MANAGEMENT & ORGANISATION DEVELOPMENT

SET-I

ANS: 1

CHARACTERISTICS OF MANAGEMENT:
Management is a distinct activity having the following salient features or characteristics:

1. Goal-oriented:
Management is a purposeful activity. It co-ordinates the efforts of workers to achieve the goals of the
organization. The success of management is measured by the extent to which the organizational goals are
achieved. It is imperative that the organizational goals must be well-defined and properly understood by the
mangers at various levels.

2. Economic Resource: Management is one of the factors of production together with land, labor and capital. It
is the most critical input in the success of any organized group activity. It is the force which assembles and
integrates other resources, namely, labor, capital and materials. These factors do not by themselves ensure
production; they require the catalyst of management to produce goods and services required by the society.
Thus, management is an essential ingredient of an organization.

3. Distinct Process: Management is a distinct process consisting of such functions as planning, organizing,
staffing, directing and controlling. These functions are so interwoven that it is not possible to lay down exactly
the sequence of various functions or their relative significance. In essence, the process of management involves
decision-making and putting of decisions into practice.

4. Integrative Force: The essence of management is integration of human and other resources to achieve the
desired objectives. All these resources are made available to those who manage. Managers apply knowledge,
experience and management principles for getting the results from the workers by the use of non-human
resources. Managers also seek to harmonize the individuals’ goals with the organizational goals for the smooth
working of the organization.

5. Intangible Force: Management has been called an unseen force. Its presence is evidenced by the result of its
efforts-orderliness, informed employees, buoyant spirit and adequate work output. Thus, feeling of management
is result-oriented. One may not see with the naked eyes the functioning of management but its results are
apparently known. People often remark of the effectiveness (or ineffectiveness) of management on the basis of
the end results, although they can’t observe it during operation.

6. Results through Others: The managers cannot do everything themselves. They must have the necessary
ability and skills to get work accomplished through the efforts of others. They must motivate the subordinates
for the accomplishment of the tasks assigned to them.

7. A Science and an Art: Management has an organized body of knowledge consisting of well-defined
concepts, principles and techniques which have wide applications. So it is treated as a science. The application
of these concepts, principles and techniques requires specialized knowledge and skills on the part of the
manager. Since the skills acquired by a manager are his personal possession, management is viewed as an art.

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8. System of Authority: Management as a team of managers represents a system of authority, a hierarchy of

command and control. Managers at different levels possess varying degrees of authority. Generally, as we move
down in the managerial hierarchy, the degree of authority gets gradually reduced. Authority enables the
managers to perform their functions effectively.

9. Multi-disciplinary Subject: Management has grown as a field of study (i.e. discipline) taking the help of so
many other disciplines such as Engineering, Anthropology, Sociology and Psychology. Much of the
management literature is the result of association of these disciplines. For instance, productivity orientation
drew its inspiration from Industrial Engineering and human relations orientation from Psychology. Similarly,
Sociology and Operations Research have also contributed to the development of management science.

10. Universal Application: Management is universal in character. The principles and techniques of
management are equally applicable in the fields of business, education, military, government and hospital.
Henri Fayol suggested that principles of management would apply more or less in every situation. The
principles are working guidelines which are flexible and capable of adaptation to every organization where the
efforts of human beings are to be coordinated.

ANS: 2

OD AND MANAGEMENT DEVELOPMENT:

At this stage, it is beneficial to make a comparison between OD and Management Development (MD) as both
have some common objectives that betterment of an organization; and techniques adopted in both may overlap
to some extent. Before making a comparison between the two, let us define management development as we
have seen the definition of OD. The term ‘development’ refers broadly to the nature and direction of change
induced in personnel through the process of training and education. Based on this, management development
has been defined as follows:
“Management development is all those activities and programmes when recognized and controlled, have
substantial influence in changing the capacity of the individual to perform his assignment better and in so doing
are likely to increase his potential for future management assignment.”
Organization development differs from management development. While the latter aims at developing the
mangers individually for the accomplishment of better performance in organizational setting, the former goes
one step further and purports to change the entire organizational climate where the mangers work. Miner has
drawn difference between two processes. According to him, there are four attributes of effective managers in
large organization.
These are:
(i) a positive attitude towards authority,
(ii) competitiveness,
(iii) assertiveness, and
(iv) A sense of responsibility.
He feels that management development reinforces the above four qualities and helps managers cultivate and
develop the will to manage, whereas OD efforts within organizations may cause confusion and chaos for
incoming human resources if the organization is underplayed and the humanistic dimension alone is
emphasized. If OD efforts train people towards anti-authority value, more attention to peer-groups, less
individual competitiveness, and greater display of feelings and emotions, then would the results be functional
for managing organization activity in a competitive world?

