UNIT 1

MPOB/U1 Topic 1 Management: Concept, Nature,

Process, Significance
Concept of Management
Every business requires planning for the future to find a way to successful business for
which the person in the helm of affairs has to take decisions and is responsible for the
consequences for his decision making whether favourable or unfavorable.

In short this is the crux of the science of management. According to Bradford and Johnson,
“Management is an intangible part of production which develops within the lives of men. It is
first a mental process, a concentration of desires, a will power.

In economic terms management is one of the factors of production together with land,
labour and capital.

According to specialists in administration and organization, management is a system of

authority.

In view of sociologists, management is a class and status system. A manager should be a

person elite of brains and education.

According to Newman and Summer, management is considered to be a process consisting

of organizing, planning, leading and controlling.

Organization deals with assigning various tasks to different people and coordinating their
efforts as well maintaining a careful balance between different parts of the enterprise.
Planning is concerned with setting goals, objectives and targets and delineating
mechanisms for attaining them at various levels throughout the organization as well as for
the total organization.

Leading is concerned with the manner in which the manager integrates the needs of the
employee with those of the departments or total organization. Leading necessitates clear
direction, coupled with a spirit of cooperation. Leadership is also concerned with the
maintenance of high standards, discipline and occasionally the judicious mix of authority,
power and influence in order to attain target objectives.

Controlling is concerned with measuring and narrowing the gap between planned
performance and actual performance, and with the monitoring of performances, as well as,
taking corrective actions wherever necessary. Management is thus a complex, integrated
and ongoing dynamic process.
 The management is viewed as:

1. An economic resource.
2. A system of authority.
3. A class or elite.

Nature of Management
(i) Universal Process: Wherever there is human activity, there is management. Without
efficient management, objectives of the company can not be achieved.

(ii) Factor of Production: Qualified and efficient managers are essential to utilization of

labor and capital.

(iii) Goal Oriented: The most important goal of all management activity is to accomplish the
objectives of an enterprise. The goals should be realistic and attainable.

(iv) Supreme in Thought and Action: Managers set realizable objectives and then
mastermind action on all fronts to accomplish them. For this, they require full support form
middle and lower levels of management.

(v) Group activity: All human and physical resources should be efficiently coordinated to
attain maximum levels of combined productivity. Without coordination, no work would
accomplish and there would be chaos and retention.

(vi) Dynamic Function: Management should be equipped to face the changes in business

environment brought about by economic, social, political, technological or human factors.
They must be adequate training so that can enable them to perform well even in critical
situations.

(vii) Social Science: All individuals that a manager deals with, have different levels of
sensitivity, understanding and dynamism.

(viii) Important Organ of Society: Society influences managerial action and managerial

actions influence society. Its managers responsibility that they should also contribute
towards the society by organizing charity functions, sports competition, donation to NGO’s
etc.

(ix) System of Authority: Well-defined lines of command, delegation of suitable authority

and responsibility at all levels of decision-making. This is necessary so that each individual
should what is expected from him and to whom he need to report to.

(x) Profession: Managers need to possess managerial knowledge and training, and have
to conform to a recognized code of conduct and remain conscious of their social and human
obligations.
(xi) Process: The management process comprises a series of actions or operations
conducted towards an end.

Management as a Process
As a process, management refers to a series of inter-related functions. It is the process by
which management creates, operates and directs purposive organization through
systematic, coordinated and co-operated human efforts, according to George R. Terry,
“Management is a distinct process consisting of planning, organizing, actuating and
controlling, performed to determine and accomplish stated objective by the use of human
beings and other resources”. As a process, management consists of three aspects:-

(i) Management is a social process – Since human factor is most important among the
other factors, therefore management is concerned with developing relationship among
people. It is the duty of management to make interaction between people – productive and
useful for obtaining organizational goals.

(ii) Management is an integrating process – Management undertakes the job of bringing

together human physical and financial resources so as to achieve organizational purpose.
Therefore, is an important function to bring harmony between various factors.

(iii) Management is a continuous process – It is a never ending process. It is concerned

with constantly identifying the problem and solving them by taking adequate steps. It is an
on-going process.

Significance of Management
(i) It helps in Achieving Group Goals – It arranges the factors of production, assembles
and organizes the resources, integrates the resources in effective manner to achieve goals.
It directs group efforts towards achievement of pre-determined goals. By defining objective
of organization clearly there would be no wastage of time, money and effort. Management
converts disorganized resources of men, machines, money etc. into useful enterprise.
These resources are coordinated, directed and controlled in such a manner that enterprise
work towards attainment of goals.

(ii) Optimum Utilization of Resources – Management utilizes all the physical & human
resources productively. This leads to efficacy in management. Management provides
maximum utilization of scarce resources by selecting its best possible alternate use in
industry from out of various uses. It makes use of experts, professional and these services
leads to use of their skills, knowledge, and proper utilization and avoids wastage. If
employees and machines are producing its maximum there is no under employment of any
resources.

(iii) Reduces Costs – It gets maximum results through minimum input by proper planning
and by using minimum input & getting maximum output. Management uses physical, human
and financial resources in such a manner which results in best combination. This helps in
cost reduction.
 (iv) Establishes Sound Organization – No overlapping of efforts (smooth and coordinated
functions). To establish sound organizational structure is one of the objective of
management which is in tune with objective of organization and for fulfillment of this, it
establishes effective authority & responsibility relationship i.e. who is accountable to whom,
who can give instructions to whom, who are superiors & who are subordinates.
Management fills up various positions with right persons, having right skills, training and
qualification. All jobs should be cleared to everyone.

(v) Establishes Equilibrium – It enables the organization to survive in changing

environment. It keeps in touch with the changing environment. With the change is external
environment, the initial co-ordination of organization must be changed. So it adapts
organization to changing demand of market / changing needs of societies. It is responsible
for growth and survival of organization.

(vi) Essentials for Prosperity of Society – Efficient management leads to better

economical production which helps in turn to increase the welfare of people. Good
management makes a difficult task easier by avoiding wastage of scarce resource. It
improves standard of living. It increases the profit which is beneficial to business and
society will get maximum output at minimum cost by creating employment opportunities
which generate income in hands. Organization comes with new products and researches
beneficial for society.

MPOB/U1 Topic 2 Managerial Levels, Skills, Functions

and Roles

The Levels of Management

Segmenting the management of an organization into levels is vital to maintaining the
productivity and work performance of employees. Although when there is a change in the
size of the business or the workforce, there would also be a change in the number of levels
of the management.

The main levels of management are:

1. Top level management.

2. Middle level management.
3. Supervisory level, operational or lower level of management.
1. Top Level Management
Top level management consists of Chairman, Board of Directors, Managing Director,
General Manager, President, Vice President, Chief Executive Officer (C.E.O.), Chief
Financial Officer (C.F.O.) and Chief Operating Officer etc. It includes group of crucial
persons essential for leading and directing the efforts of other people. The managers
working at this level have maximum authority.

Main functions of top level management are:-

(a) Determining the objectives of the enterprise. The top level managers formulate the main
objectives of the organization. They form long term as well as short term objectives.

(b) Framing of plans and policies. The top level managers also frame the plans and policies
to achieve the set objectives.

(c) Organizing activities to be performed by persons working at middle level. The top level
management assigns jobs to different individuals working at middle level.

(d) Assembling all the resources such as finance, fixed assets etc. The top level
management arranges all the finance required to carry on day to day activities. They buy
fixed assets to carry on activities in the organization.

(e) Responsible for welfare and survival of the organization—Top level is responsible for the
survival and growth of the organization. They make plan to run the organization smoothly
and successfully.
 (f) Liaison with outside world, for example, meeting Government officials etc. The top level
management remains in contact with government, competitors, suppliers, media etc. Jobs
of top level are complex and stressful demanding long hours of commitment towards
organization.

(g) Welfare and survival of the organization.

2. Middle Level Management

This level of management consists of departmental heads such as purchase department
head, sales department head, finance manager, marketing manager, executive officer, plant
superintendent, etc. People of this group are responsible for executing the plans and
policies made by top level.

They act as a linking pin between top and lower level management. They also exercise the
functions of top level for their department as they make plans and policies for their
department, organise and collect the resources etc.

Main functions of middle level management are:-

(a) Interpretation of policies framed by top management to lower level. Middle level
management act as linking pin between top level and lower level management. They only
explain the main plans and policies framed by top level management to lower level.

(b) Organizing the activities of their department for executing the plans and policies.
Generally middle level managers are the head of some department. So they organize all the
resources and activities of their department.

(c) Finding out or recruiting/selecting and appointing the required employees for their
department. The middle level management selects and appoints employees of their
department.

(d) Motivating the persons to perform to their best ability. The middle level managers offer
various incentives to employees so that they get motivated and perform to their best ability.

(e) Controlling and instructing the employees, preparing their performance reports etc. The
middle level managers keep a watch on the activities of low level managers. They prepare
their performance appraisal reports.

(f) Cooperate with other departments for smooth functioning.

(g) Implementing the plans framed by top level.

3. Supervisory Level/Operational Level

This level consists of supervisors, superintendent, foreman, sub-department executives;
clerk, etc. Managers of this group actually carry on the work or perform the activities
according to the plans of top and middle level management.

Their authority is limited. The quality and quantity of output depends upon the efficiency of
this level of managers. They pass on the instruction to workers and report to the middle
level management. They are also responsible for maintaining discipline among the workers.

Functions of lower level management are:

(a) Representing the problems or grievances of workers before the middle level
management. The supervisory level managers are directly linked with subordinates so they
are the right persons to understand the problems and grievances of subordinates. They
pass these problems to middle level management.

(b) Maintaining good working conditions and developing healthy relations between superior
and subordinate. The supervisory managers provide good working conditions and create
supportive work environment which improve relations between supervisors and
subordinates.

(c) Looking to safety of workers. Supervisory level managers provide safe and secure work
environment for workers.

MPOB/U1 Topic 3 Management VS. Administration

Management can be understood as the skill of getting the work done from others. It is not
exactly same as administration, which alludes to a process of effectively administering the
entire organization. The most important point that differs management from the
administration is that the former is concerned with directing or guiding the operations of the
organization, whereas the latter stresses on laying down the policies and establishing the
objectives of the organization.

Broadly speaking, management takes into account the directing and controlling functions of
the organization, whereas administration is related to planning and organizing function.

With the passage of time, the distinction between these two terms is getting blurred, as
management includes planning, policy formulation, and implementation as well, thus
covering the functions of administration.

Definition of Management

Management is defined as an act of managing people and their work, for achieving a
common goal by using the organization’s resources. It creates an environment under which
the manager and his subordinates can work together for the attainment of group objective. It
is a group of people who use their skills and talent in running the complete system of the
organization. It is an activity, a function, a process, a discipline and much more.

Planning, organizing, leading, motivating, controlling, coordination and decision making are
the major activities performed by the management. Management brings together 5M’s of
the organization, i.e. Men, Material, Machines, Methods, and Money. It is a result oriented
activity, which focuses on achieving the desired output.

Definition of Administration

The administration is a systematic process of administering the management of a business

organization, an educational institution like school or college, government office or any
nonprofit organization. The main function of administration is the formation of plans,
policies, and procedures, setting up of goals and objectives, enforcing rules and regulations,
etc.

Administration lays down the fundamental framework of an organization, within which the
management of the organization functions.

The nature of administration is bureaucratic. It is a broader term as it involves forecasting,

planning, organizing and decision-making functions at the highest level of the enterprise.
Administration represents the top layer of the management hierarchy of the organization.
These top level authorities are the either owners or business partners who invest their
capital in starting the business. They get their returns in the form of profits or as a dividend.
 BASIS FOR
COMPARISON MANAGEMENT ADMINISTRATION

An organized way of
The process of administering an
managing people and things
Meaning                   organization by a group of people
of a business organization is
is known as the Administration.
called the Management.
Authority      Middle and Lower Level   Top level
Role                Executive Decisive
Concerned
Policy Implementation Policy Formulation
with                       
It has full control over the
Area of operation It works under administration.
activities of the organization.
Government offices, military,
Applicable Profit making organizations, clubs, business enterprises,
to                        i.e. business organizations. hospitals, religious and
educational organizations.
Decides         Who will do the work? What should be done?
Putting plans and policies into Formulation of plans, framing
Work            
actions. policies and setting objectives
Making best possible allocation
Focus on       Managing work     
of limited resources.
Key person               Manager Administrator
Employees, who work for Owners, who get a return on the
Represents              
remuneration capital invested by them.
Function Executive and Governing Legislative and Determinative
Key Differences between Management and Administration

The major differences between management and administration are given below:

1. Management is a systematic way of managing people and things within the

organization. The administration is defined as an act of administering the whole
organization by a group of people.
2. Management is an activity of business and functional level, whereas Administration
is a high-level activity.
3. While management focuses on policy implementation, policy formulation is
performed by the administration.
4. Functions of administration include legislation and determination. Conversely,
functions of management are executive and governing.
5. Administration takes all the important decisions of the organization while
management makes decisions under the boundaries set by the administration.
6. A group of persons, who are employees of the organization is collectively known as
management. On the other hand, administration represents the owners of the organization.
7. Management can be seen in the profit making organization like business enterprises.
Conversely, the Administration is found in government and military offices, clubs, hospitals,
religious organizations and all the non-profit making enterprises.
8. Management is all about plans and actions, but the administration is concerned with
framing policies and setting objectives.
9. Management plays an executive role in the organization. Unlike administration,
whose role is decisive in nature.
10. The manager looks after the management of the organization, whereas administrator
is responsible for the administration of the organization.
11. Management focuses on managing people and their work. On the other hand,
administration focuses on making the best possible utilization of the organization’s
resources.

Conclusion

Theoretically, it can be said that both are different terms, but practically, you will find that the
terms are more or less same. You would have noticed that a manager performs both
administrative and functional activities. Although the managers who are working on the
topmost level are said to be the part of administration whereas the managers working on
the middle or lower level represents management. So, we can say that administration is
above management.

MPOB/U1 Topic 4 Coordination as Essence

of Management
Coordination can be defined as “Synchronization of efforts from the stand-point of time and
the sequence of execution”. In general coordination means bringing together the activities
and resources of organisation and bringing harmony in them.

Coordination is the base or primary function of every manager because various

departments of an organisation are working independently and there is need to relate and
integrate their activities.

Coordination: The Essence of Management

Coordination brings unity of action and integrates different activities of organisation.
Coordination is considered as the essence of management because of following reasons

1. Coordination is needed to perform all the functions of management

 (i) In planning coordination is required between main plan and supportive plans of different
departments.

(ii) In organising coordination is required between different resources of an organization and

also between authority responsibility and accountability.

(iii) In staffing coordination is required between skill of a person and job assigned to him,
between efficiency and compensation etc.

(iv) In directing function coordination is required between superior and subordinates,

between orders, instructions, guidelines and suggestions etc.

(v) In controlling function coordination is required between standards and actual

performance.

2. Coordination is required at all the levels

(i) Top level requires coordination to integrate all the activities of organisation and lead the
efforts of all the individuals in one common direction.

(ii) Coordination is required at middle level to balance the activities of different departments
so that these can work as a part of one organisation only.

(iii) Lower level requires coordination to integrate the activities of workers towards
achievement of organisational objectives.

3. Coordination is the most important function of an organization

Any company which fails to coordinate its activities cannot survive and run successfully for
a long period of time.
For example, Allwyn Company, established in 1942, was the first company to produce a
double-decker bus. It was running successfully as a leading electronic industry, especially in
refrigeration industry. By the end of 1980 the company faced the problem of coordination.
There was lack of balance and integration of different activities; as a result the company
started facing huge losses and by 1993 company had an accumulated loss of Rs. 168
crore. Company failed to balance its departmental activities and product folios.

So in short we can say without coordination no company can work efficiently and earn profit.

Need of coordination
(i) Growth in size: As organizations grow in size, the number of people in the organization
also increases. They may work for cross purposes. So, coordination is needed to integrate
their efforts and activities, i.e., to bring unity of action.

(ii) Functional differentiation: In an organization, there may be separate departments of

production, finance, marketing and human resources. All departments have their own
objectives, policies, strategies, etc. So, there may arise a conflict between them. For
example, the marketing department’s objective may be to increase sales by 10 percent by
offering discounts. But the financial department may not approve such discounts as it
means loss of revenue. Therefore, coordination is necessary to link the activities of various
departments and to avoid conflicts among them.

(iii) Specialization: In modern organizations, there is a high degree of specialization,

arising out of the complexities of modern technology and the diversity of tasks to be
performed. So, organizations employ a number of specialists, who think that they only are
members, which leads to conflict between them. Therefore, coordination is required to avoid
conflict between the specialists and the other members.

In the absence of coordination, there will be chaos and conflicts in the organization as
shown in figure. There will be no synergies among production, sales, accounts, stores and
other departments and the customers will not get timely delivery of goods.

Development of Management
Thought:
Classical Management Thought
Classical Theory of Management: There are different views of management and classical
views of management or classical management theory is also one of them. Management
has always remained a challenge for people.  Planning, organizing, recruiting, directing and
controlling, etc everything comes under the Responsibilities of Manager. In early 90’s, when
industrialization got boom, managers realized that there should be some scientific methods
 to increase productivity. Different managers provided their views to describe the classical
viewpoint, which are also known as classical management theory, such as scientific,
bureaucratic and administrative, etc.

Classical Views – Classical Management Theory

Scientific Management

There may be various ways to process one task; considering all those ways and selecting
one best way is the main purpose of scientific management. Various experiments were
done by different scientists, including Frederick W. Taylor, who is also known as “father of
scientific management”. F.W. Taylor (1856-1915) is widely recognized as first management
thinker, who tried to find out scientific methods. Taylor did different experiments from which
the event of Bethlehem Steel companies is well known. He focused to develop better
understanding among employees and managers by improving efficiency of all. The
experiment at Bethlehem was named as “pig iron”. Taylor described his principles in order
to make people understand that how to choose the one best way to increase productivity.
Scientific management is also known as “Taylorism.” It was Taylor who described
managers’ functions to plan and control and workers’ functions to do as they are instructed.
He improved the productivity and even achieved it up to 200 percent.

Taylor described the first ever solution to counter the problem of soldiering of workers in
which they deliberately perform below full capacity. He defined how to cut unnecessary
elements from the process in order to understand the time-and-motion study. It helps
breaking a task into different motions and defining the expected delay between two motions
that improves efficiency of productivity.

Taylor gave four principles of management that ensure the increase in productivity and

those are:

1. Analyze the each portion of the task and select one best method to do it.
2. Workers should be selected carefully and given specific training as they could
perform the task according to scientifically developed method.
3. The manager should be cooperating workers at each stage in order to make sure
that workers are going on the right path.
4. Task and responsibilities should divided among the workers and management
should develop scientific methods keeping workers in mind, in this way, everyone will be
clear about his or her task and will be answerable for his or her part.

Frank (1868-1924) and Lillian Gilbreth (1878-1972) also put their part in scientific

management following the concepts of F.W. Taylor. They focused to cut unnecessary
factors for the process of productivity and decrease the fatigue in each part of the task.
While on the other hand, they also improved the time-and-motion method that was
introduced by Taylor. Frank and Lillian Gilbreth coined the term “Therbligs” that is referred
to hand, arm, and body motions used at work. “The Psychology of Management” was the
first published book by Lillian that described various findings about psychology in the
workplace. Frank proved that the productivity can be increased up to three times by
 understanding the motion studies. The process of improvement in scientific management
does not end here, but many other people also contributed their views. Henry L. Gantt
(1861-1919) is known as closest associate and is famous for his work of “Gantt Chart” also
put his part. He introduced Gantt chart that helps managers to control and schedule every
portion of the task.

Because of these personalities, today companies have comprised ability to get more
productivity and make workers efficient. Various new and improved forms of previously
used scientific tools are available like business process management can be said modern
form of the Gantt chart.

Bureaucratic Management

Another classical management theory is Bureaucratic views of management that may seen
everywhere in both public and private institutes and organizations. Bureaucratic
management focuses to operate the organization under a hierarchy of positions. It is well-
known that organizations have presidents, vice presidents, managers, assistant managers,
supervisor and such other posts that lie under a higher authority. In bureaucratic
management, each group of employees has to report to a higher authority that ultimately
reaches to the CEO or president of the organization. The main contributors in bureaucratic
management are Henri Fayol and Max Weber. Henri Fayol remained active in defining his
perspective of management during the times of F.W. Taylor. While performing the
responsibilities of managing director in a large French coal-mining firm, Fayol described the
distinctive functions of management that makes it different from other functions of business.
However, Max Weber, a German sociologist described how authorities work and how an
organization should be operated by dividing authorities. He wrote various papers describing
his view of bureaucratic management during the early 20th century. Weber provided the
view of an ideal form of organization that is bureaucracy. He was first to focus on the
division of labor in a clearly defined hierarchy. An organization must operate under clearly
defined rules and regulations by establishing impersonal relationships.

It was very difficult to wait for the owner’s desire to divide the task among the people and
who should be rewarded in which manner. Rewards were also given on the basis of
favoritism, not according to the performance of workers. Weber made it very clear by
defining organizational rationality that can be achieved through a hierarchy and division of
labor. Additionally, all job descriptions and rules and regulations must be clearly defined at
very initial stage.

Characteristics of Weber’s Ideal Bureaucracy

Weber introduced an important view of bureaucracy that is called Weber’s ideal

bureaucracy and its characteristics are:

1. Specialized labor
2. Rules and procedures should be formalized
3. Application of rules and sanctions must be impersonal
4. Authorities should be formalized into a hierarchical structure
5. The career advancement process should be totally on merit

Administrative Management

 Administrative management also a one type of classical management theory and is a way
to organize things in a systematic manners. The systematic way includes clearly defined
tasks, division of labor and a hierarchical structure of the organizations. This concept of
management emphasizes improving the performance and overall function of an
organization. Henri Fayol (1841-1925) is a prominent name in this field; he gave the
perspective that planning, organizing, commanding, coordinating, and controlling are the
main functions of the administration. This approach is still in practice in various
organizations; however, the functions are modified slightly. Various books of management
written today are based on these basic functions, which serve the same purpose as it
served at the time of Fayol. He was a French industrialist; therefore, he wrote books in
French. His written work was translated into English some decades after his death.

Neo-Classical Management Thought

The NeoClassical Theory is the extended version of the classical theory wherein the
behavioral sciences gets included into the management. According to this theory, the
organization is the social system, and its performance does get affected by the human
actions.

The classical theory laid emphasis on the physiological and mechanical variables and
considered these as the prime factors in determining the efficiency of the organization. But,
when the efficiency of the organization was actually checked, it was found out that, despite
the positive aspect of these variables the positive response in work behavior was not
evoked.

Thus, the researchers tried to identify the reasons for human behavior at work. This led to
the formation of a NeoClassical theory which primarily focused on the human beings in the
organization. This approach is often referred to as “behavioral theory of organization” or
“human relations” approach in organizations.

The NeoClassical theory posits that an organization is the combination of both the formal
and informal forms of organization, which is ignored by the classical organizational theory.
The informal structure of the organization formed due to the social interactions between the
workers affects and gets affected by the formal structure of the organization. Usually, the
conflicts between the organizational and individual interest exist, thus the need to integrate
these arises.

The NeoClassical theory asserts that an individual is diversely motivated and wants to fulfill
certain needs. The communication is an important yardstick to measure the efficiency of the
information being transmitted from and to different levels of the organization. The teamwork
is the prerequisite for the sound functioning of the organization, and this can be achieved
only through a behavioral approach, i.e. how individual interact and respond to each other.
Behavioral Management Thought
As management research continued in the 20th century, questions began to come up
regarding the interactions and motivations of the individual within organizations.
Management principles developed during the classical period were simply not useful in
dealing with many management situations and could not explain the behavior of individual
employees. In short, classical theory ignored employee motivation and behavior. As a
result, the behavioral school was a natural outgrowth of this revolutionary management
experiment.

