NCERT Solutions for Class 12 Commerce Business studies Chapter 7 Directing are provided here with simple step-by-step explanations. These solutions for Directing are extremely popular among Class 12 Commerce students for Business studies Directing Solutions come handy for quickly completing your homework and preparing for exams. All questions and answers from the NCERT Book of Class 12 Commerce Business studies Chapter 7 are provided here for you for free. You will also love the ad-free experience on Meritnation’s NCERT Solutions. All NCERT Solutions for class Class 12 Commerce Business studies are prepared by experts and are 100% accurate.

Page No 211:

Question 1:

Which of the following is not an element of direction?

(a) Motivation

(b) Communication

(c) Delegation

(d) Supervision

Answer:

Delegation is not an element of directing, rather, it precedes directing. Direction refers to a process where employees of an organisation are instructed, motivated and guided to achieve certain goals and objectives. Motivation, communication and supervision are elements of direction.

Page No 211:

Question 2:

The motivation theory which classifies the needs in hierarchical order is developed by

(a) Fred Luthans

(b) Scott

(c) Abraham Maslow

(d) Peter F. Drucker

Answer:

Abraham Maslow gave the need hierarchy theory of motivation. His theory was based on the argument that within each individual there lies five basic needs that can be put in hierarchical order. Starting from the most primary ones, the order of hierarchy was stated as physiological needs, security needs, belongingness needs, esteem needs and actualisation needs.

Page No 211:

Question 3:

Which of the following is a financial incentive

(a)Promotion

(b)Stock Incentive

(c)Job Security

(d)Employee Participation

Answer:

Stock incentive is a kind of financial incentive. It is a direct monetary incentive wherein the employee is offered the shares of the company at a price lower than the market price. The other three options as given in the question, that is, promotion, job security and employee participation are non-financial incentives that focus on psychological and social needs of the employees.

Page No 211:

Question 4:

Which of the following is not an element of communication process?

(a)Decoding

(b)Communication

(c)Channel

(d)Receiver

Answer:

Communication is a process wherein ideas, feelings, facts, etc. are exchanged among people. Decoding, channel and receiver are elements of communications. Channel refers to the path through which the message in the form of encoded symbols from the sender is transferred to the receiver. Before the message is received by the receiver, the encoded symbols must be converted. This process of converting the encoded symbols is known as decoding. On the other hand, receiver refers to the person who actually receives the message.

Page No 211:

Question 5:

Grapevine is 

(a) Formal communication

(b) Barrier to communication

(c) Lateral communication

(d) Informal communication 

Answer:

Informal communication is known as grapevine. This is because informal communication spreads throughout the organisation in all directions without following the formal path of communication.

Page No 211:

Question 6:

Status comes under the following types of barriers

(a)Semantic barrier

(b)Organisational barrier

(c)Non semantic barrier

(d)Psychological barrier 

Answer:

Status comes under organisational barriers. Organisational barriers refer to those barriers in the communication that are related to structure of the organisation, hierarchical relationships in the organisation, rules and policies. Sometimes status of an individual in the company in terms of profile, authority, etc. instills a feeling of superiority (or inferiority) in him. Such a psychology acts a barrier in free flow of communication in the organisation.

Page No 211:

Question 7:

The software company promoted by Narayana Murthy is

(a)Wipro

(b)Infosys

(c)Satyam

(d)HCL

Answer:

Narayana Murthy was the founder of the software company ‘Infosys’. He started Infosys in the year 1981and in 2002 it was a global IT company. Narayana Murthy was the CEO of Infosys for two decades before he retired from the post in 2002. Under the leadership of Murthy, Infosys reached unimaginable heights and is today among the biggest exporters of software from India. 



Page No 212:

Question 8:

The highest level need in the need Hierarchy of Abraham Maslow:

(a)Safety Need

(b)Belongingness Need

(c)Self Actualisation Need

(d)Prestige Need

Answer:

The highest level need in the need Hierarchy of Abraham Maslow is self actualisation need. This need of an individual refers to achieving what one aims or aspires. For an employee in an organisation, such needs relate to growth, work satisfaction, etc.

