PARISHKRIT AGRAWAL@ BIT

Staffing refers to the managerial function of employing and developing human resources for carrying out the
various managerial and non-managerial activities in an organisation. This involves determining the
manpower requirement, and the methods of recruiting, selecting, training and developing the people for
various positions created in the organisation. This, in fact happens to be a continuous process because the
organisation‟s need to retain and update its personnel is a never ending exercise. It may be noted that
staffing function is an integral part of human resource management and, in its wider sense, also includes the
activities of determining the remuneration of workers, appraising their performance, and deciding on their
promotion, transfers, etc.

The benefits of good staffing are as follows.

(a) It helps in getting right people for the right job at the right time. The function of staffing enables the
manager to find out as to how many workers are required and with whatqualifications and experience.

(b) Staffing contributes to improved organisational productivity. Through proper selection the organisation
gets quality workers, and through proper training the performances level of the workers can be improved.

(c) It helps in providing job satisfaction to the employees keeping their morale high. With proper training
and development programmes their efficiency improves and they feel assured of their career advancements.

(d) Staffing maintains harmony in the organisation. Through proper staffing, individuals are not just
recruited and selected but their performance is regularly appraised and promotions made on merit. For all
these, certain rules are made and are duly communicated to all concerned. This fosters harmony and peace in
the organisation.

Staffing Process - Steps involved in Staffing

1. Manpower requirements- The very first step in staffing is to plan the manpower inventory required
by a concern in order to match them with the job requirements and demands. Therefore, it involves
forecasting and determining the future manpower needs of the concern. Manpower planning refers to
the process of estimating the manpower requirement of an organisation. While estimating the
manpower requirement, the management generally keeps in mind the available infrastructure
including the technology, production schedule, market fluctuation, demand forecasts, government‟s
policies and so on. It tentatively decides the kinds of staff as well as the number of staff needed for
the organisation. The focus of the manpower planning is to get right number of qualified people at
the right time
2. Job analysis is primary tool in personnel management. In this method, a personnel manager tries to
gather, synthesize and implement the information available regarding the workforce in the concern.
A personnel manager has to undertake job analysis so as to put right man on right job.
JOB DESCRIPTION is an organized factual statement of job contents in the form of duties and
responsibilities of a specific job. The preparation of job description is very important before a
vacancy is advertised. It tells in brief the nature and type of job. This type of document is
descriptive in nature and it constitutes all those facts which are related to a job
JOB SPECIFICATION is a statement which tells us minimum acceptable human qualities
which helps to perform a job. Job specification translates the job description into human
qualifications so that a job can be performed in a better manner. Job specification helps in hiring
an appropriate person for an appropriate position.
3. Recruitment- Once the requirements are notified, the concern invites and solicits applications
according to the invitations made to the desirable candidates.
External sources
o PRESS ADVERTISEMENTS Advertisements of the vacancy in newspapers and journals are
a widely used source of recruitment. The main advantage of this method is that it has a wide
reach.
o EDUCATIONAL INSTITUTES Various management institutes, engineering colleges,
medical Colleges etc. are a good source of recruiting well qualified executives, engineers,
 PARISHKRIT AGRAWAL@ BIT
medical staff etc. They provide facilities for campus interviews and placements. This source
is known as Campus Recruitment.
o PLACEMENT AGENCIES. Several private consultancy firms perform recruitment functions
on behalf of client companies by charging a fee. These agencies are particularly suitable for
recruitment of executives and specialists. It is also known as RPO (Recruitment Process
Outsourcing)
o EMPLOYMENT EXCHANGES Government establishes public employment exchanges
throughout the country. These exchanges provide job information to job seekers and help
employers in identifying suitable candidates.
o LABOUR CONTRACTORS Manual workers can be recruited through contractors who
maintain close contacts with the sources of such workers. This source is used to recruit labour
for construction jobs.
o UNSOLICITED APPLICANTS Many job seekers visit the office of well-known companies
on their own. Such callers are considered nuisance to the daily work routine of the enterprise.
But can help in creating the talent pool or the database of the probable candidates for the
organisation.
o EMPLOYEE REFERRALS / RECOMMENDATIONS Many organisations have structured
system where the current employees of the organisation can refer their friends and relatives
for some position in their organisation. Also, the office bearers of trade unions are often
aware of the suitability of candidates. Management can inquire these leaders for suitable jobs.
In some organizations these are formal agreements to give priority in recruitment to the
candidates recommended by the trade union.
o RECRUITMENT AT FACTORY GATE Unskilled workers may be recruited at the factory
gate these may be employed whenever a permanent worker is absent. More efficient among
these may be recruited to fill permanent vacancies.
Internal Sources
o TRANSFERS The employees are transferred from one department to another according to
their efficiency and experience.
o PROMOTIONS The employees are promoted from one department to another with more
benefits and greater responsibility based on efficiency and experience.
o Others are Upgrading and Demotion of present employees according to their performance.
o Retired and Retrenched employees may also be recruited once again in case of shortage of
qualified personnel or increase in load of work. Recruitment such people save time and costs
of the organisations as the people are already aware of the organisational culture and the
policies and procedures.