The behavioral management theory is often called the human relations movement

because it addresses the human dimension of work. Behavioral theorists believed that a
better understanding of human behavior at work, such as motivation, conflict, expectations,
and group dynamics, improved productivity.

The theorists who contributed to this school viewed employees as individuals, resources,
and assets to be developed and worked with — not as machines, as in the past. Several
individuals and experiments contributed to this theory.

Elton Mayo’s contributions came as part of the Hawthorne studies, a series of experiments

that rigorously applied classical management theory only to reveal its shortcomings. The
Hawthorne experiments consisted of two studies conducted at the Hawthorne Works of the
Western Electric Company in Chicago from 1924 to 1932. The first study was conducted by
a group of engineers seeking to determine the relationship of lighting levels to worker
productivity. Surprisingly enough, they discovered that worker productivity increased as the
lighting levels decreased — that is, until the employees were unable to see what they were
doing, after which performance naturally declined.

A few years later, a second group of experiments began. Harvard researchers Mayo and F.
J. Roethlisberger supervised a group of five women in a bank wiring room. They gave the
women special privileges, such as the right to leave their workstations without permission,
take rest periods, enjoy free lunches, and have variations in pay levels and workdays. This
experiment also resulted in significantly increased rates of productivity.

In this case, Mayo and Roethlisberger concluded that the increase in productivity resulted
from the supervisory arrangement rather than the changes in lighting or other associated
worker benefits. Because the experimenters became the primary supervisors of the
employees, the intense interest they displayed for the workers was the basis for the
increased motivation and resulting productivity. Essentially, the experimenters became a
part of the study and influenced its outcome. This is the origin of the term Hawthorne
effect, which describes the special attention researchers give to a study’s subjects and the
impact that attention has on the study’s findings.

The general conclusion from the Hawthorne studies was that human relations and the social
needs of workers are crucial aspects of business management. This principle of human
motivation helped revolutionize theories and practices of management.
 Abraham Maslow, a practicing psychologist, developed one of the most widely
recognized need theories, a theory of motivation based upon a consideration of human
needs . His theory of human needs had three assumptions:

 Human needs are never completely satisfied.

 Human behavior is purposeful and is motivated by the need for satisfaction.

 Needs can be classified according to a hierarchical structure of importance, from the

lowest to highest.

Maslow broke down the needs hierarchy into five specific areas:

 Physiological needs. Maslow grouped all physical needs necessary for maintaining

basic human well‐being, such as food and drink, into this category. After the need is
satisfied, however, it is no longer is a motivator.
 Safety needs. These needs include the need for basic security, stability, protection,
and freedom from fear. A normal state exists for an individual to have all these needs
generally satisfied. Otherwise, they become primary motivators.

 Belonging and love needs. After the physical and safety needs are satisfied and
are no longer motivators, the need for belonging and love emerges as a primary motivator.
The individual strives to establish meaningful relationships with significant others.

 Esteem needs. An individual must develop self‐confidence and wants to achieve

status, reputation, fame, and glory.

 Self‐actualization needs. Assuming that all the previous needs in the hierarchy are
satisfied, an individual feels a need to find himself.

Maslow’s hierarchy of needs theory helped managers visualize employee motivation.

Douglas McGregor was heavily influenced by both the Hawthorne studies and Maslow. He
believed that two basic kinds of managers exist. One type, the Theory X manager, has a
negative view of employees and assumes that they are lazy, untrustworthy, and incapable
of assuming responsibility. On the other hand, the Theory Y manager assumes that
employees are not only trustworthy and capable of assuming responsibility, but also have
high levels of motivation.

An important aspect of McGregor’s idea was his belief that managers who hold either set of
assumptions can create self‐fulfilling prophecies — that through their behavior, these
managers create situations where subordinates act in ways that confirm the manager’s
original expectations.
As a group, these theorists discovered that people worked for inner satisfaction and not
materialistic rewards, shifting the focus to the role of individuals in an organization’s
performance.

POM/U1 Topic 5 Systems and

Contingency Approaches
SYSTEM APPROACH TO MANAGEMENT
In the 1960, an approach to management appeared which try to unify the prior schools of
thought. This approach is commonly known as ‘Systems Approach’. Its early contributors
include Ludwing Von Bertalanfty, Lawrence J. Henderson, W.G. Scott, Deniel Katz, Robert
L. Kahn, W. Buckley and J.D. Thompson.

They viewed organisation as an organic and open system, which is composed of interacting
and interdependent parts, called subsystems. The system approach is top took upon
management as a system or as “an organised whole” made up of sub- systems integrated
into a unity or orderly totality.

Systems approach is based on the generalization that everything is inter-related and inter-
dependent. A system is composed of related and dependent element which when in
interaction, forms a unitary whole. A system is simply an assemblage or combination of
things or parts forming a complex whole.

One its most important characteristic is that it is composed of hierarchy of sub-systems.

That is the parts forming the major system and so on. For example, the world can be
considered-to be a system in which various national economies are sub-systems.

In turn, each national economy is composed of its various industries, each industry is
composed of firms’ and of course a firm can be considered a system composed of sub-
systems as production, marketing, finance, accounting and so on.

Features of Systems Approach:

(i) A system consists of interacting elements. It is set of inter-related and inter-dependent
parts arranged in a manner that produces a unified whole.

(ii) The various sub-systems should be studied in their inter-relationships rather, than in

isolation from each other.

(iii) An organizational system has a boundary that determines which parts are internal and
which are external.
(iv) A system does not exist in a vacuum. It receives information, material and energy from
other systems as inputs. These inputs undergo a transformation process within a system
and leave the system as output to other systems.

(v) An organisation is a dynamic system as it is responsive to its environment. It is

vulnerable to change in its environment.

In the systems approach, attention is paid towards the overall effectiveness of the system
rather than the effectiveness of the sub-systems. The interdependence of the sub-systems
is taken into account. The idea of systems can be applied at an organizational level. In
Appling system concepts, organizations are taken into account and not only the objectives
and performances of different departments (sub-systems).

The systems approach is considered both general and specialized systems. The general
systems approach to management is mainly concerned with formal organizations and the
concepts are relating to technique of sociology, psychology and philosophy. The specific
management system includes the analysis of organizational structure, information, planning
and control mechanism and job design, etc.

Systems theory is useful to management because it aims at achieving the objectives and it
views organisation as an open system. Chester Barnard was the first person to utilize the
systems approach in the field of management.

Evaluation of System Approach:

The systems approach assists in studying the functions of complex organizations and has
been utilized as the base for the new kinds of organizations like project management
organisation. It is possible to bring out the inter-relations in various functions like planning,
organizing, directing and controlling. This approach has an edge over the other approaches
because it is very close to reality. This approach is called abstract and vague. It cannot be
easily applied to large and complex organizations. Moreover, it does not provide any tool
and technique for managers.

CONTINGENCY APPROACHES TO MANAGEMENT

The ‘Contingency Approach to Management’ is relatively a new approach to management.

It is an extension of the system approach. The basic idea of the contingency approach is
that the organisation has to come up with different situations in different ways. There is no
single best way of managing applicable to all situations.

In order to be effective, the internal functioning of an organisation must be consistent with

the demands of the external environment. The managers must keep the functioning of an
organisation in harmony with the needs of its members and the external forces.

The contingency approach to management is based on the idea that there is no single best
way to manage. Contingency refers to the immediate contingent circumstances. Effective
 organizations must tailor their planning, organizing, leading, and controlling to their
particular circumstances. In other words, managers should identify the conditions of a task,
the requirements of the management job, and people involved as parts of a complete
management situation. The leaders must then work to integrate all these facets into a
solution that is most appropriate for a specific circumstance.

The main characteristics of the Contingency Approach to management

(i) Management is entirely situational. The application and effectiveness of any technique is
contingent on the situation.

(ii) Management should match its approach to the requirements of the particular situation.
To be effective, management policies and practices must respond to environmental
changes. The organisation structure, the leadership style, the control system—all should be
designed to fit the particular situation.

(iii) As management’s success depends on its ability to cope with its environment, it should
sharpen its diagnostic skills so as to anticipate and comprehend environmental changes.

(iv) The managers should understand that there is no one best way to manage.

(v) Because of the specific organisation-environment relationship, no action can be

universal. It varies from situation to situation.

Contingency approach is pragmatic in nature. It avoids vague judgements and widens the
horizons of practicing managers. It guides them to be alert and adaptive to environmental
factors while choosing their techniques and styles. They get the opportunity of becoming
innovative and creative.

The contingency approach has a wide-ranging applicability and practical utility in

organisation and management. It advocates comparative analysis of the organizations to
bring about matching between the organizational structure and situational peculiarities.
Hence, this approach is also known as ‘Situational Approach to Management’.

The contingency approach focuses attention on specific situational factors that affect the
management strategy. It requires the managers to develop skill in situational analysis. It
combines the mechanistic and humanistic approaches to fit the particular situation.

It is an improvement over the system approach as it not only examines the relationships
between the sub-systems of an organisation but the relationship between the organisation
and its environment too.

Factors that influence the contingency theory are numerous. These include the following:

 The size of the organization

 How the firm adapts itself to its environment
 Differences among resources and operations activities
 Assumption of managers about employees
 Strategies
 Technologies being used

MPOB/U1 Topic 5 Planning: Nature, Scope and objectives

of Planning
Planning is the most basic of all managerial functions. It is the process by which managers
establish goals and define the methods by which these goals are to be attained.

Planning involves selecting missions and objectives and the actions to achieve them; it
requires decision making, which is choosing from among alternative future courses of
action  – Weihrich and Koontz

Planning is thus taken as the foundation for future activities. Newman has thus defined it as,
“Planning is deciding in advance what is to be done; that is a plan is a projected course of
action.”

So, planning can be thought of as deciding on a future course of action. It may also be
treated as a process of thinking before doing.

Management has to plan for long-range and short-range future direction by looking ahead
into the future, by estimating and evaluating the future behavior of the relevant environment
and by determining the enterprise’s own desired role.

Planning involves determining various types and volumes of physical and other resources to
be acquired from outside, to allocate these resources in an efficient manner among
competing claims and to make arrangement for systematic conversion of these resources
into useful outputs.

Nature of Planning
(i) Planning Focuses on Achieving Objectives

Management begins with planning and planning begins with the determining of objectives.
In the absence of objectives no organisation can ever be thought about. With the
determining of objective, the way to achieve the objective is decided in the planning.

For example, a company decides to achieve annual sales of? 12 crores. After deciding
upon this objective, planning to achieve this objective shall immediately come into force. It
was thought to achieve this objective by giving advertisement in the newspapers.
After some time it comes to be known that the medium of advertisement appeared to be
incapable of achieving the target. In such a situation the medium of advertisement can be
changed and it can be shifted from newspapers to television in this way, every possible
change is made through the planned action for the purpose of achieving the objective.

(ii) Planning is Primary Function of Management

Planning is the first important function of management. The other functions, e.g., organising,
staffing, directing and controlling come later. In the absence of planning no other function of
management can be performed.

This is the base of other functions of management. For example, a company plans to
achieve a sales target of 112 crores a year. In order to achieve this target the second
function of management, i.e., organising comes into operation.

Under it the purchase, sales, production and financial activities are decided upon. In order
to complete these activities, different departments and positions are decided upon. The
authority and responsibility of every position are decided upon.

After the work of organising, information about the number of different people at different
levels required to achieve the objective shall have to be provided. This job will be performed
under staffing. Similarly, planning is the base of other functions like directing and controlling.

(iii) Planning is Pervasive

Since the job of planning is performed by the managers at different levels working in the
enterprise, it is appropriate to call it all-pervasive. Planning is an important function of every
manager; he may be a managing director of the organisation or a foreman in a factory.

The time spent by the higher-level managers in the process of planning is comparatively
more than the time spent by the middle-level and lower-level managers. It is, therefore,
clear that all the managers working in an enterprise have to plan their activities.

For example, the decision to expand business is taken by the higher-level managers. The
decision to sell products is taken by the middle-level and lower-level managers.

(iv) Planning is Continuous

Planning is a continuous process for the following reasons:

(a) Plans are prepared for a particular period. Hence, there is need for a new plan after the
expiry of that period.

(b) In case of any discrepancy plans are to be revised.

(c) In case of rapid changes in the business environment plans are to be revised.

(v) Planning is Futuristic

Planning decides the plan of action what is to be done, how is it to be done, when it to be
done, by whom is it to be done all these questions are related to future. Under planning,
answers to these questions are found out.

While an effort is made to find out these answers, the possibility of social, economic,
technical and changes in legal framework are kept in mind. Since planning is concerned
with future activities, it is called futuristic.

For example, a company is planning to market a new product. While doing so it shall have
to keep in mind the customs and the interests/tastes of the people and also the possibility of
any change in them.

(vi) Planning Involves Decision Making

Planning becomes a necessity when there are many alternatives to do a job. A planner
chooses the most appropriate alternative. Therefore, it can be asserted that planning is a
process of selecting the best and rejecting the inappropriate. It is, therefore, observed that
planning involves decision making.

For example, Mr. Anthony lives in a town where only commerce stream is taught in schools.
His daughter has passed matrix and wants to get admission in 10 + 1. It is evident that
there is only one option for her, i.e., commerce.

She doesn’t have to think or plan anything. On the other hand, if all the three faculties’ art,
science & commerce were available in the schools, she would have to definitely think and
plan about the subject of study. It would have been be nothing but decision making in this
case.

(vii) Planning is a Mental Exercise

Planning is known as a mental exercise as it is related to thinking before doing something.

A planner has mainly to think about the following questions:

(i) What to do? (ii) How to do it? (iii) When to do it? (iv) Who is to do it?

Objectives of Planning
(a) An improvement in the standard of living of the people through a sizable increase in
national income within a short period of time;
(b) A large expansion of employment opportunities for the removal of unemployment and for
creating jobs and incomes;

(c) A reduction in all types of social, economic and regional inequalities;

(d) An efficient utilisation of the country’s resources for faster growth;

(e) Removal of mass poverty within a definite time limit through land reform, employment
creation, and provision of educational and medical facilities;

(f) Attainment of self-reliance by reducing dependence on foreign capital and foreign aid.

MPOB/U1 Topic 6 Types of Planning, Planning Process

The 4 Types of Planning
(i) Operational Planning

“Operational plans are about how things need to happen,” motivational leadership speaker
Mack Story said at LinkedIn. “Guidelines of how to accomplish the mission are set.”

This type of planning typically describes the day-to-day running of the company.
Operational plans are often described as single use plans or ongoing plans. Single use
plans are created for events and activities with a single occurrence (such as a single
marketing campaign). Ongoing plans include policies for approaching problems, rules for
specific regulations and procedures for a  step-by-step process for accomplishing particular
objectives.

(ii) Strategic Planning

“Strategic plans are all about why things need to happen,” Story said. “It’s big picture, long-
term thinking. It starts at the highest level with defining a mission and casting a vision.”

Strategic planning includes a high-level overview of the entire business. It’s the foundational
basis of the organization and will dictate long-term decisions. The scope of strategic
planning can be anywhere from the next two years to the next 10 years. Important
components of a strategic plan are vision, mission and values.

(iii) Tactical Planning

“Tactical plans are about what is going to happen,” Story said. “Basically at the tactical
level, there are many focused, specific, and short-term plans, where the actual work is
being done, that support the high-level strategic plans.”
Tactical planning supports strategic planning. It includes tactics that the organization plans
to use to achieve what’s outlined in the strategic plan. Often, the scope is less than one
year and breaks down the strategic plan into actionable chunks. Tactical planning is
different from operational planning in that tactical plans ask specific questions about what
needs to happen to accomplish a strategic goal; operational plans ask how the organization
will generally do something to accomplish the company’s mission.

(iv) Contingency Planning

Contingency plans are made when something unexpected happens or when something
needs to be changed. Business experts sometimes refer to these plans as a special type of
planning.

Contingency planning can be helpful in circumstances that call for a change. Although
managers should anticipate changes when engaged in any of the primary types of planning,
contingency planning is essential in moments when changes can’t be foreseen. As the
business world becomes more complicated, contingency planning becomes more important
to engage in and understand.

Process of Planning
1. Recognizing Need for Action

An important part of the planning process is to be aware of the business opportunities in the
firm’s external environment as well as within the firm.  Once such opportunities get
recognized the managers can recognize the actions that need to be taken to realize them. A
realistic look must be taken at the prospect of these new opportunities and a SWOT
analysis should be done.

Say for example the government plans on promoting cottage industries in semi-urban
areas. A firm can look to explore this opportunity.

2. Setting Objectives

This is the second and perhaps the most important step of the planning process. Here we
establish the objectives for the whole organization and also individual departments.
Organizational objectives provide a general direction, objectives of departments will be
more planned and detailed.

Objectives can be long term and short term as well. They indicate the end result the
company wishes to achieve. So objectives will percolate down from the managers and will
also guide and push the employees in the correct direction.

3. Developing Premises
Planning is always done keeping the future in mind, however, the future is always uncertain.
So in the function of management certain assumptions will have to be made. These
assumptions are the premises. Such assumptions are made in form of forecasts, existing
plans, past policies etc.

These planning premises are also of two types – internal and external. External
assumptions deal with factors such as political environment, social environment,
advancement of technology, competition, government policies etc. Internal assumptions
deal with policies, availability of resources, quality of management etc.

These assumptions being made should be uniform across the organization. All managers
should be aware of these premises and should agree with them.

4. Identifying Alternatives

The fourth step of the planning process is to identify the alternatives available to the
managers. There is no one way to achieve the objectives of the firm, there is a multitude of
choices. All of these alternative courses should be identified. There must be options
available to the manager.

Maybe he chooses an innovative alternative hoping for more efficient results. If he does not
want to experiment he will stick to the more routine course of action. The problem with this
step is not finding the alternatives but narrowing them down to a reasonable amount of
choices so all of them can be thoroughly evaluated.

5. Examining Alternate Course of Action

The next step of the planning process is to evaluate and closely examine each of the
alternative plans. Every option will go through an examination where all there pros and cons
will be weighed. The alternative plans need to be evaluated in the light of the organizational
objectives.

For example, if it is a financial plan. Then it that case its risk-return evaluation will be done.
Detailed calculation and analysis are done to ensure that the plan is capable of achieving
the objectives in the best and most efficient manner possible.

6. Selecting the Alternative

Finally, we reach the decision making stage of the planning process. Now the best and
most feasible plan will be chosen to be implemented. The ideal plan is the most profitable
one with the least amount of negative consequences and is also adaptable to dynamic
situations.

The choice is obviously based on scientific analysis and mathematical equations. But a
managers intuition and experience should also play a big part in this decision. Sometimes a
few different aspects of different plans are combined to come up with the one ideal plan.
7. Formulating Supporting Plan

Once you have chosen the plan to be implemented, managers will have to come up with
one or more supporting plans. These secondary plans help with the implementation of the
main plan. For example plans to hire more people, train personnel, expand the office etc.
are supporting plans for the main plan of launching a new product

8. Implementation of the Plan

And finally, we come to the last step of the planning process, implementation of the plan.
This is when all the other functions of management come into play and the plan is put into
action to achieve the objectives of the organization. The tools required for such
implementation involve the types of plans- procedures, policies, budgets, rules, standards
etc.

MPOB/U1 Topic 7 Process and Techniques of

Decision Making
Decision making is a daily activity for any human being. There is no exception about that.
When it comes to business organizations, decision making is a habit and a process as well.

Effective and successful decisions make profit to the company and unsuccessful ones make
losses. Therefore, corporate decision making process is the most critical process in any
organization.

In the decision making process, we choose one course of action from a few possible
alternatives. In the process of decision making, we may use many tools, techniques and
perceptions.

In addition, we may make our own private decisions or may prefer a collective decision.

Usually, decision making is hard. Majority of corporate decisions involve some level of
dissatisfaction or conflict with another party.

Process of Decision Making

Following are the important steps of the decision making process. Each step may be
supported by different tools and techniques.
 Step 1: Identification of the purpose of the decision

In this step, the problem is thoroughly analysed. 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: Information gathering

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: Principles for judging the 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: Brainstorm and analyse the different choices

For this step, brainstorming to list down all the ideas is the best option. 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: Evaluation of alternatives

Use your judgement principles and decision-making criteria to evaluate each alternative. In
this step, experience and effectiveness of the judgement principles come into play. You
need to compare each alternative for their positives and negatives.

Step 6: Select the best alternative

Once you go through from Step 1 to Step 5, this step is easy. In addition, the selection of
the best alternative is an informed decision since you have already followed a methodology
to derive and select the best alternative.

Step 7: Execute the decision

Convert your decision into a plan or a sequence of activities. Execute your plan by yourself
or with the help of subordinates.

Step 8: Evaluate the results

Evaluate the outcome of your decision. See whether there is anything you should learn and
then correct in future decision making. This is one of the best practices that will improve
your decision-making skills.

Conclusion

When it comes to making decisions, one should always weigh the positive and negative
business consequences and should favour the positive outcomes.

This avoids the possible losses to the organization and keeps the company running with a
sustained growth. Sometimes, avoiding decision making seems easier; especially, when
you get into a lot of confrontation after making the tough decision.

But, making the decisions and accepting its consequences is the only way to stay in control
of your corporate life and time.

Techniques of Decision-Making
Decision-Making: Technique # 1. Marginal Analysis

This technique is used in decision-making to figure out how much extra output will result if
one more variable (e.g. raw material, machine, and worker) is added. In his book,
‘Economics’, Paul Samuelson defines marginal analysis as the extra output that will result
by adding one extra unit of any input variable, other factors being held constant.

Marginal analysis is particularly useful for evaluating alternatives in the decision-making

process.

Decision-Making: Technique # 2. Financial Analysis

This decision-making tool is used to estimate the profitability of an investment, to calculate

the payback period (the period taken for the cash benefits to account for the original cost of
an investment), and to analyze cash inflows and cash outflows.

Investment alternatives can be evaluated by discounting the cash inflows and cash outflows
(discounting is the process of determining the present value of a future amount, assuming
that the decision-maker has an opportunity to earn a certain return on his money).

Decision-Making: Technique # 3. Break-Even Analysis

This tool enables a decision-maker to evaluate the available alternatives based on price,
fixed cost and variable cost per unit. Break-even analysis is a measure by which the level of
sales necessary to cover all fixed costs can be determined.
Using this technique, the decision-maker can determine the break-even point for the
company as a whole, or for any of its products. At the break-even point, total revenue
equals total cost and the profit is nil.

Decision-Making: Technique # 4. Ratio Analysis

It is an accounting tool for interpreting accounting information. Ratios define the relationship
between two variables. The basic financial ratios compare costs and revenue for a
particular period. The purpose of conducting a ratio analysis is to interpret financial
statements to determine the strengths and weaknesses of a firm, as well as its historical
performance and current financial condition.

Decision-Making: Technique # 5. Operations Research Techniques

One of the most significant sets of tools available for decision-makers is operations
research. An operation research (OR) involves the practical application of quantitative
methods in the process of decision-making. When using these techniques, the decision-
maker makes use of scientific, logical or mathematical means to achieve realistic solutions
to problems. Several OR techniques have been developed over the years.

Decision-Making: Technique # 6. Linear Programming

Linear programming is a quantitative technique used in decision-making. It involves making

an optimum allocation of scarce or limited resources of an organization to achieve a
particular objective. The word ‘linear’ implies that the relationship among different variables
is proportionate.

The term ‘programming’ implies developing a specific mathematical model to optimize

outputs when the resources are scarce. In order to apply this technique, the situation must
involve two or more activities competing for limited resources and all relationships in the
situation must be linear.

