THE COPPERBELT UNIVERSITY

SCHOOL OF BUSINESS

DEPARTMENT OF PRODUCTION, OPERATIONS AND

MANAGEMENT

2008

BSP/BS 150/BF 110: PRINCIPLES OF

MANAGEMENT

LECTURE NOTES

LECTURER: DR. B. MALITI

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 TABLE OF CONTENTS

PAGE

1. Nature of Management………………………………………………………1
1.1 Introduction………………………………………………………………
1.2 Classification of Managers……………………………………………....
2. Evolution and Development of Management Thought………………….....
2.1 Introduction……………………………………………………………..
2.2 Scientific Management…………………………………………………
2.3 Max Weber and the Concept of Bureaucracy……………………......
2.4 The Hawthorne Experiments……………………………………….....
3. Planning and Decision Making………………………………………….....
3.1 Introduction…………………………………………………………….
3.2 The Planning Process: Rational Approach…………………………..
3.3 Establishing a Climate…………………………………………………
3.4 Decision Making………………………………………………………..
3.5 Decision Making Tools………………………..
4. Power and Authority………………………………………………………..
4.1 Power ………………………………………………………………….
4.2 Influencing……………………………………………………….
4.3 Authority……………………………………………………………….
4.4 Effective Delegation……………………………………………………
5. Nature and Purpose of Organizing…………………………………………
5.1 Introduction………………………………………………………..
5.2 The Organization Structure……………………………………….
5.3 Problems with Levels………………………………………...........
5.4 The Environment……………………………………………..........
5.5 Departmentation……………………………………………..........
5.6 Process or Equipment Department……………………….............
5.7 What is the Best Pattern…………………………………...............
5.8 Coordination versus Departmentation…………………...............
5.9 Guidelines for Making Delegation Effective……………...............
6. Groups in Organizations………………………………………………………

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 6.1 Introduction………………………………………………………….
7. Motivation and Leadership……………………………………………….
7.1 The Nature of Motivation……………………………….....................
7.2 Process Theories of Motivation…………………………………
7.3 Content Theories of Motivation…………………………………..
7.4 Reinforcement Theories of Motivation………………………………
7.5 Contemporary Issues in Motivation…………………………………..
8. Leadership…………………………………………………….........................
8.1 Introduction………………………………………………………
8.2 The Ohio State Leadership Studies……………………..................
9. Controlling…………………………………………………….......................
9.1 Introduction…………………………………………………………
9.2 The Basic Control Process………………………………...............
10. Communication
10.1 Communication……………………………………………………
10.2 Barriers to Effective Communication……………………………
11. Human Resource Management………………………………
11.1 Introduction
11.2 The Staffing Process…………………………………………….
11.3 Training and Development……………………………………
12. Readings………………………………………………………………………..

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 MODULE 1
NATURE OF MANAGEMENT

UNIT 1: INTRODUCTION

Management may be viewed as making things happen. It is about developing people,

working with them, reaching objectives and achieving results. Management takes place
within a structured organization setting. It is directed towards the attainment of aims and
objectives. It is achieved through the efforts of other people and it uses systems and
procedures.

Management can be viewed as:

1. A Discipline – Designating management as a discipline implies that it is an
accumulated body of knowledge that can be learned by study. Thus
management is a subject with principles, concepts and theories. The purpose
of studying management is to understand these principles, concepts and
Theories and learn how to apply them in the process of managing.
2. A process – Management is a process involving certain functions and work
activities that managers perform to achieve goals of an organization.
3. An Art – Successful managers are those born with appropriate initiation,
intelligence and personality, which they develop through the practice of
leadership.
4. A Career – People who wish to have a career as a manager must study the
discipline of management as a means toward practicing the process of
management.
5. As People – The word management also refers to people (managers) who
engage in the process of management. Managers are the people
primarily responsible for seeing that work gets done in an organization.
The perspective of management as people has another meaning. It refers to
and emphasizes the importance of the workers whom managers work with
and manage in accomplishing an organization‟s goals. People are an
organization‟s lifeblood. Without people goals cannot be achieved.

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MANAGEMENT DEFINED

Def.: Management is the process of working with and through others to achieve
organizational objectives within a changing environment by balancing efficiency
and effectiveness.
Five components of this definition require closer examination:
(i) Working with and through others – management is a social process. It calls for
managers to interact well with others. Intimidating and arrogant managers who
are poor team players can expose their companies to costly lawsuits.

(ii) Achieving Organizational Objectives

Objectives are the desired end-results the organization is striving to achieve.
These objectives give purpose and direction to the management process and
also serve later as measuring sticks for performance.

(iii) Balancing Effectiveness and Efficiency

Effectiveness (doing the right thing) is the degree to which the goals of an
organization have been met. In essence, effective managers are those who
select the correct approaches and achieve their goals. But given the reality of
limited resources, effectiveness alone is not enough. Efficiency (doing
the thing right) is an element in the process of management that balances
the amount of resources used to achieve an objective against the outputs.
It is based on the physical and engineering sciences and concerns the
relationship between inputs and outputs.

For example, the efficiency of an automobile engine is based on the energy value of the
fuel that is necessary to generate a given level of power output. In organisations the
inputs are the human, physical and financial resources available to the manager. Efficient
managers achieve high levels of output (goal accomplishment) with a given base of
inputs.

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When managers are able to minimize the cost of the resources that are used to attain goals
they are functioning efficiently.

BALANCING EFFECTIVENESS AND EFFICIENCY

Too much emphasis on effectiveness results into:

EFFECTIVENESS But EFFICIENCY

EFFECTIVENESS Because EFFICIENCY

The Job Does not Available Resource
Get Done Are Underutilised

BALANCED EMPHASIS ON EFFECTIVENESS AND EFFICIENCY LEADS TO

EFFECTIVENESS EFFICIENCY
The Job Gets Done and Limited Resources
Are not wasted

In productive organisations, managers are the trustees of limited resources and it is their
job to see that the basic factors of production, land labour and capital are
used efficiently as well as effectively.

(iv) Coping with a changing Environment – successful managers are the ones who
anticipate and adjust to changing circumstances rather than being passively
swept along or caught unprepared.
There are four sources of change namely:-

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 (a) Globalization – networks of transportation and communication have tied
the peoples of the world together. Business and job opportunities show
little regard for international boarders these days.
(b) The evolution of product quality – global competition has awakened
managers to quality issues. Today‟s model managers should focus on
continuous improvement of personnel, processes, and product.
(c) Environmentalism – this calls for a healthy environment. Managers are
challenged to develop create ways to make a profit without unduly
harming the environment.
(d) Business Ethics – managers are under pressure from the public to ensure
that their organisations reflect high standards of ethical behaviour.

WHAT DO MANAGERS DO?

In the field of management, various models are used as aids in understanding the
Manager‟s job. One approach, known as Functional Approach by Henri Fayol,
focuses on managerial functions. The functions of management are those elements of
the management process that give management its distinctive quality as a productive
activity.
Fayol, writing in 1916, enumerated these functions as planning, organizing, commanding,
co-coordinating and controlling. Over the years Fayol‟s list of managerial functions has
been updated and expanded by management scholars. Eight managerial functions have
been identified: planning, decision making, organizing, staffing, communicating
motivating, leading and controlling.

Planning – Commonly referred to as the primary management function, planning is the

formulation of future courses of action. Plans and the objectives on which they are based
give purpose and direction to the organization.
Decision Making – Managers choose among alternative courses of action when
they make decisions.

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Organizing - Structural considerations such as the chain of command, division of
labour and assignment of responsibility are part of the organizing function.
Staffing – consists of recruitment, training and developing people who can
contribute to the organized effort.
Communicating – Managers are responsible for communicating to their employees the
technical knowledge, instructions, rules and information required to get the job done.
Recognising that communication is a two way process, managers should be responsive to
feedback and upward communication.
Motivation – this involves satisfying the needs of individuals and meeting their
expectations with meaningful work and valued rewards.
Leading – Managers become inspiring leaders by serving as role models and
adapting appropriate management style in a given situation.
Controlling – Involves comparing desired results with actual results and taking the
necessary corrective action.

MANAGERIAL ROLES MODEL – BY HENRY MINTZBERG

Mintzberg and his followers have suggested that a more fruitful way of studying what
managers do is to focus on the key roles they play. A role is an organized set of
behaviours that the manager performs. Using a method called “structured observation"
which entailed recording the activities of five top-level executives, Mintzberg isolated ten
roles he believes are common to all managers. These roles have been grouped into three
major categories: Interpersonal, Information and Decision roles.

A. INTERPERSONAL ROLES
Because of their formal authority and superior status, managers engage in a good
deal of interpersonal contact.
The three interpersonal roles that Managers play are:
1. Figurehead – managers serve as a symbol of legal authority; they perform
tine duties of a legal or social nature – e.g. signing of documents.

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2. Leader – responsible for motivation of subordinates and for staffing and
training.
3. Liaison – maintains networks of outside contacts to obtain favours and
information.

B. INFORMATION ROLES
The manager carries out three informational roles:
4. Nerve Centre (Monitor) – seeks and receives information to obtain a
thorough understanding of an organization and its environment.
The information helps to identify problems and opportunities.
5. Disseminator – transmits information received from outsiders or insiders
to other members of the organization.
6. Spokesperson – transmits information to outsiders on organization plans,
policies and actions.

C. DECISIONAL ROLES
In their decisional roles, managers balance competing interests and make choices.
The four (4) decisional roles are:
7. Entrepreneur – initiates and supervises design of organizational
improvement projects as opportunities arise.
8. Disturbance handler – responsible for corrective action when an
organization faces unexpected crises.
9. Resource allocator – responsible for allocating of human, monetary and
material resources.
10. Negotiator – responsible for representing the organization in bargaining
and negotiations.

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UNIT 2 CLASSIFICATION OF MANAGERS

Managers can be classified by their degrees of specialization and by their

organizational level.

DEGREE OF SPECIALISATION
Within an organization, managers differ in their degree and type of specialization.
Those who have the least amount of specialization are known as general
managers. A general manager has responsibility for the overall performance of an
organization, including the performance of several functions. General Managers
typical control the inputs necessary to provide an organisation‟s product or
service. An example of a General Manager is the Chief Executive Officer of a
business firm like Zambia Sugar Limited.

Those who have job duties in a particular functional area of an organization are
known as functional managers. Every organization performs certain functions in
order to achieve it goals. These functions include finance, marketing, production,
engineering etc.

LEVELS OF MANAGERS
Managers can be classified according to the level of the organization where their
job is.

There are three organizational levels:-

First – Level Managers – Managers at the first or lowest managerial level of an
organization often called supervisors or foremen. Supervisors and foremen
usually manage employees who are not themselves managers.

First-level managers are primarily concerned with managing the day-to-day

operations of a section or a department of an organization. Their jobs can be very

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demanding because they spend most of their time with subordinates and their
work is full of interruptions and they often have to switch tasks.

Middle – Level Managers – support the infrastructure of business firms. They

play a major role in implementing the policies of the top-management group and
in making decisions that affect business success. The subordinates of middle-
level manager are almost always other managers or supervisors.

The have a difficult job in that they are not sufficiently senior to have a role in the
forming of strategy and at the same time are distanced from the organisation‟s
main activity.

Top Level Managers – or Executives are responsible for the overall direction and
operations of the organization. They not only select the basic aims and goals of
the organization, but also formulate the major strategies by which the organization
hopes to achieve these goals. They provide leadership essential to organizational
success. They play the critical role in establishing the organisation‟s culture and
climate

MANAGEMENT AND LEADERSHIP

Management and Leadership differ in many ways as follows:

MANAGEMENT
1. Managers are people who do things right.
A managerial culture emphasizes rationally and control. Whether his/her energies
are directed towards goals, resources, organization structures, or people, a
manager is a problem solver. The manager asks: "What problems have to be
solved and what are the best ways to achieve results so that people will continue
to contribute to this organization? Tom Peters and Nancy Austin associate
"Manager" with words like cop, reference, decision maker and pronounce.

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A manager requires that many people operate efficiently at different levels of
status and responsibility. It takes persistence, tough-mindedness, hard work, and
tolerance to be a manager.

2. Managers tend to adopt impersonal, if not passive attitudes towards goals.

Managerial goals arise out of necessities rather than desires.

3. Managers tend to view work as an enabling process involving some

combination of people and ideas, interacting to establish strategies and make
decisions. In this enabling process, managers use rewards, punishment,
and other forms of coercion to get work done.

4. Managers prefer to work with people.

The need to seek out others with whom to work and collaborate seems to stand
out as an important characteristic of managers. Managers however, are not
sensitive to other people‟s feelings. They lack empathy, or the capacity to sense
the
thoughts and feelings of others. Managers relate to people according to the
role they play in a sequence of events.

4. Managers see themselves as conservators and regulators of an existing

order of affairs with which they personally identify and from which they gain
rewards. Perpetuating and strengthening existing institutions enhance a
manager‟s sense of self-worth..

LEADERSHIP
1. Personality – Leaders are people who do the right thing. Leadership
requires using power to influence the thoughts and actions of other people.
Leadership is simply a practical effort to direct affairs, Peters and Austin
associate a leader with words like cheerful, enthusiastic, coach, facilitation
and builder.

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 2. Attitude towards goals – Leaders are active instead of reactive, shaping
ideas, instead of responding to them. Leaders adopt a personal and active
attitude towards goals. The influence a leader exerts in altering moods
and evoking expectations, and in establishing specific desires and
objectives determines the direction a business takes. The net result of this
influence changes the way people think about what is desirable, possible
and necessary.

3. Conceptions Of Work – A leader‟s view of work is different. Where,

managers are to limit choices; leaders develop fresh approaches to long-
standing problems and open issues to new options. Leaders project ideas
into images that excite people and only then develop choices that give
those images substance. Leaders work from high-risk positions; indeed,
they seek out risk and danger especially where the chance of opportunity
and reward appears promising relations with others.

4. Relations with others – Leaders are rich in emotional content. They attract
strong feelings of identity and relate in a more intuitive and emphatic
ways.
5. Sense of Self – Leaders are people who feel separate from their
environment. They work even in organisations to which they don‟t belong.
Their sense of who they are does not depend on memberships, work role
or other social indicators of identity.

Bens and Burn contend that the problem with many organisations today especially the
ones that are failing is that they tend to be over managed and underlet. Thus being a
manager does not imply that a person is also a leader. A manager who relies solely on
force and formal authority to direct behaviour of subordinates is not exercising
leadership.

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Leadership involves neither force not coercion. Leadership and management are not
mutually exclusive. Rather, they are complementary – both are necessary for the success
of the organization. However, leadership goes beyond management and in order to
survive and prosper in the business environment of today, organisations require people
who are vision – oriented i.e. who possess leadership qualities.

MANAGERIAL EFFECTIVENESS
Over the past years there has been a proliferation of books and articles about managerial
effectiveness and how it can increase productivity. Companies are trying to improve
executive skills through education programs, sensitivity training and participatory
management. Despite these efforts some managers have continued to perform in the
managerial style of a past era, characterized by self-serving attitudes, empire building and
autocratic methods. These styles include the following:

1. The Godfather – despite the current emphasis on teamwork and participatory

management, the Godfather style still prevails.
Godfathers‟ typically demand complete control for their organisations and total loyalty
from their employees. Subordinates are given freedom in their routine duties, but their
goals are dictated from above. Groups led by Godfathers are normally goal oriented and
known for getting thing done. Outsiders see them as well-oiled machines. Superiors
depend on them. People who have been subjected to this style for many years rarely
become good managers themselves. Most often they become new Godfathers.

2. The Ostrich – Ostriches love the status quo and fear discord. They always hope
problems will simply go a way and would rather stick their heads in the sand than
face unpleasantness of any kind. Ostriches believe firmly in no confrontational
approaches to problem solving and they avoid issues and debate. Ostriches are more
concerned with a superiors‟ opinion of their job performance than with the moral of their
subordinate, who often lack initiative, imagination and productivity, especially if they
have had their Ostrich managers for a long time. Progress cannot be achieved without
conflict and a preference for the status quo stifles growth and can weaken moral.

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3. The Do-it-yourself - Do- it- yourself managers want to handle everything
themselves, especially the more challenging assignments. The only tasks they
they ordinarily delegate are the ones that they find trivial or that require special
skills. All live by the motto, “if your want a job done well, do it yourself". They
spend long hours at their jobs. When a do-it-yourself manager falls sick, the
entire department comes to a stand still.

4. The Detailer – detailers want to know everything their subordinates do "in detail".
In larger organisations, detailers are so busy trying to keep up with their employees that
they are virtually incapable of managing groups of any size. Detailers don‟t like group
decisions and find delegating difficult. When they do delegate they stay constantly in
touch to make sure that subordinates do not arrive at independent decisions. Detailers
generally lack confidence in others and make subordinates redo assignments again and
again.

5. The Politician – many of us like to work for politicians because they tell us what
we want to hear. Their superiors like having them around for the same reason. One
of the drawbacks to this style is that politicians tend to overdo it.

6. The Eager Beaver – In the same way that beavers build large dams to interrupt the
flow of water, so eager Beavers create ever-greater workloads and eventually
interrupt the smooth functioning of their organisations. These managers measure
their worth by the number of letters and reports they generate and by how hard
their subordinates work. They are seldom content unless their subordinates put in
overtime and work weekends at least occasionally. Unnecessary work
demoralizes employees and constant work pressure wears them down.

SKILLS OF EFFECTIVE MANAGERS

1. Decision maker – effective managers are decisive. Decision making ability is by
far the most important tool a manager needs on a daily basis. Most of these

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decisions involve job assignments, people and inter-organisational dispute. A
manager is expected to not only make the right decision but also to encourage
subordinate participation.

2. Listener and Communicator – A supervisor must be sensitive to moods and

attitudes. By listening and communicating well, managers can fulfil the basic
human need employees have; to be recognized and appreciated. Good listening is
also part of an effective style in meetings. Successful Managers never dominate the
table but let everyone express his or her views.

3. Teacher – One of the responsibilities of a good manager is to train subordinates to

become managers. There are many ways to help people learn to make decisions, delegate
responsibility even to the lowest ranks, include subordinates where feasible in every
project, hold regular discussion sessions, etc. Effective managers use all these ways of
building positive self-images in their employees. Good managers delegate well, and
trusting people to do the right thing, give minimal direction. They don‟t reprimand
subordinates who fail but encourage them to try again and to seek the help of co-workers
whenever possible.

4. Peacemaker – effective managers know how to minimize conflict. One way is to

encourage work groups like quality circles and another way is to rotate jobs and
reassign people.

5. Visionary – effective managers set goals that are firm and meaningful, and
never let themselves or their subordinates lose sight of them.

6. Self-critic – Not many managers are self-confident enough to admit their

mistakes. Effective managers are quick to admit their own mistakes and don‟t
dwell on the mistakes of others. They want to learn from mistakes so as not to
repeat them.

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7. Team captain – working alone, managers may find it difficult to make decisions
affecting the whole organization. Consensus decision-making is a powerful tool.

8. Leader – Good managers genuinely like and appreciate people. They don‟t just
manipulate or command; they lead. Effective managers have a drive and determination.
They have qualities like trust, politeness, patience and sensitivity.

9. Abandon excessive perks – good managers always treat subordinates as people

first and employees second. They do not take pride in the symbols of their status neither
do they consider themselves members of an elite class. In fact, perks and status symbols
often act as obstacles to good management. After many years of enjoying these records,
some managers develop such a sense of privilege that they begin to look on employee
concerns and complaints as encroachments on their benefit. Of course not all perks are
bad business practice. Many successful companies use them as a means of projecting
company‟s images to outsiders. Managers need to mix with subordinates to promote a
spirit of teamwork, to nurture commitment to the job and to monitor the heartbeat of the
company.

10. Technical skills – Good managers team a whole new set of technical skills. They
must know about information systems, and be able to use a broad range of analytical
tools.

MODULE 2

EVOLUTION AND DEVELOPMENT OF MANAGEMENT THOUGHT

UNIT 1 INTRODUCTION

Management theory has developed in bits and pieces through the years. The actual
practice of management has been around for thousand of years. The pyramids of Egypt

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and the Great Walls of china, for example is a good evidence of the ancient world‟s
ability to manage. The only missing element at that time was systematically recorded
body of management knowledge.

The study of organisations and their management dates back to the 19th century period
which saw the emergence of large industrial organisations and the arising problems
associated with their structure and management. The industrial revolution had major
impacts on the usual way of doing business. As organisations became more and more
complex new and significant problems arose for which accepted business practices where
no longer adequate. Changes in the basic business processes brought changes in the
relationships of the employees to employers and to each other. The old management
techniques were found to be less and less effective. New solutions had to be found.
Because of its interdisciplinary nature, there has been a lot of explosion in the field of
management. The main approaches to organization structure and management include:
- The classical school
- The behavioural Approach
- The Systems approach
- The contingency approach
- The management science/decision making approach.

The Classical School grew out of the need to find guidelines for managing complex
organisations. The classical school, which flourished from 1890 to 1938, is represented
by writers such as Taylor, Gantt, Gilbreth, Fayol, Weber, Urwick, and Barnard. The
classical writers thought of the organization in terms of its purpose and formal structure.
They placed emphasis on the planning of work, the technical requirements of the
organization and principles of management. Attention was given to the division of work,
clear definition of duties and responsibilities and maintaining specialization and co-
ordination. The classical writers focused on improving the structure. They placed
emphasis on the planning of work, the technical requirements of the organization and
principles of management. Attention was given to the division of work, clear definition
of duties and responsibilities and maintaining specialization and co-ordination. The

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classical writers focused on improving the organization structure as a means of increasing
efficiency.

The Behavioural School grew in part, as a reaction against the apparent rigidity of the
classical school. It draws attention to the importance of morale, motivation, recognition
of effort and security. It views the worker as an individual who has needs and
aspirations, and it downgrades efforts to see him solely in terms of labour costs.
Exponents of this school include Elton Mayo, Fredrick Hertzberg, Douglas McGregor,
Abraham Maslow, Joan Wood ward, Burns and Stalker.

The Systems Approach developed as a result of business decisions‟ effects on a wide

range of people outside the organisations. It advocates that managers should recognize
that organisations are systems consisting of interdependent parts and that a change in one
part affects other parts. Ludwing Von Bertalamffy is the pioneer of this work.

The Contingency Approach developed by Fred E. Fieldler in 1967 is a management

theory which points out that the manager‟s actions are dependent on the conditions of
various key elements in a given situation.

The Management Science Approach often called Operations Research/Decision

making approach attempted to make management decision making more rational by
employing mathematical techniques to solve problems. An understanding of how
decisions are made helps in understanding behaviour in the organization. Leading writers
of the decision making approach include Simon, Howe, Cyert, Gordon and March. The
scope of the decision making approach is wide and other contributors include engineers,
mathematicians, operational research specialists, economists psychologists and writers on
management and organization.

Each group of scholars has interpreted and reformulated management according to its
own perspective. There is no single theory of management that is universally accepted.

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Koontz terms the various approaches to explaining the nature and knowledge of
managing as management theory jungle.

RELEVANCE OF THE DIFFERENT APPROACHES TO MANAGEMENT AND

ORGANISATIONAL BEHAVIOUR.
The various approaches represent a progression of ideas, each building on from the other
and adding to it. The approaches are not in competition with each other and no one
approach should be viewed as if it were the only approach, replacing or superseding
earlier contributions. Many ideas of earlier writers are still of relevance today and of
continuing importance in modern management practice.

The study of the various approaches helps the organization and managers in particular, to
take from the different approaches those ideas which best suit the particular requirements
of the job. For example, in dealing with a problem of structure, the ideas of the classical
writers or of contingency theory might be adopted. When there is a problem relating to
personal management ideas from the human relations movement might be of most value,.
If the problem is one of environmental influence, insights from the systems approach
might prove most helpful. For problems of a more quantitative nature, ideas from the
decision making approach or from management science might be applicable.

THE CLASSICAL APPROACHES

The classical approaches to management were developed early in the twentieth century.
The main strands of thought which make up the approach of the classical school were
drawn from scientific management theory and administrative management and
organization approach. Scientific management is associated with Taylor (1856-1915).
Other contributors to scientific management include Henry L. Gantt, Frank B. Gilbreth
and Lillian M Gilbreth.

The administrative management and organisation approach is represented by writers such

as the French management expert, Henri Fayol (1841-1925), the German Sociologist

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Max Weber (1864-1920), Chester Barnard (1886-1961), and Lyndall Urwick (1891-
1983).

SCIENTIFIC MANAGEMENT BY FREDERICK TAYLOR (1856-1915)

Scientific management arose out of a need to improve manufacturing productivity
through more efficient utilization of physical and human resources. Factories at that time
were experiencing problems in formulating proper work procedures, establishing the
boundaries of jobs, and coordinating the flow of raw materials. A breakthrough occurred.
When certain members of the engineering profession became interested in the process of
work flow. One engineer in particular, Fredrick Taylor became known as the father of
scientific management.

Taylor‟s ideas about management of jobs grew out of his years of experience in three
companies: Midvale steel; Simon‟s rolling machine and Bethlehem steel. Taylor was
appalled at industry‟s unsystematic practices. For example, there were not work
standards that specified daily work output for the operator, nor was there a relationship
between output and the wages system. Experience both as a worker and as a manager
had convinced him that few, if any, workers put more that the minimal effort into their
daily work. He called this soldering i.e. employees deliberately working at a pace slower
than their capacities. He also blamed management‟s practice of making decisions based
on hunch and rules of thumb as the primary contributions to the large conduct of waste
that was present.

Taylor‟s approach to management was influenced by his basic philosophy of work. First,
he believed that prosperity for the employer and the employee could be achieved only
through maximizing productivity improvements. However, productivity could come only
from developing more efficient jobs. Second, the continued growth of industry could
come only from a complete revolution in the mental attitudes of employers and
employees towards work. In other words, the future economic well being of the worker
would come from more efficient work methods and habits. Finally, the heart of scientific
management is in the cooperation between management and the worker.

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Scientific management is defined as "that kind of management which conducts a business
or affairs by standards established by facts or truth gained through systematic
observation, experiment, or reasoning. Taylor started scientific management movement
in industry in four areas: standardization, time and task study, systematic selection and
training, and pay incentives. Taylor developed a process of fact gathering and objective
analysis that focused exactly on what the worker did to perform a task. He identified
each element of the worker‟s job and measured every factor that was adaptable to
measurement. From these studies, a set of scientific management principles evolved.

UNIT 2 PRINCIPLES OF SCIENTIFIC MANAGEMENT

1. Develop a science for each element of a worker‟s job that replaces rules of thumb-
emphasis was on the use of the scientific method rather than intuition and experience to
determine the activities engaged in by workers. Through time and motion studies of any
work, the best way of carrying out that work could be discovered. Motion studies were

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aimed at discovering the minimum movements of the body required to carry out a
particular task. The results of time and motion studies of any work were called "The
science of work". Through standardization of work, time and energy wastage were to be
avoided.

2. Establish standards with respect to methods and time for each task – Time and
task studies were conducted using observational methods. The worker‟s movements
along with the time needed to complete a particular job were observed. After careful
analysis of the observations jobs would be redesigned in a more efficient manner.

3. Scientific selection of the worker – Taylor believed that it was important to

properly identify the person for the right job. Proper selection of people with the
appropriate abilities, coupled with specific training would facilitate good performance. A
scientifically selected worker was one who was best suited to do a particular job. He
contended that any person is a first class worker at a particular work, if only he/she could
be helped to discover that particular work. Taylor suggested that tests be used to
determine whether or not a person had the necessary attributes for a particular job. For
example, he developed a speed and reaction test for quality control inspectors.

4. Wage incentives should be an integral part of each job. One central point in
scientific management is that workers should be paid according to their individual
performances. Taylor preferred piece rate payment system. His argument was that
piece rates were good because they were fair to the hard working worker. Workers were
seen as motivated by economic rewards and Taylor believed that if material rewards were
closely related to work efforts the worker would respond with the maximum performance
he was physically capable of.

5. Job specialization should be a part of each job – Taylor believed that each worker
should be a specialist in what he did because this would ensure that each worker knew his
job well. This specialisation also includes management, which he termed functional
foremanship. Taylor‟s foremanship concept held that each employee should be

23
supervised by several foremen, each with distinct responsibilities. One foreman would be
responsible for machine speeds, another for repair, etc.

6. Planning and scheduling of the work – everything in the organisation had to be

done by plan, from yearly plans for the total organisation to daily plans for the individual
worker. Planning and scheduling activities involved getting the people and the material
at the right place, right time and in the proper condition to be used.

Taylor argued that scientific management was good for both the worker and the
management because it boasts production, which in turn boosts profits, which in turn
enables distribution of bigger dividends to capital owners and payment of higher wages
to workers.

Criticisms of Scientific Management

Critiques of scientific management theory consider it as a "machine model", regarding
human beings as mere factors of production. It is said to emphasise the use of man‟s
physiological powers and ignores the complexities of his emotional behaviour. There is
no consideration of the feelings, attitudes and private goals of the individual, neither is
there any realization that the worker is a social being influenced in his behaviour and
attitude by his colleagues, by the social structure and culture of the groups within which
he finds himself.

Contributions
In spite of the contemporary criticisms, Taylor made a lasting contribution to making jobs
and the management of these jobs more efficient and productive. He did a good deal of
work on improved methods including time and motion study. His work has constituted
the basis of modern work-study techniques. Time and motion studies have played an
important role in increases in productivity. The task and bonus plan is the foundation of
many incentive plans in industry today. Many incentive plans today use standard hours

24
which are measurements not of time but of work.
A standard hour is the amount of work a worker may normally be expected to do in an
hour. A daily wage plus premium pay for production above standard, is in fact, a feature
of most modern incentive plans.

Taylor is also remembered for his introduction of stopwatch and time study, which makes
more accurate scheduling possible. If a job is timed, it is possible to predict when it will
be completed and when the next operation can be started.

Another important contribution was his suggestion that executive "manager by

exception". This means that management should avoid study of routine operations in
which everything has gone as expected, but look closely into cases in which results are
exceptionally good or bad.

THE UNIVERSALIST, ALSO KNOWN AS THE FUNCTIONAL OR

ADMINISTRATIVE MANAGEMENT APPROACH BY HENRI FAYOL (1841-
1925)
Henri Fayol was an engineer with extensive business experience. Working as the
managing director of a large coal-mining organisation in France provided Fayol with his
particular perspective on the management process. Fayol‟s contributions to management
thought were threefold. First he made the distinction between operating and managerial
activities. He outlined five such key operating activities which included:

1. Technical activities – such as production.

2. Commercial activities – involved buying and selling
3. Financial activities – such as securing capital
4. Security activities – concerned with safeguarding property
5. Accounting activities – such as providing financial information.

Second, Fayol identified five major management functions which include:-

Planning, Organising, Commanding, Coordinating, Controlling

25
Third, Fayol proposed fourteen principles of management that should guide the thinking
of managers in resolving concrete problems. These principles specify rules for
successfully managing and structuring on organisation.

