorporated into the formal chain of command. A disadvantage of a line-and-staff
organization is conflict between line and staff personnel.
2.7.3 Functional
A functional organizational structure is a structure that consists of activities such as coordination,
supervision and task allocation. The organizational structure determines how the organization performs
or operates. The term organizational structure refers to how the people in an organization are grouped
and to whom they report. One traditional way of organizing people is by function. Some common
functions within an organization include production, marketing, human resources, and accounting.
This organizing of specialization leads to operational efficiency where employees become specialists
within their own expertise. The most typical problem with a functional organizational structure is that
communication within the company can be rather rigid, making the organization slow and inflexible.

Therefore, lateral communication between functions become very important, so that information is
disseminated, not only vertically, but also horizontally within the organization. Communication in
organizations with functional organizational structures can be rigid because of the standardized ways of
operation and the high degree of formalization.
As a whole, a functional organization is best suited as a producer of standardized goods and services at
large volume and low cost. Coordination and specialization of tasks are centralized in a functional
structure, which makes producing a limited amount of products or services efficient and predictable.
Moreover, efficiencies can further be realized as functional organizations integrate their activities
vertically so that products are sold and distributed quickly and at low cost. For instance, a small business
could make components used in production of its products instead of buying them.
Even though functional units often perform with a high level of efficiency, their level of cooperation with
each other is sometimes compromised. Such groups may have difficulty working well with each other as
they may be territorial and unwilling to cooperate. The occurrence of infighting among units may cause
delays, reduced commitment due to competing interests, and wasted time, making projects fall behind
schedule. This ultimately can bring down production levels overall, and the company-wide employee
commitment toward meeting organizational goals.
2.7.4 Matrix Structure
The matrix structure groups employees by both function and product. A matrix organization frequently
uses teams of employees to accomplish work, in order to take advantage of the strengths, as well as
make up for the weaknesses, of functional and decentralized forms. An example would be a company
that produces two products, product a and product b. Using the matrix structure, this company
would organize functions within the company as follows: product a sales department, product a
customer service department, product a accounting, product b sales department, product b
customer service department, product b accounting department.
Weak/Functional Matrix: A project manager with only limited authority is assigned to oversee the cross-
functional aspects of the project. The functional managers maintain control over their resources and
project areas.
Balanced/Functional Matrix: A project manager is assigned to oversee the project. Power is shared
equally between the project manager and the functional managers. It brings the best aspects of
functional and project-based organizations. However, this is the most difficult system to maintain as the
sharing of power is a delicate proposition.
Strong Matrix: A project manager is primarily responsible for the project. Functional managers provide
technical expertise and assign resources as needed.
Matrix management is more dynamic than functional management in that it is a combination of all the
other structures and allows team members to share information more readily across task boundaries. It
also allows for specialization that can increase depth of knowledge in a specific sector or segment.

Unit 3: Motivation and Leadership
3.1 Concept of Motivation and Incentive
Motivation is used to explain human behavior and it is the scientific word used to represent the reasons
for our actions, our desires, and our needs. Motivation is also an inducement for better performance
towards goal achievement.
Human behavior is goal directed and the behavior should be motivated with the interaction between the
individual, job and the situation. Motivation in organization makes employees to give more effort in work
and activates their willingness to increase productivity.
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The key elements in motivation are
1. Effort: It energizes behavior and motivated people always try hard.
2. Goals: Goals also direct the individual behavior.
3. Needs: People have their needs. Motivation is a need satisfying process and need satisfaction
enhances behavior.
An incentive is something that motivates an individual to perform an action. Incentive is central to the
study of all economic activities both in terms of individual decision-making and in terms of co-
operation and competition within an organizational structure. Economic analysis and the differences
between societies, amounts to characterizing the differences in incentive structures faced by individuals
involved in these collective efforts. Ultimately, incentives aim to provide value for money and contribute
to organizational success.
3.2 Characteristics of Motivation
1. Psychological Process: Motivation is a psychological process that drives individual needs, desires and
motives. It is an internal state that guides the individual behavior.
2. Complex and Unpredictable: Motivating an individual is a complex process and it is also difficult to
predict behavior due to individual differences.
3. Continuous process: Motivating individuals is a continuous process. Once an individual is motivated,
another one emerges.
4. Situational: Motivation depends on the situation and may differ from person to person and time to
time.
5. Pervasive: Motivation is the task of all levels of managers. They need to motivate subordinates for
higher productivity.
6. Goal Oriented: Motivation always leads to action. It involves effort to achieve goals.

7. Positive or Negative: Motivation can be positive as well as negative. Positive motivation is based on
incentives and reward for better performance. Negative motivation is based on punishment for poor
performance.
8. Intrinsic or Extrinsic: Motivation is intrinsic if it is self-generated. It is extrinsic if generated by external
incentives such as money or generated by external influences.
3.3 Importance of Motivation
The importance of motivation in an organization can be justified by the following
1. To understand individual behavior
- Motivation gives purpose and direction to behavior. Managers can understand why people
behave like they do.
2. Productivity
- Motivation always improve productivity as motivated employees work well to increase
productivity and performance. Rewards may be necessary for employees who perform well.
3. Quality Improvement
- Motivated employees are quality oriented and are always looking for better ways of doing
the job.
- They can minimize the waste and may improve efficiency at workplace. Total Quality
Management (TQM) is also facilitated by motivation
4. Employee Retention
- Motivation helps the retention of competent employees and they may remain for longer
time in an organization. Employees can become a strategic resource for the organization and
they can feel pride in staying in the organization
5. Creativity Promotion
- Motivated Employees are creative and innovative and they can easily adapt to changing
technologies and environmental forces
- Motivation can facilitate change management and can promote creativity as well
6. Employee Commitment
- Motivation is important for employee commitment. It leads to
o Reduced absenteeism
o Reduced accident rates
o Better employee discipline
o Reduced employee complaints
o Increased employee loyalty

