fundamentals of management and organization

FOM-UNIY-III
ORGANIZATION AND HRM
What is Organisation?
Organisation refers to a collection of people who are working towards a common goal
and objective. In other words, it can be said that organisation is a place where people assemble
together and perform different sets of duties and responsibilities towards fulfilling the
organisational goals.
Types of Organisation and their Structure
There are two broad categories of organisation, which are:
1. Formal Organisation
2. Informal Organisation
What Is Organization Design?
Organization design is a process for structuring and running organizations. It takes a
holistic approach to the work done in an organization including team formations, shift patterns,
reporting, decision-making, communication methods and much more. The purpose of
organization design is to help an organization excel at what it does and help meet its goals. That
can mean everything from a large-scale reorganization to subtle shifts in structures and systems.
Organization design often comes into play as an organization is growing or, conversely,
if it is downsizing. Either of these shifts requires a company to reexamine how it does business.
Other reasons that prompt organization design include a change in leadership, strategy or the
marketplace in which the organization operates.
Principles of Organization Design
1. Free Yourself From the Past: The organization has to look reflectively at itself, its
purpose and how changes to those foundational pillars will affect clients, employees and
investors. As you begin to explore changes, think about how they can differentiate you
from the competition and how these changes will play out over the next few years.
2. Design With Knowledge of Your DNA: In order to know what to prioritize in
organizational design, step back and identify the universal building blocks of your
organization. All organizations can be divided into tangible or formal elements such as
how decisions are made, how data is processed and how work is divided. Businesses also
have intangible or informal elements such as how people act and are inspired to
contribute.

3. Fix Your Structure Last: The organizational chart of the company might seem like the
logical first step, but you want to create a bridge that will carry the organization from the
old ways to the new ways. It’s a common mistake to think that you can simply jump from
one structure to another. That structure is the final step after you’ve done everything to
support it and the changes it will initiate.
4. Use Your Top Talent: You make a change by empowering the people in your
organization, so no matter what structural changes you plan on making, you want to
identify the strengths of your key performers and make sure they are empowered to
collaborate and facilitate those changes. The leadership team is responsible for successful
organization design.
5. Know What You Can Control: It’s important to list the constraints that are slowing you
down as an organization and the sacrifices that you’re always making. Know your
limitations before any attempt to execute a new organization design. You should also be
aware of the regulations, supply shortages and customer demand that are out of your
control but don’t spend too much time focusing on the things that you can change.
6. Promote Accountability: You want to keep everyone accountable for their jobs which
requires transparency and clear communications, not micromanaging. This is likely the
single most important change you can make to your organization. If communication
flows without obstruction and everyone is taking responsibility for their work, the
structure you design is going to work better.
7. Benchmarking Isn’t As Important As You Think: There can be problems with
tracking what competitors are doing. While it can help optimize your design and expose
hidden issues, it also short-changes your unique capabilities. It’s not productive to
compare your organization to others that might have a different value proposition or
capabilities. If you must benchmark, focus on select elements rather than the whole
organization.
8. Organization Design Should Fit Company Purpose: Every organization is different
and the right structure for your organization will likely not fit another. When designing
the organization, make sure it aligns with your purpose and is consistent across the
organization.
9. Don’t Neglect the Intangible Elements: It’s easy to focus on the tangible elements of
organization design, such as decision rights and the organization chart, but that won’t get
the results you want. Instead, balance the tangible with the intangible if you want to get
things done. The tangible is important but without addressing how people think and act in
that structure, you won’t change anything.
10. Build on Your Strengths: One of the best ways to implement successful organization
design is to build on your strengths. Often the organization’s design is so far from the
organization’s core values and strengths that it’s destined to fail. Make sure to find the
organization’s strengths and build on that foundation.

Types of Organization Design
Just as there isn’t one type of organization, there isn’t one type of organization design.
These various organizational structures are a framework for the organization to distinguish
power and authority, roles and responsibilities and determine how the information will flow
through the organization. Let’s take a look at some of the more common organization design
structures that support organization design.
Hierarchical Structure
This is a pyramid-shared organizational chart with the CEO or manager on top and each
level descending in the chain of command until the base is entry-level employees. This defines
authority, shows everyone to whom they report and clarifies the career path. However, a
hierarchical structure can slow down innovation and make those at the base of the pyramid feel
as though they are outside the process.
Functional Structure
As in the hierarchical structure, those with more authority and responsibility are placed at
the top of the chart and it then descends by responsibility. However, the organization is
determined by skillset and function in the company, with each department managed
independently. This gives departments a sense of self-determination and the structure can be
easily scaled. But a functional structure can also create silos in the organization and block
interdepartmental communications.
Horizontal or Flat Structure
The opposite of a hierarchical structure, the horizontal structure is popular with startups
and other organizations in which there is not much distance between management and
employees. It encourages less supervision and more involvement from everyone in the
organization. Employees feel ownership and take more responsibility. It fosters communication
and speeds the delivery of new ideas. However, there can be a lack of supervision that causes
confusion and is difficult to maintain at scale.
Divisional Structure
As the name implies, each division in the organization controls its own resources as if an
independent company within a larger organization. Each division has its own marketing, sales
and IT teams. The structure lends itself to larger organizations and allows them to be more
flexible, quickly responding to market changes and customer needs with a customized approach.
It can also create duplicate resources, wasting time and energy. Communication can be difficult
between divisions, too, leading to internal competition within the larger organization.

Matrix Structure
This grid-like structure is great for cross-functional teams that are created to serve special
projects. This structure helps connect otherwise disparate parties. The matrix structure also helps
managers easily find team members for whatever project they’re leading and provides a more
dynamic view of the organization. Employees are encouraged to use their skills beyond those
applied to their original role. It can create conflicts between managers in different departments.
Team-Based Structure
As the name suggests, this structure organizes employees by teams. This is against what’s
considered to be a traditional hierarchical structure and is ideal for a more problem-solving,
collaborative environment where employees have more control. This can boost productivity and
performance, breaking down the silo mentality in favor of more transparency. It also allows for
lateral moves throughout the organization and provides less managerial supervision. It’s a great
fit for agile project management and scrum teams. It does tend to make promotional paths less
clear.
What is Organisation?
Organisation refers to a collection of people who are working towards a common goal
and objective. In other words, it can be said that organisation is a place where people assemble
together and perform different sets of duties and responsibilities towards fulfilling the
organisational goals.
Types of Organisation and their Structure
There are two broad categories of organisation, which are:
1. Formal Organisation
2. Informal Organisation
Formal Organisation:
Formal organisation is that type of organisation structure where the authority and
responsibility are clearly defined. The organisation structure has a defined delegation of
authority and roles and responsibilities for the members.
The formal organisation has predefined policies, rules, schedules, procedures and
programs. The decision making activity in a formal organisation is mostly based on predefined
policies.
Formal organisation structure is created by the management with the objective of
attaining the organisational goals.

There are several types of formal organisation based on their structure, which are
discussed as follows:
1. Line Organisation
2. Line and Staff Organisation
3. Functional Organisation
4. Project Organisation
5. Matrix Organisation
Let us learn about these organisation structures in detail in the following lines.
Line Organisation:
Line organisation is the simplest organisation structure and it also happens to be the
oldest organisation structure. It is also known as Scalar or military or departmental type of
organisation.
In this type of organisational structure, the authority is well defined and it flows vertically
from the top to the hierarchy level to the managerial level and subordinates at the bottom and
continues further to the workers till the end.
There is a clear division of accountability, authority and responsibility in the line
organisation structure.
Advantages of Line organisation
1. Simple structure and easy to run
2. Instructions and hierarchy clearly defined
3. Rapid decision making
4. Responsibility fixed at each level of the organisation.
Disadvantages of Line organisation:

1. It is rigid in nature
2. It has a tendency to become dictatorial.
3. Each department will be busy with their work instead of focusing on the overall
development of the organisation.
Line and Staff Organisation:
Line and staff organisation is an improved version of the line organisation. In line and
staff organisation, the functional specialists are added in line. The staff is for assisting the line
members in achieving the target effectively.
Advantages of Line and Staff organisation
1. Easy decision making as work is divided.
2. Greater coordination between line and staff workers.
3. Provides workers the opportunity for growth.
Disadvantages of Line and Staff Organisation
1. Conflict may arise between line and staff members due to the improper distribution of
authority.
2. Staff members provide suggestions to the line members and decision is taken by line
members, it makes the staff members feel ignored.
Functional Organisation:
Functional organisation structure is the type of organisation where the task of managing
and directing the employees is arranged as per the function they specialise. In a functional
organisation, there are three types of members, line members, staff members and functional
members.
Advantages of Functional organisation
1. Manager has to perform a limited number of tasks which improves the accuracy of the work.
2. Improvement in product quality due to involvement of specialists.

