Business Studies

Organizing

Meaning

Once the objectives and plans are laid down, management has to identify and establish productive
relationships between various activities and resources for implementing plans. In general words
organising refers to arranging everything in orderly form and making the most efficient use of
resources. The aim of organizing is to enable people to work together for a common purpose.

Definition

‗Organising is the process of identifying and grouping various activities, bringing together physical,
financial and other resources and establishing authority relationships among job positions.‘

According to Louis Allen,‘ Organising is the process of identifying and grouping the work to be performed,
defining and delegating responsibility and authority and establishing relationships for the purpose of enabling
people to work most effectively together in accomplishing objectives.‟

The term ‗organisation‘ is used in two distinct meanings in management – as a process and as a
Structure

Steps In The Process Of Organizing: o Importance Of Organising

 Identification and division of work(identify (Of creating a sound organisation structure)
 functional areas→jobs→specialisation) 1. Benefits of specialization
 Departmentalization 2. Clarity in working relationships
 Assignment of duties( to different job 3. Optimum utilization of resources
positions)
4. Adaptation of change
 Establishing reporting relationship
5. Effective administration
6. Development of personnel
7. Expansion and growth

IMPORTANCE (i.e. of creating a sound org. structure):

1. Benefits Of Specialization:
- The work is divided into different parts or ‗Jobs‘ and competent persons are appointed to handle all
the sub works.
- Job description = a written document that clearly defines the jobs and spells out what exactly has to
be done in every job.
- Repetitive performance →worker to gain experience in that area →specialization.
- Maximum work performance in the minimum time →specialization.
 Business Studies
2. Clarity In Working Relationships
- Clearly established working relationships clarifies lines of communication and specifies who is to
report to whom.
- This removes ambiguity in transfer of information and instructions.
- The hierarchical order thus created enabling the fixation of responsibility and specification of the
extent of authority to be exercised by an individual.

3. Optimum Utilization Of Resources

- Proper assignment of job avoids overlapping of work/duplication of work.
- This helps in preventing confusion and minimizing wastage of resources and efforts and leads to
proper usage of material, financial and human resources.

4. Adaptation To Change
- A properly designed = flexible where working relationships can be modified to suit changing
conditions in the environment and achieve smooth transition.
- Therefore movement of people in and out of jobs does not affect the work being done and the
capacity of business to undertake more activities in order to grow and diversify.
- Provides much needed stability to the enterprise and it can survive and grow despite changes.

5. Effective Administration
- Organizing provides a clear description of jobs and working relationships.
- It helps to avoid confusion and duplication.
- Clarity in working relationships → proper execution of work → management becomes easy →
effectiveness in administration.

6. Development Of Personnel
- Under the process of organizing, delegation of authority is practiced.
- By delegating routine jobs to their subordinates,
 Managers can concentrate in developing new technologies and methods of ways of
performing jobs,
 While this becomes a good training ground for subordinates, because they get to handle
responsibilities themselves.

7. Expansion And Growth

- A sound organization structure allows a business enterprise to add more job positions, departments
and even diversify their product lines.
- New geographical territories can be used to increase the customer base, sales and profit.

CONCLUSION:
- A sound form of org is the answer to every business problem; a poor org can run even a good
product into the ground; whereas a good org even with a poor product can run a good product out
of the market.
- Koontz O‘Donnell, ―Organization is a process by which manager brings order out of chaos, removes
conflicts b/w people over work or responsibility and establishes an environment suitable for
teamwork.‖
 Business Studies
Process of Organizing (Steps):

1. Identification & Division Of Work:

- The total work to be done should be divided into specific jobs as according to predetermined plans.
- Job = a set of related tasks that can be performed by an individual. It should have specific and
definite tasks to be performed. As far as possible, it should define expected results along with the
job.
- Division of work → specialization of efforts and skills + avoids duplication of work..
- Management must ensure that all the activities required to achieve organizational objectives are
identified.

2. Departmentalization:
- Grouping similar and related jobs into larger units called departments, divisions or sections and
placing them under a department head. It facilitates specialization.
- The departments are linked together and are interdependent.
- Aims at achieving co-ordination and facilitate unity of action. Departmentation can be done on the
basis of:
•Functions: marketing, personnel, finance etc.
•Products: Textiles, chemical, power division etc.
•Territories: Western, northern, central, eastern etc.

3. Assignment Of Duties:
- Define the work of different job positions and allocate work accordingly.
- Once departments are formed, the dept is placed under the charge of an individual.
- Jobs are assigned to an individual best suited to perform it.
- Qualifications, experience, ability and aptitudes of people should be matched with duties.
- E.g. activities of finance should be assigned to persons having qualifications and experience in
finance e.g. C.A‘s.

4. Establishing Reporting Relationships:

- Granting requisite authority to enable employees to perform the job satisfactorily.
- Superior subordinate relations between different people and job positions created, so that everybody
knows from whom he is to take orders and to whom he can issue orders.
- Creates management hierarchy = a chain of command from the top manager to the individual at the
lowest level.
- This helps in coordination.
CONCLUSION: To sum up in the words of Koontz and O‘Donnell, ‗Organizing is the process by which
manager brings order out of chaos, removes conflict between people over work and responsibility and
establishes an environment suitable for teamwork.‘

o Organisation Structure
o System of job positions, roles assigned to them and authority-responsibility relationships among
positions.
o It is a framework within which managerial and operating tasks are performed.
o It specifies relationships between people, work and resources.
o It may be vertical(authority responsibility relationships.) or horizontal(coordinating relationships)
o Ensures smooth flow of communication and better control over the operations.
 Business Studies

Types of Organisation Structure:

o Functional Structure:
o Activities are grouped according to the specific functions to be performed. It is the most
widely used basis for organising activities.
Suitability
1. Where the size of the business is medium or large.
2. Where there is only one main product.
3. Where specialization is required, so functional areas are given due importance.
4. Where professional experts are required to head various functional departments for better
performance and to bring about uniformity of operations in a functional area throughout the
organization.

Advantages of Functional structure Limitations of Functional structure

1. Benefits of specialization 1. Less emphasis on overall firm‘s objective

2. Increases managerial and operational 2. Problems in coordination
efficiency.
3. Conflict in interest if departments are not
3. Facilitates control and coordination within a compatible
department
4. Inflexibility as narrow perspective may
4. No duplication of efforts leading to economy develop
of operations
5. Makes training of employees easier
6. Ensures that all functions get due attention
DIAGRAM:

MD

Production
Finance Marketing Personnel

Marketing Sales Promotion

Sales manager
manager manager

Region A Sales Region B sales

manager manager
 Business Studies

Advantages of Functional Structure:

1. Benefits Of Specialization:
- Activities are divided into depts. on the basis of major functions so leads to occupational
specialization.
- This results in more and better work being accomplished in much lesser time.
- Promotes efficiency in utilization of manpower as employees perform similar tasks within a dept. &
are able to improve performance.