3.4 Theories of Motivation
ïXðXí Do}Á[ dZ}ŒÇ }( H]ŒŒZÇ }( v
The theory of hierarchy of needs is the most popular motivation theory forwarded by psychologist
Abraham Maslow, in 1943. The theory views the human needs in the form of a hierarchy, ascending from
the lowest to the highest, and once one set of needs is satisfied, this kind of need stops to be a
motivator.
Do}Á[AšZ}ŒÇAÀ]ÁAšZA‰Œ}voAvA]vAšZA(}ŒuA}(AAZ]ŒŒZÇAvAšZAvAŒAšZA‰Œ}PŒ]ÀA
principle of motivation. The basic needs are
1. Physiological needs
2. Safety Needs
3. Social Needs
4. Esteem Needs
5. Self-Actualization Needs
fig: Maslow[s Hierarchy of Needs
1. Physiological Needs: These are the basic human needs for sustaining the life itself, such as food,
water, shelter, sleep, clothing, warmth etc. These are the lowest order needs and until these
needs are satisfied to the degree necessary to maintain life, other needs will not motivate
people. In an organization, salary satisfies the physiological needs of an individual.
2. Security or Safety Needs: These are also the low order need and are the needs to be free of
physical danger and the fear of losing a job, property, food, shelter, etc. These consists of needs
for protection from physical and emotional harm. In an organization, provident fund, pension
plans and health insurance satisfy the safety needs.
3. Social Needs: Since people are social beings, they need to belong, and be accepted by others.
These needs are also known as affiliation or acceptance needs and are high order needs. They
consist the needs for affection, belongingness, friendship and social acceptance. In an
organization, these needs are satisfied by informal groups, friends, clubs etc.

4. Esteem Needs: Once people begin to satisfy their social needs, they want to be respected both by
themselves and by others. This kind of need produces satisfactions like power, prestige, status
and self-confidence. These needs can be for status, recognition, praise and pride. In an
organization, position titles (Manager, HOD, CEO), posh and lavish office, luxury cars satisfy such
needs.
5. Self-Actualization Needs: These are the highest order needs and consists of needs for
achievement, growth, self-development, creativity, talent utilization, and self-fulfillment. It is the
desire to become wZšA}vA]A‰oA}(A}u]vPUAš}AuÆ]u]ÌA}v[A‰}švš]oAvAš}A
accomplish something. In organizations, higher authority may satisfy these needs by accepting
challenging jobs, taking part in decision making, writing poems and biography etc.
3.4.2 AldeŒ(Œ[ EZG dZ}ŒÇ
dZAZ'AšZ}ŒÇAÁA(}ŒÁŒAÇACoÇš}vAoŒ(ŒA]vAíõòõAvAšZ]AšZ}ŒÇA]A]u]oŒAš}ADo}Á[AdZ}ŒÇA
of hierarchy of needs. The ERG theory forwards the motivation needs as per the three categories:
- Æ]švAEA~]u]oŒAš}ADo}Á[AWhysiological and Safety Needs)
- ZošvAEA~]u]oŒAš}ADo}Á[A}]oAv
- 'Œ}ÁšZAEA~]u]oŒAš}ADo}Á[AšuAvAo(-actualization needs)
Alderfer suggests that a person may be motivated by needs on several levels at the same time. For
example a person may go to work to make a living (existence need satisfaction) and at the same time
he/she may be motivated by good relations with his/her coworkers (relatedness need satisfaction).
Alderfer also suggest that when people experience frustration on one level, they may focus on the needs
at the lower level need category.
ïXðXï DCooov[ dZ}ŒÇ }( LŒv E
David C McClelland proposed the theory of learned needs (also called the need theory) in 1960, which
ššAvA]v]À]µo[A‰](]AvAŒA‹µ]ŒA}ÀŒAš]uAvAŒAZ‰AÇA}v[Ao](AÆ‰Œ]vXA,]A
theory of motivation identifies three types of basic needs:
1. The need for power (n/PWR)
2. The need for affiliation (n/AFF)
3. The need for achievement (n/ACH)
Research has shown that all three needs are of particular importance to management as all must be
recognized for all individuals for an organization to work well.
1. The need for power
DCooov[AšZ}ŒÇAµPPšAšZšA‰}‰oAÁ]šZAZ]PZAvA(}ŒA‰}ÁŒAZÀAAPŒšŒA}vŒvA(}ŒA
exercising influence and control. Such people generally are seeking positions of leadership, are

good speakers, often argumentative, forceful, outspoken, hardheaded, and demanding and often
enjoy teaching and public speaking.
2. The need for affiliation
People with a high need for affiliation usually derive pleasure from being loved and tend to avoid
the pain of being rejected by a social group. They are likely to be concerned with maintaining
pleasant social relationship, enjoy a sense of intimacy, are ready to console and help others in
trouble and enjoy friendly interaction with others.
3. The need for achievement
People with high need for achievement have desire for success and equal fear of failure. They
want to be challenged and set goals for themselves. They take realistic approach to risk, analyze
and assess the problems and take personal responsibility for getting the job done, and like
prompt feedback on how they are doing. They tend to be restless, like to work long hours, and do
not worry about failure.
3XðXð DGŒP}Œ[ dZ}ŒÇ y-Y
Theory X and Y are the theories of motivation, created and developed by Douglas MacGregor in
1960s.They describe two contrasting models of workforce motivation.
Theory X
In this theory, management assumes employees are lazy and will avoid work if they can and that they
always dislike work. As a result of this, management believes that workers need to be closely supervised
and comprehensive systems of control should be developed. According to this theory, employees will
show little ambition without an incentive program and will avoid responsibility whenever they can. It
believes that the employees are only focusses on the lower order needs (physiological and security). If
the organizational goals are to be met, Theory X managers rely heavily on threat and forceful decisions to
gain their employees' support. Beliefs of this theory lead to mistrust, highly restrictive supervision and a
punishment atmosphere. The Theory X manager tends to believe that everything must end in blaming
someone. He or she thinks all prospective employees are only out for themselves. Usually these
managers feel the sole purpose of the employee's interest in the job is money. They will blame the
person first in most situations, without questioning whether it may be the system, policy, or lack of
training that deserves the blame. A Theory X manager believes that his or her employees do not really
want to work, that they would rather avoid responsibility and that it is the manager's job to structure the
work and energize the employee.
Theory Y
In this theory, management assumes employees may be ambitious, self-motivated and exercise self-
control. It is believed that employees enjoy their mental and physical work duties. According to them
work is as natural as play. They possess the ability for creative problem solving, but their talents are
underused in most organizations. Given the proper conditions, Theory Y managers believe that
employees will learn to seek out and accept responsibility, exercise self-control and self-direction in
accomplishing objectives to which they are committed. A Theory Y manager believes that, given the right

