MGT 111 Principle of Management

The Nature of Management
An Introduction to Management Page 1

CHAPTER: I

Introduction to Management

In the words of George R. Terry Management is a distinct process consisting of
planning, organizing, actuating and controlling performed to determine and accomplish
the objectives by the use of people and resources.(1953)

Management as a Process: It involves a series of interrelated functions of getting the
objectives of an organization and taking steps to achieve that objective. The
management process includes: planning, organizing, staffing, directing, controlling, deciding
and evaluating.

The process involves different implications like:

1. Social Process: Interaction with people to achieve the goal.

2. Integrated Process: Management bring human, physical, financial resources together
to put into effect. It integrates human efforts to maintain harmony among them.

3. Continuous Process: It is a continuous process of identifying and solving problems till the
goal is achieved.

4. Interactive Process: It requires interaction with internal and external factors.

According to Theo Haimann, management has three different meanings, viz.

1. Management as a Noun: refers to a Group of Managers.

2. Management as a Process: refers to the Functions of Management i.e. Planning,
Organizing, Directing, Controlling, etc.

3. Management as a Discipline: refers to the Subject of Management.

Management is an individual or a group of individuals that accept responsibilities to run an
organisation. They Plan, Organize, Direct and Control all the essential activities of the
organisation, Management does not do the work themselves. They motivate others to do the
work and co-ordinate (i.e. bring together) all the work for achieving the objectives of the
organisation. Management brings together all Six Ms i.e. Men and Women, Money,


Machines, Materials, Methods and Markets. They use these resources for achieving the
objectives of the organisation such as high sales, maximum profits, business expansion, etc.

Definitions:

According to F. W. Taylor Management is an art of knowing what to do, when to do and see
that it is done in the best and cheapest way.

According to Harold Koontz Management is an art of getting things done through and with
the people in formally organized groups.

Mary parker Follett (1919) - The art of getting things done with and through people.

Chester I. Barnard (1938) Getting things done through people by making the efficient use of
resources.

Kast and Rosenzweig (1974) - To make efficient use of resources and to get people and
other resources to work harmoniously together in order to achieve objectives.

Ricky W. Griffin (2000) Management is set of activities directed at an organization
resources with the aim of achieving organizational goals effectively and efficiently in a
changing environment.



In Summary Management can be defined as following categories:
Management is a process
Management is purposive activity
Management is a discipline
Management is a group
Management is science and an art
Management is a profession

Management refers to managing man/women tactfully.

Characteristics of Management
1. Management as a continuous process:
Management can be considered as a process because it consists of planning, organizing,
activating and controlling the resources (personnel and capital) of an organization. So they
are used to the best advantage in achieving the objectives of the organization. None of the
managerial functions would produce the ultimate results in the absence of all other basic
functions. Hence we can say that management is a continuous process.
2. Management as a discipline:
Since the boundaries of management are not exact as that of any other physical sciences, it
may not fit in very well for being addressed as discipline. However its status as a
discipline increases because it continuously discovers many aspects of business enterprises
and also passes on the verified knowledge to the practitioners of the managerial process.
3. Management as a career:
As a career or occupation, management is a broad concept- Management itself can be
regarded as a career, but it also presents a variety of interesting and challenging careers
focused on specialized occupations in the fields such as marketing, finance and personnel.
4. Management as an Applied Science:
Even though management is a science so far as it possesses a systematized body of
knowledge and uses scientific methods of research, it is not an exact science, like natural
sciences which deal with living phenomena such as botany and medicine.
Hence, management is definitely a social science like economics or psychology and has
the same institutions which these and other social sciences have.



5. Universal Application:
Management is a universal activity, applied to any form of activity, economic or
otherwise.
6. Goal Oriented:
Management has the task of attaining certain objectives. The success or failure of the
management depends on how far it is able to attain the desired goals. It is judged by the
extent to which it achieves its targets.
7. Guidance:
The main task of the management is guidance in the utilization of material and human
resources in the best possible way. Through optimum utilization of resources it has to
ensure that the objectives are attained. The essential element of management is that it gets
the work done by coordinating the performance of those who actually perform diverse and
specific jobs.
8. Divorced from proprietorship:
Management does not signify proprietorship. In earlier days, management and enterprise
were lumped into the same factor. It now refers to a specialized group of people who have
acquired the ability to carry out a project.
9. An activating factor:
Management is the factor which activates other factors of production. A manager's skill
lies in motivating his workers through guidance, training, incentives, rewards, status,
security, control, etc. So a mangers' ability lies in the fact that he is able to motivate others
to apply their skill to the best advantage of the enterprise in the accomplishment of its
objectives.
10. Management is a human activity:
Management functions are discharged only by individuals. No corporate body or an
artificial being can perform the work of a management. Although it is an activity which
may be performed by an individual it cannot be seen. It can only be felt.
11. Management signifies authority:
Since the essence of management is to direct, guide and control, it has to have authority.
Authority is the power to compel others to work and behave in a particular manner.
Management cannot discharge its function without authority. It is the foundation of
management. Since management has authority it stands at a higher pedestal.


12. Leadership:
The management has to lead a team of workers. It must be capable of inspiring,
motivating and winning their confidence.
13. Getting things done through people

The managers do not do the work themselves. They get the work done through the
workers. The workers should not be treated like slaves. They should not be tricked,
threatened or forced to do the work. A favorable work environment should be created
and maintained.

Principle of Management

HENRI FAYOL"S 14 Principles of Management
1. Division of work: Work should be divided among individuals and groups to ensure that
effort and attention are focused on special portions of the task. Fayol"s presented work
specialization as the best way to use the human resources of the organization.

2. Authority: The concepts of Authority and responsibility are closely related. Authority was
defined by Fayol as the right to give orders and the power to exact obedience. Responsibility
involves being accountable, and is therefore naturally associated with authority. Whoever
assumes authority also assumes responsibility.

3. Discipline: A successful organization requires the common effort of workers. Penalties
should be applied judiciously to encourage this common effort.

4. Unity of Command: Workers should receive orders from only one manager.

5. Unity of Direction: The entire organization should be moving towards a common
objective in a common direction.

6. Subordination of Individual Interests to the General Interests: The interests of one
person should not take priority over the interests of the organization as a whole.

7. Remuneration: Many variables, such as cost of living, supply of qualified personnel,
general business conditions, and success of the business, should be considered in determining
a workers rate of pay.

8. Centralization: Fayol defined centralization as lowering the importance of the subordinate
role. Decentralization is increasing the importance. The degree to which centralization or


decentralization should be adopted depends on the specific organization in which the
manager is working.
9. Scalar Chain (Line of Authority): Managers in hierarchies are part of a chain like
authority scale. Each manager, from the first line supervisor to the president, possesses
certain amounts of authority. The President possesses the most authority; the first line
supervisor the least. Lower level managers should always keep upper level managers
informed of their work activities. The existence of a scalar chain and adherence to it are
necessary if the organization is to be successful.

10. ORDER: For the sake of efficiency and coordination, all materials and people related to
a specific kind of work should be treated as equally as possible.

11. Equity: All employees should be treated as equally as possible. It deals with fairness,
kindness and Justice.

12. Stability of Tenure of Personal: Retaining productive employees should always be a
high priority of management. The period of service should not be too short and employees
should not be moved from positions frequently.

13. Initiative: Management should take steps to encourage worker initiative, which is defined
as new or additional work activity undertaken through self direction.

14. E spirit De Corps (Team Spirit): Management should encourage harmony and general
good feelings among employees. "Unity is Strength"

These points are being summarized as:

1. Division of Work
2. Authority
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of Individual Interests to the General Interests
7. Remuneration
8. Centralization
9. Scalar Chain (Line of Authority)
10. Order
11. Equity
12. Stability of Tenure of Personal
13. Initiative
14. E spirit De Corps( Team Spirit)



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:
1. 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.
2. 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?
3. 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.

Function of Management

According to Henry Fayol to manage is to forecasts and plan, to organize, command and to
control)

According to George and Jerry planning, organizing, actuating and controlling.

Luther Gullick keyword- ( POSDCORB ) - Planning, organizing, staffing, directing, co-
ordination, reporting and budgeting.

But most acceptable ones is by Koontz and O'Donnell i.e. planning, organizing, staffing,
directing and controlling.



1. Planning
It is the basic function of management. It deals with chalking out a future course of
action & deciding in advance the most appropriate course of actions for achievement
of pre-determined goals. According to KOONTZ, Planning is deciding in advance -
what to do, when to do & how to do. It bridges the gap from where we are & where
we want to be. A plan is a future course of actions. It is an exercise in problem
solving & decision making. Planning is determination of courses of action to achieve
desired goals. Thus, planning is a systematic thinking about ways & means for
accomplishment of pre-determined goals. Planning is necessary to ensure proper
utilization of human & non-human resources. It is all pervasive, it is an intellectual
activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.
2. Organizing
It is the process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational
goals. According to Henry Fayol, To organize a business is to provide it with
everything useful or its functioning i.e. raw material, tools, capital and personnels.
To organize a business involves determining & providing human and non-human
resources to the organizational structure. Organizing as a process involves:
Identification of activities.
Classification of grouping of activities.
Assignment of duties.
Delegation of authority and creation of responsibility.
Coordinating authority and responsibility relationships.


3. Staffing
It is the function of manning the organization structure and keeping it manned.
Staffing has assumed greater importance in the recent years due to advancement of
technology, increase in size of business, complexity of human behavior etc. The main
purpose o staffing is to put right man on right job i.e. square pegs in square holes and
round pegs in round holes. According to Kootz & ODonell, Managerial function of
staffing involves manning the organization structure through proper and effective
selection; appraisal & development of personnel to fill the roles designed the
structure. Staffing involves:
Manpower Planning (estimating man power in terms of searching, choose the
person and giving the right place).
Recruitment, Selection & Placement.
Training & Development.
Remuneration.
Performance Appraisal.
Promotions & Transfer.
4. Directing
It is that part of managerial function which actuates the organizational methods to
work efficiently for achievement of organizational purposes. It is considered life-
spark of the enterprise which sets it in motion the action of people because planning,
organizing and staffing are the mere preparations for doing the work. Direction is that
inert-personnel aspect of management which deals directly with influencing, guiding,
supervising, motivating sub-ordinate for the achievement of organizational goals.
Direction has following elements:
Supervision
Motivation
Leadership
Communication
Supervision- implies overseeing the work of subordinates by their superiors. It is the
act of watching & directing work & workers.
Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal
to work. Positive, negative, monetary, non-monetary incentives may be used for this
purpose.
Leadership- may be defined as a process by which manager guides and influences the
work of subordinates in desired direction.


Communications- is the process of passing information, experience, opinion etc from
one person to another. It is a bridge of understanding.
5. Controlling
It implies measurement of accomplishment against the standards and correction of
deviation if any to ensure achievement of organizational goals. The purpose of
controlling is to ensure that everything occurs in conformities with the standards. An
efficient system of control helps to predict deviations before they actually occur.
According to Theo Haimann, Controlling is the process of checking whether or not
proper progress is being made towards the objectives and goals and acting if
necessary, to correct any deviation.
According to Koontz & ODonell Controlling is the measurement & correction of
performance activities of subordinates in order to make sure that the enterprise
objectives and plans desired to obtain them as being accomplished. Therefore
controlling has following steps:
i) Establishment of standard performance.
ii) Measurement of actual performance.
iii) Comparison of actual performance with the standards and finding out
deviation if any.
iv) Corrective action.

Managerial Hierarchy and levels

The term Levels of Management refers to a line of demarcation between various
managerial positions in an organization. The number of levels in management increases when
the size of the business and work force increases and vice versa. The level of management
determines a chain of command, the amount of authority & status enjoyed by any managerial
position. The levels of management can be classified in three broad categories:
1. Top level / Administrative level
2. Middle level / Executors
3. Low level / Supervisory / Operative / First-line managers
Managers at all these levels perform different functions. The role of managers at all the three
levels is discussed below:


1. Top Level of Management
It consists of board of directors, chief executive or managing director. The top
management is the ultimate source of authority and it manages goals and policies for an
enterprise. It devotes more time on planning and coordinating functions.

The role of the top management can be summarized as follows

Top management lays down the objectives and broad policies of the enterprise.
It issues necessary instructions for preparation of department budgets, procedures,
schedules etc.
It prepares strategic plans & policies for the enterprise.
It appoints the executive for middle level i.e. departmental managers.
It controls & coordinates the activities of all the departments.
It is also responsible for maintaining a contact with the outside world.
It provides guidance and direction.
The top management is also responsible towards the shareholders for the
performance of the enterprise.

1. Middle Level of Management
The branch managers and departmental managers constitute middle level. They are
responsible to the top management for the functioning of their department. They devote
more time to organizational and directional functions. In small organization, there is only
one layer of middle level of management but in big enterprises, there may be senior and
junior middle level management.



Their role can be emphasized as

They execute the plans of the organization in accordance with the policies and
directives of the top management.
They make plans for the sub-units of the organization.
They participate in employment & training of lower level management.
They interpret and explain policies from top level management to lower level.
They are responsible for coordinating the activities within the division or department.
It also sends important reports and other important data to top level management.
They evaluate performance of junior managers.
They are also responsible for inspiring lower level managers towards better
performance.
2. Lower Level of Management
Lower level is also known as supervisory / operative level of management. It consists
of supervisors, foreman, section officers, superintendent etc. According to R.C. Davis,
Supervisory management refers to those executives whose work has to be largely
with personal oversight and direction of operative employees. In other words, they
are concerned with direction and controlling function of management. Their activities
include -
a. Assigning of jobs and tasks to various workers.
b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation in
the organization.
e. They communicate workers problems, suggestions, and recommendatory
appeals etc to the higher level and higher level goals and objectives to the
workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the things
done.
j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
m. They are the image builders of the enterprise because they are in direct contact
with the workers.



Managerial Skills and Roles,

The ability to make business decisions and lead subordinates within a company.
Three most common skills include:
1) Human skills - the ability to interact and motivate; Human relations skills are also
called Interpersonal skills. It is an ability to work with people. It helps the managers
to understand, communicate and work with others. It also helps the managers to lead,
motivate and develop team spirit. Human relations skills are required by all managers
at all levels of management. This is so, since all managers have to interact and work
with people.

2) Technical skills - the knowledge and proficiency in the trade; A technical skill is the
ability to perform the given job. Technical skills help the managers to use different
machines and tools. It also helps them to use various procedures and techniques. The
low-level managers require more technical skills. This is because they are in charge of
the actual operations. Apart from Prof. Daniel Katz's three managerial skills, a
manager also needs (requires) following additional managerial skills.

3) Conceptual skills - the ability to understand concepts, develop ideas and implement
strategies. Competencies include communication ability, response behavior and
negotiation tactics. Conceptual skill is the ability to visualize (see) the organisation as
a whole. It includes Analytical, Creative and Initiative skills. It helps the manager to
identify the causes of the problems and not the symptoms. It helps him to solve the
problems for the benefit of the entire organisation. It helps the manager to fix goals
for the whole organisation and to plan for every situation. According to Prof. Daniel
Katz, conceptual skills are mostly required by the top-level management because they
spend more time in planning, organizing and problem solving.



Managerial Roles

The role of a manager in business is making sure that things happen the way they are
supposing to. They work with the people under them to make sure that the work is getting
done in a timely fashion and in a way that represents the business well.

Mintzberg published his Ten Management Roles in his book, "Mintzberg on Management:
Inside our Strange World of Organizations," in 1990.
Figurehead.
Leader.
Liaison.
Monitor.
Disseminator.
Spokesperson.
Entrepreneur.
Disturbance Handler.
Resource Allocator.
Negotiator.

Let's look at each of the ten roles in greater detail.

Interpersonal Category

The roles in this category involve providing information and ideas.
Figurehead As a manager, you have social, ceremonial and legal responsibilities.
You're expected to be a source of inspiration. People look up to you as a person with
authority, and as a figurehead.
Leader This is where you provide leadership for your team, your department or
perhaps your entire organization; and it's where you manage the performance and
responsibilities of everyone in the group.
Liaison Managers must communicate with internal and external contacts. You need
to be able to network effectively on behalf of your organization.

Informational Category

The roles in this category involve processing information.
Monitor In this role, you regularly seek out information related to your organization
and industry, looking for relevant changes in the environment. You also monitor your
team, in terms of both their productivity, and their well-being.
Disseminator This is where you communicate potentially useful information to
your colleagues and your team.
Spokesperson Managers represent and speak for their organization. In this role
you're responsible for transmitting information about your organization and its goals
to the people outside it.


Decisional Category

The roles in this category involve using information.
Entrepreneur As a manager, you create and control change within the
organization. This means solving problems, generating new ideas, and implementing
them.
Disturbance Handler When an organization or team hits an unexpected roadblock,
it's the manager who must take charge. You also need to help mediate disputes within
it.
Resource Allocator You'll also need to determine where organizational resources
are best applied. This involves allocating funding, as well as assigning staff and other
organizational resources.
Negotiator You may be needed to take part in, and direct, important negotiations
within your team, department, or organization.



Emerging issues and challenges for Management.

Administrative role
Cultural role
Quality/ethics/environment impact
Power bases
Interpersonal dealing
Learning Problems
Changes and conflicts
information
Globalization
Development of Environment
Innovation and Change
Technological Development
Knowledge Management
Work Force Diversity
Empowerment of Employees

Globalization

The world economy is becoming increasing global in character. Manager will be involved
in the management of global organization. They will need to think globally and act locally.
Today more than one fourth of all goods produced worldwide cross the national
boundaries. So it is one of the main emerging challenges.

Technological Development

Development of new technology has brought quickness, simplicity and effectiveness in
managerial works. Management will need to manage changing technology effectively. So
it has appeared as challenges.

Cultural diversity

Education, tour, communication, experiences etc bring changes cultural norms and values
of human. Different races, languages, custom, fashion and living style add diversity to it.
Cultural norms and value go on changing, adding diversities which are great challenges.

Empowerment

It is the process of increasing the capacity of individuals or groups to make choices and to
transform those choices into desired actions and outcomes. The manager should provide
the works full control over their works by promoting self managed teams on encouraging
maximum participation, more information is provided to employees to make them aware
of problems of their organization.



Creativity and innovation

Creativity is essential for innovation for a product must exist at least in a concept stage for
you cannot innovate anything that does not exist. Thus innovation depends on creativity
while creativity does not depend on innovation. Although the better success of creativity
depends on innovation.
Creativity = Invention
Innovation = improvements = changes to make it effective and efficient = making it
practical = researching new ways to produce and improve creativity = the act of
producing the same concept in a newer and improved form.

Administration & management

According to Theo Haimann, Administration means overall determination of policies,
setting of major objectives, the identification of general purposes and lying down of
broad programmers and projects. It refers to the activities of higher level. It lays down
basic principles of the enterprise.

According to Newman, Administration means guidance, leadership & control of the
efforts of the groups towards some common goals.

Whereas, management involves considering, initiating and bringing together the various
elements; coordinating, actuating, integrating the diverse organizational. It is an art of
getting things done through & with the people in formally organized groups.

Workforce Diversity

Similarities and differences among employees in terms of age, cultural background,
physical abilities and, religion, sex etc.

Social Responsibility

An organization should be responsible towards shareholders, employees, customers,
society and nation. Now-days social responsibilities has become compulsory not a subject
of discussion.

Change Management

Change is demand of time. In the complex and dynamic environmental context, change
should also be brought in different aspect for organization.



Goals and Objectives

1. Goals and objectives are both tools for accomplishing what you want to achieve.
2. Goals are long term and objectives are usually accomplished in the short or medium
term.
3. Goals are nebulous and you cant definitively say you have accomplished one
whereas the success of an objective can easily be measured.
4. Goals are hard to quantify or put in a timeline, but objectives should be given a
timeline to be more effective.

Efficiency and Effectiveness

1. Efficiency means doing the things right whereas Effectiveness is about doing the
right things.
2. Efficiency focuses on the process or means whereas Effectiveness focuses on the
end.
3. Efficiency is restricted to the present state whereas effectiveness involves thinking
long term.
4. Organizations have to be both effective and efficient in order to be successful.

Management Theories
A collection of ideas which set forth general rules on how to manage a business or
organization. Management theory addresses how managers and supervisors relate to their
organizations in the knowledge of its goals, the implementation of effective means to get the
goals accomplished and how to motivate employees to perform to the highest standard.

The Classical Theories are Categories as:

a. Scientific Management Theory
b. Administrative Management Theory

Scientific Management Theory

Frederick Winslow Taylor (March 20, 1856 March 21, 1915) was an American mechanical
engineer who sought to improve industrial efficiency. He is regarded as the 'Father of
Scientific Management' and was one of the first management consultants.

Taylor was one of the intellectual leaders of the Efficiency Movement and his ideas, broadly
conceived, were highly influential in the Progressive Era.

Taylorism aims to get the most out of your workforce and reduce the general cost of labor. To
do so it puts into place systems that have been optimized, methods that can be followed by


anyone. That way in this theory you can get the same results from unskilled labor, and pay
them less.

Contribution of Taylor

1. Scientific task setting:- Taylor observed that the management does not know exactly the
works pieces of work- volume of works- which are to be performed by the workers
during a fixed period of time- which is called working day. In a working day how much
work is to be done by a worker but be fixed by a manager and the task should be set every
day. The process of task setting requires scientific technique. To make a worker do a
quantity of work in a working day is called scientific task setting

2. Differential payment system:- under this system, a worker received the piece rate
benefit which will attract the workers to work more for more amount of wages and more
incentives would be created to raise the standardization of output to promote the workers
to produce more and perform more task than before and utilize waste time to earn more
wages.

3. Reorganization of supervision: - concepts of separation of planning and doing and
functional foremanship were developed. Taylor opines that the workers should only
emphasize in planning or in doing. There should be 8 foremen in whom are for planning
and for doing. For planning they were route clerk, instruction cord clerk, time and cost
clerk and disciplinarian. And for doing they were speed boss, gang boss, repair boss and
inspector.

4. Scientific recruiting and training: - staffs and workers should be selected and employed
on scientific basis. Management should develop and train every worker by providing
proper knowledge and training to increase their skills and make them effective

5. Economy: - efficient cost accounting system should be followed to control cost which
can minimize the wastages and thoroughly reduced and thus eliminated.

6. Mental revolution: - Taylor argued that both management and workers should try to
understand each other instead of quarreling for profits and benefits which would increase
production, profit and benefits.

Limitations

Managers often implemented only the increased output side of Taylor plan.
They didnt allowed workers to share in increased output.
Specialized job become very boring.
Workers ended up distracting scientific management.
Management responded with increased of machines.


Administrative Management
According to the Administrative Management Theory / School, management is the process of
getting things done through people. Here importance is given to groups and not to
individuals.
The first expert of Administrative Management Theory was Henri Fayol (1841-1925). Fayol
is called the "Father of Modern Management". Henri Fayol was a French industrialist and a
management consultant. He started the functional approach to management.
The other management experts who contributed to the Administrative Management schools
are Mary Parker Follett, Luther Gulick, Lyndall Urwick, James Mooney, Alan Reiley, Oliver
Sheldon, Ernest Dale, etc.
Bureaucratic Management Theory
(1930-1950)
Max Weber embellished the scientific management theory with his bureaucratic theory.
Weber focused on dividing organizations into hierarchies, establishing strong lines of
authority and control. He suggested organizations develop comprehensive and detailed
standard operating procedures for all routine tasks.
Contribution of Bureaucratic Theory
1. There is a high degree of Division of Labour and Specialization.
2. There is a well defined Hierarchy of Authority.
3. It follows the principle of Rationality, Objectively and Consistency.
4. There are Formal and Impersonal relations among the member of the organisation.
5. Interpersonal relations are based on positions and not on personalities.
6. There are well defined Rules and Regulations. There rules cover all the duties and
rights of the employees. These rules must be strictly followed.
7. There are well defined Methods for all types of work.
8. Selection and Promotion is based on Technical qualifications.
9. Only Bureaucratic or legal power is given importance.

Behavioral Science Theory

This theory is categories into two categories as:
a) Human relation
b) Behavioral Approach



a) Human Relation:

The aptitudes of individuals are imperfect predictors of job performance. Although
they give some indication of the physical and mental potential of the individual, the
amount produced is strongly influenced by social factors.

Informal organization affects productivity. The Hawthorne researchers discovered a
group life among the workers. The studies also showed that the relations that
supervisors develop with workers tend to influence the manner in which the workers
carry out directives.

Work-group norms affect productivity. The Hawthorne researchers were not the first to
recognize that work groups tend to arrive at norms of what is a fair day's work; however,
they provided the best systematic description and interpretation of this phenomenon.

The workplace is a social system. The Hawthorne researchers came to view the
workplace as a social system made up of interdependent parts.

b) Behavioral Approach

It is concerned with scientific investigation, analysis and understanding human behavioral
in organizations. Notable Behavioral scientists are:
Abraham Maslow
Douglas McGregor
Frederic Herzberg
Merry Parker Follet



Abraham Maslow Hierarchy of Needs Theory

The original hierarchy of needs five-stage model includes:
1. Biological and Physiological needs - air, food, drink, shelter, warmth, sex, sleep.
2. Safety needs - protection from elements, security, order, law, limits, and stability.
3. Social Needs - Belongingness and Love, - work group, family, affection, relationships.
4. Esteem needs - self-esteem, achievement, mastery, independence, status, dominance,
prestige, managerial responsibility.
5. Self-Actualization needs - realizing personal potential, self-fulfillment, seeking personal
growth and peak experiences.

Douglas McGregor
Theory X and Theory Y are theories of human motivation created and developed by
Douglas McGregor at the MIT Sloan School of Management in the 1960 s that have been
used in human resource management, organizational behavior, organizational communication
and organizational development. They describe two contrasting models of workforce
motivation.
Theory X and Theory Y have to do with the perceptions managers hold on their employees,
not the way they generally behave. It is attitude not attributes.


Frederic Herzberg

Frederic Hertzberg theory of motivation is also called 'Two Factor Theory', 'Dual Factor
Theory' and 'Hygiene / Maintenance Theory of Motivation'. This theory is based on the
information collected by him and his associates (in the USA in 1959) by interviewing two
hundred engineers and accountants. The information collected relates to the attitude of people
towards work. This attitude towards work depends on two sets of factors namely hygiene or
maintenance factors and the motivating factors.

Herzbergs original research was undertaken in the offices of engineers and accountants
rather than on the factory floor and involved interviewing over two hundred employees. His
aim was to determine work situations where the subjects were highly motivated and satisfied
rather than where the opposite was true and his research was later paired with many studies
involving a broader sampling of professional people.
In his findings Herzberg split his factors of motivation into two categories called Hygiene
factors and Motivation factors. The Hygiene factors can de-motivate or cause dissatisfaction
if they are not present, but do not very often create satisfaction when they are present;
however, Motivation factors do motivate or create satisfaction and are rarely the cause of
dissatisfaction. The two types of factors may be listed as follows in order of importance:


Hygiene Factors (leading to dissatisfaction):
Company Policy
Supervision
Relationship with Boss
Work Conditions
Salary
Relationship with Peers
Motivators (leading to satisfaction):
Achievement
Recognition
The work itself
Responsibility
Advancement
Growth
The dissatisfies are hygiene factors in the sense that they are maintenance factors required to
avoid dissatisfaction and stop workers from being unhappy, but do not create satisfaction in
themselves. They can be avoided by using hygienic methods to prevent them.
It is clear from the lists that the factors in each are not actually opposing i.e. the satisfiers are
not the opposite of dissatisfies. The opposite of satisfaction isnt dissatisfaction but is no
satisfaction. Both lists contain factors that lead to motivation, but to a differing extent
because they fulfill different needs.
The Hygiene factors have an end which once fulfilled then cease to be motivating factors
while the Motivation factors are much more open-ended and this is why they continue to
motivate.

Herzberg also developed the concept that there are two distinct human needs:
i) Physiological needs: avoiding unpleasantness or discomfort and may be
fulfilled via money to buy food and shelter etc.
ii) Psychological needs: the need for personal development fulfilled by activities
which cause one to grow.
He identified this as the Adam and Abraham Concept where Adam is animal and wants to
avoid pain or discomfort, but Abraham is human and needs to go beyond the physical
requirements and expand psychologically too.
Herzberg believed that the Hygiene factors causing no satisfaction are not applicable to the
task an employee undertakes but are external to that task. They are the Adam part of the
concept where an incentive may be attributed to a fear of punishment or increase in


discomfort or as he phrased it A Kick up the Ass (KITA). He thought that these did work
but only as short term motivators e.g. constantly increasing someones salary to motivate
them will merely encourage them to look for the next wage rise and nothing else; however,
salary may also be a de-motivator where the employee perceives it to be too low or low
compared to that of their peers. The long term motivators are the Abraham part of the
concept that lead to satisfaction and are intrinsic to the job itself and the job design. Consider
the chambermaid who prefers to receive a note of appreciation for her high standards from a
guest than a carelessly delivered gratuity.
It is important to understand that the two types of factors are not mutually exclusive and that
management must try to fulfill both types of need for an employee to be truly satisfied with
their job. Once the Hygiene factors have been satisfied providing more of them will not
create further motivation but not satisfying them may cause de-motivation; unlike the
Motivation factors where management may not fulfill all of them but the workers may still
feel motivated. Major companies have recognized this situation when designing their
methods of reward and recognition.
Probably one of the most important ideas that Herzberg postulated based on his findings of
satisfaction is that of job enrichment. This is the addition of different tasks to a job to
provide greater involvement and interaction with that job. It is obviously a continuous
management process:
The job must use the full ability of the employee and provide them with sufficient
challenge
Any employee who demonstrates an increasing level of ability should be given
correspondingly increasing levels of responsibility
If a job cannot be designed to use an employees full ability management should consider
employing someone of lesser skills or perhaps automation of the task. If a persons skills
cannot be used to the full they will experience problems with motivation.
Most job frustrations arise from Hygiene factors such as frustration due to bureaucracy, poor
organisation, internal politics or feeling exploited. Tesco, one of the leading retailers in the
UK, recently gained recognition via achieving the National Business Awards Employer of
the Year when the judges declared that: Tesco was voted Employer of the Year because its
solutions were seen to be more holistic. Tesco recognize how motivated staff who are
committed to their work have a positive effect on Company performance. They invest
several million pounds each year in training schemes which are based on Herzberg
motivator's e.g.
i) New and more open lines of communication between managers and staff
ii) Directors and senior managers spend a week on the shop floor listening to ideas from
customers and staff


iii) A scheme exists to spot individual talent and to fast-track shop floor workers up the
promotional ladder
iv) A better understanding of individual employees personal circumstances
These initiatives have helped Tesco deliver record growth and sales profits and illustrate how
theory may be used in practice.
Over the years there are criticisms that have arisen e.g. his sample of employees was not
representative of all workers, but further studies have tended to support his findings. In
addition some critics have declared that it is natural for people to take credit for satisfaction,
but to blame dissatisfaction on external factors. Every individual is just that an individual
and theories of motivation cannot realistically apply to each single employee; however, they
are useful for identifying the main ways in which people are motivated. Herzberg and his
findings have been extremely influential in developments associated with the field of job
design and methods of management to provide job satisfaction and motivation.



Management Science Theory

Management Science Theory gives a quantitative basis for decision making. It specially
deals with the development of mathematical models to aid in decision making and problem
solving. This theory holds that managing is a logical and rationale process, so it can be
expressed in terms of mathematical models.
It evolved out of the development of mathematical and statistical solutions to military
problems during World War II. After the war, quantitative techniques were moved into the
business sector.
The quantitative approach to management includes applications of statistics, optimization
models, information models, and computer simulations. They have contributed most directly
to management decision making, particularly to planning and control decisions.

Some of the differences between these theories are as follows:

System Theory Contingency Theory
Lays emphasis on the inter dependencies and
interactions systems and sub-systems.

Identifies the nature of intendancies and the
impact of environment on organizational
design and managerial style
Treats all organizations alike. Size of the
organisation, and its socio-cultural setting are
not considered
Each organisation is to be studied as a unique
entity.
A way of thinking about organizations at an
abstract, level. Provides a global theoretical
model for understanding organisation.
A down-to-earth, pragmatic and action
focused approach. Provides operational tools
and techniques for analyzing and solving
problems.
Appears to be neutral and non-committal on
the universality of principles of management
Rejects the universality of principles, no one
best way of managing
Main focus on the internal environment of
the system.
Main focus on external environment of the
system.
Suggests deterministic solutions to
management problems.
Suggests probable solutions to management
problems.
Input-output process, open system, system
boundary, synergy, homeostasis, dynamic
equilibrium, entropy and equi-potentiality are
its main features.
Suggests a comparative analysis of
organisation to establish patterns of
similarities and differences. Fit between
approach and situation is a must.



Scientific management Human Relations Approach
Propounded by F.W. Taylor. Propounded by Elton Mayo
Suggested engineering approach to
management problems. It applied scientific
method
Suggested human relations as a method of
achieving higher productivity. It discarded
the engineering approach
Focused on the study of the productivity
problems of industry.
Focused on the study of individuals, his
needs and behavior.
The main concepts are scientific task setting,
scientific selection and training of people and
mental revolution.
The main concepts are job satisfaction,
motivation and employee morale.
Originated from the experiments of Taylor in
dealing with the problems of factories.
Originated from the Hawthorne experiments
conducted by the psychologists and
sociologists.
Scientific management is a part of classical
theory of organisation.
Human relations approach represents neo-
classical theory of organisation

s no. Taylor Henry Fayol
1 Father of scientific management theory Modern management
2 Beginning Taylor begins from lower
worker and moved upward.
Fayol begin from top management and
moved downward
3 Level of management Taylor gave
importance to the operating level.
Fayol gave importance to the top level
4 Focus Its focus is increasing
productivity by way of works
simplification, time and motion study
etc..
Its focus is to improve over all
administration by adopting certain
principles
5 Its results are based on scientific
observation. 5..
Its results are based on personal
experiences.
6 Rigidity Taylors principles are
comparatively rigid.
Fayol"s principles are comparatively
flexible.
7 To increase the productivity of workers
by eliminating the wastes.
To develop general theory of
administration.

Contingency Theory

This theory focuses on situational factors. It is based on the premise that there is probably no
one best way to solve management problem in all organizations and in every situation.
The contingency approach (sometimes called the situational approach) was developed by
managers, consultants, and researchers who tried to apply the concepts of the major schools


to real life situations. When methods highly effective in one situation failed to work in other
situations, they sought an explanation. Why, for example, did an organizational development
program work brilliantly in one situation and fall miserably in another? Advocates of the
contingency approach had a logical answer to all such questions: Results differ because
situations differ, a technique that works in one case will not necessarily work in all cases.
Contribution of contingency theory
To meet complex situation it helps managers to generate new ideas and better
approaches.
It provides more freedom to managers.
It provides opportunities to think in creative and innovative way.
Managers become more sensitive and alert.

Limitations

It doesnt cover all variables.
It ignores universal principles.
Tools to be used are not mentioned clearly.
It doesnt consider human behavior aspects.

Systems Theory

A system is a set of interrelated parts arranged in a manner that produces a unified whole.
Subsystem of an organization can be classified as physical mechanical, biological and social.
The situational or contingency theory asserts that when managers make a decision, they must
take into account all aspects of the current situation and act on those aspects that are keys to
the situation at hand. Basically, it is the approach that it depends. For example, if one is
leading troops in Iraq, an autocratic style is probably best. If one is leading a hospital or
University, a more participative and facilitative leadership style is probably best.
Some of the elements of system theory are:
Goal orientation
Subsystem
Synergy
System boundary
Information flow
Feedback
Open and closed system



Contribution of System Theory
1. Management is entirely situational and there is nothing like universal principles of
management.
2. The approach suggests suitable alternatives for those managerial actions which are
generally contingent upon external and internal environment.
3. This approach suggests that since organization interacts with its environment, neither
the organization nor any of its subsystems is free to take absolute action.
Limitations:
1. Inadequate Literature. It has not adequately spelled out various types of actions which
can be taken under different situations.
2. Complex. When put into practice, this approach becomes very complex.
Determination of situation in which managerial action is to be taken involves analysis
of large number of variables.
3. Reactive not Proactive. This approach is basically reactive in nature. It merely
suggests what managers can do in a given situation.

Contemporary prospective of management

Most contemporary management prospective have emerged and evolved over the last
hundred years or so. Beginning with the classical management perspective, first developed
toward the end of the nineteenth century, and through contemporary applied perspectives,
managers have an array of useful techniques, methods and approaches for solving problems
and enhancing the effectiveness of their organizations. Of course managers also need to
recognize that not every idea set forth is valid, and that are useful are not applicable in all
settings. And new methods and approaches will continue be developed in the future.

Era of Evaluation for Management

1. The Classical Perspectives
2. The behavioral Perspectives
3. The quantitative Perspectives
4. The System Perspectives
5. The Contingency Perspective
6. Theory Z and Excellence Perspective
7. Contemporary Applied Perspective
Seven Habits of highly effective People ( Stephen Covey)
Liberation Management ( Tom Peters)
The Competitive Advantages of Nations ( Michel Porter)
Beyond Reengineering ( Michael Hammer)
The Fifth Discipline ( Peter Senge)



Participative Management Styles: Theory Z - William Ouchi

During the 1970s, when Japanese-style management was all the rage, William Ouchi, took
the Theory X, Theory Y concept one step further: Theory Z. This is the participative model.
Ouchi was born and educated in America, but was of Japanese descent. He visited Japan and
studied their success with team and participative management and developed this theory.

Management
Concept
Douglas McGregor
(Theory X & Y)
William Ouchi
(Theory Z)
Motivation
Tends to categories people as one type or
another: either being unwilling or unmotivated
to work, or being self motivated towards work.
Threats and disciplinary action are thought to be
used more effectively in this situation, although
monetary rewards can also be a prime motivator
to make Theory X workers produce more.
Believes that people are innately self
motivated to not only do their work, but
also are loyal towards the company, and
want to make the company succeed.
Leadership
Theory X leaders would be more authoritarian,
while Theory Y leaders would be more
participative. But in both cases it seems that the
managers would still retain a great deal of
control.
Theory Z managers would have to have a
great deal of trust that their workers could
make sound decisions. Therefore, this type
of leader is more likely to act as "coach",
and let the workers make most of the
decisions.
Power &
Authority
As mentioned above, McGregor's managers, in
both cases, would seem to keep most of the
power and authority. In the case of Theory Y,
the manager would take suggestions from
workers, but would keep the power to
implement the decision.
The manager's ability to exercise power
and authority comes from the worker's
trusting management to take care of them,
and allow them to do their jobs. The
workers have a great deal of input and
weight in the decision making process.
Conflict
This type of manager might be more likely to
exercise a great deal of "Power" based conflict
resolution style, especially with the Theory X
workers. Theory Y workers might be given the
opportunity to exert "Negotiating" strategies to
solve their own differences.
Conflict in the Theory Z arena would
involve a great deal of discussion,
collaboration, and negotiation. The
workers would be the ones solving the
conflicts, while the managers would play
more of a "third party arbitrator" role.
Performance
Appraisals
Appraisals occur on a regular basis. Promotions
also occur on a regular basis.
Theory Z emphasises more frequent
performance appraisals, but slower
promotions.



Theory X Managers assume the average worker
Is gullible and not very bright.
Is indifferent to the organization's needs.
Dislikes work.
Is motivated only by financial incentives.
Must be closely supervised.

Theory Y Managers assume the average worker:
Feels work is natural.
Can enjoy work.
Is motivated by the desire to do a good job.
Might do a better job if control is minimized.
Has potential for development and advancement.

Theory Z Managers assume the average worker wants to be involved in managing a company
and building trust among all organizational members is central to raising productivity.
Summary & Conclusions:
Many assumptions are made in the work place, based on observations of the workers, and
their relationship with management. The types of tasks being performed, as well as the types
of employees which make up a particular organisation can set the stage for the types of
leadership roles which will be assumed by managers. Theory X, which shows that workers
are assumed to be lazy and do not want to work, seems to be giving way to theories, which
suggest that workers tend to be more participative and creative. Creativity and motivation
naturally lend themselves to a more effective organisation. While McGregor's Theory Y
seems to address the more motivated type of employee, Ouchi's Theory Z seems to take that
notion a step farther by implying that not only are assumptions about workers made, but
assumptions about managers as well. That is to say that under Ouchi's theory, managers must
be more supportive and trusting of their employees, in order to receive the benefit of
increased participation in the decisions of the company. As is clearly seen by comparing and
contrasting these two theorists, assumptions about people can be more clearly understood in
order for managers and workers to make for a more productive environment in the work
place.



The Environmental Context of Management

Concept

Environment means the surrounding, external object, influences or circumstances under
which someone or something exists.

Keith Davis (1986): business environment is the aggregate of all conditions, events and
influences that surround and affect a business.

Arthur M Weimer Business environment encompasses the climate or set of conditions,
economic, social, political or institutional in which business operations are conducted.

Richman and Copan (1983): business environment constitutes the factors or constraints that
are largely if not totally, external and beyond the control of individual business enterprises
and management.

Environment- Organizational Interface

There is a close relationship between organization and environment. All organization
establishes, operate and grow in environment. They get inputs from environment, transform
them into output through processing and again supply to the environment. The input gained
from environment consists of raw materials, ideas, resources, technology etc. whereas
processing consists of planning, organizing, leading and controlling. And outputs involve
finished goods, services, profit or loss. For survival and growth, organizations interact with
the dynamic environment.

Change in Environments Affects

Managerial actions Impact

How environmental affects organization

Environmental change and complexity: the degree of change is the extent to which the
environment is relatively stable or dynamic.

Environment

Organization


The degree of homogeneity is the extent to which the environment is relatively simple (few
elements, much segmentation.

How organization adopts to their environment

Common strategies are as follows:
Information system
Social responsibility
Strategic response
Organization design and flexibility
Direct influence
Merger, takeovers, acquisitions

Types and Components of Organizational Environment

Business Environment

a) Internal Environment/Micro environment

Internal environment includes all those factors which influence business and which are
present within the business itself. These factors are usually under the control of business. The
study of internal factors is really important for the study of internal environment. These
factors are:
i) Objectives of Business
ii) Policies of Business
iii) Production Capacity
iv) Production Methods
v) Management Information System
vi) Participation in Management
vii) Composition of Board of Directors
viii) Managerial Attitude
ix) Organizational Structure

Internal Environment

External Environment

Specific or Task
Environment
General Environment


b) External Environment/Macro environment

The forces and institutions outside of the organization that can potentially affect the
performance of the organization come under the external environment of Business.
The macro environment of business consists of the economic, demographic, natural,
cultural and political forces. The external environment of business is often categorized
into the economic environment, political and government environment, socio cultural
environment and the international environment.

