Page |1

PRINCIPAL OF MANAGEMENT
DELEGATION OF AUTHORITY AND DECENTRALISATON
Authority is the power to take decision which guides the activities of others. It is
not possible for a person to discharge all the duties in an organization. In order to finish
the work in time, there is need of delegation of authority and division of labor.
Definition
Hentry Fayol Authority is the right to give orders and the powers to exact obedience.
Strong Authority is the right to command.
Massie The Formal right to exercise control.
Characteristics of Authority
1. Basis of getting things done Authority gives the right to do things in an
organization and affect the behavior of others in the organization.
2. Legitimacy Authority implies a legal right available to superiors. This type of
right arises due to the tradition followed in an organization. The right of a mnager
to affect the behavior of his subordinates is given to him on the basis of an
organizational hierarchy.
3. Decision Making The manager can command to his subordinates to act or not
to act. This type of decision is taken by superiors for the smooth functioning of
the organization.
4. Implementation Implementation influences the personality function of the
manager who has given the authority. The subordinates should follow the
instructions of the manager regarding the implementation of decisions.
Sources of Authority For knowing the origin or sources of authority three main
theories are there.
1. Formal authority theory
According to this theory the authority flows from top to bottom through the
structure of an organization. Here the authority flows from the general manager to his
departmental manager and from him to the superintendent and so on. This is explained in
the following diagram.
Board of Directors

General Manager

Sales Manager

Sales Representatives

Workers

Page |2
This method is also known as traditional theory and top down authority theory.
In the case of public limited companies the authority is in the hand of shareholders and
they are delegating authority to top level management and from them to middle level and
to lower level management.
2. Acceptance of authority theory
This theory was developed by Chester barnad. According to this theory authority
flows from the superior to subordinates whenever there is an acceptance on the part of the
subordinates. The subordinates should accept the authority but there is no compulsion
made by the superior. If the subordinates are not accepting the authority then the superior
cant have any authority over them. The authority of the superior will be effective only
when the subordinates are accepting it and it is ineffective when they not accepting it.
Some times the subordinates are accepting the orders of the subordinates with a second
thought. If the subordinates are accepting the orders of the superiors without any
hesitation, it is known as zone of acceptance.
Zone of acceptance will be determined by a number of factors.
1. The subordinate believes that rewards will be given to him as an appreciation of
his work.
2. A subordinate thinks that he has to accept the authority in a particular situation.
3. The non acceptance of authority will result in dismissed of the subordinate from
organization.
4. There is no other way available than to accept the authority.
5. It is the duty of the subordinate or it is the policy of the organization.
6. People have confidence in the person giving orders.
3. Competence theory
This type of authority is given to persons who have good leadership qualities. He
has the ability to convince his subordinates and to make them accept the authority.
Delegation It is impossible for any person to execute all the work in an organization for
achieving its objectives. So the superiors assign duties or responsibilities to his
subordinates and also delegate necessary authorities to them.
Delegation is a process by which a superior divides his total work between
himself and his subordinates in order to achieve organizational objectives.
Importance of Delegation
Delegation is considered as the most important method of training subordinates.
The delegation helps the manager to concentrate on the important work of planning
organizing and controlling.
In a democratic country like India people delegate their authority to the members
of the legislature. The members of the legislature delegate, their authority to any of the

Page |3
elected leaders and who in turn delegates some of his authority to the cabinet ministers
chosen by him.
If a business unit has branches at different places the best possible way is to
delegate.
Elements of Delegation
The following are the three elements of delegation.
1. Assignment of duties or responsibilities
If a superior has no time to complete his duties the immediately assigns a part of
his work to his immediate subordinate.
2. Delegation of Authority
If the work is assigned to a subordinate the it is to give him the authority to do it
by giving written proof.
3. Accountability
Accountability means the subordinate is responsible to his immediate superior for
the work done by him. That means if the subordinate is committing any mistake he is
responsible for that. But the superior is answerable to the top management for the act of
the subordinate.
Principles of delegation
1. Delegation to go by results expected Every organization have certain objectives.
Both superior and subordinates are working for achieving these objectives. So before
delegating authority it is the responsibility of the superiors to make it clear to the
subordinates the object of this delegation and what they are expecting from them.
2. Non-Delegation of responsibility A superior can delegate authority but not
responsibility. In this case the superiors are watching the performances of the
subordinates. The ultimate responsibility for the performance of subordinates remains
with the superior.
3. Authority and responsibility should balance A subordinate can discharge his duties
effectively and efficiently if there is proper delegation of authority.
Authority without responsibility will make the subordinate a careless person and
responsibility without authority will make the subordinate and inefficient person. So there
should be a proper balance between authority and responsibility.
4. Unity of Command The principle of unity of command insists that a subordinate get
instruction from only one superior. In other words a subordinate should be assigned
duties and responsibilities from only one superior and he is accountable only to the
concerned supervisor.