conditions, most people will want to do well at work. They believe that the satisfaction of doing a good
job is a strong motivation. Many people interpret Theory Y as a positive set of beliefs about workers. It is
believed that Theory Y managers are more likely than Theory X managers to develop the climate of trust
with employees that is required for employee development. It's employee development that is a crucial
aspect of any organization. This would include managers communicating openly with subordinates,
minimizing the difference between superior-subordinate relationships, creating a comfortable
environment in which subordinates can develop and use their abilities. This environment would include
sharing of decision making so that subordinates have some suggestions in decisions that influence them.
3.5 Leadership
Leadership is an important aspect of management. A manager should have some leadership skills to
effectively manage an organization. Leadership and motivation are closely connected. To motivate some
people there should be leaders.
Leadership is the process of social influence in which one person can enlist the aid and support of others
in the accomplishment of a common taskXA/šA]AšZA]o]šÇAš}APšA‰}‰oAš}A}AÁZšAšZÇA}v[šAÁvšAš}A}A
vAÁZšAšZÇA}v[šAo]lA]šXA/šA]AšZA]v(oµvUA}AšZšA‰}‰oA(}oo}ÁAÁ]oo]vPoÇAvAvšZµ]š]ooÇAš}ÁŒA
the achievement of goals.
}Œ]vPAš}A^š‰ZvAZ}]vA^ŒZ]‰A]AšZA]o]šÇAš}A]v(oµvAAPŒ}µ‰Aš}ÁŒAšZAZ]ÀuvšA}(A
P}oX_

3.6 Leadership Styles
Leadership style deals with the way leaders influence the followers. It can be boss centered, subordinate
centered or relations centered. The leadership styles affects job performance. Some of the leadership
styles are:
1. Autocratic Leadership
2. Democratic Leadership
3. Free Rein Leadership
1. Autocratic Leadership
Under the autocratic leadership, power and decision making are totally under the control of the leader.
Some of the features of autocratic leadership are:
- Leaders make all the decisions, they order what to do and how to do and who to do it.
Subordinates are not consulted
- Leaders have position based authority. They demand total obedience from the subordinates.
- Leaders may give reward and punishment as they like. Information is controlled by the leader
Advantages of Autocratic Leadership
- Effective in crisis and emergency situations.
- Chain of command is clear
- Discipline is maintained in the organization
Disadvantages of Autocratic Leadership
- Subordinate participation is ignored.
- Motivation to employees is absent as subordinates work by fear of punishment
- It does not consider situational needs
2. Democratic Leadership
Also known as participative leadership, democratic leadership has power and decision making
decentralized, where discussion, consultation and participation among subordinate is encouraged. Some
of the features of democratic leadership are
- Leaders consult with their subordinates for decisions. Subordinates willingly cooperate with
the leader.
- Authority is delegated to the subordinates and influence flows both ways from leader to
follower and follower to leader
- Performance is based on reward and punishment
- Information is shared between leader and subordinates

Advantages of democratic leadership
- Subordinates are involved in decision making and it promotes participation
- Effective style of leadership for an organization where team work is necessary
- Results high morale and productivity. People feel committed to goals
- Motivates subordinates and provides opportunities for development and growth
- Creativity is encouraged
Disadvantages of democratic leadership
- It is time consuming, and can result in indiscipline
- Leaders may avoid responsibilities
3. Free Rein Leadership
Also known as Laissez-Faire Style, free rein leadership is the style where power and decision making is
entrusted to the subordinates. In this style, leaders use very little power and control. They serve only as
an information center. Subordinates have complete freedom to make decisions with decentralized
authority and responsibilities. They have high degree of independence in decision making and influence
flows in all directions. Subordinates set their own goals and their potential is fully utilized.
Advantages of Free Rein Leadership
- Subordinates have freedom and autonomy to work. They set their own goals
- Effective for research oriented and creative jobs
- Employee morale is high
Disadvantages of Free Rein Leadership
- Subordinates lack focus towards goal achievement
- Productivity may be less and responsibility may be avoided
- Coordination may be poor among the subordinates
3.7 Management Styles
3.7.1 Participative Management
Also called democratic or consultative management, participative management is a type of management
in which employees at all levels are encouraged to contribute ideas towards identifying and
setting organizational-goals, problem solving, and other decisions that may directly affect them. It is the
practice of empowering employees to participate in organizational decision making.
When participative management is practiced, employees are encouraged to voice their opinions about
their working conditions, their problems and their opinions.

3.7.2 Management by Objectives
Management by objectives (MBO), also known as management by results (MBR), is a process of
defining objectives within an organization so that management and employees agree to the objectives
and understand what they need to do in the organization in order to achieve them. The term
management by objectives was first popularized by Peter Drucker in his 1954 book ^The Practice of
DvPuvš_. The essence of MBO is participative goal setting, choosing course of actions and decision
ul]vPXAvA]u‰}ŒšvšA‰ŒšA}(AšZADBKA]AšZAuµŒuvšAvAšZA}u‰Œ]}vA}(AšZAu‰o}Ç[A
actual performance with the standards set. Ideally, when employees themselves have been involved with
the goal setting and choosing the course of action to be followed by them, they are more likely to fulfill
their responsibilities.
MBO is a comprehensive managerial system that integrates many key managerial activities in a
systematic manner that is consciously directed towards the effective and efficient achievement of
organizational and individual objectives. MBO can be used for performance appraisals, as an instrument
for motivating individuals, and in strategic planning. It can also be integrated into human resources
planning, career planning, reward system, budgeting and other managerial activities.
Fig: Management by Objectives
Advantages of Management by Objectives
- Improvement in management through result oriented planning
- Clarification of organizational roles, structures and delegation of authority according to the
results expected of the people occupying the roles