1. Division of work – this is the classic division of labour prescribed by Adam

Smith. Specialisation of labour is necessary for any organization. Division of labour
reduces the number of tasks performed by a job unit to as few as possible. This improves
efficiency and effectiveness because it allows for the simple but rapid repetition of
effort.

2. Authority and responsibility – Authority is the right to give orders and the
power to enforce obedience. Responsibility accrues to those who have authority. The
parity principle states that responsibility should be accompanied by commensurate
authority.

3. Discipline – There must be obedience and respect between a firm and its
employees. According to Fayol, discipline is based on respect rather than fear. Poor
discipline results from poor leadership. Good discipline results from good leadership.
Obedience and respect help on organisation run smoothly. Management must use
sanctions to ensure discipline.
4. Unity of command – Each employee should receive orders from only one
superior.

5. Unit of direction – the organisation, or any subunit therefore that has a single
objective or purpose, should be unified by one pan and one leader. The efforts of
everyone in the organisation should be coordinated and focused in the same direction.

6. Subordination of individual interest to the general interest – the interests of

the organisation as a whole should take priority over the interest of any individual or
group of individuals within the organisation.

26
7. Remuneration of personnel – remuneration should as far possible satisfy both
employee and employer. Methods of payment can influence organizational performance
and the method should be fair and should encourage keenness by rewarding well directed
effort, but not lead to overpayment.

8. Centralisation – is always present to some extent in any organisation. The

degree of centralization depends on the organisation‟s circumstances.

9. Scalar chain – is the chain of superiors from the highest authority to the lowest.
Communication flows up and down the chain, but Fayol also allowed for a
communication „bridge‟ between persons. The bridge would allow subordinates in
different divisions to communicate with each other although formally they were supposed
to communicate through the chain of command.

10. Order – there should be a place for everything and everything, people and
material, must be in its place. All factors of production must be in an appropriate
structure.

11. Equity – equality of treatment should be taken into account in dealing with
employees throughout all levels of the scalar chain.
12. Stability of tenure of personnel – retaining personnel, orderly personnel
planning, and timely recruitment and selection are critical to success.

13. Initiative – individuals should display their creative ability, zeal and energy in all
their efforts. Management should encourage initiative.

14. Espirit de corps – harmony and unity among members of the organisation is a
great strength as this contributes to high productivity. It is necessary to avoid the dangers
of divide and rule of one‟s team.

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CRITICISMS OF FAYOL’S PRINCIPLES
Fayol‟s approach has been criticized for creating the impression that the management
process is more rational and orderly than it really is. Some critics dismiss his principles
as no more than advice. Fayol‟s concepts of management are said by some critics to
reflect a rigidity and formalism which leads directly to the inefficiencies of the
bureaucracy.

FAYOL’S CONTRIBUTIONS
Fayol‟s contribution to management theory is unique and valuable. Fayol‟s contention
that management is a continuous process beginning with planning and ending with
controlling also remains popular today.
Fayol was acclaimed for emphasizing the organisation chart and the job specification.
For example, the structure of virtually all organisations use the principle of authority; all
employ the unity of command concept; and all use some degree of centralization and the
scalar chain.
Moreover, most of the other principles – equity, order, stability of tenure for personnel,
initiative, spirit de corps, remuneration and discipline can contribute to successful
management. Managers seeking to solve structuring problems would do well to use
many, if not most, of Fayol‟s basic concepts.

UNIT 3 MAX WEBER AND THE CONCEPT OF BUREAUCRACY

Weber (1864-1920) was a social scientist with an interest in organisations. He developed

the bureaucratic model as the type of organisation he felt would best serve the needs of an
increasingly urbanized and industrialized society.

28
He contended that the ideally rational organisation was one which performed its tasks
with maximum efficiency. Such an organisation would be built around a highly
organised system, with a clear, rigid structure of authority, working according to a
precisely defined set of procedures, rules and regulations. Bureaucracy has the following
characteristics:

1. A Clearly defined hierarchy of authority – there are levels of carefully graded

authority and precisely ordered relationships of superiors and subordinates. Lower levels
of the organisation are supervised and controlled by higher levels and there is a right of
appeal, or grievance procedure, from lower to higher levels. Unit of command prevails,
so that a subordinate receives instructions from a single superior.

2. Division of labour – specialisation is necessary. The functions of the job are

defined, the qualifications of the individual who could fill it are, to some extent,
specified. Selection for employment and promotion is related directly to technical
competence. The possession of appropriate qualification is demanded from applicants for
appointment. Proven capacity in the execution of the organisation‟s tasks is the basis of
selection for internal promotion.

3. A system of rules and procedures – duties standards of performance, rules and

regulations are drawn up carefully. The rules facilitate standardisation and equality in the
treatment of many cases. The rules can be learned, and knowledge of them is one of the
requisites of holding a job in a bureaucracy. Administrative acts, decisions and rules are
formulated and recorded in writing and files are properly kept.

4. Impersonality – officials are expected to carry out their duties to others without
regard to personal considerations. It is the demand for impersonality, the operation of the
rules without ill-will and without favour, which make the acceptance of bribes a
cardinal sin for the bureaucrat.

29
5. Stability of employment – career is exclusive. Members of the organisation
spend their time in that particular occupation and they enter employment under the
terms of a contractual relationship in which duties and rights are clearly stated. The
employee is offered a regular salary, some degree of security of tenure and the
opportunity of promotion. Pension rights are generally offered to most categories of the
organisation‟s employees.

6. Separation of Ownership – members of administrative staff should be

completely separated from ownership of the means of production. There should be
complete separation of the office belonging to the organisation and the personal property
of the official.

The above characteristics make the organisation run efficiently because they ensure the
continuity that is essential for any organisation that is to last longer than the life of its
founder and enables administration to be carried out on a rational basis.

Criticisms of Bureaucracy
In spite of Weber‟s rationally efficient organisational formula, bureaucracy in practice
has become the epitome of inefficiency. Many of the characteristics of bureaucracy
stated by Weber, so efficient in the ideal type, have turned out to be the opposite in
practice. The career orientation makes some bureaucrats interested in the protection of
that career than in dealing with clients. The rules often slow down the work of the
organisation as they sometimes become more important to the bureaucrats than the actual
tasks to be done. Over- emphasis on the rules leads to the familiar charge of „red tape‟.
Specialisation leads to ignorance of even related tasks, hence one reason for the familiar
“run-around” so many clients complain about as they are shunted from desk to desk by
bureaucrats who feel that the particular case, according to the rule is someone else‟s
responsibility. Moreover initiative may be stifled and when a situation is not covered by
a complete set of rules or procedures there may be a lack of flexibility or adaptation to
changing circumstances.

30
Impersonal relations can lead to a lack of responsiveness to individual incidents or
problems. There is lack of attention to the informal organisation and the development of
groups with goals of their own and inadequate recognition of conflict in organisations.
Bureaucracies restrict the psychological growth of the individual. The organisation
environment should provide a significant degree of individual responsibility and self
control, commitment to the goals of the organisation, and an opportunity for individuals
to apply their full abilities.

THE LEGACY OF THE CLASSICAL APPROCHES

The classical approaches to management still provide insights into many of the problems
managers face today. The scientific approach showed that job design is critical to the
efficiency and effectiveness of an organisation‟s members. Managers should not assume
that the way a job is being done is the best way. Performance can always be improved.
Another insight was that managers must reward performance. The administrative
concerns of the classical management approaches also have relevance today. For
example, Weber‟s concept of bureaucracy continues to define most organisational
structures.

Fayol‟s guidelines are followed by almost all modern organisations. Barnard‟s view of
cooperation is accepted practice. Accomplishing both effectiveness and efficiency is still
an issue confronting most organisations, managers are learning that they must strive to
achieve acceptance of authority as related by Barnard.

Limitations
The one most frequently cited limitation is that classical approaches do not take human
matters into account – i.e. they do not consider how people fulfil the work roles given to
them. Instead, they tend to treat workers efficiency from a mechanical view point.

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THE BEHAVIOURAL APPROACH
The Behavioural Approach to management developed partly because practicing managers
found that the ideas of the classical approach didn‟t lead to total efficiency and harmony
at workplaces. Managers still encountered problems because subordinates did not always
behave as they were supposed to.

The Behavioural Approach is a management approach concerned with increasing

productivity by focusing on understanding the human element in an organisation – i.e.
individuals and groups and how they can be effectively and efficiently combined in a
large organisation.

The Behavioural Approach has two branches: The Hawthorne Studies (1927-1932) and
the Human Relations Approach (1940).

THE HUMAN RELATIONS MOVEMENT – ELTON MAYO

An Australian, Elton Mayor (1880 – 1949) has been called the founder of both the human
relations and the industrial sociology movements. A prominent human relations
contributor was Hugo Munsterberg (1863 – 1916), a German Psychologist and
Philosopher.

The human relations movement was a concerted effort among theorists and practitioners
to make managers more sensitive to employee needs. It came into being as a result of
special circumstance that occurred during the first half of the 20th Century.

1. Following the enactment of the Wagner Act of 1935 that legalized union –
management collective bargaining, management began searching for ways of
preventing employees from joining unions since if employees were satisfied they would
be less inclined to join unions. Business managers subsequently began searching for and
adopting morale-boosting human relations techniques as a union avoidance tactic.

32
2. The second historic influences which marked the turning point in the development
of the Human relations Approach came with the famous Hawthorne experiments whose
findings revealed that productivity was less affected by changes in work conditions than
by the attitudes of the workers themselves. The Hawthorne studies are credited with
turning management theorists away from viewing man as an economic man to a more
realistic view of man as a social being.

3. The Philosophy of Industrial Humanism Mayo, Follett, McGregor.

Although unionization prompted a search for new management techniques and the
Hawthorne studies demonstrated that people were important to productivity, a philosophy
of human relations was needed to provide a convincing rationale for treating employees
better. The human relations movement provided this philosophy.

Mayo and his associates discovered that:

1. Emotional factors were a more important determinant of productive efficiency

than physical and logical factor were.
2. Non-economic rewards play a central role in determining the motivation and
happiness of the worker.
3. Workers do not react to management and its norms and rewards as individuals,
but as groups.

The Human Relations approach emphasized the role of communication, participation and
leadership. This approach assumed that the most satisfying organisation would be the
most efficient. It pointed out that workers would not be happy in the cold, formal,
rational organisations that satisfied only their economic needs.

The school emphasized the need to relate work and the organizational structure to the
social needs of the employee. If the employees were happy, the organisation would
obtain their full cooperation and effort and thus increase by deliberate efforts, the
happiness of the worker.

33
This school maintained that employees should have a feeling that the company‟s goal is
worth their effort; they should feel themselves part of the company and take pride in
their contribution to its goal. The approach emphasized the importance of communication
n between the ranks, of explaining to the lower participants the reasons why a particular
course of action is taken, the importance of participation in decision making in which
lower ranks share in the decisions made by higher ranks, particularly in matters that
affect them directly. In short, the school pointed to a perfect balance between the
organisations‟ goals and the workers‟ needs.

Criticisms
This school did not approach a full view of the organisation. It viewed the factory as a
family rather than as a power struggle among groups with conflicting values and
interests. For example, supportive supervision and good human relations may not
automatically lead to higher morale or even better job performance.

UNIT 4 THE HAWTHORNE EXPERIMENTS

The Hawthorne studies are a group of studies conducted at the Hawthorne plant of the
Western Electric Company during the late 1920s and early 1930s whose results
ultimately led to the human relation view of the need for management to have concern for
the worker.

34
When they started, the Hawthorne Studies were right in the scientific management
tradition of seeking greater efficiency through improving the tools and methods of work-
in this case, lighting. The studies came about because the General Electric Company
wanted to sell more light bulbs, other electric companies, supported studies on the
relationship between lighting and productivity that was to be conducted by researchers
from the National Research Council, the Harvard Business School, and the Massachusetts
institute of Technology. The tests were to be held at the Hawthorne works (Chicago) of
the Western Electric Company.

First set of studies (1924-1927)

The first set of studies, called the illumination studies were conducted under the direction
of several engineers. Two groups of employees of comparable performance were
isolated from the rest and located in separate parts of the plant. One group, the control
group, had consistent level of lighting the other group, the experimental group, had its
lighting varied.

Expecting that worker productivity would vary directly with the intensity of the lighting
used the researchers were surprised to find that productivity usually increased
independent of the lighting used. The researchers concluded that factors other than
lighting were at work (since performance rose in both groups) and the committee on
industrial lighting discontinued the project.

Second set of studies (1927-1929)

The most famous study involved six women assembling electrical relays in the relay
Assembly Test Room, a special room away from other workers where the researchers
were concerned about possible negative reactions and resistance from the workers who
would be included in the experiment. To lessen potential resistance, the researchers
changed the usual supervisory arrangement so that there would be no official supervisor;
rather, the workers would operate under the general direction of the experimenter.

35
The workers were given privileges such as being able to leave their workstation without
permission, and they received considerable attention from the experimenters and
company officials. The study was aimed at exploring the best combination of work and
rest periods. A number of other factors were also varied, such as pay, length of the
workday, and provisions for free lunches.

Generally, productivity increased over the period of the study, regardless of how the
factors under consideration were manipulated. One of the researchers concluded that the
change in the supervisory arrangement was the major reason for the increase in
productivity in the Relay Assembly Test Room study. The researchers felt that the
physical changes, such as rest periods, free lunches, and shortened hours, as well as the
group incentive pay plans, were factors of lesser importance (largely) because adverse
changes in some of these factors did not seem to decrease performance). One outcome of
the studies was the identification of a famous concept that ultimately came to be known
as the Hawthorne effect. The Hawthorne effect refers to the possibility that individuals
singled out for a study may improve their performance simply because of any specific
factors being tested in the study.

More contemporary investigations now suggest that the Hawthorne effect concept is too
simplistic to explain what happened during the Hawthorne studies. The workers likely
viewed the altered supervision as an important positive change in their work
environment.

Third set of studies (1928-1931)

In order to learn more about employee – supervisor relations, Hawthorne‟s management
decided to implement and interview programme designed to ascertain employee attitudes
towards working conditions, their supervision and their jobs. It became clear from the
responses that social relationships at work were of major importance to employees.

Fourth set of studies (1931-1932)

36
The fourth group of studies was conducted in the famous Bank Wiring Observation room.
Fourteen men were removed from the bank wiring to a separate observation room, where,
apart from a few differences, their principles working conditions were the same as those
in the main wiring area. The aim was to observe a group working under more or less
normal conditions cover a period of six months. The group soon developed its own rules
and behaviour. This study revealed the importance of social relations and informal work
standards set by the work group in controlling individual productivity.

Fifth and final set of studies (1936)

The final stage focused on employee relations and took the form of employee counselling
interviews. In this period of interviews called the personal counselling programme,
employees were encouraged to discuss their work problems with trained personnel
specialists. The programme addressed problems relating to individual adjustment to
industrial structure, communication and control and changes in the social structure. This
led to improved employee – supervisor relations and better individual adjustment at
work.

Criticisms
The Hawthorne experiments have been criticized, for example, on methodology and on
failure of the investigators to take sufficient accounts of environmental factors. Major
flaws of the studies included changing several factors at the same time and in addition,
important data were sometimes ignored in drawing conclusions.

UNIT 5 CONTEMPORARY MANAGEMENT THOUGHT

THE SYSTEMS APPROACH

Def.: A system is a collection of parts operating interdependently to achieve a common

purpose.

37
Thus, the systems approach represents a marked departure from the past since it requires
a completely different style of thinking.
Theorists in the other approaches mentioned above studied management by taking things
apart.
They assumed that the whole is equal to the sum of its parts and can be explained in
terms of its parts.

Systems theorists, in contrast, study management by putting things together and assume
that the whole is greater than the sum of its parts.
The difference is analytic (outside-in) thinking versus synthetic (inside-out) thinking; by
synthetic thinking we can gain understanding that we cannot obtain through analysis,
particularly of collective phenomena.
Systems theorists recommend synthetic thinking because management is not practiced in
a vacuum.
Managers affect and are, in turn, affected by many organizational and environmental
variables.
The challenge presented by systems thinking to the field of management is to identify all
relevant parts of organized activity and to discover how they interact.

Chester Barnard established this new approach to management on the basis of his
experience as a top-level Bell Telephone manager.
Rather than isolating specific management functions and principles, he devised a more
abstract systems approach.
He characterised all organizations as cooperative systems: A cooperative system is a
complex of physical, biological, personal, and social components which are in a specific
systematic relationship by reason of the cooperation of two or more persons for at least
one definite end.
According to Barnard, willingness to serve, common purpose, and communication are the
principal elements in an organization (or cooperative system).
He felt that an organization did not exist if these three elements were not present and
working interdependently.

38
He viewed communication as an energizing force that bridges the natural gap between
the individual‟s willingness to serve and the organization‟s common purpose.
Barnard‟s systems perspective has encouraged management and organization theorists to
study organizations as complex and dynamic wholes instead of piece by piece.
Significantly, he was also a strong advocate of business ethics in his speeches and
writings.
He opened some important doors in the evolution of management thought.

GENERAL SYSTEMS THEORY:

This is an interdisciplinary area of study based on the assumption that everything is part
of a larger, interdependent arrangement.
In order to understand an organized whole we must know the parts and the relations
between them.
This interdisciplinary perspective was eagerly adopted by Barnard‟s followers because it
categorized levels of systems and distinguished between closed and open systems.

Levels of Systems: One of the more important recent steps has been the identification of
hierarchies of systems, ranging from very specific systems to general ones.
A hierarchy of systems relevant to management is the seven-level scheme of living
systems and each system is a subsystem of the one above it.

Closed Versus Open Systems: In addition to identifying hierarchies of systems, general

systems theorists have distinguished between closed and open systems.
A closed system is a self-sufficient entity, whereas an open system depends on the
surrounding environment for survival.
The key to classifying a system as relatively closed or relatively open is to determine the
amount of interaction between the system and its environment.

39
 System Level Practical Examples

Supranational General United Nations

National Zambia

Organizational Shoprite

Group Family, Work group

Organismic Human being

Organic Heart

Cellular Specific Blood cell

Fig. 2.1: Levels of Living Systems

A battery-powered digital watch is a relatively closed system; after the battery is in place,
it runs without help from the outside environment.
The human body on the other hand is a highly open system because life depends on the
body‟s ability to import oxygen and energy and to export waste.
In other words, the human body is highly dependent on the environment for survival.

Similarly, general system theorists say that all organizations are open systems because
organizational survival depends on interaction with the surrounding environment.

Lessons from the Systems Approach

Because of the systems approach, managers now have a greater appreciation for the
importance of seeing the whole picture.
Open-system thinking does not permit the manager to become preoccupied with one
aspect of organizational management while ignoring other internal and external realities.

40
The manager of a business, for instance, must consider resource availability,
technological developments, and market trends when producing and selling a product or
service.
Another positive aspect of the systems approach is how it tries to integrate various
management theories.
But some management scholars see systems thinking as long on intellectual appeal and
catchy terminology and short on verifiable facts and practical advice.

THE CONTINGENCY APPROACH

A comparatively new line of thinking among management theorists has been labelled the
contingency approach.
Contingency management advocates are attempting to take a step away from universally
applicable principles of management and toward situational appropriateness.

The contingency approach is an effort to determine through research which managerial

practices and techniques are appropriate in specific situations.
Different situations require different managerial responses, according to the contingency
approach.

Generally, the term contingency refers to the choice of an alternative course of action.
In a management context, contingency has become synonymous with situational
management.
This means the application of various management tools and techniques must be
appropriate to the particular situation because each situation presents to the manager its
own problems.
In real-life management, the success of any given technique is dictated by the situation.
For example, researchers have found that rigidly structured organizations with many
layers of management function best when environmental conditions are relatively stable.
Unstable surroundings dictate a more flexible and streamlined organization that can adapt
quickly to change.

41
Contingency Characteristics
Some management scholars are attracted to contingency thinking because it is a workable
compromise between the systems approach and a purely situational perspective.
This relationship is shown below.

Very general Very specific

Contingency Purely Situational

Systems
view view
view

Everything is Relationships Every situation is

made up of between management totally unique.
systems with techniques and situations
common can be categorized.
Characteristics.

Fig. 2.2: The Contingency View: A Compromise

Contingency advocates have tried to take advantage of common denominators without

getting trapped into simplistic generalization.
Three characteristics of the contingency approach are (1) an open-system perspective,
(2) a practical research orientation, and (3) a multivariate approach.

An Open-System Perspective: Open-system thinking is fundamental to the contingency

view.
Contingency theorists are not satisfied with focusing on just the internal workings of
organizations.
They see the need to understand how organizational subsystems combine to interact with
outside social, cultural, political, and economic systems.

A Practical Research Orientation: Practical research is that which ultimately leads to

more effective on-the-job management.

42
Contingency researchers attempt to translate their findings into tools and situational
refinements for more effective management.

A Multivariate Approach: Multivariate analysis is a research technique used to

determine how a combination of variables interacts to cause a particular outcome.
For example, if an employee has a conscientious personality, the task is highly
challenging, and the individual is highly satisfied with her life and job, then analysis
might show that productivity could be expected to be high.
Contingency management theorists strive to carry out practical and relevant multivariate
analyses.

Lessons from the Contingency Approach

Although still not fully developed, the contingency approach is a helpful addition to
management thought because it emphasises situational appropriateness.
People, organizations, and problems are too complex to justify rigid adherence to
universal principles of management.
In addition, contingency thinking is a practical extension of the systems approach.
But contingency theory has been criticised for creating the impression that the
organization is a captive of its environment.
If such were strictly the case, attempts to manage the organization would be in vain.
In actual fact, organizations are subject to various combinations of environmental forces
and management practices.

Contributions
Yet, despite their shortcomings, the effects of these pioneering studies were far-reaching.
The Hawthorne studies placed a concern for people into the main stream of management
thought. There was recognition that the feelings, attitudes, background, needs and social

43
relationships of people are crucial to effective management and that efficiency and
productivity in business operations required a better utilization of human resources.
The Hawthorne studies called for a “new mix of managerial skills”.

These skills were ones which were crucial to handling human situation; first, diagnostic,
skills and understanding new behaviour; and second, interpersonal skills and counselling,
motivation leading and communicating with worker. Technical skills alone were not
enough to cope with the problems discovered at the Hawthorne works.

A SYNTHESIS OF CONTEMPORARY MANAGEMENT

Contemporary management is a synthesis of the five approaches to management.
Management theorists today recognize that the management process is dynamic and that
it must change as the organizational environment changes. Scientific management
provides a means for competing more effectively with foreign firms. Forms are placing
renewed emphasis on job design, making products simpler, and scientifically examining
the workplace to improve work functions.

Increased international competition has also resulted in the institutionalization of many

actions that the behaviour lists proposed. Chester Barnard‟s concern for communication
and cooperation and Douglas McGregor‟s belief in participation to improve both
effectiveness and efficiency can be seen throughout business today. Both managers and
operating employers are increasingly using management science techniques in their
efforts to become more competitive and make better decisions.
Systems theory is also being used more than ever as organisations build complex models
to evaluate the impact of their decisions on other stakeholders.
Finally, more and more managers are practicing contingency theory management. They
examine the variables in a problem-solving situation and then make decisions based on
experience, and knowledge.

JAPANESE MANAGEMENT PRACTICES

44
Japanese Management practices embody many aspects of the five approaches to
management. Japanese managers have refined some techniques and practices and have
imitated many of the more desirable aspects of American management philosophy. The
Japanese have been so successful with their management approaches that they have come
to dominate many foreign markets.

Japanese management practices are based on several important principles:

1. Participative management.
2. Job design.
3. Quantitative methods.
4. Effectiveness and efficiency.
5. Increasing productivity through group decision making.
6. Holistic treatment of employees, who are seen as interchangeable parts.
7. Cooperation and harmony in the workplace.

EXCLLENCE IN MANAGEMENT
Excellence in management is an approach in which characteristics of excellent firms are
used as models for other firms. Thomas J. Peters and Robert H. Waterman suggest that
financially successful companies possess certain characteristics that result in excellence.
The set of characteristics is based on information gathered from interviews and
questionnaires and on secondary data obtained principally from thirty-three leading U.S
companies. The following are the characteristics:

1. Fleet-of-foot- successful companies rely on few bright people to experiment for

a while with cheap prototypes, testing out ideas on a few intimate customer. Although
they are big companies, they manage to operate in the same human, organic way that
small innovative companies are forced to adopt through lack of resources.

2. Simple form and lean staff- the innovative, fleet-of-foot operation is only
possible because the company superstructure of top-level executives is kept lean, and the
organization structure is simple and flexible.

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3. Autonomy and entrepreneurship - innovation springs from free people. It is
necessary to have enough of them and must be given the autonomy to operate freely. This
demands mutual trust and a willingness to accept a reasonable number of mistakes.

4. Close to customers – customers are not out there, separate from the business;
they are colleagues, part of it and first among equals. They are served in the supply of
products and services. They serve through to aching management that their needs are, and
how well they are, or, being satisfied. Listening to them is often the spark that fires
innovation.

5. Simultaneous loose-tight properties – most managers are used to conventional,

rigid, hierarchical structures, in which they alone manage and everything is kept under
tight control. Top managers of successful companies concentrate only on those things
that must be centrally determined; as much responsibility and authority as possible is
placed wherever it can best be exercised. Instead of communication barriers that exist in
some traditional companies, there is a lively human interaction between the conductor and
the players.

6. Sticking to the knitting – people one by nature not as single-minded as ants in

sticking to a common purpose. An important part of the interaction between the
conductor and players is to ensure that everyone is playing the same tune or stick to the
knitting and engage only in ventures in which the company has complete competence.

7. Productivity through people – it is vital that the outcome of innovative activity

is carried out efficiently. The way people make use of the equipment provided will
determine the quality and productivity.

8. Hands-on, value driven – these are managers who spend nearly all of them
time is seclusion of their offices, relating only to a few individuals who are directly
responsible to them.

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9. These are also managers who spend very little of their time in that way. They
prefer to be out visiting operational units, Research and Development laboratories,
customers, and suppliers, gaining direct knowledge of all kinds. Through their “walking
the floor” they are able continuously to express to employees, in words and actions, the
vision and values of the company. Peters and Austin‟s phrase “managing by wandering
about‟ (MBWA) is what is most needed in times of rapid change and uncertainty.

The excellence characteristics identified by Peters and Waterman are often viewed as the
way to manage. In addition to identifying these characteristics, Peters and Waterman
found that successful companies avoid management science approaches and emphasize
“softer” issues such as closeness to the customer and the importance of innovation.

Limitation
The Peters and Waterman study has been criticized for not being very systematic. Only
successful companies were studied. It is possible that unsuccessful companies had similar
characteristics. Moreover, several of the firms included in the study subsequently
experienced financial or market difficulties.

Strength
Nevertheless, the excellence approach in which these characteristics are used as a model
changed management significantly.

MODULE 3
PLANNING AND DECISION MAKING

UNIT 1 INTRODUCTION

Def.: Planning is a process involving managerial activities designed to attain desired

organizational goals.

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It includes all the activities that lead to the definition of objectives and to the
determination of appropriate courses of action to achieve those objectives. Planning
involves the selection of objectives, examination, evaluation and selection of strategies
which will ensure the attainment of those objectives and the formulation of required
courses of action. It has been characterized as “the process of thinking before doing, and
in similar vein, the thinking that precedes the actual performances of work. Thus
planning is deciding in advance what to do, how to do it, when to do it, and who is to do
it. It is an intellectually demanding process; it requires the conscious determination of
courses of action. In this sense planning is essentially decision making, although it is
much more.

In any type of organization, planning is the responsibility of management. In general, the

more complex the organizational structure, the more difficult becomes the procedures on
planning and the greater the burden which has to be shouldered by line managers whose
responsibilities include this function of planning. Because planning affects all
downstream management functions, it has been called the primary management function.

TYPES OF PLANS
Def.: A plan is a specific documented intention consisting of an objective and an action
statement.
Plans tell what, when and how something is to be done.
Plans may be classified as standing plans or single-use plans, according to the frequency
with which they can be utilised. A standing plan is one which is repeatedly used and it
involves policies, procedures and rules. A single-use plan is designed for the attainment
of specific objectives within a relatively short time span and it is exemplified by the
programme and the budget. These different types of plans, namely Objectives, Policies
Procedures, Rules, Programmes and Budgets, are important aspects of the planning
process. Many managers prefer to call these specific plans “action plans” to emphasize
the need to turn good intentions into action.

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Objectives are the goals to which the organisation‟s activities are directed. They
represent the end points of basic planning and can be used as reference marks to indicate
to what extent the organisation‟s mission is being carried out. If for example, an airliner‟s
mission is the provision of cheap air freight facilities, its objectives could include “cutting
of costs so that its able to offer profitably, low freight charges. An objective of this type
translates the aspirations of the “mission” into specific quantitative terms which can be
used to measure performance and to check deviation from desired results. Objectives may
be long-range (e.g. 1 year span). Essentially, objectives are fundamental to the control of
organizational activity and are vital for the construction of policies, programmes and
desired rules.

Policies are written statements that reflect the basic objectives of the plan and provide
guidelines for selecting actions to achieve the objectives. Once plans have been accepted
by those who must carry them out, policies become important management tools for
implementing them. Effective policies have the following characteristics:-

1. Flexibility – A policy must strike a reasonable balance between stability and

flexibility. Conditions change, and policies must change accordingly.

2. Comprehensiveness – a policy must be comprehensive enough to cover any

contingency if plans are to be followed.

3. Coordination – a policy must provide for coordination of the various subunits

whose actions are interrelated.
4. Ethical – a policy much conform to the canons of ethical behaviour that prevail in
society.
5. Clarity – a policy must be written clearly and logically. It must specify the
intended aim of the action it governs; define the appropriate methods and action.

Procedures – emerge from the need to establish chronological sequences of detailed

instructions necessary for the successful carrying out of an activity. For example, if an

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airline has a policy of carrying out effective servicing of incoming aircraft within a
reasonable time of landing, management calls for the drawing up of appropriate
procedures. The resulting guides to action will state the sequence of activities necessary
to deal with recurring events following on the arrival of aircraft. A procure is by its
nature, much narrower and more specific than a policy. Procedures are often utilized
when high degrees of accuracy in performance are needed if policies are to be executed
effectively. But they can become more routine after some time. It is important, therefore,
that they be reviewed and revised at regular intervals.

Rules are the simplest type of operational plans. They state specific action for particular
situations. In a sense, they are guides to acceptable behaviour. They allow for no
discretion to be exercised e.g. Helmets are to be worn at all times by safflowers working
within the site. The application of rules precludes a discussion of alternatives. A rule
differs from the procedure in that it is not related to time sequences. It also differs from
the policy which, essentially, guides decision-making.

Programmes are single-use plans comprising relatively wide related activities and
requiring complex patterns of co-ordination. They involve policies and the objectives
which have generated them, procedures and operating budgets. A firm‟s arrangement to
provide intensive training for its supervisory staff is a good example of a programme. It
should be noted that the key to success of a programme is skills in co-coordinated
planning.

