MODULE – 10: MANAGERIAL FUNCTIONS:

ORGANIZING AND STAFFING

Learning Objectives
• Understanding of Organizing function its nature, features and importance.
• Understanding of Organization structure and design
• Knowledge of key elements of organizational design
• Knowledge about staffing functions and its importance in management
• Understanding of various elements of staffing

ORGANIZING
I. Organizing

Organizing is the process of establishing fixed administrative structures, assigning tasks and
allocating resources to individuals, and establishing formal relationships among them in such a
manner that they channel their energies and competencies towards the accomplishment of the
organizational goals.

According to David R. Hampton, Organization refers to dividing the overall organization into
units having vertical responsibilities and establishing hierarchical relations. The process includes,
determining the number of tasks to be performed, determining the manner in which they should
be performed, grouping of jobs, establishing authority and reporting relationships along the
hierarchical lines. Such a structure is an important element, which determines the achievement or
non-achievement of the goals of the organization.

Organizing is arranging and structuring work to accomplish the organization’s goals. It’s the
process through which managers design an organization’s goals. It’s the process through which
managers design an organization’s structure. The process is important and serves many purposes.

II. Purposes of Organizing

Divides work to be done into specific jobs and departments.

Assigns tasks and responsibilities associated with individual jobs.

Coordinates diverse organizational tasks.

 Clusters jobs into units

Establishes relationships among individuals, groups, and departments.

Establishes formal lines of authority.

Allocates and deploys organizational resources.

III. Nature or Characteristics of Organization

1. Division of Labor:

• The total work can be divided into many parts for effective performance of the work.
Each part of work may be completed by one person or a group of persons.

• The division of labor results in the creation of specialized person because a person does
the same work again and again.

2. Co-ordination:

• Different persons are assigned different works in one organization. But, all the works are
performed to achieve the objectives. It implies that there is a need of co-ordination
among the workers in an organization.

3. Objectives:

• The objectives of the organization should be defined clearly. The objectives cannot be
achieved without the existence of a good organizational structure.

4. Authority- Responsibility structure:

• An organization means an arrangement of position of executives by adopting a rank

system. In other words, a subordinate has one boss and a superior has control over the
subordinate specifically.

5. Communication:

• Every organization has its own communication system and the methods. The success of
management depends upon the effective system of communication.
IV. Importance or Advantages of Organization

Organization creates the relationship between top level executives and lower level staff
members. Organization maintains the relationship with each other in an enterprise.

1. Facilitate administration:

Administration aims at earning the highest profit by utilizing the available resources properly.
There is a planning, policy making, direction and co-ordination in the administration level to
achieve the objectives.

2. Increases the efficiency of management:

Under good organization, there is a chance of exhausting the worker’s ability in full and
utilization of resources effectively. Confusion, delay and duplication of work are avoided in
good organization.

3. Facilitates growth and diversification:

The structure of the company depends upon the structure of the organization. The structure of the
company can be changed whenever the growth and expansion activities are carried out.

4. Ensures optimum utilization of material resources and human efforts:

Division of work and specialization are the tools used to achieve the objective of optimum
utilization of material, resources and human efforts.

5. Adoption of new Technology:

The effectiveness of an enterprise is measured by the reaction of staff members to the adopting
of a new technology. In the scientific world, there is a lot of innovations and inventions
identified in the area of production, distribution and personnel management.

6. Places proportionate important to the various activities of the enterprise:

Organization classifies the entire business activities into departments. Each department is
receiving attention according to its importance it has in the achievement of business objectives.

7. Encourages creativity and initiative:

A sound organizational structure will give an opportunity for the staff to show their hidden
talents which will help the enterprise to achieve the business goals and earn higher profits.
8. Facilitates co-ordination:

The activities of different departments are grouped together to achieve the business objectives.
Each department performs its own function in a closely related manner and not as competition

9. Facilitates training and development of managerial personal:

A sound organizational provides training to new staff members before placement and give
refresher training to the existing staff members to improve their efficiency.

V. Organizational Structure and Design

Organizational structure

The formal arrangement of jobs within organization.

Structure is the pattern in which various parts or components are interrelated or

interconnected. Thus, Organization structure is the pattern of relationships among various
components or parts of the organization.

This prescribes the relationships among various activities and positions. since these positions
are held by various persons, the structure is the relationship among people in the
organization.

Organizational design

Design of basic structure involves such issues as how the work of the organization will be
divided and assigned among various positions, groups, divisions, departments etc., and how the
coordination necessary to accomplish total organizational objectives will be achieved.

An organizational structure is the formal framework by which job tasks are divided, grouped
and coordinated. When managers develop or change an organization’s structure, they are said to
be engaged in organizational design.