- Encouragement of personal commitment to their own and organizational goals
- Development of effective control and measuring leads to corrective actions
Disadvantages of Management by objectives
- It is difficult to give guidelines to goal setters
- There is also the difficulty of setting verifiable goals
- Emphasis on short-term goals may be higher at the expense of long-term goals
- Managers may be hesitant to change objectives under change in environments
- Quantitative goals may be overused and they may be used in areas where they are not
applicable
3.7.3 Management by Exception (MBE)
Management by exception is a style of business management that focuses on identifying and handling
cases that deviate from the normal business objectives. Management by exception has both a general
business application and a business intelligence application. General business exceptions are cases that
deviate from the normal behavior in a business process and need to be cared, typically by human
intervention. Their cause might include: process deviation, infrastructure or connectivity issues, external
deviation, poor quality business rules, incorrect data, etc. Management by exception here is the practice
of investigating, resolving and handling such occurrences by using skilled staff and software tools.
Management by exception (MBE), when applied to business is a style of management that gives
employees the responsibility to take decisions and to fulfill their work or projects by themselves. It
consists of focus and analysis of statistically relevant anomalies in the data. If an unusual situation or
À]š]}vA]vAšZAŒ}ŒAšA‰‰ŒUAÁZ]ZA}µoAµA]((]µoš]A(}ŒAšZAµ]vAvAv[šAA
managed by the employee at his level, the employee should pass the decision on to the next higher
level.For example, if all products are selling at their expected volumes for the quarter, except one
particular product which is underperforming or overperforming at a statistically relevant margin, only the
data for that product will be presented to the managers for further investigation and discovery of the
root cause. Management by exception can bring forward business errors and oversights, ineffective
strategies that need to be improved, changes in competition and business opportunities.
Management by exception is intended to reduce the managerial load and enable managers to spend
their time more effectively in areas where it will have the most impact.Sometimes Management by
exception is the practice of examining the financial and operational results of a business, and only
bringing issues to the attention of management if results represent substantial differences from the
budgeted or expected amount. The purpose of the management by exception concept is to only bother
management with the most important variances from the planned direction or results of the business.
Managers will then spend more time attending to and correcting these larger variances.

Advantages of Management by Exception
k It reduces the amount of financial and operational results that management must review.
k This method allows employees to follow their own approaches to achieving the results mandated in the
company's budget. Management will only step in if exception conditions exist.
Disadvantages of Management by Exception
k This concept is based on the existence of a budget against which actual results are compared. If the
budget was not well formulated, there may be a large number of variances, many of which are irrelevant,
and which will waste the time of anyone investigating them.
k The concept requires the use of financial analysts who prepare variance summaries and present this
information to management. Thus, extra people are required to prepare the report. Also, an incompetent
analyst might not recognize a potentially serious issue.
k This concept is based on the command-and-control system, where conditions are monitored and
decisions made by a central group of senior managers. A decentralized organizational structure could be
better, where local managers could monitor conditions on a daily basis.
3.8 Learning Organization
The term learning organization was coined by Peter ^vPA]vAíõõìAvAZAššAšZšA^Learning
organizations are organizations where people continually expand their capacity to create the results they
truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is
set (ŒUAvAÁZŒA‰}‰oAŒA}vš]vµooÇAoŒv]vPAš}AAšZAÁZ}oAš}PšZŒX_
A learning organization is the term given to a company that facilitates the learning of its members and
continuously transforms itself. Learning organizations develop as a result of the pressures facing
modern organizations and enables them to remain competitive in the business environment. It
encourages organizations to shift to a more interconnected way of thinking. Organizations should
become more like communities that employees can feel committed to. They will work harder for an
organization they are committed to. A learning organization has five main features:
- systems thinking
- personal achievement
- logical models
- shared vision
- team learning
3.9 Authority and Power
Power is a broader concept, and it is the ability of individuals or groups to induce or influence the beliefs
or actions of other people of groups. In the corporate environment, power is often expressed as upward
or downward. With downward power, a company's superior influences subordinates. When a company
exerts upward power, it is the subordinates who influence the decisions of the leaders.

Authority in an organization is the right to exercise the power in making decisions that may affect others.
Authority is one type of power, but a power in the organizational setting. It is the legitimate or
acceptable use of power.
3.10 Incentive Programs
An incentive program is a formal scheme used to promote or encourage specific actions or behavior by
an individual or a specific group of people during a defined period of time. Incentive programs are
particularly used in business management to motivate employees and in sales to attract and retain
customers. This concept is also referred as pay for performance. Incentive programs can be profit sharing
for employees (where certain percentage of the business profit are shared among the employees),
individual incentives (special recognition of an individual) and group incentives (where a group of people
are rewarded).
Some of the common incentives that are given to the employees of an organization may include cash
awards, trophy, gift cards, certificates, performance/sales points, merchandise (tshirt, stickers), staff
grades, travel, experiential (dinner with a celebrity) etc.

Unit 4: Personnel Management
4.1 Introduction to personnel management
Personnel management can be defined as the process of obtaining, using and maintaining a satisfied
workforce. It is concerned with employees at work and with their relationship within the organization. It
is the planning, organizing, compensation, integration and maintenance of people for the purpose of
contributing to organizational, individual and societal goals.
Personnel Management is viewed as an Administrative discipline of hiring and developing employees so
that they become more valuable to the organization. Usually it focuses on personnel administration,
compensation, and employee welfare and labor relations. Personnel Management and Human resources
management are similar, but HRM is a broader concept than personnel management. Some of the basic
tasks of personnel management includes
- conducting job analyses
- planning personnel needs
- selecting the right people for the job (recruitment)
- orientation and training
- determining and managing wages and salaries
- providing benefits and incentives,
- appraising performance,
- resolving disputes
- Communicating with all employees at all levels.
4.2 Functions of Personnel Management
The major functions of personnel management are
1. Acquisition 2. Development
3. Utilization 3. Maintenance
1. Acquisition
This function is concerned with the hiring of competent employees for an organization. It is the under the
staffing function of management that ensures entry of right number of employees at the right place at
the right time. It includes
- Planning: for predetermining the human resource needs
- Job analysis: specifies job requirements and determines qualifications and skills for various
jobs
- Recruitment: identifies prospective candidates and encourages them to apply for the job
- Selection: chooses qualified and right people from prospective candidates
- Socialization: process of adaptation of new employees to organization culture

2. Development
This function ensures proper competencies of employee to handle jobs. It consist of the following
activities:
- Analyzing Development needs: determines the future human resource needs in an
organization. Employee potential for growth is identified
- Employee training: involves skills development of employees. It can be on-the-job training
or off-the-job training
- Management Development: involves programs to enhance abilities of managers to develop
their potential for future job responsibilities
- Career Development: involves tracking career goals for employees. It assists personal
improvement of employees
3. Utilization
This function ensure the proper of usage of employees toward productivity and higher performance. It
also ensures willingness of employees for increasing productivity. It consists of
- Motivation: for influencing employee towards productivity
- Performance Appraisals: for assessment of employee effectiveness in achieving goals
through performance on the job
- Compensation Management: it includes the pay structure for the employees that they
perceive as fair for any damages, accidents occurred
4. Maintenance
This is concerned with retention of competent employees in the organization. It ensures that employees
maintain their loyalty and commitment towards the organization. It consists of
- Employee relations: it ensures employee-employer relations and their discipline. It also
includes unionization and collective bargaining among the employees.
- Employee Welfare: it includes activities that promote employee welfare like health, social
security, sports, recreation, canteen facilities etc.

