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Summary Sheet – Helpful for Retention

For

Management – Part 3

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 Important Points

1. This Summary Sheet shall only be used for Quick Revision after you have
read the Complete Notes
2. For Building Concepts, along with examples/concept checks you should
rely only on Complete Notes
3. It would be useful to go through this Summary sheet just before the
exam or before any Mock Test
4. Questions in the exam are concept based and reading only summary
sheets shall not be enough to answer all the questions

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 1 Summary Points

➢ Management Processes (as given by KOONTZ and O’DONNEL)

Note: In this summary sheet, we have covered Staffing, Directing and Controlling functions of
management.

➢ Staffing: Concerned with acquiring, developing, employing, appraising, remunerating and

retaining people so that right type of people are available at the right positions and at the
right time in the organization
➢ Characteristics of Staffing
1. Staffing is an important managerial function
2. Staffing is a pervasive activity
3. Staffing is a continuous activity
4. The basis of staffing function is efficient management of personnel
5. Staffing helps in placing right men at the right job
➢ Steps in Staffing

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 1. Manpower requirements: This involves forecasting and determining manpower
needs of the organization to fulfill job requirements
2. Recruitment: As per the manpower requirement of the organization, it invites and
solicits applications for the desirable candidates
3. Selection: Involves screening step of staffing in which the solicited applications
are screened out and suitable candidates are appointed
4. Orientation and Placement: Orientations programs are conducted for the
candidates to make them acquainted with the work units and then they are placed
on the job that matches their skill set
5. Training and Development: Training is given according to the nature of activities,
business requirements and as an incentive for the employees by adding to their
skill set. Development leads to assigning key jobs to analyze employee
performance
6. Remuneration: Denotes monetary compensation given to the employees for their
job performance
7. Performance Evaluation: This involves regular assessment of the work units to
understand the employee development cycle and growth patterns
8. Promotion and transfer: Acts as non-monetary incentives for the employees

➢ Manpower Planning (Human Resource Planning): Basically, denotes putting right people
at right place and time to do the job. It is also called Workforce Planning which means
continual process of planning to keep the alignment of the needs of the organization with
those of the workforce. Workforce planning is of 2 types:
1. Strategic workforce planning: Denotes 3-5 years of forecast period where
workforce is planned according to the strategic requirements of the firm
2. Operational workforce planning: Denotes planning for next 12-18 months to
consider day-to-day operational requirements of the firm

➢ Steps in Manpower Planning:

1. Analyzing the current manpower inventory
2. Making future manpower forecasts
3. Developing employment programmes
4. Design training programmes

➢ Job Analysis: It is a pre-requisite for any recruitment exercise. It helps in determining job
description (duties and responsibilities) and job specification (abilities and skills)

➢ Recruitment: Core function of human resource management. Requirements regarding

the manpower need to be done before this process. Involves attracting suitable talent to
the organization

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 ➢ Methods of Recruitment (according to Dunn and Stephens):

1. Direct Methods: Includes travelling and visiting to educational and professional

institutions and through referral of existing employees
2. Indirect Methods: Includes advertising in newspaper radio, in trade and
professional journals, technical journals, brochures etc.
3. Third Party Methods: Includes the use of commercial and private employment
agencies, state agencies and professional association recruiting firms

➢ Sources of Recruitment:

One more source of recruiting is hiring through AHP (Analytic Hierarchy Process):

✓ Developed by Thomas L. Saaty

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 ✓ A structured technique for organizing and analyzing complex decisions,
based on mathematics and psychology
✓ AHP helps decision makers find a decision that best suits their goal and
their understanding of the problem
✓ Helps the recruiters to make decisions when there are several diverse
criteria to be considered

➢ Determining usefulness of source

1. Time lag between Requisition and Placement: Statistics regarding the time from
when recruitment application was started and the time when the employee gets
placed in the organization needs to be considered for workforce planning. Greater
timeline calls for alternative sources of recruitment
2. Yield Ratios: Ratios tell about the number of leads/contacts needed to generate a
given number of hires in a given time
3. Correlation Studies: Tells about extent of correlation which exists between
various sources of recruitment and factors of success on the job

➢ Recruitment Process Outsourcing(RPO) means where the company engages with third
party to manage its recruitment process

