UNIT IV

DIRECTING
DEFINITION
"Activating deals with the steps a manager takes to get sub-ordinates and others
to carry out plans" - Newman and Warren.
Directing concerns the total manner in which a manager influences the actions of subordinates.
It is the final action of a manager in getting others to act after all preparations have been
completed.

Characteristics
• Elements of Management
• Continuing Function
• Pervasive Function
• Creative Function
• Linking function
• Management of Human Factor

Scope of Directing
• Initiates action
• Ensures coordination
• Improves efficiency
• Facilitates change
• Assists stability and growth

Elements of Directing
The three elements of directing are
• Motivation
• Leadership
• Communication
CREATIVITY AND INNOVATION
Often used interchangeably, they should to be considered separate and distinct.
Creativity can be described as problem identification and idea generation and innovation is
considered as idea selection, development and commercialization.
Creativity is creation of new ideas and Innovation is implementation of the new ideas.
There cannot be innovation without creativity. There can be creativity without innovation but it
has no value.
Steps involved in creativity

a) Preparation: This is the first stage at which the base for creativity and innovation is defined;
the mind is prepared for subsequent use in creative thinking. During preparation the individual is
encouraged to appreciate the fact that every opportunity provides situations that can educate
and experiences from which to learn.
The creativity aspect is kindled through a quest to become more knowledgeable. This can be
done through reading about various topics and/or subjects and engaging in discussions with
others. Taking part in brainstorming sessions in various forums like professional and trade
association seminars, and taking time to study other countries and cultures to identify viable
opportunities is also part of preparation. Of importance is the need to cultivate a personal ability
to listen and learn from others.

b) Investigation: This stage of enhancing entrepreneurial creativity and innovation involves the
business owner taking time to study the problem at hand and what its various components are.
c) Transformation: The information thus accumulated and acquired should then be subjected
to convergent and divergent thinking which will serve to highlight the inherent similarities and
differences. Convergent thinking will help identify aspects that are similar and connected while
divergent thinking will highlight the differences. This twin manner of thinking is of particular
importance in realizing creativity and innovation for the following reasons:
Ø One will be able to skim the details and see what the bigger picture is
the situation/problem's components can be reordered and in doing so new patterns can
be identified.
Ø It will help visualize a number of approaches that can be used to simultaneously tackle
the problem and the opportunity.
Ø One's decision-making abilities will be bettered such that the urge to make snap
decisions will be resisted.

d) Incubation: At this stage in the quest for creativity and innovation it is imperative that the
subconscious reflect on the accumulated information, i.e. through incubation, and this can be
improved or augmented when the entrepreneur:
Ø Engages in an activity completely unrelated to the problem/opportunity under scrutiny.
Ø Takes time to daydream i.e. letting the mind roam beyond any restrictions self-imposed
or otherwise.
Ø Relax and play
Ø Study the problem/opportunity in a wholly different environment

e) Illumination: This happens during the incubation stage and will often be spontaneous. The
realizations from the past stages combine at this instance to form a breakthrough.

f) Verification: This is where the entrepreneur attempts to ascertain whether the creativity of
thought and the action of innovation are truly effective as anticipated. It may involve activities
like simulation, piloting, prototype building, test marketing, and various experiments. While the
tendency to ignore this stage and plunge headlong with the breakthrough may be tempting, the
transformation stage should ensure that the new idea is put to the test.
MOTIVATION AND SATISFACTION

MOTIVATION
"Motivation" is a Latin word, meaning "to move". Human motives are internalized goals within
individuals. Motivation may be defined as those forces that cause people to behave in certain
ways. Motivation encompasses all those pressures and influences that trigger, channel, and
sustain human behavior. Most successful managers have learned to understand the concept of
human motivation and are able to use that understanding to achieve higher standards of
subordinate work performance.

According to Koontz and O'Donnell, "Motivation is a class of drives, needs, wishes and similar
forces".

NATURE AND CHARACTERISTICS OF MOTIVATION

Psychologists generally agree that all behavior is motivated, and that people have reasons for
doing the things they do or for behaving in the manner that they do. Motivating is the work a
manager performs to inspire, encourage and impel people to take required action.

The characteristics of motivation are given below:-

Ø Motivation is an Internal Feeling

Motivation is a psychological phenomenon which generates in the mind of an individual the
feeling that he lacks certain things and needs those things. Motivation is a force within an
individual that drives him to behave in a certain way.

Ø Motivation is Related to Needs

Needs are deficiencies which are created whenever there is a physiological or psychological
imbalance. In order to motivate a person, we have to understand his needs that call for
satisfaction.

Ø Motivation Produces Goal-Directed Behaviour

Goals are anything which will alleviate a need and reduce a drive. An individual's behavior is
directed towards a goal.
Ø Motivation can be either Positive or Negative
Positive or incentive motivation is generally based on reward. According to Flippo - "positive
motivation is a process of attempting to influence others to do your will through the possibility of
gain or reward".
Negative or fear motivation is based on force and fear. Fear causes persons to act in a certain
way because they are afraid of the consequences if they don't.

IMPORTANCE OF MOTIVATION
A manager's primary task is to motivate others to perform the tasks of the organization.
Therefore, the manager must find the keys to get subordinates to come to work regularly and on
time, to work hard, and to make positive contributions towards the effective and efficient
achievement of organizational objectives. Motivation is an effective instrument in the hands of a
manager for inspiring the work force and creating confidence in it. By motivating the work force,
management creates "will to work" which is necessary for the achievement of organizational
goals. The various benefits of motivation are:-
• Motivation is one of the important elements in the directing process. By motivating the
workers, a manager directs or guides the workers' actions in the desired direction for
accomplishing the goals of the organization.
• Workers will tend to be as efficient as possible by improving upon their skills and knowledge
so that they are able to contribute to the progress of the organization thereby increasing
productivity.
• For performing any tasks, two things are necessary. They are: (a) ability to work and (b)
willingness to work. Without willingness to work, ability to work is of no use. The willingness
to work can be created only by motivation.
• Organizational effectiveness becomes, to some degree, a question of management's ability
to motivate its employees, to direct at least a reasonable effort towards the goals of the
organization.
• Motivation contributes to good industrial relations in the organization. When the workers are
motivated, contented and disciplined, the frictions between the workers and the
management will be reduced.

