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Introduction to Management
UNIT 1 INTRODUCTION TO and Organization Behavior
MANAGEMENT AND
ORGANISATIONAL BEHAVIOR NOTES
Structure
1.0 Introduction
1.1 Unit Objectives
1.2 Management Defined
1.3 Nature of Management
1.4 Importance of Management
1.5 Managerial Roles
1.5.1 Interpersonal Roles
1.5.2 Informational Roles
1.5.3 Decisional Roles
1.6 Levels of Management
1.6.1 Top Level Management
1.6.2 Middle Level Management
1.6.3 First Level Management
1.7 Managerial Skills
1.7.1 Technical Skills
1.7.2 Human Skills
1.7.3 Conceptual Skills
1.7.4 Diagnostic Skills
1.8 Scope of Management
1.8.1 Human Resource Management
1.8.2 Financial Management
1.8.3 Production Management
1.8.4 Marketing Management
1.9 Functions of Management
1.10 Organizational Behavior
1.11 Importance of Organizational Behavior
1.12 OB Model
1.13 Summary
1.14 Key Terms
1.15 Questions & Exercises Management Process
& Organisational
1.16 Further Reading and References Behaviour : 1
MBA106 unit
Introduction to Management
and Organization Behavior 1.0 Introduction
Human beings have variety of needs, that can’t be satisfied by their individual
NOTES
efforts alone. They need to perform numerous activities to satisfy their wants. Hence
organizations are formed to cater to the need of the society. Individuals join organization
and contribute their part for the well- being of the society.
There is one basic organization to which we all belong and that is family. Family is
the basic unit of the society. It has almost all the characteristics of the organization.
Organization is a group of two or more people working together to achieve a common
objective and so is the family. The main aim of the family is to provide mental, physical
and emotional satisfaction to the members of the family along with general survival
goals. Family applies basic economic concepts such as division of labour , planning,
distribution etc. The family as a unit decides as to which member of the family will do
which task. Each person in the family has his or her role for e.g. the mother is expected
to manage the home and take care of children while father is supposed to provide
financial support to the family. The family prepares budget for the month and plans it
various activities like education, shopping, holidaying, socializing etc .
Just like family, management activities and organizations have existed for thousands
of years. Someone in the past always had a plan to accomplish whether it was building
up of Egyptian pyramids or Great Wall of China. In order to accomplish objectives the
people and material were organized, the workers were directed and controls were
imposed on them.
We can trace various practices of management that we apply today in ancient
scriptures and books. “The Great Plan” is a document that combines astrology, moral
principles, physics, politics and religion. It is a mixture of ideas from various areas. The
text itself mentions the time period 1121 BC. The document includes a passage in it that
scholars judge it to be older than 2200 BC. One passage of the document discusses
about contingency theory of leadership. Its interpretation reveals the advice given to the
manager to consider characteristics of subordinates and situation in applying the leadership
style. We can correlate this passage written in “The Great Plan” to the contingency
theory of leadership proposed by Fielder. Written around 1100 BC “The officials of
Chou” is book containing a long exhaustive and detailed list of job description for the
huge number officials in the kings service ranging from prime minister to household
services. According to the book, the prime minister could use rules and regulations (a)
to classify departments (b) to distribute responsibilities among departments (c) to specify
coordination links among officials (d) to define standards and procedures for operations
(e) to assess officials’ performance. The philosophy was that by standardizing operating
procedure efficiency will improve and formalizing procedure would provide stability to
the organizations. Officials had to behave in accordance with rules; they were punished
for not complying with the standard. Ancient bureaucracies are well articulated in the
Management Process book “The Officials Of Chou”. Similar kind of bureaucracy was proposed by Max
& Organisational
Weber in 1920.
Behaviour : 2
Management is as old as civilization; it is a life giving element in every organization. Introduction to Management
Management is the most challenging, comprehensive, central of all human activities. and Organization Behavior
Managers not only affect the organizational effectiveness but also accomplish many
special economic goals of the society.
NOTES
The primary function of the management is to satisfy the various stakeholders of
the organization. He has to make sure that organization earn enough profit that satisfies
shareholders. The management also aims at providing valued products at a reasonable
cost to the customer. After all customers is the king. The growth and survival largely
depends upon the demands of the customer. Another important objective is to provide
rewarding employment to the employees so that best talent can be retained and all this
has to be done with efficiency. With the advent of industrial revolution the increase in
size and complexity of organizations lead to the split between owner and manager. This
resulted in emergence of management as a distinct discipline. The 21st century has
brought new challenges before workforce. Everyone must adapt to rapidly changing
society with constantly changing demands and opportunities.
