Part I

BUSINESS OVERVIEW
Business - an organization of people with varied skills which uses
property or talents to produce goods or services, which can be sold to
others for more than their costs.
KINDS OF BUSINESS
1. Commerce - refers to the transfer or exchange of goods and services
with the movement of goods from point of production to point of
consumption.
2. Industry - primarily concerned with the creation of form utility or the
production of goods that are used either by the consumer or by other
industries in the further production of other goods.
3. Services - enterprises that cater to personal needs of people or with
the rendering of a personal service.
WHY DO PEOPLE GO INTO BUSINESS?
1. Increase in activities that can make available goods and services
needed in the community.
2. Realize profit from investment.
3. Increase the value of the business as an economic entity.
4. Improve the quality of life in the community.
1.
2.
3.
4.
5.
6.

VALUES DERIVED WHEN PEOPLE GO INTO BUSINESS

Social approval
Profit
Service to the community and employees
Personal satisfaction
Livelihood
Power

7. Protection
OTHER STUDIES RELEVANT TO BUSINESS
1. Statistics - deals with the study of mathematical tools, trends,
decisions and theories
2. Economics - deals with the study of scarce resources for the
satisfaction of human wants
3. Sociology - deals with the individuals relationship to society as a
whole
4. Psychology - deals with the study of the mind.
CONTROL FACTORS IN CHOOSING A BUSINESS
1. Available funds
2. Special aptitude and interest
3. Training and education
4. Social status of the business
5. Competitive situation
6. Location factor and social values of the particular community
7. Present or potential demand
8. Social significance of the business

Part II

a. Henry Fayol - identified the functions and principles of

management.
HenryFayolsPrinciples of Management

THEORIES OF MANAGEMENT

1.

Division of labor - the process of distributing work into

specialized tasks and assigning responsibilities to specific
individuals.

THEORIES OF MANAGEMENT

2.

Authority and Responsibility - the right to issue orders

and the power to compel authority.

3.

Principle of One Boss - means that each employee must

receive instructions and orders from only 1 person to avoid
conflict and confusion of authority.

4.

Unity of direction - means that employees efforts should

be focused on achieving organizational objectives.

5.

Equity - the friendly and fair treatment to employees

6.

Order - the assignment of workers in their most suitable

jobs

7.

Discipline - the need to respect and comply with the rules

of the organization.

8.

Initiative - a personal responsible decision to think of new

ideas

9.

Remuneration of personnel - means to systematically

reward efforts that support the organizations direction.

A. Classical Management Theory

1. Systematic management - it attempts to build specific
procedures and processes into operations to ensure coordination of
effort.
2. Scientific management - it arose from the need to increase
productivity and to find ways to increase the efficiency of workers.
Contributors to Scientific Management Theory
a. Frederick Taylor - introduced the differential rate system which
encouraged employers to pay more productive workers.
b. Robert Owen - conceived of the managers role as one of
reform.
c. Charles Babbage - an advocate of division of labor who
believes that each operation should be analyzed so that the
various skills involved in the operation could be isolated.
d. Henry L. Gantt - originated a charting system for production
scheduling.
e. Frank and Lillian Gilbreth - conducted the studies on fatigue
and motion.
3. Administrative management - argued that management was a
profession and could be taught.
Contributors to Administrative Management

10. Stability of tenure - the assurance that no one will be laid

off or separated from his job without due process
11. Scalar chain - the line of authority from top management
down to the lowest level
12. Subordination of individual interests to general
interests - means that individual interests of employees
should not prevail over that of the whole organization.

13. Esprit De Corps - promote a unity of interests between

employees and management
14. Centralization and Decentralization - determining the
relative importance of superior and subordinate roles
b. Chester Barnard - outlined the role of the senior executive ..
c. Mary Parker Follet - emphasizes the continually changing
situations that managers face.
4. Human relations - the approach that is aimed at understanding
how psychological and social processes interact with the work
situation to influence performance
5. Bureaucracy - the approach emphasizing a structured, formal
network of relationships among specialized positions in the
organization
B. Contemporary Approaches
1. Quantitative management - the application of quantitative or
mathematical approaches to the solutions of management
problems

4. Contingency perspectivetheory- refutes the universal principles

of management by stating that variety of factors, both internal and
external, affects the firms performance and that there is no one
best way to manage and organize because circumstances vary.

Part III
ORGANIZATIONAL NEEDS, MANAGEMENT
FUNCTIONS AND SYSTEMS
Organization - refers to the structure or form of an enterprise and the
arrangement of all parts thereof in aa manner suitable for use in service.
BASIC CONSIDERATIONS IN ORGANIZATION & MANAGEMENT
1. There should be a clear and complete statement of objectives.
2. There should be a thorough analysis of the entire proposition
surrounding the business.