Page No 212:

Question 9:

The process of converting the message into communication symbols is known as:

(a) Media

(b) Encoding

(c) Feedback

(d) Decoding

Answer:

The process of converting the message into communication symbols is known as encoding. The communication symbols in the process of encoding can be in the form of pictures, gestures, etc. 

Page No 212:

Question 10:

The communication network in which all subordinates under a supervisor communicate through supervisor only is:

(a)Single chain

(b)Inverted V

(c)Wheel

(d)Free flow

Answer:

The communication network in which all subordinates under a supervisor communicate through supervisor only is wheel communication network. In a wheel network, the supervisor is at the centre of the communication network (wheel). The subordinates cannot communicate among themselves, rather they need to communicate through the supervisor.

Page No 212:

Question 1:

Distinguish between leaders and managers.

Answer:

The following points highlight the difference between a manager and a leader.

Basis of Difference

Manager

Leader

Existence

A manager can exists only in a formal organisation. 

A leader can exists in formal as well as informal organisation.

Objective

A manger focuses towards influencing the behaviour of employees towards achievement of the goals of the organisation.

A leader focuses towards the satisfaction of the individual and group goals of his followers.

Power and Authority

A manager holds formal authority and can exercise power and control to influence the behaviour of the employees. 

A leader does not command formal authority and can only influence the behaviour of the followers through such means as trust and faith.

Interrelationship

A manager can be a leader as well. 

A leader may not be a manager. 

Functional Spread

The functions of the manager are widespread and include planning, organising, staffing and directing.

Functions of a leader are limited to directing.

 

Page No 212:

Question 2:

Define Motivation.

Answer:

Motivation refers to a process of inducing and stimulating an individual to act in certain manner. In the context of an organisation, motivation implies encouraging and urging the employees to perform to the best of their capabilities so as to achieve the desired goals of the organisation. In other words, it refers to driving the individual psychologically so as to induce his willingness to work and perform better. In an organisation motivation can take various forms such as promotion, appraisal, recognition, etc. depending on the expectations and desires of the employee. For example, an appraisal may act as a motivating factor for an employee to improve performance. Similarly, for another employee praise from the senior may motivate him to further improve the performance.

Page No 212:

Question 3:

What is informal communication?

Answer:

Informal communication refers to the communication that flows without following the formal defined path. An informal communication system is also known as grapevine. Under informal communication, a piece of information flows in all directions without paying any heed to the level or authority. It arises out of social interactions among the employees and then spreads throughout the organisation. It can take the form of a rumour or a gossip. For example, a talk over lunch regarding the attitude of a senior is an informal communication. It is difficult to determine the source of such information. Moreover, the actual talk may even get distorted and the final piece of information may come out to be much different from the original one.

Page No 212:

Question 4:

What are semantic barriers of communication?

Answer:

Semantic barriers of communication relate to the use or understanding of language. Sometimes certain words, sentences or phrases are misinterpreted or misunderstood. In such cases, effective communication is obstructed. Such barriers in communication that arise out of ambiguity or difficulty in understanding of words and sentences are known as semantic barriers. The following are some of the causes of semantic barriers.

i. Sometimes due to poor vocabulary or wrong use of words, the information may not be clearly expressed. 

ii. At times a word may have more than one meaning or two or more words may have same pronunciation (such as idle and idol). In such cases, the correct interpretation of the word remains ambiguous. 

iii. In certain cases the proficiency of a language differs among the workers and the mangers. In such cases, a translation of the information is required in the language which is understandable to the workers. However, in the process of translation some of the words or sentences may get misinterpreted. For example, in a translation of an instruction from English to Hindi, the meaning of certain words might change.

iv. At times while giving out instructions the senior or specialist uses technical vocabulary that might be difficult to understand for the subordinates.

