UNIT 1

MOTIVATION
CONTENTS
20.0 Aims and Objectives
20.1 Introduction
20.2 Motivation Incentives
20.3 Importance of Motivation
20.4 Motivation and Morale - Relationship and Differences
20.5 Staff Motivation Tips for Employees
20.6 Self-Motivation at Work
20.7 Team Motivation - Tips for Motivating Team
20.8 Motivational challenges
20.9 Essentials / Features of a Good Motivation System
20.10 Classical Theories of Motivation
20.11 Modern Theories of Motivation
20.12 conclusion
20.13 Task
AIMS AND OBJECTIVES
By the end of this unit, students should be able to:
i. Define motivation
ii. Explain the importance of motivation in an organisation
iii. Explain the Relationship and Differences between Motivation and Morale
iv. Identify Staff Motivation Tips for Employees
v. Suggest Team Motivation Tips
vi. Outline the Essentials / Features of a Good Motivation System
vii. Explain the Classical and Modern Theories of Motivation
viii. The challenges of motivation in an organisation
INTRODUCTION
Motivation is the word derived from the word ’motive’ which means needs, desires, wants or drives within
the individuals. It is the process of stimulating people to actions to accomplish the goals. In the work goal
context the psychological factors stimulating the people’s behaviour can be -

 desire for money

 success
 recognition
 job-satisfaction
 team work, etc
 One of the most important functions of management is to create willingness amongst the employees to
perform in the best of their abilities. Therefore the role of a leader is to arouse interest in performance of
employees in their jobs. The process of motivation consists of three stages:-

1. A felt need or drive

2. A stimulus in which needs have to be aroused
3. When needs are satisfied, the satisfaction or accomplishment of goals.

Therefore, we can say that motivation is a psychological phenomenon which means needs and wants of the
individuals have to be tackled by framing an incentive plan.

20.2 Motivation Incentives

Incentive is an act or promise for greater action. It is also called as a stimulus to greater action. Incentives
are something which are given in addition to wagers. It means additional remuneration or benefit to an
employee in recognition of achievement or better work. Incentives provide a spur or zeal in the employees
for better performance. It is a natural thing that nobody acts without a purpose behind. Therefore, a hope for
a reward is a powerful incentive to motivate employees. Besides monetary incentive, there are some other
stimuli which can drive a person to better. This will include job satisfaction, job security, job promotion, and
pride for accomplishment. Therefore, incentives really can sometimes work to accomplish the goals of a
concern. The need of incentives can be many:-

1. To increase productivity,
2. To drive or arouse a stimulus work,
3. To enhance commitment in work performance,
4. To psychologically satisfy a person which leads to job satisfaction,
5. To shape the behavior or outlook of subordinate towards work,
6. To inculcate zeal and enthusiasm towards work,
7. To get the maximum of their capabilities so that they are exploited and utilized maximally.

Therefore, management has to offer the following two categories of incentives to motivate employees:

1. Monetary incentives- Those incentives which satisfy the subordinates by providing them rewards in
terms of rupees. Money has been recognized as a chief source of satisfying the needs of people. Money is
also helpful to satisfy the social needs by possessing various material items. Therefore, money not only
satisfies psychological needs but also the security and social needs. Therefore, in many factories, various
wage plans and bonus schemes are introduced to motivate and stimulate the people to work.
2. Non-monetary incentives- Besides the monetary incentives, there are certain non-financial
incentives which can satisfy the ego and self- actualization needs of employees. The incentives which cannot
be measured in terms of money are under the category of “Non- monetary incentives”. Whenever a manager
has to satisfy the psychological needs of the subordinates, he makes use of non-financial incentives. Non-
financial incentives can be of the following types:-
a. Security of service- Job security is an incentive which provides great motivation to
employees. If his job is secured, he will put maximum efforts to achieve the objectives of the enterprise. This
also helps since he is very far off from mental tension and he can give his best to the enterprise.
b. Praise or recognition- The praise or recognition is another non- financial incentive which
satisfies the ego needs of the employees. Sometimes praise becomes more effective than any other incentive.
The employees will respond more to praise and try to give the best of their abilities to a concern.
c. Suggestion scheme- The organization should look forward to taking suggestions and inviting
suggestion schemes from the subordinates. This inculcates a spirit of participation in the employees. This
can be done by publishing various articles written by employees to improve the work environment which
can be published in various magazines of the company. This also is helpful to motivate the employees to feel
important and they can also be in search for innovative methods which can be applied for better work
methods. This ultimately helps in growing a concern and adapting new methods of operations.
d. Job enrichment- Job enrichment is another non- monetary incentive in which the job of a
worker can be enriched. This can be done by increasing his responsibilities, giving him an important
designation, increasing the content and nature of the work. This way efficient worker can get challenging
jobs in which they can prove their worth. This also helps in the greatest motivation of the efficient
employees.
e. Promotion opportunities- Promotion is an effective tool to increase the spirit to work in a
concern. If the employees are provided opportunities for the advancement and growth, they feel satisfied and
contented and they become more committed to the organization.

The above non-financial tools can be framed effectively by giving due concentration to the role of
employees. A combination of financial and non- financial incentives help together in bringing motivation
and zeal to work in a concern.

Positive Incentives

Positive incentives are those incentives which provide a positive assurance for fulfilling the needs and wants.
Positive incentives generally have an optimistic attitude behind and they are generally given to satisfy the
psychological requirements of employees. For example-promotion, praise, recognition, perks and
allowances, etc. It is positive by nature.

Negative Incentives

Negative incentives are those whose purpose is to correct the mistakes or defaults of employees. The
purpose is to rectify mistakes in order to get effective results. Negative incentive is generally resorted to
when positive incentive does not works and a psychological set back has to be given to employees. It is
negative by nature. For example- demotion, transfer, fines, penalties.

20.3 Importance of Motivation

Motivation is a very important for an organization because of the following benefits it provides:

1. Puts human resources into action

Every concern requires physical, financial and human resources to accomplish the goals. It is through
motivation that the human resources can be utilized by making full use of it. This can be done by building
willingness in employees to work. This will help the enterprise in securing best possible utilization of
resources.

2. Improves level of efficiency of employees

The level of a subordinate or a employee does not only depend upon his qualifications and abilities. For
getting best of his work performance, the gap between ability and willingness has to be filled which helps in
improving the level of performance of subordinates. This will result into-
a. Increase in productivity,
b. Reducing cost of operations, and
c. Improving overall efficiency.
3. Leads to achievement of organizational goals

The goals of an enterprise can be achieved only when the following factors take place :-

a. There is best possible utilization of resources,

b. There is a co-operative work environment,
c. The employees are goal-directed and they act in a purposive manner,
d. Goals can be achieved if co-ordination and co-operation takes place simultaneously which
can be effectively done through motivation.
4. Builds friendly relationship

Motivation is an important factor which brings employees satisfaction. This can be done by keeping into
mind and framing an incentive plan for the benefit of the employees. This could initiate the following things:

a. Monetary and non-monetary incentives,

b. Promotion opportunities for employees,
c. Disincentives for inefficient employees.

In order to build a cordial, friendly atmosphere in a company, the above steps should be taken by a manager.
This would help in:

i. Effective co-operation which brings stability,

ii. Industrial dispute and unrest in employees will reduce,
iii. The employees will be adaptable to the changes and there will be no resistance to the change,
iv. This will help in providing a smooth and sound concern in which individual interests will coincide
with the organizational interests,
v. This will result in profit maximization through increased productivity.

. Leads to stability of work force

Stability of workforce is very important from the point of view of reputation and goodwill of a concern. The
employees can remain loyal to the enterprise only when they have a feeling of participation in the
management. The skills and efficiency of employees will always be of advantage to employees as well as
employees. This will lead to a good public image in the market which will attract competent and qualified
people into a concern. As it is said, “Old is gold” which suffices with the role of motivation here, the older
the people, more the experience and their adjustment into a concern which can be of benefit to the enterprise.

From the above discussion, we can say that motivation is an internal feeling which can be understood only
by manager since he is in close contact with the employees. Needs, wants and desires are inter-related and
they are the driving force to act. These needs can be understood by the manager and he can frame motivation
plans accordingly. We can say that motivation therefore is a continuous process since motivation process is
based on needs which are unlimited. The process has to be continued throughout.

We can summarize by saying that motivation is important both to an individual and a business.
Motivation is important to an individual as:

i. Motivation will help him achieve his personal goals.

 ii. If an individual is motivated, he will have job satisfaction.
iii. Motivation will help in self-development of individual.
iv. An individual would always gain by working with a dynamic team.

Similarly, motivation is important to a business as:

i. The more motivated the employees are, the more empowered the team is.
ii. The more is the team work and individual employee contribution, more profitable and successful is
the business.
iii. During period of amendments, there will be more adaptability and creativity.
iv. Motivation will lead to an optimistic and challenging attitude at work place.

20.4 Motivation and Morale - Relationship and Differences

Morale can be defined as the total satisfaction derived by an individual from his job, his work-group, his
superior, the organization he works for and the environment. It generally relates to the feeling of individual’s
comfort, happiness and satisfaction.

According to Davis, “Morale is a mental condition of groups and individuals which determines their
attitude.”

In short, morale is a fusion of employees’ attitudes, behaviours, manifestation of views and opinions - all
taken together in their work scenarios, exhibiting the employees’ feelings towards work, working terms and
relation with their employers. Morale includes employees’ attitudes on and specific reaction to their job.

There are two states of morale:

High morale - High morale implies determination at work- an essential in achievement of management
objectives. High morale results in:

i. A keen teamwork on part of the employees.

ii. Organizational Commitment and a sense of belongingness in the employees mind.
iii. Immediate conflict identification and resolution.
iv. Healthy and safe work environment.
v. Effective communication in the organization.
vi. Increase in productivity.
vii. Greater motivation.

Low morale - Low morale has following features:

i. Greater grievances and conflicts in organization.

ii. High rate of employee absenteeism and turnover.
iii. Dissatisfaction with the superiors and employers.
iv. Poor working conditions.
v. Employees frustration.
vi. Decrease in productivity.
vii. Lack of motivation.

Though motivation and morale are closely related concepts, they are different in following ways:
 i. While motivation is an internal-psychological drive of an individual which urges him to behave in
a specific manner, morale is more of a group scenario.

ii. Higher motivation often leads to higher morale of employees, but high morale does not
essentially result in greatly motivated employees as to have a positive attitude towards all factors
of work situation may not essentially force the employees to work more efficiently.

iii. While motivation is an individual concept, morale is a group concept. Thus, motivation takes into
consideration the individual differences among the employees, and morale of the employees can
be increased by taking those factors into consideration which influence group scenario or total
work settings.

iv. Motivation acquires primary concern in every organization, while morale is a secondary
phenomenon because high motivation essentially leads to higher productivity while high morale
may not necessarily lead to higher productivity.

v. Things tied to morale are usually things that are just part of the work environment, and things tied
to motivation are tied to the performance of the individual.

20.5 Staff Motivation Tips for Employees

Employees are the building blocks of an organization. Organizational success depends on the collective
efforts of the employees. The employees will collectively contribute to organizational growth when they are
motivated.

Below mentioned are some tips for motivating the staff/employees in an organization:

1. Evaluate yourself- In order to motivate, encourage and control your staff’s behaviour, it is essential
to understand, encourage and control your own behaviour as a manager. Work upon utilizing your strengths
and opportunities to neutralize and lower the negative impact of your weaknesses and organizational threats.
The manager should adopt the approach “You’re OK - I’m OK”.
2. Be familiar with your staff- The manager should be well acquainted with his staff. The more and
the better he knows his staff, the simpler it is to get them involved in the job as well as in achieving the team
and organizational goals. This will also invite staff’s commitment and loyalty. A cordial superior-
subordinate relationship is a key factor in job-satisfaction.
3. Provide the employees certain benefits- Give your staff some financial and other benefits. Give
them bonuses, pay them for overtime, and give them health and family insurance benefits. Make sure they
get breaks from work. Let them enjoy vacations and holidays.
4. Participate in new employees induction programme- Induction proceeds with recruitment
advertising. At this point of time, the potential entrants start creating their own impressions and desires about
the job and the organization. The manner in which the selection is conducted and the consequent recruitment
process will either build or damage the impression about the job and organization. Thus, the manager must
have a say in framing the advertisement and also in the selection and recruitment process. After the decision
about the candidate is made, the manager must take personal interest in the selected joinee’s joining date, the
family relocation issues, cost of removal, etc. Being observed by the new recruit and your entire team / staff
to be involved completely, will ensure a persuasive entry in the organization.
5. Provide feedback to the staff constantly- The staff members are keen to know how they are
performing. Try giving a regular and constructive feedback to your staff. This will be more acceptable by the
staff. Do not base the feedback on assumptions, but on facts and personal observations. Do not indulge in
favouritism or comparing the employee with someone else. Sit with your staff on daily or weekly basis and
 make sure that feedback happens. This will help in boosting employee’s morale and will thus motivate the
staff.
6. Acknowledge your staff on their achievements- A pat on the back, some words of praise, and
giving a note of credit to the employee / staff member at personal level with some form of broad publicity
can motivate the staff a lot. Make it a point to mention the staff’s outstanding achievements in official
newsletters or organization’s journal. Not only acknowledge the employee with highest contribution, but
also acknowledge the employee who meets and over exceeds the targets.
7. Ensure effective time management- Having control over time ensures that things are done in right
manner. Motivate your staff to have “closed” times, i.e., few hours when there are no interruptions for the
staff in performing their job role so that they can concentrate on the job, and “open” times when the staff
freely communicate and interact. Plan one to one sessions of interaction with your staff where they can ask
their queries and also can get your attention and, thereby, they will not feel neglected. This all will work in
long run to motivate the staff.
8. Have stress management techniques in your organization- Create an environment in which you
and your staff can work within optimum pressure levels. Ensure an optimistic attitude towards stress in the
workplace. Have training sessions on stress management, and ensure a follow-up with group meetings on the
manner stress can be lowered at work. Give your staff autonomy in work. Identify the stress symptoms in
employees and try to deal with them.
9. Use counselling technique- The employees’ / staff feelings towards the work, their peer, their
superiors and towards the future can be effectively dealt through the staff counselling. Counselling provides
an environment, incentive and support which enable the employee to achieve his identity.
10. Give the employees learning opportunities- Employees should consistently learn new skills on the
job. It has been well said by someone that with people hopping jobs more often than required and
organizations no longer giving job security to employees, the young blood employees specifically realize
that continuing learning is the best way to remain employable. Opportunities should be given to the
employees to develop their skills and competencies and to make best use of their skills. Link the staff goals
with the organizational goals.
11. Set an example for your staff / subordinates- Be a role model for your staff. The staff would learn
from what you do and not from what you say / claim. The way you interact with your clients / customers and
how do you react later after the interaction is over have an impact upon the staff. The staff more closely
observes your non-verbal communication (gestures, body language). Being unpunctual, wasting the
organization’s capital, mismanaging organization’s physical equipments, asking the staff to do your personal
work, etc. all have a negative impact on the staff. Try setting an example for your staff to follow.
12. Smile often- Smiling can have a tremendous effect on boosting the morale of the staff. A smiling
superior creates an optimistic and motivating work environment. Smiling is an essential component of the
body language of confidence, acceptance and boldness. Smile consistently, naturally and often, to
demonstrate that you feel good and positive about the staff who works for you. It encourages new ideas and
feedback from the staff. The staff does not feel hesitant and threatened to discuss their views this way.
13. Listen effectively- Listening attentively is a form of recognizing and appreciating the person who is
talking. Reciprocal / Mutual listening develops cordial and healthy personal relationships on which the
employee / staff development rests. If the managers do not listen attentively to the subordinates, the morale
of the subordinates lowers down and they do not feel like sharing their ideas or giving their views. Effective
listening by the manager boosts up the employees’ morale and thus motivates them.
14. Ensure effective communication- In order to motivate your staff, indulge in effective
communication such as avoid using anger expressions, utilize questioning techniques to know staff’s
mindset and analysis rather than ordering the staff what to do, base your judgements on facts and not on
assumptions, use relaxed and steady tone of voice, listen effectively and be positive and helpful in your
responses. Share your views with the staff.
15. Develop and encourage creativity- The staff should be encouraged to develop the creativity skills
so as to solve organizational problems. Give them time and resources for developing creativity. Let them
hold constant brainstorming sessions. Invite ideas and suggestions from the staff. They may turn out to be
very productive.
16. Don’t be rigid. Be flexible- Introduce flexibility in work. Allow for flexible working hours if
possible. Let the employees work at home occasionally if need arises. Do not be rigid in accepting ideas
from your staff. Stimulate flexible attitudes in the employees who are accountable to you by asking what
changes they would like to bring about if given a chance.
17. Adopt job enrichment- Job enrichment implies giving room for a better quality of working life. It
means facilitating people to achieve self-development, fame and success through a more challenging and
interesting job which provides more promotional and advancement opportunities. Give employees more
freedom in job, involve them in decision-making process, show them loyalty and celebrate their
achievements.
18. Respect your team- Respect not only the employees’ rights to share and express their views, and to
be themselves, but their time too. This will ensure that the employees respect you and your time. Make the
staff feel that they are respected not just as employees / workers but as individuals too.
19. Workplace Motivation - Carrot or Stick approach doesn’t work anymore

20. employees- Even though an employee’s name has not appeared in the list of people getting
incentives, go ahead and compliment that employee for a job well done - no matter how
small. There is nothing more satisfying to an employee than a pat on his back.

21. Be transparent- While there may be some strategic decisions which you might want to share
with the employees at a later stage, make sure employees do not give in to the rumours. Stay in
touch with the employees.

22. Work on your PDP- Every employee is responsible for his / her own career. He / she should
work towards his ’Personal Development Plan’ [PDP] as discussed and agreed by his manager.
Find out what are the training company offers and which is best suited to his development
needs. How this will motivate you - remember training always increase your marketability and
enhance your career.

23. Participate and Network- Remember you work for a company where a one-on-one attention
might not be possible. Do not wait for an invitation to participate in a discussion. If you are a
part of a forum, then you have full right to express your opinion and be a part of the process.
Expressing yourself is a good way of motivating yourself.

20.6 Self-Motivation at Work

Self-motivation is a power that drives us to keep moving ahead. It encourages continuous learning and
success, whatever be the scenario. Self-motivation is a primary means of realizing our goals and progressing.
It is basically related to our inventiveness in setting dynamic goals for ourselves, and our faith that we
possess the required skills and competencies for achieving those challenging goals. We often feel the need
for self-motivation.

Following are the ways/techniques for self-motivation:

  Communicate and talk to get motivated: Communicating with someone can boost up your
energy and make you go on track. Talk with optimistic and motivated individuals. They can be
your colleagues, friends, wife, or any one with whom you can share your ideas.

 Remain optimistic: When facing hurdles; we always make efforts to find how to overcome
them. Also, one should understand the good in bad.

 Discover your interest area: If you lack interest in current task, you should not proceed and
continue with it. If an individual has no interest in the task, but if it is essential to perform, he
should correlate it with a bigger ultimate goal.

 Self-acknowledgement: One should know when his motivation level is saturated and he feels
like on top of the world. There will be a blueprint that once an individual acknowledge, he can
proceed with his job and can grow.

 Monitor and record your success: Maintain a success bar for the assignments you are
currently working on. When you observe any progress, you will obviously want to foster it.

 Uplift energy level: Energy is very essential for self-motivation. Do regular exercises. Have
proper sleep. Have tea/coffee during breaks to refresh you.

Assist, support and motivate others: Discuss and share your views and ideas with your friends and
peers and assist them in getting motivated. When we observe others performing good, it will keep us
motivated too. Invite feedback from others on your achievements.

Encourage learning: Always encourage learning. Read and grasp the logic and jist of the reading.
Learning makes an individual more confident in commencing new assignments.

Break your bigger goals into smaller goals: Set a short time deadline for each smaller goal so as to
achieve bigger goal on time.

20.7 Team Motivation - Tips for Motivating Team

A group heading towards a common objective will perform best when it is motivated as a team. Team
motivation is determined by how well the team members’ needs and requirements are met by the team.

Some tips for effective team motivation are as follows:

  The team’s objective should well align and synchronize with the team members needs and
requirements.

  Give in written the team’s mission and ensure that all understand it (as mission is a foundation
based on which the team performs).

  For maintaining motivation, the team should be given challenges (which must be difficult but
achievable) consistently.

  Giving a team responsibility accompanied by authority can also be a good motivator for the team
to perform.

  The team should be provided with growth opportunities. The team’s motivation level is high
 when the team members feel that they are being promoted, their skills and competencies are being
enhanced, and they are learning new things consistently.