Page |4
If a subordinate gets orders and instructions from more than one superior, it will
create uncertainty and confusion with in the organization. In such a situation the
subordinate will find it difficult to determine whose instruction he should do first.
5. Definition of limitation of authority An authority only can delegate authority
properly. There should be a written manual showing the authority and responsibility of
superiors. This will avoid confusion.
Types of Delegation
Following are the different types of delegation.
1. General This means giving authority to the subordinates to perform various
managerial functions and exercise control over his subordinates. At the same time same
persons are regulated.
2. Specific Delegation Under specific delegation the orders and instructions are
delegated to a particular person specifically. For e.g. Personal manager may be
delegated authority for selection of personal traveling of personal, placement of personal
etc.
3. Written delegation This type of delegation is made by written orders and
instructions.
4. Unwritten delegation Here authorities are delegated orally. There is no evidence
available for future reference.
5. Formal delegation The duties and authorities are clearly mentioned in the
organizational structure. Production manager has given authority to make changes in
production.
6. Informal delegation In certain cases, a person has to use the authority without
getting it from the top management. The reason is that he can perform his assigned duties
in time.
7. Downward delegation This means when a superior could delegate duties and
authorities to his immediate subordinate. This type of delegation is followed in many
organizations.
8. Accrued delegation Under this type of delegation a subordinate can delegate his
authority to his immediate authorities.
9. Sideward delegation A person delegate authority to another person who is also in
the same rank.

Page |5
Advantages of Delegation:1. Basis of effective functioning For the effective smooth functioning of an
organization delegation plays an important role. That means instead of doing all
works by one person sharing is effective.
2. Saving of time By allotting works to subordinates superiors are in a position to
concentrate more time to important matters like planning, organizing, controlling
and other activities.
3. Reduction of work Delegation relieves the superiors from attending day to day
activities. Daily activities are common in nature and it is easy for the subordinates
to manage that.
4. Opportunity for development Delegation is the best opportunity for the
workers to grow. It helps the superiors to identify the effective personalities.
Remember delegation is a training ground for subordinates.
5. Effective managerial supervision As per management theory superiors have
no right to compel subordinates to accept delegation. Then subordinates are
responsible to their immediate superiors and the ultimate responsibility for the
work is superiors. Because of these managers supervise subordinates effectively.
6. Efficient running of branches If a business has branches they need efficient
persons to manage the business. Delegation of authority is an effective way of
training and developing future managerial persons.
7. Interest and Initiative Most of the cases subordinates are ready to accept the
orders of superiors and do that work effectively. In certain cases subordinates are
doing work by them and take initiative personally.
8. Satisfaction to subordinates By delegating authorities superiors are accepting
the abilities of subordinates. This type of acceptance will increase subordinates
confidence and their willingness to work hard.
9. Expansion and diversification of business activity By delegation management
are indirectly giving training to workers. This helps the management to identify
effective and efficient subordinates. After this business units are planning for
expansion and diversification because so many talented managers are now
available.
Problems of delegation
A. Hesitation on the part of superiors
The superiors are not willing to delegate their work to subordinates because
1. Perfectionism Most of the superiors are thinking are more perfect
than others. Others will not do the work perfectly if he is delegating.
2. Autocratic attitude Some superiors prefer to retain powers in their
hand. They are not ready to share limited authority with others.
3. Directions If the superiors are not able to direct their subordinates
they will not delegate.
4. Confidence Because of the lack of confidence in their subordinates
some superiors will not delegate.

Page |6
5. Avoidance of risk After delegating the work if the subordinate is
making any mistake the superior is responsible to the top level
management.
6. Competition Some times the superiors are expecting competition
from their subordinates if they studying the job well.
7. Inability of the subordinates The subordinates have any ability to
accept the work, then the superiors will not delegate
8. Inability of the superior If the superior is an inefficient person then
the work method and procedures followed by him are facility. That is
he is not willing to delegate.
B. Hesitation on the part of subordinates
1. Love of spoon feeding The subordinates are getting orders and
instructions from supervisors every time and that is why they are not
accepting delegation.
2. Easier to task Superior officer is close to subordinates every time
and it is easy for them to clear the doubts. This is another reason for
non acceptance.
3. Fear of criticism Subordinates may fear that even for a silly mistake
his superior may criticize him. This nature of superiors forced
subordinates to reject delegation.
4. Lack of information or resource A subordinate may hesitate to
accept new work due to lack of information or resources.
5. Lack of self-confidence Lack of self-confidence in a subordinate is
also one of the reason for non acceptance of authority.
CENTRALIZATION
Centralization refers to a systematic reservation of authority at a central point with
in the framework of the organization. Under this method all the decisions are taken by top
level managements. The subordinates job is to carry out the orders and instructions of the
top level management. According to Hentry Fayol every thing that goes to reduce the
role of subordinates is centralization. As far as the authority is concerned in a centralized
management the subordinates role is zero.
Advantages of Centralization
1. Facilitates personal leadership For small and medium scale business personal
leadership is more effective. If a manager is able and efficient he can easily
control the activities of the organization. The main advantage of centralization is
quick decision making. Truly speaking through decentralization we creating
separate departments and these departments are headed by one departmental head.
He is then taking the decisions of that department. This is also a type of
centralization.