Page No 212:

Question 5:

Who is a supervisor?

Answer:

A supervisor refers to a person who directly oversees the activities of the workers. In the organisational hierarchy he lies immediately above the worker. A supervisor performs the following functions.

i. He is in direct contact with the workers and thereby guides and supports the workers. He also helps in maintaining harmony and unity among the workers.

ii. He acts as a link between the manager and the workers. Through supervisor, on one hand, the management communicates the ideas and policies to the workers and on the other hand, the workers are able to communicate their problems and grievances to the management. 

iii. Supervisor ensures that the workers work efficiently and as per the set targets.

iv. He provides the required knowledge and skill to the workers.

Page No 212:

Question 6:

What are elements of directing?

Answer:

Directing refers to the process of instructing, motivating, guiding and leading the people to achieve certain goals and objectives. Directing involves the following four elements.

i.Supervision: Supervision implies the process of guiding and instructing the subordinates towards achieving the desired goals. In other words, it implies overseeing the work of the subordinates. Supervision ensures that work takes place as per the desired objectives. A good supervision helps in improving the efficiency of the workers. Besides this, it also plays a key role in maintaining harmony and unity among the workers.

ii.Motivation: Motivation implies encouraging and inducing the employees to perform to the best of their capabilities so as to achieve the desired goals of the organisation. Motivation can take various forms such as promotion, appraisal, recognition, etc. By satisfying the needs of the employees, motivation helps in improving their performance. It provides a psychological boost to the workers and drives their willingness to work. Moreover, it also helps in reducing the turnover and absenteeism in the organisation.

iii.Leadership: Leadership implies influencing the behaviour of the employees in such a manner that they willingly work towards achieving the objectives of the organisation. Leadership plays a key role in the success of an organisation. Good leadership brings out the capabilities and talents of the workers and thereby, boosts their confidence. They act as guide to the workers and induces a feeling of initiative in them.

iv.Communication: Communication refers to the process of exchange of ideas, feelings, facts, etc. among people. A smooth functioning of an organisation requires a good communication. It fosters coordination among various departments and individuals in the organisation. Communication forms the basis of management. Without good communication network efficient management becomes difficult.

Page No 212:

Question 7:

Explain the process of motivation?
 

Answer:

Motivation implies inducing and stimulating an individual to act in certain manner. The following points explain the process of motivation.

i.Unsatisfied Want: The motivation process begins with an unsatisfied need of an individual.

ii.Frustration: As the want remains unsatisfied frustration builds up in the mind of the individual.

iii.Drives: The frustration drives the individual to look out for alternatives to satisfy his need. 

iv.Behaviour: Among the various alternatives he chooses one and starts behaving according to it. 

v.Satisfaction: After following a particular alternative for some time, he assesses if his need is satisfied. 

vi.Reduced Frustration: Once the need is satisfied, the frustration and tension of the individual finally gets reduced.

For example, suppose an individual desires promotion. This makes him uneasy and he starts looking out for alternatives through which he can earn a promotion. He may think of working harder and improving his performance. After consistently working hard, he may get recognition and the promotion that finally satisfies his want and reduces his frustration.

Page No 212:

Question 8:

Explain the different networks of grapevine communication?

Answer:

Grapevine communication or informal communication refers to the communication that arises out of social interaction among employees and spreads without following the formal communication path. The following are the types of grapevine communication network.

i. Single Strand Network: In this network, the information spreads from one person to other in a sequence. That is, one person communicates to another person who turn communicates to some other person.

ii. Gossip Network: In gossip network, one person shares the information with many other people.

iii. Probability Network: Under a probability network, an individual shares the information randomly with other people. That is, the person is indifferent about who he shares the information with. 

iv. Cluster Network: In this network, information is first shared between two people who trust each other. One of them then passes the information to some other person who in turn shares it with another and so the information spreads.

Page No 212:

Question 1:

Explain the principles of directing?