2. Facilitates Coordination And Control Within The Department:

- There is similarity in the tasks performed.
- Also, all employees within the dept. know what is expected out of them & that leads to effective
control over their activities.

3. Increases Managerial & Operational Efficiency:

- Similarity in the tasks being performed → specialization → improved operational efficiency.
- Specialists in functional areas supervise the operations → managerial efficiency improves.

4. No Duplication Of Efforts Leading To Economy Of Operations:

- In this type of org., unnecessary duplication of effort is eliminated.
- Human & other resources utilized more effectively and economically →economies of scale → lower
cost.
- E.g. Function of finance is only carried by the finance dept. There is no need to establish 2 or more
depts.

5. Makes Training Of Employees Easier:

- As they need to be trained in limited types of skills.
- E.g. employees of production department are given training of production techniques only.

6. Ensures That All Functional Areas Get Due Attention

Limitations of Functional Structure:

1. Less Emphasis On Overall Firm’s Objective

- Each dept. head gives more weight to their departmental objectives → overall org. objectives suffer
→ functional empires wherein the importance of a particular function may be overemphasized.
- Pursuing dept. interests at the cost of org. interests can also hinder interaction b/w 2 or more depts.
- E.g. to make his image, production dept. may make a very high quality product going contrary to
the org. objectives of selling it to the target market of middle income group.

2. Problems In Coordination:
- This structure facilitates co-ordination within the department but makes inter departmental co-
ordination difficult as to facilitate coordination, info has to be exchanged across functionally
differentiated depts.
- If dept. heads work as per according to their own wishes, sharing of info and inter-dept.
coordination becomes difficult.
 Business Studies
3. Conflict In Interest If Departments Are Not Compatible:
- Managers try to build their own functional empires & undermine the role of other depts., leading to
inter departmental rivalry and conflicts.
- E.g.: Sales dept. insists on a customer friendly design which may cause production difficulties. Such
dissension can prove to be harmful in terms of fulfillment of org. interest.
- Inter-departmental conflicts can also arise in the absence of clear separation of responsibility

4. Inflexibility as narrow perspective may develop

- As people with same skills & knowledge base may develop a narrow perspective and thus, have
difficulty in appreciating any other POV.
- Functional heads do not get training for top management positions because they are unable to
gather experience in diverse areas.

o Divisional Structure:
o Activities are grouped into divisions either on the basis of products or on the basis of
territories.
Suitability

1. Where the size of the concern is very large.

2. Where a large variety of products are manufactured
3. Where different productive resources, manufacturing technologies and marketing methods are
required for different products.
4. Firms having wide coverage or wide geographical area or having different market segments.
5. Where an organization is in an expansions mode. i.e wants to grow, add more departments.

Advantages of Divisional Structure Limitations of Divisional Structure

1. Development of generalist managers 1. Conflicts among divisions

2. Proper basis for performance evaluation and 2. Increase in costs due to duplication
ease in fixation of responsibilities for
3. Managers may ignore interests of the firm
mistakes.
4. Underutilization of performance*
3. Promotes flexibility and innovation and faster
decision making 5. Not suitable for medium or small scale
operations*
4. Facilitates expansion and growth.
Advantages of Divisional Structure:
1. Development Of Generalist Managers
- Product specialization helps in development of varied skills in a divisional head & prepares him for
higher positions.
- This is because he gains experience in all the functions related to a particular product.

2. Proper Basis For Performance Evaluation And Ease In Fixation Of Responsibilities For Mistakes
- All the activities of each div. are carried out independently. Hence the divisional results (P/L) can be
assessed easily. On this basis unprofitable division can be closed.
- Hence, in cases of poor performance of the division, appropriate remedial action can be taken.
 Business Studies

3. Promotes Flexibility And Innovation And Faster Decision Making:

- As every div. is independent, the divisional manager can take any decision regarding his div.
independently w/o consulting other divisional managers.
- Thus, division functions as an autonomous unit which leads to faster decision making

4. Facilitates Expansion And Growth.

- For every product a separate division is opened and if a company wants to introduce a new
product, it can be introduced easily without disturbing the existing divisions
Limitations of Divisional Structure:
1. Conflicts Among Divisions
- Conflicts → specially w.r.t allocation of funds and between divisional heads.
- Every division tries to display better performance, sometimes even at the cost of other divisions.
Consequently it hits the interest of the concern as a whole

2. Increase In Costs Due To Duplication

- The entire set of functions (e.g. production, marketing, finance, personnel etc.) is reqd. for all
divisions.
- Gives rise to duplicity of efforts among divisions. ∴ Resources are misused & cost of ops
unnecessarily.

3. MANAGERS MAY IGNORE INTERESTS OF THE FIRM

- Div. managers have a lot of autonomy & with time, gain a lot of power & may ignore org. interest.
DIAGRAM:

Chief
Executive

Cosmetics
Textiles Soaps
Department

Production Purchase Marketing Finance

 Business Studies
 Basis of differences between functional and divisional structure:

Basis Functional structure Divisional structure

1. Specialization Functional specialization. Product specialization
2. Basis of Formation is based on functions Formation is based on product
Formation/ lines and is supported by
organizational functions
Units

3. Responsibility Cannot be fixed on one department Can be fixed on separate

(for profits) products
4. Managerial Difficult, as each functional Easier, autonomy as well as the
Development/ manager has to report to the top chance to perform multiple
development of management. functions helps in managerial
general managers development

5. Cost Functions are not duplicated hence Duplication of resources in

economical various departments, hence
costly.
6. Coordination Difficult for a multi-product Easy, because all functions
company. related to a particular product
are integrated in one department.
 Autonomy of Less because various functions are inter- More because each unit is autonomous
operations dependent and inter related and independent

 Control Simple as authority is concentrated at the Difficult because of decentralization of

top level. authority at divisional level.

III. FORMAL ORGANIZATION:

- Refers to the org. structure that is designed by the management to accomplish organizational
objectives..
- It specifies clearly the boundaries of authority & responsibility and there is a systematic coordination
among the various activities to achieve organizational goals.
- Louis Allen – System of well defined jobs, each bearing a definite measure of authority,
responsibility & accountability.

Features of Formal Organization:

1. Clarifies Authority Relationships:

- Clearly explains the inter-relationship b/w jobs and thus, everybody knows his authority and
responsibility. This clarifies who has to report to whom.
 Business Studies
2. Means To Achieve Organizational Objectives
- It is a means to achieve the objectives specified in the plans. It lays down the rules & procedures
essential for their achievement.

3. Coordinate Efforts Of Various Departments:

- Efforts of various depts. are coordinated, interlinked & integrated through the formal org.

4. Deliberately Designed By Top Management

- The top management deliberately creates this org for successful achievement of objectives of org.

5. Emphasis On Work:
- It places more emphasis on work to be performed than inter personal relationships among
employees.