Specific or Task Environment

The task environment puts indirect pressures on business management through the
institutional processes of following elements:

1. Suppliers
2. Competitors
3. Financial Institution
4. Government
5. Media
6. Customers

1. Suppliers:

Individuals and organizations that provide an organization with the input resources that it
needs to produce goods and services. Raw materials, component parts, labor (employees).
Relationships with suppliers can be difficult due to materials shortages, unions, and lack of
substitutes. Suppliers that are the sole source of a critical item are in a strong bargaining
position to raise their prices. Managers can reduce these supplier effects by increasing the
number of suppliers of an input.

2. Distributors:

Organizations that help other organizations sell their goods or services to customers.
Powerful distributors can limit access to markets through its control of customers in those
markets. Managers can counter the effects of distributors by seeking alternative distribution
channels.

3. Customer:

Individuals and groups that buy goods and services that an organization produces.
Identifying an organizations main customers and producing the goods and services they want
is crucial to organizational and managerial success.



4. Competitors:

Organizations that produce goods and services that are similar to a particular organizations
goods and services

Potential Competitors
Organizations that presently are not in the task environment but could enter if they so
choose
Rivalry between competitors is potentially the most threatening force that managers
deal with
Strong competitive rivalry results in price competition, and falling prices reduce
access to resources and lower profits

General Environment

The macro environment includes issues which a company has no control over but which have
an effect on a company. These issues tend to be more abstract and harder to attribute to a
single business problem.
Economical
If the economy is struggling, companies struggle because people spend less money on
products. Successful businesses are able to predict when economic conditions are
going to change, and so are in a position to prepare for any eventuality. Nevertheless,
an external issue such as a sluggish economy can have an effect on a company's
bottom line.
Legal
New laws are passed every day and some of these will affect businesses. This can also
be seen as a political issue, but precedents are set by judges all the time which can
have an even greater effect on companies.


Political
A change in government leadership is always going to have an effect on business
because different politicians have different views on such issues as taxation and
regulation.
Technology
Any new technological development is going to have an effect on competing
businesses as there will be a race to be the first to use it and make it profitable. This
kind of development requires investment in time and money and does not guarantee
success.



GENERAL ENVIRONMENT

Political Environment Economic Environment
Constitution
Political philosophy
Political parties
Political Institutions
Legal Institutions

Economic System
Economic Policies
Economic Conditions
Capital Market
Globalization

Socio Culture Environment Technological Environment

Demography
Life Cycle
Social Values
Social Institutions
Religion
Language
Nature of Technology
Pace of Technology
Technology Transfer
Research and Development

Emerging Business environment in Nepal

Emergence of open market economy (economic freedom to private sectors)
Increasing role of private sectors (hydro power, telecom, water supply, airways roads
construction etc.)
Emerging of multinational companies (banking, finance, insurances, cold drinks, KFC
etc.)
Growth of service sectors (hotel, restaurants, telecom, newspapers etc.)
Development of information economy (e-mail, internet, networking, e- business, NGO,
INGOs)
Emergence of consumerism (selling market to consumer markets)

Increase of private investment in core industries:

Nepal's core industries such as electricity, communication, transportation etc. were conducted
only by the government. But now the government has adopted open door policy in all the
sectors including these sectors except those related to defense and very important basic needs.
This has paved the way towards industrialization. As a result private investment in hydro
power, communication and other sectors is increasing.



Development of private sectors:

Economic reform program has shown symptoms in economic sectors mainly in the private
sectors. Private sectors has gone ahead in sectors of hydro power, airlines, communication,
road, water supply, food and drinking water, banking and financing companies, hotel, small
and cottage industries, services industries etc.

Appearance of multinational companies:

Nepal has adopted the policy of open market and economic liberalization. It has forwarded
special policy to attract foreign investment. So, the foreign investors have entered Nepal
through multinational companies. Now hotels, banks, hydro power projects, nursing homes,
finance companies etc are being run in joint venture with the members of WTO.
Globalization has begun to influence Nepal's business environment.

Emergence of Consumerism:

Open Market policy has developed a competitive environment among the manufacture and
suppliers and has provided selection facility to the consumers. Customers can purchase
goods and services on the basis of their needs and requirements. Taste of consumer keep on
changing as per the time passed by, goods which were given more importance become less
importance as new goods appears in the markets. World has become free market where one
can purchase variety of items as per their taste and interest towards goods and services.

Development of Information Technology:

IT has become vital part of our life. Each and every sector whether it is industrial, banking,
Financial Institutions totally based on IT. Transfer of information, linkage between works,
using of e-mails and internet, fax, e-commerce networking system are some of the
examples.NGO, INGOs. Multinational companies are a head using IT technology. One
should be able to match with the rapid changes else other will lead so its importance to
update your system of work with the changing environment.



Summary

Management is defined as the art of getting things done through people". Management is
also defined as the process of designing and maintaining an environment in which
individuals, working together in groups, accomplish the chosen aims in the most efficient
manner.
Business management now consists of seven separate branches, namely human resource
management, operations management or production management, strategic management,
marketing management, educational management, financial management and information
technology management.
Key objectives of management are gaining maximum output with least effort & resources,
efficiency enhancement of production factors, employer & employee prosperity, better
living standards & peaceful society. Key characteristics of management are goal
orientation, able to integrate resources, able to manage the process continuously, persuasive
of all types of organizations and displaying team work. The 4 broad functions of a
manager are planning, organizing, leading and controlling. The role of management is to
plan, organize, staff, control and direct.

Management Theories
A conceptual framework for organizing knowledge and providing a blueprint for action

Classical Management
Theory
Behavioral
Management Theory
Quantitative
Management Theory
Integrating
Management Theory

Scientific Management
Theory

Hawthorne studies

Management science

System theory

Administrative
management theory

Human relation

Operational management

Contingency theory

The environmental context of management
Environment means the surrounding, external object, influences or circumstances under
which someone or something exists.

Keith Davis (1986): business environment is the aggregate of all conditions, events and
influences that surround and affect a business.

Arthur M Weimer Business environment encompasses the climate or set of conditions,
economic, social, political or institutional in which business operations are conducted.

Internal Environment External Environment
Owners, employees The General Environment
Board of Directors The Task Environment
Physical work environment



Review Questions

1. "Management is working through and with the people". Discuss.
2. What is the function of management? Explain the role that a manager has to perform
in an organization.
3. "At any given time, a manager is liked to engage in several different activities
simultaneously."Explain how?
4. Briefly explain the role manager has to play and the skills they require in different
managerial levels.
5. Explain the corresponding management skills required at each of these levels.
6. What are the major issues and challenges that managers confront today?
7. Describe the role identified by Henry Mintzberg.
8. Discuss the contribution of F.W. Taylor scientific management in the development of
management thought.
9. State and explain the system approach and contingency approach of management as
the integrating approach of managing an organization.
10. Describe how Hawthorne experiment contribution to the development of the theory
of human relation schools of management.
11. Differentiate between behavioral management perspectives and system management
perspectives.
12. Highlight Henry Fayol fourteen principles of management.
13. Differentiate between administrative and scientific management school of thought.
14. Explain the contribution given by Max Weber.
15. Explain the impact of various environmental forces of business organization.
16. Difference between internal and external environment of business. What is the
component of task environment?
17. Explain the nature of business environment interaction. Give your assessment of the
emerging business environment in Nepal.
18. What are the major forces that affect organization environment relation? Explain. 7



Case Study - I

Workforce Augmentation: Staffing to Overcome a Hiring Freeze and Get the Job Done
(Source: Tata Consulting (TATC))
The Challenge
A Federal client responsible for processing hundreds of thousands of applications for a
Federal program was overwhelmed because they didn't have enough staff members to
perform the necessary decision review on the volume of applications they received. A
hiring freeze left them unable to add more Federal staff to process the applications, and
as a result, applications were piling up.
Our Approach
Phase 1: Clarify the Problem and Workforce Requirements TATC worked rapidly with the
client to establish the critical workforce augmentation requirements. As part of this effort,
we:
identified the key functions performed by the under-staffed positions
Determined the number of additional people required
Analyzed the positions to identify the critical competencies required

TATC also identified application processing and regulatory challenges to supplementing the
workforce for this position that had to be overcome.
Working closely with our Federal client, we presented a plan for how to meet their staffing
needs.
Phase 2: Plan and Implement the Workforce Augmentation Approach Identified minor
changes to the application processing system that would allow non-Federal employees
to serve in key application processing roles within the constraints of the regulatory
requirements
Worked with our partners to rapidly identify and recruit candidates for these positions with
the requisite knowledge, skills, and abilities to perform effectively and hit the ground running
Presented a very affordable budget to the client that allowed TATC to staff their program
with qualified TATC employees to supplement the Federal personnel

Results Achieved
The client was able to effectively double the workforce devoted to the application
review in multiple locations around the country, despite the hiring freeze on Federal workers
A tremendous increase in the number of applications reviews completed Executive Assistant
placements from TATC enabled the Federal staff to be more productive than ever by
alleviating their extraneous tasks.

Case Study Questions

1. Are there solutions to tough problems?
2. Who can find those solutions?
Planning and Decision Making


CHAPTER: II

Organizational Goal Setting and Planning

Organizational Goals- purpose and functions

Definitions:
"Organizational goal is a desired state of affair that organizations attempt to realize".
- Etzioni (1964)
"Organizational goal is a useful frame of reference for an organization to conduct its
affairs". - Parrow (1979)
"Organization goal is desired state of affairs that indicates where the organization is
going; a frame of reference for understanding and evaluating what an organization
does".
- Steers, Ungson,and Mowday (1985)
"Organizational goals are the broad aims which serve as guides for action and as the
starting point for more specific and detailed operating objective as lower levels in the
organization". - Ivancevich, Donnelly and Gibson
(2002)

The overall objectives, purpose and mission of a business that have been established by its
management and communicated to its employees. The organizational goals of a company
typically focus on its long range intentions for operating and its overall business philosophy
that can provide useful guidance for employees seeking to please their managers.

Purpose/Benefits of Organizational Goals
1. Goals serve as guidelines for action, directing and channeling employee efforts. They
provide parameters for strategic planning, allocating resources and identifying
development opportunities.
2. Goals provide constraints in the organization. Choosing certain goals reduces
discretion in pursuing other goals. E.g. the goal of maximizing stockholder dividends
immediately reduces financial resources available for expense accounts.
3. Goals act as a source of legitimacy by justifying an organization's activities and
existence. For new organizations the struggle for legitimacy is great. Maintaining
legitimacy is easier but still, some organizations do lose legitimacy. For example
imagine a hospital whose goal was to increase occupancy by performing as much
surgery as possible. Such a goal would surely reduce its legitimacy.
4. Goals define standards of performance. To the extent that goals are clearly stated,
they set standards for evaluation.


5. Goals provide a source of motivation. By presenting a challenge and how to achieve
it, organizational goals act as behavioral incentives. For example: the path-goal theory
of leadership.

Setting Effective Organizational Goals

One of the important roles of leaders is to set goals for their organization. In fact, some would
argue its their most important function. Goals are what keep the organization moving,
changing and reaching for more. Ideally, organizational goals should be what direct the
efforts of every employee. Alas, that is often not the reality.

Here are some ways you can ensure your organizational goals are effective.

Make Organizational Goals Concrete and Measurable

Its not uncommon to see organizational goals that are little more than slogans or vision
statements; things like Dominate the market or Beat the competition. But these kinds of
goals are hard for employees to align their efforts to because theyre not concrete.
Organizational goals, as all other goals, are more effective when they describe the expected
outcome in a measurable form. The aim is to create meaningful goals that employees can feel
accountable for in some way. If they dont understand what the organization is trying to
achieve, and what success looks like, they wont understand how they can contribute to the
effort. Good leaders know that setting concrete, measurable goals for the organization is the
first step to success.

Communicate Organizational Goals

Next, its important to communicate the organizations goals to all employees. This is not an
exercise you can do once. You need to do it repeatedly and consistently, to communicate
leadership commitment and priority. Use multiple media and approaches. Make goals
accessible and visible. Make sure very employee knows what they are.

Get Employees to Link their Individual Goals to Organizational Goals

If you want the organization to achieve its goals, you need to harness the passion, efforts and
energy of every employee. The best way to do this is to challenge every employee to link
their individual goals to the organizations goals. Make it a part of your performance
appraisal or goal setting process. Every employee should know how their work and role
contribute to the organizations success. This linking gives employees a larger context for
their work, which is so important to engagement. As a leader, you should have visibility of
employee goal alignment across the organization. Aligning your workforce in this way helps
you see if the organization is well positioned to achieve its goals, or if priorities and efforts
need to be realigned.


Revisit Organizational Goals Regularly and Communicate Progress

In some groundbreaking research in 2011*, leading talent management research and advisory
services firm Bersin & Associates found that organization who revisit their goals at least
quarterly, or even more frequently, dramatically outperform those who follow an annual
cascading goal model. Regularly revisiting organizational goals allows you to be more
nimble and stay responsive to a dynamic and changing environment.
Leaders should closely track progress on organizational goals, make any necessary
adjustments to the goals, their priorities or assigned resources, and communicate progress,
status and any changes to their workforce.

Conclusion

Strong leaders know how to harness the power of their workforce through effective goal
management. They know that setting clear, concrete goals, communicating these, aligning
employee goals with organizational goals, then tracking and communicating everyones
progress is vital to success.

Function of Organizational Goals

Steers (1977) has listed the function of goal for the organization as follows

a. Functions for Organizations
b. Function for Individuals
c. Dysfunctions of organizational Goals

a. Functions for Organizations

Goals often focus attention or give direction to managers attempting to acquire and
make use of organizational resources. Goals provide guidelines for members of an
organization.
Goals are often a reason for organizing. They restrict the deviations in behaviors of
members and groups. Goals dictate power, authority, work schedule, communication
patterns etc. to department and units.
Goals can serve as a standard by which effectiveness and efficiency of the
organization or units can be judged.
Goals are of central importance in motivating staff and adapting in a dynamic and
uncertain environment.
Goals can assist the organization in acquiring the right type of human resource.



b. Function for Individuals

Goal can provide job direction to employees.
Goals may serve as a vehicle for personal goal attainment.
Goals may assist individuals by providing a sense of comfort and security, a feeling
that the organization is going somewhere and will remain in operation for some time.
Goals can provide a source of identification and status for employees.

c. Dysfunctions of organizational Goals

The means set forth for attaining organizations goals may become goals themselves.
Measurable goals tend to be focused by managers and employees.
Goals that are too general may fail to provide needed direction.
Employees are reward focused than goal focused.
Goals of the organizations may be in conflict with the personal goals of employees.

The Planning Function

Definition of Planning
Ricky W. Griffin Planning is setting an organizations goals and deciding how best to
achieve them.
Richard steers Planning is the process by which managers defines goals and takes
necessary steps to ensure that goals are achieved.
Robert R Kreitner - Planning is the process of coping with uncertainty formulating future
course of action to achieve specified results.
Importance of Planning
A plan is a determined course of action for achieving a specific objective. An individual may
prepare a plan for his journey or tour or for a family function. Similarly, a business unit may
prepare a plan to achieve a particular objective. It is called a business plan which includes
production plan, sales plan, and so on. A business unit prepares a master plan for the whole
unit. Such master plan is again divided into departmental plans for actual execution. Planning
is a process of thanking to action. It is a means to achieve well defined objectives. Business
plan and business planning move together.
Planning is the primary function of management and occupies the first position in the
management process. It is the starting point of the whole management process as other


management functions are related to planning function. Planning, in simple words, means to
decide the objectives clearly and to prepare a plan.
Planning function is performed by managers at all levels. It is deciding the objective to be
achieved and taking suitable follow-up steps for achieving the same. Planning is, now,
universally accepted as a key/passport to success, progress and prosperity in business as well
as in all other aspects of life. It acts as a base of all purposeful human activities. The concept
of planning is old enough. Planning was advocated by Confucius almost 2500 years ago. He
said "A man who does not think and plan long ahead will find trouble right at his door".
Thus, planning is the centre around which all business activities move.
In planning, various business problems are studied, decisions are taken regarding the future
course of action and business activities are adjusted accordingly. Thus, planning means
deciding in advance the objectives to be achieved and preparing plans/programmed for
achieving them. In other words, planning is the process of foreseeing desired objectives -
anticipating problems and developing solutions. It serves as a core of the whole management
process.
Planning bridges the gap from where we are to where we want to go. In the absence of
planning, events are left to chance. A plan is to-day's projection for tomorrow's activity.
The importance of planning as an element in the management process is universally accepted.
It plays a positive role in the management of a business unit. Planning brings stability and
prosperity to a business unit. It brings unity of purpose and diverts all efforts in one direction
for the achievement of certain well defined objectives. Planning also improves the
performance of a business unit. In fact, in the absence of planning there will be disorder,
confusion, inefficiency, wastage of human efforts and material resources. Planning is rightly
treated as the pre-requisite to efficient management. The fact that large majority of business
units use planning as a tool of management indicates its utility and importance. Planning
brings safety to business operations. It is the only way for survival in the competitive
business world.
Planning is important as it is more than a mere theoretical exercise or paperwork. It has
practical utility and creative value. Planning is also a rational and intelligent activity. It is,
now, rightly treated as a highly professionalized aspect of business management.
Planning is important but planning alone is not adequate. It should be supplemented by
suitable follow-up actions on the part of managers. Planning may not be able to solve all
managerial problems, but it certainly helps the thoughtful managers in overcoming various
managerial problems. A plan will remain on paper if suitable follow-up steps are not taken at
different levels for its execution. Thus, planning is a means and not the end in itself.



Planning System

An enterprise planning system covers the methods of planning for the internal and external
factors that affect an enterprise.
Enterprise planning systems will tend to vary and are flexible. These are due to the periodic
and adaptive nature of strategy formation. These will also have tactical aspects. Typically,
enterprise planning systems are part of a firm's knowledge base or corporate structure
whether it formally identified and structured or simply executed these when the need
appeared.

An enterprise planning system will address at least three basic purposes to help the enterprise:
survive
compete
thrive
Survival
An enterprise will plan for tactical moves for quick reaction to the PESTLE threats that affect
its survival. For instance, right after Japan's Fukushima nuclear power plant has experienced
explosions due to the earthquake and the tsunami that followed, several enterprises (within
and outside of Japan) have publicly announced their course of actions to address the
emergency.

Competition
Meanwhile, an enterprise will plan for longer term strategic actions to address its competition
or improve its competitiveness. For instance, enterprises will plan for, set budgets, implement
and use strategic information systems as information systems or information technology
investments can be a source of competitive advantage.

Opportunities
Most significantly, an enterprise will plan for using the PESTLE opportunities that are
available to it. The profit and benefit motives justify most enterprise planning systems.

The basic input of the planning system is: information, equipment, manpower and financial
resources.
The process components of the planning system comprise: information collection,
information processing, environmental scanning, forecasting, and analysis of internal forces.
The output of the planning system is: the goals, strategies, policies, procedures and budgets.


Figure: Planning Subsystem

Methods of Planning

Top Down Method:

1. Your organization realizes a focused use of resources from the individual managed
application.
2. The first implementation becomes a showcase for the identity management solution.
3. When the phases are completed for the managed application, you have implemented a
deeper, more mature implementation of the identity management solution.
4. Operation and maintenance resources are not initially impacted as severely as with the
bottom-up approach.

Bottom Up Method:

1. User and business awareness of the product. Benefits are realized in the early phases.
2. You can replace many manual processes with early automation.
3. You can implement password management for a large number of users.
4. You do not have to develop custom adapters in the early phases.
5. Your organization broadens identity management skills and understanding during the
first phase.
6. Identity Manager is introduced to your business with less intrusion to your
operations.



Figure: Top- Down and Bottom -up Approach

Composite Method

Team Method

Types of Planning

On the basis of hierarchy

Corporate plan(long term plan, top level involvement)
Tactical plan (sun-division corporate plan, departmental manager plan, middle level)
operational plan(specific plan, lower level)

On the basis of use

Single use plan (non-program situation, specific objective. E.g.: program. budget)
Standing use plan (program decision, guidelines for repetitive activities)

On the basis of flexibility

Specific plan
Flexible plan(changes time and situation)



Explanation On the Basis of Hierarchy

A corporate plan: is very similar to an overall strategic plan but is more inwardly focused
on operations. They share many common traits, however. Both are long-range plans; both
start in essence from a very high, big-picture level and increasingly focus on details.
Corporate plans are usually confined to very large organizations with disparate systems that
must be examined and catalogued so that the organization can march forward to the future
with a single mind.
A corporate plan, like any strategic plan, usually contains these elements:
A vision statement
A mission statement
An outline of the company's resources and scope
A listing of corporate objectives
A listing of strategies to reach those objectives

Tactical plans: are sometimes called short-term action plans because they breakdown
bigger-picture goals and strategies into narrower, actionable tasks. The key to a well-
developed tactical plan is having specifically stated actions assigned to particular employees
with specific deadlines. Bold objectives and thoughtful strategies produce nothing if no steps
are taken to put them into action. The goals and strategies give vision and the actions make
the company plans real.
One of the biggest challenges in tactical planning knows the difference between a strategy
and tactic. These are sometimes confused. A strategy is essentially a framework or plan, but it
provides no tangible results on its own. Tactics are steps for implementing your strategies and
are actionable and have a purpose and a measurable result. If you cannot see or discern the
result of the action or task it is likely not a tactic.

Operational plan: This management translates the goal of tactical management into
operational. It includes operators. The daily routine based work is done by operational
management. This is also known as operating core.
Operational planning translates your high level strategic plan into a more detailed plan of
who will do what and when. Operational plans usually relate to the short to medium term,
maybe one to three years, and may relate to your whole organisation, or a particular project or
area of work.

Steps in the Planning Process
1. Goal setting: (SMART)
Plans are the means to achieve certain ends or objectives. Therefore, establishment of
organizational or overall objectives is the first step in planning. Setting objectives is the most
crucial part of planning. The organizational objectives should be set in key areas of
operations.


They should be verifiable i.e., they should as far as possible be specified in clear and
measurable terms. The objectives are set in the light of the opportunities perceived by
managers. Establishment of goals is influenced by the values and beliefs of executives,
mission of the organization, organizational resources, etc.
Objectives provide the guidelines (what to do) for the preparation of strategic and procedural
plans. One cannot make plans unless one knows what is to be accomplished. Objectives
constitute the mission of an organisation. They set the pattern of future course of action.
The objectives must be clear, specific and informative. Major objectives should be broken
into departmental, sectional and individual objectives. Setting goals should be Specific,
Measurable, Attainable Realistic and Time bounded.
2. Developing the planning premises:
Before plans are prepared, the assumptions and conditions underlying them must be clearly
defined these assumptions are called planning premises and they can be identified through
accurate forecasting of likely future events.
They are forecast data of a factual nature. Assessment of environment helps to reveal
opportunities and constraints. Analysis of internal (controllable and external (uncontrollable)
forces is essential for sound planning premises are the critical factors which lay down the
bounder for planning.
They are vital to the success of planning as they supply per tenant facts about future. They
need revision with changes in the situation. Contingent plans may be prepared for alternate
situations.
3. Reviewing Limitations:
In practice, several constraints or limitations affect the ability of an organization to achieve
its objectives. These limitations restrict the smooth operation of plans and they must be
anticipated and provided for.
The key areas of Imitations are finance," human resources, materials, power and machinery.
The strong and weak points of the enterprise should be correctly assessed.
4. Deciding the planning period:
Once the broad goals, planning premises and limitations are laid down, the next step is to
decide the period of planning. The planning period should be long enough to permit the
fulfillment of the commitments involved in a decision.
This is known as the principle of commitment. The planning period depends on several
factors e.g., future that can be reasonably anticipated, time required to receive capital


investments, expected future availability of raw materials, lead time in development and
commercialization of a new product, etc.
5. Formulation of policies and strategies:
After the goals are defined and planning premises are identified, management can formulate
policies and strategies for the accomplishment of desired results. The responsibility for laying
down policies and strategies lies usually with management. But, the subordinates should be
consulted as they are to implement the policies and strategies.
Alternative plans of action should be developed and evaluated carefully so as to select the
most appropriate policy for the organization. Imagination, foresight, experience and
quantitative techniques are very useful in the development and evaluation of alternatives.
Available alternatives should be evaluated in the light of objectives and planning premises. If
the evaluation shows that more than one alternative is equally good, the various alternatives
may be combined in action.
6. Preparing operating plans:
After the formulation of overall operating plans, the derivative or supporting plans are
prepared. Several medium range and short-range plans are required to implement policies and
strategies.
These plans consist of procedures, programmers, schedules, budgets and rules. Such plans are
required for the implementation of basic plans.
Operational plans reflect commitments as to methods, time, money, etc. These plans are
helpful in the implementation of long range plans. Along with the supporting, plans, the
timing and sequence of activities is determined to ensure continuity in operations.
7. Integration of plans:
Different plans must be properly balanced so that they support one another. Review and
revision may be necessary before the plan is put into operation. Moreover, the various plans
must be communicated and explained to those responsible for putting them into practice.
The participation and cooperation of subordinates is necessary for successful implementation
of plans. Established plans should be reviewed periodically so as to modify and change them
whenever necessary.
A system of continuous evaluation and appraisal of plans should be devised to identify any
shortcomings or pitfalls of the plans under changing situations.



Concept of Strategic Planning

Ricky W. Griffin- strategic plan is a general plan outlining decision of resource allocation,
priorities and action steps necessary to reach strategic goals.

Ivancevich , Donnelly, Gibson strategic planning is the process that involves the review
of market conditions, customers needs, competitive strength and weakness, social- political
and economic conditions, technological developments and availability of resources that lead
to the specific opportunities or threats facing the organization.

Formulation of Strategic Planning:

1. Identifying organization current mission, goals and strategies.
2. Analyze the external environment
3. Identifying opportunities and threats
4. Analyzing internal environment
5. Identifying strengths and weakness
6. Formulating strategies

Implementation of Strategic Planning:

1. Organizational structure and Design
2. Communication
3. Technology
4. Organizational Resources
5. Groups and Teamwork
6. Motivating Employees
7. Leadership
8. Monitoring and Evaluating



Situational Analysis

A systematic collection and evaluation of past and present economical, political, social, and
technological data, aimed at
a) identification of internal and external forces that
may influence the organization's performance and choice of strategies,
b) Assessment of the organization's current and future strengths,
weaknesses, opportunities, and strengths. PEST analysis and SWOT analysis.

SWOT Analysis

It is a famous part as well as tool of strategic planning and control. SWOT Analysis refers
four situations where a business can affect directly or indirectly. These are given below;
1. Strengths (Refers internal powers)
2. Weakness (Disclose internal tactlessness)
3. Opportunities (Refers External possibilities)
4. Threats (Disclose possible losses)
Needless to mention it is an extremely constructive tool not only for evaluating different
business/project situations but also indicating new hikes. It provides an ideal framework to
formulate and criticize any strategy before it gets into action. The best part of SWOT analysis
is easiness to do. In modern business SWOT Analysis is a powerful method of brainstorming.
Thus helps business management to deeply consider the requirements of the business.
Here are some critical business functionalists where SWOT analysis can be used wisely:
Business planning
Strategic planning
Competitor evaluation
Marketing
Business/product development
Research reports
SWOT analysis is also the best way to identify internal and external factors that may be
favorable or unfavorable for the business venue. SWOT analysis can be used in team building
projects. After this short introduction of SWOT analysis, here we give you a standard format
of SWOT analysis for your convenience. From this information you can learn the method of
SWOT analysis. Lets review the standard method of SWOT analysis that is based on four
sections.

Environmental Scanning:

It is the monitoring, evaluating, and circulation of information from the external and internal
environments to the key people within the organization.



Different types of Analysis are as:

SWOT Analysis ( strength, weaknesses, opportunities and threats)

PESTEL Analysis (political, economical, social, technological, environmental, legal)

ETOP Analysis (Environmental, Threat, Opportunity Profile)

QUEST Analysis (Quick environ mental scanning technique)

Some of the Methods of Environmental Scanning are:

Extrapolation Method (future from the past)
Intuitive Reasoning (ability to acquire knowledge )
Scenario building (what might happen in future)
Cross-impact analysis (attempt to answer a question whether perceptions of how
future events may interact )
Simulation and modeling( computer-based tools developed to represent reality)
Brain storming (generate new ideas)
Delphi technique (expert opinion)

Tools to Aid Strategic Planning

1. Forecasting (future oriented)
2. Network technique(plan and control time and money)
3. Flow chart
4. Gantt chart
5. Breakeven analysis
6. Linear programming
7. Simulation etc.

1. Network Technique : (CPM &PERT)
Project management is an important part of every business enterprise. Whenever a new
product or service is launched; when embarking on a marketing campaign; or when
organizing any new projects; project management is needed to make everything organized
and successful.
As all projects consume resources such as materials, time, people, and money; starting one
would entail an effective project management team and the right techniques to accomplish
them, especially those projects that are very complex ones.
A complex project would normally encounter several delays and may surpass the budget
allocated for it making a project very costly and which may lead to losses. While many
techniques fail in solving these problems, there are two tools which have been proven to be


effective. The two most effective and widely used techniques are the Program Evaluation and
Review Technique (PERT) and the Critical Path Method (CPM).

While both serve the same purpose, that is, the fast and effective completion of a project, they
are different in many aspects such as the amount of time that they allow for each assignment.
CPM is a technique that is used in projects that have predictable activities and tasks such as
in construction projects. It allows project planners to decide which aspect of the project to
reduce or increase when a trade-off is needed. It is a deterministic tool and provides an
estimate on the cost and the amount of time to spend in order to complete the project. It
allows planners to control both the time and cost of the project.

PERT, on the other hand, is used in projects that have unpredictable tasks and activities such
as in research and development projects. It utilizes three estimates of the time to complete the
project: the most probable, the most promising, and the most unfavorable.
It is a probabilistic tool using several estimates to determine the time completion of the
project and to control the activities involved in the project so that it will be completed faster
and at a lower cost.
In projects that allow for a longer period of time for completion and which are difficult to
estimate like in research, PERT is suitable; while in conventional projects with predictable
activities and tasks, CPM is suitable.
Summary:
1. The Program Evaluation and Review Technique (PERT) is a project management
technique or tool which is suitable for projects that have unpredictable activities while the
Critical Path Method (CPM) is a project management tool which is suitable for projects that
have predictable activities.

2. CPM uses a single estimate for the time that a project can be completed while PERT uses
three estimates for the time that it can be completed.

3. CPM is a deterministic project management tool while PERT is a probabilistic project
management tool.

4. CPM allows project management planners to determine which aspect of the project to
sacrifice when a trade-off is needed in order to complete the project while PERT does not.



2. Gantt Chart

A Gantt chart is a graphical representation of the duration of tasks against the progression
of time. A Gantt chart is a useful tool for planning and scheduling projects. A Gantt chart
is helpful when monitoring a project's progress. A Gantt chart is a type of bar chart that
illustrates a project schedule. Gantt charts illustrate the start and finish dates of the
terminal elements and summary elements of a project.

3. FlowChart

A flowchart is a picture of the separate steps of a process in sequential order. Elements that
may be included are: sequence of actions, materials or services entering or leaving the
process (inputs and outputs), decisions that must be made, people who become involved, time
involved at each step and/or process measurements. The process described can be anything: a
manufacturing process, an administrative or service process, a project plan. This is a generic
tool that can be adapted for a wide variety of purposes.

4. Break-Even Analysis

An analysis to determine the point at which revenue received equals the costs associated with
receiving the revenue.
Break-even analysis calculates what is known as a margin of safety, the amount that revenues
exceed the break-even point. This is the amount that revenues can fall while still staying
above the break-even point.



5. Delphi Technique

The Delphi technique was developed in the 1950's by Rand Corporation as a valuable tool for
modeling future scenarios. Originally used for military purposes, it was quickly adapted to
other fields of research and is now used all over the world. The Delphi process has been
employed with great success for new product development, sales and marketing research,
evaluation of management methods, in demographic predictions, and in financial arenas. By
focusing on evolving trends rather than existing conditions, it is particularly effective in
reviewing the complex subjects organizations are currently grappling with as they interact
with the future.
The three qualifications for a traditional Delphi are: anonymity, iteration with controlled
feedback, and statistical response (both qualitative and quantitative). Each round poses a
series of Likert questions to the group; the answers are then tabulated, and those results are
used to form the basis for the next round. Through several iterations, this process synthesizes
the responses, resulting finally in a consensus that reflects the participants' combined intuition
and savvy, as well as expert knowledge.
"Delphi may be characterized as a method for structuring a group communication process so
that the process is effective in allowing a group of individuals, as a whole, to deal with a
complex problem."



6. Time Series Analysis

Time series data often arise when monitoring industrial processes or tracking corporate
business metrics. The essential difference between modeling data via time series methods and
using the process monitoring methods discussed earlier in this chapter is the following:
Time series analysis accounts for the fact that data points taken over time may have an
internal structure (such as autocorrelation, trend or seasonal variation) that should be
accounted for.



Managerial Decision Making

Concept,

George R. Terry Decision Making is the selection based on some criteria from two or
more alternatives.

Ricky W. Griffin Decision Making is the act of choosing one alternatives from among a
set of alternatives.

Types of Decision Making

Programmed Decisions

Programmed decisions are routine and repetitive, and the organization typically develops
specific ways to handle them. A programmed decision might involve determining how
products will be arranged on the shelves of a supermarket. For this kind of routine, repetitive
problem, standard arrangement decisions are typically made according to established
management guidelines.

Non- programmed Decision

Non programmed decisions are typically one shot decisions that are usually less structured
than programmed decision.

Other types are as follows:
Routine and Basic Decision
Organizational and Personal Decision
Individual and Group Decision
Policy and Operational Decision



Types by Nature

Strategic Decision

Administrative Decision Operational Decision
Strategic decisions are long-
term decisions.
Administrative decisions are
taken daily.

Operational decisions are not
frequently taken.

These are considered where
The future planning is
concerned.
These are short-term based
Decisions.

These are medium-period
based decisions.

Strategic decisions are taken
in Accordance with
organizational mission and
vision.

These are taken according to
strategic and operational
Decisions.

These are taken in
accordance with strategic and
administrative decision.

The Decision Making Process

A rational decision making model provides a structured and sequenced approach to decision
making. Using such an approach can help to ensure discipline and consistency is built into
your decision making process. As the word rational suggests, this approach brings logic and
order to decision making. Our rational decision making model consists of a series of steps,
beginning with problem/opportunity identification, and ending with actions to be taken on
decisions made.
A General Rational Decision Making Model
Rational decision making processes consist of a sequence of steps designed to rationally
develop a desired solution.
Typically these steps involve:
1. Identifying a problem or opportunity: The first step is to recognize a problem or to
see opportunities that may be worthwhile. A rational decision making model is best
employed where relatively complex decisions have to be made. The first decision
making lesson should be to ask yourself if you really have a problem to solve or a
decision to make.


2. Gathering information: What is relevant and what is not relevant to the decision?
What do you need to know before you can make a decision, or that will help you
make the right one?
3. Analyzing the situation: What alternative courses of action may be available to you?
What different interpretations of the data may be possible?
4. Developing options: Generate several possible options. Be creative and positive.
Evaluating alternatives
what criteria should you use to evaluate? Evaluate for feasibility, acceptability and
desirability. Which alternative will best achieve your objectives?
Selecting a preferred alternative. Explore the provisional preferred alternative for
future possible adverse consequences. What problems might it create? What are the
risks of making this decision?
5. Acting on the decision: Put a plan in place to implement the decision. Have you
allocated resources to implement? Is the decision accepted and supported by
colleagues? Are they committed to making the decision work?
Strengths and Weaknesses of the Rational Decision Making Model
The main strength of a rational decision making model is that it provides structure and
discipline to the decision making process. It helps ensure we consider the full range of factors
relating to a decision, in a logical and comprehensive manner.
However, we should always remember that whilst the model indicates what needs to be done,
it's often how things are done that characterizes effective decision making.
Research illustrates that bad decisions were usually bad because two things were missing:
a. adequate participation of stakeholders in the decision making process;
b. Sufficient time spent generating a range of possible solutions.

Conditions of Decision Making,

Certainty: When we have a feeling of complete belief or complete confidence in a
single answer to the question is called certainty e.g. Decisions such as deciding on a
new carpet for the office or installing a new piece of equipment or promoting an
employee to a supervisory position are made with a high level of certainty. While
there is always some degree of uncertainty about the eventual outcome of such
decisions but there is enough clarity about the problem, the situation and the
alternatives to consider the conditions to be certain.

Risk: A state of uncertainty where some possible outcomes have an undesired effect
or significant loss.



Measurement of risk : A set of measured uncertainties where some possible outcomes
are losses, and the magnitudes of those losses - this also includes loss functions over
continuous variables.
Uncertainty :The lack of certainty, A state of having limited knowledge where it is
impossible to exactly describe existing state or future outcome, more than one
possible outcome.

Group Decision Making
Group decision making is a type of participatory process in which multiple individuals acting
collectively, analyze problems or situations, consider and evaluate alternative courses of
action, and select from among the alternatives a solution or solutions.
The number of people involved in group decision-making varies greatly, but often ranges
from two to seven. The individuals in a group may be demographically similar or quite
diverse as well.
Decision-making groups may be relatively informal in nature, or formally designated and
charged with a specific goal. The process used to arrive at decisions may be unstructured or
structured. The nature and composition of groups, their size, demographic makeup, structure,
and purpose, all affect their functioning to some degree.
The external contingencies faced by groups (time pressure and conflicting goals) impact the
development and effectiveness of decision-making groups
Integration of the team (Specialization vs. Integration)- As we will examine when we study
organizational structure, the needs to specialized and group individuals in department by
functional expertise posses some coordination, or integration, problems. One method of
providing integration is the establishment of project teams.
Better decisions- It can be argued that group produce potentially superior decisions by
affecting one of the three elements of decisions:


1. Criteria- As group membership increases there are a likelihood that more
stakeholders will be represented and their interests can be incorporated into the
criteria used in the decision process.
2. Cause/Effect- By including individuals with specialized expertise, we tend to
increase the likelihood that more accurate cause/effect assumptions (theory) will be
used in the decision making process.
3. Alternatives- Groups tend to develop a greater number of potential options and more
creative options.
Commitment to decision- This applies especially to individuals responsible for implementing
the decision that requires a change of behavior. Individuals contributing to a decision tend to
feel greater ownership to the decision, especially when their identities are tied to it.
Resistance to change and motivation to ensure that the decision is implemented properly can
be increased through participation.

Techniques to aid Decision Making

1. Interacting Group Technique:

This type of technique involves people who interact face to face and on daily basis and
they use both verbal and non-verbal skills to communicate with each other. This
technique is not considered much reliable at organizational level decision making process
because non-verbal symbols are misinterpreted sometimes which can affect badly.

2. Brainstorming
Brainstorming is an idea generation process that specifically encourages any all
alternatives while withholding any criticism of those alternatives. It is meant to overcome
the pressure of conformity that impede to the development of inventive substitutes.
In Brainstorming usual session people are invited to meet each other physically, one
person states the problem in a clear manner and respondents freewheel to generate
multiple ideas in a given length of time.
Everyone can give multiple ideas even how absurd it is, but no one can pass any criticism
on those ideas unless the session is open for discussion on alternatives.
3. Nominal Group Technique

A better form of Brainstorming is Nominal Group Decision Making Technique. People are
restricted to have discussion or inter-personal communication during nominal session.
Employees are met physically but they act independently, they are asked to write their
ideas in response to a problem individually.
After this silent period, each member presents his ideas to the group, until all ideas have
been presented and recorded no discussion takes place.


4. Delphi Technique

In this method of decision making, the facilitator allows team members to individually
brainstorm their ideas and submit their ideas anonymously. The other team members do
not know the owner of the ideas. The facilitator then collects all the inputs and circulates
them among others for modifying or improving them. This process continues until a final
decision is made.
Team decision making is a time-consuming process and before the team leader organizes
participation of the full team, he/ she must be sure that he/ she has enough time and
resources for the decision making process and choose a technique that is most appropriate
in a given situation, keeping the profile of team members in mind.

5. SWOT Analysis: The acronym stands for Strengths, Weaknesses, Opportunities and
Threats. It is a very useful and effective tool for various situations in businesses and
organizations wherein the strengths and weaknesses are identified as well as the opportunities
and threats in order to arrive at sound decisions.

6. Pareto Analysis: This tool is useful in focusing on major causes for changes that will
bring about huge benefits to the decision maker.

7. Cost/Benefit Analysis: A tool that allows the decision maker to simply compare the costs
with the benefits of something.

8. Decision Trees: With this tool, the decision maker can choose from among alternatives
by foreseeing the possible outcomes or courses of action.

9. Paired Comparison Analysis: It is a tool that helps determine the relative significance
and feasibility of the alternatives.

10. Electronic Meeting, Nominal Group Technique is merged with new computer
technology. Half dozen to a dozen people sit around a table and same process is repeated,
respondents write their ideas on computers in front of them which are apparent to others
just by a click of tab. This process is considered as the best because individual comments
as well as aggregate votes are displayed on a projection screen. It allows people to be
brutally honest, and the process is fast as chitchat is eliminated. Participants can talk at
once, and remain anonymous.
The major disadvantage of group decision making is that it is more time consuming as
compared to individual decision making.



Summary

Strategic planning is concerned with defining company goals and determining the missions
and resources needed to achieve those targets. To determine the direction of the organization,
it is necessary to understand its current position and the possible avenues through which it
can pursue a particular course of action. There are many approaches to strategic planning but
typically either the situation-target-proposal or draw-see-think-plan approaches are used.
Planning always has a purpose. The purpose may be the achievement of certain goals or
targets. Planning helps to achieve these goals or target by using the available time and
resources.
Strategic planning is an organization's process of defining its strategy, and making decisions
on how to allocate resources to pursue this strategy. To determine the direction of the
organization, it is necessary to understand its current position and the possible avenues
through which it can pursue a particular course of action. Strategic planning generally deals
with at least one of three key questions:
What do we do?
For whom do we do it?
How do we excel?
Decision making is the mental processes resulting in the selection of a course of action
among several alternative scenarios. Decision making is a reasoning or emotional process
that can be rational or irrational. Problem solving and decision making are distinct. Problems
are deviations from what the results actually are against what they should be.
Most decisions are made unconsciously because it is too time consuming to methodically
identify pros and cons for each alternative in decisions made on a daily basis.
Every decision making process produces a final choice in an action or an opinion of choice. If
a person neither takes and action nor gives an opinion, this is also decision.
It is important to differentiate between problem analysis and decision making. The concepts
are completely distinct from each another. Traditionally, it is argued that problem analysis
must be done first, so that the information gathered in that process may be used towards
decision making. A problem is a deviation from performance standards - that is, what
occurred is different from what was expected to have occurred. In decision making, the
objective(s) are first established, and a choice is made among alternatives for action or for an
opinion. A decision that results in doing nothing - no action, nor an opinion rendered - is also
considered a decision.