Organizations process human and non- human input into valuable outputs. The
input may include men, money, machinery, material, methods and the output consists of
products, services, profitability, customer and employee satisfaction etc. Management
acts as a unifying force. It focuses on the attainment of organizational goal in an effective
and efficient manner through the use of human and non human resources
Managers have a responsibility of ensuring that individuals make their best
contribution to group activities thus enhancing their productivity. All organizations need
good management for growth and survival. The aim of all managers is same i.e.
Management Process
accomplishment of organizational goals efficiently and effectively. & Organisational
Behaviour : 3
Introduction to Management Productivity can be measured in terms of output input ratio, within a time period
and Organization Behavior with due consideration for quality. Productivity includes efficiency and effectiveness,
where effectiveness means achievement of objectives and efficiency means achievement
of the output with least amount of resources and efforts.
NOTES
MACHINE PRODUCT
PROFITA CUSTOMER
BILITY SATISFACTION
MATERIAL INPUT MONEY OUTPUT
PLANNING ORGANIZING STAFFING DIRECTING CONTROLLING
EMPLOYEE
MEN SERVICES SATISFACTION
INTERPERSONAL ROLES
INFORMATIONAL ROLES
DECISIONAL ROLES
1. Figurehead Role: the manager performs duties that are ceremonial in nature.
They represent the organization in all matters of formality for e.g. attending NOTES
social functions, greeting visitors, making speeches, hosting receptions,
bestowing honors etc. They perform social and legal duties and act as a
symbolic leader.
2. Leadership Role: it includes directing and motivating people towards
organizational objectives. He influences his sub-ordinates to exert high level
of efforts. He builds relationship with employees, coaches them and supports
them so that they meet work related goals that are essential for organization’s
growth and survival.
3. Liaison Role: a manager serves as a link between their organization and
others outside the organization in order to maintain mutually beneficial relations.
They maintain contact with the people outside the organization so as to evaluate
environmental factors effecting the organization. Self developed network of
contacts with government and other organization group can help in obtaining
favor and information.
TOP
LEVEL
MIDDLE
LEVEL
FIRST LEVEL
Top level
l
tua
la an
ep
ns
Middle
Re um
nc
tio
level
l
Co
ica
H
hn
Lower
c
(Supervisiory)
Te
level
Fig. 1.4 Managerial Skills
1.12 OB Model
Management Process
& Organisational
Behaviour : 15
Introduction to Management
Organisational Level
and Organization Behavior
* Organisational Culture
* Organisation Structure
NOTES * Work Design
* Human Resource Policies
and Practices
Productivity
Group Level
* Group Norms
Absenteeism
* Group Cohesiveness
Input Output
* Leadership
independent dependent
* Conflict
variables variables Attrition
* Team
* Group Structure
* Group Decision Making
Job
satisfaction
Individual level
* Personality
* Values
* Attitude
* Perception
* Motivation
* Individual decision making
1.13 Summary
Management Process
& Organisational
Behaviour : 18
Evolution of Management
UNIT 2 EVOLUTION OF Thoughts
MANAGEMENT THOUGHTS
NOTES
Structure
2.0 Introduction
2.1 Unit Objectives
2.2 Classical Approach
2.2.1 Scientific Approach (1900)
2.2.2 Administrative Theory- Henry Fayol
2.2.3 Bureaucracy- Max Weber
2.3 Neoclassical Approach
2.3.1 Hawthorne Studies- Elton Mayo
2.3.2 Human Relations Approach
2.3.3 Behavioral Approach
2.4 Quantitative Approach
2.5 System Approach
2.6 Contingency Approach
2.7 Modern Approach
2.7.1 Contribution of Peter Drucker
2.8 Summary
2.9 Key Terms
2.10 Questions and Exercises
2.11 Further Reading and References
2.0 Introduction
Origin of management can be traced to ancient roots. Many books were produced
during ancient and medieval time that contained advice about how the kings should
administer and govern their territory. “The Prince”, by an Italian author Nicco Machiavelli
and “Arthashatra” by chanakya are examples of conceptualization of management
practices during those times. The ancient monuments and irrigation systems of the
medieval period required organized and coordinated efforts of thousands of workers,
artisans, architects etc, which was not possible without the use of sound management
practices. Industrial revolution marked the beginning of modern management thought.