Decision-Making: Technique # 7. Waiting-line Method

This is an operations research method that uses a mathematical technique for balancing
services provided and waiting lines. Waiting lines (or queuing) occur whenever the demand
for the service exceeds the service facilities.

Since a perfect balance between demand and supply cannot be achieved, either customers
will have to wait for the service (excess demand) or there may be no customers for the
organization to serve (excess supply).

When the queue is long and the customers have to wait for a long duration, they may get
frustrated. This may cost the firm its customers. On the other hand, it may not be feasible
for the firm to maintain facilities to provide quick service all the time since the cost of idle
service facilities have to be borne by the company.
The firm, therefore, has to strike a balance between the two. The queuing technique helps
to optimize customer service on the basis of quantitative criteria. However, it only provides
vital information for decision-making and does not by itself solve the problem. Developing
queuing models often requires advanced mathematical and statistical knowledge.

Decision-Making: Technique # 8. Game Theory

This is a systematic and sophisticated technique that enables competitors to select rational
strategies for attainment of goals. Game theory provides many useful insights into situations
involving competition. This decision-making technique involves selecting the best strategy,
taking into consideration one’s own actions and those of one’s competitors.

The primary aim of game theory is to develop rational criteria for selecting a strategy. It is
based on the assumption that every player (a competitor) in the game (decision situation) is
perfectly rational and seeks to win the game.

In other words, the theory assumes that the opponent will carefully consider what the
decision-maker may do before he selects his own strategy. Minimizing the maximum loss
(minimax) and maximizing the minimum gain (maximin) are the two concepts used in game
theory.

Decision-Making: Technique # 9. Simulation

This technique involves building a model that represents a real or an existing system.
Simulation is useful for solving complex problems that cannot be readily solved by other
techniques. In recent years, computers have been used extensively for simulation. The
different variables and their interrelationships are put into the model.

When the model is programmed through the computer, a set of outputs is obtained.
Simulation techniques are useful in evaluating various alternatives and selecting the best
one. Simulation can be used to develop price strategies, distribution strategies, determining
resource allocation, logistics, etc.

Decision-Making: Technique # 10. Decision Tree

This is an interesting technique used for analysis of a decision. A decision tree is a

sophisticated mathematical tool that enables a decision-maker to consider various
alternative courses of action and select the best alternative. A decision tree is a graphical
representation of alternative courses of action and the possible outcomes and risks
associated with each action.

MPOB/U1 Topic 8 Bounded Rationality

Bounded rationality is the idea that rationality is limited when individuals make decisions: by
the tractability of the decision problem, the cognitive limitations of the mind, and the time
available to make the decision. Decision-makers, in this view, act as satisficers, seeking a
satisfactory solution rather than an optimal one.

Herbert A. Simon proposed bounded rationality as an alternative basis for the mathematical
modeling of decision-making, as used in economics, political science and related
disciplines. It complements “rationality as optimization”, which views decision-making as a
fully rational process of finding an optimal choice given the information available. Simon
used the analogy of a pair of scissors, where one blade represents “cognitive limitations” of
actual humans and the other the “structures of the environment”, illustrating how minds
compensate for limited resources by exploiting known structural regularity in the
environment. Many economics models assume that people are on average rational, and
can in large enough quantities be approximated to act according to their preferences. The
concept of bounded rationality revises this assumption to account for the fact that perfectly
rational decisions are often not feasible in practice because of the intractability of natural
decision problems and the finite computational resources available for making them.

Bounded rationality is the idea that we make decisions that are rational, but within the limits
of the information available to us and our mental capabilities. Economists who think of us as
‘boundedly rational’ don’t see us as an ‘economic superman’, or homo economicus that
spends his life optimizing the happiness created by every decision. Instead, they see us as
satisficers — as people who choose the option that will satisfy their needs and wants
without putting too much effort into making sure they’ve considering every single possibility.

Decision makers (irrespective of their level of intelligence) have to work under three
unavoidable constraints:

(1) only limited, often unreliable, information is available regarding possible alternatives and
their consequences,

(2) human mind has only limited capacity to evaluate and process the information that is
available, and

(3) only a limited amount of time is available to make a decision. Therefore even individuals
who intend to make rational choices are bound to make satisficing (rather than maximizing
or optimizing) choices in complex situations. These limits (bounds) on rationality also make
it nearly impossible to draw up contracts that cover every contingency, necessitating
reliance on rules of thumb.
 MPOB/U1 Topic 9 Organizing: Concept, Principles of
an Organization
Organizing is the function of management which follows planning. It is a function in which
the synchronization and combination of human, physical and financial resources takes
place. All the three resources are important to get results. Therefore, organizational function
helps in achievement of results which in fact is important for the functioning of a concern.
According to Chester Barnard, “Organizing is a function by which the concern is able to
define the role positions, the jobs related and the co-ordination between authority and
responsibility. Hence, a manager always has to organize in order to get results.

A manager performs organizing function with the help of following steps:-

1. Identification of activities: All the activities which have to be performed in a

concern have to be identified first. For example, preparation of accounts, making sales,
record keeping, quality control, inventory control, etc. All these activities have to be grouped
and classified into units.
2. Departmentally organizing the activities: In this step, the manager tries to
combine and group similar and related activities into units or departments. This organization
of dividing the whole concern into independent units and departments is called
departmentation.
3. Classifying the authority: Once the departments are made, the manager likes to
classify the powers and its extent to the managers. This activity of giving a rank in order to
the managerial positions is called hierarchy. The top management is into formulation of
policies, the middle level management into departmental supervision and lower level
management into supervision of foremen. The clarification of authority help in bringing
efficiency in the running of a concern. This helps in achieving efficiency in the running of a
concern. This helps in avoiding wastage of time, money, effort, in avoidance of duplication
or overlapping of efforts and this helps in bringing smoothness in a concern’s working.
4. Co-ordination between authority and responsibility: Relationships are
established among various groups to enable smooth interaction toward the achievment of
the organizational goal. Each individual is made aware of his authority and he/she knows
whom they have to take orders from and to whom they are accountable and to whom they
have to report. A clear organizational structure is drawn and all the employees are made
aware of it.

Principles of Organizing
The organizing process can be done efficiently if the managers have certain guidelines so
that they can take decisions and can act. To organize in an effective manner, the following
principles of organization can be used by a manager.

(i) Principle of Specialization

According to the principle, the whole work of a concern should be divided amongst the
subordinates on the basis of qualifications, abilities and skills. It is through division of work
specialization can be achieved which results in effective organization.

(ii) Principle of Functional Definition

According to this principle, all the functions in a concern should be completely and clearly
defined to the managers and subordinates. This can be done by clearly defining the duties,
responsibilities, authority and relationships of people towards each other. Clarifications in
authority-responsibility relationships helps in achieving co-ordination and thereby
organization can take place effectively. For example, the primary functions of production,
marketing and finance and the authority responsibility relationships in these departments
shouldbe clearly defined to every person attached to that department. Clarification in the
authority-responsibility relationship helps in efficient organization.

(iii) Principles of Span of Control/Supervision

According to this principle, span of control is a span of supervision which depicts the
number of employees that can be handled and controlled effectively by a single manager.
According to this principle, a manager should be able to handle what number of employees
 under him should be decided. This decision can be taken by choosing either from a wide or
narrow span. There are two types of span of control:-

(a) Wide span of control: It is one in which a manager can supervise and control
effectively a large group of persons at one time. The features of this span are:-

1. Less overhead cost of supervision

2. Prompt response from the employees
3. Better communication
4. Better supervision
5. Better co-ordination
6. Suitable for repetitive jobs

According to this span, one manager can effectively and efficiently handle a large number of
subordinates at one time.

(b) Narrow span of control: According to this span, the work and authority is divided
amongst many subordinates and a manager doesn’t supervises and control a very big
group of people under him. The manager according to a narrow span supervises a selected
number of employees at one time. The features are:-

Work which requires tight control and supervision, for example, handicrafts, ivory work, etc.
which requires craftsmanship, there narrow span is more helpful.

1. Co-ordination is difficult to be achieved.

2. Communication gaps can come.
3. Messages can be distorted.
4. Specialization work can be achieved.

MPOB/U1 Topic 10 Span of Control, Departmentization

Span of Control
The larger an organization, the more management layers it has. As a result, a hierarchy is
born. Multiple people in a department deal with a single superior. Some departments might
only have ten people, while others consist of over a hundred employees. In both cases,
span of control is present to properly manage all layers of the organization.

The Span of Control is the number of employees a manager can supervise as effectively as
possible. The addition of new hierarchical layers makes the organizational structure
steeper.

A large Span of Control leads to a flatter organisational structure, which results in lower
costs. A small span of control creates a steeper organisational structure, which requires
more managers and which will consequently be more expensive for the organization. It is
therefore useful for an organization if its managers have a large span of control.
 Increasing Span of Control

When a manager supervises a large number of employees, he often has little time to align
activities and monitor the quality of how activities are executed.

Every situation needs to be assessed individually based on factors that determine the span
of control. If a situation arises in which a supervisor manages too many employees, there
are several ways for finding a solution to increase the Span of Control:

 Training the manager, teaching him management skills such as delegating and clear
communication.
 Training employees, teaching them to work independently and make better use of
their time.
 Delegation by the manager, decreasing his workload and improving the division of
labour.
 Improving procedures and systems; when procedures take up a lot of time, it is a
good idea to find efficient solutions with the help of the management team.
 Involving HR, who will unburden the manager by taking over certain specialist tasks
such as the department’s HR policy.
 Assigning a personal assistant, who can take over routine activities, reducing the
manager’s workload.
 Appointing an assistant-manager who reports to the manager, but in the perception
of the subordinates is fully qualified in terms of executive and policy tasks and can act as
manager when needed.

Span of Control example

Here are two examples to illustrate the harmony between Scope of control and Span of
Control.

First is a situation with a manager with years of experience leading a team of approximately
40 people. Problems arise when his team is reduced to 20 people as a result of cutbacks.
At first, everything still seems to be okay. Everyone knows what is expected of them, but as
time goes by, the manager starts feeling uneasy. He wants to have more control and make
things go his way.

Employees start to feel the manager is constantly looking over their shoulder and see his
presence as a hindrance. It is likely that the manager will start to get bored and will no
longer be able to find intrinsic motivation in his work. Conflicts may arise and small
problems become big ones very easily. In some cases, the manager can feel he is not
sufficiently stimulated, which can have very negative consequences.

The second situation involves a manager who is used to leading a team of about five
employees. He will experience stress when he is made responsible for a group of 20
people. If the employees are able to function on their own, things might be al-right at first.
But when problems or conflicts arise, the manager needs to be there for all 20 of his
 subordinates. He will find it difficult to delegate tasks, because he is used to working one-
on-one with only about five employees.

The situation becomes more complicated for the manager when the majority of the 20
employees are not able to function independently. The manager will be confronted with his
own lack of delegating skills. In both cases it is important to identify the problem and offer
practical solutions.

Departmentalization
Departmentalization means grouping activities and people into departments, making it
possible to expand organizations, at least in theory, to an indefinite degree.

Departmentalization refers to the formal structure of the organization, composed of various

departments and managerial positions and their relationships with each other.

As an organization grows, its departments grow and more sub-units are created, which in
turn add more levels of management.

This often creates less flexibility, adaptability, and units of action within the firm.

Departmentalization is the efficient and effective grouping of jobs into meaningful work units
to coordinate numerous jobs—all for the expeditious accomplishment of the organization’s
objectives.

Types of Departmentalization
Departmentalization results from the division of work and the desire to obtain organization
units of manageable size and to utilize managerial ability.

An organization structure and design are shaped significantly by the Departmentalization

followed.

The means of Departmentalization are by

1. Functional Departmentalization.
2. Departmentalization by Territory.
3. Departmentalization of organization by customer group.
4. Matrix departmentalization.
5. Planning Task Force.

An organizer is free to use any means of departmentalization in constructing an

organization structure. In fact, in any given structure several means are typically used.

1. Functional Departmentalization
 Functional departmentalization groups together jobs which are involving the same or similar
activities. It allows the organization to staff all important positions with functional experts
and facilitates coordination and integration.

2. Departmentalization by Territory

Departmentalization by Territory method is followed where; unless to local conditions

appears to offer advantages, such as low cost of operation and opportunities to capitalize
on attractive local conditions as they arise.

Territorial departmentalization is especially popular for sales where division appears

feasible according to some geographic market segregation.

3. Departmentalization of organization by customer group.

Customer departmentalization is where the organization’s activities are ready to respond to

and interact with specific customers or customer groups.

This organizational form is used when great emphasis is placed on effectively serving
different customer types.

4. Matrix departmentalization

Matrix departmentalization attempts to combine functional and task force (project)

departmentalization designs to improve the synchronization of multiple components for a
single activity (i.e., a moon launch), to improve the economics of scale, and to better serve
the customer and company.

5. Planning Task Force

Planning task force is most often formed when the organization requires addressing special
circumstances. It is more preferable, and efficient than maintaining a different planning staff
or department.

MPOB/U1 Topic 11 Types of Organizations

1. Flat Organization
A flat organization is unlike any other corporate structure. It’s exactly as its name suggests.
While individuals may keep an expertise, hierarchy and job titles are not stressed among
general employees, senior managers, and executives. In a purely flat organization,
everyone is equal.

Flat organizations are also described as self-managed. The idea behind this organizational
structure is to reduce bureaucracy so as to empower employees to make decisions,
 become creative problem solvers, and take responsibility for their actions. Since there are
minimal or no levels of middle management, a company that adopts this structure well can
end up being more productive by speeding up the decision-making processes.

Apart from increased productivity, firms with flat organizations have leaner budgets since
they don’t involve any pricey middle-management salaries. The only thing to keep in mind is
that this structure works best for small to medium-sized companies. This way, a firm can
decentralize decision-making while still maintaining its corporate integrity.

2. Functional Organization
Also referred to as a bureaucratic structure, a functional organization is one that divides a
firm’s operations based on specialties. Ideally, there’s an individual in charge of a particular
function. It’s like any typical business that consists of a sales department, human relations,
and marketing department. It means that every employee receives tasks and is accountable
to a particular specialist.

A functional organization confers several benefits. For one, there’s a total specialization of
work meaning that every employee gets professional guidance from a specialist. Secondly,
work is performed more efficiently since each manager is responsible for a single function.
The only drawback to adopting a functional organization is the fact that there’s delay in
decision-making. All the functional managers must be consulted when making major
decisions, which can take time.

3. Divisional Organization
A divisional organization structures its activities around a market, product, or specific group
of consumers. For instance, a firm can operate in the United States or Europe or sell
products focused on a specific group of customers. Gap Inc. is the perfect case in point. It
runs three different retailers – Banana Republic, Gap and Old Navy. Although each one
operates as a separate entity that caters to different consumer segments, they are all under
the company Gap Inc. brand.

4. Matrix Organization
A matrix organizational structure is a bit more complex in that there’s more than one line of
reporting managers. It simply means that the employees are accountable to more than one
boss. Most firms that take on this organizational structure often have two chains of
command – functional and project managers. However, this organization works best for
companies with large-scale projects.

A matrix organization offers several benefits. They include a clear articulation of the
company’s mission and objectives, effective use of limited resources, and retention of
professionals throughout the life of a company. Additionally, a matrix structure provides a
practical way of integrating the firm’s objectives with operations.
MPOB/U1 Topic 12 Delegation and Decentralization
Delegation
Delegation is the assignment of any authority to another person (normally from a manager
to a subordinate) to carry out specific activities. It is one of the core concepts of
management leadership. However, the person who delegated the work remains
accountable for the outcome of the delegated work. Delegation empowers a subordinate to
make decisions, i.e. it is a shifting of decision-making authority from one organizational level
to a lower one. Delegation, if properly done, is not fabrication. The opposite of effective
delegation is micromanagement, where a manager provides too much input, direction, and
review of delegated work. In general, delegation is good and can save money and time,
help in building skills, and motivate people. On the other hand, poor delegation might cause
frustration and confusion to all the involved parties. Some agents, however, do not favour a
delegation and consider the power of making a decision rather burdensome.

According to Dr. Kanthi Wijesinghe, Senior Lecturer, National Institute of Education,

‘Delegation begins when the manager passes on some of his responsibilities to the
subordinate. Responsibility is the work assigned to an individual’. When assigning these
responsibilities to other individuals, these individuals must be willing and ready to be
delegated to as well. The delegated readiness of the individuals is an important factor in
determining the success of the delegation. Individuals must be prepared for delegation.

Delegating is a critical skill for supervisors at any level. Delegating involves working with an
employee to establish goals, granting them sufficient authority and responsibility to achieve
the goals, often giving them

(i) Substantial freedom in deciding how the goals will be achieved,

(ii) Remaining available as a resource to help them achieve the goals,

(iii) Assessing the quality of their effort and attainment of the goals,

(iv) Addressing performance issues and/or rewarding their performance. Ultimately, the
supervisor retains responsibility for the attainment of the goals, but chooses to achieve the
goals by delegating to someone else.

Delegating is different than work directing. Work directing is telling someone what to do and
how to do it. There usually is much less freedom as to how the employee does the task, and
many times is much less ownership, participation and learning on the part of the employee,
as well.

Delegation can sometimes be a major challenge for new supervisors to learn because they
are concerned about giving up control or struggling to have confidence in the abilities of
others. Supervisors that can effectively delegate can free up a great deal of their own time,
 help their direct reports to cultivate expertise in learning, and can develop their own
leadership skills — skills that are critical for problem solving, goal attainment and learning.

The Process of delegation

 Assignment of authority
 Assignment of task
 Creation of responsibility
 Creation of accountability

Decentralization
Decentralization is the process by which the activities of an organization, particularly those
regarding planning and decision making, are distributed or delegated away from a central,
authoritative location or group.[1] Concepts of decentralization have been applied to group
dynamics and management science in private businesses and organizations, political
science, law and public administration, economics, money and technology.

UNIT 2
MPOB/U2 Topic 1 Staffing: Concept, Nature and
Importance of Staffing
Staffing
The managerial function of staffing involves manning the organization structure through
proper and effective selection, appraisal and development of the personnel’s to fill the roles
assigned to the employers/workforce.

According to Theo Haimann, “Staffing pertains to recruitment, selection, development and

compensation of subordinates.”

CONCEPTS:

1. Staffing is an important managerial function- Staffing function is the most

important managerial act along with planning, organizing, directing and controlling. The
operations of these four functions depend upon the manpower which is available through
staffing function.
2. Staffing is a pervasive activity- As staffing function is carried out by all mangers
and in all types of concerns where business activities are carried out.
3. Staffing is a continuous activity- This is because staffing function continues
throughout the life of an organization due to the transfers and promotions that take place.
4. The basis of staffing function is efficient management of personnel’s- Human
resources can be efficiently managed by a system or proper procedure, that is, recruitment,
selection, placement, training and development, providing remuneration, etc.
5. Staffing helps in placing right men at the right job- It can be done effectively
through proper recruitment procedures and then finally selecting the most suitable
candidate as per the job requirements.
6. Staffing is performed by all managers depending upon the nature of business,
size of the company, qualifications and skills of managers, etc. In small companies, the top
management generally performs this function. In medium and small scale enterprise, it is
performed especially by the personnel department of that concern.

Nature of Staffing
Staffing is an integral part of human resource management. It facilitates procurement and
placement of right people on the right jobs.

The nature of staffing function is discussed below:

(i)  People Centred

Staffing is people centred and is relevant in all types of organizations. It is concerned with
all categories of personnel from top to bottom of the organization.

(ii) Responsibility of Every Manager

Staffing is a basic function of management. Every manager is continuously engaged in

performing the staffing function. He is actively associated with recruitment, selection,
training and appraisal of his subordinates. These activities are performed by the chief
executive, departmental managers and foremen in relation to their subordinates. Thus,
staffing is a pervasive function of management and is performed by the managers at all
levels.

It is the duty of every manager to perform the staffing activities such as selection, training,
performance appraisal and counseling of employees. In many enterprises. Personnel
Department is created to perform these activities.

But it does not mean that the managers at different levels are relieved of the responsibility
concerned with staffing. The Personnel Department is established to provide assistance to
the managers in performing their staffing function. Thus, every manager has to share the
responsibility of staffing.

(iii) Human Skills

Staffing function is concerned with training and development of human resources. Every
manager should use human relations skill in providing guidance and training to the
subordinates. Human relations skills are also required in performance appraisal, transfer
 and promotion of subordinates. If the staffing function is performed properly, the human
relations in the organization will be cordial.

(iv) Continuous Function

Staffing function is to be performed continuously. It is equally important in the established

organizations and the new organizations. In a new organization, there has to be
recruitment, selection and training of personnel. In a running organization, every manager is
engaged in various staffing activities. He is to guide and train the workers and also evaluate
their performance on a continuous basis.

Importance of Staffing
It is most importance for the organization that right kinds of people are employed. They
should be given adequate training so that wastage is minimum. They must also be induced
to show higher productivity and quality by offering them incentives.

In fact, effective performance of the staff function is necessary to realize the following
benefits:

1. Efficient Performance of Other Functions

Staffing is the key to the efficient performance of other functions of management. If an

organization does not have competent personnel, it can’t perform planning, organization
and control functions properly.

2. Effective Use of Technology and Other Resources

It is the human factor that is instrumental in the effective utilization of latest technology,
capital, material, etc. the management can ensure right kinds of personnel by performing
the staffing function.

3. Optimum Utilization of Human Resources

The wage bill of big concerns is quite high. They also spend money on recruitment,
selection, training and development of employees. In order to get the optimum output from
the personnel, the staffing function should be performed in an efficient manner.

4. Development of Human Capital

The management is required to determine the manpower requirements well in advance. It

has also to train and develop the existing personnel for career advancement. This will meet
the requirements of the company in future.

5. Motivation of Human Resources

 The behaviour of individuals is shaped by many factors such as education level, needs,
socio-cultural factors, etc. that is why, the human aspect of organization has become very
important. The workers can be motivated through financial and non-financial incentives.

6. Building Higher Morale

Right type of climate should be created for the workers to contribute to the achievement of
the organizational objectives. By performing the staffing function effectively, management
can show the significance it attaches to the personnel working in the enterprise. This will
increase the morale of the employees.

MPOB/U2 Topic 2 Motivating and Leading: Nature and

importance of Motivation

Motivation is an important factor which encourages persons to give their best performance
and help in reaching enterprise goals. A strong positive motivation will enable the increased
output of employee but a negative motivation will reduce their performance. A key element
in personnel management is motivation. According to Likert, “it is the core of management
which shows that every human being gives him a sense of worth in face-to-face groups
which are most important to him. A supervisor should strive to treat individuals with dignity
and a recognition of their personal worth.”

Motivation has been variously defined by scholars. Some definitions are discussed
as follows:

Berelson and Steiner: “A motive is an inner state that energizes, activates, or moves and
directs or channels behaviour goals.’

Lillis: “It is the stimulation of any emotion or desire operating upon one’s will and promoting
or driving it to action.”

The Encyclopaedia of Management: “Motivation refers to degree of readiness of an

organism to pursue some designated goal and implies the determination of the nature and
locus of the forces, including the degree of readiness.”

Dubin: “Motivation is the complex of forces starting and keeping a person at work in an
organisation.”

Vance: “Motivation implies any emotion or desire which so conditions one’s will that the
individual is properly lead into action.”
 Vitiles: “Motivation represents an unsatisfied need which creates a state of tension or
disequilibrium, causing the individual to make in a goal-directed pattern towards restoring a
state of equilibrium by satisfying the need.”

Memoria: “A willingness to expend energy to achieve a goal or reward. It is a force that

activates dormant energies and sets in motion the action of the people. It is the function that
kindles a burning passion for action among the human begins of an organisation.”

