IMST Unit-2 Dip ME 5.1

Diploma ME 501 Industrial Management & Smart Technologies Unit-2 2021
Topics Covered
 Difference between authority and responsibility
 Difference between delegation and decentralization
 Communication process
 Motivation
 Theories of motivation
 Leadership
 Styles of leadership
 Theories of leadership
 Decision making process
 Job analysis
 Departmentation
 Recruitment and selection
 Types of business ownership
 Employee participation in management
 Social responsibilities
 Corporate social responsibility (CSR)
Difference between Authority and Responsibility
S.N
o AUTHORITY RESPONSIBILITY
A responsibility is an obligation that an

1 An authority is a power or right that a person employee has to fulfill the work bestowed on
gets because of his designation, role, or job. him
An authority is the outcome of a formal A responsibility is the outcome of a superior-

2
position in an organization subordinate relationship
3 An authority is a legal right given to a person. A responsibility is consequence of authority.
4 It is a delegation of authority. It is an assumption of responsibility
The flow of authority is from the upper level The flow of authority is from lower level to
5
to lower level. upper level.
Responsibility requires the ability to follow

6
Authority requires the ability to give orders. orders.
The responsibility ends as soon as the work

7
The authority lasts for a long period of time. bestowed on the employee is complete.
8 The objective of the authority is to make The objective of responsibility is to perform
Dept. of Management Studies,

Guntur Engineering College
decisions and implement them effectively. duties effectively assigned by the superiors
Difference between Delegation and Decentralization
Basis for
S.No. DELEGATION DECENTRALIZATION
Comparison
Decentralization is the final outcome

Delegation means handing over an
achieved, when the delegation of
1 Meaning authority from one person of high
authority is performed systematically and
level to the person of low level.
repeatedly to the lowest level.
2 What it is? Technique of management Philosophy of management.
Superiors are accountable for the Department heads are accountable for
3 Accountability
acts done by subordinates. the acts of the concerned department
No, it is an optional philosophy which may

Yes, for all organization delegation or may not be adopted by the
4 Requirement organization.
of authority is very necessary.
Liberty of Subordinates do not have full

5 A substantial amount of freedom is there.
Work liberty.
The overall control vests with top

The ultimate control is the hands
6 Control management and delegates authority for
of superior.
day to day control to departmental heads.
A step towards creation of semi-

Creates superior-subordinate autonomous units.
7 Relationship
relationship.
Communication Process
Communication is a process of exchanging verbal and non verbal messages. It is a continuous process.
Pre-requisite of communication is a message. This message must be conveyed through some medium

to the recipient. It is essential that this message must be understood by the recipient in same terms as
intended by the sender. He must respond within a time frame.
Thus, communication is a two way process and is incomplete without a feedback from the recipient to
the sender on how well the message is understood by him.
Sender / Encoder:
Sender / Encoder is a person who sends the message. A sender makes use of symbols (words or graphic
or visual aids) to convey the message and produce the required response. For instance, a sender may
be a trainer who conducts training for a new batch of employees. Sender may be an individual or a
group or an organization. The views, background, approach, skills, competencies, and knowledge of the
sender have a great impact on the message. The verbal and non- verbal symbols chosen are essential in
ascertaining interpretation of the message by the recipient in the same terms as intended by the
sender.
Message:
Message is the key idea that the sender wants to communicate. It is a sign that elicits the response
from the recipient. Communication process begins with deciding about the message to be conveyed. It
must be ensured that the main objective of the message is clear.
Medium:
Medium is a means used to exchange/transmit the message. The sender must choose an appropriate
medium for transmitting the message else the message might not be conveyed to the desired
recipients. The choice of appropriate medium of communication is essential for making the message
effective and to be correctly interpreted by the recipient. This choice of communication medium varies
depending upon the features of communication. For instance, written medium is chosen when a

message has to be conveyed to a small group of people, while an oral medium is chosen when
spontaneous feedback is required from the recipient as misunderstandings are cleared promptly.
Recipient / Decoder:
Recipient / Decoder is a person for whom the message is intended / aimed / targeted. The degree to
which the decoder understands the message is dependent upon various factors such as knowledge of
recipient, their responsiveness to the message, and the reliance of encoder on decoder.
Feedback:
Feedback is one of the main components of communication process as it permits the sender to analyze
the efficacy of the message. It helps the sender in confirming the correct interpretation of message by
the decoder. Feedback may be verbal (through words) or non-verbal (in form of smiles, sighs, etc.). It
may also take written form in form of memos, reports, etc.
Motivation
Definition
A motive is an inner start that energies; activates or movers and direct or channels behaves towards
goals.
Motivation represents an unsatisfied need which creates a state of tension or disequilibrium causing
the individual to move in a goal directed pattern to words restoring a state of equilibrium by satisfying
the need
Importance/Significance of Motivation
1. Identifies employ potential and make the employ to knows the potential
2. Converts the potentialities into performers
3. Converts motivated employees into committed and loyalty employees
4. Increase, in productivity
5. Human resources development
6. Employees behave positively maintain sound human relations, supercar subordinators relation
7. Employees formulate efficient strategies

8. The present day high technology and software company’s dependent upon highly self-motive
employ
9. Proper utilization of resources
10. Optimum utilization of resources
11. Basics for co-operation
Theories of motivation
Maslow's Hierarchy of Needs
Maslow first introduced his concept of a hierarchy of needs in his 1943 paper "A Theory of Human
Motivation" and his subsequent book Motivation and Personality. This hierarchy suggests that people
are motivated to fulfill basic needs before moving on to other, more advanced needs.
Maslow's hierarchy is most often displayed as a pyramid. The lowest levels of the pyramid are made up
of the most basic needs, while the most complex needs are at the top of the pyramid.
Physiological Needs
The basic physiological needs are probably fairly apparent—these include the things that are vital to
our survival. Some examples of physiological needs include:
 Food