2. Organizational behavior - studies and identifies management

activities that promote employee effectiveness through an
understanding of the complex nature of individual, group and
organizational processes

3. The necessary functions should be determined

3. Systems theory - takes a holistic view of the entire organizational

system and stresses processes

ORGANIZATIONAL NEEDS

Types of System Theory

a. Closed system - system that does not depend on interactions
with external groups to sustain itself
b. Open system - system that is dependent on inputs from the
outside world such as raw materials, human resources and
capital

4. The men best fitted for the work and to head each department or
division should be selected

1. Sound organization methods

2. Organizational chart
3. Organizational manual
4. Standard operating procedures
Management - the art of getting things done through the efforts of
people.

FUNCTIONS OF MANAGEMENT
System - planned methods of procedure
ADVANTAGES OF PROPER USE OF SYSTEM
1. The introduction of order and method wherever it is applied
2. Everyday work becomes routine through a system
3. It permits those in authority to devote their time and effort to more
important work
4. It aids in the control and reduction of costs
RULES FOR APPLYING SYSTEM
1. System used in a particular concern should reflect a basic general plan.
2. System must represent a definite and useful purpose.
3. Maintaining a system must prove its worth as against its cost.
1. Planning - it deals with chalking out a future course of action and
deciding in advance the most appropriate course of actions for
achievement of pre-determined goals.
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.
3. Staffing - it is the function of manning the organization structure and
keeping it manned.
4. Directing - it is that part of managerial function which actuates the
organizational methods to work efficiently for achievement of
organizational purposes.
5. Controlling - It implies measurement of accomplishment against the
standards and correction of deviation if any to ensure achievement of
organizational goals.

4. A system should be clear, simple, easily understood and adequate to

fit the need, but involving the lease expenditure of time and effort.
5. There should be frequent periodic checking.

Part IV
BASIC PRINCIPLES OF MANAGEMENT
BASIC PRINCIPLES OF MANAGEMENT
1.

Principle of Policy Making - means that there should be a definite,

clear cut policies essential to effective management.

2.

Principle of Improvement and Adjustment - means that a

business must advance and cannot remain dormant.

3.

Principle of Balance - it means that a company must be internally

well-balanced to secure proper development of business and
efficiency in operation.

4.

Principle of Relationship of Task and Accomplishment principle which means that a person works best and accomplishes
most when he is given a definite job to be completed in a given time
.

5.

Principle of Individual Effectiveness - it is a principle attained

through training and improved working conditions.

6.

Principle of Simplicity - means that all elements which are not

essential to successful operation should be eliminated and all those
retained should be applied in the simplest way

7.

Principle of Specialization - means the scientific distribution of

work results in specialization of effort and task.

8.

Principle of Standardization - means that whenever practical,

best practices should be determined and expressed in terms of
definite units or standards and adopted as a pattern for use in
operation or performance and in planning and control.
Variety of Standards
a. Standardization of product - standard that has to do with
selection of items, types and sizes of products in greatest demand
b. Administration standard - it has to do with standards of
performance which give management definite measures by which
to gauge efficiency

9.

10.

Principle of Financial Incentive - principle which means that

remuneration should be in direct proportion to the value of
accomplishment.
Principle of Human Relations - means that success or failure in
business depends on the intelligent handling of relationships with
people.

11.

Principle of Planning - means the satisfactory accomplishment of

anything important depends on how one thinks in advance

12.

Principle of Control - principle which makes certain that the plans

are carried out

Part V
BUSINESS
ORGANIZATIONS
[Sole Proprietorship and
Partnership]

Organization - any structured group of people brought together to

achieve certain goals that the same individuals could not reach alone.
FORMS OF BUSINESS ORGANIZATIONS
A. Sole Proprietorship - form of organization where there is only one
owner,
B. Partnerships - an association of two or more persons who bind
themselves to contribute money, property, or industry to a common
fund, with the intention of dividing profit among themselves.
CLASSIFICATION OF PARTNERSHIPS

A. Based on object or scope of subject matter:

1. Universal partnership - refers to the contribution of partners of
all present property or of all profits.

1. Every partner is an agent of the partnership, meaning his every act,

including the execution of any instrument in the partnership name,
binds the partnership.
2. The relation between partners is fiduciary.

Kinds of Universal Partnership

DIVISION OF PROFITS AND LOSSES
a. Universal partnership of all present property - refer to all
the properties that actually belong to each of the partners at the
time the partnership is formed.
b. Universal partnership of all profits - refers to all the profits
that the partners may acquire by their industry or work during
the existence of the partnership.
2. Particular partnership - its objects are determinate things, their
use or fruits, or a specific undertaking, or the exercise of a
profession or vocation.
B. Based on liability of partners for partnership obligations
1. General partnership - partnership where all partners are liable for
partnership debts to the extent of their personal property after all
the partnership assets have been exhausted.
2. Limited partnership - partnership where all partners are liable for
partnership debts only to the extent of their capital contributions.
CLASSES OF PARTNERS
1. Capitalist partner - partner who contributes money or property to
the capital of the partnership.
2. Industrial partner - partner who contributes his work, labor or
industry to the partnership.
3. Capitalist-industrial partner - one who contributes money or
property as well as his work or industry to the capital of the
partnership.
RESPONSIBILITY OF A PARTNER

Partnership profits and losses are divided based on the

agreement between themselves. In the absence of stipulation in the
partnership contract, the same shall be divided based on their capital
contributions.
LIABILITY OF INCOMING PARTNER FOR EXISTING OBLIGATIONS
An incoming partner has limited liability for all obligations existing
at the time of his admission to a partnership.