Organizational design is a process that involves decisions about six key elements:

1. Work specialization,

2. Departmentalization,
 3. Chain of command,

4. Span of control,

5. Formalization and

6. Centralization and decentralization.

1. Work specialization: The degree to which tasks in an organization are divided into separate
jobs; also known as division of labor (Adam Smith).

2. Departmentalization: The basis by which jobs are grouped together.

• Functional departmentalization – Groups jobs by functions performed.

• Product departmentalization – Groups jobs by product line.
• Geographical departmentalization – Groups jobs on the basis of territory or
geography.
• Process departmentalization – Groups jobs on the basis of product or customer
flow.
• Customer departmentalization – Groups jobs on the basis of common customers.

3. Chain of command: The continuous line of authority that extends from upper organizational
levels to the lowest levels and clarifies who reports to whom. Authority refers to the rights
inherent in a managerial position to tell people what to do and to expect them to do it. The
obligation or expectation to perform is known as responsibility.

4. Span of control:

Span of control, Span of supervision, Span of authority and Span of responsibility are
other names for Span of management. It indicates the number of people directly managed
effectively by a single person.

Span of management means the number of people managed efficiently by a single officer
in an organization.”

It implies that a single executive should not be expected to give guidance to more people.

Only limited number of persons is allocated to the executive for dividing the work or
duties among the workers.

In an average firm, an executive can efficiently control up to five or six sub- ordinates.
 The limit of the number of members for span of control may be increased or decreased
according to the levels of management.

5. Formalization: Formalization refers to the degree to which jobs within the organization are
standardized and the extent to which employee behavior is guided by rules and procedures.

6. Centralization and decentralization: The degree to which decision-making is concentrated at

a single point in the organization is called centralization. The degree to which lower level
employees provide input or actually make decisions is called decentralization. Factors that
influence the amounts of centralization and decentralization are listed below:

Centralization Decentralization

• Environment is stable • Environment is complex and uncertain

• Lower level managers are not as capable
or experienced at making decisions as
upper level managers
• Lower level managers do not want to have
a say in decisions
• Decisions are significant
• Organization is facing a crisis or the risk
of failure
• Company is large
• Effective implementation of company
strategies depends on managers retaining
say over what happens
• Lower level managers are capable and
experienced in making decisions
• Lower level managers want a voice in
decisions
• Decisions are relatively minor
• Corporate culture is open to allowing
managers to have a say in what happens
• Company is geographically dispersed
• Effective implementation of company
strategies depends on managers having
involvement and flexibility to make
decisions

VI. Formal and Informal Organization

Characteristics of Formal Organization

The formal organization (mostly referred to structure) is deliberately designed to achieve some
particular objectives. It refers to the structure of well- defined jobs, each bearing a definite
authority responsibility, and accountability.

According to classical theorists, the formal organization is built on four pillars:

 • Division of labor,
• Scalar and functional processes,
• Structure and
• Span of control.

1) Organization structure is designed by the top management to fulfill certain requirements.

2) Organization structure is based on the principles of division of labor and efficiency in

operations.

3) Organization concentrates more in the performance of jobs and not on the individuals
performing the jobs.

4) The authority and responsibility assigned to each job have to be adhered to by the job
holders. Based on the concept of authority and responsibility.

5) Coordination among members and their control are well specified through processes
procedures, rules, etc.

Characteristics of Informal Organization

Informal organization refers to the natural grouping of people on the basis of some similarity in
an organization.

1) Informal organization is a natural outcome at the workplace. It is not designed and

planned.

2) Informal organization is created in the basis of some similarity among its members. The
basis of similarity may be age, sex, place of origin, caste, religion, personality
characteristics, likings/ disliking, etc.

3) A membership in an informal organization is voluntary. A person may become member

of several informal organizations at the same time.

4) Behavior of members of the informal organization is coordinated and controlled by group

norms and not by the formal organization.
 STAFFING

I. Staffing

• After planning and selection of the organization structure, the next step in the management
process is to fill the various posts provided in the organization. This is termed as the
management of staffing function.

• In the simplest terms, staffing is ‘putting people to jobs’. It begins with workforce planning
and includes different other function like recruitment, selection, training, development,
promotion, compensation and performance appraisal of work force.

• In other words, staffing is that part of the process of management which is concerned
with obtaining, utilizing and maintaining a satisfactory and satisfied work force. Today,
staffing may involve any combination of employees including daily wagers, consultants and
contract employees.

• Staffing recognizes the importance of every single person employed by an organization

as it is the individual worker, who is the ultimate performer.

• Staffing has been described as the managerial function of filling and keeping filled the
positions in the organization structure. This is achieved by, first of all, identifying
requirement of work force, followed by recruitment, selection, placement, promotion,
appraisal and development of personnel, to fill the roles designed into the organization
structure.

II. Importance of Staffing

• Staffing is one of the most important elements of management process.