Nature of Motivation
Motivation is a psychological phenomenon which generates within an individual. A person
feels the lack of certain needs, to satisfy which he feels working more. The need satisfying
ego motivates a person to do better than he normally does.

From definitions given earlier the following inferences can be derived:

1. Motivation is an inner feeling which energizes a person to work more.

2. The emotions or desires of a person prompt him for doing a particular work.
3. There are unsatisfied needs of a person which disturb his equilibrium.
4. A person moves to fulfill his unsatisfied needs by conditioning his energies.
5. There are dormant energies in a person which are activated by channelizing them
into actions.

Importance of Motivation
Management tries to utilize all the sources of production in a best possible manner. This
can be achieved only when employees co-operate in this task. Efforts should be made to
motivate employees for contributing their maximum. The efforts of management will not
bear fruit if the employees are not encouraged to work more. The motivated employees
become an asset to the organisation. The following is the importance of motivation.

(i) High Performance

Motivated employees will put maximum efforts for achieving organisational goals. The
untapped reservoirs, physical and mental abilities are tapped to the maximum. Better
performance will also result in higher productivity. The cost of production can also be
brought down if productivity is raised. The employees should be offered more incentives for
increasing their performance. Motivation will act as a stimulant for improving the
performance of employees.

(ii) Low Employee Turnover and Absenteeism

When the employees are not satisfied with their job then they will leave it whenever they get
an alternative offer. The dissatisfaction among employees also increases absenteeism. The
employment training of new employees costs dearly to the organization. When the
employees are satisfied with their jobs and they are well motivated by offering them
financial and non-financial incentives then they will not leave the job. The rate of
absenteeism will also be low because they will try to increase their output.

(iii) Better Organizational Image

Those enterprises which offer better monetary and non-monetary facilities to their
employees have a better image among them. Such concerns are successful in attracting
better qualified and experienced persons. Since there is a better man-power to
development programme, the employees will like to join such organizations. Motivational
efforts will simplify personnel function also.

(iv) Better Industrial Relations

A good motivational system will create job satisfaction among employees. The employment
will offer those better service conditions and various other incentives. There will be an
atmosphere of confidence among employers and employees. There will be no reason for
conflict and cordial relations among both sides will create a health atmosphere. So
motivation among employees will lead to better industrial relations.

(v) Acceptability to Change

The changing social and industrial situations will require changes and improvements in the
working of enterprises. There will be a need to introduce new and better methods of work
from time to time. Generally, employees resist changes for fear of an adverse effect on their
employment. When the employees are given various opportunities of development then
they can easily adapt to new situations.

They will think of positive side of new changes and will co-operate with the management. If
the employees are satisfied with their work and are not offered better avenues then they will
oppose everything suggested by the management. Motivation will ensure the acceptability
of new changes by the employees.

LEADING
Leading involves the social and informal sources of influence that you use to inspire action
taken by others. If managers are effective leaders, their subordinates will be enthusiastic
about exerting effort to attain organizational objectives.

The behavioral sciences have made many contributions to understanding this function of
management. Personality research and studies of job attitudes provide important
information as to how managers can most effectively lead subordinates. For example, this
research tells us that to become effective at leading, managers must first understand their
subordinates’ personalities, values, attitudes, and emotions.

Studies of motivation and motivation theory provide important information about the ways in
which workers can be energized to put forth productive effort. Studies of communication
 provide direction as to how managers can effectively and persuasively communicate.
Studies of leadership and leadership style provide information regarding questions, such as,
“What makes a manager a good leader?” and “In what situations are certain leadership
styles most appropriate and effective?

MPOB/U2 Topic 3 Types of Motivation

Some of the important types of motivation are as follows:

1. Achievement Motivation

It is the drive to pursue and attain goals. An individual with achievement motivation wishes
to achieve objectives and advance up on the ladder of success.

Here, accomplishment is important for its own sake and not for the rewards that accompany
it. It is similar to ‘Kaizen’ approach of Japanese Management. This motivation is more
important for professionals.

2. Affiliation Motivation

It is a drive to relate to people on a social basis. Persons with affiliation motivation perform
work better when they are complimented for their favorable attitudes and co-operation. This
motivation is of greater use where money cannot be used to motivate, especially minimum-
wage employees and contingent professionals.

3. Competence Motivation

It is the drive to be good at something, allowing the individual to perform high quality work.
Competence motivated people seek job mastery, take pride in developing and using their
problem-solving skills and strive to be creative when confronted with obstacles. They learn
from their experience. Specialists, like heart surgeons would feel motivated if they get
chances to operate upon unique cases.

4. Power Motivation

It is the drive to influence people and change situations. Power motivated people create an
impact on their organization and are willing to take risk to do so. Ms Mayawati, Chief
Minister of UP, is power motivated.

5. Attitude Motivation

Attitude motivation is how people think and feel. It is their self- confidence, their belief in
themselves, and their attitude to life. It is how they feel about the future and how they react
to the past.
6. Incentive Motivation

It is where a person or a team reaps a reward from an activity. It is “you do this and you get
that”, attitude. It is the type of rewards and prizes that drive people to work a little harder.
Most of the unorganized job workers get motivated when they are offered more money.

7. Fear Motivation

Fear motivation coercions a person to act against will. It is instantaneous and gets the job
done quickly. It is helpful in the short run. Managers following Theory x come into this
category. In Indian army, this kind of motivation is very popular.

MPOB/U2 Topic 4 Theories of Motivation: Maslow,

Herzberg, X,Y and Z
Maslow’s Hierarchy of Needs Theory
This theory was produced in order to answer the question “What motivates an individual”.
Every second need comes to force when the first need is satisfied completely. Maslow
explained the hierarchy of needs by grouping them into two: deficiency needs and growth
needs.
Physiological Needs

Every individual needs to take care of the basic requirements required to sustain. These
requirements include food to eat, clothing to wear and shelter to live in. These necessities
are relatively independent of each other but are finite.

Safety Needs

Everybody wants to stay in a protected environment with minimal danger so that they can
have a peaceful life. Safety needs basically includes protection from physiological danger
like accident and having economic security like bank accounts, health insurance

In an enterprise, it includes job security, salary increment, etc. The managerial practice to
satisfy this involves offering pension scheme, provident fund, gratuity etc.

Social Needs

We have all heard that man is a social animal, we want to be there with those people where
we are loved and we are accepted as we are; nobody wants to be judged. This is a
common requirement every human desires.

This theory helps managers to think about encouraging their employees by identifying
employee needs. In short, it presents motivation as constantly changing force, expressing
itself to the constant need for fulfilment of new and higher levels of needs.

Esteem

Esteem means the typical human desire to be accepted and valued by others. People often
involve in a profession or hobby to gain recognition, earn fame and respect. According to
Maslow, the needs of humans have strict guidelines – the hierarchies rather than being
sharply separated, are interrelated. This means that esteem and the consequent levels are
not strictly separated but are closely related.

Self-Actualization

Self-actualization means realizing one’s full potential. Maslow describes this as a desire to
complete everything that one can, to become the most that one can be.

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”.
 Herzberg classified these job factors into two categories-

1. 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 Security – The organization must provide job security to the employees.

2. 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.

McGregor’s Theory X and Theory Y

The idea that a manager’s attitude has an impact on employee motivation was originally
proposed by Douglas McGregor, a management professor at the Massachusetts Institute of
Technology during the 1950s and 1960s. In his 1960 book, The Human Side of Enterprise,
McGregor proposed two theories by which managers perceive and address employee
motivation. He referred to these opposing motivational methods as Theory X and Theory Y
management. Each assumes that the manager’s role is to organize resources, including
people, to best benefit the company. However, beyond this commonality, the attitudes and
assumptions they embody are quite different.

Theory X

According to McGregor, Theory X management assumes the following:

 Work is inherently distasteful to most people, and they will attempt to avoid work
whenever possible.
 Most people are not ambitious, have little desire for responsibility, and prefer to be
directed.
 Most people have little aptitude for creativity in solving organizational problems.
 Motivation occurs only at the physiological and security levels of Maslow’s hierarchy
of needs.
 Most people are self-centered. As a result, they must be closely controlled and often
coerced to achieve organizational objectives.
 Most people resist change.
 Most people are gullible and unintelligent.

Theory Y

The higher-level needs of esteem and self-actualization are ongoing needs that, for most
people, are never completely satisfied. As such, it is these higher-level needs through which
employees can best be motivated.
 In strong contrast to Theory X, Theory Y management makes the following assumptions:

 Work can be as natural as play if the conditions are favorable.

 People will be self-directed and creative to meet their work and organizational
objectives if they are committed to them.
 People will be committed to their quality and productivity objectives if rewards are in
place that address higher needs such as self-fulfillment.
 The capacity for creativity spreads throughout organizations.
 Most people can handle responsibility because creativity and ingenuity are common
in the population.
 Under these conditions, people will seek responsibility.

Ouchi’s Theory Z

Management professor William Ouchi argued that Western organizations could learn from
their Japanese counterparts. Although born and educated in America, Ouchi was of
Japanese descent and spent a lot of time in Japan studying the country’s approach to
workplace teamwork and participative management. The result was Theory Z—a
development beyond Theory X and Theory Y that blended the best of Eastern and Western
management practices. Ouchi’s theory first appeared in his 1981 book, Theory Z: How
American Management Can Meet the Japanese Challenge. The benefits of Theory Z, Ouchi
claimed, would be reduced employee turnover, increased commitment, improved morale
and job satisfaction, and drastic increases in productivity.

Theory Z stresses the need to help workers become generalists, rather than specialists. It
views job rotations and continual training as a means of increasing employees’ knowledge
of the company and its processes while building a variety of skills and abilities. Since
workers are given much more time to receive training, rotate through jobs, and master the
intricacies of the company’s operations, promotions tend to be slower. The rationale for the
drawn-out time frame is that it helps develop a more dedicated, loyal, and permanent
workforce, which benefits the company; the employees, meanwhile, have the opportunity to
fully develop their careers at one company. When employees rise to a higher level of
management, it is expected that they will use Theory Z to “bring up,” train, and develop
other employees in a similar fashion.

Ouchi’s Theory Z makes certain assumptions about workers. One assumption is that they
seek to build cooperative and intimate working relationships with their coworkers. In other
words, employees have a strong desire for affiliation. Another assumption is that workers
expect reciprocity and support from the company. According to Theory Z, people want to
maintain a work-life balance, and they value a working environment in which things like
family, culture, and traditions are considered to be just as important as the work itself.
Under Theory Z management, not only do workers have a sense of cohesion with their
fellow workers, they also develop a sense of order, discipline, and a moral obligation to
work hard. Finally, Theory Z assumes that given the right management support, workers
can be trusted to do their jobs to their utmost ability and look after for their own and others’
well-being.
 Theory Z also makes assumptions about company culture. If a company wants to realize
the benefits described above, it need to have the following:

 A strong company philosophy and culture:- The company philosophy and culture

need to be understood and embodied by all employees, and employees need to believe in
the work they’re doing.
 Long-term staff development and employment:- The organization and
management team need to have measures and programs in place to develop employees.
Employment is usually long-term, and promotion is steady and measured. This leads to
loyalty from team members.
 Consensus in decisions:- Employees are encouraged and expected to take part in
organizational decisions.
 Generalist employees:- Because employees have a greater responsibility in
making decisions and understand all aspects of the organization, they ought to be
generalists. However, employees are still expected to have specialized career
responsibilities.
 Concern for the happiness and well-being of workers:- The organization shows
sincere concern for the health and happiness of its employees and their families. It takes
measures and creates programs to help foster this happiness and well-being.
 Informal control with formalized measures:- Employees are empowered to
perform tasks the way they see fit, and management is quite hands-off. However, there
should be formalized measures in place to assess work quality and performance.
 Individual responsibility:- The organization recognizes the individual contributions
but always within the context of the team as a whole.

POM/U3 Topic 4 Leadership – Nature and Significance

“Leadership is the quality of behavior of individuals whereby they guide people or their
activities in organizing efforts” — Chester I. Barnard

“Leadership is the ability of a superior to induce subordinates to work with confidence and I
zeal” — Koontz and ‘Donnell

“Leadership is the process by which an executive imaginatively directs, guides and

influences the work of others in attaining specified goals.” — Theo Haimann

Leadership may be defined as a position of power held by an individual in a group, which

provides him with an opportunity to exercise interpersonal influence on the group members
for mobilizing and directing their efforts towards certain goals. The leader is at the Centre of
group’s power structure, keeps the group together, infuses life into it, moves it towards its
goals and maintains its momentum.
 For example, a leader of national or international standing commands widespread influence
over a large number of people while the influence of the leader of a small work group in an
organisation is very limited. Both are leaders in their own right and fulfill our definition of
leadership.

Leadership is an influential process. The leader is in a position to shape, regulate, control

and change the attitudes, behaviour and performance of his group members. The latter are
supposed to comply with the former’s desires and directives and partially suspend their own
judgment and discretion. There exists a particular relationship between the leader and his
group members which is characterized by interpersonal and social interaction.

Nature of Leadership

1. Leadership derives from power and is similar to, yet distinct from, management. In
fact, “leadership” and “management” are different. There can be leaders of completely
unorganized groups, but there can be managers only of organized groups. Thus it can be
said that a manager is necessarily a leader but a leader may not be a manager.
2. Leadership is essential for managing. The ability to lead effectively is one of the keys
to being an effective manager because she/he has to combine resources and lead a group
to achieve objectives.
3. Leadership and motivation are closely interconnected. By understanding motivation,
one can appreciate better what people want and why they act as they do. A leader can
encourage or dampen workers motivation by creating a favorable or unfavorable working
environment in the organization.
4. The essence of leadership is followership. In other words, it is the willingness of
people to follow a person that makes that person a leader. Moreover, people tend to follow
those whom they see as providing a means of achieving their desires, needs and wants.
5. Leadership involves an unequal distribution of power between leaders and group
members. Group members are not powerless; they can shape group activities in some
ways. Still, the leader will usually have more power than the group members.
6. Leaders can influence the followers’ behavior in some ways. In fact, leaders can
influence workers either to do ill or well for the company. The leader must be able to
empower and motivate the followers to the cause.
7. The leader must co-exist with the subordinates or followers and must have the clear
idea about their demands and ambitions. This creates loyalty and trust in subordinates for
their leader.
8. Leadership is to be concerned about values. Followers learn ethics and values from
their leaders. Leaders are the real teachers of ethics, and they can reinforce ideas. It is very
important for leaders to make positive statements of ethics if they are not hypocritical.
9. Leading is a very demanding job for both physically and psychologically. The leader
must have the strength, power, and ability to meet the bodily requirements; zeal, energy,
and patience to meet the mental requirements for leading.

Significance of Leadership
(i) Effective direction
 An organisation comes into existence with certain objectives. To attain the objectives, the
activities of the organisation must be directed. Direction of the activities is effected through
leadership. In short, effective leadership directs the activities of an organisation towards the
attainment of the specified organisational goals.

(ii) Source of motivation

Leadership is the motivating power to group efforts. Effective leadership motivates the
subordinates for higher productivity.

(iii) Confidence

Leadership creates confidence in-the subordinates by giving proper guidance and advice.

(iv) High Morale

Good leadership increases the morale of the employees which, in turn, contributes to higher
productivity.

(v) Development of Team Spirit

Effective leadership promotes team-spirit and teamwork which is quite essential for the
success of any organisation.

(vi) Encouraging initiative

A progressive, forward and democratic minded leader, always encourages initiative on the
part of the followers.

(vii) Overcoming resistance to change

A leader overcomes resistance, if any on the part of followers to organizational changes;

through explaining to them the utility of such changes to both—the enterprise and the
employees.

Traits of a Leader
A common misconception is that individuals are just naturally gifted with leadership skills.
The truth is that leadership traits, like other skills, can be acquired with time and practice.
Below are seven traits of an effective leader:

1. Effective Communicators
 Leaders are excellent communicators, able to clearly and concisely explain problems and
solutions. Leaders know when to talk and when to listen. In addition, leaders are able to
communicate on different levels: one-on-one, via phone, email, etc.

2. Accountable and Responsible

Leaders hold themselves accountable and take responsibility for any mistakes. Leaders
support and encourage individuality while abiding by organizational structure, rules, and
policies that need to be followed.

3. Long-term Thinkers

Leaders are visionaries. This is evidenced by the leadership trait of being able to plan for
the future through concrete and quantifiable goals. They understand the need for
continuous change and are open to trying new approaches to solve problems or improve
processes.

4. Self-motivated

Leaders are self-motivated and are able to keep going and attain goals despite setbacks. In
addition, good leaders try their best to exceed, not just meet, expectations.

5. Confident

Virtually all good leaders share the leadership trait of confidence. They are able to make
tough decisions and lead with authority. By being confident, leaders are able to reassure
and inspire others, establish open communications, and encourage teamwork.

6. People-oriented

Leaders are typically people-oriented and team players. They’re able to foster a team
culture, involve others in decision-making, and show concern for each team member. By
being people-oriented, leaders are able to energize and motivate others. By making each
individual feel important and vital to the team’s success, they secure the best efforts from
each member of the team.

7. Emotionally Stable

Leaders exercise good control and regulation over their own behavior and are able to
tolerate frustration and stress. Leaders are able to cope with changes in an environment
without having an intense emotional reaction.

Traits of a Bad Leader

Listed below are the traits that bad leaders commonly exhibit:
 Too bossy
 Fearful of change
 Unwilling or unable to communicate effectively
 Dismissive of ideas other than their own
 Lacking empathy
 Inconsistent
 Prone to blame others rather than accept responsibility themselves
 Indecisive

Leadership Style

Likert’s System of Management

Rensis Likert and his associates studied the patterns and styles of managers for three
decades at the University of Michigan, USA, and identified a four-fold model of
management systems. The model was developed on the basis of a questionnaire
administered to managers in over 200 organizations and research into the performance
characteristics of different types of organizations. The four systems of management system
or the four leadership styles identified by Likert are:

 System 1- Exploitative Authoritative: Responsibility lies in the hands of the people

at the upper echelons of the hierarchy. The superior has no trust and confidence in
subordinates. The decisions are imposed on subordinates and they do not feel free at all to
discuss things about the job with their superior. The teamwork or communication is very
little and the motivation is based on threats.
 System 2- Benevolent Authoritative: The responsibility lies at the managerial
levels but not at the lower levels of the organizational hierarchy. The superior has
condescending confidence and trust in subordinates (master-servant relationship). Here
again, the subordinates do not feel free to discuss things about the job with their superior.
The teamwork or communication is very little and motivation is based on a system of
rewards.
 System 3- Consultative: Responsibility is spread widely through the organizational
hierarchy. The superior has substantial but not complete confidence in subordinates. Some
amount of discussion about job related things takes place between the superior and
subordinates. There is a fair amount of teamwork, and communication takes place vertically
and horizontally. The motivation is based on rewards and involvement in the job.
 System 4- Participative: Responsibility for achieving the organizational goals is
widespread throughout the organizational hierarchy. There is a high level of confidence that
the superior has in his subordinates. There is a high level of teamwork, communication, and
participation.

The nature of these four management systems has been described by Likert through a
profile of organizational characteristics. In this profile, the four management systems have
been compared with one another on the basis of certain organizational variables which are:
 Leadership processes
 Motivational forces
 Communication process
 Interaction-influence process
 Decision-making process
 Goal-setting or ordering
 Control processes

On the basis of this profile, Likert administered a questionnaire to several employees

belonging to different organizations and from different managerial positions (both line and
staff). His studies confirmed that the departments or units employing management practices
within Systems 1 and 2 were the lease productive, and the departments or units employing
management practices within Systems 3 and 4 were the most productive.

Advantages

With the help of the profile developed by Likert, it became possible to quantify the results of
the work done in the field of group dynamics. Likert theory also facilitated the measurement
of the “soft” areas of management, such as trust and communication.

Managerial Grid
The treatment of task orientation and people orientation as two independent dimensions
was a major step in leadership studies. Many of the leadership studies conducted in the
1950s at the University of Michigan and the Ohio State University focused on these two
dimensions.

Building on the work of the researchers at these Universities, Robert Blake and Jane
Mouton (1960s) proposed a graphic portrayal of leadership styles through a managerial
grid (sometimes called leadership grid). The grid depicted two dimensions of leader
behavior, concern for people (accommodating people’s needs and giving them priority) on
y-axis and concern for production (keeping tight schedules) on x-axis, with each
dimension ranging from low (1) to high (9), thus creating 81 different positions in which the
leader’s style may fall. (See figure 1).
 The five resulting leadership styles are as follows:

1. Impoverished Management (1, 1): Managers with this approach are low on both
the dimensions and exercise minimum effort to get the work done from subordinates. The
leader has low concern for employee satisfaction and work deadlines and as a result
disharmony and disorganization prevail within the organization. The leaders are termed
ineffective wherein their action is merely aimed at preserving job and seniority.
2. Task management (9, 1): Also called dictatorial or perish style. Here leaders are
more concerned about production and have less concern for people. The style is based on
theory X of McGregor. The employees’ needs are not taken care of and they are simply a
means to an end. The leader believes that efficiency can result only through proper
organization of work systems and through elimination of people wherever possible. Such a
style can definitely increase the output of organization in short run but due to the strict
policies and procedures, high labour turnover is inevitable.
3. Middle-of-the-Road (5, 5): This is basically a compromising style wherein the leader
tries to maintain a balance between goals of company and the needs of people. The leader
does not push the boundaries of achievement resulting in average performance for
organization. Here neither employee nor production needs are fully met.
4. Country Club (1, 9): This is a collegial style characterized by low task and high
people orientation where the leader gives thoughtful attention to the needs of people thus
providing them with a friendly and comfortable environment. The leader feels that such a
treatment with employees will lead to self-motivation and will find people working hard on
 their own. However, a low focus on tasks can hamper production and lead to questionable
results.
5. Team Management (9, 9): Characterized by high people and task focus, the style is
based on the theory Y of McGregor and has been termed as most effective style according
to Blake and Mouton. The leader feels that empowerment, commitment, trust, and respect
are the key elements in creating a team atmosphere which will automatically result in high
employee satisfaction and production.

Advantages of Blake and Mouton’s Managerial Grid

The Managerial or Leadership Grid is used to help managers analyze their own leadership
styles through a technique known as grid training. This is done by administering a
questionnaire that helps managers identify how they stand with respect to their concern for
production and people. The training is aimed at basically helping leaders reach to the ideal
state of 9, 9.

Limitations of Blake and Mouton’s Managerial Grid

The model ignores the importance of internal and external limits, matter and scenario. Also,
there are some more aspects of leadership that can be covered but are not.

MPOB/U2 Topic 5 Controlling: Nature and Scope

of Control
Control is a primary goal-oriented function of management in an organisation. It is a process
of comparing the actual performance with the set standards of the company to ensure that
activities are performed according to the plans and if not then taking corrective action.

Every manager needs to monitor and evaluate the activities of his subordinates. It helps in
taking corrective actions by the manager in the given timeline to avoid contingency or
company’s loss.

Controlling is performed at the lower, middle and upper levels of the management.

Features of Controlling

 An effective control system has the following features:

 It helps in achieving organizational goals.
 Facilitates optimum utilization of resources.
 It evaluates the accuracy of the standard.
 It also sets discipline and order.
 Motivates the employees and boosts employee morale.
 Ensures future planning by revising standards.
 Improves overall performance of an organization.
 It also minimises errors.
 Controlling and planning are interrelated for controlling gives an important input into the next
planning cycle. Controlling is a backwards-looking function which brings the management
cycle back to the planning function. Planning is a forward-looking process as it deals with
the forecasts about the future conditions.