The driving force in shaping what management is today is the urge of the human being
to improve and flourish. After industrial revolution search began to find better ways to
utilize organizational resources. With the rise in use of machine and large scale
Management Process &
mechanized manufacturing new problems were identified which resulted in the Organisational
development of classical approach. After classical approach many other school of Behaviour : 19
Evolution of Management thoughts were developed that added value to the previous school of thought and helped
Thoughts in aligning management practices to the ever changing dynamic environment. The
classical approach was followed by neoclassical approach, quantitative approach,
systems approach, contingency approach and modern approach.
NOTES
CLASSICAL APPROACH
The major contributors of classical approach were F.W Taylor, Max Weber and
Henry fayol.
Management Process & 2.2.1 Scientific Approach
Organisational
Behaviour : 20 Frederick W. Taylor known as the father of scientific management is the most
famous management pioneer. He rose from the position of common laborer to chief Evolution of Management
engineer in just 6 years. The goal of Taylor was to find out “one best” way to perform Thoughts
a task. In order to do so he did time and motion studies. One of his experiments was the
study of workers loading pig iron to rail car. Taylor first tried to break tasks into elementary
NOTES
movements like walking speed, carrying positions, bending etc. and noted the time of
each elementary movement with a stop watch. After that Taylor tried various
combinations of procedures, tools and technique to arrive at “one best way”. He also
used rest periods of specific duration and interval to improve the output. Taylor also
developed incentive plans for workers to improve their performance. With his efforts
Taylor was able to increase the efficiency of workers from 12 to 47 tons per day.
In 1911, Taylor published his famous book “principles of scientific management”.
Later on Henry Gantt, disciple of Taylor developed charts for use in planning and
controlling. Frank Gilbreths, an associate of Taylor developed micro motion study in
which he identified seventeen micro motions known as herbligs to help analyze any
worker movement. The main principles of scientific management are as follows:
The task should be designed scientifically and not by the old rule of thumb methods.
Selection, training and development of workers should be based on scientific methods.
There should be a proper match between job and worker’s skill. There must be division
of labor thus increasing specialization. There should be equal division of responsibility
between management and workers and close cooperation between them.
Taylor summed up his philosophy in these words:
1. Science, not rule of thumb- People should develop logical and scientific
methods to do a job.
2. Harmony, not discord- People should avoid conflict at work place.
3. Cooperation, not individualism- Teamwork should be given importance.
4. Maximum output, in place of restricted output.- Optimum utilization of
organizational resources.
5. Development of each man to his greatest efficiency.
6. Equitable distribution of work and responsibility between management and
labor.
Limitations
Scientific management did not take psychological aspects of workers. Workers
were treated as economic tools. They had to perform same task over and over again
leading to boredom and monotony.
2.2.3 Bureaucracy
Max Weber, a professor of political economy in Germany propagated the concept
of highly formalized structure. He argued that organizations can reduce variability through
Management Process &
formalization of behavior by introducing bureaucratic organization. This will make the Organisational
activities of the organizations predictable and easy to control. The main features of Behaviour : 23
Evolution of Management bureaucracy are given below:
Thoughts
Rational legal authority: the managers do not exercise authority according to
their whims and fancies. Instead authority is exercised through a system of rules and
NOTES procedures attached to his position. In the bureaucratic structure the rules, decisions
and dictions of the managers are written down so that they can act as guidelines in
future for decision making.
Hierarchy: The formal hierarchial structure is a firmly ordered system of
supervision and subordination in which each level of operation follows the direction of
the level above and gives the directions to the level below.
Division of work: The total work is divided into small units of routine, well defined
task. Each unit takes a form specialized job. When the worker does the same job
repeatedly efficiency is increased and the worker becomes an expert in course of time.
Rules, regulation and procedures: in order to ensure predictability and uniformity
of behavior, rules and procedures are established. Employees are expected to follow
the rules and procedures strictly.
Records: files are maintained to record the actions and decision taken in the
organization for future reference.
Impersonal relationship: the decision should be made strictly according to rules;
there is no room for personal relationships, sentiments or emotions in decision making.