➢ Selection: Denotes selecting right people with prerequisite qualifications and capabilities
to fill the jobs in the organization

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 1. Preliminary Interviews/ Screening Interviews: Are less formalized and planned
than the final interviews and used as minimum eligibility criteria to eliminate
candidates at initial stage
2. Receiving Applications: Candidate needs to fill in the job application form giving
details like age, qualification, experience, etc.
3. Screening Applications: Candidates are short listed in this step according to the
requirements of the job profile
4. Employment Tests: Conducted to check the mental ability and skill set of an
individual. Following are diverse types of tests:
✓ Intelligence Tests: Measures one’s mental ability and capacity of
understanding
✓ Aptitude Tests: Measures one’s natural propensity or talent or ability to
acquire a skill
✓ Achievement Tests: Tests using actual task and working conditions to
assess the ability to perform than merely the ability to know
✓ PIP Tests: Measures one ‘s personality, interest and preferences
✓ Projective Tests: Candidates are required to interpret problems or
situations which help to understand his values, beliefs and motives.
Thematic Apperception Test and Rorschach Ink Blot Test are examples of
projective tests.
i. Thematic Apperception Test: A photograph is shown to candidate
and asked to interpret it
ii. Rorschach test: A psychological test in which subjects’ perceptions
of inkblots are recorded and then analyzed
using psychological interpretation, complex algorithms, or both
5. Employment Interview: One on one session with the candidate is conducted to
gain more insights about him and briefing of organizational policies is done
6. Checking References: References from the candidates are asked to cross check
the authenticity of the information provided by him
7. Medical Examination: Physical and mental fitness of the candidate are checked to
ensure that he can perform the job
8. Final Selection: At the end, appointment letter is given to the candidate

➢ Difference between Recruitment and Selection:

Recruitment Selection
Helps in attracting suitable candidates Helps in finding out right candidates as per
the requirements of the job
Positive Process Negative process as it leads to rejection of
candidates

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 Involves decisions of sources for getting Involves steps of selecting of the
potential candidates candidates as per the procedure adopted
by the organization
Helps manager to attract good candidates Helps manager to make the right choice
for the job

➢ Orientation and Placement: Candidates are first placed at the right job as per their skill set
after appointment and then the freshly appointed candidates are familiarized with the
organizational work culture

➢ Training and Development: Training involves improving knowledge and skills of the
employees whereas development is the extension of the training process where the overall
competence of the employees is considered to make them fit to take challenging tasks

➢ Methods of Training:
1. On the job training: Done by putting employees in actual working scenario in day to
day operations of the organization. Main motto is “learning by doing”. Usually done
through job rotation, coaching, temporary promotions, etc.
2. Off the job training (Vestibule training): In this training is provided outside the actual
working conditions of the organization such as through workshops, conferences,
seminars, etc.

➢ Remuneration: Reward or compensation given to the employees for their work

performances

➢ Methods of Remuneration:
1. Time Rate Method: Remuneration is directly linked with the time spent by an
employee on the job. They are paid a fixed pre-decided amount hourly, daily, weekly
or monthly irrespective of their output. More suitable where the work is non-
repetitive in nature and emphasis is more on quality output rather than quantity
output.
2. Piece Rate Method: Method of compensation in which remuneration is paid on the
basis of units or pieces produced by an employee. Emphasis is more on quantity
output rather than quality output and is more suitable for repetitive work

➢ Types of Remuneration:
1. Commission: Involves payment of commission as remuneration for services rendered
or products sold
2. Compensation:

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 ✓ Executive compensation or executive pay: Composed of the financial
compensation and other non-financial awards received by an executive from
their firm for their service to the organization
✓ Deferred compensation: Means portion of an employee's income is paid out
later after which the income was earned
3. ESOP: Means employee stock option (ESOP), a complex call option on common stock
of the company
4. Employee Benefits: Also called fringe benefits, perquisites, or perks which includes
housing, free utilities, vacation, daycare, sick leave, etc.
5. Salary: Form of periodic payment from an employer to an employee which may be
specified in an employment contract

➢ Performance Appraisal: Way of knowing the performance of the employees, if they are
working satisfactorily or not and causes behind their inefficient performance

➢ Promotion: Refers to assignment of job with higher pay, status and responsibilities than the
employee’s present job. Leads to job satisfaction and encourages superior performance