 Water
 Breathing
 Homeostasis
Security and Safety Needs

As we move up to the second level of Maslow’s hierarchy of needs, the requirements start to become a
bit more complex. At this level, the needs for security and safety become primary.
People want control and order in their lives. So, this need for safety and security contributes largely to
behaviors at this level. Some of the basic security and safety needs include:
 Financial security
 Health and wellness
 Safety against accidents and injury
Social Needs
The social needs in Maslow’s hierarchy include such things as love, acceptance, and belonging. At this
level, the need for emotional relationships drives human behavior. Some of the things that satisfy this
need include:
 Friendships
 Romantic attachments
 Family
 Social groups
 Community groups
 Churches and religious organizations.
Esteem needs
are the fourth level in Maslow’s hierarchy and include self-worth, accomplishment and respect.
Maslow classified esteem needs into two categories: (i) esteem for oneself (dignity, achievement,
mastery, independence) and (ii) the desire for reputation or respect from others (e.g., status, prestige).
Self-actualization needs
Is the highest level in Maslow's hierarchy, and refer to the realization of a person's potential, self-
fulfillment, seeking personal growth and peak experiences. Maslow (1943) describes this level as the
desire to accomplish everything that one can, to become the most that one can be.
McGregor’s Theory X and Theory Y

In 1960, Douglas McGregor formulated Theory X and Theory Y suggesting two aspects of human
behavior at work, or in other words, two different views of individuals (employees): one of which is
negative, called as Theory X and the other is positive, so called as Theory Y. According to McGregor, the
perception of managers on the nature of individuals is based on various assumptions.
Theory X
According to McGregor, Theory X management assumes the following:
 Work is inherently distasteful to most people, and they will attempt to avoid work whenever
possible.
 Most people are not ambitious, have little desire for responsibility, and prefer to be directed.
 Most people have little aptitude for creativity in solving organizational problems.
 Motivation occurs only at the physiological and security levels of Maslow’s hierarchy of needs.
 Most people are self-centered. As a result, they must be closely controlled and often coerced to
achieve organizational objectives.
 Most people resist change.
 Most people are gullible and unintelligent.
Essentially, Theory X assumes that the primary source of employee motivation is monetary, with
security as a strong second. Under Theory X, one can take a hard or soft approach to getting results.
Theory Y
The higher-level needs of esteem and self-actualization are ongoing needs that, for most people, are
never completely satisfied. As such, it is these higher-level needs through which employees can best be
motivated.
In strong contrast to Theory X, Theory Y management makes the following assumptions:
 Work can be as natural as play if the conditions are favorable.
 People will be self-directed and creative to meet their work and organizational objectives if they
are committed to them.
 People will be committed to their quality and productivity objectives if rewards are in place that
address higher needs such as self-fulfillment.
 The capacity for creativity spreads throughout organizations.
 Most people can handle responsibility because creativity and ingenuity are common in the
population.
 Under these conditions, people will seek responsibility.
Implications of Theory X and Theory Y

Quite a few organizations use Theory X today. Theory X encourages use of tight control and
supervision. It implies that employees are reluctant to organizational changes. Thus, it does not
encourage innovation.
 Many organizations are using Theory Y techniques. Theory Y implies that the managers should
create and encourage a work environment which provides opportunities to employees to take
initiative and self-direction.
 Employees should be given opportunities to contribute to organizational well-being. Theory Y
encourages decentralization of authority, teamwork and participative decision making in an
organization.
 Theory Y searches and discovers the ways in which an employee can make significant
contributions in an organization.
 It harmonizes and matches employees’ needs and aspirations with organizational needs and
aspirations.
ERG Theory of Motivation

To bring Maslow’s need hierarchy theory of motivation in synchronization with empirical

research, Clayton Alderfer redefined it in his own terms. His rework is called as ERG theory of
motivation. He recategorized Maslow’s hierarchy of needs into three simpler and broader classes of
needs:
Existence Needs: The existence needs comprises of all those needs that relate to the physiological and
safety aspects of human beings and are a prerequisite for the survival. Thus, both the physiological and
safety needs of Maslow are grouped into one category because of their same nature and a similar
impact on the behavior of an individual.
Relatedness Needs: The relatedness needs refer to the social needs, that an individual seeks to
establish relationships with those for whom he cares. These needs cover the Maslow’s social needs and
a part of esteem needs, derived from the relationship with other people.
Growth Needs: The growth needs cover Maslow’s self-actualization needs as well as a part of esteem
needs which are internal to the individual, such as a feeling of being unique, personnel growth, etc.
Thus, growth needs are those needs that influence an individual to explore his maximum potential in
the existing environment.
Implications of the ERG Theory

Managers must understand that an employee has various needs that must be satisfied at the same
time. According to the ERG theory, if the manager concentrates solely on one need at a time, this will
not effectively motivate the employee.

Also, the frustration- regression aspect of ERG Theory has an added effect on workplace motivation.
For instance- if an employee is not provided with growth and advancement opportunities in an
organization, he might revert to the relatedness need such as socializing needs and to meet those
socializing needs, if the environment or circumstances do not permit, he might revert to the need for
money to fulfill those socializing needs.
The sooner the manager realizes and discovers this, the more immediate steps they will take to fulfill
those needs which are frustrated until such time that the employee can again pursue growth.
Leadership
What is Leadership
Leadership is a process by which an executive can direct, guide and influence the behavior and work of
others towards accomplishment of specific goals in a given situation. Leadership is the ability of a
manager to induce the subordinates to work with confidence and zeal.
Leadership is the potential to influence behaviour of others. It is also defined as the capacity to
influence a group towards the realization of a goal. Leaders are required to develop future visions, and
to motivate the organizational members to want to achieve the visions.
According to Keith Davis, “Leadership is the ability to persuade others to seek defined objectives
enthusiastically. It is the human factor which binds a group together and motivates it towards goals.”
Characteristics of Leadership
1. It is a inter-personal process in which a manager is into influencing and guiding workers towards
attainment of goals.
2. It denotes a few qualities to be present in a person which includes intelligence, maturity and
personality.
3. It is a group process. It involves two or more people interacting with each other.
4. A leader is involved in shaping and moulding the behaviour of the group towards
accomplishment of organizational goals.
5. Leadership is situation bound. There is no best style of leadership. It all depends upon tackling
with the situations.
Types of leadership
1. Authoritarian Leadership
Authoritarian leadership styles allow a leader to impose expectations and define outcomes. A one-
person show can turn out to be successful in situations when a leader is the most knowledgeable in the
team. Although this is an efficient strategy in time-constrained periods, creativity will be sacrificed since