Competence of employees: the employees are selected on the basis of
qualification and competency and promoted according to their ability and skills. Their
competency is improved through regular training and orientation program. The experience
and achievements of the employees are valued. Only those employees form the part of
management who are able and efficient.
Adavntages of Bureaucracy
1. Bureaucratic structure helps in gaining the advantage of specialization;
specialization improves efficiency by reducing mistakes, increasing speed
and quality of work.
2. Highly formalized structure based on rules, regulations, specialized task lead
to predictability. There is no room for uncertainty and chaos. Everyone knows
what is expected from them and no one crosses his or her boundaries. The
problem of role ambiguity is highly reduced.
3. Rules and regulations are formed after deliberate discussions. Pros and cons
of every rule are discussed. The decisions taken are more rational and not
subjective.
4. Promotion, selection is on the basis of qualification and competence there is
no room for biasness or privileged treatment for some. Rules and regulations
are uniform for everybody. Such equitable treatment leads to high degree of
democracy.
Management Process & Disadvantages of Bureaucracy
Organisational
Behaviour : 24 1. The bureaucracy is characterized by highly rigid and static structure. There
is strict adherence to rules. The rules are not changed frequently. The Evolution of Management
environment in which the organization function is very dynamic, thus making Thoughts
rules redundant sometime. In the name of following rules people may also
avoid their responsibility.
NOTES
2. Too much emphasis on rules gives no space for emotions and needs of people.
This is a highly mechanized structure where innovative ideas of people do
not get much attention.
3. Too much compartmentalization of activities do not allow people to do those
activities that they are capable of performining but are outside their boundaries.
In bureaucratic structure there is a tendency for continuing a job even if it is
not required by the organization.
4. Superiors try to increase their power and status by adding more people and
more resources to their departments, even if they are not necessary for the
organization. Such approach of superiors leads to empire building.
5. Due to rigid hierarchy, vertical line of communication and necessity to record
every action as well as decision on paper makes the files move through
elaborate official channels causing inordinate delays. Due to red tapism
decision cannot be taken promptly.
Classical theory made available a scientific base for management studies. It laid a
foundation for education and training of managers. It was for the first time that universal
nature of management was recognized. But the limitation of this approach is that role of
humans and their contribution towards organizational effectiveness has been discounted.
The organization should be looked as ‘whole’ and as a part of the larger external
environment. Dealing with the various parts of an organization separately can be
erroneous for e.g. if the marketing department brings huge orders from the customers
through aggressive campaign while the production capacity is not adequate to meet
those orders in time then the overall organizational performance will get hampered .
The manager should attempt to increase the overall effectiveness of the system rather
than effectiveness of any sub part of the system in isolation.
There exists a system boundary which separates it from the environment. The
boundary is rigid in case of closed system while it is flexible in case of open system.
The boundary determines that which part is internal to the system and which part is
external to the system for e.g. employees are internal to the organization system and
customers are external to the organization system.
Synergy is said to happen when two plus two becomes five, in other words when
the whole is greater than parts. Synergy can be attained when all the parts of the
organization are well coordinated and function properly so that output is optimal.
The advantage of this approach is that the managers are forced to see the broader
picture, and look at the totality of the situation before arriving at any decision.
The limitation of the system approach is that it does not have specific tools and
techniques for the manager to practice. The conceptual framework of this approach is
criticized for being too vague.
Management Process & The major contributors of the system are Chester Bernard, R.A Johnson, Nesbit
Organisational Wiener and E. L. Trist.
Behaviour : 28
Evolution of Management
2.6 Contingency Approach Thoughts
2.8 Summary
Many Academician and practicing manager have contributed to the discipline of
management with different approaches towards it. Industrial revolution triggered the
search of one best method of doing work . Scientific management aimed at introducing
systematic study of work methods in order to improve efficiency. Bureaucracy advocated
mechanistic structure comprising of legal authority rules, regulation and procedure for
formalizing organization’s behavior. Administrative management proposed process and
principles of management. Neoclassical approach focused on human behavior and group
behavior. They emphasized that a motivated and satisfied work force contribute more to
the organizations objectives. Quantitative approach argued that decision making can be
highly improved through the use of operations research, mathematics and statistics
.Systems approach emphasized that manager should have an eagle view of the situation.
