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Class 12-commerce NCERT Solutions Business Studies Chapter 7 - Directing

Directing Exercise 203

Solution VSA 2

Laissez Faire or free reign leadership style does not believe in the use of power unless it is absolutely essential. In such leadership complete decentralisation of the authority is given to the subordinates. Subordinates are provided maximum freedom and are encouraged to take decisions independently.

Solution SA 5

in the above 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.

Solution VSA 3

The element wherein a message is converted to communication symbols is called encoding. These communication symbols can be in the form of pictures and gestures.

Solution VSA 1

Informal communication is one where information flows in all directions without following the formal path. It is also known as grapevine communication. It arises simply out of the social interactions among employees. Information under this channel crosses the barriers of level or authority. For example, a talk over lunch with a senior is an informal communication.

Although the spread of information through informal channels is faster, it is possible that the actual information gets distorted. Moreover, it is difficult to determine the source from where the information arose.

Solution SA 1

Semantic barriers of communication refer to barriers where there is a problem in decoding the message because of factors such as difficulty in interpretation, wrong translations or wrong use of words. The following are some causes of semantic barriers:

  1. There may be difficulty in expressing the information because of poor vocabulary or wrong use of words.
  2. Sometimes, a single word may have many different meanings. In such cases, it may be difficult for the receiver to interpret the intended meaning of the word.
  3. Sometimes, it may happen that there is a language barrier between workers such that the level of proficiency of a language may be different for the two. For instance, while managers may be proficient in English, workers may not be proficient in English. In such cases, the information must be appropriately translated. However, in the process of translation, the information may get misinterpreted.
  4. Sometimes, a senior or a specialist uses technical vocabulary which the subordinates might find difficult to understand or interpret.  

Solution SA 2

Motivation refers to inducing workers to work and perform in a desired manner so as to achieve the goals of the organisation. The process of motivation is as follows:

  1. Unsatisfied Want: An unsatisfied want is the basis of the motivation process.
  2. Frustration: Because of the unsatisfied want, the individual develops frustration.
  3. Drives: The frustration prompts the individual to search alternatives to satisfy his need.
  4. Behaviour: From among the numerous alternatives, he selects one and modifies his behaviour according to it.
  5. Satisfaction: After following a particular behavioural pattern, he evaluates whether his need is satisfied.
  6. Reduced Frustration: When the desired need is satisfied, the frustration which had built up reduces.  

For example, suppose a worker desires higher pay. This makes him uneasy and he starts searching for alternatives through which he can earn a higher pay. For instance, he may think of working harder and improving his performance. After consistently working harder for a considerable amount of time, his work is recognised and his salary raised. Accordingly, his need is satisfied and thereby his stress and frustration reduced.

Solution SA 3

Informal communication is the one where information flows in all directions without following the formal path. Types of grapevine communication network:

  1. Single Strand Network: The spread of information is in a particular sequence. That is one person communicates to another person who in turn communicates to some other person.
  2. Gossip Network: Information is shared by one person with many others at a time.
  3. Probability Network: Information is shared with other people at random. That is, the person sharing the information is indifferent about whom he shares the information with.
  4. Cluster Network: In this network, the first two persons who trust each other share information. One of them then passes the information to some third person who in turn shares it with the fourth and so on. 

Solution SA 4

Following is the list of principles of directing:

  1. Maximum Individual Contribution: According to this principle, such technique of directing should be used which encourage workers to work efficiently and to the best of their capabilities such that he contributes the maximum towards the common goals of the organisation. For example, for encouraging workers, various financial and non-financial incentives can be given.
  2. Harmony of Objectives: Often it is seen that the personal goals of an employee are not in sync with the overall organisational goals. In such situations, the focus of directing function should be to bring about convergence between the two. For example, while an employee may wish to increase earnings, the goal of the organisation may be to increase production. In such cases, the directing techniques used should encourage workers to work harder such that production increases and they are able to earn better.
  3. Unity of Command: According to this principle, an employee should receive instructions or orders from only one superior. In other words, he should be answerable to only one superior. Violation of this principle leads to confusion and chaos in the minds of the subordinate.
  4. Appropriateness of Direction Technique: According to this principle, the manager must appropriately select the direction technique such that it is according to the needs, desires and attitude of workers. Different motivation techniques work for different employees. For instance, while one employee might desire financial incentive, some other employee might get satisfied with praise from a superior.
  5. Managerial Communication: Effective communication is highly important for effective directing. There must be free flow of communication between the manager and the subordinate without any hesitation or barrier with regard to authority or power. While the superiors must clearly express their instructions to the subordinates, the subordinates also should communicate freely with the superior.
  6. Use of Informal Organisation: The manager must realise and identify the informal groups in an organisation. Such informal organisation can be used strategically for the advantage of the organisation. For example, informal communication can be used to bring forward the real thinking of employees with regard to a policy change.
  7. Leadership: A manager should have leadership qualities. He must be able to bring out the best in employees. He must be able to motivate and encourage workers to work towards the organisational goals. In addition, he must be able to work on the individual goals of employees.
  8. Follow Through: According to this principle, the manager must not only provide orders or commands to the subordinates but should also ensure that the instructions are followed and implemented properly. For this, proper follow-up actions should be taken. Corrective actions, as required, must also be taken. 