4.3 Job Analysis
Organizations consist of empty positions that have to be staffed. Job analysis is the procedure for
determining the duties, responsibilities, and skill requirements of the position and the characteristic of
the person who should be hired for it. Job analysis produces information used for writing job description
(a list of duties, working conditions, reporting relationships) and job specifications (a list of human
requirements for the job).
A supervisor or a HR specialist normally collects the following information while preparing a job analysis
- t}ŒlAš]À]š]WA]ŒšUAZlZA}oošAšZA]v(}Œuš]}vA}µšAšZAi}[AšµoAš]À]š]Ao]lA
selling, cleaning, teaching, collecting, counseling etc. This list may also include how, why and
when the worker performs each activity.
- Human Behavior: The specialist may also collect information about human behavior like
sensing, communicating, deciding and writing. It may also include job demands like lifting
weight, walking long distances.
- Machines, tools, equipment and work aids: This category includes information regarding
tools used, materials processed, knowledge applied (like finance, account, laws) and services
provided (counseling, repairing)
- Performance standards: the employer may also want information regarding performance
standards in terms of quantity or quality levels and management can use these standards to
appraise the employees.
- Job Context: This includes the information about the physical working conditions, work
schedules, organizational and social context (number of people that the employee have to
interact). This may also include the incentive information.
- ,µuvAZ‹µ]ŒuvšWAdZ]A]voµA]v(}Œuš]}vAŒPŒ]vPAšZAi}[AŒ‹µ]ŒuvšAo]le skills,
education, training, work experience, personal attitudes, language skills, personality, and
interests.
4.3.1 Uses of Job Analysis
Job analysis may be used for following management activities
- Recruitment and Selection
- Compensation
- Performance Appraisals
- Training
- Discovering unassigned duties

4.3.2 Steps in Job Analysis
1. Understand the purpose of Job Analysis
The HR specialist should understand why the organization need a job analysis. The purpose of job analysis
can be
- Human resource planning decision
- Recruitment and selection decision
- Training and management development decisions
- Employee compensation decisions
- Performance appraisal decisions
- Assignment of duties, responsibilities and authority
2. Select Positions for Job Analysis
The specific positions in the organization that needs job analysis should be selected for collection of
information.
3. Identify Information Needed
The various information needed for job analysis should be identified. They can be
a. Work Activities: activities concerned with what the worker does like
o Specific tasks or activities that are involved in the job
o Procedure used to perform activities
o Complexity of activities and their timings
o Personal responsibility for property, funds, duties
o Hazards and discomforts of jobs
b. Worker oriented activities: activities that are concerned with how the job is performed. They
can be
o Nature of operations, such as handling, lifting, walking, driving etc
o Human behavior required, such as communicating, sensing, decision making
c. Machines and Materials used: these are concerned with what the workers uses. They can be
o Types of machines, equipment and tools used
o Type of materials used, such as metal, plastic etc
o Knowledge applied such as accounting, legal
o Products made or services rendered

d. Job performance standard: they are concerned with performance standards and they can be
o Quantity and quality standards for the job
o Time taken for the job
e. Job context: it is concerned with the job context such as
o Physical working conditions, work schedule
o incentives
f. personal attributes: concerned with personal qualifications such as
o education, training, special skills required
o work experience needed
o aptitude and social skills, physical strength
4. Identify sources of information for job analysis
The sources for collecting information should be identified. They can be
a. employees
b. supervisors
c. independent experts
d. job review committee: labor unions, HRM departments, industrial engineering departments
etc
e. non-human sources: existing job descriptions, maintenance records, training manuals,
published literatures
5. Choose methods for collecting information
Various methods are available for collecting information for job analysis. They can be
a. Observation method
b. Interview method
c. Questionnaire method
d. Diary method: employees record their daily activities in diary and that can be crucial as well
e. Technical conference method
6. Collect Information
The needed information is collected and processed. It is also checked for accuracy.

4.4 Job Description
A job description is a list of job duties, responsibilities, reporting relationships, working conditions and
supervisory responsibilities of a particular job position. It is a product of job analysis and an overall
written summary of task requirements of a particular job. It may contain the following information.
1. Title of the Job, Level of the job: This identifies the job position
2. Location of the job: Physical Location (City, Branch), Department
3. Relationships: Responsible to and Responsible for
4. Job Summary: Describes general nature of the job
5. Duties and responsibilities: Details of what the employee has to do
6. Authority: Right to make decisions and give orders to subordinates
7. Accountability: Answerability for standards of performance
8. Organizational Interactions: Communication and reporting to both inside and outside of
organization
4.5 Recruitment
Recruitment is an important function in all organization. It is the process of searching for prospective
employees and stimulating them to apply for the jobs. It is a part of the acquisition function of personnel
management that aims to attract a high performing workforce in the organization. It is the process of
finding right people for the right positions at the right time and is concerned with identifying the qualified
candidates.
4.5.1 Sources of Recruitment
a. Internal Source: They involve recruiting from within the organization. Prospective candidates are found
through internal search. Internal sources can be
- Promotion from within
- Transfer from one branch to another, transfer from one department to another
- Rehiring left employees
- Job rotation from one department to another, one skill to another
b. External Source
- Advertising
- Educational Institution Placement
- Employee Referrals
- Internet Search
- Contract with workforce providers