Review Questions

1. How Strategic planning differs from operational planning? HOW do they complement
each other?
2. Explain the style of decision making. Do these styles equally apply in all situations?
Explain when you would use which style?
3. Explain briefly the steps of rational decision making.
4. Goal setting is the most important part of planning process. Explain.
5. Explain different types of planning that typical organization formulates.
6. What is strategic planning? Do you agree with the statement that strategic planning
involves making decision today that will have impact in future?
7. Define MBO AS Technique of plan formulation. What are its strengths and
weaknesses?
8. Why is planning important? Discuss
9. Planning is not a single event; it is ongoing process that reflects and adapts to change
in the environment surrounding the organization. Explain this statement.
10. What is SWOT analysis? Why this analysis is important and widely used by
organization?
11. Discuss the concept of group decision making. In what ways group decision can be
taken?
12. Define decision trees. Why is decision tree a useful technique as decision making?
13. To succeed business organization nowadays must incorporate social wellbeing in
their planning.
14. How situational can be made by the manager in an organization? Explain it with the
help of suitable examples.
15. Planning is an intellectual process, the conscious determine of course of action, the
biasing of decision on purpose, facts and considered estimates. Comment on this
statement.
16. Explain the style of decision making. Do these styles equally apply in all situations?
Explain when you would use which style.


Case Study - II

Let us examine the problem faced by Mr. Nataraj, Regional Manager of Alpha Pvt. Ltd.
Alpha makes and distributes products from more than 10 international pharmaceutical and
health care companies. Mr. Nataraj is responsible for managing existing clients and also to
get new clients. He manages a number of sales representatives. Important customers have
dedicated sales representatives, while other sales representatives try to get new clients.
One day an important customer (Good Health Hospital) called Mr. Nataraj and complained
that Mr. Bhavan (the sales representative) was ineffective and insisted he be removed, or else
they would not give any business.
Here are Mr. Nataraj's thoughts:
In an internal enquiry, Mr. Nataraj found that the real reason was personal differences
between Mr. Bhavan and the hospital superintendent.
The track record of Mr. Bhavan was good and he was liked within the company.
Dismissing him or even transferring him to a new region will affect the morale of the
work force.
Good Health Hospital is a major customer and gives good business. Losing the
hospital is not an option. Therefore the demands of the hospital have to be met.
Questions

1. If you were Mr. Nataraj how will you solve these issues?

Here are some sample options:
1. Good Health Hospital is a major customer and cannot be displeased. I will remove or
transfer Mr. Bhavan.
2. Mr. Bhavan is a loyal and hard working. I need to keep people like him even if it means
losing customers.
3. I will stop answering calls, act ignorant of the whole episode. 'Time will solve the
problem'.
4. I will try to get Mr. Bhavan and the Hospital Superintendent together for discussion and try
to compromise over the differences.


5. I will move Mr. Bhavan to a new and more important project - develop new business in the
newly formed sub-region. Good Health Hospital will have no problem with the new sales
representative.
Organizational Structure and Staffing


CHAPTER: III

Organizational Structure and Design

Concept

A social unit of people that is structured and managed to meet a need or to pursue collective
goals. All organizations have a management structure that determines relationships between
the different activities and the members, and subdivides and assigns roles, responsibilities,
and authority to carry out different tasks. Organizations are open systems--they affect and are
affected by their environment.
As posed to simple organizational structures, functional structures are useful for relatively big
companies. Employees within the functional structure are differentiated to perform a
specialized set of tasks. For instance, the marketing department would be staffed only with
marketers responsible for the marketing of the company's products.
This specialization leads to operational efficiencies where employees become specialists
within their own realm of expertise. The most typical problem with a functional
organizational structure is however that communication within the company can be rather
rigid, making the organization slow and inflexible. Therefore, lateral communication between
functions becomes very important, so that information is disseminated, not only vertically,
but also horizontally within the organization.
Functional structures are often characterized by a large degree of formalization, making each
function reliant on standardized ways of operating. Decision-making power is often
centralized at the top of the hierarchy.
Functional organizational structures are best suited for companies producing standardized
goods and services at large volumes and low cost. Therefore, functional structures may be
most effective for companies operating in rather stable environments with low rates of
change and dynamism.
As posed to e.g. a simple organizational structure, the functional structure works best when
the surrounding environment is rather stable, and when customers expect a standardized
range of products not subject to continuous change in e.g. taste, fashion or innovation. If the
environment becomes more complex and uncertain, the functional structure may not be the
best suited structure for the company, and the company may need to change their structure to
be able to cope with new challenges and uncertainties.
Organizational structures such as the divisional structure and the matrix structure could be the
solution for companies operating in more uncertain and complex environments, and the
solution for companies offering a broad range of products to different customer segments.



Principle of Organizing

Organizations are made up of a series of elements. The most common of these involve
designing jobs, grouping jobs, establishing reporting relationships, distributing authority,
coordinating activities, and differentiating between positions.
Job design is the determination of an individual's work-related responsibilities. The most
common form is job specialization. Because of various drawbacks to job specialization,
managers have experimented with job rotation, job enlargement, job enrichment, the job
characteristics approach, and work teams as alternatives.
After jobs are designed, they are grouped into departments. The most common bases for
departmentalization are function, product, customer, and location. Each has its own unique
advantages and disadvantages. Large organizations employ multiple bases of
departmentalization at different levels.
Establishing reporting relationships starts with clarifying the chain of command. The
span of management partially dictates whether the organization is relatively tall or flat. In
recent years there has been a trend toward flatter organizations. Several situational factors
influence the ideal span.
Distributing authority starts with delegation. Delegation is the process by which the
manager assigns a portion of his or her total workload to others. Systematic delegation
throughout the organization is decentralization. Centralization involves keeping power and
authority at the top of the organization. Several factors influence the appropriate degree of
decentralization.
Coordination is the process of linking the activities of the various departments of the
organization. Pooled, sequential, or reciprocal interdependence among departments is a
primary reason for coordination. Managers can draw on several techniques to help achieve
coordination.
A line position is a position in the direct chain of command that is responsible for the
achievement of an organization's goals. In contrast, a staff position provides expertise, advice,
and support for line positions. Administrative intensity is the degree to which managerial
positions are concentrated in staff position.

Process of Organizing

The process of organization design is:
Design of jobs - How to group tasks into individual jobs?
Grouping of jobs - How to group job into function and department?


Delegation of authority - How to allocate authority in the organization among jobs,
functions and departments?
Coordination of work - How to coordinate or integrate jobs, functions, and
departments?

Job Design

Job design is defined as the process of deciding on the content of a job in terms of duties and
responsibilities of the job holders, on the methods to be used in carrying out the job, in terms
of techniques, systems and procedures and on the relationships that should exists between the
job holder and his superiors, subordinates and colleagues. Factors affecting job design are
organizational factors, environmental factors and behavioral factors. Some of its objectives
are as follows:

1. To meet the organizational requirements such as higher productivity, operational
efficiency, quality of product / service.
2. To satisfy the needs of the individual employees like interests, challenges,
achievement etc.
3. To integrate the needs of the individuals with the organizational requirements.

The following are the benefits of a good job design:
1. Employee Input: A good job design enables a good job feedback. Employees have
the option to vary tasks as per their personal and social needs, habits and
circumstances in the workplace.
2. Employee Training: Training is an integral part of job design. Contrary to the
philosophy of leave them alone job design lays due emphasis on training people so
that are well aware of what their job demands and how it is to be done.
3. Work / Rest Schedules: Job design offers good work and rest schedule by clearly
defining the number of hours an individual has to spend in his/her job.
4. Adjustments: A good job designs allows for adjustments for physically demanding
jobs by minimizing the energy spent doing the job and by aligning the manpower
requirements for the same.
Job design is a continuous and ever evolving process that is aimed at helping employees
make adjustments with the changes in the workplace. The end goal is reducing
dissatisfaction, enhancing motivation and employee engagement at the workplace.



Approach to Job Design

1. Job Rotation
2. Job Enrichment
3. Job Enlargement
4. Job specification
5. Job Characteristics

1. Job Enrichment:
One individual contemporary job design is job enrichment. Five positive personal and work
outcomes - high motivation, quality work performance, satisfaction, absenteeism and
turnover - result when people are allowed to function in an environment where work enables
the individual to obtain a sense of:
meaningfulness
responsibility
empowerment
satisfaction in knowing the results

2. Job Rotation:

Job Rotation does not change the nature of a specific job; it increases the overall number of
duties an employee performs overtime - by moving the employee around different jobs in the
same - or even other departments. Thus, job rotation can increase task variety and job identity
since the employee is performing several tasks.

3. Job Enlargement:

Job Enlargement is the opposite of the scientific approach, which seeks to reduce the number
of duties in a given job. Job enlargement seeks to increase skill variety. In addition, job
identity can also improve - when the employee completes a whole and identifiable piece of
work. Job enlargement is also known in the literature as horizontal loading, since it involves
adding more duties with the same type of tasks characteristics.Whereas, vertical loading


means creating a job with more autonomy and responsibility. Thus, job enrichment loads a
job vertically, whereas job enlargement loads the content of the job horizontally.

Job Characteristics Model

The job characteristics approach was popularized by Hackman and Oldham. According to
this approach there is a direct relationship between job satisfaction and rewards. They said
that employees will be their productive best and committed when they are rewarded
appropriately for their work. They laid down five core dimensions that can be used to
describe any job - skill variety, task identity, task significance, autonomy and feedback.
Skill variety (SV): The employees must be able to utilize all their skills and develop
new skills while dealing with a job.
Task Identity (TI): The extent to which an identifiable task or piece or work is
required to be done for completion of the job.
Task Significance (TS): How important is the job to the other people, what impact
does it create on their lives?
Autonomy (Au): Does the job offer freedom and independence to the individual
performing the same.
Feedback (Fb): Is feedback necessary for improving performance.
These are different approaches but all of them point to more or less the same factors that need
to be taken into consideration like interest, efficiency, productivity, motivation etc. All these
are crucial to effective job design.
MPS = S V + TI +TS/3 *Au* Fb

MPS = Motivating Potential Score

Approaches to Organizing

Three Major types of approaches are:

1. Classical Approach
2. Behavioral Approach
3. System and contingency Approach

1. Classical Approach

Classical organizational theories focus on formal concepts related to management and
workplace efficiency. Taylor's scientific management approach falls under the classical
theory. This approach focused on increasing productivity through mutual trust between


management and employees. Weber's bureaucratic approach is a classical theory that
explains the importance of hierarchy, rules, procedures and making impartial personnel
decisions.
Benefits of Classical Approach
Hierarchical Structure
One of the advantages of the classical management structure is a clear organizational
hierarchy with three distinct management levels. Each management group has its own
objectives and responsibilities. The top management is usually the board of directors or the
chief executives who are responsible for the long-term goals of the organization. Middle
management oversees the supervisors, setting department goals according to the approved
budget. At the lowest level are the supervisors who oversee day-to-day activities, address
employee issues and provide employee training. The levels of leadership and responsibilities
are clear and well defined. While the three-level structure may not be suitable for all small
businesses, it can benefit those that are expanding.
Division of Labor
One of the advantages of classical management approach is the division of labor. Projects are
broken down into smaller tasks that are easy to complete. Employees' responsibilities and
expectations are clearly defined. This approach allows workers to narrow their field of
expertise and to specialize in one area. The division of labor approach leads to increased
productivity and higher efficiency, as workers are not expected to multitask. Small-
businesses owners can benefit from taking this approach if they are looking to increase
production with minimal expense.
Monetary Incentive
According to classical management theory, employees should be motivated by monetary
rewards. In other words, they will work harder and become more productive if they have an
incentive to look forward to. This gives management easier control over the workforce.
Employees feel appreciated when being rewarded for hard work. A small-business owner can
take this approach to motivate the employees to achieve production goals.
Autocratic Leadership
The autocratic leadership approach is the central part of classical management theory. It
states that an organization should have a single leader to make decisions, to organize and
direct the employees. All decisions are made at the top level and communicated down. The
autocratic leadership approach is beneficial in instances when small-business decisions need
to be made quickly by a leader, without having to consult with a large group of people, such a
board of directors. Small businesses, especially sole proprietorships, can have an advantage
in taking this approach, as they need a strong leader to grow.


Behavioral approach is an extension of the Human Relations School advanced by Abraham
Maslow, who presented a theory of individual needs. The basic aim of this approach is to
increase the organizational effectiveness by increasing the effectiveness of its human
resources, which could be achieved by properly taking care of human needs.
The human needs could be physiological or psychological. According to Maslow, these needs
fall into a hierarchy. At the bottom of this hierarchy are the lower level needs such as
physical and safety needs.
At the top are higher level needs such as need for respect and self-fulfillment. In general, the
lower level needs must be satisfied before higher level needs arise.
Being aware of these needs enables a manager to use different methods to motivate worker.
This is important due to complexity of man's nature. Different people will react differently to
the same situation, or, their reaction may be similar to different situations. Hence the
management must be aware of these differences and react accordingly.
3. The Systems Approach
The systems approach is a modern organizational theory that breaks structure into
mutually dependent subsystems. These systems are connected through
communication, balance and decision making. Included within each system are the
individual employees, the roles, patterns of behavior and physical environment.
Modern theories of organization combine elements of the classical and neo-classical
theories. The systems approach looks at the structure of the organization and how it
must adapt to the environment and the employees within the organization.

4. Contingency or Situational Approach
The contingency approach states there are no universal guidelines for all
organizations and situations. The environmental factors need to be considered before
determining the best organizational approach. These factors may be related to social,
legal, political, technical or economic circumstances. According to the situational
approach, the most productive organization has the ability to adapt to its environment.

Organizational Design

More specifically, Organization Design is a formal, guided process for integrating the people,
information and technology of an organization. It is used to match the form of the
organization as closely as possible to the purpose(s) the organization seeks to achieve.


Through the design process, organizations act to improve the probability that the collective
efforts of members will be successful.
Typically, design is approached as an internal change under the guidance of an external
facilitator. Managers and members work together to define the needs of the organization then
create systems to meet those needs most effectively. The facilitator assures that a systematic
process is followed and encourages creative thinking.
Traditional organizations emphasize a strict division of labor, top-down decision-making, and
extensive rules and procedures. As global economies emerge, organizations that implement
more decentralized organizational structures are faster responders to market changes.

Traditional Organizational Structure

The traditional organization is a pyramid with a president at the top, a few vice presidents,
and layers of management and the majority of employees at the bottom. Jobs are specialized,
and information and authority flow from higher to lower levels.
Weaknesses of Traditional Structure
A strict hierarchical organization hinders response to rapidly changing
environments. It is slower to react to changes in market conditions, and less
efficient in taking advantage of knowledge introduced from a variety of
sources on the ground.
Contemporary Organizational Structure
The contemporary design flattens the traditional pyramid structure, facilitates the flow
of information to all parts of the organization and reduces response time to external
and internal demands.
Types of Contemporary Organizational Structures
The matrix structure, the boundary-free organization and the learning organization
decentralize decision-making power, and allow information and innovation to flow
horizontally through a more interdependent organization.
Weaknesses in the Contemporary Structure
In less hierarchical organizations, conflicts may break out related to uncertainty about roles,
role conflict between managers and "turf wars." Organizations resolve these problems with
training programs run by skilled organizational management trainers.


Types of Organization Design and Departmentation
Types of Organization Design Types Of Departmentation
Line Organization Function Departmentation
Function Organization Product/Service Departmentation
Line and staff Organization Customer Departmentation
Line and line-staff Organization Territory Departmentation
Line and function Organization Process Departmentation
Committee Organization Time Departmentation
Matrix Organization

Departmentation
Departmentation the process of combining jobs into groups is termed Departmentation.
Merits/importance
Develops specification
Administrative control
Fixation of responsibility
Feeling of autonomy
Helpful for expansion
Management development

Types of Departmentation
1. Departmentation by Function
On the basis of functions undertaken by an enterprise, departments are created; this is a
process of uniting people with similar activities to perform. This is based on specialized
functions like production, marketing, finance and personnel.
This type of Departmentation is suitable for small and medium business where the chief
executive can coordinate the functional specialists. A high degree of centralization of power
with the chief executive is the chief character of this structure.


Some of the advantages of this structure are
2. 1. Benefits of occupational specialization
3. 2. Easier inter-departmental- coordination
4. 3. Simple and understandable structure
5. Limitations of this structure are:
6. 1. Excess centralization.
7. 2. Unsuitable when geographical.
8. 3. Unsuitable when emphasis on product line in called for.
9. 4. Lower scope for promotional avenues.
There are also some disadvantages:
i) Responsibility for profits tends to be at the top.
ii) There may be chances of heavy centralization in decision-making.
iii) Where geographical centralization is desirable or required, this form becomes
unsuitable.
iv) This is not very suitable where product lines have to be emphasized.
v) There is a lower potential for manager development.

2. Departmentation by product/service

Product Departmentation organizes employees based on which product line or set of
services they work with. Each product line has a department of its own, and each
department has specialists in all of the functions needed to produce and sell that product,
such as marketing, manufacturing, accounting and human resources. The departments in
this type of company operate autonomously from each other and are often better at
responding to changing circumstances in a flexible way. For example, the salespeople can
talk to the design and manufacturing specialists in their own department to address
customer satisfaction issues rather than having to go outside the department. Smaller
businesses would use this type of structure only if they offer distinctly different products


or services. For instance, if your company provides both copywriting and printing, it
might make sense to operate these services as separate and autonomous departments.

The advantages of this type of structure are:
i) Places greater effort on individual product line.
ii) Better customer service arising from greater product knowledge.
iii) Simplifies Departmentation of profitability of each product line. Responsibility for
profits is at the Division level.
iv) Improves co-ordination of functional activities.
v) New department may be added without difficulty. Permits growth and diversity of
products and services.
vi) Detailed information on markets for specific products will be generated.
vii) Extremely suitable where product lines are complex or vary greatly.
Some of the disadvantages inherent in such Departmentation are:
i) A customer has to deal with different salesmen or managers for different products of
the same company.
ii) Extra costs of maintaining separate sales force for each product.
iii) Duplication of costs on travel, etc.
iv) Tends to make maintenance of economical central services difficult.
v) Results in increased problems of the top management control.

3. Departmentation by Customer

Some advantages of this type of structure are:

i) Greater specialized customer service.
ii) Where marketing channels are considerably different for various types of
customers, this type of structure is very useful.


Some disadvantages of this type are:

i) May not be enough work for certain types of customers. Hence, under
employment of facilities and manpower specialized in terms of customer groups.
ii) Problems of co-ordination might pose difficulties.
iii) Unequal development of customer groups.

4. Departmentation by Process
The process or equipment used in producing a product or service may be the basis for
determining departmental units. Since a certain amount of expertise or training is required to
handle complicated processes or complex machinery, activities that involve the use of
specialized equipment may be grouped into a separate department. This form of
Departmentation is similar to functional Departmentation. The grouping of all milling
machines into one department or the placing of lathes in another department is illustrative of
Departmentation by equipment or process. As a further example, a large food products firm
may be departmentalized by processes such as manufacturing, package design, distribution,
and shipping.

5. Territorial or Geographical Departmentation

The advantages of such Departmentation are:

i) Regional expertise is generated and managers can tackle customers or competition
better. Places responsibility at lower levels.
ii) Proximity will reduce costs of operation and administration.
iii) Places emphasis on local markets and problems. Local conditions might warrant
different types of selling. This is possible only in territorial Departmentation.
iv) Improves co-ordination at the regional level.
v) Better face-to-face communication with local interests in mind.
vi) Better manager development.


Some disadvantages are listed as follows:

i) Involves higher costs of co-ordination and control from headquarters.
ii) Results in more managerial levels which increases overhead costs.
iii) Unsuitable for departments like Finance, where no gains are possible by
specialization on local factors.
iv) Increases problems of the top management control.

Others are:

6. Departmentation by division
7. Department by time

Types/Forms of Organizational Structure

Matrix Structure
Matrix structure is a combination of the functional and divisional types of organizational
design. As with divisional structure, there is a manager or executive responsible for
overseeing each category.
The hierarchy is similar to functional design because each division has separate teams for
each project or major function. For this reason, an employee will typically report to two
managers, one who manages the project and another who manages the category. Common
categories include finance, sales, and manufacturing.



Advantages:
It is an efficient means for bringing together the diverse specialized skills required
to solve a certain problems.
It solves the problems of coordination as they works as a team.
Employees learn each other jobs better while working together and adopt realistic
attitude.
It gives flexibility to organization.
Saves cost by reducing unnecessary duplication in the organization.
Disadvantages:
It is difficult for employees to adopt and adjust with matrix culture.
Increase in Work Load
High Operational Cost
Absence of Unity of Command.
Difficulty of Balance
Power Struggle
Affects Morale
Complexity
Shifting of Responsibility
Unique features of matrix structure:
Hybrid Structure
Functional Manager
Project Manager
Problem of Unity of Command
specialization
suitability

Functional Structure
The functional structure groups positions into work units based on similar activities, skills,
expertise, and resources. Production, marketing, finance, and human resources are common
groupings within a functional structure.


As the simplest approach, a functional structure features welldefined channels of
communication and authority/responsibility relationships. Not only can this structure improve
productivity by minimizing duplication of personnel and equipment, but it also makes
employees comfortable and simplifies training as well.
But the functional structure has many downsides that may make it inappropriate for some
organizations. Here are a few examples:
The functional structure can result in narrowed perspectives because of the
separateness of different department work groups. Managers may have a hard time
relating to marketing, for example, which is often in an entirely different grouping. As
a result, anticipating or reacting to changing consumer needs may be difficult. In
addition, reduced cooperation and communication may occur.
Decisions and communication are slow to take place because of the many layers of
hierarchy. Authority is more centralized.
The functional structure gives managers experience in only one fieldstheir own.
Managers do not have the opportunity to see how all the firm's departments work
together and understand their interrelationships and interdependence. In the long run,
this specialization results in executives with narrow backgrounds and little training
handling top management duties.

Divisional Structure
Because managers in large companies may have difficulty keeping track of all their
company's products and activities, specialized departments may develop. These departments
are divided according to their organizational outputs. Examples include departments created
to distinguish among production, customer service, and geographical categories. This
grouping of departments is called divisional structure. These departments allow managers to


better focus their resources and results. Divisional structure also makes performance easier to
monitor. As a result, this structure is flexible and responsive to change.

However, divisional structure does have its drawbacks. Because managers are so specialized,
they may waste time duplicating each other's activities and resources. In addition,
competition among divisions may develop due to limited resources.

Team Structure
Team structure organizes separate functions into a group based on one overall objective.
These crossfunctional teams are composed of members from different departments who
work together as needed to solve problems and explore opportunities. The intent is to break
down functional barriers among departments and create a more effective relationship for
solving ongoing problems.


The team structure has many potential advantages, including the following:
Intradepartmental barriers break down.
Decisionmaking and response times speed up.
Employees are motivated.
Levels of managers are eliminated.
Administrative costs are lowered.
The disadvantages include:
Conflicting loyalties among team members.
Timemanagement issues.
Increased time spent in meetings.
Managers must be aware that how well team members work together often depends on the
quality of interpersonal relations, group dynamics, and their team management abilities.
Line Structure
This is the oldest form of organisation. This is known by different names, i.e. military,
vertical, scalar, departmental, organization. All other types of organization structure have
mostly been either modifications of this organisation. The concept of line organisation holds
that in any organization derived from a scalar process, there must be a single head who
commands it. Although an executive can delegate authority, he has ultimate responsibility for
results. According to McFarland, "Line structure consists of the direct vertical relationship
which connects the positions and tasks of each level with those above and below it."
According to Allen, "Organizationally, the line is the chain of command that extends from


the board of directors through the various delegations and re-delegation of authority and
responsibility to the point where the primary activities of the enterprise are performed."
Following is the chart showing line organization:

Features of line organization:

1. There are many levels of management depending upon the scale of business and
decision-making ability of managers. Each level of management has equal rights.
2. There is vertical flow of authority and responsibility. The lower positions derive
authority from the positions above them.
3. There is unity of command. Every person is accountable to only one person (his
immediate boss) and none else. A person receives orders only from his immediate
boss.
4. There is scalar chain in line organization. The flow of orders, communication of
suggestions and complaints etc. are made as it is in the case of a ladder. One cannot
defy the claim.
5. There is limit on subordinates under one manager. A manager has control only over
the subordinates of his department.

Merits

1. Simplicityit is the simplest of all types of organizations. It can be easily established
and easily understood by the workers.

2. Clear-cut division of authority and responsibilitythe authority and responsibility
of every person is clearly defined. Everyone knows as to whom he can issue orders
and to whom he is accountable. Further it is easier to fix up the responsibility if there
is any lapse anywhere in the performance of activities.

3. Strong DisciplineBecause of direct authorityresponsibility relationships,
discipline can be maintained more effectively. Direct supervision and control also
helps in maintaining strong discipline among the workers.
4. Unified controlsince the orders are given by one superior, there is no confusion
among the subordinates. This ensures better understanding and quick action.

5. Prompt Decisions-As the superiors enjoy full authority, quick decisions are taken by
them. Such decisions are executed promptly also.

6. Flexibility-Since each departmental head has sole responsibility for his department,
he can easily adjust the organization to changes in business situation.



Demerits

1. Heavy Burden of worksince the departmental head has to look after all the
activities of his department; he is over burdened with work. He may neglect some of
the duties and there may be inefficiency in management.

2. Concentration of Authorityit is dictatorial in nature as all important powers are
concentrated in the hands of a few top executives. If they are not able the enterprise
will not be successful.

3. Lack of specializationLine organization suffers from lack of specialized skill of
experts. It is extremely difficult for one person to handle activities of diverse nature. It
is not possible to achieve the advantages of specialization in all fields.

4. Lack of communication -There is failure to get correct information and to act upon
it due to lack of communication. Although there is communication from top to bottom
there is usually no communication from the lower ranks to higher ranks and
executives. They are not provided with an opportunity to put forward their view point
or problems or suggestions to persons at the top level. Thus, they lose their capacity
for independence thinking.

5. Scope for favoritismsince the departmental head is almost all-in-all for the
activities of his department. There is scope for favoritism. There may be a good deal
of nepotism and jobbery and personal prejudices. The executive may appoint and
promote his own men in various positions ignoring the claim of efficient persons.

Line- and - Staff Structure
While the line structure would not be appropriate for larger companies, the line-and-staff
structure is applicable because it helps to identify a set of guidelines for the people directly
involved in completing the organization's work. This type of structure combines the flow of
information from the line structure with the staff departments that service, advice, and
support them (Boone and Kurtz, 1993, p. 259).
Line departments are involved in making decisions regarding the operation of the
organization, while staff areas provide specialized support. The line-and-staff organizational


structure "is necessary to provide specialized, functional assistance to all managers, to ensure
adequate checks and balances, and to maintain accountability for end results" (Allen, 1970, p.
63).

An example of a line department might be the production department because it is directly
responsible for producing the product. A staff department, on the other hand, has employees
who advise and assisting sure the product gets advertised or that the customer service
representatives computer is working (Boone and Kurtz, 1993, p. 259).
Based on the company's general organization, line-and-staff structures generally have a
centralized chain of command. The line-and-staff managers have direct authority over their
subordinates, but staff managers have no authority over line managers and their subordinates.
Because there are more layers and presumably more guidelines to follow in this type of
organization, the decision-making process is slower than in a line organization. The line-and-
staff organizational structure is generally more formal in nature and has many departments



Advantages and disadvantages of line - staff organization

Advantages Disadvantages

Managerial specialization Problem conflict
Better co-ordination Greater confusion
Limited functional authority High cost structure
Practical decision Over dependence on staff
Facilitates growth Inefficient staff
Better utilization of resources Lack of responsibility
Greater flexibility Complication for management

Authority, Power and Responsibility

Authority is the legal right of person or superior to command his subordinates while
accountability is the obligation of individual to carry out his duties as per standards of
performance.
Authority flows from the superiors to subordinates, in which orders and instructions are given
to subordinates to complete the task. It is only through authority, a manager exercises control.
In a way through exercising the control the superior is demanding accountability from
subordinates.
If the marketing manager directs the sales supervisor for 50 units of sale to be undertaken in a
month. If the above standards are not accomplished, it is the marketing manager who will be
accountable to the chief executive officer. Therefore, we can say that authority flows from
top to bottom and responsibility flows from bottom to top. Accountability is a result of
responsibility and responsibility is result of authority.
Authority
1. It is the legal right of a person or a superior to command his subordinates.
2. Authority is attached to the position of a superior in concern.
3. Authority can be delegated by a superior to a subordinate
4. It flows from top to bottom.

Responsibility

1. It is the obligation of subordinate to perform the work assigned to him.
2. Responsibility arises out of superior and subordinate relationship in which subordinate
agrees to carry out duty given to him.
3. Responsibility cannot be shifted and is absolute
4. It flows from bottom to top.


Power

Power is an attribute of an individuals influence over other individuals
French & Raven introduce five bases of power:
Coercive, Reward, Legitimate, Referent, and Expert. This was followed by Raven's
identification of a sixth separate and distinct base of power.

Coercive Power

This type of power is based upon the idea of coercion. The main idea behind this concept is
that someone is forced to do something that he/she does not desire to do. The main goal of
coercion is compliance. According to Changingminds.org "demonstrations of harm are often
used to illustrate what will happen if compliance is not gained". The power of coercion has
been proven to be related with punitive behavior that may be outside one's normal role
expectations. However coercion has also been associated positively with generally punitive
behavior and negatively associated to contingent reward behavior. This source of power can
often lead to problems and in many circumstances it involves abuse. Mindtools.com states
that "coercive power can cause unhealthy behavior and dissatisfaction in the workplace".
These types of leaders rely on the use of threats in their leadership style. Often the threats
involve saying someone will be fired or demoted.

Reward Power

The second type of power involves having the ability to grant other person things which that
person desires or to remove or decrease things the person does not desire. Present
subordinates with outcomes that the subordinate regards in a positive manner. This type of
power is based on the idea that we as a society are more prone to do things and to do them
well when we are getting something out of it. Social exchange theorists as well as Power-
Dependence theorists continue to focus on the idea of reward power. The most popular forms
are offering raises, promotions, and simply compliments. The problem with this according to
Mindtools.com is that "when you use up available rewards, or the rewards don't have enough
perceived value to others, your power weakens. (One of the frustrations with using rewards is
that they often need to be bigger each time if they're to have the same motivational impact.
Even then, if rewards are given frequently, people can become dissatisfied by the reward,
such that it loses its effectiveness.)"
In Group Dynamics Forsyth notes that Raven categorized rewards as either impersonal or
personal. Forsyth described this distinction as: "Impersonal rewards are material resources,
such as food, shelter, protection, promotion, wages and awards. Personal rewards are positive
interpersonal reinforcements, such as verbal approbation, compliments, smiles, and promises
of liking or acceptance."



Legitimate Power

This power which means the ability to administer to another certain feelings of obligation or
the notion of responsibility. "Rewarding and Punishing subordinates is generally seen as a
legitimate part of the formal or appointed leadership role and most managerial positions in
work organizations carry with them, some degree of expected reward and punishment."
People traditionally obey the person with this power solely based on their role, position or
title rather than the person specifically as a leader. Therefore this type of power can easily be
lost and the leader does not have his position or title anymore. This power is therefore not
strong enough to be one's only form of influencing/persuading others.

Referent Power

The power of holding the ability to administer to another a sense of personal acceptance or
personal approval. This type of power is strong enough that the power-holder is often looked
up to as a role model. This power is often regarded as admiration, or charm. The
responsibility involved is heavy and the power easily lost, but when combined with other
forms of power it can be very useful. Referent power is commonly seen in political and
military figures, although celebrities often have this as well.

Expert Power

The ability to administer to another information, knowledge or expertise. ( Example: Doctors,
lawyers. As a consequence of the expert power or knowledge, a leader is able to convince his
subordinates to trust him. The expertise does not have to be genuine - it is the perception of
expertise that provides the power base. When individuals perceive or assume that a person
possesses superior skills or abilities, they award power to that person.

Informational Power

Informational power is based on the potential to utilize information. Providing rational
arguments, using information to persuade others, using facts and manipulating information
can create a power base. How information is used - sharing it with others, limiting it to key
people, keeping it secret from key people, organizing it, increasing it, or even falsifying it -
can create a shift in power within a group.



Delegation and Decentralization of Authority
Basis Delegation Decentralization
Meaning
Managers delegate some of
their function and authority to
their subordinates.
Right to take decisions is shared by top
management and other level of
management.
Scope
Scope of delegation is limited
as superior delegates the
powers to the subordinates on
individual bases.
Scope is wide as the decision making is
shared by the subordinates also.
Responsibility
Responsibility remains of the
managers and cannot be
delegated
Responsibility is also delegated to
subordinates.
Freedom of
Work
Freedom is not given to the
subordinates as they have to
work as per the instructions of
their superiors.
Freedom to work can be maintained by
subordinates as they are free to take
decision and to implement it.
Nature It is a routine function
It is an important decision of an
enterprise.
Need on
purpose
Delegation is important in all
concerns whether big or small.
No enterprises can work
without delegation.
Decentralization becomes more
important in large concerns and it
depends upon the decision made by the
enterprise, it is not compulsory.
Grant of
Authority
The authority is granted by
one individual to another.
It is a systematic act which takes place
at all levels and at all functions in a
concern.
Grant of
Responsibility
Responsibility cannot be
delegated
Authority with responsibility is
delegated to subordinates.
Degree
Degree of delegation varies
from concern to concern and
department to department.
Decentralization is total by nature. It
spreads throughout the organization i.e.
at all levels and all functions
Process
Delegation is a process which
explains superior subordinates
relationship
It is an outcome which explains
relationship between top management
and all other departments.
Essentiality Delegation is essential of all Decentralization is a decisions function


kinds of concerns by nature.
Significance
Delegation is essential for
creating the organization
Decentralization is an optional policy
at the discretion of top management.
Withdrawal
Delegated authority can be
taken back.
It is considered as a general policy of
top management and is applicable to
all departments.
Freedom of
Action
Very little freedom to the
subordinates
Considerable freedom

Centralization and Decentralization
All organizations have to make daily decisions that vary from strategic, to operational in
nature. The way these decisions are made is governed by whether the organization is
centralized or decentralized. All organizations have varying structures. Centralized and
decentralized systems use opposite ways of delegating decision-making power, but in
practice, none of these systems is perfect and neither can be declared the ultimate solution for
all organizations.
Centralization
In a centralized organization, important information is mainly reserved for top
management. The authors of "Business" say that this system concentrates power in
the upper levels of the organization. It is an autocratic, instead of a democratic,
approach to decision-making: The top tier has all the power. In such a system, a
limited number of people have all the power in the organization and enjoy a wide
spectrum of control.
Pros and Cons
Although centralization is a comparatively older system of management, it still has its
benefits. Policies and objectives are clear, giving employees a fair idea of what the
organization expects from them. Topmost management is usually comprised of
experts who are likely to make the best and speediest decisions, due to the limited
number of people making them. It bypasses potential conflicts, and the time it takes to
solve them -- but this system invests a great deal of responsibility in relatively few
people, and is is less effective as a solution to big problems.
Decentralization


In a decentralized organization, decision-making power is held not just by upper-level
management; it is shared with lower-level staff. In such a system, the top managers
get a continuous input of facts, information and ideas from the reporting line. It is a
more democratic approach towards running an organization; everyone has some level
of autonomy.
Benefits and Drawbacks
Since the employees are involved in making decisions and setting objectives, they
own those conclusions and objectives. Morale and motivation levels in a decentralized
organization are always higher than in a centralized one. Better choices can be made
due to the firsthand knowledge available, but this system can also be risky if the
dependent staff does not have the skills required for expert decision-making.
Comparison
Top-tier management enjoys far-reaching control in a centralized organization, while
control is limited in decentralized organizations, due to delegation of authority to
lower ranks. Centralized systems are more effective in small businesses, while
decentralization is preferable in larger organizations that handle multiple operations.
Most organizations have found a way to strike a balance between the two; strategic
and tactical decisions are made by top-level management, while operational decision-
making is passed down to the lower ranks.

In Brief:
Centralization and Decentralization
Centralization and decentralization are important concepts in devolution of powers
and authority in an organization.



Highly centralized structure refers to an organization where decision making powers
are in the hands of remaining few at the top and the structure is called a top to bottom
approach.

Decentralized structure is one which adopts a bottom to top approach and allows
devolution of powers at lower levels.

Decentralized structures are seen as a necessity in todays context with bigger and
bigger corporations coming into existence.

Centralization and decentralization are important concepts used in many other fields
too.

Formal / Informal Organization
1. Meaning
Formal Organisation is formed when two or more persons come together. They have a
common objective or goal. They are willing to work together to achieve this similar
objective.
Formal Organisation has its own rules and regulation. These rules must be followed by the
members (employees and managers). A formal organisation has a system of co-ordination. It
also has a system of authority. It has a clear superior-subordinate relationship. In a formal
organisation, the objectives are specific and well-defined. All the members are given specific
duties and responsibilities. Examples of formal organisation are:- a company, a school, a
college, a bank, etc.
Informal Organisation exists within the formal organisation. An informal organisation is a
network of personal and social relationships. People working in a formal organisation meet
and interact regularly. They work, travel, and eat together. Therefore, they become good
friends and companions. There are many groups of friends in a formal organisation. These
groups are called informal organisation.
An informal organisation does not have its own rules and regulation. It has no system of co-
ordination and authority. It doesn't have any superior-subordinate relationship nor any
specific and well-defined objectives. Here in informal organisation, communication is done
through the grapevine.


Emerging concept in Organizing and Design

1. Team structure: - Team consists of group of people with diversified skill and knowledge
who work together for common purpose. Teams are considered today as the most
effective means to organize people and work activities. Team concept is getting popular
as it breaks down departmental barriers and decisions are push down to work team.
Organization perform complex task through teams. Teams achieve flexibility and
increase productivity. Team based environment enhance performance reduce stress and
promotes the climate of creativity and innovation in organization. Teams may be of
different types.

a. Problem solving teams: - It is formed from the same department to solve departmental
problem.

b. Cross functional team: - This team consists of members from various departments.
Complex task and problems are assigned to this team.

c. Self managed team: - This is very much powerful team which has well defined
responsibility and authority. They have authority to make solution of the problem and
implement solution. This team is also called autonomous team.

d. Quality circle: - This team consists of members from the same department which work
for quality improvement for product service and activities. They regularly meet and


think about quality improvement. Small organizations themselves are team and in big
organization there are teams at operational level.

2. Virtual organizations: - Virtual organization is a temporary network of companies. They
come together to quickly exploit fast changing opportunities. Its foundation is strong
information technology platform. The essence of virtual organization is outsourcing. All
managerial activities are outsources to other companies. Outsourcing is the process of
giving jobs to other companies in contract which were previously performed by
organization itself. The objective of outsourcing is to improve quality and reduce cost.
Distribution, packaging, accounting, trading, recruitment and selection and even
manufacturing. Activities are outsourced what leave them a little. Hence, it is called virtual
organization. Management can concentrate on strategy formulation, policy formulation and
coordination.

3. Boundary less organization: - These organizations are known as barrier free or modular
organization. A boundary less organization is one in which there are no barriers in
information flow where they are best needed. It is not bound by chain of command and span
of management. Members of these organizations do not have face to face conversation or
contact. They establish relationship through modern important jobs. They are linked basically
through computers. People are utilized where there services are needed. But, they are not
formal member of organization.

4. Organizational downsizing: - Organization downsizing is the planned reduction in jobs
and positions. Common approach to downsizing improves eliminating functions, positions,
hierarchical levels, dropping those products which continuously include loss. It is thus the
process of becoming slimmer, smaller and faster by reducing the size of work force or
eliminating divisions or business. Therefore, downsizing is the process of eliminating
positions, jobs departments and hierarchical levels. The purpose of downsizing is to bring the
organization in right size. The methods of downsizing are: -
a) Firing
b) Transfer
c) Reduced work weeks
d) Early retirement
e) Lay off
f) Job sharing

5. Process reengineering: - The process reengineering emerged in management literature in
1950. Reengineering is a radical redesigning is the part of all business work process to
achieve major gains in cost, quality, service and speed. In other words, it is concerned with
radical redesigning work process to achieve improvement in critical area such as cost, quality
service and speed.



Currently reengineering has become popular, redesigning strategy. It is the popular
restructuring organization. When old structure does not function in changing environment,
new structure must be designed. The important elements of process reengineering are: -
a) It focus is on work process,
b) It is a radical process improvement strategy,
c) It applies to individual as well as organizational process,
d) It tries to maximize the value added content and minimize those that does not add
value,
e) It aims to improve performance by redesigning work process.



Staffing

Concepts

The selection and training of individuals for specific job functions, and charging them with
the associated responsibilities.

After an organization's structural design is in place, it needs people with the right skills,
knowledge, and abilities to fill in that structure. People are an organization's most important
resource, because people either create or undermine an organization's reputation for quality in
both products and service.
In addition, an organization must respond to change effectively in order to remain
competitive. The right staff can carry an organization through a period of change and ensure
its future success. Because of the importance of hiring and maintaining a committed and
competent staff, effective human resource management is crucial to the success of all
organizations.
Human resource management (HRM), or staffing, is the management function devoted to
acquiring, training, appraising, and compensating employees. In effect, all managers are
human resource managers, although human resource specialists may perform some of these
activities in large organizations. Solid HRM practices can mold a company's workforce into a
motivated and committed team capable of managing change effectively and achieving the
organizational objectives.
Understanding the fundamentals of HRM can help any manager lead more effectively. Every
manager should understand the following three principles:
All managers are human resource managers.
Employees are much more important assets than buildings or equipment; good
employees give a company the competitive edge.
Human resource management is a matching process; it must match the needs of the
organization with the needs of the employee.
Definitions
Staffing is an integral part of the Human Resource Management System.
David E. Guest (1984) HRM comprises a set of policies designed to maximize
organizational integration, employees commitment, flexibility and quality of work.


DeCenzo and Robbins (1989) HRM is a process consisting of four functions
acquisition, development, motivation and maintenance of human resources. These four
functions are described as getting people, preparing them, activating them, and keeping
them.
Chruden and Sherman (1984) HRM represents a new concept and a systems approach
in performing personal functions. It still requires the performance of these personnel
functions that have evolved over the years in response to emerging needs. But instead of
being treated as being separate and distinct, these functions are being performed as inter-
related parts of management system.
R. E. Walton (1992) HRM is mutuality between employers and employees, mutual goals,
mutual respect, mutual rewards and mutual responsibility. The theory is that policy of
mutuality will elicit commitment, which in turn will yield both better economic performance
and greater human development.