Disadvantages of Functional organisation
1. It is difficult to achieve coordination among workers as there is no one to manage them
directly.
2. Conflicts may arise due to the members having equal positions.
Project Organisation:
A project organisation is a temporary form of organisation structure that is formed to
manage projects for a specific period of time. This form of organisation has specialists from
different departments who are brought together for developing a new product.
Advantages of Project organisation
1. The presence of many specialists from different departments increases the coordination among
the members.
2. Each individual has a different set of responsibilities which improves control of the process.
Disadvantages of Project Organization
1. There can be a delay in completion of the project.
2. Project managers may find it difficult to judge the performance of different specialists.
Matrix Organisation: Matrix organisation is the latest form of organisation that is a
combination of functional and project organisation. In such organisations there are two lines of
authority, the functional part of the organisation and project management part of the organisation
and they have vertical and horizontal flow of authority, respectively.
Advantages of Matrix Organisation
1. Since the matrix organisation is a combination of functional and project management teams,
there is an improved coordination between the vertical and horizontal functions.
2. Employees are motivated as everyone will be working towards one project.
Disadvantages of Matrix Organisation

1. Due to the presence of vertical and horizontal communication, there will be increased cost and
paperwork.
2.Having multiple supervisors for the workers leads to confusion and difficulty in control.
Informal Organisation:
Informal organisations are those types of organisations which do not have a defined
hierarchy of authority and responsibility. In such organisations, the relationship between
employees is formed based on common interests, preferences and prejudices.
Departmentalization
Definition:
Departmentalization or Departmentation is a process wherein jobs/teams are combined
together into functional units called as departments on the basis of their area of specialization, to
achieve the goals of the organisation. So, in this way, the entire organization is divided into parts,
i.e. departments which comprise of a group of employees, who carry out activities of similar
nature.
It determines the functions/activities which are to be housed together and coordinated at
the same place. Further, it groups the personnel, who will undertake the delegated
functions/tasks.
In a corporate ladder, every level below the top is departmentalized, and each subsequent
level is further differentiated into departments.
The top-level executives, groups activities in various departments, such as production,
marketing, finance, human resource, research and development, etc. These departments are
headed by senior executives, called as managers of the respective department. The departmental
managers can delegate tasks and duties to the subordinates, and they are accountable to the chief
executive for the performance of the department.
Objectives of Departmentalization
 To specialize activities.
 To simplify the process and operations of the organization
 To maintain control
Departmentalization of activities results in the increase in efficiency of the management
and ultimately the enterprise. It is helpful in fixing responsibilities and accountability.
Methods of Departmentalization
Departmentalization by Function: When the creation of department is on the basis of specified
functions, such as production, marketing, purchase, finance etc. In this method, all the activities

related to a function or which are of similar nature are combined in a single unit, to give proper
directions to the entire group in one go.
Departmentalization by Process: In departmentation by the process, the activities are grouped
as per the production processes. These departments require manpower and material so as to
carryout operations.
Departmentalization by Product: When the activities related to product development and
delivery are combined into a particular division, it is called as product departmentalization. It is
appropriate for large-scale multi-product enterprises.

Departmentalization by Customer: The grouping of the organization according to the different
classes of customer or clients. It focuses on special customer needs.
Departmentalization by Territory: When the division is based on the geographical area, it is
called as territorial departmentalization. This is suitable for the organizations that have
widespread operations at different locations.
Departmentalization by Project: In project departmentalization, the organizational activities
are classified by differentiated or special ventures or activities.
The choice of departmentalization basis is influenced by the factors such as the degree of
specialization, coordination, control, cost consideration, adequate attention to key areas, etc.
DELEGATION
Delegation of Authority
Definition:
The Delegation of Authority is an organizational process wherein, the manager divides
his work among the subordinates and gives them the responsibility to accomplish the respective

tasks. Along with the responsibility, he also shares the authority, i.e. the power to take decisions
with the subordinates, such that responsibilities can be completed efficiently.
In other words, a delegation of authority involves the sharing of authority downwards to
the subordinates and checking their efficiency by making them accountable for their doings. In
an organization, the manager has several responsibilities and work to do. So, in order to reduce
his burden, certain responsibility and authority are delegated to the lower level, i.e. to the
subordinates, to get the work done on the manager’s behalf.
Under the delegation of authority, the manager does not surrender his authority
completely, but only shares certain responsibility with the subordinate and delegates that much
authority which is necessary to complete that responsibility.
Features of Delegation of Authority
1. Delegation means giving power to the subordinate to act independently but within the
limits prescribed by the superior. Also, he must comply with the provisions of the
organizational policy, rules, and regulations.
2. Delegation does not mean that manager give up his authority, but certainly he shares
some authority with the subordinate essential to complete the responsibility entrusted to
him.
3. Authority once delegated can be further expanded, or withdrawn by the superior
depending on the situation.
4. The manager cannot delegate the authority which he himself does not possess. Also, he
cannot delegate his full authority to a subordinate.
5. The delegation of authority may be oral or written, and may be specific or general.
6. The delegation is an art and must comply with all the fundamental rules of an
organization.
Process of Delegation of Authority
Definition:
The Delegation of Authority is a process wherein the manager assigns responsibility to its
subordinate along with the certain authority to accomplish the task on the manager’s behalf.

Process of Delegation of Authority
The process of delegation of authority comprises of four steps which are as follows:
Assignment of Duties to Subordinates:
Before the actual delegation of authority, the delegator must decide on the duties which
he wants the subordinate or the group of subordinates to perform. Here, the manager lists the
activities to be performed along with the targets to be achieved, and the same is spelled out to the
subordinates. Thus, in the first stage, the duties are assigned to the subordinates as per their job
roles.
Transfer of Authority to perform the duty:
At this stage, an adequate authority is delegated to the subordinate which is essential to
perform the duty assigned to him. A manager must make sure; that authority is strictly delegated
just to perform the responsibility, as more authority may lead to its misuse by the subordinate.
Acceptance of the Assignment:
At this stage, the subordinate either accepts or rejects the tasks assigned to him by his
superior. If the subordinate or the delegate, refuses to accept the duty and the authority to
perform it, then the manager looks for the other person who is capable of and is willing to
undertake the assignment. Once the assignment gets accepted by the subordinate, the delegation
process reaches its last stage.
Accountability:
The process of delegation of authority ends at the creation of an obligation on the part of
the subordinate to perform his responsibility within the powers assigned to him. Once the
assignment is accepted by the subordinate, then he becomes responsible for the completion of the
duty and is accountable to the superior for his performance.
Thus, the process of delegation of authority begins with the duties assigned to the
subordinates and ends when the subordinate is obliged to carry out the operations as intended.

EMPOWERMENT
Definition: Empowerment refers to the delegation of some authority and responsibility to
employees and involving them in the decision-making process, not in mere job activities, but
rather at all the levels of management.
In other words, empowerment implies freedom, power, authority, motivation and
encouragement given to the employees to take decisions related to a specific organizational task.
It is also called as Participative Management, as employees are involved in the decision
making. The purpose of empowerment is to facilitate decision-making at lower levels of the
organization where the employees can offer a unique idea and suggestion about the problem
being faced by the organization at a certain level.
The most common ways of empowerment are participation in boards, stock options,
collective bargaining, job enrichment and enlargement, quality circles, suggestion schemes, total
quality management, self-managed teams, etc.
Empowerment offers several benefits;
It brings a sense of ownership to the employee due to which he personalizes the goals and
objectives of the organization and associate his success with his own abilities. Also, the
performance of the employee improves as he attaches self-induced rewards with his performance
by making decisions pertaining to the problem and sees the results (success) that follow.
Empowerment increases the organization’s responsiveness towards the problems or
issues. Also, there is an increase in the productivity of an employee as he is completely engaged
with the firm and take decisions for the betterment of the organization as a whole.
Empowerment suffers from serious limitations.
First, the decisions made might not be in line with the organizational
goals. Second, there could be a lack of coordination among the different levels of the
organization. Third, the superior-subordinate relation might get tensed due to the violation of
authority. Fourth, sometimes it can be counterproductive as the superior might keep a close
watch on the employee to check if the authority is misused. This might increase the
dissatisfaction among the employees.