  Effective and true leaders can develop environment for the team to motivate itself. They provide
spur for self- actualization behaviours of team members.

  Devote quality/productive time to your team. Have an optimistic and good relation with your
team members. This will make you more acquainted with them and you can get knowledge of
how well they are performing their job. Welcome their views and ideas as they may be fruitful
and it will also boost their morale.

  Motivation is all about empowerment. The skills and competencies of the team members should
be fully utilized. Empowering the team members makes them accountable for their own actions.

  Provide feedback to the team consistently. Become their mentor. Give the team recognition for
good and outstanding performance. Give the team a constructive and not negative feedback.

  Discover and offset the factors which discourage team spirit such as too many conflicts, lethargy,
team members’ escape from responsibilities, lack of job satisfaction, etc.

20.8 Motivational Challenges

Motivation seems to be a simple function of management in books, but in practice it is more challenging.

The reasons for motivation being challenging job are as follows:

One of the main reasons of motivation being a challenging job is due to the changing workforce.
The employees become a part of their organization with various needs and expectations. Different
employees have different beliefs, attitudes, values, backgrounds and thinking. But all the organizations are
not aware of the diversity in their workforce and thus are not aware and clear about different ways of
motivating their diverse workforce.

Employees motives cannot be seen, they can only be presumed. Suppose, there are two employees in a team
showing varying performance despite being of same age group, having same educational qualifications and
same work experience. The reason being what motivates one employee may not seem motivating to other.

Motivation of employees becomes challenging especially when the organizations have considerably changed
the job role of the employees, or have lessened the hierarchy levels of hierarchy, or have chucked out a
significant number of employees in the name of down-sizing or right-sizing. Certain firms have chosen to
hire and fire and paying for performance strategies nearly giving up motivational efforts. These strategies are
unsuccessful in making an individual overreach himself.

The vigorous nature of needs also pose challenge to a manager in motivating his subordinates. This is
because an employee at a certain point of time has diverse needs and expectations. Also, these needs and
expectations keep on changing and might also clash with each other. For instance-the employees who spend
extra time at work for meeting their needs for accomplishment might discover that the extra time spent by
them clash with their social needs and with the need for affiliation.

20.9 Essentials / Features of a Good Motivation System

 Motivation is a state of mind. High motivation leads to high morale and greater production.

A motivated employee gives his best to the organization. He stays loyal and committed to the organization.

A sound motivation system in an organization should have the following features:

1. Superior performance should be reasonably rewarded and should be duely acknowledged.

2. If the performance is not consistently up to the mark, then the system must make provisions for
penalties.
3. The employees must be dealt in a fair and just manner. The grievances and obstacles faced by them
must be dealt instantly and fairly.
4. Carrot and stick approach should be implemented to motivate both efficient and inefficient
employees.

The employees should treat negative consequences (such as fear of punishment) as stick, an outside push and
move away from it. They should take positive consequences (such as reward) as carrot, an inner pull and
move towards it.

5. Performance appraisal system should be very effective.

6. Ensure flexibility in working arrangements.
7. A sound motivation system must be correlated to organizational goals. Thus, the individual/employee
goals must be harmonized with the organizational goals.
8. The motivational system must be modified to the situation and to the organization.
9. A sound motivation system requires modifying the nature of individual’s jobs. The jobs should be
redesigned or restructured according to the requirement of situation. Any of the alternatives to job
specialization - job rotation, job enlargement, job enrichment, etc. could be used.
10. The management approach should be participative. All the subordinates and employees should be
involved in decision- making process.
11. The motivation system should involve monetary as well as non- monetary rewards. The monetary
rewards should be correlated to performance. Performance should be based on the employees’ action
towards the goals, and not on the fame of employees.
12. “Motivate yourself to motivate your employees” should be the managerial approach.
13. The managers must understand and identify the motivators for each employee.
14. Sound motivation system should encourage supportive supervision whereby the supervisors share
their views and experiences with their subordinates, listen to the subordinates views, and assist the
subordinates in performing the designated job.

20.10 Classical Theories of Motivation

The motivation concepts were mainly developed around 1950’s. Three main theories were made during this
period. These three classical theories are-

 Maslow’s hierarchy of needs theory

 Herzberg’s Two factor theory
 Theory X and Theory Y

These theories are building blocks of the contemporary theories developed later. The working mangers and
learned professionals till date use these classical theories to explain the concept of employee motivation.
Maslow’s Hierarchy of Needs Theory

Abraham Maslow is well renowned for proposing the Hierarchy of Needs Theory in 1943. This theory is a
classical depiction of human motivation. This theory is based on the assumption that there is a hierarchy of
five needs within each individual. The urgency of these needs varies. These five needs are as follows-

Figure: Maslow’s need hierarchy model

Physiological needs- These are the basic needs of air, water, food, clothing and shelter. In other
words, physiological needs are the needs for basic amenities of life.
Safety needs- Safety needs include physical, environmental and emotional safety and protection.
For instance- Job security, financial security, protection from animals, family security, health security, etc.
Social needs- Social needs include the need for love, affection, care, belongingness, and friendship.
Esteem needs- Esteem needs are of two types: internal esteem needs (self- respect, confidence,
competence, achievement and freedom) and external esteem needs (recognition, power, status, attention and
admiration).
Self-actualization need- This include the urge to become what you are capable of becoming / what
you have the potential to become. It includes the need for growth and self-contentment. It also includes
desire for gaining more knowledge, social- service, creativity and being aesthetic. The self- actualization
needs are never fully satiable. As an individual grows psychologically, opportunities keep cropping up to
continue growing.

According to Maslow, individuals are motivated by unsatisfied needs. As each of these needs is
significantly satisfied, it drives and forces the next need to emerge. Maslow grouped the five needs into two
categories - Higher-order needs and Lower-order needs. The physiological and the safety needs
constituted the lower-order needs. These lower-order needs are mainly satisfied externally. The social,
esteem, and self-actualization needs constituted the higher-order needs. These higher-order needs are
generally satisfied internally, i.e., within an individual. Thus, we can conclude that during boom period, the
employees lower-order needs are significantly met.
 Implications of Maslow’s Hierarchy of Needs Theory for Managers
As far as the physiological needs are concerned, the managers should give employees appropriate
salaries to purchase the basic necessities of life. Breaks and eating opportunities should be given to
employees.

As far as the safety needs are concerned, the managers should provide the employees job security, safe
and hygienic work environment, and retirement benefits so as to retain them.

As far as social needs are concerned, the management should encourage teamwork and organize social
events.

As far as esteem needs are concerned, the managers can appreciate and reward employees on
accomplishing and exceeding their targets. The management can give the deserved employee higher
job rank / position in the organization.

As far as self-actualization needs are concerned, the managers can give the employees challenging jobs
in which the employees’ skills and competencies are fully utilized. Moreover, growth opportunities can
be given to them so that they can reach the peak.

The managers must identify the need level at which the employee is existing and then those needs can be
utilized as push for motivation.

Limitations of Maslow’s Theory

 It is essential to note that not all employees are governed by same set of needs. Different individuals
may be driven by different needs at same point of time. It is always the most powerful unsatisfied need
that motivates an individual.
 The theory is not empirically supported.
 The theory is not applicable in case of starving artist as even if the artist’s basic needs are not
satisfied, he will still strive for recognition and achievement.

Herzberg’s Two-Factor Theory of Motivation

In 1959, Frederick Herzberg, a behavioural scientist proposed a two-factor theory or the motivator-hygiene
theory. According to Herzberg, there are some job factors that result in satisfaction while there are other job
factors that prevent dissatisfaction. According to Herzberg, the opposite of “Satisfaction” is “No
satisfaction” and the opposite of “Dissatisfaction” is “No Dissatisfaction”.

FIGURE: Herzberg’s view of satisfaction and dissatisfaction

 Herzberg classified these job factors into two categories-

a. Hygiene factors- Hygiene factors are those job factors which are essential for existence of
motivation at workplace. These do not lead to positive satisfaction for long-term. But if these factors are
absent / if these factors are non-existant at workplace, then they lead to dissatisfaction. In other words,
hygiene factors are those factors which when adequate/reasonable in a job, pacify the employees and do not
make them dissatisfied. These factors are extrinsic to work. Hygiene factors are also called as dissatisfiers
or maintenance factors as they are required to avoid dissatisfaction. These factors describe the job
environment/scenario. The hygiene factors symbolized the physiological needs which the individuals wanted
and expected to be fulfilled. Hygiene factors include:
Pay - The pay or salary structure should be appropriate and reasonable. It must be
equal and competitive to those in the same industry in the same domain.
Company Policies and administrative policies - The company policies should not be
too rigid. They should be fair and clear. It should include flexible working hours, dress code, breaks,
vacation, etc.
Fringe benefits - The employees should be offered health care plans (mediclaim),
benefits for the family members, employee help programmes, etc.
Physical Working conditions - The working conditions should be safe, clean and
hygienic. The work equipments should be updated and well-maintained.
Status - The employees’ status within the organization should be familiar and retained.
Interpersonal relations - The relationship of the employees with his peers, superiors
and subordinates should be appropriate and acceptable. There should be no conflict or humiliation
element present.
Job S ecurity - The organization must provide job security to the employees.

b. Motivational factors- According to Herzberg, the hygiene factors cannot be regarded as motivators.
The motivational factors yield positive satisfaction. These factors are inherent to work. These factors
motivate the employees for a superior performance. These factors are called satisfiers. These are factors
involved in performing the job. Employees find these factors intrinsically rewarding. The motivators
symbolized the psychological needs that were perceived as an additional benefit. Motivational factors
include:
 Recognition - The employees should be praised and recognized for their accomplishments by the managers.
 Sense of achievement - The employees must have a sense of achievement. This depends on the job. There
must be a fruit of some sort in the job.
 Growth and promotional opportunities - There must be growth and advancement opportunities in an
organization to motivate the employees to perform well.
 Responsibility - The employees must hold themselves responsible for the work. The managers should give
them ownership of the work. They should minimize control but retain accountability.
 Meaningfulness of the work - The work itself should be meaningful, interesting and challenging for the
employee to perform and to get motivated.

Limitations of Two-Factor Theory

The two factor theory is not free from limitations:

1. The two-factor theory overlooks situational variables.

2. Herzberg assumed a correlation between satisfaction and productivity. But the research conducted by
Herzberg stressed upon satisfaction and ignored productivity.
3. The theory’s reliability is uncertain. Analysis has to be made by the raters. The raters may spoil the
findings by analyzing same response in different manner.
4. No comprehensive measure of satisfaction was used. An employee may find his job acceptable
despite the fact that he may hate/object part of his job.
5. The two factor theory is not free from bias as it is based on the natural reaction of employees when
they are enquired the sources of satisfaction and dissatisfaction at work. They will blame dissatisfaction on
the external factors such as salary structure, company policies and peer relationship. Also, the employees
will give credit to themselves for the satisfaction factor at work.
6. The theory ignores blue-collar workers. Despite these limitations, Herzberg’s Two-Factor theory is
acceptable broadly.

Implications of Two-Factor Theory

The Two-Factor theory implies that the managers must stress upon guaranteeing the adequacy of the
hygiene factors to avoid employee dissatisfaction. Also, the managers must make sure that the work is
stimulating and rewarding so that the employees are motivated to work and perform harder and better.
This theory emphasize upon job-enrichment so as to motivate the employees. The job must utilize the
employee’s skills and competencies to the maximum. Focusing on the motivational factors can
improve work-quality.

Theory X and Theory Y

In 1960, Douglas McGregor formulated Theory X and Theory Y suggesting two aspects of human behaviour
at work, or in other words, two different views of individuals (employees): one of which is negative, called
as Theory X and the other is positive, so called as Theory Y. According to McGregor, the perception of
managers on the nature of individuals is based on various assumptions.

Assumptions of Theory X

 An average employee intrinsically does not like work and tries to escape it whenever possible.
 Since the employee does not want to work, he must be persuaded, compelled, or warned with
punishment so as to achieve organizational goals. A close supervision is required on part of managers. The
managers adopt a more dictatorial style.
 Many employees rank job security on top, and they have little or no aspiration/ ambition.
 Employees generally dislike responsibilities.
 Employees resist change.
 An average employee needs formal direction.

Assumptions of Theory Y

 Employees can perceive their job as relaxing and normal. They exercise their physical and mental
efforts in an inherent manner in their jobs.
 Employees may not require only threat, external control and coercion to work, but they can use self-
direction and self-control if they are dedicated and sincere to achieve the organizational objectives.
 If the job is rewarding and satisfying, then it will result in employees’ loyalty and commitment to
organization.
 An average employee can learn to admit and recognize the responsibility. In fact, he can even learn
to obtain responsibility.
 The employees have skills and capabilities. Their logical capabilities should be fully utilized. In other
words, the creativity, resourcefulness and innovative potentiality of the employees can be utilized to solve
organizational problems.

Thus, we can say that Theory X presents a pessimistic view of employees’ nature and behaviour at work,
while Theory Y presents an optimistic view of the employees’ nature and behaviour at work. If correlate it
with Maslow’s theory, we can say that Theory X is based on the assumption that the employees emphasize
on the physiological needs and the safety needs; while Theory X is based on the assumption that the social
needs, esteem needs and the self-actualization needs dominate the employees.

McGregor views Theory Y to be more valid and reasonable than Theory X. Thus, he encouraged cordial
team relations, responsible and stimulating jobs, and participation of all in decision-making process.

Implications of Theory X and Theory Y

Quite a few organizations use Theory X today. Theory X encourages use of tight control and
supervision. It implies that employees are reluctant to organizational changes. Thus, it does not
encourage innovation.

Many organizations are using Theory Y techniques. Theory Y implies that the managers should create
and encourage a work environment which provides opportunities to employees to take initiative and
self-direction. Employees should be given opportunities to contribute to organizational well-being.
Theory Y encourages decentralization of authority, teamwork and participative decision making in an
organization. Theory Y searches and discovers the ways in which an employee can make significant
contributions in an organization. It harmonizes and matches employees’ needs and aspirations with
organizational needs and aspirations.

20.11 Modern Theories of Motivation

We all are familiar with the classical theories of motivation, but they all are not empirically supported. As
far as contemporary theories of motivation are concerned, all are well supported with evidences. Some of the
contemporary / modern theories of motivation are explained below:

A. ERG (Existence, Relatedness and Growth) Theory of Motivation

To bring Maslow’s need hierarchy theory of motivation in synchronization with empirical research, Clayton
Alderfer redefined it in his own terms. His rework is called as ERG theory of motivation. He re-categorized
Maslow’s hierarchy of needs into three simpler and broader classes of needs:

 Existence needs- These include need for basic material necessities. In short, it includes an
individual’s physiological and physical safety needs.
 Relatedness needs- These include the aspiration individuals have for maintaining significant
interpersonal relationships (be it with family, peers or superiors), getting public fame and recognition.
Maslow’s social needs and external component of esteem needs fall under this class of need.
 Growth needs- These include need for self-development and personal growth and advancement.
Maslow’s self-actualization needs and intrinsic component of esteem needs fall under this category of need.
The significance of the three classes of needs may vary for each individual.

Difference between Maslow Need Hierarchy Theory and Alderfer’s ERG Theory
ERG Theory states that at a given point of time, more than one need may be operational.
 ERG Theory also shows that if the fulfillment of a higher-level need is subdued, there is an increase in
desire for satisfying a lower-level need.

According to Maslow, an individual remains at a particular need level until that need is satisfied. While
according to ERG theory, if a higher- level need aggravates, an individual may revert to increase the
satisfaction of a lower- level need. This is called frustration- regression aspect of ERG theory. For
instance- when growth need aggravates, then an individual might be motivated to accomplish the
relatedness need and if there are issues in accomplishing relatedness needs, then he might be motivated
by the existence needs. Thus, frustration/aggravation can result in regression to a lower-level need.

While Maslow’s need hierarchy theory is rigid as it assumes that the needs follow a specific and
orderly hierarchy and unless a lower-level need is satisfied, an individual cannot proceed to the higher-
level need; ERG Theory of motivation is very flexible as he perceived the needs as a range/variety
rather than perceiving them as a hierarchy. According to Alderfer, an individual can work on growth
needs even if his existence or relatedness needs remain unsatisfied. Thus, he gives explanation to the
issue of “starving artist” who can struggle for growth even if he is hungry.

Implications of the ERG Theory

Managers must understand that an employee has various needs that must be satisfied at the same time.
According to the ERG theory, if the manager concentrates solely on one need at a time, this will not
effectively motivate the employee. Also, the frustration- regression aspect of ERG Theory has an added
effect on workplace motivation. For instance- if an employee is not provided with growth and advancement
opportunities in an organization, he might revert to the relatedness need such as socializing needs and to
meet those socializing needs, if the environment or circumstances do not permit, he might revert to the need
for money to fulfill those socializing needs. The sooner the manager realizes and discovers this, the more
immediate steps they will take to fulfill those needs which are frustrated until such time that the employee
can again pursue growth.

B. McClelland’s Theory of Needs

David McClelland and his associates proposed McClelland’s theory of Needs / Achievement Motivation
Theory. This theory states that human behaviour is affected by three needs - Need for Power, Achievement
and Affiliation. Need for achievement is the urge to excel, to accomplish in relation to a set of standards, to
struggle to achieve success. Need for power is the desire to influence other individual’s behaviour as per
your wish. In other words, it is the desire to have control over others and to be influential. Need for
affiliation is a need for open and sociable interpersonal relationships. In other words, it is a desire for
relationship based on co-operation and mutual understanding.

The individuals with high achievement needs are highly motivated by competing and challenging work.
They look for promotional opportunities in job. They have a strong urge for feedback on their achievement.
Such individuals try to get satisfaction in performing things better. High achievement is directly related to
high performance. Individuals who are better and above average performers are highly motivated. They
assume responsibility for solving the problems at work. McClelland called such individuals as gamblers as
they set challenging targets for themselves and they take deliberate risk to achieve those set targets. Such
individuals look for innovative ways of performing job. They perceive achievement of goals as a reward,
and value it more than a financial reward.
The individuals who are motivated by power have a strong urge to be influential and controlling. They want
that their views and ideas should dominate and thus, they want to lead. Such individuals are motivated by the
need for reputation and self-esteem. Individuals with greater power and authority will perform better than
those possessing less power. Generally, managers with high need for power turn out to be more efficient and
successful managers. They are more determined and loyal to the organization they work for. Need for power
should not always be taken negatively. It can be viewed as the need to have a positive effect on the
organization and to support the organization in achieving its goals.

The individuals who are motivated by affiliation have an urge for a friendly and supportive environment.
Such individuals are effective performers in a team. These people want to be liked by others. The manager’s
ability to make decisions is hampered if they have a high affiliation need as they prefer to be accepted and
liked by others, and this weakens their objectivity. Individuals having high affiliation needs prefer working
in an environment providing greater personal interaction. Such people have a need to be on the good books
of all. They generally cannot be good leaders.

C. Goal Setting Theory of Motivation

In 1960’s, Edwin Locke put forward the Goal-setting theory of motivation. This theory states that goal
setting is essentially linked to task performance. It states that specific and challenging goals along with
appropriate feedback contribute to higher and better task performance.

In simple words, goals indicate and give direction to an employee about what needs to be done and how
much efforts are required to be put in.

The important features of goal-setting theory are as follows:

The willingness to work towards attainment of goal is main source of job motivation. Clear, particular
and difficult goals are greater motivating factors than easy, general and vague goals.

Specific and clear goals lead to greater output and better performance. Unambiguous, measurable and
clear goals accompanied by a deadline for completion avoids misunderstanding.

Goals should be realistic and challenging. This gives an individual a feeling of pride and triumph
when he attains them, and sets him up for attainment of next goal. The more challenging the goal, the
greater is the reward generally and the more is the passion for achieving it.

Better and appropriate feedback of results directs the employee behaviour and contributes to higher
performance than absence of feedback. Feedback is a means of gaining reputation, making
clarifications and regulating goal difficulties. It helps employees to work with more involvement and
leads to greater job satisfaction.

Employees’ participation in goal is not always desirable.

Participation of setting goal, however, makes goal more acceptable and leads to more involvement.

Goal setting theory has certain eventualities such as:

a. Self-efficiency- Self-efficiency is the individual’s self-confidence and faith that he has potential
of performing the task. Higher the level of self-efficiency, greater will be the efforts put in by the
individual when they face challenging tasks. While, lower the level of self-efficiency, less will be the
 efforts put in by the individual or he might even quit while meeting challenges.
b. Goal commitment- Goal setting theory assumes that the individual is committed to the goal
and will not leave the goal. The goal commitment is dependent on the following factors:
Goals are made open, known and broadcasted.
Goals should be set-self by individual rather than designated.
Individual’s set goals should be consistent with the organizational goals and vision.