input from the team is limited. The authoritarian leadership style is also used when team members
need clear guidelines.
Advantages:
 Time spent on making crucial decisions can be reduced.
 Chain of command can be clearly emphasized.
 Mistakes in the implementation of plans can be reduced.
 Using authoritarian leadership style creates consistent results.
Disadvantages:
 A very strict leadership style can sometimes lead to employee rebellion.
 It kills employee creativity and innovation.
 It reduces group synergy & collaboration.
 Group input is reduced dramatically.
 Authoritarian leadership increases employee turnover rate.
2. Participative Leadership
Participative leadership styles are rooted in democratic theory. The essence is to involve team
members in the decision making process. Team members thus feel included, engaged and motivated to
contribute. The leader will normally have the last word in the decision-making processes. However, if
there are disagreements within a group, it can be a time-consuming process to reach a consensus.
Advantages:
 It increases employee motivation and job satisfaction.
 It encourages use of employee creativity.
 A participative leadership style helps in the creation of a strong team.
 High level of productivity can be achieved.
Disadvantages:
 Decision-making processes become time-consuming.
 Leaders have a high probability of being apologetic to employees.
 Communication failures can sometimes happen.
 Security issues can arise because of transparency in information sharing.
 Poor decisions can be made if the employees are unskilled.
3. Delegative leadership
Also known as "laissez-faire leadership", a delegative leadership style focuses on delegating initiative to
team members. This can be a successful strategy if team members are competent, take responsibility
and prefer engaging in individual work. However, disagreements among the members may split and
divide a group, leading to poor motivation and low morale.
Advantages:
 Experienced employees can take advantage of their competence and experience.
 Innovation & creativity is highly valued.

 Delegative leadership creates a positive work environment.
Disadvantages:
 Command responsibility is not properly defined.
 Delegative leadership creates difficulty in adapting to change.
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4. Transactional leadership
Transactional leadership styles use "transactions" between a leader and his or her followers - rewards,
punishments and other exchanges - to get the job done. The leader sets clear goals, and team members
know how they'll be rewarded for their compliance.
This "give and take" leadership style is more concerned with following established routines and
procedures in an efficient manner, than with making any transformational changes to an organization.
Advantages:
 Leaders create specific, measurable and time-bound goals that are achievable for employees.
 Employee motivation and productivity is increased.
 Transactional leadership eliminates or minimizes confusion in the chain of command.
 It creates a system that is easy to implement for leaders and easy to follow by employees.
 Employees can choose reward systems.
Disadvantages:
 Innovation & creativity is minimized.
 Empathy is not valued.
 Transactional leadership creates more followers than leaders among employees.
5. Transformational Leadership
In transformational leadership styles, the leader inspires his or her followers with a vision and then
encourages and empowers them to achieve it. The leader also serves as a role model for the vision.
Advantages:
 It leads to a lower employee turnover rate.
 Transformational leadership places high value on corporate vision.
 High morale of employees is often experienced.
 It uses motivation and inspiration to gain the support of employees.
 It is not a coercive approach to leadership.
 It places high value on relationships.
Disadvantages:
 Leaders can deceive employees.
 Consistent motivation and constant feedback may be required.
 Tasks can’t be pushed through without the agreement of employees.
 Transformational leadership can sometimes lead to the deviation of protocols and regulations.
Theories of Leadership
Trait Theory of Leadership

The trait model of leadership is based on the characteristics of many leaders - both successful and
unsuccessful - and is used to predict leadership effectiveness. The resulting lists of traits are then
compared to those of potential leaders to assess their likelihood of success or failure.
Among the core traits identified are:
 Achievement drive: High level of effort, high levels of ambition, energy and initiative
 Leadership motivation: an intense desire to lead others to reach shared goals
 Honesty and integrity: trustworthy, reliable, and open
 Self-confidence: Belief in one’s self, ideas, and ability
 Cognitive ability: Capable of exercising good judgment, strong analytical abilities, and

conceptually skilled
 Knowledge of business: Knowledge of industry and other technical matters
 Emotional Maturity: well adjusted, does not suffer from severe psychological disorders.
 Others: charisma, creativity and flexibility
Strengths/Advantages of Trait Theory

 It is naturally pleasing theory.
 It is valid as lot of research has validated the foundation and basis of the theory.
 It serves as a yardstick against which the leadership traits of an individual can be assessed.
 It gives a detailed knowledge and understanding of the leader element in the leadership
process.
Limitations of The Trait Theory

 There is bound to be some subjective judgment in determining who is regarded as a ‘good’ or
‘successful’ leader
 The list of possible traits tends to be very long. More than 100 different traits of successful
leaders in various leadership positions have been identified. These descriptions are simply
generalities.
 There is also a disagreement over which traits are the most important for an effective leader
 The model attempts to relate physical traits such as, height and weight, to effective leadership.
Most of these factors relate to situational factors. For example, a minimum weight and height
might be necessary to perform the tasks efficiently in a military leadership position. In business
organizations, these are not the requirements to be an effective leader.
 The theory is very complex

Implications of Trait Theory
The trait theory gives constructive information about leadership. It can be applied by people at all
levels in all types of organizations. Managers can utilize the information from the theory to evaluate
their position in the organization and to assess how their position can be made stronger in the
organization. They can get an in-depth understanding of their identity and the way they will affect
others in the organization. This theory makes the manager aware of their strengths and weaknesses
and thus they get an understanding of how they can develop their leadership qualities.
WHAT IS BEHAVIORAL THEORY OF LEADERSHIP?