Importance/ Advantages of Formal Org

a. Easy To Fix Responsibilities: Since mutual relationships are clearly defined.

b. Avoids Duplication Of Effort: In FO, work is systematically divided among various depts.
&employees. ∴ No chance of overlapping of work.

c. Maintains Chain Of Command : FO clearly defines superior subordinate relationships, i.e. who
reports to whom

d. Clarifies Roles Of Job Positions And So Facilitates Achievement Of Firm‟s Goals: Leads to
effective accomplishment of goals by providing a framework for the operations to be performed
and ensuring that each employee knows the role he has to play.

e. Provides Stability To The Org: As behavior of employees can be fairly predicted since there are
specific rules to guide them. FO brings stability in the org. through policies, procedures & rules.
Working continues in spite of old employees leaving and new employees joining.

Limitations Of Formal Org:

A) Procedural Delays
Formal communication may lead to procedural delays as the established chain of command has to
be followed which 𝗍s the time taken for decision-making.
Work is bound by rules & while following the scalar chain of command, decisions & actions get
delayed

B) Rigidity/ Curbs Creativity

In this org. the employees have to do what they are told to do & have no opportunity of thinking.
Thus, their initiative gets slackened
Poor org. practices may not provide adequate recognition to creative talent, since it does not allow
any deviations from rigidly laid down polices. Does not allow deviations from set policies.

C) Does Not Give A Complete Picture Of How The Org. Works

FO gives importance to work only. It ignores human relationships, creativity & talent.
Does not give a complete picture of how an org. works as it does not incorporate the human element
so does not provide a complete picture of the functioning of the org.
 Business Studies
IV. INFORMAL ORGANIZATION
- While working in the FO structure, individuals interact w/ each other & develop some social &
friendly relationships in the org.
- This network of social & friendly groups forms another structure in the org. called informal org.
structure.
- This may be based on common language, tastes, likes etc. & its main purpose is psychological
satisfaction.
- IO has no written rules, is fluid in form and scope and does not have fixed lines of communication
- Depends upon FO structure & if there is no FO structure, there will be no jobs & people & thus, no
IO.

Features of Informal Org:

1. Arises Within The Formal Setup As A Result Of Personal Interactions B/W Members.
- IO emerges to meet the social and psychological needs of the people

2. Group Norms For Standards Of Behavior

- No written rules & procedures to govern inter relationships. But there are group norms to be
observed.
- E.g.: employees working in an org. and belonging to a particular community form a separate group
in an informal way and gradually some norms emerge and all the members are bound to observe
them.

3. Independent Channels Of Communication

- Info flows in all directions and it is very difficult to trace the source of information.

4. Emerges Spontaneously
- An IO is not deliberately created by management but comes into existence on the basis of personal
interaction, relationships, common interest, tastes, languages, likes etc.

5. No Definite Structure Or Form

- It is a complex network of social relationships and it cannot be defined because an employee at the
lowest level can have relationship at the top level.

Advantages of Informal Org

1. Faster Spread Of Communication And Quick Feedback
- IO cuts across formal channels of communication. May not follow scalar chain of command ∴
spreads faster.
- Through IO, the managers can get to know the real feedback on various policies and plans

2. Fulfill Natural Desires Of Members

- Members of an IO share their tensions, joys & frustrations w/ one another. They have an outlet to
release all their emotions and feelings and provide relief from the monotony created by FO.
- It helps to fulfill the social needs of the members and allows them to find like-minded people.
- This enhances their job satisfaction since it gives them a sense of belongingness in the org.

3. Compensates For Inadequacies In The Formal Structure

- E.g.: Improper and arbitrary use of authority by managers can be challenged so managers act
carefully.
 Business Studies
Limitations of Informal Org
1. Spreads Rumors
- IO is a breeding ground for rumors esp. where there is ambiguity in the policies and
programs of FO.
- An outbreak of rumor can cause serious harm to the enterprise and its management by
carrying incorrect information throughout the organization.

2. Resistance To Change
- IO generally prefers status quo & the existing work routine. Changes are regarded as a threat
to its beliefs & values.
- Thus, management has to face resistance to new work methods. This may delay/ restrict
growth.

3. Pressurizes Members To Conform To Group Norms.

- An IO evolves its own norms.
- These norms may be harmful if norms are against firms‘ interests & are contrary to standards
of behavior and performance in FO. In such a case it becomes very difficult to achieve the
goals of the formal org.

Basis Formal Organization Informal Organization

1. Meaning Structure of authority Network of social relationships

relationships created by the arising out of interaction among
management employees

2. Origin Arises as a result of company rules Arises as a result of social

and policies interaction

3. Authority Arises by virtue of position in Arises out of personal qualities

management

4. Behavior It is directed by rules There is no set behavior pattern

5. Flow of Communication takes place Flow of communication is not

Communication through the scalar chain through a planned route. It can
take place in any direction

6. Nature Rigid Flexible

7. Leadership Managers are leaders. Leaders may or may not be

managers.
The group chooses the leaders.
 Business Studies
 Differences Between Formal And Informal Organisations:

NCERT Points Non NCERT Points

 Meaning  Formation *
 Origin  Stability*
 Authority  Adherence to rules*
 Behavior  Inter-dependence*
 Flow of communication  Rigidity*
 Nature  Focus*
 Leadership  Depiction in Organisation chart*
 Structure*
 Purpose*

Delegation

According to Louis Allen, ‟Delegation is the process a manager follows in dividing the work assigned
to him so that he performs that part which only he, because of his unique organizational placement, can perform
effectively and so that he can get others to help him with what remains‟. Delegation refers to systematic
transfer of authority from superior to subordinates.

Delegation does not mean abdication

The manager, who assigns the job to the subordinates, shall still remain accountable for the
performance of the assigned tasks. It means that accountability is absolute. It can never be passed or
delegated. After creating accountability on subordinates, the superiors also remain accountable.

o Features of Delegation: o Importance of Delegation:

o Does not mean abdication of 1. Effective management
responsibility
2. Employee development
o Does not diminish authority of superior
3. Motivation of employees
o Delegated from higher to lower level
4. Facilitation of growth
o Accountability retained by managers
5. Basis of management hierarchy
6. Better coordination
7. Increases managerial effectiveness
 Business Studies

Features of Delegation:
A) Does Not Mean Abdication Of Responsibility:
- The manager shall still be accountable for the performance of the assigned tasks.
- Moreover, the authority granted to a subordinate can be taken back and re delegated to another
person.
- Thus, irrespective of the extent of delegated authority, the manager shall still be accountable to the
same extent as before delegation.