Solution VSA 4

In the given situation, employees require proper motivation. The supervisor must work towards encouraging employees to improve work efficiency and performance. In this regard, the needs and requirements of workers must be appropriately identified. In other words, an attempt should be made to identify the real cause for the unwillingness to work. Accordingly, suitable actions should be taken.

The supervisor can use various financial incentives (such as bonus and profit sharing) or non-financial incentives such as work enrichment.

Directing Exercise 204

Solution SA 6

GyanPradhan has given perquisites and fringe benefits to the employees in the form of free education to children and medical aid. 

Perquisites and fringe benefits are a type of Financial incentive. Some other financial incentives are:

1.   Bonus: Additional reward over and above the salary such as gifts, festival bonus, etc.
2.   Profit-Sharing: Sharing a portion of the profit with the employees

Solution LA 1

Some qualities which a successful leader must possess:

  1. Physical Attributes: It is a general perception that people with good physical features and attractive personality make good leaders. One who is healthy and active himself can work efficiently. The one who works to the best of his ability is looked up to and induces others to improve performance. 
  2. Honesty: A good leader should maintain a high level of honesty and integrity such that he is an idol for others in terms of these values. He must demonstrate an ethical behaviour.
  3. Intelligence: A leader must have high knowledge and intelligence. He should have a strong presence of mind. He must be able to use logic and facts for decision making. He must be able to provide solutions to various problems encountered during working.
  4. Inspiration: A leader should be able to inspire and influence others. He must be a source of inspiration and motivation to others. He must be looked up to in terms of work, performance, values and ethics.
  5. Confidence: A leader must possess high confidence. This confidence must be maintained in difficult and adverse situations as well. In this way, he must be able to boost the confidence of his subordinates as well.
  6. Responsibility: A leader must not move away from his responsibility in any situation. In situations where his subordinates make mistakes, he must hold the responsibility of being answerable. However, he must share and involve the subordinates in the credit of success.
  7. Effective Communication Skills: One of the important qualities of a good leader is to possess effective communications skills. He must be clearly able to express his thoughts and ideas. Moreover, he must be a good listener and counsellor. He must be able to act as a link between the higher management and the subordinates such that he can communicate the problems and grievances of the subordinates to the superiors.
  8. Ability to Take Decisions: A leader must have the ability to take appropriate rational decisions which are based on logic and facts. Moreover, once a decision is taken he should be confident enough to hold on to it.
  9. Social Behaviour: He should be socially active and friendly. He must be supportive and understanding towards the subordinates.
  10. Dynamic: A leader must be a dynamic personality in the sense that he must be able to bring in new ideas in the organisation. He must be able to break the old paradigms for the overall organisational benefit.


While the above-mentioned qualities are prerequisites for being a good leader, the mere possession of these qualities does not ensure successful leadership. It is not possible for a single individual to have all the above-mentioned qualities. However, managers must make a conscious and sincere effort towards acquiring them. 

Solution LA 2

Maslow's Hierarchy of Needs helps in understanding the phenomenon of motivation. According to Maslow, the needs of an individual can be classified into five categories which can be arranged in a hierarchical order. With the knowledge of these needs, a manager can better understand the behaviour of employees in the organisation and accordingly provide appropriate motivation.


Maslow's theory is based on the following assumptions:

  1. People behave according to their needs and desires.
  2. It is possible to arrange the needs of an individual in an order of hierarchy.
  3. An individual would move to a higher level need in the hierarchy only when the need at the lower level is appropriately satisfied.
  4. When a need at a particular level is satisfied, further motivation can be provided only through the next level need. 


Hierarchy of needs as given by Maslow:

  1. Physiological Needs: These needs are the most basic needs in the need hierarchy. It comprises needs which are essential for survival and sustenance. For example, need for food, clothing and shelter. In terms of an organisation, the requirement of a basic salary is a physiological need.
  2. Security Needs: An individual requires physical and economic security. For example, an employee wishes for job security and stability in income.
  3. Belongingness Needs: It refers to the social needs of an individual in terms of affection and acceptance. In other words, it refers to a feeling of belongingness to society.
  4. Esteem Needs: It comprises elements such as respect, dignity and recognition in the peer group.
  5. Self-Actualisation Needs: Every individual wishes to achieve what he aims or aspires. For an employee, it includes factors such as recognition of work, autonomy and growth.