Answer:

Directing as a function of management is quite complex. To help in the directing process, certain principles have been developed. The following are the principles of directing.

1. Maximum Individual Contribution: According to this principle, a manager should use such directing techniques that induce the workers to perform to the best of their capabilities. It should encourage the workers to work towards the goals of the organisation. That is, each individual should contribute the maximum towards the organisational goals. For example, suitable incentive and motivation techniques can be used by the managers to urge the employees to perform better. 

2. Harmony of Objectives: Often the objectives of an individual diverge from the overall organisational objectives. For example, an individual’s focus may be on earning greater income while the organisation aims at increasing the production. In such a case, directing should work towards converging the individual goals with the goals of the organisation. 

3. Unity of Command: As per this principle, an individual should receive commands and instructions from only one superior. If a worker receives orders from more than one superior, it creates confusion and clashes that leads to delay in the work. For example, the worker might get confused whose order to follow. Moreover, it might also happen that a conflict is created between the two superiors. 

4. Appropriateness of Direction Technique: According to this principle, the direction technique to be used should be appropriately selected. It should suit the need and attitude of the employees. For example, one employee might get motivated by a praise while other requires monetary incentive. Thus, the manager should use suitable directing techniques on requirement basis. 

5. Managerial Communication: Effective communication plays a key role in directing. The instructions and commands given by the superior must be clear and easily understandable by the subordinates. In addition, the subordinates must also be able to communicate with the superiors in an unhesitant manner. They must be able to express freely their feedbacks and suggestions. Thus, an effective two way communication must take place between the superior and the subordinates.

6. Use of Informal Organisation: The manger should realise the existence and importance of informal organisation. He must strategically use them. For example, informal communication can be used to divulge true and real feedback on policy matters.

7. Leadership: Leadership is an important element of directing. A manager must be able to bring out the capabilities of the employees. He must be able to influence the behaviour of the employees such as to boost the willingness of the employees to work towards the organisational goals. In addition, he must also be able to work effectively towards the satisfaction of the individual goals of the employees.

8. Follow Through: According to this principle, a manager’s role is not just limited to giving instructions to the subordinates rather, he should continuously review the implementation of the instructions. Through a proper follow up he must ensure that the commands are properly followed and implemented. If required suitable corrective actions must also be taken.

Page No 212:

Question 2:

Explain the qualities of a good leader? Do the qualities alone ensure leadership success?

Answer:

It is said that to be a successful leader an individual must possess certain qualities. Some of the qualities of a good leader are as follows.

1. Physical Attributes: People with good physical features such as height, appearance, health etc. are attractive. A healthy and active person can himself work hard and efficiently and thereby, has the capability of being looked up to. Thus, he can induce his subordinates as well to work and perform better. 

2. Honesty: A good leader should maintain high degree of honesty. He should be sincere and should follow ethics and values. He should be an idol for others in terms of honesty, integrity and values.

3. Intelligence: A leader must have a good presence of mind and knowledge. He should be competent enough to effectively examine and solve the problems encountered in the course of work. He must have the required intelligence to take proper decisions based on logic and facts.

4. Inspiration: A leader should be a source of inspiration and motivation to others. That is, he must be exemplary in terms of work, performance and values. He must be able to develop willingness among the subordinates to work to the best of their capabilities.

5. Confidence: A leader should be high in confidence. He must also be able to maintain his confidence in difficult situations as well. Only when a leader is confident himself, he can boost the confidence of his subordinates. 

6. Responsibility: A leader should command responsibility for the work and tasks of his group. He should hold the responsibility of being answerable for the mistakes of his subordinates. However, as a mark of encouragement he must share the credit of the success with his subordinates. 

7. Effective Communication Skill: A leader should be able to clearly express his ideas and instructions clearly to the subordinates. On the other hand, a leader also forms the link between the higher authorities and the subordinates. He should be able to effectively pass the problems and suggestions of the subordinates to the seniors. Besides, he should also be a patient listener and counsellor.