Advantages of Goal Setting Theory

 Goal setting theory is a technique used to raise incentives for employees to complete work quickly
and effectively.
 Goal setting leads to better performance by increasing motivation and efforts, but also through
increasing and improving the feedback quality.

Limitations of Goal Setting Theory

 At times, the organizational goals are in conflict with the managerial goals. Goal conflict has a
detrimental effect on the performance if it motivates incompatible action drift.
 Very difficult and complex goals stimulate riskier behaviour.
 If the employee lacks skills and competencies to perform actions essential for goal, then the goal-
setting can fail and lead to undermining of performance.
 There is no evidence to prove that goal-setting improves job satisfaction.

D. Reinforcement Theory of Motivation

Reinforcement theory of motivation was proposed by BF Skinner and his associates. It states that
individual’s behaviour is a function of its consequences. It is based on “law of effect”, i.e, individual’s
behaviour with positive consequences tends to be repeated, but individual’s behaviour with negative
consequences tends not to be repeated.

Reinforcement theory of motivation overlooks the internal state of individual, i.e., the inner feelings and
drives of individuals are ignored by Skinner. This theory focuses totally on what happens to an individual
when he takes some action. Thus, according to Skinner, the external environment of the organization must
be designed effectively and positively so as to motivate the employee. This theory is a strong tool for
analyzing controlling mechanism for individual’s behaviour. However, it does not focus on the causes of
individual’s behaviour.

The managers use the following methods for controlling the behaviour of the employees:

Positive Reinforcement- This implies giving a positive response when an individual shows positive
and required behaviour. For example - Immediately praising an employee for coming early for job.
This will increase probability of outstanding behaviour occurring again. Reward is a positive reinforce,
but not necessarily. If and only if the employees’ behaviour improves, reward can said to be a positive
reinforcer. Positive reinforcement stimulates occurrence of a behaviour. It must be noted that more
spontaneous is the giving of reward, the greater reinforcement value it has.

Negative Reinforcement- This implies rewarding an employee by removing negative / undesirable

 consequences. Both positive and negative reinforcement can be used for increasing desirable / required
behaviour.

Punishment- It implies removing positive consequences so as to lower the probability of repeating

undesirable behaviour in future. In other words, punishment means applying undesirable consequence
for showing undesirable behaviour. For instance - Suspending an employee for breaking the
organizational rules. Punishment can be equalized by positive reinforcement from alternative source.

Extinction- It implies absence of reinforcements. In other words, extinction implies lowering the
probability of undesired behaviour by removing reward for that kind of behaviour. For instance - if an
employee no longer receives praise and admiration for his good work, he may feel that his behaviour is
generating no fruitful consequence. Extinction may unintentionally lower desirable behaviour.

Implications of Reinforcement Theory

Reinforcement theory explains in detail how an individual learns behaviour. Managers who are making
attempt to motivate the employees must ensure that they do not reward all employees simultaneously. They
must tell the employees what they are not doing correct. They must tell the employees how they can achieve
positive reinforcement.

E. Equity Theory of Motivation

The equity theory of motivation describes the relationship between the employee’s perception of how fairly
is he being treated and how hard he is motivated to work. J. Stacy Adams developed equity theory.

Equity Theory states that the employees perceive what they get from a job situation (outcomes) in relation to
what they put into it( inputs) and then compare their inputs- outcomes ratio with the inputs- outcomes ratios
of others.

This theory show-

 Inputs: inputs include all the rich and diverse elements that employees believe they bring or
contribute to the job – their education, experience, effort, loyalty, commitment.
 Outcomes: Outcomes are rewards they perceive they get from their jobs and employers outcomes
include- direct pay and bonuses, fringe benefit, job security, social rewards and psychological.
 Over rewarded: if employees fell over-rewarded equity theory predicts then they will feel and
imbalance in their relationship with their employee and seek to restore that balance.
 Equity: if employees perceive equity then they will be motivated to continue to contribute act about
the same level.
 Unrewarded: unrewarded who feel they have been unrewarded and seek to reduce their feeling in
Eequity through the same types of strategies but same of this specific action are now reverse.

Assumptions of the Equity Theory

 The theory demonstrates that the individuals are concerned both with their own rewards and also
with what others get in their comparison.
 Employees expect a fair and equitable return for their contribution to their jobs.
 Employees decide what their equitable return should be after comparing their inputs and outcomes
with those of their colleagues.
 Employees who perceive themselves as being in an inequitable scenario will attempt to reduce the
inequity either by distorting inputs and/or outcomes psychologically, by directly altering inputs and/or
outputs, or by quitting the organization.
 F. Expectancy Theory of Motivation
The expectancy theory was proposed by Victor Vroom of Yale School of Management in 1964. Vroom
stresses and focuses on outcomes, and not on needs unlike Maslow and Herzberg. The theory states that the
intensity of a tendency to perform in a particular manner is dependent on the intensity of an expectation that
the performance will be followed by a definite outcome and on the appeal of the outcome to the individual.

The Expectancy theory states that employee’s motivation is an outcome of how much an individual wants a
reward (Valence), the assessment that the likelihood that the effort will lead to expected performance
(Expectancy) and the belief that the performance will lead to reward (Instrumentality). In short, Valence is
the significance associated by an individual about the expected outcome. It is an expected and not the actual
satisfaction that an employee expects to receive after achieving the goals. Expectancy is the faith that better
efforts will result in better performance. Expectancy is influenced by factors such as possession of
appropriate skills for performing the job, availability of right resources, availability of crucial information
and getting the required support for completing the job.

Instrumentality is the faith that if you perform well, then a valid outcome will be there. Instrumentality is
affected by factors such as believe in the people who decide who receives what outcome, the simplicity of
the process deciding who gets what outcome, and clarity of relationship between performance and outcomes.
Thus, thF.e expectancy theory concentrates on the following three relationships:

 Effort-performance relationship: What is the likelihood that the individual’s effort be recognized in
his performance appraisal?
 Performance-reward relationship: It talks about the extent to which the employee believes that
getting a good performance appraisal leads to organizational rewards.
 Rewards-personal goals relationship: It is all about the attractiveness or appeal of the potential
reward to the individual.

Vroom was of view that employees consciously decide whether to perform or not at the job. This decision
solely depended on the employee’s motivation level which in turn depends on three factors of expectancy,
valence and instrumentality.

Advantages of the Expectancy Theory

 It is based on self-interest individual who want to achieve maximum satisfaction and who wants to
minimize dissatisfaction.
 This theory stresses upon the expectations and perception; what is real and actual is immaterial.
 It emphasizes on rewards or pay-offs.
 It focuses on psychological extravagance where final objective of individual is to attain maximum
pleasure and least pain.

Limitations of the Expectancy Theory

 The expectancy theory seems to be idealistic because quite a few individuals perceive high degree
correlation between performance and rewards.
 The application of this theory is limited as reward is not directly correlated with performance in
many organizations. It is related to other parameters also such as position, effort, responsibility, education,
etc.
Implications of the Expectancy Theory
The managers can correlate the preferred outcomes to the aimed performance levels.

The managers must ensure that the employees can achieve the aimed performance levels.

The deserving employees must be rewarded for their exceptional performance.

The reward system must be fair and just in an organization.

Organizations must design interesting, dynamic and challenging jobs.

The employee’s motivation level should be continually assessed through various techniques such as
questionnaire, personal interviews, etc.
20.12 Conclusion
Having studied this unit you should by now know that People will be motivated by a range of factors
and these are different for everyone. That, personality and the environment both need to be considered
when motivating people. Need achievement theory explains why high achievers choose difficult or
challenging tasks and why low achievers choose easier tasks at which they are less likely to fail.
Attribution theory shows that what we attribute our success or failure to will have an effect on our
motivation.
20.13 Tasks
i. Define motivation
ii. Explain the importance of motivation in an organisation
iii. Explain the Relationship and Differences between Motivation and Morale
iv. Identify Staff Motivation Tips for Employees
v. Suggest Team Motivation Tips
vi. Outline the Essentials / Features of a Good Motivation System
vii. Explain the Classical and Modern Theories of Motivation
viii. The challenges of motivation in an organisation

UNIT 2
ORGANIZATIONAL CHANGE PROCESS
CONTENTS
20.0 Aims and Objectives
21.1 Introduction
21.2 Types of Change within an organisation
21.3 Steps in implementing change
21.4 Forces for Change
21.5 Resistance to change
21.6 Overcoming resistance to change
23.2.4 Approaches to managing organization change
23.2.5 Emotional responses to change
23.2.6 Implementing successful change
23.3 let us sum up
23.4 lesson-end activities
23.5 References
21.0 AIMS AND OBJECTIVES
On completion of this lesson, the students are able to:
i) Understand the dynamics of change process and identify the various external and internal forces for the
change process
ii) Describe the various individual and organizational factors which are resisting the change process
iii) Outline the strategies to overcome the resistance to the change process and its benefits to the
organization.
iv) Describe various approaches to managing organizational change process.
21.1 INTRODUCTION
Changes are constantly taking place in our environment. Changes occur outside organization that requires
internal adaptation. The manager has to ensure that individual and groups in organizations, and structures,
process and behaviours of sub-systems must adapt to the changing external and internal environments. In
effect, the manager is a change agent who facilities changes to occur in the various subsystems of the
organization needed. Changes at the individual level can be facilitated by offering special training to
particular employees to handle a new assignment. At group level, team building efforts can be initiated to
operate interactively in a smooth and harmonious fashion so as to increase their effectiveness. Changes can
be brought at the technological level through implementation of sophisticated and more effective machines
or by better ways of doing things. At the structural level, job can be redesigned or new policies initiated
which serve the needs of both employees and the organization. Changes at the perceptual, attitudinal and
behavioural levels can be brought about by changing the organizational climate. By being able to scan the
internal and external environment of the organization and deciphering how changes in these environments
are likely to widen the gap between desired and actual state of affairs (performance, productivity, customer
satisfaction, employee satisfaction etc.), the manager can become an effective change agent for introducing
planned changes.

21.2 TYPES OF CHANGE WITHIN AN ORGANISATION

a) Strategic Change: A restructuring of an organization's business or marketing plan that is typically
performed in order to achieve an important objective. For example, a strategic change might include shifts in
a corporation's policies, target market, mission or organizational structure.
b) Structural Change: Structural change is a change made to the organization's structure that might stem
from internal or external factors and typically affect how the company is run.
c) Process-oriented Change: The goal of process-oriented change is to improve productivity. Process-
oriented change affects the way in which an organization delivers services, produces products, or handles
current business practices. As the environmental factors of an organization change, the need for process-
oriented change increases.
d) People-oriented Change: This type of change alters the attitudes, behaviours, skills, or performance of
employees in the company. Changing people‐centred processes involves communicating, motivating,
leading, and interacting within groups. This focus may entail changing how problems are solved, the way
employees learn new skills, and even the very nature of how employees perceive themselves, their jobs, and
the organization.

21.3 STEPS IN IMPLEMENTING CHANGE

Need for change can be identified either through internal factors or through external forces that may be in
place. Once this need is identified, the following steps can be taken to implement such change:
1. Develop new goals and objectives
2. Select an agent for change
3. Diagnose the problem
4. Select methodology
5. Develop a plan
6. Strategy for implementation of the plan
7. Implementation of the plan
8. Receive and evaluate feedback

21.4 FORCES FOR CHANGE

There are both external and internal forces that result in pressure for change,
External Forces:
The external forces that create the need for change come from various sources. Some of them are as follows:
Competitive Market Force:
Competition is changing. The global economy means that competitors are as likely to come from across the
ocean as from across town. Heightened competition also means the established organizations need to defend
themselves against both traditional competitors that develop new products and services and small,
entrepreneurial firms with innovative offers. Successful organizations will be the ones that can change in
response to the competitor.
Government laws and regulations:
These are frequent impetus for change. Creation of special economic zones and foreign direct investment in
India sparked off major changes in the IT Industries, Insurance, and Car manufacturing industries. More
foreign automobile industries are setting up manufacturing plants and generating more employment
opportunities in India.
Technology:
It creates the need for change. For example, technological developments in sophisticated and extremely
expensive diagnostic equipment have created significant economy of scale for hospitals and medical centres.
Assembly-line technology is undergoing dramatic change as organizations replace human labour with
robots. Even in the greetings card industry, electronic mail and internet have influenced the way people send
greetings.
Labour Markets:
The fluctuation in labour markets forces managers to change. For instance, the demand for webpage
designers and website managers made it necessary for organizations that need those kinds of employees to
change their human resources management activities to attract and retain skilled employees in the areas of
greatest need.

Economic Changes:
Economic changes affect almost all organization. The appreciation of rupee value against the US dollar
affects the export prospects of knitwear products from India to America as those products cost more to
Americans. But even in strong economy, uncertainties about interest rates, government budgets deficits and
current exchange rates create conditions that may force organizations to change.
Internal Forces:
Internal forces can also stimulate the need for change. These internal forces tend to originate primarily from
the internal operations of the organizations or from the impact of external changes.
Structural factors:
A structural force would be the inability to transmit important information from the top of the organization
to the lower level cadre. Because of numerous layers in the hierarchy, information moves slowly from one
level to the next. This could be viewed as a process or a behavioural problem involving a failure to
communicate effectively.
Strategy:
A redefinition or modification of an organization’s strategy often introduces a host of change. The strategic
move of Reliance Industries in getting into retail business in urban and rural markets made them to introduce
a change in the managerial approach as well as the human relations approach to gain acceptance from the
different cross section of the customers.
Organizations Workforce:
In recent times, the work force composition is varied and is not very static. Its composition changes in terms
of age, education, sex and so forth. In a stable organization with a large pool of seasoned executives, there
might be a need to restructure jobs in order to retain younger managers who occupy lower ranks. The
compensation and benefit system might also need to be adapted to reflect the needs of an older work force
Technology:
The introduction of new equipment represents another internal force for change. Employees may have their
jobs redesigned, they need to undergo training on how to operate the new equipment or they may be required
to establish new interactions patterns with their work group.
Employee Attitudes:
Employee attitudes such as increased job satisfaction may lead to increased absenteeism, more voluntary
resignations, and even labour strikes. Such events will often lead to changes in management policies and
practices.
21.5 RESISTANCE TO CHANGE
In planning for change, the team leaders must take into consideration the various factors on which the
members exhibit their resistance to implement the change process. For example, the company wanted to
install a new software program in cash counter computer terminals to facilitate the fast movement. But some
employees may not respond favourably and display their refusal to cooperate by increasing absenteeism,
sub-standard work, joining of union increased labour turn over etc. Resistance to change can also be a
source of functional conflict. For example, resistance to a reorganization plan or a change in a product line
can stimulate a healthy debate over the merits of the idea and result in a better decision.
Resistance can be overt, implicit, immediate or deferred. It is the easiest for management to deal with
resistance when it is overt and immediate such as employees strike, work slowdown etc. The greater
challenge is managing resistance that is implicit or deferred.
Such as loss of loyalty to the organization, loss of motivation to work, increased errors or mistakes increased
absenteeism etc. .
Individual Resistance
Individual sources of resistance to change lie in basic human characteristics such as perceptions,
personalities and needs.
Habit: The team members are habituated or conditioned to do their job or activity in a particular way. When
they are asked to do differently, they tend to respond to resist change. When employees are asked to move to
new office building across the town, they are likely to change their routine habits like waking up ten minutes
earlier, finding new parking place, adjusting to new office layout, developing new lunch time
routine etc.
Security: The team members with a high need for security are likely to resist change because it threatens
their feelings of safety. When Indian Railway introduced new online booking for their reservations,
employees may have similar fears.
Economic Factors: If the members feel that the new changes result in lower pay, they may likely to resist
change process. Changes in jobs or established work routine can also arouse economic fears if people are
concerned that they won’t be able to perform the new tasks or routines to their previous standards, especially
when the pay is closely tied to productivity.
Fear of the Unknown: The cashiers or secretaries might fear the new activities due to lack of knowledge in
operating the new software program. They might develop a negative attitude towards working with new
programs or behave dysfunctionally if required to use them. Employees in organizations hold the same
dislike for uncertainty. For example, if an organization introduced TQM, the production employees will have
to learn statistical process control techniques. Therefore, they may develop a negative attitude towards TQM
or behaviour dysfunctionally if required to use statistical techniques.
Selective Information Processing: Once the team members shape their world through their own way, they
prefer to do their work based on their perceptions. If the change process demands to follow the new method,
the members tend to resist. So individuals are guilty of selectively processing information in order to keep
their perception intact. They hear what they want to hear. They ignore information that challenges the world
they have created.
Organizational Resistance
Some organizations prefer to follow their routine and reluctant to venture new things or follow any new
methods of doing. Government agencies want to continue doing what they have been doing for years,
whether the need for their service changes or remains the same. Six major sources of organizational
resistance have been identified. They are as follows:
Structural Inertia: Organizations have built in mechanisms to produce stability. For instance, the training
and orientation programs reinforce specific role requirements and skills. Formalization provides job
descriptions, rules and procedures for employees to follow. Once the routine has been established,
organization is very reluctant to adapt to new changes. When an organization is confronted with the
change process, the team members tend to resist.
Limited Focus of Change: The change process is interlinked. One activity cannot be changed without
affecting the others. If change is introduced in technology without considering the structural changes, the
change in technology is not likely to be accepted. Organizations are made up of number of interdependent
subsystems.
Group Inertia: Sometimes the group norm or standards could act as a constraint. For example, the union
norms may dictate resistance to change process.
Threat to Expertise: The change process could threaten the expertise of team members of the groups. Once
the members feel that they are forced to learn something new, they tend to resist. The introduction of
decentralized personal computers, which allow managers to gain access to information directly from a
company’s mainframe, is an example of a change that was strongly resisted by many information system
departments in the 1980s. Because of decentralized end-user computing was a threat to the specialized skills
held by those in the centralized information system departments
Threat to Established Power Relationship: The change process can threaten long-established power
relationships within the organization. Due to this reason, the members can resist the change.
Threat to established resource allocation: The group, which enjoys sizable resources, may not like to
accept the change process that facilitates reduction in their budget.
21.6 OVERCOMING RESISTANCE TO CHANGE
John Kotter and Leonard Schlesinger offered six ways of overcoming resistance to change, which are highly
situation dependent. More than one of these techniques may be used in any given situations.
Education and Communication: If the logic and advantages of the change are explained early to the team
members, resistance can be reduced. This can be achieved through one-to-one discussions, memos, group
presentations, or reports. This tactics assumes that the source of resistance lies in misinformed or poor
communication. If the team members received the full facts and have their misunderstanding cleared up,
their resistance will subside. Once people have bought into the idea, they will implement the change. The
only problem is that this could be very time consuming process, if too many people are to be communicated
with.
Participation and Involvement: Resistance to change can be reduced or eliminated by having those
involved participate in the decision of the change through meetings and induction. It is difficult for
individuals to resist a change decision in which they participated. Once people have had an opportunity to
contribute ideas and become a part of the change process, they will be less inclined to see it fail. However,
working in committees or task forces is a time consuming activity, and hence it will take a longer time to
bring about changes.
Facilitation and Support: Easing the change process and providing support for those caught up in it is
another way managers can deal with resistance. Retraining programs, allowing time off after a difficult
period, and offering emotional support and understanding may help. This emotional support can be given
through empathic listening, offering training and other types of help. Such facilitation and emotional
support help individual to deal more effectively with their adjustment problems. This process can be time
consuming and there is no guarantee that it will always work.
Negotiation and Agreement: It is sometimes necessary for a team leader to negotiate with potential
resistance or exchange something of value for a lessening the resistance. For instance, if the resistance is
from a few powerful individuals in the team, a specific reward package can be negotiated that will meet their
individual needs. Though in some instances this may be the relatively easy way to gain acceptance, it is
possible that this could be an expensive way of effecting changes as well. Also, if the use of this strategy
becomes public knowledge, others might also want to try to negotiate before they accept the change.
Manipulation and Co-optation: The team leader seeks to ‘buy off’ the key members who are resisting by
giving them an important role in the change decision. The team leader’s advice is sought, not to arrive at a
better decision but to get their endorsement. Some of the co-opting tactics include selectively sharing
information and consciously structuring certain types of events that would win support. This can be a quick
and relatively easy and inexpensive strategy to gain support. However, the purpose will be
defeated if people feel they are being manipulated.
Explicit and Implicit Coercion: The team leaders can force the members to go along with changes by
threats involving loss or transfers of jobs, lack of promotion, etc.
Such methods, though not uncommon, i s more difficult to gain support for future change efforts. This
strategy can be particularly resorted to when changes have to be speedily enforced or when changes are of a
temporary nature. Though speedy and effective in the short run, it may make people angry and resort to all
kinds of mean behaviours in the long run.
21.7 APPROACHES TO MANAGING ORGANIZATION CHANGE
Kurt Lewin argued that successful change in organizations should follow three steps
i) Unfreezing the status quo
ii) Movement to a new state
iii) Refreezing the new change to make it permanent.
Unfreezing:
It is actually the process of preparing the system for change through disconfirmation of the old practices,
attitudes, tendencies, or behaviours. This is the initial phase where those involved in the change experience a
need for something different and a sense of restlessness with the status quo. In essence, the feeling that the
system is hurting itself badly now and desperately requires a change to survive, is sensed by all. Initiative for
changes efforts are taken to overcome the pressures of both individual resistance and group conformity.
Movement to a new state:
Changing or moving is the phase where the changes that have been planned are actually initiated and carried
out. Changes could relate to the mission, strategy, objectives, people, tasks, work roles, technology,
structure, corporate culture, or any other aspects of the organization. Well thought out changes have to be
carefully implemented with participation of the members who will be affected by the change. Changes
incorporated too quickly without adequate preparation will result in resistance to change.
Refreezing:
It is the last phase of the planned change process. Refreezing ensures that the planned changes that have
been introduced are working satisfactorily, that any modifications, extra considerations, or support needed
for making the changes operational are attended to, and that there is reasonable guarantee that the changes
will indeed fill the gap and bring the system to the new, desired state of equilibrium. This necessarily implies
that the results are monitored and evaluated, and wherever necessary corrective measures are
taken up to reach the new goal. If the refreezing phase is neglected or temporarily attended to, the desired
results will not ensure and the change may even be total disaster.
Forced Field Analysis:
Kurt Lewin stated that there are two types of forces operating in the change process.
i)Those forces which prepare or make the system ready for changes to occur, are called as
driving forces,
ii) Those forces which oppose or operate against changes taking place in the system, are called as restraining
forces. If the two sets of forces are equal in strength, then the systems is in a state of equilibrium and
changes will not occur. If the driving forces are stronger than the restraining forces, then the system will be
changing to find a new equilibrium as the gap to be filled gets narrowed down. A more viable option is to
reduce existing resistance by dealing with and minimizing the forces that resist the change. In practice, a
combination of both strategies – reducing the restraining factors and increasing the driving forces often
ensures best results.
21.8 EMOTIONAL RESPONSES TO CHANGE:
The four emotional phases people experience when going through change are as follows:
denial, resistance, exploration and commitment.
Denial:
During the initial stages, the members deny the need for change and remain in a state of numbness. They
work as usual and there is no progress exists. Employees focus on the known and neglecting themselves
future. The way or need to change is not explored.
Employees have ignored the signals of the new changes and managers have not given them a real chance to
register their worries and reaction. During the denial phase, managers need to provide information, to
communicate clearly the details and reasons for the change, and to encourage employees to ask questions.
Resistance:
The employees experience the self-doubt, anger, depression, anxiety, frustration, fear and uncertainty that
accompany major changes. They think about leaving the organization, availing sick leave, accidents occur
and work-related illness increase etc. During this phase, managers need to allow people to express their
negativity, their personal fears and worries and to encourage them to share their problems with other
colleagues.
Exploration:
During this phase, the employees begin to think things are improving and show a renewed interest in work
and cooperation begin to happen, which results in more creativity and more positive feelings within the
group. Employees focus the external environment and less on internal conflict and worries. Exciting creative
ideas and new bonds can emerge among employees who work together on new and powerful ideas.
Commitment:
In the commitment phase, employees often create or revitalize their mission and develop
action plan to make it work. People identify with their objectives and are willing to put in
extra effort to achieve them. In this final stage, it is important to develop point in systems
and structures which reinforce these changes and make them permanent.
Advantages of this Model:
This model can help to predict and to understand employees’ reactions during changes. It can be used to
assess where individuals and teams stand in relation to the change grid.
Sometimes it can be useful for top managers who are in the exploration phase to become aware that many
colleagues in the organization might be in the resistance or denial phase.
This model can also be used to help design a strategy to implement change.
21.9 IMPLEMENTING SUCCESSFUL CHANGE
In order to implement a successful change, a due care musts be taken for the following
factors.
i) Pressure for Change:
Pressure for change is necessary otherwise employees will never place a high priority on the desired change.
Pressure to perform can come from external sources such as government legislation, political requirements,
funding constraints, or increased competition. Major problems such as customer dissatisfaction or poor
quality can result in pressure to change. Internal pressure can come about from CEO setting new directions
or employees indicating dissatisfaction by leaving the organization. Without this pressure, the change will
become low priority change.
ii) A clear, shared vision:
This helps the employees to understand the purpose for the change and to gain a commitment to it.
Employees need to feel a sense of involvement and to identify with the vision, rather than just being dictated
to them Managers must find ways to communicate the vision clearly to all employees. If the vision is not
understood or shared, employees may not be able to focus their effort in the intended direction.
iii) Actionable first steps:
This facilitates the employees to start the change process immediately. Even a small wins attained by the
employees will be encouraged and allows employees to feel a positive sense of achievement and the
beginning of the problem. They are then willing to invest more time and energy.
iv) Capacity for change:
This refers to the resources and skills necessary to implement the change adequately. Managers need to plan
and budget for the implementation of the change. Adequate time is allowed to the employees to participate
in the change program.
v) Model the way:
This refers to the leader and manager of the organization putting into practice the values and behaviour that
reflect the vision. The managers’ action must be consistent with his works; otherwise the employees will
become cynical and distrustful. Managers need to operate with integrity and sincerity so that employees see
the actions of their managers as example of what is expected of them
vi) Reinforce /solidify the change:
Management must offer adequate rewards and appreciation to their employees for successful implementation
of the changes and process and getting the expected results. These can also involve solidifying the change by
changing the procedure and process so that change becomes a regular part of the operation.
vii) Evaluate and improve: The program must be evaluated thoroughly and improve the change program
after it has been under way for a time. Due to negligence of this process, the change programs are sloppy or
superficial. As result, programs are discontinued or abandoned based on the personal feelings or lack of
budget. Surveys and baseline measure should be gathered at the beginning of the program and repeated once
the program has been running for one to two years.
21.10 CHANGE AGENT
A change agent is anyone who has the skill and power to stimulate, facilitate, and coordinate the change
effort. change agents may be either external or internal.