Budgets – are statements in quantified terms, of future expenditures and revenues

reflecting resources allocated to specified activities within a stated period of time (usually
one year). They mirror basic organizational plans and are used as guides to, and controls
of, standards of performance. They act as signals for corrective action to be taken.

The Importance of Planning

The planning function has four important goals:
1. To offset uncertainty and change – future uncertainty make planning a necessity.

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Even when the future is highly certain, some planning is usually necessary so as to select
the best way in any to accomplish an objective.

2. To focus attention on objectives – because all planning is directed toward

achieving an organisation‟s objectives, the very act of planning focuses attention on these
objectives. Well considered overall plans unify interdepartmental activities. Managers,
being typically immersed in immediate problems, are forced through planning to consider
the future and even consider the periods need to revise and extend plans in the interest of
achieving their objectives.

3. To gain economical operation – planning minimizes costs because of the

emphasis on efficient operation and consistency. Planning allows joint directed effort.

4. To facilitate control – managers cannot check on their subordinate‟s

accomplishments without having goals and programs against which to measure. Plans are
standards that are used to control activities.

Steps in Planning
The following steps are followed in any thorough planning:-

1. Being aware of opportunity – the awareness of an opportunity is the real starting

point for planning. It includes a preliminary look at possible future opportunities and the
ability to see them clearly and completely, knowledge of where we stand in the light of
our strengths and weaknesses, an understanding of why we wish to solve uncertainties,
and a vision of what we expect to gain. Setting realistic objectives depends on this
awareness.

2. Establishing objectives – once opportunities are identified, objectives for the

entire organization and then for each unit or department must be established.
Objectives specifying the results expected, indicate the end points of what is to be
done, where the primary emphasis is to be placed, and what is to be accomplished

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by the network of strategies, policies, procedures, rules, budgets, and programs.

3. Premising – are assumptions about the environment in which organizational plans

are to be implemented. Premises are needed about both internal and external
environmental factors. Internal factors include expected changes in key personnel,
cash flow and capital budgeting, organizational structure, production technology, and
management philosophy. External factors include legislation, political climate, general
economic conditions, industry trends, consumer attitudes and behaviour, competition, and
so on. The external environment of an organization can be quite complex. Forecasting is
important in premising: What kind of markets will there be? What quantity of sales?
What prices? What products? What technical developments? What costs? What wage
rates? What tax rates and policies? What new plants? What policies with respect to
dividends? How will expansion be financed? Because the future environment of plans is
so complex, it would not be profitable or realistic to make assumptions about every detail
of the future environment of a plan. Therefore, premises should be limited to those
which are critical, or strategic, to plan, that is, those which most influence its operation.

4. Determining alternative courses – all plans have alternative courses of action.

The number of alternatives should be reduced so that those promising the most fruitful
possibilities may be analysed.

5. Evaluating alternative courses – having sought out alternatives courses and

examined their strong and weak points, the next step is to evaluate them by weighing
alternatives, it may be discovered that one course may appear to be the most profitable
but require a large cash outlay and a slow payback; another may be less profitable but
involve less risk; still another may better suit the company‟s long long-range objectives.
Evaluating alternative courses of action is a complex process. Due to these complexities,
operations research, mathematical and computing techniques have been developed and
are being widely applied to the field of management.

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6. Selecting a course of action – this is a stage at which a plan is adopted – the real
point of decision making.

7. Formulating derivative plans – once a decision is made, there will be derivative

plans required to support the basic plan. In the case where an airline decides to acquire
a fleet of new planes, this decision will require development of a host of derivative plans
dealing with the hiring and training of various types of personnel, the acquisition and
positioning of spare parts, the development of maintenance facilities, scheduling and
advertising, financing and insurance.

8. Numbering plans by budgeting – after decisions are made and plans are set, the
final step is to convert them to budgets. The overall budgets of an organization represent
the sum total of income and expenses. Each department or program of a business can
have its own budgets, usually of expenses and capital expenditures, which tie into the
overall budget. It done well, budgets become important standards against which planning
progress can be measured.

UNIT 2 THE PLANNING PROCESS: RATIONAL APPROACH

Planning is simply a rational approach to accomplishing an objective. Decision making

may be the easiest part of planning, although it involves techniques of evaluating and
approach and considerable skill in applying these. The real difficulties arise primarily
from sharpening and giving meaning to objectives, spelling out and giving meaning to
critical premises, seeing the nature and relationship of the strengths and weaknesses of

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alternatives, and communication goals and premises to those throughout the organization
who must plan.

The Planning Period:

Planning can be short-range, medium-range or long-range. In some cases planning a
week in advance may be ample time while in others the desirable period may be a
number of years. Even within the same firm at the same time, various planning periods
may exist for various matters. There should be some logic in selecting the right time
range for company planning. In general, since planning and the forecasting that underlies
it are costly, a company should probably not plan for a longer period than is economically
justifiable, yet it is risky to plan for a shorter period. It is important to integrate short-
range and long-range plans. Short-run plans should not be made unless they contribute to
the achievement of the relevant long-range plan.

Planning involves an Open-System Approach

It is important to take into account interactions with the total environment in every aspect
of managing. An organization does not operate in isolation of its environment.
Objectives must obviously be set in the light of the economic, technological, social,
political, and ethical elements of an organisation‟s environment. Plan requires an
analysis of every environmental element.

The Environment of Plans

Plans operate in an environment, both internal and external to the organization.
Some of these environmental elements are controllable, while others are not. Non-
controllable elements include population growth, future price levels, political
environment, tax rates and policies and business cycles. There are semi-controllable
elements such as a firm‟s assumptions as to its market share, the character of labour
turnover, labour efficiency, company price policy, and even industry legislative policy.

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And finally, there are controllable elements decided largely by company management and
involving policies and programs such as expansion into new markets, the adoption of an
aggressive research programs, or the site for headquarters offices. Therefore, effective
managers anticipate the environment in which their plans will operate. This means that it
is necessary to forecast what those elements in the environment affecting any given plan
will be. The successful manager is not one who just responds to changes as they occur
but one who will, rather, forecast change and take appropriate action.

Environmental Forecasting
In view of the environmental influences on plans, the need for adequate forecasting is
apparent. The making of forecasts and their review by managers compel thinking ahead,
looking into the future, and providing for it. In addition, the very act of forecasting may
disclose areas where necessary control is lacking. Forecasting, especially where
participated in throughout the organization, may help to unify and coordinate plans. By
focusing attention on the future, it assists in bringing a singleness of purpose to planning.
It is important to note that forecasts are not always accurate because they subject to a
degree of error. Guesswork can never be omitted from forecasts, although it can be
reduced to a minimum.

Economic Forecasting
Economic factors can be obtained from the well considered forecasts of employment,
productivity, national income, and gross national product that have been available to
planners for a number of years. Most economic forecasts are derived from calculating
gross national product, the total of which is not difficult to estimate if acceptable
forecasts of population, productivity increases, unemployment percentage, and average
workweek are available. After studying forecasts of national and regional economic
trends, a company should translate them into their impact on its industry and on itself.

Technological Forecasting
Since the pace of technological change is so great, companies are making technological
forecasts affecting their industry. Companies encourage members of their technical staff

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to be alert to future developments; to make frequent contacts with suppliers and
customers; to think in terms of the impact of current scientific developments on the future
state of technology; and to develop orderly forecasts of how these developments affect
the company‟s products, processes, or markets.

Social and Political Forecasting

To be effectively responsive, managers must forecast social and political environments in
which social pressures and government‟s rules and regulations affect organizations.

Why People Fail in Planning

There are many reasons why people fail in planning. The following are among the most
important reasons for ineffective planning:

 Lack of commitment to planning – despite the interest in planning, there is too

often a lack of real commitment to planning by managers – from the very top down to
the lowest-level supervisor. There is a natural tendency to let today‟s problems push
aside planning for tomorrow‟s opportunities. Most people would rather do other
activities than devote their time to planning which requires a lot of thinking. This
means that there is need for a climate that forces people to plan.

 Psychological difficulties – managers who lack confidence and shun the risk
taking which is inherent in most planning activity will find it difficult to plan. The
fear of adding to one‟s work load may also inhibit the desire to plan.
 Lack of meaningful objectives or goals – planning cannot be effective unless
goals are clear (do people understanding them?), attainable (can they be
accomplished?), actionable (can action be developed to achieve them?), and verifiable
(will we know whether we have accomplished them?). Like supporting plans, goals
must be defined in the light of our strengths and weaknesses and the many internal
and external environmental forces that may influence their achievement.

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 Tendency to underestimate the importance of planning premises – if plans and
decisions in an organization are to be consistent, that is, to fit one another, they must
be made in the light of uniform and generally understood planning premises.

 Failure to see the scope of plans – some managers get so wrapped up in

developing major and minor programs that they neglect seeing that there are other
types of plans: missions pr purposes, objectives or goals, strategies, policies, rules,
procedures, and budgets as well as programs. All these types of plans involve
analysis and decision making and must be implemented if a system of planning is to
be complete.

 Failure to see planning as a rational process – planning requires clear goals, a

knowledge of alternatives, an ability to analyze alternatives in the light of goals
sought, information, and a desire to come up with the best possible answer.
 Excessive reliance on experience – experience is likely to be a dangerous teacher
simply because what happened in the past is not likely to fit a future situation.

 Failure to use the principle of the limiting factor – this principle requires that
managers search out those factors in a problem situation which make the most
difference in the solution and the deal primarily with them, since, in most problem
situations, there are so many variables that no one can solve for all of them.

 Lack of top management support – planning is not likely to be very effective if

top managers do not believe in it, encourage it, and make the necessary decisions that
will allow their subordinates to make their plans.

 Lack of clear delegation – it is very difficult for people to plan if they do not
know what their job is, if they are unaware of how their job relates to others in an
organization, and if they do not have clear authority to make decisions.

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 Lack of adequate control technique and information – since the task of managerial
control is to follow up on plans and to assure that plans are actually succeeding
planning can hardly be very effective unless people responsible for them know how
well they are working.

 Lack of an appropriate planning climate within the organization as whole-

procedural inflexibilities weaken the effectiveness of planning and too much pressure
on line managers to act quickly leaves them with no time to prepare effective plans.

 Technical problems – a manager who lacks technical skills will be deficient in

solving some of the technical organizational problems which accompany planning..

 Resistance to change – planning implies something new. It means change. It is

well known that people resist change. Managers are often frustrated in instituting a
new plan simply by the unwillingness or inability of people to accept the condition of
change. Without the proper levels of participation and careful planning for
implementation, proposed plans and objectives will be resisted by some members of
the organization. Limiting resistance to change requires patient selling of ideas,
careful dissemination of information, and aggressive leadership.

Limits to Planning
Planning is not an easy task. The reasons why people tend to fail in planning
emphasize the practical difficulties encountered in planning. At the same time, even
a person who is good in planning faces a number of limiting factors. Awareness of
these limits can help remove many of the frustrations in effective planning.

 Cost - effective planning requires a lot of time and energy. Firstly, the more
committed to planning an organization is, the more time and energy it devotes to it.
Secondly, the more detailed planning becomes, the more expensive it will surely be.
Thirdly, the further into the future plans are projected, the more costly they are likely

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to be. Moreover, in today‟s managerial environment, plans have to be updated
constantly to take advantage of, or react to rapidly changing situations. The cost of
planning will rise as a result, but the cost of being unprepared will be still higher.

 Complexity of the planning process – industries with shifting patterns of market

demand make prediction highly uncertain, so that planning without complex
techniques is very difficult. The very process of forecasting, essential for planning is
complicated. A number of the forecasting and planning techniques now in use
require a fair degree of mathematical knowledge from managers, so that a lack of
training in quantitative approaches to planning problems creates difficulties. One
way of reducing the risks involved in future uncertainties is to engage in contingency
planning by having alternative sets of premises and alternative plans based on them
so that unexpected circumstances can be readily reflected in action.
 Problem of rapid change – another limiting factor in planning arises from social
dynamics. In a complex and rapidly changing industry, the succession of new
problems is often magnified by complications that make planning most difficult.

 Political climate – every organization, to a greater or lesser degree, is faced with

inflexibilities of the political climate existing at a given time. Government
regulations must be taken into account in planning.

 Labour organization – the existence of strong unions, particularly those organized

on a national basis, tend to restrict freedom in planning. The numerous wage and
working condition provisions of union contracts and the influence of union policies
on employee productivity and attitudes must be taken into account.

 Technological change – the rate and nature of technological change also present
external limitations upon planning. Technology changes rapidly, and one new
development begets another.

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 Current crises – managers in many firms seem constantly to be dealing with
current crises. Many such crises occur because of uncontrollable environment
circumstances, such as government policy actions, technological changes, or a
competitor‟s marketing strategy.

 Policy and procedural inflexibility – once some policies and procedures are
established, they become ingrained in the organization, and changing them becomes
difficult. One of the problems with bureaucracy is the existence of complicated
procedures designed to avoid mistake. Progressive planning requires an environment
of change, with some reasonable degree of freedom and willingness to assume the
risks of mistakes; this is prevented in organization bound by policy and procedural
inflexibility.

 Capital Investment – in most cases, once capital is invested in a fixed asset, the
ability to switch courses of future action becomes limited, and the investment itself
becomes a planning premise. Unless the company can reasonably liquidate its
investment or change its course of action or unless it can afford to write off the
investment, these irretrievable costs may block the way of change.

UNIT 3 ESTABLISHING A CLIMATE

In a period of change, planning becomes a matter of great urgency, for those who
manage the resources of an organization or a nation. It is critical that every manager
establish a climate for planning.

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 Planning must forced – every manager should remove obstacles to planning and
try to establish a climate in which subordinates must plan. This involves, at each
level of management, setting goals establishing and publicizing applicable significant
planning premises, involving all managers in the planning process, reviewing
subordinate plans and their performance, and assuring appropriate staff assistance and
information. Planning will not occur unless it is forced and the facilities to undertake
it are made available. The organization should establish a culture that is receptive to
planning, that not only encourages it but demands it, facilitates it, and rewards it.
Such a culture encourages top managers to review the plans of their subordinates,
who in turn review the plans of those working under the. Individuals should be
recognized and rewarded when they reach planned goals and encouraged through
delegated authority and an emphasis on risk taking, to participate in the process.

 Planning should start at the top – basic goals from which others stem must be set
at the top management level. The example and drive of top management are the most
important single force in planning.

 Planning must be organized – good organization structure through appropriate

grouping of activities and clear delegation of authority establishes an environment for
performance. Managers must be held responsible for planning within their area of
authority. It is not possible for a manager to make decisions without taking part in
planning since decision making is central to the planning process. Planning and
doing cannot be separated.

 Planning must be defined – goals must be clearly be defined. Also, the critical
premises against which to make planning decisions must be definite. Plans can be
made definite by specifying steps of action and by translating them into needs for
people, materials, and money.

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 Goals, premises, strategies and policies must be communicated – managers should
make sure that clear goals, premises, and policies are communicated to those who
must have them.

 Training – technical barriers to effective planning can disappear with training in

planning techniques, particularly in relation to the definition of managerial problems
and the analysis of alternative courses of action. A training programme designed to
improve a manager‟s level of numeracy can bring about a more positive approach to
the process of planning. Practice in the interpretation of data and in simple
forecasting techniques will assist in overcoming some types of difficulty.

 Explaining the objectives of planning – misunderstanding of the nature of

planning may be diminished by an explanation of its objectives. It must be explained
to the manager that planning is but one function of management. The manager‟s
superiors should show their own involvement with planning and they should
formulate and publicise objective. In this way a planning climate will be created.

 A discussion with the manager, in which the fundamentals of planning are

outlined, with emphasis on the solution of day-to-day and long-term problems, may
go some way towards the removal of psychological barriers.
 Long-range planning must be integrated with short-rage plans – managers often
focus attention on very short-range planning and regard long-range planning as not
affecting this area of responsibility. Part of this difficulty stems from lack of
knowledge of what long-range decisions should cover. Long-range decisions include
new product selection and development; marketing channels and strategies; facilities,
manpower etc. Obviously, there are few day-today decisions not concerned with at
least one of these, and successful planning cannot exist when short-range plans and
decisions do not contribute to, or fit in with, longer-range planning.

 Planning must include awareness and acceptance of change – since people resist
change, managers must build in their organizations an awareness of change, an ability

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 to forecast it, and a welcoming attitude toward it. Change is acceptable when it
understood; when those affected have helped create it; when it has been planned and
when people have been trained to accept it.

 Planning participation – participation of subordinates with superiors is a key

element in making planning a success. Participation can be increased in many way:-
- Use of planning committee – their appropriate use at various levels
and points of the organization structure can improve communication
by transmitting planning information, by obtaining suggestions, and by
encouraging participation.

- Grass roots budgeting – instead of a budget for operations or capital

expenditures being prepared at the top or departmental level, the
smallest organizational units must be given clear planning premises
and they should also be aware of objectives, policies, and programs
which affect their operations. The need for managers to develop,
defend, and sell a course of action over which they have control and
for which the bear responsibility is in itself an incentive to planning.

- Formation of a management club – an organization of all members of

management. During the course of the year, top management team or
the company president conducts meeting at which the planning is
reported to the club and questions are asked and answered.

UNIT 4 DECICISON MAKING

Def.: Decision making is the selection from among alternatives of a course of action

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It is at the core of planning. A plan cannot be said to exist unless a decision – a
commitment of resources, direction, or reputation – has been made. Decision making is a
key step in planning. It involves:-
 Premising
 Identifying alternatives
 The evaluation of alternatives in terms of the goal sought
 The choosing of an alternative, that is making a decision

Classes of Organisational Decisions

There are three major classes of organizational decision: routine, adaptive, or innovative.
Routine Decisions – are standardized choices made in response to relatively well-defined
and known problems and solutions. Employees often find a solution to their problems in
established rules or standard operating procedures or in computer software. Processing
payroll vouchers, preparing customer‟s orders and making travel arrangements are a few
examples of tasks requiring routine decisions.

Adaptive Decisions – are choices made in response to a problem that is unusual and
partially known. Adaptive decisions often involve gradually modifying past routine
decisions and practices. The ability to diagnose a problem and find its solution in
moderately or entirely new ways is crucial. Continuous improvement occurs when
streams of adaptive decisions are made over time in an organization, resulting in a large
number of small, incremental improvements year after year.

Innovative Decisions – are those that are based on the discovery, identification, and
diagnosis of unusual and ambiguous problems and the development of unique or creative
alternative solutions. To be effectively innovative, individuals must be careful in
defining the problem and creating solutions.

Conditions Affecting Decision Making

Managers and other employees make decisions based on the amount and accuracy of
information available to them. Decisions involved future action and results, which

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cannot always be foreseen. Decisions also involve differing levels of risk or uncertainty.
Routine decisions are most often made under conditions of near certainty, or low risk.
Adaptive decisions are usually accompanied by moderate levels of uncertainty, or risk.

Decision-Making Models
The Rational Model
Effective decision making requires a rational selection of a course of action. A rational
decision permits the maximum achievement of an objective within the limitations to
which the decision is subject. Rationality implies:
 Attempting to reach some goal that could not be attained without positive
action.
 Having a clear understanding of alternative courses by which a goal could be
reached under existing circumstances and limitations.
 Having the information and the ability to analyze and evaluate alternatives in
the light of the goal sought.
 Having a desire to come to the best solution by selecting the alternative that
best satisfies goal achievement.

The rational model consists of the series of steps that individuals or teams should
follow to increase the likelihood that their decisions will be logical and well-founded.

The steps are as follows:

Step 1: Define and diagnose the problem.
If managers or teams are unaware of the true problems and their possible causes, no
effective decision making can occur. Problem definition and diagnosis involves three
conceptual skills:
 Noticing – means that individuals or teams monitor numerous external and
internal environmental forces and decided which ones are contributing to the
problem or problems.

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  Interpreting – means that individuals or teams assess the forces they have
noticed and determine which are causing the real problem and are not just
symptoms of it.
 Incorporating – means that individuals or teams relate their interpretations to
the current or desired objectives.

If noticing, interpreting, and incorporating are done incorrectly when diagnosing a

problem, the individual or team is likely to choose a poor solution. For example, an
organization experiencing a decrease in sales may assert that the problems is the
understaffing in the marketing department. Acting on this definition of the problem, the
organization might focus on the obvious objective of obtaining funds for new positions.
The more basic problem may relate to selling strategies becoming ineffective as a result
of competitor‟s action.

Fundamental to problem definition and diagnosis is asking lots of probing questions.

- A question is an invitation to creativity
- A question is an unsettled and unsettling issue
- A question is a beginning of adventure
- A question is a disguised answer
- A question pokes and prods that which has not yet been poked and prodded.
- A question is a point of departure
- A question has no end and no beginning.
By asking a variety of who, what, when, where, how, and why questions, individuals and
teams will improve the odds of effective problem definition and diagnosis.

Step 2: Set Objectives

Once individuals or teams have defined a problem, they can set specific objectives for
eliminating it. Objectives spell out the desired results: what is to be achieved and by
what date. Under the condition of uncertainty, setting precise objectives can be very
difficult. Individuals or teams may have to identify alternative objectives, compare to
evaluate these objectives and choose among them.

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Set 3: Search for Alternative Solutions
Individuals or teams must look for alternative ways to achieving an objective. This step
might involve seeking additional information, thinking creatively, consulting experts,
undertaking research, and similar actions. However, when there seem to be no feasible
solutions for reaching an objective, there may be a need to modify it.

Step 4: Compare and Evaluate Alternative Solutions

Once individuals or teams have identified alternative solutions, they must compare and
evaluate these alternatives. This step emphasizes expected results, including the relative
cost of each alternative.

Step 5: Choose among Alternative Solutions

Decision making is commonly associated with having made a final choice. Choosing
among alternative solutions might appear to be straightforward. Unfortunately, this step
may prove difficult when the problem is complex and ambiguous and involves high
degrees of risk or uncertainty.

Step 6: Implement the Solution Selected

A well-chosen solution isn‟t always successful. A technically correct decision has to be
accepted and supported by those responsible for implementing it if it is to be an effective
one.

Step 7: Follow Up and Control

Implementing the preferred solution won‟t automatically achieve the desired objective.
Individuals or teams must control implementation activities and follow up by evaluating
results. If implementation isn‟t producing satisfactory results, there is need to take
corrective action. Environmental forces affecting decisions change continually. Thus
follow-up and control may indicate a need to redefine the problem or review the original

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objectives. Feedback from this step could even suggest the need to start over, and repeat
the entire decision-making process.

The Bounded Rationality Model

The bounded rationality model was first introduced by Herbert Simon, a management
scholar, in the mid 1950s. The bounded rationality model emphasizes the limitation of
the individual‟s rationality. Complete rationality can seldom be achieved, particularly in
the area of managing. This is so because:
1. Since no one can make decisions for the past, decisions must operate for the
future, and the future involves uncertainties.
2. All the alternatives that might be analyzed to reach a goal can hardly be
recognized because in most cases there are many ways of achieving a goal.
3. In most cases not all alternatives can be analyzed, even with the most
advanced techniques and computational facilities, because there are so many.
The model explains why different individuals may make different decisions when
they have exactly the same information. The bounded rationality model reflects the
individual‟s tendencies to.

1. Select less than the best objective or alternative solution (that is, to satisfies).
2. Engage in a limited search for alternative solutions
3. Have inadequate information and control over external and internal environmental
factors that affect the outcomes of decisions.

Satisfying - the practice of selecting an acceptable (good enough) objective or alternative

solution. In this case acceptable might mean easier to identify and achieve, less
controversial, or otherwise safer that the best available objective or alternative. But
satisficing doesn‟t necessarily mean that managers have to be satisfied with what
alternatives pops up first in their minds or in their computers. The level of satisficing can
be raised by personal determination, setting higher individual or organizational standards,
and by the use of an increasing range of sophisticated management science and
computer-based decision-making and problem-solving techniques. They should always

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attempt to make the best decisions then can within the limits of rationality and in the light
of the size and nature of risks involved in uncertainty.

Limited search – individuals usually make a limited search for possible objectives or
alternative solutions to a problem, considering the options only until they find one that
seems adequate. Identifying and assessing alternative solution costs time, energy, and
money and as a result, individuals stop searching for alternatives as soon as they hit on an
acceptable one.

Inadequate or Misinterpreted Information – bounded rationality means that

individuals frequently have inadequate information about problems and that the state of
nature, which cannot be controlled by individuals, will influence the results of their
decisions.

The Political Model

The political model describes the decision-making process in terms of the particular
interests and objectives of powerful stakeholders. Power is the ability to influence or
control individual, departmental, divisional, or organizational decision and outcomes. To
have power is to be able to influence or control.
1. The definition of the problem
2. The choice of the objective
3. The consideration of alternative solutions
4. The selection of the alternative to be implemented
5. The actions and success of the organization

Problem definition – internal and external stakeholders try to define problems for their
own advantage.

Choice of objectives – the political model recognizes the likelihood of conflicting

objectives among stakeholders. The choice of objectives will be strongly influenced by
the relative power of stakeholders.

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If power is concentrated in one stakeholder, the organisation‟s major objectives will
likely reflect that stakeholders will therefore often distort and selectively withhold
information in order to further their own interests. Such actions can severely limit
management‟s ability to make innovative decisions, which, by definition, require
utilizing all relevant information as well as exploring a full range of alternative solutions.

UNIT 5 DECISION MAKING TOOLS

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The various mathematical and scientific techniques generally developed generally
developed in the study of the physical sciences have had applications to the study of
management problems. The following are some of the techniques:

1. Probability Theory
This important statistical device is based upon the inference from experience that certain
things are likely to happen in accordance with a predictable pattern. For example, if a
coin is tossed a hundred times, it is probable, although by no means certain, that it will
fall heads fifty times. However, the deviations from such a probability are within a fairly
predictable margin. In an enterprise problem, where probabilities can be substituted for
unknowns the margin. In an enterprise problem, where probabilities can be substituted
for unknown the margin of error in the solution, although nor removed, is limited.

2. Game Theory
Although far too complicated, this tool is based upon the premise that a man or woman
seeks to maximize gain and minimize loss, that he or she acts rationally, and that an
opponent or competitor will be similarly motivated. Under these circumstances, game
theory attempts to work out an optimum solution in which an individual in a certain
situation can develop a strategy which, regardless of what an adversary does, will
maximize gains or minimize losses.

3. Linear Programming
This is a technique for determining the optimum combination of limited resources to
obtain a desired goal. It is based on the assumption that a linear, or straight-line,
relationship exists between variables and that the limits of variations can be determined.
For example, in a production shop, the variables may be units of output per machine in
a given time, direct labour costs or material cost per unit of output, number of operations
per unit, and so forth. Most or all of these may have linear relationships, within certain
limits, and by solving linear equations, the optimum in terms of cost, time, machine
utilization, or other objectives can be established.
4. Risk Analysis

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All intelligent decision makers dealing with uncertainty like to know the size and nature
of the risk they are taking in choosing a course of action. Virtually every decision is
based on the interaction of a number of critical variables, many of which have an
element on uncertainty but, a fairly high degree of probability. Thus, the wisdom of
undertaking the launch of a new product might depend upon the critical variables of
expense of introduction, cost of production, capital investment required, price obtainable,
total marker for the product, and share of the market obtainable by it. A bet might be
made that the new product has a high (say, 80%) chance of yielding a return of 30% on
the total investment made in it.

5. Decision Trees
One of the best ways to analyse a decision is to use so-called decision trees, which
make it possible to see directions that actions might take from various decision
points and the decision points relating to it in the future. The tree deficits future
decision points and shows a manager in what direction the events are.

Evaluating the Importance of the Decision

The importance of a decision depends on a number of factors:
 Size or length of commitment – if a decision commits an organization to
heavy expenditure of funds or if the commitment can be fulfilled only over a
long period, such as designing and constructing a new chemical plant, it will
require thorough analysis.
 Flexibility plans – some plans can be easily changed and others involve action
difficult to change. Clearly, decisions involving inflexible courses of action
must carry a priority over those easily changed.
 Certainty of goals and premises – if goals and premises are fairly certain, a
decision resting on them tends to be less difficult than where they are highly
uncertain.
 Quantifiability of Variables - where the goals, inputs, parameters, and
variables can be accurately quantified, as with definite inputs in a production
machine shop, the importance of the decision, other things remaining the

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 same, tends to be less than were the inputs are difficult to quantify, as in
pricing a new consumer product.
 Human impact – where the human impact of a decision is great, its importance
is high. Decision makers should not overlook the acceptance of a decision by
the people going to be affected by it.

The Politics of Decision Making

Good managers must be sensitive in their decision making to what they can do. It is
not enough that a decision be logical and point to the best way of reaching a goal.
The beliefs, attitudes, and prejudices of people must often be taken into account. The
political environment of decisions thus rests largely on communicating and is
favourable when all those involved are well informed about their particular planning
area. Political problems of decision making often disappear with wide-spread
participation in planning. Participation goes beyond consulting and advising. It
involves sharing of the decision making process.

MODULE 4

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 POWER AND AUTHORITY
UNIT 1 POWER

Definition: Power is the ability to marshal the human, informational and material
resources to get something done.

Power affects organizational members in the following three areas:

1. Decisions. An employee decides to take on a difficult new assignment after hearing
her boss‟s recommendations.
2. Behaviour. An employee achieves a month of perfect attendance after receiving a
written warning about absenteeism from his supervisor.
3. Situations. The productivity of a product design group increases dramatically
following the purchase of project management software.
We can also distinguish between “power over” (ability to dominate), “power to” (ability
to act freely), and “power from” (ability to resist the demands of others).

While authority is the right to direct the activities of others (an officially sanctioned
privilege that may or may not get results), power is the demonstrated ability to get results.
One may possess authority but have no power, possess no authority yet have power, or
possess both authority and power.
Power must be used because managers must influence those they depend on to obtain
organizational effectiveness.

The Sources of Power

Power is the basis of influencing.

The total amount of power each individual in an organization possesses will be made up
of varying amounts of the 6 power types.
The more power a manager has (type and amount) the greater the number of influencing
strategies that he can use, and the greater the success with which they can use them

Also, the amount of power possessed is not fixed.

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Organizational members gain and lose power depending on what they do, fail to do and
the actions of others around them.

Six power bases have been identified.

Reward Power (R): Rewards to those who comply with a command or request is the key
to reward power.
The target of this power must also value these rewards.

Management‟s reward power can be strengthened by linking pay raises, merit pay and
promotions to job performance.
Sought-after expressions of friendship or trust also enhance reward power.

Coercive Power (C): Rooted in fear, coercive power is based on threatened or actual
punishment.
The person with coercive power has the ability to inflict punishment or aversive
consequences on the other person or, at least, to make threats that the other person
believes will result in punishment or undesirable outcomes.

Legitimate Power (L): This power source stems from the internalised values of the other
persons that give the legitimate right to the agent to influence them.
This power is achieved when a person‟s superior position alone prompts another person
to act in a desired manner.
This type of power closely parallels formal authority.
The others feel they have the obligation to accept this power.