Objectives of Staffing
The main aims of staffing are to match employee skills with necessary tasks in the most cost-
effective ways. Effective staffing involves understanding company needs, such as when it's
most important to save money and when it's most important to do the best job possible. It also
involves understanding the skills and needs of staff members, as well as their passions and
idiosyncrasies in order to find the best possible fit.
Scheduling
Staffing involves scheduling employees to cover shifts in order to perform the tasks
necessary to effectively run a company. Some businesses, such as retail stores, must
cover a set number of hours, or the times when customers expect their doors to be open.
Other companies, such as manufacturers, earn income by completing a specified
volume of work regardless of how long it takes. If your business must staff a specific
number of hours, it makes sense to schedule your best employees during the busiest
times and the lowest achievers during the slowest times. If your company profits by
completing a set amount of work, staffing is a matter of scheduling the most efficient
workers to complete a project as quickly and thoroughly as possible.
Flexibility
Every business encounters unforeseen circumstances. Staffing should take into account
the fact that sometimes a rigid schedule will fail to adequately address the surprises and
opportunities that are an inevitable part of company operations. Successful staffing
should have built-in flexibility to allow for extra work when necessary and to cut back
on shifts when demand unexpectedly drops.


Building Skills
Staffing also should build the skills of employees. When workers perform the same
tasks repeatedly, their morale declines because they do not feel challenged. Scheduling
employees for responsibilities outside of their comfort zone enables them to grow, learn
and maintain interest in their jobs. It also benefits management by enabling a company
to be able to draw on more employees qualified to perform a broader range of tasks.
Cutting Costs
Successful staffing produces the best possible results at the lowest possible cost. This
does not mean a manager should keep wages as low as possible or schedule workers for
fewer hours because these cost-cutting measures can be quite expensive when shoddy
work results. Rather, successful staffing should be thorough without being wasteful and
frugal without cutting corners.

Importance of Staffing
The decisions you make about staffing your business can have dramatic effects on the quality
of your work, your retention rates and level of customer service. Production and goals are at
risk. Making appropriate staffing decisions is one of the most important tasks for a manager
or small business owner.
Goals
The primary purpose that you add staff to your organization is to get the right people in
place to help you meet your goals. By being clear about your goals, you can make plans and
implement changes that bring you closer to that goal. One of the basic functions of a
successful manager is to map out the future and make plans that support that ideal,
according to the Management Study Guide. By choosing appropriate action, such as
developing and utilizing viable staffing solutions, you come closer to ensuring that you'll
reach your target goals.
Planning
Proper planning ensures you'll have appropriate staff in place as you need it. For example,
if you own a restaurant, you need to plan ahead to holidays and special events at which you
expect to draw crowds. Keeping a calendar that highlights rush times in your industry or
peak production expectations allows you to plan for the needs and not be caught short-
handed. If you don't plan for expected surges, not only will you lose business, you may lose
the confidence of your other employees and your base clientele.



Recruitment
In addition to having sufficient staff to meet your customer demands, you also need to have
the right people in the right positions, advises the Management Study Guide. Your business
runs more smoothly and more effectively when you look for specific qualities in potential
employees during the recruitment process. Starting out with the best candidates, you then
should be on the lookout for staff members that you can promote cross-train and develop.
Staff development helps you keep your retention rates high and save money on hiring and
newcomer training.
Guidelines
A wise businessperson develops staffing guidelines that you and your hiring managers can
follow during the recruitment process. You must be aware of anti-discrimination laws to
prevent lawsuits or labor reviews. A successful staffing system takes advantage of
electronic data available online about potential candidates. Set probationary periods for
new-hires to allow yourself room for early termination if your staffing system fails at any
point. Additionally, a successful staffing system keeps up with current trends in employee
benefit packages to attract quality staff and retain your current trained staff. Meet the needs
of your employees and your business will thrive.

Staffing Process / Components of involved in Staffing

1. Manpower requirements- The very first step in staffing is to plan the manpower
inventory required by a concern in order to match them with the job requirements and
demands. Therefore, it involves forecasting and determining the future manpower
needs of the concern.

2. Recruitment- Once the requirements are notified, the concern invites and solicits
applications according to the invitations made to the desirable candidates.

3. Selection- This is the screening step of staffing in which the solicited applications are
screened out and suitable candidates are appointed as per the requirements.

4. Orientation and Placement- Once screening takes place, the appointed candidates
are made familiar to the work units and work environment through the orientation
programmes. Placement takes place by putting right man on the right job.

5. Training and Development- Training is a part of incentives given to the workers in
order to develop and grow them within the concern. Training is generally given
according to the nature of activities and scope of expansion in it. Along with it, the
workers are developed by providing them extra benefits of in-depth knowledge of


their functional areas. Development also includes giving them key and important jobs
as a test or examination in order to analyze their performances.

6. Remuneration- It is a kind of compensation provided monetarily to the employees
for their work performances. This is given according to the nature of job- skilled or
unskilled, physical or mental, etc. Remuneration forms an important monetary
incentive for the employees.
7. Performance Evaluation- In order to keep a track or record of the behavior,
attitudes as well as opinions of the workers towards their jobs. For this regular
assessment is done to evaluate and supervise different work units in a concern. It is
basically concerning to know the development cycle and growth patterns of the
employees in a concern.

8. Promotion and transfer- Promotion is said to be a non- monetary incentive in which
the worker is shifted from a higher job demanding bigger responsibilities as well as
shifting the workers and transferring them to different work units and branches of the
same organization.

Human Resource Management System

A system is a unified whole composed of interrelated and interacting part to achieve common
goals. Human resource management is an open system. It consists of input, processing,
Output and feedback component. It has both internal and external environment.
HRM System consists of basic three elements
a) Input
b) Process
c) Output


1. Input:
It is a major component of human resource management system. It is the first step in the
system. It consists of the following components:

Human energy and competency:
Energy is represented by physical strength. Competencies are represented by skills,
knowledge, experience, potential for growth etc.

Organizational Plan:
The human resource management system is guided by organizational plan. These input
components are very essential to support human resource management system.
Organizational plan consists of overall organizational goals and targets.

Human Resource Plan:
Human resource plan is also the important input component. It is the process of making plan
of future human resources. It is also the process of marketing future, human resource demand
and supply.

Human Resource (management) Inventory:
Management inventory represent inventory of current human resources available in the
organization. Management inventory is an important component of making human resource
plan.

Job Analysis:
Job analysis specifies job requirement, qualification and skills for various jobs. It mainly
consists of job description and job specification.

Labor Market:
Labor market serves as the major source of supply for human resource. It may be schools,
colleges, universities, training institutions, manpower agents etc.



b) Process Components

1. Acquisition
Acquisition function is concerned with recruitment and selection of manpower requirement
for an organization. It ensures that the company has the right number of people at the right
place and at the right time that are capable to complete required work. It is the starting point
of human resource management function. Acquisition is primarily concerned with planning,
recruitment, selection and socialization of employees. It selects and socializes the competent
employees who have adopted the organization's culture.

2. Development
Development phase begins after the socialization of newly appointed employees in an
organization. It is concerned with imparting knowledge and skill to perform the task properly.
Moreover, it is an attempt to improve employee performance by imparting knowledge,
changing attitudes and improving skills. It can be done through teaching, coaching, class-
room courses, assignments, professional programs and so on. The ultimate goal of employee
development is of course to enhance the future performance of the organization by the
efficient employees.

3. Motivation
Only training and development do not inspire employees to do better work. For this, they
should be motivated. Here motivation means an activity which induces and inspires people to
perform well in actual work floor. Motivation includes job specification, performance
evaluation, reward and punishment, work performance, compensation management,
discipline and so on. It is important for better work performance because high performance
depends on both ability and motivation.

4. Maintenance
Maintenance is the last components of human resource management. it is concerned with the
process of retaining the employees in the organization. This contributes towards keeping the
employees who can do extremely better for the organization. It creates such a homely and
friendly environment for those high performers, and makes them to remain in the same


organization for a longer period of time. This requires that the organization should provide
additional facilities, safe working conditions, friendly work environment, and satisfactory
labor relations.

c) Output Component

The human resource management system also consists of certain output. Output components
of human resource management are as follows:-

Goal Achievement:
This refers to overall organizational goal achievement. The goal of societal well-being is also
one of the goals of organization.



Summary

Management takes part in every step of an organization, giving direction and aligning
resources in order to achieve goals. The overall role of managers is to guide organizations
toward accomplishing goals. Good management covers six basic functions: planning,
organizing, staffing, leading, controlling and motivation. All managers perform a range of
functions, with the amount of time spent on each function depending on the level of
management and specific organizational needs.
The term Levels of Management" refers to a line of demarcation between various
managerial positions in an organization. Levels of management can be classified in three
broad categories: top level administration, middle level management of executing
organizational objectives, and first level supervision of tasks and employees. The four
common elements of an organization as proposed by Edgar Schein include common purpose,
coordinated effort, division of labor, and hierarchy of authority.
Common purpose unifies employees or members and gives everyone an understanding of the
organization's reason for being. Coordinated effort is the coordination of individual efforts
into a group or organization-wide effort. Division of labor is the arrangement of having
discrete parts of a task done by different people for greater efficiency. Hierarchy of authority
is the control mechanism for making sure the right people do the right things at the right time.
Human Resource Management views people as an organization's asset and seeks to align
them with business goals. Human Resource Management communicates with employees and
adapts the organization's culture and structure to their needs, such as in negotiating with
unions or re-engineering processes. Human Resource Management leads the employment
life-cycle, from attracting and hiring the right employees, to facilitating performance reviews,
and eventually processing terminations.
Human Resource Management (HRM) is the coordination of an organization's people to
achieve specific business objectives, such as:
High engagement
Low turnover
Employee satisfaction

HRM does so through the use of people, process, and technology geared toward the internal
parts of the organization rather than its external strategies and goals. HRM draws upon many
diverse subjects such as psychology, business management, process management,
information technology, statistical analysis, sociology, and anthropology, to achieve these
objectives.



Review Questions

1. What is organizing? How an organization is designed functionally?
2. Briefly explain various elements of organizing.
3. Explain the process of organization design? Describe the matrix design of
organization?
4. Elaborate the difference between line and staff authority.
5. Distinguish between centralization and decentralization. In which situation would
centralization of authority be more appropriate?
6. What are the emerging concepts in organizing?
7. Define matrix organization. List out its merits and demerits.
8. How are decentralization and delegation different? Why organizations are
decentralized?
9. How are organization strategy and its structure related?
10. Define Departmentation. What is the various form of Departmentation?
11. Explain the principle of organizing.
12. What are the unique features of matrix structure?
13. What is difference between line and staff authority?
14. What is staffing? List out importance of staffing.
15. Explain human resource management system in brief.
16. What are the major components of staffing? Explain.
17. Write short notes on:
a) Approaches of Job Design
b) Authority, responsibility and Power
c) Line and Staff Organization
d) Staffing
e) HRMS



Case Study - III
Berks and Beyond
A construction company learned that one of their key accounting employees would need an
extended period of time off for maternity leave. The employer was pleased with the service
Berks & Beyond provided him in the past, so he trusted us to find a temporary replacement
for this important position.
The Solution:
Although this client had several months to spare, we both agreed that we should begin
screening applicants immediately. We knew that being proactive would prevent us
scrambling at the last minute to find a suitable replacement.
Our Account Manager met with the companys Vice President to create a detailed position
description. Once we thoroughly understood the skills, experience and culture fit
requirements of the job; our Account Manager immediately began recruiting.
The Results:
After interviewing the top candidates we provided, our client selected an individual who has
worked out very well. Because this client proactively planned for their staffing needs, they
received an exceptional temporary employee who transitioned seamlessly into their
environment.
In our clients words:
I have used Berks and Beyond in the past and I have had good success with the staff and
employees that we have used as temps and hired to full-time employment.
The employee they provided is very professional and has picked up the position she has
been training for very successfully. She is always on time, has a great personality and is a
team player. I am very happy to this point with this individual. In addition, Cory has been
very helpful with finding, screening and providing our company with qualified candidates for
our positions.
Mobilizing Individual and Groups


CHAPTER: IV

Leadership

Concepts
Good leaders are made not born. If you have the desire and willpower, you can become an
effective leader. Good leaders develop through a never ending process of self-study,
education, training, and experience (Jago, 1982). This guide will help you through that
process.
To inspire your workers into higher levels of teamwork, there are certain things you must be,
know, and, do. These do not come naturally, but are acquired through continual work and
study. Good leaders are continually working and studying to improve their leadership skills;
they are NOT resting on their laurels.
Leadership is a process by which a person influences others to accomplish an objective and
directs the organization in a way that makes it more cohesive and coherent. This definition is
similar to Northouse's (2007, p3) definition Leadership is a process whereby an individual
influences a group of individuals to achieve a common goal.
Leaders carry out this process by applying their leadership knowledge and skills. This is
called Process Leadership (Jago, 1982). However, we know that we have traits that can
influence our actions. This is called Trait Leadership (Jago, 1982), in that it was once
common to believe that leaders were born rather than made.
While leadership is learned, the skills and knowledge processed by the leader can be
influenced by his or hers attributes or traits; such as beliefs, values, ethics, and character.
Knowledge and skills contribute directly to the process of leadership, while the other
attributes give the leader certain characteristics that make him or her unique.
Skills, knowledge, and attributes make the Leader, which is one of the:
There are four major factors in leadership (U.S. Army, 1983):
Leader
You must have an honest understanding of who you are, what you know, and what you can
do. Also, note that it is the followers, not the leader or someone else who determines if the
leader is successful. If they do not trust or lack confidence in their leader, then they will be
uninspired. To be successful you have to convince your followers, not yourself or your
superiors, that you are worthy of being followed.


Followers
Different people require different styles of leadership. For example, a new hire requires more
supervision than an experienced employee does. A person who lacks motivation requires a
different approach than one with a high degree of motivation. You must know your people!
The fundamental starting point is having a good understanding of human nature, such as
needs, emotions, and motivation. You must come to know your employees' be, know, and do
attributes.

Communication
You lead through two-way communication. Much of it is nonverbal. For instance, when you
set the example, that communicates to your people that you would not ask them to perform
anything that you would not be willing to do. What and how you communicate either builds
or harms the relationship between you and your employees.
Situation
All situations are different. What you do in one situation will not always work in another.
You must use your judgment to decide the best course of action and the leadership style
needed for each situation. For example, you may need to confront an employee for
inappropriate behavior, but if the confrontation is too late or too early, too harsh or too weak,
then the results may prove ineffective. Also note that the situation normally has a greater
effect on a leader's action than his or her traits. This is because while traits may have an


impressive stability over a period of time, they have little consistency across situations
(Mischel, 1968). This is why a number of leadership scholars think the Process Theory of
Leadership is a more accurate than the Trait Theory of Leadership.
Various forces will affect these four factors. Examples of forces are:
your relationship with your seniors
the skill of your followers
the informal leaders within your organization
how your organization is organized

Some of the definition regarding leadership is:

George R. Terry leadership is the activity of influencing people to strive willingly
for mutual objectives.
Stephen P. Robbins leadership is the ability to influence a group toward
achievement of goals.
Koontz and Weihrich leadership is the art of or process of influencing people so
that they will strive willingly and enthusiastically toward the achievement of group
goals.

Functions of Leadership
Yukl concludes his book with his opinion of the 10 most effective leadership functions for
enhancing collective work in teams and organizations. But he reminds us there is no recipe
for leadership, and these 10 functions can and should be performed by anyone, anywhere in
the organization. Here is Yukls list:
1. Help interpret the meaning of events
2. Create alignment on objectives and strategies
3. Build task commitment and optimism
4. Build mutual trust and cooperation
5. Strengthen collective identity
6. Organize and coordinate activities
7. Encourage and facilitate collective learning
8. Obtain necessary resources and support
9. Develop and empower people
10. Promote social justice and morality



Leadership versus Management

A person can be effective leader, but may not be good manager. A good manager needs to
have managerial skills. He needs to be good leader.
But leader may or may not be effective manager. They may not necessary be good managers.
Management is doing things right. Leadership is doing the right things.

Basic Manager Leader
origin A person becomes a manager by virtue of
his position.
A person becomes a leader
on basis of his personal
qualities.
formal right Manager has got formal rights in an
organization because of his status.
Rights are not available to a
leader.
followers The subordinates are the followers of
managers.
The group of employees
whom the leaders lead is his
followers.
functions A manager performs all five functions of
management.
Leader influences people to
work willingly for group
objectives
necessity A manager is very essential to a concern. A leader is required to create
cordial relation between
person working in and for
organization.
stability It is more stable. Leadership is temporary


mutual
relationship
All managers are leaders. All leaders are not managers
Accountability Manager is accountable for self and
subordinates behavior and performance.
Leaders have no well defined
accountability.
concern A managers concern is organizational
goals.
A leaders concern is group
goals and members
satisfaction.

The manager administers; the leader innovates.
The manager is a copy; the leader is an original.
The manager maintains; the leader develops.
The manager accepts reality; the leader investigates it.
The manager focuses on systems and structure; the leader focuses on people.
The manager relies on control; the leader inspires trust.
The manager has a short-range view; the leader has a long-range perspective.
The manager asks how and when; the leader asks what and why.
The manager has his or her eye always on the bottom line; the leader has his or her eye on
the horizon.
The manager imitates; the leader originates.
The manager accepts the status quo; the leader challenges it.
The manager is the classic good soldier; the leader is his or her own person.
The manager does things right; the leader does the right thing.
The most dramatic differences between leaders and managers are found at the extremes: poor
leaders are despots, while poor managers are bureaucrats in the worst sense of the word.
Whilst leadership is a human process and management is a process of resource allocation,
both have their place and managers must also perform as leaders. All first-class managers
turn out to have quite a lot of leadership ability.

Qualities of Good Leadership

1. To act as a representative of the work-group: Leader is the link between the top
management and the work group. He has to communicate the problems and difficulties of
the work group to the management and the expectation of the management to the work
group. He acts as a link between the top management and the work group.

2. To develop team spirit: One of the core functions of the Leader manager is that to create
a team spirit in between the members of the group. They should act as a team rather than
performing as individuals. It is his responsibility to create a pleasant atmosphere keeping
in view the subordinates needs, potential abilities and competence.

3. To act as a counselor of the people at work: When the subordinates face problems at
work, which may be technical or emotional, the leader has to guide and advise the
subordinate concerned. There may be situation which is out of control, in that situation,


leader must stand behind the subordinate to encourage and support and find a solution for
the problem.

4. Proper use of Power: Leader must be careful while exercising his power or authority in
relation to his subordinates. According to the situation he may exercise different types of
powers like reward power, corrective power, coercive power, expert power, formal or
informal power etc., for the positive response from his subordinate. Make sure that while
using the power the response from his subordinate should not yield a negative response to
the group work. Leader must analyze the situation before exercising his power.

5. Time Management: Leader must ensure the timely completion of the work while
ensuring the quality and efficiency of the work. At different stages, the work should be
complete according to the plan. The timely completion of the individual tasks will ensure
the completion of the group work. Leader should monitor and ensure the individual task
at different stages is accomplished as per the plan.

6. Secure effectiveness of group-effort: To get the maximum contribution towards the
achievement of objectives the leader must delegate authority, ensure the availability of
the adequate resources, and provide for a reward system to improve the efficiency of
capable workmen, invite participation of employees in decision making and communicate
necessary information to the employees.

Leadership is one of the core functions of the Management. The management has to get the
work done, for that Managers use their Leadership Quality.

Development of Leadership Theories

1900 - The Great Man Theories Its innate ability who is born to lead?

1940s - 1950s Trait Theory What universal traits are common to all leaders.

1950 1960 Behavior Theory What key behavioral patterns result in leadership.

1960 1970 Contingency /situational Establish with leadership behavior
succeeded in specific situation.



Leadership Style

Leadership style as per Kurt Lewins is

Autocratic Leadership Style
Democratic Leadership Style
Laissez-Faire Leadership Style

1. Autocratic Leadership
Autocratic leadership is an extreme form of transactional leadership, where leaders have a
lot of power over their people. Staff and team members have little opportunity to make
suggestions, even if these would be in the team's or the organization's best interest.
The benefit of autocratic leadership is that it's incredibly efficient. Decisions are made
quickly, and work gets done efficiently.
The downside is that most people resent being treated this way. Therefore, autocratic
leadership can often lead to high levels of absenteeism and high staff turnover. However,
the style can be effective for some routine and unskilled jobs: in these situations, the
advantages of control may outweigh the disadvantages.
Autocratic leadership is often best used in crises, when decisions must be made quickly
and without dissent. For instance, the military often uses an autocratic leadership style; top
commanders are responsible for quickly making complex decisions, which allows troops
to focus their attention and energy on performing their allotted tasks and missions.

2. Bureaucratic Leadership

Bureaucratic leaders work "by the book." They follow rules rigorously, and ensure that
their people follow procedures precisely.
This is an appropriate leadership style for work involving serious safety risks (such as
working with machinery, with toxic substances, or at dangerous heights) or where large
sums of money are involved. Bureaucratic leadership is also useful in organizations where
employees do routine tasks (as in manufacturing).
The downside of this leadership style is that it's ineffective in teams and organizations that
rely on flexibility, creativity, or innovation.
Much of the time, bureaucratic leaders achieve their position because of their ability to
conform to and uphold rules, not because of their qualifications or expertise. This can
cause resentment when team members don't value their expertise or advice.

3. Charismatic Leadership

A charismatic leadership style can resemble transformational leadership because these
leaders inspire enthusiasm in their teams and are energetic in motivating others to move
forward. This ability to create excitement and commitment is an enormous benefit.


The difference between charismatic leaders and transformational leaders lies in their
intention. Transformational leaders want to transform their teams and organizations.
Charismatic leaders are often focused on themselves, and may not want to change
anything.
The downside to charismatic leaders is that they can believe more in themselves than in
their teams. This can create the risk that a project or even an entire organization might
collapse if the leader leaves. A charismatic leader might believe that she can do no wrong,
even when others are warning her about the path she's on; and this feeling of invincibility
can ruin a team or an organization.
Also, in the followers' eyes, success is directly connected to the presence of the
charismatic leader. As such, charismatic leadership carries great responsibility, and it
needs a long-term commitment from the leader.

4. Democratic/Participative Leadership

Democratic leaders make the final decisions, but they include team members in the
decision-making process. They encourage creativity, and team members are often highly
engaged in projects and decisions.
There are many benefits of democratic leadership. Team members tend to have high job
satisfaction and are productive because they're more involved in decisions. This style also
helps develop people's skills. Team members feel in control of their destiny, so they're
motivated to work hard by more than just a financial reward.
Because participation takes time, this approach can slow decision-making, but the result is
often good. The approach can be most suitable when working as a team is essential, and
when quality is more important than efficiency or productivity.
The downside of democratic leadership is that it can often hinder situations where speed or
efficiency is essential. For instance, during a crisis, a team can waste valuable time
gathering people's input. Another downside is that some team members might not have the
knowledge or expertise to provide high quality input.

5. Laissez-Faire Leadership ( Paternalistic)

This French phrase means "leave it be," and it describes leaders who allow their people to
work on their own. This type of leadership can also occur naturally, when managers don't
have sufficient control over their work and their people.
Laissez-faire leaders may give their teams complete freedom to do their work and set their
own deadlines. They provide team support with resources and advice, if needed, but
otherwise don't get involved.
This leadership style can be effective if the leader monitors performance and gives
feedback to team members regularly. It is most likely to be effective when individual team
members are experienced, skilled, self-starters.


The main benefit of laissez-faire leadership is that giving team members so much
autonomy can lead to high job satisfaction and increased productivity.
The downside is that it can be damaging if team members don't manage their time well or
if they don't have the knowledge, skills, or motivation to do their work effectively.

6. People-Oriented/Relations-Oriented Leadership

With people-oriented leadership, leaders are totally focused on organizing, supporting, and
developing the people on their teams. This is a participatory style and tends to encourage
good teamwork and creative collaboration. This is the opposite of task-oriented leadership.
People-oriented leaders treat everyone on the team equally. They're friendly and
approachable, they pay attention to the welfare of everyone in the group, and they make
themselves available whenever team members need help or advice.
The benefit of this leadership style is that people-oriented leaders create teams that
everyone wants to be part of. Team members are often more productive and willing to take
risks, because they know that the leader will provide support if they need it.
The downside is that some leaders can take this approach too far; they may put the
development of their team above tasks or project directives.



7. Servant Leadership

This term, created by Robert Greenleaf in the 1970s, describes a leader often not formally
recognized as such. When someone at any level within an organization leads simply by
meeting the needs of the team, he or she can be described as a "servant leader."
Servant leaders often lead by example. They have high integrity and lead with generosity.
In many ways, servant leadership is a form of democratic leadership because the whole
team tends to be involved in decision making. However, servants leaders often "lead from
behind," preferring to stay out of the limelight and letting their team accept recognition for
their hard work.
Supporters of the servant leadership model suggest that it's a good way to move ahead in a
world where values are increasingly important, and where servant leaders can achieve
power because of their values, ideals, and ethics. This is an approach that can help to
create a positive corporate culture and can lead to high morale among team members.
However, other people believe that in competitive leadership situations, people who
practice servant leadership can find themselves left behind by leaders using other
leadership styles. This leadership style also takes time to apply correctly: it's ill-suited in
situations where you have to make quick decisions or meet tight deadlines.
Although you can use servant leadership in many situations, it's often most practical in
politics, or in positions where leaders are elected to serve a team, committee, organization,
or community.

8.Task-Oriented Leadership

Task-oriented leaders focus only on getting the job done and can be autocratic. They
actively define the work and the roles required, put structures in place, and plan, organize,
and monitor work. These leaders also perform other key tasks, such as creating and
maintaining standards for performance.
The benefit of task-oriented leadership is that it ensures that deadlines are met, and it's
especially useful for team members who don't manage their time well.
However, because task-oriented leaders don't tend to think much about their team's well-
being, this approach can suffer many of the flaws of autocratic leadership, including
causing motivation and retention problems.

9. Transactional Leadership

This leadership style starts with the idea that team members agree to obey their leader
when they accept a job. The "transaction" usually involves the organization paying team
members in return for their effort and compliance. The leader has a right to "punish" team
members if their work doesn't meet an appropriate standard.
Although this might sound controlling and paternalistic, transactional leadership offers
some benefits. For one, this leadership style clarifies everyone's roles and responsibilities.
Another benefit is that, because transactional leadership judges team members on


performance, people who are ambitious or who are motivated by external rewards
including compensation often thrive.
The downside of this leadership style is that team members can do little to improve their
job satisfaction. It can feel stifling, and it can lead to high staff turnover.
Transactional leadership is really a type of management, not a true leadership style,
because the focus is on short-term tasks. It has serious limitations for knowledge-based or
creative work. However, it can be effective in other situations.

10. Transformational Leadership

As we discussed earlier in this article, transformation leadership is often the best
leadership style to use in business situations.
Transformational leaders are inspiring because they expect the best from everyone on their
team as well as themselves. This leads to high productivity and engagement from everyone
in their team.
The downside of transformational leadership is that while the leader's enthusiasm is passed
onto the team, he or she can need to be supported by "detail people."
That's why, in many organizations, both transactional and transformational leadership
styles are useful. Transactional leaders (or managers) ensure that routine work is done
reliably, while transformational leaders look after initiatives that add new value.
It's also important to use other leadership styles when necessary this will depend on the
people you're leading and the situation that you're in.

Approaches to Leadership

Approaches of leadership can be divided into three categories as:
1. Trait Approach
(a) The Ohio State Studies
(b) University Of Michigan studies
(c) The Managerial Grid
3. Situational Approach
a. Fiedler Model
b. Path Goal Theory

1. Trait Approach :( Natural part of personality by birth)
It is known as great-man theory.
Assumes Leaders are born not made.
Similar in some ways to "Great Man" theories, trait theories assume that people
inherit certain qualities and traits that make them better suited to leadership.


Trait theories often identify particular personality or behavioral characteristics shared
by leaders.
If particular traits are key features of leadership, then how do we explain people who
possess those qualities but are not leaders?

Four primarily traits by McCall and Lombardo (1983) are:

Emotional Stability and Composure
Admitting Error
Good interpersonal skill
Intellectual breadth

Some of the other personality traits are:

Supervising ability, Intelligence, Power over others, Initiative, Self actuation, Self
assurance, Decisiveness, Maturity, Muscularity, Job Security etc.

2. Behavioral Approach:
(b) University Of Michigan studies
(c) The Managerial Grid
Behavioral theories of leadership are based upon the belief that great leaders are
made, not born.
Rooted in behaviorism, this leadership theory focuses on the actions of leaders not on
mental qualities or internal states.
According to this theory, people can learn to become leaders through teaching and
observation.

The Ohio State Leadership Studies which began in the 1940s and focused on how
leaders could satisfy common group needs.
The findings indicated that the two most important dimensions in leadership included:
"Initiating Structure", and "Consideration".
Initiating Structure: Leader defines and structure his role and those of his
subordinates in search of goal attainment. Organize work, work relationship goal falls
under these categories.
Consideration: consideration leaders are involved in solving personal problems, they
are friendly in nature, treat all employees equally. Mutual trust, respect for
subordinates ideas and feeling falls under these categories.
These characteristics could be either high or low and were independent of one
another.


The research was based on questionnaires to leaders and subordinates. These
questionnaires are known as the Leader Behavior Description Questionnaire (LBDQ)
and the Supervisor Behavior Description Questionnaire (SBDQ). By 1962, the LBDQ
was on version XII.

(b) University of Michigan Studies:

The Michigan Leadership Studies which began in the 1950s and indicated that
leaders could be classified as either "employee centered," or "job centered."
These studies identified three critical characteristics of effective leaders: task oriented
behavior, relationship-oriented behavior, and participative leadership.

Major Finding

UNIVERSITY TASK ORIENTED PEOPLE ORIENTED
Ohio State Studies initiating structure consideration
University of Michigan studies:

Job Centered employee centered

People/Employee Oriented Behaviour:

Like showing trust, respect for subordinates, Genuine Concern, looking for their
welfare.

Task/ Job Oriented Behaviour:

The behaviour that tends to define and structure work role. Assigning specific tasks to
subordinates, classify work duties and procedures etc.

Comparisons between Leadership Models and Their Contributions

The Ohio State and University of Michigan leadership models are different in that the
University of Michigan places the two leadership behaviours at opposite ends of the same
continuum, making it one-dimensional. The Ohio State University Model considers the two
behaviours independent of one another, making it two-dimensional.
University of Michigans one dimensional model proposed two leadership styles (1)
employee-centred and (2) job-centred while Ohio State leadership model has four leadership
styles as follows, (1) low initiating structure and high consideration, (2) high initiating


structure and high consideration, (3) low initiating structure and low consideration, and (4)
high initiating structure and low consideration.

Managerial Grid

This is an interesting illustration presented by Blake and Moulton in 1962 showing four
extreme forms of management and many variations in between. In the top left of the grid,
Country Club Management has maximum concern for people, but minimum concern for
production. Task Management on the bottom right has minimum concern for people, but
maximum concern for production. The other extremes are to have maximum concern for both
people and production (Team Management), or to have minimum concern for both people
and production (Impoverished Management). Most firms are probably somewhere in the
middle of the grid.



Situational Approach:

Some of the widely used models for effective leadership are:
Fiedler Model
Path Goal Theory

Situational theories propose that leaders choose the best course of action based upon
situational variables. Different styles of leadership may be more appropriate for certain types
of decision-making. For example, in a situation where the leader is the most knowledgeable
and experienced member of a group, an authoritarian style might be most appropriate. In
other instances where group members are skilled experts, a democratic style would be more
effective.
(a) Fiedler Contingency Model:
Fred E. Fiedlers contingency theory of leadership effectiveness was based on studies of a
wide range of group effectiveness, and concentrated on the relationship between leadership
and organizational performance. This is one of the earliest situation-contingent leadership
theories given by Fiedler. According to him, if an organization attempts to achieve group
effectiveness through leadership, then there is a need to assess the leader according to an
underlying trait, assess the situation faced by the leader, and construct a proper match
between the two.
It is necessary to match the leader with the situation based on three criteria.

Leader-member relations--The degree of confidence, trust, and respect subordinates have in
their leader.

Task structure--The degree to which the job assignments of subordinates are structured or
unstructured.

Position power--The degree of influence a leader has over power variables such as hiring,
firing, discipline, promotions, and salary increases

The next step is to evaluate the situation in terms of these three contingency variables.

The better the leader-member relations, the more highly structured the job, and the stronger
the position power, the more control or influence the leader has.

Fiedler concluded that task-oriented leaders perform best in situations that are very favorable
or very unfavorable to them.



A moderately favorable situation, however, is best handled through relationship-oriented
leadership
Leadership Effectiveness
The leaders effectiveness is determined by the interaction of the leaders style of behavior
and the favorableness of the situational characteristics. The most favorable situation is when
leader-member relations are good, the task is highly structured, and the leader has a strong
position power.
Research on the contingency model has shown that task-oriented leaders are more effective in
highly favorable (1, 2, 3) and highly unfavorable situation (7, 8), whereas relationship-
oriented leaders are more effective in situations of intermediate favorableness (4, 5, 6).

Findings of fielder are:

(b) Path Goal Theory of Leadership

Robert House proposes that the leader can affect the performance, satisfaction, and
motivation of a group in different ways:
Offering rewards for achieving performance goals
Clarifying paths towards these goals
Removing obstacles to performance
A person may perform these by adopting a certain leadership style, based on the situation:

Directive leadership: Specific advice is given to the group and ground rules and
structure are established. For example, clarifying expectations, specifying or assigning
certain work tasks to be followed.
Supportive leadership: Good relations are promoted with the group and sensitivity
to subordinates' needs is shown.
Participative leadership: Decision making is based on consultation with the group
and information is shared with the group.
Achievement-oriented leadership: Challenging goals are set and high performance
is encouraged while confidence is shown in the groups' ability.



Managing Work Teams

Concepts of Team and Group

TEAM stand for together everyone achieve more.
The terms team and group are often used interchangeably, but there are some
differences between these two concepts.
We define teams as consisting of three to 25 people who:
Work toward a common set of goals
Work jointly
Share common leadership
Hold joint accountability for performance
See themselves as being part of a team with common goals and shared fates
Common examples of teams might include commercial aircrews, crews of
firefighters, United States Army platoons, product development teams, manufacturing
shift workers, fast food restaurant crews, research and development teams, and soccer
teams.
The individuals in each of these examples share common goals, depend on the help of
the other team members, share leadership and common fates, and most importantly,
identify with their teams.

GROUP:
Groups are clusters of people that do not share these five characteristics to the same
extent as teams.
A regional sales team responsible for selling insurance and other financial services to
local citizens would be a prototypical group.


In this so-called team, each sales rep has individual revenue and profitability goals for
an assigned geographic territory.
An individuals ability to achieve these goals does not depend on what the other sales
reps do; instead it is completely dependent upon that persons own performance.
A team is internally organized, with specific goals and usually with specific roles for
different members of the team. A group is just a collection of people with something
in common, such as being in the same place or having a shared interest.

Importance of Group

People from diverse backgrounds come together to form groups in business and personal
settings. Whether you own a small business, are employed by a company, volunteer at a non-
profit or are a member of a professional organization, working in a group is inevitable. Group
work, whether it is a team of two or a team of 20, is important in solving problems and
accomplishing tasks.

1. Delegate Tasks

Working in a group allows members to share responsibilities, rather than the brunt of the
work falling in the hands of one person. Instead, group members can delegate tasks to
individuals who possess the knowledge, skills and abilities necessary to accomplish the task
successfully.
Spark Creativity
Group work helps spark creativity in the minds of the group members giving them a wider
range of ideas as they work to come up with solutions for organizational problems.


Individuals may go into a group with ideas, but with the help of the group, their ideas get
expanded upon and turned into creative, attainable, strategic or timely solutions.

2. Share Diverse Opinions

Group work gives members an opportunity to explore diverse opinions, which can provide
different points of view, as they work to solve problems. One group member may consider an
option or have a stance that other members of the group have not considered. With diverse
experiences and knowledge, group work ensures that problems are not solved using one
person's input.
3. Learn to Compromise

Group work teaches members the essence of compromising and not insisting upon their own
ways. As group members come up with solutions, they work to incorporate the ideas and
opinions of the group in their final decisions.

4. Combine Skills

Groups are composed of individuals who may share some of the same knowledge and skills,
however, oftentimes, members come from different educational backgrounds and have
different work and volunteer experiences, which uncovers strengths that one group member
may have, while others are lacking.

5. Build Relationships
Working in a group can help individuals build long-lasting relationships based on trust and
loyalty. As group members, people learn about the commonalities they share and differences,
which lead them to seek group members they can build relationships with even outside of the
group.

Types of Group

1. Formal Group
A formal group is created within an organisation to complete a specific role or task. This
may be a one off objective such as the launch of a particular product or service or a
permanent/ongoing objective such as the provision of Information Technology (IT).

2. Informal Group

Informal groups are established by individuals who decide they want to interact with each
other. Informal groups usually do not have a specific purpose; often the group forms
because the group members regularly happen to be in the same location or because they


enjoy each other's company. For example people may form a group because they sit close
together in an office or live together in a house.

3. Primary Group

A primary group is made up of a small group of people who interact regularly. A small
team with a leader is an example of a primary group. A family can also be called a primary
group. Within the primary group, values, beliefs and culture are all very important.

4. Secondary Group

When a large number of people get together (who do not normally get together) it is called
a secondary group. Secondary group members do not get the opportunity to get to know
each other as well as primary group members because the interaction with each other is
less than in a primary group. When a secondary group is formed, individuals usually have
their own agenda and goals. The relationship they form is not long term and social
interaction within a secondary group is likely to be low.

Formation of Work Groups

Tuck man and Jensen draw on the movement known as group dynamics, which is concerned
with why groups behave in particular ways. This offers various suggestions for how groups
are formed and how they develop over time. The formation of some groups can be
represented as a spiral; other groups form with sudden movements forward and then have
periods with no change. Whatever variant of formation each group exhibits, they suggest that
all groups pass through six sequential stages of development. These stages may be longer or
shorter for each group, or for individual members of the group, but all groups will need to
experience them. They are forming, storming, and norming, performing, mourning and
retiring.
1. Forming
What was the task?
Did you all share the same expectations of the task?
Did you all have the same attitude to working in a group?
Did you feel any anxiety at the outset of the activity?
2. Storming
Was there any conflict in the group?
Did you all agree on the means of carrying out the task?
Did you have a leader and was his/her authority challenged?


Did any group members withdraw from the group?
3. Norming
Did you move on to agree methods of working?
Did you have a common goal?
Did you cooperate with each other?
Did you work out how to proceed at all? (If not, you were probably still
storming.)
4. Performing
Did everyone take on a functional role to achieve the task?
Did you work constructively and efficiently?
Did the group's activity focus on fulfilling the task?
Did you experience a sense of achievement?

5. Retiring/Adjourning
Did you stop abruptly and all go your separate ways or did you finish the task
and then go off together and socialize?
Did you talk about the group and your experience of it?
What sort of issues did you discuss or think about after the group activity?
Was it more or less acceptable to give and receive feedback in a relaxed
atmosphere when adjourning?



6. Mourning/Grieving
Have you experienced the mourning stage following the completion of a show or
project?
Have you ever felt empty or sad when a group activity has finished
Why might some people feel the mourning stage more acutely than others?
How do you deal with your own feelings after the project or show?
Reasons for forming of Group
Member security
Status
Self esteem
Social needs
Unity
Goal achievement
Socialization of new employees
Getting job done
Decision making
communication



Team management

Concept
Team management refers to techniques, processes and tools for organizing and coordinating
a group of individuals working towards a common goali.e. a team.
Several well-known approaches to team management have come out of academic work.
Examples include the Belbin Team Inventory by Meredith Belbin, a method to identify the
different types of personalities within teams, and Ken Blanchard's description of "High
Performing Teams".
The 'Team Development Model', identified by Bruce Tuckman, offers a foundational
definition of the stages teams go through during their lifecycle. Those stages are labeled
Forming, Storming, Norming and Performing.

Types of Teams
When individuals with a common interest, goal, attitude, need and perception come together,
a team is formed. Individuals need to come and work together to form a team for the
accomplishment of complicated tasks. In a team, all team members contribute equally and
strive hard to achieve the teams objective which should be predefined.
In any organization, no one works alone. Every employee is a part of a team and works in
close coordination with the team members to perform his level best and in turn benefit the
organization. The team members should complement each other and come to each others
need whenever required.
Teams can be formed anywhere, anytime whenever the task is little difficult and complicated.
Let us understand the various types of teams in detail.
1. Permanent teams- These teams perform on a permanent basis and are not dissolved
once the task is accomplished. Let us understand the concept with an example.
Mike, Peter, Joe and Ana had a strong inclination towards branding as well as
promotions and hence were a part of the branding team with a leading organization.
They were primarily responsible for promoting their brand and designing marketing
strategies to generate maximum revenue for their organization. They worked
extremely hard and always managed to achieve their targets well in advance, but their
team was always in place and never dissolved. Their organization never asked them to
leave or ever dissolved their team. Such teams are called permanent teams.
Work or no work, the human resources team, operation team, administration team
always function effectively throughout the year and hence are permanent teams.


2. Temporary teams - Unlike permanent teams, temporary teams loose their
importance, once the task is accomplished. Such teams are usually formed for a
shorter duration either to assist the permanent team or work when the members of the
permanent team are busy in some other project.
When organizations have excess of work, they generally form temporary teams which
work in association with the members of the permanent team for the accomplishment
of the task within the stipulated time.
3. Task Force - Such teams are formed for a special purpose of working on any specific
project or finding a solution to a very critical problem.
The government generally appoints special teams to investigate critical issues like
bomb blasts, terrorist attacks and so on. The task force explores all the possible
reasons which led to a severe problem and tries to resolve it within a given deadline.
4. Committee - Committees are generally formed to work on a particular assignment
either permanently or on a temporary basis. Individuals with common interests, more
or less from the same background, attitude comes together on a common platform to
form a committee and work on any matter.
To organize any cultural event, organizations generally make committees to raise
funds, invite celebrities and all the major tasks involved to successfully organize any
event. The committee members work together, design strategies to successfully
accomplish the task.
In educational institutes, various committees are formed where students with a
common interest join hands to organize cultural events and various other activities
required for the all round development of students.
5. Organization/Work Force - Such groups are formed in organizations where team
members work together under the expert guidance of leader. A leader or a supervisor
is generally appointed among the members itself and he along with his team works
hard to achieve a common goal. The leader all through must stand by his team and
extract the best out of each team member. He must not underestimate any of his team
members and take his team along to avoid conflicts.
Samuel was working with a leading advertising firm with two members reporting to
him. Samuel always believed in his team members and worked together with his team
and no doubts his team always did wonders and was way ahead of others.
6. Self Managed Teams - Self Managed Teams consist of individuals who work
together again for a common purpose but without the supervision of any leader. Here
as the name suggests every individual is accountable for his individual performance.