ROLES OF CHANGE AGENT

1. Consulting
As a consultant, the manager places employees in touch with data from outside the organization or
helping organization members to generate data from within the
organization. The overall purpose is to help employees find solutions to problems
through analysis of valid data.
2. Training
To help organization members derive implications for action from the present data and to provide
organization members with a new set of skills—the ability to retrieve, translate, and use new data
to solve future problems.
3. Research
Finally, and closely associated with the previous role, the manager may assume the role of researcher. As
researcher, the manager may train organization members in the skills needed for valid evaluation of the
effectiveness of action plans that have been implemented.

TYPES OF CHANGE AGENT

1. Outside Pressure Type
These change agents work to change systems from outside the organization. They are not members of the
company they are trying to change and use various pressure tactics such as mass demonstrations, civil
disobedience, and violence to accomplish their objectives.
2. People-Change-Technology Type
The focus of activity for this type of change agent is the individual. The change agent may be concerned
with employee morale and motivation, including absenteeism, turnover, and the quality of work performed.
The methods used include job enrichment, goal setting, and behaviour modification
3. Analysis-for-the-Top Type
changing the organizational structure so as to improve output and efficiency. The change agent uses
operations research, systems analysis, policy studies, and other forms of analytical approaches to
change the organization's structure or technology.
4. Organization-Development Type
Focus their attention on internal processes such as intergroup relations, communication, and decision
making. Their intervention strategy is often called a cultural change approach, because they thoroughly
analyse the culture of the targeted organization.

SKILLS OF CHANGE AGENT

 Empathy
This is the skill of understanding the feelings of another person. Empathy leads to improved communication
and understanding between the change agent and organization Members.
 Linkage
This refers to the extent to which the change agent and organization members are tied together in
collaborative activities. The greater the collaborative involvement (the tighter the linkage), the more likely
the change agent will be successful.
 Proximity
This refers to the physical and psychological closeness of the change agent and organization members.
Proximity has relevance to open door policy and the visibility of the change agent during working
hours.
 Structuring
This factor refers to the ability of the change agent and organization members to clearly plan and organize
their activities concerning the change effort. A clearly designed change effort is more likely to be understood
and implemented by the employees.
 Openness
This characteristic refers to the degree to which the change agent and organization members are willing to
hear, respond to, and be influenced by one another.
 Reward
This refers to the nature and variety of potential positive outcomes of the change effort that might accrue to
the change agent and organization members. Change efforts should be designed so that the employees are
rewarded for changing.
21.11 Conclusion
In this unit, we have discussed about the organizational change process. There are both external and internal
forces that result in pressure for change. We have also learnt about the ways of overcoming resistance to
change.
21.12 Tasks
1. What are the key factors to be considered while implementing a successful change program?
2. Describe the various emotional responses to change process.
3. Explain Kurt Lewins’ three step change process and the types of constraints in each of these stages.
4. Describe the individual level resistance factors and organizational level resistance factors which restrain
the implementation of change process.
5. What are the techniques to overcome resistance to change in the hierarchical order?
6. What are the internal and external factors which force an organization to implement change process forces
which force

UNIT 3
DECISION MAKING
CONTENTS
22.0 Aims and objectives
22.1 Introduction
22.2 Characteristics of decision making
22.3 Types of decisions
22.4 Importance of decision making in organisations
22.5 Decision making process
22.6 Decision making approaches
22.7 Conclusion
22.9 Tasks
22.0 AIMS AND OBJECTIVES
At the end of studying this unit , the student should be able to:
i) Explain what a decision is.
ii) State the characteristics of decision making
iii) Identify the types of decisions
iv) State the types of decision making processes and approaches

22.1 INTRODUCTION

A decision can be defined as a particular course of action chosen by a manager as the most potent apparatus
at his disposal for achieving goal(s) he is pursuing or for solving the problem that is bothering him. In other
words, decision in its simplest form is a selection of alternatives. It is implied that decision making envisages
two or more alternatives from which a final decision can be made. However, if there is only one alternatives,
there is no decision to be made.

It is the selection of one course of action from two or more alternative courses of action.

According to MacFarland, "A decision is an act of choice wherein an executive forms a conclusion about
what must be done in a given situation. A decision represents a course of behaviour chosen from a
number of possible alternatives".

Thus, the way an executive acts or decides the course of action from among various alternatives is an act of
decision making.

According to George Terry, "Decision making is the selection based on some criteria from two or more
possible alternatives".

Though there are many alternatives available to a manager, he has to choose the best out of them on the basis
of the above definitions.

22.2 CHARACTERISTICS OF DECISION MAKING

1. Decision making is based on rational thinking. The manager tries to foresee various possible effects of a
decision before deciding a particular one.

2. It is a process of selecting the best from among alternatives available.

3. It involves the evaluation of various alternatives available. The selection of best alternative will be made
only when pros and cons of all of them are discussed and evaluated.

4. Decision making is the end product because it is preceded by discussion and deliberations.

5. Decision making is used to achieve organizational goals.

6. It also involves certain commitment. Management is committed to every decision it takes.

22.3 Types of Decisions

The following are the main types of decisions every organization need to take:
1. Programmed and non-programmed decisions:
Programmed decisions are concerned with the problems of repetitive nature or routine type matters.
A standard procedure is followed for tackling such problems. These decisions are taken generally by
lower level managers. Decisions of this type may pertain to e.g. purchase of raw material, granting leave
to an employee and supply of goods and implements to the employees, etc. Non-programmed decisions
relate to difficult situations for which there is no easy solution.
These matters are very important for the organisation. For example, opening of a new branch of the
organisation or a large number of employees absenting from the organisation or introducing new product
in the market, etc., are the decisions which are normally taken at the higher level.
2. Routine and strategic decisions:
Routine decisions are related to the general functioning of the organisation. They do not require much
evaluation and analysis and can be taken quickly. Ample powers are delegated to lower ranks to take
these decisions within the broad policy structure of the organisation.
Strategic decisions are important which affect objectives, organisational goals and other important policy
matters. These decisions usually involve huge investments or funds. These are non-repetitive in nature
and are taken after careful analysis and evaluation of many alternatives. These decisions are taken at the
higher level of management.
3. Tactical (Policy) and operational decisions:
Decisions pertaining to various policy matters of the organisation are policy decisions. These are taken
by the top management and have long term impact on the functioning of the concern. For example,
decisions regarding location of plant, volume of production and channels of distribution (Tactical)
policies, etc. are policy decisions. Operating decisions relate to day-to-day functioning or operations of
business. Middle and lower level managers take these decisions.
An example may be taken to distinguish these decisions. Decisions concerning payment of bonus to
employees are a policy decision. On the other hand if bonus is to be given to the employees, calculation
of bonus in respect of each employee is an operating decision.
4. Organisational and personal decisions:
When an individual takes decision as an executive in the official capacity, it is known as organisational
decision. If decision is taken by the executive in the personal capacity (thereby affecting his personal
life), it is known as personal decision.
Sometimes these decisions may affect functioning of the organisation also. For example, if an executive
leaves the organisation, it may affect the organisation. The authority of taking organizational decisions
may be delegated, whereas personal decisions cannot be delegated.
5. Major and minor decisions:
Another classification of decisions is major and minor. Decision pertaining to purchase of new factory
premises is a major decision. Major decisions are taken by top management. Purchase of office
stationery is a minor decision which can be taken by office superintendent.
6. Individual and group decisions:
 When the decision is taken by a single individual, it is known as individual decision. Usually routine
type decisions are taken by individuals within the broad policy framework of the organisation.

Examples of Decisions Commonly Made Within Organizations

22.4 IMPORTANCE OF DECISION MAKING IN ORGANISATIONS

1. Better Utilisation of Resources

Decision making helps to utilise the available resources for achieving the objectives of the organisation. The
available resources are the 6 Ms, i.e. Men, Money, Materials, Machines, Methods and Markets. The manager
has to make correct decisions for all the 6 Ms. This will result in better utilisation of these resources.

2. Facing Problems and Challenges

Decision making helps the organisation to face and tackle new problems and challenges. Quick and correct
decisions help to solve problems and to accept new challenges.

3. Business Growth

Quick and correct decision making results in better utilisation of the resources. It helps the organisation to
face new problems and challenges. It also helps to achieve its objectives. All this results in quick business
growth. However, wrong, slow or no decisions can result in losses and industrial sickness.

4. Achieving Objectives

Rational decisions help the organisation to achieve all its objectives quickly. This is because rational
decisions are made after analysing and evaluating all the alternatives.

5. Increases Efficiency

Rational decisions help to increase efficiency. Efficiency is the relation between returns and cost. If the
returns are high and the cost is low, then there is efficiency and vice versa. Rational decisions result in
higher returns at low cost.

6. Facilitate Innovation

Rational decisions facilitate innovation. This is because it helps to develop new ideas, new products, new
process, etc. This results in innovation. Innovation gives a competitive advantage to the organisation.

7. Motivates Employees

Rational decision results in motivation for the employees. This is because the employees are motivated to
implement rational decisions. When the rational decisions are implemented the organisation makes high
profits. Therefore, it can give financial and non-financial benefits to the employees.

22.5 DECISION MAKING PROCESS

Decision making is the process of making choices by setting goals, gathering information, and assessing
alternative occupations. There are seven steps in effective decision making
 Step 1: Identify the decision to be made. You realize that a decision must be made. You then go through
an internal process of trying to define clearly the nature of the decision you must make. This first step is a
very important one. There are a couple of questions one should ask when it comes to identifying the purpose
of the decision.

 What exactly is the problem?

 Why the problem should be solved?
 Who are the affected parties of the problem?
 Does the problem have a deadline or a specific time-line?

Step 2: Gather relevant information. Most decisions require collecting pertinent information. The real
trick in this step is to know what information is needed, the best sources of this information, and how to go
about getting it. Some information must be sought from within yourself through a process of self-
assessment; other information must be sought from outside yourself-from books, people, and a variety of
other sources. This step, therefore, involves both internal and external “work”. A problem of an organization
will have many stakeholders. In addition, there can be dozens of factors involved and affected by the
problem.

In the process of solving the problem, you will have to gather as much as information related to the factors
and stakeholders involved in the problem. For the process of information gathering, tools such as 'Check
Sheets' can be effectively used.

Step 3: Identify alternatives. Through the process of collecting information you will probably identify
several, possible paths of action, or alternatives. You may also use your imagination and information to
construct new alternatives. In this step of the decision-making process, you will list all possible and desirable
alternatives. In this step, the baseline criteria for judging the alternatives should be set up. When it comes to
defining the criteria, organizational goals as well as the corporate culture should be taken into consideration.

As an example, profit is one of the main concerns in every decision making process. Companies usually do
not make decisions that reduce profits, unless it is an exceptional case. Likewise, baseline principles should
be identified related to the problem in hand.

Step 4: Weigh evidence. In this step, you draw on your information and emotions to imagine what it would
be like if you carried out each of the alternatives to the end. You must evaluate whether the need identified
in Step 1 would be helped or solved through the use of each alternative. In going through this difficult
internal process, you begin to favor certain alternatives which appear to have higher potential for reaching
your goal. Eventually you are able to place the alternatives in priority order, based upon your own value
system. Before the idea generation step, it is vital to understand the causes of the problem and prioritization
of causes.

For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool. Cause-and-Effect diagram
helps you to identify all possible causes of the problem and Pareto chart helps you to prioritize and identify
the causes with highest effect.

Then, you can move on generating all possible solutions (alternatives) for the problem in hand.

Step 5: Choose among alternatives. Once you have weighed all the evidence, you are ready to select the
alternative which seems to be best suited to you. You may even choose a combination of alternatives. Your
choice in Step 5 may very likely be the same or similar to the alternative you placed at the top of your list at
the end of Step 4.
 Step 6: Take action. You now take some positive action which begins to implement the alternative you
chose in Step 5.

Step 7: Review decision and consequences. In the last step you experience the results of your decision and
evaluate whether or not it has “solved” the need you identified in Step 1. If it has, you may stay with this
decision for some period of time. If the decision has not resolved the identified need, you may repeat certain
steps of the process in order to make a new decision. You may, for example, gather more detailed or
somewhat different information or discover additional alternatives on which to base your decision.

22.6 Decision making approaches

Three decision making approaches

There are a number of ways to characterize approaches to making decisions. In most cases, we all tend to
make decisions using all of the approaches at one time or another.

1. Rational or Analytical approach - Exemplified by step by step decision making, this approach defines
success factors upfront, seeks information and logically looks at how each alternative meets each success
factor. Decision making is planned, and choices are made under the premise desired solutions can be
achieved except for large unforeseeable or unknowable events. With this approach, consequences of the final
choice are taken into consideration.

a) Decision makers do not have complete knowledge of all the facts surrounding the problems. They cannot
foresee future events with complete accuracy. Therefore, it is not always possible to choose the optimum
solution.

b) The search for decision is stopped as soon as the minimum acceptable level of rationality is reached. Most
decisions involve too many complex variables all of which cannot be examined fully by a decision maker. It
is not always possible to identify all possible alternatives due to time and cost constraints.

c) A decision making situation may involve multiple goals all of which cannot be maximized simultaneously. It
is not possible to maximize goals when a suitable quantitative measure of progress is not available.

d) The environment of decision making is often uncertain. The making and implementation of decisions are
influenced by several uncontrollable factors. Therefore, the consequences of various alternatives cannot be
anticipated accurately

e) The outcome of a decision can be known only in future. It is not always possible to foresee future events and
the anticipated consequences of various alternatives may differ from those actually realized.

f) A decision in one area may have an adverse effect on another area of operations. For example, a decision to
produce high quality goods may result into increase in cost of production and; may not be possible to sell the
product with sufficient profit margin.

g) Human factors are the main limits on rational decision making. Personal value systems, perceptions,
economic and social factors, etc., are the main human limits on rationality. Every decision maker is a human
being and his” decisions are influenced by his personal beliefs, attitudes and biases.

2. Intuitive Decision Making Approach - Relying on emotions and feelings characterizes this approach.
Careful planning is not possible or not desired. People will point to a "gut feeling" or "hunch" as the cause
for a choice, reflecting that explanation is not accessible through conscious thought.
3. Random, Chance, or Luck Approach - In this approach a decision is made on impulse, without thought.
Flipping a coin or using a "decision wheel" would be representative of employing this approach. It is
sometimes considered a dependent style because this approach can promote denial of responsibility.