CENTRALIZATION
Definition:
Centralization, means the concentration of powers, authority and control, at the head or
center of the organization. So, the location of powers as to planning,
formulation of policies, etc. lies in the hands of top
executives who regulate the organization.
In a centralized organization, there is only one focus of control, And so, the powers are
concentrated and retained by the group of people or by a particular authority, while the rest of the
members receive orders, and work as per the directions.
The system seeks to improve efficiency by making use of potential economies of scale
and to increase reliability by reducing the chances of errors.
Further, the level of centralization in an organization is measured on
hierarchy of authority, as well as the degree of participation in the process of decision making.
Objectives of Centralization
Centralization is an organizational philosophy which stresses on the selective
concentration of the authority, within the organization structure. The objectives of centralization
are discussed as under:
. So, the location of powers as to planning, decision making,
formulation of policies, etc. lies in the hands of top-level management, which consists of a few
executives who regulate the organization.
ed and retained by the group of people or by a particular authority, while the rest of the
members receive orders, and work as per the directions.
and to increase reliability by reducing the chances of errors.
Further, the level of centralization in an organization is measured on
within the organization structure. The objectives of centralization
decision making,
level management, which consists of a few
ed and retained by the group of people or by a particular authority, while the rest of the
Further, the level of centralization in an organization is measured on the basis of –
within the organization structure. The objectives of centralization

1. To facilitate personal leadership
success of the organization is based on personal leadership and
visionary leader. When the authority is centralized, personal leadership may result in effective
decision making and imaginative action.
2. To improve efficiency: Overlapping of efforts and duplication of work can be avoided wit
centralization, to a great extent. The management can exercise higher control to reduce waste and
attain economy in operations.
3. To increase coordination: The success of every organization depends on the coordination of
individual efforts. A centralized s
units and subunits of the concern.
4. To achieve uniformity in action
authority is centralized at the apex level of management. The
is a must in personnel, purchasing, marketing, etc.
However, this system limits the growth and development of the lower
not allowed to act on their own initiative, and they became dependent on
management for various decisions.
Advantages of Centralization
 Clear Chain of Command: As there is a unity of command, centralization tends to improve
coordination in the organization.
 Consistency in Decision Making
consistency in the decisions, taken at different points in time, to meet the organization’s
objectives.
To facilitate personal leadership: At the time of commencement of the organization, the
success of the organization is based on personal leadership and supervision of the dynamic and
decision making and imaginative action.
: Overlapping of efforts and duplication of work can be avoided wit
: The success of every organization depends on the coordination of
individual efforts. A centralized system acts as a thread which coordinates the work of different
units and subunits of the concern.
To achieve uniformity in action: To cause the uniformity and consistency in actions and policy,
authority is centralized at the apex level of management. The uniformity in decisions and actions
is a must in personnel, purchasing, marketing, etc.
However, this system limits the growth and development of the lower-level workers, as they are
not allowed to act on their own initiative, and they became dependent on
management for various decisions.
: As there is a unity of command, centralization tends to improve
Consistency in Decision Making: Due to the concentration of power at the apex level, it ensures
: At the time of commencement of the organization, the
supervision of the dynamic and
: Overlapping of efforts and duplication of work can be avoided with
: The success of every organization depends on the coordination of
ystem acts as a thread which coordinates the work of different
: To cause the uniformity and consistency in actions and policy,
uniformity in decisions and actions
level workers, as they are
not allowed to act on their own initiative, and they became dependent on the top-level
: As there is a unity of command, centralization tends to improve
of power at the apex level, it ensures

 Optimum utilization of resources: Centralization facilitates effective utilization of
organizational talent and resources, which helps in developing the corporate personality.
 Uniformity in procedures and policies: There is a uniformity in the work processes,
which are performed as per the same policies and procedures.
 Better control over operations: With centralization, maximum control over the
organization as well as its operations is possible.
 Economy in Administration: As the employee gets orders from the top management
directly, the chances of chaos and duplication of work are minimum, which ensures the
economy in administration.
Disadvantages of Centralization
 Delay in implementation of actions: As the workers have to refer to the top-level management
of the organization for every action which increases dependability and also delays the
implementation of actions.
 Autocratic control: Centralization of the activities results in autocratic (absolute) control over
the subordinates, which reduces the flexibility in work.
 Increases irresponsiveness: The decisions are taken by the top management, but at the same
time they are not completely aware of the local conditions and requirements, which results in
irresponsiveness.
 Lack of employee’s participation: Due to the concentration of the powers in the hands of a few
people, employees do not get the opportunity to act on their own, and so there is lack of
employee’s participation.
In a nutshell, centralization is the process of withholding, a greater portion of formal authority, at
the top tier of management. Therefore, all important and crucial decisions are made by higher-
level executives only.
DECENTRALISATION
“Decentralisation refers to tire systematic effort to delegate to the lowest levels all
authority except that which can only be exercised at central points.” —Louis A. Allen
“Decentralisation means the division of a group of functions and activities into relatively
autonomous units with overall authority and responsibility for their operation delegate to time of
cacti unit.’—Earl. P. Strong
Definition of Decentralisation
Decentralisation is referred to as a form of an organisational structure where there is the
delegation of authority by the top management to the middle and lower levels of management in
an organisation.

In this type of organisation structure, the duty of daily operations and minor decision-
making capabilities are transferred to the middle and lower levels which allow top-level
management to focus more on major decisions like business expansion, diversification etc.
Delegation refers to the assigning a portion of work and the associated responsibility by a
superior to a subordinate. In simple words, when delegation is expanded on an organisational
level, it is called decentralisation.
Example of Decentralisation
Good examples of decentralised business are Hotels, supermarket, Dress showrooms and
etc. Because it is not possible for one person to focus on more than 100 branches which have
branches throughout the world, take an example of a hotel. When a particular person holds a
chain of hotels as his business, he particularly focuses on using decentralised structures so that
local hotel managers and assistants are empowered to make on-the-spot decisions to handle
customers – problems, complaints and requirements.
Importance of Decentralisation
1. Rapid decision making – Most of the decisions are taken on the spot, and approval from
the higher authority is not required. The ability to make a prompt decision allows an
organization to function its operation quickly and effectively.
2. Administrative development – The decentralization process questions the manager’s
judgments and techniques, when responsibility and challenges to develop solutions are
given to them. This questioning method grows confidence, encourages self-reliance, and
makes them a good decision-maker resulting in the development of the organization.
3. Development of executive skills – It allows the employee to perform task individually,
giving them invaluable exposure. This individual performance creates an environment
where an individual can enhance their expertise, take ownership & more significant
responsibilities, and be suitable for promotion.
4. Promotes growth – Decentralization also allows the heads of the department to work
independently. This independence helps the department to grow, have a healthy
competition between other departments. Ultimately, the competition will lead to an
improvement and enhancement in productivity.
5. Higher control – It also evaluates and reviews the performances of each department and
gives them a comprehensive perspective of their work. However, controlling is the
biggest challenge of decentralization and stabilized management and scorecard are being
developed.
Objectives of Decentralization

Decentralization is an important strategical decision. It changes the whole organizational
structure right from the top management to the bottom level. Like other business strategies,
decentralization is also purposeful.
Let us understand the various objectives for which organizations decentralize their operations
:
Development of Managerial Personnel
Decentralization provides for self-learning of the managers by facing the problem,
finding the solutions themselves and taking the correct decisions. It adds on to the skills,
experience and expertise of the managers in their respective departments.
Effective Control and Supervision
The managers exercise better control over the operations of the subordinates by taking
disciplinary actions. They can make decisions related to production schedules, promotions and
leaves taken by the subordinates.
Flexibility
Decentralization leads to flexibility in business operations. It also provides authority to
the managers to handle unexpected situations independently. It allows them to manage their
respective departments in the way they want to.
Motivates and Boosts Morale
It creates self-dependent managers and drives them to enhance their performance, take
the initiative and develop a problem-solving attitude. Decision making also boosts their morale
and confidence.
Prompt Decision Making
There are times when the managers have to take immediate and unplanned decisions at
operational levels; it is only possible in decentralized organizations.
On the contrary, in a centralized organization, the decision-making process is quite lengthy
and complicated, which is ineffective for handling unforeseen operational problems and issues.

Reduces the Burden of Top Management
The management has to take certain crucial strategically decisions which require a lot of
analysis and planning. Decentralization releases the management from operational decision
making, facilitating them to engage themselves in future strategic planning.
Advantages of Decentralisation
1. Reduces the burden on top executives
2. Facilitates diversification
3. Executive Development
4. It promotes motivation
5. Better control and supervision
Disadvantages of Decentralisation
1. Uniform policies not Followed
2. Problem of Co-Ordination.
ORGANIZATIONAL CULTURE
Definition:
Organizational culture, as the name suggests is the culture inherent in the organization,
which determines its internal atmosphere and the overall personality.
It refers to a pattern of accepted and learned behaviour, which are mutually shared and
are taught to the new joiners as to how to perceive, think and behave in the organization.
Moreover, it develops a sense of identity and uniqueness in the employees.
Organizational Culture is a system of common values, beliefs, ideas, preferences,
assumptions, code of conduct, unwritten rules, priorities, and principles, that guides employees
of the appropriate and inappropriate behaviour.