It must however be noted that it may happen that the needs of an individual are not in the exact order of the hierarchy. Nevertheless, a good understanding of the needs helps managers in using effective motivation.

Solution LA 3

Barriers in Communication

Sometimes a barrier to effective communication may arise in the sense that there is a misunderstanding or misinterpretation of the information on the part of the receiver.

Barriers to communication:

  1. Semantic Barriers: Semantic barriers refer to barriers wherein there is problem in decoding the message because of factors such as difficulty in interpretation, wrong translations or use of wrong words. For example, sometimes a single word may have many different meanings. The receiver of the message must correctly interpret the meaning of the word as intended to be used by the sender. Similarly, the use of technical vocabulary by specialists might be difficult to understand others.
  2. Psychological Barriers: Various psychological factors such anger and frustration might also act as a barrier in effective communication. For example, if an individual is frustrated over a matter, his mind would be preoccupied and he would not be able to clearly understand a piece of information given to him.
  3. Personal Barriers: Personal barriers arise out of the personal factors affecting the sender and the receiver. For example, sometimes the subordinates do not communicate freely with managers because of the fear of authority. On the other hand, the manager may not also communicate certain information with the subordinates if he feels that it would affect his authoritative power. Similarly, if the manager does not have confidence in the skill and competence of the subordinates, he would not seek their advice or opinion.
  4. Organisational Barriers: Organisational barriers refer to barriers in effective communication which arise in formal organisations because of factors such as authority and hierarchical relationships. For example, if there are long vertical chains of communication in an organisation, it would create a barrier to effective communication. Similarly, a highly centralised organisational structure restricts the free flow of communication. 

 Measures to overcome Barriers in Communication 

Some measures which can be adopted to overcome various barriers of communication:

  1. The understanding level of the receiver must be kept in mind while providing information.
  2. The language, tone and content of the information should be such that it does not harm the sentiments of the receiver.
  3. While communicating, the receiver must be regularly prompted to respond so as to ensure that information is being understood.
  4. The sender must ensure that the information provided is complete in all respects.
  5. Both sender and receiver must be clear with regard to the basic idea of the communication.
  6. The sender must also be a patient listener and invite response and communication from the receiver as well.  

Solution LA 4

Financial Incentives 

Financial incentives refer to the direct monetary benefits given to employees by an organisation with the objective of providing motivation to improve performance. The following are some types of financial incentives:

  1. Salary and Allowances: It is the most basic form of financial incentive. A regular increment in salaries and other allowances acts as a good motivation factor for employees.
  2. Performance-based Incentives: Sometimes, monetary incentives can be given based on the performance of employees. In other words, they can be suitably rewarded for good performance. This motivates workers to improve work efficiency.
  3. Bonus: Bonus refers to the monetary reward which is over and above the basic salary. It can be in the form of cash and gifts. 
  4. Stock Option: Employees are offered the shares of the company at a discounted price. This helps in developing a feeling of belongingness among the employees.
  5. Sharing of Profit: Employees are offered a share in the profits of the organisation. This motivates workers to improve performance so as to contribute positively towards the growth of the organisation.
  6. Retirement Benefits: Employees may be offered retirement benefits by the organisation. These benefits can be in the form of pensions, gratuity and provident fund. This instils a feeling of security and stability among employees.
  7. Fringe Benefits: It refers to the additional benefits provided to employees over the salaries. For example, housing allowance and medical allowance. 

Non-Financial Incentives 

Non-financial incentives are incentives which cater to the non-monetary needs of employees such as social and psychological needs. The following are some non-financial incentives:

  1. Position: The employees often require a rise in the status in terms of power and authority. It provides them psychological satisfaction.
  2. Organisational Characteristics: Various organisational characteristics such as employee freedom and recognition of performance play an important role in motivating employees. For example, if an employee's work is recognised and praised, it would encourage him to further improve performance.
  3. Work Enrichment: 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.
  4. Career Opportunities: Employees must be given ample opportunities to develop their skills and knowledge such that they are able to improve their career prospects. This can be done through training and development programmes.
  5. Job Security: Employees need a certain degree of security of job in the sense that they must be certain about the income in the future. This is would enable them to work with greater passion.
  6. Involvement: Employees must be involved in decision making, especially in issues pertaining to them. This provides workers a feeling of belongingness towards the organisation.  

Solution LA 5

The organisation in the given situation follows an informal system of communication. To improve the communication in the organisation, steps must be taken to move towards a formal system of communication. In other words, steps must be taken such that information flows following the formal hierarchy. In such a system, the flow of information would be systematic and in the proper order. In this way, it would be easy to identify the original source of communication and thereby the proof of communication can be maintained.

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