MANAGEMENT AND ENTREPRENEURSHIP FOR IT INDUSTRY (18CS51)

V SEMESTER CS

MODULE-I

INTRODUCTION
Management:
Introduction - Meaning - nature and characteristics of Management, Scope and Functional areas
of management – Roles of management - Levels of Management, Brief overview of evolution of
Management Theories – Planning – Nature, Importance, Types of Plans, Steps in Planning –
Organizing- Nature and Purpose, Types of Organizations – Staffing-Meaning, Process of
Recruitment and Selection.

Introduction:

Human needs are largely satisfied through economic activities of organized groups and
associations. In their own interest, people should join together and accomplish common goals
through cooperation. However, to be more effective in this pursuit, it is essential that group
efforts should be properly organized, directed, and coordinated. In other words, there is a need
for management. Therefore, management is as old as civilization or organized life. The
systematic study of management, however, has evolved only in the last six or seven decades.

Definition(s) of Management:

 Management is the coordination of all resources through the process of planning,

organizing, directing and controlling in order to attain stated objectives. -Henry L. Sisk

 Management is principally the task of planning, coordinating, motivating and controlling

the efforts of others towards a specific objective. - James L. Lundy

 Management is the art and science of organizing and directing human efforts applied to
control the forces and utilize the materials of nature for the benefit of man. –ASME

 “Management is the art of knowing what you want to do in the best and cheapest way.”
- F.W. Taylor
CHARACTERISTICS OF MANAGEMENT:
The main characteristics of management are as follows:

1. Management is Goal-oriented: Management is not an end in itself. It is a means to

achieve certain goals. Management goals are called group goals or organizational goals.
The basic goal of management is to ensure efficiency and economy in the utilization of
human, physical and financial resources. The success of management is measured by the
extent to which the established goals are achieved.

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 2. Management is Universal: Management is an essential element of every organized
activity irrespective of the size or type of activity. Wherever two or more persons are
engaged in working for a common goal, management is necessary. All types of
organizations, e.g., family, club, university, government, army, cricket team or business,
require management. Thus, management is a pervasive activity. The fundamental
principles of management are applicable in all areas of organized effort.

3. Management is an Integrative Force: The essence of management lies in the

coordination of individual efforts in to a team. Management reconciles the individual
goals with organizational goals. As unifying force, management creates a whole that is
more than the sum of individual parts. It integrates human and other resources.

4. Management is a Social Process: Management is done by people, through people and

for people. It is a social process because it is concerned with interpersonal relations.
Human factor is the most important element in management. A good manager is a leader
not a boss. It is the pervasiveness of human element which gives management its special
character as a social process”.

5. Management is multidisciplinary: Management has to deal with human behavior under

dynamic conditions. Therefore, it depends upon wide knowledge derived from several
disciplines like engineering, sociology, psychology, economics, anthropology, etc. The
vast body of knowledge in management draws heavily upon other fields of study.

6. Management is a continuous Process: Management is a dynamic and an on-going

process. The cycle of management continues to operate so long as there is organized
action for the achievement of group goals.

7. Management is Intangible: Management is an unseen or invisible force. It cannot be

seen but its presence can be felt everywhere in the form of results. However, the
managers who perform the functions of management are very much tangible and visible.

8. Management is an Art as well as Science: It contains a systematic body of theoretical

knowledge and it also involves the practical application of such knowledge. Management
is also a discipline involving specialized training and an ethical code arising out of its
social obligations.

FUNCTIONS OF MANAGEMENT:

The activities included in the subject matter of management are: planning, organizing, staffing,
directing, coordinating and controlling.

1. Planning

It is the basic function of management. It deals with chalking out a future course of action
& deciding in advance the most appropriate course of actions for achievement of pre-

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 determined goals. According to KOONTZ, “Planning is deciding in advance - what to do,
when to do & how to do. It bridges the gap from where we are & where we want to be”.
A plan is a future course of actions. It is an exercise in problem solving & decision
making. Planning is determination of course of action to achieve desired goals. Thus,
planning is a systematic thinking about ways & means for accomplishment of pre-
determined goals. Planning is necessary to ensure proper utilization of human & non-
human resources. It is all pervasive, it is an intellectual activity and it also helps in
avoiding confusion, uncertainties, risks, wastages etc.

2. Organizing

It is the process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational
goals. According to Henry Fayol, “To organize a business is to provide it with everything
useful or its functioning i.e. raw material, tools, capital and personnel”. To organize a
business involves determining & providing human and non-human resources to the
organizational structure. Organizing as a process involves:

 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.
 Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships.

3. Staffing

It is the function of manning the organization structure and keeping it manned. Staffing
has assumed greater importance in the recent years due to advancement of technology,
increase in size of business, complexity of human behavior etc. The main purpose of
staffing is to put right man on right job i.e. square pegs in square holes and round pegs in
round holes. According to Kootz & O’Donell, “Managerial function of staffing involves
manning the organization structure through proper and effective selection; appraisal &
development of personnel to fill the roles designed in the structure”. Staffing involves:

 Manpower Planning (estimating man power in terms of searching, choose the person and
giving the right place).
 Recruitment, Selection & Placement.
 Training & Development.
 Remuneration.
 Performance Appraisal.
 Promotions & Transfer.

4. Directing

It is that part of managerial function which actuates the organizational methods to work
efficiently for achievement of organizational purposes. It is considered life-spark of the

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 enterprise which sets it in motion the action of people because planning, organizing and
staffing are the mere preparations for doing the work. Direction is that inert-personnel
aspect of management which deals directly with influencing, guiding, supervising,
motivating sub-ordinate for the achievement of organizational goals. Direction has
following elements:

 Supervision
 Motivation
 Leadership
 Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act
of watching & directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to

work. Positive, negative, monetary, non-monetary incentives may be used for this
purpose.

Leadership- may be defined as a process by which manager guides and influences the
work of subordinates in desired direction.

Communications- is the process of passing information, experience, opinion etc. from

one person to another. It is a bridge of understanding.

5. Controlling

It implies measurement of accomplishment against the standards and correction of

deviation if any to ensure achievement of organizational goals. The purpose of
controlling is to ensure that everything occurs in conformities with the standards. An
efficient system of control helps to predict deviations before they actually occur.
According to Theo Haimann, “Controlling is the process of checking whether or not
proper progress is being made towards the objectives and goals and acting if necessary, to
correct any deviation”. According to Koontz & O’Donnell, “Controlling is the
measurement & correction of performance activities of subordinates in order to make
sure that the enterprise objectives and plans desired to obtain them as being
accomplished”. Therefore controlling has following steps:

a. Establishment of standard performance.

b. Measurement of actual performance.
c. Comparison of actual performance with the standards and finding out deviation if any.
d. Corrective action.