Nature of Controlling
Based on the above definitions the following natures or characteristics of controlling can be
presented below:

1. Control is a Function of Management

Actually control is a follow-up action to the other functions of management performed by

managers to control the activities assigned to them in the organization.

2. Control is based on Planning

Control is designed to evaluate actual performance against predetermined standards set-up

in the organization. Plans serve as the standards of desired performance. Planning sets the
course in the organization and control ensures action according to the chosen course of
action in the organization.

Unless one knows what he wants to achieve in the organization, he cannot say whether he
has done right or wrong in the organization. Control is said to be the Last step in
management process but really speaking it begins with the setting up a plan in the
organization. Control implies the existence of plans or standards in the organization.

3. Control is a Dynamic Process

It involves continuous review of standards of performance and results in corrective action,

which may lead to changes in other functions of management.

4. Information is the Guide to Control

Control depends upon the information regarding actual performance. Accurate and timely
availability of feedback is essential for effective control action. An efficient system of
reporting is required for a sound control system. This requires continuing monitoring and
review of operations.

5. The Essence of Control is Action

The performance of control is achieved only when corrective action is taken on the basis of
feedback information. It is only action, which adjust performance to predetermined
standards whenever deviations occur. A good system of control facilities timely action so
that there is minimum waste of time and energy.
6. It is a Continuous Activity

Control is not a one-step process but a continuous process. It involves constant revision
and analysis of standards resulting from the deviations between actual and planned
performance.

7. Delegation is the key to Control

An executive can take corrective action only when he has been delegated necessary
authority for it. A person has authority to control these functions for which he is directly
accountable. Moreover, control becomes necessary when authority is delegated because
the delegator remains responsible for the duty. Control standards help a manger expand his
span of management.

8. Control Aims at Future

Control involves the comparison between actual and standards. So corrective action is
designed to improve performance in future.

9. Control is a Universal Function of Management

Control is a basic or primary function of management. Every manager has to exercise

control over the subordinates’ performance, no manager can get things done without the
process of controlling. Once a plan becomes operational, follow-up action is required to
measure progress, to uncover deficiencies and to take corrective actions.

Therefore, control is an essential managerial function at every level. The process of

management is incomplete without controlling.

10. Controlling is Positive

The function of controlling is positive. It is to make things happen i.e. to achieve the goal
with instead constraints, or by means of the planned activities. Controlling should never be
viewed as being negative in character.

Scope of controlling in Management

The scope of control is very wide. A well designed plan of control (or control system) covers
almost all management activities. According to Holden, Fish and Smith, the main areas of
control are as follows:

(i) Control over policies

The success of any business organization to a large extent, depends upon, how far its
policies are implemented. Hence the need of control over policies is self-evident. In many
enterprises, policies are controlled through policy manuals.
(ii) Control over organization

Control over organization is accomplished through the development of organization chart

and organization manual. Organization manual attempts at solving organisational problems
and conflicts making long-range organisation planning possible, enabling rationalisation of
organisation structure, helping in proper designing of organisation and department.

(iii) Control over personnel

The statement that ‘Management is getting the work done through people’ underlines
sufficiently the importance of control of personnel.

All employees working at different levels must perform their assigned duties well and direct
their efforts in controlling their behaviour. Personal Director or Personnel Manager prepares
control plan for having control over personnel.

(iv) Control over wages and salaries

Such type of control is done by having programme of job evaluation and wage and salary
analysis. This work is done either by personnel department or industrial engineering
department. Often a wage and salary committee is constituted to help these departments in
the task of controlling wages and salaries.

(v) Control over costs

Cost control is exercised by the cost accountant, by setting cost standards for material,
labour and over heads and making comparison of actual cost data with standard cost. Cost
control is supplemented by budgetary control systems.

(vi) Control over methods

Control over methods is accomplished by conducting periodic analysis of activities of each

department. The functions performed, methods adopted and time devoted by every
employee is studied with a view to eliminate non-essential motions, functions and methods.

(vii) Control over capital expenditures

It is exercised through a system of evaluation of projects, ranking of projects in terms of

their rank power and appropriate capital to various projects. A capital budget is prepared for
the whole firm. A capital budgeting committee reviews the project proposes and approves
the projects of advantages to the firm. Capital budgeting, project analysis, break-even
analysis, study of cost of capital, etc. are some popular techniques of control over capital
expenditure.

(viii) Control over research and development

 Such activities are highly technical in nature so no direct control is possible over them. By
improving the ability and judgement of research staff through training programmes and
other devices, an indirect control is exercised on them. Control is also exercised by having a
research on the business.

(ix) Control over external relations

Public relations department is responsible for controlling the external relations of the
enterprise. It may prescribe certain measures for other operating departments which are
instrumental in improving external relations.

(x) Overall control

It is effected through budgetary control. Master plan is prepared for overall control and all
the departments are made involved in this procedure. For effective control through the
master plan, active support of the top management is essential.

MPOB/U2 Topic 6 Types of Control, Control Process

Types of Control

1. Feed-Forward Controls

Feed forward controls are future-directed: they attempt to detect and anticipate

problems or deviations from the standards in advance of their occurrence (at various points
throughout the processes). They are in-process controls and are much more active,
aggressive in nature, allowing corrective action to be taken in advance of the problem.

Feed forward controls thus anticipate problems and permit action to be taken before a
problem actually arises.

Feed forward control devices are of two broad categories: diagnostic and therapeutic.

Diagnostic controls seek to determine what deviation is taking (or has taken) place. The
sales manager, for instance, who receives the monthly sales figures (showing sales quota
results) is virtually working with a diagnostic control device. It will no doubt indicate
deviations from the acceptable standard (i.e., what is wrong) but not why. Discovering the
‘why’ is often the most difficult part of the process.

Therapeutic controls tell us both what and why, and then proceed to take corrective action.
For example, engines having internal control system such as an engine speed governor and
automatic transmission are designed to take necessary corrective actions when warranted
by the conditions.
 An example of utilisation of such control can be found in case of a manager who conducts
employee training using the coaching method. When, for instance, the trainee is performing
the task, the manager observes him closely by standing on his side. The objective is to
discover if any deviations from the intended processes take place.

In case a deviation occurs, the manager observes it, diagnoses the reason for the incorrect
technique, and corrects the deviation immediately (i.e., without any loss of time). Thus the
control and correction take place during the process itself, not after a few days.

2. Concurrent (Prevention) Control

Concurrent control, also called steering control because it allows people to act on a process
or activity while it is proceeding, not after it is proceeding, nor after it is completed.
Corrections and adjustments can be made as and when the need a rises. Such controls
focus on establishing conditions that will make it difficult or impossible for deviations from
norms to occur.

An example of concurrent control is the development by companies of job descriptions and

job specifications. It may be recalled that job description identifies the job that has to be
done, thus clarifying working relationships, responsibility areas, and authority relationships.
It thus assists in preventing unnecessary duplication of effort (work) and potential
organisational conflict.

In a like manner job specification identifies the abilities, training, education and
characteristics needed of an employee to do the work. It is control device inasmuch as it
works to prevent a person who is totally unqualified and unfit from being selected for the
job, thereby saving money and time, and thus precluding potential poor performance.

3. Feedback Controls

Feedback control is future-oriented. It is historical in nature and is also known as post-action

control. The implication is that the measured activity has already occurred, and it is
impossible to go back and correct performance to bring it up to standard. Rather,
corrections must occur after the act.

Such post-action controls focus on the end results of the process. The information derived
is not utilised for corrective action on a project because it has already been completed.
Such control provides information for a manager to examine and apply to future activities
which are similar to the present one. The basic objective is to help prevent mistakes in the
future.

Controlling Process in Business Management

1. Setting Performance Standards

 The first step in the process of controlling is concerned with setting performance standards.
These standards are the basis for measuring the actual performance.

Thus, standards act as a lighthouse that warns & guides the ships at sea. Standards are the
benchmarks towards which efforts of entire organization are directed. These standards can
be expressed both in quantitative and qualitative terms.

Examples of Quantitative Standards:-

 Revenue to be earned.
 Units to be produced and sold.
 Cost to be incurred.
 Time to be spent in performing a task.
 Amount of inventories to be maintained etc.

Examples of Qualitative Standards:-

 Improving motivation level of employees.

 Improving labour relations.
 Improving quality of products.
 Improving goodwill etc.

2. Measurement of Actual Performance

Once the standards have been determined, the next step is to measure the actual
performance. The various techniques for measuring are sample checking, performance
reports, personal observation etc. However, in order to facilitate easy comparison, the
performance should be measured on same basis that the standards have.

Following are some of the ways for measuring performance:

(a) Superior prepares a report regarding the performance of an employee.

(b) Various ratios like gross profit ratio, debtor turnover ratio, return on investment, current
ratio etc. are calculated at periodic intervals to measure company’s performance.

(c) Progress made in areas like marketing can be measured by considering the number of
units, increase in market share etc.

(d) In small organisations, each unit produced can be checked personally to ensure the
quality standards.

(e) In large organisation, the technique of sample checking is used. Under this technique,
some pieces are checked at random for quality specifications.
3. Comparing Actual Performance with Standards

This step involves comparing the actual performance with standards laid down in order to
find the deviations. For example, performance of a salesman in terms of unit sold in a week
can be easily measured against the standard output for the week.

4. Analysing Deviations

Some deviations are possible in all the activities. However, the deviation in the important
areas of business needs to be corrected more urgently as compared to deviation in
insignificant areas. Management should use critical point control and management by
exception in such areas.

5. Taking Corrective Action

The last step in the process of controlling involves taking corrective action. If the deviations
are within acceptable limits, no corrective measure is required. However, if the deviations
exceed acceptable limits, they should be immediately brought to the notice of the
management for taking corrective measures, especially in the important areas.

MPOB/U2 Topic 7 Control Techniques-Traditional

and Modern
Techniques of Managerial Control: Traditional and Modern Techniques

1. Traditional Techniques
Traditional techniques refer to the techniques that have been used by business organisation
for longer period of time and are still in use.

Such techniques are:

 Personal Observation
 Statistical Reports.
 Breakeven Analysis.
 Budgetary Control.

(a) Personal Observation: This is the most traditional technique of control. It helps a

manager to collect first hand information about the performance of the employees. It also
creates psychological pressure on the employees to improve their performance as they are
aware that they are being observed personally by the manager. However, this technique is
not to be effectively used in all kinds of jobs as it is very time consuming.
(b) Statistical Reports: Statistical analysis in the form of percentages, ratios, averages etc.
in different areas provides useful information regarding performance of an organisation to its
managers. When such information is presented in the form of tables, graphs, charts etc., it
facilitates comparison of performance with the standards laid and with previous years’
performance.

(c) Breakeven Analysis: The technique used by managers to study the relationship

between sales volume, costs and profit is known as Breakeven Analysis. This technique
helps the managers in estimating profits at different levels of activities. The following figure
shows breakeven chart of a firm.

The point at which the total revenue and total cost curves intersect is breakeven point. The
figure shows that the firm will have the breakeven point at 60,000 units of output. At this
point, there is neither profit nor loss. The firm starts earning profit beyond this point.

Breakeven Point= Fixed Cost/ (Selling Price per unit- Variable cost per unit).

Through breakeven analysis, a firm can keep a check on its variable cost and can also
determine the level of activity at which it can earn its profit target.

(d) Budgetary Control: Under this technique, different budgets are prepared for different
operations in an organization in advance. These budgets act as standards for comparing
them with actual performance and taking necessary actions for attaining organizational
goals.
 A budget can be defined as a quantitative statement of expected result, prepared for a
future period of time. The budget should be flexible so that necessary changes, if need be,
can be easily made later according to the requirements of the prevailing environment.

2. Modern Techniques
Modem techniques are those techniques which are very new in management world. These
techniques provide various new aspects for controlling the activities of an organisation.

These techniques are as follows:

(a) Return on Investment.

(b) Ratio Analysis.

(c) Responsibility Accounting.

(d) Management Audit.

(e) PERT and CPM.

(f) Management Information System.

(a) Return on Investment: Return on investment is very useful technique for determining

whether the capital invested in the business has been effectively used or not for generating
reasonable amount of return.

Return on Investment= (Net Income / Total Investment) X 100 Net Income before or after
tax can be used for calculating ROI. Total investment includes investment in fixed Assets as
well as working capital.

It acts as an effective control device in measuring and comparing the performance of

different departments. It also helps departmental managers to find out the problems which
adversely affect ROI.

(b) Ratio Analysis: Ratio Analysis is a technique of analyzing the financial statements of a

business firm by computing different ratios.

(c) Responsibility Accounting: Under this system of accounting, various sections,

departments or divisions of an organization are set up as ‘ Responsibility Centers’. Each
centre has a head who is responsible for attaining the target of his centre.

(d) Management Audit: Management Audit is a process of judging the overall performance

of the management of an organisation. It aims at reviewing the efficiency and effectiveness
of management and improving its future performance. Its basic purpose is to identify the
deficiencies in the performance of management functions. It also ensures updating of
existing managerial policies.

(e) PERT and CPM: PERT (Programme Evaluation and Review Technique) and CPM
(Critical Path Method) are two important techniques used in both planning and controlling.
These techniques are used to compute the total expected time needed to complete a
project & it can identify the bottleneck activities that have a critical effect on the project
completion date. Such techniques are mainly used in areas like construction projects,
aircraft manufacture, ship building etc.

The various steps involved in using these techniques are as follows:

(i) The project is first divided into various activities and then these activities are arranged in
a logical sequence.

(ii) A network diagram is prepared showing the sequence of activities.

(iii) Time estimates are laid down for each activity. PERT prepares three time estimates-(1)
Optimistic (shortest time) (2) Most likely time & (3) Pessimistic (longest time).In CPM, only
one time estimate is prepared. Along with this, CPM also lays down the cost estimates for
completing the project.

(iv) The most critical path in the network is the longest path. Longest path consists of those
activities which are critical for completing the project on time; hence the name CPM.

(v) If required, necessary changes are made in the plan for completing the project on time.

(f) Management Information System (MIS): Management Information System (MIS) is a

computer based information system which provides accurate, timely and up-to-date
information to the managers for taking various managerial decisions. Thus, it is an important
communication tool as well as an important control technique. It provides timely information
to the managers so that they can take appropriate corrective measures in case of deviations
from standards.

UNIT 3 Organizational Behavior

MPOB/U3 Topic 1 Concept and Nature of
Organizational Behavior
Organizational Behavior (OB) is the study of human behavior in organizational settings, the
interface between human behavior and the organization, and the organization itself.
 Organizational Behavior researchers study the behavior of individuals primarily in their
organizational roles.

One of the main goals of organizational behavior is to revitalize organizational theory and
develop a better conceptualization of organizational life.

“Organizational behavior is directly concerned with the understanding, prediction, and

control of human behavior in organizations.” — Fred Luthans.

Organizational behavior is the study of both group and individual performance and activity
within an organization.

This area of study examines human behavior in a work environment and determines its
impact on job structure, performance, communication, motivation, leadership, etc.

It is the systematic study and application of knowledge about how individuals and groups
act within the organizations where they work. OB draws from other disciplines to create a
unique field.

For example, when we review topics such as personality and motivation, we will again
review studies from the field of psychology. The topic of team processes relies heavily on
the field of sociology.

When we study power and influence in organizations, we borrow heavily from political
sciences.

Even medical science contributes to the field of Organizational Behavior, particularly in the
study of stress and its effects on individuals.

There is increasing agreement as to the components or topics that constitute the subject
area of OB.

Although there is still considerable debate as to the relative importance of change, there
appears to be general agreement that OB includes the core topics of motivation, leader
behavior, and power, interpersonal communication, group structure and processes,
learning, attitude development and perception, change processes, conflict, work design,
and work stress.

NATURE OF ORGANIZATIONAL BEHAVIOUR

Organizational behaviour has emerged as a separate field of study. The nature it has
acquired is identified as follows :

1. A Separate Field of Study and not a Discipline Only

 By definition, a discipline is an accepted science that is based on a theoretical foundation.
But, O.B. has a multi-interdisciplinary orientation and is, thus, not based on a specific
theoretical background. Therefore, it is better reasonable to call O.B. a separate field of
study rather than a discipline only.

2. An Interdisciplinary Approach

Organizational behaviour is essentially an interdisciplinary approach to study human

behaviour at work. It tries to integrate the relevant knowledge drawn from related disciplines
like psychology, sociology and anthropology to make them applicable for studying and
analysing organizational behaviour.

3. An Applied Science

The very nature of O.B. is applied. What O.B. basically does is the application of various
researches to solve the organizational problems related to human behaviour. The basic line
of difference between pure science and O.B. is that while the former concentrates of
fundamental researches, the latter concentrates on applied researches. O.B. involves both
applied research and its application in organizational analysis. Hence, O.B. can be called
both science as well as art.

4. A Normative Science

Organizational Behaviour is a normative science also. While the positive science discusses
only cause effect relationship, O.B. prescribes how the findings of applied researches can
be applied to socially accepted organizational goals. Thus, O.B. deals with what is accepted
by individuals and society engaged in an organization. Yes, it is not that O.B. is not
normative at all. In fact, O.B. is normative as well that is well underscored by the
proliferation of management theories.

5. A Humanistic and Optimistic Approach

Organizational Behaviour applies humanistic approach towards people working in the

organization. It, deals with the thinking and feeling of human beings. O.B. is based on the
belief that people have an innate desire to be independent, creative and productive. It also
realizes that people working in the organization can and will actualize these potentials if
they are given proper conditions and environment. Environment affects performance or
workers working in an organization.

6. A Total System Approach

The system approach is one that integrates all the variables, affecting organizational
functioning. The systems approach has been developed by the behavioural scientists to
analyse human behaviour in view of his/her socio-psychological framework. Man’s socio-
psychological framework makes man a complex one and the systems approach tries to
study his/her complexity and find solution to it.
 MPOB/U3 Topic 2 Importance, Challenges and
Opportunities of OB
Importance of Organizational Behavior

1. It builds better relationship by achieving people’s, organizational, and social

objectives.
2. It covers a wide array of human resource like behavior, training and development,
change management, leadership, teams etc.
3. It brings coordination which is the essence of management.
4. It improves goodwill of the organization.
5. It helps to achieve objectives quickly.
6. It makes optimum utilization of resources.
7. It facilitates motivation.
8. It leads to higher efficiency.
9. It improves relations in the organization.
10. It is multidisciplinary, in the sense that applies different techniques, methods, and
theories to evaluate the performances.

Challenges and Opportunities of Organizational Behavior

Challenges and opportunities of organizational behavior are massive and rapidly changing
for improving productivity and meeting business goals.

Although the problems with organizations and the solutions over the ages have not really
changed, the emphasis and surrounding environmental context certainly have changed.

Although the resulting lean and mean organizations offered some short-run benefits in
terms of lowered costs and improved productivity, if they continued to do business, as
usual, they would not be able to meet current or future challenges.

Main challenges and opportunities of organizational behavior are;

1. Improving Peoples’ Skills

Technological changes, structural changes, environmental changes are accelerated at a

faster rate in the business field.

Unless employees and executives are equipped to possess the required skills to adapt
those changes, the targeted goals cannot be achieved in time. These two different
categories of skills – managerial skills and technical skills.

Some of the managerial skills include listening skills, motivating skills, planning and
organizing skills, leading skills, problem-solving skill, decision-making skills etc.
 These skills can be enhanced by organizing a series of training and development programs,
career development programs, induction, and socialization etc.

2. Improving Quality and Productivity

Organizational Behavior Opportunities for Improving Quality and Productivity

Quality is the extent to which the customers or users believe the product or service
surpasses their needs and expectations.

For example, a customer who purchases an automobile has a certain expectation, one of
which is that the automobile engine will start when it is turned on.

3. Total Quality Management (TQM)

It is a philosophy of management that is driven by the constant attainment of customer

satisfaction through the continuous improvement of all organizational process.

The components of TQM are;

(a) An intense focus on the customer,

(b) Concern for continual improvement,

(c) Improvement in the quality of everything the organization does,

(d) Accurate measurement and,

(e) Empowerment of employees.

4. Managing Workforce Diversity

This refers to employing different categories of employees who are heterogeneous in terms
of gender, race, ethnicity, relation, community, physically disadvantaged, elderly people etc.

The primary reason to employ heterogeneous category of employees is to tap the talents
and potentialities, harnessing the innovativeness, obtaining synergetic effect among the
divorce workforce.

In general, employees wanted to retain their individual and cultural identity, values and life
styles even though they are working in the same organization with common rules and
regulations.

The major challenge for organizations is to become more accommodating to diverse groups
of people by addressing their different life styles, family needs, and work styles.
5. Responding to Globalization

Today’s business is mostly market driven; wherever the demands exist irrespective of
distance, locations, climatic Conditions, the business

Operations are expanded to gain their market share and to remain in the top rank etc.
Business operations are no longer restricted to a particular locality or region.

Company’s products or services are spreading across the nations using mass
communication, the internet, faster transportation etc. More than 95% of Nokia (Now
Microsoft) hand phones are being sold outside of their home country Finland.

Japanese cars are being sold in different parts of the globe. Sri Lankan tea is exported to
many cities around the globe

Garment products of Bangladesh are exporting in USA and EU countries. Executives of

Multinational Corporation are very mobile and move from one subsidiary to another more
frequently.

7. Empowering People

The main issue is delegating more power and responsibility to the lower level cadre of
employees and assigning more freedom to make choices about their schedules, operations,
procedures and the method of solving their work-related problems.

Encouraging the employees to participate in work related decision will sizable enhance their
commitment to work.

Empowerment is defined as putting employees in charge of what they do by eliciting some

sort of ownership in them.

Managers are doing considerably further by allowing employees full control of their work.

Due to the implementation of empowerment concepts across all the levels, the relationship
between managers and the employees is reshaped.

Managers will act as coaches, advisors, sponsors, facilitators and help their subordinates to
do their task with minimal guidance.

8. Coping with Temporariness

In recent times, the product life cycles are slimming, the methods of operations are
improving, and fashions are changing very fast. In those days, the managers needed to
introduce major change programs once or twice a decade.
 Today, change is an ongoing activity for most managers.

The concept of continuous improvement implies constant change.

In yesteryears, there used to be a long period of stability and occasionally interrupted by a

short period of change, but at present, the change process is an ongoing activity due to
competitiveness in developing new products and services with better features.

Everyone in the organization faces today is one of permanent temporariness. The actual
jobs that workers perform are in a permanent state of flux.

So, workers need to continually update their knowledge and skills to perform new job
requirements.

9. Stimulating Innovation and Change

Today’s successful organizations must foster innovation and be proficient in the art of
change; otherwise, they will become candidates for extinction in due course of time and
vanished from their field of business.

Victory will go to those organizations that maintain flexibility, continually improve their
quality, and beat the competition to the market place with a constant stream of innovative
products and services.

For example, Compaq succeeded by creating more powerful personal computers for the
same or less money than EBNM or Apple, and by putting their products to market quicker
than the bigger competitors.

Amazon.com is putting a lot of independent bookstores out of business as it proves you can
successfully sell books from an Internet website.

10. Emergence of E-Organization & E-Commerce

It refers to the business operations involving the electronic mode of transactions. It

encompasses presenting products on websites and filling the order.

The vast majority of articles and media attention given to using the Internet in business are
directed at online shopping.

In this process, the marketing and selling of goods and services are being carried out over
the Internet.

In e- commerce, the following activities are being taken place quite often – the tremendous
numbers of people who are shopping on the Internet, business houses are setting up
 websites where they can sell goods, conducting the following transactions such as getting
paid and fulfilling orders.

It is a dramatic change in the way a company relates to its customers. At present e-

commerce is exploding. Globally, e-commerce spending was increasing at a tremendous
rate.

11. Improving Ethical Behavior

The complexity in business operations is forcing the workforce to face ethical dilemmas,
where they are required to define right and wrong conduct in order to complete their
assigned activities.