➢ Types of Promotion:
1. Horizontal promotion: When an employee is shifted in the same category. E.g.:
employee shifts within the same department, from one department to other or from
one plant to another plant
2. Vertical Promotion: When an employee is promoted from a lower category to higher
category involving increase in salary, status, authority
3. Dry Promotion: When promotion is made without increase in salary

➢ Purpose of Promotion:
1. Recognize an employee’s skill and knowledge and utilize it to improve the
organizational effectiveness
2. Reward and motivate employees
3. Develop competitive spirit and inculcate the zeal
4. Promote employee’s satisfaction and boost their morale
5. Retain skilled and talented people
6. Incentivize the other employees that opportunities are available

➢ Important principles of Promotion:

1. Provide equal opportunities for promotion across the jobs, departments, and regions
2. Applied uniformly to all employees irrespective of their background
3. Fair and impartial
4. Basis of promotion must be clearly specified and made known
5. Must be correlated with career planning

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 6. Appropriate authority must be entrusted with the decision

➢ Bases of Promotion: Seniority, merit, qualification, potential to perform, career and

succession plan, vacancies in the organization, motivational strategy and training could be
the bases of promotion

➢ Glass Ceiling: Refers to invisible barrier to promotion and tendency to be biased against
people of certain race, community, tribe, nationality, gender etc. by not giving promotions

➢ Peter Principle: Given by Laurence J. Peter and published in 1969. It states that the selection
of a candidate for a position is based on the candidate's performance in their current role,
rather than on abilities relevant to the intended role

➢ Transfer: Refers type of job change where any employee is assigned a different job of the
same rank and pay, or when an employee is assigned a similar job in another unit of the firm.
It may be initiated either by company or employee and can be permanent or temporary
arrangement

➢ Pointers needed to be present in a good transfer policy are:

1. Specify the circumstances under which transfers will be made

2. Specify the basis for transfer i.e., whether transfer will be made based on seniority or skill
and competency or on any other basis.
3. Decide the authority which would handle transfers.
4. Intimate the fact of transfer to the person concerned well in advance.
5. Specify the jobs to which transfers will be made and duties and salary on assumption of
new jobs should also be clarified.
6. Clarify whether transfer is permanent or temporary.
7. Indicate whether transfers can be made within a department or between departments or
between units

➢ Types of Transfer:
1. Production Transfer: These transfers are made when labor requirements in one division or
branch is declining
2. Remedial Transfer: These transfers are affected to correct the wrong selection and
placement of employees
3. Replacement Transfer: Are affected when labor requirements are declining and are
designed to replace a new employee by an employee who has been in the organization for
a sufficiently long time
4. Versatility Transfer: These are also known as “job rotation”. In this, employees are moved
from one job to another to gain varied and broader experience of work

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 5. Shift Transfers: Transfers are affected in the organizations where work progresses for 24
hours or in shifts
6. Penalty Transfer: Used transfer as an instrument to penalize employees’ involved in
undesirable activities in the organization

➢ Directing: Includes majorly guiding, overseeing and leading people. Consists of all those activities
which are designed to encourage the subordinates to work effectively and efficiently. Has following
essential elements:

➢ Importance of Directing:
1. Initiates Action: Works as actuating function of management because only through it the
operation of an enterprise starts after all the planning, organizing and staffing
2. Integrates Efforts: Through direction the efforts of every department can be related and
integrated with others. Persuasive leadership and effective communication help to
integrate efforts
3. Means of Motivation: Direction requires manager to Motivate which helps to improve the
performances of subordinates
4. Efficient Utilization of Resources: Direction leads to proper utilization of resources with
minimum wastage
5. Coping up with the changes: Effective direction requires proper communication tactics to
be used to cope with the changing business or other work environmental factors
➢ Nature of Directing:
1. Performed by all levels of management
2. It is continuous process
3. Involves human factor
4. Human behavior is unpredictable by nature and conditioning the people’s behavior towards
the goals of the enterprise is one of the delicate functions of the manager
➢ Principles of Directing:
1. Harmony of objectives: Effective direction involves harmonization of individual objectives
with group objectives