B) Delegated From Higher To Lower Level:

- Delegation refers to the downward transfer of authority from a superior to a subordinate.
- It is a pre-requisite to the efficient functioning of an org. because it enables a manager to use his time
on high priority activities. However, his authority is not given up.
- It also satisfies the subordinate‘s need for recognition & provides them w/ opportunities to develop
& exercise initiative
o Importance of Delegation:
1. Effective management::
 permits a manager to share his workload with his subordinates.
 Thus, the manager is able to concentrate on more important aspects of his work.
2. Employee development:
 Subordinates are required to exercise their authority to handle situations and to solve
managerial problems. This makes them better leaders and decision makers.
 Through the experience and competence acquired, they are prepared to take up higher
responsibilities in course of time.
3. Motivation of employees:
 Delegation provides a feeling of status and importance to subordinates, builds their
self-esteem and enhances their job satisfaction and confidence level. They become more
willing to work hard and achieve targets laid down by higher authorities.
4. Facilitation of growth:
 Of an organization by providing a ready workforce to take up leading positions in new
ventures.
 These trained and experienced employees are able to play significant roles in the launch
of new projects.
5. Basis of management hierarchy:
 Delegation of authority establishes superior subordinate relationships, which are the
basis of management hierarchy.
 It directs and regulates the flow of authority from top to bottom of the organization. It
gives meaning and content to the managerial jobs.
6. Better coordination:
 Delegation helps to define the authority, responsibility and accountability related to the
various positions in the organization.
 Such clarity in reporting relationships help to avoid duplication of work and facilitate
effective co-ordination amongst departments, levels and functions of management.
Conclusion: From the above discussion it is clear that delegation of authority is necessary for the
smooth functioning of work and facilitates higher efficiency levels in the organization. Infact, the
success of managing is determined by the effectiveness of delegation of authority.
 Business Studies
In the words of Allen,‘ Once a man‟s job grows beyond his personal capacity, his success lies in his
ability to multiply himself through his people.
o Elements of delegation:
There are three basic elements of delegation of Authority:
1. Assignment of Work/ Responsibility = obligation to perform certain activities.
2. Delegation of Authority = it is the right to decide, to direct others and to take action in
achieving the organisational objectives.
3. Creation of Accountability = it is the obligation to carry out responsibilities and exercise
authority in terms of established performance standards.

Authority Responsibility Accountability

 Right to issue orders and instructions and  Obligation o the employee  Being answerable for
exact obedience to properly perform the the final outcome
assigned duties.
 Helps to maintain order in the firm  Created because of
 Includes all activities that delegation of authority
 Arises by virtue of position in the scalar
must be performed to carry and responsibility.
chain of command and reduces successively
out a certain duty.
as one goes down the organizational  Enforced thro regular
structure.  Can be delegated. feedback on the extent
of work completed.
 Implies right to us resources and control  Flows upwards
others  Cannot be delegated
 Is bound by limits imposed by laws and  Flows upwards
rules and regulations of the firm
 Can be delegated
 Flows downwards.

Basis Authority Responsibility Accountability

Meaning Right to command. Obligation to perform an Answerability for outcome

assigned task. of the assigned task.

Delegation Can be delegated. Cannot be entirely delegated. Cannot be delegated at all.

Origin Arises from formal Arises from delegated Arises from responsibility.
position . authority.

Flow Flows downward from Flows upward from Flows upward from
superior to subordinate. subordinate to superior. subordinate to superior
 Business Studies
Inter Relationship Between Authority, Responsibility And Accountability

 Authority is delegated, responsibility is created and accountability is imposed.

 Responsibility arises out of authority and accountability arises out of responsibility.
 Authority flows downwards whereas responsibility and accountability flow upwards.
 E.g when the MD authorizes the departmental heads to manage their respective departments,
they become responsible to the MD for the due performance of their assigned jobs. They are
also answerable for the results of their departments.

o Essential Aspects/Process Of Delegation:

Entrustment of Entrustment of authority consistent

Responsibility with responsibility Creating Accountability

1. Entrustment Of Responsibility
- In the process of delegation every superior has to define the jobs to be performed by his
subordinates. He must also define the results expected. He has to further decide on the allocation of
duties to his subordinates.
2. Grant Of Authority
- It is giving the right to subordinates to decide & act & use the necessary resources & report to
superior.
- Every sub needs authority to carry out the tasks and perform the duties assigned to him.
- Managers at all levels derive authority granted by his superiors and confer a part of it on his subs.
3. Creation Of Accountability
- The subordinates are assigned responsibility that creates obligation to carry out the tasks assigned.
They also have to give an account of the results achieved, in terms of the standards of performance
laid down.
o Decentralization
o Decentralisation of authority means dispersal of authority to take decisions throughout the
organization, upto the lower levels.
o It implies reservation of some authority with the top level management and transferring rest of
the authority to the lower levels of the organization. This empowers lower levels to take decisions
regarding problems faced by them without having to go to the upper levels.
According to Allen,‘ Decentralisation refers to systematic efforts to delegate to the lowest level, all authority
except the one which can be exercised at central points.‟
Centralization = authority retained at top level and Decentralization = Systematic delegation of
authority at all levels and in all departments of a firm. Firm needs to balance the two.

o In case of a decentralized firm, Top level retains authority for:

o Policies and decisions w.r.t the whole firm
o Overall control and coordination
o Middle and lower levels have authority to take decisions w.r.t tasks allocated to them.
 Business Studies
Importance of Decentralization:

1. Develops initiative among subordinates

- Helps to promote self-reliance and confidence amongst the subordinates.
- Cause when lower managerial levels are given freedom to take their own decisions, they learn to
depend on their own judgment & feel constantly challenged to develop solutions for the problems
they encounter.

2. Develops managerial talent for the future

- Decentralisation gives the employees a chance to prove their abilities. They learn how to decide
and develop managerial skills.
- It also helps to create a reservoir of qualified manpower who have the necessary potential to
become dynamic leaders and who can be considered to fill up more challenging positions.

3. Quick decision making

- Under decentralisation, authority to make decisions is placed in the hands of those who are well
aware of the realities of the situation and are responsible for executing the decisions.
- As a result more accurate and faster decisions can be taken. There are also lesser chances of
information getting distorted because it does not have to go through long channels.

4. Relief to top management

- Decentralisation helps to reduce the workload of the top executives. They can devote greater time
and attention to important policy matters by decentralizing authority for routine operational
decisions.
- It reduces the need for direct supervision by the superior over the subordinates.

5. Facilitates growth
- Decentralisation facilitates the growth and diversification of the enterprise. Each department or
product division is given sufficient autonomy for innovations and creativity.
- Also a sense of competition can be created among different departments or divisions and the top
management can extend overall leadership over a giant enterprise

6. Better control
- Managers at all levels have adequate authority to make changes in work assignment, to change
production schedules, to recommend supervision and to take disciplinary actions. Therefore more
effective supervision can be exercised.
- Control can be made effective by the evaluating the performance of each decentralized unit in the
light of clear and pre determined standards.