Before the Behavioral Theory of management emerged, it was believed that leaders are ‘naturally
born’. The Great Man Theory, for example, proposed that effective leaders are born with
innate leadership qualities. If you’re born with leadership qualities (like confidence) it doesn’t mean
that you’ll become a successful leader. Therefore, this leadership theory was highly criticized. The
behavioral theory surfaced and changed the game.
The Behavioral approach to leadership evolved from the behaviorism movement of the 1950s. Many
behavior scientists attempted to identify different behavioral patterns of leadership styles.
They achieved this by studying the activities of various leaders. The behavioral theory argued that the
success of a leader is based on their ability to respond to environmental factors. Therefore, anyone can
become a leader if they learn and implement certain behaviors.
TYPES OF BEHAVIORAL LEADERSHIP

Business success is rooted in effective leadership styles. There are several styles of behavioral
leadership that are practiced in work environments:
1. PEOPLE-ORIENTED LEADERSHIP
These leaders are primarily driven by their interpersonal connections. They build relationships
that inspire them and increase their efficiency.
2. TASK-ORIENTED LEADERSHIP
Task-oriented leaders perform well in structured environments and often display authoritative
behavior. Their behavior is influenced by setting goals and monitoring progress.
3. SOUND LEADERSHIP
This type of leadership is highly effective but also ideal. Sound leaders prioritize both
productivity and team morale at the same time. They value their teams and find satisfaction in
supporting their teams’ progress.
ADVANTAGES OF BEHAVIORAL THEORY

 It helps determine the leadership styles of managers and team leaders
 It helps managers determine how their leadership style affects their relationship with the team
and promotes commitment towards business goals

 It guides managers to find the right balance between different leadership styles and helps them
decide how to behave in different situations
DISADVANTAGES OF BEHAVIORAL THEORY

 Behavioral theories are learned processes that take time and may not always be successful
 Personal biases may influence a manager’s decision because they’re expected to make
independent decisions and respond to different situations differently
CONCLUSION
The Behavioral Theory of management provides a map on how to practice effective leadership in
organizations. The best leaders are those who can adjust their leadership styles and use the right
approach in every situation.
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Decision Making Process

Decision making is a daily activity for any human being. There is no exception about that. When it
comes to business organizations, decision making is a habit and a process as well.
Effective and successful decisions make profit to the company and unsuccessful ones make losses.
Therefore, corporate decision making process is the most critical process in any organization.
In the decision making process, we choose one course of action from a few possible alternatives. In
the process of decision making, we may use many tools, techniques and perceptions.
In addition, we may make our own private decisions or may prefer a collective decision.
Usually, decision making is hard. Majority of corporate decisions involve some level of dissatisfaction
or conflict with another party.
Steps of Decision Making Process
Step 1: Identification of the purpose of the decision

In this step, the problem is thoroughly analysed. There are a couple of questions one should ask when
it comes to identifying the purpose of the decision.
 What exactly is the problem?
 Why the problem should be solved?
 Who are the affected parties of the problem?
 Does the problem have a deadline or a specific time-line?
Step 2: Information gathering

A problem of an organization will have many stakeholders. In addition, there can be dozens of factors
involved and affected by the problem.
In the process of solving the problem, you will have to gather as much as information related to the
factors and stakeholders involved in the problem. For the process of information gathering, tools such
as 'Check Sheets' can be effectively used.
Step 3: Principles for judging the alternatives

In this step, the baseline criteria for judging the alternatives should be set up. When it comes to
defining the criteria, organizational goals as well as the corporate culture should be taken into
consideration.
As an example, profit is one of the main concerns in every decision making process. Companies usually
do not make decisions that reduce profits, unless it is an exceptional case. Likewise, baseline principles
should be identified related to the problem in hand.

Step 4: Brainstorm and analyze the different choices

For this step, brainstorming to list down all the ideas is the best option. Before the idea generation
step, it is vital to understand the causes of the problem and prioritization of causes.
For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool. Cause-and-Effect
diagram helps you to identify all possible causes of the problem and Pareto chart helps you to
prioritize and identify the causes with highest effect.
Then, you can move on generating all possible solutions (alternatives) for the problem in hand.
Step 5: Evaluation of alternatives

Use your judgement principles and decision-making criteria to evaluate each alternative. In this step,
experience and effectiveness of the judgement principles come into play. You need to compare each
alternative for their positives and negatives.

Step 6: Select the best alternative

Once you go through from Step 1 to Step 5, this step is easy. In addition, the selection of the best
alternative is an informed decision since you have already followed a methodology to derive and
select the best alternative.
Step 7: Execute the decision

Convert your decision into a plan or a sequence of activities. Execute your plan by yourself or with the
help of subordinates.
Step 8: Evaluate the results

Evaluate the outcome of your decision. See whether there is anything you should learn and then
correct in future decision making. This is one of the best practices that will improve your decision-
making skills.
Job Analysis
Meaning & Definition
Job analysis refers to a systematic process of collecting all information about a specific job, including
skill requirements, roles, responsibilities and processes in order to create a valid job description. Job
analysis also gives an overview of the physical, emotional & related human qualities required to
execute the job successfully.
Job analysis is an important step in ensuring that the right candidate is selected. Job analysis helps the
employer in recruitment and selection, performance management, choosing compensation and
benefits, etc. It helps the employees to have a clear picture of what is actually required of them.
Why is a job analysis important?

1. Manpower Planning
Job analysis is a qualitative aspect of manpower needs, as it determines job requirements in
terms of skills, qualities and other human characteristics. This facilitates the division of labor
into different occupations.
2. Recruitment, Selection and Placement
In order to hire a good person for the job, it is very important to know the requirements of
the job and the qualities of the person who will be doing the job. Information on these two
elements comes from the job description or job description and helps management to tailor
the job requirements as closely as possible to the attitudes, skills, interests of employees, etc.
3. Training and Development:
Job analysis determines standard levels for job performance. Helps manage learning
development programs.
4. Job Evaluation
Job analysis provides the basis for job evaluation. The purpose of a job appraisal is to
determine the relative value of the job which in turn helps determine job compensation.

5. Performance Appraisal
Job analysis data provides a clear standard of performance for each job. Employee
performance can be objectively evaluated against the job performance standard.
6. Job Designing
Industrial engineers may use the job analysis information in designing the job by making the
comprehensive study of the job elements.
7. Safety and Health
Management can take corrective actions to ensure the safety of workers and reduce the risk
of various hazards to eliminate harmful conditions.
8. Promotions
The job analysis is mainly based on the effective policies. Effective policies may be formulated
in regard to promotions and transfers.
9. Employment Guidance
Job description, which is basically carried out on the basis of Job analysis, helps the aspirates
in ascertaining the job, for which they have the necessary ability and skills.
10. Labour Relations
Job analysis serves as the basis for resolving disputes that may arise due to quality of
performance expected of workers.
How do you conduct a job analysis?