However, legitimate power is unlike reward and coercive power in that it does not
depend on the relationships with others but on the position or role that the person holds.

Referent Power (R): An individual has referent power over those who identify with him if
they comply on that basis alone.

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This type of power comes from the desire on the part of the other persons to identify with
the agent wielding power, regardless of the outcomes.
The others grant the person power because he is attractive and has desirable resources or
personal characteristics.

Charisma is a term often used in conjunction with referent power.

Advertisers take advantage of this type of power when they use celebrities to do
testimonial advertising.

Expert Power (E): Those who posses and can dispense valued information generally
exercise this power over those in need of such information.
This is based on the extent to which others attribute knowledge and expertise on the
power seeker.

All the sources of power depend on the target‟s perceptions but expert power may be
even more dependent on this than the other.
In particular, the target must perceive the agent to be credible, trustworthy and relevant
before expert power is granted.

Information Power (I): This is based on the power of information technology.

IT experts are in a position today to wield a lot of expert power because knowledge is
power.

Thus, total power is the sum of the six types of power and can be expressed as.

R + C + R + L +E + I = POWERT

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UNIT 2 INFLUENCING

Definition: Any attempt by a person to change the behaviour of superiors, peers or lower-
level employees.
It is the ability to affect another‟s attitude, beliefs or behaviours, seen only in its effect,
without using coercion or formal position, and in a way that influences believe that they
are acting in their own best interests.
Influence can be used for purely selfish reasons, to subvert organizational objectives or to
enhance organizational effectiveness.
Managerial success is firmly linked to the ability to exercise the right sort of influence at
the right time.

Guidelines for Using Power

Influencing strategies:

Seven influencing strategies used by managers to influence their own managers, co-
workers and subordinates have been identified.
These are: Reason, Friendliness, coalition, bargaining, Assertiveness, Higher Authority,
sanctions.

Reason: A strategy of influencing which relies on the presentation of data and

information as the basis for a logical argument that supports a request.
The basis of the influencer‟s power is their own knowledge and ability to communicate
the information.
It is the most widely used strategy in organizations, and is the first choice when
influencing bosses and subordinates.

Friendliness: a strategy that depends on the influence thinking well of the influencer.
This can be accomplished by „acting friendly‟, showing sensitivity and understanding,
creating goodwill and using flattery.
Its basis is the influencer‟s personality, interpersonal skills and sensitivity to the feelings
and attitudes of others.
It is mostly used with co-workers, subordinates and superiors.

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It is used when seeking personal favours, help with work or when the organizational
power based is weak.

Coalition: This is mobilizing other people in the organization to support one, thereby
strengthening one‟s request.
It operates on the premises that there is power in numbers.
Power when using this strategy is based on alliances with other organisational members.
Coalition is a complex strategy which requires substational skill and effort.
It is widely used when influencing co-workers and bosses.
It is used to attain both personal and organizational goals, usually as a back-up strategy.

Bargaining: This is influencing through negotiation and the exchange of benefits based
on the social norms ob obligation and reciprocity.
Implied in this strategy are the notions of finding common ground, equity and
compromise.
The influence relies on a trade that involves making concessions in exchange for setting
what they want.
It is used when the influencer seeks personal benefits.
It is commonly used with co-workers, but less with subordinates or bosses.

Assertiveness: is an influencing strategy which involves influencing people through one‟s

insistent, forceful manner.
Assertiveness – insistence indicates that the behavioural style involved in this strategy is
closer to the aggressive end of the continuum.
It involves overtly making strident verbal statements (commends) and regularly
reminding the influence of the request.
It can involve setting deadlines, deciding who attends certain meetings, which items will
be on the agenda, etc.
It is used more with subordinates and less with co-workers and superiors.

Higher Authority: An influencing strategy which uses the chain of command and outside
sources of power to influence the target person.

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This is where the influencer is appealing for the support of senior people who had power
over the influence.
Higher authority can be used when framing requests.
Another application is appealing to a higher order of ethical or moral values.
It is most often used as a backup strategy when the influencer does not expect the
influence to agree to her request.
It tends to be used more often on co-workers.

Sanctions: These can be either positive or negative, involving either desirable benefits or
undesirable consequences.
Its use depends on the influencer‟s ability to provide rewards and administer
punishments.
This is the least popular of all the influencing strategies.
It is used by managers on subordinates as a last resort.
It can also be used by staff on both their bosses and co-workers.
It has to be used carefully since failure to follow through can lead to a loss of credibility.

Preferred order of use of influencing strategies:

Influencing up Influencing Down Influencing across
[Manager] [Manager] [Co-worker]

Reason, coalition, Reason, Assertive- Friendliness,

Friendliness, ness, Friendliness, Reason, Bargaining,
Bargaining, coalition, Assertiveness,
Assertiveness, Higher bargaining, Higher Higher Authority,
Authority authority, sanctions Sanctions, coalition

Popularity of the influencing strategies varies depending on the direction of influence:

influencing up (upwards towards managers), influencing down (towards subordinates) or
influencing across (laterally towards co-workers).
Power Base Influencing Strategy
Reward Bargaining
Coercive Sanctions
Referent Friendliness
Legitimate Assertiveness, sanctions
Expert Reason
Information Reason

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UNIT 3 AUTHORITY

Are Authority and Responsibility the Same Thing?

No. Authority should go hand in hand with responsibility, but the two are not the same
thing.
Your responsibilities are those things you are held accountable for – such as costs, on-
time deliveries, and good housekeeping.
Responsibilities are also spoken of as your duties – such as checking time cards,
investigating accidents, scheduling employees, and keeping production records.

Authority is the power you need to carry out your responsibilities.

A manager‟s authority includes the right to make decisions, to take action to control costs
and quality, and to exercise necessary discipline over the employees assigned to help
carry out the responsibilities.
One shouldn‟t be given a responsibility without enough authority to carry it out.

Sources of Organizational Authority

Authority, like responsibility, is usually handed down to managers from their immediate
bosses who in turn receive it from their immediate superiors. This process of handing
down responsibility and authority is known as delegation.
The biggest amount of authority and responsibility rests with the CEO and the amounts
get smaller as it goes down the line of command.

Most companies try to make the responsibilities and authorities at each level of
management fairly consistent. For instance, a supervisor in Department A should have
the same general responsibilities as a supervisor in Department B. And their authorities
would be generally the same even though the specific duties of each might differ widely.

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Other Sources of Authority
In addition to a manager‟s organizational “right” to get things done, one may often draw
on other, more personal sources.
The employer tries to establish an employee‟s organizational rights by granting him a
title or a rank, by depicting his position on an organizational chart, and by providing
some visible demonstration of status, such as a desk or an office or some special
privilege.
Ordinarily, one must reinforce this personal authority – or power – with one of the
following:
 One‟s job knowledge or skill
 One‟s personal influence in the organization ( whom you know and whom you
can get to help you or your department)
 One‟s personal charm ( if one has it)
 One‟s ability to see that things get done (performance)
 One‟s persuasive ability ( a communication skill)
All these sources are important because employees tend to restrict their
acknowledgement of organizational rights over them.
They expect their managers to show a little more real power than that.
When employees come to accept a manager‟s authority as deserved or earned (acceptance
theory of authority rather than institutional), he will find that his people relationships will
improve.

Authority vs Responsibility vs Accountability

A manager might be held accountable to higher management for the way in which
operating supplies are conserved in her department.
But the manager has the prerogative to delegate this responsibility to one of his
employees – if he also grants the employee the authority to take any steps needed to
protect these supplies. If the employee were to misuse these supplies or to lose track of
them, the manager might discipline him for failing to discharge his responsibility in this
matter.

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But the manager might still be held accountable to his boss (and would be subject to
discipline) for what happened – no matter which one of them was at fault.
Thus, you can delegate responsibility but you cannot delegate accountability.

Classification of Authority
There is no hard-and-fast rule as to how much leeway managers have in taking
authoritative action.
Generally speaking, a company may establish three rough classifications of authority
within which managers can make decisions:
Class 1: Complete authority. Managers can take action without consulting
their superiors.
Class 2: Limited authority. Managers can take action they deem fit as long as
the superior is told about it afterward.
Class 3: No authority. Managers can take no action until they check with their
superiors.

If many decisions fall into class 3, managers will become little more than messengers.
To improve this situation, one must first learn more about one‟s company‟s policy and
then spend time finding out how one‟s bosses would act.
If the manager can convince them that he would handle matters as they might, his bosses
are more likely to transfer class 3 decisions into class 2 and, as one proves himself, from
class 2 to class 1.
But the existing company policy would still prevail.
The big change would be in permitting supervisory discretion.
And this would be because one has demonstrated that he is qualified to translate front-
office policy into frontline action.

Exertion of Influence by Staff People

Staff departments‟ role is to advise or suggest. They may suggest a different, and
improved, way of doing something, advise that someone‟s department is off target (e.g.
on quality), or provide information for others‟ use and guidance.

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If managers are smart, they will make every use they can of the staff department‟s
knowledge.
But in many organizations, staff units are granted functional authority.
Functional authority entitles a staff department to specify the policies and procedures to
be followed in matters within their specialties.

Additionally, organizational policy may specify that while managers have final authority
over a functional matter, they may be required either (1) to consult with the functional
specialist before taking action or (2) to reach an agreement beforehand on the intended
action.

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UNIT 5 EFFECTIVE DELEGATION
Definition: Delegation is the process of assigning various degrees of decision-making
authority to lower-level employees.

Delegation is a continuum and there are five different degrees of delegation from high to
low as follows: (i) investigate and take action; (ii) investigate and take action; advise on
action taken; (iii) Investigate and advice on action planned; (iv) investigate and
recommend action; and (v) investigate and report back.

Delegation of selected tasks by managers can greatly add to their personal effectiveness.
Any member of management, including the manager, can usually delegate some
responsibility – and authority, since the two must go together.
A manager should delegate when she can‟t personally keep up with everything she feels
she should do.
Giving minor time-consuming tasks to others will save one time for bigger things.
As a manager, arrange to have certain jobs taken over when you are absent from your
department in an emergency or during vacation.
Keep it to routine matters, if you will, and to those requiring a minimum of authority.
But do try to get rid of the tasks that are routine and simple.

What Should Be Delegated

Start by thinking of yourself as primarily a manager. No matter how good a person you
might be, you will always have more responsibilities than you can carry out yourself.
The trick of delegating is to concentrate on the most important matters yourself.
Trouble begins when one can‟t distinguish between the big and the little matters.
Be ready, too, to give up certain work that you enjoy.
A manager must learn to let go of those tasks that rightfully belong to a subordinate,
otherwise larger and more demanding assignments may not get done.
Also don‟t worry too much about getting blamed by your boss for delegating to an
employee work the boss has given to you.

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Generally speaking, managers should be interested only in seeing that the job is done the
right way, not in who carries it out.

You MUST do

You SHOULD do but someone

else could help you

You COULD do but others

could do if given an
opportunity

Others SHOULD do
but you can help out in
an emergency

Others MUST
do

Fig. 4.1: Manager’s Task and Delegation Chart

The figure gives an idea of how to decide which jobs should be targeted for delegation.
Although authority may be passed along to people at lower levels, ultimate responsibility
cannot be passed along.
Thus, delegation is the sharing of authority, not the abdication of responsibility.

By passing along well-defined tasks to lower-level people, managers can free more of
their time for important chores like planning and motivating.
It is recommended that managers should delegate those activities they know best since it
is easier to monitor something with which one is familiar.

The organizational structure provides the framework for the formal distribution – or
delegation – of authority and responsibility.

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What Not To Delegate
Some things should not be delegated as they are for the manager alone.
When a duty involves technical knowledge which only the manager possesses, it would
be wrong to let someone less able take over.
It is also wrong to trust confidential information to others.

What To Tell Employees About Jobs Delegated To Them

 Give employees a clear statement of what they are to do, how far they can go, and
how much checking you intend to do.
 Let employees know the relative importance of the job so that they can judge how
much attention it should receive.
 Tell employees why you delegated the job.
If it shows you have confidence in them, they will try that much harder. But if
they think you are pushing off all the dirty jobs onto them, they may deliberately
make mistakes.
 Don‟t mislead employees about authority.
Do define the scope of the task and see that others in your department know that
this new task isn‟t something an employee assumed without authorization. Let it
be known that you gave the assignment and that you will expect cooperation from
the other workers.

Why Employees Should Accept A Delegated Job

Employees who accept a delegated job outside their own job responsibilities are really
taking the job on speculation.
They have a right to know what‟s in it for them, as follows:
 Employees who take on an extra duty get a chance to learn.
 Delegated jobs provide more job satisfaction. Employees thrive on varied
assignments.
 Delegation is sometimes a reward for other work well done. This will help build
employee pride and a feeling of status.

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Problems of Delegating
Delegation of personal tasks will invite trouble if you are tempted to engage in any of the
following practices:
o Delegating dirty work, trivial work, or boring work that cannot be justified as
representing a genuine opportunity for self-development.
o Overloading a subordinate beyond the limits of his time or ability.
o Failing to match responsibility with the appropriate authority to obtain the
resources needed to complete the job successfully.
o Under controlling or over controlling the subordinate. You should keep an eye on
progress and be ready to help, if requested. Otherwise, try to stand aside and let
the subordinate handle the assignment independently.

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 MODULE 5
NATURE AND PURPOSE OF ORGANISING

UNIT 1 INTRODUCTION

One of the most important resources of an organization is people. How people are
organised is crucial to the success/effectiveness of the organization. For an organizational
role to exist and to be meaningful to people, it must incorporate:
1. Verifiable objectives
2. A clear concept of the major duties or activities involved.
3. An understood area of discretion, or authority, so that the person filling it knows
what he or she can do to accomplish results.
4. Provision of needed information and other tools and resources necessary for
performance in a role.

Def.: Organisation is the grouping of activities necessary to attain objectives, the

assignment of each grouping to a manager with authority necessary to supervise it, and the
provision for coordination horizontally and vertically in an organisation‟s structure.
The organizing process is concerned with the extent to which tasks should be broken in
the light of desired results.

THE ORGANIZATION STRUCTURE

Def.: Organisational Structure is a system of task, reporting, and authority relationships

within which the work of the organization is done.
It is the formal pattern of interactions and coordination designed by management to link
the tasks of individuals and groups in achieving organizational goals. Thus, structure
defines the form and function of the organization‟s activities. Structure also defines how
the parts of an organization fit together, as an organization chart.

An organization structure should be designed for the purposes of:

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 Clarifying the environment so that everyone knows who is do what and who is
responsible for what results.
 Removing obstacles to performance caused by confusion and uncertainty of
assignment.
 Furnishing a decision-making communications network reflecting and
supporting an organization‟s objectives.

Major Variables in Organisation Structures

In establishing a structure to facilitate their activities, the members of an organization
will be confronted by, and seek to resolve the often conflicting demands between a
number of important variables which include:

(i) Purpose/goal – i.e. the fundamental aims and goals of the group.
(ii) People – i.e. those basic activities that are required to achieve organization
(iii) Tasks – i.e. those basic activities that are required to achieve organizational
aims and goals.
(iv) Technology – i.e. the technical aspects of the internal environment.
(v) External environment – i.e. the external market, technological and social
conditions affecting the organisation‟s activities.

The designing of a suitable structure for a group must begin with some idea of what
the organization is there fore, and where it intends to go – i.e. the prime purpose. In
making this decision the group must usually take account of their external
environment i.e. the market or customers, the technological, economic, legal and
political background. The next step is identifying the key tasks that must be
accomplished if the group is to succeed in its purpose.

This leads on to a consideration of the skills and talents of the existing members and
the identification of any gaps in their portfolio of skills and know-how, which may be
filled by the employment of newcomers or by training the present group.

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Lastly, the question of technology will have to be addressed- what production
systems are already in operation, or planned? What equipment will be necessary?
Give the dynamic nature of organisations, the structuring and re-structuring is a
continual process in their life.

Structural Configuration
The structure of an organization is most often described in terms of its organization
chart. A complete organization chart shows all people, positions, reporting
relationships and lines of formal communication in the organization.

The organization chart shows the following relationships:

 The division/specialization of labour – each box on a typical organization
chart represents a job position that combines a certain number of tasks. The
chart also indicates the type of work that is being performed by individuals in
the various positions.
 Relative authority – normally a position higher up on the chart has more
authority than positions below it.
 Departmentation – organisation charts – normally depict groups of positions
in what are known as departments.
 Span of control – the chart indicates the number of subordinates a manager
has.
 The levels of management – the number of levels of management in the
organization are indicated on the chart.
 Coordination centres – the organization chart shows how activities of various
subunits are coordinated.
 Communication channels – through which coordination would occur are
clearly shown on the chart
 Decision responsibility – can easily be determined on the chart.

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UNIT 2 FORMAL AND INFORMAL COMPONENTS OF AN ORGANISATION
Every organisation has both a formal and an informal component.

The formal Component

The formal component is the total pattern of working relationships among organisation
members that is officially specified. It is the organisation reflected on the organisation
chart. It is how the organisation is supposed to work. For individual employees, the
formal component includes their jobs, their boss, rules and procedures, and so on. Its
distinguishing features include:
(a) Well defined structure
(b) Regularity of planned activity
(c) Relative durability
(d) Patterns of planned relationships among members
(e) Procedures intended to mobilize and c0-ordinate the efforts of sub-units and
individuals

Informal components
Informal component of an organisation is the set of relationships that evolves out of the
formal component.

Members of an organisation may strike up relationships with other members because they
like them, work in the same department with them, have the same seniority, are about the
same age etc. Other relationships are job- related and can be a help or a hindrance in
making the formal component work better. The informal component of an organisation
has neither a constitution nor written rules and procedure. It functions irregularly, being
characterized not by any complex patterned structure, but rather by its social relationships.

Organisation Levels and Span of Management

While the reason for organizing is to make human cooperation effective, there is a limit to
the number of persons a manager can supervise.

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How Wide a Span
In every organization, it must be decided how many subordinates a superior can manage
but the exact number will depend upon underlying factors, all of which affect the
difficulty and time requirements of managing. If one look at what it is that consumes the
time of managers in their handling of their superior subordinate relationships, and also
ascertain what devices can be used to reduce these time pressures, the analyst has an
approach that will be helpful in determining the optimum span in individual cases and
also a powerful tool for finding out what can be done to extend the span without
destroying effective supervision. Spans in the middle levels of management are much
lower than at the top.

There is no correct number of subordinates that a manager can supervise effectively.

There are four key factors which determine the best span of management for a given
situation:
1. Qualifications, skills, expertise, experience, motivation and competence of both
the manager and the employees – if employees are new to a task, they obviously
take up more of a manager‟s time than knowledgeable employees do. New
employees work best under closer supervision.

2. The similarity or dissimilarity of tasks being supervised – the more numerous and
dissimilar the products, the narrower the span.

3. The incidence of new problems in the manager‟s department – the manager must
know enough about the operations of his or her department to understand
precisely the problems that subordinates are likely to face. If the manager knows
these, then a span can increase.

4. The extent of clear operating standards and rules – where there are extensive rules
to govern the behaviour of employees, a manager‟s span may be wide because
rules do a lot of the controlling. Complexity of the work – the more complex the
work, the narrower the span of management.

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5. Degree of similarity to other work – the span can be wider if a manager is
supervising employees performing similar jobs.

6. Degree of interdependence with other work – if jobs are closely interlocked and
interdependent, coordination becomes difficult. A limited span of management
would facilitate coordination.

7. Stability of the organization and the situation – if the organization is operating in

a rapidly changing environment, a narrow span may prove to be more effective.

8. Degree of standardization of the work – the establishment of numerous standards

increases predictability and provides the basis for effective control, thereby
resulting in a wider effective span.

9. Type of Technology – production technology is classified into unit or small batch

processing, mass production and process production with continuous long runs of
a standardized product. Spans of management are widest in those firms using
mass production technology. The jobs in mass production tend to be more routine
and similar to one another, thereby leading to wider effective spans of
management. Unit and process production have narrow spans.

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UNIT 3 PROBLEMS WITH LEVELS

Division of activities into departments and hierarchical organization and the creation of
multiple levels are not completely desirable in themselves.
It is important to note that:
1. Levels are expensive – as they increase, more and more effort and money are
devoted to managing because of the additional managers, staffs to assist them, and the
necessity of coordinating departmental activities, plus the costs of facilities for such
personnel.

2. Departmental levels complicate communication – an organization with so many

levels experience more difficulties in communicating objectives, spans, and policies
through the organizational structure than the firm in which top manager communicates
directly with lowest-level employees. Omissions and misinterpretations occur as
information passes down the scalar chain. It has been said that levels are “filters” of
information.

3. Departments and numerous levels complicate planning and control. The plan that
may be definite and complete at the top level loses coordination and clarity as it is
subdivided and elaborated at lower levels. Control becomes more difficult as levels and
managers are added.

Tall Versus Flat Structure

Span of management (the number of subordinates that report directly to a manager) and
the number of organizational levels (the number of different ranking in the organization
beginning with top management and going down to the operative worker level) are
related. As the total number of employees in an organization increases, there is a choice
between increasing the number of organisational levels and increasing the span of
management. A tall structure is one that has many levels relative to the organisation‟s
size. A flat structure has few levels relative to size. The advantage of a tall structure is

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that the small span of management at each level allows the managers to exercise greater
direct control.

However, there are major disadvantages of the tall structure:

 It increases administrative costs by requiring more managers.
 It complicates communication by requiring information to be filtered through
so many levels.
 The smaller span associated with a tall structure can prevent subordinates
from exercising self-direction and control. This in turn, can decrease their
motivation and their opportunities for developing new job skills.

ORGANISATION DESIGN
Organization design is the process of determining the structure and authority
relationships for an entire organization. Organization design is a means of
implementing the strategies and plans that embody the organization‟s goals.
Organization design is no more than the sum of managerial decisions for
implementing a strategy, and ultimately, achieving organization‟s objectives. Thus
the design of the organization acts as a means of coordinating the various tasks in
ways that promote the attainment of the firm‟s goals.

Strategy, the Environments, and Organizational Design

The purpose of organizing is to prepare resources to carry out plans. It follows that
the purpose of structure is to carry out strategy. For example, and organization that
focuses on innovation as a way of differentiating itself from its competitors would
normally choose a structure that is highly decentralized and encourages innovation.
Similarly, a diversified organization would be highly decentralized, allowing each
SBU to manage in its own right. Organizations that focus on cost leadership strategy
are extremely centralized in order to retain tight control over all organization‟s
functions. Strategy leads to structure.

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Factors Affecting an Organization’s Design and Structure
There are a number of factors, which determine how the organization must be
designed and structured in order to be effective. These factors include size,
technology, information processing strategies, environment and organization‟s stage
in its life cycle.

1. Size
The size of an organization is measured in terms of total number of employees, value
of the organisation‟s assets, total sales in the previous year or physical capacity.
Large organisations have a more complex structure than smaller ones. Large size is
associated with greater specialization of labour, a large span of control, more
hierarchical levels and greater formalization. Increasing size leads to more
specialization of labour within a work unit, which increases the amount of
differentiation among work units and the number of levels in the hierarchy and
consequently the need for more intergroup formalization. With greater specialization
within the units, there is less need for coordination among groups thus the span of
control can be large. Large organisations therefore may be more efficient because of
their large spans of control and reduced administrative overhead since fewer first-line
managers are required.

Economies of scale are another advantage of large organisations. In a large

operation, fixed costs for example plant and equipment can be spread more over units
of output, thereby reducing the cost per unit. In addition, some administrative
activities, such as purchasing, clerical work and marketing, can be accomplished for a
large number of units at the same cost as for a small number. Some theorists have
gone against the conventional wisdom that large is always better in manufacturing
plants. They argue that smaller firms have the following advantages:

(i) Smaller Investment required for smaller plants. The need to produce a
variety of products is reduced.

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 (ii) Organisational complexity which results from large size are decreased
i.e. the number of hierarchical levels is reduced and lines of
communication are shortened.

(iii) The smaller-size plant has resulted in increased team spirit, improved
productivity and higher profits.

To deal with the problem of organisational complexity, large organisation is cutting staff
throughout the organisation. This is done through organisational down sizing-a popular
trend aimed primarily at reducing the size of corporate staff and middle management to
reduce costs. Positive results of organisational down sizing include quicker decision
making because fewer layers of management must approve every decision.

2. Technology
Organisational technology refers to the mechanical and intellectual process that
transforms inputs into outputs. A firm‟s technology has a significant impact on its
organizational structure and design. Different technologies impose different kinds of
demands on an individual organisation, and these demands must be met through an
appropriate form of organisation. Large-batch or mass production, routine, and long-
linked technologies are not very adaptable to change. Continuous process, non-routine,
and intensive technologies are readily adaptable to change. If the rate of change in
technology is slow, the most effective design is bureaucratic or mechanistic, the term
used by Buns and stalkers. If the technology is changing rapidly, the organisation needs
a structure that allows more flexibility and quicker decision making so that it can react
quickly to change. This design is called organic.

3. Information – Processing Strategies

Part of technology‟s impact is that it determines the pattern of problems and information
needs within an organization. The design of an organization‟s information processing
system is contingent on the stability of its environment and its technology. Changes in an
organization‟s environment create uncertainty. With respect or organization design,

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uncertainty refers to the gap between the amount of information required to perform a task
and the amount of information that the organization already possess. Managers can
increase their organization‟s ability to process information by creating vertical
information systems or lateral relations.

Vertical information system – is an information-processing strategy managers can use to

send information efficiently up and sown the levels of the organization. By bringing
information up to top management, vertical information systems tend to support
centralized decision making.

Lateral relation – is an information-processing strategy that cuts through the chain of

command and increases coordination among functional departments by pushing decision
making down to where the relevant information exists. Lateral relations tend to
decentralize decisions. There are two methods of implementing this strategy.
1. Establish direct contact between employees or departments
2. Creating a new position to integrate information

An integrator facilitates communication between departments, bypassing formal lines of

communication within the hierarchy. The simplest form of lateral relations is to allow
direct contact between two employees or departments that share a common problem, in
order to facilitate joint decision making.

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UNIT 4 THE ENVIRONMENT

The organisational environment includes all elements – people, other organisations,

economic factors, objects and events – that lie outside the boundaries of the organisation.
People in the organisational environment include customers, donors, regulators,
inspectors, and shareholders. Among the other organisations are competitions,
legislatives and regulatory agencies. Economic factor include interest rates, the trade
deficit, and the growth rate of the gross national product.

An organization that provides goods or services in an environment with slow

technological innovation and relatively few competitors has problems that are different
from those of an organization in a growing, competitive market. The first environment is
stable; the second is changing and uncertain. A stable environment is characterized by
little change, and any change that occurs has minimal impact on the organization‟s
internal operation. A stable environment has several features:
 Products that haven‟t changed much in recent years
 Little technological innovation
 A fixed set of competitors, customers, and other stakeholders
 Consistent government policies

Firms operating in this type of environment can base planning and sales efforts in the
information provided by common business indicators
A changing environment is unpredictable because of frequent shifts in products,
technology, competetitors, markets or political forces. This type of environment has
certain characteristics:
 Products and services that are continuously changing or evolving.
 Major technological innovations that make production processes or equipment
obsolete.
 Ever-changing sets and/or actions of competitors, customers or other
stakeholders.

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  Unpredictable government actions that reflect the current level of political
clout wielded by various interest groups for consumer protection, product
safety, pollution control, and civil rights.

Firms operating effectively in stable environments tend to chose organizational structures

that differ from those chosen by firms operating in changing environments. Researchers
Tom Burns and Gene Stalker labelled these contrasting structures mechanistic and
organic, respectively.

Mechanistic Structure
A mechanistic structure is an organizational structure in which activities are broken down
into specialized tasks and decision making is centralized at the top. Firms using this
structure resemble bureaucratic organization. Decision making is a centralized at the top.
Tasks, authority, responsibility and accountability for both managers and subordinates are
defined by levels in the organization. Employees‟ performance the same tasks over and
over, and there is job specialization and standardization. Jobs tend to narrow in scope,
routinized and highly programmed. Little individual initiative and innovation are
encouraged. Employees are trained to work efficiently. Thus the operation of the
organization is seen as a machine process, which sustains the balance between different
parts. When one employee leaves, another can slip into the empty spot – like
interchangeable machine parts. Operating in an environment characterized by low rates
of change, the machine organization has a tall structure, and each of its many
management levels has a narrow span of management and few subordinates.

The following are the characteristics of mechanistic structures.

 Tasks are highly specialized
 Tasks tend to remain rigidly defined unless changed by top management.
 Specific roles (rights, obligations, and technical methods) are prescribed for
each employee.
 Structure of control, authority, and communication is hierarchical.
 Communication is primarily vertical, between superior and subordinate.

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 Communication primarily takes the form of instructions and decisions issued
by superiors and of information and requests or decisions supplied by
superiors and of information and requests or decisions supplied by
subordinates.
 Insistence on loyalty to the organization and obedience to superiors.

Contribution of Mechanistic System

Much of the views of the advocates of this system have endured and the concepts that
management skills apply to all types of group activity have, if anything increased in
importance today. The concept that certain identifiable principles underlie effective
managerial behaviour and that these principles can be taught also continues to be
valid. These theories raise issues that remain important to managers. Managers have
been made aware of basic kinds of problems that they would face in any organization.

Shortcomings of the Machine Organisation

It was more appropriate for the past than for the present. When organizations were in
a stable and predictable environment these principles seemed valid. Today with
organizational environments becoming more turbulent, these guidelines seem less
appropriate. In this machine organization, the normal procedure for dealing with any
matter lying outside the boundaries of one‟s individual functional responsibility is to
refer it to the point in the system where such responsibility is known to reside, or
failing than to lay it before one‟s superior. If conditions are changing rapidly such
episodes occur frequently; in many instances the immediate superior has to put such
matters higher up still. Top management become overloaded with work.

An Organic Structure
An organic form of organisation is much more flexible and it is appropriate to
changing conditions. Flexibility of structure and the ability to respond to new
problems are hallmark characteristics of the organic system. It stresses teamwork,
open communications, and decentralized decision making. There is less emphasis on
giving and taking orders and more on encouraging managers and subordinates to

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work together in teams and to communicate openly with each other. In fact,
employees are encouraged to communicate with anyone who might help them solve a
problem. Decision making is decentralized. Authority, responsibility and
accountability flow to employees with the expertise required to solve problems. Jobs
tend to be broad in scope. An organic organizational structure is well suited to a
changing environment.

The following are the characteristics of Organic Structure

 Tasks tend to be interdependent
 Tasks are continually adjusted and redefined through interaction
 Generalized roles (responsibility for task accomplishment beyond specific role
definition) are accepted.
 Structure of control, authority and communication is a network.
 Communication is both vertical and horizontal, depending on where needed
information resides.
 Communications primarily take the form of information and advice among all
levels.

The key to organizational design is to structure the department to match the

challenges posed by its external environment. Most firms, however, operate in both
stable and changing environments. As a result, some departments may undergo little
structural change, while other may change considerably.