• In any organization, there is a need for people to perform work. The staffing function
of management fulfills this requirement and finds the right people for the right job.
Basically, staffing fills the positions as shown in the organization structure.

• Due to its growing popularity and significance in organization to perform staffing functions,
‘personal management’ or human resource management’ department is created as a line
department.
 • The significance of staffing functions arises from the key and important role assumed by
human force at all time but it also helps in securing capable and qualitative human inputs
through effective recruitment and selection. Its overall importance can be understood on the
following counts.

Proper Staffing ensures the following benefits to the organization:

Helps in discovering and obtaining competent personnel for various jobs and it is done by
procuring required quantity and quality of human force.

Makes for higher performance, by putting right person on the right job;

Ensures the continuous survival and growth of the enterprise through the succession
planning for managers;

Helps to ensure optimum utilization of the human resources by avoiding over manning, it
prevents underutilization of personnel and high labor costs. At the same time it avoids
disruption of work by indicating in advance the shortages of personnel; and

Improves job satisfaction and morale of employees through objective assessment and fair
reward for their contribution

III. Elements of Staffing Process

The prime concern of the staffing function in the management process is the timely
fulfillment of the manpower requirements within an organization.

It is important to appreciate staffing as a process that starts from understanding the

manpower requirements within the organization and identifying the potential sources from
where it can be met, either from within the organization or from outside.

The following elements are involved in staffing process

1. Manpower of human resource planning

2. Job analysis

3. Recruitment

4. Selection

5. Placement and orientation

 6. Training and development

7. Performance appraisal

8. Promotion and transfer of the employees

9. Compensation

1. Manpower of human resource planning

• The need of manpower planning arises because at any given point of time organization might
be experience gap between desired and actual state of human forces. And it is through the
process of manpower planning, the management determines how organization should move
from its current manpower position to a desired manpower position.

• According to Edwin B Gester, “ Manpower planning is a process including forecasting,

developing, implementing and controlling by which a firm ensures that it has right number of
the people and right kind of people at a right place and at the right time for things for which
they are economically useful.” This definition indicates that manpower planning is concerned
with raising required quantity of manpower, of required quality at a right time when it is
needed and at a lesser cost.

2. Job analysis:

• Job analysis is an important part of manpower planning. It refers to detailed and proper
study of all elements involved in the job such as job contents, duties, functions, responsibility
abilities, knowledge and skills, etc.

• According to Mill Woich and Boudev job analysis is, “Systematic process of collecting data
and making certain judgment about all the important information related to the nature of
specific job”.

• The process of job analysis consists of two sub-processes, namely job description and job
specification. Job-description is a factual statement and summary of the job- content in terms
of duties, equipment to be used, working conditions, amount of supervision needed, and
relationship with other jobs and personnel requirements of the job.
 • Job specification states minimum qualification required on the part of personnel to perform
the job in satisfactory manner such as educational qualifications, job related experiences,
knowledge, skill and capabilities needed for performing the job. Job specifications can be
used as an important tool in the process of selection.

3. Recruitment:
• Recruitment may be defined as the process of searching for prospective employees and
stimulating them to apply for jobs in the organization.
• It is a process of identifying sources of human force and attracting and motivating them to apply
for the jobs in the organization.
• A primary task of recruitment is to help in deciding whether they are likely to be suitable to fill
the job vacancy.
• The essential objective is to create a pool of the prospective job candidates. Both internal and
external sources of recruitment may be explored. Internal sources may be used to a limited extent.
For fresh talent and wider choice external sources are used.
4. Selection
• Selection is the process by which candidates for employment are distinguished between those
who are suitable and those who are not suitable.
• It is involves rejection of some candidates and hence sometimes known as negative process of
elimination.
• It aims at choosing from a list of applicants for a job, the person or persons who best meet
selection criteria and related constraints.
• In fact, the process of selection starts with reference to job specifications which do not indicate
only immediate requirements but also other qualities and abilities which may be considered
desirable in long run are pointed out by it.
5. Placement and orientation
• Once the candidate is finally selected and joins the organization, he needs to be places on
the job for which he was selected.
• Placement may be defined as a process of determining the job to which successful
candidate has been appointed and to place him on that job or assignment.
• Placement is made by taking into account aptitude, interest and knowledge and skill of
the selected candidate for a particular job which may likely to be assigned to him.
 • The process of placement requires special attention particularly when two or more
alternative positions are to be filled.

6. Training and development

• Training and development of the employees both managerial and non-managerial is the
most important aspect of staffing function.

• Training may be defined as a systematic and continuous process of providing relevant

information and knowledge to the employees as to enable them to contribute more
significantly to the accomplishment of organizational goals.

• According to Decenzo and Robbins, “training is a learning experience in that it seeks a

relatively permanent change in an individual that will improve his or her ability to
perform on the job”.

• Training may be considered as key input for developing man power in organization so as
to improve their job performance.