 Gather information about a position
 Evaluate the importance of each task and competency
 Research industry standards
 Revise job descriptions and standards
 Use data to make changes
Methods can you use to conduct a job analysis?

 Interviews
 Observations
 Surveys
 Work logs
Disadvantages of job analysis?

 Time consuming
 Too much human effort
 Lack of Skills
 Lack of mental abilities
Social responsibilities of Business:-
Social responsibility of the business is the main objective or principle of the business which help for
survival and long run of business in the market. The survival of business or smooth running of the
business is always supported by various factors such as Government, Consumer, Society, Share holders

etc. The main responsibility of the business is to satisfy all these factors. Unless these factors are
satisfied no business can survive for long time.
1. Responsibility towards the consumer:-
The primary responsibility of the business man is to satisfy the consumer by manufacturing suitable
and good quality of product at right price, Satisfying needs and wants of the customer by giving after
sales service and satisfying them by providing various sales offers like discounts, 50% extra, Travel trip
to foreign schemes etc.
2. Responsibility towards Society:-

It includes infrastructure development in the society, providing employment opportunity, optimum
utilization of local resources, providing quality products to the society, implementing ethical aspects in
business like pollution control, optimum utilization of resources and protecting the society from
pollution and adopting some villages nearby and developing them.
3. Responsibility towards the Government:-

Business responsibility towards the government means paying taxes to the government without
postponing or delay, implementation of government reservations in organization, paying salary to
employees according to the government norms, providing welfare facilities to the employees like
provident fund, Employee state insurance etc according to government rules, producing quality
products according to government standards (i.e. ISI) and finally developing the infrastructure in that
location. It also includes providing employment to the local people.
4. Responsibility towards employees:-

It involves activities like giving preference to merit candidates, providing proper training to employees,
implementing suitable incentives and various welfare facilities like insurance, provident fund, gratuity
fund etc. It focuses on achieving employee satisfaction and employee cooperation.
5. Responsibility towards share holders:-

Responsibility of the business towards the share holders is to sell their shares to share holders.
Management has to run the organization and gain the profits. This profit should be distributed among
the share holders rationally. They had to satisfy the share holders by providing adequate information
about the company and also by running the organization effectively by gaining profits and increase
market value and share in the market.
6. Responsibility towards owner:-

Manager has to satisfy all the responsibilities given to him. He had to satisfy all the above said factors
and he had to satisfy himself by receiving equal profit for his efforts.
Departmentation
Departmentation is a part of the organizational process. It involves the grouping of common activities
under a single person. The first step in designing an organization structure is the identification of
activities and to group them properly. The process of grouping the activities is commonly known as
Departmentation. The term used to denote the departments that result Departmentation vary a great
deal. I.e. in Business organizations such term as Division, Department and Section are used.
Departmentation involves distributing the activities and responsibilities on the basis of product,
process and area etc.
Definition:-
“Departmentation may be defined as the process of grouping of activities into units for the purpose of
administration.”
Or
“Departmentation may be defined as a process of dividing the large monolithic functional organization
into small and flexible administrative unit.” - Koontz and O.Donnell
Types of Departmentation:-
1. Departmentation on the basis of functions:-
Here grouping of activities is done on the basis of functions in the organization.
Advantages:-
 a) It is logical reflection of functions.

 b) Maintain power and prestige of major functions.

 c) Follow principle of occupational specialization.
 d) It simplifies training.
 e) It furnishes means of tight control at top.
 Departmentation on the basis of product:-
In this grouping of activities is done according to products or product line especially in multi line large
enterprise

3. Departmentation on the basis of Area or Territory:-
Here grouping of activities is done by area or territory in an enterprise operating over wide
geographical area.
4. Departmentation on the basis of customer:-

Here grouping of activities are done to reflect the primary interest in customer.
Advantages:-
a) Encourages concentration on customer needs.
b) Gives customers feeling that they have an understanding supplier.
c) It develops expertness in customer area.
5. Departmentation on the basis of process :-

Here grouping of activities are done according to various equipment used for production. If we take a
typical example of Departmentation on the basis of process in spinning mill, it is given below.

6. Departmentation on the basis of time:-
In some organizations, where work is performed through out day and night, the work is divided into
shift. Thus, when an organization operates on three shifts, three different departments may exist. One
department for each shift though they all may be alike in terms of objectives and activities
Need and Importance of Departmentation:-

1. Advantage of specialization
2. Fixation of responsibility
3. Development of Managers
4. Facility in Appraisal
5. Feeling of Autonomy
RECRUITMENT
According to Edwin B. Flipper, “Recruitment is the process of searching the candidates for employment
and stimulating them to apply for jobs in the organization”. Recruitment is the activity that links the
employers and the job seekers.
RECRUITMENT NEEDS ARE OF THREE TYPES
 PLANNED
i.e. the needs arising from changes in organization and retirement policy.
 ANTICIPATED
Anticipated needs are those movements in personnel, which an organization can predict by
studying trends in internal and external environment.
 UNEXPECTED
Resignation, deaths, accidents, illness give rise to unexpected needs.
PURPOSE AND IMPORTANCE

Attract and encourage more and more candidates to apply in the organization.
 Create a talent pool of candidates to enable the selection of best candidates for the
organization.
 Determine present and future requirements of the organization in conjunction with its
personnel planning and job analysis activities.
 Recruitment is the process which links the employers with the employees.
 Increase the pool of job candidates at minimum cost.
 Help increase the success rate of selection process by decreasing number of visibly
under qualified or overqualified job applicants.
 Help reduce the probability that job applicants once recruited and selected will leave the
organization only after a short period of time.
 Meet the organizations legal and social obligations regarding the composition of its
workforce.
 Begin identifying and preparing potential job applicants who will be appropriate
candidates.
 Increase organization and individual effectiveness of various recruiting techniques and
sources for all types of job applicants
RECRUITMENT PROCESS
1. Identify vacancy
2. Prepare job description and person specification
3. Advertising the vacancy
4. Managing the response
5. Short-listing
6. Arrange interviews
7. Conducting interview and decision making
SOURCES OF RECURITMENT

FACTORS AFFECTING RECURITMENT
SELECTION
Definition:
The process of interviewing and evaluating candidates for a specific job and selecting an individual for
employment based on certain criteria. Employee selection can range from a very simple process to a
very complicated process depending on the firm hiring and the position. Certain employment laws such
as anti-discrimination laws must be obeyed during employee selection
Selection is the process of examineing the applicants with regard to the suitability for the given job and
choosing the best from the suitable applicants and rejected the others.