• Motivation is the best remedy for resistance to changes. When changes are introduced in an
organization, generally, there will be resistance from the workers. But if the workers of an
 organization are motivated, they will accept, introduce and implement the changes whole
heartily and help to keep the organization on the right track of progress.
• Motivation facilitates the maximum utilization of all factors of production, human, physical
and financial resources and thereby contributes to higher production.
• Motivation promotes a sense of belonging among the workers. The workers feel that the
enterprise belongs to them and the interest of the enterprise is their interests.
• Many organizations are now beginning to pay increasing attention to developing their
employees as future resources upon which they can draw as they grow and develop.

SATISFACTION
Employee satisfaction (Job satisfaction) is the terminology used to describe whether
employees are happy and contented and fulfilling their desires and needs at work. Many
measures purport that employee satisfaction is a factor in employee motivation, employee goal
achievement, and positive employee morale in the workplace.
Employee satisfaction, while generally a positive in your organization, can also be a downer if
mediocre employees stay because they are satisfied with your work environment.
Factors contributing to employee satisfaction include treating employees with respect, providing
regular employee recognition, empowering employees, offering above industry-average benefits
and compensation, providing employee perks and company activities, and positive management
within a success framework of goals, measurements, and expectations.
Employee satisfaction is often measured by anonymous employee satisfaction surveys
administered periodically that gauge employee satisfaction in areas such as:
• management,
• understanding of mission and vision,
• empowerment,
• teamwork,
• communication, and
• Coworker interaction.
The facets of employee satisfaction measured vary from company to company.
A second method used to measure employee satisfaction is meeting with small groups of
employees and asking the same questions verbally. Depending on the culture of the company,
either method can contribute knowledge about employee satisfaction to managers and
employees.
JOB DESIGN
It is the process of Work arrangement (or rearrangement) aimed at reducing or
overcoming job dissatisfaction and employee alienation arising from repetitive and
mechanistic tasks. Through job design, organizations try to raise productivity levels
by offering non-monetary rewards such as greater satisfaction from a sense of personal
achievement in meeting the increased challenge and responsibility of one's work.

Approaches to job design include:

Ø Job Enl argement: Job enlargement changes the jobs to include more
and/or dif f erent tasks. Job enlargement should add interest to the work but may
or may not give employees more responsibilit y.
Ø Job Rotation: Job r otation moves employees f rom one task to another. It
distr ibutes the group tasks among a number of employees.
Ø Job Enrichment: Job enrichment allows employees to assume more
responsibilit y, accountabilit y, and independence when learning new tasks or to
allow f or greater participat ion and new opportunities.

TYPES OF MOTIVATION TECHNIQUES

If a manager wants to get work done by his employees, he may either hold out a promise of a
reward (positive motivation) or he/she may install fear (negative motivation). Both these types
are widely used by managements.

a) Positive Motivation:
This type of motivation is generally based on reward. A positive motivation involves the
possibility of increased motive satisfaction. According to Flippo - "Positive motivation is a
process of attempting to influence others to do your will through the possibility of gain or
reward". Incentive motivation is the "pull" mechanism. The receipt of awards, due recognition
and praise for work-well done definitely lead to good team spirit, co-operation and a feeling of
happiness.
• Positive motivation include:-
• Praise and credit for work done
• Wages and Salaries
 • Appreciation
• A sincere interest in subordinates as individuals
• Delegation of authority and responsibility

b) Negative Motivation:
This type of motivation is based on force and fear. Fear causes persons to act in a certain way
because they fear the consequences. Negative motivation involves the possibility of decreased
motive satisfaction. It is a "push" mechanism. The imposition of punishment frequently results in
frustration among those punished, leading to the development of maladaptive behaviour. It also
creates a hostile state of mind and an unfavourable attitude to the job. However, there is no
management which has not used the negative motivation at some time or the other.

MOTIVATION THEORIES
Some of the motivation theories are discussed below

a) McGregor’s Theory X and Theory Y:

McGregor states that people inside the organization can be managed in two ways. The
first is basically negative, which falls under the category X and the other is basically positive,
which falls under the category Y. After viewing the way in which the manager dealt with
employees, McGregor concluded that a manager’s view of the nature of human beings is based
on a certain grouping of assumptions and that he or she tends to mold his or her behavior
towards subordinates according to these assumptions.

Under the assumptions of theory X :

• Employees inherently do not like work and whenever possible, will attempt to avoid it.
• Because employees dislike work, they have to be forced, coerced or threatened with
punishment to achieve goals.
• Employees avoid responsibilities and do not work fill formal directions are issued.
• Most workers place a greater importance on security over all other factors and display
little ambition.
In contrast under the assumptions of theory Y :
• Physical and mental effort at work is as natural as rest or play.
 • People do exercise self-control and self-direction and if they are committed to those
goals.
• Average human beings are willing to take responsibility and exercise imagination,
ingenuity and creativity in solving the problems of the organization.
• That the way the things are organized, the average human being’s brainpower is only
partly used.

On analysis of the assumptions it can be detected that theory X assumes that lower-order
needs dominate individuals and theory Y assumes that higher-order needs dominate
individuals. An organization that is run on Theory X lines tends to be authoritarian in nature, the
word “authoritarian” suggests such ideas as the “power to enforce obedience” and the “right to
command.” In contrast Theory Y organizations can be described as “participative”, where the
aims of the organization and of the individuals in it are integrated; individuals can achieve their
own goals best by directing their efforts towards the success of the organization.

b) Abraham Maslow’s “Need Hierarchy Theory”:

One of the most widely mentioned theories of motivation is the hierarchy of needs theory
put forth by psychologist Abraham Maslow. Maslow saw human needs in the form of a
hierarchy, ascending from the lowest to the highest, and he concluded that when one set of
needs is satisfied, this kind of need ceases to be a motivator.
As per his theory these needs are:
(i) Physiological needs:
These are important needs for sustaining the human life. Food, water, warmth, shelter, sleep,
medicine and education are the basic physiological needs which fall in the primary list of need
satisfaction. Maslow was of an opinion that until these needs were satisfied to a degree to
maintain life, no other motivating factors can work.
(ii) Security or Safety needs:
These are the needs to be free of physical danger and of the fear of losing a job, property, food
or shelter. It also includes protection against any emotional harm.
(iii) Social needs:
Since people are social beings, they need to belong and be accepted by others. People try to
satisfy their need for affection, acceptance and friendship.
(iv) Esteem needs:
According to Maslow, once people begin to satisfy their need to belong, they tend to want to be
held in esteem both by themselves and by others. This kind of need produces such satisfaction
as power, prestige status and self-confidence. It includes both internal esteem factors like self-
respect, autonomy and achievements and external esteem factors such as states, recognition
and attention.
(v) Need for self-actualization:
Maslow regards this as the highest need in his hierarchy. It is the drive to become what one is
capable of becoming; it includes growth, achieving one’s potential and self-fulfillment. It is to
maximize one’s potential and to accomplish something.