As a conclusion, it must be noted that in spite of its benefits decentralisation should be applied with
caution as it can lead to organisational disintegration if the departments start to operate on their own
guidelines which may be contrary to the interest of the organisation. Decentralisation must always be
balanced with centralisation in areas of major policy decisions.
 Business Studies

Basis Delegation Decentralisation

1.Definition/ It refers to entrustment of responsibility It refers to systematic delegation of authority to

Nature and authority from a superior to his the lower levels in the organization. This is
subordinate. This is individualistic. totalistic.

2.Relationship Delegation establishes superior Decentralisation denotes relationship between

subordinate relationship the top management and various departments
and divisions.

3.Control The person who delegates keeps the Control is exercised in a general manner. The
power to control with himself. authority to control may be delegated to the
lower levels.

4.Need Delegation is essential, if an executive Decentralisation is not compulsory. It is the top

wants to get the help from others in management which decides the introduction of
getting things done. decentralisation

5.Purpose To reduce the burden the burden of a To increase the role of subordinates and giving
manager. them more autonomy.

6.Process Delegation of authority is a process. Decentralisation is not a process. It is the result

policy deceision taken by the top management.

7.Parties involved Involves two parties: the officer delegating It involves the entire organization. It is
the authority and the subordinate to concerned with all managerial levels.
whom the authority is delegated.

8. Responsibility Full responsibility and accountability is Full responsibility and accountability is

and accountability not transferred. The executive remains transferred. The executives holding authority
liable to his superior even after delegation. are held liable.

9.Freedom of There is lesser freedom of action because There is more freedom of action. Once the
action there is a constant and continuous authority is decentralized there is only periodic
supervision by the manager. appraisal and no constant supervision.

10.Withdrawal of Delegated authority can be withdrawn by Decentralisation authority cannot be

authority the delegator. It is the individual officer‘s withdrawn easily. These authorities can be
will to continue or withdraw. withdrawn only when the decision is taken to
discontinue decentralization
 Business Studies
Span of control:
It refers to the number of subordinates placed under the manager‟s supervision and control. According to the
principle of span of control, there is a limit to the number of subordinates which a manager can supervise and
control. Generally the span of control is narrow at higher levels of management and wider at lower levels.

Factors affecting span of control

1. Capacity and intelligence level of the managers: If the managers are smart and intelligent, they can have
a wider span. i.e more number of subordinates can work under them.
2. Trust of the managers in their employees: The managers who have more trust in their employees can
have a wider span.
3. Intelligence level of employees: If the employees are trained and professional, then there can be a wider
span. On the contrary unskilled employees need more guidance, so narrow span of control is needed.
4. Nature of job: If routine jobs have to be performed, then there can be wide span, but for specialized and
challenging jobs, a narrow span of control is preferred.
 Business Studies

Staffing
Introduction:

o Managerial function of filling and keeping filled the positions in an organisation structure. This is
achieved by identifying requirement of work force, followed by recruitment, selection, placement,
promotion, appraisal and development of personnel to fill the roles designed into the organisation
structure.

o It is the process of hiring and developing the required personnel to fill in various positions in the
organisation.

Role Of Staffing Function In A New Enterprise

o In a new enterprise, the staffing function follows the planning and organising functions.
o After deciding what is to be done, how it is to be done and after creation of the organisation
structure, the management is in a position to know the human resource requirements of the
enterprise at different levels.
o Once the number and types of personnel to be selected is determined, management starts with the
activities relating to recruiting, selecting and training people, to fulfill the requirements of the
enterprise.

Role Of Staffing Function In An Existing Enterprise

o In an existing enterprise, staffing is a continuous process because new jobs may be created and
some of the existing employees may leave the organisation.

Need for Staffing:

o (i.e. why is staffing function needed by a firm and is considered to be a field of study)
1. The staffing function of management fulfils this requirement and finds the right people for
the right job. Basically, staffing fills the positions as shown in the organisation structure.
2. Emphasis on the Human element as qualities like the aptitude, attitude, commitment of
employees: help in fitting the right person to the right job. The right people can help you take
your business to the top; the wrong people can break your business. Hence, staffing is the most
fundamental and critical drive of organisational performance. The staffing function has
assumed greater importance these days because of rapid advancement of technology,
increasing size of organisation and complicated behaviour of human beings. Human resources
are the most important asset of an organisation.
3. The ability of an organisation to achieve its goal depends upon the quality of its human
resources. Therefore, staffing is a very important managerial function.
4. Availability of knowledge and theory as a specialized area of study. Researches on various
aspects of staffing i.e., recruitment, selection, compensation and incentives, train-ing and
development, can be utilised for better results.
 Business Studies
Importance of Staffing:

o (i.e. proper staffing ensures the following benefits to a firm)

a. Helps in discovering and obtaining competent personnel for various jobs;

b. Makes for higher performance by putting right person on the right job;
c. Ensures the continuous survival and growth of the enterprise through the succession
planning for managers;
d. Helps to ensure optimum utilisation of the human resources. By avoiding ‗over manning‘,
it prevents under•utilisation of personnel and high labour costs. At the same time it
avoids disruption of work by indicating in advance the shortages of personnel; and
e. Improves job satisfaction and morale of employees through objective assessment and fair
reward for their contribution.

What is the difference in the performance of staffing function in a small and a large organization?

When the manager performs the staffing function in a small organsiation his role is slightly
limited. Some of these responsibilities will include
a. Placing the right person on the right job,
b. Introducing new employees to the organisation,
c. Training employees and improving their performance,
d. Developing their abilities,
e. Maintaining their morale and protecting their health and physical conditions.

In a large organization, as the number of persons employed increases, a separate department called
the human resource department is formed which has specialists in managing people. The
management of human resource is a specialised area which requires the expertise of many people.
The number of human resource specialists and size of this department gives an indication of the size
of the business as well. For a very large company, the Human Resources Department itself will
contain specialists for each function of this department.
Their duties are:
a. Recruitment i.e., search for qualified people
b. Analysing jobs, collecting information about jobs to prepare job descriptions.
c. Developing compensation and incentive plans.
d. Training and development of employees for efficient performance and career
growth.
e. Maintaining labour relations and union management relations.
f. Handling grievances and complaints.
g. Providing for social security and welfare of employees.
 Business Studies
Staffing As a Part of Human Resource Management
 Staffing
o Function which all managers have to perform as all managers directly deal with people
o Staffing refers to this kind of role played by all managers in small organizations.

 As organizations grow and number of people employed increases, a separate department called
the human resource department is formed which consists of specialists who are experts in dealing
with people.

 In fact early definitions of staffing focused narrowly on only hiring people for vacant positions.
But today staffing is a part of HRM which encompasses not only staffing but also a number of
other specialized services such as job evaluation, management of labour relations.

 Human Resource Management

 Involves procuring, developing, maintaining and appraising a competent and satisfied workforce
to achieve the goals of the organization efficiently and effectively.
 Its purpose is to enable every human being working in the organization to make his best possible
contribution.