4.6 Promotion
WŒ}u}š]}vA]AvA]všPŒoA‰ŒšA}(Au}šA‰}‰o[AŒŒXAWŒ}u}š]}vAŒ(ŒAš}AšZAÀvuvšAš}A‰}]š]}vA
}(A]vŒAŒ‰}v]]o]šÇXAdZAÀvuvšA]AµµooÇA}vAvAu‰o}Ç[AŒvlA}ŒA‰}]š]}vA]vAvA
organization hierarchy. Promotion may be an employee's reward for good performance, i.e., positive
appraisal. Before a company promotes an employee to a particular position, it ensures that the person is
able to handle the added responsibilities by screening the employee with interviews and tests and giving
them training or on-the-job experience. A promotion can involve advancement in terms of designation,
salary and benefits. The opposite of a promotion is a demotion.
4.7 Performance Appraisal
Performance appraisal is a review }(AvAu‰o}Ç[AšµoA‰Œ(}ŒuvA}vAšZAi}AvAšZ]ŒA‰}švš]oA(}ŒA
assuming future responsibilities. It reviews job-relevant strengths and weaknesses of an employee.
Performance appraisal provides feedback to the employees and it assist them to know where they stand,
where they should be going and how they are going to get there. It assesses the relative worth of each
employee to the organization and it is also the basis for allocating rewards.
4.7.1 Uses of Performance Appraisals
The various uses of performance appraisals are
- Performance Improvements
- Reward Management
- Training and Development Decisions
- Promotion, Transfer
- Supervisory Understanding
- Career and Succession Planning
- Policy Formulation
4.7.2 Process of Performance Appraisal
a. Set Performance Standards
The starting point of performance appraisal is the establishment of performance standards. They serve as
the criteria of performance and standards may be in terms of quantity, quality, time, cost, etc.
b. Communicate standards to employees
The performance standards are communicated to the employees. There should be no guesses about the
expected terms of performance from the employees.
c. Measure actual performance
The actual performance of the employees during a specified period should be measured from following
sources

- Performance Observation: Managers can personally observe the job performance activities
of subordinates for a certain period of time
- Internal Reports: Internally prepared report provide statistical information about the job
performance of the employees
- Special Reports: Specialist can be hired to provide special reports about job performance of
the employees
d. Find Deviations
The actual performance is compared with the performance standards and the deviations are noted. The
magnitude, nature, causes and incidence of performance deficiency are analyzed.
e. Discuss Appraisal with employees
The result of the performance appraisal are discusses with the employees and it can provide a feedback
to the employees. The discussion should be based on the comparison of actual results with the
standards.
f. Initiate corrective actions
The corrective actions should be initiated to
- Correct Deviations
- Change Standards
- Train the employees
4.8 Wage
A wage is monetary compensation (or remuneration) paid by an employer to an employee in exchange
for work done. Payment may be calculated as a fixed amount for each task completed (a task
wage or piece rate), or at an hourly or daily rate, or based on an easily measured quantity of work done.
The payment made to labor for its work is called wages in economics. Wages are the price for the
services of the labor. Generally, by labor, we mean physical or manual work. In economics, labor includes
not only the physical work but all types of work whether it is mental or physical. In other words, by labor
we mean the work done both by hand and brain. So the reward given to workers, whether mental or
physical, are termed as wages in economics.
}Œ]vPAš}ABvZuA^AÁPAuÇAA(]vAAAµm of money paid under contract by an employer to
AÁ}ŒlŒA(}ŒAšZAŒÀ]AŒvŒX_
}Œ]vPAš}AWŒ}(XA:XA,v}vA^tPA]AA‰ÇuvšAš}AAo}ŒŒA(}ŒA]šA]švAš}A‰Œ}µš]}v_X

4.8.1 Methods of Wage Payment
There are two popular methods of wage payment
a. Time Rate Payment
- the wages to the workers are paid on the basis of time spent by them on work
irrespective of the quantity of production.
- The wage rate is fixed on the basis of some unit of time such as Hour, Day, Week or
Month.
- The formula for the calculation of wages is :
Wage=Hours Worked x Rate per Hour
b. Piece Rate Payment
- the extent or volume of work done forms the basis of determination of wages
payable to the workers.
- Wages are paid at a certain rate per united produced or job performed or operation
completed irrespective of the duration of time taken by workers.
- Wages under this method is calculated as :
Wage=No. of Units produced x Rate per Unit
4.9 Training
Training is the important part of personnel development that enhances the capabilities of employees to
improve their performance in the present jobs. It is the act of increasing the knowledge and skills in an
employee for doing a particular job. It involves bringing positive changes in knowledge, skills and
attitudes of the employees. It also increases their efficiency and effectiveness on the job.
Training in organizations is usually aimed to achieve the following objectives
a. Update capabilities: (knowledge and skills) of the employees to adapt with the new technologies,
job redesign and change. Continuous training promotes innovation as well.
b. Develop healthy relations: to facilitate better cooperation, commitment and loyalty of employees
c. Socialization: to adapt employees with the organization culture and job environment
d. Develop future potential: training prepares employees for future assignments. It helps career
development of employees.
e. Improve productivity: it increases productivity, efficiency and effectiveness of the employees
Benefits of Training
Some of the benefits of employee training in organizations are
a. Competency Development in employees
b. Productivity Improvement
c. Better Communication
d. Improved Labor Relations
e. Career Development
f. Reduced Supervisory Burden