Dimensions of Organizational Culture
 Innovation and Risk-Taking: The extent to which employees are motivated to become
innovative, willing to experiment and take risks.
 Attention to detail: The standard to which organizations workers are expected to work on
precision, analysis and pay attention to details.
 Outcome Orientation: The degree to which the company’s management is oriented towards the
outcomes instead of the strategies and processes employed to achieve them.
 People Orientation: The extent to which the impact of the decisions made and the consequences
of these decisions on people of the organization are considered by the management, through
greater participation. Hence, it is all about the degree of value and respect for people working in
the organization.
 Team Orientation: The extent to which relevance is given to effective teamwork in
comparison to the individual efforts and contributions to the organization, by way of
collaborative problem-solving.
 Aggressiveness: It is all about the employee’s approach to the work, i.e. the extent to
which employees show competitiveness towards work, instead of having a casual
approach.
 Stability: It determines how open an organization is, with respect to change. Moreover, it
is also associated with the company’s status quo, i.e. to what extent the company gives
preference on maintaining the statement of affairs.
The above-mentioned dimensions interact dynamically so as to build an organizational
culture, of which one or more is in a continuous state of change depending on various factors.

How do employees learn Culture?
Employees get to know about the culture of the organization through various means such
as ceremonies, rituals, stories, languages, symbols etc.
Levels of Organizational Culture
Organizational Culture has a very strong impact on the people in the organization
governing the way they interact, dress, behave and perform their tasks. It can be a source of an
organization’s competitive advantage. Let’s take a look at the levels of organizational culture:
1. Assumptions: It indicates the basic beliefs concerning human tendency and reality, but it cannot
be read and understood.
2. Beliefs and Values: It refers to the common principles, standards and goals of the organization,
reflecting the greater level of awareness.
3. Artefacts: It determines visible or say tangible features of the organizational culture, but are
usually taken for granted.
The organizational culture cannot be seen or touched, though it influences the behaviour,
thinking and performance of all the employees. Hence, it is abstract, which the members of the
organization can sense it.
It answers questions like – How tasks are supposed to be completed? What is appropriate
in the context of an organization? It is acceptable to question the decision of managers?
Furthermore, it constitutes the distinct social and psychological environment of the
organization. When these are combined, they create a climate which acts as a guide to
communicate, plan and make decisions effectively.

It encompasses shared beliefs and values designed by the company’s top executives,
which is passed on down the line, i.e. conveyed and implemented through various methods,
which helps in determining employee’s perceptions, behaviour and understanding.
ORGANIZATIONAL CLIMATE
What do you mean by organizational climate?
Organizational climate, on the other hand, is often defined as the recurring patterns of
behavior, attitudes and feelings that characterize life in the organization, while an organization
culture tends to be deep and stable. Although culture and climate are related, climate often
proves easier to assess and change.
ORGANIZATIONAL CLIMATE:
Organizational climate refers to an employee's long-lasting perception of the working
environment and culture of the business they work for. You can think of climate as similar to
personality: every person has a unique personality, and every organization has a unique climate.
Types of Organizational Climate
Type Explanation
Human-centric
climate
An organizational climate that emphasizes the importance of caring for
each other.
Rule-oriented
climate
An organizational climate that prioritizes compliance with organizational
rules and regulations for every organizational member.
Innovation-
oriented climate
An organizational climate that focuses on implementing innovative
working styles and processes to foster creativity and innovativeness at
work.
Goal-oriented
climate
An organizational climate that is result-driven. Thus, this organizational
climate emphasizes the realization of organizational values and
perfectionism to attain desirable business outcomes.

Organizational Climate Characteristics
Five common characteristics can shape an organizational climate at work.They are:
1. General perception: the organizational climate is people's general perception of an
organization. It offers an understanding of people's impressions of the organization's
internal environment.
2. Abstract and intangible concept: an organizational climate is abstract and intangible in
the sense that it is subjective. Thus, an organizational climate is challenging to explain
and measure in units.
3. Unique and distinct identity: an organizational climate gives an organization a unique
and distinctive identity that differs from other organizations.
4. Long-standing quality: an organizational climate cannot be built overnight. In other
words, organizations must spend a long time and consistent efforts in shaping their
desirable organizational climate.
5. Multi-dimensional concept: an organizational climate is multi-dimensional given that it
involves various dimensions at work, such as individual autonomy, leadership style,
communication, organizational conflicts, teamwork, etc.
ORGANIZATIONAL CHANGE
Organizational change refers to the actions in which a company or business alters a major
component of its organization, such as its culture, the underlying technologies or infrastructure it
uses to operate, or its internal processes.
Organizational change happens when a company decides to change its structure,
strategies, culture, policies, technology, or even its core values in order to improve performance
and business growth. Reasons to implement change include: Adapting to market changes. Digital
transformation and technology upgrades.
Organizational changes are of two types:
1. Reactive changes and
2. Proactive changes (planned changes).
A brief description of these follows:
1. Reactive Changes:
Reactive changes occur when forces compel organization to implement change without
delay. In other words, when demands made by the forces are compiled in a passive manner, such
a change is called reactive change.

2. Proactive Changes:
Proactive changes occur when some factors make realize organization think over and
finally decide that implementation of a particular change is necessary. Then, the change is
introduced in a planned manner.
The difference between reactive and proactive changes can made on the basis of
behavioural angle:
1. Reactive change involves a reflexive behaviour whereas proactive change involves
purposive behaviour.
2. Reactive change covers a limited part of the system but proactive change co-ordinates
the various parts of the system as a whole.
3. While reactive changes respond to immediate symptoms, proactive changes address to
underlying forces creating symptoms.
Reasons for Organization Changes:
What causes organisational change?
The main reason for restructuring a business is to execute a new strategy. A strategy sets out
a plan that determines how a business will use its major resources to meet its strategic objectives.
When you change your strategy, you often have to adapt your business structure to ensure
that the two elements continue to support each other. This may happen, for example, when you:
 transition from a start-up to a scale-up company
 take on a partner, or introduce change in management
 move into new product lines
 prepare your business for growth
 expand your business overseas
External factors affecting organisational change
External factors that might prompt a change in your business' structure include having to:
 address new markets
 react to changes in product or service demand
 keep up with new technologies or products from competitors
Other external events that can affect either your business or your rivals can also stimulate
organisational change. These include, for example:
 mergers and acquisitions
 joint ventures and business partnerships

 preparing to sell your business
Internal factors affecting organisational change
Internal business needs can also prompt business change. For example, these may include the
need to:
 raise capital, improve cash flow or profitability of your business
 improve working practices and processes
 eliminate excess job positions and duplicate management roles
 reorganize internal functions, such as sales and marketing, for efficiencies
What is the difference between organization culture and climate?
Organizational culture refers to the shared behavioral expectations and norms in a work
environment. This is the collective view of “the way work is done.” Organizational climate
represents staff perceptions of the impact of the work environment on the individual.
TALENT MANAGEMENT
Talent management is a constant process that involves attracting and retaining high-
quality employees, developing their skills, and continuously motivating them to improve their
performance. The primary purpose of talent management is to create a motivated workforce who
will stay with your company in the long run. The exact way to achieve this will differ from
company to company.
IMPORTANCE OF TALENT MANAGEMENT
1. It helps businesses improve performance
Talent management is most effective of all when it combines three key components:
rapid talent
allocation, positive employee experience, and a strategic HR team.
2. It allows companies to stay competitive
By hiring and developing talented employees, your organization becomes stronger and
better prepared to face changes and risks.
3. It drives innovation

New technologies are always hitting the scene, whatever your industry. Talented
employees are able to find ways to harness the capabilities of new tools and solve problems or
come up with original ideas.
4. It helps form productive teams
The appropriate talent management strategy will allow you to form a more productive
team. This is far more useful than just having a bunch of creative and talented people in your
organization.
5. It decreases turnover
When employees feel valued at a company, when they know
opportunities to grow in the business, they are less likely to seek work elsewhere.
6. It leads to strong employer branding
Talent management brands your company as an employer. This helps you to attract the
best candidates for future hires.
7. It motivates others to grow
Having inspiring talent on your team will motivate other employees and help them grow.
TALENT MANAGEMENT MODEL
able to find ways to harness the capabilities of new tools and solve problems or
4. It helps form productive teams
alent management strategy will allow you to form a more productive
is far more useful than just having a bunch of creative and talented people in your
When employees feel valued at a company, when they know they will have plenty of
6. It leads to strong employer branding
TALENT MANAGEMENT MODEL
able to find ways to harness the capabilities of new tools and solve problems or
alent management strategy will allow you to form a more productive
is far more useful than just having a bunch of creative and talented people in your
they will have plenty of