ORGANIZATIONAL LIFE CYCLE

An organizational life cycle is a sequence of major stages of development through
which any organization evolves. Although every organization passes through the life
cycle at its own pace, there are usually four stages: birth, youth, midlife and maturity.
Each stage presents managers with unique opportunities and organization design
problems.

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 Organization Design Features at Various Life Cycle Stages
Life Cycle Stage
Design Feature Birth Youth Midlife Maturity
Size Small Medium Large Very large
Environment Changing Less changing Somewhat stable Stable
Structure Organic Less organic Somewhat Mechanistic
mechanistic
Differentiation Low Moderate High Very high
Integration High Moderate Some use of Very high
Integrator
Technological Reciprocal Pooled and Sequential Sequential an
Interdependence Sequential Pooled
Information Lateral Lateral relations Vertical Self-contained
Processing Relations And stack resources Information system Departments
Strategies

Birth Stage
In this stage the organization is created. The focus is on providing the product r service
and surviving marketplace. The organization‟s size, typically measured by the number of
employees, is small, and its operations are informal and non-bureaucratic. The founders
are engaged in all of the firm‟s activities, from production to marketing. Employees
work long hours to help the organization survive. There are few rules and procedures to
coordinate people. Employees form informal task forces and simply do whatever is
necessary to get the work done.

Youth Stage
The organization is a successful competitor in the market place, and because the
organization has survived and knows how to compete in its industry, its environment is
less uncertain. It has more employees, and a division of labour is emerging. Functional
departments are formed, and their managers are given the authority and responsibility to
make decisions in their fields of expertise.

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Midlife Stage
By the midlife stage the organization has succeeded and grown quite large. It looks more
like a bureaucracy, with rules, procedures, and job descriptions for employees. Top
Managers delegate decision making to subordinates and invest money in vertical
information systems to keep them abreast of what‟s going on.

Maturity Stage
In the maturity stage the organization is large and mechanistic and operates in a stable
environment, where competitors are well known. It has numerous functional
departments, each with its own area of expertise, to handle the problems of running the
business. Rules, procedures, and budgets are used by top managers as a means to
integrate a coordinate employees activities across multiple products and different
geographical locations.

At this point in the life cycle some organizations begin to decline. To offset this
tendency and regain some innovation and flexibility, the organization may be broken
down into smaller units. Another option to get out of unprofitable businesses:
Organizations that fail to revitalize themselves may level off as mature organizations or
even go into a steady decline.

Fitting and organization with a design

An organization‟s design should reflect its environment, technology, information needs
and life cycle stage. Managers should choose a design that fits the organization‟s needs
at any given time and as these needs change, so must the design.

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UNIT 5 DEPARTMENTATION

The limitations on the number of subordinate that can be directly managed would restrict
the size of an organization if there was no departmentation. Grouping activities and
employees into departments makes it possible to expand organizations to an indefinite
degree.

Jobs must first be appropriately specialized. Then they must be grouped into logical
units. Job grouping occurs at several levels. First, individual jobs must be grouped to
make sections, teams or work groups. These, in turn, must be grouped to make
organizational subunits such as departments. “Department” designates a distinct area,
division or branch of an organization over which a manager has authority for the
performance of specified activities. A department, as the term if generally used, may be
the production division, the sales department, the market research section or the account
receivable unit. The process of combining jobs into groups is termed Departmentation.

Approaches to Grouping Jobs.

The major approaches an organization can use to grouping jobs are by:
1. Function
2. Product
3. Process or equipment
4. Geographical location
5. Customer

FUNCTIONAL DEPARTMENTATION
Functional departmentation is a type of department in which positions are grouped
according to their main functional (or specialized) area. In other words, positions are
combined into units on the basis of similarity of expertise, skills and work activities. For
example, the production, or operations function combines activities directly related to
manufacturing a product or delivering a service. Marketing focuses on the promotion and

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sale of products and services. Human resources is responsible for attracting and
retaining, and enhancing the effectiveness of organization members. Research and
development is responsible for producing unique ideas and methods that will lead to new
and improved product and services. According deals with financial reporting to meet the
needs of both internal and external sources. Legal functions handle legal matters
affecting the organization. The term “function” in this context refers to specialized area
of expertise.

Advantages of Functional Structure

1. It encourages the development of expertise because employees can concentrate on
fostering specialties within a single function. For example, as vice president for
Human Resources, you might be able to develop specialists in such areas as
recruiting, compensation and training.
2. Employees have clear career paths within their particular function, giving them
further encouragement to develop their expertise.
3. A functional structure usually facilities more efficient use of resources because it
is fairly easy to shift individuals from one project to another as needed when they
work in the same department.
4. Economies of scale also may be possible, either because large amounts of work
often can be handled efficiently when individuals specialize or because expensive
equipment can be concentrated in one functional area to avoid duplicating the
equipment elsewhere.
5. A functional structure may facilitate ease of coordination within departments,
since the activities are all related on one way or another to the same specialized
area.
6. Grouping by functions increases the potential for developing specialized
technical competencies that can constitute an advantage over competitor.

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Disadvantages of Functional Structure
1. The coordination across function that is necessary in handling complex
problems my seriously delay responses, because major issues and conflicts
must be passed up the chair for resolution.
2. Specialists sometimes become so narrow in orientation that they cannot relate
to the needs of the other function or to the overall goals of the organization.
They become ignorant of related tasks.
3. It makes exchange of information difficult due to large volume of information
that must be communicated.
4. At the same time, performance of the unit may be difficult to measure,
because the various functions all have a hand in the organizational results.
5. A functional structure provides fairly narrow training grouped for managers,
because they tend to move up within one function and hence, have only
limited knowledge of the other functions.
6. Specialists develop attitudes and other behavioural pattern involving loyalty to
a function and not to the organization as a whole. Such “walls” between
functional departments are common and require considerable efforts towards
integration.

Use of Functional Department

The functional form of departmentation is most often used in small and medium size
organizations that are too large to coordinate their activities without some type of
formal structure but are not so laree as to make coordination across functions
difficult. Such organizations frequently have a limited number of related products or
services or deal with a relatively homogeneous set of customers or clients. A
functional design also may be useful in large or more diverse organizations, such as
insurance companies, that operate in relatively stable environments in which change
occurs at a slow enough rates for the various function to coordinate the efforts.

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DEPARTMENT BY PRODUCT OR PRODUCT DEPARTMENTATION
Product structure is a type of departmentation in which positions are grouped
according to the similarity of products, or services provided by an organization.
Product grouping is appropriate for organizations that produce multiple products and
services. Product groupings are created to concentrate on a single product or service
or at least a relatively homogeneous set of products or services. Each product
department has its own functional specialists, in areas such as marketing,
manufacturing and personnel, who perform work associated with the product of their
specific division only.

Advantages
1. It frees headquarters staff from being concerned with day to day operational
details that may now pay more attention to long-term strategic planning.
2. It promotes the development of top level management by providing a training
group.
3. It facilitates coordination by making a single manager accountable for all the
activities and results associated with a particular product or service.
4. It makes it easier to pinpoint responsibility for decisions affecting particular
products.
5. Product grouping makes it easier to assess the contribution of each product.

Disadvantages
1. It can be expensive, as costs increase through duplication of staff activities in
engineering, production and marketing.
2. Product grouping makes it more difficult to develop functional expertise and
specialized skills
3. It can lead to narrow perspective when employees become too involved with and
loyal to their own product.

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 Uses of Product Departments
A product structure is likely to be used in fairly large organizations in which there are
substantial differences among products or services provided.

GEOGRAPHICAL/TERRITORIAL DEPARTMENTATION
An organization may divide all or part of its activities on the basis of geography or
territory. Geographic structures are designed to serve different geographic areas. The
factors that necessitate this structure include:
1. The need to cut down on transport costs.
2. When an organization/s customers are scattered over a large geographic area.
3. Territorial departmentation is also proper when its purpose is to encourage local
participation in decision making and to take advantage of certain economies of
localized operations.

Disadvantages
1. Costs are incurred through duplication of personnel positions and additional
building.
2. Since geographic departmentation requires more persons with general managerial
abilities, it increases the problem of headquarters control.

Uses of Geographic Structure

It is used in large organizations in which there are differences in geographic areas.

CUSTOMER DEPARTMENTATION
The grouping of activities to reflect a paramount interest in customers in commonly
found in a variety of organizations customer structures are divisions set up to service
particular types of clients or customers. Customers are the key to the way activities are
grouped when the things an organization does for them are managed by one department.
The assumption made is that customers in each department have a common set of wants
and needs that can best be satisfied by having specialists for each customer segment. For
example, children‟s clothing‟s, men clothing‟s, appliances etc.

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Customer departmentation is utilized in many types of organizations. Business owners
and managers frequently arrange activities on this basis to cater to the requirements of
clearly defined customer group, and educational institutions offer regular and extension
courses to serve different groups of students.

Advantages
1. The customer structure tends to encourage a strong orientation toward serving the
customer type of customer.
2. It facilitates the grouping of activities of those firms which cater to different
classes of customers.

Disadvantages
1. Coordination problems arise between this type of department and those organized
on other bases, with constant pressure from the managers of customer partments
for special treatment.
2. There is a possibility of underemployment of facilities and employees specialized
in terms of customer groups. In periods of recession some customer groups may
all but disappear.

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UNIT 6 PROCESS OR EQUIPMENT DEPARTMENTATION

The involves dividing the company according to the production process used. In many
manufacturing plants, the required sequence of the production process determines the
layout of facilities, the workflow and the grouping of jobs. Each of the process requires
different equipment and skills on the part of the workers. People and material are rough
together in such a department in order to carry out a particular operation. For example,
for painting operations, all the material and people will be assembled to form a painting
department.

MATRIX ORGANISATION
Many of the difficulties with grouping jobs around products are that it can require
duplication of personnel and facilities in functional areas. One of the difficulties with
grouping jobs around functions is that it is difficult to coordinate all the work required for
products. There is a way around these difficulties. Matrix grouping is a hybrid approach
to grouping jobs that attempts to combine the advantages of both functional and product
grouping. Matrix departmentalization is based on multiple authority and support systems
through creation of the position of project manager. The project manager coordinates
activities across departments and shares authority with both functional and product
managers. There are two lines or authority in a matrix – one (by functional department)
runs vertically and the other (by product or project) runs horizontally. The every matrix
contains three unique sets of relationships:
1. Those between the project manager, who heads up and balances dual line of
authority, and the functional and product managers.
2. Those between the functional managers and product managers, who share
subordinates.
3. Those between subordinates and their dual managers.

Matrix departmentalization helps break down barriers by allowing employees from

different functional departments to pool their skills involving a common problem, and it
increases the organization‟s abilities to use human and financial resources wisely and to

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adapt to changing business conditions. Matrix departmentalization‟s requires flexibility
and cooperation at all levels of the organization. Furthermore, both managers and
subordinates may need to learn new skills, such as how to resolve interdepartmental
conflicts and how to run meetings effectively. Because the matrix form of organization is
so complicated, organizations should use it only under the following conditions
 Strong competition requires the organization to provide multiple, innovative,
state-of-art products – under such pressure, manager must give equal
consideration to coordinating the production of various goods or services and
the technical expertise needed to develop them.
 Managers must process large amounts of information because of rapid market
and technological changes – combining product or service coordination with
technical expertise can ease companywide communication of important
information.
 The organization needs to use its resources efficiently but is unable to assign
separate facilities for each product or service – in this case it must have the
ability to shift personnel from one area to another, according to the needs of
various product or service lines.

Advantages
 Gives flexibility to managers in assigning people to projects.
 Encourages interdepartmental cooperation – all key personnel associated with
a project work together as a team under one project manager. This
arrangement lessens coordination problems associated with
departmentalization by function or product.
 The project manager gains valuable experience in three managerial roles,
interpersonal, information and decision roles.
 Involves and challenges employees.
 Makes specialized knowledge available to all projects – Team members are
exposed to and can draw on the diverse background of other members, which
encourages innovation, improves the quality of solutions, and eases their
implementation.

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Disadvantages
 It is costly to implement
 A member of a project team need finely tuned interpersonal skills to
communicate effectively with specialists from other departments.
 Team morale can be adversely affected by personnel shifts, when one project
ends and a new one begin. Some team members no longer have jobs in the
new project and must return to their functional areas to await new
assignments. Fear of not having meaningful work or being laid off at the end
of a project may lead to job dissatisfaction.
 Conflict sometimes arises between employees‟ loyal to their department to
their project team.
 Increases frustration level for employees who receive orders from two bosses.
 May lead to more discussion than action.

SERVICE DEPARTMENT
Although often thought of as „staff departments rather than a kind of departmentation,
service departments are essentially a grouping of activities which might be carried on
in other departments but are brought together in a specialized department for purposes
of efficiency or control or both. Thus, service departments should accurately be
regarded as a form of departmentation. Typical of service departments found in both
business and non-business organizations are personnel, accounting, purchasing, plant
maintenance and typing pools. As can be seen, in each case the activities – which
could be done in the various departments using these services – are gathered together
for efficiency or control or both.

The nature and desirability of service departments can be illustrated by several

examples. It would be possible to have every division, department or section of an
organization do its own accounting but it has been found that accounting can be done
more efficiently and with a higher degree of accuracy and control if put in a
specialized department. Likewise, supervisions and their employees in a factory
could do their own maintenance of machines and electrical appliances, but it has

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proved to be more efficient to have a group of specialists do these things. It can be
seen that on the accounting personnel, and purchasing departments, specialized
groupings of activities has advantages for both efficiency and control.

Some Major Problems In Service Departments

Three major problems have been encountered in service department organization and
operations.
1. Efficient inefficiency – service departments are formed for cost serving purposes.
By having a single department in a company or other organization do all the
statistical reports, it can be readily shown that the reports will be done at the
lowest cost. However, low-cost reports may not really meet the information
needs of managers who are to use them. Money is saved by having all training
handled by a personnel department. But often managers may not get people
trained in what they think is necessary. Pooling of secretaries in one place and
letting all managers take their work to the pool is regarded as a cost saving. But
what is overlooked is the time lost and the cost incurred by managers taking
secretarial work to a pool and waiting hours or days to get it back. Therefore,
with a service department sometimes a high degree of efficiency is obtained in
that department, but at a greater cost to the people the department is designed to
serve.

2. The desire to exercise control – service department people sometimes forget that
their task is to serve others and with to take control over an activity. In one
company, the purchasing people refused to order the exact equipment and parts
that engineers wanted, feeling that they knew the best what the engineers needed,
the result was not only friction but, in too many cases, the ordering of items that
did not fit an engineer‟s needs for specific use or quality.
3. The problem of adequate service – service department managers often have a
difficult time. Sometimes the pressure is too much that they fail to quickly meet
all requests for service.

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How to Utilize Service Departmentation Wisely
The use of specialized departments to service other parts of an organization is
important. Some guideline to help using service departments wisely are the following:

1. Never overlook that their task is service – people in service departments must be
continually taught that their task is service. It is also important for service
managers to ensure that services are provided effectively and efficiently.

2. Place department and close to point of service as possible – one of the tendencies
in large organizations is to centralize service activities so much that a service
department is too far away from the people being served. The problem with
centralization is that there are many occasions where special reports and
information, not having been planned for, cannot be easily made available to
individual managers who need them. The result is that many companies and
government agencies have chosen to decentralize operations closer to the point
where they are used.

3. Change service cost to users – one way of making sure that people will be
reasonable in their requests for service from a specialized department is to charge
users with the costs of their service requirements. When costs, even of a central
service, are charged to users, it is interesting to note how the number of needless
requests for service decline.

4. Never overlook the possibilities of using outside services – often organizations

can serve money by hiring outside specialist to handle their service needs. Many
companies have found it cheaper and more satisfactory to contract their cleaning
work to independent firms. Also executive and personnel recruiting firms are
used to handle many of an organization‟s job openings.

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MARKET-ORIENTED DEPARTMENTATION
Newer forms of basic departmentation involve organizing an organization around
markets served or around marketing channels used. Organizing around marketing
channels involves making an organization structure reflect the ways a company reaches
an ultimate customer, whether that is through wholesale channels direct to grocery
stores or direct to supermarkets. Market-cantering organization, on the other hand,
groups activities to support marketing efforts in such key market.

Advantages.
In trying to reach customer through effective selling, good marketing is vital if
organizations are to survive.

Disadvantages
Market-oriented organization needs a manager with strong entrepreneurial skills to run
a division or department. Another problem associated with market-oriented
departmentation is that there may be duplication of many top organization services,
such as sales, advertising, accounting, purchasing and personnel. In addition, the
demands for market and other information are likely to be greater and more costly.

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UNIT 7 WHAT IS THE BEST PATTERN OF DEPARTMENTATION?

No particular type of departmentalization – functional, place, product or service, or

matrix is best. Managers must choose a structure that matches the firm‟s specific
conditions. The following characteristics could help a manager decide which structure
is best for a given situation.

Organisation characteristics Type of Departmentalisation favoured

Small Functional
Global or national scope Place
Depends highly on competitive state-of-the
Art-technology Matrix
Critical to use scare resources appropriately Matrix

Customers‟ base is:-

Changing Matrix
Diverse Product or service
Stable Functional
Makes use of specialized equipment Product or service
Requires skill specialization Functional
High transportation costs for raw materials Place Place

COORDINATION
Departmentalization divides the organisation‟s work and allows for specialization and
standardization of activities. However, in order to achieve organizational objectives,
managers also need to coordinate people, projects and tasks. Coordination is the
process of integrating the efforts of individuals and departments to achieve the
organisation‟s purpose. Without coordination, people‟s efforts are likely to end in
delay, frustration, and waste.

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Coordination involves several structural issues: formalization, complexity, integration,
differentiation and the linking-pin concept.
Formalisation is the extent to which written documentation occurs within an
organization. It focuses on objectives and related job descriptions but may also include
policies, strategies, procedures, and systems manuals. A highly formalized
organizational structure would have policies and strategies; detailed job descriptions,
objectives, and procedures; and detailed sets of rules – all in writing. Family-type
organizations are not very formalized. However, as an organization grows, it
eventually becomes necessary to formalize its structure in order to avoid confusion,
clarify roles, and eliminate ambiguity. It is also important to ensure that not only is the
structure formalized as the organization grows, but also to make certain that the
resultant written statements are accepted as valid and necessary by employees.

Complexity of an organization – refers to the number of different jobs and departments

it encompasses and their interrelationships. An organization‟s structure is said to be
complex if it includes a large number of different jobs and departments and/or if there
are a numbed of loosely structured arrangements among them – for example,
autonomous teams in a horizontal arrangements or internal or external networks.
Normally, the more complex an organisation‟s structure, the more numerous and
difficult the problems encountered in managing it. Complex organizations tend to have
slower communications and to make decisions more slowly (unless they are highly
decentralized) than less complex organizations. One of the reasons why complex
organisations are slow in making decisions is that so many of their internal units must
have a role in the decision process. Complex organizations also often tend to be too
tightly controlled. Members of such organizations frequently feel that they are tied up
with “red tape”. Overcoming the negative consequences of complexity may require
changes in certain organizational behaviours. It may be necessary, for example, to
increase the level of participation by subordinates in decision making. Computerized
information systems offer a means of dealing with complexity. Organisations that
become mired in bureaucracy may also require major restructuring.

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Integration – is the measure of the similarity among various departments with respect
to their goals and structure. If departments have similar goals, are organized in a
similar way, and work together as a team to accomplish organizational objectives, an
organization is highly integrated.

Differentiation – is the measure of the difference among various departments with

respect to their structure, tasks, and managerial orientation. If departmental managers
have different goals and structure their department differently, an organization can be
classified as highly differentiated.

Linking pin – rests on the idea that the manager of each work unit serves as a linking
pin among at least three groups: the group the he or she leads and manages, the group
of managers at the same level (peer managers) of which he or she is a member, and the
group of managers higher in the organizational hierarchy, of which the manager‟s boss
is a member. In addition to linking basic work groups, a manager may also serve as a
link between autonomous, or self-managed, work teams and units outside the
organization. The manager thus is the vital connecting point for many of the elements
in the organization structure, i.e. span of control, departmentation, delegation,
decentralization, formalization, acceptance of authority, and parity. As a linking pin,
the manager is primarily responsible for implementation. This requires coordination of
the organizational objectives that come from higher levels. Influencing motivation is
also an essential task. Coordination with peer managers also facilitates these processes.
Because of the increasing emphasis on team approaches and the increased use of
networks, managers need to develop the skills that will enable them to perform the
linking function more effectively.

Principles of Coordination
There are three basic principles of coordination: the unity of command principle, the
scalar principle, and the span or management principle.
1. Unity of command principle – states that an employee should have only one
boss. Every employee needs to know who is giving the orders and to whom he or

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 she reports. Managers must minimize any confusion over who makes decisions
and who implements them, because uncertainty in this area can lead to serious
productivity and moral problems.
2. Scalar principle – states that a clear and unbroken chain of command should link
every person in the organization with someone a level higher, all the way to the
top of the organization chart. Tasks should be delegated clearly, with no
overlapping or splitting of assignments.
3. Span of management principle – states that the number of people reporting
directly to any one manager must be limited because one manager can‟t
effectively supervise a large number of subordinates.

Problems of Coordination
Problems of coordination are caused by a number of factors:
1. In large organizations, problems of coordination may arise from the very nature of
the productive process. A capital-intensive process, for example, may require less
continuous coordination than a labour intensive operation.

2. Another cause of coordination problems arises from the division of labour,

departmentalization and specialization of large-scale organization. Where people
perform a variety of differing tasks within the organization, perception of goals,
roles and relationships will vary, so that there will always exist the possibility of
individuals, groups and departments forgetting their wider roles and pursuing self-
interest at the expense of the overall objectives of the organization. As a result,
deviation from plans may become widespread, marking coordination more
difficult. In short, the employment of specialists within large organizations is
essential, but it does present added problems of coordination.

3. The greater number of persons involved in large organizations presents, in itself,

added problems of coordination, for to control and coordinate the activities and
efforts of thousands of people is a difficult task.

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Methods of Improving Coordination
Coordination can be improved in a number of ways:
1. Careful and detailed plans which are understood and accepted by those involved
make coordination easy. This implies that an efficiently coordinated organization
in which each sub-unit works in harmony with the others, individuals and units
have received precise instructions as to their specific roles and the tasks of
combining with others, and work programmes have been kept up-to-date
facilitates coordination.

2. A managerial hierarchy with a clear structure of authority, able to produce and

utilize policies, rules and procedures is the basis of coordination.

3. There should be mechanisms of interdepartmental communication, so that

horizontal communication between managers on the same organizational level be
intensified to the point where misunderstanding and conflict are reduced, making
coordination more effective.

Additional Coordination Devices

Richard L. Draft has identified several devices in addition to objectives and planning
that organizations can use to improve coordination. These include the following:
1. Add levels of positions to the hierarchy – if the manager is overworked, adding
positions may improve coordination.
2. Use information systems better – providing managers with better information in
periodic reports may improve their ability to coordinate. Electronic mail can be
especially useful.
3. Exchange paperwork – managers can improve coordination by exchanging
information with other managers.
4. Increase personal contact – have more direct contact with subordinates and other
managers.

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5. Emphasize liaison – liaison roles can be created to improve the coordination of
individuals, groups, and departments. It may be necessary to appoint a full-time
integrator.
6. Employ task forces – a person in liaison role can usually coordinate two or more
departments. When more departments need to be coordinated, temporary task
forces can be established, made up representatives from each department affected
by a problem. They join to solve the problem, or at least to coordinate efforts to
solve it.
7. Teams can be created to achieve coordination – in addition, networks groupware
(software for grouping decision-making), and horizontal structures can be used to
improve coordination.

Coordination becomes more effective, where it is based on balancing, timing and

integrating. Balancing involves the provision of support where it is needed; timing
requires that the variety of organizational activities be brought into phase with one
another. Integrating involves unification of interests in relation to overall objectives.

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UNIT 8 COORDINATION VERSUS DEPARTMENTATION

In any organization there is tension between coordination and departmentalization.

Where the forces of coordination are stronger than those of departmentalization, a
functional departmentalization provides the necessary degree of coordination. To
provide speedy, efficient service to customers, coordination of departmental activities
must be smooth and flawless. When a problem arises, top managers must be able to
quickly coordinate the actions of various functional departments‟ need to provide
technical help. Employees move from product, depending on which tasks must be
completed next.

Where forces for departmentalization are strong than those for coordination a place or
product or service departmentalization work best. Managers decide what is appropriate
for only their product or service, and they decide without having to consider the impact
of their decisions on other product lines. Since each product line is unique, there is
little need for coordinating activities between lines. Some coordination, however,
might take place across products (or services) by having managers of each line use
similar reporting forms or techniques for financial, accounting, or purchasing
information so that comparable data are collected at the corporate level.

AUTHORITY
Def.: Authority is the right to act or make a decision. It is also the right to require
someone else to do it.
The principle governing this relationship is the principle of coequal Authority and
responsibility. This principle states that a commensurate amount of authority should
accompany a delegation of responsibility.

DELEGATION OF AUTHORITY
Def.: Delegation is the actual process of assigning job activities and corresponding
authority to specific individuals within an organization.

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It involves dividing up work, entrusting some part of it to subordinates and creating the
conditions necessary to hold subordinates accountable for their performance. It is a
two-way activity, involving the giving and acceptance of responsibility and authority.
The primary purpose of delegation is to make organization possible. Just as no one
person in an organization can do all the tasks necessary for accomplishment of group
purpose, so it is impossible, as an organization grows, for one person to exercise all the
authority for making decisions. There is a limit to the number of persons managers can
effectively supervise and for whom they can make decisions.

Delegation is the most important of all the skills a manager must possess. Delegation,
the ability to get results through others, is important because it is both the gauge and
the means of a manager‟s accomplishment. Once a supervisor‟s job grows beyond his
personal capacity, his success lies in his ability to multiply himself through other
people. How well he delegates determines how well he can manage. The overworked
manager, who carries a full brief case home, is often overloaded because he does not
know how to delegate. One of the greatest failures of managers is the unwillingness or
inability to delegate responsibility and authority. Yet delegation of responsibility and
authority is essential if managers are to provide opportunities for the development of
people.

Step in the Delegation Process

There are four steps in the delegation process:
i) Assigning specific duties to the individual – the manager must be sure that the
subordinate has a clear understanding of what these duties entail. Whenever,
possible, care should be taken to state the activities in operational terms so that a
subordinate knows exactly what action must be taken to perform the assigned
duties.
ii) Granting appropriate authority to the subordinate – the subordinate must be given
the right and power within the organization to accomplish the duties assigned.

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iii) Acceptance by the subordinate of the obligation involved in the delegated task-
the subordinate must be fully aware of what the task involves and what is
demanded by way of added responsibility.
The final step is completion of the delegated tasks to the satisfaction of the superior – at
this point careful assessment and evaluation may be necessary.

Many managers and supervisors complain that they do know how to delegate
effectively. Even after delegating responsibilities to others, some managers still want
to know everything about anything that is going on; they insist on being kept informed
of all details affecting their area of responsibility.

Advantages of Delegation
1. Delegation leads to a quicker action and faster, better decisions – action can be
taken much faster by subordinates if they do not have to go to their superiors for
each decision. When routine matters are handled at a higher level than necessary,
time is wasted and work output is reduced.
2. Delegation is an important facet of training and developing personnel in the
organization. Employees or managers cannot learn to perform certain functions
or make decisions unless they are given the opportunity.
3. Delegation is essential if the firm wants to develop its personnel to assume more
challenging and demanding jobs in the future.
4. Delegation may lead to higher levels of motivation among personnel since they
believe they are being trusted and their managers have confidence in their
abilities.
5. Delegation not only builds the confidence of personnel but also improves attitudes
and morale generally.
6. Decision-making making may be more effective where the subordinate is nearer
the situation to which the delegated task refers
7. Delegation is said to lead to a widening of awareness of the general problems of
the organization and a deepening of understanding, on the part of those whose

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 duties have been widened, of how the sub-units of the organization are related to
the whole.
8. Managers are assisted by subordinates to complete tasks they simply would not
have time for otherwise.
9. The supervisor has more free time to accomplish other tasks.

Disadvantages of Delegation
1. There is possibility of a manager losing track of the progress of a task once it has
been delegated.
2. Ensuring that the subordinate is capable of carrying out the task may not be easy
particularly when potential for accepting additional responsibilities has not been
established.
3. Delegation can fail if the degree of responsibility and authority is not clearly
defined and understood.
4. Problems can result if an employee is given responsibility for a job but is not
given sufficient authority to perform the task.

Barriers in Superiors
1. Lack of confidence in subordinates – supervisors may be afraid that their
subordinates will not do a job well.
2. Lack of self-confidence – some supervisors fear that surrendering some of their
authority may be seen by others as a sign of weakness.
3. Fear of competition from subordinates
4. Desire to be involved in all the details of work
5. Belief that, “if you want it done right, do it yourself”.
6. If supervisors are insecure in their job of see specific activities as being extremely
important to their personal success, the may find it difficult to put the
performance of these activities into the hands of others
7. Lack of experience in delegating
8. Belief that being busy is the same as being productive
9. Failure to define responsibilities so that they can be delegated.

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Barriers in Subordinates
1. Subordinates may be reluctant to accept delegated authority for fear of failure or
because of a lack of self-confidence.
2. Desire to avoid responsibility – subordinates fear that accepting additional
authority may complicate comfortable working relationships that presently exist.
3. Preferring to be dependent on the boss – some subordinates fear that the
supervisor may not be available for guidance once the delegation is made.
4. Lack of trust in the superior
5. Aversion to risk taking
6. Real lack of job skills
7. Lack of understanding of policies and procedures.

Barriers in organisations
1. Delegation
2. Understaffing in organizations hinders delegation
3. The need for quick action can be a barrier to delegation
4. The characteristics of the organization itself may make delegation difficult. For
example, a very small organization may present the supervisor with only a
minimal number of activities to be delegated.
5. The organisational history can be a roadblock to delegation. If every few job
activities and little authority have been delegated over several years in an
organisation, attempting to initiate the delegation process could make individuals
very reluctant and apprehensive. In essence, the supervisor would be introducing
a change in procedure that some members of the organisation may resist very
strongly.
6. Uncertainty and ambiguity about job requirements make it difficult to delegate.
7. An organisational culture that discourages mistakes can discourage delegation.

Eliminating Barriers to Delegation

1. The art of successful delegation demands the establishment of clear objectives for
subordinates.

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2. Managers should build subordinate confidence in the use of delegated authority.
Coaching them in their new job would be very helpful
3. Supervisors themselves should have the willingness to seriously consider the
ideas of others
4. A balance of trust and the need for control characterizes many successful acts of
delegation. Supervisors should give subordinates the freedom to carry out their
responsibilities. They should trust in the abilities of subordinates who should be
given the chance to learn from their mistakes without suffering unreasonable
penalties for making them.
5. Authority, which is needed in the new situation, should be granted to
subordinates.
6. For the superior who is either unwilling or unable to carry out delegation, training
which explains its purpose and its advantages is essential.