FUNCTIONAL AREAS OF MANAGEMENT:

Functional areas are teams of employees who have similar skills and expertise.
Management is the ‘brain’ of any business operations.’ Functional management is

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 focused on the execution of a specific organizational task within functional areas, through
organizing and leading an organization’s talent.
Functional managers have a high level of technical knowledge and skills relative to the
area they manage and focus their efforts on achieving best practices. There are five main
functional areas of management:

1. Human resource management:

Human resource development or personnel management or manpower management is

concerned with obtaining and maintaining of a satisfactory and satisfied work force i.e.,
employees. It is a specialized branch of management concerned with ‘man management’.

The recruitment, placement, induction, orientation, training, promotion, motivation,

performance appraisal, wage and salary, retirement, transfer, merit-rating, industrial
relations, working conditions, trade unions, safety and welfare schemes of employees are
included in personnel management. The object of personnel management is to create and
promote team spirit among workers and managers.

2. Production management:

Production management refers to planning, organization, direction, coordination and

control of the production function in such a way that desired goods and services could be
produced at the right time, in right quantity, and at the right cost. Some authors treat
material, purchase and inventory management as part of production management.
Production management involves the following functions:

 Product planning and development,

 Plant location, layout and maintenance,
 Production systems and machines,
 Management of purchase and storage of materials,
 Ensuring effective production control.

3. Office management:

Office management can be defined as, “the organization of an office in order to achieve a
certain purpose and to make the best use of the personnel by using the most appropriate
machines and equipment, the best possible methods of work and by providing the most
suitable environment.’’

The main topics of office management are; office accommodation, layout and
environment, communication, handling correspondence and mail, typing and duplicating,
record management and filing, indexing, forms and stationary and machines etc.

4. Financial management:

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 Financial management can be looked upon as the study of relationship between the
raising of funds and the deployment of funds. The subject matter of financial
management is: capital budgeting cost of capital, portfolio management, dividend policy,
short and long term sources of finance. Financial management involves mainly three
decisions pertaining to:

i. Investment policies:

It dictates the process associated with capital budgeting and expenditures. All
proposals to spend money are ranked and investment decisions are taken
whether to sanction money for these proposed ventures or not.

ii. Methods of financing:

A proper mix of short and long term financing is ensured in order to provide
necessary funds for proposed ventures at a minimum risk to the enterprise.

iii. Dividend decisions:

This decision affects the amount paid to shareholders and distribution of

additional shares of stock.

5. Marketing management:

Marketing as a social and managerial process by which individuals and group obtain
what they need and want through creating and exchanging products and values with
others. The course content of marketing management generally includes; marketing
concept, consumer behavior, marketing mix, market segmentation, product and price
decisions, promotion and physical distribution, marketing research and information,
international marketing etc.

NATURE OF MANAGEMENT

To understand the basic nature of management, it must be analyzed in terms of art and science,
in relation to administration, and as a profession, in terms of managerial skills and style of
managers.

IS MANAGEMENT A SCIENCE OR AN ART?

Management as an Art:

To manage effectively, one must have not only the necessary abilities to lead but also a set of
critical skills acquired through time, experience, and practice.

The art of managing is a personal creative attribute of the manager, which is more often than not,
enriched by education, training, experience.

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In fact, the art of managing involves the conception of a vision of an orderly whole created from
chaotic parts and the communication and achievement of this vision.

Managing is the “art of arts” because it organizes and uses human talent. Following are the
elements of art in management.

 Practical Knowledge
 Personal Skill
 Creativity
 Perfection through practice
 Goal-Oriented

Management as a Science:

Science is obtaining information about a particular object by a systematic pattern of observation,

study, practice, experiments and investigation.

Management process also follows the same pattern. Gathering data and facts, analyzing them and
making a decision based on analysis, are the basic functions of the management.

Management follows a systematic method to find the possible solution for a problem. It is true
that the science underlying managing is inexact or a soft science at best.

It is not as “Science” as physical sciences such as chemistry or biology which deal with non-
human entities.

The inclusion of the human element in managing makes this discipline not only complex but also
debatable as a pure science.

Human behavior is unpredictable; people think, act or react differently under identical
circumstances.

And so, management can never become as pure science. However, the study of the scientific
foundations of management practice can definitely improve one’s management skills.

Managers who attempt to manage without management science have to trust their intuition or
luck at their peril rather than their expertise or skill.

Following are the elements of science in management.

 Concepts
 Methods and principles
 Theories
 Organized knowledge
 Practice

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Management as a Profession:

A profession may be defined as an occupation that requires specialized knowledge and intensive
academic preparations to which entry is regulated by a representative body. The essentials of a
profession are:

Specialized Knowledge - A profession must have a systematic body of knowledge that can be
used for development of professionals. Every professional must make deliberate efforts to
acquire expertise in the principles and techniques. Similarly a manager must have devotion and
involvement to acquire expertise in the science of management.

Formal Education & Training - There are number of institutes and universities to impart
education & training for a profession. No one can practice a profession without going through a
prescribed course. Many institutes of management have been set up for imparting education and
training. For example, a CA cannot audit the A/C’s unless he has acquired a degree or diploma
for the same but no minimum qualifications and a course of study has been prescribed for
managers by law. For example, MBA may be preferred but not necessary.

Social Obligations - Profession is a source of livelihood but professionals are primarily

motivated by the desire to serve the society. Their actions are influenced by social norms and
values. Similarly a manager is responsible not only to its owners but also to the society and
therefore he is expected to provide quality goods at reasonable prices to the society.

Code of Conduct - Members of a profession have to abide by a code of conduct which contains
certain rules and regulations, norms of honesty, integrity and special ethics. A code of conduct is
enforced by a representative association to ensure self discipline among its members. Any
member violating the code of conduct can be punished and his membership can be withdrawn.
The AIMA has prescribed a code of conduct for managers but it has no right to take legal action
against any manager who violates it.

Representative Association - For the regulation of profession, existence of a representative

body is a must. For example, an institute of Charted Accountants of India establishes and
administers standards of competence for the auditors but the AIMA however does not have any
statuary powers to regulate the activities of managers.

From above points, it is quite clear that management fulfills several essentials of a profession.

ROLES OF MANAGEMENT:

Management is largely about interpersonal relations between the manager and people both inside
and outside the organization, such as employees, superiors, suppliers and customers. A well-
known researcher by the name of Henry Mintzberg identified three general management roles.
They are interpersonal roles, informational roles and decisional roles.