Page |7
2. Facilitates integration For unification and integration of the organization
unified direction is necessary. This is possible only in centralization. That means
subordinates are getting orders and instructions from only one head.
3. Promotes uniformity of action Uniformity in action is an important part of
modern management. In an organization so many activities are taking place daily,
buying goods, recruiting personals, advertising, planning, framing policies are
some areas where uniformity is need. If you are getting orders and instructions
from one head this uniformity is possible.
4. Successful handling of emergencies Quick decision and flexibility are the
main advantages of centralization. So for taking emergency decisions personal
leadership is the best way. Delay in taking emergency decisions sometimes affects
the organizations negatively.
DECENTRALIZATION
Decentralization is just opposite of centralization where there is no centralization
of authority. Decentralization emerges from the principles of delegation. Decentralization
is the pushing down of authority and power of decision making to lower levels of
organization. Hentry Fayol everything that goes to increase the importance of the
subordinates role is decentralization.
The following are the main objectives of decentralization.
1.
2.
3.
4.
5.

To relieve from the burden of work by chief executives.

To develop managerial personals.
To satisfy the ego of lower levels of workers and motivate them.
To take quick and appropriate decisions.
To reduce communication gap.

Advantages of Decentralization
1. Reduction of the burden of chief executive
Decentralization helps in reducing the burden of the top executives as they
delegate their power to their subordinates and make them free to concentrate their
attention on other important matters. The efficiency and output of top executives should
increase because of delegation.
2. Diversification Facilitated
Decentralization helps diversification effective. Diversification of products in
particular helps in taking the advantage of market conditions. This helps in increasing
both productivity and profitability. Workers are also getting opportunity to prove their
ability.

Page |8
3. Development of Managerial Facilities
If authorities and responsibilities are properly delegating, it is the ideal way of
training new managers. Here workers are getting an opportunity for proving their abilities
and capabilities.
4. Importance to production and Marketing function
The main objective of every business is making profit. For achieving this
production and marketing activities will show best results. Human element is involved in
both so by decentralization managements are getting a chance to find out effective
employees.
5. Creation of good atmosphere and development of morals
Job satisfaction is an important part of good management. If a worker likes his
job, automatically he will work hard, his efficiency and productivity will also increase by
decentralization there is a feeling in the minds of the workers that managements are
having confidence in them and their work.
6. Effective control
The more the decentralization the more effective becomes the control as span of
control is reduced with every decision of decentralization.
7. Effective Co-ordination
Decentralization reduces the need of co-ordination in the enterprises a whole. By
decentralization there is scope for more co-ordination between departments.
Distinction between the 3Ds
Departmentation is a process of grouping and sub grouping.
Decentralization is a diffusion of authority within the entire enterprise and also
with in a department.
Delegation is confirmation authority to a position on the basis of decentralized
departmentation.
TYPES OF ORGANISATIONS
Organization is designed on the basis of division of labor and span of
management. The success of an organization depends on experience and competence of
the managers so business units are trying there level best to appoint persons having
process track record as managers.
The normal factor which determines the forms of internal organization is size
nature and scale of production. Following are the most common types of organizations.
1. Line, Military or scalar organization.
2. Functional organization.

Page |9
3.
4.
5.
6.
7.

Line and staff organization.

Committee organization.
Project organization.
Matrix organization
Free form organization

Line, Military or Scalar Organization

This is the simplest and oldest form organization. Under this form each
department is generally a complete self contained unit. A separate person is in charge of
the department and he has full control over the department certain powers are given to
these departmental heads for taking decisions. They are giving instructions to their
subordinates and how them they are going down wards. This is a glow of information
from top to bottom. The top level people have greater decision making authority than the
bottom level management it should be noted that in line organization each executive is
independent of each other. They have no right to communicate each other regarding
business matters. They receive orders from their immediate boss (general manger) and
give orders to their subordinates. All the departmental heads are responsible to the
general manager. The general manager in turn responsible to the board of directors. The
board of the directors is finally responsible to the share holders. This type of organization
is followed in army that is why it is also known as military organization. Under this
structure authority flows from top to bottom vertically. So it is also known as line
organization.

Board of directors
General Manager

Purchase
Manager

Production
Manager

Sales
Manager

Financial
Manager

Purchase
Assistants

Foreman

Supervisor

Superintendent

Workers

Workers

Workers

Workers

Characteristics of line Organization

P a g e | 10

1.
2.
3.
4.