Unit 5: Introduction to Industrial Relations
5.1 Trade Union
A trade union or a labor union is an organization of workers who have come together to achieve common
goals such as protecting the integrity of its trade, achieving higher pay and benefits such as health care
and retirement, hiring or firing employees, safety standards and better working conditions. The trade
union through its leadership, bargains with the employer on behalf of its union members and negotiates
labor contracts with employers. The most common purpose of the unions is to maintain or improve the
condition of their employment and it may include negotiation of wages, work rules, complaint
procedures, rules governing hiring-firing, promotion, benefits, workplace safety and policies.
A union can be
- A company union: Also called house union. Represents interests of only one company and
may not have connections with other unions. Eg. Union of the employees of Everest hotel
- A general union: Also called industrial union. Represents workers from several companies in
the same industry. Eg. REBAN, HAN
- A craft union: represents skilled workers in a particular field. Eg. Doctors union (NMC), NEA
(engineers)
5.2 Trade Union Movement in Nepal
The history of trade union movement in Nepal is of recent origin. There were no trade unions in Nepal
before 1945 as the country was under the family rule of Ranas. Nepal had followed closed-door
economy, having almost no relations with the outside world. In 1946 All Nepal Trade Union Congress
(ANTUC) was formed. In 1947, Biratnagar Workers Union (BWU) was set up. In March 1947 the first
Á}ŒlŒ[Au}ÀuvšAš}}lA‰oAšAB]ŒšvPŒA(}ŒAšZAšo]ZuvšA}(Au}ŒÇXA/vAíõñíAEdhCAvA
BWU became united and formed the first trade union federation in Nepal. The World Federation of Trade
Unions (WFTU) in 1953 granted membership to ANTUC. After the democratic change of 1950, the
freedom of association allowed the opportunities to many voluntary organizations in the country and the
workers, too, felt the need to be united under one umbrella to fight against the exploitation of the
uvPuvšAvAšZAP}ÀŒvuvšXAdZAµv]}vAÆ]šAšAšZšAš]uAÁŒWAB]ŒšvPŒAt}ŒlŒ[Ahv]}vUA
C}šš}vAD]ooAt}ŒlŒ[Ahv]}vUAooAE‰oAdŒAhv]}vAC}vPŒUA/v‰vvšAt}ŒlŒ[Ahv]}vUAB]ŒšvPŒA
D]ooAt}ŒlŒ[A}]š]}vUAooAE‰oAhv]šAt}ŒlŒ[Ahvion, All Nepal Trade Union Organization and
Nepal Labour Union. But these unions were merely instruments of political parties without the capacity
of free collective bargaining. After the success of democratic struggle against 104 years of Rana family
rule in 1950 freedom of expression and organization became part of political life. The Nepalese political
history took a new turn in 1960 when the King staged a putsch, banned the political parties and trade
unions and established a partyless Panchayat system in 1962. This system limited the freedom of
expression and association but envisioned creating exploitation-free society through the harmonization
and co-ordination of the interests of different classes. For this, six different class organizations including
Nepal Labour organization were created. As this organization was controlled by the system and also that
the central body was heavily politicized, the objective of ensuring the labour welfare remained

unfulfilled. Still, some of the noticeable achievements were also made during this period in the field of
labour administration, such as, establishment of a separate labour ministry, department and some labour
offices and the admission of Nepal into the International Labour Organization (ILO) as a member. Multi-
party democracy was restored in the Spring of 1990 after the success of people's movement, in which
many professional organizations, including workers had actively participated. The Constitution of the
Kingdom of Nepal 1990 guaranteed multi-party parliamentary system, human rights, constitutional
monarchy and the sovereignty of people. It also granted the freedom of expression and association,
which has inspired the formation of trade unions. At an early stage, there was mushrooming growth of
trade unions. They were heavily divided in the line of political ideologies. Each party has its own unions, if
not general federation. With the passage of time, most of these unions could not exist and some of the
unions were merged.
Some of the trade unions in Nepal are
1. Nepal Trade Union Congress (NTUC): was established in 1947 with the objectives of promoting
workers rights. The labour movement in Nepal started on March 4, 1947 in Biratnagar against the
hereditary Rana rule for the establishment of democracy and advvuvšA}(AÁ}ŒlŒ[AŒ]PZšXA
The ideology of NTUC was based on democracy, nationalism and socialism. After the
establishment of democracy in the country in 1950, NTUC became active in the promotion of
workers rights to organize, express and struggle for their collective welfare. In 1960 with the
dissolution of multiparty democracy in Nepal, trade unions were banned along with political
parties for almost 30 years of Panchayat system. With the overthrow of Panchayat polity in 1990
following popular movement for the restoration of democracy, freedom of expression and
organization became a part of national life. Nepal Trade Union Congress also revived its
organization in 1990 and now works closely to ruling Nepali Congress party in general and Nepali
Congress President in particular.
NTUC Affiliates:
1. Nepal Factory Labor Congress
2. Nepal Tourism and Hotel Workers' Union
3. Nepal Press Union
4. Nepal Tea Garden Worker's Union
5. Nepal Garment Workers' Union
6. Nepal Carpet Workers' Union
7. Financial Employees' Union of Nepal
8. Nepal Inter-Corporation Employees Union
9. Nepal Teachers' Association
10. Nepal Labor Union (Informal Sector Union)
11. Nepal Transport Workers' Union
12. Nepal Health Professional Association
13. Nepal National Barbers' Union
14. Nepal Leather and Leather Show Workers' Union
15. Nepal Small Hotel and Restaurant Worker's Union
16. Nepal Wood Workers' Union
17. Nepal Electric Workers' Union
18. Nepal Rickshaw Drivers' Union
19. Nepal Building and Construction Workers' Union
20. Nepal Shop Workers' Union

2. General Federation of Nepalese Trade Unions (GEFONT): was established in July 20, 1989 with
four founder federations: Nepal Independent Workers Union (NIWU), Independent Transport
t}ŒlŒ[A}]š]}vA}(AE‰oA~/dtEUAE‰oA/v‰vvšAt}ŒlŒ[Ahv]}vA~E/,thAvA
dŒll]vPAt}ŒlŒ[A}]š]}vA}(AE‰o (TWAN). It is affiliated to Communist Party of Nepal,
Unified Marxist-Leninist party (CPN-UML).
GEFONT Affiliates:
k NIWU-Nepal Independent Workers Union
k ITGWUN-Independent Textile Garment Workers' Union of Nepal
k ITWAN-Independent Transport Workers' Association of Nepal
k NICWU-Nepal Independent Carpet Workers' Union
k NIHWU-Nepal Independent Hotel Workers' Union
k UNITRAV- Union of Trekking, Travel Rafting Workers - Nepal
k ITPWUN-Independent Tea Plantation Workers' Union of Nepal
k IPWUN - Independent Press Workers' Union of Nepal
k NATU- Nepal Auto - Mechanics Trade Union
k CUPPEC - Central Union of Painters, Plumbers, Electro construction Workers- Nepal
k IGCUN- Independent Garbage Cleaners' Union of Nepal
k NIFBWU - Nepal Independent Food Beverage Workers' Union
k NICIWU - Nepal Independent Chemical Iron Workers' Union
k NRPU- Nepal Rikshaw-Pullers' Union
k FAWN - Federation of Agricultural Workers, Nepal
k CWWD - Central Women Workers' Department and special arrangements
3. Democratic Confederation of Nepalese Trade Unions (DECONT) was established on August 14,
1997 after it broke away from NTUC. This division extends to the grassroots level on factional
lines of the political party.
DECONT Affiliates:
1. Nepal Carpet Workers' Union
2. Construction and Allied Workers' Union of Nepal (CAWUN)
3. Agricultural Workers' Union of Nepal
4. Nepal Transport Workers'
5. Nepal Hotel Workers' Union
6. Garment Workers' Union of Nepal
7. Nepal Custom and Airport Workers' Union
8. Nepal Film Workers' Union
9. Barbers' Union of Nepal
10. Nepal Commercial Workers' Union
11. Nepal Rickshaw and Cart Workers' Union
12. Nepal Small Hotel and Restaurant Workers' Union
13. Nepal Printing Press Workers' Union
14. Nepal Factory Workers' Union
15. Nepal Automobile Workers' Union
16. Democratic Employees' Union of Banking and Financial Institutes of Nepal
17. Democratic Health Workers' Union of Nepal*
18. Democratic Press Union-Nepal