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1. Interpersonal Role

Interpersonal roles of a manger are concerned with his interacting with people both inside the
organization and outsiders. There are three types of interpersonal roles.

a. Figure Head: In figure head role manager performs activities which are ceremonial and
symbolic nature. These include greeting the visitors attending the social functions
involving employees, handing out merit certificates and other awards to outstanding
employees.

b. Leader: Manager’s leader role involves leading his subordinates and motivating them
for willing contributions. Manager is responsible for activities of his subordinates. He has
to set example of hard work and dedication so that subordinate follow his directions with
respect.

c. Liaison Role: In liaison role manager serves as a connecting link between his and
outsiders or between his unit and other organizational units.

2. Informational Role

Informational roles involve the receiving and sending of information—whether as a

spokesperson, a mentor, a trainer, or an administrator. There are three types of informational
roles.

a. Monitor: A manager is an important figure in monitoring what goes on in the

organisation, receiving information about both internal and external events and
transmitting it to others.

In monitoring role, manager collects the information which can affect the organizational
activities by reading magazines and periodicals, reports from the departments, talking
with others to learn changes in the public’s taste.

b. Disseminator: In disseminator role manger distribute the information to his subordinates

and superiors by sending circulars, holding meetings and making phone calls.

c. Spokesperson: In spokesperson role the manager represents his organization or unit with
interacting with outsiders. These may customer, financer, govt. suppliers or other
agencies in society. It can be done by attending press conferences, meetings and by
issuing notices.

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3. Decision Making Role:

All managers are required to make decisions, but managers at different levels make different
kinds of decisions. According to Mintzberg, there are four primary types of management
decision roles. These include the following:

a. Entrepreneur. The entrepreneurs in a firm are usually top-level managers. They identify
economic opportunities, lead the initiative for change, and make product decisions.

b. Disturbance handler. Top and middle managers will react to disturbances (unexpected
events) in the organization—whether internal or external. They will decide what
corrective actions should be taken to resolve the problems.

c. Resource allocator. All levels of management will make resource allocation decisions,
depending upon whether the decision affects the entire organization, a single department,
or a particular task or activity.

d. Negotiator. Depending on the effect on the organization, most negotiation is done by top
and middle-level managers. Top managers will handle negotiations that affect the entire
organization, such as union contracts or trade agreements. Middle-level managers
negotiate most salary and hiring decisions

LEVELS OF MANAGEMENT:

The term “Levels of Management’ refers to a line of demarcation between various managerial
positions in an organization. The number of levels in management increases when the size of the
business and work force increases and vice versa. The level of management determines a chain
of command, the amount of authority & status enjoyed by any managerial position. The levels of
management can be classified in three broad categories:

1. Top level / Administrative level

2. Middle level / Executory
3. Low level / Supervisory / Operative / First-line managers

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 Figure 1.2 Levels of management

1. Top Level of Management

It consists of board of directors, chief executive or managing director. The top management is
the ultimate source of authority and it manages goals and policies for an enterprise. It devotes
more time on planning and coordinating functions.

The role of the top management can be summarized as follows:

a. Top management lays down the objectives and broad policies of the enterprise.
b. It issues necessary instructions for preparation of department budgets, procedures,
schedules etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders for the performance of
the enterprise.

2. Middle Level of Management

The branch managers and departmental managers constitute middle level. They are responsible
to the top management for the functioning of their department. They devote more time to
organizational and directional functions. In small organization, there is only one layer of middle
level of management but in big enterprises, there may be senior and junior middle level
management. Their role can be emphasized as:

a. They execute the plans of the organization in accordance with the policies and directives
of the top management.
b. They make plans for the sub-units of the organization.

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 c. They participate in employment & training of lower level management.
d. They interpret and explain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the division or department.
f. It also sends important reports and other important data to top level management.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower level managers towards better performance.

3. Lower Level of Management

Lower level is also known as supervisory / operative level of management. It consists of

supervisors, foreman, section officers, superintendent etc. According to R.C. Davis, “Supervisory
management refers to those executives whose work has to be largely with personal oversight and
direction of operative employees”. In other words, they are concerned with direction and
controlling function of management. Their activities include -

a. Assigning of jobs and tasks to various workers.

b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation in the
organization.
e. They communicate workers problems, suggestions, and recommendatory appeals etc. to
the higher level and higher-level goals and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc. for getting the things done.
j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
m. They are the image builders of the enterprise because they are in direct contact with the
workers.

DEVELOPMENT (EVOLUTION) OF MANAGEMENT THOUGHTS:

Management has developed since the time when the world came into existence. Whenever group
efforts are necessary to achieve anything, there is a need for management. Kautilya’s “Artha
Sastra” and saint Thiruvalluvar’s “Thirukural” state the principles and concepts of management.
These principles and concepts may be applied in our modern world and in the future also. An
individual cannot achieve anything single handed. Cooperation, group efforts, direction and
control are necessary to achieve the objective or goals of an individual. In our modern world an
individual cannot survive separately. He has to rely upon others. So, managerial efficiency is an
essential requisite to human being.

A. EARLY MANAGEMENT APPROACHES

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History of management is as old as man. Evidences of well-organized principles of management
can be seen in ancient civilizations. Following are the early management approaches.

1. Scientific management:

Fredrik Winslow Taylor, Frank Gilberth, Lillian Gilberth, H. L. Gantt, Henri Fayol and others
have made tremendous contributions to the concept of scientific management. Of all these
persons, Taylor’s contribution is the most significant and because of this, he is considered as the
father of scientific management. We shall see at the contributions of Taylor and some others.

Fredrick Winslow Taylor (1865-1915), the founder of scientific management movement, states
that the object of management should be to secure the maximum prosperity for each
employer, coupled with the maximum prosperity of each employee.

When management of a business unit is based on a systematic study and analysis of various
aspects of work involved with a view to find out the best way of doing things, we call it the
scientific management of business. Broadly speaking, scientific management is the art of
knowing exactly what is to be done and the best way of doing it.

According to Taylor, scientific management, in its essence, consists of a certain philosophy

which results in the combination of FIVE great principles of management, viz.,

1. Science, not the Rule of Thumb

This rule focuses on increasing the efficiency of an organisation through scientific analysis of
work and not with the ‘Rule of Thumb’ method. Taylor believed that even a small activity like
loading paper sheets into boxcars can be planned scientifically. This will save time and also
human energy. This decision should be based on scientific analysis and cause and effect
relationships rather than ‘Rule of Thumb’ where the decision is taken according to the manager’s
personal judgement.

