CBSE Class 12 Business Studies - Directing 


Directing means where a manager instructs, guide and oversee the performance of the workmen to achieve the objectives of an organization. But in the context  of management of an organization directing refers to the process of guiding, leading instructing, motivating, coaching and counseling, people in the organization to achieve predetermined objectives of the organization. For example - a manager directs it’s supervisor and supervisor instructs the workmen in the factory how the work will be done.

According to ERNEST DALE – directing is telling people to do and see that they do it to the best of there ability.


  1. Initiates Action-  Function that initiates action – in the organization and all other functions are just preparatory in nature.
  2. Pervasive Function-  It is all-pervasive in the organization i.e directing found at each and every level of organization.
  3. Continuous Process- Directing is a continuous process and takes place throughout the life of an organization.
  4. Top to Bottom-  It flows from top to bottom i.e director instructs it’s CEO, CEO instructs general manager, general manager instructs deputy manager, deputy manager instructs manager/supervisor and at last manager/supervisor instruct workmen that’s how it flows downward.



Supervision is made of two words super- means over and above and vision – means an art of seeing. Therefore supervision is a process of guiding the subordinates/workmen and seeing them continuously so that they work in the desired manner and accomplish goals of the organization. It also ensures optimum utilization of resources.

Supervision is a function performed by a supervisor who is the immediate superior of workmen he instructs them, guides and lead them in the desired way to achieve objectives and ensures proper performance of workers.


Ensures Performance Of Work- supervisors are held responsible for the achievement of the task and motivating his/her employees to work effectively and efficiently thus ensuring the performance of work.

Maintains day-to-day contact and friendly relations with workers- supervisor acts as a guide, friend and philosopher to the workers.

Acts as a link between workers and management- supervisors play a very significant role as they convey management policies and ideas to the workers and conveys workers problems to the notice of the management.

Builds an efficient team of workers- a      skilled and knowledgeable supervisor can build an efficient team of workers by providing good on-the-job training.

Maintains group harmony among workers- a good supervisor solves out internal differences and maintain harmony among them. Thus, a supervisor maintains discipline in the organizations.

Improves motivation - a good leadership quality in a supervisor can build up a high morale among workers by influencing their behaviour towards achievement of organisational goals.


Motivation has been derived from a word motive which means anything which initiates action and sustain activity. Motivation is a process of stimulating people to achieve there desired goals .

According to WILLIAM G.SCOT -       ’Motivation means a process of stimulating people to action to accomplish desired goals. motivation depends upon satisfying needs of people.”

It’s a personal and internal feeling which directs one to achieve his or her predetermined goals, hence it’s also a continuous process which directs one throughout the time till he achieve something. It can positive  (increment, bonus or giving free holiday package ) or negative ( demotion, threats, punishment or penalities).

The process starts with a sense of unsatisified needs which creates tension in mind of a person, which stimulates his/her derives and leads to a search behaviour to satisfy such needs. If that need is satisfied, the person tension is relieved and if not then he/she will have to repeat the process again as u can see in the diagram.


FEATURES of theory:

  1. The urge to fulfill needs is a prime factor in motivation of people at work.
  2. Human needs from a particular structure or hierarchy, where – physiological or basic needs are at base of the hierarchy and self actualization need is at top.
  3. Lower level needs must be fulfilled before fulfilling higher needs emerges.
  4. As soon as one need satisfied other need emerges.
  5. A satisfied need is not a motivator anymore.
  6. Various needs level are independent and overlapping .