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Thus, according to him, OD tries to fit the organization to the men; MD tries to fit the men to the organization,
with their existing objectives and structure. However, he appears to be biased against OD and the real
distinction between OD and MD lies in between these two extremes. Burke and Schmidt have made this
difference more clear which is presented in the following table.

DIFFERENCE BETWEEN MANAGEMENT DEVELOPMENT & OD:

Factors Management Development Organization Development

Objectives Increasing manager’s contributions to goalChanging the nature of the organization.
accomplishments.

Focus Train and equip employees and managersFocus on design, not on the managers; focus on achieving
to perform better in existing organization. improvement in design.

Approach Educative and training Problem-solving approach.

Time Short-range. Long-range strategy for organizational innovation and
renewal.

Specialist No special requirement. Trained specialists required.

ANS: 3

THE IDEA OF CHANGE PROCESS:

Kurt Lewin introduced two ideas about change that have been influential since the 1940s. The first idea states
that what is occurring at any point in time is a resultant in a field of opposing forces.
Lewin’s second idea was a model of the change process itself. He suggested that change is a three-stage
process:
Unfreezing, the old behavior (or situation), moving to new level of behavior.
Refreezing, the behavior at the new level. Change entails moving from one equilibrium point to another.

A THREE-STAGE MODEL OF THECHANGEPROCESS:

Lewin’s three-stage model is a powerful tool for understanding change situations. Edgar Schein took this
excellent idea and improved it by specifying the psychological mechanisms involved in each stage.

Stage 1: Unfreezing: Creating motivation and readiness to change through

a. Disconfirmation or lack of confirmation
b. Creation of guilt or anxiety
c. Provision of psychological safety

Stage 2: Changing through Cognitive Restructuring: Helping the client to see things, judge things, feel things,
and react to things differently based on a new point of view obtained through
a. Identifying with a new role model, mentor, etc.
b. Scanning the environment for new relevant information

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Stage 3: Refreezing: Helping the client to integrate the new point of view into
a. The total personality and self-concept.
b. Significant relationships.

In stage 1, unfreezing, disconfirmation creates pain and discomfort, which cause guilt and anxiety, which
motivate the person to change. But unless the person feels comfortable with dropping the old behaviors and
acquiring new ones, change will not occur. That is, the person must develop a sense of psychological safety in
order to replace the old behaviors with new behaviors.

In stage 2, moving, the person undergoes cognitive restructuring. The person acquires information and
evidence showing that the change is desirable and possible. This motivating evidence is gained by, for example,
identifying with ex-smokers and learning about the health risks of smoking.

The primary task in stage 3, refreezing, is to integrate the new behaviors into the person’s personality, and
attitudes. That is, stabilizing the changes requires testing to see if they fit-fit with the individual, and fit with the
individual’s social surroundings. The phrase significant relationships refer to important people in the person’s
social environment-do these significant others approve of the changes?

ANS: 4

THE ORGANISATIONAL EFFECTIVENESS:

Organizational effectiveness, also called as organizational success or growth, is defined and conceptualized in
different ways, and no unanimity is found in different approaches. Though a large volume of literature is
available on the concept and working of organizational effectiveness, there is often contradiction in various
approaches. The various approaches are judgmental and open to question. Thus, various terms such as
efficiency, productivity, profitability, organizational growth, are often used interchangeably, to denote
organizational effectiveness.
Whatever the criteria adopted for organizational effectiveness, the organizational analysis is incomplete for a
practicing manager unless the factors underlying effectiveness are identifying. Though each individual’s
effectiveness is significant but perhaps the most important aspect of effectiveness is its relationship to the entire
organization. From this point of view, there are numerous variables. These variables have been classified by
Likert into three groups-causal, intervening and end result- which are useful in discussing organizational
effectiveness over time. Grouping variables into these categories aids greatly in the correct interpretation of the
data and their use for diagnostic and other purposes.