4. Selection- This is the screening step of staffing in which the solicited applications are screened out
and suitable candidates are appointed as per the requirements. The steps are
Preliminary Interviews- It is used to eliminate those candidates who do not meet the minimum
eligiblity criteria laid down by the organization. The skills, academic and family background,
competencies and interests of the candidate are examined during preliminary interview.
Preliminary interviews are less formalized and planned than the final interviews. The candidates
are given a brief up about the company and the job profile; and it is also examined how much the
candidate knows about the company. Preliminary interviews are also called screening interviews.
Application blanks- The candidates who clear the preliminary interview are required to fill
application blank. It contains data record of the candidates such as details about age,
qualifications, reason for leaving previous job, experience, etc.
Written Tests- Various written tests conducted during selection procedure are aptitude test,
intelligence test, reasoning test, personality test, etc. These tests are used to objectively assess the
potential candidate. They should not be biased.
Employment Interviews- It is a one to one interaction between the interviewer and the potential
candidate. It is used to find whether the candidate is best suited for the required job or not. But
 PARISHKRIT AGRAWAL@ BIT
such interviews consume time and money both. Moreover the competencies of the candidate
cannot be judged. Such interviews may be biased at times. Such interviews should be conducted
properly. No distractions should be there in room. There should be an honest communication
between candidate and interviewer.
Medical examination- Medical tests are conducted to ensure physical fitness of the potential
employee. It will decrease chances of employee absenteeism.
Appointment Letter- A reference check is made about the candidate selected and then finally he
is appointed by giving a formal appointment letter.

5. Orientation and Placement- Once screening takes place, the appointed candidates are made
familiar to the work units and work environment through the orientation programmes. placement
takes place by putting right man on the right job.
6. Training and Development- Training is a part of incentives given to the workers in order to develop
and grow them within the concern. Training is generally given according to the nature of activities
and scope of expansion in it. Along with it, the workers are developed by providing them extra
benefits of indepth knowledge of their functional areas. Development also includes giving them key
and important jobsas a test or examination in order to analyse their performances.
Training is generally imparted in two ways:
On the job training- On the job training methods are those which are given to the employees
within the everyday working of a concern. It is a simple and cost-effective training method. The
inproficient as well as semi- proficient employees can be well trained by using such training
method. The employees are trained in actual working scenario. The motto of such training is
“learning by doing.” Instances of such on-job training methods are job-rotation, coaching,
temporary promotions, etc.
Off the job training- Off the job training methods are those in which training is provided away
from the actual working condition. It is generally used in case of new employees. Instances of off
the job training methods are workshops, seminars, conferences, etc. Such method is costly and is
effective if and only if large number of employees have to be trained within a short time period.
Off the job training is also called as vestibule training,i.e., the employees are trained in a separate
area( may be a hall, entrance, reception area,etc. known as a vestibule) where the actual working
conditions are duplicated.
Training is skills focused Development is creating learning abilities
Training is presumed to have a for Development is not education dependent
mal education
Training needs depend upon lack o Development depends on personal drive and ambition
r deficiency in skills
Trainings are generally need based Development is voluntary
Training is a narrower concept foc Development is a broader concept focused on personality
used on job related skills development
Training is aimed at improving job wherevernecessaryDevelopment aims at overall personalef
related efficiency and performance fectiveness including job efficiencies

7. Remuneration- It is a kind of compensation provided monetarily to the employees for their work
performances. This is given according to the nature of job- skilled or unskilled, physical or mental,
etc. Remuneration forms an important monetary incentive for the employees.
8. Performance Evaluation- In order to keep a track or record of the behaviour, attitudes as well as
opinions of the workers towards their jobs. For this regular assessment is done to evaluate and
supervise different work units in a concern. It is basically concerning to know the development cycle
and growth patterns of the employeesin a concern.
9. Promotion and transfer- Promotion is said to be a non- monetary incentive in which the worker is
shifted from a higher job demanding bigger responsibilities as well as shifting the workers and
transferring them to different work units and branches of the same organization.
 PARISHKRIT AGRAWAL@ BIT
TYPES OF AUTHORITY:
3 main types of authority can exist within an organization:
1. Line Authority
2. Staff Authority
3. Functional Authority
Each type exists only to enable individuals to carry out the different types of responsibilities with which they
have been charged.

LINE AUTHORITY: The most fundamental authority within an organization, reflects existing superior-
subordinate relationships. It consists of the right to make decisions and to give order concerning the
production,sales or finance related behaviour of subordinates. In general, line authority pertains to matters
directly involving management system production, sales, finance etc., and as a result with the attainment of
objectives. People directly responsible for these areas within the organization are delegated line authority to
assist them in performing their obligatory activities.

STAFF AUTHORITY: Staff authority consists of the right to advise or assist those who possess line
authority as well as other staff personnel. Staff authority enables those responsible for improving the
effectiveness of line personnel to perform their required tasks.

Line and Staff personnel must work together closely to maintain the efficiency and effectiveness of the
organization. To ensure that line and staff personnel do work together productively, management must make
sure both groups understand the organizational mission, have specific objectives, and realize that they are
partners in helping the organization reach its objectives.
Size is perhaps the most significant factor in determining whether or not an organization will have staff
personnel. The larger the organization, the greater the need and ability to employ staff personnel.
As an organization expands, it usually needs employees with expertise in diversified areas. Although small
organizations may also require this kind of diverse expertise, they often find it more practical to hire part
time consultants to provide it is as needed rather than to hire full time staff personnel, who may not always
be kept busy.