All of the needs are structured into a hierarchy and only once a lower level of need has been
fully met, would a worker be motivated by the opportunity of having the next need up in the
hierarchy satisfied. For example a person who is dying of hunger will be motivated to achieve a
basic wage in order to buy food before worrying about having a secure job contract or the
respect of others.
A business should therefore offer different incentives to workers in order to help them fulfill each
need in turn and progress up the hierarchy. Managers should also recognize that workers are
not all motivated in the same way and do not all move up the hierarchy at the same pace. They
may therefore have to offer a slightly different set of incentives from worker to worker.

c) Frederick Herzberg’s motivation-hygiene theory:

 Frederick has tried to modify Maslow’s need Hierarchy theory. His theory is also known
as two-factor theory or Hygiene theory. He stated that there are certain satisfiers and
dissatisfiers for employees at work. Intrinsic factors are related to job satisfaction, while extrinsic
factors are associated with dissatisfaction. He devised his theory on the question: “What do
people want from their jobs?” He asked people to describe in detail, such situations when they
felt exceptionally good or exceptionally bad. From the responses that he received, he concluded
that opposite of satisfaction is not dissatisfaction. Removing dissatisfying characteristics from a
job does not necessarily make the job satisfying. He states that presence of certain factors in
the organization is natural and the presence of the same does not lead to motivation. However,
their non-presence leads to de-motivation. In similar manner there are certain factors, the
absence of which causes no dissatisfaction, but their presence has motivational impact.
Examples of Hygiene factors are:
Security, status, relationship with subordinates, personal life, salary, work conditions,
relationship with supervisor and company policy and administration.
Examples of Motivational factors are:
Growth prospectus job advancement, responsibility, challenges, recognition and achievements.

d) Victor Vroom’s Expectancy theory:

The most widely accepted explanations of motivation have been propounded by Victor
Vroom. His theory is commonly known as expectancy theory. The theory argues that the
strength of a tendency to act in a specific way depends on the strength of an expectation that
the act will be followed by a given outcome and on the attractiveness of that outcome to the
individual to make this simple, expectancy theory says that an employee can be motivated to
perform better when there is a belief that the better performance will lead to good performance
appraisal and that this shall result into realization of personal goal in form of some reward.
Therefore an employee is:
Motivation = Valence x Expectancy.
The theory focuses on three things:
• Efforts and performance relationship
• Performance and reward relationship
• Rewards and personal goal relationship

e) Clayton Alderfer’s ERG Theory:

 Alderfer has tried to rebuild the hierarchy of needs of Maslow into another model named
ERG i.e. Existence – Relatedness – Growth. According to him there are 3 groups of core needs
as mentioned above. The existence group is concerned mainly with providing basic material
existence. The second group is the individuals need to maintain interpersonal relationship with
other members in the group. The final group is the intrinsic desire to grow and develop
personally. The major conclusions of this theory are :
• In an individual, more than one need may be operative at the same time.
• If a higher need goes unsatisfied than the desire to satisfy a lower need intensifies.
• It also contains the frustration-regression dimension.

f) McClelland’s Theory of Needs:

David McClelland has developed a theory on three types of motivating needs :
(i) Need for Power
(ii) Need for Affiliation
(iii) Need for Achievement
Basically people for high need for power are inclined towards influence and control. They like to
be at the center and are good orators. They are demanding in nature, forceful in manners and
ambitious in life. They can be motivated to perform if they are given key positions or power
positions.
In the second category are the people who are social in nature. They try to affiliate themselves
with individuals and groups. They are driven by love and faith. They like to build a friendly
environment around themselves. Social recognition and affiliation with others provides them
motivation.
People in the third area are driven by the challenge of success and the fear of failure. Their
need for achievement is moderate and they set for themselves moderately difficult tasks. They
are analytical in nature and take calculated risks. Such people are motivated to perform when
they see at least some chances of success.
McClelland observed that with the advancement in hierarchy the need for power and
achievement increased rather than Affiliation. He also observed that people who were at the
top, later ceased to be motivated by this drives.

g) Stacey Adams’ Equity Theory:

As per the equity theory of J. Stacey Adams, people are motivated by their beliefs about
the reward structure as being fair or unfair, relative to the inputs. People have a tendency to use
subjective judgment to balance the outcomes and inputs in the relationship for comparisons
between different individuals. Accordingly:

If people feel that they are not equally rewarded they either reduce the quantity or quality of
work or migrate to some other organization. However, if people perceive that they are rewarded
higher, they may be motivated to work harder.

h) Skinner’s Reinforcement Theory:

B.F. Skinner, who propounded the reinforcement theory, holds that by designing the
environment properly, individuals can be motivated. Instead of considering internal factors like
impressions, feelings, attitudes and other cognitive behavior, individuals are directed by what
happens in the environment external to them. Skinner states that work environment should be
made suitable to the individuals and that punishment actually leads to frustration and de-
motivation. Hence, the only way to motivate is to keep on making positive changes in the
external environment of the organization.
LEADERSHIP
Definition
Leadership is defined as influence, the art or process of influencing people so that they
will strive willingly and enthusiastically toward the achievement of group goals.
- Leaders act to help a group attain objectives through the maximum application of its
capabilities.
- Leaders must instill values – whether it be concern for quality, honesty and
calculated risk taking or for employees and customers.

Importance of Leadership
1. Aid to authority
2. Motive power to group efforts
3. Basis for co operation
4. Integration of Formal and Informal Organization.