Hence 5 categories of human needs are-

  1. PHYSIOLOGICAL NEEDS: these needs are basic needs necessary for survival of a human being. If these needs are not satisfied properly individual cannot move forward to other needs in the hierarchy . for ex – food, clothing , save drinking water, house to stay.
  2. SAFETY NEEDS: Once physiological needs are satisfied other need arise is safety needs, where an individual wants protection from economic security and physical danger. Safety needs mostly come under management context. These needs are finite but still may serve as a motivator. In an organisation an individual feel motivated when there is proper job security provided to him and there is no uncertainty with regards to his job. hence motivations here are – job security, employee insurance, pension schemes.
  3. SOCIAL NEEDS:  Man is a social animal, he wants to be loved, seeks affections and associations with others, social needs hence are need for love, affection, belonging, acceptance, etc . these needs are considered as secondary needs because these are not necessary with context to human survival as they represent mind and spirit not physical body. In organization a supervisor can influence his workers by group and communication system.
  4. ESTEEM NEEDS: Esteem needs are of two types: self- esteem and esteem of others. Self - esteem needs include self-respect, self-confidence and competence, achievement, knowledge and independence. Esteem of others includes reputation, status, recognition. These needs are infinite and thwarting them results in inferiority, weakness and helplessness.
  5. SELF-ACTUALISATION NEEDS: These needs are of highest order. These are concerned with becoming what an individual is capable of becoming. These needs include self – fullfilment and growth of an individual. It is psychological in nature and very few person satisfy it.


Incentives mean all measures which are used to motivate people to improve performance. They are classified as -


Financial incentives refer to incentives which are in direct monetary form or measurable in monetary term to motivate people for better performance.

  1. Pay and allowances- for every employee salary is the basic monetary incentive. It includes basic pay, dearness allowance and other allowances.
  2. Productivity linked wage incentives- it aims at linking payment of wages to increase in productivity at individual or group level.
  3. Bonus- it is an incentive offered over and above the wages/salary to the employees.
  4. Profit-sharing - employees of the organisation are given a share in the profit of the organisation. This motivates them to improve their performance and contribute to increasing profits.
  5. Co-partnership- stock option- under these incentive schemes, employees are offered company shares at a set price which is lower than market price. Resulting in creating a feeling of ownership to the employees and making them contribute to the growth of the organisation.
  6. Retirement benefits- there are several retirement benefits like provident fund, pension, and gratuity provide financial security to employees after their retirement. This act as an incentive when they are in service in the organisation.
  7. Perquisites- in many, companies perquisites and fringe benefits are offered such as car allowance, housing, medical aid, and education to the children over and above the salary.


Non- financial incentives focus on psychological, social and emotional factors also play an important role in motivating employees. The emphasis is to provide psychological and emotional satisfaction rather than money-driven satisfaction.

  1. Status- it means the ranking of positions in the organisation. The authority, responsibility, rewards, recognition, p[erquisites and prestige of job indicate the status given to a person in an organisation. Psychological, social and esteem needs of an individual are satisfied by status given to their job.
  2. Organisational climate- it indicates the characteristics which describe an organisation and distinguish one organisation from the there such as individual autonomy, reward orientation, consideration to employees, risk-taking etc. thus influencing the behaviour of individuals in the organisation.
  3. Job enrichment - it is concerned with designing jobs that include a greater variety of work content, require a higher level of knowledge and skill .if jobs are enriched and made interesting, the job itself becomes a source of motivation to individual.
  4. Recognition- when employees are appreciated for their good performance of work, they feel motivated.
  5. Career advancement opportunity - every individual wants to form to a higher level in the organisation. Appropriate skill development programmes and sound promotion will help employees to achieve promotions. Promotion works as a tonic and encourages employees to exhibit improved performance.
  6. Job security- if the job of the employees is secured, there is certain stability about future income and work, it motivates employees to work with greater zeal. However, there is one negative aspect of job security. When people feel that they are not likely to lose their jobs, they may become complacent.
  7. Employee participation- it means involving employees in decision making of the issues related to them. These programmes are in practice in the form of joint management committees, work committees, canteen committees etc.
  8. Employee empowerment- empowerment means giving more autonomy and powers to subordinates .it makes people that their jobs are important resulting in making them contribute positively to the use of skills and talents in the job performance.


Leadership tends to lead people in the desired manner to achieve the goals of the organisation. It’s a process of influencing the behaviour of others just like leaders do in general in any organisation.

According to LOUIS ALLEN “ a leader is one who guides and directs other people. He gives the effort of his followers a direction and purpose by influencing  their behaviour.”

Hence leadership indicates the ability of a manager to maintain good inter-personal relation with his/her subordinate and influencing them to contribute to achieving organisational objectives.