It consists of direct vertical relationships.

Authority flows from top level to bottom level.
Departmental heads are given full freedom to control their departments.
Existence of direct relationship between superiors and subordinates.

Advantages of line organization

1.
2.
3.
4.

A line organization is very easy to establish.

There is division of authority and responsibility.
Individual can receive orders from one superior.
Direct communication is possible.

Disadvantages of line organization

1.
2.
3.
4.
5.

Lack of specialization.
Possibility of overloading of work.
Lack of initiative.
Limited communication.
Lack of coordination.

Functional Organization
Under line organization a single person is in charge of all the activities of the
concerned department. Here the head of the department find it difficult to supervise all
the activities efficiently in order to overcome the limitations of the line organization F.W.
Taylor proposed a new type of organization called functional organization.
Under functional organization various specialist are selected and they are asked to
work as supervisors. The workers are getting orders and instructions from specialists.
Characteristics of functional organization
1. The work is divided according to specialized functions.
2. Authority is given to a specialist.
3. The executives and supervisors discharge the responsibilities of functional
authority.
4. The decisions are taken only after consultation with the functional authority
relating to his specialized area.
Advantages of functional organization
1.
2.
3.
4.
5.

Benefit of specialization.
Application of expert knowledge.
Reducing the workload.
Adequate supervision.
Relief to line executives.

P a g e | 11

Disadvantages of functional organization

1.
2.
3.
4.
5.
6.
7.

Ineffective co-ordination.
Lack of responsibility.
Centralization.
Poor administration.
Increasing the overhead expenses.
Over specialization.
Complex relationship.

Line and staff organization

There are some advantages and disadvantage both in the line organization and
functional organization. In order to get the advantages of line organization and functional
organization a new type of organization is developed known as line and staff
organization. By forming this disadvantages of line and functional organizations are
avoided to considerable extent.
The line officers have authority to take decision and implement the decisions to
achieve the organizational objectives. The line officers may be assisted by the staff
officers while framing policies and plans and taking decisions.
The authority flows from top level to bottom through the line officers while the
staff officers attached to the various departments advice the departmental heads. The staff
officers do not have any authority to control any body in the organization. More than that
the staff officers have no right to compel the line officers to follow the advice given by
him.
Each department is headed by line officers and they are having full authority
regarding planning implementing and control of workers under him with the help of staff
officers. There is no connection between workers and the staff officers in any department.
The worker gets orders and instructions from line officers. Hence in line and staff
organization there is unity of command.
Types of staff
1. Personal staff Means a person who assists another person in the performance of
work effectively. Under such circumstances the work of line officers could not be
delegated to others. The types of persons are appointed by top level management.
The personal staff has no right to supervise the subordinates of line officers.
2. Specialized staff The specialized staff officers render service to the line officers
at all levels of the organizations. They gave advice to line officers with some
limited provisions. These provisions are imposed by the top management.

P a g e | 12
3. General staff assistant They are a group of persons who are rendering service
as advisors to top management in specialized matters. They are not specialized in
any area but they gave advice regarding over all plans and policies.
Functions of staff officers
1. The staff officers assist the line officers in the planning of business activity.
2. The board of directors frames the policies of the organization with the help of
staff officers.
3. They are helping top level management for selecting training, placement and
salary fixation of top level managers.
4. The staff officers give advice regarding the method of improving the product the
techniques of reducing cost of production, increasing the profit margin etc.
5. Staff officers help the line officers in the
a. Execution of policies and programmer.
b. Preparation of budgets.
c. To solve administrative problems.
In many organizations the line officers extend their co-operation to staff officers
and vice versa. This helps in the smooth running of the organization. But in certain cases
conflicts may arise between staff officers and line officers. If one officer blames the other
officer for any reason, that will affect the smooth functioning of the business.
Arguments by Line officers against Staff officers
1. The staff members have only theoretical knowledge but have no practical
knowledge.
2. They are exceeding their authorities and trying to control subordinates.
3. The staff officers are blaming line officers for any failure where they are
taking all the credits of success.
4. Since the staff officers are not responsible for the results they are more
careless in their work.
5. Staff officers are giving advice with out considering the whole objectives of
the business.
Arguments of Staff officers against Line officers
1.
2.
3.
4.

The line officers are not following their advices.

Some line officers are completely neglecting staff officers.
Some line officers are not ready to ask for any advice from the staff offices.
The line officers do not exploit the full services of the staff officers.