LINE – STAFF RELATIONSHIPS : e.g. A plant manager has line authority over each immediate
subordinate, human resource manager, the production manager and the sales manager.
However, the human resource manager has staff authority in relation to the plant manger, meaning the
human resource manager has staff authority in relation to the plant manager, meaning the human resource
manager possesses the right to advise the plant manager on human resource matters.
Still final decisions concerning human resource matters are in the hands of the plant manager, the person
holding the line authority.

ROLE OF STAFF PERSONNEL:

Harold Stieglitz has pinpointed 3 roles that staff personnel typically perform to assist line personnel:
1. The Advisory or Counseling Role : In this role, staff personnel use their professional expertise to
solve organizational problems. The staff personnel are, in effect, internal consultants whose
relationship with line personnel is similar to that of a professional and a client.
2. The Service Role : Staff personnel in this role provide services that can more efficiently and
effectively be provided by a single centralized staff group than by many individuals scattered
throughout the organization. This role can probably best be understood if staff personnel are viewed
as suppliers and line personnel as customers.
3. The Control Role : Staff personnel help establish a mechanism for evaluating the effectiveness of
organizational plans.
The role of staff in any organization should be specifically designed to best meet the needs of that
organization.
 PARISHKRIT AGRAWAL@ BIT
CONFLICT IN LINE – STAFF RELATIONSHIP:
From the view point of line personnel, conflict is created because staff personnel tend to
Assume Line Authority
Do not give Sound Advice
Steal Credit for Success
Fail to Keep line personnel informed of their activities
Do not see the whole picture.

From the view point of Staff Personnel, conflict is created because line personnel do not make proper use of
staff personnel, resist new ideas and refuse to give staff personnel enough authority to do their jobs.
Staff Personnel can often avert line-staff conflicts if they strive to emphasize the objectives of the
organization as a whole, encourage and educate line personnel in the appropriate use of staff personnel,
obtain any necessary skills they do not already possess, and deal intelligently with the resistance to change
rather than view it as an immovable barrier.
Line personnel can do their part to minimize line staff conflict by sing staff personnel wherever possible,
making proper use of the staff abilities, and keeping staff personnel appropriately informed.

FUNCTIONAL AUTHORITY:
Functional authority consists of the right to give orders within a segment of the organization in which this
right is normally non existent. This authority is usually assigned to individuals to complement the line or
staff authority they already possess. Functional Authority generally covers only specific task areas and is
operational only for designated amounts of time. It is given to individuals who, in order to meet
responsibilities in their own areas, must be able to exercise some control over organization members in other
areas.

What is an organisation chart?

This is a diagram showing the formal arrangement of its parts and their interrelationships. The
interrelationships gives an indication of who does what and how activities are divided, organised and
coordinated. The diagram helps managers to show duplication in functions and whether it needs
reorganising.

What does the chart look like?

An organisational chart is normally drawn to look like a triangular/pyramid shape or upside-down tree-like
structure. Within this structure, management is usually placed at the top or pinnacle, staff in the middle, and
the customers at the bottom. This is known as a controlling (or hierarchical) structure. Some of the more
recent organisation charts coming out from service-oriented companies are now showing the pyramid
upside-down to emphasise the customers as being more important than the management team and their staff.
This is called the supporting structure. In other diagrams, the customer, the staff, the managers, and even the
natural environment are kept to the same level to help emphasise the importance of all parts of an
organisation.

Traditional Structures. These are the structures that are based on functional division and departments. These
are the kind of structures that follow the organization's rules and procedures to the T. they are characterized
by having precise authority lines for all levels in the management. Under types of structures under
traditional structures are:
1. Line Structure - this is the kind of structure that has a very specific line of command. The approvals
and orders in this kind of structure come from top to bottom in a line. Hence the name line structure.
This kind of structure is suitable for smaller organizations like small accounting firms and law
offices. This is the sort of structure that allows for easy decision-making, and also very informal in
nature. They have fewer departments, which makes the entire organization a very decentralized one.
 PARISHKRIT AGRAWAL@ BIT
2. Line and Staff Structure - though line structure is suitable for most organizations, especially small
ones, it is not effective for larger companies. This is where the line and staff organizational structure
comes into play. Line and structure combines the line structure where information and approvals
come from top to bottom, with staff departments for support and specialization. Line and staff
organizational structures are more centralized. Managers of line and staff have authority over their
subordinates, but staff managers have no authority over line managers and their subordinates. The
decision-making process becomes slower in this type of organizational structure because of the
layers and guidelines that are typical to it, and let's not forget the formality involved.
3. Functional structure - this kind of organizational structure classifies people according to the function
they perform in their professional life or according to the functions performed by them in the
organization. The organization chart for a functional based organization consists of Vice President,
Sales department, Customer Service Department, Engineering or production department, Accounting
department and Administrative department.
4. Divisional Structures This is the kind of structure that is based on the different divisions in the
organization. These structures can be further divided into:
Product structure - a product structure is based on organizing employees and work on the basis of
the different types of products. If the company produces three different types of products, they
will have three different divisions for these products.
Market Structure - market structure is used to group employees on the basis of specific market
the company sells in. a company could have 3 different markets they use and according to this
structure, each would be a separate division in the structure.
Geographic structure - large organizations have offices at different place, for example there could
be a north zone, south zone, west and east zone. The organizational structure would then follow a
zonal region structure.
5. Project organization: This type of organization is suitable when an organization undertakes
specialized work for a particular period as one time operation. In order to deal with such situations
organizations develops a unit which is specially designed to accomplish such project works without
disturbing the routine jobs of the organization. The organizations engage their existing employees on
deputation basis to deal with a particular project and then that particular executive resumes to his
parent department after the completion of the project. The advantage of such organizations is that it
does not disturb the regular work of the organization. It enables the better control over the project
activities because the managers enjoy the authority to function the projects effectively. But at times
these organizations spoil the stability of the various departments as the personnel are shifted for the
sake of the project and thus disrupt the basic functioning of the parent department.
Project Manager (PM) has full line authority over the project
Project workforce members are directly responsible to the PM
Lines of communication are shorter because there is less intervening management structure
Several successive projects of similar kind can benefit from a cadre of experts who move from
project to project
Project team has a strong, separate identity of its own which results in a higher level of
commitment
Ability to make swift decisions is enhanced because of centralized authority
Unity and continuity of command exists
Simple and flexible organizational structure
holistic approach to the project
Disadvantages are:
Duplication of effort on multiple projects due to staffing levels of each project
Tendency of PM to stockpile resources and materials to ensure availability when needed, or “just
in case”
Members of a high technology project tend to learn a lot about the high tech aspect of their
project, but fall behind in other areas of technical expertise
 PARISHKRIT AGRAWAL@ BIT
Pure project approach tends to foster inconsistency in the way policies and procedures are carried
out.
Project takes on a life of its own – team members develop bonds, a we-they divisiveness grows
(projectitis)
Worry about “life after the project ends” tends to make the project last longer than necessary