For example,

 Should the employees of chemical company blow the whistle if they uncover the
discharging its untreated effluents into the river are polluting its water resources?
 Do managers give an inflated performance evaluation to an employee they like,
knowing that such an evaluation could save that employee’s job?

12. Improving Customer Service

OB can contribute to improving an organizational performance by showing drat how

employees’ attitude and behavior are associated with customer satisfaction.

In that case, service should be the first production oriented by using technological
opportunities like a computer, the internet etc.

To improve the customer service need to provide sales service and also the after sales
service.

MPOB/U3 Topic 3 Individual Behavior

Individual behavior can be defined as a mix of responses to external and internal stimuli. It
is the way a person reacts in different situations and the way someone expresses different
emotions like anger, happiness, love, etc.

Individual Behavior Framework

On the basis of these elements, psychologist Kurt Lewin stated the Field theory and
outlined the behavior framework. This psychological theory studies the patterns of
interaction between an individual and the environment. The theory is expressed using the
formula

B = F(P,E)
 where, B – Behavior, F – Behavior Function, P – Person, and E – Environment around the
person.

Say for example, a well payed person who loses his job in recession may behave differently
when unemployed.

Causes of Individual Behavior

Certain individual characteristics are responsible for the way a person behaves in daily life
situations as well as reacts to any emergency situations. These characteristics are
categorized as:

 Inherited characteristics
 Learned characteristics

(i) Inherited Characteristics

The features individuals acquire from their parents or from our forefathers are the inherited
characteristics. In other words, the gifted features an individual possesses by birth is
considered as inherited characteristics.

Following features are considered as inherited characteristics:

 Color of a person’s eye

 Religion/Race of a person
 Shape of the nose
 Shape of earlobes

(ii) Learned Characteristics

Nobody learns everything by birth. First our school is our home, then our society followed by
our educational institutions. The characteristics an individual acquires by observing,
practicing and learning from others and the surroundings is known as learned
characteristics.

It consists of the following features:

 Perception: Result of different senses like feeling, hearing etc.

 Values: Influences perception of a situation, decision making process.
 Personality: Patterns of thinking, feeling, understanding and behaving.
 Attitude: Positive or negative attitude like expressing one’s thought.

MPOB/U3 Topic 4 Personality-Determinants and Traits

The term ‘personality’ is derived from the Latin word ‘persona’ which means a mask.
According to K. Young, “Personality is a …. patterned body of habits, traits, attitudes and
ideas of an individual, as these are organised externally into roles and statuses, and as they
relate internally to motivation, goals, and various aspects of selfhood.” G. W. Allport defined
it as “a person’s pattern of habits, attitudes, and traits which determine his adjustment to his
environment.”

According to Robert E. Park and Earnest W. Burgess, personality is “the sum and
organization of those traits which determine the role of the individual in the group.” Herbert
A. Bloch defined it as “the characteristic organization of the individual’s habits, attitudes,
values, emotional characteristics……. which imparts consistency to the behaviour of the
individual.” According to Arnold W. Green, “personality is the sum of a person’s values (the
objects of his striving, such as ideas, prestige, power and sex) plus his non- physical traits
(his habitual ways of acting and reacting).” According to Linton, personality embraces the
total “organized aggregate of psychological processes and status pertaining to the
individual.”

According to Anderson and Parker, “Personality is the totality of habits, attitudes, and traits
that result from socialization and characterizes us in our relationships with others.”
According to N.L. Munn, “Personality may be defined as the most characteristic integration
of an individual’s structure modes of behaviour, interests, attitudes, capacities, abilities and
aptitudes.” According to Morton Prince, “Personality is the sum total of all the biological
innate dispositions, impulses tendencies and instincts of the individual, and the acquired
disposition and tendencies acquired by experience.” According to Young, “Personality is the
totality of behaviour of an individual with a given tendency system interacting with a
sequence of situations.”
Lawrence A. Pewin has given a working definition of personality in these words,
“Personality represents those structural and dynamic properties of an individual or
individuals as they reflect themselves in characteristic responses to situations.”

Personality Determinants
Personality is not determined by a single factor, but by an accumulation of many factors.
Some of those factors are psychological, while others are physical, biological, and
hereditary. I have compiled some of the most influential factors when it comes to
determinants of personality.

(a) Heredity: Heredity refers to those factors that were determined at conception.

Physical stature, facial attractiveness, sex, temperament, muscle composition and reflexes,
energy level, and biological rhythms are characteristics that are considered to be inherent
from one’s parents. The heredity approach argues that the ultimate explanation of an
individual’s personality is the molecular structure of the genes, located in the chromosomes.

Research on animals has showed that both physical and psychological characteristics can
be transmitted through heredity. But research on human beings is in adequate to support
this view point. However, psychologists and geneticists have accepted the fact that heredity
plays an important role in one’s personality.

(b) Brain: The second biological approach is to concentrate on the role that the brain plays
in personality. Though researchers make some promising inroads, the psychologists are
unable to prove empirically the contribution of human brain in influencing personality. The
most recent and exciting possibilities come from the work done with electrical stimulation of
the brain (ESB) and split-brain psychology.

Preliminary results from the electrical stimulation of the brain (ESB) research give indication
that better understanding of human personality and behaviour might come from the study of
the brain. Work with ESB on human subjects is just beginning.

There seem to be definite pleasurable and painful areas in the human brain. This being
true, it may be possible physically to manipulate personality through ESB.

(c) Biofeedback: Until recently, physiologists and psychologists felt that certain biological
functions such as brainwave patterns, gastric secretions, and fluctuations in blood pressure
and skin temperature were beyond conscious control. Now some scientists believe that
these involuntary functions can be consciously controlled through biofeedback. In BFT the
individual learns the internal rhythm of a particular body process through electronic signals
feedback from equipment that is wired to the body area. From this biofeedback the person
can learn to control the body processing question. More research is needed on biofeedback
before any definitive conclusions can be drawn. But its potential impact could be extremely
interesting for the future.
 (d) Physical features: A vital ingredient of the personality, an individual’s external
appearance, is biologically determined. The fact that a person is tall or short, fat or skinny,
black or white will influence the person’s effect on others and this in turn, will affect the self-
concept. Practically all would agree that physical characteristics have at least some
influence on the personality. According to Paul H Mussen “a child’s physical characteristics
may be related to his approach to the social environment, to the expectancies of others, and
to their reactions to him. These, inturn, may have impacts on personality development”.

Personality Traits
These are characteristics that determine an individual’s behavior. The traits are grouped
into 16 sets called as primary traits. The primary traits are as follows:

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1. Reserved vs. Outgoing.

2. Less intelligent vs. More intelligent.
3. Affected by feelings vs. emotionally stable.
4. Submissive vs. Dominant.
5. Serious vs. happy go lucky.
6. Expedient vs. consdentious.
7. Timid vs. venturesome.
8. Tough minded vs. sensitive.
9. Trusting vs. suspicious.
10. Practical vs. imagination.
11. Forthright vs. strand.
12. Self assured vs. apprehensive.
13. Conservative vs. experimenting.
14. Group-dependent vs. self-sufficient.
15. Uncontrolled vs. controlled.
16. Relaxed vs. tense.

MPOB/U3 Topic 5 Learning-Theories and Process

Learning theories are the basis of getting an idea of how different people learn different
things and how much time they will need to learn them. It is a fact that some people are
successful at learning new knowledge and skills which other people are unable to grasp.
That’s where these theories come in as a guiding light to help in the analysis of the learning
capabilities of their employees. Moreover, by providing the necessary knowledge, these,
actually provide alternative means for achieving a target like pre-defining a broad spectrum
of workshops, training courses and much more.
 4 Most Important Learning Theories

1. Constructivism learning theory

An instructor using the constructivism theory actually focuses on making the employees
play an active role in their learning and development process. It makes use of the fact that
the morale of the learners boosts up quickly when they take responsibility for their own
development in their career as well as general life. For the purpose, the individuals are
required to keep an eye on the working experiences from the past, cultural background as
well as their true personality and molding their responsibilities under the light of these
points.

Career development is not something that even employee will take lightly since they
understand that their chances of success rise higher with every expertise that they gain in
their existing field or having knowledge of the fields, newer to them. So, there’s no reason
for them to drop their morale and job satisfaction. Since this strategy requires the employee
to revise his previous working experience and putting it use in the situations at hand, so it
ensures the safety of their skill sets that they had before joined the company which can be
used for the cause of the company.

2. Behaviorism learning theory

It is Just as its name suggests, the behaviorism learning theory unveils the effect of the
external factors that impact the process of learning and its pace. For the purpose, it
assumes that all the positive and negative factors that affect the mental situation of the
individual, either directly or indirectly, can also accelerate and decelerate the rate of
learning.

In simple words, it targets the instructors rather than employees. According to this model,
an instructor’s praise, upon the successful completion of a particular task, and punishing for
the behaviors that are against the rules and regulations, can improve the rate of learning
immensely. This assumption does not base itself on the age limit e.g. it is not limited to just
kids who are studying in schools but also to adults who might be working under an
organization currently.

3. Cognitivism learning theory

 According to the Cognitivism model, the educators need to focus on discovering new and
improved methods for making their mental processes better rather than the physical
actions. So, the main job left for the instructors is to assist them in expanding their
knowledge along with paving up their way to success. The strategy can be used by small
business owners to encourage the employee base for reshaping their strategic thinking
practices into something more professional.

This also involves manipulating their problem-solving skills along with their memory. This
objective can easily be achieved by the conduction of games, contest and different types of
activities that make the employ feel as if they are being challenged by something that they
 can solve, just, if they manage to link up to their various parts of brains. All this takes their
attention, flexibility, speed and ingenuity to a higher level than before, and the same goes
for the productivity of the workplace.

4. Connectivism learning theory

 Thanks to Connectivism learning theory, all of the successful entrepreneurs understand

that it’s the interconnectivity of different types of people that take their business to success.
Since, in the present age, computer and internet act as the basis of every other device that
makes the everyday life of a normal person easy and fun to live. According to this model,
learning grows extremely quickly when it is reinforced with a variety of working
environments and those different environments are provided to a normal learner through the
internet. Today, free online courses are available which can be used by anyone for taking
an advantage of the opportunities that originate throughout the world by developing a new
and better skillset, techniques and gather more knowledge.

 This model visualizes the learning as a process which flourishes extremely fast when it
comes in contact with diverse opinions, resources, and techniques. Moreover, it is also true
that people want more control of what they learn and at what pace, which they can’t achieve
especially when they are trying to achieve their goals through the training and development
processes ran by companies.

All this scenario gives rise to the best conditions for the social networking technology to hop
in for letting people connect with others, no matter how far they live. So, the physical
boundaries do not cast bad effects to the connectivity and learning processes which alter
the future of the students. Furthermore, the topics with simulation effects or interactivity
attached to them show better results for the companies.

 Since smaller companies and even individuals also have access to the learning resources
distributed over the internet, this means that they, now, have even higher chances for
putting this new knowledge for effective use, just like larger enterprises.

Process of Learning
(a) Naming the Problem

An action learning coach will have one participant state, in about two minutes, the problem
the group needs to consider. The time limit on this prevents the speaker from taking team
members down a path to his or her preferred solution.

At this point, team members begin asking questions of each other, as well as of the person
who presented the problem. In addition, the presenter asks questions. With each question,
the seeds of the solution are planted and the problem solving begins.

In action learning, the group approaches the problem at hand very differently from the way
businesses usually approach challenges. Action learning teams get to new breakthrough
solutions because they clearly identify the real problem before attempting to define the
solution. See the sidebar, Clearly Defining the Problem, for examples of how problems are
often presented.

Initially it feels like this process of defining the problem slows the team down, but by getting
to the real issue, the team fixes the situation once and for all, instead of slapping another
bandage on a symptom.

(b) Solving the Problem

The problem solving is done in two stages. The first focuses on coming to a consensus as
to what the problem is. The challenge that is presented in the first step often is merely a
symptom of the true problem.

The coach plays a key role in ensuring the group reaches consensus on the what the
problem is before moving to the solution stage. The coach accomplishes this by recognizing
when the conversation shifts from dissecting the problem to moving to a solution. When the
coach becomes aware that the group is prematurely shifting from dissecting the problem to
deciding on a solution, an intervention is in order. During this intervention, the coach will
have each person write down what he or she understands the problem to be.

Once members have written down their concept of the issue, they will read aloud what they
have written. This exercise of writing and reading “the problem” forces teams to consider
what each member believes is the true nature of the problem at hand. Typically participants
do not have consensus during a first intervention. The power of this exercise is seen in the
questions that follow. As the participants hear what others believe the problem to be, they
recognize aspects of the situation they had not previously seen.

Many first-time participants of action learning find this process frustrating; they are used to
jumping into solution mode. What they quickly discover is that, as they dissect the troubling
situation, they are planting the seeds for the next stage, developing a solution. Regardless
of how certain the participants were of the nature of the problem when they entered the
problem-solving session, this exercise quickly opens their eyes to other possibilities.

(c) Timing

Action learning sessions are intense. Consider this when you schedule sessions. Each
session should require no more than four hours in a day, and there should be no more than
four weeks between sessions. Intense outcomes have been seen in sessions that happen
on sequential days.

Action learning groups tend to show similar patterns. The process starts slowly–the
members typically find it hard to ask questions. After the first intervention, the process
begins to pick up; the coach draws all members into the conversation and helps them figure
out how to communicate better. In addition to helping them determine how to ask better
 questions and work better as a team, the coach probes to ensure members know why
certain actions will work better.

Particularly exciting sessions occur when a group reconvenes after taking a night off. The
subconscious—having worked all night on the learnings and the problems—creates an
intense fire when the group gathers again in the morning. This new relationship among the
group members infiltrates their day-to-day activities from that moment forward;
conversations shift from statements to questions because those who have participated in
action learning realize the real power is determining what is not known, not showing off
what is known.

(d) Questioning and Answering

During the questioning, the coach listens for learning opportunities; they present themselves
in several forms. The simplest such opportunity is an early intervention that takes place
within the first 10 minutes of a session. The purpose is to determine how the group has
started as a team, but more important, to ensure everyone is participating.

The other two opportunities the coach looks for are:

 Reinforcing when things are going well

 Helping the team perform better.

On each occasion, the coach will test how the group feels it is doing and lead the group to
dig deeper. Through this process, the team will discover and surface any issues hiding
under the table. This allows the air to be cleared of tension and helps the group focus on
being a better team and solving the prime issue at hand.

If the team does not identify a learning opportunity that the coach has observed, the coach
will use a future, positive question to bring it to awareness. The final question from the
coach will lead the team in determining how to move forward. Action learning coaches
should restrict their participation to asking questions, letting the members find the answers
for themselves. This questioning processes forces the participants to reflect on the impact
of their actions.

(e) Resolution

Team members are encouraged to keep a learning journal for the duration of the project.
They won’t be asked to share what they’ve written. Rather, at the end of the project they will
be asked to summarize their learning journey. The composite of the team’s learning journey
should then be shared at the beginning of a final presentation to the C-suite: The results of
the project can be dramatic.

In the ideal world, the team will be empowered to implement the identified solution—sooner
rather than later. Unfortunately, the real world is not nearly trusting enough, and the C-suite
 typically will need a presentation of the problem and solution. Consequently, the team
needs to work continually with the problem owner.

At regular intervals, the team should apprise the problem owner of its progress. These
meetings can be to confirm scope, verify the likelihood that the path the team is on will be
accepted by the C-suite, and deal with challenges that have arisen.

When the day of the presentation arrives, there should be no surprises for the problem
owner or the team. The expected response to the presentation should be all systems are
go. The consequence of the solution not being implemented deflates the team and, more
often than not, the process is blamed for the failure, making future action learning sessions
unlikely.

MPOB/U3 Topic 6 Perception-Process and Errors

Perception is a process by which people regard, analyze, retrieve and react to any kind of
information from the environment. For example, some people feel happy about earning
money while others feel happy about spending money.

Perception may be defined as “a process of interpretation of a present stimulus on the basis

of past experience”.

Perception is not as simple as said here. It is an integrated approach. It is a synthetic

process where different physiological and psychological processes are involved. For
example, the accuracy of sense organs, clarity of sensations, mental set of an individual,
etc. Otherwise our perception may go wrong.

Process of Perception

 Reception: In this process, a person receives the information through stimuli.

 Selection: This is governed by two types of factors:
 External factors: These are size, intensity, proximity, motion and novelty.
 Internal factors: These are attitude, motives, experiences, interests and
expectations.
 Organization: It is the process by which we sort stimuli into a meaningful pattern. It
involves the following:
 Grouping: Assembling of stimuli on the grounds of similarity.
 Proximity: This is the closeness of stimuli to one another that affects perception.
 Closure: It is the ability to organize stimuli so that together they form a whole
pattern.
 Interpretation: It is the formation of an idea about the information that is sensed,
selected and organized. It involves the following phenomena: primacy effect, selective
perception, stereotyping, halo effect, projection and expectancy effect. They are the types of
perceptual errors.
 Primacy/ Recency Effect: The first impression is given the most important which is
known as the primacy effect. Recency effect, on the other hand, is that human beings
remember latest events more than the less recent ones.
 Stereotyping: It is the effect caused by forming a certain belief about a category of
stimuli and generalizing that notion to encounters with each member of that category. In
reality, there is a difference between the perceived notion of each category and the actual
traits of the members. It may affect the interview process in an organization.
 Halo effect: It is the process of generalizing from a comprehensive analysis to a
single attribute or trait. A negative halo effect is known as the reverse halo effect. It affects
the performance appraisal of employees in a company.
 Projection: It is a psychological defence mechanism which makes a person
compare his negative traits with other people and conclude that they are better off than
others. Perceptual checking minimizes the negative effects of projection.
 Selective Perception: This means a person sees, feels or hears what he wants to
and skips other information which are inconsistent to his view.
 Expectancy effect: It is the tendency of an individual to interpret any person or
object based on how he expects the person or object to be in the first place. It is also called
as Pygmalion effect.

Factors affecting Perception

The factors which affect the perception are shown in the figure below:

Perceptual Errors
1. Stereo Typing

“Making positive or negative generalizations about a group or category of people, usually

based on inaccurate assumptions and beliefs and applying these generalizations to an
individual member of the group.” For e.g. Girls are very talkative, Rich are cruel to poor.

2. Halo Effect

Drawing general impression of individual on the basis of a single characteristic. I.e. if

someone is good at one dimension, he/she is perceived to be good at other dimensions as
well.

3. Recency Effect

When the most RECENT information influences our judgment, even though we have a
whole of other information on the Person.

4. The Similar-to-Me Effect

We tend to favor/like or give favorable judgment to those who are similar to us. Example
two candidates came along for interview, one from Delhi and the other from Bihar. As
interviewer is from Delhi, he tends select to the candidate from Delhi, better evaluation.

5. Fundamental Attribution Error

The tendency to underestimate the influence of external factors and overestimate the
influence of internal factors when making judgments about the behavior of others.

6. Self-Serving Bias

The tendency for individuals to attribute their own successes to internal factors while putting
the blame for failures on external factors.

7. Self-fulfilling prophecy

People’s preconceived expectations and beliefs determine their behavior, thus, serving to
make their expectations come true Example when a teacher, labeled a kid as stupid
(because he has illegible handwriting). Soon the kid believed on teacher and behave like
one.

8. Perceptual defense

People tend to defend the way they perceive things. Once established, a person’s way of
viewing the world may become highly resistant to change. Sometimes, perceptual defense
may have negative consequences. This perceptual error can result in manager’s inability to
perceive the need to be creative in solving problems. As a result, the individual simply
proceeds as in the past even in the face of evidence that business as usual is not
accomplishing anything worthwhile

MPOB/U3 Topic 7 Attitudes- Formations

An attitude is a general and lasting positive or negative opinion or feeling about some
person, object, or issue. Attitude formation occurs through either direct experience or the
persuasion of others or the media. Attitudes have three foundations: affect or emotion,
behavior, and cognitions. In addition, evidence suggests that attitudes may develop out of
psychological needs (motivational foundations), social interactions (social foundations), and
genetics (biological foundations), although this last notion is new and controversial.

Emotional Foundations of Attitudes

A key part of an attitude is the affect or emotion associated with the attitude. At a very basic
level, we know whether we like or dislike something or find an idea pleasant or unpleasant.
For instance, we may say that we know something “in our heart” or have a “gut feeling.” In
such cases our attitudes have been formed though our emotions rather than through logic
or thinking. This can happen through (a) sensory reactions, (b) values, (c)
operant/instrumental conditioning, (d) classical conditioning, (e) semantic generalization, (f)
evaluative conditioning, or (g) mere exposure.

(a) Sensory Reactions

Any direct experience with an object though seeing, hearing, smelling, tasting, or touching
will lead to an immediate evaluative reaction. We are experts at knowing whether we find a
certain sensory experience pleas-ant or unpleasant. For example, immediately upon tasting
a new type of candy bar, you know whether you like it or not. This also applies to aesthetic
experiences, such as admiring the color or composition of an artwork. We form attitudes
about objects immediately upon experiencing them.

(b) Values
Some attitudes come from our larger belief system. We may come to hold certain attitudes
because they validate our basic values. Many attitudes come from religious or moral beliefs.
For example, for many people their attitudes about abortion, birth control, same-sex
marriage, and the death penalty follow from their moral or religious beliefs and are highly
emotional issues for them.

(c) Operant Conditioning

Operant or instrumental conditioning is when an attitude forms because it has been
reinforced through reward or a pleasant experience or discouraged through punishment or
an unpleasant experience. For example, a parent might praise a teenager for helping out at
an after-school program with little kids. As a result, the teen may develop a positive attitude
toward volunteer work. Similarly, many people find that broccoli has a terrible taste, and so
they dislike broccoli because of its punishing flavor.
(d) Classical Conditioning
Classical or Pavlovian conditioning happens when a new stimulus comes to elicit an
emotional reaction because of its association with a stimulus that already elicits the
emotional response. The Russian physiologist Ivan Pavlov took dogs, which naturally
salivate to meat powder, and trained them to salivate at the sound of a bell by continually
ringing the bell as the meat powder was presented. In humans, some of our attitudes have
become conditioned in much the same way. For example, some people have a negative
attitude towards “dirty” words. Just the thought of a taboo word will cause some people to
blush. The words themselves have come to elicit an emotional reaction because their use is
frowned upon in our culture in most contexts.

(e) Semantic Generalization

Not only can we become conditioned to a specific stimulus, but this initial conditioning can
generalize or spread to similar stimuli. For example, a bell higher or lower in pitch to the
original conditioned sound may elicit the same reaction. In humans, the initial conditioning
can spread even to words or concepts similar to the original stimulus. As a result, we can
form attitudes about an object or idea without having direct contact with it. When this kind of
generalization occurs, the process is called semantic generalization. For example, human
subjects who have been conditioned to the sound of a bell may also show a response to the
sight of a bell or by the spoken word bell. Semantic generalization can account for the
formation of attitudes, like prejudice, where people have formed an attitude without having
direct contact with the object of that attitude.

(f) Evaluative Conditioning

An object need not directly cause us to feel pleasant or unpleasant for us to form an
attitude. Evaluative conditioning occurs when we form attitudes toward an object or person
because our exposure to them coincided with a positive or negative emotion. For example,
a couple may come to feel positive toward a particular song that was playing on the radio
during their first date. Their positive attitude to the song is a result of its association with the
happy experience of a date.

(g) Mere Exposure

Finally, when we see the same object or person over and over, we will generally form a
positive attitude toward that object or person. This is true for an object or person we feel
neutral or positive about, so long as we are not overexposed to it. For example, many
popular styles of clothing seem bizarre at first, but then as we see more of them we may
come to accept and even like them.