 It includes many specialized activities performed by human resource personnel. These are:

1. Human resource planning 5. Training and development of employees (as

2. Recruitment a part of their career development)
3. Selection 6. Performance Appraisal of employees
4. Developing compensation and 7. Handling grievances and maintaining
incentive plans management labor relations
8. Providing for social security and welfare of
employees

o Thus we see that human resource management is a much broader concept and includes a wide
range of activities and staffing is an integral part of human resource management.

Evolution of Human Resource management

Human Resource Management in its present form has evolved from a number of significant inter-
related developments over a period of time.
o Industrial Revolution--- led to trade unions---(Labour welfare Officer)
o Introduction of factory system led to employment of large number of labour under
one roof-- (Personnel Officer/Manager)
o Human Relations Approach--- (Human Resource Manager)

Staffing is both a function of management just like planning, organising, directing, and controlling as
well as a distinct functional area of management just as marketing management and financial
management. Staffing, is therefore, referred to as both a line as well as a staff activity i.e., an essential
function of the manager as well as an advisory role played by the Human Resource Department.
 Business Studies
Steps in Staffing Process:

1. Estimate manpower requirement:

 Work load analysis and workforce analysis
 Avoid both under and over staffing
 specific job description and the desirable profile of its occupant charted.

2. Recruitment:
3. Selection
4. Placement and orientation:
 Placement = putting the right person on the right job. This would reduce turnover,
absenteeism and accidents and increase the morale of employees.
 Orientation = introduce employees to job, workgroup and organisation.
5. Training and Development:
 In most organisations there is a separate Human Resource Department, which takes care of
the staffing function. But in small organisations the line manager is required to perform all
the functions of management viz, planning, organising, staffing, directingandcontrolling.
 The process of staffing will then include three more stages.

6. Performance appraisal
7. Promotion and carer planning
8. Compensation

STAFFING PROCESS

(i) Estimating the Manpower Requirements: Operationally, understanding the manpower

requirements would necessitate workload analysis on the one hand and workforce analysis on
the other.
a. Workload analysis would enable an assessment of the number and types of human
resources necessary for the performance of various jobs and accomplishment of
organisational objectives.
b. Workforce analysis would reveal the number and type available. In fact such an
exercise would reveal whether we are understaffed, overstaffed or optimally staffed.
c. Translate the manpower requirements into specific job description and the desirable
profile of its occupant — the desired qualifications, experience, personality
characteristics etc.
(ii) Recruitment: Recruitment may be defined as the process of searching for prospective
employees and stimulating them to apply for jobs in the organisation. The information
generated in the process of writing the job description and the candidate profile may be used
for developing the ‗situations vacant‘ advertisement. The essential objective is to create a pool
of the prospective job candidates. Both internal and external sources of recruitment may be
used.
(iii) Selection: Selection is the process of choosing from among the pool of the prospective job
candidates developed at the stage of recruitment. The selection process serves two
important purposes:
a. it ensures that the organisation gets the best among the available, and
b. it enhances the self•esteem and prestige of those selected and conveys to them the
seriousness with which the things are done in the organisation.
 Business Studies
(iv) Placement and Orientation: The employee is given a brief presentation about the company
and is introduced to his superiors, subordinates and the colleagues. He is taken around the
workplace and given the charge of the job for which he has been selected. This process of
familiarization is very crucial and may have a lasting impact on his decision to stay and on
his job performance. Orientation is, thus, introducing the selected employee to other
employees and familiarizing him with the rules and policies of the organization. Placement
refers to the employee occupying the position or post for which the person has been selected.

(v) Training and Development: By offering the opportunities for career advancement to their
members, organisations are not only able to attract but also retain its talented people.

 In most organisations there is a separate Human Resource Department, which takes care of
the staffing function. But in small organisations the line manager is required to perform all
the functions of management viz, planning, organising, staffing, directing and controlling.

 The process of staffing will then include three more stages.

(vi) Performance Appraisal: After the employees have undergone a period of training and they
have been on the job for some time, there is a need to evaluate their performance. Performance
appraisal means evaluating an employee’s current and/or past performance as against
certain predetermined standards. The employee is expected to know what the standards are
and the superior is to provide the employee feedback on his/her performance. The
performance appraisal process, therefore, will providing feedback.

(vii) Promotion and career planning: Promotions are an integral part of people‘s career. They
refer to being placed in positions of increased responsibility. It usually means more pay,
responsibility and job satisfaction.

(viii) Compensation: Compensation, therefore, refers to all forms of pay or rewards going
to employees. It may be in the form of direct financial payments like wages, salaries.
Direct financial payments are of two types :
a. time based: A time based plan means salary and wages are paid either daily, weekly or
monthly or annually.
b. performance based. A Performance based plans means salary/wages are paid
according to piecework. For example, a worker may be paid according to the number of
units produced by him/her. There are many methods to calculate the compensation
under various incentive plans to reward performance.
c. Certain pay plans can be created which are a combination of time based pay plus
incentives for higher performance.
d. Besides there are some other factors also which influence the design of any pay plan,
like legal (labour laws), union, company policy and equity.

Primary/Major Aspects of Staffing

= Recruitment (identifying and attracting staff) + Selection(assessment, evaluation and final match) +
Training(acquainting and skill development).
 Business Studies
Recruitment - Meaning and Sources:
o Process of searching for prospective employees and stimulating them to apply for jobs in
the organisation.
o The various activities involved with the process of recruitment includes
 Identification of the different sources of labor supply,
 Assessment of their validity,
 Choosing the most suitable source or sources, and
 Inviting applications from the prospective candidates, for the vacancies.

o Sources of recruitment of employees:

Internal Sources External Sources
o Transfers
o Promotions o Direct recruitment o Campus recruitments*
o Layoffs* o Casual callers o Recommendation of
o Advertisements employees*
o Employment exchanges* o Labour contractors
o Placement agencies and o Advertisement on TV*
management consultants* o Web publishing*

(* = specifically for managerial positions)

Internal Sources External Sources

Merits Limitations Merits Limitations

1. Motivated employees 1. inbreeding 1. Qualified 1. Dissatisfaction
and higher morale of 2. Employees become personnel among existing
employees. lethargic 2. Wider choice staff
2. Simple and reliable 3. Filling all vacancies thro 3. Fresh talent 2. Lengthy process
3. Induction training not internal source is not 4. Competitive Spirit 3. Costly process
required possible
4. Surplus staff can be 4. Competition hampered
moved to areas that have 5. Reduce productivity of
shortage employees
5. Cheaper

Differences between internal external sources:

1. Economy 2. Time involved 3. Extent of choice 4. Motivation to
existing staff
5. Quality of recruitment
Q. External sources are more expensive than internal sources, then why does an org opt for these?
Ans. An enterprise has to tap external sources for various positions because all the vacancies cannot be
filled through internal recruitment. The existing staff may be insufficient or they may not fulfill the
eligibility criteria of the jobs to be filled.
 Business Studies

I. Internal Sources Of Recruitment:

i. Transfers:
 It involves shifting of an employee from one job/department/ shift to another, without a
substantive change in the responsibilities and status of the employee.
 It may lead to changes in duties and responsibilities, working condition etc., but not
necessarily salary.
 Shortage of suitable personnel in one branch may be filled through transfer from other
over staffed branch or department.
 helpful in avoiding termination and in removing individual problems and grievances.
 Employees transferred from one job to another should be capable of performing it.
 Transfers can also be used for training of employees for learning different jobs.

ii. Promotions:
 Promotion leads to shifting an employee to a higher position, carrying higher
responsibilities, facilities, status and pay.
 Promotion is a vertical shifting of employees.
 Improves motivation, loyalty and satisfaction level of employees.