LEADERSHIP STYLES
The leadership style we will discuss here are:
a) Autocratic style
b) Democratic Style
c) Laissez Faire Style

a) Autocratic style
Manager retains as much power and decision-making authority as possible. The manager does
not consult employees, nor are they allowed to give any input. Employees are expected to obey
orders without receiving any explanations. The motivation environment is produced by creating
a structured set of rewards and punishments.

Autocratic leadership is a classical leadership style with the following characteristics:

• Manager seeks to make as many decisions as possible
• Manager seeks to have the most authority and control in decision making
• Manager seeks to retain responsibility rather than utilize complete delegation
• Consultation with other colleagues in minimal and decision making becomes a solitary
process
• Managers are less concerned with investing their own leadership development, and prefer
to simply work on the task at hand.

Advantages

Reduced stress due to increased control

A more productive group ‘while the leader is watching’

Improved logistics of operations

Faster decision making

Disadvantages

Short-termistic approach to management.

Manager perceived as having poor leadership skills

Increased workload for the manager

People dislike being ordered around

Teams become dependent upon their leader

b) Democratic Style
Democratic Leadership is the leadership style that promotes the sharing of responsibility,
the exercise of delegation and continual consultation.

The style has the following characteristics:

• Manager seeks consultation on all major issues and decisions.
• Manager effectively delegate tasks to subordinates and give them full control and
responsibility for those tasks.
• Manager welcomes feedback on the results of intiatives and the work environment.
• Manager encourages others to become leaders and be involved in leadership development.

Advantages

Positive work environment

Successful initiatives

Creative thinking

Reduction of friction and office politics

Reduced employee turnover

Disadvantages

Takes long time to take decisions

Danger of pseudo participation

Like the other styles, the democratic style is not always appropriate. It is most successful
when used with highly skilled or experienced employees or when implementing operational
changes or resolving individual or group problems.

c) Laissez-Faire Style
This French phrase means “leave it be” and is used to describe a leader who leaves
his/her colleagues to get on with their work. The style is largely a "hands off" view that tends to
minimize the amount of direction and face time required.

Advantages
• No work for the leader
• Frustration may force others into leadership roles
• Allows the visionary worker the opportunity to do what they want, free from interference
• Empowers the group

Disadvantages

It makes employees feel insecure at the unavailability of a manager.

The manager cannot provide regular feedback to let employees know how well they are
doing.

Managers are unable to thank employees for their good work.

The manager doesn’t understand his or her responsibilities and is hoping the employees
can cover for him or her.
LEADERSHIP THEORIES
The various leadership theories are

a) Great Man Theory:

Assumptions
• Leaders are born and not made.
• Great leaders will arise when there is a great need.

Description
Early research on leadership was based on the study of people who were already great leaders.
These people were often from the aristocracy, as few from lower classes had the opportunity to
lead. This contributed to the notion that leadership had something to do with breeding.
The idea of the Great Man also strayed into the mythic domain, with notions that in times of
need, a Great Man would arise, almost by magic. This was easy to verify, by pointing to people
such as Eisenhower and Churchill, let alone those further back along the timeline, even to
Jesus, Moses, Mohammed and the Buddah.

Discussion
Gender issues were not on the table when the 'Great Man' theory was proposed. Most leaders
were male and the thought of a Great Woman was generally in areas other than leadership.
Most researchers were also male, and concerns about androcentric bias were a long way from
being realized.

b) Trait Theory:
Assumptions
• People are born with inherited traits.
• Some traits are particularly suited to leadership.
• People who make good leaders have the right (or sufficient) combination of traits.
Description
Early research on leadership was based on the psychological focus of the day, which was of
people having inherited characteristics or traits. Attention was thus put on discovering these
traits, often by studying successful leaders, but with the underlying assumption that if other
people could also be found with these traits, then they, too, could also become great leaders.

McCall and Lombardo (1983) researched both success and failure identified four primary traits
by which leaders could succeed or 'derail':
Emotional stability and composure: Calm, confident and predictable, particularly when under
stress.
Admitting error: Owning up to mistakes, rather than putting energy into covering up.
Good interpersonal skills: able to communicate and persuade others without resort to negative
or coercive tactics.
Intellectual breadth: Able to understand a wide range of areas, rather than having a narrow (and
narrow-minded) area of expertise.

c) Behavioral Theory:
Assumptions
• Leaders can be made, rather than are born.
• Successful leadership is based in definable, learnable behavior.

Description
Behavioral theories of leadership do not seek inborn traits or capabilities. Rather, they look at
what leaders actually do.
If success can be defined in terms of describable actions, then it should be relatively easy for
other people to act in the same way. This is easier to teach and learn then to adopt the more
ephemeral 'traits' or 'capabilities'.

d) Participative Leadership:
Assumptions
• Involvement in decision-making improves the understanding of the issues involved by
those who must carry out the decisions.
• People are more committed to actions where they have involved in the relevant decision-
making.
• People are less competitive and more collaborative when they are working on joint
goals.
 • When people make decisions together, the social commitment to one another is greater
and thus increases their commitment to the decision.
• Several people deciding together make better decisions than one person alone.

Description
A Participative Leader, rather than taking autocratic decisions, seeks to involve other people in
the process, possibly including subordinates, peers, superiors and other stakeholders. Often,
however, as it is within the managers' whim to give or deny control to his or her subordinates,
most participative activity is within the immediate team. The question of how much influence
others are given thus may vary on the manager's preferences and beliefs, and a whole
spectrum of participation is possible

e) Situational Leadership:
Assumptions
• The best action of the leader depends on a range of situational factors.

Description
When a decision is needed, an effective leader does not just fall into a single preferred style. In
practice, as they say, things are not that simple.
Factors that affect situational decisions include motivation and capability of followers. This, in
turn, is affected by factors within the particular situation. The relationship between followers and
the leader may be another factor that affects leader behavior as much as it does follower
behavior.
The leaders' perception of the follower and the situation will affect what they do rather than the
truth of the situation. The leader's perception of themselves and other factors such as stress
and mood will also modify the leaders' behavior.

f) Contingency Theory:
Assumptions
• The leader's ability to lead is contingent upon various situational factors, including the
leader's preferred style, the capabilities and behaviors of followers and also various
other situational factors.