8. Ability to take Decisions: A leader should be able to take appropriate decisions based on logic, facts and figures. Moreover, he should be confident enough to hold on to his decisions and not get confused. 

9. Social Behaviour: He should maintain a friendly and supportive behaviour with his subordinates. He must be able to understand people and maintain good social relations with them. 

10. Dynamic: A leader must be dynamic and outgoing. He must be able to take up new initiatives and break the old paradigms for the benefit of the organisation. 

Though the above mentioned qualities are necessary for being a good leader, however, the mere presence of these qualities does not ensure leadership success. In fact, no single individual can possess all the qualities. However, a conscious effort must be made by the managers to acquire them.

Page No 212:

Question 3:

Discuss Maslow’s Need Hierarchy theory of motivation.

Answer:

Maslow’s Need Hierarchy theory provides an understanding of the complex phenomenon of motivation. According to Maslow, within each individual there exists a set of five needs that can be arranged in a hierarchy. Knowledge of these needs helps the manager in understanding the behaviour of employees. With identification of the needs of the employees, appropriate motivation can be provided to them.

Assumptions 

Maslow’s theory is based on the following assumptions.  

(i) People’s need influences their behaviour. 

(ii) Needs of the individuals can be arranged in a hierarchical order.

(iii) An individual can move to a higher level need only when the lower level need in the hierarchy is satisfied. 

(iv) Once a need is satisfied, an individual can be motivated only through the next higher level need. 

Theory 

The following is the hierarchy of needs as given by Maslow.

1. Physiological Needs: Such needs comprise of essential requirements for sustenance of life. They are at the top of the hierarchy. The fulfilment of these needs is necessary for survival. For example, food, clothing, shelter are physiological needs. An employee requires a certain basic salary for the satisfaction of these needs.

2. Security Needs: These needs relate to physical and economic security and well being. For example, an employee desires job security, income stability, etc.

3. Belongingness Needs: Such needs comprise of the social needs of an individual such as affection, acceptance, companionship, etc. as every individual yearns for social acceptance and belongingness.

4. Esteem Needs: These needs include such elements as respect, dignity, recognition, etc. as every individual wants to command respect and acknowledgement in the peer group.

5. Self-Actualisation Needs: This need refers to achieving what one aims or aspires. It is the highest level need in hierarchy. For an employee such needs relate to growth, work satisfaction, etc.

Maslow’s theory is widely appreciated and is used as basis for motivation by the managers. However, sometimes it can happen that needs of an individual do not follow the exact order of hierarchy. Nevertheless an understanding of the needs as given by Maslow helps the managers in practicing efficient motivation.

Page No 212:

Question 4:

What are the common barriers to effective communication? Suggest measures to overcome them.

Answer:

Barriers in Communication

Sometimes the information that reaches the receiver is not in the manner that the sender had intended. That is, at times there arises misunderstanding or misinterpretation of the information as it is passed from the sender to the receiver. This creates barriers in the effective flow of communication. Barriers to communication can be classified as follows.

1. Semantic Barriers: Semantic barriers of communication relate to the use or understanding of language. Sometimes it happens that certain words, sentences or phrases remain ambiguous or difficult to understand. Thereby, they are likely to get misinterpreted. Such barriers in communication that arise out of ambiguity or difficulty in understanding of words and sentences are known as semantic barriers. For example, sometimes while giving out instructions the senior or specialist uses technical vocabulary that might be difficult to understand for the subordinates. Similarly, at times two or more words have the same pronunciation (such as access and excess), that results in confusion regarding the correct interpretation of the word. 

2. Psychological Barriers: Sometimes psychological factor such as frustration, anger, fright may also obstruct effective communication. For example, out of frustration over a certain matter, an individual’s mind may be preoccupied and he may not be able to attentively grasp the information given to him. Similarly, due to preconceived notions regarding a conversation, an individual might derive conclusions even before the information is completed. 