ORGANIZATIONAL SET-UP IN A PARTNERSHIP

A partnership usually has a managing partner appointed in the
articles of partnership. A managing partner has all the powers of a general
agent as well as all the incidental powers necessary to carry out the object
of the partnership in its operations.

Part VI
BUSINESS ORGANIZATIONS
[Corporation]
CORPORATION - an artificial being created by operation of law having the
right of succession and the powers, attributes and properties expressly
authorized by law or incident to its existence.
General Features of a Business Corporation

1. It is an artificial being.
2. The business operation is managed by the Board of Directors.
3. The capital is accumulated through the sale of stocks and bonds
representing units of ownership and entitling the stockholders to
receive dividends.
4. Stockholders may enjoy limited liability for business debts.
5. It has perpetual existence.
RIGHTS OF SUCCESSION
A corporation has the right to continuous existence irrespective of
the death, withdrawal, insolvency or incapacity of the individual members
or stockholders and regardless of the transfer of their interest or shares of
stock.

1. Close corporation - limited to selected persons or members of the

family
2. Open corporation - one which is open to any person who may
wish to become a stockholder or member
TERMS USED FOR PERSONS COMPRISING A CORPORATION
Corporators - refers to all the persons composing a corporation whether
they are stockholdersor members.
Incorporators - refers to corporators mentioned in the articles of
incorporation as originally forming and composing the corporation and
who executed and signed the articles of incorporation.
Stockholders - any natural or juridical person owning at least one share
of capital stock of a corporation
Member - corporators in a non-stock corporation

SOME CLASSIFICATION OF CORPORATIONS

Board of Directors - governing body in a corporation. To exercise their

powers, the directors must meet and act at a meeting at which there is
quorum.

BasedOn The Nature Of Its Capital

Board of Trustees - governing body for a non-stock corporation.

1. Stock corporation - capital is in the form of capital stock divided into

shares.

By Laws - refers to the body of rules and regulations that govern the
internal management of the organization.

2. Non-stock corporation - one where no part of its income is

distributable as dividends to its members, trustee, or officers.

STOCKHOLDERS TYPES OF RIGHTS

Based On The Laws Of The State OrCountry From Which They Are
Created

A. Managerial Prerogatives
B. Individual Rights

1. Domestic corporation - corporation created under Philippine laws.

Types of Individual Rights

2. Foreign corporation - one formed, organized or existing under laws

other than those of the Philippines

1. Pre-emptive right of stockholders - the privilege of current

stockholders to subscribe or buy new additional issues of shares of
stock in proportion to the number of shares they hold before such
shares are sold to the public.

As To Whether They Are OpenTo The Public Or Not

2. Right to receive dividends

Requirements Prior to Distribution of Dividends

Answer: 7,000 shares x 7 seats = 49,000 votes

a. The corporation has available net income.

b. The Board of Directors should declare dividends.

Formula: No. of shares to ensure election

c. In the case of stock and bond dividends, it should be approved

by majority of the stockholders.

Total # of shares outstanding

X desired # of seats

3. Voting Right
Kinds of Voting Rights
a. Voting in person - stockholder casts his vote personally

N= SxD
1

# of shares

------- + 1 = to ensure election

elected + 1

Where:

c. Voting by trust - device whereby a group of stockholders

surrender their voting rights over a specified period to the
trustee who will be registered as the stockholder in the books of
the company.

N
S
D
T

SAMPLE PROBLEM:

Total # of directors to be

T+1

b. Voting by proxy - means that the stockholder appoints a third

party to cast his vote in a particular meeting for a particular
purpose.

Cumulative voting - refers to a process of voting where a stockholder is

entitled to cast votes equal to the number of shares he holds multiplied by
the number of directors to be elected

= -------------------------------------- +

=
=
=
=

no. of shares to ensure election

total no. of shares outstanding
desired no. of seats
total # of directors to be elected

Sample Problem:
Paris Hilton would want to have 3 seats in the BOD of Venetian Hotel
which has 120,000 shares of capital stock, outstanding and 11 directors.
How many shares does Paris need to get 3 seats?