Description
Contingency theories are a class of behavioral theory that contend that there is no one best way
of leading and that a leadership style that is effective in some situations may not be successful
in others.
An effect of this is that leaders who are very effective at one place and time may become
unsuccessful either when transplanted to another situation or when the factors around them
change.
Contingency theory is similar to situational theory in that there is an assumption of no simple
one right way. The main difference is that situational theory tends to focus more on the
behaviors that the leader should adopt, given situational factors (often about follower behavior),
whereas contingency theory takes a broader view that includes contingent factors about leader
capability and other variables within the situation.

g) Transactional Leadership:
Assumptions
• People are motivated by reward and punishment.
• Social systems work best with a clear chain of command.
• When people have agreed to do a job, a part of the deal is that they cede all authority to
their manager.
• The prime purpose of a subordinate is to do what their manager tells them to do.

Description
The transactional leader works through creating clear structures whereby it is clear what is
required of their subordinates, and the rewards that they get for following orders. Punishments
are not always mentioned, but they are also well-understood and formal systems of discipline
are usually in place.

The early stage of Transactional Leadership is in negotiating the contract whereby the
subordinate is given a salary and other benefits, and the company (and by implication the
subordinate's manager) gets authority over the subordinate.

When the Transactional Leader allocates work to a subordinate, they are considered to be fully
responsible for it, whether or not they have the resources or capability to carry it out. When
things go wrong, then the subordinate is considered to be personally at fault, and is punished for
their failure (just as they are rewarded for succeeding).
h)Transformational Leadership:
Assumptions
• People will follow a person who inspires them.
• A person with vision and passion can achieve great things.
• The way to get things done is by injecting enthusiasm and energy.

Description
Working for a Transformational Leader can be a wonderful and uplifting experience. They put
passion and energy into everything. They care about you and want you to succeed.
Transformational Leaders are often charismatic, but are not as narcissistic as pure Charismatic
Leaders, who succeed through a belief in themselves rather than a belief in others.
One of the traps of Transformational Leadership is that passion and confidence can easily be
mistaken for truth and reality.
Transformational Leaders, by definition, seek to transform. When the organization does not
need transforming and people are happy as they are, then such a leader will be frustrated. Like
wartime leaders, however, given the right situation they come into their own and can be
personally responsible for saving entire companies.

COMMUNICATION
Communication is the exchange of messages between people for the purpose of
achieving common meanings. Unless common meanings are shared, managers find it
extremely difficult to influence others. Whenever group of people interact, communication takes
place. Communication is the exchange of information using a shared set of symbols. It is the
process that links group members and enables them to coordinate their activities. Therefore,
when managers foster effective communication, they strengthen the
connections between employees and build cooperation. Communication also functions to build
and reinforce interdependence between various parts of the organization. As a linking
mechanism among the different organizational subsystems, communication is a central feature
of the structure of groups and organizations. It helps to coordinate tasks and activities within
and between organizations.

DEFINITION
According to Koontz and O'Donnell, "Communication, is an intercourse by words, letters
symbols or messages, and is a way that the organization members shares meaning and
understanding with another".

THE COMMUNICATION PROCESS

Communication is important in building and sustaining human relationships at work.
Communication can be thought of as a process or flow. Before communication can take place, a
purpose, expressed as a message to be conveyed is needed. It passes between the sender and
the receiver. The result is transference of meaning from one person to another.
The figure below depicts the communication process. This model is made up of seven parts:
(1) Source, (2) Encoding, (3) Message, (4) Channel, (5) Decoding, (6) Receiver, and (7)
Feedback.

a) Source:
The source initiates a message. This is the origin of the communication and can be an
individual, group or inanimate object. The effectiveness of a communication depends to a
considerable degree on the characteristics of the source. The person who initiates the
communication process is known as sender, source or communicator. In an organization, the
sender will be a person who has a need or desire to send a message to others. The sender has
some information which he wants to communicate to some other person to achieve some
purpose. By initiating the message, the sender attempts to achieve understanding and change
in the behaviour of the receiver.
b) Encoding:
Once the source has decided what message to communicate, the content of the message must
be put in a form the receiver can understand. As the background for encoding information, the
sender uses his or her own frame of reference. It includes the individual's view of the
organization or situation as a function of personal education, interpersonal relationships,
attitudes, knowledge and experience. Three conditions are necessary for successful encoding
the message.
• Skill: Successful communicating depends on the skill you posses. Without the requisite
skills, the message of the communicator will not reach the requisite skills; the message
of the communicator will not reach the receiver in the desired form. One's total
communicative success includes speaking, reading, listening and reasoning skills.
• Attitudes: Our attitudes influence our behaviour. We hold predisposed ideas on a
number of topics and our communications are affected by these attitudes.
• Knowledge: We cannot communicate what we don't know. The amount of knowledge
the source holds about his or her subject will affect the message he or she seeks to
transfer.

c) The Message:
The message is the actual physical product from the source encoding. The message contains
the thoughts and feelings that the communicator intends to evoke in the receiver. The message
has two primary components:-
• The Content: The thought or conceptual component of the message is contained in the
words, ideas, symbols and concepts chosen to relay the message.
• The Affect: The feeling or emotional component of the message is contained in the
intensity, force, demeanour (conduct or behaviour), and sometimes the gestures of the
communicator.

d) The Channel:
The actual means by which the message is transmitted to the receiver (Visual, auditory, written
or some combination of these three) is called the channel. The channel is the medium through
which the message travels. The channel is the observable carrier of the message.
Communication in which the sender's voice is used as the channel is called oral communication.
When the channel involves written language, the sender is using written communication. The
sender's choice of a channel conveys additional information beyond that contained in the
message itself. For example, documenting an employee's poor performance in writing conveys
that the manager has taken the problem seriously.

f) Decoding:
Decoding means interpreting what the message means. The extent to which the decoding by
the receiver depends heavily on the individual characteristics of the sender and receiver. The
greater the similarity in the background or status factors of the communicators, the greater the
probability that a message will be perceived accurately. Most messages can be decoded in
more than one way. Receiving and decoding a message are a type of perception. The decoding
process is therefore subject to the perception biases.

g) The Receiver:
The receiver is the object to whom the message is directed. Receiving the message means one
or more of the receiver's senses register the message - for example, hearing the sound of a
supplier's voice over the telephone or seeing the boss give a thumbs-up signal. Like the sender,
the receiver is subject to many influences that can affect the understanding of the message.
Most important, the receiver will perceive a communication in a manner that is consistent with
previous experiences. Communications that are not consistent with expectations is likely to be
rejected.

h) Feedback:
The final link in the communication process is a feedback loop. Feedback, in effect, is
communication travelling in the opposite direction. If the sender pays attention to the feedback
and interprets it accurately, the feedback can help the sender learn whether the original
communication was decoded accurately. Without feedback, one-way communication occurs
between managers and their employees. Faced with differences in their power, lack of time, and
a desire to save face by not passing on negative information, employees may be discouraged
from providing the necessary feedback to their managers.