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UNIT 9 GUIDELINES FOR MAKING DELEGATION EFFECTIVE

The following guidelines are practical in making delegation real:

1. Define assignments and delegate authority in the light of results expected i.e.
grant authority to make possible the accomplishment of goal assignments.

2. Maintain open lines of communication – since plans change and decisions must
be made in the light of changing conditions, there would be a free flow of
information between superior and subordinate, furnishing the subordinate
information with which to make decisions and to interpret properly the authority
delegated. Delegations, then, do depend on situations.

3. Establish proper controls – because no manager can relinquish responsibility,

delegations should be accompanied by techniques to make sure the authority is
properly used. But if controls are not to interfere with delegation, they must be
relatively broad and designed to show deviations from plans rather than interfere
with detailed actions of subordinates.

4. Reward effective delegation and successful assumption of authority

Degrees of Delegation
As the delegation process occurs in an organization, the result is some dispersion of
decision-making authority throughout the organization. In referring to the degree of
this dispersion, two commonly used terms are centralization and decentralization.

CENTRALISATION
Centralisation is a condition in which an organisation‟s top managers retain most
decision-making authority. Centralisation of authority is characterized by authority
concentrated at the top of an organization or department.

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Advantages of Centralisation
 Easier to coordinate the activities of those who report to top strategic
management
 Assures that decisions and policies will be consistent with the organisation‟s
goals.
 Economises on administrative overhead costs by avoiding duplication of
administrative work.
 Allows experienced top managers to make better decisions that affect the
organization.
 Allows for quick response to major unanticipated events.
 Facilitates organizational identity by focusing authority in a small group of
managers.
 Provides for economies of scale in operations by avoiding duplication of
facilities.
 Enables an organization to handle emergencies. When emergency decisions,
which affect all units of the company, must be made, centralization of
decision-making is highly desirable.
 Enables closer control of operations.
 Utilizes the skills of central and specialized experts.

Disadvantages
 It creates pressure of work at top management levels.
 It causes delays in handling of issues since all cases have to be referred to the
central body.
 It may lead to frustrations of employees at lower levels who may feel not
capable of handling issues.
 Accountability becomes very difficulty since all activities are controlled at the
top level.

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DECENTRALISATION
Decentralisation is a condition in which meaningful decision-making authority is
distributed to lower levels in the organization. Decentralisation of authority is
characterized by a high degree of delegated authority throughout an organization or
department. Decentralisation of authority is characterized by a high degree of
delegated authority throughout an organization or department. Decentralisation is an
approach that requires managers to decide what and when to delegate, to carefully
select and train personnel, and to formulate adequate controls. There is a trend in
business firms today toward greater decentralization. The major impetus for the trend
is the belief that more decentralization will make the firms perform better in dynamic
environments. The trend is supported by the existence today of technology capable of
providing management with information and decision support systems. These
systems enable top managers to keep informed and to retain adequate control without
personally being involved in decision making.

Advantages of Decentralisation
 Relieves top managers to concentrate on more strategic issues.
 Provides a major source of motivation for a large number of organization
members.
 It is an invaluable way to develop managerial talent and to assure they have
the competence needed to handle responsibilities.
 Allows organizations to respond more quickly to environmental uncertainty
by placing decision making authority at the level where problems arise.
 Allows problems to be handled by people who are most familiar with the
problems.
 Allows achievement of effective managerial control by making managers of
decentralized units accountable for results.
 Encourages development of managers by giving managers a management job
to do and delegating to them the authority to make important decisions.

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Disadvantages
 It leads to delay in decision-making due to the need to consult the central
body.
 There is a possibility of poor co-ordination at lower levels.
 There is a danger of deviating from overall objectives.
There is no organization which is totally centralized or totally decentralized. No one
manager makes all the decisions, even in a centralized setting. Within an organization
that centralizes authority for making strategic and tactical decisions, authority for
making operating decisions may be decentralized. Conversely, in organizations
regarded as highly decentralized in some functions, (i.e., marketing or production),
other functions (i.e. finance, strategic planning, legal) may be centralized.

Factors affecting Centralisation and Decentralisation

 Costliness of decision – the more costly the action to be decided, the more
probable it is that the decision will be made at the upper levels of
management. The need for top control depends on the kind of decision. In
large organizations, authority over the expenditure of capital funds is usually
not delegated.
 Uniformity of policy – organizations which value consistency are in favour of
centralized authority, since this is the easiest road to such a goal.
 Geographic dispersion of the organization customers – the more physically
separated the customers of the organization, the greater the need for
decentralization.
 Geographic dispersion of the organization – when difficulties of are
compounded by geographic dispersion, the organization has a greater need for
decentralization. Time loss and perhaps even transportation costs associated
with shipping raw materials over great distances from supplier to
manufacturer could support the need for decentralization of certain functions.
 History of the enterprise – decentralization of authority depends upon the way
the business has been built. If the organization has grown by acquiring other
organizations, it will tend to be more decentralized. If a company grows

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 simply by selling more of what it is already involved in it may remain fairly
centralized.
 Corporate culture – a firm‟s culture will play a large part in determining
whether authority will be centralized. Corporate culture refers to the norms,
values, and practices characterizing the organization.
 Control mechanisms – all organizations insist on controls to determine
whether actual events are meeting expectations. If a department‟s operations
are not within certain guidelines, then management can take some decision-
making responsibility away from it.
 Availability of managers – many organizations work hard to ensure an
adequate supply of competent managers, an absolute necessity for
decentralization. These organizations believe that practical experience is the
best training for developing managerial potential. They are therefore willing
to permit managers to make mistakes involving small costs.
 Environmental influences – external factors, such as unions, federal and state
regulatory agencies, and tax policies, affect the degree of centralization within
a firm. Government policy on the employment of minorities, for example,
makes it hard for a company to decentralize hiring authority.
 Desire for creativity – if creativity is a desirable feature of the organization
then some decentralization probably is desirable.

Line Authority and Staff Authority

Line authority belongs to managers who have formal authority to direct and control
immediate subordinates who perform activities essential to achieving organizational
objectives. Line authority thus flows through the primary chain of command,
according to the scalar principle.
Staff authority direct and control subordinates who support line activities through
advice, recommendations, research, and technical expertise. Staff managers and
employees support line functions with specialized services and information.

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 MODULE 6
GROUPS IN ORGANIZATIONS

UNIT 1 INTRODUCTION

Def.: A group is two or more freely interacting individuals who share a common identity
and purpose.

Relationships rule in organizations.

The more managers know about building and sustaining good working relationships, the
better.

Characteristics:

All groups may be collections of individuals, but all collections of individuals are not
groups.

What does it take to make a group? Four important dimensions of groups:

First, a group must be made up of two or more people if it is to be considered a social
unit.
Second, the individuals must freely interact in some manner.
Generally, larger organisations with bureaucratic tendencies are made up of many
overlapping groups.
Third, the interacting individuals must share a common identity.
Each must recognize himself as a member of the group.
Fourth, interacting individuals who have a common identity must also have a common
purpose.

Types of groups:

Human beings belong to groups for many different reasons.

Groups fulfil very different needs.
Groups display common characteristics: Formality of structure, Permanence, Purpose.

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Formality of structure: Groups can be formal or informal in nature.

Formal Groups:

A formal group is a group created for the purpose of doing productive work.
It may be called a team, a committee, or simply a work group.
It is usually formed for the purpose of contributing to the success of a larger organization.
The completely formal group exhibits the characteristics of a formal organization –
rigidity and bureaucracy.
A hierarchy of authority is established, with specified member roles and functions.
Rules, regulations, incentives and sanctions guide the behaviour of formal group
members.
Rather than joining formal tasks groups, people are assigned to them according to their
talents and the organization‟s needs.
One person normally is granted formal leadership responsibility to ensure that the
members carry out their assigned duties.

Thus, formal groups are those groups in an organization which have been consciously
created to accomplish the organization‟s collective purpose.

Informal Groups:

An informal group is a collection of individuals who become a group when members

develop interdependencies, influence one another‟s behaviour and contribute to mutual
need satisfaction.
An informal group results if the principal reason for belonging is friendship.
Informal groups usually evolve spontaneously when individual band together but without
setting up a formal structure.
They serve to satisfy esteem needs because one develops a better self-image when
accepted, recognized and like by others.
Sometimes, as in the case of a group of friends forming an investment club, an informal
group may evolve into a formal one.
Managers cannot afford to ignore informal groups because grassroots social networks can
either advance or threaten the organization‟s mission.

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Informal groups are highly flexible and adaptive.
Member roles are loosely defined.
Member behaviour is guided by an internalized perception of appropriateness.
Such behaviour is sanctioned by granting or with holding social approval.

Permanent or Temporary:

A group may be relatively permanent, like a church, or quite temporary, like a task group
which is disbanded after the accomplishment of a task.

Task or Social purpose:

The purpose around which a group is formed may be either task-oriented or socially
oriented.
Accomplishing a particular task may tend to direct group members‟ activities in ways
different from the activities of members of the purely social group.
Most groups fall somewhere in the middle along this spectrum, with a mixture of task and
social purposes.

Characteristics of a Mature Group:

1. Members are aware of their own and each other‟s assets and liabilities vis-a-vis the
group‟s tasks.
2. These individual differences are accepted without being labelled as good or bad.
3. The group has developed authority and interpersonal relationships that are recognised
and accepted by the members.
4. Group decisions are made through rational discussion. Minority opinions and
dissension are recognized and encouraged.
Attempts are not made to force decisions or a false unanimity.
5. Conflict is over substantive group issues such as group goals and the effectiveness
and efficiency of various means for achieving those goals. Conflict over emotional issues
regarding group structure, processes or interpersonal relationships is at a minimum.
6. Members of mature groups tend to be emotionally mature, which paves the way for
building much-needed social capital.

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Group Structures

Group structure is the relatively stable pattern of relationships among the differentiation
within a group occurs along several dimensions:

Status: Status structure of a group

Individual commitment to either an informal or formal group hinges on two factors.
(a) The first is attractiveness, the outside-looking-in view.
A non-member will want to join a group that is attractive and will shy away from
a group that is unattractive.
(b) The second factor is cohesiveness – the tendency of group members to follow the
group and resist outside influences.
This is the inside-looking-out view.
Cohesive group members stick together.

Factors that either enhance or destroy group attractiveness are listed below.

Table 6.1: Factors That Enhance or Detract from Group Attractiveness and
Cohesiveness
Factors That Enhance Factors That Detract
1. Prestige and Status 1. Unreasonable or disagreeable demands
on the individual
2. Cooperative relationship 2. Disagreement over procedures,
activities, rules and the like
3. High degree of interaction 3. Unpleasant experience with the group
4. Relatively small size 4. Competition between the group‟s
demands and preferred outside activities
5. Similarity of members 5. Unfavourable public image of the group
6. Superior public image of the group 6. Competition for membership by other
groups
7. A common threat in the environment

Both the decision to join a group and that to continue being a member depend on a net
balance of the factors above.

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Roles:
Def.: A role is a socially determined prescription for behaviour in a specific position.

Every employee has one or more organizational roles to play.

An organization that is appropriately structured, in which everyone plays her role(s)
effectively and efficiently, will have a greater chance for organizational success.
The term role refers to:
(1) a set of expectations concerning what a person in a given position must, must not, or
may do;
(2) the actual behaviour of the person who occupies the position.

Thus, any person occupying a position and filling a role behaves similarly to anyone else
who could be in that position.
Roles evolve out of the tendency for social units to perpetuate themselves, and roles are
socially enforced.
Role models are a powerful influence.

Norms:
Def.: Norms are general standards of conduct that help individuals judge what is right or
wrong or good or bad in a given social setting ( such as work, home, play, or
religious organization)
Norms define degrees of acceptability and unacceptability.
Because norms are culturally derived, they vary from one culture to another
Norms have a broader influence than do roles, which focus on a specific position.
Although usually unwritten, norms influence behaviour enormously.

Every mature group, whether formal or informal, generates its own pattern of norms that
constraints and directs the behaviour of its members.
Norms are enforced for at least four reasons:
(a) To facilitate survival of the group
(b) To simplify or clarify role expectations

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(c) To help group members avoid embarrassing situations (protect self-images)
(d) To express key group values and enhance the group‟s unique identity.

Norms tend to go above and beyond formal rules and written policies.
Compliance is shaped with social reinforcement in the form of attention, recognition and
acceptance.
Those who fail to comply with the norm may be criticized or ridiculed.

Worse than ridicule is the threat of being ostracized.

Def.: Ostracism is the rejection from the group.

Ostracism is the capital punishment of group dynamics.

Informal groups derive much of their power over individuals through the ever-present
threat of ostracism.
Thus, informal norms play a pivotal role in on-the-job ethics.

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 MODULE 7
MOTIVATION AND LEADERSHIP

UNIT 1 NATURE OF MOTIVATION

People work for a variety of reasons. Some want challenge and some want security. The
things that each individual in an organization want from work play an instrumental role in
determining motivation to work. Motivation is vital to all organizations and hence to
their managers. Often the difference between highly effective organizations and less
effective ones lies in the motivational profiles of their members. Thus, managers need to
understand the nature of individual motivation, especially as it applies to work situations.
Motivation is defined as the human process that activates, directs, sustains and stops
behaviour. The starting point in the motivational process is a need. A need is anything
an individual requires or wants. Motivated behaviour usually begins when an individual
experiences a deficiency in one or more important needs. Individuals go through the
motivation cycle as they attempt to satisfy their needs.

The Motivation Cycle

Motivation is a cyclical process consisting of six stages:
1. An individual has unsatisfied need
2. Because the individual is driven to attempt to satisfy this need, he or she searches
for alternatives that might satisfy it.
3. The individual chooses the best way to satisfy the need
4. The individual is motivated to take action to obtain the need satisfier.
5. The individual re-examines the situation, contemplating what has taken place
depending on the outcomes of these efforts, the individual may or may not be
motivated again by the same type of need or need satisfier.

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The stages in the motivation cycle are presented in the following figure:

Fig. 7.1: The Motivation Cycle

The individual has an

unsatisfied need

Will the individual The individual searches

continue to be for means to satisfy the
motivated to satisfy deed, evaluates available
this need in the same alternatives and decides
way? on one

The individual reassesses The individual is motivated

the situation to take action and does so.

The individual either

achieves or fails to
achieve the need
satisfier sought

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The cycle begins when a person becomes consciously or subconsciously aware of
personal needs. The person then proceeds through a series of steps aimed at satisfying
those needs until the cycle begins again.

To achieve organizational goals, managers must understand basic human nature. What
motivates a person to work hard? What does a person want or need from work? One of
the manager‟s major functions is to influence the motivation cycle in order to achieve the
organisation‟s objectives. At each stage of the motivation cycle the manager must take
certain actions and design a system to satisfy these wants and needs.

Factors Affecting Motivation:-

 Individual differences – are those personal needs, values, attitudes, and interests that
people bring to their jobs. Because these characteristics vary from person to person, so
will what motivates people. One employee may be motivated by money and hold out for
a job paying a high salary. Another may be motivated be security and accept a lower
paying job that involves few risks or unemployment. Still another may thrive on
challenges and seek a position that stretches her or his abilities to the limit. Learning to
handle the challenges of such a job gives an employee advantages in today‟s increasingly
global organizations.

 Job characteristics – are the dimensions of the job that determine its limitations
and challenges. These characteristics include the variety of skills required, the degree to
which the employee can do the entire task from start to finish (task identity), the
significance attributed to the job, autonomy (the degree to which the job provides
substantial freedom, independence, and discretion to the individual in scheduling work
and determining the procedures to be used in carrying out tasks) and the type and extent
of performance feedback (the degree to which carrying out work activities requires by the
job results in the individual‟s obtaining direct and clear information about his or her
performance) that the employee receives. Different jobs may rate high on some
characteristics and low on others. For example, a repetitive task would rate low on
autonomy, skill variety (the degree to which the job involves a variety of different work

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activities or requires the use of a number of skills and talents) and task significance (the
degree to which the job has a substantial impact on the goals or work of others in the
company) but high on task identity. In contrast, a specialized job of a mechanic rates
high on skill variety and task identity. An employee who derives satisfaction from the
job and its particular characteristics will be more motivated to perform well than one who
doesn‟t.

 Organisational practices – are the rules, personnel policies, managerial practices

and reward systems of an organization. Policies defining fringe benefits (such as bonuses
or commissions) can attract new employees and convince older employees to remain with
a company. Rewards can motivate employees, but if they are to do so effectively, the
must be administered fairly and based on performance.

In working with employees on motivation, managers need to consider all three factors.
Managers must understand, for instance, that the way they apply certain rules and
rewards can either motivate or demotivate subordinates.

MOTIVATION THEORIES
Over the years many people have attempted to develop theories to describe how
motivation affects work behaviour. Theories of worker motivation attempt to explain
people‟s inner working, initiatives, and aspirations.

Three basic types of motivation theories namely content, process and reinforcement will
be discussed.

CONTENT THEORIES OF MOTIVATION

Content theories (also called need theories) are based on the idea that people are driven to
meet basic needs that produce satisfaction when they are met. A need is a strong feeling
of deficiency in some aspect of a person‟s life. This sense of deficiency creates an
uncomfortable tension, which the individual strives to reduce, usually by taking some
action to satisfy the need. Some people re driven by a need to succeed; others by the

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need to be well liked, to gain power or wealth, or to feel secure in their jobs. If an
individual succeeds in reducing the sense of deficiency, the intensity of the motivating
force is also reduced.

These theories include:

 Maslow‟s hierarchy of needs.
 Clayton Alderfer‟s Erg theory
 Hertzberg‟s two factor theory
 McClelland‟s Achievement Motivation theory

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UNIT 2 PROCESS THEORIES OF MOTIVATION

ABRAHAM MASLOW: HIERARCHY OF NEEDS THEORY

Abraham Maslow (1908-1970), and American psychologist, viewed the motivation of

human beings as arising from levels of hierarchy of needs. His theory is based on four
assumptions:.
1. Human needs, in general, cannot all be satisfied since on the satisfaction of one
need, another arises.
2. Different needs are active at different times, and only needs not yet satisfied can
influence behaviour.
3. Some needs are innate (e.g. the need for food and water), while others are
acquired from social experience (e.g. the need for social esteem).
4. Human beings attempt to satisfy their needs in a specific order, based on a
hierarchy. As soon as a lower order need is satisfied, a higher order need emerges and
demands satisfaction.

According to Maslow‟s theory behaviour is triggered by a need deficit which drives the
individual to reduce the tension it creates. Tension leads to behaviour that will
potentially satisfy the need.

Maslow identified five categories of needs and explained each level of hierarchy as
follows:-

1. Physiological needs – these are needs which are of a basic nature and which may
require satisfaction repeatedly within short periods of time e.g. the need for food, water
shelter, sleep and other bodily needs. Where they remain unsatisfied they will dominate
almost all other needs. It is only when these needs are satisfied that needs on the next
level emerge.

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2. Safety needs – once the basic physiological needs are satisfied, safety needs
emerge so as to dominate behaviour. A perceived need for protection from physical
danger, threats, or a desire for economic security is examples of safety needs.

Self-Actualisation

Needs

Esteem needs

Social needs

Safety needs

Physiological needs

3. Social needs – the need for friendship, affection, acceptance by one‟s workmates
and admission to formal or informal groups are significant motivating factors.
Satisfaction of the need to feel needed becomes a matter of importance.
4. Esteem needs – internal esteem factors such as self respect, freedom and
achievement, and external esteem factors such as status, recognition must be satisfied
though not fully. Their total non-satisfaction will breed feelings of insecurity and
inferiority.
5. Self actualization needs – at the summit of the hierarchy is the need to realize
one‟s potentialities so as to satisfy what Maslow referred to as “the desire to become
everything that one is capable of becoming”.

Maslow hypothesized that the journey up the hierarchy would take most of a lifetime. In
fact, some people might never reach the highest levels. Moreover, if a formerly satisfied
need were no longer satisfied the individual would drop back to a lower level of the
hierarchy. If an individual who was dominated predominantly by social needs lost his or

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her job, for example, security might become the most important need. If he or she were
unemployed long enough, physiologically need might become dominant.

Maslow also noted that some people might ignore lower-level needs because their focus
is on a higher-level need. Martyrs, for example, seem to ignore the need for security
altogether. Teachers, nurses and other people in low-paying but socially beneficial
occupations are often satisfying higher level needs at the expense of lower-level ones.
Maslow emphasizes the importance of studying the nature of man‟s needs, their
interrelationships and their significance as motivators. To understand these matters is,
according to Maslow, to understand better why those who work in organizations act as
they do.

The hierarchy of needs gives managers a straightforward way of understanding how

various work condition satisfy employee needs. Certain basic conditions of employment
(such as pay) satisfy physiological needs. Safety needs are met by safe work conditions
and job security. Social needs are satisfied by interaction and communication with fellow
workers, and finally, work that is fulfilling can satisfy self-esteem and self-actualisation
needs.

Limitations
1. There is some question as to whether five need levels for individuals are found in
all organizations. Some research has shown that the number of need levels can range
from two to as many as seven.
2. Managers must acknowledge that need are not static, but are quite dynamic: in
other words one can go down the hierarchy as fast, or as faster than up. For example.
Managers in troubled organizations can go from being motivated by ego needs to security
needs quite quickly after the announcement of impending manpower cutbacks.
3. More than one level need can be operative at any one time, which is counter to the
theory.

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4. The theory states that a satisfied need is not a motivator. Although in a general
sense this may be true, it is also true that individuals needs are never fully or permanently
satisfied as a result of a single act or behaviour.

CLAYTON ALDERFER’S ERG THEORY

Alderfer combined Maslos‟s five needs into three need levels: ERG

Existence need – include the various forms of material and physiological desires, such as
food and water, as well as work related forms such as pay, fringe benefits and physical
working conditions.

Relatedness needs – needs that address our relationships with others, such as families,
friendship groups, work groups, and professional groups. They deal with our need to be
accepted by others, achieve mutual understanding on matters that are important to us, and
exercise some influence over those with whom we interact on an on going basis.

Growth needs – needs that impel creativity and innovation, along with the desire to have
a productive impact on our surroundings.

According to ERG theory, we generally tend to concentrate first on our most concrete
requirements. As existence needs are resolved, we have more energy available for
concentrating on relatedness needs, which offer a potential source of support that can
help us in satisfying growth needs. Then, as relatedness needs are somewhat fulfilled, we
have the energy and support needed to pursue growth needs. Thus ERG theory
incorporates a satisfaction-progression principle similar to that of Maslow in that
satisfaction of one level of need encourages concern with the next level.

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FREDRICK HERZBERG’S TWO-FACTOR THEORY
Hertzberg‟s two-factor theory or the motivator hygiene theory is a second popular content
theory of motivation. He proposed a theory of employee motivation based on
satisfaction. Hertzberg and his colleagues were interested in identifying those factors that
satisfaction. Hertzberg and his colleagues were interested in identifying those factors that
caused workers to be satisfied with their work.
To investigate this idea, Hertzberg designed a study in which data was gathered from
accountants and engineers. He asked participants in the study to think of times when they
felt especially good and especially bad about their jobs. Each participant was then asked
to describe the conditions or events that caused those good or bad feelings. The
participant identified different work conditions for each of the two feelings. That is,
while the presence of one condition (e.g. fulfilling work) made the participants feel good,
the absence of that condition (fulfilling work) made the participants feel good, the
absence of that condition (fulfilling work) did not make them feel bad.

Hertzberg discovered two factors that separately explained satisfaction and

dissatisfaction. Dissatisfaction tended to be associated with complaints about the job
context or factors in the immediate work environment. Hertzberg described eight general
factors of work which employees disliked about their job:-
1. Company policy and administration
2. Working conditions
3. Quality of technical supervision
4. Quality of interpersonal relations among peers, supervisors and subordinates
5. Fringe security
6. Job security
7. Salary
8. Status

These he called dissatisfies, which serve primarily to prevent job satisfaction. They have
been named hygiene factor or maintenance factors meaning preventive. Hygiene factors
refer to aspects of work that border the task itself and more related to the external

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environment (the job context). They are preventive factors that produce dissatisfaction.
Hygiene factors if absent in the job, lead to high levels of dissatisfaction; if present, they
create “zero dissatisfaction” or neutrality”. By themselves, hygiene factors do not
motivate individuals to better performance.

Hertzberg then drew up his list of factors whose presence lead to satisfaction. These are
called satisfier or, simply motivational factors. Motivational factors relate directly to the
job content (the specific aspects of a job). The presence in a job of factors such as job
challenge is motivational. When these factors are absent, the level of satisfaction is
reduced to the zero point. Absence of these factors, is however not dissatisfying. He
identified the following motivator or satisfier factors workers liked:-
1 Recognition
2 Advancement
3. The task or work itself
4. The workers potential for personal learning or growth
5. he workers responsibility

He concluded that enriched jobs were the key to self-motivation e.g. changing jobs to
remove the routineness, boredom, and the lack of challenge.
According to Hertzberg, the opposite of job satisfaction is not job dissatisfaction, but
rather no job satisfaction and similarly, the opposite of job dissatisfaction is not job
satisfaction, but no dissatisfaction.
The two-factor theory has received a great deal of notice and acceptance among
managers in many types of organizations Hertzberg observations are useful because they
point managers toward types or groups of satisfiers that can be offered to meet different
kinds of employees needs.

Limitations
The two-factor theory fails to account for differences in individuals. Hertzberg assumes
that all employees will react similarly to motivational factors. A close examination of the
people reveal, however, that some people will indeed be motivated by an advancement,

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but on the other hand, there are many people who are highly motivated by money,
security and status. In other words, trying to motivate employees through the content of
the job is bound to result in only partial success.

DAVID McCLELLAND’S ACHIEVEMENT MOTIVATION THEORY

McClelland‟s initial work centred on the need for achievement in individuals rather than
in the general population of works. For more than three decades, McClelland has studies
mainly three needs:

The need for achievement – the desire to accomplish challenging tasks and achieve a
standard of excellence in one‟s work. Individuals with a high need for achievement
typically seek competitive situations in which they can achieve results through their own
efforts and can receive relatively immediate feedback on how they are doing. They like
to pursue moderately difficult goals and take calculated risks. Managers who want to
motivate high achievers need to make sure that such individuals have challenging, but
reachable, goals that allow relatively immediate feedback about achievement progress.

The need for affiliation – the desire to maintain warm, friendly relationships with
others. To motivate high need for affiliation individuals, managers need to provide a
cooperative, supportive work environment in which individuals, meet both performance
expectations and their high affiliation needs by working with others. Individuals with a
high need for affiliation can be assets in situations that require a high level of cooperation
with and support of others, including clients and customers.
The need for power – the desire to influence others and control one‟s environment, as a
particularly important motivator in organisations. Need for power has two forms,
personal and institutional. Individuals with a high need for personal power want to
dominate others for the sake of demonstrating their ability to wield power. They expect
followers to be royal to them personally rather than to the organization. In contrast,
individuals with a high need for institutional power focus on working with others to solve
problem and further organizational goals. Individuals with a high need for institutional
power like getting things done in as organized fashion. They also are willing to sacrifice

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some of their own self-interests for the good of the organization. Motivating individuals
with a high need for institutional power involves giving them opportunities to hold
positions that entail organizing the efforts of others. Individuals with a high institutional-
power need make the best managers because they are oriented toward coordinating the
efforts of others to achieve long-term organizational goals.

MANAGERIAL APPLICATION OF CONTENT THEORIES

McClelland‟s need for achievement and affiliation, and Hertzberg‟s intrinsic motivators-
responsibility, personal growth and the work itself-are consistent with quality expert W.
Edwards Deming‟s belief that motivation and worker commitment come from pride of
workmanship and the joy of work. But managers often underestimate employees‟ need
for achievement.
A climate of achievement in the work place can be cultivated in several ways.
First, work that is challenging and gives the employee a sense of responsibility is
motivational.
Second, managers can identify and recognize individual employees‟ contributions rather
than simply attributing a firm‟s success to managers.

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UNIT 3 PROCESS THEORIES OF MOTIVATION

Process theories include Expectancy and Equity. Process theories are concerned with
how people are motivated – specifically, with how they choose need satisfiers and how
external factors affect that process. Thus, according to process theory, a worker is likely
to consider a variety of methods, weighing each method in terms of how attractive its
expected outcome might be, before engaging in an activity.

EXPECTANCY THEORY – VICTOR H. VROOM

Expectancy theory argues that people choose among alternative behaviours according to
their expectation that a particular behaviour will lead to one or more desired outcomes
(such as pay, recognition, or new challenges). Expectancy theory further predicts that an
employee will be motivated to improve performance if the employee knows that he or she
is capable of the desired behaviour, believes that satisfactory performance will result in
the desired outcome, and places a high value on that outcome.

Vroom‟s expectancy theory rests on three basic assumptions:-

1. Forces at work in the individual and in the job situation combine to motivate and
determine behaviour - people seek to satisfy different needs. Forces in the job situation
influence how they go about doing so.
2. People make conscious decisions about their own behaviour – for example, an
individual decides whether to accept a job with the organization, come to work or call in
sick, put in overtime, strive for a promotion, and so forth.
3. Selecting a course of action depends on the expectation that a certain behaviour
will lead to a desired outcome – in essence, individuals tend to behave in ways that they
believe will help them achieve their objectives (such as a promotion or job security) and
avoid behaving in ways that will lead to undesirable consequences (such as demotion or
criticism).

To sum up, the theory is based on the assumption that motivational strength is determined
by perceived probabilities of success. For example, an employee‟s expectation for pay

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rise diminished after being turned down, later rebounds when the supervisor indicates a
willingness to reconsider the matter.

The theory contends that motivation depends on four key concepts or factors:-
a) Expectancy – is the individual‟s subjective assessment that effort will produce
the desired results. At work employees may question whether increasing their level of
effort will increase their level of job performance as evaluated as evaluated by their
supervisor. Their experience may be that no matter how hard they work their
supervisor does not notice it. How supervisors appraise their employees performance can
be more important to the employees than actual performance.
b) Instrumentality – is the employee‟s assessment of how instrumental or likely it
is that successful task performance will be rewarded with a rise. Thus instrumentality is a
measure of the relationship between performance and rewards. For example, in some
work environments high performers are the only one who receive the promotions and pay
increase when employees see this, they are likely to believe there is a strong and clear
relationship between high performance and desired outcome.
c) Outcomes – outcomes that employees receive as a result of their job behaviour
can be external or internal outcomes are largely controlled by others in the organization
e.g. pay, promotions, employee benefits, training opportunities etc. Internal outcomes
which are controlled by the person include feelings of satisfaction, feelings of frustration,
etc.
d) Valence of the outcome – is the value or weight that an individual attaches to the
outcome. Thus the valences of various outcomes can motivate behaviour and influence
decisions. Desirable rewards encourage effort, undesirable rewards discourage effort. A
valance can range from negative to positive depending on whether the individual
believes the outcome is personally undesirable or desirable.