The team members of self managed teams must respect each other and should never
loose focus on their target. No leader is appointed and the team members have to take
their own responsibility. Individuals take the initiative on their own and are their own
guides and mentors.
7. Cross Functional Team - Let us understand this with the help of an example.
Maria and Andy both were part of the branding team. They got an assignment from
their superiors to be completed within two days. Unfortunately Andy met with an
accident and was advised complete bed rest. To avoid delays, Peter from the
operations team was shifted to the marketing team to assist Maria for the time being
and form a team. Such teams are called cross functional teams. Ideally the employees
should be more or less on the same level to avoid ego hassles. Individuals from
different areas come and work together for a common objective to form a cross
functional team. In such teams, people from different areas, interests and likings join
hands to come out with a unique idea to successfully complete a task.
8. Virtual Teams - Virtual teams consist of individuals who are separated by distances
and connected through computer. Here individuals communicate with each other
online through internet. Sam at Los Angeles can form a team with Mandy at Mexico
and Sara at Denver all working for a common objective but the communication is
totally digital through internet. Such teams are helpful when employees need to
connect with each other and are located at different places. Individuals supporting any
community in social networking sites such as face book or orkut also form a virtual
team as all the members are from different locations but support a common
community. They all have a common objective -to support and promote their
community.
Strategy for Effective Team Management

Having goals or a clear purpose is important to each of us. In fact, people who set goals are
always more successful than the others.
For leaders who are serious about setting goals, some things are to be kept in mind. These
goals need to be Specific, Measurable, Attainable, Realistic, and with Timelines. Besides, for
any organization, goals should also be expressed positively. And for a team, goals need to be
personalized for each member of the team. All these goals should be put in writing, where
you as well as the team can see them often.
Once you sit down with your team and set some goals, it can be very useful to develop some
kind of action plan for accomplishing that goal.
Informality as well as Participation: In order to build an effective team, the climate
has to be informal, comfortable, as well as relaxed. There should be no tension or any


signs of boredom. Teams enjoy getting together, they interact easily. There should be
lots of good-natured kidding and laughter. Have seating arrangements in order to
facilitate this. A circle is the best seating arrangement usually, while a typical
classroom arrangement is the worst.

Listening: A highly efficient team has team members who use effective listening
techniques. These include questioning, paraphrasing, as well as summarizing in order
to get out ideas. Listening is the most effective factor that distinguishes effective
teams from ineffective teams. This is a highly important subject which needs to be
discussed in detail in another article.

The ability to really listen is a highly important skill. Each team member has to
have it. Listening lets you understand what the other person is saying. Besides, it
shows the other person that youre interested in what he/she has to say. But all of us
experience common listening problems.

We tend to let our attention wander. Our mind drifts away. We start thinking about
the time, or other tasks at hand. This way we lose our concentration.

We miss the real point of what is being said. We may end up focusing on the
personality of the speaker. Else we may let our judgment of the person based on past
experiences come in the way. Or, we may be trying hard to look for hidden messages
and lose out on the crux of the conversation.

Our emotions interfere with our judgment. This takes away our focus from what is
being said. Our judgment of the person interferes with our understanding of what is
being said.

We tend to interrupt and step on the statements of others. This way we dont
listen to what is being said. Besides, there is a tendency to think ahead to what we
want to say next and miss out on whats being said right now. It is important to use
the steps of active listening in order to be a good listener.
There are many facets of building an effective team. Having an informal atmosphere as well
as listening skills are some of them.



Team Effectiveness Model

CONTEXT
Adequate resources
Leadership and Structure
Climate of trust
Performance evaluation and reward
system
COMPOSITION
Abilities of members
Personality
Allocating roles
Diversity
Size of teams
Member flexibility
Member preferences

WORK DESIGN
Autonomy
Skill variety
Task variety
Task significance
PROCESS
Common purpose
Specific goals
Team efficiency
Conflict levels
Social loafing

Source: Robbins, 2005: 278



Organizational Conflicts

Concepts

People don't stop being people at work. Conflict unfortunately is inevitable. But
organizational conflict theory says there are several varieties of conflicts within an
organization--inter-personal being only one type. Departments have conflicts with one
another, senior managements have power struggles and organizations even have conflict with
other organizations. But there isn't consensus on what it all means. Some theorists say
conflict must be resolved; others say that it drives success.

Types of Organizational Conflicts

Interpersonal Conflicts

Some people don't mix--plain and simple. Perhaps outside work they would choose not to
socialize or interact. Perhaps if they weren't forced to deal with one another, they could have
friendly, polite conversation as acquaintances. But when forced to work together to achieve
goals or to share workspace on a consistent basis, friction may arise.
In these situations, managers must take on the roles of mediator and counselor to diffuse the
situation and find resolution, or make a difficult choice to transfer or remove someone based
on inability to function in a team.

Role Conflict

Some conflicts between employees have nothing to do with personalities, but are caused by
circumstances related to their roles and duties. For example, a hospital administrator instructs
a nurse manager not to run a particular test on a patient because the patient's insurance refuses
to cover the costs.
The nurse knows the patient needs the test and has physician's orders to run them. The nurse's
obligation by code of ethics and licensing regulations is to the patient. The administrator has
a fiduciary duty to the hospital. They run into conflict due to their duties--when on another
day in another circumstance could find themselves fast friends.
This situation is inevitable in organizations. However, theorists disagree about whether this is
harmful. Some hold that some conflicts act as checks and balances while others can be
counter-productive and harmful to an organization's functioning.

Maturity and Immaturity Theory

One theory holds that people in their career lives want to grow and mature with increasing
levels of responsibility and opportunity--just as they do in personal lives. However, many
hierarchical organizations for the sake of efficiency, break jobs into specialties, giving
employees narrow scopes and duties, which they are expected to perform well. As a result,


employees don't get to use all of their talents and abilities, and feel constrained and unable to
develop.
The result is conflict between employees and the organization itself. On an individual level
employees may develop resentment and apathy. In some circumstances, sentiments can take
on larger dimensions and employees begin to formally or informally organize--sometimes
forming unions. Organizations that promote a high degree of specialization and little mobility
may find themselves with higher turnover as a result of the conflict stemming from Maturity-
Immaturity Theory.

Inter-group Conflict

Similar to role conflict, inter-group conflict usually occurs because of the roles and functions
of teams and departments. Both are just trying to do their jobs, but somehow run up against
each other. An example might be conflict between a sales and information technology
department. The sales department needs software to perform certain functions that support
their sales and invoicing. The IT department finds the request difficult because the requested
changes would negatively impact other parts of the company database.
The result is a tension or conflict through neither party's fault. This is considered a
problematic conflict requiring resolution by mediation or managerial decision. If the conflict
persists and becomes part of the company dynamic or culture, it can become very destructive
to the organization and everyone involved.
In other circumstances inter-group conflict can be healthy. Such an example would be two
sales teams that compete for the best results. While there may be some jeering and prodding
between them, they drive each other to perform better, producing higher commissions for
everyone and better results for the company. Conflict theory holds this to be a healthy or
useful conflict.

.
Conflict Management

Conflict Management is the process of limiting the negative aspects of conflict while
increasing the positive aspects of conflict.
The aim of conflict management is to enhance learning and group outcomes, including
effectiveness or performance in organizational setting (Ra him, 2002, p. 208).
Properly managed conflict can improve group outcomes (Alpert, Osvaldo, & Law, 2000;
Booker & Jame son, 2001; Ra-him & Bono ma, 1979; Kuhn & Poole, 2000; Church &
Marks, 2001 Conflict begins in an organization when group of colleagues start gossiping,
walking in factions and not taking their role seriously.
Some of the most common causes of conflict are communications breakdowns, personality
clashes, power and status differences, goal discrepancies, disputed authority boundaries, and
allocation of resources.
Every conflict presents an opportunity for developing innovative procedures, according to
author Lawrence Khan in his article, "Fundamentals of Conflict for Business Organizations."
Workplace conflicts are inevitable. People with different personalities and different work


methods often disagree. This leads to loss of productivity, distraction and uncomfortable
feelings in the workplace. However, organization leaders can resolve conflicts by listening to
employees and learning from the experience.
Sources of Organizational Conflict
Lack of Information
A cause for conflict in organizations is lack of information. This lack of information comes
from a variety of culprits, such as not knowing how to use email properly or not knowing
how to read a report correctly. Employees should be knowledgeable about how to understand
and utilize the information they receive. Staff and company meetings are an ideal way to
educate a group of employees at one time. Teach methods for organizing emails, reading
company reports and checking personal mailboxes frequently. Learning these skills will help
avoid conflict from lack of information in the organization.
Ineffective Organization
Tammy Lenski, Ed.D describes conflict caused by ineffective organization systems in her
article titled, "Conflict at Work: The Root Causes of Workplace Conflict Are Often
Systemic." Dr. Lenski does not place the blame on individuals, but on the organizational
system. She states that these organizational problems may be invisible, until the conflict
arises. Organizational culture describes the way employees and leaders communicate. Dr.
Lenski states that intervention systems between employees and leaders can help conflicts
unfold in a healthy way. If employees and leaders are not communicating effectively, conflict
will arise and have a ripple effect throughout the system.



Limited Resources
Mediate.com features an article by Lawrence Kahn called, "Fundamentals of Conflict for
Business Organizations." In this article, Khan states that a major basis for conflict in
organizations is limited resources. Competition in the organization arises over people's fight
for resources, such as land and money. Intangible assets such as power, appreciation and
stature may also cause conflict. Because many marketplaces deal with scarce funds, different
departments within the same organization find themselves competing for the same money.
Khan states that conflicts of this type can be resolved if management understands that the
problem lies in the structure of the company, and not in the personalities of employees.
Effects of Conflict
The result of conflict is not always negative; it gives a positive effect as well.
Positive effect
a conflict gives positive effects if it is handled constructively. They are:
Positive change in the society
Opportunity for newer possibilities
Renewal in relationships
Increase in productivity of all sectors
These effects of conflict will bring positive change that will aid in the development of the
society.

Negative effect
the effects of conflict will be negative if proper conflict management is not done. The
negative effects are:
Increase in stress in people
Decrease in production
Participation for Social Harmony (UJYALO) Program 3
Degradation in relationships and worsening cooperation.
Restricted areas increase
Increase in the possibilities of violent conflict
these negative effects of conflict can lead to disintegration. So, importance must be
given to timely interventions to resolve conflict.

Ways to Minimize Conflicts
Collective bargaining
Especially in workplace situations, it is necessary to have agreed mechanisms in place for
groups of people who may be antagonistic (e.g. management and workers) to collectively
discuss and resolve issues. This process is often called "collective bargaining", because


representatives of each group come together with a mandate to work out a solution
collectively. Experience has shown that this is far better than avoidance or withdrawal, and
puts democratic processes in place to achieve "integrative problem solving", where people or
groups who must find ways of co-operating in the same organization, do so within their own
agreed rules and procedures.
Conciliation
The dictionary defines conciliation as "the act of procuring good will or inducing a friendly
feeling". South African labor relations legislation provides for the process of conciliation in
the workplace, whereby groups who are in conflict and who have failed to reach agreement,
can come together once again to attempt to settle their differences. This is usually attempted
before the more serious step of a strike by workers or a lock-out by management is taken; and
it has been found useful to involve a facilitator in the conciliation process. Similarly, any
other organization (e.g. sports club, youth group or community organization) could try
conciliation as a first step.
The difference between negotiation, mediation, and arbitration
Three methods of resolving situations that have reached the stage of open conflict are often
used by many different organizations. It is important to understand these methods, so that
people can decide which methods will work best for them in their specific conflict situation:
Negotiation: this is the process where mandated representatives of groups in a
conflict situation meet together in order to resolve their differences and to reach
agreement. It is a deliberate process, conducted by representatives of groups, designed
to reconcile differences and to reach agreements by consensus. The outcome is often
dependent on the power relationship between the groups. Negotiations often involve
compromise - one group may win one of their demands and give in on another. In
workplaces Unions and management representative usually sue negotiations to solve
conflicts. Political and community groups also often use this method.
Mediation: when negotiations fail or get stuck, parties often call in and independent
mediator. This person or group will try to facilitate settlement of the conflict. The
mediator plays an active part in the process, advises both or all groups, acts as
intermediary and suggests possible solutions. In contrast to arbitration (see below)
mediators act only in an advisory capacity - they have no decision-making powers
and cannot impose a settlement on the conflicting parties. Skilled mediators are able
to gain trust and confidence from the conflicting groups or individuals.
Arbitration: means the appointment of an independent person to act as an adjudicator
(or judge) in a dispute, to decide on the terms of a settlement. Both parties in a
conflict have to agree about who the arbitrator should be, and that the decision of the
arbitrator will be binding on them all. Arbitration differs from mediation and
negotiation in that it does not promote the continuation of collective bargaining: the
arbitrator listens to and investigates the demands and counter-demands and takes over


the role of decision-maker. People or organizations can agree on having either a single
arbitrator or a panel of arbitrators whom they respect and whose decision they will
accept as final, in order to resolve the conflict.

Conflict Management Strategies and Techniques

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.

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.



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.

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.

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.



Employee Motivation

Concepts

Motivating employees can be a manager's biggest challenge. Employee motivation is a key to
the overall effectiveness of an organization. An understanding of the applied psychology
within a workplace, also known as organizational behavior, can help achieve a highly
motivated workforce.

Defining Motivation

According to Gareth R. Jones and Jennifer M. George's book, "Contemporary Management,"
motivation is defined as "psychological forces that determine the direction of a person's
behavior in an organization, a person's level of effort and a person's level of persistence."

Decenzo and Robbins Motivation is willingness to exert high level of efforts to reach
organizational goals, conditioned by the efforts ability to satisfy some individual need.

Koontz and ODonnell Motivation is a general term applying to the entire class of
drives, desires, needs, wishes and similar forces that include an individual or a group of
people to work.

William G. Scott Motivation means a process of stimulating people to action to achieve
desired goals.

Dale S. Beach Motivation can be defined as a willingness to work to expand energy to
achieve a goal or reward.

Dalton E. Mc Farland The concept of motivation is mainly psychological. It relates to
those forces operating within the individual employee or subordinate which impel him to act
or not to act I certain ways.

Types of Motivation

There are two types of motivation, Intrinsic and Extrinsic motivation. It's important to
understand that we are not all the same; thus effectively motivating your employees requires
that you gain an understanding of the different types of motivation. Such an understanding
will enable you to better categorize your team members and apply the appropriate type of
motivation. You will find each member different and each member's motivational needs will
be varied as well. Some people respond best to intrinsic which means "from within" and will
meet any obligation of an area of their passion. Quite the reverse, others will respond better to
extrinsic motivation which, in their world, provides that difficult tasks can be dealt with


provided there is a reward upon completion of that task. Become an expert in determining
which type will work best with which team members.

1. Intrinsic Motivation

Intrinsic motivation means that the individual's motivational stimuli are coming from within.
The individual has the desire to perform a specific task, because its results are in accordance
with his belief system or fulfills a desire and therefore importance is attached to it.
Our deep-rooted desires have the highest motivational power. Below are some examples:
Acceptance: We all need to feel that we, as well as our decisions, are accepted by our
co-workers.
Curiosity: We all have the desire to be in the know.
Honor: We all need to respect the rules and to be ethical.
Independence: We all need to feel we are unique.
Order: We all need to be organized.
Power: We all have the desire to be able to have influence.
Social contact: We all need to have some social interactions.
Social Status: We all have the desire to feel important.

2. Extrinsic Motivation

Extrinsic motivation means that the individual's motivational stimuli are coming from
outside. In other words, our desires to perform a task are controlled by an outside source.
Note that even though the stimuli are coming from outside, the result of performing the task
will still be rewarding for the individual performing the task.
Extrinsic motivation is external in nature. The most well-known and the most debated
motivation is money. Below are some other examples:
Employee of the month award
Benefit package
Bonuses
Organized activities



Process of Motivation

One of the most important functions of management is to create willingness amongst the
employees to perform in the best of their abilities. Therefore the role of a leader is to arouse
interest in performance of employees in their jobs. The process of motivation consists of
three stages:-
1. A felt need or drive
2. A stimulus in which needs have to be aroused
3. When needs are satisfied, the satisfaction or accomplishment of goals.
Therefore, we can say that motivation is a psychological phenomenon which means needs
and wants of the individuals have to be tackled by framing an incentive plan.
Importance of Motivation
1. Puts human resources into action
Every concern requires physical, financial and human resources to accomplish the
goals. It is through motivation that the human resources can be utilized by making full
use of it. This can be done by building willingness in employees to work. This will
help the enterprise in securing best possible utilization of resources.
2. Improves level of efficiency of employees
The level of a subordinate or a employee does not only depend upon his qualifications
and abilities. For getting best of his work performance, the gap between ability and


willingness has to be filled which helps in improving the level of performance of
subordinates. This will result into-
a. Increase in productivity,
b. Reducing cost of operations, and
c. Improving overall efficiency.
3. Leads to achievement of organizational goals
The goals of an enterprise can be achieved only when the following factors take place
:-
a. There is best possible utilization of resources,
b. There is a co-operative work environment,
c. The employees are goal-directed and they act in a purposive manner,
d. Goals can be achieved if co-ordination and co-operation takes place
simultaneously which can be effectively done through motivation.
4. Builds friendly relationship
Motivation is an important factor which brings employees satisfaction. This can be
done by keeping into mind and framing an incentive plan for the benefit of the
employees. This could initiate the following things:
a. Monetary and non-monetary incentives,
b. Promotion opportunities for employees,
c. Disincentives for inefficient employees.
In order to build a cordial, friendly atmosphere in a concern, the above steps should
be taken by a manager. This would help in:
Effective co-operation which brings stability,
Industrial dispute and unrest in employees will reduce,
The employees will be adaptable to the changes and there will be no resistance
to the change,
This will help in providing a smooth and sound concern in which individual
interests will coincide with the organizational interests,
This will result in profit maximization through increased productivity.
5. Leads to stability of work force
Stability of workforce is very important from the point of view of reputation and
goodwill of a concern. The employees can remain loyal to the enterprise only when
they have a feeling of participation in the management. The skills and efficiency of
employees will always be of advantage to employees as well as employees. This will
lead to a good public image in the market which will attract competent and qualified


people into a concern. As it is said, Old is gold which suffices with the role of
motivation here, the older the people, more the experience and their adjustment into a
concern which can be of benefit to the enterprise.
From the above discussion, we can say that motivation is an internal feeling which can be
understood only by manager since he is in close contact with the employees. Needs, wants
and desires are inter-related and they are the driving force to act. These needs can be
understood by the manager and he can frame motivation plans accordingly. We can say that
motivation therefore is a continuous process since motivation process is based on needs
which are unlimited. The process has to be continued throughout.
We can summarize by saying that motivation is important both to an individual and a
business. Motivation is important to an individual as:
1. Motivation will help him achieve his personal goals.
2. If an individual is motivated, he will have job satisfaction.
3. Motivation will help in self-development of individual.
4. An individual would always gain by working with a dynamic team.
Similarly, motivation is important to a business as:
1. The more motivated the employees are, the more empowered the team is.
2. The more is the team work and individual employee contribution, more profitable and
successful is the business.
3. During period of amendments, there will be more adaptability and creativity.
4. Motivation will lead to an optimistic and challenging attitude at work place.
Theories of Maslow and Hertzberg
There are many similarities and dissimilarities between Maslows Need Hierarchy Theory
and Herzbergs Theory. They both are popular and widely accepted. The similarities and
dissimilarities are as follows:
Similarities:
(a) The basic similarity between the two theories is that they both assume that specific
needs affect behavior.
(b) Maslows physiological and safety needs is equal to Herzbergs hygiene factor whereas
Maslows esteem, social and self actualization needs are equal to Herzbergs Motivational
factors.


As we compare Frederick Herzberg's two factor theory and Abraham Maslow's hierarchy of
needs theory, they both specify the criteria as to what motivates people. We would also come
to realize that Abraham Maslow's theory is has a wider approach where as Herzberg's theory
considers work situations, his studies basically derive from within the work environment.
With Herzberg's theory there is no specific order when we look at the factors that cause
employees to be dissatisfied.
Techniques of employee motivation
Recession can lead to de-motivated staff - just when their input is vital. Here are some
motivations techniques that will help to get staff re-energized and engaged at work. To begin
with, make sure you have the right conditions in place so that your work culture supports
motivation.
Make sure you offer:
Fair pay and conditions
A comfortable, safe, working environment
Opportunities for employees to socialize and make friends
Clearly defined work responsibilities and goals
Education and training opportunities
Career opportunities
As a manager, you play a key role in building on a solid foundation and motivating
employees. Remember that 70% of people leave their boss, not the company.
So what can you do to make sure that employees are switched on at work?



Here are some practical motivation techniques that you can use to improve motivation
in your workplace:

1. Treat Employees as Individuals

Do you make assumptions about what motivates your employees? Some are likely to be
career focused, but others may see their work as a place to make friends and earn money.
Find out what motivates employees outside of work. Some enjoy a challenge such as a
sporting activity; others may like to be on committees so they can use their organizational
skills.
Use their innate talents in the workplace where possible to keep them motivated.
Set goals which stretch their abilities. Make goals SMART - specific, measurable,
achievable, and relevant and timeframe.

2. Treat Employees with Respect

Get to know your employees on a personal level, and offer support when needed, even if it
is only to listen to their concerns.
Ask your employees for their opinions where possible, for example if you are changing
systems or introducing new equipment. Being involved in decision making is one of the
best motivation techniques.
Catch your employees doing something well and praise them - and if you do this in front
of others, it makes the employee feel even better. Giving employees recognition for their
efforts will motivate them to repeat the process.

3. Provide Opportunities for Employee Learning and Development

Encourage a learning climate, through structured on-the-job training programmes, job
transfers, inter-disciplinary projects and support for further education. Aim to have your
employees constantly learning new skills and gaining new knowledge. This will reduce the
level of stagnation that can easily occur in a business.
Promote from within where feasible - and invest the time and support in developing
employees so they can take on new opportunities.
Some managers worry that by offering a high level of training to employees, they may
leave the business for better opportunities elsewhere. Remember this allows other
employees to rise up and take their place! Also the word will spread that you are a good
employer - which may encourage a higher caliber of external job applicants.

4. Make the Workplace a Fun Place

Having fun is one of the best motivation techniques. And small things can make all the
difference.


bringing sweets to team meetings
sharing non-business news through e.g. newsletters
arranging activities such as lunchtime yoga sessions
surprising employees with a birthday cake

Interpersonal and Organizational Communication
Concept

Websters dictionary states that communication is the act of exchanging information
and communicates means to exchange ideas.
Peter little defines communication as communication is a process by which
information is passed between individuals and /or organizations by means of
previously agreed symbols.
Keith Davis states that communication is a process of passing information and
understanding from one person to another.
The American Management Association considers communication to be: any
behavior that results in an exchange of meaning.
In the words of Hicks, when communication stops, organized action comes to an
end.

Two-way process of reaching mutual understanding, in which participants not only exchange
(encode-decode) information, news, ideas and feelings but also create and share meaning. In
general, communication is a means of connecting people or places. In business, it is a key
function of management--an organization cannot operate without communication between
levels, departments and employees. See also communications. The sharing of meaningful
information between two or more people with the goal of the receiver understanding the
sender's intended message. In business, the effectiveness of a company's internal and external
communication process is often very important to its overall success.



The barriers to an effective communication are and how they lead to an ineffective
communication.

Noise - Noise plays an important barrier to effective communication. Imagine you
want to pass on some information to a person standing next to a blaring mike. Do you
think, the sender will ever be able to interpret it correctly? Do you think the receiver
in this case is to blame? In this case, because of the blaring mike, the information will
never reach the person in its desired form. Any presentation or speech delivered in a
noisy classroom or auditorium is pointless as the information would never fall on the
ears of the listeners. Try sharing some information with your friend in an
overcrowded bus or a noisy market, correct information will never reach the recipient
and he would never be able to interpret it correctly or respond accordingly. Here noise
is an external communication barrier and it results in the distortion of the message.

Unorganized Thought - Unorganized and haphazard thoughts also are instrumental
in poor communication and a very important barrier to effective communication.
Mike to Monalisa -Please come at 2 pm, okay not 2 come at 2.30 pm instead, fine let
us freeze it for 3 pm
Monalisa is bound to get confused as Mike himself is not clear about the timings. The
sender must pass on crystal clear information to the receiver. The sender must first be
himself very clear what he wants to communicate and then only begin the
conversation. Abstract ideas, haphazard thoughts lead to ineffective communication.
First know what you have to communicate and then only speak.



Wrong interpretations - Wrong interpretations again play a very important role in
miscommunication. Information can be wrongly interpreted by the receiver leading to
a complete mess. Tom went for a bash yesterday night. The word bash can be
decoded as beating as well as a party. The sender might convey his message to the
recipient in order to provide some necessary information but the receiver might
misinterpret it. It is the responsibility of the receiver to give proper feedback to the
speaker and clear all the doubts before ending the conversation. Dont keep things
within yourself; ask if you are not clear with anything.

Not Understanding the receiver - The boss once wanted to address his young team.
He quoted examples from the year 1950 - the year when his team members were not
even born. Dont you think, all the young chaps will lose interest after sometime?
Thats the importance of understanding the recipient. Dont just prepare a speech;
learn more about the culture, habits, thought process of your listeners. The sender
must understand the receiver first and then pass on the information. If a sender is sad
and you want to give him some exciting news, he will neither respond nor understand
and hence the effect will for sure get nullified. Not understanding the receiver again is
a barrier to effective communication.

Ignoring the content - One should lay emphasis on the content of his speech. The
content has to be clear, crisp and above all interesting. Dont just speak; take some
time to find out what you are speaking. Find out whether the content is relevant or
not? During presentations, the speaker must use interesting words, funny one liner to
capture the attention of the listeners. Dont make your speech monotonous otherwise
the listeners after sometime will definitely fall asleep. One should be smart enough to
understand when to crack a slight joke in mid of a conversation. It really works. Dont
just speak for the heck of it, understand what you are speaking and try to make it more
interesting, crisp and above all relevant.

Avoiding the Listener - Imagine yourself attending a seminar where the speaker is
simply reading from his notes and for once has not made any eye contact with you.
You will never be able to relate with the speaker and hence never bother to find out
what he wants to convey. Dont just go on. Create a friendly atmosphere and then
start communicating. Dont just come to the point, one can ask questions from the
listeners like whats new?, Lovely weather or even use compliments like wonderful
crowd, enthusiastic group. Dont avoid your listeners; make an eye contact with them
to effectively communicate.

Not confirming with the recipient - Always cross check with the listeners, whether
they have received the correct information or not. For instance, if you are sharing
some important contact no, do make it a habit to verify the number with the receiver
whether the receiver has noted it correctly or not. Use words like Did you get it?
Am I Audible? in between the conversation. Try to find out whether the listener is


getting your message or not. Take pauses in between, simply dont rush. Make a habit
to spell out words. If you want to pass on your email id to your team, it is better to
spell out each word of the email account. Another effective way is to break each word
into alphabets, like ant can be communicated as a as in alpha, n as in Netherlands, t as
in tango. The error rate will definitely go down and the communication will be more
effective.

Not understanding the mood of the recipient - Try to understand the interest or the
mood of the second party and read the mind of the other person. Dont just start
speaking, understand the mood of the other person first and then share the
information. If you think, the receiver is in the pink of his moods, dont give him sad
news, he will never bother to listen. Wait for the correct time and then communicate if
you want your communication to create an impact.

Low pitch and tone - Sometimes even the pitch and tone can play a communication
barrier. Your content might be accurate, crisp and even related, but if your pitch is
low your information will never reach the listeners bang on. The tone has to be crystal
clear and loud for passing on correct information. Remember to give the correct pause
after each sentence and dont forget the punctuation marks. Remember you are
communicating not only for the first benchers but the people on the last bench are also
a part of the communication. Be loud and clear but dont shout.

Impatient Listener - The listener also has to be patient enough to absorb the
complete information and then respond accordingly. Always jot down your points and
start off with your queries once the sender is through with the communication. Dont
just jump in between the conversation as it leads to unnecessary confusions,
misunderstandings and conflict and the communication never reaches any conclusion.

Different cultural level - In any organization, an individual can never think on the
same line as his boss does. There is always a difference in their thought process. The
work pressure, lack of transparency between the team members are also the barriers
which lead to an ineffective communication. These barriers are called internal
barriers.

Thus to conclude, any obstacle which comes in between an effective communication are
called communication barriers. They result in distortion of the message and the goal is never
accomplished. External barriers arise from the external environment and external factors
where as internal barriers are present within the individual like tensions, work pressure, high
expectations, peer rivalry etc. It is of prime importance to get rid of the above barriers for an
effective communication and the proper flow of information between the sender and the
receiver.



Some of the ways to overcome Communication Barriers

1. Eliminating differences in perception: The organization should ensure that it is
recruiting right individuals on the job. Its the responsibility of the interviewer to ensure
that the interviewee has command over the written and spoken language. There should be
proper Induction program so that the policies of the company are clear to all the
employees. There should be proper trainings conducted for required employees (for eg:
Voice and Accent training).
2. Use of Simple Language: Use of simple and clear words should be emphasized. Use of
ambiguous words and jargons should be avoided.
3. Reduction and elimination of noise levels: Noise is the main communication barrier
which must be overcome on priority basis. It is essential to identify the source of noise
and then eliminate that source.
4. Active Listening: Listen attentively and carefully. There is a difference between
listening and hearing. Active listening means hearing with proper understanding of
the message that is heard. By asking questions the speaker can ensure whether his/her
message is understood or not by the receiver in the same terms as intended by the
speaker.
5. Emotional State: During communication one should make effective use of body
language. He/she should not show their emotions while communication as the receiver
might misinterpret the message being delivered. For example, if the conveyer of the
message is in a bad mood then the receiver might think that the information being
delivered is not good.

Important/Significance of Communication in an Organization
1. Communication promotes motivation by informing and clarifying the employees about
the task to be done, the manner they are performing the task, and how to improve their
performance if it is not up to the mark.
2. Communication is a source of information to the organizational members for decision-
making process as it helps identifying and assessing alternative course of actions.
3. Communication also plays a crucial role in altering individuals attitudes, i.e., a well
informed individual will have better attitude than a less-informed individual.
Organizational magazines, journals, meetings and various other forms of oral and written
communication help in molding employees attitudes.
4. Communication also helps in socializing. In today's life the only presence of another
individual fosters communication. It is also said that one cannot survive without
communication.
5. As discussed earlier, communication also assists in controlling process. It helps
controlling organizational members behavior in various ways. There are various levels of
hierarchy and certain principles and guidelines that employees must follow in an
organization. They must comply with organizational policies, perform their job role


efficiently and communicate any work problem and grievance to their superiors. Thus,
communication helps in controlling function of management.
An effective and efficient communication system requires managerial proficiency in
delivering and receiving messages. A manager must discover various barriers to
communication, analyze the reasons for their occurrence and take preventive steps to avoid
those barriers. Thus, the primary responsibility of a manager is to develop and maintain an
effective communication system in the organization.

Types of Communication:

There are basically three types of communication as:
1. verbal communication
2. non-verbal communication
3. visual communication
Some books has mentioned as:
1. Formal communication
a. downward communication
b. upward communication
c. sideward communication



2. Informal communication:
a. rumor: (gossip) - three component of rumor are: i) target ii) allegation
iii) source
b. grapevine:(pathway)
3. Interpersonal communication
c. oral communication
d. written communication
4. Non-verbal communication

Process of Communication
Communication is a process of exchanging verbal and non verbal messages. It is a continuous
process. Pre-requisite of communication is a message. This message must be conveyed
through some medium to the recipient. It is essential that this message must be understood by
the recipient in same terms as intended by the sender. He must respond within a time frame.
Thus, communication is a two way process and is incomplete without a feedback from the
recipient to the sender on how well the message is understood by him.

The main components of communication process are as follows:
1. Context - Communication is affected by the context in which it takes place. This
context may be physical, social, chronological or cultural. Every communication
proceeds with context. The sender chooses the message to communicate within a
context.
2. Sender / Encoder - Sender / Encoder is a person who sends the message. A sender
makes use of symbols (words or graphic or visual aids) to convey the message and
produce the required response. For instance - a training manager conducting training
for new batch of employees. Sender may be an individual or a group or an
organization. The views, background, approach, skills, competencies, and knowledge
of the sender have a great impact on the message. The verbal and non verbal symbols
chosen are essential in ascertaining interpretation of the message by the recipient in
the same terms as intended by the sender.


3. Message - Message is a key idea that the sender wants to communicate. It is a sign
that elicits the response of recipient. Communication process begins with deciding
about the message to be conveyed. It must be ensured that the main objective of the
message is clear.
4. Medium - Medium is a means used to exchange / transmit the message. The sender
must choose an appropriate medium for transmitting the message else the message
might not be conveyed to the desired recipients. The choice of appropriate medium of
communication is essential for making the message effective and correctly interpreted
by the recipient. This choice of communication medium varies depending upon the
features of communication. For instance - Written medium is chosen when a message
has to be conveyed to a small group of people, while an oral medium is chosen when
spontaneous feedback is required from the recipient as misunderstandings are cleared
then and there.
5. Recipient / Decoder - Recipient / Decoder is a person for whom the message is
intended / aimed / targeted. The degree to which the decoder understands the message
is dependent upon various factors such as knowledge of recipient, their
responsiveness to the message, and the reliance of encoder on decoder.
6. Feedback - Feedback is the main component of communication process as it permits
the sender to analyze the efficacy of the message. It helps the sender in confirming the
correct interpretation of message by the decoder. Feedback may be verbal (through
words) or non-verbal (in form of smiles, sighs, etc.). It may take written form also in
form of memos, reports, etc.

Purpose of Communication

The purpose of communication is to allow the exchange of information, ideas, concepts,
emotions, thoughts and opinions. It is done with aim of socialization as well as development.
Communication is part of life.

According to Camp & Satterwhite (2002), there are four main purposes of communication:
To inquire
This involves obtaining information in various ways, for instance, by asking questions or
through formulating questionnaires.

To inform
This entails the dissemination of information using different channels of communication.

To persuade
This aims to influence people and bring them round to your way of thinking.



To develop goodwill
This involves maintaining and forming cordial and harmonious relationships with people
you are communicating.

Features

Achieving real effectiveness requires executives to define the outcome they want to achieve
from any communication with a customer or with a colleague. Author and lecturer Asha Kaul
writes that setting an expected outcome helps communicators focus their energy on a specific,
measurable goal. In addition, Kaul notes that the most powerful business communication
requires an interactive cycle marked by speaking and listening. For instance, a salesperson
and a prospect may volley communications for days or weeks before arriving at the intended
next action: a closed deal.

Effects

Viewing the purpose of communication as an opportunity to reach a defined goal helps
professionals refocus their efforts around cultivating strong relationships, inside and outside
their organizations. The effects of building a feedback cycle around engaged listening often
include increased sales, earned trust, and status as a key adviser for customers and executives.
Using scenario planning and other conceptual tools, professionals can review their progress
along a longer-term path, reducing frustration over perceived audience resistance.

Considerations

The clich about the customer always being right haunts many executives. Retailer Marshall
Field often gets credit for coining the phrase, but modern professionals understand that a
powerful communication cycle can bridge the gap between parties until they see clear ways
to meet each others needs. For instance, in an engaged feedback cycle, a salesperson doesnt
have to bend his offering to match the exact request of a customer. Instead, he can reframe or
refocus the message to highlight that a customers feedback has been heard and integrated
into the ongoing conversation.

Misconceptions

Failing to acknowledge a prospects concerns can derail communication, often negating the
original purpose for engagement. For example, direct mail marketing companies often earn
criticism for blanketing prospects with multiple mail pieces while leaving no opportunity for
audience feedback. Novice marketers might mistakenly blame an audience for failing to
understand the mass-produced message. However, experienced communicators use
alternative methods to learn why prospects ignore advertising. Tailoring future campaigns to
include their feedback results in more consistent success.



Benefits

When business professionals clarify the purpose of their communication, they often develop a
commitment to achieving goals. In his book, The Seven Habits of Highly Effective People,
author Stephen Covey advises readers to seek first to understand, then to be understood.
Matching up that habit with the skill to measure success in small segments gives leaders the
tools necessary to celebrate consistent wins on the way to long-term achievement.

Communication Networks

Following are the types of communication networks:

Wheel: In this, all communication flows through one person who generally happens to
be the group leader.
Y-Pattern: The y pattern is slightly less centralized two persons are closer to the
centre of the network.
Chain: The chain gives a flow of information among members, although the people
are at the end of the chain.
Circle: Here, each person can communicate with two others located on both of his
sides.
All Channels (Star): This pattern is more decentralized and, allows a free flow of
information among all group members.



Communication Flows

In an organization, communication flows in various directions:

Downward communication
Downward communication flows from people at higher level to those at lower levels
in the organization hierarchy. This kind of communication exists especially in
organizations with an authoritarian leadership style. Examples of written downwards
communication are memo, letters, handbooks, policy statements and procedures.

Upward communication
This communication travels from subordinates to superiors and continues up the
organizational hierarchy. This type of communication is found in participative and
democratic organizational environments. Typical means of upward communication
are suggestion systems, appeal and grievance procedures, complaint systems,
counseling sessions, grapevine, group meetings, morale questionnaires and the exit
interview.

Crosswise communication
It includes the horizontal flow of information between people on the same or similar
organizational levels and diagonal flow between persons at different levels who have
no direct reporting relationships. This kind of communication is used to speed
information flow, to improve understanding and to coordinate efforts for the
achievement of organizational objectives. It may include oral communication ranging
from informal meetings, or more formal conferences and board meetings. Written
forms include company newspapers or magazine and bulletin boards.

Enhancing Organizational Communication

Irish playwright George Bernard Shaw once said, "The single biggest problem in
communication is the illusion that it has taken place." Communication is an important part of
human life. Effective communication, meaning messages have gotten across and been
understood, is even more important. Enhancing communication skills to make them even
more effective is a desirable goal in all interpersonal relationships.

Listen carefully

Communication is a bi-directional process, meaning that it goes both ways. People take
turns talking and listening. So, when it is your turn to listen, do it well. Practice what is
called "active listening," which is the act of listening attentively and truly focusing on
what the speaker saying and then repeating what the speaker has said in order to show
comprehension and empathy.


Use body language to communicate effectively

The human body provides nonverbal cues to others, so make sure that your body
language matches your message. For example, if you want to come across as friendly and
warm, do not stand stiffly or avoid eye contact.

Remember the three "Lee brothers" when you speak

Slowly, loudly, clearly, Speaking slowly will ensure that your listeners can understand
what you are saying. Talk at a volume at which others can hear you without having to ask
you to repeat yourself. Of course, use a volume which is appropriate for the setting. Do
not mumble and enunciate your words. Pronouncing your words correctly will help make
you comprehensible.

Be brief and direct
If you spend too long talking about irrelevant topics, your true message will get lost.
Also, if you are too subtle or do not make your point obvious, your listeners will not
understand what you are trying to communicate.

Take anger out of the equation
If your listener is angry, the chances are good that he will not take the time to listen to
what you are saying. Defuse anger by distracting your listener from his anger and focus
on yourself. Start sentences in the first person. For example, say, "I see the situation this
way." When you talk about yourself and your feelings, you can avoid blaming or
attacking your listener. Do not be judgmental. If you sound open-minded, your listener
will relax and be more willing to talk to you.

Some other ways are:

Utilizing Feedback
Regulating information flow
Two way communication
Reducing psychological Barrier

Formal and Informal Communication
Both informal communication and formal communication take place in any organization
whether it is business or personal. But how does informal and formal communication differ?
First, let's take a look at informal communication.



Informal Communication

Informal communication is casual and spontaneous. Informal communication comes from
communication activities outside of those formally learned through discipline or at school
through education, or in business through related experiences and formal training.

It comes from the social communication of home family culture, casual conversations and
grapevines, rumors, inter-relational activities outside of the formal or public arenas.
We do not behave the same way at work as we do at home or at play. I always say that people
are at their best at work. We really don't know someone until we've stayed with them outside
of work for a few days -- or even a few hours with some people. Informal communication
may not be as reliant as formal communication. Informal communication may be vulnerable
to being deceptive and imprecise in its casualness - -consciously or unconsciously. In an
informal setting, the quality of communication may be affected by the more relaxed or careless
attitude or behavior. Informal communication is what takes place without the formal addition of
conventions and ceremonies. In order to understand the difference between formal and informal
communication, we need to look at both and compare some of the variances between the two.

Formal Communication
Formal communication is more thought-out and prepared from learned experiences or
organized training that present rules and conventions authorities by business and formal
etiquette.
With formal communication, more accountability is expected. In an organizational setting,
such as business, corporations or associations and the like, communication is connected with
official status-quo or protocols of the formal channels of structure and company culture
which the line of manager/subordinate reporting system is expectedly accepted.
In business, the different forms of formal communication including departmental
functionality, activities taking place within meeting and conference settings, verbal and
written communication through telephone, memos, letters and bulletins, etc., all add up to the
formality. In a formal setting, people take the time to recognize the consequences of
transmitting any wrong or incomplete information. However, both formal and informal
communication is found in an organization, depending on the level of business experience
and training one possesses in his or her personal life.
An organization can make efficient use of informal communication by confirming and
affirming that which is being communicated by the less trained individual. Both informal
communication and formal communication can be expressed verbally or non-verbally by
words, tone of voice, signs such as glances and gestures and even silence. For the purpose of
effective communication, one needs to identify and affirm anything that may be
communicated formally or informally, if and when unsure of the true meaning behind the
communicator.