6. Matrix Organization. Matrix organization is an attempt to combine functional and pure project
organizations to couple the positive aspects of both and minimize the negative. Matrix Organization:
It aims to combine the advantages of autonomous project organization and functional specialization.
In this structure functional departments are having full time specialized workers to accommodate and
are capable of handling more than one project at a time. This is found suitable as the organization is
most of the time engaged in the project activities and the managers are also more in number and can
accomplish the project work effectively. It provides for the flexible system of working as it adapts
the changes quickly. The demerit of such organizations is that the employees are engaged in dual
jobs and are burdened with more work which affects the unity of command at times in the
organization.

Advantages are:
Project as a point of emphasis – PM takes the responsibility for managing the project.
Project has reasonable access to all required resources without having to maintain them – draws
from the functional resource pool as required
Less anxiety about what happens when the project is completed
Response to client is as rapid as pure project
Project has access to the administrative units of the parent firm to maintain consistency w/
policies, practices and procedures
With several projects in work, matrix offers a better company wide balancing of resources
Matrix organizations span the extremes of the organization spectrum – from functional to pure
project.

Disadvantages include:
Delicate balance of focus of decision making power between PM and functional manager
Multiple projects have to be monitored as a set to derive the benefits of a matrix organization
Strong matrix organizations have problems shutting down projects similar to pure project
organizations
Division of decision making responsibilities between PM (administrative decisions) and
functional manager (technological decisions) is complex and not so clear for the operating PM
Project members have at least two bosses, the functional and the PM. This can lead to confusion
and disorder.

DIRECTING is said to be a process in which the managers instruct, guide and oversee the performance of
the workers to achieve predetermined goals. Directing is said to be the heart of management process.
Planning, organizing, staffing have got no importance if direction function does not take place.

Directing initiates action and it is from here actual work starts. Direction is said to be consisting of human
factors. In simple words, it can be described as providing guidance to workers is doing work. In field of
management, direction is said to be all those activities which are designed to encourage the subordinates to
work effectively and efficiently. According to Human, “Directing consists of process or technique by which
instruction can be issued and operations can be carried out as originally planned” Therefore, Directing is the
function of guiding, inspiring, overseeing and instructing people towards accomplishment of organizational
goals.
 PARISHKRIT AGRAWAL@ BIT
Direction has got following characteristics:

1. Pervasive Function - Directing is required at all levels of organization. Every manager provides
guidance and inspiration to his subordinates.
2. Continuous Activity - Direction is a continuous activity as it continuous throughout the life of
organization.
3. Human Factor - Directing function is related to subordinates and therefore it is related to human
factor. Since human factor is complex and behaviour is unpredictable, direction function becomes
important.
4. Creative Activity - Direction function helps in converting plans into performance. Without this
function, people become inactive and physical resources are meaningless.
5. Executive Function - Direction function is carried out by all managers and executives at all levels
throughout the working of an enterprise, a subordinate receives instructions from his superior only.
6. Delegate Function - Direction is supposed to be a function dealing with human beings. Human
behaviour is unpredictable by nature and conditioning the people‟s behaviour towards the goals of
the enterprise is what the executive does in this function. Therefore, it is termed as having delicacy in
it to tackle human behaviour.