3. Personal Barriers: Sometimes personal factors related to the sender or the receiver act as a hurdle in communication. For example, often in formal organisations, superiors do not share such information that they fear will harm their authority. Similarly, due to lack of trust on their subordinates, they may not be willing to pay attention to the information provided by them. In a similar manner, subordinates may lack the incentive to communicate freely with the superiors. Thus, in such cases effective communication is hindered due to personal factors pertaining to the sender and the receiver.

4. Organisational Barriers: In formal organisational structures, barriers to communication arise due to such factors as authority, rules, regulations, relationships, etc. For example, if an organisation follows long vertical chains of communication, it might result in delay in the flow of information. Similarly, a highly centralised organisational structure obstructs free communication.

Measures to overcome Barriers in Communication

The following are some of the measures that can be adopted to overcome various barriers of communication.

(i) The communication should take place as per the understanding level and capabilities of the receiver. That is, it must be ensured that the receiver is clearly able to understand the information.

(ii) The language, tone and content of the information should be appropriately chosen. It should be easily understandable and should not harm anybody’s sentiments.

(iii) For the communication to be effective proper feedbacks must be taken from the receiver. That is, he must be encouraged to respond during the conversation.

(iv) It must be ensured that the information is complete in all respect and nothing is left ambiguous.

(v) The core idea of the communication must be clear between the sender and the receiver. That is, it must be conveyed properly what the communication is about.

(vi) The sender of the information should also be a patient listener. He should be open to communication from the other end as well.

Page No 212:

Question 5:

Explain different financial and non-financial incentives used to motivate employees of a company?

Answer:

Financial Incentives

Financial incentives refer to direct monetary incentives offered to the employees to motivate or reward people for better performance. The following are some of the financial incentives used in the organisations. 

i. Salary and Allowances: In every organisation salary and allowances given to the employees forms the basic form of financial incentive. Regular raise in salaries and grant of allowances acts as a motivation for the employees 

ii. Performance Based Incentives: Often organisation offer monetary rewards for good performance. This induces the workers to improve their efficiency and performance.

iii. Bonus: Bonus refers to the extra reward over and above the basic salary. It can take the form as cash, gifts, paid vacations, etc. For example, some organisations grant bonus during festival times such as Diwali bonus.

iv. Stock Option: Under this incentive scheme, the employee is offered the shares of the company at a price lower than the market price. This instils a feeling of ownership and belongingness in the employee and urges him to contribute towards the goals of the organisation.

v. Sharing of Profit: Herein, the organisation shares a portion of the profit with its employees. This encourages the workers to contribute actively towards the growth of the organisation.

vi. Retirements Benefits: Many organisations offer certain retirement benefits to its employees such as pensions, gratuity, provident fund, etc. This provides a sense of security and stability to the employees.

vii. Fringe Benefits: Besides the basic salary an organisation may offer certain additional advantages also to its employees such as housing allowance, medical allowance, etc.

Non Financial Incentives 

Non-financial incentives refer to those incentives that focus on non-monetary needs of the employees such as the social and psychological needs. The following are some of the non- financial incentives used in the organisations.

i. Position: Rise in status in terms of power, authority, responsibility provides a psychological boost to the employees. For example, a promotion may satisfy the esteem and self actualisation needs of an individual. 

ii. Organisational Characteristics: Certain characteristics such as employee freedom, recognition of performance, incentives and rewards play an important role in influencing the behaviour of the employees. For example, if the employees get due recognition for their performance, it encourages them to work more efficiently. 

iii. Work Enrichment: Often, a challenging work endowed with greater responsibility and requiring higher knowledge and skill enhances the interest of the employee. It provides the employee prospects for personal growth. Thus, it proves to be a good source of motivation for him.

iv. Career Opportunities: If the organisation is endowed with appropriate growth and career opportunities for its employees, it strives then to perform better and thereby, climb the professional ladder. 

v. Job Security: An employee should have a certain extent of security regarding his association with the organisation. Constant fear of losing the job hampers their efficiency. However, a complete security can also result in loss of interest in work.

vi. Involvement: If an organisation allows the participation of the employees in the policy and decision making matters, then it instils a feeling of belongingness in them and motivates them to work towards the organisational goals. 