  • A leader must have followers.
  • Leadership is a working relationship between the leader and his followers.
  • The purpose of leadership is to achieve some common goal or goals.
  • A leader influences his followers willingly not by force or coercion.
  • Leadership is a continuous process.


  • Physical Qualities – sound health, physical and nerve energy, vitality, endurance, and enthusiasm.
  • Intellectual Qualities – high intelligence, sound judgement, ability to teach, self-understanding, the quick decision-maker.
  • Moral Qualities- integrity, moral coverage, will power, sense of purpose, fair play, objective, achievement drive.
  • Social Qualities- tactful, ability to inspire, persuasiveness, self-confidence, empathy, initiative, human relation attitude, knowledge of human nature.


Leadership styles refer to leaders behaviour. A behavioural pattern which the leader reflects in his role as a leader is often described as the style of leadership.

On the basis how leaders uses its power leadership style can be classified under 3 broad category - 

Autocratic or Authoritarian Leadership

An autocratic leader exercises complete control over the subordinates. He centralises power in himself and takes all decision without consulting subordinates. He dominates the group with coercion and command. He never delegate the authority to subordinates and only expects the subordinates to follow them unquestioningly. He gives threats and rewards to direct subordinates.

  • This leadership style permits quick decision making.
  • It provides strong motivation and self-confidence to leader who leads them.
  • Style yield positive results when great speed is required.
  • Leads to frustration, low moral and conflicts among subordinates.
  • Subordinates tend to share  responsibility .
  • Full potential and creative idea of subordinates are not utilised.
  • This style may increase absenteeism.

Hence autocratic leadership style is suitable for uneducated, unskilled and submissive. Lack of knowledge makes necessary on the part of leader to take decision himself. When a leader prefers to dominate then there is no room for errors in final accomplishment of work. These days autocratic leadership style is less desirable as employees are becoming more educated and well- oraganised.

Democratic and Participative Leadership

A democratic leader takes a decision in consultation and participation with the subordinates. He decentralises authority and allows subordinates to share his power. The leader goes with the majority opinions and follows them. He keeps his group informed and provide freedom of thinking and expression. He always listens to the suggestion, grievances and opinions of the subordinates.

  • Improves job satisfaction and morale of subordinates.
  • It cultivates the decision-making ability of his followers.
  • Develops a positive attitude and reduce resistance to change.
  • Reduces labour absentees and labour turnover.
  • Leadership style is time-consuming and may result in delays in decision making.
  • Subordinates may develop the habits of being consulted each and every time if not consulted they may feel frustrated.
  • Works best when subordinates are eager to share their knowledge and are skilled. It is important to have plenty of time to allow people to contribute, develop a plan and vote on the best course for action. When time is the main factor then this leadership style may lead to communication failure and incomplete project.

Laissez-Faire or Free-Rein Leadership

Free- Rein leadership involves complete delegation of authority so that subordinates can take their own decision.  A leader under this style tends to avoid power and relinquishes the leadership position. He serves as a host who only provides the information needed to the subordinates.

  • Positive effect on job satisfaction and morale of subordinates.
  • Maximum possible scope for the development of subordinates.
  • Full utilization of the potential of subordinates.
  • Subordinates do not get the guidance and support of the leader.
  • Ignores the leader’s contribution just as autocratic style ignores the contribution of labour.
  • Subordinate may move in different directions and may work at cross purposes which may degenerate into chaos.
  • This form of leadership may be appropriate where the subordinates are well-trained, highly knowledge, self – motivated and ready to assume responsibility. 



Communication is an indispensable element in human relationship. Human beings interact with one another through communication. It means the exchange of ideas, facts, information and opinions or emotions between one another to create a mutual understanding.

According to KOONTZ and O’DONNELL -

communication is an intercourse by words, letters, symbols, or message, and is a way that one organization member shares meaning and understanding with another.”

Hence it is a process of communicating, passing information and create understanding from one person to another person.