Expectancy theory provides a general guide to the factors that determine the amount of
effort a worker puts forth. It also helps explain how a worker‟s goals influence his
efforts. Managers with polished listening skills can readily discover what particular
rewards specific individuals‟ value.

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EQUITY THEORY: BY STACY J. ADAMS

Equity theory is based on the assessment process workers use to evaluate the fairness or
justice of organizational outcomes. Employees perceive what they get from a job
situation (outcomes) in relation to what they put into it (inputs) and then compare their
input-outcome ration with the input-income ration of others. If they perceive their ratio
to be equal to the others with whom they compare themselves, a state of equity exist. If
the ratios are unequal, inequity exists that is they view themselves as under rewarded or
over rewarded.

Equity theory recognizes that individuals are concerned not only with the absolute
rewards they receive for their efforts but also with the relationship of these rewards to
what others receive. Based on one‟s inputs, such as effort, experience, education and
competence, one compares outcomes such as salary levels, recognition and other factors.
When people perceive imbalance in their input-outcome ration relative to others, tension
arises and they may:-
1) Increase their inputs to justify higher rewards – when they feel that they are over
rewarded in comparison with others.
2) Decrease their inputs to compensate for lower rewards when they feel under
rewarded.
3) Change the compensation they receive through legal or other actions, such as
leaving work early, stealing the company‟s supplies, and so on.
4) Modify their compensations by choosing another person to compare themselves
against
5) Distort reality by rationalizing that the inequalities are justified.
6) Leave the situation (quit the job) if the inequities cannot be resolved.

Equity theory provides managers with a framework for analyzing the factors that might
lead to perceived inequity, an important component of perceived justice, between
individuals and groups.
UNIT 4 REINFORCEMENT THEORIES OF MOTIVATION

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Reinforcement theory contents that behaviour is a function of its consequences.
Behaviour that produces rewarding consequences is likely to be repeated, whereas,
behaviour that produce no rewards or has punishing consequences is less likely to be
repeated.

Reinforcement theory identifies four types of reinforcement:

1. Positive Reinforcement – Offers rewards to increase the likelihood that a desired
behaviour will be repeated. Anything that encourages an individual to repeat a desired
behaviour can be classified as a positive reinforcer. Some common positive reinforces
used by organizations include praise, recognition of accomplishment, promotion and
salary increase.
2. Punishment – is the application of negative consequences whenever undesired
behaviour occurs. The purpose of punishment is to decrease the likelihood that the
individual will repeat the undesired behaviour. For example, a manager may discipline
an employee who comes to work late or neglects to clean up the work area. The
disciplinary action might take the form of a verbal reprimand, a monetary fine, a
demotion, or if the employee persists, a suspension – all with the intention of
discouraging the behaviour.
3. Avoidance – is the maintenance of desired behaviour in order to escape or avoid
the known unpleasant consequences. Some students come to class on time in order to
avoid a reprimand from the instructor.
4. Extinction – is the absence of any reinforcement, either positive or negative,
following an incidence of undesired behaviour. The theory states that if undesirable
behaviour is simply ignored, it will eventually cease.

Schedules of Reinforcement
Reinforcement theory emphasizes using positive reinforcement to encourage desired
behaviours. In studying positive reinforcement, researchers have discovered that
different patterns of rewarding affect the time required to learn a new behaviour and the

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degree to which the behaviour persists. These different patterns, called schedules of
reinforcement, specify the basis for and timing of positive reinforcement.
There are two major types of schedules or reinforcement: Continuous and partial.
A continuous schedule or reinforcement involves rewarding a desired behaviour each
time it occurs.
For example a manager might praise a worker every time the worker performs a task
correctly.
A partial schedule of reinforcement, involves rewarding the desired behaviour
intermittently rather than each time it occurs.
There are four major types of partial reinforcement schedules:
1. Fixed-interval schedule – provides reinforcement at fixed time intervals – for
example, a weekly, twice-monthly, or monthly paycheck.
2. Fixed-ratio schedule – reinforcement is given after a fixed number of desired
behaviours.
3. Variable–interval schedule – provides reinforcement at irregular intervals of time.
Inspection crews work on this type of schedule. If employees don‟t know when their
manager is going to drop in, they will maintain a reasonably high level of desired
behaviour.
4. Variable ration schedule – reinforcement occurs after a varying number of
behaviours occurs regardless of the time elapsed.

Managers should emphasise positive reinforcement to encourage desired behaviours and

to let subordinates know what behaviours will be rewarded.

Principles of Reinforcement
1. Positive reinforcement should take the form of incentive bonuses and praise.
Earning incentive bonuses and receiving praise from management provide strong
extrinsic rewards.
2. Immediacy – to get maximum productivity, reinforcement must be immediate.
3. Contingency – rewards (positive reinforcement) should be contingent on
performance level.

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4. Individualization – incentive programmes should be designed to reward
individual performance. Thus low performers do not adversely affect high performers.

5. Measure output, not process – reinforcement programmes should focus on how

much employees produce, not how they do it.

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UNIT 5 CONTEMPORARY ISSUES IN MOTIVATION

1. Motivation through job design

A job serves two but related functions. It is a productive unit for the organization
and a career unit for the individual. Considering that the average adult spends
about half of his or her working life at work, a challenging and interesting job can
add meaning to one‟s life. Boring and tedious jobs can become a serious threat to
one‟s motivation to work hard.

a) Fitting people to jobs

Through realistic job previews, job rotation and limited exposure, the
organization can boost motivation. Each of the three mentioned alternative
involves adjusting the person rather than the job in the person-job match. This is
the first strategy.
Realistic Job Previews: - Unrealized expectations are a major cause of job
dissatisfaction and low motivation. Managers commonly create unrealistically
high expectations in recruits to entice them to accept a position. Realistic job
previews, honest explanations of what a job actually entails, have been useful in
this area.

Job rotation: - This involves periodically moving people from one specialized job
to another. Doing this prevents stagnation.

Limited Exposure:- Another way of coping with a tedious job is to limit the
individual‟s exposure to it. This technique called contingent time off (CTO),
involves establishing a challenging yet fair daily performance standard and letting
employees go home when it is reached.

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b) Fitting jobs to people
This second design strategy calls for managers to consider changing jobs instead
of people. This is mainly through two techniques namely job enlargement and job
enrichment.
i) Job Enlargement: Is the process of combining two or more specialized
tasks in a work flow sequence into a single job.
ii) Job Enrichment: Job Enrichment:- Job Enrichment builds more
complexity and depth into jobs by introducing planning and decision
making responsibility normally carried out at higher levels.
Jobs can be enriched by upgrading five core dimensions of work namely:-
- Skill variety – is the degree to which a job requires a variety of different activities
in carrying out the work, involving the use of a number of different skills and
talents of the person.
- Task identity – the degree to which a job requires completion of a whole and
identifiable piece of work that is doing a job from beginning to end, with a
visible outcome.
- Task Significance – the degree to which the job has a substantial impact on the
lives of other people.
- Autonomy – The degree to which the job provides substantial freedom,
Independence and discretion to the individual in scheduling the work and in
determining the procedures to the used in carrying it out.
- Job feedback – the degree to which carrying out the work activities required by
the job provides the individual with direct and clear information about the
effectiveness of his or her performance.

2. Motivation Through Rewards

All workers, including volunteers who donate their time to worthy causes, expect to be
rewarded in some way for their contributions.
Def.: Rewards may be defined as the material and psychological payoffs for doing
something.

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Job performance and satisfaction can be improved by properly administered rewards.
Rewards, if they are to motivate job performance effectively need to be administered in
ways that:
i) Satisfy individual needs – whether it is a pay rise or a part on the back, there is no
motivational impact unless the reward satisfies the individual‟s need. Not all people need
the same things, and individual may need different things at different times. Money is a
powerful motivator for those who seek security through material wealth. Others seek
recognition.
ii) Foster positive expectations – An employee will not try to attain an attractive reward
unless it is perceived as attainable.
iii) Ensure equity distribution – Something is equitable if people perceive it to be fair and
just.
iv) Reward results – There should be a relationship between work and rewards.
Managers can strengthen motivation to work by making sure that those who give a little
extra through for instance, merit, pay, bonus etc.

3. Motivation through Quality – of-Work- Life innovations

Def.: Quality-of-work life (QWL) is a process by which an organization attempts to
unlock the creative potential of its people by involving them in decision affecting
their work lives.
Quality of work-life programmes include:-
i) Flexible work schedules – allowing employees to determine their own arrival and
departure times within specified limits.
ii) Participative Management – Employees may participate in setting goals, making
decisions, solving problems and designing and implementing organizational changes. By
being personally and meaningful involved in one or more of these overlapping areas,
employee motivation and performance are paid to improve.
iii) Workplace Democracy – encompasses all efforts to increase employee self
determination.

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 MODULE 8
LEADERSHIP

UNIT 1 INTRODUCTION

Leadership is a skill that can and must be learned in order to motivate subordinates to be
productive. Many large businesses, and even countries, have achieved success as a result
of good leadership.
There is a distinction between the terms “leader” and “manager”.
A manager is one who performs the functions of planning, organizing and controlling and
who occupies a formal position in an organization.
A leader is anyone who is able to influence others to pursue certain goals.
It is important for individuals to be both leaders and managers.

Bennie contends that a business short on capital can borrow money, and one with a poor
location can move. But a business short on leadership has little chance for survival.

THE NATURE OF LEADERSHIP

Leadership can be thought of as both a property of individuals and as a process carried
out by individuals.
As a property, leadership is a set of qualities possessed or attributed to those who carry
out the leadership process.

As a process, leadership is the ability of one individual or a small group of individuals to

influence other individuals positively in order to accomplish group goals.
Power is the foundation of the leadership process. It is a resource that leaders can call
upon in order to influence or control others.

Def.: Power is the capacity or potential to get other people to do things they might not
otherwise have done.

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There are six principal sources, or bases of power coercive power, reward power,
legitimate power, expert power, reference power and information power.

Coercive Power is a form of power, which uses threats and punishment to achieve its
ends. Examples include the threat of dismissals for non-cooperating staff. Coercion is
important as a potential influence e.g. the threat of being disciplined for not arriving at
work on time is effective in influencing the arrival time of many employees.
Reward Power this is the use of rewards (such as pay rise, promotions and praise) to
influence people‟s compliance.
Legitimate power – this is generally known as „authority‟, i.e. power conferred on an
individual by the organization
Expert power – this is the power that comes from possessing specialized knowledge and
skills. Computer specialists and engineers often have substantial power in organizations
because of their technical knowledge that others need.
Reference power or charisma – is power based on the leader‟s possession of personal
characteristics that make him or her attractive to other people.
Information power – is power that derives from information they possess and people and
activities in the organization.

Power acts as a motive force for leadership. It influences who gets what, when and how.

EFFECTIVE LEADERS
Different situations call for different types of leadership. Most mergers need a sensitive
negotiator at the Helm, whereas turnarounds require a more forceful authority. However,
the most effective leaders are alike in one crucial way: they all have a high degree of
what has come to be known as emotional intelligence. This does not imply that IQ and
technical skills are irrelevant. They do matter, as they are entry requirements for
executive positions.

Emotional intelligence is the sine qua non of leadership. Without it, a person can have
the best training in the world, an analytical mind, and on endless supply of smart ideas,

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but he still won‟t make a great leader. Emotional intelligence not only distinguishes
outstanding leaders but can also be linked to strong performance. People can, if they take
the right approach, develop their emotional intelligence. However, the process is not
easy. It takes time and commitment.

THE FIVE COMPONENTS OF EMOTIONAL INTELLIGENCE

1. Self-awareness – means having a deep understanding of one‟s emotions,
strengths, weaknesses, needs and drives. Rather, they are honest with themselves and
with others; they recognize how their feelings affect them, other people and their job
performance. Thus a self-awareness person who knows that tight deadlines bring out the
worst in him plans his time carefully and gets his work done well in advance.

2. Self-regulation – It is the ability to control or redirect disruptive impulses and

moods. People who are in control of their feelings and impulses are able to create an
environment of trust and fairness. People who have mastered their emotions are able to
roll with the changes. Self-regulation enhances one‟s integrity.

3. Motivation – is a passion to work for reasons that go beyond money or status.

Effective leaders have a deep desire to achieve for the sake of achievement. Such people
seek out creative challenges, have to learn, and take great pride in a job well done. They
are forever raising the performance bar and are always tracking progress- their own, their
team‟s and their company‟s.

4. Empathy – is the ability to understand the emotional make up of other people. It

means thoughtfully considering employees‟ feelings-along with other factors-in the
process of making intelligent decisions.

5. Social Skill – is the proficiency in managing relationships and building networks.

Social skill is friendliness with a purpose, i.e. moving people in the right direction.
Socially skilled people are expert persuaders. They know when to make an emotional
plea. Leaders need to manage relationships effectively, no leader is an island. After all,

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the leaders need to manage relationships effectively, no leader is an island. After all, the
leader‟s task is to get work done through other people, and social skills make that
possible.

APPROACHES TO LEADERSHIP
TRAIT THEORY
The trait approach to leadership is based on early leadership research studies, which
attempted to compare the traits of effective and ineffective leaders.
Researchers identified several common traits that are essential to leadership success:-
1. Decisiveness – nothing is possibly more damaging to the morale of an organization
than a vacillating and hesitating leader. A clear and constant focus on a central
purpose builds trust by letting others know where the leader stands.
2. Clarity of Vision – a leader must know what he wants and what he does not want.
3. Unerring Judgment – a leader judgment has to be more correct than incorrect.
4. Building up of Subordinates – the extent to which an executive can change
individual‟s bad behaviour into good behaviour is an index of his good leadership.
He must win the confidence and trust of his staff and inspire them.
5. Participative Management – a leader should be a good organizer and should also be
able to create in the worker a feeling of participating in managing the organization.
6. Good Public Relations – the executive should have the skill to build relationships
and defend the integrity of his company.
7. Improvement in Consciousness – the leader should be progressive and be zealous
about improving performance of the organization.
8. Management of self- successful leaders nurtures their strength and learns from their
mistakes.

STYLES OF LEADERSHIP
Authoritarian Style
This style of leadership has the following characteristics:-
 The leader makes most of the decisions without consulting group members

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 The leader controls the actions of group members by using the power to provide
rewards and discipline. There is very little individual freedom of action.
 The leader tries to develop obedient and predictable behaviour from group members.
 The leader establishes group goals, provide coordination and plan activities.
 The leader has little concern for the attitudes, feelings and value of the group members.

Democratic (participative style)

 The leader consults with members and involves them in the decision making process.
 The leader delegates authority and responsibility to group members.
 The leader considers the attitudes, feelings and values of group members in making
decisions.
 The leader uses two-way communication and is directly involved with group members
in setting goals and conducting activities.

Laissez-faire (permissive) style

 Group members are allowed to make decisions without any input from the leader
 The leader does not attempt to coordinate or control the actions of group members.
 The individual desires of the group members are the major influence on ground‟s goals
and methods of operation.
 The leader‟s primary role is to help individual group members achieve their personal
objectives.

THE MANAGERIAL GRID

Perhaps the most widely known of all leadership theories is the managerial grid
developed by researchers in Michigan. The Michigan studies looked at the differences
between high producing and low-producing groups to see if they could identify any
differences in leadership behaviour. What they found was that supervisors in high-
producing groups were employee centred in there approach to their work targets, whereas
supervisors in low-producing groups were production centred.

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Some supervisors adopted characteristics of both extremes, and the resulting model of
leadership styles was presented as a continuum of alternatives. Blake and Mouton
created a grid depicting five major leadership styles representing the degree of concern
the leader has for “people, and “production” (Fig. 8.1).

Fig. 8.1: The Managerial Grid

High 9 1,9 9,9

C 8 CCM TM
o
7
n
6
c
e
5 5,5
r 4 OMM
n 3
for 2 IM AO
People
1 1,1 9,1

Low Low 1 2 3 4 5 6 7 8 9
Low Concern for Production High

i) Impoverished management (IM) – the manager has little concern for

either people or production.
Exertion of minimum effort to get required work done is appropriate to
sustain organizational membership.
ii) Authority-obedience (AO) – the leader concentrates on task efficiency
but shows little concern for the development and moral of subordinates.
Efficiency in operations results from arranging conditions of work in
such a way that human elements interfere to a minimum degree.
iii) Country club management (CCM) – the leader focuses on being
supportive and considerate and has little concern for output.
Thoughtful attention to needs of people for satisfying relationships leads
to a comfortable, friendly organization atmosphere and work tempo.

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 iv) Organisation man management (OMM) – adequate task efficiency
and satisfactory morale are the goals of this style. The leader attempts
to balance and trade off concern for work in exchange for a satisfactory
level of morale – a compromiser.
Adequate organization performance is possible through balancing the
necessity to get out work with maintaining morale of people at
satisfactory level.
v) Team management (TM) – the leader seeks high output through
committed people. Achieved through mutual trust, respect and a
realization of interdependence.
Work accomplishment is from committed people; interdependence
through a common stake in organization purpose leads to relationships
of trust and respect.

From these findings, Blake and Mouton recommended team management.

They argue that using team management approach results in improved
performance, lower employee turnover and absenteeism, and greater employee
satisfaction.

THE OHIO STATE LEADERSHIP STUDIES

Beginning 1945, researchers in the bureau of business Research at Ohio State

University made a series of detailed studies of the behaviour of leaders in a wide
variety of organisations. The key concern of the Ohio State leadership studies was the
leader‟s behaviour in directing the efforts of others towards group goals. After many
studies, researchers identified two important dimensions of leader behaviour.
1. Initiating structure – the extent to which leaders establish goals and structure their
roles and the roles of subordinates toward the attainment of the goals. It is
behaviour that is principally concerned with organizing the task where task
requirement is given priority.

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 2. Consideration – the extent to which leaders have relationships with subordinates
characterized by mutual trust, respect, and consideration of employees‟ ideas and
feelings. It is behaviour that is essentially relationships oriented i.e. where
employee‟s needs are taken into consideration.

High High consideration High structure

and and
Consideration Low structure (A) High
consideration
(B)
Low consideration High structure
Low and and
Low structure (C) Low
consideration
(D)
Low Initiating Structure High

Fig. 8.2: Ohio State Leadership Styles

The figure illustrates four basic leadership style representing different combinations of
leadership behaviour. A manager can be high in consideration and initiating structure,
low in both, or high in one and low in the other.
The following observations can be made with regard to the type of leadership styles
proposed in the Ohio state model:-
 High Structure, Low Consideration (D): Leader devotes primary attention to getting the
job done. Personal concerns are strictly secondary.
If a group expects and wants authoritarian leadership behaviour, it is more
likely to be satisfied with that type of leadership.
 Low Structure, High Consideration (A): Leader strives to promote group harmony and
social need satisfaction.

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If group members have less authoritarian expectations, a leader who strongly
emphasizes initiating structure will be resented.
 High Structure, High Consideration (B): Leader strives to achieve a productive balance
between getting the job done and maintaining a cohesive, friendly work group.
If the work situation is highly structured by technology and the pressures of
time, the supervisor who is high in consideration is more likely to meet with
success.
 Low Structure, Low Consideration (C): Leader retreats to a generally passive role of
allowing the situation to take care of itself.
If employees must work and interact continuously, the usually want the
superior to be high in consideration‟

The optimum style is one where the tension between high consideration and high
structure has been successfully resolved – the leader pays thorough attention to people‟s
needs and organizes the work very efficiently.

PATH-GOAL THEORY – ROBERT HOUSE

The essence of the theory is that it is the leader‟s job to help his or her followers attain
their goals and to provide the necessary direction and support to ensure that their goals
are compatible with the overall objectives of the organization. It gets its name from the
idea that if an employee sees high productivity as a path that leads to one or more
personal goals the employee will tend to be a high producer, and the leader‟s job is to
help the employee move along the path to his or her goals satisfaction. According to the
path goal approach, effective job performance results if the manager clearly defines the
job, provides training for the employee, assists the employee in performing the job
effectively, and rewards the employee for effective performance.
The path-goal theory identified four different leadership style that managers need to rely
on:-
1. Directive leadership – the leader tells people what is expected of them and
provide specific guidance, schedules, rules, regulations and standards.

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 2. Supportive leadership – the leader treats subordinates in a friendly manner and
shows concern for subordinates‟ status, well being and needs.
3. Participative leadership – the leader consults with subordinates about issues and
takes their suggestions into account before making a decision.
4. Achievement oriented leadership – involves setting challenging goals, expecting
subordinates to perform at their highest level, and showing strong confidence that
subordinates will put forth effort and accomplish goals.

Thus, path-goal theory emphasizes the use of different leader behaviour depending upon
the situation

HERSEY AND BLANCHARD’S SITUATIONAL LEADERSHIP THEORY

Paul Hersey and Kenneth Blanchard‟s situational leadership theory is based on the notion
that the most effective leadership style varies according to the level of maturity of the
followers and the demands of the situation. Successful leadership is achieved by selecting
the right leadership style, which Hersey and Blanchard argue is contingent on the level of
the followers maturity and situation demands.

Maturity is not defined as age or psychological stability. The maturity level of the
followers is defined as:-
 The ability and willingness of people to take responsibility for directing their own
behaviour
 A desire for achievement
 Education or experience and skills relevant to the particular task.

A leader should consider the level of maturity of his or her followers only in relation to
the work or job to be performed. Certainly employees are mature on some tasks when
they have the experience and skills as well as the desire to achieve and are capable of
assuming responsibility. The appropriate leadership style used by a manager varies
according to the maturity level represented by M1 through M4 stages:-

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M1: People are both unable and unwilling to take responsibility for doing
something. They are neither competent nor confident.
M2: People are unable but willing to do the necessary job tasks. They are
motivated but currently lack the appropriate skills.
M3: People are able but unwilling to do what leaders want.
M4: People are both able and willing to do what is asked of them

Hershey and Blanchard identified four leadership styles that are appropriate given
different levels of subordinate‟s maturity. These are classified as:

S1: Telling – the leader defines roles and tells people what, how, when, and
where to do various tasks. It emphasizes directive behaviour.
S2: Selling – the leader provides both directive behaviour and supportive
behaviour
S3: Participating – the leader and follower share in decision making,. With the
main role of the leader being facilitating and communicating.
S4: Delegating – the leader provides little direction or support.

The S1 style is very appropriate when dealing with subordinates who are relatively new
and inexperienced employees. Inexperienced employees need to be told what to do and
how to accomplish their jobs.

As employees learn their jobs, the manager begins to use an S2 leadership style. There is
still need for guidance and support since the employees do not yet have the experience or
skills to assume more responsibility. The manager encourages the employees and
demonstrates greater trust and confidence in them.

The S3 leadership style is suitable when employees posses considerable task-relevant

maturity. As employees become more experienced and skilled, as well as more
achievement motivated and more willing to assume responsibility the leader should
encourage participation.

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The S4 leadership style is for followers with the highest level of task maturity. At this
stage, the employees are very skilled and experienced, possess high achievement
motivation and are capable of exercising self-control. The employees no longer need or
expect a high level of support.

A leader must have insight into the abilities, needs, demands, and expectations of the
followers and be aware that these can and do change over time. Also, managers must
recognize that they must adapt or change their style of leadership whenever the level of
maturity of followers changes. Maturity levels can change for many reasons – for
instance, change in jobs, personal or family problems, and a break in a relationship, or
switch in the present job to new technology.

Situational leadership is only effective if:

(i) The leader is flexible in behaviour
(ii) The subordinate is recognized as a major situational determinant

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UNIT 2 AN INTEGRATED APPROACH TO LEADERSHIP

There is no one best leadership style that can be used to manage diverse groups. The
most effective style is one that meets the needs of each particular situation. This requires
a careful consideration of characteristics of the leader, the followers, and the specific
situation.

The development of an integrated approach to effective leadership requires consideration

of several important situational factors. Characteristics of the leader, the followers, and
the situation all interrelated to determine the most effective leadership style. The
followers represent the personnel. The situation includes the structure, the technology,
objectives, and the external environment. The leaders represent managers.

Leader
Everyone has a different combination of abilities, personalities, experiences and
expectations. Because of these factors each person develops different patterns of doing
work. A person who has found that being an autocratic manager will get the job done
will likely continue this pattern unless something happens to show that this style is no
longer appropriate. A participative style may also continue to be used until it is no longer
effective. The leader should use a style that meets the needs of the followers and the
situation. A leader‟s flexibility is important.

Followers
Like the leader followers have varying abilities, personalities, experiences and
expectations. Followers are a major factor for consideration in the integrated approach to
leadership. If the followers are inexperienced, lack the necessary education or skills and
do not seek more individual responsibility for their job, the most effective leadership.
Managers must take into consideration the needs, goals, capabilities and experiences of
the followers if they are to be effective.

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Situation
The four factors of structure, technology, objectives and the external environment
comprise the situation. Each must be considered if leaders are to determine their most
effective style. The organizational structure and the environment in which the manager
operates affect the leadership style. In a loosely structured environment like a research
lab, a more participative style may be more appropriate.

Technology is another major factor that affects the selection of the most appropriate
leadership style. Technology has an impact on the design of work, which may in turn
determine the most appropriate leadership style. For example, if the technology the firm
is using is well understood and the workers have a great deal of experience with it,
managers will probably not have to exercis4 close supervision of employees.
Conversely, if the firm experimenting with a new technology and does not understand it
well, management may have to supervise workers closely until the technology becomes
familiar.

As the objective of the firm change, a change in leadership style may be necessary. For
example, if a firm determines that it should be innovative, it may require personnel
changes and a modification of leadership styles. The personnel who are hired to make
the transition to an innovative firm may not accept an autocratic style. As the level of
professional and technical capabilities increases, the style of leadership may lean toward
a more relationship-oriented leadership style. Still, if the firm‟s goal is survival, the
leadership style may again move toward a greater emphasis on task accomplishment.

The external environment has considerable influence on determining the most effective
leadership style. Obviously economic, political, social, and cultural forces must be
considered. For example, during periods of economic difficulty, some managers tend to
become more autocratic and place greater emphasis on the efficiency of task
accomplishment. The interaction of all the situational variables must be a consideration
by managers who wish to use the most effective leadership style.

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 MODULE 9
CONTROLLING
UNIT 1 INTRODUCTION

The managerial function of controlling is the measurement and correction of the

performance of activities of subordinates in order to make sure that organizational
objectives and plans devised to attain them are being accomplished.
Def.: Control refers to the methods and mechanisms used to ensure that behaviours and
performance conforms to an organization‟s objectives, plans and standards.
Control is necessary if all activities are to conform to the plans.

Prerequisites of control systems

Two major prerequisites must exist before any manager can devise or maintain a system
of controls.
 Controls require plans – there is no way that managers can determine whether their
organizational unit is accomplishing what is desired and expected unless they first
know what is expected. Controls must be based on plans. The clearer, more complete,
and more integrated plans are, the more effective controls can be. Controls are the
reverse side of the coin of planning. First, managers‟ plan; then plans becomes the
standards by which desired actions are measured. It is fruitless to try to design control
without first taking into account plans and how well they are made.

 Controls require organization structure – control of activities operates through people.

Hence, important that responsibilities are clearly defined. The existence of a clear,
complete and integrated organization structure makes control more effective. It is
frustrating for managers to know that something is going wrong in their organization
and not knowing exactly where the responsibility for the trouble lies.

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Preventive and Corrective Controls
There are two types of organizational controls:
 Preventive controls – are intended to reduce errors and thereby minimize the need for
corrective action. Rules and procedures are examples of preventive controls. They all
direct and limit the behaviours of employees and managers. The assumption is that, if
employees comply with these restrictions, the organization is likely to achieve its
objectives. Again control mechanisms are needed to make sure that rules and regulations
are being followed and are working.
 Corrective controls – are intended to change unwanted behaviours and make
performance conform to establish standards or rules.
Sources of Control
There are four primary sources of control in most organizations:
 Stakeholder control – refers to pressure from outside sources, such as customers,
governmental agencies, stockholder, or banks, on organizations to change their
behaviours.
 Organisational control – refers to a company‟s formal strategies and mechanisms for
pursuing its objectives. Examples include rules, standards, budgets and audit.
 Group control – refers to the norms and values that group members share and maintain
through rewards and punishments.
 Individual self-control – consists of control mechanism operating consciously or
unconsciously within each person.
Managerial controls
Corrective control methods are tools that help managers assess how well their
departments are doing. There are five categories of managerial control.
Bureaucratic Controls
Bureaucratic controls have the following characteristics:
 Use of detailed rules and procedures whenever possible
 Top-down authority, with emphasis on positional power
 Activity based job descriptions that prescribe day-to-day behaviours
 Emphasis on extrinsic rewards (wages. Pensions) for controlling performance.

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  Team control is disregarded on the understanding that team objectives conflict
with organizational objectives.
 Organisational culture is not recognized as a source of control.
Organic Control
Organic controls have the following characteristics:
 Rules and procedures are used only when necessary.
 Flexible authority, with emphasis on expert power and networks of control.
 Results-based job descriptions that emphasize objectives to be achieved.
 Emphasis on both extrinsic and intrinsic rewards (meaningful work) for
controlling performance.
 Group controls promoted on the understanding that group objectives and
norms assist in achieving organizational objectives.
 Organisational culture is seen as a way of integrating organizational, group,
and individual objectives for greater overall control.
Market Controls
Market control occurs when price competition is used to evaluate the output and
productivity of an organization. In order to be effective, market controls must generally
satisfy the following requirements:-
 Competition must be present for efficient pricing.
 Costs of the resources used in the outputs can be measured monetarily.
 The value of the outputs can be clearly defined and monetarily priced.
 Competitively based prices can be set for these outputs.

Financial Controls
Financial controls include a wide range of methods, techniques and procedures that are
intended to prevent the misallocation of financial resources and provide timely financial
information so that corrective action can be taken if needed.
Some of the methods for financial control include:-
(i) Comparative financial analysis.
Comparative financial analysis evaluates a firm‟s financial condition for two or more
time periods. The most common method of comparisons is ration analysis.

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(ii) Budgeting
Budgeting is the process of categorizing proposed expenditures and linking them to
objectives. Budgeting has three primary objectives:-
 To assist in resource allocation
 To assist managers in planning their work more effectively.
 To assist in controlling and monitoring resource utilization during the budget period.

The control aspect of budgeting may be either corrective or preventive. When budgeting
is used as a corrective control, the emphasis is on identifying deviations from the budget.
Deviations alert managers to the need to identify and correct their causes or to change the
budget itself. The power of a budget, especially when used as a preventive control,
depends on whether managers and employees view it as an informal contract to which
they have agreed.
The different types of budgets used in business include:-
 Sales budget – a forecast of expected revenues, generally stated by product line on a
monthly basis and revised at least annually.
 Materials budget – expected purchases, generally stated by specific categories, which
may vary from month to month because of seasonal variations and inventory levels.
 Labour budget – expected staffing, generally stated by number of individuals and
dollars for each job category.
 Capital budget – targeted spending for major tangible assets.
 Research development budget – targeted spending for the refinement or development
of products or services, materials, processes etc.
 Cash budget – expected flow of monetary receipts and expenditures.