 The process of selection involves these stages namely recruitment screening and selections
 Selection is the process of differentiating between application in order to identify and here
those with a greater likelihoods of success in a job
 Selection methods can be used with an organization for promotions are transfer selection
applicants from outside the organization.
 Recruitment and selection are tow crucial steps in HR process and are ofter used
interchangeably
SELECTION PROCESS

6 Main Types of Business Ownership

1. Single Ownership:
Ownership when applied to an industrial enterprise means title to and possession of the assets of the
enterprise, the power to determine the policies of operation, and the right to receive and dispose of
the proceeds.
It is called a single ownership when an individual exercises and enjoys these rights in his own interest. A
business owned by one man is called single ownership. Single ownership does well for those
enterprises which require little capital and lend themselves readily to control by one person.
Advantages of Single Ownership:
1. Easy to establish as it does not require to complete any legal formality.
2. Simplicity of organization.
3. The expenses in starting the business are minimal.
4. Owner is free to make all decisions.
5. This type of ownership is simple, easy to operate and extremely flexible.

6. The owner enjoys all the profits, thus,
7. There is a great deal of personal motivation and incentive to succeed.
8. Minimum legal restrictions are associated with this form of ownership.
9. Owner can keep secrecy as regards the raw materials used, method of manufacture, etc.
10. Single ownership associates with it the great ease with which the business can be discontinued.
Disadvantages of Single Ownership:

1. The owner is liable for all obligations and debts of the business.
2. The business may not be successful if the owner has limited money, lacks ability and necessary
experience to run the business.
3. Because of relatively unstable nature of the business, it is difficult to raise capital for expanding
the business.
4. If the business fails, creditors can take the personal property as well as the business property of
the (single) owner to settle their claims. This means single ownership involves unlimited liability
for debts and losses.
5. There is limited opportunity for employees as regards monetary rewards (e.g., profit sharing,
bonuses, etc.) and promotions.
6. Generally, single ownership firm has limited life, i.e., the firm may cease to exist with the death
of the proprietor. This is the cause of unstable nature of the firm.
2. Partnership:
A single owner becomes inadequate as the size of the business enterprise grows. He may not be in a
position to do away with all the duties and responsibilities of the grown business. At this stage, the
individual owner may wish to associate with him more persons who have either capital to invest, or
possess special skill and knowledge to make the existing business still more profitable.
Kinds of Partners:
1. Active Partners who take active part in the management of the business enterprise.
2. Sleeping Partners who do not take any active part in the conduct of the business. Both Active
and Sleeping partners are responsible for the debts of the Partnership.
General Duties of Partners:
Partners should:
1. Be just and faithful to one another.
2. Render true accounts and full information about everything that affects any partner.
3. Cooperate and accommodate each other.
4. Have confidence in each other and better mutual understanding.
5. Respect the views of one-another.
Types of Partnership:
(i) General Partnership:
Whatever has been discussed above so far pertains to General Partnership; besides that in a general
partnership, each partner has full agency powers and may bind the partnership by any act, i.e., each
partner may act as though he were an individual proprietor.

Advantages of General Partnership:

1. Large capital is available to the firm.
a. The firm possesses much better talents, judgment and skills.
2. General partnership is easy to form and is relatively inexpensive in terms of organization cost.
3. Incentive for success is high.
4. There is a definite legal status of the firm.
5. Partners have full control of the business and possess full rights to all profits.
6. Partnership associates tax advantages with it.
7. Partnership firms can borrow money quite easily from the banks.
8. For all losses, there are more than one person to share them.
Disadvantages of General Partnership:

1. Each partner has unlimited liability for the debts of the firm,
2. Danger of disagreement and distrust among the partners,
3. Authority being divided among the partners,
4. Partnership lacks permanence and stability; it has limited life. Partnership may dissolve if a
partner dies,
5. Investors and lenders hesitate to provide money because of the lack of stability of a partnership
firm, and
6. All partners suffer because of the wrong steps taken by one partner.
(ii) Limited Partnership:

Limited partnership is an association of one or more general partners who manage the business and
one or more limited partners whose liability is limited to the capital they have invested in the business.
Limited partners share the profit but they do not participate or interfere with the control or
management of the firm. Moreover limited partners have their liabilities limited to the amount of their
investment.
3. Joint Stock Company:

Joint Stock Company overcomes many of the disadvantages associated with Partnership types of
industrial ownership, such as:
1. Difficulties in raising capital,
2. Easy disruption,
3. Lack of facility for centralised management, and
4. Unlimited liability, etc.
A joint stock company is an Association of individuals, called shareholders, who join together for profit
and agree to supply capital divided into shares that are transferable for carrying on a specific business.
Death, insolvency, disablement or lunacy of the shareholders does not affect the joint stock company.
A joint stock company consists of more than twenty persons for carrying any business other than the
banking business.
The Board of Directors:

1. Makes policies;

2. Takes decisions; and

3. Runs the company efficiently.
Types of Joint Stock Company:
(a) Private Limited Company:
1. The capital is collected from the private partners; some of them may be active while others
being sleeping.
2. Private limited company restricts the right to transfer shares, avoids public to take up shares or
debentures.
3. The number of members is between 2 and 50, excluding employee and ex-employee sharehold-
ers.
4. The company need not file documents such as consent of directors, list of directors, etc., with
the Registrar of Joint Stock Companies.
5. The company need not obtain from the Registrar, a certificate of commencement of business.
6. A private company must get its accounts audited.
(b) Public Limited Company:

1. In Public limited company, the capital is collected from the public by issuing shares having small
face value (Rs. 50,20,10).
2. The number of shareholders should not be less than seven, but there is no limit to their
maximum number.
3. A public limited company has to file with the Registrar of Joint Stock Companies, documents
such as consent of the directors, list of directors, director’s contract, etc., along with the
memorandum of association and articles of association.
4. A public company has to issue a prospectus to the public.
5. It has to allot shares within 180 days from the date of prospectus.
6. It can start only after receiving the certificate to commence business.
7. It has to hold a Statutory Meeting and to issue a Statutory Report to all members and also to
the Registrar within a certain period.
8. There is no restriction on the transfer of shares. (be) Directors of the company are subject to
rotation.
9. The public company must get its account audited every year by registered auditors.
10. It has to send financial statements to all members and to the Registrar.
11. It has to hold a general meeting every year.
12. The Managing Agent gets a fixed percentage of net profit as remuneration.
Advantages of Joint Stock Companies:

1. A huge sum of money can be raised.
2. It associates limited liability with it.
3. Shares are transferable.
4. Company’s life is not affected by the life (death) of shareholders.
5. Services of specialists can be obtained.
6. Risk of loss is divided among many shareholders.
7. The company associates with it stability, efficiency and flexibility of management.