Solution to the Conflict between line officers and staff officers

P a g e | 13

1. Both line officers and staff officers should clearly understand the nature of
relationship prevailing between them.
2. Management should advice the line officers to accept the advice of the staff
officers or make it as a rule of the organization.
3. The responsibility for the activity should be fixed for both line officers and staff
officers.
4. The staff officers can give full credit to line officers for the results achieved.
5. If favorable results are obtained the line officers should appreciate staff officers
for their valuable advice.
Advantages of line organization
1. Specialization is possible because line officers are getting advice from specially
trained staff officers.
2. The line officers are relieved from their work to a considerable extent because
they are relieved from the problem of taking decisions.
3. A very good opportunity is getting to young persons to get training from
specialized hand.
4. The principle of unity of command is followed in the line and staff organization.
Hence there is one leader to control the workers.
Disadvantages of Line and Staff organization
1. If the authority and responsibility of Line officers and Staff officers are not clearly
defined there may be confusion throughout the organization.
2. It is very difficult to control line officers when they are not obeying the advice of
the staff managers.
3. The staff officers are not responsible if favorable results are not obtained.
4. There Staff officers are underestimating the Line officers. They are always
thinking they are move able and efficient.
5. The difference in opinion of line and staff officers will defeat the very purpose of
specialization.
Committee Organization
In modern business world all managerial tasks cannot be performed by a single
person alone. At that time two or more persons are asked to perform the same managerial
functions collectively. They form a committee for this. A committee is a group of persons
to whom certain management functions are assigned and from whom so me advice or
recommendations are expected. The duties responsibilities and authorities are fixed by
the top management and the committee is accountable to the management.

Types of committee

P a g e | 14

1. Advisory committee or problem solving committee

This type of committee consists of persons having knowledge and experience in
different areas. They are in a position to give advises, opinions and suggestions in
different important matters. Before solving a problem the problem is analyzed by the
committee members from different angles and arriving at a final solution.
2. Fact Finding Committee
This is the most common committee formed in any organization. This is formed
only for the purpose of collecting information on a particular project.
3. Action Committee or Executives Committee
This committee is of permanent in nature and has the power to take and
implement decisions. For eg- Board of directors of a company.
Functions of a Committee
1. Collect the necessary information from different sources and arrange the
information orderly.
2. Comparing actual and standard performance.
3. Framing the policies of the organization.
Advantages of committee organization
1. The committee can take valuable decision with the help of experience and
knowledge of the committee members.
2. The committee decisions are better than one. Remember the proverb, Two heads
are better than one.
3. Committees are following a democratic principle for decision making.
4. Even if a decision is opposed by one person he will accept the decisions taken by
the committee in future.
Disadvantages of a committee organization
1. If the decisions taken by the committee members are different, then there is
possibility of delay in taking find decisions.
2. It is difficult to maintain the secrecy of the committee.
3. In committees all members have the right to express their own views and ideas
and so there is possibility heated argument between committee members.
4. It increases the administrative expenses of the organization.

Project Organization

P a g e | 15

The project organization idea was developed after the Second World War. This
organization is developed with the object of eliminating the defects of functional
organization. Delay in taking decisions and lack of co-ordination are the two main defects
of functional organization. Here the authority and responsibility of each project are
clearing defined and applied.
Matrix Organization
There are a number of departments under matrix organization. Each department is
assigned with a specified task. All departments are working with close co-operation and
sharing the available resources.
Free form organization (Ad hoc)
This type of organization is formed when ever a necessity arises to form an
organization. After the completion of the project these organizations will be dissolved.
The formation of a free form organization depends upon the external environment
of the business. If the business is highly affected by the external environment, the free
form organization will be established. The decisions taken by free form organization are
without following and rules and regulations. Since these committees are organizing
quickly, there are pre planned rules and regulations.
Staffing
The staffing function includes recruitment, selection, training, development,
transfer, promotion and compensation of personnel.
Elements of staffing
While performing the staffing function remember the rule appoint right person to
right job. The major elements are
1.
2.
3.
4.
5.
6.
7.

Effective recruitment and selection.

Proper classification of personnel and pay fixed for them.
Proper placement.
Adequate and appropriate training.
Satisfactory and fair transfer and promotion.
Sound relationship between management and workers.
Adequate provision for retirement.

Recruitment

P a g e | 16

Recruitment means the discovery of the staff members for the present and future
jobs in the organization.
According to Flippo Recruitment is the process of searching for prospective
employees and stimulating them to apply for the jobs in the organization.
The success of recruitment depends upon the procedure followed by the company
while recruiting members. For some jobs it is very difficult to get people. For eg- Low
salary, poor working conditions etc.
Sources of Recruitment
The source of recruitment is based on the policies followed by the management.
The jobs can be filled with existing employees or from outside the company.
If the company is filling a vacancy with present employees of the company it is
said to be internal source of the company.
If the same job is filled up from outside candidates that is said to be the external
source.
Internal Sources Whenever a vacancy arises it can be filled by giving a promotion to
the present employee of the company. It is based on the promotion policy followed by the
company. In certain cases, the same cadre staff member is deputed to the job by the
company. This is called transfer. This is based on the transfer policy of the company.
Advantages
1.
2.
3.
4.
5.