  1. SENDER- communicator is the person who sends the message or an idea. He is the main source who initiates the communication process.
  2. MESSAGE-  A message is what is conveyed by the sender which consists of facts, ideas and opinions basically.
  3. ENCODING- it the use of proper verbal or non-verbal for transmitting the message i.e words, symbols, gestures, that is known to both the parties.
  4. CHANNEL/MEDIA- it is a medium or a route through which the message is conveyed to the receiver. It may be face-to-face talk, telephone, letter, etc.
  5. RECEIVER- receiver or communicate is the person in the group who actually supposed to receive the message. he may be the reader, observer or listener.
  6. DECODING- it means translating the message into words for the purpose of understanding. The receiver interprets the message to understand the meaning of it from symbols, gestures and words.
  7. Feedback- it is the response of the receiver or reaction that he/she for whom the message is sent has understood the message or not. This stage in the communication process increases the effectiveness of the communication.


Communication is generally of 2 types in any organization-

1. Downward Communication – it refers to the flow of information from superior to the subordinate i.e high level to lower level. It is used to issue orders and instructions, informing objectives, policies and programs of the organisation. It’s effectiveness can be judged by degree of improvement in the performance of the subordinates.

Downward communication performs following functions: 

1. Prepares employees for change.

2. removes confusion and suspicions.

3. getting workdone.

4. creates pride of being well-informed

2. Upward Communication- upward communication flows downside to up i.e from lower level to higher level. It flows from subordinate to superior. It includes reporting of work, giving anykind of valueable information or suggestion , conveying any grievances or complaints from workmens at lower levels, making request for signing leave application etc.

3. Horizontal Communication- downward and upward communication are the part of vertical communication but horizontal communication is different from both of it. Horizontal communicate takes place where the superiors or the subordinates at same level of different department communicating  with each other is known as horizontal communication. It means production manager is talking to finance manager about releasing of funds for production. That means both are at same level. Horizontal communication  includes – inter department memos, line and staff players, telephonic conversations, union-management meetings etc.

4. Crosswise or Diagonal Communication – it is totally different from all three. Diagonal communication take place between different persons of diferent department at different levels.

For Example- workmen for production department communicating with clerk of cost department. It’s a least used channel of communication in the organisation. A diagonal communication take place when sales representative submits it’s reports directly to the cost and work accountant. Such communication may save time and provide speed but violates the principle of unity of command.

Formal communication not only took place within the organisation but also take place between external environment i.e company may supply information to customers, investors, government, financial institutions and public for establishing mutual understanding  and better public relations.

Formal Communication Networks –

  • Circle Network – In case of circle network , the message moves in a circle. Here each individual communicates with two others located on both the sides. This type of network offers a wider choice of channels and offers greater satisfaction to employees. But it is very slow, noisy and unorganized.
  • Chain Network – under this network, the message flows to both side upside and downside. All the subordinates receive orders and instruction from one superior and reports to him .
  • Wheel Network – under this network a number of subordinates report to one superior. It’s called wheel because all communication pass through the center person similar to the hub of provides no direct communication among the subordinates. It is the fastest but the most authoritarian network.
  • All channel Network- it represents free flow of communications i.e every member is allowed to communicate with each and every other member. It provides highest satisfaction and informal network.
  • Y Network – under this style one person that may be head of the project is in center and that one person communicate with other person in the project. Both upward and downward communication take place


It takes place in informally and inter-personally between the employees of the organization. Members pass on information informally to others no set of channels are followed.

There is no barriers and any kind of boundaries in communication. It is multiple in nature same person is having relationship with several other persons in the organization.

It is technically known as Grapevine Networks. Widespread of rumours take place under this system of communication.

Grapevine channels carry information rapidly and , therefore may be useful to the manager to transmit information to know the reactions of his / her subordinates.

  1. The grapevine communication spreads rapidly and sometimes gets distorted . It is very difficult to detect the source of such communication.
  2. It also generates rumours . people behaviour is affected by rumours and informal discussions and sometimes may hamper work environment.

Grapevine communication may follow different types of networks , which are given below.