Guidelines for effective Communication

(i) Senders of message must clarify in their minds what they want to communicate. Purpose of
the message and making a plan to achieve the intended end must be clarified.
(ii) Encoding and decoding be done with symbols that are familiar to the sender and the
receiver of the message.
(iii) For the planning of the communication, other people should be consulted and encouraged
to participate.
(iv) It is important to consider the needs of the receivers of the information. Whenever
appropriate, one should communicate something that is of value to them, in the short run as
well as in the more distant future.
(v) In communication, tone of voice, the choice of language and the congruency between what
is said and how it is said influence the reactions of the receiver of the message.
(vi) Communication is complete only when the message is understood by the receiver. And one
never knows whether communication is understood unless the sender gets a feedback.
(vii) The function of communication is more than transmitting the information. It also deals with
emotions that are very important in interpersonal relationships between superiors,
subordinates and colleagues in an organization.
(viii) Effective communicating is the responsibility not only of the sender but also of the
receiver of the information.

BARRIERS TO EFFECTIVE COMMUNICATION

Barriers to communication are factors that block or significantly distort successful
communication. Effective managerial communication skills helps overcome some, but not all,
barriers to communication in organizations. The more prominent barriers to effective
communication which every manager should be aware of is given below:

a) Filtering:
Filtering refers to a sender manipulating information so it will be seen more favourably by
the receiver. The major determinant of filtering is the number of levels in an organization's
structure. The more vertical levels in the organization's hierarchy, the more opportunities for
filtering. Sometimes the information is filtered by the sender himself. If the sender is hiding some
meaning and disclosing in such a fashion as appealing to the receiver, then he is "filtering" the
message deliberately. A manager in the process of altering communication in his favour is
attempting to filter the information.

b) Selective Perception:
 Selective perception means seeing what one wants to see. The receiver, in the
communication process, generally resorts to selective perception i.e., he selectively perceives
the message based on the organizational requirements, the needs and characteristics,
background of the employees etc. Perceptual distortion is one of the distressing barriers to the
effective communication. People interpret what they see and call it a reality. In our regular
activities, we tend to see those things that please us and to reject or ignore unpleasant things.
Selective perception allows us to keep out dissonance (the existence of conflicting elements in
our perceptual set) at a tolerable level. If we encounter something that does not fit out current
image of reality, we structure the situation to minimize our dissonance. Thus, we manage to
overlook many stimuli from the environment that do not fit into out current perception of the
world. This process has significant implications for managerial activities. For example, the
employment interviewer who expects a female job applicant to put her family ahead of her
career is likely to see that in female applicants, regardless of whether the applicants feel that
way or not.

c) Emotions:
How the receiver feels at the time of receipt of information influences effectively how he
interprets the information. For example, if the receiver feels that the communicator is in a jovial
mood, he interprets that the information being sent by the communicator to be good and
interesting. Extreme emotions and jubilation or depression are quite likely to hinder the
effectiveness of communication. A person's ability to encode a message can become impaired
when the person is feeling strong emotions. For example, when you are angry, it is harder to
consider the other person's viewpoint and to choose words carefully. The angrier you are, the
harder this task becomes. Extreme emotions – such as jubilation or depression - are most likely
to hinder effective communication. In such instances, we are most prone to disregard our
rational and objective thinking processes and substitute emotional judgments.

d) Language:
Communicated message must be understandable to the receiver. Words mean different
things to different people. Language reflects not only the personality of the individual but also
the culture of society in which the individual is living. In organizations, people from different
regions, different backgrounds, and speak different languages. People will have different
academic backgrounds, different intellectual facilities, and hence the jargon they use varies.
Often, communication gap arises because the language the sender is using may be
incomprehensible, vague and indigestible. Language is a central element in communication. It
may pose a barrier if its use obscures meaning and distorts intent. Words mean different things
to different people. Age, education and cultural background are three of the more obvious
variables that influence the language a person uses and the definitions he or she gives to
words. Therefore, use simple, direct, declarative language.
Speak in brief sentences and use terms or words you have heard from you audience. As much
as possible, speak in the language of the listener. Do not use jargon or technical language
except with those who clearly understand it.

e) Stereotyping:
Stereotyping is the application of selective perception. When we have preconceived
ideas about other people and refuse to discriminate between individual behaviours, we are
applying selective perception to our relationship with other people. Stereotyping is a barrier to
communications because those who stereotype others use selective perception in their
communication and tend to hear only those things that confirm their stereotyped images.
Consequently, stereotypes become more deeply ingrained as we find more "evidence" to
confirm our original opinion. Stereotyping has a convenience function in our interpersonal
relations. Since people are all different, ideally we should react and interact with each person
differently. To do this, however, requires considerable psychological effort. It is much easier to
categorize (stereotype) people so that we can interact with them as members of a particular
category. Since the number of categories is small, we end up treating many people the same
even though they are quite different. Our communications, then, may be directed at an
individual as a member of a category at the sacrifice of the more effective communication on a
personal level.

f) Status Difference:
The organizational hierarchy pose another barrier to communication within organization,
especially when the communication is between employee and manager. This is so because the
employee is dependent on the manager as the primary link to the organization and hence more
likely to distort upward communication than either horizontal or downward communication.
Effective supervisory skills make the supervisor more approachable and help reduce the risk of
problems related to status differences. In addition, when employees feel secure, they are more
likely to be straightforward in upward communication.
g) Use of Conflicting Signals:
A sender is using conflicting signals when he or she sends inconsistent messages. A
vertical message might conflict with a nonverbal one. For example, if a manager says to his
employees, "If you have a problem, just come to me. My door is always open", but he looks
annoyed whenever an employee knocks on his door". Then we say the manager is sending
conflicting messages. When signals conflict, the receivers of the message have to decide which,
if any, to believe.