1. Planning
Planning aligns your talent management model in line with the overall goals of your
organization. Only with the correct planning can you ensure that you seek talent with the right
skills and experience. In addition, it assesses current employees to see what is working well for
the company. For instance, if employees with certain characteristics tend to stay at the
organization for longer, you should plan to hire more workers like them.
2. Attracting
It is not always as simple as when one person leaves the company, you start a search for
someone else to fill the role. For instance, your needs may change or employees may take on
new responsibilities. Talent management ensures that you always have sufficient staff to carry
out all your operations and prevent heavy workloads that could cause demotivation.
The right strategy will attract just the kind of workers you want at your business. Such
hires will be driven, skilled, and seeking to advance within the company. Attracting talent is all
about branding your company as an employer. You’ll need to find ways to increase visibility in
ways that allow you to present company as a best place to work. The main consideration here is
to make your business more approachable.
Even if you choose not to hire someone for a particular position, you still need to create a
positive experience. This will give you the opportunity to hire these candidates for other jobs or
use them as ambassadors to acquire other talent.
3. Developing
The development part of the model involves taking steps to help talent grow within the
company. It should be aligned with the employee development plan and includes identifying
roles where particular employees could move to in the future as well as considering how to
expand workers’ skills and knowledge to fulfill new challenges facing your organization. Talent
Management also looks at what will keep employees at your company enthusiastic and willing to
go the extra mile. It is necessary to provide employees with value. Motivation also requires the
correct on boarding — to give new hires a great impression of your company from the very

beginning. This will increase the chance that they stay with the company and work hard.
4. Retaining
Another purpose of talent management is to keep people at your company for longer.
Employees need to continue feeling that the company is an enjoyable, meaningful place to work.
Through training and other types of engagement, employees have the chance to create a career
without leaving the company. You may achieve this by focusing on compensation (monetary and
otherwise) as well as company culture.
5. Transitioning
After hiring and developing their skills, you need to plan for employees’ transitions. Your
aim at this stage is to keep their knowledge within the company this is called knowledge
management.
TALENT MANAGEMENT PROCESS
The talent management process is how you organize the management of your human
resources.
It is how you choose employees, how you hire them, and how (or if) you train them,
motivate them, fire them, and so on. The following steps cover what you need to do to develop a
continuous talent management process for your organization. It covers how to find the most
talented people available and then help them stay in your company.
Step 1: Specify What Skills You Need
What is the first step in the talent management process? Before you can go any further,
you must determine what kinds of hires you need and what requirements they should fill.
Consider if it would be possible to teach existing employees to avoid the need to hire anyone
new.
Step 2: Attract the Right People
There are several stages to attracting talent:
1. Create targeted advertisements and post them on top job sites — HR branding is helpful
here.
2. Plan interviews and other means to identify the best person for the job. In addition to
regular questions, consider using personality assessments, references, and tests that

require candidates to perform in real-life situations.
3. Hire your top choices.
Step 3: Onboard and Organize Work
Help new employees feel orientated by being ready for them as soon as they enter the
company.
Know what tasks you will set them, have training sessions scheduled, and assign current
employees to support new workers settle in.
Step 4: Organize Learning and Development
Remember, it is often easier to develop the skills of your current employees than to hire
new talent. Plus, even if you do hire top talent, they will likely want to learn something in their
new role. Plan ways for your workers to learn and grow, such as through conferences, courses,
and a learning management system to create a learning environment.
Step 5: Hold Performance Appraisals
Checking employee performance regularly allows you to see if workers could manage
additional responsibilities. This could save you hiring new talent and it may help an employee
prepare for a promotion.
Step 6: Strategize to Retain Your Best Talent
Keep employees satisfied at work through promotions, benefits, motivating tactics,
ensuring job satisfaction, and improving company culture.
Step 7: Plan for Successions
Nurture employees for successions, such as for when a senior member of staff retires.
Enable employees to perform to their best through continuous learning opportunities, including
Knowledge management. If an employee decides to leave the company, conduct an exit
interview
to find out what went wrong — this will help you prevent the same issue occurring again in the
future.
Talent Management ─ Types
Talent management includes within its fold those individuals who can make a difference
to the organization’s goals, either through their immediate contribution or in the long run.

Talent is a composite state made up of various elements. An Ind
talented when he/she possesses or acquires the following elements.
 Skills, knowledge, intelligence, and experience
 Ability to learn and grow
 Judgment, attitude, character
 Perseverance and self
Talent is a set of unique abilities possessed by individuals. There are two types of talent
found in an organization. They are unidimensional and multidimensional. Both types
of talent have the same objective, however, with different perspectives
Unidimensional Talent
In an organization, we observe that some employees are best in a particular skill and
ability. For instance, some employee may be best in administration, some of them best in
sales, while some employees may be best in their respective functions. When individuals
possess a singular talent in any particular field, it is called unidimensional talent.
Multidimensional Talent
On the other hand, in an organization we also observ
multipleskills and abilities. For example, one employee is bes
accountingand production at a stretch. Such an employee is said to possess multi
talent.
Talent is a composite state made up of various elements. An Individual is said to be
talented when he/she possesses or acquires the following elements.
Skills, knowledge, intelligence, and experience
Ability to learn and grow
Judgment, attitude, character
Perseverance and self-motivation
abilities possessed by individuals. There are two types of talent
of talent have the same objective, however, with different perspectives.
organization, we observe that some employees are best in a particular skill and
On the other hand, in an organization we also observe that employees are adept at
ltipleskills and abilities. For example, one employee is best in administration sales,
accountingand production at a stretch. Such an employee is said to possess multi
ividual is said to be
abilities possessed by individuals. There are two types of talent
organization, we observe that some employees are best in a particular skill and
e that employees are adept at
t in administration sales,
accountingand production at a stretch. Such an employee is said to possess multi-dimensional

Definition of Human Resource Planning
According to Vetter, “HRP is the process by which management determines how the
organization should move from its current man power position to desired manpower position.
Through planning, management strives to have the right time, doing things which result in both
the organization and individual receiving maximum long run benefits”.
According to Gordon McBeath, “HRP is concerned with two things: Planning of
manpower requirements and Planning of Manpower supplies”.
HUMAN RESPOURCES PLANNING
Human Resource Planning which is also called as manpower Planning consists of putting
right number of people, right kind of people at the right place, right time, doing the right things
for which they are suited for the achievement of goals of the organization. Human Resource
Planning has got an important place in the arena of industrialization. Human Resource Planning
has to be a system approach and is carried out in a set procedure. The procedure is as follows:
1. Analyzing the current manpower inventory
2. Making future manpower forecasts
3. Developing employment programmes
4. Design training programme
STEPS IN HUMAN RESOURCES PLANNING
1. Analyzing the current manpower inventory- Before a manager makes forecast of future
manpower, the current manpower status has to be analyzed. For this the following things have to
be noted-
• Type of organization
• Number of departments
• Number and quantity of such departments
• Employees in these work units
Once these factors are registered by a manager, he goes for the future forecasting.
2. Making future manpower forecasts- Once the factors affecting the future manpower
forecasts are known, planning can be done for the future manpower requirements in several work
units.

The Manpower forecasting techniques commonly employed by the organizations are as
follows:
i. Expert Forecasts: This includes informal decisions, formal expert surveys and Delphi
Technique.
ii. Trend Analysis: Manpower needs can be projected through extrapolation (projecting
Past trends), indexation (using base year as basis), and statistical analysis (central
Tendency measure).
iii. Work Load Analysis: It is dependent upon the nature of work load in a department, in a
branch or in a division.
iv. Work Force Analysis: Whenever production and time period has to be analyzed, due
Allowances have to be made for getting net manpower requirements.
v. Other methods: Several Mathematical models, with the aid of computers are used to
forecast manpower needs, like budget and planning analysis, regression, new venture
analysis.
3. Developing employment programmes-
Once the current inventory is compared with futureforecasts, the employment
programmes can be framed and developed accordingly, which willinclude recruitment, selection
procedures and placement plans.
4. Design training programmes-
These will be based upon extent of diversification, expansionplans, development
programmes,etc. Training programmes depend upon the extent ofimprovement in technology and
advancement to take place. It is also done to improve upon theskills, capabilities, knowledge of
the workers.
IMPORTANCE OF HUMAN RESOURCE PLANNING
1. Efficient utilization- Efficient management of personnel becomes an important function in
theindustrialization world of today. Setting of large-scale enterprises require management of
large-scale manpower. It can be effectively done through staffing function.
2. Motivation- Staffing function not only includes putting right men on right job, but it also