Dwayne Wade owns 7,000 shares of the 25,000 outstanding

shares of the capital stock of NBA Inc. There are 7 seats in
the BOD. How many votes can he cast?
Formula: No. of Votes
No. of Shares x No. of BOD Seats = No. of Votes

N=SxD
--------- + 1
shares

N = 120,000 x 3 + 1
--------------------

30,001

T+1

11 + 1

Formula: No. of seats a given number of share can get

H-1xT+1
# of shares held - 1 x # of directors to be
elected + 1
D = ---------------------------------------------------------------------------------------

Total No. of Shares Outstanding

Problem 2:
Rachael Ray owns 80,000 shares in Food Network. The company has
150,000 shares of capital stock outstanding and 9 BOD. How many seats
can she get in the Board?

Where:
D
H
T
S

=
=
=
=

No. of seats a given number of share can get

No. of shares held
No. of directors to be elected
Total no. of shares outstanding
Problem 3:

H-1xT+1
D = ---------------S

30,001 - 1 x 11 + 1
D=

------------------------

3 seats

Manny Pacquiao would want to have 5 seats at the Golden Boy

Promotions Corporation. The Corporation has 9 directors and an existing
900,000 capital share, 75% of which is outstanding. How many shares
does Manny need to be able to get 5 seats?

120,000.00

Problem 1:
If Oprah would want to have 8 seats in the BBC Network which has
300,000 shares of capital stock outstanding and 15 directors, how many
shares does she need?

Problem 4:
Rajo Laurel owns 65% of the 700,000 shares of capital stock outstanding
in Lifestyle Asia Incorporated, for which there are 12 BOD. How many
seats would be available for him?

a resident and citizen of the Philippines] and such other officers as may be
provided in the by-laws.
Any 2 or more positions may be held concurrently by the same
person, except that no one shall act as president and secretary or as
president and treasurer at the same time.

Part VII
CLASSES OF STOCKS
1. Common Stock and Preferred Stock
a. Common stock - basic issue of shares and has all the basic rights
of a share of stock so that it is often referred to as the basic
ownership in a corporation.
b. Preferred stock - class of stock having preferences over common
stock.
2. Class "A" and Class "B"
a. Class "A" shares - are for Filipino shareholders
b. Class "B" - are for foreign investors.
3. Par Value and No-Par Value Shares
a. Par value shares - refer to shares of capital stock that have been
assigned a definite or fixed value in the articles of incorporation so
as to fix the minimum subscription or original issue price.
b. No-par value shares - those that have not have been assigned a
definite or fixed value.

CORPORATE OFFICERS
A corporation must have a president [who shall be a director], a
treasurer [who may or may not be a director], a secretary [who shall be

HUMAN RESOURCE MANAGEMENT

[Staffing]
Human Resource Management - the philosophies and practices that
affect the people who work for an organization.
ASPECTS OF HUMAN RESOURCE MANAGEMENT
I.

Legal and Regulatory Environment

II.

Staffing - the process by which organizations meet their human

resource needs, including forecasting future needs, recruiting and
selecting candidates and orienting new employees.
Components of the Staffing Process
A. Human Resource Planning - means forecasting the
organizations human resource needs and developing the steps
to be taken to meet them.
Tools and Techniques Used for Planning and Forecasting
Human Resource needs
1. Competency inventory - a detailed file maintained for each
employee that lists level of education, training experience,
length of service, current job title and salary as well as
performance history.

2. Job analysis - a breakdown of the tasks and responsibilities

for a specific job and the personal characteristics, skill and
experience necessary for their successful performance.

Types of Tests Given

a. General learning ability - the catch on , pick up or
understand instructions and underlying principles easily,

Parts of Job Analysis

a. Job description - an outline of a positions
essential tasks and responsibilities.

b. Mental alertness test - measures a persons ability to

quickly learn jobs which involve memory

b. Job specification - a list of the personal

characteristics, competencies and experience a
worker needs to carry out a jobs task and assume
its responsibilities

c. Verbal ability - the ability to understand meanings of

words and ideas
d. Clerical aptitude test - measure the individuals ability
to pertinent details as well as avoidance of perceptual
errors

3. Replacement charts - a diagram showing each position in

the organization, along with the name of the person
occupying the position and the names of candidates eligible
to replace that person.

e. Personality test - measures the emotional maturity of

the individual

B. Recruitment - the process of searching, both inside and outside

the organization, for people to fill vacant positions.

f.

Aspects of Environment That Affects Recruitment

g. Mechanical Aptitude Test - measures applicant

potential for certain trades especially in factory or
maintenance

1. Government regulations
2. Labor union

h. Space Relations Test - the ability to think visually of

geometric forms and to visualize a constructed object
from a picture

3. Labor market
C. Selection and hiring

i.

Selection and Hiring Procedure

1.

Recruiting qualified applicants

2.

Reception of Applicants

3.

Issue out Application Form

4.