Proper balance should be sought between requirements of various interrelated parts of
the enterprise and the goal of the enterprise as a whole. According to contingency approach
appropriate management action depends upon the situation. Every situation has unique
characteristics and hence there cannot be a universal management practice. Modern
management picks up important valuable concepts from all the previous approaches and
combines them to make it relevant to the present business scenario.
3.0 Introduction
Planning is the basic and crucial function of management which provides foundation
to other functions such as staffing, directing, organizing and controlling. To plan is to
forecast about future course of action detailing about what is to be done, how it is to be
done, what timeframe would be required and who will execute it. It necessary has to
fulfill a purpose. Planning in an organization is done to determine its objectives, goals,
programs, policies, procedures and means to achieve them. In the words of Koontz
and O’Donnell, “Planning is deciding in advance what to do, how to do it, when to do it,
and who is to do it.” According to Urwick, “Planning is a mental predisposition to do
things in orderly way, to think before acting and to act in the light of facts rather than
guesses”.
They are the basic assumption regarding the business environment, which help
make planning realistic. These are the broad frame work within which plans have to be
formulated. These are of following types:
(1) Controllable, semi-controllable and uncontrollable factors: Controllable
premises are completely under the control of management. The examples
are machines, materials, and funds. Semi-controllable premises are to a certain
extent under the control of management like marketing strategy. Uncontrollable
premises are beyond the control of management. Examples are government
policy, weather conditions, natural calamities, etc
(2) Internal and external factors: Internal Premises are the part of
business itself. These are the internal environment of the business which
includes the expertise of the workers, policies, philosophy of management,
etc. External Premises constitute the external environment in which the
business operates without having any control over it. The economic, political,
social, cultural and technological environments are examples of external
premises.
Establishing
NOTES
Objectives
Securing Develop
Coperation and Planning
Particpation Premises
Formulate Determine
Derivative Plan Alternative
course of action
Select the Best
Evaluate
Course of Alternatives
Action
Generally, there are two types of plan, Standing Plan and Single Use Plan. Standing
Plans are long term plan and are of repetitive nature. This is because their key area
is organizational situations that occur frequently. A single use plan as the name indicates Management Process &
is for short period and for only one use. The use of this kind of plan is just once, or at Organisational
Behaviour : 39
Planning most, couple of times, as the key area for such plan is a unique or exceptional situation.
(5) Rules: these are precise statements on how a situation needs to be tackled.
These are management decision regarding what one needs to do and what one
should refrain from in a certain situation. These are regulatory instructions to
people on their behavior and action. One can identify them as the ‘organization’s
commandments’ to ensure that the environment has discipline and well defined
code of conduct for controlling the behavior of the people of the organization. A
rule is distinct, clear and has no scope of flexibility or discretion, therefore the
infringement of rules carries a penalty.
(6) Strategy: The word strategy has been derived from Greek word ‘stratçgia’,
meaning the art of troop leader. The word has been more commonly used in
military environment. In business management it means policy formulation by top
management which helps in interpretation and understanding the meaning of other
policies. A strategy is a unique plan devised to cope up with the actions and
Check Your Progress reactions of the competitors. In the words of C. T. Hardwick and B.F. Landuyt,
1. What are the “The word strategy is used to signify the general concept and salient aspect of
limitations of planning? gamesmanship as an administrative course designed to bring success.” The purpose
2. What are the essential of formulating strategy is to provide competitive advantage by capitalizing on its
characteristics of sound own strength, grabbing opportunities in environment and saving the organization
plan? from the threats posed by the environment. According to john Argenti “strategic
planning is a careful, deliberate taking of decisions which affect or are intended to
affect the organization as a whole, as opposed to only parts of it, over long periods
Management Process &
of time”.
Organisational
Behaviour : 42
3.9.2 Single Use Plan Planning
(1) Programs: An action based, result-oriented and unique plan to meet a specific
business condition is termed as programs. These are formed to accomplish a
project undertaken. Since the projects are accomplished over a certain period of NOTES
time these programs also are short lived.
(2) Budget: An estimated or forecasted quantifiable statement discussing the
expectation is termed as Budget. It is forecasted statement expressed numerically
of what an organization wants to achieve and what will be the expenses to achieve
it. It is a financial plan for a specified period of time generally illustrating movements
of funds (inflow and outflow).It is designed to allocate resources of an organization
and forms a standard for performance appraisal.