22.8 Conclusion
Decision making is choosing among alternative courses of action, including inaction. There are different
types of decisions ranging from automatic, programmed decisions to more intensive nonprogrammed
decisions. Structured decision-making processes include rational, bounded rationality, intuitive, and creative
decision making. Each of these can be useful, depending on the circumstances and the problem that needs to
be solved.

22.9 Tasks
1. What do you see as the main difference between a successful and an unsuccessful decision? How
much does luck versus skill have to do with it? How much time needs to pass to know if a decision is
successful or not?
2. Research has shown that over half of the decisions made within organizations fail. Does this surprise
you? Why or why not?
3. Have you used the rational decision-making model to make a decision? What was the context? How
well did the model work?
4. Share an example of a decision in which you used satisficing. Were you happy with the outcome?
Why or why not? When would you be most likely to engage in satisficing?
5. Do you think intuition is respected as a decision-making style? Do you think it should be? Why or
why not?
 UNIT 4
WITHDRAWAL
CONTENTS
24.0 Aims and objectives
24.1 Introduction
24.2 Types of Withdrawal Behaviours
24.3 Lateness
24.4 Causes of Lateness
24.5 Results of lateness
24.6 Curbing lateness
24.7 Absenteeism
24.8 Causes of absenteeism
24.9 Effects of absenteeism
24.10 Methods to remedy absenteeism
AIMS AND OBJECTIVES
By the end of studying this unit, students should be able to:
i. Explain the term withdrawal at workplace
ii. Identify the type of workplace withdrawal
iii. State the causes of lateness and how it can be remedied
iv. List and explain the causes of work place absenteeism and how it can be curbed

INTRODUCTION
In job withdrawal there may be two possible cases. First is when an employee considers to quit his/her job
working in an organization due to some reasons. And second is where an employer or boss asks a staff to
quit his/her job or withdraws his/her job offer for several reasons. There are many instances, where an
employer revokes or withdraws the job offer to the candidate.
24.2 Types of Withdrawal Behaviours
Physical Withdrawal Behaviours
Lateness: Excessive tardiness can be a physical sign that an employee has disengaged from the
company. Research, though limited, does suggest that lateness is a good predictor of severe types of
 withdrawal. This is particularly true if the person is consistently late because it shows a lack of
motivation to arrive to work on time.
Absenteeism: Absenteeism is exhibited when an employee fails to report to work, typically for an
extended period of time, or for an excessive number of days that have not been excused. Examples
of excused absences may include medical appointments and pre-approved vacations.
Turnover: Turnover occurs when an employee leaves an organization, and frequently it results
from both lateness and absenteeism (Rosse, 1988). Unlike absenteeism, which has been looked at in
a primarily negative light from an organizational perspective, turnover is seen as having both
beneficial and harmful effects on an organization. Turnover can result in new employees who may
be more motivated and eager to help the company succeed versus long-term employees who may
have lost interest and motivation in the company. By injecting new people into an organization,
fresh ideas and a reduction in group think occur so that a company is more likely to adapt to the
world around it; which as the speed of business continues to increase, that will be particularly
important going forward.
Psychological Withdrawal Behaviours
Presenteeism: Presenteeism occurs when an employee shows up for work but works in a limited
capacity. This can occur due to physical impairment, such as being sick with a cold, or due to
mental or psychological strain. Withdrawal behavior is concerned primarily with presenteeism due
to psychological reasons. An employee might sit at their desk and stare off into space, or spend
increased time leisurely surfing the internet instead of accomplishing work tasks. Decreased
productivity due to presenteeism is more difficult to identify and measure than absenteeism
(Trotter, et al., 2009).
Burnout: Burnout can develop when emotional or other stressors become unbearable. Burnout
occurs when an employee has exhausted all their personal mental and physical resources for the job.
Burnout is “a prolonged response to chronic emotional and interpersonal stressors on the job, and is
defined by the three dimensions of emotional exhaustion, cynicism, and inefficacy” (Maslach,
Shaufeli, & Leiter, 2001). Evaluating each of these physical and psychological withdrawal
behaviour is beneficial for both the organization and its employees.
24.3 Lateness
It is important to distinguish between different types of lateness in order to identify withdrawal behaviors.
Blau (1994) identified three specific types of lateness behaviour categorized by pattern, frequency and
duration; including increasing chronic lateness, stable periodic lateness, and unavoidable lateness.
Types of Lateness
It is sometimes hard to tell if an employee has a legitimate reason for being late. When employees are late
due to legitimate reasons, they are likely to provide similar reasons for their lateness as an employee who is
leaning towards withdrawing from the company. Examples of excuses could be heavy traffic, an accident or
transportation issues. Types of lateness include the following:
Unavoidable Lateness: Transportation concerns are a primary cause of unavoidable lateness; however,
personal illness and accidents also can create unavoidable lateness (Blau, 1994).
Stable Periodic Lateness: This type of lateness is due to higher leisure-income trade off, as well as work
and family conflict. Employees exhibiting this type of lateness are not unhappy with their job, they simply
have other things they consider more important than arriving on time (Blau,1994). For example, an
employee with high job satisfaction and young children might experience work-family conflict. He or she
may prioritize his or her children's needs over arriving to work on time.
Increasing Chronic Lateness: Lower job satisfaction, lower job involvement and lower organizational
commitment can all lead to increased chronic lateness (Blau,1994). Chronic lateness by staff can become
costly to an organization.
24.4 Causes of Lateness
Low Morale
Morale is a major deciding factor when it comes to lateness. Some managers favor a draconian leadership
style, coupled with a narcissistic attitude. Combine that with poor compensation or workplace bullying, and
employees will have plenty of reasons to not want to show up on time -- or miss work altogether.
Illness
Illness goes beyond the flu or a migraine. Chronic lateness can be a sign of serious mental issues that even
the employee may not be aware of. Burnout, for example, can have major mental and physical effects.
Employees who are forced to work long hours or are voluntary workaholics could work themselves into
depression, chronic fatigue or physical pain. As a result, they will find it difficult to motivate themselves to
make it into work.
Arrogance
Some employees will feel that they are highly valued to the point where they "own" the workplace. In other
words, they may believe they are irreplaceable and therefore above the rules. This can be especially
problematic if a manager is chronically late for that reason. Managers need to enforce equal discipline for
tardiness and follow their own rules. Failure to do so can cause resentment and a loss of respect from fellow
workers.
Emergencies
Everyone experiences serious problems from time to time that could in lateness. Family emergencies, poor
weather conditions or car accidents are not something that an employer should find fault with; however,
employees must notify their supervisor as soon as possible out of courtesy and responsibility.

Minor Circumstances
Sometimes, lateness is caused by circumstances beyond an employee's control. Traffic jams, car problems or
public transit issues are just a few things that workers cannot avoid. In cases like these, it is again important
for management to show understanding and flexibility. Failure to do so can make the employee feel
oppressed or afraid, resulting in low morale and, in turn, less productivity.
Family Demands
Although most of us use such tools as alarm clocks, PDAs, wristwatches and cell phones to keep track of
time, family demands and other outside influences can result in chronic tardiness. A single parent who has to
get herself and two children dressed, fed and out the door to school and work is juggling a lot of balls first
thing in the morning. If anything goes awry -- a lost sock, a plugged toilet or a balky toddler -- the morning
schedule can quickly nosedive.
24.5 Results of Lateness
i. Productivity losses
ii. Negative morale
iii. Customer dissatisfaction
iv. Management problems
v. Lateness spreads
vi. Image issues
24.6 Curbing Lateness
1. Establish a clear policy on tardiness and absenteeism. Your employees need to know that there are
penalties for failing to get to work on time or failing to come at all. Set up logical penalties that worsen in
severity for more than one offense.
2. Distribute this policy to all of your employees. It may also be necessary to schedule a meeting to discuss
the new policy and answer any questions your employees may have. Avoid singling anyone out during this
meeting.
3. Schedule meetings with any known offenders. Make sure the meeting has a positive tone and is
conducted in a private setting. Let them know that you cannot accept this behavior and that they will have to
face repercussions if it continues. Ask them if there is a reason they are chronically late or absent and a find
a way to work with them if they have an honest reason. If they only have excuses, let them know firmly it
will no longer be tolerated.
4. Offer rewards to employees who are on time and show up for work. For example, once an employee
reaches 30 consecutive days of being on time and being present every day, give him a gift card. You can also
reward the whole staff with a free lunch if everyone is on time and present. This helps increase peer pressure
and the reward gives your staff motivation to follow your new policy.
5. Enforce your policy swiftly. Your policy will have no weight if you don't enforce it. If someone is late,
you need to take action. While there may be extenuating circumstances, if he did not contact you to let you
know he would be late or not present, then he needs to be dealt with according to your new policy.
6. Identify the behaviour. It’s understandable if an employee has a legitimate reason for being late every
once in a while. Traffic accidents happen, weather intervenes, kids get sick. Life happens and unexpected
problems do come up occasionally. What’s not acceptable is an employee who shows up late most of the
time. When a staff member consistently shows up late, he's essentially not respecting your time, or his own.
That’s when you need to decide if your employee's behavior is worth condoning or reprimanding.
7. Be proactive. Don’t let a person’s excessive tardiness go so long that you react in anger. Remember,
you’re tired of the behavior, not the person. Try not to lose your cool. It’s counterproductive to use foul
language or threaten an employee. Deal with the situation as soon as you see a pattern arise; then be
proactive. Schedule a time to talk and address the issue one-on-one. Bring documentation of an employee's
tardiness into your meeting and ask him what is preventing him for reporting to work on time.
8. Verbalize your disappointment. It’s a trick your mother probably used on you as a child. Most people
tend to be disappointed in themselves when someone they respect is disappointed in them. When a team
member doesn’t follow through on a commitment, explain the consequences of his actions. If he is late to a
client meeting, say something like, “The client waited ten minutes for you to arrive. I had to ask Ashley to
fill in for you.” Perhaps the employee doesn’t realize (although he should) that his behaviour affects his co-
workers, as well.
9. Come up with an action plan. Don't act in haste. Your employee’s excessive tardiness may be due to a
medical issue or family obligations. In that case, you may want to make an exception and suggest a later start
time or a more flexible work schedule.
10. Respect a person’s privacy. Always try to have difficult discussions in private, especially when
disciplinary action might be necessary. If you confront an employee in public, he will be more likely to be
embarrassed, humiliated or react defensively. Explain your concerns, cite specific examples and then solicit
feedback. Allow the employee to absorb what you’ve said and respond. Practice effective listening. Your
employee will be more apt to respect a fair, honest and forthright approach.
11. Clearly outline the consequences. Develop a policy that addresses the consequences for tardiness. For
example, if your employee is occasionally late, ask him to make up that time. If he is consistently late, you
may choose to issue a written warning, dock his pay or decrease any bonus he receives. If the behavior
affects your bottom line or tarnishes a client relationship, you may have to take more serious action.
12. Reward improvements. Reinforce change through praise. When you notice an employee has altered his
behavior in a positive way, say so. Your simple acknowledgement will let him know he’s on the right track
and will also show him that you appreciate his efforts. You'll be surprised how a few kind words go a long
way.
24.7 Absenteeism
There are many reasons an employee may be absent from work; the most common accepted and excused
reasons are sickness and vacation leave. These two forms of leave from work are planned absences and are,
to a degree, required by law to be available to employees. However, absenteeism is when an individual
misses an extended amount of time from work, usually a day or more that is unexcused. Absenteeism,
unplanned and unexcused, generates great focus due to its perceived negative impact upon organizations,
such as the loss of production.
24.8 Causes of Absenteeism
Just as it is commonly assumed that a happy worker is a productive worker, it is also assumed that an
unhappy worker is more likely to be an absent worker. The causes of absenteeism at work include:
1. Sickness and low vitality: The committee pointed out that sickness is most important responsible for
absenteeism in almost of the in Industrial sector. Epidemics like cholera, small-pox and malaria always
break out in severe from in most industrial areas. The low vitality of the Indian workers makes them easy
prey to such epidemics and bad housing and unsanitary conditions of living aggravate the trouble. However,
the Commission has been noticed that the rate of absenteeism among the female workers is higher than their
male counterparts.
2. Means of Transport: The Commission also stated that the transport facilities also play very important to
contribute the absenteeism of the worker in the industries.  It has been pointed out that, the rate of
absenteeism is higher in those factories where transport facilities are not easily available as compared to
those where such facilities are easily available or provided by the factory itself.
3. Hours of work: The long hours of work also affect the workers’ efficiency and consequently their
sickness rate and absenteeism rate are increased.
4. Nightshift: It has also been pointed out that there is a greater percentage of absenteeism during the
nightshifts than in the dayshifts, owing to the greater discomforts of work during the night-time.
5. Rural exodus: The committee also pointed out that probably the most predominant cause of absenteeism
is the frequent urge of rural exodus. It has been noticed that the workers go back to their villages at the time
of harvesting and sowing the crops. It increases the rate of absenteeism in factories.
6. Accident: Industrial accident depends upon the nature of work to be performed by the worker and his
ability for doing that work. In case of hazardous nature of job, the accidents occur more frequently which
lead to higher rate of absenteeism.
7. Social and religious Function: it has been noticed that workers become absent form their duty on
occasions of social and religious functions. Since the workers like to join their families on such occasions,
they go back to their villages for like to join short periods.
8. Drinking and amusement: the Labour Investigation committee pointed out that drinking and
amusements are also responsible for absenteeism. Since drinking and amusements in the late hours of night
make it difficult for the workers to reach in time on their duties. They like to become absent rather than late
since they know that badli workers will be substituted for them, if they are late.
9. After Pay-Day: the Labour Investigation committee also noted the level of absenteeism is comparatively
high immediately after the pay-day because they get their wages, they  feel like having a good time or  return
to their villages to make purchases for the family and to meet them, so the absenteeism is high after they got
paid.
10. Nature of work: the absenteeism rate is also affected by the nature of work. According to
Professor.William absenteeism prevails because workers are not accustomed to the factory life and factory
discipline. In other words, absenteeism prevails because the nature of work in factories is different from that
for which the worker is accustomed. So when they come to work in the factory, they feel strange, this new
situation make them uncomfortable, so lead to high rate of absenteeism of the industrial workers.
11. Other causes: The above factors which caused the absenteeism in the Industrial sectors are pointed out
briefly by industry. However, there can be other factors which caused the absenteeism in industrial sector.
These factors are:
a) Personal Factors and b) Workplace factors.
A.  Personal factor: The personal factor also divided into other sub-factors, these are:
i. Personal Attitude:  there are different attitude of employees. The Employees with strong workplace ethics
will respect their work and appreciate the contribution they make to their companies. Such employees will
not engage themselves in taking unscheduled off. On the other hand, employees with very low or no work
ethics are indiscipline and have lot of integrity and behavioral issues. Since, they feel no obligation towards
the company, absenteeism comes easily to them.
ii. Age: The younger employees are often restless. They want to spend time with their friends and have fun,
rather than being tied down with work responsibility. This lack of ownership often leads them to take
unauthorized time off. With age, people gain experience and maturity, which makes them focused and
responsible. Their approach is rather professional and they prefer to stick to their chairs to get the work
done. If ever they are found absent, then it could be due to sickness.
iii .Seniority: Employees, who have been with the company for a long time are well-adjusted with the
working culture and the job, therefore, they find no reason to be absent without permission. On the other
hand, new hires are more prone to taking ad hoc breaks to unwind themselves.
iv. Gender: Women generally do a balancing act by shuffling their time between home and work. Family,
being their foremost priority, they don't think twice before taking a step towards absenteeism.
B. Workplace Factors
i. Stress: The pressure at work sometimes takes a toll on the employees. This results in increased levels of
stress. The employees then resort to excuses that can help them stay away from work.
ii. Work Routine: Doing the same job over a period of time can get monotonous. The employees find the job
functions boring. They rather choose time off to do something interesting than come to work.
iii. Job Satisfaction: If employees do not find their job challenging, dissatisfaction creeps in. That leads to
more absenteeism in the workplace.

24.9 Effects of absenteeism

a) The employee loses income, and incurs additional expenditure on whatever caused the absence like
sickness, travel or celebrations.
b) The employer incurs loss of work hours, sick pay, overtime or payroll plus training costs of temporary
staff and attrition costs as well as costs in lowered productivity, quality and output with a possible loss of
customers. There will be additional administrative costs with the rescheduling and hiring efforts, and
some end up over-staffing at additional cost.
c) Colleagues suffer stress brought on by the additional load of work and deadline pressures along with a
feeling of demoralization and/or victimization.
d) The Government incurs higher costs in social security payments.
e) Workers who chronically miss work or show up late risk being let go, forcing employers to go through
the time and expense of hiring and training replacements.
f) Further complicating matters is the cost of having to pay another employee to fill in, especially if short
staffing forces management to pay that individual overtime.
g) Frequent absenteeism and tardiness can cause tension among co-workers. Employees who show up to
work regularly and on time feel frustrated that a chronically late or absent employee is giving them an
increased workload by forcing them to fill in.
h) They may also pass judgment on the person's perceived laziness. This anger can be aggravated further if
no disciplinary action is taken. The worst possible scenario is if a member of management is chronically
late or absent, as the staff will feel that she is abusing her authority and not leading by example. The end
result will be low morale and -- potentially -- high turnover as employees seek work elsewhere.
i) Naturally, an employee who puts in less time -- either through showing up late or missing work -- will be
less productive. While coworkers can fill in sometimes, this may not be possible for highly specialized
roles. A lack of productivity reduces an employee's work quality, jeopardizing his chances for
advancement and stifling the company's ability to remain competitive.
j) Increased staff supervision because the new replacement staff will lack knowledge and experience,
therefore a need for constant supervision and the need to cross-check their work regularly.
k) Absenteeism lead to loss of productivity given the replacement staff will require training and also
because of the learning curve effect.
l) In some cases, absent staff are not immediately replaced, this will tend to create work overload for other
staff who will be asked to take extra work to cover up for absent staff.
m) Consumers are likely to complain because some customers will have developed some 'intimacy' with
staff in terms of service and they prefer to be served by such staff always when they visit the company.
In addition to this, staff on replacement will be very knowledgeable to meet all the customer demands,
leading to customer complaints.
n) Staff on replacement of absent employees will need to be trained so that they can work with confidence.
o) Payment of overtime to the existing staff for additional work.
p) Increase in wage bill due to hired staff.
q) Training costs associated with hired staff.
r) Increase in costs due to payment of sick leave.
s) Rescheduling of work calls for additional cost.

24.10 Method to remedy the absenteeism

As regard to the measure to be adopted to remove the absenteeism, the Bombay Textile Labour Enquiry
committee stated that “the proper conditions of work in the factory, adequate wages, protection from
accident and sickness, and facilities for obtaining leave for rest and recuperation constitute the most effective
means of reducing absenteeism.
The Labour investigation committee, agreed with the above view, stated that “the excessive fatigue and
sweated conditions of work are bound to create a defence mechanism’ in the worker and if adding results are
to be obtained, the best policy would be to improve conditions of work and life for the workers and make
them feel contented and happy. Therefore, the Committee suggested that the most effective way of dealing
with absenteeism is to provide holiday with pay  or even without pay and permit workers to attend their
private affairs occasionally and thus regularise absenteeism instead of merely taking disciplinary actions for
it . Provision of suitable housing facilities in industrial towns should also go a long way in improving
attendance.
Besides, the above provisions a sense of responsibility towards industry should be created among the
workers through proper education and training. The workers’ participation in the management of industry,
introduction of an incentive wage scheme and linking wages and bonus with production may also prove very
helpful in checking the rate of absenteeism.
           