2. Harmony not Discord

Taylor indicated and believed that the relationship between the workers and management should
be cordial and completely harmonious. Difference between the two will never be beneficial to
either side. Management and workers should acknowledge and understand each other’s
importance. Taylor also suggested the mental revolution for both management and workers to
achieve total harmony.

3. Mental Revolution

This technique involves a shift of attitude of management and workers towards each other. Both
should understand the value of each other and work with full participation and cooperation. The
aim of both should be to improve and boost the profits of the organisation. Mental Revolution
demands a complete change in the outlook of both the workers and management; both should
have a sense of togetherness.

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4. Cooperation not Individualism

It is similar to ‘Harmony, not discord’ and believes in mutual collaboration between workers and
the management. Managers and workers should have mutual cooperation and confidence and a
sense of goodwill. The main purpose is to substitute internal competition with cooperation.

5. Development of Every Person to his Greatest Efficiency.

The effectiveness of a company also relies on the abilities and skills of its employees. Thus,
implementing training, learning best practices and technology, is the scientific approach to brush
up the employee skill. To assure that the training is given to the right employee, the right steps
should be taken at the time of selection and recruiting candidates based on a scientific selection.

The elements of scientific management are:

(a) Determination of the task: Determination of task or workload to each employee is on the
basis of method study, routing, motion study, time study, fatigue study and differential piece-
wage system.

(b) Planning of industrial operations: After setting the task to workers, the next step is to plan
production, which requires the planning of industrial operations. This involves further
considerations, viz., what work shall be done, how the work shall be done, where the work shall
be done and when the work shall be done.

(c) Proper selection and training of workers: Proper selection and training of workers and also
their correct placement has to be done by the management.

(d) Improvement in methods of work: Further, in order to make the workers complete the task
as per the conditions set by the management, there is need for improvement in the methods of
work. This involves standardization of tools and equipment, speed, conditions of work and
materials.

(e) Modification of organization: Taylor also suggested modification in the organization. This
involves introduction of functional foremanship. According to this, the two functions of planning
and doing are divided. He has also suggested eight functional foremen, viz., (i) route clerk, (ii)
instruction card clerk, (iii) time and cost clerk, (iv) gang boss, (v) speed boss, (vi) repair boss,
(vii) inspector, and (viii) shop disciplinarian.

(f) Mental revolution: For the success of scientific management, there should be a thorough
change in the mental outlook of both the employees and the employer and their mutual hostility
and suspicion should give place to co-operation and goodwill.

2. PROCESS MANAGEMENT (H. Fayol 1841-1925)

Around 1910, Henri Fayol, a French engineer, initiated the administrative theory of management
(process management) in Europe. Sheldon, Mooney and Railey, L. F. Urwick and L. Gulick also

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contributed a lot to the administrative theory of management. This theory is called process
(functional) management and advocates of this theory belong to the process school of
management.

In 1916, Fayol published his book “General and Industrial Management” in French, of which
later an English edition was brought out. Mr. Fayol identified management as a separate set of
skills or functions performed by a supervisor in an organization. He clearly distinguished the
difference between technical and managerial skills and emphasized that supervisor should be
efficient in both. He stated that technical ability is more dominant at the lower level of
management, whereas managerial ability is more important at the higher level of management.
Fayol, in his famous book, stated fourteen management principles that can capture the entire
flavor of the process management theory.

B. MODERN MANAGEMENT APPROACHES

1. BEHAVIORAL SCIENCE MOVEMENT:

The behavioral science approach through its research studies of individual behavior and
motivation indicated that the relation between morale and productivity was oversimplified and
there was no direct or deep connection between morale and productivity. Behavioral science
experts made a further refinement of human relations movement and also covered a much wider
scope in interpersonal roles and relationships.

The behavioral science movement which started after 1940 emphasized the importance of
individuals and their interpersonal relationship, psychology of the individuals as related to
personal needs and motivation and motivational potential in people. The important contributors
to the behavioral science movement are A. Maslow, F. Hertzberg, V. Vroom and D. McGregor.
While Maslow developed a need hierarchy to explain human behavior within an organization,
Hertzberg and Vroom developed motivational models, which explained the causes of human
behavior and motivation in business. Behavioral science movement has drawn heavily on the
work of Maslow to explain human behavior and the dynamics of motivation process. McGregor
developed his two theories, viz., Theory X and Y and also explained certain basic assumptions
about the human element. The classical theory reflected almost all the aspects of Theory X while
the behavioral approach theory of management reflected almost all the aspects of Theory Y.

2. SYSTEMS APPROACH

Systems approach is based on the generalization that everything is inter-related and inter-
dependent. A system is composed of related and dependent element which when in interaction,
forms a unitary whole. A system is simply an assemblage or combination of things or parts
forming a complex whole.

Thus, the organization comprises a unified singular system made up of these subsystems. For
example, a firm is a system that may be composed of sub-systems such as production, marketing,

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finance, accounting and so on. As such, the various sub-systems should be studied in their inter-
relationships rather, than in isolation from each other.

Organizational success depends upon interaction and interdependence between the subsystems,
synergy between the sub-systems, and interaction between internal components (closed system)
and external components (internal system).

Main contributors to ‘Systems Approach’ management thought are: Ludwig Von Bertalanffy,
Lawrence J. Henderson, W.G. Scott, Daniel Katz, Robert L. Kahn, W. Buckley and J.D.
Thompson.

PLANNING:

Planning is the most basic of all managerial functions. It is the process by which managers
establish goals and define the methods by which these goals are to be attained.

Planning involves selecting missions and objectives and the actions to achieve them; it requires
decision making, which is choosing from among alternative future courses of action.

NATURE OF PLANNING:
The natures of planning are as listed below.

2. Planning focuses on achieving objectives: Organizations are set up with a general

purpose in view. Specific goals are set out in the plans along with the activities to be
undertaken to achieve the goals. Thus, planning is purposeful. Planning has no meaning
unless it contributes to the achievement of predetermined organizational goals.

3. Planning is a primary function of management: Planning lays down the base for other
functions of management. All other managerial functions are performed within the
framework of the plans drawn. Thus, planning precedes other functions. This is also referred
to as the primacy of planning. The various functions of management are interrelated and
equally important. However, planning provides the basis of all other functions.

4. Planning is pervasive: Planning is required at all levels of management as well as in all

departments of the organisation. It is not an exclusive function of top management nor of any
particular department. But the scope of planning differs at different levels and among
different departments. For example, the top management undertakes planning for the
organisation as a whole. Middle management does the departmental planning. At the lowest
level, day-to-day operational planning is done by supervisors.