(4) Strategy implementation and control: this involves resource mobilization and
allocation, development of appropriate system and procedure and designing of
organization structure. Programs, schedules, tactical and operational plans are
developed. Various controls are developed to monitor the progress of strategy
implementation and its contribution towards organizational goals is evaluated. If
required the strategy should be molded to suit the changes in the external
environment.
Action Planning
Final Appraisal
(1) Preliminary goal settings: The initial stage in the process of MBO is to
identify the organizational objectives. The top management generally in
consultation with other managers determines it. The important aspect in
determining these is identifying “Key-Result Areas’ (KRA). Once these goals
are identified they must be shared with other members.
(2) Setting specific performance objectives: the organization goals can only
be achieved if they are divided and every individual performs the given task.
Therefore every individual should be informed about the task that is expected
from them. The subordinate should be consulted before providing with the
resources for performing the task. The resources provided should be
proportionate according to the goals. Goal setting is a two way process it is
not imposed on the subordinate by the superior. Superior suggests a goal to Management Process &
subordinate and subordinate accepts it. Organisational
(3) Development of action plans: after the goals are set actions plans are Behaviour : 45
Planning developed to bring the things into force. Procedures are formed for
achievement of set goals. Under MBO the subordinates and superior jointly
and interactively perform a given task. The superior gives suggestion and the
subordinates perform. The objectives are so formed that every objective
NOTES accomplished at lower level contributes to the fulfillment of the greater goal.
For the evaluation of key areas check points are also established.
(4) Periodic performance review: at specified time interval evaluation of the
work is done with joint participation to identify shortcomings or deviations if any.
Subordinate and superior sit and discuss about the problem areas identified.
Feedbacks and suggestions are made available for the potential development.
The main purpose is to improve the quality instead of focusing on criticism.
(5) Final appraisal: at the end of the year, performance of the individual is
evaluated on the basis of task completed. The standards which are set are
compared with the actuals. The actual work is evaluated based on which the
appraisal or rewards of the subordinate is decided.
3.11.3 Importance of Management by Objective
(1) Helps in reducing wastage of resources as the resources are provided in
proportion to goals set.
(2) Helps in making planning effective with the help of action plans and result
oriented planning.
(3) The subordinate is able to relate his goals with organizational objectives and
feels proud of his contribution towards the organizational objectives
(4) Induces team spirit with democratic and participative style of work.
(5) It gives subordinate valuable feedback through the system of periodic
evaluation. The employee becomes aware of his progress and can take timely
corrective action if he is lacking somewhere.
(6) Induces employee morale as their participation is given due consideration.
Also the rewards are according to the contribution which raises their morale.
(7) It acts as a effective tool of self control as every individual know what is
expected out of him, which help in self regulation.
3.11.4 Limitation of Management by Objective
(1) Rigidity: the problem is that it sometimes fails to incorporate prevailing trends
and the current scenario of the organization.
(2) Goal Setting: which criteria should be given more preference quantity or
quality? The goal should be long term or short term, these are various issues
confronted while setting goals. Sometimes overemphasis on measurable goals
can neglect crucial qualitative goals like job satisfaction.
(3) Time consuming: setting up of goal that are measurable and that too in
participative style requires a lot of time. Instilling confidence, deciding on
task all these require a lot of time. The process of evaluation and performance
appraisal involves considerable paper work and time.
Management Process & (4) Unhealthy environment: sometimes more emphasis is laid on work rather
Organisational than improving the quality which produces lot of pressure and unhealthy
Behaviour : 46
competition between work group. Planning
(5) Participation problem: at times to avoid time wastage, superior do not
consult subordinates and set the goals authoritatively which loses the essence
of the process.
NOTES
(6) Managerial skill: some managers may not be very good at human skills.
They may not be effective in motivating and leading people towards the goal.
The subordinate may not get necessary guidance and counselling during the
process.
3.13 Summary
Planning is a primary and crucial function of management which is followed by
other functions such as staffing, directing, organizing and controlling. To plan is to forecast
about what is to be done, how it is to be done, when it is to be done and who will do it.
Planning is goal oriented, continuous, forward looking and intellectual process. It provides
direction, facilitates control, reduces risk, improves morale and aids in coordination. A
sound plan should be realistic, flexible and should contribute towards organizational
objectives. Planning starts with determination of objectives and development of planning
premises. Alternative courses of actions are identified and evaluated. The best course
of action is chosen and implemented. Planning is costly and time consuming. Its strength
depends upon the accuracy of data and manager’s acumen. Planning may sometimes
become redundant because of changing environmental conditions. The plans can be
either standing plans or single use plan. The standing plans include strategy, policies,
rule and procedures. The single use plans are programs and budget. The planning can
be done at the operational level or strategic level. Planning can be classified according
to time frame also; they can be short term or long term.