Merits - Internal Sources

1. Motivated employees and higher morale of employees.
 Chain of promotions motivates employees to improve thro learning and practice.
 Employees become committed, loyal and have job satisfaction => organizational peace.
2. Simple and reliable
 Simplifies selection process = evaluation = accurate and economical.
 Reliable as candidates are already known.
3. Tool of training for higher positions and Induction training not required
 Transfers = tools of training for higher positions.
 Ind Tr ≠ needed as candidates are already a part of the firm
4. Surplus staff can be moved to areas that have shortage
 So helpful in avoiding terminations.
5. Cheaper:
 As selection process is simplified +lesser requirement for tests and induction training.

Limitations - Internal Sources

1. Inbreeding
 Scope for induction of fresh talent is reduced, therefore stopping infusion of ‗new
blood‘ into the organization.
2. Employees become lethargic
 If they are sure of time bound promotions.
3. Filling all vacancies thro internal source is not possible
4. Competition hampered
5. Reduce productivity of employees
 Business Studies
II. External Sources Of Recruitment:

1. Direct Recruitment:
- A notice is placed on the notice board of the enterprise specifying the details of the jobs available.
- Job seekers assemble outside the firm on the specified date & selection is done on spot.
- Followed usually for casual vacancies of unskilled/ semi•skilled jobs.Such workers are known as
casual or ‗badli‘ workers and theyare paid remuneration on daily wage basis.
Benefits of Direct Recruitment:
- Very inexpensive, as it does not involve any cost of advertising the vacancies.
- Suitable for filling casual vacancies when there is a rush of work or when some permanent workers
are absent.

2. Casual Callers:
- Many reputed biz orgs keep a database of unsolicited applicants in their offices. Such jobseekers can
be a valuable source of manpower.
- A list of such job•seekers can be prepared & can be screened to fill the vacancies as they arise.
Benefits of casual Callers:
- It reduces the cost of recruiting workforce in comparison to other sources.

3. Advertisement:
- Advertisement in newspapers or trade & professional journals is generally used when a wider
choice is required.
- Most of the senior positions of industry as well as commerce are filled by this method.
Benefits of Advertisements:
- More information about the org and job can be given in the advertisement.
- Advertisement gives the management a wider range of candidates from which to choose.
Disadvantages:
- It may bringin a flood of response, and many times, from quite unsuitable candidates.

4. Employment Exchange:
- Employment exchanges run by the Govt. are regarded as a good source of recruitment forunskilled
and skilled operative jobs.
- In some cases, law requires compulsory notification of vacancies to employment exchange.
Benefits:
- Help to match personnel demand &supply by serving as link b/w employees and employers.
Disadvantages:
- The records of employment exchange are often not up to date.
- Many of the candidates referred by them may not be found suitable.

5. Placement Agencies & Management Consultants:

- Placement agencies provide a nationwide service in matching personnel demand and supply.
- Compile bio data of a large no. Of candidates & recommend suitable names to their clients.
- Such agencies charge fee for their services and they are useful where extensive screening is required.
Benefits:
- Management consultancy firms help the orgs to recruit technical, professional & managerial
personnel.
- They specialize in middle level and top-level executive placements.
 Business Studies
6. Campus Recruitment:
- Refers to Recruitment from educational institutions
- Colleges and institutes of management and technology have become popular source of recruitment
for technical, professional and managerial jobs.
- Many big orgs maintain a close liaison with the universities, vocational schools and management
institutes to recruit qualified personnel for various jobs.

7. Recommendation Of Employees:
- Applicants introduced by present employees, or theirfriends and relatives may prove to be a good
source of recruitment.
- Such applicants are likely tobe good employees because their background is sufficiently known.
- A type of preliminary screening takes place because the present employees know both the company
and the candidates and they would try tosatisfy both.

8. Labor Contractors:
- Labor contractors maintain close contacts with laborers and they can provide the reqd. no. Of
unskilled workers at short notice.
- Workers are recruited through labor contractors who are themselvesemployees of the org.

Disadvantages:
- If the contractor himself decides to leave the org., all the workers employed through him will follow
suit.

9. Advertising On Television:
- The practice of telecasting of vacant posts over TV is gaining importance these days.
- The detailed requirements of the job and the qualities required to doit are publicized along with the
profile of the org where vacancy exists.

10. Web Publishing:

- Internet is becoming a common source of recruitment these days.
- There are certain websites specifically designed and dedicated for the purpose of providing
information about both job seekers and job opening.
- In fact, websites such aswww.naukri.com, www.jobstreet.com etc., are very commonly visited both
by the prospective employees and the orgs searching for suitable people.

Merits - External Sources

1. Qualified personnel
 Better access to qualified and trained personnel as compared to internal.
2. Wider choice
 Because of larger number of applicants.
3. Fresh talent
 Wider choice +infusion of ‗new blood‘ into the firm.
4. Competitive Spirit
 As existing staff will have to compete => work harder
 Business Studies
Limitations - External Sources
1. Dissatisfaction among existing staff
 As they feel that their chances of promotions reduce.
2. Lengthy process
 Time period for notifying vacancies, receiving applications and then starting the
selection process.
3. Costly process
 Because of expenses on advertisements and processing of applications.

Selection - Meaning And Process:

 Process of screening candidates who offer themselves for appointment so as to choose the most
appropriate one for the job.

PROCESS OF SELECTION
1. Preliminary Screening:
- Helps the manager eliminate unqualified/ unfit job seekers based on the info supplied in the
application forms.
- Preliminary interviews help reject misfits.

2. Selection Tests:
- An employment test is a mechanism (either a paper &pencil test or an exercise) that attempts to
measure certain characteristics of individuals.
- These characteristics range from aptitudes, such as manual dexterity, to intelligence to personality.
- Important Tests Used for Selection of Employees:

Intelligence Tests:
- This is one of the imp psychological tests used to measure the level of intelligence quotient of an
individual.
- It is an indicator of a person‘s learning ability or the ability to make decisions and judgments.

Aptitude Test:
- It is a measure of individuals potential for learning new skills.
- It indicates the person‘s capacity to develop.
- Such tests are good indices of a person‘s future success score, potential to acquire skills and the later
the actual skills possessed.