On the basis of the above analysis, it can safely be concluded that the rate of absenteeism can be reduced by
making provisions for:
a)     Improving the working condition in organisations.
b)     Providing adequate wages,
c)     Protection from accident and sickness
d)     Providing facilities for obtaining leave for rest
e)     Suitable housing facilities
f)      Creating a sense of responsibility in workers towards industry
g)     Workers participation in the management of industry,
h)     Introducing incentive wage scheme and linking wages and bonus with production
i)       And adequate transport facilities
j)       Besides, an affectionate and mild behaviour of the employer will be helpful in reducing the rate of
absenteeism.
24. 11 Conclusion
Late trains, road works, broken alarm clocks; all are valid excuses for being late to work once in a while. But
for small businesses, persistent staff lateness can seriously affect your productivity and profits. A tardy
employee causes your business money in time and productivity lost, and puts stress on co-workers. Other
employees, who already have their own work to do, often must cover the late employee's job until he arrives.
Such an unplanned staff shortage, however brief, can make the overall business suffer. You can stop
employee tardiness before it becomes a problem by disciplining a tardy employee and setting a firm policy
on late arrivals. Absenteeism is traditionally defined as a specific employee’s unavailability for work, when
work is actually available for this specific employee. Absenteeism can fall under 3 broad categories: legal
(such as public holidays), authorized (such as approved holidays) and unauthorized (also referred to as
casual absence). Unauthorized absence is what most organizations strive to avoid and keep to a minimum.
Whatever the cause of absenteeism is, it is a cost to the organisation and steps must be taken to curb it to the
barest minimum.
24. 12 Tasks
i. Explain the term withdrawal at workplace
ii. Identify the types of workplace withdrawal
iii. State the causes of lateness and how it can be remedied
iv. List and explain the causes of work place absenteeism and how it can be curbed
v. As a manager to your organisation describe how you will implement a workplace policy on
absenteeism and lateness.
 UNIT 5
TURNOVER
CONTENTS
25.0 Aims and objectives
25.1 introduction
25.2 What Is Turnover?
25.3 The Causes for Employee Turnover
25.4 Retaining Employees
25.0 AIMS AND OBJECTIVES
By the end of this unit the student should be able to:
i) Explain the meaning of employee turnover
ii) List and explain the types of turnover
iii) Explain and calculate the turnover rate
iv) The Causes for Employee Turnover
v) State the Positive and the Negative Effects of Employee Turnover
vi) Explain the Ways to Retain Employees

25.1 INTRODUCTION
Most employees will eventually leave a company and a company may view these turnovers in a positive or
negative manner, depending on the impact to the company at that time. An employee may voluntarily leave
the company because he or she is leaving the workforce entirely, because he or she accepted a position with
a different company, or an employer may force the employee to leave the company for a variety of reasons.
25.2 What Is Turnover?
When employees leave a company and have to be replaced, that's called turnover. A certain amount of
turnover is unavoidable, but too much can ruin a company.
Some employees will always retire, move away, go back to school, or leave the workforce. This level of
turnover is not only unavoidable, it can be beneficial. It brings new people into the organization with new
ideas and a fresh perspective.
Types of Turnover
 The two general types of turnover are voluntary and involuntary. Voluntary turnover is when the employee
chooses to leave for whatever reason. Involuntary turnover is caused by layoffs and similar actions where the
decision for an employee to leave is made by the company and not the employee.
What Is Turnover Rate
Turnover rate is a calculation of the number of employees who have left the company and it is expressed as a
percentage of the total number of employees. Although turnover rate is usually calculated and reported as a
percentage per year it can be for different periods.
25.3 The Causes for Employee Turnover
1. Lack of Opportunities for Professional Development 
2. Inadequate Compensation 
3. Boredom/Lack of Challenge 
4. Poor Work/Life Balance 
5. Job Stress and Unfair Treatment 
The Positive Effects of Employee Turnover
1. Addition by Subtraction
2. Gaining Fresh Ideas
3. Avoiding Painful Decisions
4. Improving Diversity
5. Employee Upgrade
6. Fresh Perspective
7. Removal of Negative Influence
8. Salary Reduction
The Negative Effects of Employee Turnover
1. Decreased Performance
2. Unfulfilled Daily Functions
3. Costs
4. Lower Knowledge Base
5. Reduction in Revenue
6. Low Workplace Morale
7. Deteriorating Product or Service Quality
8. Reduction in Marketing Return on Investment
25.4 Retaining Employees
Key employee retention is critical to the long-term health and success of your business. Managers readily
agree that retaining your best employees ensures customer satisfaction, product sales, satisfied coworkers
and reporting staff, effective succession planning and deeply embedded organizational knowledge and
learning. If managers know this so well, why do they behave in ways that so frequently encourage great
employees to quit their jobs?
Ways to Retain Employees
1. Management thinkers agree that a satisfied employee knows clearly what is expected from him every day
at work. Changing expectations keep people on edge and create unhealthy stress.
2. The quality of the supervision an employee receives is critical to employee retention. People leave
managers and supervisors more often than they leave companies or jobs.
3. The employee's freedom to speak his or her mind freely within the organization is another key factor in
employee retention.
4. Employees seek to use their talent and skills in the workplace. A motivated employee wants to contribute
to work areas outside of his specific job description
5. The perception of fairness and equitable treatment is important in employee retention
6. Tools, time and training are the easiest problems to solve and affect employee retention the most.
7. Your best employees that you want to retain seek frequent opportunities to learn and grow in their
careers, knowledge and skill.
8. An employee never felt senior managers knew he existed. This is a common complaint or lament I hear
during an exit interview.
9. No matter the circumstances, never, ever threaten an employee's job or income.
10. Your staff members must feel rewarded, recognized and appreciated.
25.5 Conclusion
Employee turnover occurs when employees voluntarily leave their jobs and must be replaced. Turnover is
expressed as an annual percentage of the total workforce. For example, 25 percent employee turnover would
mean that one-quarter of a company's workforce at the beginning of the year has left by the end of the year.
Turnover should not to be confused with layoffs, which involve the termination of employees at the
employer's discretion in response to business conditions such as reduced sales or a merger with another
company.
The severity of turnover varies widely by type of business and the economic health of the region where
companies are located. Innovative high-tech companies and the most successful manufacturers frequently
experience low turnover rates while fast-food restaurant managers expect turnover to be as high as 50-70%.
25.6 Tasks
i) Explain the meaning of employee turnover
ii) List and explain the types of turnover
iii) List and explain five Causes for Employee Turnover
iv) State the Positive and the Negative Effects of Employee Turnover
v) Explain five Ways by which employees could be Retained at a job
 UNIT 6
BURNOUT
CONTENTS
26.0 Aims and objectives
26.1 introduction
26.2 what is burnout?
26.3 Who is susceptible to burnout?
26.4 Signs of job burnout
26.5 Causes of job burnout
26.6 Consequences of job burnout
26.7 Prevention of job burnout
26.8 Conclusion
26.9 Tasks
AIMS AND OBJECTIVES
i. By the end of this unit students should be able to:
ii. Explain what burnout is.
iii. State who are susceptible to burnout
iv. State the signs of job burnout
v. State some of the causes of burnout
vi. List the consequences of job burnout and how they can be prevented
26.0 INTRODUCTION
An emotional and physical exhaustion resulting from a combination of exposure to environmental and
internal stressors and inadequate coping and adaptive skills.
In addition to signs of exhaustion, the person with burnout exhibits an increasingly negative attitude toward
his or her job, low self-esteem, and personal devaluation.
Occupational burnout or job burnout is characterized by exhaustion, lack of enthusiasm and motivation,
feelings of ineffectiveness, and also may have the dimension of frustration or cynicism, and as a result
reduced efficacy within the workplace.
26.1 WHAT IS BURNOUT?
Burnout is a prolonged response to chronic emotional and interpersonal stressors on the job, and is defined
by the three dimensions of exhaustion, cynicism, and inefficacy.
Job burnout is a special type of job stress — a state of physical, emotional or mental exhaustion combined
with doubts about your competence and the value of your work.
26.2 WHO IS SUSCEPTIBLE TO BURNOUT?
Hardest hit are service providers who often become cynical about their work and openly hostile to the very
people are to serve. Other burnout-prone professions are those that involve life or death   decisions; 
managers, team leaders, and others who work with people;. working under demanding time schedules; work
that requires exacting attention or repetitive detailed work; and work that is "politically incorrect". No one is
immune from job burnout. Any person, in any   profession, at any level can become a candidate for job
burnout.
You might be more likely to experience job burnout if:

 You identify so strongly with work that you lack a reasonable balance between your work life and
your personal life

 You try to be everything to everyone

 You work in a helping profession, such as health care, counselling or teaching

 You feel you have little or no control over your work

 Your job is monotonous

26.3 SIGNS OF A JOB BURNOUT

1. Exhaustion
A clear sign of burnout is when you feel tired all the time. Exhaustion can be emotional, mental or physical.
It’s the sense of not having any energy, of being completely spent.
2. Lack of Motivation
When you don’t feel enthusiastic about anything anymore or you no longer have that internal motivation for
your work, there's a good chance you're experiencing burnout. Other ways this manifests? It may be harder
to get going in the morning and more difficult to drag yourself into work every day.
3. Frustration, Cynicism and Other Negative Emotions
You may feel like what you’re doing doesn’t matter that much anymore, or you may be disillusioned with
everything. You might notice that you feel more generally pessimistic than you used to. While everybody
experiences some negative emotions from time to time, it’s important to know when these are becoming
unusual for you.
4. Cognitive Problems
Burnout and chronic stress may interfere with your ability to pay attention or concentrate. When we're
stressed, our attention narrows to focus on the negative element that we perceive as a threat. In the short
term, this helps us deal with the problem at hand, but our bodies and brains are designed to handle this in
short bursts and then return to normal functioning. When stress becomes chronic, this narrow focus
continues for a long time and we have difficulty paying attention to other things."
This "fight or flight" tunnel vision can negatively affect your ability to solve problems or make decisions.
You might find that you’re more forgetful and have a harder time remembering things.
5. Slipping Job Performance
Not sure whether you're burnt out? Compare your job performance now to your performance in previous
years. Because burnout tends to happen over an extended period of time, taking this long-term view might
reveal whether you're in a temporary slump or experiencing more chronic burnout.
6. Interpersonal Problems at Home and at Work
This tends to play out in one of two ways: (a) You’re having more conflicts with other people, such as
getting into arguments, or (b) you withdraw, talking to your co-workers and family members less. You might
find that even when you’re physically there, you’re tuned out.
7. Not Taking Care of Yourself
When suffering from burnout, some people engage in unhealthy coping strategies like drinking too much,
smoking, being too sedentary, eating too much junk food, not eating enough or not getting enough sleep.
Self-medication is another issue and could include relying on sleeping pills to sleep, drinking more alcohol
at the end of the day to de-stress or even drinking more coffee to summon up the energy to drag yourself into
work in the morning.
8. Being Preoccupied With Work ... When You're Not at Work
Even though you might not be working at a given moment, if you’re expending mental energy mulling over
your job, then your work is interfering with your ability to recover from the stresses of your day. In order to
recover, you need time to yourself after the actual task stops ... and time when you stop thinking about that
task altogether.
9. Generally Decreased Satisfaction
This is the tendency to feel less happy and satisfied with your career and with your home life. You might
feel dissatisfied or even stuck when it comes to whatever is going on at home, in the community or with your
social activities.
10. Health Problems
Over a long period of time, serious chronic stress can create real health problems like digestive issues, heart
disease, depression and obesity.
26.4 CAUSES OF BURNOUT
There is no single cause, burnout results from a combination of factors. It is best
understood by considering the individual, interpersonal, and organizational factors that contribute to the
condition. Recognizing the causes of burnout can itself be a step in dealing with it. A few of them are:
1. Doing the same type of work with little variation, especially if this work seems meaningless;
2. Giving a great deal personally and not getting back much in the way of appreciation or other positive
responses;
3. Lacking a sense of accomplishment and meaning in work;
4. Being under constant and strong pressure to produce, perform, and meet deadlines, many of which
may be unrealistic;
5. Working with a difficult population, such as those who are highly resistant, who are involuntary
clients, or who show very little progress;
6. Conflict and tension among staff; absence of support from colleagues and an abundance of criticism;
7. Lack of trust between supervisor and mental-health workers, leading to conditions in which they are
working against each other instead of toward commonly valued goals;
8. Not having opportunities for personal expression or for taking initiative in trying new
approaches, a situation in which experimentation, change, and innovation are not only unrewarded but also
actively discouraged;
9. Facing unrealistic demands on your time and energy;
10. Having a job that is both personally and professionally taxing without much opportunity for
supervision, continuing education, or other forms of in-service training;
11. Unresolved personal conflicts beyond the job situation, such as marital tensions, chronic health
problems, financial problems, and so on.
26.5 CONSEQUENCES OF A JOB BURNOUT
Ignored or unaddressed job burnout can have significant consequences, including:

 Excessive stress

 Fatigue

 Insomnia

 A negative spill over into personal relationships or home life

 Depression

 Anxiety

 Alcohol or substance abuse

 Heart disease

 High cholesterol

 Type 2 diabetes, especially in women

 Stroke

 Obesity

 Vulnerability to illnesses

26.6 PREVENTION OF BURNOUT

1. Increase your self-efficacy
2. Identify what you need from your work
3. Have a creative outlet
4. Take care of yourself
5. Get support where you can find it
6. Increase your diet of positive emotions
7. Be receptive to your own feelings and needs
8. Recognize when your passion turn to poison
26.7 Conclusion
Burnout is a phenomenon associated with job stress. It is a state of complete exhaustion of physical,
emotional and mental resources due to an extreme and long term struggle to reach a target. Burnout builds
gradually, manifesting itself in symptoms such as irritability, decreasing productivity, discouragement,
exhaustion, entrapment and resentment.
26.8 Task
i. Explain the term burnout
ii. State the signs of job burnout
iii. State some of the causes of burnout
iv. List the consequences of job burnout and how they can be prevented.

UNIT 7
ATTITUDE
CONTENTS
27.1 Aim and objectives
27.2 introduction
27.3 Nature Of Attitudes
27.4 Definitions of Attitude
27.5 Components Of Attitudes
27.6 Features of attitude
27.7 Formation Of Attitudes
27.8 Types of Attitude
27.9 Functions Of Attitudes
27.10 Changing Attitudes
27.11 Measurement Of Attitude
27.12 Work Related Attitudes
27.0 AIMS AND OBJECTIVES
By the end of this unit students should be able to:
i. Explain the term attitude
ii. State and explain the components of attitudes
iii. Describe how attitudes are formed
iv. State the functions of attitudes and how attitudes can be changed
27.1 INTRODUCTION
Attitudes come into the workplace under four different headings, these are:
Work Situation – Attitude towards the actual job; pay, co-workers, working conditions, etc. – This will
influence how the culture is in the company, how people see the work situation will change their behaviours.
If they believe they are not being paid enough, they may well act out behaviourally.
Personality – The way someone attitude is in the first place. – Completely dependent on the actual
employee and a reason why the hiring process can be such a big part of a business, to ensure that they hire
the right personality, the right person whose attitudes and behaviours fit in with those already working in the
organisation.
Values – What comes out of the work. – The attitude towards the standard of work.
Social Influences – What co-workers, managers etc. attitudes are like. – If fellow co-workers are lazy, then
the attitude is likely to by ‘well why should I work harder?’ and this will cause the behaviour of not working
hard enough just because others are.

27.2 Nature of Attitude

Attitudes are learned. It is the feeling, beliefs of individuals and groups. These feelings and beliefs define
one’s predispositions towards given aspects of the world. Attitudes endure, unless something happens.
Attitudes can fall anywhere along a continuum for very favourable to very unfavourable.
Attitudes are organized and are core to an individual. All people irrespective of their status or intelligence,
hold attitudes.

27.3 Definitions of Attitude

“An attitude is mental state of readiness, learned and organized through experience, exerting a specific
influence on person’s response to people, objects and situations with which is related.”
According to Bem,
“Attitudes are likes and dislikes.”
An attitude is "a relatively enduring organization of beliefs, feelings, and behavioural tendencies towards
socially significant objects, groups, events or symbols" (Hogg, & Vaughan 2005)
27.4 Components of Attitude
ABC MODEL
i. Cognitive or Informational Component
ii. Affective or emotional component
iii. Behavioural component

Cognitive Component:
It refers to what we know or we think that we know about an object, situation or an individual. The beliefs,
opinion, knowledge, or information held by the individual.
Affective Component:
It consists of the feelings a person has towards an object, situation or an individual.
The feelings, sentiments, moods and emotions about some idea, person, event or object.
Behavioural Tendency Component:
It is the way an individual is inclined towards an object, situation or an individual.
The predispositions to get on a favourable and unfavourable evaluation of something.
(I’m going to look for another job that pays better)
27.5 FEATURES OF ATTITUDES
It Attitude can be characterized in Different ways:
It Changes with time & situation
It is Related to feelings & beliefs of people
It Effects one’s behaviour positively or negatively
It Affects perception
It is Learned through experiences
It May be unconsciously held

27.6 Formation of Attitude

1. Direct Experience with the Object
Attitudes can develop from a personally rewarding or punishing experience with an object.
Employees form attitudes about jobs on their previous experience.
2. Classical conditioning and attitude
This can be explained on the basis of learning principles.
The classical conditioning processes that made Pavlov’s dogs salivate at the sound of a bell.
3. Operant Conditioning And Attitude Acquisition
Attitudes that are reinforced, either verbally or non-verbally tend to be maintained.
4. Vicarious Learning
This refers to formation of attitudes by observing behavior of others and consequences of that behavior.
This form of learning encourages awareness of surroundings and teaches the individual the basics of social
interaction.
5. Family And Peer Group
A person may learn attitudes through imitation of parents. If parents have a positive attitude towards an
object and the child admires his parents.
6. Neighborhood:
The neighbourhood we live in has a certain structure in terms of its having cultural facilities, religious
groupings and possibly ethnic differences.
7. Economic Status and Occupation
A person’s attitude towards a host of issues such as pleasure, work, working women, etc., is influenced by
economic factors such as his economic status in the society, rate of inflation in the economy, government’s
economic policies and the country's economic condition.
8. Mass Communication
All varieties of mass communication – television, radio, newspaper, magazine, etc., feed their audiences
larger quantities of information. The presentation of news or information is constructed so as to cater to the
attitude of audience.
 27.7 BENEFITS OF POSIVE EMPLOYEE ATTITUEDE
Once formed, attitudes play an important role in one’s life. It applies to every sphere of life, including one’s
personal and professional life. When all employees in an organization have positive attitude, benefits will be
many, like-
1. Increases productivity
2. Fosters Teamwork
3. Solves problem
4. Improves quality
5. Makes for congenial atmosphere
6. Breeds loyalty
7. Increases profit
8. Fosters better relationship with employees, employers and customers
9. Reduces stress
10. Makes for pleasing personality
27.8 Types of Attitude
Job Satisfaction
A collection of positive and or negative feelings that an individual holds toward his or her job.
Job Involvement
Identifying with the job, actively participating in it, and considering performance important to self-
worth.
Organizational Commitment
Identifying with a particular organization and its goals, and wishing to maintain membership in the
organization.
27.9 Functions of Attitude
ADJUSTMENT
Attitudes often help people adjust to their work environment. Well treated employees are likely to develop
positive attitude towards management and the organization. Berated and paid poorly employees are likely to
develop negative attitude towards firm and its owner.
The adjustment function directs people toward pleasurable or rewarding objects and away from unpleasant,
undesirable ones. It serves the utilitarian concept of maximizing reward and minimizing punishment. Thus,
the attitudes of consumers depend to a large degree on their perceptions of what is needed satisfying and
what is punishing. Because consumers perceive products, services and stores as providing need satisfying or
unsatisfying experiences we should expect their attitudes toward these object to vary in relation to the
experiences that have occurred.
EGO-DEFENSIVE FUNCTION
This type of attitudes help people to retain their dignity and self- image. Attitudes formed to protect the ego
or self-image from threats help fulfil the ego defensive function. Actually many outward expressions of such
attitudes reflect the opposite of what the person perceives him to be. For example a consumer who has made
a poor purchase decision or a poor investment may staunchly defend the decision as being correct at the time
or as being the result of poor advice from another person. Such ego defensive attitude helps us to protect out
self-image and often we are unaware of them.
THE VALUE-EXPRESSIVE FUNCTION
Whereas ego defensive attitudes are formed to protect a person’s self-image, value expressive attitudes
enable the expression of the person’s centrally held values. Therefore consumers adopt certain attitudes in an
effort to translate their values into something more tangible and easily expressed . Thus, a conservative
person might develop an unfavorable attitude toward bright clothing and instead be attracted toward dark, pin
striped suits.