Administer the Employment Tests

Numerical aptitude test - the ability to carry out

arithmetic processes quickly and accurately

Motor coordination - ability to regulate equally the

movement of eyes and hands or fingers rapidly and
accurately

5.

Checking the applicants work experiences, school records

and personal references

6.

Interview
Types of Interview

a. Initial interview - designed to eliminate obviously

unqualified applicants

b. Dependability
c. Self-confidence

b. Evaluation interview- interview given to applicant

who looks like good prospects for the job

d. Attitude towards job

Basic Contents of the Evaluation Interview

e. Creativeness

a. Personal qualities - includes the personal

qualifications required in the position

f.

Attitude towards other persons

g. Value system
b. Academic achievement - provides a good
indication of an applicants initiative, independence,
reliability, intellectual competence and emotional
stability

h. Critical attitude
7.

c. Occupational experience - area which emphasizes

not only the applicants technical competence but
also the level of responsibility and skill he has
attained in previous jobs

Matching the Applicant with the Job

Tips In The Selection Of Right Employees For The Job
a. Age
b. Education

d. Interpersonal competence - includes the

applicants ability to get along well with others

c. Experience

e. Career orientation - covers the applicants career

aspirations, his immediate and long-range plans and
his potentials for advancement
Forms of Interview

d. Appearance
e. Health
8.

Final Selection by Immediate Supervisor or Department

Head

a. Directive Interview
Selection - the process of determining who from among
the job applicants should get the job.

b. Non-directive Interview
c. Group Interview

9.

d. Team Method

10. Hiring or Placement

Reasons for the Interview

a. Emotional maturity

Physical and Medical Examination

Placement - the function of making a new employee

familiar with his new job and work environment

D. Orientation- formal or informal introduction of new employees

to their job responsibilities, their co-workers and the
organizations policies.

determine preference in employment

opportunities.

What Can an Effective Orientation Program Accomplish?

Types of Promotion
1. Promote realistic job expectations
2. Promote functional work behavior
3. Reduce employee turnover
E. Movement

a. From within - employees to be promoted will come

from the department where there is a vacant position
b. External - in case there is no qualified employee
within the department, promotion will be open to
employees of other departments

Forms of Movement
A. Transfer - defined as the movement of employees from one
job to another on the same level in the organization with
more or less the same pay, privileges, duties and
responsibilities.

2. Demotions - refer to the movement of people to a less

important job from a higher level job in the organization
Reasons for Demotion
a. Reduction in business

Kinds of Transfer
b. Failure to qualify or meet job standards
1. Promotion - refer to the upward movement of employees
in an organization from lower level jobs to higher level
jobs involving increases in duties and responsibilities,
higher pay and privileges
Bases for Promotion

c. Form of disciplinary action

d. Inability to meet requirements
B. Separation - the termination of employee as a result of
resignation, lay-off, retirement or discharge

a. Competency or merit
1

Types of Separation
b. Seniority
TypesOf Seniority
1. Straight seniority - means that length of service
alone determines employment preference.
2. Qualified seniority - means that length of service
is just one of a number of specified factors used to

1. Resignation - termination of employment, generally

initiated by the employee
2. Lay-off - suspension of the employment relationship
initiated by the employer through no fault of the
employee
3. Retirement - mandatory or early separation from the job

4. Discharge - termination of an employee by the employer

with just cause

3. Halo effect - a rating error that occurs when knowledge of

performance on one dimension colors the ratings on all others.

Part VIII

4. Central tendency - a rating error that occurs when all

employees are given an average rating, even when their
performance varies

HUMAN RESOURCE MANAGEMENT

[Training & Development / Performance
Appraisal]

V.

Managing Total Compensation Systems

Components of Compensation System
1. Direct compensation - employees base wage or salary and
any incentive pay received

III.

Training and Development - activities aimed at helping

employees overcome the limitations, current or anticipated that are
causing them to perform at less than desired level.
Objectives of Training and Development

Types of Pay

1. Productivity

a. Job-based pay - compensation that is linked to the specific

tasks a person performs

2. Effectiveness on the present job

3. Qualification for a better job
4. Morale booster
IV.

2. Indirect compensation - benefits that are required by law and

those that are provided voluntarily by the employer

Performance appraisals - the process of systematically

evaluating each employees job-related strengths, developmental
needs and progress
Common Errors Made in Performance Appraisal
1. Rater characteristics - the personal attributes that a
performance appraiser brings to the task which often exert
indirect influence on performance appraisals.
2. Leniency - a rating error that occurs when an individual rates all
employees in a group higher than they deserve.

b. Competency-based pay - compensation that is linked to

peoples competencies
c. Incentive pay - intended to link at least a portion of pay to
job performance to encourage superior performance.
3. Individual-based incentive pay
Types of Individual-Based Incentive Pay
a. Bonus - lump-sum payments given for achieving a particular
performance goal
b. Merit pay - a permanent increase in base pay linked to an
individuals performance during the preceding year.

