Technological Innovation

Management And
Entrepreneurship
Course Code - 21EC61

Module 2

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 Organization

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Meaning of Organization
• According to Amitai Etzioni “an organistion is a social unit or human
grouping deliberately structured for the purpose of attaining specific goals”.
• According to Sehein “rational co-ordination of the activities of a number of
people for the achievement of some common explicit purpose or goal,
through division of labor and function & through a hierarchy of authority &
responsibility”.
• According to Allen “the process of identifying & grouping of the work to be
performed, defining & delegating responsibility & authority & establishing
relationships for the purpose of enabling people to work most effectively
together in accomplishing their objectives”.
• According to Pfiffner & Sherwood “organistion is the pattern of ways in
which large numbers of people ,too many to have intimate face to face
contact with all others & engaged in a complexity of tasks, relate
themselves to each other in the conscious, systematic establishment &
accomplishment of mutually agreed purposes”.
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 Characteristics
1. A purpose, goal(s) are the task of planning
2. A clear concept of the major duties or activities required to achieve the
purpose
3. Classification of activities into jobs
4. Establishment of relationships between these jobs in order to ensure
coordination. This is achieved through division of labour & delegation of
authority.
A group of organisations sharing a common profile of characteristics is called
an organizational configuration.
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 Process of Organisation
• Consideration of objectives – It determine the various activities which need
to be performed & the type of organization which needs to be built for this
purpose. It is called “structure follows strategy”
• Deciding organisational boundaries – It decides what to do inside & outside
the boundaries of the organization.
• Grouping of activities into departments – It is to group all closely related &
similar activities into departments & sections.
• Deciding which departments will be key departments – Key departments
are those which render essential activities for the fulfilment of goals. Other
departments exist to serve them.

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• Determining levels at which various types of decisions are to be made –
The levels at which various major & minor decisions are to be made. Each
firm must decide as to how much decentralization of authority &
responsibility it wants.
• Determining the span of management – During designing a structure it
needs to determine the number of subordinates who should report directly
to each executive. The narrower the span, the taller would be the structure
which several levels of management. Flat structure is generally preferred.
• Setting up a coordination mechanism – A direct consequence of
departmentalization is the need to coordinate the independent activities of
the members of the organization.

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Principles of Organizing
• Objectives – It influences the organization structure & hence should be
clearly defined.
• Specialisation – The activities of the enterprise should be grouped
together according to functions & assigned to people according to their
specialization.
• Span of control – As there is a limit to the number of people that can
be supervised by a person, the span control must be less.
• Management by exception principles – Executives at higher levels
have limited time so exceptionally complex problems should be
referred.
• Scalar principle – Also sometimes known as chain of command.
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• Unity of command – Each subordinate should have only one supervisor
whose command has to be obeyed.
• Delegation – Proper authority should be delegated at the lower levels of
the organization. The authority should be equal to responsibility.
• Responsibility – The supervisor should be held responsible for the acts of
his subordinates.
• Authority – The authority is the tool by which the manager is able to
accomplish the desired objective. The authority should be equal to
responsibility.
• Efficiency – The organization structure should enable the enterprise to
function efficiently & accomplish its objectives with lowest possible cost.
• Simplicity – The organization structure should be as simple as possible &
organization levels as minimum as possible.
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• Flexibility – The organization should be adaptable to changing
circumstances & permit corrections of demonstrated deficiencies in the
existing structure without disruption of the basic design.
• Balance – There should be a reasonable balance in the size of various
departments, between centralization, between the principle of span of
control, short chain of command.
• Unity of direction – There should be one objective & one plan for a group
of activities having the same objective.
• Personal ability – There is need for proper selection, placement, training &
staff. The organisation structure must ensure optimum use of human
resources.
• Acceptability – The structure of organization should be acceptable to the
people who constitute it.
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 Meaning of Span of Management
• It refers to as span of control, span of supervision, span of authority, span
of responsibility.
• It indicates the number of subordinates who report directly to a manager.

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Span of Management

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 Importance of Span of Management
• Span of management affects the efficient utilisation of managers &
effective performance of their subordinates.
Too wide span may mean managers are overstrained & subordinates are
receiving too little guidance/control
Too narrow span may mean managers are underutilised & subordinates are
overcontrolled.
• There is a relationship between span of management & organisation
structure.
Narrow span of management results in tall organization with many levels
of supervision.
Wide span for the same number of employees means flat organization with
fewer management levels.
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 Departmentalization
• The horizontal differentiation of tasks or activities into discrete
segments.
• The aim is to take advantage of division of labour & specialization up
to a certain limit.
• There are 2 categories
1. Process departmentalization
2. Purpose departmentalisation