5. Planning is continuous: Plans are prepared for a specific period of time, may be for a
month, a quarter, or a year. At the end of that period there is need for a new plan to be drawn
on the basis of new requirements and future conditions. Hence, planning is a continuous

16
 process. Continuity of planning is related with the planning cycle. It means that a plan is
framed, it is implemented, and is followed by another plan, and so on.

6. Planning is futuristic: Planning essentially involves looking ahead and preparing for the
future. The purpose of planning is to meet future events effectively to the best advantage of
an organisation. It implies peeping into the future, analyzing it and predicting it. Planning is,
therefore, regarded as a forward looking function based on forecasting. Through forecasting,
future events and conditions are anticipated and plans are drawn accordingly. Thus, for
example, sales forecasting is the basis on which a business firm prepares its annual plan for
production and sales.

7. Planning involves decision making: Planning essentially involves choice from among
various alternatives and activities. If there is only one possible goal or a possible course of
action, there is no need for planning because there is no choice. The need for planning arises
only when alternatives are available. In actual practice, planning presupposes the existence of
alternatives. Planning, thus, involves thorough examination and evaluation of each
alternative and choosing the most appropriate one.

8. Planning is a mental exercise: Planning requires application of the mind involving

foresight, intelligent imagination and sound judgment. It is basically an intellectual activity
of thinking rather than doing, because planning determines the action to be taken. However,
planning requires logical and systematic thinking rather than guess work or wishful thinking.
In other words, thinking for planning must be orderly and based on the analysis of facts and
forecasts.

PLANNING PROCESS:

Planning, as we all know is deciding in advance what to do and how to do. It is a process of
decision making. How do we go about making a plan? Since planning is an activity there are
certain logical steps for every manager to follow.

1. Setting Objectives: The first and foremost step is setting objectives. Every organisation
must have certain objectives. Objectives may be set for the entire organisation and each
department or unit within the organisation. Objectives or goals specify what the organisation
wants to achieve. It could mean an increase in sales by 20% which could be objective of the
entire organisation. How all departments would contribute to the organisational goals is the
plan that is to be drawn up. Objectives should be stated clearly for all departments, units and
employees. They give direction to all departments. Departments/ units then need to set their
own objectives within the broad framework of the organization’s philosophy. Objectives
have to percolate down to each unit and employees at all levels. At the same time, managers
must contribute ideas and participate in the objective setting process. They must also

17
 understand how their actions contribute to achieving objectives. If the end result is clear, it
becomes easier to work towards the goal.

2. Developing Premises: Planning is concerned with the future which is uncertain and every
planner is using conjecture (imagination) about what might happen in future. Therefore, the
manager is required to make certain assumptions about the future. These assumptions are
called premises. Assumptions are the base material upon which plans are to be drawn. The
base material may be in the form of forecasts, existing plans or any past information about
policies. The premises or assumptions must be the same for all and there should be total
agreement on them. All managers involved in planning should be familiar with and use the
same assumptions. For example, forecasting is important in developing premises as it is a
technique of gathering information. Forecasts can be made about the demand for a particular
product, policy change, interest rates, prices of capital goods, tax rates etc. Accurate forecasts
therefore become essential for successful plans.

3. Identifying alternative courses of action: Once objectives are set, assumptions are made.
Then the next step would be to act upon them. There may be many ways to act and achieve
objectives. All the alternative courses of action should be identified. The course of action
which may be taken could be either routine or innovative. An innovative course may be
adopted by involving more people and sharing their ideas. If the project is important, then
more alternatives should be generated and thoroughly discussed amongst the members of the
organisation.

4. Evaluating alternative courses: The next step is to weigh the pros and cons of each
alternative. Each course will have many variables which have to be weighed against each
other. The positive and negative aspects of each proposal need to be evaluated in the light of
the objective to be achieved. In financial plans, for example, the risk-return trade-off is very
common. The riskier the investment, the higher the returns it is likely to give. To evaluate
such proposals detailed calculations of earnings, earnings per share, interest, taxes, dividends
are made and decisions taken. Accurate forecasts in conditions of certainty/uncertainty then
become vital assumptions for these proposals. Alternatives are evaluated in the light of their
feasibility and consequences.

5. Selecting an alternative: This step is the real step in planning. The best plan has to be
adopted and implemented. The ideal plan, of course, would be the most feasible, profitable
and with least negative consequences. Most plans may not always be subjected to a
mathematical analysis. In such cases, subjectivity and the manager’s experience, judgment
and at times, intuition play an important part in selecting the most viable alternative.
Sometimes, a combination of plans may be selected instead of one best course. The manager

18
 will have to apply permutations and combinations and select the best possible course of
action.

6. Implementing the plan: This is the step where other managerial functions also come into
the picture. The step is concerned with putting the plan into action, i.e., doing what is
required. For example, if there is a plan to increase production then more labor, more
machinery will be required. This step would also involve organizing for labor and purchase
of machinery.

7. Follow-up action: To see whether plans are being implemented and activities are performed
according to schedule is also part of the planning process. Monitoring the plans is equally
important to ensure that objectives are achieved.

TYPES OF PLANS: Different types of plans are shown in the following chart.

Types of Plans

On the basis of On the basis of On the basis of use

On the basis of nature managerial level
time

Top level
Operational Long term plans Single use

Middle
Tactical Intermediate level plans Standing

Strategic Lower level

plans
Short term

1. Types of Plans on the basis of nature:

Operational Plan: Operational plans are the plans which are formulated by the lower-level
management for short term period of up to one year. It is concerned with the day-to-day
operations of the organization. It is detailed and specific. It is usually based on past experiences.
It usually covers functional aspects such as production, finance, Human Resources etc.

Tactical Plan: Tactical plan is the plan which is concerned with the integration of various
organizational units and ensures implementation of strategic plans on day-to-day basis. It

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involves how the resources of an organization should be used in order to achieve the strategic
goals. The tactical plan is also known as coordinative or functional plan.

Strategic Plan: Strategic plan is the plan which is formulated by the top-level management for a
long period of time of five years or more. They decide the major goals and policies to achieve
the goals. It takes in a note of all the external factors and risks involved and make a long-term
policy of the organization. It involves the determination of strengths and weaknesses, external
risks, mission, and control system to implement plans.

2. Type of Plans on the basis of time

Long Term Plan: Long-term plan is the long-term process that business owners use to reach
their business mission and vision. It determines the path for business owners to reach their goals.
It also reinforces and makes corrections to the goals as the plan progresses.