Personality Tests:
- Personality tests provide clues to a person‘s emotions, her reactions, maturity and value system etc.
- These tests probe the overall personality. Hence, these are difficult to design and implement.

Trade Test:
- These tests measure the existing skills of the individual.
- They measure the level of knowledge & proficiency in the area of professions or technical training.

Interest Tests:
- Every individual has fascination for some job than the other.
- Interest tests are used to know the pattern of interests/ involvement of a person.
 Business Studies
3. Employment Interview:
- It is a formal, in-depth conversation conducted to evaluate the applicant‘s suitability for the job.
- The role of the interviewer is to seek info and that of the interviewee is to provide the same.
- Though, in present times, the interviewee also seeks information from interviewer.

4. Reference and Background Checks:

- Many employers request names, addresses, &telephone numbers of references for the purpose of
verifying info and, gaining additional info on an applicant.
- Previous employers, known persons, teachers and university professors can act as references.

5. Selection Decision:
- The final decision has to be made from among the candidates who pass the tests, interviews and
reference checks.
- The views of the concerned manager will be generally considered in the final selection because it is
he/she who is responsible for the performance of the new employee.

6. Medical Examination:
- After the selection decision and before the job offer is made, the candidate is required to undergo a
medical fitness test.
- The job offer is given to the candidate being declared fit after the medical examination.

7. Job Offer:
- Joboffer to those applicants who have passed all the previous hurdles.
- Made through a letter of appointment/confirmhis acceptance.
- Such a letter generally contains a date by which the appointee must report on duty.

8. Contract of Employment:
- Certain documents need to be executed by the employer and the candidate.
- One such doc =Attestation form.
- This form contains certain vital details about the candidate, which are authenticated and attested by
him or her. Attestation form will be a valid record for future reference.
- There is also a need for preparing a contract of employment. Basic info that should be included in a
written contract of employment will vary according to the level of the job, but the following
checklists sets out the typical headings:
- Job Title, Duties, Responsibilities, Date (when continuous employment starts) and the basis for
calculating service, rates of pay, allowances, hours of work, leave rules, sickness, grievance
procedure.

Training and Development

Training:
 The term training is used to indicate the process by which attitudes, skills&abilities of employees to
perform specific jobs are increased.
 Training is a process of increasing knowledge &skills. It is to enable the employee to do the job
better.
 It is a job-oriented process.
 Business Studies

Development:
 Refers to the learning opportunities designed to help employees grow. It covers not only those
activities that improve job performance but also those, which bring about growth of the personality,
help individuals in the progress towards maturity & actualization of their potential capacities so that
they become not only good employees but also better men and women.
 The term development means growth of individual in all respects.
 Training is short-term process but development is an on going process.
 Also, development includes training.

Education:
 It is the process of increasing the knowledge.
 Imparts qualities of mind, character and understanding of the basic principles and develops the
capacities of analysis, synthesis and objectivity.
 Broader in scope than training.

o Need for training:

Benefits to the firm: Benefits to the employee:

1. Avoids wastage of time, effort and money involved in 1. Improved skills an knowledge so better
the hit and trial method. career opportunities
2. ↑ productivity(quality + quantity)thereby leading to ↑ 2. Better performance→ higher earnings
profits 3. Less accidents
3. Equips future managers(to take over in emergencies) 4. ↑ satisfaction and morale of employees
4. ↑ employee morale,↓ absenteeism and turnover
5. response to fast changing environment
6. ↓ supervision, standardization of procedure and
safety of operations

o Methods Of Training :

On the job: Off the job

 Employees are trained while they are performing  Training the employees by taking them away
the job in their workplace. from work position =>employees are given a
 Employees learn by doing. Suitable only for break from the job and sent for training. It
technical jobs and where a few employees are to be emphasizes on learning rather than doing.
trained in the real job environment.  The employer specifically arranges the training
 Advantage => employees can learn about practical programme/ workshop by calling in experts.
problems while working on the job + promotes self-  More suitable for managerial job positions or where
learning. large number of employees has to be trained.
 Disadvantage => results in wastage of resources  Advantage => enables the trainees to concentrate
and might disrupt normal functioning. better because they are free from job pressure.
 Disadvantage => more expensive.
Types: Apprenticeship Program and Internship
Types: Vestibule Training and Induction Training
 Business Studies

Apprenticeship Programme/training: Induction Training :

o Persons who want to enter skilled jobs such as o Induction training is a type of training given to help
plumbing, iron smithy, electrician‘s job are sent for a new employee in settling down quickly into the
apprenticeship programme. job by becoming familiar with the people, the
o Master worker /trainer is appointed who guides surroundings, the job and the business. The
the worker or the learner regarding the skills of the duration of such type of training may be from a few
job. hours to a few days

o When the learner becomes an expert then he is

given the full charge of the job position.
o Generally the time period for such a programme
may vary from 2 to 5 years

Internship: Vestibule Training:

o An agreement between the professional institutes o Employees learn their jobs on the equipment that
and the corporate sector, whereby the professional they will be using, but the training is conducted
Institutes send their students to various companies away from the workplace.
so that they can practice the theoretical knowledge
o A dummy model of the workplace/ machinery is
acquired through these professional Institutes.
prepared for this purpose and the employees are
o The companies prefer this arrangement because trained on it, using similar materials, files and
they get people with fresh ideas and latest equipment instead of the original work set-up.
knowledge and because they can pay them nominal o This method is suitable when the employees are
stipends. On the other hand students get a chance
required to handle sophisticated machinery and
to practice under the real work situation.
equipment and it provides the benefit of the on the
o Thus we can say that under Internship the class job methods.
room sessions are backed with Practical training.

 Situations in which training is required :

a. Increase in labour turnover d. industry is expanding

b. Inexperienced personnel e. economy recover after depression
c. As a tool for controlling f. introduction of new technology

Training Development
It is a process of increasing knowledge and skills. It is a process of learning and growth.
It is to enable the employee to do the job better. It is to enable the overall growth of the employee.
It is a job oriented process. It is a career oriented process
 Business Studies

Points of distinction Between Training and Development

1. Concept/ Depth of knowledge 5. Time/duration

2. Purpose 6. Initiative

3. Nature/ Scope of learning 7. Suitability

4. Methods used

Q. What should be done in case of over staffing or understaffing?

It may be pointed out that neither over•staffing nor under•staffing is a desirable situation.
 A situation of overstaffing somewhere would necessitate employee removal or transfer elsewhere.
 A situation of understaffing would necessitate the starting of the recruitment process.

Topics given in NCERT but not included in the Syllabus:

1. Methods of Training:
o On the Job Methods,
 Coaching, Internship Training, Job Rotation:
o Off the Job Methods:
 Class Room Lectures/Conferences, Films, Case Study, Computer Modelling,
Programmed Instruction.