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 Process of Departmentalisation
1. Business or Organisation Functions – Each major function of the enterprise
is grouped into a department.
Advantage:
• Grouping activities for small organizations which manufactures only one or
related products.
• Promotes excellence in performance due to expertise in narrow range of skills.
Drawbacks:
• Fosters sub-goal loyalties.
• Does not offer good training ground for overall development of manager.
• Unsuitable for organisations which are large & complex work.
• Procedures are overly complicated & time consuming
• Accounting
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2. Technology – Departmentalisation is done on the basis of several discrete
stages in the process or technologies involved in the manufacture of a
product.
Advantage:
• Facilitates use of heavy & costly equipment in an efficient manner.
• It follows the principle of specialization.
• Suitable for organisations which are engaged in manufacture of products
which require more processes.
Disadvantage:
• Workers tend to feel less responsible for the whole product.
• Does not provide good training & opportunity for overall development of
managerial talent.
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• When technology is sequential breakdown in one dept. slows the work of
all other dept.
• Difficult to compare the performance of different technology-based dept.
• Managers need extra attention for inter-departmental coordination.

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 Purpose of Departmentalization
• Products – Product departmentalization is the logical pattern to follow
when each product requires raw material, manufacturing technology,
marketing methods that are marked from those used by other products in
the organization.
• Customers – An enterprise may be divided into a number of departments
on the basis of the customers that they serve. It gives attention to major
groups which have a very different set of criteria governing their decisions
of purchase.
• Region, Territory or Location – When several production or marketing
units of an organization are geographically dispersed in various locations,
it is logical to departmentalise those units on a geographical basis.
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• Division – When large, multi-product companies segment themselves into
several independent profit centres on the basis of product, territory or
customer, these units are called divisions.
• Time – Activities are grouped on the basis of timing of their performance.
• Combined Base –
Communication of all necessary inputs at one place reduces problems of
communication & coordination.
Flexibility in organizing resources around the priorities of individual
customers creates the ability to innovate around specific customer needs.
Change of projects promotes intellectual growth & development of
employees.
Stress on optimization of the total project eliminates chances of
subooptimisation
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Combined Base Organisation
Matrix Organisation
 Meaning of Committees
• Committee is a group of people who have been formally assigned some
task or some problem for their decision &/or implementation.
• It is set up where new kinds of work &/or unfamiliar problems seem to
involve decisions, responsibilities, & power beyond the capabilities of
any one dept.

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COMMITTEES

LINKING PIN
 Types of Committees
1. Advisory Committees – Whenever committees are vested with staff
authority. They have a recommendatory role & cannot enforce
implementation of their advice or recommendation.
2. Executive Committees (plural executives) – Whenever committees are
vested with line authority. They not only take decisions but also enforce
decisions & its execution.
3. Standing (permanent) Committees – They are formed to deal with
recurrent organizational problems. Members are chosen of their title or
position instead of qualified skills.
4. Ad hoc Task Forces – They have short duration, i.e. dissolved after the
task is over or problem is solved. Members are chosen for their skills &
experience.
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 Staffing

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 Need & Importance of Staffing
• Any business cannot be successful for any length of time unless it is
capable of bringing in & developing right kind of people.
• There are a number of advantages of proper & efficient staffing.
1. It helps in discovering talented & competent workers & developing
them to move up the corporate ladder.
2. It ensures greater production by putting the right man in the right job.
3. It helps to avoid sudden disruption of an enterprise’s production run by
indicating shortages of personnel in advance.
4. It helps to prevent under-utilization of personnel through overmanning
& the resultant high labour cost & low profit margin.
5. It provides information to management for the internal succession of
managerial personnel in the event of an unanticipated turnover.
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• Functions:
recruitment
selection
training
performance appraisal
compensation plans

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Recruitment Process
• Sources of Recruitment
Re-employing former employees
Friends & relatives of present employees
Applications at the gate
College & technical institutions
Employment exchanges
Advertising the vacancy
Labour unions

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• Evaluation of Alternative sources
Time lag- between requisition & placement
Recruitment ratio
Employee attitude studies to discover the reactions of present employees
to internal & external recruiting
Correlation between different sources of recruitment & factors of success
on the job
Data on turnover, grievances & disciplinary actions tabulated according to
different sources of recruitment.
Gross cost per hire
• Internal & External sources of recruitment
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• Advantages of Internal recruitment
 Sense of security among employees & better employer-employee
relationship
Employees remain loyal to organization
Do not need additional training
Employees in lower ranks are encouraged to look for higher positions
People are motivated to become efficient
Labour turnover is reduced
• Advantages of External recruitment
More dynamic environment
The field of choice becomes wide hence there is possibility of selecting
people with rich & varied experience.
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 Selection Process
• Steps in selection procedure
1. Application blank
2. Initial interview
3. Employment tests
Aptitude tests
Interest test
Intelligence test
Trade/performance/achievement/job-specific test
Personality test
4. Checking references
5. Physical or medical examination
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 Directing & Controlling

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Meaning of Direction & Supervision
• The manager stimulates action by giving direction to his subordinates
through orders & supervise their work to ensure that the plans &
policies achieve the desired actions & results.
• Planning, organizing & staffing are concerned only with the
preparation for work performance & it is the direction which
stimulates the organization & staff to execute the plan, which is called
management-in-action.
• It means issuing orders to employees & leading & motivating
subordinates as they go about executing orders.