Intermediate Plan: Intermediate planning covers 6 months to 2 years. It outlines how the
strategic plan will be pursued. In business, intermediate plans are most often used for campaigns.

Short-term Plan: Short-term plan involves pans for a few weeks or at most a year. It allocates
resources for the day-to-day business development and management within the strategic plan.
Short-term plans outline objectives necessary to meet intermediate plans and the strategic
planning process.

3. Types of Plans on the basis of managerial levels

Top level Plans: Plans which are formulated by general managers and directors are called top-
level plans. Under these plans, the objectives, budget, policies etc. for the whole organization are
laid down. These plans are mostly long term plans.

Middle-level Plans: Managerial hierarchy at the middle level includes the departmental
managers. A corporate has many departments like purchase department, sales department,
finance department, personnel department etc. The plans formulated by the departmental
managers are called middle-level plans.

Lower-level Plans: These plans are prepared by the foreman or the supervisors. They take the
existence of the actual workplace and the problems connected with it. They are formulated for a
short period of time and called short term plans.

4. Types of Plans on the basis of Use

Single Plan: These plans are connected with some special problems. These plans end the
moment of the problems to be solved. They are not used, once after their use. They are further
re-created whenever required.

Standing Plan: These plans are formulated once and they are repeatedly used. These plans
continuously guide the managers. That is why it is said that a standing plan is a standing guide to
solving the problems. These plans include mission, policies, objective, rules and strategy.

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IMPORTANCE/SIGNIFICANCE OF PLANNING:

1. Planning provides Direction:

Planning is concerned with predetermined course of action. It provides the directions to the
efforts of employees. Planning makes clear what employees have to do, how to do, etc. By
stating in advance how work has to be done, planning provides direction for action. Employees
know in advance in which direction they have to work. This leads to Unity of Direction also. If
there were no planning, employees would be working in different directions and organisation
would not be able to achieve its desired goal.

2. Planning Reduces the risk of uncertainties:

Organizations have to face many uncertainties and unexpected situations every day. Planning
helps the manager to face the uncertainty because planners try to foresee the future by making
some assumptions regarding future keeping in mind their past experiences and scanning of
business environments. The plans are made to overcome such uncertainties. The plans also
include unexpected risks such as fire or some other calamities in the organisation. The resources
are kept aside in the plan to meet such uncertainties.

3. Planning reduces over lapping and wasteful activities:

The organizational plans are made keeping in mind the requirements of all the departments. The
departmental plans are derived from main organizational plan. As a result, there will be co-
ordination in different departments. On the other hand, if the managers, non-managers and all the
employees are following course of action according to plan then there will be integration in the
activities. Plans ensure clarity of thoughts and action and work can be carried out smoothly.

4. Planning Promotes innovative ideas:

Planning requires high thinking and it is an intellectual process. So, there is a great scope of
finding better ideas, better methods and procedures to perform a particular job. Planning process
forces managers to think differently and assume the future conditions. So, it makes the managers
innovative and creative.

5. Planning Facilitates Decision Making:

Planning helps the managers to take various decisions. As in planning goals are set in advance
and predictions are made for future. These predictions and goals help the manager to take fast
decisions.

6. Planning establishes standard for controlling:

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Controlling means comparison between planned and actual output and if there is variation
between both then find out the reasons for such deviations and taking measures to match the
actual output with the planned. But in case there is no planned output then controlling manager
will have no base to compare whether the actual output is adequate or not.

For example, if the planned output for a week is 100 units and actual output produced by
employee is 80 units then the controlling manager must take measures to bring the 80-unit
production up to 100 units but if the planned output, i.e., 100 units is not given by the planners
then finding out whether 80-unit production is sufficient or not will be difficult to know. So, the
base for comparison in controlling is given by planning function only .

7. Focuses attention on objectives of the company:

Planning function begins with the setting up of the objectives, policies, procedures, methods and
rules, etc. which are made in planning to achieve these objectives only. When employees follow
the plan, they are leading towards the achievement of objectives. Through planning, efforts of all
the employees are directed towards the achievement of organizational goals and objectives.

ORGANIZING:

Organizing in a general sense means systematic arrangement of activities. In this sense,

organizing is done by each individual. However, organizing as a process of management
essentially relates to sub-dividing and grouping of activities.

Organizing becomes necessary when two or more persons work together to achieve some
common objectives. When a player is playing alone, there is perhaps no need of organizing. But
organizing becomes important when players are playing in a team. In that case, it is important to
determine the role of each player and for the team as a whole to attain victory over the rival
team. Similarly, in a one-man business, all the activities are performed by the owner himself. But
when the owner employs someone to assist him, he has to determine the work to be done by the
employee and give him the right to use materials, machinery, equipment, etc. This is the point
when organizing becomes necessary.

Organization:

“An organization is a Social Unit or Human Grouping, deliberately structured for the purpose
of attaining Specific Goals.”

Eg: Corporations, Schools, Colleges, Hospitals, Temples etc. are all Organizations

NATURE OF ORGANISATION

There are some common features of organisation through which a clear idea about its nature can
be obtained. These are indicated below:

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1. Process:

Organisation is a process of defining, arranging and grouping the activities of an enterprise and
establishing the authority relationships among the persons performing these activities. It is the
framework within which people associate for the attainment of an objective.

The framework provides the means for assigning activities to various parts and identifying the
relative authorities and responsibilities of those parts. In simple term, organi-sation is the process
by which the chief executive, as a leader, groups his men in order to get the work done.

2. Structure:

The function of organizing is the creation of a structural framework of duties and responsibilities
to be performed by a group of people for the attainment of the objectives of the concern. The
organisation structure consists of a series of relationships at all levels of authority.

An organisation as a structure contains an “identifiable group of people contributing their efforts

towards the attainment of goals.” It is an important function of man-agement to organize the
enterprise by grouping the activities necessary to carry out the plans into administrative units,
and defining the relationships among the executives and workers in such units.

3. Dividing and Grouping the Activities:

Organizing means the way in which the parts of an enterprise are put into working order. In
doing such, it calls for the determination of parts and integration of one complete whole on the
other. In fact, organisation is a process of dividing and combining the activities of an enterprise.

Activities of an enterprise are re-quired to be distributed between the departments, units or

sections as well as between the persons for securing the benefits of division of labor and
specialization, and are to be inte-grated or combined for giving them a commonness of purpose.

L. Urwick defines organisation as: ‘determining what activities are necessary to any purpose and
arranging them as groups which may be assigned to individual.