Elements of Direction
1. Supervision "Guiding and directing efforts of employees and other resources to accomplish stated work
outputs" - Terry and Franklin. Supervision is an element of direction. "Day-to-day relationship between
an executive and his immediate assistant and covers training, direction, motivation, coordination,
maintenance of discipline, etc." - Newman and Warren. Supervision denotes the functions performed by
the supervisors.
2. Motivation "Motivation is the complex force starting and keeping a person at work in an organisation.
Motivation is something that moves the person to action, and continues him in the course of action
already initiates." - Dubin. Motivation is the core of management. Technically, the term motivation can
be traced to the Latin word movere, which means 'to move'. Motivating is a term which implies that one
person induces another, to engage in action by ensuring that a channel to satisfy the motive becomes
available to the individual. Motive is energiser of action, motivating is the channelisation and activation
of motives, motivation is the work behaviour itself. Motivation depends on motives and motivating. It is
a complex process.
3. Leadership"Leadership is essentially a continuous process of influencing behaviour. A leader breathes
life into the group and motivates it towards goals. The lukewarm desires for achievement are
transformed into burning passion for accomplishment" - George R. Terry. Leadership is the process of
influencing the behaviour of others to work willingly and enthusiastically for achieving predetermined
goals. It is an essential ingredient for successful organisation.The successful organisation has one major
attribute that sets sets it apart from unsuccessful organisation that is dynamic and effective leadership.
4. Communication"Communication is the transfer of information from one person to another person. It is a
way of reaching others by transmitting ideas, facts, thoughts, feeling sand values." - Newstrom and
Davis. Communication is regarded as basic to the functioning of the organisation, in its absence, the
organisation would cease to exist. It is the process through which two or more persons come to exchange
ideas and understanding among themselves

Importance of Directing
1. Direction initiates actions to get the desired results in an organisation.
2. Direction attempts to get maximum out of employees by identifying their capabilities.
3. Direction is essential to keep the elements like Supervision, Motivation, Leadership and
Communication effective.
4. It ensures that every employee work for organisational goals.
5. Coping up with the changes in the Organisation is possible through effective direction.
6. Stability and balance can be achieved through directing.
 PARISHKRIT AGRAWAL@ BIT
PRINCIPLES OF DIRECTING
Direction is a complex function as it deals with people whose behaviour is unpredictable. Effective direction
is an art which a manager can learn and perfect through practice. However, managers can follow the
following principles while directing their subordinates:
1. Harmony o objectives: Individuals join the organisation to satisfy their physiological and
psychological needs. They are expected to work for the achievement of organisational objectives.
They will perform their tasks better if they feel that it will satisfy their personal goals. Therefore,
management should reconcile the personal goals of employees with the organisational goals.
2. Maximum individual contribution. Organisational objectives are achieved at the optimum level
when every individual in the organisation makes maximum contribution towards them. Managers
should, therefore, try to elicit maximum possible contribution from each subordinate.
3. Unity of command. A subordinate should get orders and instructions from one superior only. If he is
made accountable to two bosses simultaneously, there will be confusion, conflict, disorder and
indiscipline in the organisation. Therefore, every subordinate should be asked to report to only one
manager.
4. Appropriate techniques. The managers should use correct direction techniques to ensure efficiency of
direction. The techniques used should be suitable to the superior, the subordinates and the situation.
5. Direct Supervision. Direction becomes more effective when there is a direct personal contact
between a superior and his subordinates. Such direct contact improves the morale and commitment
of employees. Therefore, wherever possible direct supervision should be used.
6. Strategic use of informal organisation. Management should try to understand and make use of
informal groups to strengthen formal or official relationships. This will improve the effectiveness of
direction.
7. Managerial communication. A good system of communication between the superior and his
subordinates helps to improve mutual understanding. Upward communication enables a manager to
understand the subordinates and gives an opportunity to the subordinates to express their feelings.
8. Comprehension. Communication of orders and instructions is not sufficient. Managers should ensure
that subordinates correctly understand what they are to do and how and when they are to do. This
will avoid unnecessary queries and explanations.
9. Effective leadership. Managers should act as leaders so that they can influence the activities of their
subordinates without dissatisfying them. As leaders, they should guide and counsel subordinates in
their personal problems too. In this way, they can win the confidence and trust of their subordinates.
Principle of follow through. Directing is a continuous process. Therefore, after issuing orders and
instructions, a manager should find out whether the subordinates are working properly and what
problems they are facing. He should modify, if necessary, his orders in the light of these findings.

Value Chain Management

The term „Value Chain‟ was used by Michael Porter in his book "Competitive Advantage: Creating and
Sustaining superior Performance" (1985). The value chain analysis describes the activities the organization
performs and links them to the organizations competitive position.

Value chain analysis describes the activities within and around an organization, and relates them to an
analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular
activity adds to the organizations products or services. This idea was built upon the insight that an
organization is more than a random compilation of machinery, equipment, people and money. Only if these
things are arranged into systems and systematic activates it will become possible to produce something for
which customers are willing to pay a price. Porter argues that the ability to perform particular activities and
to manage the linkages between these activities is a source of competitive advantage.
Porter distinguishes between primary activities and support activities. Primary activities are directly
concerned with the creation or delivery of a product or service. They can be grouped into five main areas:
inbound logistics, operations, outbound logistics, marketing and sales, and service. Each of these primary
activities is linked to support activities which help to improve their effectiveness or efficiency. There are
 PARISHKRIT AGRAWAL@ BIT
four main areas of support activities: procurement, technology development (including R&D), human
resource management, and infrastructure (systems for planning, finance, quality, information management
etc.).