Part IX

MOTIVATING FOR PERFORMANCE

Motivation - any influence that brings out, directs or maintains goaldirected behavior
THEORIES ABOUT WORK MOTIVATION
A. Theories about individual differences
1. Abraham Maslows Hierarchy of Needs - approach to
motivation that suggests that people have a complex 5-level set of
needs, which they meet in sequence.
a. Physiological needs
b. Security needs
c. Affiliation needs
d. Esteem needs

3. David McClellands Learned Needs - approach to motivation

which specifies that people acquire 3 needs or motives,
achievement, affiliation and power through interaction with
achievements.
Motives for Understanding DifferencesAmong Individuals
a. Achievementmotive - the desire to succeed relative to some
standard of excellence or in competitive situations
b. Affiliation motive - a persons desire to develop and maintain
close, mutually satisfying interpersonal relationships with others.
c. Power motive - an individuals desire to influence and control
others and the social environment
B. Theories about how the job and organization context affect motivation
4. Frederick Herzbergs 2-Factor theory - approach to motivation,
which states that distinct types of experiences produce job
satisfaction and job dissatisfaction
a. Motivation factors - factors which lead to job satisfaction
b. Hygiene factors - factors which produce job satisfaction

e. Self-actualization needs
2. Clay Alderfers ERG Theory- approach to motivation, which
specifies a hierarchy of 3 needs categories: existence, relatedness,
and growth

Critical Psychological States Needed to create High-Level

Motivation

a. Existence needs - the desires for material and physical wellbeing

1. Experienced meaningfulness - the extent to which employees

perceive their work to be valuable and worthwhile

b. Relatedness needs - the desires to establish and maintain

interpersonal relationships with other people

2. Experienced responsibility - refers to whether employee feel

responsible for the quantity and quality of their work

c. Growth needs - the desires to be creative, make useful and

productive contributions, and have opportunities for personal
development

3. Knowledge of results - refers to the extent to which employees

receive feedback about how well they are doing
Key Job Characteristics That Affect Critical Psychological States

1. Skill variety - degree to which the job involves many different

work activities or requires several skills and talents
2. Task identity -the extent to which a job involves completing an
identifiable piece of work, that is, doing a job with a visible
beginning and outcome

2. Goal setting theory - an approach to motivation that states that

managers can direct the performance of their employees by
assigning specific, difficult goals and providing feedback to
employees about their progress in achieving those goals.
D. Theories that consider the entire motivation process

3. Task significance - the extent to which a job has a substantial

impact on the goals or work of others in the company
4. Autonomy - the extent to which the job provides substantial
freedom, independence and discretion to the individual in
scheduling work and determining the procedures to be used in
carrying out tasks
5. Feedback -when employees receive direct and clear information
about their work performance from the task itself or from others.
C. Theories about how managerial behavior affects motivation

Basic expectancy theory - the view that people tend to choose

behaviors that they believe will help them achieve desired outcomes
and avoid behaviors that they believe will lead to undesirable
outcomes

Part X
THE DYNAMICS OF LEADERSHIP

Rewards and Goals Used to Motivate Employees

1. Reinforcement theory - an approach to motivation that suggests
that behavior is a function of its consequences.
Types of Reinforcement Theory
1.1 Positive reinforcement - creates a pleasant consequence by
the use of rewards to increase the likelihood that a behavior
will be repeated.
1.2 Negative reinforcement - it is when people engage in
behavior to avoid unpleasant consequences
Factors Involved in Reinforcement Theory
a. Punishment - an attempt to discourage a target behavior by
the application of negative outcomes whenever it does occur.
b. Extinction - the absence of any reinforcement, either positive
or negative, following the occurrence of a behavior

Leadership - involves influencing others to act toward the attainment of

a goal
Power - the ability to influence the behavior of others
TYPES OF POWER
1. Legitimate power - influence based on the leaders formal position in
the organizations hierarchy
2. Reward power - the influence stemming from a leaders ability to
reward followers
3. Coercive power - the ability of a leader to obtain compliance through
fear or punishment
4. Referent power - influence based on followers personal identification
with the leader
5. Expert power - influence based on a leaders specialized knowledge

TYPES OF BEHAVIOR IN FOLLOWERS

1. Committed subordinates - they are enthusiastic about meeting their
leaders expectations and strive to do so.

6. Employee-centered leadership style - encourages employees to

participate in making decisions and making sure that they are
satisfied with their work.
B. CONTINGENCY MODELS- leadership model based on the idea that
the situation determines the best style to use.

2. Subordinates who merely Comply - they are subordinates who will

do only what has to be done.

Leadership Styles Under the Contingency Model

3. Resistant subordinates - they are subordinates who expressed or

appear to respond to their leaders requests while not actually doing
so or even intentionally delaying or sabotaging plans.

1. Fred Fiedlers Contingency model - model which suggests that

successful leadership depends on matching a leaders style to a
situations demands.