Thus a Marketer should develop an understanding of what values consumers wish to express about
themselves and they should design products and promotional campaigns to allow these self-expressions.
.
THE KNOWLEDGE FUNCTION
A function of attitudes that serves the individual in understanding the environment. The knowledge function
aids the individual in organizing information into an understandable or cohesive whole. Humans have a need
for a structured and orderly world, and therefore they seek consistency stability definition and
 understanding. Out of this need develops attitudes toward acquiring knowledge. In addition, the need to
know tends to be specific. Therefore an individual who does not play golf, nor wish to learn the sport is
unlikely to seek knowledge or an understanding of the game. This will influence the amount of information
search devoted to this topic. Thus, out of our need to know come attitudes about what we believe we need or
do not need to understand.
27.10 CHANGING EMPLOYEE ATTITUDE
Employee attitude needs to be changed, especially if it is negative. However, changing attitudes is a difficult
task as attitude generally endure. Difficulty is reinforced because of the escalation of commitment, cognitive
dissonance and insufficient information.
Escalation of commitment
Escalation of commitment refers to the prior commitment of people to a particular cause and their
unwillingness to change.
Escalation of commitment happens when someone continues to dedicate resources, including time and
money, to a failing course of action.
Cognitive Dissonance
The feeling of discomfort that results from holding two conflicting beliefs
People expose themselves to information that they perceive to support their choices, and avoid information
which is likely to favour rejected.
Cognitive dissonance refers to a situation involving conflicting attitudes, beliefs or behaviors. This produces
a feeling of discomfort leading to an alteration in one of the attitudes, beliefs or behaviors to reduce the
discomfort and restore balance etc.
For example, when people smoke (behavior) and they know that smoking causes cancer (cognition).
Festinger's (1957) cognitive dissonance theory suggests that we have an inner drive to hold all our attitudes
and beliefs in harmony and avoid disharmony (or dissonance).
Two factors affect the strength of the dissonance: the number of dissonant beliefs, and the importance
attached to each belief. There are three ways to eliminate dissonance:
(1) reduce the importance of the dissonant beliefs,
(2) add more consonant beliefs that outweigh the dissonant beliefs, or
(3) change the dissonant beliefs so that they are no longer inconsistent.
Dissonance occurs most often in situations where an individual must choose between two incompatible
beliefs or actions. The greatest dissonance is created when the two alternatives are equally attractive.
Furthermore, attitude change is more likely in the direction of less incentive since this results in lower
dissonance. In this respect, dissonance theory is contradictory to most behavioural theories which would
predict greater attitude change with increased incentive (i.e., reinforcement).
27.11 Ways of Changing Attitude
CHANGING ATTITUDE OF SELF
 Be aware of one’s attitude
 Think for self
 Realize that there are few benefits from harbouring negative attitudes
 Keep an open mind
 Get into continuous education program
 Build a positive self-esteem
 Stay away from negative influences such as smoking, etc.
CHANGING ATTITUDES OF EMPLOYEES
 Give feedback
 Accentuated positive conditions
 Positive role model
 Providing new information will help change attitudes
 Use of fear
 Influence of friends or peers
 The co-opting approach
 Group membership
 Rewards
 UNIT 8
MOODS AND EMOTIONS
CONTENTS
28.0 Aims and objectives
28.1 introductions
28.2 What are emotions and emotions?
28.3 A Basic Set of Emotions
28.4 Some Aspects of Emotions
28.5 Mood as Positive and Negative Affect
28.6 Sources of Emotions and Moods
28.7 External Constraints on Emotions
28.8 Emotional Labor
28.9 Affective Events Theory
28.10 Emotional Intelligence
28.11 OB Applications of Emotions and Moods
28.12 Conclusion
28.13 Tasks
28.0 Aims and objectives
28.1 Introduction
28.1 AIMS AND OBJECTIVES
After reading this unit, the student should be able to:
i. Differentiate emotions from moods.
ii. Discuss the different aspects of emotions.
iii. Identify the sources of emotions and moods.
iv. Describe external constraints on emotions.
v. Discuss the case for and the case against emotional intelligence.
vi. Discuss the impact emotional labour has on employees.
vii. Apply concepts on emotions and moods to OB issues.

28.2 INTRODUCTION
The expressions of emotion and mood represent a challenge for psychologists. While the words are often
used interchangeably, the majority of academics agree that the concepts they denote are closely related.
Distinctions between them are clouded, in part, as an emotion and a mood may well feel very much the same
from the viewpoint of an individual experiencing them (Beedie, Terry and Lane, 2010).
until recently, the field of OB has given the topic of emotions little or no attention.
Why Were Emotions Ignored in OB?
The “Myth of Rationality”

 Emotions were seen as irrational

 Managers worked to make emotion-free environments

B. View of Emotionality

 Emotions were believed to be disruptive

 Emotions interfered with productivity

 Only negative emotions were observed

It is now clear that emotions can’t be separated from the workplace.

28.3 WHAT ARE Emotions AND MOODS?

Affect is a generic term that covers a broad range of feelings that people experience and encompasses both
emotions and moods.
Emotions are intense feelings that are directed at someone or something. They are reactions, not a trait.
Moods are feelings that tend to be less intense than emotions and which lack a contextual stimulus. They are
not directed at an object.
Emotions can turn into moods when you lose focus on the contextual object.
 Affect is a broad term encompassing both emotions and moods.
 Differences exist between emotions and moods.
 Emotions and moods can mutually influence each other.
28.4 A Basic Set of Emotions
Numerous research efforts to limit and define the dozens of emotions into a basic set of emotions.
Differences exist among researchers in this area. Contemporary research, psychologists have tried to
identify basic emotions by studying facial expressions.
Cultural norms that govern emotional expression – how we experience an emotions isn’t always the same as
how we show it. There has been agreement on six essentially universal emotions (other emotions subsumed
under one of the six categories).

Happiness—surprise—fear—sadness—anger—disgust
Closer any two emotions are, the more likely to be confused
28.5 Some Aspects of Emotions
1. The Biology of Emotions

 All emotions originate in the brain’s limbic system

 Not everybody’s limbic system is the same

 Women tend to have larger limbic systems than men

2. Intensity
  Personality differences account for differing reactions.

 Job requirements also are a factor.

 People vary in their inherent ability to express emotional intensity.

3. Frequency and Duration

 Whether employees can meet the emotional demands of the job depends also how frequency and
how long they need to sustain the effort
4. Do Emotions Make Us Irrational?

 Research is showing that emotions are actually critical to rational thinking.

 Emotions provide important information about how we understand the world around us.

 Key to good decision making is to employ both thinking and feeling.

5. What Functions Do Emotions Serve?

 Drawing on Darwin, evolutionary psychology says we must experience emotions because they
serve a purpose

 Interesting perspective – hard to gauge its validity

28.6 Mood as Positive and Negative Affect

 Emotions can’t be neutral

 Group emotions into positive and negative categories

 Positive affect = positive emotions like excitement on the high end and tiredness at the low end

 Negative affect = nervousness at the high end and poise at the low end

 Positive and negative affect colour perceptions

 Negative emotions are likely to translate into negative moods

 Research shows the positivity offset—at zero input most individuals experience a mildly positive
mood
28.7 Sources of Emotions and Moods
1. Personality

 Affect intensity—individual differences in the strength with which individuals experience their
emotions.

 People differ in how predisposed they are to experience emotions intensely.

 Positive events are more likely to affect the positive mood and positive emotions of extraverts.

 Negative events more likely to influence the negative mood and negative emotions of those
scoring low on emotional stability.
2. Day of the Week and Time of the Day

 People tend to be in their worst moods early in the week and best moods late in the week.
  People are generally in lower moods early in the morning. Positive affect tend to peak around the
halfway point between waking and sleeping. Negative affect shows little fluctuation during the
day.
3. Weather

 Weather has little effect on mood.

 Illusory correlation occurs when people associate two events but in reality there is no connection.

4. Stress

 Stress can be cumulative and does affect mood and emotional states.

5. Social Activities

 Social activities tend to increase positive mood.

 People who are in positive moods seek out social activities.

 Type of social activity matters; physical activities, informal, Epicurean are strongly associated
with increases in positive mood.

 Social interactions have long-term positive health benefits.

6. Sleep

 Americans, on average, sleep less than 7 hours per weekday night.

 Sleep quality affects mood.

7. Exercise

 Enhances positive moods, but moderate effect.

8. Age

 Negative emotions seem to occur less as people get older.

9. Gender

 Women show greater emotional expression than men, experience emotions more intensely, and
display more frequent expressions of both positive and negative emotions.

 Women also report more comfort in expression emotions.

 Women are better at reading nonverbal cues than are men.

 These differences may be explained several ways:

 Women may have more innate ability to read others and present
their emotions than do men.
 Women may have a greater need for social approval and thus a
higher propensity to show positive emotions such as happiness.
28.8 External Constraints on Emotions

 Every organization defines the boundaries that identify which emotions are acceptable and the
degree to which employees may express them.
 1. Organizational Influences:

 There is no single emotional “set” sought by all organizations.

 In the United States, there is a bias against negative and intense emotions. Expressions of
negative emotions such as fear, anxiety, and anger tend to be unacceptable except under fairly
specific conditions.

 Consistent with the myth of rationality, well-managed organizations are expected to be

essentially emotion-free.
2. Cultural Influences:

 Cultural norms in the United States dictate that employees in service organizations should smile
and act friendly when interacting with customers. But this norm does not apply worldwide.

 Cultures differ in terms of the interpretation they give to emotions. There tends to be high
agreement on what emotions mean within cultures but not between cultures. For example,
smiling is often seen as an expression of happiness by Americans. However, in Israel, smiling by
cashiers is seen as being inexperienced.

 Studies indicate that some cultures lack words for such standard emotions as anxiety, depression,
or guilt.

28.9 Emotional Labor

A. Introduction

 Employee’s expression of organizationally desired emotions during interpersonal transactions at

work.

 Concept emerged from studies of service jobs.

 Challenge for employees is to project one emotion while simultaneously feeling another
(emotional dissonance).
B. Felt Versus Displayed Emotions

 Emotional labor creates dilemmas for employees.

 Separate emotions into felt and displayed.

 Displayed emotions may require acting to keep employment (Surface acting hiding inner feelings
by modifying facial expressions.

 Deep acting is the modification of inner feelings.

C. Are Emotionally Demanding Jobs Rewarded with Better Pay?

 Positive correlation between a job’s cognitive demands and its emotional demands.

 Some jobs are demanding on both levels.

 Some jobs are undemanding on both dimensions.

  Emotional demands matter, but only when jobs already were cognitively demanding (lawyers,
nurses).
28.10 Affective Events Theory
Understanding emotions at work has been helped by a model called affective events theory (AET).
o Employees react emotionally to things that happen to them at work and this influences job performance
and satisfaction.
o Work events trigger positive or negative emotional reactions.

o Events-reaction relationship is moderated by the employee’s personality and mood.

o Person’s emotional response to a given event can change depending on his or her mood.

o Emotions influence a number of performance and satisfaction variables such as OCB, organizational
commitment, turnover, and level of effort.

 Tests of the theory suggest:

o Emotional episode is a series of experiences precipitated by a single event

o Job satisfaction is influenced by current emotions along with history of emotions surrounding the event

o Effect on performance fluctuates

o Emotion-driven behaviors are short in duration and variable

o Typically have a negative influence on job performance

 Emotions provide valuable insights in understanding employee behavior.

 Emotions in organizations shouldn’t be ignored even when minor.

28.11 Emotional Intelligence

 Emotional intelligence (EI) refers to an assortment of non-cognitive skills, capabilities, and

competencies that influence a person’s ability to succeed in coping with environmental demands
and pressures.
o Self-awareness. Being aware of what you are feeling.

o Self-management. The ability to manage one’s own emotions and impulses.

o Self-motivation. The ability to persist in the face of setbacks and failures.

o Empathy. The ability to sense how others are feeling.

o Social skills. The ability to handle the emotions of others.

 Several studies suggest EI may play an important role in job performance.

 EI, not academic I.Q., characterized high performers.

 The implications from the initial evidence on EI are that employers should consider it as a factor
in selection, especially in jobs that demand a high degree of social interaction.
B. The Case for EI
 1. Intuitive Appeal
2. EI Predicts Criteria That Matter.
3. EI Biologically Based
C. The Case Against EI
1. EI Is Too Vague a Concept.
2. EI Can’t Be Measured.
3. The Validity of EI Is Suspect.

29.12 OB Applications of Emotions and Moods

A. Selection
B. Decision Making

 Traditional approaches to the study of decision making in organizations have emphasized

rationality. That approach is probably naïve. People use emotions as well as rational and intuitive
processes in making decisions.

 Negative emotions can result in a limited search for new alternatives and a less vigilant use of
information.

 Positive emotions can increase problem solving and facilitate the integration of information.

C. Creativity

 Good moods associated with idea generation.

 Some believe that good moods makes people more creative.

D. Motivation

 Motivation theories basically propose that individuals “are motivated to the extent that their
behavior is expected to lead to desired outcomes.”

 The image is that of rational exchange. People’s perceptions and calculations of situations are
filled with emotional content that significantly influences how much effort they exert.

 Not everyone is emotionally engaged in their work, but many are.

E. Leadership

 The ability to lead others is a fundamental quality sought by organizations.

 Effective leaders almost all rely on the expression of feelings to help convey their messages and
is often the critical element that results in individuals accepting or rejecting a leader’s message.

 When effective leaders want to implement significant changes, they rely on “the evocation,
framing, and mobilization of emotions.’’
F. Negotiation

 Displaying a negative emotion can be effective in negotiation

 Emotions may impair negotiator performance

 G. Customer service

 Quality customer service makes demands on employees that can create emotional dissonance.

 Emotional contagion is an important consideration.

H. Job Attitudes
I. Deviant Workplace Behaviors

 Negative emotions can lead to a number of deviant workplace behaviors.

 Employee Deviance: Voluntary actions that violate established norms and which threaten the
organization, its members, or both.

 They fall into categories such as:

o Production: leaving early, intentionally working slowly

o Property: stealing, sabotage

o Political: gossiping, blaming coworkers

o Personal aggression: sexual harassment, verbal abuse

 Many of these deviant behaviors can be traced to negative emotions. For example, envy is an
emotion that occurs when you resent someone for having something that you do not, and which
you strongly desire, and can lead to malicious deviant behaviors.
K. How Managers Can Influence Moods

 Humor

 Appreciation

 Select positive team members

28.13 CONCLUSION
A. Moods and emotions are both affective, they are part of an individual’s makeup
 Emotions are effected by events more readily than moods
 Manager’s should pay attention to emotions of their employees
B. Job Performance
o Negative emotions can hinder job performance

o Positive emotions can enhance job performance in two ways

 increase arousal for job

 recognize emotional labor as part of the job

C. Functional/Dysfunctional emotions
  The more complex a task, the less emotional an employee can be before emotions
interfere with job performance
28.14 TASKS
1. Differentiate emotions from moods and list the basic emotions and moods.
2. Identify the sources of emotions and moods.
3. Discuss the impact emotional labor has on employees.
4. Contrast the evidence for and against the existence of emotional intelligence.
5. How can the concepts of emotions and moods be applied on OB issues.
 UNIT 9
ORGANIZATIONAL JUSTICE
CONTENTS
29.0 AIM AND OBJECTIVES
29.1 Introduction
29.2 Organizational Justice
29.3 Evolution of Organizational Justice
29.4 TYPES OF ORGANIZATIONAL JUSTICE
29.5 ANTICEDENTS OF PERCEPTION OF ORGANISATIONAL JUSTICE
29. 6 OUTCOMES OF ORGANIZATIONAL JUSTICE AND INJUSTICE
29.7 WAYS TO PROMOTE ORGANIZATIONAL JUSTICE
29.8 CONCLUSION
29.9 TASKS
29.0 AIM AND OBJECTIVES
By the end of the unit, students should be able to:
i. explain the concept of organizational behaviour
ii. state the types of organizational justice
iii. outline the antecedents of organizational justice
iv. enumerate ways to promote organizational justice
29.1 Introduction
Justice or fairness refers to the idea that an action or decision is morally right, which may be defined
according to ethics, religion, fairness, equity, or law. Justice and its execution is one of the basic and
instinctive needs of human beings. That’s why justice plays an effective and major role in studying the
organizations and individuals either inside or outside of it.
29.2 Organizational Justice
Organizational justice refers to employees' perception from justice and fair behaviours.
It studies that how to behave with employees so that they feel they have been treated fairly. c to
Organizational justice mainly concentrates on the workplace’s fairness which influences numerous
organizational and individual work-related factors like turnover intentions, absenteeism, job satisfaction,
organizational commitment, role breadth, job performance, leader-member exchange, trust, leadership and
job satisfaction.
The idea of organizational justice stems from Equity theory of motivation, which says that judgments of
equity and inequity are derived from comparisons between one‘s self and others based on inputs and
outcomes.
Inputs refer to what a person perceives to contribute (e.g., knowledge and effort).
Outcomes are what an individual perceives to get out of an exchange relationship (e.g., pay and recognition).
29.3 Evolution of Organizational Justice
The concept of Justice is a so complex that it’s meaning and implications varies from time to time and place
to place. Since the dawn of human civilization, justice has always been the matter of concern for mankind.
Traditionally Justice is assumed as person’s responsiveness against right and wrong or fair and unfair with
regard to their own thought. This responsiveness is not only at individual level but also includes the
consciousness of the entire society. Justice has always emphasised on doing fair things. The idea of justice is
a concept developed from an instinct rooted in human nature, that in any interface among humans a person
should get what he or she deserves. Though with the emergence of new principles in society, the concept of
Justice has undergone drastic transformations. The traditional view of Justice was based on the concept of
Social Justice. On the other hand in Contemporary world, Justice is all about determining the basis of equal
distribution of resources, equity in procedures, and equal power in social settings. In modern world, with the
advancement of organizations, people became more concerned about equity in the workplace like division of
resources, fair decision making process and same interpersonal treatment for all.
The idea of organizational justice stems from Equity theory of motivation, which says that judgments of
equity and inequity are derived from comparisons between one‘s self and others based on inputs and
outcomes.
Inputs refer to what a person perceives to contribute (e.g., knowledge and effort).
Outcomes are what an individual perceives to get out of an exchange relationship (e.g., pay and recognition).
29.4 TYPES OF ORGANIZATIONAL JUSTICE
A. DISTRIBUTIVE JUSTICE
Distributive justice is the workers’ perception in the fairness of outcomes such as monetary rewards obtained
by the workers from the organization (e.g. pay raises, promotions, and selection for further studies/training)
etc.
Distributive justice is related specifically to the results of decisions on distribution.

Appropriateness of outcomes.
Equality: Need:
Equity:
providing each providing a
rewarding
employee roughly benefit based on
employees based
the same one’s personal
on their
compensation. requirements.
contributions.

B. PROCEDURAL JUSTICE
Procedural justice is the perception of justice in the decision-making process. This kind of justice is based on
the perception that the reasons for the decisions taken by the management are justified.
Procedural justice is the perception of equity regarding rules and regulations applied in the process of
rewarding or punishing.

Appropriateness of process
Lack of
Representa Correction:
bias:
Consistenc Accuracy: tion of all there is an Ethics:
y: no person concerned:
decisions appeals norms of
or group is
all are based appropriate process or professiona
singled out
employees on accurate stakeholder other l conduct
for
are treated information s have mechanism are not
discriminati
the same . input into for fixing violated.
on or ill
decision. mistakes.
treatment.

C. INTERACTIONAL JUSTICE
Interactional justice is considered as key aspect in workplace settings because of its relationship with unfair
and fair treatment. The interpersonal treatment employees receive from decision makers and the adequacy
with which the formal decision-making procedures are explained.

Appropriateness of the treatment one receives from

authority figures.

Interpersonal justice: Informational justice:

treating an employee with sharing relevant information
dignity, courtesy and respect. with employees.

D. TEMPORAL JUSTICE
Temporal justice in an organization is concerned with “the fair distribution of time”.
Organizations must distribute work time evenly across employees irrespective of them being single or
married, part time students or working full time
 Appropriateness of time distribution
Personal Time:
Time spent with Office Time/Late
Marital Time: friends, gym, Sittings:
Time spent with hobbies, sleep and Extra time spent for
spouse and children effect of working work in office after
time on personal office hours
time.

29.5 ANTICEDENTS OF PERCEPTION OF ORGANISATIONAL JUSTICE

A. EMPLOYEE PARTICIPATOIN
It is the extent to which employees feel that they are involved in decision-making or other organizational
procedures. The opportunity or ability to participate in decision making improves an individual’s perceptions
of procedural justice, even when the decision is unfavourable to the individual
Higher levels of justice are perceived when employees feel that they have input in processes than when
employees do not perceive that they have the opportunity to participate

Higher Employee
Participation

Perception of
Lower
Organizational
Injustice

B. COMMUNICATION
Communication has been shown to be related to interpersonal and informational justice perceptions
It is important that the information provided be accurate, timely, and helpful in order for the impact on
justice perceptions to be positive. The quality of communication by an organization or manager can improve
justice perceptions by improving employee perceptions of manager trustworthiness and also by reducing
feelings of uncertainty.

Higher Good
Quality
Communication

Perception of Lower
Organizational
Injustice

C. JUSTICE CLIMATE
Perceptions of organizational justice can be influenced by others, such as co-workers and team members.
Team level perceptions of justice form what is called a ‘justice climate’ which can impact individuals’ own
views of justice Employees working within a team may share their perceptions with one another which can
lead to a shared interpretation of the fairness of events.
Individuals can “learn” justice evaluations from team members and these can lead to homogeneity of justice
perceptions within teams, creating a strong justice climate. Thus, group-level perceptions of justice can be
conceptualized as an antecedent to individuals’ justice perceptions.