Page No 212:

Question 1:

The workers always try to show their inability when any new work is given to them. They are always unwilling to take up any kind of work. Due to sudden rise in demand a firm wants to meet excess orders. The supervisor is finding it difficult to cope up with the situation. Suggest ways for the supervisor to handle the problem.

Answer:

In the given situation what is required is providing motivation to the employees. The supervisor must motivate the employees and encourage them to perform to the best of their capabilities. He must identify the needs and requirements of the workers. In other words, the cause for the unwillingness to work must be identified and worked upon. For motivation various financial incentives such as bonus and profit sharing or non-financial incentives such as work enrichment and position can be used.



Page No 213:

Question 2:

Workers of a factory often come to the Production Manager with the grievances. The production manager finds himself overburdened with so many tasks. Advise a way to relieve the production manager.

Answer:

In the hierarchical structure, a supervisor can be appointed in between the manager and the workers. The supervisor would act as a link between the managers and the workers. It is through him that the manager would communicate his policies and ideas and the workers would communicate their grievances to the managers. In other words, the supervisor would remain in direct contact with the workers, thereby reducing the workload of the manager.

Page No 213:

Question 3:

In an organisation employees always feel they are under stress. They take least initiative and fear to express their problems before the manager. What do you think is wrong with the manager?

Answer:

In the given situation what is wrong is that there is absence of free flow of communication. The manager must involve his subordinates in the decision making process and encourage them to actively give their feedback and suggestions.

Page No 213:

Question 4:

In an organisation all the employees take things easy and are free to approach anyone for minor queries and problems. This has resulted in everyone taking to each other and thus resulting in inefficiency in the office. It has also resulted in loss of secrecy and confidential information being leaked out. What system do you think the manager should adopt to improve communication.

Answer:

In the given situation an informal system of communication is being followed. What is required is a move towards a formal system of communication. In a formal system of communication messages and facts would flow through officially designed channels. In such a system information would flow systematically and in proper order. The original source that initiated the communication can be located and proof of communication can be maintained. 



Page No 214:

Question 1:

Y limited is a bank functioning in India. It is planning to diversify  into insurance business. Lately, the government of India has allowed the private sector to gain entry in the insurance business. Previously, it was the prerogative of LIC and GIC to do insurance business. But now with liberalisation of the economy and to make the field competitive other companies have been given licenses to start insurance business under the regulation of ‘Insurance Regulatory and Development Authority’.
Y limited plans to recruit high quality employees and agents and exercise effective direction to capture a substantial part of life and non life insurance business.

Questions

1. Identify how the company can supervise its employees and agents effectively. What benefits will the company derive from effective supervision?

2. What financial and non-financial incentives can the company use for employees and agents separately to motivate them. What benefits will the company get from them?

3. How can the company ensure that higher order needs i.e. esteem and self-actualisation as specified by Abraham Maslow are met?

4. Identify the qualities of leadership in this line of business that the company managers must possess to motivate employees and agents.

5. Give a model of formal communication system that the company can follow. Identify the barriers in this model. How can they be removed?

6. How can informal communication help to supplement formal communication model given by you in answer to question 5?

Answer:

1. Effective supervision can be achieved by employing a supervisor who would directly interact with the workers. The supervisor would act as a link between the managers and the workers. The following are the benefits that the company would derive by employing a supervisor.

i. As a supervisor would be in indirect contact with the employees, he would be better able to motivate and guide them. This helps in maintaining unity and harmony among the employees.
ii. He ensures that the personnel work efficiently as per the targets.
iii. He provides the employees with the required knowledge and skills.
iv. A supervisor endowed with the required leadership skills helps in boosting the morale of the employees and instils a feeling of belongingness in them.
v. He can help in improving the performance efficiency by providing them regular feedback and suggestions.