1. Causal Variables: Causal variables are those factors that influence the course of development within an
organization and its results or accomplishment. Likert states that causal variables are independent variables
which determine the course of developments within an organization and the results achieved by the
organization. These causal variables include only those independent variables which can be altered or changed
by the organization and its management. Causal variables include the structure of the organization and its
management. Causal variables include the structure of the organization and management’s policies, decisions,
business and leadership strategies, skills, and behavior.

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2. Intervening Variables: Intervening variables are those factors which are reflected as the internal state of
organization. Many of these variables are caused by causal variables. Likert states that the intervening variables
reflect the internal state and health of the organization, e.g., the loyalties, attitudes, motivations, performance
goals, and perceptions of all members and their collective capacity for effective interaction, communication,
and decision-making. The intervening variables may be divided into two broad categories: (I) the intervening
attitudinal, motivational, and perceptual cluster, and (ii) the intervening behavioral cluster. Intervening variables
are concerned with building and developing the organization, and they tend to be long-term goals. This is one
part of effectiveness that many managers overlook because it emphasis long-term potential as well as short-term
performance.

3. End – result Variables: End-result variable are those factors which are caused by causal and intervening
variable and are often in terms of the factors in which managers are interested or measure their effectiveness.
According to Likert, end-result variables are the dependent variables which reflect the achievements in the
organization such as its productivity, costs, scrap loss, and earnings.

ANS: 5

FRENCH & REVEN’S “BASIS OF SOCIAL POWER:

In a notable study of power conducted by social psychologists John French and Bertam Raven in 1959 power is
divided into five separate and distinct forms. As we know leadership and power are closely linked. This idea
shows how the different forms of power affect one's leadership and success. This idea is used often in
organizational communication and throughout the workforce. "The French-Raven power forms are introduced
with consideration of the level of observability and the extent to which power is dependent or independent of
structural conditions. Dependency refers to the degree of internalization that occurs among person's subject to
social control. Using these considerations it is possible to link personal processes to structural conditions".
(Donald Warren 1968) (Lazarfeld and Menzel 1961) French & Raven introduce five bases of power
(i) Coercive,
(ii) Reward,
(iii) Legitimate,
(iv) Referent, and
(v) Expert.

1. Coercive Power:
This type of power is based upon the idea of coercion. This involves forcing someone to do something that they
do not want to do. The ultimate 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". French &
Raven (1959) state that "other forms of power can also be used in coercive ways, such as when reward or
expertise is withheld or referent power is used to threaten social exclusion". The power of coercion has been
proven to be related with punitive behavior that may be outside one's normal role expectations. (Hinkin &
Schriesheim 1989) However coercion has also been associated positively with generally punitive behavior and
negatively associated to contingent reward behavior. (Gioia & Sims 1983) 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 type of leaders rely on the use of threats in their
leadership style. Often the threats involve saying someone will be fired or demoted.

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2. Reward Power:
The second type of power involves having the ability to administer to other things he/she desires or to remove
or decrease things he/she does not desire. (French & Raven 1959) For supervisors in an organizational setting, it
is the perceived ability to present subordinates with outcomes that are valued in a positive manner. (Hinkin &
Schriesheim 1989) This type of power in 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. (Molm 1988) 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 satisfied by
the reward, such that it loses its effectiveness.)"

3. Legitimate Power:
The power which holds the ability to administer to another certain feelings of obligation or the notion of
responsibility. (Hinkin & Schriesheim 1989) "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".( Bass 1990) Legitimate power is typically
based on one's role. People are traditionally obeying the person holding this power solely based on their
position or title rather than the person specifically as a leader. Therefore this type of power can easily dissolve
with the loss of a position or title. This power is therefore not strong enough to be one's only form of
influencing/persuading others.

4. Referent Power:
The power of holding the ability to administer to other feelings of personal acceptance or personal approval.
(Hinkin & Schriesheim 1989) This type of power is strong enough that the power-holder is often looked up to
as a role model. (Raven, 1988) This power is often looked at as admiration, or charm. The power derives from
one person having an overall likability leading people to strongly identify with them in one form or another. A
person with this type of power generally makes people feel good around them therefore one has a lot of
influence. The responsibility involved is heavy and one can easily lose this power, but when combined with
other forms of power it can be very useful. Celebrities often have this type of power in society on the flip side
they also often lose it quickly in some circumstances.