Machines Controls
Machine controls are methods that use instruments or devices to prevent and correct
deviations from desired results.

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UNIT 2 THE BASIC CONTROL PROCESS

The basic control process involves three steps:-

1. Establishment of standards – because plans are the yardsticks against which controls
must be devised, it follows logically that the first step in the control process would be to
establish plans. However, since plans vary in detail and complexity and since managers
cannot usually watch everything, standards are established. Standards are criteria or
performance. Standards may be of many kinds. The best standards are the verifiable
goals or objectives, whether stated in quantitative or qualitative terms.

2. Measurement of performance – once standards are drawn, it becomes easy to measure

the performance of subordinates.

3. Correction of deviations – control is not confined to measuring performance against

standards without doing anything when the performance falls short. Once standards are
drawn to reflect organization structure and if performance is measured in these terms, the
correction of negative deviations is expected, since the manager then knows exactly
where in the assignment of individual or group duties the corrective measures must be
applied.

Requirements For Adequate Controls

Control systems can only be adequate and effective if they are designed for the specific
task and person they are intended to serve. This implies that:-
 Controls should be tailored to plans and positions – since the purpose of control is to
make sure that plans are accomplished, they must relate to plans. This means that
deviations from plans should be reported quickly and also the manager should have a
system that will give an indication of possible deviations before they occur so that there
is time to do something about them. Controls should also be tailored to positions. For
example, controls for the sales department will differ from those for finance department.

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 Controls should be tailed to individual managers and their personalities- control
systems and information are intended to help individual managers carry out their
function of control. Control information which is not understood by a manager will
not be useful. Individual managers and their personalities-control systems and
information are intended to help individual managers carry out their function of
control. Control information which is not understood by a manager will not be
useful. It is important that controls be tailored to individual personalities. Some
people, such as statisticians and accountants, like their information in forms of
complex tables of data or voluminous computer printouts. In such cases, let them
have it that way. Other people like their information in chart form; if so, it should be
furnished this way.

 Controls should point up exceptions at critical points – effective control requires

primary attention to those points which are critical to appraising performance. Such
controls allow managers to detect those places where their attention is required and
should be given. A manager, for example, might be concerned if the cost of labour
deviated from budget by 5 percent, but be unworried if the cost of postage stamps
deviated from budget by 20 percent.

 Controls should be object – effective control requires objective, accurate and suitable
standards. Objective standards can be quantitative, such as costs or labour hours per
unit or date of job completion; they can also be qualitative, as in the case of a training
program that is designed to accomplish a specific kinds or upgrading of the quality of
personnel. In either case, the standard is determinable and verifiable.

 Controls should be flexible – if controls are to remain effective, despite failure or

unforeseen changes of plans, flexibility is required in their design. In production
scheduling, the production manager must be prepared for failures occasioned by the
breakdown of a machine or the illness of a key worker. If the control system is too
inflexible to account for such hitches, the slowdown may affect control. Much flexibility

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in control can be provided by having alternative plans for various probable situations. In
fact, flexible control is normally best achieved through flexible plans.

 The control system should fit the organizational climate – a tight control system
applied in an organization where people have been given considerable freedom and
participation may not work. On the other hand, if subordinates have been managed
by a superior who allows little participation in decision-making, a generalized and
permissive control system would hardly succeed. People, who have not been
accustomed to participating, are likely to want to have clear standards and
measurement and be told what to do.

 Controls should be economical – control must be worth their cost. A small company
cannot afford the extensive control system of a large company. Complex budgetary
control programmes may be well worth their cost to the large organization, but only a
simple system would be economical for the small one.

 Controls should lead to corrective action – an effective control system is one which
discloses where failures are occurring and who is responsible for them. Control is
justified only if deviations from plans are corrected through appropriate planning,
organizing, staffing and leading.

Critical Control Points and Standards

The establishment of standards furnishes the yard-stick against which actual or expected
performance is measured. In a simple operation, a manager might control through careful
personal observation of the work being done.
However, in most operations this is not possible because of the complexity of the
operations and the fact that a manager has far more to do than personally observe
performance. A manager must choose points for special attention and then watch them to
be sure that the whole operation is proceeding as planned.

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Effective control requires attention to those factors critical to performance as measured
against individual plans. The ability to select critical points of control is one of the arts of
management.

Types of Critical-Point Standards

The different types of standards are as follows:-
 Physical standards – these deal with nonmonetary measurements and are common at
the operating level where materials are used, labour employed, services rendered, and
goods produced. They may reflect quantitative performance, such as labour-hours
per unit of output or units of production per machine-hour. Physical standards may
also reflect quality, such as hardness of bearings.
 Cost standards – are a variety of cost standards arising from the application of
monetary measurements to physical items. They deal with the capital invested in the
firm e.g. return on investment.
 Revenue standards – these arise from attaching monetary values to sales e.g. average
sales per sales personnel.
 Intangible standards – standards not expressed in either physical or monetary
measurements e.g. determination of the competence of the purchasing agent or a
public relations officer.
 Goals as standards – clearly defined goals can be used as performance standards.

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 MODULE 10
COMMUNICATION AND STAFFING

UNIT 1 COMMUNICATION

Def.: Communication is the transfer of information and understanding from one person to
another, or within a system or organization.
Communication is a social process and the chief purpose of communication is to make
the receiver of a communication understand what is in the mind of sender.
Communication is incomplete unless it is received and understood.

Function of Communication
Communication has five functions:-
(i) To express emotions – people have emotions, which they express to
others through communication. The emotive function is oriented toward
feelings and is aimed at increasing acceptance of the organisation‟s
goal and actions.
(ii) To activate motivation – communication concerned with motivation is
designed to promote commitment to the organisation‟s objectives. Most
of the major activities of leaders such as informing subordinates about
objectives, rewarding, disciplining and defining roles, all require
communication.
(iii) To inform – the objective of the information function is to provide the
information necessary for decision-making. Whenever, a manager is
ready to make a decision he or she needs information.
(iv) To control – reports, policies, and plans function to control the behaviour
of an organisation‟s members. They define roles, clarify duties, authority
and responsibilities, and reinforce organizational structure which defines
jobs and the authority to do them. By providing a means of checking for
the achievement of objectives, these types of communication further the
organisation‟s mission.

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(v) To provide feedback on performance

Idea Understanding

Perception Perception

Sender Feedback Receiver

NOISE

Encode Medium Decode

Fig. 10.1: The Basic Communication Process

Elements of the Communication Process

There are six basic elements of the communication process. These are:-
(i) A sender – a person, group or organization that has a message to share
with another person or group of persons.
(ii) Encoding – translating internal though patterns into a language or code
that the intended receiver of the message is likely to understand. When
encoding a message, the sender must use symbols that represent ideas
and concepts that are familiar to the intended receiver. There are five
principles for increasing encoding accuracy:-

Relevancy – make the message meaningful and significant, carefully

selecting the words, symbols, or gestures to be used.
Simplicity – put the message in the simplest possible terms, reducing the
number of works, symbols, and gestures used to communicate the
intended thoughts and feelings.

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 Organisation – arrange the message into a series of points in order to
facilitate understanding.
Repetition – restate key points of the message at least twice. Repetition is
particularly important in oral communication.
Focus – focus on the essential aspects or key points of the message. Make
the message clear, and avoid unnecessary detail.

(iii) Selecting a Medium of Transmission (a means of carrying an encoded message

from the source to the receiver) – when selecting the channel of communication, the
sender should consider the following factors:-
- The intended purpose of the message.
- The number of receivers.
- The characteristics of receivers

Possible media include telephone calls, memos, letters, computers, bulletins boards,
photographs, meetings, publications, advertising on television, and radio etc. If a sender
relays a message through inappropriate medium of transmission, its message may not
reach the right receivers.

(iv) Decoding – is the process by which the receiver interprets the symbols (coded
massage) sent by the source by converting them into concepts and ideas. A
message will not accomplish its purpose unless it is understood.
(v) Feedback – is the receiver‟s response to the sender‟s message. During feedback,
the Receiver becomes the sources the source of a message that is directed back to
the original source, who then becomes a receiver. Without feedback, senders have
no way of knowing whether their ideas have been accurately understood.
(vi) Perception – is the meaning given to a message by both the receiver and the sender.
If the perception differs, then there can be a breakdown in communication

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Methods of Communicating
As already indicated, we communicate when we speak or write. But there are other
methods of communicating.

1. ORAL
People communicate with each other most often by talking or oral communication.
Popular forms of oral communication include speeches, informal discussions and the
informal rum or mill or grapevine.

Advantages
The advantages of oral communications are quick transmission and quick
feedback. A verbal message can be conveyed and a response received in a
minimum amount of time.
Disadvantages
The major disadvantages surfaces whenever a message has to be passed through a
number of people. The more people involved, the greater the potential of
distortion.

2. WRITTEN
Written communications include memos, letters, organizational periodicals,
bulletin boards or words symbols.

Advantages
Written communications is permanent, tangible and verifiable. Typically, both the sender
and receiver have a record of the communications. The message can be stored for an
indefinite of time.

Disadvantages
They are time consuming and sometimes feedback is either delayed or not received.
Written communications do not have a built-in feedback mechanism. The result is that

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mailing a memo is no assurance that it will be received, and if it is received, there is no
guarantee that the recipient will interpret it as the sender-meant.

3. NONVERBAL
Some of the most meaningful communications are neither spoken nor written.
These are nonverbal communications. A loud siren or red light at an intersection
tells you something without using words. The most well known areas of
nonverbal communications are body language and verbal intonation.
Body language refers to gestures, facial expressions and other movements of the
body. Expressions and other gestures can communicate emotions or temperatures
such as aggression, fear, shyness, arrogance, job and anger.

4. ELECTRONIC MEDIA
Today we rely on a number of sophisticated electronic media to carry out
communications, e.g. telephone, public address system, television etc.

Organisational Communication Versus Interpersonal Communication

Interpersonal Communication is face to face. It is person-to-person exchange that
conveys meaning.

Organisational Communication is the deliberate establishment and use of a system

to transmit information-conveying meaning to large number of people, both
within and outside the organization. Organisational Communication is more
complex in that people in organisations play roles and operates in an authority
hierarchy.
In every organization, there are actually two communication systems. One is
formal, and the other is informal.

Formal Communications
Refer to those that follow the authority chain of command and are part of the
communications required to do one‟s job.

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 Informal Communications (or grapevine)
Def.: The communication that is not approved by management not defined by
any structural hierarchy.
Employees form friendships which in turn allow them to fill in communication gaps
within the formal channels. Informal communication can also improve an organisation‟s
performance by creating alternative and frequently faster and more efficient channels
through which to communicate to get that same information through formal channels
might require three levels of management and several days time. Thus informal
communication can act as a support system to the formal channels.

DIRECTION OF COMMUNICATION FLOW

Organizational Communication can flow downwards, laterally or diagonally.

Downward Communication
Is any communication that flows from a manager down the authority hierarchy.
Downward communication is used to inform, direct, coordinate and evaluate
subordinates. When managers assign goals and tasks to subordinates they are using
downward communication. They also use it when they provide subordinates with job
descriptions, inform them of organizational policies and procedures, etc.

Upward Communication
Is the communication that flows from subordinates to higher-level managers and also
serves the primary function of providing information about what occurs at lower levels.
This type of information provides management with knowledge about potential problems
as well as suggestions for improvement. Upward communication keeps manager aware
of how employees feel about their jobs, their co-workers and the organization in general.
Some examples of upward communication include performance reports prepared by
lower management for review by middle and top management. The extent of upward
communication, particularly that which is initiated at the lowest level depends on the
organizational culture. If management has created a climate of trust and respect, there is

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likely to be extensive use of participative decision-making. As such, there will be
considerable communication as employees provide inputs decisions.

Lateral Communication
Is communication that takes place among members of the same work-group at the same
level or among any horizontally equivalent personnel?

Horizontal Communication
Horizontal communications are often necessary to save time and facilities coordination.
Since an organization is a system of interrelated parts, management must ensure that the
specialized parts are working together, pulling the organisation in a desired direction.

Diagonal Communication
Cuts across functions in an organization. When a supervisor in the credit department
communicates directly with a regional marketing manager, who not only is in a different
department, but at a higher level in the organization, he or she is engaged in diagonal
communication.

The vertical and horizontal dimensions in organizational communications can be

combined into a variety of patterns, or into what is referred to as communication
networks.

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UNIT 2 BARRIERS TO EFFECTIVE COMMUNICATION

Problems of communication directly retard the success of managers in the performance of

their functions. If messages are poorly transmitted, or if the action is not effected
management cannot plan or control activities properly. The barriers to good
communication required constant attention. There are organizational and individual
barriers to effective communication.

Organisational Barriers
 Differing specialisations of members – distortion is likely to result from
inadequacy of words in carrying the precise ideas of the sender. If an
accountant submits a report on “costs” to an economist, distortion may result
because of differences in meanings of the word “cost”.

An important means of overcoming the distortion barrier is to use what the

psychologist calls empathy – attempt to project one‟s self into the viewpoint
of the other person.

 Differing departmental objectives – this can result into misunderstandings and

conflict.

Management should enthuse the vision of the organisation into every member
so that effort is directed towards a common goal.
 Environment – a noisy environment can affect communication.

 Information overload is the receipt of more information than can be

effectively observed. Organisations with large structures process a lot of
information. Latest methods of processing and transmitting data have
increased the amount of communication, which flow to executives.
Technology makes it possible for managers to have at their fingertips, up-to-
date information on those activities for which they are responsible. When

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 managers allow themselves to be flooded with information, given the time and
limits under which they operate the effectiveness of communication is likely
to suffer. Managers are forced to ignore or review many messages;
consequently, they overlook or misinterpret some messages.

 Timing of communications – can result in problems for management. Some

types of messages need to be released so that everyone will receive them
simultaneously. Other types of messages being transmitted should be timed
sequentially so that issues that are not important to them at the moment will
not confuse receivers.

 Routing – If official information is first received by persons outside the

organisation, the employee may be placed in an insecure position. The
solution to the problem lies in the proper planning of a communications
system and in the recognition of its human elements.

Individual Barriers
 Failure to listen – the receiver of a message should be attentive when a
message is being transmitted.
 Emotions – One‟s mood can be a barrier to effective communication.
 Communication skills – lack of communication skills hinders effective
communication.
 Complexity of message – if the message is too complex, there is a danger of
misinterpreting it.
 Attitude to tasks/people – a poor attitude to tasks and people can affect one‟s
ability to listen and communicate.
 Conflicting interests – communication is affected if personal interests are
conflicting with the interest of the organisation.
 Clarity of instructions – instructions that are not clear will not be understood.
 Lack of trust – can affect communication

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  Attention Span – people have different levels of concentration. People with a
short attention span will loose attention if subjected to listening for too long.

National Culture Differences

Misunderstandings have occurred because of differences in behaviours, gestures and
ways of saying things, which are directly due to the cultural background of the parties
concerned.

Overcoming Barriers
Determinations of the flow of communications and recognition of the many barriers to
good communication are basic to the communication function. Communication
networks, communication channels and barriers to communicate must continually receive
attention.
Barriers to communication can be overcome in the following ways:-
 Regulate the flow of information – managers who receive too much
information suffer from information overload. They should set up a system
that identifies priority messages for immediate attention. One way of doing
this is to instruct subordinates to bring the manager information only when
significant deviations from objectives and plans occur. Encourage feedback –
managers and others should follow up to determine whether important
messages have been understood.
 Simplify the language of the message – because language can be a barrier,
managers and others should choose words that subordinates will understand.
 Listen actively – employees need to become good listeners as well as good
message senders. Recently, several organisations have developed training
programs to improve listening.
 Restrain negative emotions – like everyone else, managers convey emotions
when communicating, but negative emotions can distort the content of the
message. When a manager is emotionally upset, he or she is more likely to
phrase the message poorly.

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  Use nonverbal cues – managers and other employees should use nonverbal
cues to emphasize points and express feelings.
 Use the grapevine – this is the organisation‟s informal communication system.
Managers should use it to send information rapidly, test reactions before
announcing a final decision, and obtain feedback,

Guideline for Effective Communication

To be effective communicators, managers must understand the guidelines for effective
communication. These guidelines are as follows;
 Clarify your ideas before communicating – analyse the problem to clarify it in
your mind before sending a message. Communication often is ineffective
because the message is inadequately planned. Part of good message planning
is considering the goals and attitudes of those who will receive the message.

 Examine the true purpose of the communication – before you send a message,
ask yourself what you really want to accomplish with it. Decide whether you
want to obtain information, convey a decision, or persuade someone to take
action.

 Consider the setting in which the communication will take place – you convey
meaning and intent by more than words alone. Trying to communicate with a
person in another location is more difficult than doing so face-to-face.

 Consult with others, when appropriate, in planning communications –

encourage the participation of those who will be affected by the message.
They can often provide a viewpoint that you might not have considered.
 Be mindful of the nonverbal messages you send – tone of voice, facial
expression, eye contact, personal appearance, and physical surroundings all
influence the communication process. The receiver considers both the words
and the nonverbal cues that make up your message.

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 Take the opportunity to convey something helpful to the receiver –
considering the other person‟s interests and needs often presents opportunities
to the sender. You can make your message clear by imagining yourself in the
other‟s position. Effective communicators really try to see the message from
the listener‟s point of view.

 Following up the communication – your best efforts at communication can be

wasted unless you succeed in getting your message from the listener‟s point of
view.

 Be sure your actions support your communication – the most effective

communication is not in what you say but in what you do. Actions speak
louder than words.

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 MODULE 11
HUMAN RESOURCE MANAGEMENT

UNIT 1 INTRODUCTION

Definition: Human resource management involves the acquisition, retention, and

development of human resources necessary for organizational success.

Fig. 11.1: A General Organizational

Model for Human strategy and
Resource structure
Management

Human resource
strategy

Recruiting and
selection

Performance
appraisal
Identifying and
solving human
resource problems
Training

Desired result: The

right number of
appropriately skilled
people in the right
jobs at the right
time.

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This broader definition underscores the point that people are valuable resources requiring
careful nurturing.
In fact, what were once called personnel departments are now called human resource
departments.
Progressive and successful organizations treat all employees as valuable human
resources.
Fig. 11.1 reflects this strategic orientation.

A logical sequence of human resource management activities – human resource strategy,

recruiting, selection, performance appraisal and training- all derive from organizational
strategy and structure.
Without a strategic orientation, the management of people becomes haphazardly
inefficient and ineffective.

THE STAFFING PROCESS

Staffing has long been an integral part of the management process.
Like other traditional management functions, the domain of staffing has grown
throughout the years.
This growth reflects increasing environmental complexity and greater organizational
sophistication.
Today, the traditional staffing function is just one part of the more encompassing human
resource management process.
Staffing is the process by which organizations satisfy their human resource needs. They
forecast future needs, recruit and select candidates to meet these needs, and then orient
new employees to their jobs and to the organization.
The staffing process has the following components:-
 Planning – before hiring anyone, the organization needs to forecast its human
resource requirements. By doing so, a firm can determine the number of
employees to hire and the types of skills they will need.

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  Recruitment – the organization should then develop a pool of job candidates
from which to select qualified employees.
 Selection and hiring – after recruiting candidates for available positions, the
organization selects and hires those people who are most likely to perform
well on the job.
 Orientation – once employees are hired, they must be oriented to their jobs
and the organization in general.
 Compensation and benefits – is the wages or salaries, bonuses, and other
monetary items paid to employees in exchange for their labour.
 Performance appraisals – once employees begin working, managers are
responsible for providing them with feedback about their performance.
 Separation – the final stage in the staffing process is separation of the
employee from the organization.

1. Recruitment and Selection

a) Recruiting for Diversity:
The ultimate goal of recruiting is to generate a pool of qualified applicants for new and
existing jobs.
Everyday recruiting tactics include internal job postings, referrals by present and past
employees, campus recruiters, newspaper ads, Web sites, public and private employment
agencies, head-hunters, job fairs, temporary-help agencies, and union halls.
But today‟s recruiting is extremely challenging since applicant pools need to be
demographically representative of the population at large if diversity is to be achieved.

b) The Selection Process:

Equal employment opportunity (EEO) legislation in the United States and elsewhere
attempts to ensure a fair and unprejudiced race for all job applicants.
The first two hurdles are résumé screening and reference checking; both are very
important because an estimated 40% of job applications include false information.
Background checks for criminal records and citizenship/immigration status are more
essential than ever in an age of workplace violence and international terrorism.

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Other hurdles may include psychological tests, physical examinations, interviews, work-
sampling tests, and drug tests.

A respected author and trainer summarizes the overall employee selection process with
the acronym PROCEED, with each letter representing one of the seven steps involved.
This model encourages managers to take a systems perspective, all the way from
preparation to the final hiring decision.

Step 1 is where job analysis and job descriptions come into play.
Def.: Job analysis is the process of identifying basic task and skill requirements for
specific jobs by studying superior performers.
Def.: A job description is a concise document outlining the role expectations and skill
requirements for a specific job.
Up-to-date job descriptions foster discipline in selection and performance appraisal by
offering a formal measuring stick.

Table 11.1: The Employee Selection Process- The PROCEED Model

Step 1: PREPARE
o Identify existing superior performers
o Create a job description for the position
o Identify the competencies or skills needed to do the job
o Draft interview questions
Step 2: REVIEW
o Review questions for legality and fairness
Step 3: ORGANIZE
o Select your interview team and your method of interviewing
o Assign roles to your team and divide the questions
Step 4: CONDUCT
o Gather data from the job candidate
Step 5: EVALUATE
o Determine the match between the candidate and the job
Step 6: EXCHANGE
o Share data in a discussion meeting
Step 7: DECIDE
o Make the final decision
c) Equal Employment Opportunity (EEO):

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EEO law now provides a broad umbrella of employment protection for certain categories
of disadvantaged individuals.
The result of this legislation has been that in virtually all aspects of employment, it is
unlawful to discriminate on the basis of race, colour, sex, religion, age, national origin,
etc.
This means managers cannot lay off or discharge, refuse to hire, promote, train, or
transfer employees simply on the basis of the characteristics listed above.
Selection and all other personnel decisions must be made solely on the basis of objective
criteria such as ability to perform or seniority.
Lawsuits and fines by agencies such as the EEO Commission are powerful incentives to
comply with EEO laws.

d) Employment Selection Tests:

The definition of an employment selection test has been broadened to include any
procedure used as a basis for an employment decision.
Thus, in addition to traditional pencil-and paper tests, numerous other procedures qualify
as tests, such as unscored application forms; informal and formal interviews; performance
tests; and physical, educational, or experience requirements.
Historically, women and minorities have been victimized by invalid, unreliable, and
prejudicial employment selection procedures.
Similar complaints have been voiced about the use of personality tests, polygraphs
(lie detectors), drug tests, and AIDS and DNA screening during the hiring process.

e) Effective Interviewing:
Interviewing is the most common employee selection tool.
Line managers at all levels are often asked to interview candidates for job openings and
promotions and should be aware of the weaknesses of the traditional unstructured
interview.
The traditional unstructured or informal interview, which has no fixed question format or
systematic scoring procedure, has been criticized for being highly subjective and
unreliable.

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For example, these interviews are notorious for being culturally insensitive.

f) Structured Interviews:
Structured interviews are the recommended alternative to traditional unstructured or
informal interviews.
Def.: A structured interview is a set of job-related questions with standardized answers
applied consistently across all interviews for a specific job.

Structured interviews are constructed, conducted, and scored by a committee of three to

six members to try to eliminate individual bias.
The systematic format and scoring of structured interviews eliminate the weaknesses
inherent in unstructured interviews.
Four questions typically characterize structured interviews: (1) situational (handling
difficult situations), (2) job knowledge (possession of required knowledge), (3) job
sample simulation (doing essential aspects of the job), and (4) worker requirements
(coping with job demands).

g) Behavioural Interviewing: Behavioural scientists believe that past behaviour is the

best predictor of future behaviour.
We are, after all, creatures of habit.
Situational-type interview questions can be greatly strengthened by anchoring them to
actual past behaviour (as opposed to hypothetical situations).

Structure, job-related, behaviourally specific interview questions keep managers from

running afoul of the problems associated with unstructured interviews.
If the questions are worded appropriately, the net result should be a good grasp of the
individual‟s relevant skills, initiative, problem-solving ability, and ability to recover from
setbacks and learn from mistakes.

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UNIT 2 PERFORMANCE APPRAISAL
Annual performance appraisals are a common part of modern organizational life.
But both appraisers and subjects tend to express general dissatisfaction with performance
appraisals.

Def.: Performance appraisal is the process of evaluating individual job performance as a

basis for making objective personnel decisions.

Formally documented appraisals are needed both to ensure equitable distribution of

opportunities and rewards and to avoid prejudicial treatment of protected minorities.
Two important aspects of performance appraisal are legal defensibility and alternative
techniques.

a) Making Performance Appraisals Legally Defensible:

Lawsuits challenging the legality of specific performance appraisal systems and resulting
personnel actions have left scores of human resource managers questioning the legality of
their organizations‟ performance appraisal systems.
Managers need specific criteria for legally defensible performance appraisal systems.
Employers can successfully defend their appraisal systems if they satisfied four criteria:
 A job analysis was used to develop the performance appraisal system.
 The appraisal system was behaviour-oriented, not trait-oriented.
 Performance evaluators followed specific written instructions when conducting
appraisals.
 Evaluators reviewed the results of the appraisals with the rates.

Each of these conditions has a clear legal rationale.

Job analysis anchors the appraisal process to specific job duties, not to personalities.
Behaviour-oriented appraisals properly focus management‟s attention on how the
individual actually performed her job.

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Performance appraisers who follow specific written instructions are less likely to be
plagued by vague performance standards and/or personal bias.
Finally, by reviewing performance appraisal results with those who have been evaluated,
managers provide the feedback necessary for learning and improvement.

b) Alternative Performance Appraisal Techniques:

 Goal setting. Within an MBO framework, performance is typically evaluated in
terms of formal objectives set at an earlier date.
This is a comparatively strong technique if desired outcomes are clearly linked to
specific behaviour.
 Written essays. Managers describe the performance of employees in narrative
form, sometimes in response to predetermined questions.
 Critical incidents. Specific instances of inferior and superior performance are
documented by the supervisor when they occur.
Accumulated incidents then provide an objective basis for evaluations at appraisal
time.
 Graphic rating scales. Various traits or behaviour are rated on incremental scales.
Behaviourally anchored rating scales (BARS), defined as performance rating
scales divided into increments of observable job behaviour determined through
job analysis, are one of the strongest performance appraisal techniques.
 Weighted checklists. Evaluators check appropriate adjectives or behavioural
descriptions that have predetermined weights that are unknown to the evaluator.
Following the evaluation, the weights of the checked items are added or averaged
to permit interpersonal comparisons.
 Rankings/ comparisons. Co-workers in a subunit are ranked or compared in head-
to-head fashion according to specified accomplishments or job behaviour.
 Multirater appraisals. This is a general label for a diverse array of non-traditional
appraisal techniques involving more than one ratter for the focal person‟s
performance.

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UNIT 3 TRAINING AND DEVELOPMENT

No matter how carefully job applicants are screened and selected, typically a gap
remains between what employees do know and what they should know.
Training is needed to fill in this knowledge gap.
Companies spend billions of dollars annually on training.
Huge as this number sounds; it still is not nearly enough.
Most of this money is spent by big companies training already well-educated managers
and professionals.
Clearly, managers need to rethink the country‟s training priorities.
Remedial education and basic skills training for non-management personnel are good for
both the employer and the employee.

Definition: Training is the process of changing employee behaviour and/or

attitudes through some type of guided experience.

TODAY’S TRAINING: CONTENT AND DELIVERY.

Fig 11.1 lists the ten most common types of training.

Fig. 11.1: The Content and Delivery of Today’s Training

General Types of Percentage How Training is Percentage
Training Delivered
Performance 71 Instructor-led 77
Appraisals (classroom)
New Employee 69 By computer (no 11
Orientation instructor)
Sexual 68 Instructor- led 5
Harassment (from remote
location)
Safety 64 Other 7
Leadership 60
Product 56
Knowledge
Customer 54
Education
Team Building 53
Diversity 53

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 Problem Solving/ 52
Decision Making
Despite the hype over the Internet, the vast bulk of today‟s training is remarkably low-
tech. The typical college classroom is still a realistic preview of what to expect in the
world of workplace training.
Given variables such as interpersonal differences, budget limitations, and instructor
capabilities, there is no one best training technique.
It is up to the trainers to do their absolute best because they are key facilitators for
people‟s hopes and dreams.

THE INGREDIENTS OF A GOOD TRAINING PROGRAM.

Every training program should be designed along the following lines to maximize
retention and transfer learning to the job.

1. Maximize the similarity between the training situation and the job situation.
2. Provide as much experience as possible with the task being taught.
3. Provide for a variety of examples when teaching concepts or skills.
4. Label or identify important features of a task.
5. Make sure that the trained behaviours and ideas are rewarded in the job situation.
6. Design the training content so that the trainees can see its applicability.
7. Use adjacent questions to guide the trainee‟s attention.

SKILL VERSUS FACTUAL LEARNING.

The ingredients of a good training program vary according to whether skill learning or
factual learning is involved.
Effective skill learning should incorporate four essential ingredients:

(1) Goal setting What should be done

(2) Modelling Showing how it should be done
(3) Practice Trying out what has been shown
(4) Feedback Telling them what they are doing correctly.

In factual learning, meaningful presentation of the materials is substituted for modelling.

The object of training is learning.
Learning requires thoughtful preparation, carefully guided exposure to new ideas or
behaviour, and motivational support.

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READINGS
1. Bittel, L. R. & Newstrom, J.W. (1990): What Every Supervisor Should
Know. 6th Ed., NY, New York: McGraw-Hill.
2. Gray, R.E. & Smelter, L.R. (1989): Management – The Competitive Edge.
London: Macmillan.
3. Albanese, R. (1988): Management. West Chicago: South Western
Publishing.
4. Hicks, H. G. & Gullet, C.R.(1974): Modern Business Management. NY,
New York: McGraw-Hill.
5. Ivancevich, Donnelly & Gibson (1989): Management – Principles and
Functions. Irwin: Homewood.
6. Koontz, H. O‟Donnell & Weihrich, H. (1984): Management. London:
McGraw-Hill.
7. Certo, C.S.: Principles of Modern Management – Functions and Systems.
W.M.Brown Company.
8. Bedeian (1983): Management. Dryden.
9. Appleby, D.S.: Modern Business Administration. Pitman
10. Handy, C.B.: Understanding Organization. Penguin
11. Cole, G.A.: Management Theory and Practice. DP Publications
12. Drucker, P.: Management. Heinemann: London
13. Batty, J.: Industrial Administration & Management. M + E
14. McGregor, D.: The Human Side of Enterprise.
15. Harding: Production Management. M + E
16. Wild, R.: Techniques of Production Management. Holt
17. Evans & Ford: Control of Manufacturing
18. Stone, B.W.: Supervisory Skills. Pitman/ CIB
19. Robins, S., Debu, M.: Managing.

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