Summary

Leadership has been described as a process of social influence in which one person can
enlist the aid and support of others in the accomplishment of a common task". However,
many people think of leadership as an abstract concept that people are "born" with instead of
a skill that they can learn. Research shows that there are many characteristics that can predict
a successful leader, but many of these characteristics can also be learned.
There is no universal theory of leadership. However, because of the recent explosion in
leadership thinking, we now have an array of different theories about leadership. These
include such notable theories as servant leadership (Robert K. Greenleaf), collaborative
leadership (David D. Chrislip and Carl E. Larson), visionary leadership (Burt Nanus),
situational leadership (Kenneth H. Blanchard), and principle-centered leadership (Stephen R.
Covey). Some of these theories support the distinctions between managers and leaders, such
as transactional leadership (managers) as opposed to transformational leadership (leaders).
Recently, focus has turned to the traits and characteristics of leader. These include studies on
which personality and cognitive factors are most likely to predict a successful leader.
Teamwork processes can be divided into three categories: the transition process, action
processes and interpersonal processes. Five characteristics of good teamwork include: shared
values, mutual trust, inspiring vision, skills and rewards. Effective teams needs to work
together without focusing on personal recognition in order to achieve common goals that are
for the good of the team and the organization. Teamwork is performed by groups, each doing
a part, with all of them subordinate to the team goals and overall efficiency. In performing
their tasks, it is important for employees to understand who in the group will have specific
responsibilities. This often means giving up personal recognition for the overall benefit of the
team.
Generally, motivation in the workplace can be approached through four specific theoretical
frameworks: needs-based, cognitive processes, behavioral, and job-based. Needs-based
theories represent the basic concept that motivation is achieved through fulfilling the needs of
a particular employee, through tangibles such as salary to intangibles such as fulfillment.
Communication is the activity of conveying information through the exchange of thoughts,
messages, or information, as by speech, visuals, signals, writing, or behavior. Communication
requires a sender, a message, and a recipient, although the receiver need not be present or
aware of the sender's intent to communicate at the time of communication. Communication
requires that the communicating parties share an area of communicative commonality. The
communication process is complete once the receiver has understood the message of the
sender. Business communication is the communication between the people in the
organization for the purpose of carrying out business activities.



Review Questions

1. Define motivation. Describe path goal theory of motivation?
2. What are the situational approaches to leadership? Briefly describe each approach
and compare the findings.
3. What is leadership? Discuss the traits and behavioral approaches to leadership?
4. Mention the major finding of the Michigan and Ohio state studies of leadership
behavior?
5. Difference between Maslow hierarchy of need and ERG theory of motivation.
6. Explain the concept of employee participation in management. How can "employee
share ownership" and flexible work schedule" work as motivational factors?
7. "Employee motivation is keys to organization success". Explain
8. Could someone be a manager but not a leader? A leader but not a manager? Both a
leader and a manager? Explain
9. Conflict is not always bad. Do you agree or not? Discuss.
10. How are the conflict managed in an organization?
11. Why do you think people join group and teams and how is group formed?
12. How effective team is build? How such teams can contribute to organization
effectiveness?
13. Difference between formal and informal communication in an organization.
14. Describe the cause of conflict in an organization. Is conflict always bad? Why or why
not?
15. What are the barriers to effective communication that are usually faced in
organization setting? How do effective manager overcome these barriers?
16. Describe the cause of interpersonal and inter group conflicts. How should conflicts be
managed?



Case Study - IV

Leadership Styles Case Study
Located at opposite ends of the country, Northwest Center for Families (NCF) and Southeast
Social Services (SSS) are local government agencies specializing in family, child, and school
social work in rural areas. After attending a conference on performing social work in small
communities, the directors of both organizations have returned with plans to address the issue
of dual relationships, in which social workers relate to their clients on multiple levels
including social and professional. Each director takes a different approach to solving the
problem.
NCFs director sends out a memo to employees stressing that dual relationships are a conflict
of interest prohibited by the organization. She states that a dual relationship could be grounds
for employee termination and encourages employees to report any non-sanctioned interaction
between social workers and their clients. The NCF directors plan also includes the
construction of a new employee lounge, with the understanding that employees will eat their
lunches in the office, rather than eating in town.
The director of SSS holds a meeting with his staff to discuss the organizations role and
purpose in the community. He shares what he has learned at the conference: the potential to
improve peoples lives outweighs any other social or professional interaction that could derail
the organizations purpose. The SSS director explains that he will make it his personal
mission to solve the problem of dual relationships and asks employees for their input and
participation in overcoming this obstacle. The leader explains all the employees must work
together to reform the organization in order to better serve the community.

Answer the following questions:

1. What type of leadership is practiced at NCF, transactional or transformational? How do
you know?
2. What type of leadership is practiced at SSS, transactional or transformational? How do you
know?
3. Which style of leadership would you recommend for a health care or human service
organization? Explain your answer.

Activities - 1
Reflect on your school time experiences and write down instances when you have worked in
a group.
Management Control System


CHAPTER: V

Control System

Concept
Controlling is one of the managerial functions, like planning, organizing, staffing, and
directing. It is an important function because it helps to check for errors and to take corrective
action so that deviation from standards is minimized and the stated goals of the organization
are achieved in the desired manner. Control in management means setting standards,
measuring actual performance, and taking corrective action.
The direction for organizational control comes from the goals and strategic plans of the
organization. General plans are translated into specific performance measures, such as share
of the market, earnings, return on investment, and budgets. The process of organizational
control is to review and evaluate the performance of the system against these established
metrics.
Definitions
In 1916, Henri Fayol formulated one of the first definitions of control as it pertains to
management:
Control of an undertaking consists of seeing that everything is being carried out in
accordance with the plan which has been adopted, the orders which have been given, and the
principles which have been laid down. Its object is to point out mistakes in order that they
may be rectified and prevented from recurring.
According to EFL Breach:
Control is checking current performance against pre-determined standards contained in the
plans, with a view to ensure adequate progress and satisfactory performance.
According to Harold Koontz:
Controlling is the measurement and correction of performance in order to make sure that
enterprise objectives and the plans devised to attain them are accomplished.
According to Stafford Beer:
Management is the profession of control.



Robert J. Mockler presented a more comprehensive definition of managerial control:
Management control can be defined as a systematic effort by business management to
compare performance to predetermined standards, plans, or objectives in order to determine
whether performance is in line with these standards and presumably in order to take any
remedial action required to see that human and other corporate resources are being used in
the most effective and efficient way possible in achieving corporate objectives.
[2]

Importance of Controlling

Controlling consists of verifying whether everything occurs in conformities with the
plans adopted, instructions issued and principles established. Controlling ensures that there is
effective and efficient utilization of organizational resources so as to achieve the planned
goals. Controlling measures the deviation of actual performance from the standard
performance, discovers the causes of such deviations and helps in taking corrective actions.
Controlling has got two basic purposes
1. It facilitates co-ordination
2. It helps in planning
Control is very important in a management position. This refers both to control over a
situation, control over people and also self control. A person in a management position must
have all of these types of control in order to be a successful manager. Control over a situation
is important for a manager because a manager needs to be able to make a situation run
smoothly. A manager without control over a situation may make employees uncomfortable so
that they do not do what he or she wants them to do. In addition, a manager not in control of a
situation may let the situation get out of hand, finding himself in a situation that is too much
for him to handle. Gaining control over a situation quickly is important because a benign
situation my get out of control very quickly. In addition, a manager must have control over
the people he manages. Control over others does not necessarily mean that a manager
imposes his will on other people. Subordinates may be much more willing to listen to
someone who treats them with respect and listens to their ideas than someone who is
dismissive and disrespectful. Respected managers have more control over their employees
because employees are much more likely to listen to and do what their respectful managers
ask them to do. Lastly, a manager must have self control. Having self control allows a
manager to lead by example rather than by words alone. A manager with self control also
does not let a situation get to him. This means that he is more able to make rational decisions
than if he loses self control. In addition, in crisis situations, a cool-headed manager does not
excite his employees so everyone can think with a clearer head and make the best decisions.
For more information,



Types of Controlling
Mainly there are three types of control. They are as follows:
Feed forward
Feed forward is a management and communication term that refers to giving a control impact
to a subordinate, a person, or an organization from which you are expecting an output. Feed
forward is not just a pre-feedback, because feedback is always based on measuring an output
and sending respective feedback. A pre-feedback given without measurement of output may
be understood as a confirmation or just an acknowledgment of control command.
Feed forward is generally imposed before any willful change in output may occur. All other
changes of output determined with feedback may result from distortion, noise, or attenuation.
Feed forward usually involves giving a document for review and giving an ex post
information on that document that has not already been given. However, social feedback is
the response of the supreme hierarch to the subordinate as an acknowledgement of a
subordinate's report on output (hence, the subordinate's feedback to the supreme).
Concurrent Control
Concurrent control is control that happens at the same time as a project is occurring. This
monitoring and controlling consists of the processes that observe project execution so that
potential problems can be identified in a timely manner and corrective action can be taken,
when necessary, to control the execution of the project. Controlling is one of the managerial
functions, like planning, organizing, staffing, and directing. It is an important function
because it helps to check for errors and to take corrective action so that deviation from
standards is minimized and the stated goals of the organization are achieved in the desired
manner. Control in management means setting standards, measuring actual performance, and
taking corrective action.
Concurrent control is control that happens at the same time as a project is occurring. This
monitoring and controlling consists of the processes that observe project execution so that
potential problems can be identified in a timely manner and corrective action can be taken,
when necessary, to control the execution of the project.


Feedback
Feedback is a process in which information about the past or the present influences the same
phenomenon in the present or future. As part of a chain of cause-and-effect that forms a
circuit or loop, the event is said to "feedback" into itself.
As an organization seeks to improve its performance, feedback helps it make required
adjustments. Feedback serves as motivation for many people in the workplace. When one
receives either negative or positive feedback, one decides how to apply it to his or her job.
Joseph Folkman says that to find the greatest level of success in an organization, working
with other people, a person should learn how to accept any kind of feedback, analyze it in the
most positive manner possible, and use it to further impact future decision-making.

Steps in Controlling Process
Controlling as a management function involves following steps:
1. Establishment of standards- Standards are the plans or the targets which have to be
achieved in the course of business function. They can also be called as the criterions
for judging the performance. Standards generally are classified into two-
Inputs Transformation

Outputs
Feed Forward

Focus is on inputs to
the organizational
system.
Concurrent

Focus is on how inputs
are beings transformed
into outputs.
Post Control

Focus is on output
from the
organizational
system.
Feedback


a. Measurable or tangible - Those standards which can be measured and
expressed are called as measurable standards. They can be in form of cost,
output, expenditure, time, profit, etc.
b. Non-measurable or intangible- There are standards which cannot be measured
monetarily. For example- performance of a manager, deviation of workers,
their attitudes towards a concern. These are called as intangible standards.
Controlling becomes easy through establishment of these standards because controlling is
exercised on the basis of these standards.
2. Measurement of performance- The second major step in controlling is to measure
the performance. Finding out deviations becomes easy through measuring the actual
performance. Performance levels are sometimes easy to measure and sometimes
difficult. Measurement of tangible standards is easy as it can be expressed in units,
cost, money terms, etc. Quantitative measurement becomes difficult when
performance of manager has to be measured. Performance of a manager cannot be
measured in quantities. It can be measured only by-
a. Attitude of the workers,
b. Their morale to work,
c. The development in the attitudes regarding the physical environment, and
d. Their communication with the superiors.
It is also sometimes done through various reports like weekly, monthly, quarterly,
yearly reports.

3. Comparison of actual and standard performance- Comparison of actual
performance with the planned targets is very important. Deviation can be defined as
the gap between actual performance and the planned targets. The manager has to find
out two things here- extent of deviation and cause of deviation. Extent of deviation
means that the manager has to find out whether the deviation is positive or negative or
whether the actual performance is in conformity with the planned performance. The
managers have to exercise control by exception. He has to find out those deviations


which are critical and important for business. Minor deviations have to be ignored.
Major deviations like replacement of machinery, appointment of workers, quality of
raw material, rate of profits, etc. should be looked upon consciously. Therefore it is
said, If a manager controls everything, he ends up controlling nothing. For example,
if stationery charges increase by a minor 5 to 10%, it can be called as a minor
deviation. On the other hand, if monthly production decreases continuously, it is
called as major deviation.
Once the deviation is identified, a manager has to think about various causes which
have led to deviation. The causes can be-
a. Erroneous planning,
b. Co-ordination loosens,
c. Implementation of plans is defective, and
d. Supervision and communication is ineffective, etc.
4. Taking remedial actions- Once the causes and extent of deviations are known, the
manager has to detect those errors and take remedial measures for it. There are two
alternatives here-
a. Taking corrective measures for deviations which have occurred; and
b. After taking the corrective measures, if the actual performance is not in
conformity with plans, the manager can revise the targets. It is here the
controlling process comes to an end. Follow up is an important step because it
is only through taking corrective measures, a manager can exercise
controlling.

Features of Effective Control,
Effective control systems have certain features. For a control system to be effective, it must
be:
1. Accurate. Information on performance must be accurate. Evaluating the accuracy of
the information they receive is one of the most important control tasks that managers
face.
2. Timely. Information must be collected, routed, and evaluated quickly if action is to be
taken in time to produce improvements.
3. Objective and Comprehensible. The information in a control system should be
understandable and be seen as objective by the individuals who use it. A difficult-to
understand control system will cause unnecessary mistakes and confusion or
frustration among employees.
4. Focused on Strategic Control Points. The control system should be focused on
those areas where deviations from the standards are most likely to take place or where
deviations would lead to the greatest harm.


5. Economically Realistic. The cost of implementing a control system should be less
than, or at most equal to, the benefits derived from the control system.
6. Organizational Realistic. The control system has to be compatible with
organizational realities and all standards for performance must be realistic.
7. Coordinated with the Organization's Work Flow. Control information needs to be
coordinated with the flow of work through the organization for two reasons: (1) each
step in the work process may affect the success or failure of the entire operation, (2)
the control information must get to all the people who need to receive it.
8. Flexible. Controls must have flexibility built into them so that the organizations can
react quickly to overcome adverse changes or to take advantage of new opportunities.
9. Prescriptive and Operational. Control systems ought to indicate, upon the detection
of the deviation from standards, what corrective action should be taken.
10. Accepted by Organization Members. For a control system to be accepted by
organization members, the controls must be related to meaningful and accepted goals.
Managing Information for Effective Control
Computer Based Information System:
Computer Based Information System (CBIS) is an information system in which the computer
plays a major role. Such a system consists of the following elements:
Hardware, Software, Data, Procedures, People

Types of CBIS

Categories of different information systems with their characteristics have been described
briefly in table below.



Category of
Information System
Characteristics
Transaction Processing
System
Substitutes computer-based processing for manual processes.
Includes record-keeping applications.
Management
Information System
Provides input to be used in the managerial decision process.
Deals with supporting well structured decision situations. Typical
information requirements can be anticipated
Decision Support
System
Provides information to managers who make judgments about
particular situations. Supports decision makes in situations that
are not well structured.
Office Automation
System

It is a multi-function, integrated computer based system that
allows many office activities to be performed in an electronic
mode.

TPS MIS DSS EIS

Programmed Decision Making Non Programmed DM

Types of Information
Today all the corporate organizations use different kinds of information systems. MIS, DSS
and EIS the most popular information systems which are completely computer based. It is
very difficult to choose a particular type of system because each organization has different
type of operational requirement in terms of information system.
Let us know about these three systems and find out their suitability for different
organizations.
1. MIS is Management Information System and is known as the main system because it can
control and maintain other information systems. Employees are the most important element
of this system and it involves the management of the internal information of the businesses
and management of the functions of the employees and relating both these with each other.
MIS is helpful in all the operational areas of a business.
2. DSS is Decision Support system and this helps in right decision making for any business.
Decision making is a process that involves consideration of all the aspects of a business


including the operations, activities, planning, forecasts and management of different
functions in an organization. DSS is helpful for the senior management which needs data to
be available instantly while making decisions and executing them with perfection. The only
drawback of DSS is that it cannot handle large amount of data.
3. EIS is Executive Information System and this system also helps managers in decision
making. This system is more reliable than other systems and works even when other systems
fail. This is adopted by small and large business because of this reliability and the ability to
store huge amount of data. This system is also for supporting the senior managers in taking
good decisions.
The major difference between these three systems is that MIS is for taking care of
documentation and work related to internal operations while DSS is for providing required
data to all the employees including senior managers, in running daily activities smoothly. EIS
is for supporting senior level managers in taking decisions.
These systems are related to each other and complement each other. MIS is used for all the
documentation work and this is used by EIS and DSS. DSS and EIS, further provide the data
and information critical for decision making. MIS is used by higher and middle level
management while DSS is used by all the levels of organization and it uses internal and
external information. EIS is little complicated than MIS and DSS.
Techniques of Control

Some of the techniques are listed below:
1. Direct Supervision and Observation
'Direct Supervision and Observation' is the oldest technique of controlling. The supervisor
himself observes the employees and their work. This brings him in direct contact with the
workers. So, many problems are solved during supervision. The supervisor gets first hand
information, and he has better understanding with the workers. This technique is most
suitable for a small-sized business.
2. Financial Statements
All business organisations prepare Profit and Loss Account. It gives a summary of the
income and expenses for a specified period. They also prepare Balance Sheet, which shows
the financial position of the organisation at the end of the specified period. Financial
statements are used to control the organisation. The figures of the current year can be
compared with the previous year's figures. They can also be compared with the figures of
other similar organisations.


Ratio analysis can be used to find out and analyze the financial statements. Ratio analysis
helps to understand the profitability, liquidity and solvency position of the business.
3. Budgetary Control
A budget is a planning and controlling device. Budgetary control is a technique of managerial
control through budgets. It is the essence of financial control. Budgetary control is done for
all aspects of a business such as income, expenditure, production, capital and revenue.
Budgetary control is done by the budget committee.
4. Break Even Analysis
Break Even Analysis or Break Even Point is the point of no profit, no loss. For e.g. When an
organisation sells 50 K cars it will break even. It means that, any sale below this point will
cause losses and any sale above this point will earn profits. The Break-even analysis acts as a
control device. It helps to find out the company's performance. So the company can take
collective action to improve its performance in the future. Break-even analysis is a simple
control tool.
5. Return on Investment (ROI)
Investment consists of fixed assets and working capital used in business. Profit on the
investment is a reward for risk taking. If the ROI is high then the financial performance of a
business is good and vice-versa.
ROI is a tool to improve financial performance. It helps the business to compare its present
performance with that of previous years' performance. It helps to conduct inter-firm
comparisons. It also shows the areas where corrective actions are needed.
6. Management by Objectives (MBO)
MBO facilitates planning and control. It must fulfill following requirements:-
1. Objectives for individuals are jointly fixed by the superior and the subordinate.
2. Periodic evaluation and regular feedback to evaluate individual performance.
3. Achievement of objectives brings rewards to individuals.
7. Management Audit
Management Audit is an evaluation of the management as a whole. It critically examines the
full management process, i.e. planning, organizing, directing, and controlling. It finds out the
efficiency of the management. To check the efficiency of the management, the company's
plans, objectives, policies, procedures, personnel relations and systems of control are
examined very carefully. Management auditing is conducted by a team of experts. They


collect data from past records, members of management, clients and employees. The data is
analyzed and conclusions are drawn about managerial performance and efficiency.
8. Management Information System (MIS)
In order to control the organisation properly the management needs accurate information.
They need information about the internal working of the organisation and also about the
external environment. Information is collected continuously to identify problems and find out
solutions. MIS collects data, processes it and provides it to the managers. MIS may be
manual or computerized. With MIS, managers can delegate authority to subordinates without
losing control.
9. PERT and CPM Techniques
Programme Evaluation and Review Technique (PERT) and Critical Path Method (CPM)
techniques were developed in USA in the late 50's. Any programme consists of various
activities and sub-activities. Successful completion of any activity depends upon doing the
work in a given sequence and in a given time.
CPM / PERT can be used to minimize the total time or the total cost required to perform the
total operations.
Importance is given to identifying the critical activities. Critical activities are those which
have to be completed on time otherwise the full project will be delayed.
So, in these techniques, the job is divided into various activities / sub-activities. From these
activities, the critical activities are identified. More importance is given to completion of
these critical activities. So, by controlling the time of the critical activities, the total time and
cost of the job are minimized.
10. Self-Control
Self-Control means self-directed control. A person is given freedom to set his own targets,
evaluate his own performance and take corrective measures as and when required. Self-
control is especially required for top level managers because they do not like external control.
The subordinates must be encouraged to use self-control because it is not good for the
superior to control each and everything. However, self-control does not mean No control by
the superiors. The superiors must control the important activities of the subordinates.



Quality Management

Concept

Quality has become a very important dimension of operations management. Producing the
items in required quantities at the right time is not enough to satisfy the customers. Customers
demand that quality be incorporated in the product and in the service that goes along with it.
You will appreciate that without quality every other thing loses relevance. Thus, quality is a
strategy for survival and for expending the markets. Quality is a marketing strategy to enter a
market or to compete with existing manufacturers. Quality is the foundation for achieving
customers satisfaction. Brands get created as a consequence of that. Following are the
important aspects which improve the quality of a product.
Performance and Services: The basis of quality lies in the performance of the product and the
perception of service. The ingredients or components which improve the performance of
the product have to be built into the design processes and operations. Also, proper care
has to be taken while delivering services either independently or as a part of the product.

Identifying Defects: Statistical tools are used to identify sources of defects in the
processes. They are eliminated in a systematic method, keeping records of the
improvements that were possible. Every opportunity to improve the system is used.
Identifying the defects at the operating levels even before they occur improves the
performance and the quality of the product. This encourages involvement and
commitment, which are essential for improving quality on a continuous basis. This
helps the organisation to get better feedbacks from the customers.

Efficiency: As cost has also become a major dimension of customer
satisfaction, efficiencies have to be built in all operations. Production, material
handling, maintenance, marketing, packaging, supply chain, and after sales service
have to become efficient by adopting policies.

Innovation: Innovation has become vital to the development and progress of the
organizations. This enables an organisation to aspire to be a leader in its field. All this
is possible with commitment for quality across all functions and all activities of the
organisation. The principles involved and the processes implemented to achieve them,
form the part of the study of Total Quality Management.

Certification: Certification is another aspect of quality as it gives public recognition
to the companys attainments. It improves compliance to the processes and improves
performance of the employees. As measurements and observations are made by a
competent and neutral body, the certification agency bias is not seen and the
compensation and reward systems are seen to be transparent. Customers perception


ofadequacy, if not excellence, goes a long way in establishing long term relationships
which is the dream of every organisation.
Total Quality Management
Total Quality management is defined as a continuous effort by the management as well
as employees of a particular organization to ensure long term customer loyalty and
customer satisfaction. Remember, one happy and satisfied customer brings ten new
customers along with him whereas one disappointed individual will spread bad word of
mouth and spoil several of your existing as well as potential customers.
A core definition of total quality management (TQM) describes a management approach to
longterm success through customer satisfaction. In a TQM effort, all members of an
organization participate in improving processes, products, services, and the culture in which
they work. The methods for implementing this approach come from the teachings of such
quality leaders as Philip B. Crosby, W. Edwards Deming, Armand V.Feigenbaum, Kaoru
Ishikawa,and Joseph M.Juran. Total quality management can be summarized as a
management system for a customer-focused organization that involves all employees in
continual improvement. It uses strategy, data, and effective communications to integrate the
quality discipline into the culture and activities of the organization.
You need to give something extra to your customers to expect loyalty in return. Quality can
be measured in terms of durability, reliability, usage and so on. Total quality management is a
structured effort by employees to continuously improve the quality of their products and
services through proper feedbacks and research. Ensuring superior quality of a product or
service is not the responsibility of a single member. Every individual who receives his /her
paycheck from the organization has to contribute equally to design foolproof processes and
systems which would eventually ensure superior quality of products and services. Total
Quality management is indeed a joint effort of management, staff members, workforce, and
suppliers in order to meet and exceed customer satisfaction level. You cant just blame one
person for not adhering to quality measures. The responsibility lies on the shoulder of
everyone who is even remotely associated with the organization. Total quality management
ensures that every single employee is working towards the improvement of work
culture, processes, services, systems and so on to ensure long term success.
Total Quality management can be divided into four categories:
Plan
Do
Check
Act
Also referred to as PDCA cycle.


Planning Phase
Planning is the most crucial phase of total quality management. In this phase employees have
to come up with their problems and queries which need to be addressed. They need to come
up with the various challenges they face in their day to day operations and also analyze the
problems root cause. Employees are required to do necessary research and collect relevant
data which would help them find solutions to all the problems.
Doing Phase
In the doing phase, employees develop a solution for the problems defined in planning phase.
Strategies are devised and implemented to overcome the challenges faced by employees. The
effectiveness of solutions and strategies is also measured in this stage.
Checking Phase
Checking phase is the stage where people actually do a comparison analysis of before and
after data to confirm the effectiveness of the processes and measure the results.
Acting Phase
In this phase employees document their results and prepare themselves to address other
problems.

Importance of Quality Management

Quality management ensures superior quality products and services. Quality of a
product can be measured in terms of performance, reliability and durability. Quality is a
crucial parameter which differentiates an organization from its competitors. Quality
management tools ensure changes in the systems and processes which eventually result in
superior quality products and services. Quality management methods such as Total Quality
management or Six Sigma have a common goal - to deliver a high quality product. Quality
management is essential to create superior quality products which not only meet but also
exceed customer satisfaction. Customers need to be satisfied with your brand. Business
marketers are successful only when they emphasize on quality rather than quantity. Quality
products ensure that you survive the cut throat competition with a smile.
Quality management is essential for customer satisfaction which eventually leads to
customer loyalty. How do you think businesses run? Do businesses thrive only on new
customers? It is important for every business to have some loyal customers. You need to have
some customers who would come back to your organization no matter what.


Would you buy a Nokia mobile again if the previous handset was defective? The answer is
NO.
Customers would return to your organization only if they are satisfied with your products and
services. Make sure the end-user is happy with your product. Remember, a customer would
be happy and satisfied only when your product meets his expectations and fulfills his needs.
Understand what the customer expects from you? Find out what actually his need is? Collect
relevant data which would give you more insight into customers needs and demands.
Customer feedbacks should be collected on a regular basis and carefully monitored. Quality
management ensures high quality products and services by eliminating defects and
incorporating continuous changes and improvements in the system. High quality products in
turn lead to loyal and satisfied customers who bring ten new customers along with them. Do
not forget that you might save some money by ignoring quality management processes but
ultimately lose out on your major customers, thus incurring huge losses. Quality management
ensures that you deliver products as per promises made to the customers through various
modes of promotions. Quality management tools help an organization to design and
create a product which the customer actually wants and desires.
Quality Management ensures increased revenues and higher productivity for the
organization. Remember, if an organization is earning, employees are also earning.
Employees are frustrated only when their salaries or other payments are not released on time.
Yes, money is a strong motivating factor. Would you feel like working if your organization
does not give you salary on time? Ask yourself. Salaries are released on time only when there
is free cash flow. Implementing Quality management tools ensure high customer loyalty, thus
better business, increased cash flow, and satisfied employees, healthy workplace and so on.
Quality management processes make the organization a better place to work.
Remove unnecessary processes which merely waste employees time and do not contribute
much to the organizations productivity. Quality management enables employees to deliver
more work in less time.
Quality management helps organizations to reduce waste and inventory. It enables
employees to work closely with suppliers and incorporate Just in Time Philosophy.
Quality management ensures close coordination between employees of an organization. It
inculcates a strong feeling of team work in the employees.



Principle

The concept of TQM rests largely on five principles:
1. Produce quality work the first time.
2. Focus on the customer.
3. Have a strategic approach to improvement.
4. Improve continuously.
5. Encourage mutual respect and teamwork.
These elements are considered so essential to TQM that many organizations define them, in
some format, as a set of core values and principles on which the organization is to operate.

Quality control

Concept
Quality control is a process that is used to ensure a certain level of quality in a product or
service. It might include whatever actions a business deems necessary to provide for the
control and verification of certain characteristics of a product or service. Most often, it
involves thoroughly examining and testing the quality of products or the results of services.
The basic goal of this process is to ensure that the products or services that are provided meet
specific requirements and characteristics, such as being dependable, satisfactory, safe and
fiscally sound.
Companies that engage in quality control typically have a team of workers who focus on
testing a certain number of products or observing services being done. The products or
services that are examined usually are chosen at random. The goal of the quality control team
6 Cs of
TQM
Commitment
Culture
Control
Cooperation
Continuous
improvement
Customer
Focus


is to identify products or services that do not meet a company's specified standards of quality.
If a problem is identified, the job of a quality control team or professional might involve
stopping production or service until the problem has been corrected. Depending on the
particular service or product as well as the type of problem identified, production or services
might not cease entirely.
Usually, it is not the job of the quality control team or professional to correct quality issues.
Typically, other individuals are involved in the process of discovering the cause of quality
issues and fixing them. After the problems are overcome and the proper quality has been
achieved, the product or service continues production or implementation as usual.
Many types of businesses perform these types of quality checks. Manufacturers of food
products, for example, often have employees who test the finished products for taste and
other qualities. Clothing manufacturers have workers inspect garments to ensure that they are
properly sewn. Service-oriented companies often have representatives who observe the
services being performed or who do follow-up checks to ensure that everything was done
properly.
Quality control also might involve evaluating people. If a company has employees who don't
have adequate skills or training, have trouble understanding directions or are misinformed,
the quality of the company's products or services might be diminished. This is especially
important for service-oriented companies, because the employees are the product that they
provide to customers.
Often, quality control is confused with quality assurance. Though the two are similar, but
there are some basic differences. Quality control is concerned with examining the product or
service the end result and quality assurance is concerned with examining the process that
leads to the end result. A company would use quality assurance to ensure that a product is
manufactured in the right way, thereby reducing or eliminating potential problems with the
quality of the final product.
Advantages of Quality Control
Many corporations have extensive quality control programs to ensure their product or service
is consistently meeting or exceeding company expectations. While these programs are often
costly to administer, they can be very beneficial.
Uniformity
Whether you are providing a product or service, any defect can have a dire impact on
your bottom line, such as through losing repeat business and lowering your reputation.
Quality control programs are set up to prevent or greatly reduce defects.



Detection in Manufacturing
Quality control programs allow companies to detect any defective products (often
through software and inventory monitoring) and remove them before reaching the
consumer.
Detection in Service Industry
Quality control or feedback surveys can be distributed to customers to monitor
satisfaction levels. Businesses can take this information and improve (or maintain)
their customer service efforts.
Prevention
According to Jurans Quality Control Handbook by J.M. Juran, the cost of finding
defective products averages 20 to 40 percent of total sales. Quality control programs
help prevent defects by identifying issues before they occur.
Considerations
According to Denver defective product litigation attorneys, thousands of people are
injured each year from faulty products. Implementing a quality control program can
save companies millions in potential lawsuits. These programs are especially
important for certain industries, such as pharmaceutical, automobile and children's
products companies.
Methods of Quality Control
If quality control methods were not in place, some of the many electronics and other
hardware devices that you're enjoying might not function and could potentially cause harmful
outcomes. Quality control is a matter of checking and re-checking various components in the
manufacturing and marketing process to ensure the product or service being provided is
satisfactory and safe for all involved. There are methods used for quality control based on the
industry and also the company structure.
Quality Assurance
Quality assurance is a basic method of quality control, and you may notice it in
multiple industries, including call centers (when you call an automated system and it
states your call may be recorded for quality assurance). Individuals are listening to the
call to ensure you receive the best service. During manufacturing of vehicles and
other items, there may be inspectors that test the product to ensure it meets a certain
standard for the company. Also, companies also test all the individual components
that make up the individual product or service for quality and satisfaction.


Product Testing
Product testing usually includes purposely breaking or damaging a product to see how
well it holds up. An example of this is when brand-new cars are put under rigorous
crash tests to determine how safe and effective they are before selling them to
customers. Pharmaceutical industries test and retest drugs before the FDA (Food and
Drug Administration) states they are safe for human consumption. Another testing
option to use product multiple times and place it under extreme circumstances and
conditions until it fails to see how it holds up; this is failure testing.
Total Quality Control
The marketing department or other finance departments within a firm may notice a
dip in sales or a decrease in stock price. As a result, the company might test every
department or product component to find out if the quality has depleted, which may
explain the decrease in sales/consumer demand.
Customer Feedback
Consumers use the product or service and can provide input. Focus groups, surveys
and test subjects may necessary to determine if there are any problems with the item
that the company can correct. Client input and suggestions exist in virtually any
industry including entertainment (video games and movies), vehicles and appliances.
Statistical Quality Control
Quality control techniques require extensive usage of statistical methods. The advantages of
the statistical analysis are as follows:
Statistical Tools are automated and therefore, require less manual intervention,
leading cost reduction.
Statistical tools work on a model thus is very useful where testing requires
destruction of products.
Statistical Quality tools can broadly be classified into following categories:
Acceptance sampling is an important part of quality control wherein quality of
products is assessed post production.
Statistical process control helps in confirming whether the current process is falling
within pre-determined parameters.


Acceptance Sampling
Acceptance sampling is done on samples post production to check for quality
parameters as decided by the organization covering both attributes as well as variables.
If the sample does not meet the required parameters of quality than that given lot is rejected,
and further analysis is done to identify the source and rectify the defects. Acceptance
sampling is done on the basis of inspection, which includes physical verification of color,
size, shape, etc.
The major objectives of inspection are:
To detect and prevent defects in products and process.
To identify defected parts or product and prevent it from further consumption or
usage.
To highlight the product or process defect to appropriate authorities for necessary and
corrective actions.
Scope of inspection covers input materials, finished material, plant, machinery etc.
To sustain quality of product and services it is important to have in place robust quality
control techniques.

Tools and Techniques of TQM

The '5 Whys' - asking 'Why?' at least five times to uncover the root cause of a problem.
Flowcharts - A boxes and arrows method of examining activities, potentially used in
brainstorming, also found in business process modeling.



Fishbone/Ishikawa Diagrams

Fishbone-structured diagram for identifying cause & effect patterns, in which primary
categories are generally pre-determined according to context. Also referred to as
Fishbone Chart (because of its shape which resembles the side view of a fish
skeleton) and Ishikawa diagrams after its creator Kaoru Ishikawa, Cause and Effect
Diagram records causes of a particular and specific problem .The cause and effect
diagram plays a crucial role in identifying the root cause of a particular problem and
also potential factors which give rise to a common problem at the workplace.

Run Charts - a graph which plots data/change along a timeline.



Pareto Charts - a line and bar graph displaying cause/effect ratios, especially biggest
relative cause, based on Pareto theory.

Histograms - a bar graph displaying data in simple categories which together account for
a total.

Checklists/Check sheets
Pre-formatted lists for noting incidence, frequency, etc., according to known useful
criteria. Check lists are useful in collecting data and information easily .Check list
also helps employees to identify problems which prevent an organization to deliver
quality products which would meet and exceed customer expectations. Check lists are


nothing but a long list of identified problems which need to be addressed. Once you
find a solution to a particular problem, tick it immediately. Employees refer to check
list to understand whether the changes incorporated in the system have brought
permanent improvement in the organization or not?

Control/Stewart Charts - a standard pattern of performance/time for a given process,
often in Run Chart format, which acts as a template to check conformance and deviation.

Scatter Diagram/Scatter plot - a graph which plots points (typically very many
individual instances) according to two variables, which produces a useful visual indication
of the relationship between the two variables.



Example process improvement tools:
FMEA - Failure Mode Effects Analysis
PDCA - Plan Do Check Act
SIPOC Analysis
Statistical Control

Factors affecting Quality Control are:
Policy
Information
Engineering and design
Materials
Equipments
People

The 6 Ms (used in manufacturing industry)

Machine (technology)
Method (process)
Material (Includes Raw Material, Consumables and Information.)
Man Power (physical work)/Mind Power (brain work): Kizen Suggestions
Measurement (Inspection)
Milieu/Mother Nature (Environment)

The original 6Ms used by the Toyota Production System have been expanded by some to
include the following and are referred to as the 8Ms. However, this is not globally


recognized. It has been suggested to return to the roots of the tools and to keep the teaching
simple while recognizing the original intent; most programs do not address the 8Ms.
Management/Money Power
Maintenance

The 7 Ps (used in marketing industry)

Product=Service
Price
Place
Promotion
People/personnel
Process
Physical Evidence

The 5 Ss (used in service industry)

Samples
Scheme
Synchronous
Skin.
Search

5 W

Who
Where
What
When
Why

Deming Management

W Edwards Deming was an American statistician who was credited with the rise of Japan as
a manufacturing nation, and with the invention of Total Quality Management (TQM).
Deming went to Japan just after the War to help set up a census of the Japanese population.
While he was there, he taught statistical process control' to Japanese engineers - a set of
techniques which allowed them to manufacture high-quality goods without expensive
machinery. In 1960 he was awarded a medal by the Japanese Emperor for his services to that
country's industry.


Deming returned to the US and spent some years in obscurity before the publication of his
book "Out of the crisis" in 1982. In this book, Deming set out 14 points which, if applied to
US manufacturing industry, would he believed, save the US from industrial doom at the
hands of the Japanese.

14 Principle of Deming:

1. Create constancy of purpose towards improvement.
2. Adopt the new philosophy.
3. Cease dependence on inspection.
4. Move towards a single supplier for any one item.
5. Improve constantly and forever.
6. Institute training on the job.
7. Institute leadership
8. Drive out fear
9. Break down barriers between departments
10. Eliminate slogans
11. Eliminate management by objectives
12. Remove barriers to pride of workmanship.
13. Institute education and self-improvement.
14. The transformation is everyone's job.

1. Constancy of purpose: Create constancy of purpose for continual improvement of
products and service to society, allocating resources to provide for long range needs rather
than only short term profitability, with a plan to become competitive, to stay in business, and
to provide jobs.

2. The new philosophy: Adopt the new philosophy. We are in a new economic age, created
in Japan. We can no longer live with commonly accepted levels of delays, mistakes, defective
materials and defective workmanship. Transformation of Western management style is
necessary to halt the continued decline of business and industry.

3. Cease dependence on mass inspection: Eliminate the need for mass inspection as the way
of life to achieve quality by building quality into the product in the first place. Require
statistical evidence of built in quality in both manufacturing and purchasing functions.
4. End lowest tender contracts: End the practice of awarding business solely on the basis of
price tag. Instead require meaningful measures of quality along with price. Reduce the
number of suppliers for the same item by eliminating those that do not qualify with statistical
and other evidence of quality. The aim is to minimize total cost, not merely initial cost, by
minimizing variation. This may be achieved by moving toward a single supplier for any one
item, on a long term relationship of loyalty and trust. Purchasing managers have a new job,
and must learn it.



5. Improve every process: Improve constantly and forever every process for planning,
production, and service. Search continually for problems in order to improve every activity in
the company, to improve quality and productivity, and thus to constantly decrease costs.
Institute innovation and constant improvement of product, service, and process. It is
management's job to work continually on the system (design, incoming materials,
maintenance, improvement of machines, supervision, training, retraining).

6. Institute training on the job: Institute modern methods of training on the job for all,
including management, to make better use of every employee. New skills are required to keep
up with changes in materials, methods, product and service design, machinery, techniques,
and service.

7. Institute leadership: Adopt and institute leadership aimed at helping people do a better
job. The responsibility of managers and supervisors must be changed from sheer numbers to
quality. Improvement of quality will automatically improve productivity. Management must
ensure that immediate action is taken on reports of inherited defects, maintenance
requirements, poor tools, fuzzy operational definitions, and all conditions detrimental to
quality.

8. Drive out fear: Encourage effective two way communication and other means to drive out
fear throughout the organization so that everybody may work effectively and more
productively for the company.

9. Break down barriers: Break down barriers between departments and staff areas. People
in different areas, such as Leasing, Maintenance, Administration, must work in teams to
tackle problems that may be encountered with products or service.

10. Eliminate exhortations: Eliminate the use of slogans, posters and exhortations for the
work force, demanding Zero Defects and new levels of productivity, without providing
methods. Such exhortations only create adversarial relationships; the bulk of the causes of
low quality and low productivity belong to the system, and thus lie beyond the power of the
work force.

11. Eliminate arbitrary numerical targets: Eliminate work standards that prescribe quotas
for the work force and numerical goals for people in management. Substitute aids and helpful
leadership in order to achieve continual improvement of quality and productivity.
12. Permit pride of workmanship: Remove the barriers that rob hourly workers, and people
in management, of their right to pride of workmanship. This implies, among other things,
abolition of the annual merit rating (appraisal of performance) and of Management by
Objective. Again, the responsibility of managers, supervisors, foremen must be changed from
sheer numbers to quality.



13. Encourage education: Institute a vigorous program of education, and encourage self
improvement for everyone. What an organization needs is not just good people; it needs
people that are improving with education. Advances in competitive position will have their
roots in knowledge.

14. Top management commitment and action: Clearly define top management's permanent
commitment to ever improving quality and productivity, and their obligation to implement all
of these principles. Indeed, it is not enough that top management commit themselves for life
to quality and productivity. They must know what it is that they are committed to-that is,
what they must do. Create a structure in top management that will push every day on the
preceding 13 Points, and take action in order to accomplish the transformation. Support is not
enough: action is required!

Deming has been criticized for putting forward a set of goals without providing any tools for
managers to use to reach those goals (just the problem he identified in point 10). His
inevitable response to this question was:"You're the manager, you figure it out."

Emerging Quality management issues and challenges

Total quality management is always going to have issues and the emerging issues of
yesterday are the same ones for tomorrow. The philosophy of TQM is getting everyone
involved with quality concepts and principles and what must be done to achieve quality
results in everything an organization does.

From Human resource functions to creating a philosophy of producing a quality product or
performing a service with quality objectives is more important today than ever before. The
competition today is on a world scale for most businesses and if not at least within a specific
country. The financial constraints businesses and even countries face are difficult and


sometimes it is important to identify that making a good product or performing a quality
service is worth every cent spent.

Management and owners of a business or organization must display that quality principles are
important not only in the policies identified but the actions taken with respect to issues an
organization must face. Actions which do not match the philosophy of the importance of
quality principles will fall on deaf ears if employees or volunteers do not feel management is
exhibiting the philosophies they have in place.

Quality Assurance and Productivity

Quality is the ability of the product to satisfy customers need. How to improve quality of the
product or how to assure customers about the quality of the product has become a great
challenge for management. Quality ensures organizations survival and growth. Organizations
use quality to compete with competitors. Only improving quality of product organizations
can face the global competition. Therefore, there must be continuous improvement in quality.
Quality improvement has no boundary. It is the race without final line. It is said that people
buy quality not product. And, to improve quality is a really a challenge for management.
Along, with increasing quality to increase productivity again is another challenge for
management. Organization must try to achieve higher productivity. Higher productivity only
helps to reduce cost. Productivity is the ratio between input and output. Improved technology,
employees, regular skill development and better utilization of resources helps to increase
productivity. Total quality management is the latest approach or needs to improve quality.



Technological advancement

How to utilize advanced and sophisticated technology has become another challenge for
quality management. Technology has developed beyond the expectation of anybody in the
world over last 100 years. Tremendous advancement has been made in production,
distribution and information technology. Managers must manage all this technology with the
development of computer, the face of information technology has absolutely changed.
Introduction of internet, email and other electronic media, have benefitted organizations in
the field of productions, distribution and other areas of business. Decision making have been
facilitated by information technology. Technological advancement has changed the nature of
job. Most of the jobs which were performed by unskilled and semi-skilled labors previously,
now they are performed by skilled labors. Number of white collar job is increasing and blue
collar jobs are decreasing. Organization must train their employees about new technology.
Only with new technology, Organization can compete with other competitors.