It increases the moral among the staff members of the company.

Giving promotion is an important motivating factor.
Reduction in advertisement expenses, recruitment, training, test expenses.
It increases the job security.
Promotion gives workers job satisfaction.

Disadvantages
1. If the higher posts are filled, then there is again vacancy at lower levels.
2. By promotion so many under qualified persons are appointed in the higher post.
External Sources
There are various external sources of recruitment. They are
1. Advertisement When a company wants to inform the public that it has a
vacancy they given an advertisement. The company may receive applications in

P a g e | 17
response to the advertisement. After scrutiny of applications an interview will be
conducted. In certain case a walk in interview method may be adopted by the
company. Here applications are received from the candidates. The data, time and
place of interview are mentioned in the advertisement. In this way a person can be
recruited immediately.
2. Recommendations Visually managements are getting two types of
recommendations. One is a letter from a reliable person well known to the
company outside the organization and second one is the recommendation by an
existing employee.
3. Gate applicants The educated unemployed youths are approaching company
management for jobs. These candidates may not have any recommendations. Here
candidates are personally approaching the appointing authority with out seeing
any advertisement. If such candidates are found fit for any one vacancies at that
time, the candidate is appointed
4. Employment Exchange The candidates register there name with the
employment exchange with their qualifications. The company gets a list of
candidates who are having prescribed qualifications for their jobs. Out of these
candidates they are selecting any one. There are two types of employment
exchanges. They are private and public employment exchanges. The private
employment exchange is run by a private party. They are getting fees from both
the candidates and the company. The public employment exchanges are run by
government. They are not demanding any commission from candidates and
companies.
5. Personal Consultant This is a separate specified agency doing the function of
recruitment of the personal on behalf of the company. In other words the functions
of the personal department of the company are performed by these consultants. It
receives applications from the consultants, scrutinizing the applications, conducts
interviews and selects the candidates. The personnel consultants receive fees from
the company for his service.
6. Educational Institution Universities, colleges and institutions are formed for
conducting different type of courses. These educational institutions make
arrangements for campus interview. The business concern comes to the campus of
educational institutions to recruit the students. The selected students are requested
to join the post after completing the course.
7. Field Trips In these companies are sending some expert groups to cities and
town for conducting interviews. Before sending them an advertisement is given
mentioning the date, time and place of interview. The interview is conducted at
different places.
Selection

P a g e | 18

Selection is the process adopted by an organization to appoint adequate number of

persons who are fit for the job.
Stages of selection procedure
The selection procedure is as follows.
1. Receiving and screening of applications All candidates are requested to submit the
applications in white paper or in a prescribed form. In both cases full information about
the candidates should give. That is informations about name, age, qualifications,
experience etc. The same information is kept as a permanent record in the organization. If
the number of applicants is more than the requirement, they may select more candidates.
2. Initial interview This is also known as preliminary interview. The purpose of
conducting this type of interview is to know whether the candidate is physically and
mentally fit for the job. Some questions are asking to the candidates regarding their
qualification, experience etc only a minimum time is spent for the interview. Candidates
who have passed in the initial interview are called for the next selection procedure.
3. Blank application A specific format is followed by an organization for this selection
process. The nature of the format varies from job to job. Managements are using different
formats because the qualification and skills required for various jobs are different.
4. Test For knowing whether the applicants to be selected or rejected tests are
conducted. Tests can be of two types. They are proficiency test and aptitude test.
Proficiency tests refers to testing of the skills and abilities possessed by the candidate.
Aptitude best refers to the measuring of the skills and abilities which may be developed
by the applicant to perform the job in future.
5. Checking References Some times the applicants are requested furnish references.
Generally three references they are asking. They may be from educational institutions
heads present employers and highly designated relatives.
6. Interview Interview is considered as a method of personal appraisal through face to
face conversation and observation. The management selects a candidate through an
interview by one or more persons. The interviewing persons are experts in interview
techniques and have through knowledge in different areas. Interview helps the employer
to evaluate the candidate regarding his personality, smartness, intelligence, aptitude etc.
Kinds of Interview There are different type of interview models.
a. Direct Interview This is a face to face conversation between
interviewers and interviewees. By this method employers will get an idea
about the skills, character, and ability of the candidates.