Trait models - leadership models base on the assumption that certain

physical, social and personal characteristics are inherent in leaders

2. Paul Hersey and Kenneth Blanchards Situational Leadership

Model - model which suggests that the levels of directive and
supportive leader behaviors should be based on the readiness level
of followers.

TYPES OF TRAIT MODELS OF LEADERSHIP

A. BEHAVIORAL MODELS - leadership model that focus on differences in
the actions of effective and ineffective leaders

3. Houses Path Goal Model - model which indicates that effective

leaders specify the task and clear roadblocks to task achievement

Leadership Styles Under the Behavioral Model

C. TRANSFORMATIONAL LEADERSHIP - means leading by motivating
1. Theory X - a leadership style whereby leaders tell subordinates
whats expected of them
2. Theory Y - a leadership style whereby leaders consult with their
subordinates,
3. Considerate leadership style - style that exhibits concern for
employees well-being, status, and comfort

LEADERSHIP TYPES
1. Autocraticleadership- it demands obedience from his
subordinates through the use of formal authority, rewards and
punishments.

centralize power; determines policies and makes all

decisions

4. Initiating-structure leadership style - characterized by actively

planning, organizing, controlling and coordinating subordinates
activities.
5. Production-centered leadership style - setting standards,
organizing and paying close attention to employees work, keeping
production schedules and stressing results

Authority
Leader

Follower

2. Democraticleadership - it solicits ideas and suggestions from

his subordinates and encourages them to participate in matters
that concerns them.

decentralize authority

Authority
Leader

4.Managers communicate.

4.Leaders persuade.

5.Managers direct groups.

5.Leaders create teams.

6.Managers try to be heroes.

7.Managers take credit.

6.Leaders make heroes of everyone

around them.
7.Leaders take responsibility.

8.Managers are focused.

8.Leaders create shared focus.

9.Managers exercise power over people. 9.Leaders develop power with people

Follower

3. Free-rein or Laissez Faire - tones down Manager's role in the

group's activities and merely provides information or data,
materials and facilities to the group in accomplishing its
objectives.

avoid power and responsibility; exercises a minimum

of central authority or power

Part XI
ORGANIZATIONAL COMMUNICATION
Communication - is the transfer of information and understanding from
one person to another through meaningful symbols.
MAIN ELEMENTS OF THE COMMUNICATION PROCESS
1. Sender - the source of information and the initiator of the
communication process

Authority
Leader

Follower

Communication Principles that Increase Encoding Accuracy

a. Relevancy
b. Simplicity

DIFFERENCE BETWEEN A MANAGER AND A LEADER

1.Managers have employees.

1.Leaders win followers.

2.Managers react to change.

2.Leaders create change.

3.Managers have good ideas.

3.Leaders implement them.

c. Organization
d. Repetition
e. Focus
2. Receiver - the person who receives and decodes the senders
message

3. Message - the verbal symbols and nonverbal cues representing the

information that the sender wants to convey to the receiver.

c. It should be specific rather than general.

d. It should be well-timed

Types of Messages
e. It should not overwhelm
a. Non-verbal message
b. Verbal messages

6. Perception - the meaning ascribed to a message by a sender or

receiver

c. Written messages
Problems of Perception
4. Channel - the path that a message follows from sender to receiver
Types of Channel
4.1 Downward channel - communication paths that managers use
to send messages to employees or customers.
4.2 Upward channels - communication paths that subordinates use
to send information to superiors.
4.3 Horizontal channels - communication paths that managers and
employees use when communicating across departmental lines

1. Selective perception - the process of screening out information

that a person wants or needs to avoid
2. Stereotyping - making assumptions about individuals solely on
the basis of their belonging to a particular gender, race, age or
other group.
BARRIERS TO EFFECTIVE COMMUNICATION
A. Organizational Barriers
1. Authority and status levels

Types of Informal Channels

2. Specialization
1. Grapevine - an organizations informal communication system,
along which information can travel in any direction.
2. Employee network groups - informal groups who organize
regularly scheduled social activities that foster the
establishment of informal communication channels among
employees who share a common interest or concern.
5. Feedback - the receivers response to the senders message.

3. Different goals
B. Individual Barriers
1. Semantics - the study of the way words are used and the
meanings they convey
2. Emotions - a subjective reaction or feeling

Characteristics of Feedback

OVERCOMING BARRIERS TO COMMUNICATION

a. It should be helpful.

1. Regulate the flow of information

b. It should be descriptive rather than evaluative.