2. The following financial and non-financial incentives can be given by the company to the employees and agents.

Financial benefits for the employees and agents:

i. Performance based incentives: The employees and agents can be given performance based monetary rewards.
ii. Stock option: The employees and agents can be given shares of the company at a price lower than the market price.

Non-financial benefits for the employees and agents:

i. Work enrichment: The employees and agents can be endowed with greater responsibility and more challenging work.
ii. Job security: The employees and agents can be given job security with regard to his/her association with the company.

The company will get the following benefits from providing financial and non financial benefits to the employees and agents.

i. Improves performance: Financial and non-financial incentives works towards fulfilling the needs and desires of the employees. Therefore, it encourages them to work to the best of their capabilities and improve their performance.

ii. Develops a positive attitude: Financial and non-financial incentives in the form of appreciation, rewards, etc. helps in changing the negative attitude of employees to a positive one so that they work efficiently towards the achievement of organisational objectives.

iii. Reduces employee turnover: If the financial and non-financial incentives succeed in satisfying the needs of the employees, they would have less urge of leaving the organisation. In this way, it helps to retain people in the organisation.

iv. Creates a healthy work environment: Financial and non-financial incentives helps in creating a conducive and healthy work environment. Motivated employees view work as a source of joy and therefore increase their presence at workplace.

3. For satisfying the higher order needs measures such as work enrichment and career opportunities must be given to the employees. The employees can be endowed with challenging work and greater responsibilities that require higher knowledge and skills. Moreover, they must be offered with growth opportunities in the organisation.

4. In the given line of business, the following leadership qualities must be possessed by the manager.

i. Effective communication skills: He must have good communication skills such that he is able to express his ideas and instructions clearly.

ii. Dynamic: He must be dynamic and outgoing in the sense that he must be able to take new initiatives and break old paradigms for the overall benefit of the organisation.

iii. Social behaviour: He must be friendly and cordial with his subordinates while maintaining good social relations with them.

iv. Confidence: He should be high in confidence, even in difficult situations. A leader can boost the confidence of his subordinates only when he is confident about himself.

v. Responsibility: He should command responsibility for the work and tasks of his group. He should hold the responsibility of being answerable for the mistakes of his subordinates. As a mark of encouragement, he must also share the credit of success with his subordinates.

5. The company can follow a free flow communication model wherein any person can talk to any person in the company. That is, there are no barriers or definite channels for communication.

The following barriers are encountered in communication:

i. Organisational barriers: It refers to those barriers that related to structure, hierarchical relationships and rules and regulations in the organisation. For example, a complex organisation structure acts as a barrier to effective communication as the information has to pass through numerous levels.

ii. Semantic barriers: It refers to barriers pertaining to use or understanding or language. For instance, sometimes due to poor vocabulary or wrong usage of words by the communicator the information may not be clearly expressed.

iii. Psychological barriers: Psychological factors such as frustration, anger, fright may also obstruct effective communication. For example, due to lack of trust between the communicator and the commute the information may not be perceived in the original sense.

iv. Personal barriers: Personal factors related to the sender or the receiver may also act as a hurdle in effective communication. For example, lack of incentives may discourage the initiatives to communicate.

The following steps can be taken to remove the barriers:

i. The communication should be as per the understanding level and capabilities of the receiver.
ii. The language, tone and content of the information should be appropriately chosen.
iii. Appropriate feedback regarding the communication must be taken from the receiver.
iv. The information should be clear, unambiguous and complete.
v. The sender of the information should be a patient listener and should be open to ideas from the other end as well.

6. The informal communication supports the formal communication in the following manner:

i. Through informal communication the information tends to flow faster.
ii. The employees develop a interpersonal and social relations among them, thereby develop a feeling of belongingness towards the organisation.
iii. It helps in divulging true responses of the employees on certain important matters.



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