P a g e | 19
b. Indirect Interview Here questions are not asking directly to the
candidates. Instead they giving a particular topic and asking them to
comment on that. The candidates have given full freedom to answer. There
will be no interference from the part of the interviewer. The
communication skills and personality of the candidates can be easily
assessed.
c. Patterned Interview A number of standard questions are framed well in
advance which are to be part before the applicant. The answers of these
questions are found while framing questions and answers are written near
the questions. Then answers given by the candidates are comparing with
original answer for verification.
d. Stress Interview Under this method so many irritating and illogical
questions are asking to the interviewee. If any candidate gets angry after
hearing these types of questions, then that particular candidate is treated as
unfit for the job.
7. Final Selection Finally a suitable applicant is selected on the basis of performance in
the above mentioned test and interview. Only the required numbers of applicants are
selected by the management.
8. Medical Examination It is also called physical examination. This is carried out for
the purpose of assessing the physical fitness of the prospective employee. Most of the
organizations are not following this strictly but for getting some jobs it is compulsory.
9. Placement After completing all the formalities the applicants are placed on a
probation basis. The probation period varies from job to job. The maximum probation
period is two years and it may be extended to three year under extra ordinary
circumstances. The new employees are observed clearly during this period. After
completing probation successfully candidates are regularized.
10. Orientation This means providing information about the organization briefly to
new employees. This information is about co-workers, work place, superiors,
subordinates, authorities responsibilities etc. Orientation program is carried out through
lectures or films or by introducing personally by some one.
MANAGEMENT BY OBJECTIVES
MBO system was developed by George Odiorne of U.S.A. MBO is a
management system in which each member of the organization effectively participates
and involves himself this system gives full scope to the individual strength and
responsibility. Under this system all managerial personals are getting an opportunity to
prove themselves their abilities. Those are worked together for the attainment of
organizational objective.

P a g e | 20
Features of M.B.O Here management is making an attempt to integrate the activities
of the organization for achieving organizational objectives. Following are the process of
M.B.O.
1. Defining organizational objectives Organizational objectives are framed by
the top level management. After framing they are communicating this to middle
and lower levels of management. The purpose of defining organizational objective
is to state why the business is started and exists. First managements are framing
long term objectives and short-term like that.
2. Goals of each section Objectives of each and every department or division are
formed on the basis of overall objectives of organization. Time period for
achieving this objectives are also clearly mentioned here.
3. Fixing key Result areas This is an important element of M.B.O. KRAs are
fixed on the basis of organizational objectives. K.R.A.s arranged on priority
basis. The concept is all areas of an organization are not equally important. So
find out the important areas and concentrate more managerial attention on that.
4. Setting subordinates objectives or targets The objectives of each subordinate
are fixed. It is better to fix the targets of the subordinates in quantitative units.
Before fixing the objectives discuss this with subordinates. Just ask them to fix a
there own targets. If the subordinates are allowed to do so they may set high
standards and the chances of achieving this are also more.
5. Matching resources with objectives Frame the objectives on the basis of
availability of resources. If certain resources like technical personals, scarce raw
materials are not readily available; the objective of an organization is changed
accordingly. So there is a need for matching resources with objectives.
6. Periodical review meetings The superior and subordinates should hold
meetings periodically in which they discuss the progress of the objectives. They
are comparing the actual and standards set and finding the differences. If there are
short fails corrective actions are taken.
7. Appraisal of activities After the expiry of the time period, there should be a
discussion between superiors and subordinates. The discussion is related with
subordinates performance and they are getting appraisal on the basis of activities
done.
8. Re appraisal of objectives Modern world is fast changing. So instead of
following a particular objective make changes in objectives accordingly.
Planning

P a g e | 21
Planning is an important part of life. All are developing different types of plans. A
person whether he is engaged in business or not has framed a number of plans during his
life. The plan period may be short or long.
Planning is the first and foremost function of management. According to
management experts planning is the primary function and all other managerial functions
are secondary.
According to Koontz and O Donnel Planning is deciding in advance what to do,
how to do it, when to do it and who is to do it.
Steps in Planning Process
The planning process is different from one person to another and one organization
to another commonly acceptable planning process is given below.
1. Analysis of external Environment External environment of an organization
includes socio economic conditions and political conditions prevailing in a
country. Socio economic condition refers to classification of society on the basis
of income, age, class, living conditions, aspirations, expectations and the like.
These are uncontrollable ones, But organizations has to prepare plans according to
the changing trends in the external environment.
2. Analysis of Internal Environment This is also known as resource audit. This is
an analysis of the strength and weakness of an organization. Due consideration is
made on the availability of resources profitability, plant capacity, man power
availability etc.
3. Determination of objectives Determine the objectives of the organization in
advance while determining the objectives prepare departmental wise objectives.
This is essential because this helps each department to know their objectives and
what managements are expecting from them.
4. Determining the planning premises and constraints Planning are forward
looking therefore planning is based on forecasting. Forecasting means the
assumption of and the anticipation of certain events. It is the calculation of how
certain factors will behave in future this is what is known as planning premises.
Generally forecasting is made in the following ways.
1.
2.
3.
4.
5.
6.

What will be the market? That is demand supply, capacity etc.

The expectation of volume of sales.
What is the price of the product?
What would be the tax policy and economic policy of the government?
The expectation of technological changes.
How is the finance raised for expansion and modernization?