Greater Team Level

Justice

Perception of Lower
Organizational
Injustice

29. 6 OUTCOMES OF ORGANIZATIONAL JUSTICE AND INJUSTICE

A. TRUST
The relationship between trust and organizational justice perceptions is based on mutuality.
Trust in the organization is built from the employee’s belief that current organizational decisions are fair,
future organizational decisions will be fair. The continuance of employee trust in the organization and the
organization continuing to meet the employee’s expectations of fairness creates the reciprocal relationship
between trust and organizational justice. A positive relationship between an employee and supervisor can
lead to trust in the organization.
B. PERFORMANCE
Equity theory of organizational justice suggest that when people perceive injustice they seek to restore
justice.
One way that employees restore justice is by altering their level of job performance.
Procedural justice affects performance as a result of its impact on employee attitudes. Distributive justice
affects performance when efficiency and productivity are involved. Improving justice perceptions improves
productivity and performance.
C. JOB SATISFACTION AND ORGANIZATIONAL COMMITMENT
Job satisfaction was found to be positively associated with overall perceptions of organizational justice such
that greater perceived injustice results in lower levels of job satisfaction and greater perceptions of justice
result in higher levels of job satisfaction.
Additionally, organizational commitment is related to perceptions of procedural justice such that greater
perceived injustice results in diminished commitment while greater perceived justice results in increases
commitment to the organization.
E. ORGANIZATIONAL CITIZENSHIP BEHAVIOUR
Organizational citizenship behaviours are actions that employees take to support the organization that go
above and beyond the scope of their job description. OCBs are related to both procedural justice and
distributive justice perceptions. As organizational actions and decisions are perceived as more just,
employees are more likely to engage in OCBs.
F. ABSENTEEISM AND WITHDRAWAL
Absenteeism, or non-attendance, is another outcome of perceived injustice.
Failure to receive a promotion is an example of a situation in which feelings of injustice may result in an
employee being absent from work without reason. When people see both their commitment to the
organization and the organization’s commitment to them as high, absenteeism is diminished.
Additionally, withdrawal, or leaving the organization, is a more extreme outcome stemming from the same
equity theory principles. Distributive justice perceptions are most strongly related to withdrawal
G. EMOTIONAL EXHAUSTION
Emotional exhaustion, which related to employee health and burnout, is related to overall organizational
justice perceptions. As perceptions of justice increase employee health increases and burnout decreases.
Distributive, procedural, and interactional justice perceptions are able to capture state and specific levels of
emotional exhaustion.
29.7 WAYS TO PROMOTE ORGANIZATIONAL JUSTICE
 Pay workers what they deserve
 Follow open and fair procedures
 Offer workers a voice
 Meet regularly and invite input
 Conduct employee surveys
 Keep an “open door policy”
 Use suggestion system
29.8 Conclusion
As a conclusion we can say that organizational justice has a huge effect on working life It is a personal
evaluation about the ethical and moral standing of managerial conduct. It refers to how an employee judges
the behaviour of the organization and their resulting attitude and behaviour that comes from this.
29.10 Tasks
i. Explain the concept of organizational behaviour
ii. State the types of organizational justice
iii. Outline the antecedents of organizational justice
v. Enumerate ways to promote organizational justice
 UNIT 10
ORGANISATIONAL STRUCTURE AND DESIGN
CONTENTS

31.0 Aims and objectives

31.1 Introduction
31.2 Organisational Design
31.3 Line Organisational Structure:
31.4 Line and Staff Organisational Structure:
31.5 Divisional Organisational Structure:
31.6 Project Organisational Structure:
31.7 Matrix Organisational Structure:
31.8 Hybrid Organisational Structure:
31.9 The Informal Organisation:
31.10 Conclusion
31.11 Tasks

31.0 AIMS AND OBJECTIVES

By the end of studying this unit students should be able to:
i. Apply organizational design concepts
ii. Understand span of control
iii. Distinguish between tall and flat structures
iv. Contrast authority and responsibility
v. Distinguish the mechanistic and organic structure
vi. Understand contingency factors that affect structure
vii. Explain need for an organization to have an appropriate organization structure.
viii. Identify various organizational structures that can be adopted.
31.1 INTRODUCTION
WHAT IS AN ORGANIZATION'S STRUCTURE?
An organizational structure is the formal framework by which job tasks are divided, grouped, and
coordinated. The challenge for managers is to design an organizational structure that allows employees
to effectively and efficiently do their work.
31.2 ORGANIZATIONAL DESIGN
Developing or changing an organizational structure is called engaging in organisational design. This
process involves decisions about six key elements.
1. Work Specialization
2. Departmentalization
3. Chain of Command
4. Span of Control
5. Centralization/Decentralization
6. Formalization
1. Work Specialization
Work specialization to describe the degree to which tasks in an organization are divided into
separate jobs. An entire job is not done by one individual but instead is broken down into
steps, and each step is completed by a different person. Individual employees specialize in
doing part of an activity rather than the entire activity.
2. Departmentalization
Departmentalization is the process of grouping activities into departments. Every Organization has its
own way of classifying and grouping work activities. There are five
common types of departmentalization.
Functional departmentalization – In functional departmentalization ,departments are separated on
basis of tasks they perform. Employees are placed in these departments with shared skills and
knowledge into for example, human resources, IT, accounting, manufacturing, marketing, and
engineering. Functional departmentalization can be used in all types of organizations.
Product departmentalization – Departments are separated based on a type of product produced by
the company. Here, every individual department is responsible for producing and selling the type of
products assigned to them. For example , a car manufacturing company, may have departments based
on motorcycles, cars and trucks.
Customer departmentalization - Grouping activities on the basis of common customers or types of
customers. Jobs may be grouped according to the type of customer served by the organization. It is
thought that customers in each department have a common set of problems and needs that can best be
met by specialists. For example: The sales activities in an office supply firm can be broken down into
three departments that are retail customers, wholesale customers and government customers.
Geographic departmentalization - Grouping activities on the basis of territory. If an organization's
customers are geographically spread, it can group jobs based on geography. For example, the
organization structure of Coca-Cola is based on two broad geographic areas – the North American
sector and the international sector, which includes rest of the world.
Process departmentalization – In process departmentalization , departments are separated based on
their role in a production process. Because each process requires different skills, process
departmentalization allows similar activities to be categorized. For example, in a textile mill there is a
spinning department, weaving department, colour dyeing department and printing department.
3. Chain of Command
The chain of command is the continuous line of authority that extends from upper organizational
levels to the lowest levels and clarifies, who reports to whom.
It can also be defined as :
A system in which authority passes down from the top through a series of executive positions or
ranks in which each is accountable to the direct superior.
It helps employees answer questions such as "Who do I go to if I have a problem?" or "To whom
am I responsible?"
Authority : Authority means the rights contained in a manager’s position to tell people what to do
and to expect them to do.
Responsibility : The obligation or expectation to perform.
Unity of Command : This concept means to report to only one manager. It is important to have
unity of command to avoid conflicting demands from multiple bosses.
4. Span of Control
Span of control means the number of subordinates a manager has control over. Span of control also
tells the number of levels and managers of an organization. If the span is wider and larger, then
organization is considered as more efficient because less managers control more number of
employees.
5. Centralization and Decentralization
Centralization
The degree to which decision-making is concentrated at a single point in the organizations.
Organizations in which top managers make all the decisions and lower-level employees simply carry
out those orders.
 Decentralization
Organizations in which decision-making is pushed down to the managers who are closest to the
activities.
It is considered that decentralization provides opportunity for employee empowerment.

6.Formalization
The degree to which jobs within the organization are standardized and the extent to which employee
behaviour is guided by rules and procedures. Highly formalized jobs offer little power over what is to
be done. Low formalization means fewer restriction on how employees do their work.
All managers must bear that there are two organisations they must deal with-one formal and the other
informal. The formal organisation in usually delineated by an organisational chart and job descriptions.
The official reporting relationships are clearly known to every manager.
Alongside the formal organisation exists are informal organisation which is a set of evolving
relationships and patterns of human interaction within an organisation that are not officially prescribed.
Formal organisational structures are categorised as:
i. Line organisational structure.
ii. Staff or functional authority organisational structure.
iii. (Line and staff organisational structure.
iv. Committee organisational structure.
v. Divisional organisational structure.
vi. Project organisational structure.
vii. Matrix organisational structure and
viii. Hybrid organisational structure.
These organisational structures are briefly described in the following paragraphs:

31.3 Line Organisational Structure:

A line organisation has only direct, vertical relationships between different levels in the firm. There are only
line departments-departments directly involved in accomplishing the primary goal of the organisation. For
example, in a typical firm, line departments include production and marketing. In a line organisation
authority follows the chain of command.
Features:

Has only direct vertical relationships between different levels in the firm.

Advantages:

1. Tends to simplify and clarify authority, responsibility and accountability relationships

2. Promotes fast decision making

3. Simple to understand.

Disadvantages:

1. Neglects specialists in planning

2. Overloads key persons.

Some of the advantages of a pure line organisation are:

(i) A line structure tends to simplify and clarify responsibility, authority and accountability relationships.
The levels of responsibility and authority are likely to be precise and understandable.

(ii) A line structure promotes fast decision making and flexibility.

(iii) Because line organisations are usually small, managements and employees have greater closeness.

However, there are some disadvantages also. They are:

(i) As the firm grows larger, line organisation becomes more ineffective.

(ii) Improved speed and flexibility may not offset the lack of specialized knowledge.

(iii) Managers may have to become experts in too many fields.

(iv) There is a tendency to become overly dependent on the few key people who an perform numerous jobs.

31.4 Staff or Functional Authority Organisational Structure

The jobs or positions in an organisation can be categorized as:

(i) Line position:

a position in the direct chain of command that is responsible for the achievement of an organisation’s goals
and

(ii) Staff position:

A position intended to provide expertise, advice and support for the line positions.

The line officers or managers have the direct authority (known as line authority) to be exercised by them to
achieve the organisational goals. The staff officers or managers have staff authority (i.e., authority to advice
the line) over the line. This is also known as functional authority.
An organisation where staff departments have authority over line personnel in narrow areas of specialization
is known as functional authority organisation. Exhibit 10.4 illustrates a staff or functional authority
organisational structure.

In the line organisation, the line managers cannot be experts in all the functions they are required to perform.
But in the functional authority organisation, staff personnel who are specialists in some fields are given
functional authority (The right of staff specialists to issue orders in their own names in designated areas).

The principle of unity of command is violated when functional authority exists i.e., a worker or a group of
workers may have to receive instructions or orders from the line supervisor as well as the staff specialist
which may result in confusion and the conflicting orders from multiple sources may lead to increased
ineffectiveness. Some staff specialists may exert direct authority over the line personnel, rather than exert
advice authority (for example, quality control inspector may direct the worker as well as advise in matters
related to quality).

While this type of organisational structure overcomes the disadvantages of a pure line organisaional
structure, it has some major disadvantages:

They are: (i) the potential conflicts resulting from violation of principle of unity of command and (ii) the
tendency to keep authority centralized at higher levels in the organisation.

31.5 Line and Staff Organisational Structure:

Most large organisations belong to this type of organisational structure. These organisations have direct,
vertical relationships between different levels and also specialists responsible for advising and assisting line
managers. Such organisations have both line and staff departments. Staff departments provide line people
with advice and assistance in specialized areas (for example, quality control advising production
department).

Exhibit 10.5 illustrates the line and staff organisational chart. The line functions are production and
marketing whereas the staff functions include personnel, quality control, research and development, finance,
accounting etc. The staff authority of functional authority organisational structure is replaced by staff
responsibility so that the principle of unity of command is not violated.

Three types of specialized staffs can be identified:

(i) Advising,

(ii) Service and

(iii) Control.

Some staffs perform only one of these functions but some may perform two or all the three functions. The
primary advantage is the use of expertise of staff specialists by the line personnel. The span of control of line
managers can be increased because they are relieved of many functions which the staff people perform to
assist the line.

Some advantages are:

(i) Even through a line and staff structure allows higher flexibility and specialization it may create conflict
between line and staff personnel.

(ii) Line managers may not like staff personnel telling them what to do and how to do it even though they
recognize the specialists’ knowledge and expertise.

(iii) Some staff people have difficulty adjusting to the role, especially when line managers are reluctant to
accept advice.

(iv) Staff people may resent their lack of authority and this may cause line and staff conflict.

Features:

1. Line and staff have direct vertical relationship between different levels.

2. Staff specialists are responsible for advising and assisting line managers/officers in specialized areas.

3. These types of specialized staff are (a) Advisory, (b) Service, (c) Control e.g.,

(a) Advisory:

Management information system, Operation Research and Quantitative Techniques, Industrial Engineering,
Planning etc

(b) Service:

Maintenance, Purchase, Stores, Finance, Marketing.

(c) Control:

Quality control, Cost control, Auditing etc. Advantages’

(i) Use of expertise of staff specialists.

(ii) Span of control can be increased

(iii) Relieves line authorities of routine and specialized decisions.

(iv) No need for all round executives.

Disadvantages:

(i) Conflict between line and staff may still arise.

(ii) Staff officers may resent their lack of authority.

(iii) Co-ordination between line and staff may become difficult.

Committee Organisational Structure Features:

(a) Formed for managing certain problems/situations

(b) Are temporary decisions.

Advantages:

1. Committee decisions are better than individual decisions

2. Better interaction between committee members leads to better co-ordination of activities

3. Committee members can be motivated to participate in group decision making.

4. Group discussion may lead to creative thinking.

Disadvantages:

1. Committees may delay decisions, consume more time and hence more expensive.

2. Group action may lead to compromise and indecision.

3. ‘Buck passing’ may result.

31.6 Divisional Organisational Structure:

In this type of structure, the organisation can have different basis on which departments are formed. They
are:

(i) Function,

(ii) Product,

(iii) Geographic territory,

(iv) Project and

(iv) Combination approach.

Exhibit 10.6 illustrates organisational structures formed based on the above basis of departmentation.
31.7 Project Organisational Structure:

The line, line and staff and functional authority organisational structures facilitate establishment and
distribution of authority for vertical coordination and control rather than horizontal relationships. In some
projects (complex activity consisting of a number of interdependent and independent activities) work process
may flow horizontally, diagonally, upwards and downwards. The direction of work flow depends on the
distribution of talents and abilities in the organisation and the need to apply them to the problem that exists.
The cope up with such situations, project organisations and matrix organisations have emerged.

A project organisation is a temporary organisation designed to achieve specific results by using teams of
specialists from different functional areas in the organisation. The project team focuses all its energies,
resources and results on the assigned project. Once the project has been completed, the team members from
various cross functional departments may go back to their previous positions or may be assigned to a new
project. Some of the examples of projects are: research and development projects, product development,
construction of a new plant, housing complex, shopping complex, bridge etc.

Exhibit 10.7 illustrates a project organisational structure.

Feature:

Temporary organisation designed to achieve specific results by using teams of specialists from different
functional areas in the organisation.

Importance of Project Organisational Structure:

Project organisational structure is most valuable when:

(i) Work is defined by a specific goal and target date for completion.

(ii) Work is unique and unfamiliar to the organisation.

(iii) Work is complex having independent activities and specialized skills are necessary for accomplishment.

(iv) Work is critical in terms of possible gains or losses.

(v) Work is not repetitive in nature.

Characteristics of project organisation:

1. Personnel are assigned to a project from the existing permanent organisation and are under the direction
and control of the project manager.

2. The project manager specifies what effort is needed and when work will be performed whereas the
concerned department manager executes the work using his resources.

3. The project manager gets the needed support from production, quality control, engineering etc. for
completion of the project.

4. The authority over the project team members is shared by project manager and the respective functional
managers in the permanent organisation.

5. The services of the specialists (project team members) are temporarily loaned to the project manager till
the completion of the project.
6. There may be conflict between the project manager and the departmental manager on the issue of
exercising authority over team members.

7. Since authority relationships are overlapping with possibilities of conflicts, informal relationships between
project manager and departmental managers (functional managers) become more important than formal
prescription of authority.

8. Full and free communication is essential among those working on the project.

31.8 Matrix Organisational Structure:

It is a permanent organisation designed to achieve specific results by using teams of specialists from
different functional areas in the organisation. The matrix organisation is illustrated in Exhibit 10.8.

Feature:

Superimposes a horizontal set of divisions and reporting relationships onto a hierarchical functional structure

Advantages:

1. Decentralised decision making.

2. Strong product/project co-ordination.

3. Improved environmental monitoring.

4. Fast response to change.

5. Flexible use of resources.

6. Efficient use of support systems.

Disadvantages:

1. High administration cost.

2. Potential confusion over authority and responsibility.

3. High prospects of conflict.

4. Overemphasis on group decision making.

5. Excessive focus on internal relations.

This type of organisation is often used when the firm has to be highly responsive to a rapidly changing
external environment.

In matrix structures, there are functional managers and product (or project or business group) managers.
Functional manager are in charge of specialized resources such as production, quality control, inventories,
scheduling and marketing. Product or business group managers are incharge of one or more products and are
authorized to prepare product strategies or business group strategies and call on the various functional
managers for the necessary resources.

The problem with this structure is the negative effects of dual authority similar to that of project
organisation. The functional managers may lose some of their authority because product managers are given
the budgets to purchase internal resources. In a matrix organisation, the product or business group managers
and functional managers have somewhat equal power. There is possibility of conflict and frustration but the
opportunity for prompt and efficient accomplishment is quite high.

31.9 Hybrid Organisational Structure:

Exhibit 10.9 (a) illustrates the hybrid organisational structure.

Exhibit 10.9 (b) illustrates a combination structure

Advantages:

1. Alignment of corporate and divisional goals.

2. Functional expertise and efficiency.

3. Adaptability and flexibility in divisions.

Disadvantages:

1. Conflicts between corporate departments and units.

2. Excessive administration overhead.

3. Slow response to exceptional situations.

Uses:

Used in organisations that face considerable environmental uncertainty that can be met through a divisional
structure and that also required functional expertise or efficiency

This type of structure is used by multinational companies operating in the global environment, for example,
International Business Machines USA. This kind of structure depends on factors such as degree of
international orientation and commitment. Multinational corporations may have their corporate offices in the
country of origin and their international divisions established in various countries reporting to the CEO or
president at the headquarters. The international divisions or foreign subsidiaries may be grouped into regions
such as North America, Asia, Europe etc. and again each region may be subdivided into countries within
each region.

While the focus is on international geographic structures, companies may also choose functional or process
or product departmentation in addition to geographic pattern while at the head quarter’s the departmentation
may be based on function.

31.10 The Informal Organisation:

An informal organisation is the set of evolving relationships and patterns of human interaction within an
organisation which are not officially presented. Alongside the formal organisation, an informal organisation
structure exists which consists of informal relationships created not by officially designated managers but by
organisational members at every level. Since managers cannot avoid these informal relationships, they must
be trained to cope with it

The informal organisation has the following characteristics

(i) Its members are joined together to satisfy their personal needs (needs for affiliation, friendship etc.)

(ii) It is continuously changing:

The informal organisation is dynamic.

(iii) It involves members from various organisational levels.

(iv) It is affected by relationship outside the firm.

(v) It has a pecking order: certain people are assigned greater importance than others by the informal group.

Even though an informal organisational structure does not have its own formal organisational chart, it has its
own chain of command:

Benefits of Informal Organisation:

(i) Assists in accomplishing the work faster.

(ii) Helps to remove weakness in the formal structure.

(iii) Lengthens the effective span of control.

(iv) Compensation for violations of formal organisational principles.

(v) Provides an additional channel of communication.

(vi) Provides emotional support for employees.

(vii) Encourages better management.

Disadvantages of informal organisation:

(i) May work against the purpose of formal organisation.

(ii) Reduces the degree of predictability and control.

(iii) Reduces the number of practical alternatives.

(iv) Increases the time required to complete activities.

31.10 Conclusion

organisational structure is hierarchical arrangement of lines of authority, communications, rights and duties
of an organization. Organizational structure determines how the roles, power and responsibilities are
assigned, controlled, and coordinated, and how information flows between the different levels of
management.

A structure depends on the organization's objectives and strategy. In a centralized structure, the top layer of
management has most of the decision making power and has tight control over departments and divisions. In
a decentralized structure, the decision making power is distributed and the departments and divisions may
have different degrees of independence.

31.11 Tasks

i. What is departmentalization?
ii. What are the primary forms of departmentalization?
iii. Describe a matrix form of departmentalization.
iv. Why is delegation the art of managing?
v. Describe how the process of delegation works.
vi. What is meant by the parity of authority and responsibility?
vii. what is span of control?
viii. What is the scalar principle?
ix. In the organizational context, what is meant by centralization versus decentralization?
x. How do you differ between line and staff in organizational terms?
xi. What is the committee organization, and what forms can it take?