MPOB/U3 Topic 8 Relationship between Attitude

and Behavior

One of the widely accepted facts about human beings is, No two people are alike, whether
in terms of physical appearance (i.e. body structure, height, weight, colour, etc) or abstract
aspects (like intelligence, attitude, personality, behaviour and so on). Many people take a
person’s attitude as their behaviour. Although directly or indirectly they are interrelated, they
are different in the sense that attitude represents how a person thinks or feels about
someone or something.

On the other extreme, behavior represents an individual’s reaction to a particular action,

person or environment.

It has been said that ‘a person’s attitude affects thoughts while his/her behavior
affects actions.’ So, in our today’s topic, we are going to explore some significant
differences between attitude and behavior.

Attitude
To put simply, attitude is a person’s mental outlook, which defines the way we think or feel
anything. It is a hypothetical construct, i.e. whose direct observation is not possible. It is a
predisposition to respond in a settled way to a person, event, opinion, object, etc., which is
reflected in our body language. It has a strong impact on our decisions, actions, stimuli, etc.
Education, experience, and environment are the major factors that affect a person’s
attitude.

A person’s attitude can be positive, negative or neutral views, which shows one’s likes and
dislikes for someone or something. So, the type of attitude we carry, speaks a lot about us,
as we get into that mood and transmits a message to the people around us. There is no
such thing like ideal attitude, for a particular situation as it is spontaneous and so we always
have a choice to opt the right attitude for us.

Behavior
The term ‘behavior’ can be described as the way of conducting oneself. It is the manner of
acting or controlling oneself towards other people. It is the range of actions, responses, and
mannerisms set by an individual, system or organization in association with themselves or
their environment, in any circumstances.

In short, behavior is an individual or group reaction to inputs such as an action, environment

or stimulus which can be internal or external, voluntary or involuntary, conscious or
subconscious.

BASIS FOR
ATTITUDE BEHAVIOR
COMPARISON

Attitude refers to a person’s Behavior implies the actions,

mental view, regarding the way moves, conduct or functions of
Meaning
he/she thinks or feels about an individual or group towards
someone or something. other persons.
 Based on Experience and observation Situation
Trait Human Inborn
What is it? A person’s mindset. Outward expression of attitude.
Reflects What you think or feel? What you do?
Defined by Way we perceive things. Social Norms

MPOB/U3 Topic 9 Interpersonal Behavior

THE ART OF INTERACTING WITH OTHERS, CONNECTING WITH OTHERS IS KNOWN
AS INTERPERSONAL BEHAVIOUR.

It constitutes how well you manage to present yourself in front of others.

Your personality, your aura, your social skills, your background, and most importantly your
language these are the factors that affect the interpersonal behaviour.

Well today if you want to live a healthy social life you need to interact with others, you need
to talk to them on various factors and for this you need to be good at interpersonal
communication.

The word ‘inter’ means between and ‘personal’ means persons and hence it means
between persons .therefore it is called interpersonal communication.

From a kinder garden student to a highly qualified professional, there is everyone who
require this skill.

Interpersonal communication is nothing , it’s just a two way communication between two
people,who can be and cannot be from the same background.

But for the interpersonal communication to take place ,always use a language tat is
familiar to both.

MPOB/U3 Topic 10 Johari Window

The Johari window model is used to enhance the individual’s perception on others. This
model is based on two ideas- trust can be acquired by revealing information about you to
others and learning yourselves from their feedbacks. Each person is represented by the
Johari model through four quadrants or window pane. Each four window panes signifies
personal information, feelings, motivation and whether that information is known or
unknown to oneself or others in four viewpoints.
 The Johari Window Model

The method of conveying and accepting feedback is interpreted in this model. A Johari is
represented as a common window with four panes. Two of these panes represent self and
the other two represent the part unknown to self but to others. The information transfers
from one pane to the other as the result of mutual trust which can be achieved through
socializing and the feedback got from other members of the group.

1. Open/self-area or arena: Here the information about the person his attitudes,

behaviour, emotions, feelings, skills and views will be known by the person as well as by
others. This is mainly the area where all the communications occur and the larger the arena
becomes the more effectual and dynamic the relationship will be. ‘Feedback solicitation’ is a
 process which occurs by understanding and listening to the feedback from another person.
Through this way the open area can be increased horizontally decreasing the blind spot.
The size of the arena can also be increased downwards and thus by reducing the hidden
and unknown areas through revealing one’s feelings to other person.
2. Blind self or blind spot: Information about yourselves that others know in a group
but you will be unaware of it. Others may interpret yourselves differently than you expect.
The blind spot is reduced for an efficient communication through seeking feedback from
others.
3. Hidden area or façade: Information that is known to you but will be kept unknown
from others. This can be any personal information which you feel reluctant to reveal. This
includes feelings, past experiences, fears, secrets etc. we keep some of our feelings and
information as private as it affects the relationships and thus the hidden area must be
reduced by moving the information to the open areas.
4. Unknown area: The Information which are unaware to yourselves as well as others.
This includes the information, feelings, capabilities, talents etc. This can be due to traumatic
past experiences or events which can be unknown for a lifetime. The person will be
unaware till he discovers his hidden qualities and capabilities or through observation of
others. Open communication is also an effective way to decrease the unknown area and
thus to communicate effectively.

MPOB/U3 Topic 11 Transactional Analysis-Ego States

Transactional Analysis is first and foremost a therapeutic tool for positive change and
growth. It can be used either in therapy for the individual concerned or on a more surface
level for problem solving in everyday life.

TA is basically the study of how people take on certain behaviors, either by accident or from
their early caretakers or authority figures and then continue to play them out in their adult
lives. It is a model for people to use to work towards ‘autonomy’, a place from where they
can choose to live the way they want to and not to be still acting as if they are controlled by
past events or messages.

Transactional Analysis then is a modern psychotherapy model, which has; it’s own
particular language and theory of personality. It states that the person transacts with a
person in certain ways, structures their time between life and death in a particular way,
plays their own particular games and lives out their own unique script.

An understanding of Transactional Analysis can give hope for the person in that they can
change their script and choose the way they want to re-write their own life plan, without
hanging on to inappropriate behaviors of the past.

The creator of Transactional Analysis Was Eric Berne, a Psychiatrist and a man who was
largely influenced by Freud, though by the time of his death in 1970,he had become a,in
some ways, a critic of Freud. Transactional Analysis though does have its roots in Psycho
dynamic theory.
The personality for Transactional Analysis, for Berne, is based on the recognition of three
quite different ego states, called specifically the Parent, Adult and Child.

An ego state for Berne is:

‘a system of feelings accompanied by related set of behaviour patterns.’

For example, spontaneous feelings, compliance and rebellion are all features of the child
ego state and may be activated by the individual at any time throughout his life.

Berne recognised that three such ego states must be in everyone and that together they
make up the unique individuals Personality.

For Berne the ego states are not roles but are phenomenological realities.

Each ego state is concerned with what actually happened in the past for that person and
how they acted will determine how they act in the here and now. The decisions that they
made then will determine the decisions and behaviours they now make in the present.

The Parent Ego State

The parent ego state contains the attitudes and behaviours that are observed and copied
from the individual’s caretakers and figures. In other words the spoken and unspoken rules.
The “shoulds’ and the ‘oughts” of life. The individual’s early parent is formed in the child
from birth to approx five years and in Transactional Analysis terms is called the parent in the
child or the P1. The complete parent ego state or the P2 is formed between the ages of five
years to approx twenty years as a result of even more external stimuli from their authority of
caretaker figures.

The Child Ego State

The Child Ego State is primarily concerned with feelings though that does not mean that
when in the ‘here and now’ experience the person does not have access to attitudes and
thinking, but it simply means that when activated feelings are usually the executive energy
force.

The child ego state is the part of the personality, which is preserved from actual childhood; it
also contains all the impulses a person was born with. The child ego state is, as said above,
primarily about spontaneous feelings, needs and wants of the child. It is also important to
note that the child ego state contains ‘recordings’ of childhood memories and experiences.
Therefore, when the person feels and acts as they did when they were very young, they are
experiencing their child ego state.
MPOB/U3 Topic 12 Types of Transactions
Transactional analysis, originally developed by Dr. Berne, defined the transaction as the
basic unit of social intercourse. When two people communicate, one person initiates the
transaction. The person to whom the transaction is directed responds. Basic transactional
analysis involves identifying the ego state that initiated the transaction and which ego state
responded.  There are three types of transactions: complementary, crossed and ulterior, all
of which you will encounter on a daily basis.

The crux of transactional analysis is the rule that effective and successful communications
must be generated from complementary transactions. Complementary transactions
complete a transit from the receiving ego state back to the sending ego state. If the
transaction is from adult to child, the response must be child to adult.  For example, seeing
that Paul the programmer is agitated during a team discussion, Sari the scrum master pulls
Paul aside and says . . .”Paul you seem to be upset, tell me what you’re feeling.” The
transaction goes from the scrum master’s nurturing parent to Paul’s child. If Paul responds,
“I was feeling cut out of the conversation and I need help,” he would be responding from his
child state to Sari’s parent.

Crossed transactions occur when the communication transaction does not return directly to
the state it came from.  In the saga of Paul and Sari, if Paul had responded from his adult
state to Sari’s adult state the communication would be confused and ineffective. For
example, Paul asked Sari for a definition of the term upset. A crossed transaction occurs
when an unexpected response is made to the stimulus. Crossed transactions occur for
many reasons ranging from misinterpretations (the receiver does not understand the
transaction) to misdirection (the receiver want to avoid the conversation). Crossed
transactions can escalate into anger unless one (or both) parties disengage or redirects the
conversation back to complementary patterns.

The third type of transaction is ulterior. Ulterior transactions always involve two or more ego
states in parallel.  One portion of the transaction is generally verbal and the other an
unspoken psychological transaction.  For example, if a manager tells an employee, “this is a
really intriguing problem, but it it might be too hard for you.” This message can be heard
either by the employee’s adult (I don’t have the capability to deal with this scenario) or by
the employee’s child (I will do it and show him!).  Ulterior transactions are manipulative and
increase the risk of communication failure and conflict. A better approach be to avoid
innuendo and to break the conversation down into a set of complementary transactions
exposing the meaning of each step in the conversation.

Teams are built on effective communication.  Very little productive work can be
accomplished if communication breaks down. Agile team members need an understanding
of the three ego states and how the transactions between the states can either be
complementary (effective), crossed (ineffective) or ulterior (manipulative). Transactional
analysis provides a framework to understand whether our communication is effective and
how to get it back on track when it’s not.
 MPOB/U3 Topic 13 Life Positions
The Life Positions refers to the specific behavior towards others that an individual learns
on the basis of certain assumptions made very early in the life.

The life positions can be categorized as follows:

1. I am O.K., You are O.K.: This life position shows that an individual has several O.K.
experiences with others. This means, an individual encountered no severe problems or
issues with others in his childhood and had a normal relationship with them. People with
such life positions about themselves and others around him can solve any problem very
easily and realizes the significance of others being in his life. This position is based on the
adult ego.
2. I am O.K., You are not O.K.: This life position is created when an individual was too
much ignored when he was a child. Here, an individual believes that he is right, and all the
others around him are wrong. These are the individual who possesses the rebellion child
ego and put blame on others for anything that goes wrong with them.
3. I am not O.K., you are O.K.: This life position gets created when an individual feels
that others do things better than him. He feels inferior to others and believes that others can
do many things which he cannot do by himself. These kinds of people always complain
about one thing or the other and remain highly dissatisfied with their lives.
4. I am not O.K., you are not O.K.: This kind of life position is created by those who
lacks interest in living. They feel life is not worth living and are the ones who have been
neglected by their parents in their childhood and were brought up by the servants. Such
kind of people commits suicide or homicide to end their lives.
Thus, the life positions talk about the individual developing his identity, sense of worth and
perception about others during his childhood and believing it to be true until and unless
some major experience changes it.

MPOB/U3 Topic 14 Applications of

Transactional Analysis
Transactional Analysis is a simple and effective tool which can be useful to anyone who is
interested to make a positive change in life. By using the concepts one can easily identify
the limitations and initiate better choices to progress. The ego states, strokes, transactions
(communicating) and racket system are some of the powerful concepts. The thoughts,
feelings and the behaviour pattern can be changed.

TA has four fields of specializations – Counseling, psychotherapy, organizational and

educational. Any one field of specialization can be done under a certified training group run
by a trainer who is competent and certified as well.

UNIT 4 Group behavior & Team

Development
MPOB/U4 Topic 1 Concept of Group and Group Dynamics
GROUP
A Group is basically an assemblage of people. It can be understood as a collection of
individuals (two or more), who come together and interact with each other, so as to achieve
the objectives of the organization. These are the foundation of an organization.

Characteristics of Groups
(i) Size: To form a group, it must be having at least two members. Practically, the number of
group members ranges from 15 to 20. The more the members in the group, the more
complex it is to manage.

(ii) Goals: Every group has certain goals, that are the reasons for its existence.

(iii) Norms: A group has certain rules, for interacting with the group members.

(iv) Structure: It has a structure, based on the roles and positions held by the members.

(v) Roles: Every member of a group has certain roles and responsibilities, which are
assigned, by the group leader.

(vi) Interaction: The interaction between the group members can occur in several ways,
i.e. face to face, telephonic, in writing or in any other manner.

(vii) Collective Identity: A group is an aggregation of individuals, which are separately

called as members, and collectively called as a group.

Reasons for Group Formation

 Personal Characteristics: Individuals with similar beliefs, attitudes and values are
more likely to form groups.
 Opportunity for interaction: If the employees of an organization, are given an
opportunity to interact with one another, they find that they have many things similar, which
also creates a group.
 Interest and goals: When individuals share common interest and goals, it requires
cooperation and coordination for its achievement, which also results in the formation of
groups.
 Influence and power: Last but not the least, a group has more influence and power,
as compared to an individual, which also promotes its formation.

In general, groups are created out of individual need satisfaction, which can be personal,
social or economical. Meaning that the members need to associate with the group in order
to fulfil their basic needs.

Types of Groups
GROUP DYNAMICS
Group dynamics deals with the attitudes and behavioral patterns of a group. Group
dynamics concern how groups are formed, what is their structure and which processes are
followed in their functioning. Thus, it is concerned with the interactions and forces operating
between groups.

Group dynamics is relevant to groups of all kinds – both formal and informal. If the UPA
government has set up Group of Ministers for every governance issue, the Supreme Court
of India has 27 Group of Judges committees overseeing all manner of non-judicial work in
the apex court. In an organizational setting, the term groups are a very common and the
study of groups and group dynamics is an important area of study.

MPOB/U4 Topic 2 Stages of Group Development

Group Development is a dynamic process. How do groups evolve? There is a process of
five stages through which groups pass through. The process includes the five stages:
forming, storming, forming, performing, and adjourning.
1. Forming
The first stage in the life of a group is concerned with forming a group. This stage is
characterized by members seeking either a work assignment (in a formal group) or other
benefit, like status, affiliation, power, etc. (in an informal group). Members at this stage
either engage in busy type of activity or show apathy.

2. Storming
The next stage in this group is marked by the formation of dyads and triads. Members seek
out familiar or similar individuals and begin a deeper sharing of self. Continued attention to
the subgroup creates a differentiation in the group and tensions across the dyads / triads
may appear. Pairing is a common phenomenon. There will be conflict about controlling the
group.

3. Norming
 The third stage of group development is marked by a more serious concern about task
performance. The dyads/triads begin to open up and seek out other members in the group.
Efforts are made to establish various norms for task performance.

Members begin to take greater responsibility for their own group and relationship while the
authority figure becomes relaxed. Once this stage is complete, a clear picture will emerge
about hierarchy of leadership. The norming stage is over with the solidification of the group
structure and a sense of group identity and camaraderie.

4. Performing
This is a stage of a fully functional group where members see themselves as a group and
get involved in the task. Each person makes a contribution and the authority figure is also
seen as a part of the group. Group norms are followed and collective pressure is exerted to
ensure the Process of Group effectiveness of the group.

The group may redefine its goals Development in the light of information from the outside
environment and show an autonomous will to pursue those goals. The long-term viability of
the group is established and nurtured.

5. Adjourning
In the case of temporary groups, like project team, task force, or any other such group,
which have a limited task at hand, also have a fifth stage, This is known as adjourning.

The group decides to disband. Some members may feel happy over the performance, and
some may be unhappy over the stoppage of meeting with group members. Adjourning may
also be referred to as mourning, i.e. mourning the adjournment of the group.

MPOB/U4 Topic 3 Theories of Group Formation

Theories of Group Formation:

1. Propinquity Theory
The most basic theory explaining affiliation is propinquity. This interesting word simply
means that individuals affiliate with one another because of spatial or geographical
proximity. In an organisation employees who work in the same area of the plant or office or
managers with offices close to one another would more probably form into groups than
would those who are not physically located together. There is some research evidence to
support the propinquity theory and on the surface, it has a great deal of merit for explaining
group formation. The drawback of this theory is that it is not analytical and does not begin to
explain some of the complexities of group formation. Some more theoretical and practical
reasons need to be explored.
2. Homan’s Theory
According to George C. Homans, “The more activities persons share, the more numerous
will be there interactions and the stronger will be their shared activities and sentiments, and
the more sentiments people have for one another, the more will be their shared activities
and interactions.”

It is a very comprehensive theory and based on activities, interactions and Homan’s theory
is based on sentiments. These three elements are directly related to each other. The
members’ activities interactions and of a group share activities and interact with one another
not just because of physical proximity but also to accomplish group goals.

The key element is interaction because of which they develop common sentiments for one
another. These sentiments gradually get expressed through the formation of informal
groups. If any disturbance is caused to any of the three-activities, interactions and
sentiments, it is likely to disturb all the others.

3. Balance Theory
Another very comprehensive theory is a Balance Theory of group formation. This theory as
proposed by Theodore Newcomb states that “Persons are attracted to one another on the
basis of similar attitudes towards commonly relevant objects and goals. Once a relationship
is formed, it strives to maintain a symmetrical balance between the attraction and the
common attitudes. If an imbalance occurs, attempts are made to restore the balance. If the
balance cannot be restored, the relationship dissolves.”

Thus, the balance theory is additive in nature in the sense, that it introduces the factor of
balance to the propinquity and interaction factors. There must be a balance in the
relationship between the group members for the group to be formed and for its survival. The
following -figure shows the balance theory.

Individual (A) will interact and form a relationship/group with individual (B) because of
common attitudes and values (C). Once this relationship is formed, the participants strive to
 maintain a symmetrical balance between the attraction and the common attitudes. If an
imbalance occurs, an attempt is made to restore the balance. If the balance cannot be
restored, the relationship dissolves.

4. Exchange Theory
This theory is based on reward-cost outcomes of interactions. To be attracted towards a
group, a person thinks in terms of what he will get in exchange of interaction with group
members. A minimum positive level (rewards greater than costs) of an outcome must exist
in order for attraction or affiliation to take place. Rewards from interactions gratify needs
while costs incur anxiety, frustrations, embarrassment or fatigue. Propinquity, interaction
and common attitudes all have roles in the exchange theory.

MPOB/U4 Topic 4 Concept of Team v/s Group

Nowadays, group or team concept is adopted by the organization, to accomplish various
client projects. When two or more individuals are classed together either by the organization
or out of social needs, it is known as a group. On the other hand, a team is the collection of
people, who are linked together to achieve a common objective.

Most of the work in a business entity is performed in groups. Although the individual
personality of an employee is important, their effectiveness depends on the teams in which
they are working collectively to achieve any objective. In a particular team, there can be
several groups in which the group members individually help their leader to accomplish the
goals.

Comparison Chart

BASIS FOR
GROUP TEAM
COMPARISON

Meaning A collection of individuals A group of persons having

 who work together in collective identity joined
completing a task. together, to accomplish a goal.

Leadership               Only one leader More than one

Members                  Independent Interdependent

Discuss, Decide and

Process                      Discuss, Decide and Do.
Delegate.

Work Products                    Individual Collective

Accomplishing individual
Focus on                   Accomplishing team goals.
goals.

Accountability                     Individually Either individually or mutually

Group
A group is an assemblage of persons who work, interact and cooperate with one another in
achieving a common goal in a specified time. The identity of the group members is taken
individually. The members share information and resources with other group members.

In an organisation, the groups are made on the basis of common interests, beliefs,
experience in common fields and principles, so that they can easily coordinate with each
other. There are two kinds of groups:

 Formal Group: These groups are created by the management of the organisation

for performing a specific task.
 Informal Group: The formation of these groups is done naturally in an organisation,
to satisfy the social or psychological human needs.

For example: Ethnic groups, trade unions, friendship circles, airline flight crew, etc.

Team
A group of people who are joined for achieving a common goal within a stipulated period,
having collective accountability is known as the team. The agenda of the team is “one for all
and all for one”. Apart from sharing information, the team members also share the
responsibility of the team task. The team is always responsible for the outcome (i.e. Result
of the collective efforts of the team members).

The team members have a mutual understanding with other members. They work jointly to
maximise the strengths and minimise the weakness by complementing each other. The
most important feature of a team is “synergy” i.e. the team can achieve much more as the
members can achieve individually. The three key features of team functioning are:
 Cohesion
 Confrontation
 Collaboration

For example: Cricket team, team for accomplishing a project, team of doctors, management
team etc.

Key Differences between Group and Team

The difference between group and team in the workplace can be drawn clearly on the
following grounds:

1. There is only one head in a group. A team can have more than one head.
2. The group members do not share responsibility, but team members share the
responsibility.
3. The group focuses on achieving the individual goals. Conversely, the team members
focus on achieving the team goals.
4. The group produces individual work products. As opposed to, the team who
produces collective work products.
5. The process of a group is to discuss the problem, then decide and finally delegate
the tasks to individual members. On the other hand, a team discusses the problem, then
decide the way of solving it and finally do it collectively.
6. The group members are independent. Unlike a group, the team members are
interdependent.

MPOB/U4 Topic 5 Types of Teams

Teams can be divided into four main groups: project teams, self-managed teams, virtual
teams, and operational teams. What type of team you have depends on its purpose,
location, and organizational structure. Each type of team comes with its unique set of
strengths and weaknesses. In order to fully utilize your team, you first need to understand
where each type of teams works the best.

1. Project team

A project team is a group of employees that work collectively and have shared goals and
strategies.

This type of team means structuring work in a specific, measurable and time-constrained
way. Project teams allow assigning clear roles and responsibilities, set specific deadlines.

Types of Project teams

(i) Functional team

 A functional team is permanent. It includes members of the same department with different
responsibilities. There is a manager who is responsible for everything. Everyone in the team
reports to him.

A functional team can be usually recognized in traditional project management companies.

This type requires a manager who ensures that there are no obstacles when it comes to
transferring work from one team to another.

(ii) Cross-functional team

A cross-functional team consists of members from different departments. This kind of team
tackles specific tasks that require different expertise and inputs.

Cross-functional teams are becoming increasingly popular all over the world. However,
there is an opinion that the whopping number of all cross-functional teams are
dysfunctional.

(iii) Matrix team

A matrix team is a “2-boss system”. Here an individual reports to a different manager for
his/her work. A matrix team is the product of a Matrix management approach.

It helps top managers to retain control over the project without being involved in decisions.

(iv) Contract team

A contract team is an outsourced team where the members are tied down by a contract.

The client can easily cut all ties to the team after the project is completed and the contract
has ended. In this kind of team, the role of project managers is crucial. They have to
maintain constant communication between the customer and team members, to
compensate for the lack of the team’s physical presence, to bear full responsibility for
project success or failure.

2. Self-managed teams

Self-managed teams consist of employees of the same company who work together.
Although they have a wide set of objectives, their key goal is to reach a common result.