comprises of motivational programmers, i.e., incentive plans to be framed for further
participation and employment of employees in a concern. Therefore, all types of incentive plans
become an integral part of staffing function.
3. Better human relations- A concern can stabilize itself if human relations develop and are
strong. Human relations become strong trough effective control, clear communication, effective
supervision and leadership in a concern. Staffing function also looks after training and
development of the work force which leads to co-operation and better human relations.
4. Higher productivity- Productivity level increases when resources are utilized in best possible
manner. Higher productivity is a result of minimum wastage of time, money, efforts and
energies.
This is possible through the staffing and its related activities (Performance appraisal, training and
development, remuneration)
OBSTACLES OF HUMAN RESOURCE PLANNING
Following are the main obstacles that organizations face in the process of manpower
planning:
1. Under Utilization of Manpower: The biggest obstacle in case of manpower planning is the
factthat the industries in general are not making optimum use of their manpower and once
manpowerplanning begins, it encounters heavy odds in stepping up the utilization.
2. Degree of Absenteeism: Absenteeism is quite high and has been increasing since last few
years.
3. Lack of Education and Skilled Labour: The extent of illetracy and the slow pace of
development of the skilled categories account for low productivity in employees. Low
productivity has implications for manpower planning.
4. Manpower Control and Review:
a. Any increase in manpower is considered at the top level of management
b. On the basis of manpower plans, personnel budgets are prepared. This act as control
mechanisms to keep the manpower under certain broadly defined limits.
c. The productivity of any organization is usually calculated using the formula:
Productivity = Output / Input.
But a rough index of employee productivity is calculated as follows:

Employee Productivity = Total Production / Total no. of employees
d. Exit Interviews, the rate of turnover and rate of absenteesim are source of vital
information on the satisfaction level of manpower. For conservation of Human Resources
and better utilization of men studying these condition, manpower control would have to
take into account the data to make meaningful analysis.
e. Extent of Overtime: The amount of overtime paid may be due to real shortage of men,
ineffective management or improper utilization of manpower. Manpower control would
require a careful study of overtime statistics.
RECRUITMENT:
Meaning and Definition
Recruitment forms a step in the process which continues with selection and ceases with
the placement of the candidate. It is the next step in the procurement function, the first being the
manpower planning. Recruiting makes it possible to acquire the number and types of people
necessary to ensure the continued operation of the organisation. Recruiting is the discovering of
potential applicants for actual or anticipated organisational vacancies.
According to Edwin B. Flippo, “Recruitment is the process of searching for prospective
employees and stimulating them to apply for jobs in the organisation.”
According to Lord, “Recruitment is a form of competition. Just as corporations compete
to develop, manufacture, and market the best product or service, so they must also compete to
identify, attract and hire the most qualified people. Recruitment is a business, and it is a big
business.”
Factor Affecting Recruitment
The factors affecting recruitment can be classified as internal and external factors.
The internal factors are:
 Wage and salary policies;
 The age composition of existing working force;
 Promotion and retirement policies;
 Turnover rates;
 The nature of operations involved the kind of personnel required;
 The level and seasonality of operations in question;

 Future expansion and reduction programmes;
 Recruiting policy of the organisation;
 Human resource planning strategy of the company;
 Size of the organisation and the number of employees employed;
 Cost involved in recruiting employees, and finally;
 Growth and expansion plans of the organisation.
The external factors are:
 Supply and demand of specific skills in the labour market;
 Company’s image perception of the job seekers about the company.
 External cultural factors: Obviously, the culture may exert considerable check on
recruitment. For
 example, women may not be recruited in certain jobs in industry.
 Economic factors: such as a tight or loose labour market, the reputation of the
enterprise in the
 community as a good pay master or otherwise and such allied issues which
determine the quality
 and quantity of manpower submitting itself for recruitment.
 Political and legal factors also exert restraints in respect of nature and hours of
work for women
 and children, and allied employment practices in the enterprise, reservation of Job
for SC, ST andso on.
Recruitment Process
Every organization follows its own recruitment process, but there are some basic steps
that are followed by most the organization, which are listed here:
Step 1: Preparing
Once the job opening is approved internally, the recruiter contacts the hiring manager.
This step is about gathering details about the open position. During the discussion, the recruiter
has to gather information, like the required skills, roles, responsibilities, etc., and use this
information to write a clear and inclusive Job description. Based on the job description, they
can write the job posting.
Step 2: Sourcing
Once the job description is ready, the next step is to start the sourcing. It refers to
identifying and contacting qualified candidates rather than waiting for the candidate to apply
for the position. The primary goal is to pull qualified candidates. A recruiter uses a variety
of job portals to pull the resumes, but it is not essential that for every position, sourcing is
required. In some cases, if there are a large number of applications, there may not be any need
to source more candidates.

Step 3: Screening
The Screening of a candidate can take place in many ways. Generally, the first step is
Resume screening. If the resume meets the criteria required for the job opening, then the next
step is the phone screening, in which, the recruiter can cover topics, like thecandidate’s
availability, current role, and responsibilities, current salary, salary expectations, Notice
period, etc., and if he seems to be the right candidate, an organization can process further with
his profile.
Step 4: Selecting
This process is about sending the assignments, psychometric tests and scheduling
interviews, participating in the interview process, and also keeping the hiring manager in the
loop for the whole process. It is about maintaining a good relationship with the candidate and
keeping the candidate updated about the interview feedback.
Step 5: Hiring
This step includes the final discussion with the candidate about salary, joining date, etc.
Once the joining date is confirmed, the offer letter is released. In some cases, this step also
includes background checks.
Step 6: Onboarding
Once the candidate has accepted the offer letter, the process is not over yet. This is
where the pre-boarding period starts. This is the time between the joining date and when the
offer letter was accepted. And it’s very important to be in touch with your candidate during this
period to keep them engaged. If not done so, it can result in them joining another company. It
also includes sharing the new hire’s email and other details with the team. Once the candidate
starts the first day, it’s time to begin the onboarding process.
SELECTION
Selection is the process of choosing people by obtaining and assessing information about
the applicants with a view to matching these with the job requirements. It involves a careful
screening and testing of candidates who have put in their applications for any job in the
enterprise. It is the process of choosing the most suitable persons out of all the applicants. The
purpose of selection is to pick up the right person for every job.
According to Dale Yoder, “Selection is the process in which candidates for employment
are divided into two classes-those who are to be offered employment and those who are not”.
According to Thomas Stone, “Selection is the process of differentiating between
applicants in order to identify (and hire) those with a greater likelihood of success in a job”.
Dale Yoder says, “Selection has long held a high rank in the priority of problem areas in
management. Investments in good people produce a very high rate of return. A good choice of
people can provide a basis for long, sustained contributions.”
Selection Procedure

The selection procedure is concerned with securing relevant information about an
applicant. This information is secured in a number of steps or stages. The objective of selection
process is to determine whether an applicant meets the qualification for a specific job and to
choose the applicant who is most likely to perform well in that job. Selection is a long process,
commencing from the preliminary interview of the applicants and ending with the contract of
employment (sometimes).
The major factors which determine the steps involved in a selection process are as follows:
a) Selection process depends on the number of candidates that are available for selection.
b) Selection process depends on the sources of recruitment and the method that is adopted
for
c) making contact with the prospective candidates.
d) Various steps involved in as selection process depend on the type of personnel to be
selected.
All the above factors are not mutually exclusive, rather these operate simultaneously. In any
case, the basic objective of a selection process is to collect as much relevant information about
the candidates as is possible so that the most suitable candidates are selected. A comprehensive
selection process involves the various steps as shown in Figure.

1. Application Pool:
Application pool built-up thro
process. The basic objective at the recruitment level is to attract as much worthwhile applications
as possible so that there are more options available at the selection stage.
2. Preliminary Screening and Interview
up through recruitment process is the base for selection
possible so that there are more options available at the selection stage.
Interview:
ugh recruitment process is the base for selection

It is highly noneconomic to administer and handle all the applicants. It is advantageous to
sort out unsuitable applicants before using the further selection steps. For this purpose, usually,
preliminary interviews, application blank lists and short test can be used. All applications
received are scrutinised by the personnel department in order to eliminate those applicants who
do not fulfil required qualifications or work experience or technical skill, his application will not
be entertained.
Such candidate will be informed of his rejection.
Preliminary interview is a sorting process in which the prospective candidates are given
the necessary information about the nature of the job and the organisation. Necessary
information is obtained from the candidates about their education, skills, experience, expected
salary etc. If the candidate is found suitable, he is elected for further screening. This courtesy
interview; as it is often called helps the department screen out obvious misfits. Preliminary
interview saves time and efforts of both the company and the candidate. It avoids unnecessary
waiting for the rejected candidates and waste of money on further processing of an unsuitable
candidate. Since rejection rate is high at preliminary interview, the interviewer should be kind,
courteous, receptive and informal.
3. Application Blank or Application Form:
An application blank is a traditional widely accepted device for getting information from
a prospective applicant which will enable the management to make a proper selection. The blank
provides preliminary information as well as aid in the interview by indicating areas of interest
and discussion. It is a good means of quickly collecting verifiable (and therefore fairly accurate)
basic historical data from the candidate. It also serves as a convenient device for circulating
information about the applicant to appropriate members of management and as a useful device
for storing information for, later reference. Many types of application forms, sometimes very
long and comprehensive and sometimes brief, are used. Information is generally taken on the
following items:
(a) Biographical Data: Name, father’s name, data and place of birth, age, sex,
nationality, height, weight, identification marks, physical disability, if any, marital status, and
number of dependants.
b) Educational Attainment: Education (subjects offered and grades secured), training
acquired in special fields and knowledge gained from professional/technical institutes or through
correspondence courses.
(c) Work Experience: Previous experience, the number of jobs held with the same or other
employers, including the nature of duties, and responsibilities and the duration of various
assignments, salary received, grades, and reasons for leaving the present employer.