Porter (1985) described inbound logistics activities as those associated with the functions of receiving,
storing and dissemination of inputs, such as material handling, inventory control, vehicle scheduling, and
returns to suppliers. It further described outbound logistics activities as those associated with functions in the
final storage of goods from the last production process to the distribution of the goods to the customers,
such as collecting, storing, and physically distributing the product to buyers, warehousing, material
handling, delivery vehicle operations, order processing and scheduling.

Porter (1985) described activities in operations as those associated with the functions of transforming inputs
into the final product form, such as machining, packaging, assembly, equipment maintenance, testing,
printing, and facility operations. Just-in-time production is becoming the norm in the digital economy where
production activities are triggered by real-time customer orders, and thereby avoiding large warehouse
inventories, reducing order-todelivery cycle time, and better responding to specific customer needs.

Marketing and Sales Porter (1985) described activities in marketing and sales as those associated with the
functions of providing the means by which buyers can purchase the product and inducing them to do so,
such as advertising, promotion, quoting, pricing, channel and sales force management.
Porter (1985) described activities in services as those associated with the functions of providing service to
enhance or maintain the value of the product, such as installation, repair, training, parts supply, and product
adjustment. In a market saturated with product offerings, quality value-added service can be a key
differentiator for businesses. Value-added service goes beyond the support of products; it covers many other
aspects of customer relationship management in providing information, resolving issues, providing account
and technical support. The 21st century is characterized by the demand of instantaneous delivery of
information and services. The long lines to see a teller at the bank are replaced by ATM machines and online
banking. Online shopping eliminates the trips to physical stores. Real-time service is becoming the norm in
many industries.

Procurement Porter (1985) described activities in procurement as those associated with the functions of
purchasing inputs used in the firm‟s value chain which include raw materials, supplies, and other
consumable items as well as assets such as machinery
 PARISHKRIT AGRAWAL@ BIT
Human Resource management - consists of all activities involved in recruiting, hiring, training, developing,
compensating and (if necessary) dismissing or laying off personnel.

Technological Development - pertains to the equipment, hardware, software, procedures and technical
knowledge brought to bear in the firm's transformation of inputs into outputs.

Infrastructure - serves the company's needs and ties its various parts together, it consists of functions or
departments such as accounting, legal, finance, planning, public affairs, government relations, quality
assurance and general management.

The term ‚Margin‟ implies that organizations realize a profit margin that depends on their ability tomanage
the linkages between all activities in the value chain. In other words, the organization is able to deliver a
product / service for which the customer is willing to pay more than the sum of the costs of all activities in
the value chain.

Some thought about the linkages between activities: These linkages are crucial for corporate success.The
linkages are flows of information, goods and services, as well as systems and processes for adjusting
activities. Their importance is best illustrated with some simple examples: Only if the Marketing & Sales
function delivers sales forecasts for the next period to all other departments in time and in reliable accuracy,
procurement will be able to order the necessary material for the correct date. And only if procurement does a
good job and forwards order information to inbound logistics, only than operations will be able to schedule
production in a way that guarantees the delivery of products in a timely and effective manner – as pre-
determined by marketing. In the result, the linkages are about seamless cooperation and information flow
between the value chain activities.

Corporate social responsibility

Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship, social
performance, or sustainable responsible business)[1] is a form of corporate self-regulation integrated into a
business model. CSR policy functions as a built-in, self-regulating mechanism whereby business monitors
and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The
goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through
its activities on the environment, consumers, employees, communities, stakeholders and all other members
of the public sphere.

DIMENSIONS OF SOCIAL RESPONSIBILITIES

The responsibilities of managers cannot be limited to the owners only. They have also to take into account
the claims and expectations of other stakeholders and adopt a balanced approach so as to best serve the
community at large. Accordingly, social responsibilities of business have to be considered with particular
reference to its responsibilities towards owners (shareholders), the employees, the consumers, the
government and the general public. Let us examine the nature of
Obligation of business with respect to each of these groups.

Responsibility towards Shareholders (Owners)

The management of an enterprise (company) has the primary responsibility to assure a fair and reasonable
rate of return on capital and fair dividend to the owners (shareholders) as investors and providers of risk
capital. Investors generally expect a rate of return on capital commensurate with the amount of risk involved
in a particular field of activity. The rate of return on investment in business is expected to be higher than
interest on bank deposits and may vary between 10% and 30%. Besides dividend, the shareholders of
companies also expect appreciation in the value of shares over time. This may be reflected i n market
capitalisaton based on company's performance and management's track record. These are recognized as
legitimate expectations, and have to be met in order to ensure continuity and growth of the business.
 PARISHKRIT AGRAWAL@ BIT

Responsibility towards Employees

The nature of employer-employee relationship has undergone a sea-change over time. Gone are the days of
master-servant relationship. The new orientation of the relationship is linked with the major issues of wages
and salaries, supervisor-subordinate relationship and employee welfare. The principles of adequacy, equity
and human dignity are expected to be the basis of management responsibility of providing fair wages to
employees. In India, wage fixation is governed by well-defined concepts of minimum wages, fair wage and
living wage. The lower limit of fair wage is the minimum wage, while its upper limit may be based on the
capacity of industry to pay, Management responsibility lies in fixing the actual wages between tlie two
limits with due consideration of(i) productivity of Iabour, (ii) prevailing rates of wages in the same or
neighbouring areas, (iii) the level of national income and its distribution, and (iv) the place of the industry in
the national economy. Managerial remuneration including salaries and perquisites is generally linked with
responsibility, risk-taking, initiative and ski1 I. In actual practice, tlie maximum remuneration depends upon
tlie nature and volume of business, productivity, production capacity installed, etc. Under the Company
Law, the maximum remuneration payable is fixed including salaries and allowances, perquisites and
commission and it is linked with the paid up capital and profitability of the company It is also the
responsibility of management to maintain harmonious relationship between managers and subordinates. This
can be taken care of keeping in view the potential lapses on the part of both management and employees.
With regard to worker performance and attitudes, management responsibility lies in taking the initiative in
labour relations rather than leaving it entirely to the labour union.