Management by objective is a management tool in which measurable goals are
set jointly by superior and subordinate and the contribution of the subordinate is measured
in terms of his accomplishment of the goals. The goals set in MBO are not thrust on the
subordinate by supervisor. The superior subordinate then develop actions plan followed
by periodic performance review. MBO is result oriented; it helps in minimizing of wastage
and motivates subordinates. It is very time consuming and requires managerial skills on
part of the supervisor.
4.0 Introduction
The act of pulling together different parts of organization to unify them and to
form a collective group for attaining organization’s predetermined goal is called
coordination. In the words of Mooney and Reelay, “Co-ordination is orderly arrangement
of group efforts to provide unity of action in the pursuit of common goals”. It aims at
establishing harmony between individuals efforts headed for realization of collective
goals which is an input to success of management. According to Henry Fayol “To
coordinate means is to unite and correlate all activities”. Therefore it is called as the
essence of management and is inherent and innate to all other functions of management.
Coordination and cooperation are often mixed up, but these two although sounds
alike are different things. Cooperation can be defined as combined efforts of people
who unite willingly to attain particular objectives. It indicates purely the eagerness of
Management Process individuals to facilitate each other.
& Organisational
Behaviour : 50 Cooperation is a voluntary effort; coordination is a conscious and deliberate effort.
It is the effect of voluntary outlook for support of a collective group. Coor-dination is a Coordinating and Organizing
much more wide term necessitating not only the willingness to cooperate but to find
methods to coordinate. Cooperation is automatic while coordination is to be induced. It
inculcates cooperation in itself. In the words of McFarland, “Coordination is a far more
NOTES
inclusive term embracing the idea of cooperation. Cooperation, that is mere willingness
of individuals to help each other, cannot serve as a satisfactory substitute for
coordination.” Coordination has a wider scope.
NOTES
Figure 4.2
(1) Identification of activities: the process starts with fixing the objectives to
be achieved. For the purpose of achievement of objectives various activities
are identified. Unless the work done is identified, goal achievement is not
possible. The total work is then divided and distributed among different
departments. For the proper identification of various activities grouping is
done so that work is not duplicated. It also enables top manager to concentrate
more on important issues.
(2) Grouping of activities: once the work is divided it should be closely
coordinated among different working groups. Groups with similar activity
should be aligned together so that double incidence of work could be reduced.
This also helps in reducing wastage and smooth flow of work. This activity is
generally performed under the supervision of senior managers.
(3) Assignment of duties: the duties and responsibilities of every member or
employee are distinctly defined. This would lead to the selection of appropriate
person for the job. This helps employee to understand precisely what is
expected out of him. Consequently, this enhances efficiency.
(4) Delegation of authority: every employee is delegated authority so that
work could be done. Mere responsibility without authority will lead no purpose.
Authority is the right to assert orders and the power to obtain obedience. The
authority provided to an employee should to be in proportion to the responsibility
given to him.
Check Your Progress
1. Distinguish between
co-operation and 4.9 Span of Control
coordination.
2. What are the principles Often referred as Span of Management’ or ‘Span of Attention’, the concept of
of coordination. Span of Control owes its existence to British Army General Sir Ian Standish Monteith
Hamilton (1853-1947) who introduced and popularized this concept through his book
Management Process titled “The soul and body of an army.” According to Louis Allen, “Span of control refers
& Organisational to the number of people that a manager can supervise. The simplest way to understand
Behaviour : 54 span of control is the number of subordinates a superior can manage. “Span of control”
comprises two terms, ‘span’ and ‘control’. While the term ‘span’ here means the utmost Coordinating and Organizing
limit of supervising number of men, ‘control’ means legitimate authority to order or
direct them. Span of Control in management therefore means the maximum number of
people (to be more precise, subordinates or employees) that a manager can efficiently
NOTES
direct, control and supervise. Although there is no consensus on the number of
subordinates a supervisor should have.Most management experts hold the opinion that
at the top level of management, it should not exceed 1:6 while at the lower level of
management, it should not go beyond 1:20. This implies that the senior at the top level
can have a maximum of 6 subordinates under his control and that at lower level the
manager can have 20. The span of control can be narrow or wide according to the
organization preference.