There is no manager here. The members of self-managed teams should determine rules
and expectations, solve problems and bare shared responsibilities.

Thinking about creating a self-managed team, you should pay attention to the levels of
responsibility and the autonomy that is given to the team.
 The main advantages of self-managed teams are:

 Improved motivation because of autonomy

 Ability to manage own time and handle tasks when it suits employees
 No pay for office
 Pride in team accomplishments because of shared responsibility

3. Virtual team

A virtual team involves employees who work in different locations and who rely on the
power of communication and collaboration tools to get things done together.

This kind of team provides people with better life-work balance and allow business owners
to hire the best experts.

There are different types of virtual teams that are characterized by 3 dimensions: time,
space and culture.

 Time is about when people work (during different hours, on different shifts, in
different time-zones).
 Space is about where people work (right next to each other or hundreds of
kilometers away).
 Culture is about how people work (including such factors as gender, age, race,
language, education, nationality, social, religious, economic factors, etc.)

4. Operational team

An operational team deal with supporting other types of teams. It is formed to make sure
that all office processes go smoothly.

Operational teams may have their own projects and function as they also have well-defined
roles and responsibilities.

5. Problem-solving team

A problem-solving team is usually temporary. It is focused on solving a specific issue. This

kind of team may be created after the financial crisis or any unplanned event or challenge. It
is aimed to come up with solutions to help the company climb out of a steep recession.

Once guidelines are set in place and plans are formed, the task forces and committees are
disbanded.
MPOB/U4 Topic 6 Building and Managing Effective Team
Without team building skills, a manager risks limiting the productivity of their employees to
what each member can do on their own, whereas if you foster team building you can unite
your team around a common goal, which will raise productivity as a result.

So here are five steps to building a productive and effective:

Step 1: Establish leadership

If your employees trust your judgement, they will work effectively even when you’re not
around. Before you can start team building, you need to develop the right kind of leadership
skills. This doesn’t mean asserting authority, instead try to foster trust through honesty and
transparency.  Especially in larger organizations, managers can’t be everywhere at once,
but if your employees trust your judgements they will work effectively even when you’re not
around.

Step 2: Establish relationships with each of your employees

Try to learn more about each member of your team, their skill sets, how they are motivated
and their likes and dislikes. This knowledge is invaluable to leaders, as it allows them to
match each employee’s expertise and competencies to specific problems, which will help
increase their productivity and job satisfaction.

As well as this, try to include your employees in the decision making process where
possible. Instead of delegating tasks, give your team’s open-ended projects and allow them
to determine the best solution. This will encourage them to cooperate and develop problem
solving skills.

Step 3: Build relationships between your employees

As your team starts to cooperate more, examine the way they work together and take steps
to improve communication, cooperation and trust amongst the team. If there are any
conflicts, try to resolve them amicably. Listen to both sides of the argument and act as a
mediator. One way to do this is to brainstorm solutions, which helps to empower your
employees and may lead to new solutions to the problem.

Step 4: Foster teamwork

Once you have established relations with and between your employees, it’s time to help
them work together effectively. Encourage your team to share information, both amongst
themselves and within the wider organisation.  Also, try to communicate more with your
team. This goes beyond simply holding meetings, and includes things like being open to
suggestions and concerns, asking about each team member’s work and offering assistance
where necessary, and doing everything you can to communicate clearly and honestly with
your team.

Step 5: Set ground rules for the team

Finally, you can begin officially establishing your team through creating team values and
goals, as well as evaluating team performance alongside individual performance. Be sure to
include your team in this process, so they know what’s required and agree with it.

Team building is one of the most important responsibilities a manager has. It isn’t
something that can be achieved in a short time and then forgotten. It is an ongoing organic
process that you a will have to facilitate and guide. As this process unfolds, however, your
team members will begin to trust and support one another and share their skill sets and
effort in order to more effectively complete your organisation’s goals.

Organization Culture and Change Management:

MPOB/U4 Topic 7 Concept of Organizational Culture
To understand the meaning of organisational culture, we must first understand the meaning
of culture. “Culture is the set of important understandings that members of a community
share in common.” It consists of a basic set of values, ideas, perceptions, preferences,
concept of morality, code of conduct etc. which create a distinctiveness among human
groups.

When we talk about culture, we typically refer to the pattern of development reflected in a
society’s system of knowledge, ideology, values, laws, social norms and day to day rituals.
Depending upon the pattern and stage of development, culture differs from society to
society. Moreover, culture is passed on from generation to generation.

In simple words we can say that “culture is a combination of factors that are learned through
our interaction with the environment during our developmental and growth years.” After
understanding the meaning of culture, we will now attempt to define organisational culture.

Few Definitions:
“The organisational culture is a system of shared beliefs and attitudes that develop within an
organisation and guides the behaviour of its members.”

“The corporate culture consists of the normal values and unwritten rules of conduct of an
organisation as well as management styles, priorities, beliefs and inters personal behaviour
that prevails. Together they create a climate that influences how will people communicate,
plan and make decisions.”
 “Organisational culture can be defined as the philosophies, ideologies, values, assumptions,
beliefs, expectations, attitudes and norms that knit an organisation together and are shared
by its employees.”

According to Edgar Schein, “Organisational culture can be defined as a pattern of basic

assumptions-invented, discovered or developed by a given group as it learns to cope with
its problems of external adaptation and internal integration-that has worked well enough to
be considered valuable and, therefore, to be taught to new members as the correct way to
perceive, think and feel in relation to those problems.”

All the above definitions of organisational culture stress on the sharing of norms and values
that guide the organisational members’ behaviour. These norms and values are clear
guidelines as to how employees are to behave within the organisation and their expected
code of conduct outside the organisation.

Characteristics of Organisational Culture:

The following characteristics help us to understand the nature of organisational culture
better.

When we mix and match these characteristics, we get to the basis of culture:

1. Individual Autonomy:

The degree of responsibility, freedom and opportunities of exercising initiative that

individuals have in the organisation.

2. Structure:

The degree to which the organisation creates clear objectives and performance
expectations. It also includes the degree of direct supervision that is used to control
employee behaviour.

3. Management Support:

The degree to which, managers provide clear communication, assistance; warmth and
support to their subordinates.

4. Identity:

The degree to which, members identify with the organisation as a whole rather than with
their particular work group or field of professional expertise.

5. Performance Reward System:

 The degree to which reward system in the organisation like increase in salary, promotions
etc. is based on employee performance rather than on seniority, favouritism and so on.

6. Conflict Tolerance:

The degree of conflict present in relationships between colleagues and work groups as well
as the degree to which employees are encouraged to air conflict and criticisms openly.

7. Risk Tolerance:

The degree to which, employees are encouraged to be innovative, aggressive and risk
taking.

8. Communication Patterns:

The degree to which, organisational communications are restricted to the formal hierarchy
of authority.

9. Outcome Orientation:

The degree to which, management focuses on results or outcomes rather than on the
techniques and processes used to achieve these outcomes.

10. People Orientation:

The degree to which, management decisions take into consideration the impact of
outcomes on people within the organisation. When we appraise the organisation on the
basis of the above characteristics, we get a complete picture of the organization’s culture.
This picture becomes the basis of shared norms, beliefs and understanding that members
have about the organisation, how things are done in it and how the members are supposed
to behave.

MPOB/U4 Topic 8 Managing Conflict

In any situation involving more than one person, conflict can arise. The causes of conflict
range from philosophical differences and divergent goals to power imbalances. Unmanaged
or poorly managed conflicts generate a breakdown in trust and lost productivity. For small
businesses, where success often hinges on the cohesion of a few people, loss of trust and
productivity can signal the death of the business. With a basic understanding of the five
conflict management strategies, small business owners can better deal with conflicts before
they escalate beyond repair.

Strategy One: Accommodating

The accommodating strategy essentially entails giving the opposing side what it wants. The
use of accommodation often occurs when one of the parties wishes to keep the peace or
perceives the issue as minor. For example, a business that requires formal dress may
institute a “casual Friday” policy as a low-stakes means of keeping the peace with the rank
and file. Employees who use accommodation as a primary conflict management strategy,
however, may keep track and develop resentment.

Strategy Two: Avoiding

The avoidance strategy seeks to put off conflict indefinitely. By delaying or ignoring the
conflict, the avoider hopes the problem resolves itself without a confrontation. Those who
actively avoid conflict frequently have low esteem or hold a position of low power. In some
circumstances, avoiding can serve as a profitable conflict management strategy, such as
after the dismissal of a popular but unproductive employee. The hiring of a more productive
replacement for the position soothes much of the conflict.

Strategy Three: Collaborating

Collaboration works by integrating ideas set out by multiple people. The object is to find a
creative solution acceptable to everyone. Collaboration, though useful, calls for a significant
time commitment not appropriate to all conflicts. For example, a business owner should
work collaboratively with the manager to establish policies, but collaborative decision-
making regarding office supplies wastes time better spent on other activities.

Strategy Four: Compromising

The compromising strategy typically calls for both sides of a conflict to give up elements of
their position in order to establish an acceptable, if not agreeable, solution. This strategy
prevails most often in conflicts where the parties hold approximately equivalent power.
Business owners frequently employ compromise during contract negotiations with other
businesses when each party stands to lose something valuable, such as a customer or
necessary service.

Strategy Five: Competing

Competition operates as a zero-sum game, in which one side wins and other loses. Highly
assertive personalities often fall back on competition as a conflict management strategy.
The competitive strategy works best in a limited number of conflicts, such as emergency
situations. In general, business owners benefit from holding the competitive strategy in
reserve for crisis situations and decisions that generate ill-will, such as pay cuts or layoffs.

MPOB/U4 Topic 9 Managing Change

Change in a business happens for many reasons and affects different people in different
ways. There is a process that company management can follow that will help in managing
change in a business. When you manage change, you attempt to facilitate the smooth
evolution of the company. Managing change properly helps to maintain company morale,
 keeps the lines of communication open throughout the company and allows management to
implement decisions that can help the success of the company.

1. Discuss change ideas with company managers before implementing any new
policies. The managers can give you input about how the proposed change will impact
employees, and they can also suggest ways to implement change that would be easier and
more beneficial to the company. Be sure to emphasize the need for the change to company
managers so that they will understand why the change is important for the company. Create
a sense of urgency by comparing what the company is like presently, to how much better
the company will be after the change.
2. Analyze the effects of change completely before deciding to pursue it. Once the
company managers weigh in on your ideas, you can then take their input and determine the
potential ways that the change will affect the company. Remember that implementing
change all at once can cause confusion and frustrate employees. So analyze your change
effects in stages, and determine how making the change will affect revenue, production and
personnel.
3. Put your ideas down on paper, and get input on your written ideas from managers
within the company. Your written ideas will represent a change from your original ideas
because of the consideration you have taken for the managers’ input earlier in the process.
4. Discuss the final change schedule with your top executives and determine how to
implement changes with the least amount of disruption to finance, human resources and
production.
5. Begin training employees on the change at least 60 days prior to implementing it.
Circulate written material for employees to review when the change is introduced. As with
your managers, be sure to emphasize the reason for the change so that the entire staff
understands why the change is being made. When employees understand the reasons for a
change, they are better able to get behind the change and help make it happen.
6. Encourage employees to ask questions about the change, how it will affect the
company and how it will affect their job by designating a team to handle questions about the
change. Make that team easily accessible to employees. This helps to reinforce the
understanding of the change.

Managing change within your organization can be difficult. In order to make change go

smoothly, you need to instill in all the affected parties a sense of confidence that the change
is positive. When you are managing a transition from an old organizational structure to a
new one, you can take certain steps to help the entire company through the change without
disrupting business.

Defining Roles
According to an article on the Free Management Library website by professional
organizational consultant Carter McNamara, an effective transition requires several kinds of
managers. Among them are the manager who initiates the idea of change and points out
the need, the manager who coordinates the transition, the manager who rallies the
company to get behind the change and the manager responsible for seeing the change
through. It is possible for one person to take on multiple roles, but these roles must be
defined before the transition can begin.
Identifying Need
A complete organizational transition can only be successful if the company feels the change
needs to be made, according to management consultant John Covington in an article for the
journal Industrial Management. The initial steps of change involve painting a business
picture for the company that shows an essential need for change to avoid negative
consequences.

Transition Team
The transition team should consist of the managers mentioned previously and any
employees needed to make the change happen. Recruit employees from all parts of the
company so workers can see that all departments are involved in the change. Gather
support for the change from all company executives and managers, along with any strong
leaders who may not be part of management. Group leaders and other employees who
garner respect from workers should all be part of the transition team.

Lay Out the Plan

According to the online career resource Mind Tools, the transition plan should be put on
paper so everyone knows what blueprint to follow. It should explain why the change is being
made and what the company will look like when the transition from the old organizational
structure to the new one is complete. The plan should lay out the new structure and how
current personnel will fit into it.

Get Input
It is not possible to get approval from every single employee in the company, nor is that a
practical way to transition to a new structure. However, the company needs some
consensus on the change. Take the plan to the various departments and get input.
Compare the ideas you receive to the plan you have and make any necessary changes.

Finalize the Plan

When crafting the final transition plan, the transition team should carefully consider the
employee input and the executive team’s vision. Create a comprehensive plan detailing how
the transition will take place, how it will affect each department and the timetable for the
change. The transition team should present the plan to the company with confidence, and
the plan must be clear enough for employees to understand the vision and buy into it.

Clear the Path

Identify resources and employees within the organization that may cause obstacles to the
transition, and deal with them. It may mean letting some employees go, hiring employees to
fill vacancies identified by the transition plan, or changing the current office space or layout.
 Milestones
Mark the progress of the transition by milestones created during the planning phase. Keep
the company updated on the progress of the change by reporting successes in reaching
transition milestones. Once the final milestone is reached, the transition is complete.

MPOB/U4 Topic 10 Resistance to Change

One of the most important tasks of managers is to facilitate changes smoothly. Change is
always inevitable but so is resistance to change. It is basic human nature of people to try
and keep their methods and customs constant. This is where change management comes
into play. An organization always must strive to adapt to change if it wants to be successful.

Change is basically a variation in pre-existing methods, customs, and conventions. Since all
organizations function in dynamic environments, they constantly have to change
themselves to succeed.

Change management contains several strategies that help in facilitating the smooth
adoption of such changes.

One of the most important facets of change management is resistance to change. It is

simply human nature to counteract any changes and maintain the status quo.

But since change is inevitable, instead of resisting changes the organization must try to
implement them with minimum hassle.

Resistance to change may be either overt or implicit. For example, employees may react to
a change in policies with outright rejection and protests.

They may even refrain from showing disapproval expressly, but they may do so implicitly by
not accepting changes. Managers must understand these problems and help the
employees adopt these changes smoothly.

Reasons for Resistance to Change

In order to facilitate transitions and changes, managers must first be able to identify the
exact reason for resistance. Such resistance to change is common in all organizations. The
following are some common reasons for this:

 People generally find it convenient to continue doing something as they have always
been doing. Making them learn something new is difficult.
 Changes always bring about alterations in a person’s duties, powers, and influence.
Hence, the people to whom such changes will affect negatively will always resist.
 People who are adamant on maintaining customs instead of taking risks and doing
new things will always resist changes. This can happen either due to their insecurities or
lack of creativity and will.

Types of Resistance to Change

Resistance to change may be of the following three types:

a) Logical resistance: This kind of resistance basically arises from the time people
genuinely take to adapt and adjust to changes. For example, when computers became
common, accountants had to shift from accounting on paper to digital accounting. This
naturally takes time to adapt to.

b) Psychological resistance: Under this category, the resistance occurs purely due to

mental and psychological factors. Individuals often resist changes for reasons like fear of
the unknown, less tolerance to change, dislike towards the management, etc.

c) Sociological resistance: This resistance relates not to individuals but rather to the

common values and customs of groups. Individuals may be willing to change but will not
due to peer pressure from the group they are members of. For example, if a workers’ union
protests against new management policies, all workers face pressure to protest together.

Overcoming Resistance
While change will almost always face resistance, it is certainly possible to overcome it.
Managers must strive to help their employees adjust to changes and facilitate new
variations in functioning.

Firstly, managers must be able to convince workers that the changes they are proposing
are necessary. They should show how the workers and the organization itself will benefit
from these changes.

Secondly, the management can keep the following considerations in mind to implement
changes smoothly:

 Changes should not happen in one go because it is easier to implement them in

stages.
 Changes should never cause security problems for the workers.
 Managers must consider the opinions of all employees on whom the proposed
change will have an effect.
 If managers portray leadership by first adapting to the changes themselves,
employees are less likely to resist.
 Sufficient prior training of employees can help them accept changes with confidence.
 MPOB/U4 Topic 11 Managing Cross Cultures
Cross-cultural management is examining human behaviour within organizations from an
international perspective.

Cross-cultural management describes organizational behaviour within countries and

cultures; compares organizational behaviour across countries and cultures; and seeks to
understand how to improve the interaction of co–workers, managers, executives, clients,
suppliers, and alliance partners from around the world.

Thus here, we can experience that in present day’s scenario where people employed in
multinational companies (MNCs) are from various cultures and each and every employee is
different in his attitudes, practices, behaviour and values. Thus it becomes very difficult for a
manager to manage his subordinates who are diverse in their culture. There emerges need
to understand and gain knowledge on different cultures. It helps employees to know each
others’ cultures and languages. This helps, inturn, in keeping the employees integrated in
the organization so that they cooperate with each other in attaining the goals of the
organization.

Cross-cultural management focuses on reducing the cross-cultural differences and barriers

and creating cross-cultural awareness in order to have better communication and
cooperation at the workplace. It is the toughest job of a cross-cultural manager to keep his
employees involved in the tasks by keeping their differences aside. This will not only help in
retaining the employees but also to stay in the organization for a longer period of time.
Hence, it is very necessary to recognize the business culture, management values and
methodologies across the globe. Every country follows a different way of management style
and it becomes difficult for an international manager to manage various cultures.

CROSS CULTURAL DIFFERENCES:

One of the main tasks of management is solving of problems that appear at encountering
individual company and national cultures. Managers of international companies often face
challenges of cultural differences. There are three sources of cultural differences.

1. Corporate company culture:

The corporate company culture elements are such as history of the company, company’s
experience, leadership and dominant coalition, ownership, stage of development and
business diversity.

2. Professional industry culture:

The professional industry culture comprises of two elements; functional orientation and
industry norms. Functional orientation includes marketing, finance, engineering, research
and development functions. Industry norms include technology, change, key success
factors, and types of customers.
3. National ethnic culture:

National ethnic culture includes elements such as country history, education, social
organization, religion and philosophy.

DIMENSIONS OF CROSS-CULTURAL DIFFERENCES:

The major cultural differences could be categorized into two major dimensions. One was
given by Geert Hofstede and the other by Fons Trompenaars. Both approaches propose a
set of cultural dimensions along which dominant value systems can be ordered. These
value systems affect human thinking, feeling, and acting, and the behavior of organizations
and institutions in predictable ways. The two sets of dimensions reflect basic problems that
any society has to cope with but for which solutions differ. They are similar in some respects
and different in others. The dimensions can be grouped into several categories: 

1) Relations between people:

Two main cultural differences have been identified. Geert Hofstede distinguishes
between individualism and collectivism.  Fons Trompenaars breaks down this distinction
into two dimensions:  universalism versus particularism and individualism versus
communitarianism.

2) Motivational orientation: 

Societies choose ways to cope with the inherent uncertainty of living. In this category
Hofstede identifies three dimensions: masculinity versus femininity, amount of uncertainty
avoidance, and  power distance.

3) Attitudes toward time: 

Hofstede distinguishes between a long-term versus a short-term orientation.  Trompenaars

identifies two dimensions: sequential versus synchronic and inner versus outer time.

The cultural differences could in any of the above mentioned dimensions. For more detailed
understanding, I have selected Hofstede’s basic model.

In his original work, Hofstede identified four key dimensions which impact on natural cultural
differences. These are:

 Individualism/collectivism: This dimension reflects the extent to which individuals’

value self-determination as opposed to their behaviour being determined by the collective
will of a group or organization.
 Power-distance: At the core of this dimension lies the question of involvement in
decision making. In low power-distance cultures, employees seek involvement and have a
desire for a participative management style. At the other end of this scale, employees tend
 to work and behave in a particular way because they accept that they will be directed to do
so by the hierarchy or the organization.
 Uncertainty avoidance: This dimension is concerned with employees’ tolerance of
ambiguity or uncertainty in their working environment. In cultures which have high
uncertainty avoidance, employees will look for clearly defined, formal rules and conventions
governing their behaviour.
 Masculinity/femininity: This is possibly the most difficult dimension to use in an
organization context. In practice, the difficulty is more to do with terminology and linguistics,
in Hofstede’s work the dimension related to values. In highly “masculine cultures” dominant
values relate to assertiveness and material acquisition. In highly “feminine cultures” values
focus on relationship among people, concern for others and quality of life.

STRATEGIES FOR MANAGING CROSS-CULTURAL DIFFERENCES:

As the managers and the employees in a multinational organization gradually understand
the dimensions and differences, it is the duty of both managers and the employees to adopt
the strategies to keep the diversity at bay. Following are the strategies which help us to
overcome the obstacles of cross-cultural differences;

1. Good knowledge of foreign culture:

 The first strategy is acknowledging and admitting the existence of differences between
cultures. This mainly includes differences in perceptions, interpretations and evaluations of
social situations and people who create them and act within them. These differences than
have to be named, described, explained and understood. Recognition of the culture of a
partner is considered to be the first condition of mutual understanding and good
cooperation. This step is definitely neither common nor easy. 

2. Respect of a foreign culture:

Respect of a foreign culture means most of all accepting their differences without any
judgment. It is not possible to claim that a certain culture is more perfect, “better” than
another culture. Cultures are different and for their members they represent optimum to
manage life situations in conditions they have been living in for a long time. 

3. Helpful steps in the relationship to a foreign culture:

The next strategy of the recommended process should be the effort to find common
solution, mutual understanding and simplification of the complicated and demanding
process of behaving in different cultural conditions. These helpful steps in no case mean
that the participating partners should give up their cultural background, but it suggests that
they should use their knowledge of own culture to gain knowledge about the partner’s
culture, which can be quite easy after all. Very often it is enough to sacrifice something that
is not too important for us, but it means a lot for another culture. The main condition is a
very good knowledge of partners and their cultural environment, though.

4. Ignore the cultural differences:

 In this strategy, a stage comes where the managers ignore the differences. It later becomes
irrelevant as the managers and employees would be having a good understanding about
each others’ cultures and practices as earlier they would learn to respect the cultures. The
employees and managers feel in this type of strategy that “our way is the only way” as it is
also practices in parochial type of organizations. The ignorance of diversity precludes
effective management of cultural differences and also precludes the possibility of minimizing
negative impacts and increasing positive impacts of diversity.

5. Minimize differences:

In this strategy, the managers recognize cultural differences but only as a source of
problems. This strategy is mostly adopted by ethnocentric organizations. In such
organizations, managers try to reduce the problems of differences by reducing cultural
diversity. They do not think about advantages of diversity. They try to either select a
culturally homogenous workforce or attempt to socialize all employees into behaviour
patterns of dominant culture.

6. Managing differences:

This strategy is adopted by synergistic organizations. These organizations recognize the

impacts of cultural differences that lead to both advantages and disadvantages. The
managers in synergistic organizations believe that “our way and their way of believing and
managing differ, but neither is superior to other”. In this case, the managers and employees
minimize potential problems by managing the impacts of cultural differences, not by
minimizing the differences themselves. Similarly, managers maximize the potential
advantages by managing impacts of cultural differences, rather than by ignoring them. The
organizations which use the strategy of managing differences train their managers and
employees to recognize the cultural differences and to use cultural differences to  create
advantages for the organizations.

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