Provision of welfare amenities also an important part of management responsibility towards employees, like
provision of satisfactory working conditions for safety, security, health and hygiene, medical facilities,
housing, canteen, leave and retirement benefits. Under thc Factories Act, 1918, the Employees Statement
Insurance Act, 1948, and Employees Provident Fund and Miscellaneous Provisions Act, 1952, there are
provisions wliel.eby statutory duty is cast on the employers to provide for many of these amenities.
Provision of welfare amenities cannot be viewed within the narrow limits of legal requirement as, in the long
run, it also enables management to secure and maintain a contented workforce for superior performance in
the interest of the company. For the same reason, management has the responsibility to assess the training
needs of employees and managers at all levels and arrange regular training programmes for them so that
they leave the opportunities of developing their potential abilities.

Responsibility towards Consumers

Competitive strategy of most business firms focuses on consumer satisfaction as the prime objective.
However, in a market economy, product markets are invariably characterized by oligopoly or happen to be
subject to monopolistic competition, while there are traders and manufacturers who are on the lookout for
creating artificial shortages of essential consumer goods. Besides, consumers are quite often victims of
misleading advertisements, restrictive trade practices, unethical and unfair trading, adulteration, sub-
standard quality of products, and deficiency of services. This happens because the market is not an effective
arbiter in those matters. There are a number of legal enactments aimed at protecting the consumer against
market malpractices. The Consumer Protection Act, 1986 has provided for a three-tier quasi judicial
machinery for speedy redressal of consumer complaints and grievances. Even then, management of business
firms are expected to anticipate the problems of consumers and assume the responsibility of protecting
consumer interests, in the long run interest of the business itself It is expected that management should desist
from hoarding and profiteering or creating artificial scarcity as also false and misleading ads. In particular,
they are expected to ensure adequate supply of goods to satisfy the needs of different customer categories,
the goods should be of standard quality and available at reasonable priccs. Customer services are expected to
be provided by way of guidance, maintenance and advice.

Responsibility towards the Government

While it is necessary that corporate management in India should contribute to economic growth by aligning
with the national priorities and in conformity with the economic and social policies of the State, there are
several other aspects of the social responsibility of management towards the government. Business affairs
 PARISHKRIT AGRAWAL@ BIT
should be conducted by companies as law abiding citizen and taxes and other dues ought to be paid honestly
as per rules. More particularly, management should desist from corrupting public servants or the democratic
process for selfish ends, as also from attempts to buy political support by patronage or money.

Responsibility towards the Community and Public at large

Corporate accountability to the society has been advocated by many writers and social reformers to ensure
that private property is used for the social good based on the concept of trusteeship. Over time, the socially
responsible role of management been defined in terrns of their policies with respect to environmental
protection, conservation of natural resources, abatement of pollution, rural development, employment of the
handicapped and weaker sections of the society, locating industries in the backward areas and assisting the
relief and rehabilitation of victims of natural calamities. Laws like water (Prevention and Control of
Pollution) Act, 1974,Air (Prevention and Control of Pollution) Act, 198 1, and Environnient (Protection)
Act, 1986 have been enacted for the prevention and control of environmental pollution. These enactments
require prior permission to be obtained from the Pollution Control Boards (PCBs) before setting up any
industry, process or operation, involving the use or discharge of noxious gases or effluents in the air or water
bodies, sewerage, etc., and comply with the standards of pollutions et by the Boards. Moreover, submission
of Environment Audit Report has been made compulsory for the organisation carrying on an industry,
operation or process requiring consent under these Acts.

LEADERSHIP

Leading is one important function of management only next to planning and organizing. It is the liveliest
element in the management process. It initiates actions to translate the decisions into concrete actions.
Managers have to lead their subordinates through guiding and motivating. Leading involves directing,
influencing and motivating employees to perform essential tasks.

Every manager has to act as a leader in his area of operation. This means he has to guide, instruct, lead and
motivate his subordinates so as to use their skills, efficiency, capacity etc. for the benefit of his Organisation.
He has to influence the behavior of his subordinates and get the work done through their collective efforts.
Leadership qualities are required in order to conduct various managerial functions effectively. Each and
every group of people engaged in a particular activity needs a leader in order to guide, co-ordinate and
control their efforts. In this sense, leadership is required for the conduct of economic, social, political or
cultural activities.

1. According to Koontz and O'Donnell, "Leadership is the ability of a manager to induce subordinates
(followers) to work with confidence and zeal."
2. According to George Terry, "Leadership is the activity of influencing people to strive for mutual
objectives."
3. According to Peter Drucker, "Leadership is the shifting of own's vision to higher sights, the raising
of man's performance to higher standards, the building of man's personality beyond its normal
limitations."