Innovation and change

Quality Management must pay attention on innovation and change. Otherwise, they would go
out of business. Rapid innovations are taking place in technology, product and service.
Product lifecycle is getting shorter and shorter. Product needs continuous improvement if the
life span is to be made long. New ideas, new techniques, new methods are being innovated;
there must be new inventions of ideas, new invention of product. Old and outdated product
cannot satisfy customers.
There is change in external environment, political and legal, socio-cultural, economic and
technological environment change rapidly. How to adjust with such change, how to keep
pace with such change, how to keep pace with such change that has become challenge for
quality management.

Empowerment

This is the age of empowerment. Role difference between management and workers has
narrowed down. Status between worker and manager is very narrow. Most of the decisions
are taken at operating level. Workers are free to plan and schedule their work. They are given
more and more autonomy and freedom. They participate in major decision making activities.
Joint goal setting and joint performance evaluation has become common. Self managed work
team had been established, more and more information are given to employees, and how to
manage such empower team has become challenge for managers.



Remedies
Determining the Cost of Quality
Communication Skills
Project Management Training
Quality Management Training
Problem Solving Skills
Quality Functional Deployment
Having a Coach or Mentor
Quality Certification
Training for Senior Management



Summary

The control process is the direction for organizational control that derives from the goals
and strategic plans of the organization.

In order to create an effective control process, the company needs to determine what it is
and where it is going. Strategic goals need to begin with a broad view and then create
layers of focus that outline how each department within the organization will contribute
to those goals. It is important to have a way to review organizational processes and
determine if the company is on target to meet its goals.

The direction for organizational control comes from the goals and strategic plans of the
organization. General plans are translated into specific performance measures, such as
share of the market, earnings, return on investment, and budgets. The process of
organizational control is to review and evaluate the performance of the system against
these established norms.

TQM is a set of management practices throughout the organization, geared to ensure the
organization consistently meets or exceeds customer requirements. TQM places strong
focus on process measurement and controls as means of continuous improvement.

A number of key principles can be identified in defining TQM, including:
Executive Management Top management should act as the main driver for TQM
and create an environment that ensures its success.
Training Employees should receive regular training on the methods and concepts
of quality.
Customer Focus Improvements in quality should improve customer satisfaction.
Decision Making Quality decisions should be made based on measurements.
Methodology and Tools Use of appropriate methodology and tools ensures that
non-conformance incidents are identified, measured and responded to consistently.
Continuous Improvement Companies should continuously work towards improving
manufacturing and quality procedures.
Company Culture The culture of the company should aim at developing employees
ability to work together to improve quality.
Employee Involvement Employees should be encouraged to be pro-active in
identifying and addressing quality related problems.



Review Questions

1. What are the steps in control process? Which step is likely to be the most difficult to
perform?
2. Why is controlling important in organization? Explain.
3. What is control? Explain its types.
4. What are the features of effective controlling?
5. Define control. List out some of the techniques for control.
6. Explain Deming management. What are the major factors affecting quality?
7. What do you mean by TQM? What are its tools and techniques? Explain briefly.
8. Why is control needed? Diagram the steps in the control process and explain each
step.
9. What is the role of information in effective control?
10. Explain emerging issues and challenges for quality management.



Case Study -V

Eurocamp Travel

Eurocamp Travel, which provides family camping holidays, has a reputation for the high-
quality of its equipment and services, and has become market leader in this rapidly growing
holiday sector. In recent years, sales offices have been opened in the Netherlands and
Germany, and Eurocamps geographic coverage has been extended from its original French
sites to include sites throughout Europe. As the business has become larger and more
complex, the demands placed on the office systems have also become greater, reinforcing the
need for functional specialization of staff, yet requiring more interdepartmental
understanding and cooperation. When it became clear that Eurocamps service package could
be copied by competitors eager to attract premium customers, the company decided to
reinforce quality at every stage in their process. This was, they believed, the main criterion
that already differentiated Eurocamp, and this was also potentially the most difficult for lower
priced competitors to follow. A consultant was brought in to facilitate a major quality
improvement programme. This was conceived as a top-down approach, whereby important
projects were identified and tackled by trained teams, But soon it became apparent that these
early projects were not achieving the anticipated sustainable improvements. It also became
clear that the failure was largely the result of only involving senior managers, who could not
devote the time, required to projects, and did not fully understand the process concerned.
Those employees who did have a very detailed understanding of the process had been
excluded from problem definition, evaluation and implementation of changes. So, the
company launched their quality management system (QMS) initiative. Each department
established a quality steering committee which comprised at least one director, a trained
facilitator and volunteers from every grade of employee. The emphasis at this stage was on
the identification and improvement of internal processes with further emphasis on satisfying
the internal customer. Early success demonstrated the validity of this approach and generated
a high level of enthusiasm throughout the company.
Questions
1 Why are the differences between the first top-down attempt, and the second attempt at
establishing a quality initiative?
2 What do you think are the main advantages and problems with the more participative
approach?
Organizational Change and Development


CHAPTER: VI

Organizational Change

Concepts
Organizational change management (OCM) is a framework for managing the effect of new
business processes, changes in organizational structure or cultural changes within an
enterprise. Simply put, OCM addresses the people side of change management.
A systematic approach to OCM is beneficial when change requires people throughout an
organization to learn new behaviors and skills. By formally setting expectations, employing
tools to improve communication and proactively seeking ways to reduce misinformation,
stakeholders are more likely to buy into a change initially and remain committed to the
change throughout any discomfort associated with it.
Successful OCM strategies include:
Agreement on a common vision for change -- no competing initiatives.

Strong executive leadership to communicate the vision and sell the business case for
change.

A strategy for educating employees about how their day-to-day work will change.

A concrete plan for how to measure whether or not the change is a success -- and
follow-up plans for both successful and unsuccessful results.

Rewards, both monetary and social, that encourage individuals and groups to take
ownership for their new roles and responsibilities.

Forces- Internal and External

If there is anything that is stead fast and unchanging, it is change itself. Change is inevitable,
and those organizations who do not keep up with change will become unstable, with long-
term survivability in question.

There are things, events, or situations that occur that affect the way a business operates, either
in a positive or negative way. These things, situations, or events that occur that affect a


business in either a positive or negative way are called "driving forces."
There are two kinds of driving forces; Internal driving forces, and external driving forces.

1. Internal driving forces are those kinds of things, situations, or events that occur inside
the business, and are generally under the control of the company.
Examples might be as follows
organization of machinery and equipment,
technological capacity,
organizational culture,
management systems,
financial management
Employee morale.

2. External driving forces are those kinds of things, situation, or events that occur outside of
the company and are by and large beyond the control of the company. Examples of
external driving forces might be, the industry itself, the economy, demographics,
competition, political interference, etc. Whether they are internal or external driving
forces, one thing is certain for both. Change will occur! A company must be cognizant of
these changes, flexible, and willing to respond to them in an appropriate way.

External driving forces can bury a business if not appropriately dealt with. The question is,
how does a business know what changes are occurring so that they can deal with them in a
positive way. OK, that's the next issue.

In order for a business to succeed and gain the competitive edge, the business must know
what changes are indeed occurring, and what changes might be coming up in the future. I
guess you might call this forecasting. Thus, critical to the business is what we call
"informational resources."
It is the collection and analyzing of data. Some examples of critical information might
include the following:
Competition (what are they doing?)
Customer behavior (needs, wants, and desires)
Industry outlook (local, national, global)
Demographics (the change in populations and their density, etc.)
Economy (are we peaking, or moving negatively)
Political movements and/or interference
Social environment
Technological changes
General environmental changes

The above are just some issues organizations must be on top of. Well it's never easy, but
businesses that are successful include all of the above (and more), to develop the appropriate
tactics, strategies, and best practices, to ensure successful out comes.


Need for Planned Change
Every organization makes minor structural adjustments in reaction to changes in its direct
action and indirect action environments. A sales form is revised to eliminate customer
confusion. Or, the human resources department may create a training program on OSHA-
mandated safety programs. What distinguishes planned change from these routine changes is
its scope and magnitude. Planned change aims to prepare the entire organization, or a major
part of it, to adapt to significant changes in the organizations goals and direction. A detailed
definition of planned change is the deliberate design and implementation of a structural
innovation a new policy or goal or a change in operating philosophy climate or style.
Change programs are necessary today precisely because of the shift in time and relationships
that we have seen throughout the organizational world. The sophistication of information
processing technology, together with the increase in the globalization of organizations, means
that managers are bombarded with more new ideas new products, new challenges than ever
before. To handle such an increase in information accompanied by a decrease in the decision
making time managers can afford to take, managers must improve their ability to manage
change. Many large organizations have explicit change management programs to increase the
ability of people throughout the organization to anticipate and learn from the changes that are
occurring.
Some Theories of Planning Change

a. Lewin"s Change Model
b. Action Research Model
c. Contemporary Action Model

a. Lewin"s Change Model

Kurt Lewin's change management model is a fantastic change model for understanding the
basic concepts of a straight-forward change management process.

Lewin's Three Step Change Model Phases are:

Unfreeze: Reducing the forces that are striving to maintain the status quo, and dismantling
the current mind set. Usually by presenting a provocative problem or event to get people to
recognize the need for change and to search for new solutions.

Transition: Developing new behaviors, values, and attitudes, sometimes through
organizational structure and process changes and development techniques. There may be a
period of some confusion as we move from the old ways of doing things to the new.



Freeze: The final stage of crystallizing and the adaptation of ownership of the new 'as is'. The
organization may revert to former ways of doing things at this point unless the changes are
reinforced through freezing.

b. Action Research Model
The action research model underlies most current approaches to planned change and is often
identified with the practice of OD. Recently, action research has been extended to new
settings and applications, and consequently researchers and practitioners have made requisite
adaptations of its basic framework. Trends in the application of action research include
movement from smaller sub-units of organizations to total systems and communities. In those
larger contexts, action research is more complex and political than in smaller settings.
Therefore, the action research cycle is coordinated across multiple change processes
and includes a diversity of stakeholders who have an interest in the organization.

Action research is applied increasingly to promote social change and innovation, as
demonstrated most clearly in community development and global social change projects.
Those applications are heavily value laden and seek to redress imbalances in power and
resource allocations across different groups. Action researchers tend to play an activist role in
the change process, which is often chaotic and confliction.



Steps/Process of Planned Change
Once managers and an organization commit to planned change, they need to create a logical
stepby step approach in order to accomplish the objectives. Planned change requires
managers to follow an eightstep process for successful implementations.
1. Recognize the need for change. Recognition of the need for change may occur at the
top management level or in peripheral parts of the organization. The change may be
due to either internal or external forces.

2. Develop the goals of the change. Remember that before any action is taken, it is
necessary to determine why the change is necessary. Both problems and opportunities
must be evaluated. Then it is important to define the needed changes in terms of
products, technology, structure, and culture.

3. Select a change agent. The change agent is the person who takes leadership
responsibility to implement planned change. The change agent must be alert to things
that need revamping, open to good ideas, and supportive of the implementation of
those ideas into actual practice.

4. Diagnose the current climate. In this step, the change agent sets about gathering data
about the climate of the organization in order to help employees prepare for change.
Preparing people for change requires direct and forceful feedback about the negatives
of the present situation, as compared to the desired future state, and sensitizing people
to the forces of change that exist in their environment.



5. Select an implementation method. This step requires a decision on the best way to
bring about the change. Managers can make themselves more sensitive to pressures
for change by using networks of people and organizations with different perspectives
and views, visiting other organizations exposed to new ideas, and using external
standards of performance, such as competitor's progress.

6. Develop a plan. This step involves actually putting together the plan, or the what
information. This phase also determines the when, where, and how of the plan. The
plan is like a road map. It notes specific events and activities that must be timed and
integrated to produce the change. It also delegates responsibility for each of the goals
and objectives.

7. Implement the plan. After all the questions have been answered, the plan is put into
operation. Once a change has begun, initial excitement can dissipate in the face of
everyday problems. Managers can maintain the momentum for change by providing
resources, developing new competencies and skills, reinforcing new behaviors, and
building a support system for those initiating the change.

8. Follow the plan and evaluate it. During this step, managers must compare the actual
results to the goals established in Step 4. It is important to determine whether the
goals were met; a complete followup and evaluation of the results aids this
determination. Change should produce positive results and not be undertaken for its
own sake.


Keep in mind that a comprehensive model of planned change includes a set of activities that
managers must engage in to manage the change process effectively. They must recognize the
need for change, motivate change, create a vision, develop political support, manage the
transition, and sustain momentum during the change.

Resistance to Change
The Concept of Resistance emerges when an individual senses a threat to something that he
values. This threat could be for real or may just be a perception by the individual himself.
The resistance may arise either from a genuine understanding of the change or from
misunderstanding. It could also arise as a result of his almost total ignorance about the
change.
According to change theory, human systems look for homeostasis and equilibrium. Let us go
look into what the above statement is suggesting to us. Most of us prefer predictability and
stability in both personal as well as our professional lives. We typically avoid situations that
upset order, threaten our self-interests, increase stress or involve risk. When faced with
changes to our status quo, we tend to resist initially. The resistance continues and, in some
cases increases, until we recognize the benefits of the change and see the gains to be worth
more than the danger to our self-interests.
There are two fundamental sources of resistance. They are:
Fear.
Lack of awareness.
Causes of Resistance to Change
It is difficult for organizations to avoid change, as new ideas promote growth for them and
their members. Change occurs for many reasons such as new staff roles; increases or
decreases in funding; acquisition of new technology; new missions, vision or goals; and to
reach new members or clients. Changes can create new opportunities, but are often met with
criticism from resistant individuals within the group.
Poor Communication
Changes within an organization start with key decision makers. It is up to them to pass along
the details to team members and ensure all questions and complaints are handled before
changes go into effect. Unfortunately, as news of a change spreads through the hierarchy,
details are sometimes skewed and members end up receiving inaccurate, second-hand
information. Poor communication can therefore cause resistance to change.



Self-Interest
Ego often interferes with the ability to adapt to change. Some want to maintain the status quo
to better advance their own personal agendas; others have different motivations. In the end,
employees acting in their own self-interest, instead of the organization's greater good, will
resist change.
Feeling Excluded
Organizations often solicit advance input to ensure that everyone has an opportunity to voice
their ideas and opinions. If, however, employees hear of a sudden change, and they had no
input, they will feel excluded from the decision making process and perhaps offended.
Lack of Trust
Trust plays a big role in running a successful organization. When organization members feel
they cannot trust each other or key decision makers, it becomes difficult for them to accept
organizational changes. They may ascribe the changes to some negative underlying reason or
even assume they will eventually lose their jobs.
Skills/Training Dearth
When change requires mastering new skills, resistance is likely, particularly when it comes to
new technology. Organizations can prevent this through offering education and training.
Reducing Resistance to Change
From the issues raised in the section above, it can be seen that change is complex and there is
not a single solution. There are chances that you may come across people who accept or
welcome the change.
When an individual foresees possibilities of gain in the following areas such as:
Increased Security.
Money.
More Authority.
Status or Prestige.
Better work conditions.
Self satisfaction.
Better personal contacts.
Reduced time and effort.



Other Factors
Some of the other reasons that an individual accepts change are as follows:
Provides a New challenge.
Likes or Respects the source.
Likes the way in which the change is being communicated.
Reduces the boredom.
Provides an opportunity for input.
Improves the future.
Perception that the change is necessary.
Thus, we can infer from the two situations that resistance to change can be minimized
through the following manner:
Education and communication.
Participation and involvement.
Facilitation and support.
Negotiation and agreement.
Manipulation and co-optation.
Explicit and implicit coercion.
The following is a step-by-step procedure which when followed will help you to
minimize the resistance to change:
1. Provide all the facts about the reason for changing. If risks are involved, acknowledge
them but explain.
2. Objectively explain the benefits that could result from the change.
3. Seek questions or clarifications and answer them.
4. Invite participation and ask for suggestions because the people involved know the
situation best.
5. Avoid surprise because this stirs unreasoning opposition more than any other factor.
6. Acknowledge the rough spots and explain how you plan to smooth the change.
7. Set standards and explain your expectations.
8. Contact the informal leaders and use their resources.
9. Acknowledge and reinforces the staffs co-operation and give them feedback on the
process.
10. Keep the two way communications open for suggestions and corrections.



Techniques for Managing Resistance
The 5 key techniques that are used to manage resistance to change:
Factual aspect of dealing with resistance to change.
Emotional aspect of dealing with resistance to change.
Personal aspect of dealing with resistance to change.
Individual and collective capacity for change.
Acceptance of the limitations of change.
Let us look into the mentioned aspects in detail:
Factual aspect of dealing with resistance to change: A good communication tactic is vital
for a successful change management procedure, and is essential to deal with the factual
aspects of resistance.
There are 2 stages to the factual communication:
Before the change occurs and during the change process.
The structural and content part of your communication will help greatly from the
order of a program-based approach to leading and overseeing the change initiative.
Emotional aspect of dealing with resistance to change: Many leaders in the world of
change management and change leadership are now speaking about the importance of the
emotional aspect of leadership and the need to address the human dimension of change.
The definitive work in this area is William Bridges as he focuses on transitions and the
psychological changes that lie behind significant organisational change.
He maintains that the situational changes are not as difficult for companies to make as the
psychological transitions of the people impacted by the change.
Personal aspect of dealing with resistance to change: We often either overlook or ignore
the factor of YOU as the change leader
It is easy to speak of change management but the reality is that change involves leadership
as well as management. The primary cause of failure in all the change initiatives is that all the
people related are to be dealt with their emotions. So the change leader is expected to possess
some very special qualities. What you do, and how you do it, is largely dependent on how
you are as a person. The mastery of this area is critical to the success of a change initiative.
According to Daniel Goleman, "The leaders emotions are contagious - they infect the
organisation"


Individual and collective capacity for change: Another factor that is often over-looked is
that of limits to how far and how fast people and organisations can change.
Why this happens to be so important is because organisational cultures are the single biggest
determinant factor of how an individual responds in an organisational environment.
In other words, you cannot jump from childhood to adult maturity in a single step and
without evolving through all the prevailing stages of development.
Acceptance of the limitations of change: Another dimension that that is involved in dealing
with the resistance to change, is that however well planned and executed things happen.
Whether we like it or not there are significant aspects of our personal and organisational lives
that are out of our control.
These things are generally very stressful and often cannot be fully resolved.
Types of Resistance to Change:
Level 1: I Do Not Get It.
Level 2: I Do Not Like It.
Level 3: I Do Not Like You.
Let us now look into the types of resistance involved in the same.
Level 1: I Do Not Get It:
Level 1 involves information involving the facts, figures and ideas. It is the world of thinking
and rational action. It is the world of presentations, diagrams, and logical arguments.
This could also arise from lack of information, disagreement with data, and lack of exposure
to the critical information or maybe even just the confusion over what it means.
Many at times, we make the mistake of treating all resistance as if it were Level 1. Well-
meaning managers supply their people with more information - hold more meetings, and
make more PowerPoint presentations - when, in fact, something completely different is called
for. And that's where Levels 2 and 3 come in.
Level 2: I Do Not Like It:
Level 2 concerns the emotional reaction to the change. Blood pressure rises, adrenaline flows,
pulse increases. It is centered on fear: People are afraid that this change may cause them to
lose face, status, control - maybe even their jobs.


When Level 2 is active, it makes communicating the change very difficult. People stop
listening. So no matter how terrific your presentation is, once people hear "downsizing" their
minds go elsewhere. This, however, is uncontrollable. They are not choosing to ignore you;
it's just that they've got more important things on their minds - like their own survival.
Level 3: I Do Not Like You:
This means, maybe they do like you, but they don't trust you or don't have enough confidence
in your leadership. This is difficult to digest, but lack of attention to Level 3 is a major reason
why resistance flourishes and changes fail as it is seldom talked about.
In Level 3 resistance, people are not resisting the idea in fact, they may love the change you
are presenting they are resisting you. But maybe it may not be you; they may be resisting
those whom you represent.
Whatever be the reason for this deeply ingrained resistance, you can't afford to ignore it.
People may understand the idea you are suggesting (Level 1), and they may even have a good
feeling about the possibilities of this change (Level 2) but they won't go along if they don't
trust you.
Thus, the example broadly classifies the types of resistance involved in an actual
organizational change. However, the following section explains the methodology involved in
reducing resistance to change.
Approaches to Organizational Change
The various types of organizational changes are;

c. Individual Level Change

Individual level changes may take place due to changes in job assignment, transfer of an
employee to a different location or the changes in the maturity level of a person which occurs
over a passage of time. The general opinion is that change at the individual will not have the
significant implications for the organization. But this is not correct because individual level
changes will have impact on the group which in turn will influence the whole organization.
Therefore, a manager should never treat the employees in isolation but he must understand
that the individual level change will have repercussions beyond the individual.

d. Group Level Change

Management must consider group factors while implementing any change, because most of
the organizational changes have their major effects at the group level. The groups in the
organization can be formal groups or informal groups. Formal groups can always resist
change for example; the trade unions can very strongly resist the changes proposed by the


management. Informal groups can pose a major barrier to change because of the inherent
strength they contain. Changes at the group level can affect the work flows, job design, social
organization, influence and status systems and communication patterns.
The groups, particularly the informal groups have a lot of influence on the individual
members of the group. As such by effective implementing change at the group level,
resistance at the individual level can be frequently overcome.

e. Organizational Level Change

The organizational change involves major programmes which affect both the individuals and
the groups. Decisions regarding such changes are made by the senior management. These
changes occur over long periods of time and require considerable planning for
implementation.

A few different types of organization level changes are:

Strategic Change

Strategic change is the change in the very basic objectives or mission of the organization. A
simple objective may have to be changed to multiple objectives. For example, a lot of Indian
companies are being modified to accommodate various aspects of global culture brought in
by the multinational or transnational corporations.

Structural change

Organizational structure is the pattern of relationships among various positions and among
various position holders. Structural change involves changing the internal structure of the
organization. This change may be in the whole set of relationships, work assignments and
authority structure. Change in organization structure is required because old relationships and
interactions no longer remain valid and useful in the changed circumstances.

Process oriented change

These changes relate to the recent technological developments, information processing and
automation. This will involve replacing or retraining personnel, heavy capital equipment
investment and operational changes. All this will affect the organizational culture and as a
result the behavior pattern of the individuals.
People oriented change. People oriented changes are directed towards performance
improvement, group cohesion, dedication, and loyalty to the organizations as well as
developing a sense of self-actualization among members. This can be made possible by closer
interaction with employees and by special behavioral training and modification sessions.
To conclude, we can say that changes at any level affect the other levels. The strength of the
effect will depend on the level or source of change.



Planning and Implementing Change

Outcomes and Evaluation of Change

While implementing organizational change it is important issue for practitioners and
academics are how effective is the organizational change effort. Researchers where focused
on employee and managerial reports to find if the change made is a failure or successful, later
researchers conducted quantitative studies of organizational change efforts more precisely. A
seven year quantitative meta-analysis of organizational change research was conducted by
Barry Macy and Hiroaki Izumi and they found structural changes and human resource
changes of organizational change efforts have a positive impact on an organizations financial
performance. The changes that are designed to change power or control systems in a firm
such as autonomous team or behavior-modification reinforcement systems are referred to
structural changes and the changes that eventually change the way employees viewed such as
recognition systems, management development and multi skill training that are passed within
the existing organizations hierarchical structure are referred to human resource change.
It is observed that some researchers have reported low level of success rate for change
efforts; however other studies have suggested that, it is not the type of change that affects the
impact as the method the change process is managed. Sharon Parker, Nik Chmiel and Toby
Wall said that downsizing did not have negative consequences for the existing employees
since the change was related to the improvements in work organisation and improved chances
for empowerment.

Several issues are considered to evaluate the effectiveness of organizational change and
development efforts that include:

A variety of strategies and change techniques, and to assess the effectiveness of change
efforts are examined into techniques such as structural interventions and human interventions.
Researches should focus on discrete change techniques, such as the introduction of
management feedback systems that is, we should recognize the specific change activities that
work in particular settings.
Assessing the complex change in an accurate process, most change researches are observed
on a unique basis that uses a cross-sectional design that rely on the conservative information
of those concerned in the change. Sometimes employees develop post hoc-explanations of
their actions which is a limitation to this approach. The effective change observation shows
the change over an extended period of time, starting from the evaluation earlier to the change,
assessing the condition during change, and examining the long term and short term effects of
the change. In an ideal condition to include control group is easy that is an comparable area
of organisation that is not exposed to change, for any variations that appear within an
organisation it is easy to find if the change effort is responsible or other factors such as
seasonal or economic factors are responsible for the variations caused, but generally it is hard
to include a control group since the entire organisation is undergoing change or it is not easy
to compare an organisation that is not undergoing the change.


Therefore it is important to focus on financial outcomes and consider employee outcomes
such as sadness, anxiety and exhaustion and also consider assessing the effects of change,
since in an organisation success is very important when considering the effectiveness of
organizational change and development efforts. Thus evaluation of change is not a simple
process and is critical for a better understanding of works and the managers should carefully
plan the evaluation process and consider it as an essential part of the change program.

Monitoring the Change Process
Good management practices include regular monitoring on both a short- and long-term basis.
An effective monitoring process provides ongoing, systematic information that strengthens
project implementation. The monitoring process provides an opportunity to:

a. Compares implementation efforts with original goals and targets,
c. Determine whether sufficient progress is being made toward achieving expected results,
and,
d. Determine whether the time schedule is observed.

Monitoring is not an event that occurs at the end of a management cycle, but rather is an
ongoing process that helps decision-makers to better understand the effectiveness of the
action or system. An effective monitoring and evaluation programme requires collecting and
analyzing important data on a periodic basis throughout the management cycle of a project.
This process often involves collecting baseline data on existing conditions, reporting on
progress toward environmental/sustainability improvements, making connections between
actions and intended outcomes, and making mid-course changes in program design.

An effective monitoring and data management system records the performance of all
institutions with implementation responsibilities. It provides a system of accountability for all
responsible parties on how well they are achieving the goals and targets established.
The responsibility of appropriate application of the monitoring system lies with the
responsible persons/organisations/authorities assigned to this activity and has to follow the
reporting duties as outlined during the organisational setup phase.
Implementation together with monitoring show how important it is to work with indicators
and SMART targets from the very beginning of the system implementation. The work with
indicators and measurable data has to start with the baseline review. Key data based on
indicators have to be mapped in addition to analysis and recognition of missing indicators on
the occasion of the baseline review of the existing situation. Within the next step of the
system, these key data and indicators are used to formulate SMART targets in the strategic
programme and as a result will form the basis for the action programme and therefore the
basis for implementation processes. Finally, the implementation can be further controlled and


monitored, referring to the clearly defined indicators and thus SMART targets. Effectiveness
monitoring is thus very much dependent on a baseline recognition and reference to selected
indicators.

It is important to have a look at the current situation of monitoring to adapt the monitoring
system as much as possible to the structures in place and to avoid duplication of work.



Organizational Development

Concept

Organization development is an applied behavioral science which aims at improving
the effectiveness of the organizations and people working in organizations. The
organizations are facing different challenges due to different social political and economical
factors. All these aspects also affect the behavior of individual in the organization. The
concept of Organization development started developing in the 1950s. It focuses on the
human and social processes in the organization, design of work, organization culture,
structure, strategy formulation and managing change.

Richard Beckhard, an authority on organizational development and change management,
defined organizational development as "an effort, planned, organization-wide, and
managed from the top, to increase organization effectiveness and health through planned
interventions in the organization's processes, using behavioral-science knowledge" (Beckhard
1969).

Organization Development (OD) is a response to change, a complex educational
strategy intended to change the beliefs, attitudes, values and structure of organization so
that they can better adapt to new technologies, markets, and challenges, and the dizzying
rate of change itself. (Bennis, 1969).

OD can be defined as a planned and sustained effort to apply behavioral science for system
improvement, using reflexive, self-analytic methods. (Schmuck and Miles, 1971)
Leavitt (1972) has viewed an organization as a social system consisting of different sub-
systems such as task, structure, technology and human resource, interlinked by various
processes. Any change in one part or process has implications for other parts or processes
relevant to the system.

Organizational development is a process of planned change-change of an organizations
culture from one which avoids an examination of social processes (especially decision
making, planning and communication) to one which institutionalizes and legitimizes this
examination. (Burke and Hornstein, 1972)

The aims of OD are: (Beer, 1980).

1) Enhancing congruence between organizational structure, processes, strategy, people, and
culture;
2) Developing new and creative organizational solutions; and
3) Developing the organizations self-renewing capacity Organization development is an
organizational process for understanding and improving any and all substantive
processes an organization may develop for performing any task and pursuing any


objectives. A process for improving processes that is what OD has basically sought to
be for approximately 25 years (Vaill, 1989)

Organizational development is a set of behavioral science-based theories, values, strategies,
and techniques aimed at the planned change of the organizational work setting for the
purpose of enhancing individual development and improving organizational
performance, through the alteration of organizational members on-the-job behaviours.
(Porras and Robertson, 1992)

OD is a systematic application of behavioral science knowledge to the planned
development and reinforcement of organizational strategies, structure, and processes for
improving an organizations effectiveness. (Cummings and Worley, 1993)
Organization development (OD) is a planned approach to improve employee and
organizational effectiveness by conscious interventions in those processes and structures
that have an immediate bearing on the human aspect of the organization (Ramanarayan,
Rao, and Singh 1998).

Objectives of OD

As objectives of organizational development are framed keeping in view specific situations,
they vary from one situation to another. In other words, these programs are tailored to meet
the requirements of a particular situation. But broadly speaking, all organizational
development programs try to achieve the following objectives:

Making individuals in the organization aware of the vision of the organization.
Organizational development helps in making employees align with the vision of the
organization.
Encouraging employees to solve problems instead of avoiding them.
Strengthening inter-personnel trust, cooperation, and communication for the
successful achievement of organizational goals.
Encourage every individual to participate in the process of planning, thus making
them feel responsible for the implementation of the plan.
Creating a work atmosphere in which employees are encouraged to work and
participate enthusiastically.
Replacing formal lines of authority with personal knowledge and skill.
Creating an environment of trust so that employees willingly accept change.

According to organizational development thinking, organization development provides
managers with a vehicle for introducing change systematically by applying a broad selection
of management techniques. This, in turn, leads to greater personal, group, and organizational
effectiveness.



Characteristics of Organization Development

A number of special characteristics together distinguish organizational development
from other approaches to managing and improving organizational function.

1. Planned Change: OD is a strategy of planned change for organizational improvement.
This planned emphasis separates OD efforts from other kinds of more haphazard changes
that are frequently undertaken by organizations.

2. Comprehensive Change: OD efforts focus on comprehensive change in the organization,
rather than focusing attention on individuals, so that change is easily observed. The concept
of comprehensive change is based on the systems concept-open, dynamic and adaptive
system. OD efforts take an organization as an interrelated whole and no part of it can be
changed meaningfully without making corresponding changes in other parts.

3. Long-range Change: OD efforts are not meant for solving short-term; temporary, or
isolated problems. Rather, OD focuses on the elevation of an organization to a higher level
of functioning by improving the performance and satisfaction.

4. Dynamic Process: OD is a dynamic process and includes the efforts to guide and direct
changes as well as to cope with or adapt changes imposed. It recognizes that
organizational goals change, so the methods of attaining these goals should also change.
Thus, OD efforts are not one-shot actions; rather, they are ongoing, interactive, and
cyclic processes.

5. Participation of Change Agent: Most OD experts emphasize the need for an outside,
third party change agent, or catalyst. They discourage do it yourself approach. There is a
close working relationship between the change agent and the target organizational members
to be changed. The relationship involves mutual trust, joint goals and means, and
mutual influence. The change agent is a humanist seeking to get a humanistic philosophy in
the organization. He shares a social philosophy about human values.

6. Emphasis on Intervention and Action Research: OD approach results in an active
intervention in the ongoing activities of the organization. Action research is the basis for
such intervention. A change agent in OD process does not just introspect the people
and introduce changes, rather, he conducts surveys, collects relevant data, evaluates these
data, and then, takes actions for intervention. He designs intervention strategies based on
these data.

7. Normative Educational Process: OD is based on the principle that norms form
the basis for behavior and change is a re-educative process of replacing old norms by
new ones. This is done to arrive at certain desirable outcomes that may be in the form
of increased effectiveness, problem-solving, and adaptability for the organization as a whole.


At the individual level, OD attempts to provide opportunities to be human and to increase
awareness, participation, and integrate individual and organizational goals

Key Benefits/Importance of OD

Organizational development is the use of organizational resources to improve efficiency and
expand productivity. It can be used to solve problems within the organization or as a way to
analyze a process and find a more efficient way of doing it. Implementing organizational
development requires an investment of time and money. But when you understand its
importance, you can justify the costs.
Organizational Change
The process of organizational development identifies areas of company operations where
change is needed. Each need is analyzed, and the potential effects are projected into a
change management plan. The plan outlines the specific ways in which the change will
improve company operations, which will be affected by the change and how it can be
rolled out efficiently to employees. Without organizational development as part of change
management, a company would have a difficult time developing effective change
management programs.
Growth
Organizational development is an important tool in managing and planning corporate
growth. An organizational development analysis brings together sales projections and
consumer demand to help determine the rate of company growth. This information is used
to alter the company business plan and plan the expansion and use of company resources
such as personnel and the distribution network to accommodate future growth.
Work Processes
When a company is involved in organizational development, it analyzes work processes
for efficiency and accuracy. Any quality control measures required to attain company
standards are put in place. Evaluators analyze duplicate process, or processes that can be
combined for greater efficiency, and develop and implement detailed plans on how to
improve company methods.
Product Innovation
Product innovation requires the analysis of several kinds of information to be successful.
Organizational development is critical to product innovation because it can help analyze
each element of product development and create a method for using it effectively. Some of
the processes that come together in organizational development to assist in product


innovation are competitive analysis, technology development, consumer preferences, and
target market research, manufacturing capabilities analysis and patents and trademarks.

Organizational Development Activities

In practice, Organizational Development can take on many forms, and typical OD activities
can include some of the following:

1. Team Building
Team building is a philosophy of job design in which employees are viewed as
members of interdependent teams instead of as individual workers. Team building
(which is correctly spelled with two words)

refers to a wide range of activities,
presented to businesses, schools, sports teams, religious or nonprofit organizations
designed for improving team performance. Team building is pursued via a variety of
practices, and can range from simple bonding exercises to complex simulations and
multi-day team building retreats designed to develop a team (including group
assessment and group-dynamic game), usually falling somewhere in between. It
generally sits within the theory and practice of organizational development, but can
also be applied to sports teams, school groups, and other contexts. Team building is
not to be confused with "team recreation" that consists of activities for teams that are
strictly recreational. Team building can also be seen in day-to-day operations of an
organization and team dynamic can be improved through successful leadership. Team
building is said to have benefits of self-development, positive communication,
leadership skills and the ability to work closely together as a team to solve problems.

2. Organizational Assessments

An organizational assessment is a process of taking a step back to reflect and look at
the various areas of the organization in regards to what is working and what could be
different. An assessment helps to create an objective view of an organizations current
reality in regards to its funding streams, work flow processes, organizational structure,
outcomes measurement, client satisfaction, employee turnover, board development,
etc. It is a full systems view of where the organization stands that enables
management to leverage its current assets as well as choose to do some things
differently in order to maximize efficiency and effectiveness in achieving the
organizations mission. (Amy Foster, Unbridled Performance)
The organizational assessment can help to guide a group discussion about the
operations of a nonprofit organization. Ideally, this group discussion would be
comprised of senior staff, board members, volunteers and, sometimes, recipients.


3. Career Development

Career development describes the lifelong process of managing life, learning and work. It
involves individuals planning and making decisions about education, training and career
choices as well as developing the right skills and knowledge to do.

4. Training

Training is the acquisition of knowledge, skills, and competencies as a result of the
teaching of vocational or practical skills and knowledge that relate to specific useful
competencies. Training has specific goals of improving one's capability, capacity,
productivity and performance. It forms the core of apprenticeships and provides the
backbone of content at institutes of technology (also known as technical colleges or
polytechnics). In addition to the basic training required for a trade, occupation or
profession, observers of the labor-market
[who?]
recognize as of 2008 the need to
continue training beyond initial qualifications: to maintain, upgrade and update skills
throughout working life. People within many professions and occupations may refer
to this sort of training as professional development.

5. E- Learning

E-Learning is the use of technology to enable people to learn anytime and anywhere.
E-Learning can include training, the delivery of just-in-time information and guidance
from expert.
And others are so on
6. Coaching
7. Innovation
8. Leadership Development


Process of OD

The process consists of three major steps: diagnosis, intervention and evaluation. These steps
are similar to the planned change process, since it is actually a specialized type of change
effort. Such a process is most likely to be initiated when top management believes that there
are deficiencies in the way the overall organization is functioning.

1. Diagnosis

The first step involves diagnosis of the present situation. Change agents collect the
required information through interviews, questionnaires, internal documents, records, and
reports. Usually, a diagnostic strategy is developed using two or more methods of data
collection after their respective strengths and weaknesses have been considered.

2. Intervention

After the situation is diagnosed interventions or change strategies can be designed and
implemented with the help of a change agent. Some intervention techniques are:

Process consultation: This is concerned with interpersonal relations and
functioning of work groups. The change agent observes the group and gives
feedback regarding dysfunctions in areas of decision-making, handling conflicts,
and communication patterns.

Team building: This technique is used to help work groups become effective in
performing their tasks. The consultant helps in assessing group tasks, member
roles, and strategies for accomplishing work tasks.

Third-party intervention: Here, the consultants help the parties concerned to
resolve their differences through techniques like problem solving and conciliation.
Survey Feedback: In survey feedback, data gathered through survey
questionnaires and personal interviews are analyzed, tabulated into understandable
form and shared with those who first supplied the information. Survey feedback
lets people know where they stand in relation to others on important
organizational issues thus helping them resolve conflicts in a constructive manner.
Effective feedback should be relevant, understandable, descriptive, verifiable, and
inspiring.

Techno structural activities: This technique is used to improve work technology
and organization structure. It is intended to help employees evaluate themselves
and to make appropriate changes in task design, work methods, and organization
structure.


Skill development: This technique is used to help employees identify their
shortcomings and overcome their deficiencies. It is used to improve performance
in areas such as delegation, problem solving conflict resolution, and leading.

3. Evaluation: Since organizational development is directed towards long-term change, the
programs have to be monitored on a regular basis.
An accurate evaluation of developmental interventions is dependent on the accurate
diagnosis of the current situation and the clear identification of the desired results.



Summary
This unit provides you an overview of change management. Change management is actually
carried out in an organisation. The main purpose of change is to cope up with the changing
business environment and to sustain the position in the global market. Change management
basically deals with change.
As we know that managing change in an organisation is not an easy task. It needs systematic
planning such that changes brought in an organisation do not produce any adverse affect. The
customers' demands and technological updates also enforce an organisation to go for change
in their day-to-day activities.
We cannot consider change as vague process, as it involves employees and managers at
different levels in an organisation to understand the importance of change and engage
themselves in design and implementation of a transition. Organisations are also following a
programmatic approach that considers those affected by the changes as well as supports the
behaviour change.
We know that each organisation has complex culture and also has certain policies that have
been followed for decades. Thus people tend to resist any change that has been brought in the
organisation. Generally, people will be confused about the new roles and responsibilities. In
this situation, communication forms the key to let them know the importance of change.
The resistance can arise from the individual who feels threat of losing something valuable or
can arise due to mere misunderstanding. The resistance arises due to fear of change and lack
of awareness. Changes need not significantly alter the way the leader leads. Dealing with
resistance to change involves looking totally at the sources and the causes of resistance. To a
large extent, resistance to change is the default element for the adult behavior, and often the
level of resistance is directly proportional to the life and work experience.
Organizational development deals with improving a companys performance and individual
development of its employees. Each organization should be viewed as a coherent system
composed of separate parts. Organizational development as a process includes methodologies
and achievements in strategic planning, organizational design, leadership development,
coaching, diversity and balance between work and life.

The term organizational development identifies the stages through which organizations go in
the process of their development. You could say that organizational development is the way
organizations change, evolve. This understanding is based on the assumption that
organizations, just like human beings, have cycles of development, each characterized by its
specific problems, crises and ways to overcome them.



Review Questions

1. Define change management. Why it is importance in HRM.
2. List out the impact of change management.
3. What are the types of organizational change? Explain in brief.
4. What are the roles of Change Management?
5. Define resistance to change. What are the factors to minimize resistance to change?
6. What are the approaches to organizational change? Explain.
7. Explain process of OD in details.
8. List out the key benefits of OD.
9. Write short notes on:
a. Planning and implementing change
b. Forces of Organizational Change
c. OD Techniques



Case Study - VI
Managing Change in Banking Sector
This case study illustrates an instance of Resistance to change that occurred in the banking
sector. In the year 2000, the Nepalese Banking sector faced a crisis. It was decided to
introduce computers. This was a decision taken by the bank management to improve the
efficiency of the bank processes in general which included speeding up of work.
This change was met with lots of resistance from the employees. The primary fears being the
loss of job, as the introduction of computers would reduce the manpower. Other fears that
added to the resistance by the employees belonging to the middle age group were the lack of
confidence to grasp the technology and apprehensions of being replaced by young and skilled
professionals.
Their resistance was expressed openly. The unions representing the bank employees went on
strike against the decision. They did not in any way try to hide their dislike.
The management then understood their fears, but introduction of computers was inevitable.
They had to go ahead with the decision, and this was possible only if the employees would
cooperate. The management then realized that, it was the lack of information that leads to
most of their insecurities. They decided to educate them concerning the positive changes that
the introduction of computers would bring and how it would benefit not just the employee but
also the customer who is at the receiving end and thereby increase their efficiency. It was
decided to provide all its employees with an extra increment for using the computers.
This helped them to introduce computers into the banking sectors. However, this meant that
the head count was to be reduced. But, they could not just remove the employees. Instead, the
concept of VRS (Voluntary Retirement Service) along with attractive packages was
introduced, which tempted the bank employees to go for VRS. The attractive packages
included ex-gratia for the individuals who opted for it.
Now, as we see it has been 10 years since the use of computers have come into practice. The
employees now agree with the management on the terms that the computers have helped to
speed up all the processes, thereby, reducing manual labour. The customers have been
benefited as the banking sector is now able to provide them with a faster and better service.
Questions:
1. What were the challenges faced by Management while introducing computers into the
banking sector?
2. Discuss the step-by-step procedure adopted by the Management to overcome the resistance
to the change.
Short Notes

Short Notes

Function of management: planning, organizing, staffing, directing and controlling. ( POSDC )

Types of Managers:

On the basis of level On the basis of area
Top level Generalist manager
Middle level Functional manager
lower level Staff manager

Roles of Managers:

Interpersonal Informational Decisional
Figurehead Monitor Entrepreneur
Leader Disseminator Disturbance handler
liaison spokesperson Resource allocator
negotiator

Managerial Skills:

Conceptual skills
Human skills
Technical skills

Emerging challenges for Management:

Globalization Multicultural effects
Innovation and change Development of
environmentalism
Employment of
employees
Quality and productivity
Knowledge management Ethics and social responsibility
Technological
development
Workforce diversity

Short Notes

Management Theories

Scientific management
theories

F. w. Taylor
Maximum use of resources
Minimizing cost production
Workers efficiency
Changes in the attitudes
Greater economic
Provide training and
development to workers

Administrative theory

Henry Fayol 14
principles
Max Weber( bureaucracy)
Bureaucracy means rules
by office. It should be
Hierarchy of authority
Division of work
System of rules, regulation
and procedures.
Impersonality
Standardization of method.
Life long, employment and
adequate protection.
Management Science
theory

Relates mathematics,
qualitative, operational
research, statistics and use
of technology.
Relation among variables
Factual data and logical
analysis

Behavioral science
approaches

Human relation
Hawthorne effects
Illumination experiments
Relay assembly test room exp.
Banking wiring observation
room exp.