5.3 Collective Bargaining
Collective bargaining is a process of negotiation between management and workers for determining the
mutually agreed terms and conditions of work which protect the interest of both workers and the
uvPuvšXA}Œ]vPAš}AoAz}ŒUA^}ooš]ÀAŒP]v]vPA]Avš]ooÇAA‰Œ}A]vAÁZ]ZAu‰o}ÇA
šAAAPŒ}µ‰A]vAl]vPAš}AZ‰A}v]š]}vAvAŒoš]}vZ]‰A]vAšZ]ŒAu‰o}ÇuvšX_
In collective bargaining, proposals are matched with counter proposals and both parties make every
Œ}voA((}ŒšAš}AŒŒ]ÀAšAvAPŒuvšXABµšA]šA}v[šAuvA]šZŒA‰ŒšÇA]A}u‰ooAš}APŒAš}AA
proposal. The basic objective is to arrive at an agreement between the management and the employees
determining the mutually beneficial terms and conditions of employment. Some of the major objectives
of collective bargaining are:
- To foster and maintain cordial and harmonious relations between the
employer/management and the employees
- To protect the interests of both the employers and the employees
- To keep the outside parties (government, public, competitors) at bay
- To promote industrial democracy
5.3.1 Types of Collective Bargaining
a. Distributed Bargaining
- it involves bargaining over the distribution of a surplus like wages, salaries, bonuses etc
- ]vA]šŒ]µš]ÀAŒP]v]vPUA}vA‰ŒšÇ[AP]vA]Av}šZŒA‰ŒšÇ[Ao}X
- it is also known as conjunctive bargaining
b. Integrative Bargaining
- involves negotiation of an issue on which both the parties may gain or at least neither of them loses
- eg. Representatives of employer and employees may bargain over better training or better job
evaluation method
- also known as cooperative bargaining
c. Attitudinal Restructuring
- involves shaping and reshaping of some attitudes like trust or distrust, friendliness, hostility between
labor and management.
- it tries to erase the bitterness between parties and bring smooth and harmonious industrial
relationships
d. Intra-organizational Bargaining
- it aims to resolve the internal conflicts
- there may be differences between groups, skilled workers and even in the management as well
- it tries to resolve and achieve consensus between the conflicting groups

5.4 Occupational Health and Safety
Employee health and safety in the workplace is an important issue in organizations. It is both legal and
u}ŒoAŒ‰}v]]o]šÇA}(Au‰o}ÇŒAš}AvµŒAšZšAšZAÁ}Œl‰oA]A(A(}ŒAu‰o}Ç[A‰ZÇ]oAvAuvšoA
health. Accidents and health hazards cost money to the employer in wages and production losses.
Occupational safety is freedom from work related accidents. Occupational health is absence of health
hazards and illness at workplace. It is physical as well as mental well-being.
5.4.1 Importance of Occupational Health and Safety
Occupational Health and safety are important because of the following reasons
a. Legal Compliance: Every country has legal framework to enforce occupational health and safety.
Penalties for non-compliance can be high for organizations. In Nepal, the Labor Act 1992 enforces
the health and safety standards in workplace.
b. Moral Requirement: Employers have a moral duty to provide safe and healthy working
environment for better quality of life to employees.
c. Productivity: Safety and health plans promote productivity. Employees in safe and healthy
environment are likely to improve performance.
d. Cost Saving: Medical costs and compensation payable on accidents can be reduced or avoided if
health and safety measures are applied. Loss of production can also be avoided.
e. Employee Retention: Health and safety programs usually attract competent employees. They can
decrease labor absenteeism as well.
f. Improved labor relations: Health and safety programs help in maintaining harmonious relations
with workforce in the organization.
g. Minimize social evils: Health and Safety programs also minimize social evils like alcoholism, drug
abuse, gambling, prostitution, AIDS and stress.
h. Image: properly planned health and safety programs enhance the image of an organization as a
good employer.
5.5 Compensation
Compensation refers to all forms of financial benefits received by the employees in an organization. For
employers, compensation is the cost of production and operations. Compensation management is an
important managerial function that consists of designing a cost effective pay structure that will attract,
retain and motivate the competent employees. Compensation system should be able to balance
}ŒPv]Ìš]}v[A]o]šÇAš}A‰ÇAÁ]šZAu‰o}ÇAš](š]}vXA
There are basically two categories of compensation
1. Direct Compensation
It consists of the following
a. Pay: it is wages and salaries received for performing work. It can be base pay or merit pay.
- Base pay is hourly, weekly, or monthly pay that employees receive for their work
- Merit pay is based on performance. It is addition to the base pay and is only received by
those who work better.
b. Incentives: it is provided for higher performance and they can be in the form of commission,
bonus, profit sharing, stock, shares etc.

2. Indirect Compensation
It consists of the following
a. Benefits: they are payments in addition to the basic salaries and are the membership-based
financial rewards. Employees receive them as a result of continuing their employment in the
organization and it can be in the form of
- Pay for time not worked: paid vacation, holidays, leaves, maternity leaves, bereavement
leaves, sick leaves etc
- Retirement benefits: pensions, gratuity, insurance, provident fund, medical expenses
- Executive benefits: free newspapers, free telephone/electricity, quarters
b. ^ŒÀ]WAšZÇAŒAv}šA‰]A]vAZAµšAš]ooA]vŒAšZAu‰o}Ç[AÁoo-being. They are also
known as perks and can be
- CZ]oŒv[Aµš]}vAÆ‰vUAZ]oŒA(]o]š]
- Discount on in-house purchases, credit cards, loans
- Company vehicles, travel vouchers
- Socio cultural recreational opportunities, club membership, physical fitness programs
- Free legal advices, counselling for financial management
- Relocation expenses on transfers

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