(d) Salary and Benefits: Present and expected.
(e) Other Items: Names and addresses of previous employers, references, etc. An application
blank is a brief history sheet of an employee’s background and can be used for future reference,
in case needed.
4. Selection Tests:
Many organisations hold different kinds of selection tests to know more about the
candidates or to reject the candidates who cannot be called for interview etc. Selection tests
normally supplement the information provided in the application forms. Such forms may contain
factual information about candidates. Selection tests may give information about their aptitude,
interest, personality, which cannot be known by application forms. Types of tests and rules of
good of testing have been discussed in brief below:
A. Aptitude Tests: These measure whether an individual has the capacity or talent ability
to learn a given job if given adequate training. These are more useful for clerical and trade
positions.
B. Personality Tests: At times, personality affects job performance. These determine
personality
traits of the candidate such as cooperativeness, emotional balance etc. These seek to assess an
individual’s motivation, adjustment to the stresses of everyday life, capacity for interpersonal
relations and self-image.
C. Interest Tests: These determine the applicant’s interests. The applicant is asked
whether he likes, dislikes, or is indifferent to many examples of school subjects, occupations,
amusements, peculiarities of people, and particular activities.
D. Performance Tests: In this test the applicant is asked to demonstrate his ability to do
the job. For example, prospective typists are asked to type several pages with speed and
accuracy.
E. Intelligence Tests: This aim at testing the mental capacity of a person with respect to
reasoning, word fluency, numbers, memory, comprehension, picture arrangement, etc. It
measures the ability to grasp, understand and to make judgement.
F. Knowledge Tests: These are devised to measure the depth of the knowledge and
proficiency in certain skills already achieved by the applicants such as engineering, accounting
etc.

G. Achievement Tests: Whereas aptitude is a capacity to learn in the future,
achievement is concerned with what one has accomplished. When applicants claim to know
something, an achievement test is given to measure how well they know it.
H. Projective Tests: In these tests the applicant projects his personality into free responses about
pictures shown to him which are ambiguous.
5. Interview:
An interview is a procedure designed to get information from a person and to assess his
potential for the job he is being considered on the basis of oral responses by the applicant to oral
inquiries by the interviewer. Interviewer does a formal in-depth conversation with the applicant,
to evaluate his suitability. It is one of the most important tools in the selection process. This tool
is used when interviewing skilled, technical, professional and even managerial employees. It
involves two-way exchange of information.
The interviewer learns about the applicant and the candidate learns about the employer.
Objectives of Interviews: Interview helps:
 To obtain additional information from the candidate.
 Facilitates giving to the candidate information about the job, company, its policies,
products etc.
 To assess the basic suitability of the candidate.
6. Background Investigation:
The next step in the selection process is to undertake an investigation of those applicants
who appear to offer potential as employees. This may include contacting former employers to
confirm the candidate’s work record and to obtain their appraisal of his or her performance/
contacting other job-related and personal references, and verifying the educational
accomplishments shown on the application.
The background investigation has major implications. Every personnel administrator has
the responsibility to investigate each potential applicant. In some organization, failure to do so
could result in the loss of his or her job. But many managers consider the background
investigation data highly biased. Who would actually list a reference that would not give
anything but the best possible recommendation? The seasoned personnel administrator expects
this and delves deeper into the candidate’s background, but that, too, may not prove to be
beneficial. Many past employers are reluctant to give any information to another company other
than factual information (e.g., date of employment).
6. Physical Examination

After the selection decision and before the job offer is made, the candidate is
required to undergo physical fitness test. Candidates are sent for physical examination
either to the company’s physician or to a medical officer approved for the purpose. Such
physical examination provides the following information.
a) Whether the candidate’s physical measurements are in accordance with job requirements
or not?
b) Whether the candidate suffers from bad health which should be corrected?
c) Whether the candidate has health problems or psychological attitudes likely to interfere
with work
d) efficiency or future attendance?
e) Whether the candidate is physically fit for the specific job or not?
7. Approval by Appropriate Authority:
On the basis of the above steps, suitable candidates are recommended for
selection by the selection committee or personnel department. Though such a committee
or personnel department may have authority to select the candidates finally, often it has
staff authority to recommend the candidates for selection to the appropriate authority.
Organisations may designate the various authorities for approval of final selection of
candidates for different categories of candidates. Thus, for top level managers, board of
directors may be approving authority; for lower levels, even functional heads concerned
may be approving authority.
8. Final Employment Decision:
After a candidate is finally selected, the human resource department recommends his name
for employment. The management or board of the company offers employment in the form of an
appointment letter mentioning the post, the rank, the salary grade, the date by which the
candidate should join and other terms and conditions of employment. Some firms make a
contract of service on judicial paper. Usually an appointment is made on probation in the
beginning. The probation period may range from three months to two years. When the work and
conduct of the employee is found satisfactory, he may be confirmed. The personnel department
prepare a waiting list and informs the candidates. In case a person does not join after being
selected, the company calls next person on the waiting list.
9. Evaluation: The selection process, if properly performed, will ensure availability of
competent and committed personnel. A period audit, conducted by people who work
independently of the human resource department, will evaluate the effectiveness of the
selection process. The auditors will do a thorough and the intensive analysis and evaluate
the employment programme.

Performance Appraisal:
Performance Management is the managerial process that deals with the various
dimensions of the performance of the employees which include the identification of the
resources to be provided to the employees, evaluation of the employees at regular intervals of
time and delivering feedback to them, planning the rewards and incentives, etc.
 Performance Appraisal deals with the evaluation part of performance management.
 It involves the systematic evaluation of an employee with regard to their contribution to
the organization. Performance appraisal takes the behaviour, attitude, skillset and
knowledge improvement, learning potential and other factors into consideration.
 Performance appraisal is the process of assessment of the job performance of the
employees by taking specific metrics into consideration by the supervisors or any other
assigned team members.
 It involves the comparison of the performance of an employee with their own
performance and with the performance of the other employees over a specific period
of time.
Objectives of Performance appraisal
 Helping the organization over promotions, salary increments, incentives, internal job
transfers, terminations, improving training modules, etc.
 Providing evaluation feedback to employees, to state what is required from them and
what are the areas they need to improve.
 Creating a friendly environment by assessing the difficulties faced by the employees
and motivating them.
 To monitor the performance of the employees.
Methods of Performance appraisal
i. Traditional methods
ii. Modern Methods:
Traditional methods
The traditional methods of performance appraisal are as follows:
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1. Ranking method: In this method, the employees are ranked by taking their performance
levels and other characteristics into consideration.
 Very useful to divide a good and an average performer.
 Can be used easily for a small set of employees.