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Requirements of effective Direction
• Harmony of objectives – Goals are in complete harmony with and
complementary to the goals of the organization. The manager while
directing subordinates must take advantage of individual motives to gain
group goals.
• Unity of command – The principle implies that the subordinates should
receive orders & instructions from one supervisor only.
• Direct supervision – Every supervisor must maintain face-to-face direct
contact with the subordinates.
• Efficient communication – Communication is the instrument of
direction. Efficient communication is a two-way process.
• Follow through – Direction is not only telling subordinates what they
should do but also that they do it in desired way.
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 Giving Orders
• Mary Parker Follett lays down the following principles which should be
followed while giving orders
The attitude necessary for carrying out the orders must be prepared in
advance
Face-to-face suggestions are preferable to long distance orders
Order should be depersonalized & made an integral part of a given
situation
• Chester Barnard lays down the conditions which makes an order
acceptable.
Orders should be clear & complete
Should be compatible with purpose of organisation
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Should be compatible with the employee’s personal interest
Should be operationally feasible
• Orders can be communicated verbally or in written. Written orders are
appropriate when
Subject is important
Many details are involved
geographical distance between the order giver & recipient
• Types of methods a manager must follow to ensure compliance to his orders
force
paternalism
bargain
harmony
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Motivation

• Motivation concerns the dynamic processes which produce a goal

directed behavior.
• The process begins with individual feeling certain needs.
• These needs give an energizing thrust to the individual towards certain
goals or incentives which he perceives as possible satisfier of his
needs.
• So, what controls human behavior & gives direction to it is not goal or
incentive but the need.
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Nature of Motivation
• Individuals differ in their motives
• Sometimes the individual himself is unaware of his motive
• Motives change
• Motives are expressed differently
• Motives are complex
• Multiple motives make the choice of goals difficult for an individual

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Motivation Theories
1. Maslow’s Need-Hierarchy Theory
• At any given time, some needs are satisfied & some not. An unsatisfied
need is the starting point in the motivation process.

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1. Maslow’s Need-Hierarchy Theory
• Characteristics of human needs

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2. Herzberg’s Two Factor Theory
Maintenance or hygiene factors necessary to maintain a reasonable level
of satisfaction to serve as a take-off point for motivation.
• Fair company policies & administration
• Supervisor who knows the work
• Good relationship with supervisor
• Good relationship with peers
• Good relationship with subordinates
• Fair salary
• Job security
• Personal life
• Good working conditions s
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To build high level of motivation, a different set of factors is necessary.
If these factors are not present they do not in themselves lead to strong
dissatisfaction called as motivator’s or satisfiers.

• Opportunity to accomplish something significant

• Recognition for significant accomplishments
• Chance of advancement
• Opportunity to grow & develop on the job
• Chance for increased responsibility
• The job itself

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Herzberg’s theory draws attention to the importance of intrinsic job
satisfaction in work motivation. It could be done by job enrichment
means the deliberate upgrading of responsibility & challenge in work. It
is different from job enlargement in which a job is made structurally
bigger by adding more tasks.
Job enrichment makes a job interesting by increasing its planning &
controlling contents & reducing its doing content.
• Eliminating a layer of supervision
• Increasing workers autonomy & authority
• Giving worker a complete natural unit of work
• Giving direct feedback to the workers without the supervisors coming
in between
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Meaning of Communication
• According to Newman & Summer “it is exchange of facts, ideas,
opinions, emotions by two or more person”
• According to Allen Louis “as the sum of all the things one person does
when he wants to create understanding in the minds of another”
• Communication means the process of passing information &
understanding from one person to another.
• Communication also means correct interpretation & understanding of
the information.

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Importance
• Every organization structure is a social system involving the
interactions of people working at different levels & proper
communication among them is necessary for achieving goals of the
organization.

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Purpose
• Recruitment process
• Orientation to make people acquainted with peers, supervisors &
company’s rules and regulation
• To perform the functions effectively
• To acquaint the subordinates with evaluation of their contribution
• To teach employees about personal safety on te job
• In projecting the image of enterprise to society
• Helps managers in decision process
• Co-ordination
• Co-operation & industrial peace
• Increases managerial efficiency
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