Disadvantages of Joint Stock Companies:

1. A good deal of legal formalities is required for the formation of a joint stock company.
2. Company is managed by big shareholders only.
3. High paid officials manage the whole shows; they cannot have as high interests in the company
as the proprietors can have.
4. People can commit frauds with the company.
5. Board of directors and managers who remain familiar with the financial position of the company
may sell or purchase shares for their personal profits.
6. It is difficult to maintain secrecy as in partnership.
7. The team spirit with which partnership works, is lacking in a joint stock company.
8. Divided responsibility.
4. Cooperative Organisation (Or Societies):

It is a form of private ownership which contains features of large partnership as well as some features
of the corporation. The main aim of the cooperative is to eliminate profit and provide goods and
services to the members of the cooperative at cost.
Members pay fees or buy shares of the cooperative, and profits are periodically redistributed to them.
Since each member has only one vote (unlike in joint stock companies), this avoids the concentration of
control in a few hands.
Advantages of Cooperative Enterprises:

1. Daily necessities of life can be made available at lower rates.
2. It is the democratic form of ownership.
3. Overheads are reduced as members of the cooperative may render honorary services.
4. It promotes cooperation, mutual assistance and the idea of self-help.
5. The chances of large stock-holding (hoarding) and black marketing are eliminated.
6. No one person can make huge profits.
7. Common man is benefited by cooperatives.
8. Monetary help can be secured from government.
9. Goods required can be purchased directly from the manufacturers and therefore can be sold at
less rates.
Disadvantages of Cooperative Enterprises:

1. Since the members of the cooperative manage the whole show, they may not be competent
enough to make it a good success.
2. Finance being limited, specialist’s services cannot be taken.
3. Conflict may arise among the members on the issue of sharing responsibility and enjoying
authorities.
4. Members who are in position may try to take personal advantages.
5. Members being in services may not be able to devote necessary attention and adequate
time for supervising the works of the cooperative enterprise.
5. Public Sector:
A public enterprise is one that is:

1. Owned by the state,

2. Managed by the state, or
3. Owned and managed by the state.
The sector of public enterprises is popularly known as the Public Sector. Public enterprises are
controlled and operated by the Government either solely or in association with private enterprises.
Public enterprises are controlled and operated by the Government to produce and supply goods and
services required by the society. Ultimate control of public enterprises remains with the state and the
stale runs it with a service motto.
Objectives of Public Sector:

1. To provide basic infrastructure facilities for the growth of economy.
2. To promote rapid economic development.
3. To undertake economic activity strategically important for the growth of the country, which
if left to private initiative would distort the national objective.
4. To have balanced regional development and even dispersal of economic activity throughout
the country.
5. To avoid concentration of economic power in a few hands.
6. To create employment opportunities on an increasing scale.
7. To earn foreign exchange in order to export commodities not available in the country e.g.,
petroleum oil, sophisticated weapon systems etc.
8. To look after well-being and welfare of public.
9. To minimize exploitation of workers and consumers.
Merits of Public Sector:

1. Public sector helps in the growth of those industries which require huge amount of capital
and which cannot flourish under the private sector.
2. Public sector helps in the implementation of the economic plans and enables them to reach
the target of achievement within a prescribed period by taking initiative in- the
establishment of industries of its own accord.
3. Due to the absence of project motive in the public sector, the consumers are benefitted by
greater, better and cheaper products.
4. Public enterprise prevents the concentration of wealth in the hands of a few and paves the
way for equitable distribution of wealth among different sections of community.
5. Public enterprise encourages industrial growth of under-developed regions in the country.
6. Profits earned by public sector may be used for the general welfare of the community.
7. Public sector offers equitable employment opportunities to all; there is no discrimination, as
may be in a private sector.
8. Capital, raw material, fuel, power and transport are easily made available to them.
Demerits of Public Sector:

1. Public sector can rarely attain the efficiency of a private enterprise; wastage and inefficiency can
seldom be reduced to a minimum.
2. Due to heavy administrative expenses, state enterprises are mostly run at a loss leading to addi-
tional burden of taxation on the people.

3. Delay in decisions is a very common phenomena in public enterprises.

4. Incompetent persons may occupy high levels.
5. Workers (unlike in private concerns) shirk work.
6. Private Sector:
Private sector serves personal interests and is a non-government sector. Profit (rather than service) is
the main objective. Private sector constitutes mainly consumer’s goods industries where profit
possibilities are high. Private sector does not undertake risky ventures or those having low-profit
margin. Private enterprises are run by businessmen; capital is collected from the private partners.
Merits of Private Sector:

1. The magnitude of profits incurred is high.
2. The efficiency of the private enterprise is high,
3. Wastage of material and labour is minimum.
4. Decision-making is very prompt.
5. There is no interference in its internal affairs by politicians or Government.
6. Competent persons occupy high levels.
Demerits of Private Sector:

1. There is exploitation motive, the workers and the consumers may not receive fair deal.
2. There is dearth of capital to expand the business.
3. Private enterprise leads to concentration of wealth in the hands of a few.
4. Private enterprises lead to unbalanced growth of industries.
Definitions of Workers Participation in Management

According to Keith Davis, Participation refers to the mental and emotional involvement of a person in a
group situation which encourages him to contribute to group goals and share the responsibility of
achievement.
According to Walpole, Participation in Management gives the worker a sense of importance, pride and
accomplishment; it gives him the freedom of opportunity for self-expression; a feeling of belongingness
with the place of work and a sense of workmanship and creativity.
The concept of workers’ participation in management encompasses the following:

1. It provides scope for employees in decision-making of the organization.
2. The participation may be at the shop level, departmental level or at the top level.
3. The participation includes the willingness to share the responsibility of the organization by the
workers.
Features of Workers Participation in Management

1. Participation means mental and emotional involvement rather than mere physical presence.
2. Workers participate in management not as individuals but collectively as a group through their
representatives.