4. Accomplishment of Goals or Objectives:

An organisation structure has no meaning or purpose unless it is built around certain clear-cut
goals or objectives. In fact, an organisation structure is built-up precisely because it is the ideal
way of making a rational pursuit of objectives. Haney defines organisation as: “a harmonious
adjustment of specialized parts for the accomplishment of some common purpose or purposes”.

5. Authority-Responsibility Relationship:

An organisation structure consists of various positions arranged in a hierarchy with a clear

definition of the authority and responsibility associated with each of these. An enterprise cannot

23
serve the specific purposes or goals unless some positions are placed above others and given
authority to bind them by their decisions.

In fact, organisation is quite often defined as a structure of authority-responsibility relationships.

6. Human and Material Aspects:

Organisation deals with the human and material factors in business. Human element is the most
important element in an organisation. To accomplish the task of building up a sound
organisation, it is essential to prepare an outline of the organisation which is logical and simple.
The manager should then try to fit in suitable men. Henry Fayol says in this connection: “see that
human and material organisations are suitable” and “ensure material and human order”.

From these features of organisation, it emerges that, an organisation is essentially an

administrative ‘process’ of determining what activities are necessary to be performed for the
achievement of objectives of an enterprise, dividing and grouping the work into individual jobs
and, a ‘structure’ of positions arranged in a hierarchy with defined relationships of authority and
responsibility among the executives and workers performing these tasks for the most effective
pursuit of common goals of the enterprise.

PURPOSE OF AN ORGANIZATION:

The Purpose of an organization is the fundamental reason why the organization exists. The
Purpose of an organization is not the answer to the question “What do you do?” which typically
focuses on products, services and customers, but rather the answer to the question “Why is the
work you do important?” Employees should find the Purpose inspirational and motivational. It is
the cause that defines their contribution to society through work. Businesses exist to make a
profit, but they also exist to make a difference. Through work, individuals can make a difference
and be part of a meaningful legacy.

Work should be purposeful and meaningful. It should contribute to making the world a better
place.

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Work should be more than a job. It should be a cause that’s making a difference in people’s
lives.

A Purpose statement should be brief in length yet broad in scope. Make it brief so employees can
remember it and use it to guide their daily actions. The Purpose should also be broad in scope to
allow the organization to adapt over time to a changing world while its central focus remains
constant. Products and services may change, but the organization must endure. Organizations are
living entities; they are vehicles for improving life and the world we live in.

We need the organizations to provide our daily requirements like food, shelter, clothing,
entertainment, transport, education, and host of other requirements. This is the present need of
organization.

We also need organisations to build a desirable future. The dynamic economy needs continuous
growth and innovations. When people work together in organizations, create new products and
innovative services. These innovative activities are continuous practices and have impact
(positive or negative) on future status of the economy. If we look at the growth of our country,
we find that number of organizations is addressing concern about the future in their products and
services.

Thus, we need organizations to keep pace with the time for development and for our own
development and career planning. We may organize our own establishments to manufacture or
deal in products and services or work for organizations suiting to our education and skills. Thus,
organizations are required for providing goods and services that are demanded by the society.

TYPES OF THE ORGANIZATION

1. Formal organization –

The formal organisation refers to the structure of jobs and positions with clearly defined
functions and relationships as prescribed by the top management. This type of organization is
built by the management to realize objectives of an enterprise and is bound by rules, systems
and procedures. Everybody is assigned a certain responsibility for the performance of the
given task and given the required amount of authority for carrying it out.

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 Characteristic Features of formal organisation

1. Formal organisation structure is laid down by the top management to achieve

organisational goals.
2. Formal organisation prescribes the relationships amongst the people working in the
organisation.
3. Organisation structure concentrates on the jobs to be performed and not the individuals
who are to perform jobs.
4. In a formal organisation, individuals are fitted into jobs and positions and work as per the
managerial decisions. Thus, the formal relations in the organisation arise from the pattern
of responsibilities that are created by the management.
5. A formal organisation is bound by rules, regulations and procedures.
6. In a formal organisation, the position, authority, responsibility and accountability of each
level are clearly defined.

2. Informal organization –

1. Informal organisation refers to the relationship between people in the organisation based
on personal attitudes, emotions, prejudices, likes, dislikes etc. an informal organisation is
an organisation which is not established by any formal authority, but arises from the
personal and social relations of the people.

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 2. These relations are not developed according to procedures and regulations laid down in
the formal organisation structure; generally large formal groups give rise to small
informal or social groups. These groups may be based on same taste, language, culture or
some other factor. These groups are not pre-planned, but they develop automatically
within the organisation according to its environment.

Characteristics features of informal organisation

1. Informal organisation is not established by any formal authority. It is unplanned and

arises spontaneously.
2. Informal organisations reflect human relationships. It arises from the personal and social
relations amongst the people working in the organisation.
3. Formation of informal organisations is a natural process. It is not based on rules,
regulations and procedures.
4. The inter-relations amongst the people in an informal organisation cannot be shown in an
organisation chart.
5. In the case of informal organisation, the people cut across formal channels of
communications and communicate amongst themselves.
6. The membership of informal organisations is voluntary. It arises spontaneously and not
by deliberate or conscious efforts.

3. Matrix organization –

An organizational structure that facilitates the horizontal flow of skills and information. It is used
mainly in the management of large projects or product development processes, drawing

27
employees from different functional disciplines for assignment to a team without removing them
from their respective positions.

Employees in a matrix organization report on day-to-day performance to the project or product

manager whose authority flows sideways (horizontally) across departmental boundaries. They
also continue to report on their overall performance to the head of their department whose
authority flows downwards (vertically) within his or her department.

4. The project organization –

A project organisation is one, in which a project structure is created as a separate unit or division
within a permanent functional structure; drawing specialists and workers from various functional
departments who work under the overall leadership, control and co-ordination of a project
manager to complete projects of a technical and costly nature.

Under a project organisation, a team of specialists and workers is drawn from various functional
areas, out of the permanent functional structure of the organisation to work on a project. The
project manager may take assistance from outside sources also.

The project team functions under the overall control and leadership of the project manager.
During the continuance of the project, functional managers renounce their authority over
subordinates (comprised in the project team) in favor of the project manager.