P a g e | 22
5. Examination of alternative courses of action We can perform one activity in
different ways but a particular ways is most suitable to the organization.
6. Weighing alternative courses of action All the alternatives are not suitable to
the organization. Each one has its own strong and weak points. So there is a need
for weighing all the alternatives to determine the best one.
7. Selection of the best alternative course of action This activity is based on the
weighing of various alternatives while selecting the best alternative course of
action do not show any type of partiality.
8. Formulation of action programs After allotting the course of action to
different departments action program is fixed. The action program includes fixing
time limit for performance, allocation of work to individuals. This is necessary to
achieve the objectives with in the specified period.
9. Determining secondary plans Once a basic plan is developed there is need of
developing secondary plans. Once a basic plan of sales is decided upon, a number
of secondary plans could be prepared. Hence the secondary plan includes
production schedule, purchase of plant and machinery, purchase of raw materials,
selection, training and development of personnel and the like.
10. Securing participation of employees The successful execution of any plan
depends up on the extent of participation of employees. So before executing any
plans try to consult it with employees.
11. Follow-up and evolution There should be a system of follow-up. The manager
should watch how the planning is being done. If any short comings it can be
identified through a follow-up action and rectified then and there. Evaluate the
plans continuously. It means compare actual and plans and take corrective action
if there are any deviations.
Methods of Planning
(Type of planning components of planning or elements of planning)
According to the usage and nature of planning the method of planning are divided
in to the following categories.
1. Objective plans Objectives are treated as basic plans. These basic plans are
necessary for all types of planning operation. The entire planning activity is
developed through objective plans objectives not only dominate planning activity
but also play an important role in the managerial work of organizing directing and
controlling.
2. Standing plans Standing plans includes policies and procedure which are
repetitive in nature. Any action may be divided in to two categories. This is
repetitive and non repetitive.

P a g e | 23

Standing plans provide guide lines for solving recurring problems. We are not using
standing plans for solving special problems. For that we are using special policies for
solving special problems.
3. Master plans Master plans includes all other plans. It is a combination of
different small plans applicable to different departments.
Planning Premises
Planning is prepared for the future. But the future is uncertain. So management
executives are making certain assumptions about the future while preparing plans. These
assumptions are not based on guess work. The assumptions are based through scientific
forecasting of future events. This is known as planning premises.
Classification of planning premises
1. External Premises External premises are lying outside the organization. For
eg- economic technological, political, social and market conditions. Economic
premises refers to purchasing power of customers, technological premises refers
to application of latest technology, political environment refers to the policy of the
government and social premises relate culture and market conditions like demand
and supply.
2. Internal Premises Internal premises are existing within the organization.
Human resources material resources, machine resources, financial resources are
some examples. The most important internal premises are managerial competence
and skill of labor force.
3.

Tangible Premises Quantifies factors can be termed as tangible premises.

Money time and units of production are some of the kinds of tangible premises.
Money can be quantifies as rupees, time can be quantified as second minutes and
units of production can be quantified as kilogram, liter etc.

4. Intangible Premises Qualitative factors can be termed as intangible premises

goodwill of the company, loyalty of the workers, public relations, employee moral
are some kinds of intangible premises. Both tangible and intangible premises must
be taken in to consideration in planning.
5. Controllable Premises Premises which are entirely within the control of
management are known as controllable premises policies, programs, procedures,
rules and regulations are some examples.
6. Uncontrollable Premises Premises which can not be controlled by
management are known as uncontrollable premises. These are also taken in to

P a g e | 24
consideration while developing plans. For eg- wars, natural calamities, human
behavior etc.
7. Semi-controllable Premises Some premises can be controlled and predicted to
some extent. In other words managements have partial control over some
premises. Trade union and management relations, employer employee relations
superior subordinate relations, inter department relations are examples.
8. Fixed or constant premises Some premises cannot be changed by management
by taking action. They are clear definite and well understood. No used of
considering this fixed plans for planning. Money, men, machine are examples.
9. Variable Premises Some variables may be changed because of management
actions. These premises play an important role in planning. Hence management
should consider these premises for planning. Sales volume, production expenses
are examples.
10. Foreseeable Premises All fixed or constant premises can be treated as
foreseeable premises.
11. Unforeseeable Premises Some premises can not be controllable. These are
unpredictable also. Wars. Natural calamities, consumer preferences and tastes etc.
Decision Making
Decision Making is the selection based on some criteria from two or more
possible alternatives.
Decision Making Process
1. Identification of the problem.
2. Diagnosing the problem.
3. Collect and analyze the relevant information.
4. Discovery of alternative course of action.
5. Analysis the alternatives.
6. Screening of alternatives.
7. Selection of best alternative
8. Conversions of decision in to action.
9. Implementation.
10. Verifying the decision.