Characterstics

1. Involves guiding and motivating : Leadership is a managerial process of guiding and motivating the
subordinates for achieving organizational goals/objectives. For motivating, communicating is
necessary. Leadership is described as an art of influencing and inspiring subordinates to perform
their duties efficiently.
2. Needs subordinates and common interests : It pre-supposes the existence of subordinates. There must
be common interest for the leader and his followers due to which they cooperate and participate for
achieving common objectives.
 PARISHKRIT AGRAWAL@ BIT
3. Promotes interest in the work : The purpose of leadership is to influence, motivate and encourage
subordinates to take active interest in the work assigned and give the best results.
4. Needs support from all : The leader must recognize the presence of all employees irrespective of
their position. The leader cannot become successful unless he obtains support from all.
5. Influences subordinates through personal qualities : A leader understands the problems of his
subordinates and influences them by his personal qualities.
6. Dynamic and continuous process : Leadership is a dynamic and continuous process. It is a regular
activity of guiding and motivating subordinates for improving their performance and contribution
towards organizational objectives.
7. Leadership is situational : An ideal leadership is always situational. A leader has to study the
prevailing situation and provide appropriate leadership to his subordinates.
8. Assumes obligation : A leader always inspires followers. In the event of failure, he does not shift the
responsibility to his subordinates but accepts his personal weaknesses in performance. A leader leads
by setting good example.
9. Needs interaction with followers : The objective of the leader and his subordinates should be the
same. If the leader attempts for one purpose and his subordinates for some other purpose, it is no
leadership. Their interest must be identical.
10. Achievement of objectives : The success of a leader largely depends on his ability to achieve
organizational objectives. When a leader fails to attain the objectives, he is of no utility to the
management.

Qualities of a Good Leader / Leadership Qualities.

A leader needs sound health and physical capacity to perform his functions or duties assigned in an efficient
manner. In addition to physical qualities, an ideal leader needs certain qualities of head and heart. The main
qualities include Personal Traits and Managerial Traits which are shown in the following chart:

The Managerial Grid

Blake and Mouton set out to apply the ideas of behavioural scientists such as Rensis Likert to the practice of
management. They built on studies conducted at Ohio State University and the University of Michigan in
the 1940s which attempted to identify the behavioural characteristics of successful leaders. Blake and
Mouton identified two fundamental drivers of managerial behaviour as concern for getting the job done, and
concern for the people doing the work. They argued that, on the one hand, an exclusive concern for
production at the expense of the needs of those engaged in production leads to dissatisfaction and conflict,
thus adversely affecting performance; but that, on the other hand, an excessive concern to avoid conflict and
maintain good relationships is also detrimental to the achievement of goals and objectives.
In order to provide a framework for describing management behaviours, the two variables of "concern for
production" and "concern for people" were plotted on a grid showing nine degrees of concern for each, from
1 indicating a low level of concern, to 9 indicating a high level of concern. Five positions on the grid
represent five differing managerial behaviour patterns.
 PARISHKRIT AGRAWAL@ BIT

Country Club Leadership – High People/Low Production This style of leader is most concerned about the
needs and feelings of members of his/her team. These people operate under the assumption that as long as
team members are happy and secure then they will work hard. What tends to result is a work environment
that is very relaxed and fun but where production suffers due to lack of direction and control.

Produce or Perish Leadership – High Production/Low People Also known as Authoritarian or Compliance
Leaders, people in this category believe that employees are simply a means to an end. Employee needs are
always secondary to the need for efficient and productive workplaces. This type of leader is very autocratic,
has strict work rules, policies, and procedures, and views punishment as the most effective means to
motivate employees.

Impoverished Leadership – Low Production/Low People This leader is mostly ineffective. He/she has
neither a high regard for creating systems for getting the job done, nor for creating a work environment that
is satisfying and motivating. The result is a place of disorganization, dissatisfaction and disharmony.

Middle-of-the-Road Leadership – Medium Production/Medium People This style seems to be a balance of

the two competing concerns. It may at first appear to be an ideal compromise. Therein lies the problem,
though: When you compromise, you necessarily give away a bit of each concern so that neither production
nor people needs are fully met. Leaders who use this style settle for average results and often believe that
this is the most anyone can expect.

Team Leadership – High Production/High People According to the Blake Mouton model, this is the pinnacle
of managerial style. These leaders stress production needs and the needs of the people equally highly. The
premise here is that employees are involved in understanding organizational purpose and determining
 PARISHKRIT AGRAWAL@ BIT
production needs. When employees are committed to, and have a stake in the organization‟s success, their
needs and production needs coincide.

Transactional leadership seeks to motivate followers by appealing to their own self-interest. Its principles
are to motivate by theexchange process. For example, business owners exchange status and wages for the
work effort of the employee. In the political environment, politicians may exchange favors or government
jobs for votes. Transactional behavior focuses on the accomplishment of tasks and good worker
relationships in exchange for desirable rewards. Transactional leadership may encourage the leader to adapt
their style and behavior to meet the perceived expectations of the followers.
PARISHKRIT AGRAWAL@ BIT
PARISHKRIT AGRAWAL@ BIT
PARISHKRIT AGRAWAL@ BIT
PARISHKRIT AGRAWAL@ BIT