  1. Single strand network- a person communcates with other in sequence
  2. Gossip network- a person communicates with all on non- selective basis.
  3. Probability network- a person communicates randomly with others.
  4. Cluster networks- a person communicates with only those people whom he/ she trusts. Cluster is most popular  in n organistaion.


Barriers to communication in the organisation is classified under 4 broad categories , these are as follows:


These barriers  are concerned with problems/ obstructions in the process of encoding or decoding the message into words or impressions.

  1. Badly expressed message- sometimes intended meaning may not be conveyed by a manager to his subordinates. These badly expressed messages may be an account of inadequate vocabulary, usage of wrong words, omission of needed words etc.
  2. Symbols with different meanings- a word may have several meanings . 

For Example-  the word “cost"may mean unit cost of production to the production manager, advertisement cost to the marketing manager and a debit item of profit and loss account for the accounts manager.

This  type of language barrier causes difficulties in effective communication.

3. Faulty translations - sometimes the communication drafted in one language e.g English need to be translated to the language understandable. To workers. E.g Hindi . If the translator is not proficient with both the languages , may arise causing different meanings to the communications.

4. Unclassified assumptions- if the sender does not clarify the assumptions about the message , the receiver may have different assumptions .

For Example-  a boss may instruct his subordinates to take care of guests . Boss may mean to to take care of transport, food, accommodation of guests whereas, subordinate may interpret that guest to be taken to hotel with care.

5. Technical jargons- it is generally found the specialist use technical jargons  while explaining to persons who are not specialists in the concerned field. Therefore , they may not understand the actual meaning of many such words.

6. Body language and gesture- the body language and gesture of the communicator plays a very important role while communicating the message . Every body movement conveys some meaning. therefore, if the message being conveyed and the body movement does not match it will result in communication problems.


These barriers arise on account of the emotional or psychological status of the sender and receiver off the message.

Some of the psychological barriers are-

  1. Premature evaluation- some time people evaluate the meaning of message before the sender completes his message. Such premature evaluation may be due to pre-conceived notions against the communication.
  2. Lack of attentiion- inadequate attention top the message make the communication less effective and the message is likely to be misunderstood.

3. Distrust- if the sender of the message and the receiver of the message does not trust each other it will result in ineffective communication.

These barriers are related to organisational structure, authority relationships, rules and regulations.

  1. Rules and regulations- rigid rules and regulations may b hurdle to effective communication.
  2. Status- status of the superior may create distance between him and his subordinates . A status conscious manager dos not allow his subordinates to express their feelings.
  3. Complexities in organisational structure- in an organisation, with large number of managerial levels, communication gets delayed and distorted as the number filtering points is more.
  4. Organisational facilities- facilities like frequent meetings, suggestion box, complaint box etc, will encourage free flow of communication. Lack of these facilities may create communication problems.


These barriers are related to the personal factors of both the sender and the receiver of communication.

  1. Fear of challenge to authority- if the superior receives that a particular communication may adversely affect his authority, he or she may withhold pr suppress such communication.
  2. Lack of confidence of superior on his subordinates- if the superior does not have confidence in the competency of their subordinates , they may not seek their advice .
  3. Unwillingness to communicate- sometimes, subordinates may not be prepared to communicate with their superiors , if they perceive that it may adversely affect their interest.


There are certain measures which help to overcome the barriers to communication and improve communication effectiveness.

  1. Clarify the ideas before communication- senders of the message must clarify in the minds the purpose of the message being communicated. The entire problem should be studied in depth, analysed and stated in such a manner that is clearly conveyed to subordinates.
  2. Communication according to the needs of the receiver- the level of the understanding of the receiver should be clear in the mindset of the communicator. A manger should adjust his communication according to the education and understanding of the subordinates.
  3. Consult others before communicating - before, communicating the message , it is better to consult and encourage other people to participate to collect the facts, analyse the message and select the appropriate media/
  4. Beware of language , tone and content of message- these all are the important aspects of the effective communication. The language use should be understandable to the receiver and shouldn’t offend the sentiments of the listener. The message should be stimulating to evoke response from the listeners.
  5. Ensure proper feedback- the receiver of the communication should always respond to communication. The communication process may be improved by the feedback received to make it more responsive.