h) Reluctance to Communicate:
For a variety of reasons, managers are sometimes reluctant to transmit messages. The reasons
could be:-
• They may doubt their ability to do so.
• They may dislike or be weary of writing or talking to others.
• They may hesitate to deliver bad news because they do not want to face a negative
reaction.
When someone gives in to these feelings, they become a barrier to effective communications.

i) Projection:
Projection has two meanings.
(a) Projecting one's own motives into others behavior. For example, managers who are
motivated by money may assume their subordinates are also motivated by it. If the
subordinate's prime motive is something other than money, serious problems may arise.
(b) The use of defense mechanism to avoid placing blame on oneself. As a defense
mechanism, the projection phenomenon operates to protect the ego from unpleasant
communications. Frequently, individuals who have a particular fault will see the same fault in
others, making their own fault seem not so serious.

j) The "Halo Effect":

The term "halo effect" refers to the process of forming opinions based on one element from a
group of elements and generalizing that perception to all other elements. For example, in an
organization, a good attendance record may cause positive judgments about productivity,
attitude, or quality of work. In performance evaluation system, the halo effect refers to the
practice of singling out one trait of an employee (either good or bad) and using this as a basis
for judgments of the total employee.
CHANNELS OF COMMUNICATION
a) Formal Communication
Formal communication follows the route formally laid down in the organization structure.
There are three directions in which communications flow: downward, upward and laterally
(horizontal).

i) Downward Communication
Downward communication involves a message travelling to one or more receivers at the lower
level in the hierarchy. The message frequently involves directions or performance feedback.
The downward flow of communication generally corresponds to the formal organizational
communications system, which is usually synonymous with the chain of command or line of
authority. This system has received a great deal of attention from both managers and behavioral
scientists since it is crucial to organizational functioning.

ii) Upward Communication

In upward communication, the message is directed toward a higher level in the hierarchy. It is
often takes the form of progress reports or information about successes and failures of the
individuals or work groups reporting to the receiver of the message. Sometimes employees also
send suggestions or complaints upward through the organization's hierarchy.
The upward flow of communication involves two distinct manager-subordinate activities in
addition to feedback:
• The participation by employees in formal organizational decisions.
• Employee appeal is a result against formal organization decisions. The employee appeal is
a result of the industrial democracy concept that provides for two-way communication in
areas of disagreement.

iii) Horizontal Communication

When takes place among members of the same work group, among members of work groups at
the same level, among managers at the same level or among any horizontally equivalent
personnel, we describe it as lateral communications. In lateral communication, the sender and
receiver(s) are at the same level in the hierarchy. Formal communications that travel laterally
involve employees engaged in carrying out the same or related tasks.
The messages might concern advice, problem solving, or coordination of activities.

b) Informal Communication or Grapevine

Informal communication, generally associated with interpersonal communication, was primarily

seen as a potential hindrance to effective organizational performance. This is no longer the
case. Informal communication has become more important to ensuring the effective conduct of
work in modern organizations.
Probably the most common term used for the informal communication in the workplace is
“grapevine” and this communication that is sent through the organizational grapevine is often
considered gossip or rumor. While grapevine communication can spread information quickly
and can easily cross established organizational boundaries, the information it carries can be
changed through the deletion or exaggeration crucial details thus causing the information
inaccurate – even if it’s based on truth.
The use of the organizational grapevine as an informal communication channel often results
when employees feel threatened, vulnerable, or when the organization is experiencing change
and when communication from management is restricted and not forthcoming.

ORGANIZATIONAL CULTURE
Organizational culture is an idea in the field of organizational studies and management
which describes the psychology, attitudes, experiences, beliefs and values (personal and
cultural values) of an organization. It has been defined as "the specific collection of values and
norms that are shared by people and groups in an organization and that control the way they
interact with each other and with stakeholders outside the organization."

ELEMENTS OF ORGANIZATIONAL CULTURE

Johnson and Scholes described a cultural web, identifying a number of elements that
can be used to describe or influence Organizational Culture:
The six elements are:
a) Stories: The past events and people talked about inside and outside the company. Who
and what the company chooses to immortalize says a great deal about what it values,
and perceives as great behavior.
b) Rituals and Routines: The daily behavior and actions of people that signal acceptable
behavior. This determines what is expected to happen in given situations, and what is
valued by management.
c) Symbols: The visual representations of the company including logos, how plush the
offices are, and the formal or informal dress codes.
d) Organizational Structure: This includes both the structure defined by the organization
chart, and the unwritten lines of power and influence that indicate whose contributions
are most valued.
e) Control Systems: The ways that the organization is controlled. These include financial
systems, quality systems, and rewards (including the way they are measured and
distributed within the organization.)
 f) Power Structures: The pockets of real power in the company. This may involve one or
two key senior executives, a whole group of executives, or even a department. The key
is that these people have the greatest amount of influence on decisions, operations, and
strategic direction.

TYPES OF ORGANIZATIONAL CULTURE

Deal and Kennedy argue organizational culture is based on based on two elements:
1. Feedback Speed: How quickly are feedback and rewards provided (through which the
people are told they are doing a good or a bad job).
2. Degree of Risk: The level of risk taking (degree of uncertainty).
The combination of these two elements results in four types of corporate cultures:

a) Tough-Guy Culture or Macho Culture (Fast feedback and reward, high risk):
• Stress results from the high risk and the high potential decrease or increase of the
reward.
• Focus on now, individualism prevails over teamwork.
• Typical examples: advertising, brokerage, sports.

The most important aspect of this kind of culture is big rewards and quick feedback. This kind of
culture is mostly associated with quick financial activities like brokerage and currency trading. It
can also be related with activities, like a sports team or branding of an athlete, and also the
police team. This kind of culture is considered to carry along, a high amount of stress, and
people working within the organization are expected to possess a strong mentality, for survival
in the organization.

b) Work Hard/Play Hard (Fast feedback and reward, low risk):

• Stress results from quantity of work rather than uncertainty.