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 2. Principle of efficiency: Effective direction involves proper motivation tactics to be used to
increase productivity of employees and attaining objectives at minimum costs
3. Principle of unity of command
4. Principle of direct supervision: Helps to boost morale among employees
5. Principle of communication: Good system of communication between executives & sub-
ordinates ensures the success
6. Principle of leadership: Good leadership leads to cooperation, co-ordination and
confidence among workforce

➢ Supervision: A supervisor needs to perform many functions like,

1. Planner: A supervisor must plan the daily work schedules in the factory
2. Manager: Need to check operational management of the factory
3. Guide and Leader: He leads the way by guiding subordinates to do daily work and inspiring
them to work hard
4. Mediator: A Supervisor is called a linking pin between management and workers
5. Inspector: Plays an important role of enforcing discipline in the factory
6. Counselor: Listens to worker’s problems and tries to to build good relations and co-
operation from workers

➢ Controlling: As per Henri Fayol – “Control of an undertaking consists of seeing that everything is
being carried out in accordance with the plan which has been adopted, the orders which have been
given, and the principles which have been laid down. Its object is to point out mistakes in order
that they may be rectified and prevented from recurring”

➢ Four Steps in Controlling:

1. Set Standards: Valid, understandable and acceptable standards for measurement of

work should be established
2. Measure Performance: Record must be kept of work as it progresses so that
performance can be compared to the applicable standard

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 3. Compare Performance: Results accomplished must be evaluated in terms of the
standards by which work is being judged
4. Take Corrective Action: When variations from plan occur, it is necessary to bring the
work going on back to the desired course

➢ Elements of Control:

The four basic elements in a control system are:

1. Characteristic or Condition to be controlled
2. Sensor: Means for measuring the characteristic or condition
3. Comparator: Determines the need for correction by comparing what is
occurring with what has been planned
4. Activator: The corrective action taken to return the system to its expected
output

➢ Four Categories of Control:

1. Stage when Control occurs (Feedforward, Concurrent or Feedback Control)
2. Nature of the information flow designed into the system (open- or closed-loop
control)
3. The kind of components included in the design (man or machine control systems)
4. The relationship of control to the decision process (organizational or operational
control

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 ➢ Feed forward control: Also called preliminary or preventive controls, attempt to identify and
prevent deviations in the standards before they occur

➢ Concurrent controls: Monitor ongoing employee activity to ensure consistency with quality
standards and these controls are based on performance standards, rules, and regulations for
guiding employee tasks and behaviors

➢ Feedback controls: Involves reviewing information to determine whether performance meets

established standards. This takes place after the activity has happened

➢ Open Loop Controls: The output has no influence or effect on the control action of the input
signal. That is, an open-loop system is expected to faithfully follow its input command or set
point regardless of the result

➢ Closed Loop Controls: The type of control system which uses feedback signals to both control
and adjust itself. Are designed to automatically achieve and maintain the desired output
condition by comparing it with the actual condition

➢ Machine Control: In automatic machine systems, inputs of information are used in a process
of continual adjustment to achieve output specifications

➢ Human Control: The relationship between objectives and associated characteristics is often
vague and the measurement of the characteristic may be extremely subjective in such systems

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 ➢ Organization Control: Implicit to the bureaucratic theory of Max Weber. Direction for
organizational control comes from the goals and strategic plans of the organization. The
process of organizational control is to review and evaluate the performance of the system
against the established norms

➢ Operational Control: Serves to regulate the day-to-day output relative

to schedules, specifications, and costs

➢ Approaches to Control System:

1. Market Control: Emphasizes the use of external market mechanisms such as price
competition and market share
2. Bureaucratic control: Emphasizes organizational authority and relies on administrative
rules, regulations, procedures, policies, etc.
3. Clan control:Emphasizes on shared values, norms, traditions, rituals, beliefs, and other
aspects of organization’s culture on employee’s behavior

➢ Techniques of Controlling:
4. Budgetary control
5. Management Audit
6. PERT (Programme Evaluation Review Technique) and CPM (Critical Path Method)
✓ PERT uses expected completion time for the completion of project, computed
from three estimated times- the optimistic time, the pessimistic time and the
most likely time
✓ CPM uses the best possible time to complete a project
7. Management by Objectives(MBO)
8. Management Information System (MIS)

➢ Role of Manager (Described by Henry Mintzberg)

9. Interpersonal: This role involves human interaction
10. Informational: This role involves the sharing and analyzing of information
11. Decisional: This role involves decision making

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