3. Workers’ participation in management may be formal or informal. In both the cases it is a

system of communication and consultation whereby employees express their opinions and
contribute to managerial decisions.
Levels of Workers Participation in Management

Information participation: It ensures that employees are able to receive information and express their
views pertaining to the matter of general economic importance.
Consultative importance: Here workers are consulted on the matters of employee welfare such as
work, safety and health. However, final decision always rests with the top-level management, as
employees’ views are only advisory in nature.
Associative participation: It is an extension of consultative participation as management here is under

the moral obligation to accept and implement the unanimous decisions of the employees. Under this
method the managers and workers jointly take decisions.
Administrative participation: It ensures greater share of workers’ participation in discharge of

managerial functions. Here, decisions already taken by the management come to employees,
preferably with alternatives for administration and employees have to select the best from those for
implementation.
Decisive participation: Highest level of participation where decisions are jointly taken on the matters
relating to production, welfare etc.
Objectives of Workers Participation In Management

1. To establish Industrial Democracy.
2. To build the most dynamic Human Resources.
3. To satisfy the workers’ social and esteem needs.
4. To strengthen labour-management co-operation and thus maintain Industrial peace and
harmony.
5. To promote increased productivity for the advantage of the organization, workers and the
society at large.
6. Its psychological objective is to secure full recognition of the workers.
7.
Importance of Workers Participation in Management
1. Unique motivational power and a great psychological value.
2. Peace and harmony between workers and management.
3. Workers get to see how their actions would contribute to the overall growth of the company.
4. They tend to view the decisions as `their own’ and are more enthusiastic in their
implementation.
5. Participation makes them more responsible.
6. They become more willing to take initiative and come out with cost-saving suggestions and
growth-oriented ideas.

Essential conditions for of Workers Participation in Management

1. The attitude and outlook of the parties should be enlightened and impartial so that a free and
frank exchange of thoughts and opinions could be possible. Where a right kind of attitude exists
and proper atmosphere prevails the process of participation is greatly stimulated.
2. Both parties should have a genuine faith in the system and in each other and be willing to work
together. The management must give the participating institution its right place in the
managerial organization of the undertaking and implementing the policies of the undertaking.
The labor, on the other hand, must also whole heartedly co-operate with the management
through its trade unions. The foremen and supervisory cadre must also lend their full support so
that the accepted policies could be implemented without any resentment on either side.
3. Participation should be real. The issues related to increase in production and productivity,
evaluation of costs, development of personnel, and expansion of markets should also be
brought under the jurisdiction of the participating bodies. These bodies should meet frequently
and their decisions should be timely implemented and strictly adhered to. Further,
4. Participation must work as complementary body to help collective bargaining, which creates
conditions of work and also creates legal relations.
5. There should be a strong trade union, which has learnt the virtues of unit and self-reliance so
that they may effectively take part in collective bargaining or participation.
6. A peaceful atmosphere should be there wherein there are no strikes and lock-outs, for their
presence ruins the employees, harms the interest of the society, and puts the employees to
financial losses.
7. Authority should be centralized through democratic management process. The participation
should be at the two or at the most three levels.
8. Programs for training and education should be developed comprehensively. For this purpose,
Labor is to be given education not to the head alone, not to the heart alone, not to the hands
alone, but it is dedicated to the three; to make the workers think, feel and act. Labor is to be
educated to enable him to think clearly, rationally and logically; to enable him to feel deeply
and emotionally; and to enable him to act in a responsible way.



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Diploma ME 501 Industrial Management & Smart Technologies Unit-2 2021

A responsibility is an obligation that an

An authority is the outcome of a formal A responsibility is the outcome of a superior-

3 An authority is a legal right given to a person. A responsibility is consequence of authority.

4 It is a delegation of authority. It is an assumption of responsibility

Responsibility requires the ability to follow

The responsibility ends as soon as the work

8 The objective of the authority is to make The objective of responsibility is to perform

Dept. of Management Studies,

Difference between Delegation and Decentralization

Decentralization is the final outcome

2 What it is? Technique of management Philosophy of management.

No, it is an optional philosophy which may

Liberty of Subordinates do not have full

The overall control vests with top

A step towards creation of semi-

Dept. of Management Studies,

Dept. of Management Studies,

Dept. of Management Studies,

Maslow's Hierarchy of Needs

Dept. of Management Studies,

Security and Safety Needs

McGregor’s Theory X and Theory Y

Implications of Theory X and Theory Y

ERG Theory of Motivation

Dept. of Management Studies,

To bring Maslow’s need hierarchy theory of motivation in synchronization with empirical

Implications of the ERG Theory

Dept. of Management Studies,

Dept. of Management Studies,

Dept. of Management Studies,

 Delegative leadership creates a positive work environment.

Trait Theory of Leadership

 Honesty and integrity: trustworthy, reliable, and open

 Self-confidence: Belief in one’s self, ideas, and ability

 Cognitive ability: Capable of exercising good judgment, strong analytical abilities, and

 Knowledge of business: Knowledge of industry and other technical matters

 Others: charisma, creativity and flexibility

Strengths/Advantages of Trait Theory

Limitations of The Trait Theory

 The theory is very complex

Dept. of Management Studies,

Implications of Trait Theory

WHAT IS BEHAVIORAL THEORY OF LEADERSHIP?

TYPES OF BEHAVIORAL LEADERSHIP

ADVANTAGES OF BEHAVIORAL THEORY

Dept. of Management Studies,

DISADVANTAGES OF BEHAVIORAL THEORY

Decision Making Process

Steps of Decision Making Process

Step 1: Identification of the purpose of the decision

Step 2: Information gathering

Step 3: Principles for judging the alternatives

Dept. of Management Studies,

Step 4: Brainstorm and analyze the different choices

Step 5: Evaluation of alternatives

Dept. of Management Studies,

Step 6: Select the best alternative

Step 7: Execute the decision