5. Expert Power:
The ability to administer to another information, knowledge or expertise. (French & Raven 1959) Leaders who
possess this type of power have high intelligence and rely on their ability to perform various organizational
tasks and functions. This power makes one able to combine the power of reward in the correct fashion. When
someone has the expertise in an organization people are more convinced to trust them and to respect what they
stand for. When your expertise is valued, so are your ideas, and leadership.

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ANS: 6

THE PROCESS OF MBO:

MBO is a system for achieving organizational objectives, enhancement of employee commitment and
participation. Therefore, its process should facilitate translation of basic concepts into management practice.
The MBO process is characterized by the emphasis on the rigorous analysis, the clarity and balance of
objectives, and participation of the managers with accountability for results. The MBO process is not as simple
as it appears to be. Managers need training and experience for developing the required skills.

1. Setting of Organizational Purpose and Objectives: The first step in MBO is the definition of
organizational purpose and objectives. Questions, such as, “why does the organization exist?”. What business
are we in?” and what should be our business?” provide guidelines for the statement of purpose. This, in
interaction with external factors, then determines the long-range strategic objectives like
(i) whether to achieve growth through expansion in the same line of business or diversity:
(ii) what should be blending of trading and manufacturing activities;
(iii) what should be the degree of vertical integration and so on.
Usually the objective setting starts at the top level of the organization and moves downward to the lowest
managerial levels. This will go in a sequence like this
(i) defining the purpose of the organization,
(ii)long-range and strategic objectives,
(iii) short-term organizational objectives,
(iv) divisional/departmental/sectional objectives,
(v) individual manager’s objectives.

2. Key Result Areas: Organizational objective and planning premises together provide the basis for the
identification of key result areas (KRAs). It may be emphasized that KRAs are derived from the expectations of
various stakeholders and indicate the priorities for organizational performance. KRAs also indicate the present
state of an organization’s health and the top management perspective for the future. Examples of KRAs
applicable to most of the business organizations are (i) profitability, (ii) market standing, (iii) innovation,
(iv) productivity, (v) worker performance, (vi) financial and physical resources, (vii) manager performance, and
(viii) public responsibility. Even though KRAs are most durable, the list of KRAs gets considerably changed
over the period in response to new needs and opportunities. Sometimes, the achievement in a particular KRA
also provides the impetus for a new KRA in future.

3. Setting Subordinates’ Objectives: The organizational objectives are achieved through individuals.
Therefore, each individual manager must know in advance what he is expected to achieve. Every manager in
the managerial hierarchy is both superior and subordinate except the person at the top level and lowest level.
Therefore, there is a series of superior and subordinate relationships. The process of objective setting begins
with superior’s proposed recommendations for his subordinate’s objectives. In turn, the subordinate states his
own objectives as perceived by him. Thereafter, the final objectives for the subordinate are set by the mutual
negotiation between superior and subordinate. In the beginning of MBO process in an organization, there may
be wide gap between the recommended objectives by the superior and subordinate’s stated objectives because
the latter may like to put lesser burden on him by setting easily achievable objectives. However, with the
experience gained over the period of time, this gap narrows because of narrowing down of perception of
superior and subordinate about what can be done at a particular level.

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4. Matching Resources with Objectives: When objectives are set carefully, they also indicate the resource
requirement. In fact, resource availability becomes an important aspect of objective setting because it is the
proper application of resources which ensures objective achievement. Therefore, there should be matching
between objectives and resources. By relating these to objectives, a superior manager is better able to set the
need and economy of allocating resources. By relating these to objectives, a superior manger is better able to
see the need and economy of allocating resources. The allocation and movement of resources should be done in
consultation with the subordinate manager.

5. Appraisal: Appraisal aspect of MBO tries to measure whether the subordinate is achieving his objective or
not. If not, what are the problems and how these problems can be overcome? Appraisal is undertaken as an
ongoing process with a view to find out deficiency in the working and also to remove it promptly. It is not taken
merely to punish the non-performer or to reward the performer. It is taken as a matter of system to ensure that
everything is going as planned and the organization is able to achieve its objectives.

6. Recycling: Though appraisal is the last aspect of MBO process, it is used as an input for recycling objectives
and other actions. Objectives are neither set at the top and communicated to the bottom nor are they set at the
bottom and go up. Objective setting is a joint process through interaction between superior and subordinate.
Therefore, what happens at each level may affect other levels also. The outcome of appraisal at one level is
recycled to see if the objectives have been set properly at the level concerned and also at the next higher level.