2. Encourage feedback

3. Simplify the language used in the message

4. Listen actively
Characteristics of Active Listeners

Part XII
ORGANIZATIONAL BEHAVIOR

a. Appreciative - listens in a relaxed manner; seeking

enjoyment or inspiration
b. Empathic - listens without judging, supportive of speaker,
learns from experiences of others
c. Comprehensive - listens to organize and make sense of
information by understanding relationships among ideas
d. Discerning - listens to get complete information, understand
main message and determine important details
5. Restrain negative emotions

Organizational Behavior[O. B.] - is the study and application of

knowledge about how people - as individuals and as groups - act within
organizations.
PRIMARY GOALS OF O.B.
1. Describe how people behave under a variety of conditions
2. Understand why people behave as they do

6. Use nonverbal cues

3. Predict which employees might be dedicated and productive or which

might be absent, tardy or disruptive on a certain day

7. Use the grapevine and informal networks

4. Control and develop some human activity at work

GUIDELINES FOR EFFECTIVE COMMUNICATION

ELEMENTS OF O. B.

1. Clarify your ideas before communicating

1. People - consist of individuals and groups who make up the internal

social system of the organization

2. Examine the true purpose of the communication

3. Consider the setting in which communication will take place

2. Structure - defines the formal relationship of people in organizations

4. Consult with others, when appropriate in planning communications

3. Technology - provides the resources with which people work and

affects the tasks that they perform.

5. Be mindful of the nonverbal messages you send

4. Environment - internal and external

6. Take the opportunity to convey something helpful to the receiver

7. Follow up the communication
8. Be sure that your actions support your communication

BASIC CONCEPTS OF PEOPLE

2. Mutual interest - people see organizations as a means of helping

them reach organizational objectives.

1. Individual differences - means that people have much in common,

BASIC APPROACHES OF O.B.

PEOPLE

1. Human Resources Approach - employee growth and development

are supported

ENVIRONMENT

ENVIRONMENT

3. Productivity Approach - means that o. b. programs are assessed in

terms of their efficiency.

ORGANIZATION

STRUCTURE

2. Contingency Approach - different behaviors are required by different

environment for effectiveness.

TECHNOLOGY
ENVIRONMENT

but each person in the world is also individually different.

2. Perception - people look at the world and see things differently.
3. Whole Person - organization may wish they could employ only a
person's skill or knowledge, but they actually employ a whole person.
4. Motivated Behavior - a person's behavior may relate to a person's
needs and/or consequences that result from acts.
5. Desire for Involvement - people wish to feel good about themselves.
6. Value of the Person - people deserved to be treated differently than
other factors of production

4. Systems Approach - means that all parts of an organization interact

in a complex relationship
ELEMENTS OF THE O. B. SYSTEM
1. Philosophy - consists of integrated set of assumptions and beliefs
about the way things are and the purpose for these activities and the
way they should be
2. Vision - represents a challenging portrait of what the organization and
its members can be
3. Goals - a more concrete formulations of achievements, the
organization is aiming for within set periods of time.
MODELS OF ORGANIZATIONAL BEHAVIOR PHILOSOPHIES
1. Autocratic Model -managerial orientation is formal, it depends on
power.

KEY CONCEPTS OF ORGANIZATIONS

2. Custodian Model - employers and unions and government began

caring for the security needs of workers.

1. Social system - implies that the organizational environment is one of

dynamic change

3. Supportive Model - depends on leadership instead of power or

money.
4. Collegial Model - managerial orientation is toward teamwork.

5. Use of information

Part XIII

THE PROCESS OF PLANNED CHANGE

ORGANIZATIONAL INNOVATION &

CHANGE

1. Assess the environment

2. Determine the performance gap
3. Diagnose organizational problems

Innovation - the process of creating and implementing a new idea.

4. Identify sources of resistance

TYPES OF INNOVATION

5. Reduce Resistance

1. Technical innovation - means the creation of new products and

services
2. Process innovation - involves creating a new means of producing,
selling or distributing and existing product or service

Commonly Used Methods for Managing Resistance

a. Education
b. Participation

3. Administrative innovation - occurs when creation of a new

organization design better supports the creation, production and
delivery of products and services

c. Negotiation

Organizational change - any transformation in the design or functioning

of an organization.

e. Selecting a method

Learning organizations - the involvement of all employees in identifying

and solving problems
CHARACTERISTICS OF LEARNING ORGANIZATIONS
1. Shared leadership
2. Culture
3. Strategy
4. Organization design

d. Cooptation

Issues to be Considered in the Selection of Methods to

Overcome Resistance to Change
a. Amount and types of resistance anticipated
b. Power of resisters
c. Location of needed information and commitment
d. Stakes involved
e. Short-term and long-term effects
6. Set goals

7. Implement change
8. Follow up the change
APPROACHES TO CHANGE

Organizational development - a planned long-range behavioral science

strategy for understanding, changing, and developing an organizations
workforce in order to improve its effectiveness.
SETS OF VALUES THAT DEFINE ORGANIZATIONAL DEVELOPMENT
[OD]

1. Technology-based approach
1. People values
2. Redesign approach
2. Group values
3. Task-based approach
3
4. People-oriented approach

Organization values