• Focus on high-speed action, high levels of energy.
• Typical examples: sales, restaurants, software companies.

This type of organization does not involve much risk, as the organizations already consist of a
firm base along with a strong client relationship. This kind of culture is mostly opted by large
organizations which have strong customer service. The organization with this kind of culture is
equipped with specialized jargons and is qualified with multiple team meetings.

c) Bet Your Company Culture (Slow feedback and reward, high risk):
• Stress results from high risk and delay before knowing if actions have paid off.
• Focus on long-term, preparation and planning.
• Typical examples: pharmaceutical companies, aircraft manufacturers, oil prospecting
companies.

In this kind of culture, the company makes big and important decisions over high stakes
endeavors. It takes time to see the consequence of these decisions. Companies that postulate
experimental projects and researches as their core business, adopt this kind of culture. This
kind of culture can be adopted by a company designing experimental military weapons for
example.

d) Process Culture (Slow feedback and reward, low risk):

• Stress is generally low, but may come from internal politics and stupidity of the system.
• Focus on details and process excellence.
• Typical examples: bureaucracies, banks, insurance companies, public services.

This type of culture does not include the process of feedback. In this kind of culture, the
organization is extremely cautious about the adherence to laws and prefer to abide by them.
This culture provides consistency to the organization and is good for public services.

One of the most difficult tasks to undertake in an organization, is to change its work culture. An
organizational culture change requires an organization to make amendments to its policies, its
workplace ethics and its management system. It needs to start right from its base functions
which includes support functions, operations and the production floor, which finally affects the
overall output of the organization. It requires a complete overhaul of the entire system, and not
many organizations prefer it as the process is a long and tedious one, which requires patience
and endurance. However, when an organization succeeds in making a change on such a
massive level, the results are almost always positive and fruitful. The different types of
organizational cultures mentioned above must have surely helped you to understand them. You
can also adopt one of them for your own organization, however, persistence and patience is
ultimately of the essence.

MANAGING CULTURAL DIVERSITY

Experts indicate that business owners and managers who hope to create and manage an
effective, harmonious multicultural work force should remember the importance of the following:
• Setting a good example—This basic tool can be particularly valuable for small business
owners who hope to establish a healthy environment for people of different cultural
backgrounds, since they are generally able to wield significant control over the business's
basic outlook and atmosphere.
• Communicate in writing—Company policies that explicitly forbid prejudice and discriminatory
behavior should be included in employee manuals, mission statements, and other written
communications. Jorgensen referred to this and other similar practices as "internal
broadcasting of the diversity message in order to create a common language for all
members of the organization."
• Training programs—Training programs designed to engender appreciation and knowledge
of the characteristics and benefits of multicultural work forces have become ubiquitous in
recent years. "Two types of training are most popular: awareness and skill-building," wrote
Cox. "The former introduces the topic of managing diversity and generally includes
information on work force demographics, the meaning of diversity, and exercises to get
participants thinking about relevant issues and raising their own self-awareness. The skill-
building training provides more specific information on cultural norms of different groups and
how they may affect work behavior." New employee orientation programs are also ideal for
introducing workers to the company's expectations regarding treatment of fellow workers,
whatever their cultural or ethnic background.
• Recognize individual differences—Writing in The Complete MBA Companion, contributor
Rob Goffee stated that "there are various dimensions around which differences in human
relationships may be understood. These include such factors as orientation towards
authority; acceptance of power inequalities; desire for orderliness and structure; the need to
belong to a wider social group and so on. Around these dimensions researchers have
demonstrated systematic differences between national, ethnic, and religious groups." Yet
Goffee also cautioned business owners, managers, and executives to recognize that
differences between individuals can not always be traced back to easily understood
 differences in cultural background: "Do not assume differences are always 'cultural.' There
are several sources of difference. Some relate to factors such as personality, aptitude, or
competence. It is a mistake to assume that all perceived differences are cultural in origin.
Too many managers tend to fall back on the easy 'explanation' that individual behavior or
performance can be attributed to the fact that someone is 'Italian' or 'a Catholic' or 'a
woman.' Such conclusions are more likely to reflect intellectually lazy rather than culturally
sensitive managers."
• Actively seek input from minority groups—Soliciting the opinions and involvement of minority
groups on important work committees, etc., is beneficial not only because of the
contributions that they can make, but also because such overtures confirm that they are
valued by the company. Serving on relevant committees and task forces can increase their
feelings of belonging to the organization. Conversely, relegating minority members to
superfluous committees or projects can trigger a downward spiral in relations between
different cultural groups.
• Revamp reward systems—An organization's performance appraisal and reward systems
should reinforce the importance of effective diversity management, according to Cox. This
includes assuring that minorities are provided with adequate opportunities for career
development.
• Make room for social events—Company sponsored social events—picnics, softball games,
volleyball leagues, bowling leagues, Christmas parties, etc.—can be tremendously useful in
getting members of different ethnic and cultural backgrounds together and providing them
with opportunities to learn about one another.
• Flexible work environment—Cox indicated that flexible work environments—which he
characterized as a positive development for all workers—could have particularly "beneficial
to people from nontraditional cultural backgrounds because their approaches to problems
are more likely to be different from past norms."
• Don't assume similar values and opinions—Goffee noted that "in the absence of reliable
information there is a well-documented tendency for individuals to assume that others are
'like them.' In any setting this is likely to be an inappropriate assumption; for those who
manage diverse work forces this tendency towards 'cultural assimilation' can prove
particularly damaging."
• Continuous monitoring—Experts recommend that business owners and managers establish
and maintain systems that can continually monitor the organization's policies and practices
to ensure that it continues to be a good environment for all employees. This, wrote
 Jorgensen, should include "research into employees' needs through periodic attitude
surveys."
"Increased diversity presents challenges to business leaders who must maximize the
opportunities that it presents while minimizing its costs," summarized Cox. "The multicultural
organization is characterized by pluralism, full integration of minority-culture members both
formally and informally, an absence of prejudice and discrimination, and low levels of inter-
group conflict…. The organization that achieves these conditions will create an environment in
which all members can contribute to their maximum potential, and in which the 'value in diversity
' can be fully realized."