7. Performance appraisal

• After the employees have undergone a period of training and they have been on the job
for some time, there is a need to evaluate their performance. All organizations have some
formal or informal means of appraising their employee’s performance.
• Performance appraisal means evaluating an employee’s current and/or past performance
as against certain predetermined standards. The employee is expected to know what the
standards are and the superior is to provide the employee feedback on his/her
performance.
• The performance appraisal process, therefore, will include defining the job, appraising
performance and providing feedback
10. Promotion and career planning

• It becomes necessary for all organizations to address career related issues and
promotional avenues for their employees. Managers need to design activities to serve
employees’ long-term interests also.
 • They must encourage employees to grow and realize their full potential. Promotions are
an integral part of people’s career. They refer to being placed in positions of increased
responsibility. They usually mean more pay, responsibility and job satisfaction.
11. Compensation

• All organizations need to establish wage and salary plans for their employees. There are various
ways to prepare different pay plans depending on the worth of the job. Basically the price of the
job needs to be determined.
• Compensation, therefore, refers to all forms of pay or rewards going to employees. It may be in
the form of direct financial payments like wages, salaries, incentives, commissions and bonuses
and indirect payments like employer paid insurance and vacations.

References
1. L.M. Prasad, Principles & Practice of Management, Sultan Chand & Sons, 1999, ISBN:
81-7014-024-2

2. B.S. Moshal, Management Theory and Practice, Galgotia Publishing Company, 1998,
ISBN: 81-85989-26-5

3. Business studies, Part I, Principles and functions of management, NCERT.

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CASELETS ON ORGANISING
Caselet1.
A company, which manufactures a popular brand of toys, has been enjoying good market
reputation. It has a functional organizational structure with separate departments for Production,
Marketing, Finance, Human Resources and Research and Development. Lately to use its brand
name and also to cash on to new business opportunities it is thinking to diversify into
manufacture of new range of electronic toys for which a new market is emerging.

Question:
1. Prepare a report regarding organization structure giving concrete reasons with regard to
benefits the company will derive from the steps it should take.

Caselet2.
A company X limited manufacturing cosmetics, which has enjoyed a pre-eminent position in
business, has grown in size. Its business was very good till 1991. But after that, new liberalized
environment has seen entry of many MNC’s in the sector. With the result the market share of X
limited has declined. The company had followed a very centralized business model with
Directors and divisional heads making even minor decisions. Before 1991 this business model
had served the company very well as consumers had no choice. But now the company is under
pressure to reform.

Questions:
1. What organization structure changes should the company bring about in order to retain its
market share?
2. How will the changes suggested by you help the firm? Keep in mind that the sector in
which the company is FMCG.

CASELETS ON STAFFING

Caselet3.
A company X limited is setting up a new plant in India for manufacturing auto components.
India is a highly competitive and cost effective production base in this sector. Many reputed car
manufacturers source their auto components from here. X limited is planning to capture about
40% of the market share in India and also export to the tune of at least $5 million in about 2
years of its planned operations. To achieve these targets it requires a highly trained and
motivated work force. You have been retained by the company to advise it in this matter. While
giving answers keep in mind the sector the company is operating.

Questions
1. Outline the process of staffing the company should follow.
2. Which sources of recruitment the company should rely upon. Give reasons for your
recommendation.
3. Outline the process of selection the company should follow with reasons.
4. Which methods of training and development should be company initiate? Explain giving
reasons.
Caselet4
Ms. Jayshree recently completed her Post Graduate Diploma in Human Resource Management.
A few months from now a large steel manufacturing company appointed her as its human
resource manager. As of now, the company employs 800 persons and has an expansion plan in
hand which may require another 200 persons for various types of additional requirements. Ms.
Jayshree has been given complete charge of the company’s Human Resource Department.

Questions
1. Point out, what functions is she supposed to perform?
2. What problems do you foresee in her job?
3. What steps is she going to take to perform her job efficiently?
4. How significant is her role in the organisation?

APPLICATION TYPE EXCERCISES

1. The workers of a factory are unable to work on new machines and always demand for
help of supervisor. The Supervisor is overburdened with their frequent calls. Suggest the
remedy.
2. The workers of a factory remain idle because of lack of knowledge of hi-tech machines.
Frequent visit of engineer is made which causes high overhead charges. How can this
problem be removed.
3. The quality of Production is not as per standards. On investigation it was observed that
most of the workers were not fully aware of the proper operation of the machinery. What
could be the way to improve the accuracy?
4. An organization provides security services. It requires such candidates who are reliable
and don’t leak out the secrets of their clients. What step should be incorporated in
selection process?
5. A company is manufacturing paper plates and bowls. It produces 100000 plates and
bowls each day. Due to local festival, it got an urgent order of extra 50,000 plates bowls.
Advise how the company will fulfill its order and which method of recruitment would
you suggest.