Behavioral approach
Maslow hierarchy needs
Douglas McGregor (X and Y)
theories.
Frederick Herzberg( two
factors theory) motivator and
Hygiene factors.
System Theory

Interrelates and
interdependence of
management and
organization.
Every element is related to
each other.
Integrates management
theories, physical aspects,
behavioral aspects and
environmental
considerations.
Input process-----output
feedback
Contingency theories

Situational or logical
theory
Innovating new and better
approach
Capacity to think in
analytical, critical and
multidimensional ways.
Give freedom to managers.
Managers become more
sensitive and alert.

Short Notes

Internal environment

Owners
Board of directors
Organizational resources
Organizational structure
Organizational culture

External environment

Specific or task environment

Customers
Suppliers
Competitors
Government
Pressure groups
Financial institutions
Strategic allies

General environment
P Political
E Economic
S- Socio- cultural
T Technological

Environment organization relationship

Env. Affects orgn.

Orgn. Adapt to
Env.
Change and
complexity
Information
management
Competitive forces Strategic response
Env. turbulence Organization design
and flexibility
Direct influences of
the environment
Mergers,
acquisitions,
alliances

Emerging business environment in Nepal
Emerging of open market economy
Increasing role of private sectors
Private investment in infrastructure
development
Emerging of multinational companies
Growth of service sectors
Development of IT

Planning Process/Steps:

1 Analyze opportunities
2 Setting goals (SMART)
3 Determination of premises
4 Determination of alternatives
5 Evaluation of alternatives
6 Selecting o best course of action
7 Formulation of derivative plans
8 Implementation of plan
9 Reviewing the planning process

Short Notes

Type of Plan:

On the basis of hierarchy

On the basis of use On the basis of flexibility
Corporate plan Single use plan Specific pan
Tactical plan Standing use plan Flexible plan
Operational plan

Tools for Planning and Decision Making:

Tools for planning

Techniques/Tools for decision making
Forecasting Brainstorming
Network techniques Delphi techniques
Flow chart Queuing model
Gantt chart Game theory
Simulation Accounting tools
Linear programming Payoff matrix

Styles of Decision Making

Directive style
Analytic style
Conceptual style
Behavioral style

Process of Decision Making:

Identification of problems
Analysis of problems
Development of alternatives
Evaluation of alternatives
Selection of best alternatives
Implementation of alternatives
Review of implementation

Advantages and disadvantages of Line and Staff Organization

Managerial specialization Problem conflict
Better co-ordination Greater confusion
Limited functional authority High cost structure
Short Notes

Practical decision Over dependence on staff
Facilitates growth Inefficient staff
Better utilization of resources Lack of responsibility
Greater flexibility Complication for management

Matrix Organization:

Better coordination and control Violation of unity of
command
Adoptable to dynamic environment Costly structure
Maximum use of resource Problem of over-
specialization
Participative management Difficult to balance
Sufficient time to top management Feeling of insecurity
Excellence in inter-disciplinary
specialization
Lack of wide coordination
Development of teamwork Lack of commitment

Differences between Delegation and Decentralization

Delegation Decentralization
It is primary concept It is secondary concept delegation
process
Essential part of organization structure It is optimal
It shows the relationship in management
hierarchy
It shows the relationship between
various departments of the firms.
It means not to delegate responsibility of the
superior
It provide relief to the superior
through decentralization of
responsibility
It is the technique to get work done through
subordinates
It is management techniques as well as
management philosophy
Total control over subordinates General control over subordinates

Emerging concepts in Organizing

Re engineering process
Team work
Network organization structure
Downsizing organization
Boundary-less organization

Short Notes

Motivation through Employee Participation
Quality of work life (QWL)
Quality circle
Employee share ownership
Flexible work schedule
Self managed work team
Approaches to leadership

Trait Approach: (drive, desire to lead, honesty and indignity, self confidence, intelligence,
job relevant knowledge)

Behavioral Approach:
Initial structure
Ohio state studies
Consideration

Concern for people
Michigan studies
Concern for production

Situational approaches:
Leader member relations
Fiedler model Task structure
Position power

Directive behavior
Path goal theory supportive behavior
Participative behavior
Achievement oriented behavior

Theories of Motivation:

Need hierarchy theory: (basic needs, safety, social needs, Esteem need and self actualization)
Two factor theory: (hygiene factors and motivator factor)

Barriers to Effective Communication:
The use of jargon, over-complicated or unfamiliar terms.
Emotional barriers
Lack of attention, interest, distractions, or irrelevance to the receiver.
Differences in perception and viewpoint.
Physical disabilities such as hearing problems or speech difficulties.
Short Notes

Physical barriers to non-verbal communication.
Language differences and the difficulty in understanding unfamiliar accents.
Expectations and prejudices which may lead to false assumptions or stereotyping.
People often hear what they expect to hear rather than what is actually said and jump
to incorrect conclusions.
Cultural differences. The norms of social interaction vary greatly in different
cultures, as do the way in which emotions are expressed. For example, the concept
of personal space varies between cultures and between different social settings.

Types of Communication:

Interpersonal Conflict

Methods of interpersonal are: oral and written communication
Conflict between individuals due to differences in their goals or values.

Intra - group Conflict:
Conflict within a group or team.

Intergroup Conflict:
Conflict between two or more teams or groups.
Managers play a key role in resolution of this conflict

Enhancing effective Communication
Effective listening
Reducing physical barriers
Simplifying the languages
Promoting interpersonal relation
Adjusting with communication technology
Two way communication
Create an environment of trust and confidence
Short Notes

Managing Conflict in Organization

Simulating conflict
Reorganizing
Communication
Encouraging competition
Bringing in outsiders
Preventing conflict
Super ordinates goals
Reducing interdependence
Exchanging of personnel
Liaison group or integrators
Appeal to higher authority
Resolving conflict
Problem solving
Accommodating
Compromising
Avoidance

Forms/Structure of Organizational Communication

Wheel network, Circle network, Chain network and all channel networks

Process of Communication

Sender encoding message medium receiving decoding
Noise
Feedback

Types of Control

Input Process Output
(Pre-control) (Con-current control) (Post Control)

Process of Control

Managing control in organization

Establishment of standard

Initiate effective control
Measurement of actual performance

Appropriate focus

Comparison of actual performance

initial effective control
Short Notes

Analyzing the cause of deviation Reward for efficiency

Taking remedial action effective communication

Participative management

proper coordination

MIS, DSS, EIS

TQM
Objectives:
Better, less variable quality of product and services.
Customer Satisfaction.
Greater flexibility in adjusting to customer shifting requirements.
Lower cost through quality improvement and elimination of non value added works.

Tools/Techniques for
TQM

Factor Affecting Quality
benchmarking Policy
ISO 9000 Information
speed Engineering & Design
outsourcing Materials
statistical quality control Equipments
flow chart People
fishbone diagram
Deming Wheel
Quality improvement drives the entire economy
the customer always comes first
dont blame the person fix the system
plan - do - check - act

Programmed D.M. Non- Programmed D.M.
TPS MIS
DSS
EIS
Short Notes

Abbreviations

PESTL - Political, Economical, Social, Technological Legal
PDCA PLAN DO CHECK-ACT
SWOT - Strength, Weakness, Opportunities, Threats
TQM Total Quality Management
MBO Management By Objectives
KSA Knowledge, Skills Abilities
CSR Corporate Social Responsibility
SMART Specific, Measurable, Attainable, Realistic, Time bounded
QWL Quality of Work Life
QC Quality Circle
POSDC - Planning, Organizing, Staffing, Directing and Controlling
OSCAR - Objectives, Specialization, Co-ordination, Authority and Responsibility
CONTIGENCY - SITUATIONAL - LOGICAL
Glossary


Glossary

Accountability
This is the ultimate responsibility which managers cannot delegate. While managers may
delegate authority, they remain accountable for the decisions and actions of their
subordinates.

Achievement-oriented leadership

Involves setting challenging goals for subordinates, seeking improvement in their
performance and showing confidence in subordinates' ability to perform well.

Action-centered leadership
A theory on leadership which focuses on what leaders do. It states that the effectiveness
of a leader is dependent upon meeting three areas of need within the work group: the need
to achieve the common task, the need for team maintenance, and the individual needs of
group members.

Action learning
An approach to management development which involves a small self-selecting team
undertaking a practical, real-life and organizational-based project. The emphasis is on
learning by doing with advice and support from tutors and other course members.

Assessment centre
Provides an in-depth assessment of a group of broadly similar candidates, and aims to
gauge the attributes and competencies required for a particular type of job.

Associative organizations
Organizations that are formed for members with a common interest and are not
necessarily related to the activities of the workplace.

Attitudes
Attitudes can be defined as providing a state of readiness' or tendency to respond in a
particular way. They are learned through life and are embodied within our socialization
process.

Authoritarian style of leadership
Where the focus of power is with the manager. The manager alone exercises decision-
making and authority for determining policy, procedures, and the allocation of work and
has control of rewards or punishments.

Glossary


Authority
The right of subordinates to take action or make decisions that the manager would
otherwise have done.

Avoidance: The opportunity to avoid or escape from an unpleasant circumstance after
exhibiting behavior. Avoidance occurs when the interacting parties' goals are
incompatible and the interaction between groups is relatively un important to the
attainment of the goals.

Accommodation: Occurs when the parties' goals are compatible and the interaction
between groups is relatively unimportant to the goals' attainment.

Behavioral science

A collective term for the grouping of social sciences concerned with the study of people's
behavior. The term is often used in a more narrow and specific way in relating to
problems of organizations and management in the work environment.

Benchmarking
An organizations assessment of the performance and practices of other organizations and
competitors in an effort to analyze and compare its own performance.

Brainstorming
Where a group adopts a freewheeling' attitude aimed at generating as many ideas as
possible. The focus is on freedom of expression and the quantity of ideas rather than
quality.

Bureaucracy
A form of structure found in many large-scale organizations. Bureaucracy is based on
specialization of tasks, hierarchy of authority and decision-making, systems of rules and
regulations and an impersonal orientation from officials.

Business ethics
An example of applied ethics which seeks to explore the implications of general ethics to
the conduct of business.

Business process re-engineering (BPR)
Concerned with the total restructuring of an organisation which involves a radical
redesign of business processes to achieve dramatic improvements in organizational
performance.

Centralized network
A network of communication where a link person is at the centre of the network and acts
as the focus of activities and information flows and is the coordinator of group tasks.

Glossary


Chain of command
The number of different levels in the structure of the organisation, the chain of
hierarchical command.

Charismatic organisation
An organisation in which authority is legitimized by belief in the personal qualities of the
leader and their strength of personality and inspiration.

Classical conditioning
A theory on learning developed by Pavlov, using dogs, who found that instinctive
reflexes could be conditioned' to respond to a new situation and new stimulus.

Classical approach to management
The organisation is thought of in terms of its purpose and formal structure and this
approach aims to identify how methods of working can improve productivity. Emphasis
is placed on the planning of work, the technical requirements of the organisation,
principles of management and the assumption of rational and logical behavior.

Coercive power
Based on fear and the subordinate's perception that the leader has the ability to punish or
bring about undesirable outcomes for those who do not comply with the directives (e.g.
withholding promotion or privileges).

Cognitive theories of learning

Theories of learning that identify how and why people learn, taking individual factors
into consideration, and not simply the behavior demonstrated through the learning
process.

Community (institutional) level

The level within an organisation that is concerned with broad objectives and the work of
the organisation as a whole.

Competency-based approach

The development of a list of abilities and competencies necessary to perform successfully
a given job, and against which the applicant's performance can be assessed.

Competencies-based HRM
An approach to HRM based on a clear notion of required competencies for future success
in new individual and team roles. Discrimination of good from poor performance by
means of critical observance or measurement of the real strengths and weaknesses of
people, and their contribution to the organisation.

Glossary


Conceptual ability
The ability to view the complexities of the operations of the organisation as a whole,
including environmental influences, and the ability to make decisions.

Conflict
Conflict is present where there is an incompatibility of goals arising from opposing
behaviors at the individual, group or organizational level. Particularly, conflict is
behavior intended to obstruct the achievement of some other person's goals.

Constructive behavior
A positive reaction to the blockage of a desired goal through problem-solving or
compromise.

Content theories of motivation
These theories attempt to explain those specific things which actually motivate the
individual at work and are concerned with identifying people's needs, the strength of
those needs and the goals they pursue in order to satisfy those needs.

Contingency approach
An extension of the systems approach to management that implies that the structure of an
organisation and its success are dependent upon the nature of tasks which are undertaken
and the nature of environmental influences. There is, therefore, no one best way to
structure or manage organizations; rather it must be dependent upon the contingencies of
the situation.

Continuing professional development

The process of planned, continuing development of individuals throughout their career.

Control
Within an organisation control is primarily a process for motivating and inspiring people
to perform organizational activities and monitoring those activities to ensure that they
will further the organizations goals.

Corporate social responsibility
This concept gives rise to how a company should conduct itself within society, and
different views on what a business is for and how it should act.

Corporate strategy
Corporate strategy formalizes the objectives and policy of an organisation, serves to
describe its sense of purpose together with its direction and scope over the long term.

Glossary


Creativity
The application of imaginative thought which may lead to new ways of seeing things and
result in innovative solutions to a problem or the initiation of change.

Cultural control
An approach to control which is based on the acceptance and willing compliance with the
requirements of management, for example, through strong professional identification and
acceptance of the values and beliefs of the organisation.

Decentralization
Where specific delegation is given to sub-units or groups within an organisation such that
they enjoy a measure of autonomy or independence.

Decentralized network
A network of communication where there is no link person at the centre of the network
but communication takes place freely between all members of the network.

Decision-making approach
An approach to management that focuses on managerial decision-making and how
organizations process and use information in making decisions.

Delegation
The process of entrusting authority and responsibility to others throughout the various
levels of the organisation, and the creation of a special managersubordinate relationship.

Democratic style of leadership
Where the focus of power is more with the group as a whole than with the manager.
Leadership functions are shared with members of the group and the manager is more part
of a team.

Directive leadership
Involves letting subordinates know exactly what is expected of them and giving specific
directions.

Displaced aggression
When aggression is displaced towards some other person or object than that which is
perceived as the source of frustration, i.e. a scapegoat' is found for the outlet of
frustration.

Diversity
Visible and non-visible differences which will include sex, age, background, race,
disability, personality and work style.
Glossary


E-business
An organisation which connects critical business systems directly to their customers,
employees, partners and suppliers via intranets, extranets and over the Web.

Economic organizations
Organizations that have an economic, commercial and profit-making focus.

E-learning
Learning via communications technology.

Element functions
Activities within an organisation which are not directed towards specific and definable
ends but are supportive of the task functions and an intrinsic part of the management
process.

Employment relations
Concerned with the relationships between the policies and practices of the organisation
and its staff and the behavior of work groups.

Empowerment
Where employees are allowed greater freedom, autonomy and self-control over their
work, and the responsibility for decision-making.

Equity theory
A theory of motivation which focuses on people's feelings of how fairly they have been
treated in comparison with the treatment received by others.

Ethics
The study of morality practices and activities that are considered to be importantly right
and wrong, together with the rules that govern those activities and the values to which
those activities relate.

Expectancy theory
A theory of motivation based on the idea that people prefer certain outcomes from their
behavior over others. Motivation is a function of the relationship between effort, level of
performance and rewards related to performance.

Expert power
Based on the subordinate's perception of the leader as someone who is competent and
who has some special knowledge or expertise in a given area. This power is based on
credibility and clear evidence of knowledge or expertise.

Explicit knowledge
Knowledge which is easily communicated, quantified and systematic.

Glossary


External environment
The external factors outside of the organisation that can influence and affect the
performance of it, the major environmental factors being political, technical, economic
and social.

Extrinsic motivation
Related to tangible rewards such as salary, promotion, working conditions and fringe
benefits. These tangible rewards are often determined at the organizational level and may
be outside the control of individual managers.

Fixation
When an individual is frustrated but persists in a form of behavior which has no adaptive
value and actions are continued which have no positive results.

Flat hierarchical structure
An organisation that has broad spans of control and few levels of authority.

Flexible working arrangements
Flexibility on patterns of work organisation and the workforce, including part-time work,
annual hours contracts and flextime.

Formal goals
Goals of an organisation set out in broad terms as the purpose of the organisation.

Formal group

Formal groups are created to achieve specific organizational objectives and are concerned
with the co-ordination of work activities. Group members have defined roles and the
nature of tasks to be undertaken is a predominant feature of the group.

Formal organisation
A planned co-ordination of the activities of a number of people for the achievement of
some common, explicit purpose or goal, through the division of labor and function, and
through a hierarchy of authority and responsibility.

Forming
The initial formation of a group and the first stage in group development.

Frustration
A negative response to the blockage of a desired goal resulting in a defensive form of
behavior.

Glossary


Functional (or group) approach to leadership
This focuses attention on the functions of leadership, rather than the personality of the
leader, and how the leader's behavior affects and is affected by the group of followers.
This approach to leadership believes that the skills of leadership can be learned and
developed.

Functional relationships
The formal relationships within an organisation between people in a specialist or advisory
position, and line managers and their subordinates. This occurs when a person offers a
common service throughout all departments of the organisation.

Gap analysis
An investigation of the gap between the vision, objectives and goals of the organisation
and actual levels of performance, and establishing the necessary actions to bring activities
in line with that which is planned.

Gender shaping
The hidden' patterns of behavior during the education process which reinforce the
differences between the male and female identity and which help children to learn and
conform to their gender role. The notion of male dominance is generally supported.

Goal model approach
An approach towards organizational structure that concentrates on the study of
organizational goals and the measurement of success against the realization of those
goals.

Goal theory
A theory of motivation that is based on the premise that people's goals or intentions play
an important part in determining behavior. Goals guide people's responses and actions
and direct work behavior and performance, leading to certain consequences or feedback.

Graphology
May be used as a method of selecting suitable candidates for a job and involves the
analysis of handwriting.

Group
Any numbers of people, who interact with one another, are psychologically aware of one
another and who perceive themselves as being in a group.
Group cohesiveness
The extents, to which members of a group interact, co-operate, are united and work
together effectively. Generally, the greater the cohesiveness within a group, the more
rewarding the experience is for the members and the higher the chances are
of success.

Glossary


Group dynamics
The study of interactions and forces within small face-to-face groups. It is concerned with
what happens when groups of people meet.

Group norm
Codes and practices developed by a group which group members consider to constitute
proper group behavior.

Groupthink
The tendency within a group to drift along' towards decisions which may be
inappropriate or unquestioned due to various in-group pressures.

Halo effect
When the perception of a person is formulated on the basis of a single favorable or
unfavorable trait or characteristic and tends to shut out other relevant characteristics of
that person.

Harassment
Conduct which is unreasonable, unwelcome and offensive and which creates an
intimidating or humiliating working environment. Harassment is a direct type of
discrimination if the victim can show that the behavior caused injury to feelings.

Hierarchy of needs
A theory of motivation developed by Maslow which states that people's behavior is
determined by their desire to satisfy a progression of physiological, social and
psychological needs.

Human capital management The measurement and value of employees (human capital)
to the organisation and as a key indicator of a company's success.

Human relations approach
A management approach based on the consideration of and attention to the social factors
at work and the behavior of employees within an organisation. Particular importance is
paid to the informal organisation and the satisfaction of individual's
needs through groups at work.

Human resource management (HRM)
The design, implementation and maintenance of strategies to manage people for optimum
business performance including the development of policies and processes to support
these strategies.

Glossary


Human resource planning
A strategy for the acquisition, utilization, improvement and retention of an organizations
human resources.
Hygiene (maintenance) factors
Factors within a job that serve to prevent dissatisfaction. They are related to the job
environment, are extrinsic to the job itself and include job security, working conditions
and salary.

Idiographic approaches
Approaches to the study of personality that focuses on understanding the uniqueness of
individuals. These approaches regard personality as a process which is open to change.

Informal goals
The goals which the organisation actually pursues as a result of the members of the
organisation having different and conflicting goals to the officially stated (formal) goals
of the organisation as a whole.

Informal groups
Informal groups serve to satisfy the psychological and social needs of the group members
and are not necessarily related to tasks to be undertaken. Informal groups are based on
personal relationships and membership can cut across the formal structure of an
organisation.

Informal organisation
An organisation arising from the interaction of people, their psychological and social
needs, and the development of groups with their own relationships and norms of
behavior, irrespective of those defined within the formal structure.

Information technology
Generation of new information about organizational activities.

Information technology

Extends beyond computing to include telecommunications, office equipment and more
automated procedures of work. The impact of information technology will involve new
patterns of work organisation.

Inspirational leadership
Leadership associated with the concept of creating a vision with which others can
identify, getting along with others and inspiring through personal qualities or charisma.

Glossary


Instrumental orientation
An individual's orientation to work in which they regard it as a means to an end and not
as a central life issue.

Interaction analysis
The description of group process and indications of factors influencing the process
through the categorization of every act of behavior within the group.

Internal environment
Relates to the culture and climate of an organisation and to the prevailing atmosphere
surrounding the organisation.

Intrinsic motivation
Related to psychological rewards such as achieving appreciation, positive recognition and
being given the opportunity to use one's ability. These psychological rewards can usually
be determined by the actions and behavior of individual managers.

Introduction stage
The second main phase in the adoption and introduction of new technology into an
organisation. This involves working on the technology and the associated organizational
changes with a view to making them effective.

Job analysis
The process by which the job description is derived, describing the total requirements of
the job, which then leads to the person specification for that job.

Job description
Tell you about the total requirements of the job: exactly what it is, its purpose, duties,
activities and responsibilities, and position within the formal structure.

Job design
Concerned with the relationship between workers and the nature and content of jobs, and
their task functions.

Job enlargement
Involves increasing the scope of the job and the range of tasks that the person carries out.
Job enlargement is horizontal job design and makes a job structurally bigger.

Job enrichment
This arises from Herzberg's two-factor theory and is an attempt at enriching a job by
incorporating motivating or growth factors such as increased responsibility or autonomy.
Job enrichment involves vertical job enlargement and aims to give an individual a more
Glossary


meaningful and challenging job.

Job redesign
The changing and restructuring of individual's jobs primarily through job rotation, job
enlargement or job enrichment.
Job rotation
The moving of a person from one job or task to another in an attempt to add variety and
help remove boredom. It may also give the individual a holistic view of the
organizations activities and be used as a form of training.

Job satisfaction
An attitude or internal state which is associated with the working environment and
working experiences. In recent years it has been closely associated with improved job
design and work organisation and the quality of working life.

Kaizen
A Japanese concept of a total quality approach based on continual evolutionary change
with considerable responsibility to employees within certain fixed boundaries.

Knowledge management
The promotion and formalization of learning within the workplace with the aim of
aligning training with the needs of the business.

Laissez-faire(genuine) style of leadership
Where the manager consciously makes a decision to pass the focus of power to members
of the group allowing them freedom of action. The manager has observed that the
members of the group work well on their own and does not interfere.

Lateral relationships
Formal relationships within an organisation which exist between individuals in different
departments or sections, especially between individuals on the same level.

Leadership
A relationship through which one person influences the behavior or actions of other
people.

Leadership Grid
A grid which compares the varying styles of management based on the concern for
production against the concern for people.

Leadership and Management Model
A developmental framework for ensuring that organizations create, manage and invest in
effective leadership now and in the long term. The model is based on four key principles
Glossary


of commitment, planning, action and evaluation

Learning
A change of a relatively permanent kind which may result in new behaviors and actions
or new understanding and knowledge gained through a formal process or spontaneously
and incidentally through life experiences.

Learning organisation
An organisation that encourages and facilitates the learning and development of people at
all levels of the organisation, values the learning and simultaneously transforms itself.

Legitimate (organizational) power
Based on the subordinate's perception that the leader has a right to exercise influence
because of the leader's role or position in the organisation. This power is based on
authority and related to a person's position within an organisation.

Line organisation
Relates to those functions within an organisation concerned with specific responsibility
for achieving the objectives of the organisation and to those people in the direct chain of
command.

Line relationships
A formal relationship within an organisation between individual positions where
authority flows vertically down through the structure.

Locus of control
The extent to which an individual perceives that his/her behavior has a direct impact on
the outcomes which result from that behavior.

Maintenance function
Functions within a group that are concerned with the emotional life of the group and
directed towards building and maintaining the group as an effective working unit.

Management
The process through which efforts of members of the organisation are co-ordinate,
directed and guided towards the achievement of organizational goals. The clarification of
objectives, planning, organizing, directing and controlling other people's work.

Management by Objectives (MBO)
A system or style of management which attempts to relate organizational goals to
individual performance and development through the involvement of all levels of
management.
Glossary


Management development
Concerned with improving the effectiveness of individual managers but also with an
improvement in management performance as a whole. It must be integrated with the
development of the organisation and the associated improvement in organizational
effectiveness.

Managerial effectiveness
Concerned with doing the right things' and relates to the outputs of the job and what the
manager actually achieves, i.e. attainment of the aims and objectives of the organisation.

Managerial efficiency
Concerned with doing things right' and relates to the input requirements of the job, i.e.
planning, organizing, directing and controlling.

Managerial level
The level within an organisation that is concerned with the co-ordination and integration
of work at the technical level.

Managerial role
A role from which some work has to be delegated to subordinate roles but for which the
occupant remains accountable to a higher authority for the manner in which all of this
work is carried out. The role includes planning, controlling, organizing, commanding and
co-ordination the activities of subordinates.

Matrix structure
Where there is a two-way flow of authority and responsibility within an organisation due
to the vertical flow of authority and responsibility from the functional departments and
the horizontal flow of authority and responsibility from project teams.

Mechanistic system
A rigid system of management practice and structure which is characterized by a clear
hierarchical structure, specialization of task, defined duties and responsibilities and
knowledge centered at the top of the hierarchy.

Mission statement
Sets an organizations purpose, guiding values and principles and the way in which it
intends to achieve its objectives, whilst recognizing the interests of other stakeholders.

Motivation
The driving force within individuals by which they attempt to achieve some goal in order
to fulfill some need or expectation.

Glossary


Motivators or growth factors
Factors within a job that, if present, serve to motivate the individual to superior effort and
performance. These factors are related to the job content of the work itself and include
recognition, personal growth and sense of achievement.

Neo-human relations
A management approach developed by such writers as Maslow, Herzberg and McGregor
which adopts a more psychological orientation than that of the human relations approach.
Particular attention is paid to the personal adjustment of individuals at work and the
effects of group relationships and leadership styles.

Network-building
Involves individuals interacting with others and establishing a network of co-operative
relations. These networks are outside of the formal structure and provide a means of
exchanging information on a wide range of topics.

Normative power
A form of power which relies on the allocation and manipulation of symbolic rewards
(e.g. esteem and prestige).

Norming
The third stage of group development during which members of the group establish
guidelines and standards and develop their own norms of acceptable behavior.

Objectives (organizational)

Objectives set out the specific goals of the organisation, the aims to be achieved and the
desired end results.

An open system model
The organisation is viewed as an open system that takes input from the environment and
through a series of activities transform or converts these into outputs to achieve some
objective.

Operant conditioning
A theory of learning developed by Skinner showing the effects of reward and
punishment and demonstrating that responses in behavior are learned because of their
outcomes.

Organic system
A fluid and flexible system of management practice and structure which is characterized
by the adjustment and continual redefinition of tasks, a network structure of control,
authority and communication and where superior knowledge does not necessarily
coincide with positional authority.
Glossary


Organisation audit
Involves a review of the operations of the organisation as a whole and an examination of
the full range of management activities, including the effective use of human resources.

Organisation development
A generic term which embraces a wide range of intervention strategies which are aimed
at the development of individuals, groups and the organisation as a total system.
Organizational behavior
The study and understanding of individual and group behavior and patterns of structure in
order to help improve organizational performance and effectiveness.

Organizational climate
Relating to the prevailing atmosphere surrounding the organisation, to the level of
morale, and to the strength of feelings or belonging, care and goodwill among members.
Organizational climate is based on the perceptions of members towards the organisation.

Organizational culture
The collection of traditional values, policies, beliefs and attitudes that constitute a
pervasive context for everything we do and think in an organisation.

Organizational goals
Something that the organisation is striving to achieve, a future expectation, a desired
future state and something towards which the activities of the organisation are directed in
an effort to attain.

Organizational ideology

Based on the beliefs, values and attitudes of the individuals, determines the culture of the
organisation and provides a set of principles which govern the overall conduct of the
organisation.

Organizational structure
Structure is the pattern of relationships among positions in the organisation and among
members of the organisation. It defines tasks and responsibilities, work roles and
relationships and channels of communication.

Organizational sub-systems
The interrelated sub-systems of an organisation: tasks, technology, structure, people and
management. These sub-systems need to be co-ordinate to ensure that the activities of an
organisation are directed towards the achievement of aims and objectives.

Glossary


Organizations
A consciously co-ordinate social unit created by groups in society to achieve specific
purposes, common aims and objectives by means of planned and co-ordinate activities.

Output control
A form of control that is based on the measurement of outputs and the results achieved.
This form of control serves the needs of the organisation as a whole and is used when
there is a need for quantifiable and simple measures of organizational performance.

Parkinson's Law
The concept of the Rising Pyramid' and the idea that: work expands so as to fill the time
available for its completion'.

Participative leadership
Involves consulting with subordinates and the evaluation of their opinions and
suggestions before the manager makes the decision.

Peer rating
May be used as a method of selecting suitable candidates for a job and involves all
candidates nominating other candidates, usually on the basis of a sociability' or buddy'
rating.

Perception
The dynamic and complex way, in which individuals select information (stimuli) from
the environment, interpret and translate it so that a meaning is assigned which will result
in a pattern of behavior or thought.

Perceptual defense
When people select information which is supportive of their own point of view and
choose not to acknowledge contrary information. They avoid or screen out certain stimuli
that are perceptually disturbing or threatening.

Performance appraisal
A method of reviewing the performance and potential of employees that is usually
undertaken formally and systematically at regular intervals.

Performing
The fourth stage of group development during which the group concentrates on the
performance of the common task.

Person culture
A form of culture where the individual is the central focus and any structure exists to
serve the individuals within it. Individuals have almost complete autonomy and any
influence over them is likely to be on the basis of personal power.
Glossary


Person specification
Tells you not only about the job but provides a blueprint of the ideal' person to do that
job, and details the personal attributes and qualities associated with successful
performance.

Personal centralized control
An approach to control which is characterized by the centralization of decision-making
and initiative around a leadership figure.

Personal (informal) power
Power that derives from the individual and is in the eye of the beholders who believe that
person has the ability to influence other people or events to make things happen.

Personality
An individual's unique set of characteristics and tendencies which shape a sense of self,
and what that person does and the behavior they exhibit.

PESTEL analysis
A technique for analyzing the general external environment of an organisation in terms of
the political, economic, socio-cultural, technological, environmental and legal aspects.

(The) Peter Principle
Concerned with the study of occupational incompetence and hierarchies, and the idea that
in a hierarchy every employee tends to rise to their level of incompetence'.

Pluralistic perspective
Where a work organisation is viewed as being made up of powerful and competing sub-
groups with their own legitimate loyalties, objectives and leaders.

Policy (organizational)
Policy is developed within the frame of the objectives and details the how', where' and
when' in terms of the course of action which must be followed to achieve the objectives.

Power
The level of control or influence a person holds over the behavior of others with or
without their consent.

Power culture
A form of culture that depends on a central power source that exerts influence throughout
the organisation.

Glossary


Private enterprise organizations
Organizations owned and financed by individuals, partners or shareholders accountable
to their owners or members. The main aim is of a commercial nature such as profit, return
on capital employed, market standing or sales level.

Privatization
The transfer of business undertakings from state (government) control to the private
sector. The extent of state ownership, and the balance between commercial and social
interests.

Process theories of motivation
Concerned with how behavior is initiated, directed and sustained, i.e. the actual process
of motivation.

Projection
Attributing or projecting one's own feelings, motives or characteristics to other people.
Projection is a distortion which can occur in the perception of other people.

Protective organizations
Organizations that are formed for the purpose of offering protection for individuals or
the public as a whole.

Psychological contract
An unwritten contract between employers and employees which covers a series of mutual
expectations and satisfaction of needs arising from the peopleorganisation relationship.

Psychological (psychometric) tests
Tests which assess an individual's typical responses to given situations based on their
choices and strength of feeling or which assess an individual's ability to perform
effectively under standard conditions, including aptitude and ability.

Psychology
The study of the personality system, i.e. human behavior, traits of the individual and
membership of small social groups.

Public sector organizations
Organizations created by the government which do not generally have profit as their goal
but have political purposes. They include municipal undertakings financed by rates, taxes,
government grants and loans; and central government departments which are state
owned' and financed by funds granted by Parliament.

Glossary


Qualities (or traits) approach to leadership
This assumes that leaders are born and not made. Leadership consists of certain inherited
characteristics, or personality traits, which distinguish leaders from their followers.
Attention is focused on the person in the job and not the job itself.

Quality circles
A group of people within an organisation, who meet together on a regular basis to
identify, analyze and solve problems relating to quality, productivity or other aspects of
day-to-day working arrangements using problem-solving techniques.

Rationaleconomic concept of motivation
Based on the belief of earlier writers such as F. W. Taylor that employees want, more
than anything else from their employer, the highest possible wages for their work and are
motivated by their economic needs.

Referent power
Based on the subordinate's identification with the leader. The leader exercises influence
because of perceived attractiveness, personal characteristics, reputation or charisma.

Regression
When an individual is frustrated and reverts to a childish or primitive form of behavior,
e.g. sulking, crying or tantrums.

Remunerative power
A form of power that involves the manipulation of material resources and rewards (e.g.
salaries and wages).

Responsibility
Involves an obligation by a subordinate to perform certain duties or make certain
decisions and having to accept possible reprimand for unsatisfactory performance.

Reward power
Based on the subordinate's perception that the leader has the ability and resources to
obtain rewards for those who comply with directives (e.g. pay or promotion).

Risky shift
Where a group decides to take a riskier course of action rather than the more conservative
or safer option.

Role
The expected pattern of behaviors associated with members occupying a particular
position within the structure of the organisation.

Glossary


Role ambiguity
This occurs when there is a lack of clarity as to the precise requirements of the role and
the individual is unsure what to do.

Role conflict
Arises from inadequate or inappropriate role definition and results in a person behaving
in a way which may not be consistent with their expected pattern of behavior.

Role culture
A form of culture that is based on logic and rationality and relies on the strength of the
functions of specialists in, for example, finance or production. The interactions between
the specialists are controlled by procedures and rules.

Role expectations
Indicate what the person is expected to do and their duties and obligations.

Role incompatibility
Arises when compliance with one set of expectations makes it difficult or impossible to
comply with the other expectations. The two role expectations are in conflict.

Role incongruence
This arises when a member of staff is perceived as having a high and responsible position
in one respect but a low standing in another respect.

Role overload
When an individual faces too many separate roles or too great a variety of expectations
and is unable to satisfactorily meet all expectations.

Role-set
Comprises the range of associations or contacts with which the individual has meaningful
interactions in connection with the performance of their role.

Role under load
When the prescribed role expectations fall short of the individual's own perception of
their role.
Scientific management
Developed by F. W. Taylor, this classical approach to management advocates the
breaking down of work processes into discrete tasks to find the one best way' of
performing each task in terms of scientific procedures. Increased productivity is rewarded
by financial rewards.

Glossary


Shamrock organisation
A concept developed by Handy which states that each leaf of the shamrock is symbolic of
a different group of people within the organisation: the professional core; the contractual
fringe; the flexible labor force; and customers.

Situational approach to leadership
Where the person who is best suited to lead in a particular situation takes on the role of
leader. The importance of the situation is the focus and the person who is seen as the most
suitable leader is appointed by the group.

Social action
A study of organizations in which the organisation is considered from the standpoint of
the individual. Individual goals, interpretation of the work situation in terms of the
satisfaction sought and the meaning that work has for them are used as a basis for
explaining behavior

Social learning
The process through which individuals learn by watching others and repeating the
actions, i.e. imitating.

Social skills
Abilities related to interpersonal relationships in working with and through other people,
and the exercise of judgment.

Sociology
The study of the social system, i.e. social behavior, relationships among social groups and
societies and the maintenance of order.

Sociometry
A method of indicating the feelings of acceptance or rejection among members of a
group.

Socio-technical system
A sub-division of the systems approach which is concerned with the interactions between
the psychological and social factors and the needs, demands of the human part of
organisation and its structural and technological requirements.

Solidarity orientation
An individual's orientation to work in which group activities are most important. There is
an ego involvement with work groups rather than with the organisation itself.

Span of control
The number of subordinates who report directly to a given manager or supervisor.
Glossary


Staff organisation
Relates to those functions within an organisation which provide specialist and support
functions for the line organisation, creating an advisory relationship.

Staff relationships
These formal relationships within an organisation arise from the appointment of personal
assistants to senior members of staff. Someone in a staff position usually has little or no
direct authority in his or her own right but acts as an extension of his or her superior.

Stakeholder (organizational)
Any individual or group which has an interest in and/or is affected by the goals,
operations or activities of the organisation or the behavior of its members.

Stakeholder theory
A business is for its stakeholders and the actions of management should be designed to
balance stakeholder interests.

Stereotyping
The tendency to ascribe positive or negative characteristics to a person on the basis of a
general categorization and perceived similarities. It occurs when an individual is judged
on the basis of the group to which it is perceived that person belongs.

Storming
The second stage of group development which involves members of the group getting to
know each other and putting forward their views.

Stress
A source of tension and frustration which tends to arise when an individual feels that a
certain situation should not exist.

Structuralism
A management approach which combines elements of both the classical and human
relations approaches. Greater attention is given to the relationship between the formal and
informal aspects of the organisation and, in particular, the study of conflict within the
organisation.

Supportive leadership
Involves a friendly and approachable manner from the leader and displaying concern for
the needs and welfare of subordinates.

SWOT analysis
The study of Strengths, Weaknesses, Opportunities and Threats facing an organisation
Glossary


that may provide a basis for decision-making and problem solving.

Systems approach
A management approach which attempts to reconcile the classical and human relations
approaches. Attention is focused on the total work of the organisation and the
interrelationships of structure and behavior and the range of variables within the
organisation. The organisation is viewed within its total environment and emphasizes the
importance of multiple channels in interaction.

Tacit knowledge
Knowledge and wisdom which is not easily communicated or quantified but is gained
through experience and communicated on an informal basis.

Tall hierarchical structure
An organisation that has narrow spans of control and a relatively large number of levels
of authority.

Task culture
A form of culture which is task or job oriented and seeks to bring together the right
resources and people and utilizes the unifying power of the group.

Task function (within groups)
Functions within a group that is directed towards problem-solving, the accomplishment of
the tasks of the group and the achievement of its goals.

Task functions (within organizations)
The basic activities of the organisation that is related to the actual completion of the
productive process and directed towards specific and definable end-results.

Team-role
A pattern of behavior, characteristic of the way in which one team member interacts with
another, where performance facilitates the progress of the team as a whole.

Technical competence
Relates to the application of specific knowledge, methods and skills to discrete tasks.

Technical level
The level within an organisation which is concerned with specific operations and discrete
tasks, with the actual job or tasks to be done and with the performance of the technical
function.

Glossary


Technology
The machinery, equipment, processes, work layout, methods, systems and procedures in
carrying out the work of the organisation and converting inputs to outputs.

Technology approach
A sub-division of the systems approach which emphasizes the effects of varying
technologies on organisation structure, work groups and individual performance and job
satisfaction.

T-groups
A leaderless and unstructured training group which is formed to provide participants with
an opportunity to learn more about themselves and their impact on others.

Theory X
A theory towards human nature and behavior at work that assumes that most people are
lazy, have an inherent dislike of work and must be coerced, controlled and directed
through a central system of organisation and the exercise of authority. Motivation occurs
only at the lower level needs.

Theory Y
A theory towards human nature and behavior at work that assumes that most people enjoy
work, are creative, can exercise self-direction and control and want to accept
responsibility. Motivation occurs at the higher level needs as well as lower levels.

Theory Z
A Japanese style organizational environment where the characteristics include long-term
employment, development of company-specific skills, participative and collective
decision-making and a broad concern for the welfare of workers.

Total Quality Management (TQM)
An approach to quality within an organisation which is committed to total customer
satisfaction through a continuous process of improvement, and the contribution and
involvement of people.

Traditional Organizations
An organisation in which authority is legitimized through tradition, custom and a
longstanding belief in the natural right to rule or is possessed through the traditional'
procedure.

Transactional Analysis
Originally developed by Eric Berne, this is a popular way of explaining the dynamics of
interpersonal communication which assumes that individuals store all events and feelings
ever experienced and that the personality has three ego states: Child, Adult and Parent.
Glossary


Transactional leadership
Based on legitimate authority within the bureaucratic structure of the organisation. The
emphasis is on the clarification of goals and objectives, work task and outcomes, and
organizational rewards and punishment.

Transformational Leadership
Based on the objective of transforming the performance or fortunes of a business. The
emphasis is on generating a vision for the organisation and the leader's ability to appeal to
the values of followers in attempting to create a feeling of justice, loyalty and trust.

Unitary Perspective
Where a work organisation is viewed as an integrated and harmonious whole with
managers and other staff sharing common interests and objectives.
Upward Feedback
An upward review or appraisal system that involves subordinates' appraisal of managers.

Virtual Teams

Teams where the primary interaction among members is by some electronic information
and communication process.

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The Nature of Management

An Introduction to Management Page 1

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