 The ranking becomes difficult when a large set of employees have similar characteristics.
2. Grading method: In this method, different grades are given to the employees based on
their contribution to the organization.
 Grades may be in the form of alphabets (A, B, C, D, E, F..) or in words like excellent,
very good, moderate, bad, very bad, worst or excellent, good, bad.
 Based on the grades given, promotions, hikes, training, etc. are planned.
3. Paired comparison method: In this method, the appraiser compares two employees and
marks the better performer. The process is continued until all the employees are compared
with one another in this manner.
 After the entire process is completed, ranking is given to all the employees based on
the number of times that the employee has been marked as a better performer.
 This method is very difficult for an organization that has a large number of
employees.
4. Forced choice method: In this method, the appraiser is given a set of statements and asked
to select one statement which defines the employee.
 Let us consider the following three statements,
o He/ She is a team player.
o He/ She needs to be trained to improve the skill set.
o He/ She completes the assigned tasks in time.
 The appraiser has to select one statement as a part of the evaluation process.
 This is a time-consuming method.
5. Graphical rating method: In this method, different characteristics of the employees are
rated. The appraiser rates the employees on each characteristic in the form of points like 1, 2,
3, 4, 5, 6, 7 or in the form of excellent or average or bad, etc.
 Let us consider two characteristics like efficiency and training. If an employee
performs very well in the training sessions, then that employee will be given the rating as
6 or 7 on 7 point scale.
 If the same employee performs poorly on the project related tasks, then that employee
will be given 2 points or 1 point for efficiency.
6. Forced distribution method: In this method, the appraiser has to distribute the employees
into five levels like excellent, very good, average, very bad and worst performers.
 For example, if there are 1000 employees, the appraiser has to distribute the employees
into various categories as per their performance levels.
 If there are 200 excellent performers, they fall into the excellent category. If the
performance levels of another 200 employees are not up to the mark, then they fall into

the very bad category. This method is continued until every employee is distributed into
some category.
7. Checklist method: In this method, all the characteristics in the question form are written
in order and two options yes and no is given to the appraiser for every question. The appraiser
has to tick the yes box when the given characteristic is found and no box when it is not.
 All the responses are counted, and a final rating is obtained.
 It is a time taking process and not accurate.
8. Essay method: In this method, the appraiser writes about the characteristics of the
employee in his own words in the form of an essay.
 With this, the strong and weak points can be easily known.
 But the essay depends on the writing skills of the appraiser. Sometimes, there may be
a chance of weak areas getting more highlighted than the strong areas of an
employee. This may demotivate the employee.
9. Critical incidents method: In this method, the performance of the employees during
critical incidents is taken into consideration.
 All the critical tasks performed by each employee are written and are compared
with each other by the appraisal team.
 The rating is done based on the severity of the critical incident.
10. Field review method: In this method, the appraiser takes the help of subordinates and
supervisors to rate an employee.
 This method is mostly used during the promotions and increments.
 It is a time-consuming process.
Modern Methods:
1. Management by Objectives(MBO): This method was developed by Peter Drucker. In this
method, certain tasks(objectives) based on their job role are given to the employees and a
team is assigned to monitor the tasks.
 This will help the organization to know the skill gap of the employees.
 This will help the organization to plan the training modules.
 The setting of objectives to determine the true potential of the employees is a difficult
and time-consuming task.
2. 360-degree appraisal: In this method, an employee is appraised by the supervisors, the
clients, the subordinates, the customers, including themselves.

 This will help the organization
employees.
 The employees can freely
methods.
3. Assessment centres: In this method,
to perform a few tasks individually and a few tasks in teams.
 These tasks are mainly aimed to
of the employees.
 The tasks are mostly related to their job responsibilities.
 This method is used to decide
4. Behaviourally Anchored Rating Scales (BARS):
are identified and are divided into different groups
 The employees are rated on their behaviour towards
traits.
 This will enable the organization to know the involvement of the employees.
Training and Development:
Meaning & Definition
According to Edwin Flippo “Training is the act of increasing the knowledge & skill of an
employee for doing a particular job.”The following features have been directly associated with
improved employee and organizational o
Training is important for the following reasons:
i. Higher employee morale
ii. Less wastage  Easy adaptability
iii. Reduced turnover and absenteeism
iv. Employee Development
This will help the organization to know about the strong and weak areas of the
The employees can freely express their views and suggest any changes
In this method, a group of employees are selected
tasks individually and a few tasks in teams.
These tasks are mainly aimed to check the teamwork, leadership qualities and skill set
The tasks are mostly related to their job responsibilities.
This method is used to decide whether an employee is to be promoted or trained.
Behaviourally Anchored Rating Scales (BARS): In this method, all the critical incidents
are identified and are divided into different groups based on their departments.
The employees are rated on their behaviour towards the incidents rather than on the
organization to know the involvement of the employees.
improved employee and organizational outcomes:  Start with training needs assessment.
Training is important for the following reasons:  Increased productivity
Higher employee morale  Less supervision
 Easy adaptability
Reduced turnover and absenteeism
the strong and weak areas of the
express their views and suggest any changes in the training
a group of employees are selected and are asked
check the teamwork, leadership qualities and skill set
yee is to be promoted or trained.
all the critical incidents
based on their departments.
rather than on the
organization to know the involvement of the employees.
assessment.

What is Training and Development?
Training and Development is the continuous process of improving skills, gaining
knowledge, clarifying concepts and changing attitude through structured and planned education
by which the productivity and performance of the employees can be enhanced. Training and
Development emphasize on the improvement of the performance of individuals as well as groups
through a proper system within the organization which focuses on the skills, methodology and
content required to achieve the objective. Good & efficient training of employees helps in their
skills & knowledge development, which eventually helps a company improve its productivity
leading to overall growth.
Training is about knowing where you are in the present and after some time where will
you reach with your abilities. By training, people can learn new information, new methodology
and refresh their existing knowledge and skills. Due to this there is much improvement and adds
up the effectiveness at work. The motive behind giving the training is to create an impact that
lasts beyond the end time of the training itself and employee gets updated with the new
phenomenon. Training can be offered as skill development for individuals and groups.
Training and Development Process
Training and development is a continuous process as the skills, knowledge and quality of
work needs constant improvement. Since businesses are changing rapidly, it is critical that
companies focus on training their employees after constantly monitoring them & developing
their overall personality.
Steps for training and development processes are:
1. Determine the need of training and development for individuals or teams
First of all the need has to be seen for training and development. it has to align with the
company's goals and objectives. If a company is trying to start a new department or strengthen
existing sales team in new products, then an appropriate training is needed.
2. Establish specific objectives & goals which need to be achieved
goals and objectives of the training and development have to be established. Whether the
goal is awareness about new products or even installation is required to be learnt.
3. Select the methods of training
Next, methods have to be defined. The training can be done as a :
a. Classroom Training
b. Online Self paced courses
c. Course with certification
d. Instructor led online training
4. Conduct and implement the programs for employees
After the plan and methods are finalized, the training and development programs have to
be executed where courses, instructions are taught to the employees, partners or vendors.

5. Evaluate the output and performance post the training and development sessions
Training and Development is incomplete without proper monitoring. Monitoring can be
done through evaluation of the instructor as well as attendees. Instructor evaluation can be done
through feedback or ratings but attendees can be evaluated through internal or external
certifications or scores.
6. Keep monitoring and evaluating the performances and again see if more training is
required
Based on the evaluation results in the previous step, management needs to ascertain that
if the training and development program was sufficient for now or more training and enablement
would be required. Also, if future trainings are to be planned.
Importance of Training and Development
For companies to keep improving, it is important for organizations to have continuous
training and development programs for their employees. Competition and the business
environment keeps changing, and hence it is critical to keep learning and pick up new skills. The
importance of training and development is as follows:
1, Optimum utilization of resources
2. Development of skills like time management, leadership, team management etc.
3. To increase the performance, productivity and motivation
4. To imbibe the team spirit
5. For improvement of organization culture
6. To improve quality
7. To increase profitability and bottom line by acquiring new skills

8. Improving brand image by having well trained employees
Relation and Difference between Training and Development
There is a relation between training and development, and there is clear difference
between the two based on goals to be achieved. Development is made to answer the training
problems:
TRAINING DEVELOPMENT
Training is meant for
operatives
Development is meant for
executives
It is reactive process It is proactive process
AIM: To develop additional
skills
AIM: To develop the total
personality
It is short term process It is continuous process
OBJECTIVE: To meet the
present need of an employee
OBJECTIVE: To meet the
future need of an employee
Initiative is taken by the
management
Initiative is taken by an
individual.
Need for Training and Development
Training and development of employees is a costly activity as it requires a lot quality
inputs from trainers as well as employees. But it is essential that the company revises its goals
and efficiencies with the changing environment. Here are a few critical reasons why the
company endorses training and development sessions.
1. Improvement
When management thinks that there is a need to improve the performances of employees
2. Benchmarking
To set up the benchmark of improvement so far in the performance improvement effort
3. Specific Role Requirement
To train about the specific job responsibility and skills like communication management,
team management etc.
4. Testing
To test the new methodology for increasing the productivity
Advantages of training and development
Training and development has a cost attached to it. However, since it is beneficial for
companies in the long run, they ensure employees are trained regularly. Some advantages are:

1. Helps employees develop new skills and increases their knowledge.
2. Improves efficiency and productivity of the individuals as well as the teams.
3. Proper training and development can remove bottle-necks in operations.
4. New & improved job positions can be created to make the organization leaner.
5. Keeps employees motivated and refreshes their goals, ambitions and contribution levels.
Disadvantages of training and development
Even though there are several advantages, some drawbacks of training and development
are mentioned below:
1. It is an expensive process which includes arranging the correct trainers and engaging
employees for non-revenue activities.
2. There is a risk that after the training and development session, the employee can quit the job.

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