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5. Government Organizations

a. Permanent or semi-permanent machinery of government.

b. Responsible for the supervision and administration of specific functions.
c. Can be established by national or state through legislation or by executive powers.
d. Autonomy, independence and accountability varies widely.
e. One and only mission- public interest
Examples: ISRO, DRDO

6. Non-Government Organizations

a. Legally constituted organization, created by natural or legal persons that operates

independently from any government and Not-for-profit.
b. Charitable oriented, Service oriented, Participatory, Empowerment
Examples: Red Cross, Greenpeace

STAFFING:

The term ‘Staffing’ relates to the recruitment, selection, development, training and compensation
of the managerial personnel. Staffing, like all other managerial functions, is the duty which the
apex management performs at all times. In a newly created enterprise, the staffing would come
as a third step—next to planning and organizing—but in a going enterprise the staffing process is
continuous.

PROCESS OF SELECTION AND RECRUITMENT:

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Steps involved in the process of staffing of an organization are:

1. Estimating Manpower Requirements

2. Recruitment
3. Selection
4. Placement and orientation
5. Training and Development
6. Performance Appraisal
7. Promotion
8. Compensation
9. Separation

RECRUITMENT:

In human resource management, “recruitment process of finding and hiring the best and most
qualified candidate for a job opening, in a timely and cost-effective manner. It can also
be defined as the “process of searching for prospective employees and stimulating and
encouraging them to apply for jobs in an organization”.

It is one whole process, with a full life cycle, that begins with identification of the needs of the
company with respect to the job, and ends with the introduction of the employee to the
organization.

When we speak of the recruitment process, we immediately think of activities such as the
analysis of the requirements of a specific job, attracting candidates to apply for that job,
screening the applicants and selecting among them, hiring the chosen candidates to become new
employees of the organization, and integrating them into the structure.

Obviously, the main reason why the recruitment process is implemented is to find the persons
who are best qualified for the positions within the company, and who will help them towards
attaining organizational goals. But there are other reasons why a recruitment process is
important.

STEPS IN RECRUITMENT:

1. Recruitment planning
2. Strategy development
3. Search
4. Screening
5. Assessment and Monitoring.

1. Recruitment Planning

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Recruitment planning is the first step of the recruitment process, where the vacant positions are
analysed and described. It includes job specifications and its nature, experience, qualifications
and skills required for the job, etc.
A structured recruitment plan is mandatory to attract potential candidates from a pool of
candidates. The potential candidates should be qualified, experienced with a capability to take
the responsibilities required to achieve the objectives of the organization.

2. Strategy Development

Recruitment strategy is the second step of the recruitment process, where a strategy is prepared
for hiring the resources. After completing the preparation of job descriptions and job
specifications, the next step is to decide which strategy to adopt for recruiting the potential
candidates for the organization.

While preparing a recruitment strategy, the HR team considers the following points –

 Make or buy employees

 Types of recruitment
 Geographical area
 Recruitment sources

The development of a recruitment strategy is a long process, but having a right strategy is
mandatory to attract the right candidates. The steps involved in developing a recruitment strategy
include –

 Setting up a board team

 Analyzing HR strategy
 Collection of available data
 Analyzing the collected data
 Setting the recruitment strategy

3. Candidate Search
Searching is the process of recruitment where the resources are sourced depending upon the
requirement of the job. After the recruitment strategy is done, the searching of candidates will be
initialized. This process consists of two steps −

Source activation − Once the line manager verifies and permits the existence of the vacancy, the
search for candidates starts.

Selling − Here, the organization selects the media through which the communication of
vacancies reaches the prospective candidates.

Searching involves attracting the job seekers to the vacancies. The sources are broadly divided
into two categories: Internal Sources and External Sources.

Internal Sources-

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Internal sources of recruitment refer to hiring employees within the organization through −
 Promotions
 Transfers
 Former Employees
 Internal Advertisements (Job Posting)
 Employee Referrals
 Previous Applicants

External Sources-
External sources of recruitment refer to hiring employees outside the organization through –

 Direct Recruitment
 Employment Exchanges
 Employment Agencies
 Advertisements
 Professional Associations
 Campus Recruitment
 Word of Mouth

4. Screening

Screening starts after completion of the process of sourcing the candidates. Screening is the
process of filtering the applications of the candidates for further selection process.

Screening is an integral part of recruitment process that helps in removing unqualified or

irrelevant candidates, which were received through sourcing. The screening process of
recruitment consists of three steps −

Reviewing of Resumes and Cover Letters-

Reviewing is the first step of screening candidates. In this process, the resumes of the candidates
are reviewed and checked for the candidates’ education, work experience, and overall
background matching the requirement of the job

Conducting Telephonic or Video Interview-

Conducting telephonic or video interviews is the second step of screening candidates. In this
process, after the resumes are screened, the candidates are contacted through phone or video by
the hiring manager.

Identifying the top candidates

Identifying the top candidates is the final step of screening the resumes/candidates. In this
process, the cream/top layer of resumes are shortlisted, which makes it easy for the hiring
manager to take a decision.

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 5. Evaluation and Control

Evaluation and control is the last stage in the process of recruitment. In this process, the
effectiveness and the validity of the process and methods are assessed. Recruitment is a costly
process; hence it is important that the performance of the recruitment process is thoroughly
evaluated.

The costs incurred in the recruitment process are to be evaluated and controlled effectively.
These include the following –

 Salaries to the Recruiters

 Advertisements cost and other costs incurred in recruitment methods, i.e., agency fees.
 Administrative expenses and Recruitment overheads
 Overtime and Outstanding costs, while the vacancies remain unfilled
 Cost incurred in recruiting suitable candidates for the final selection process
 Time spent by the Management and the Professionals in preparing job description, job
specifications, and conducting interviews.

Finally, the question that is to be asked is, whether the recruitment methods used are valid or
not? And whether the recruitment process itself is effective or not? Statistical information on the
costs incurred for the process of recruitment should be effective.

SELECTION:

Under the process of selection, better applicants are selected out of a large number of them. It
must be kept in mind that the ability of the applicant & the nature of work must match. It means
that right man should be selected for the right job. This will lead to better performance on all
fronts i.e., quality, quantity, time, cost etc.

It includes the following steps:

1. Preliminary Screening
2. Selection Test
3. Employment interview
4. Reference & Background checks
5. Selection Decision
6. Medical Examination
7. Job Offer
8. Contract of Employment

DIFFERENCE BETWEEN RECRUITMENT AND SELECTION:

Recruitment refers to the process where potential applicants are searched for, and then
encouraged to apply for an actual or anticipated vacancy.

33
Recruitment is defined as the process that involves finding or reaching out to job seekers
and luring them to apply for the said vacancy.

Selection is the process of hiring employees among the shortlisted candidates and
providing them a job in the organization.

Selection is the process whereby a company selects or picks a certain number of

applicants out of the hundreds of applicants they received for the said vacancy.

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