Manager
Subordinate Subordinate
Manager
(1) Nature of work: the nature of work is a crucial factor in determining the
span of control. If the work is complex in nature a narrow span of management
is used and if it is simple a wide span of control is used. NOTES
(2) Type of technology: if an organization is employing latest and complex
technology, narrow span of control will be opted while if it is employing
traditional one which is in use for a long time then a wider span of control can
be perferred.
(3) Ability of manager: if the manager is experienced and competent than he
can manage a large number of employees and in that case the span of control
can be wide and vice- versa.
(4) Capacity of subordinates: professionally qualified and skilled subordinate
require less supervision, in this case a wide span of control will be helpful. If
the subordinates are novice and lack proper skill a narrow span of control
will be preferred.
(5) Degree of decentralization: if the organization has more degree of
decentralization wider span of control will be there, while the centralization
leads to tall structure and calls manager to perform several duties therefore
he may opt for narrow span of control.
(6) Planning: clarity in planning also determines the span of control. If the planning
has clarity the wider will be span of control is advocated, as the supervision
tends to decrease with clear laid plans and procedures.
(7) Staff assistance: if the staff assisting bears equal competency in tackling
situation, than the manager can easily go for wider span of control.
(8) Communication technique: if direct contact is to be established using face
to face communication the span of control tends to be narrow. If new and
electronic methods are used communication can be effective at large therefore
wider span of control can be effectively used.
r = n(2n-1+n-1)
Criticism:
The theory is not all pervasive. It ignores several critical determinants on
which span of control depend.
The theory exclusively deals with superior and subordinate relationship.
4.10 Authority
4.11 Power
Power is the ability to influence and is a broader concept than authority. It refers
to the ability and capacity of influencing the behaviour and attitude of others so that
they do those things that they would not do otherwise.
Sources of power
French and Raven identified five sources of power. They are as follows
Legitimate Power
It is also known as positional power that a person derives from his or her position
in the formal hierarchy of an individual. Job description gives the power to the manager
to assign duties and supervise the work of subordinates.
Expert Power Management Process
Individual derives expert power from possessing expertise, special skills, or & Organisational
Behaviour : 59
Coordinating and Organizing knowledge. Due to his problem solving abilities he may be highly valued by the
organizational members. Dependency is the key to power. If other members are
dependent on the person to perform a critical task then the person becomes indispensable.
His decision and opinion are highly valued and he becomes powerful and influential.
NOTES
Referent Power
It is derived from possession of certain pleasant personality traits or charisma by
the individual. These traits help in cultivating healthy interpersonal relationships. The
person is admired, respected and followed.
Coercive Power
It is based on the fear of the negative outcome that the individual perceives if he
fails to obey the orders or decision of the person possessing coercive power. It is
derived from person’s ability to threaten, punish, demote, dismiss etc.
Reward Power
It arises from the person’s ability to influence others by way of distribution of
rewards that others view as valuable. The rewards include monetary incentives,
favourable appraisal, preferred work shifts etc.
4. Level of Higher the level of manager Does not depend upon the
Management higher is the authority he level of management
possess. even a subordinate
can have power over
superior due to his expertise.
4.14 Centralization
4.15 Decentralization
Employee morale Lower, as they are treated High, they are given due
more like machines, only importance in performance
task are given to perform of the activities.
4.18 Summary
Management Process
& Organisational
Behaviour : 66 Coordination aims at synchronizing the work performed by organisational member
to ensure that the organisation goals are achieved with efficiency. Coordination is a Coordinating and Organizing
deliberate effort as compared to cooperation which is voluntary. Coordinates promote
team work, efficiency and interdepartmental harmony. Coordination should start at
early stage and should be a continuous process. Effective communication, integration
of plans, appointment of special coordinator, sound leadership and direct personal contact NOTES
is essential for achieving effective coordination.
Organising lay down the formal relationship among employees and resources to
achieve organisational goals. Steps in organising include identification of activities ,
grouping of activities , assignment of duties and delegation of authority. Span of control
refers to the number of subordinates that work under the supervisor. It can be narrow
or wide depending upon nature of work, type of technology, ability of managers and
subordinates, degree of decentralisation, clarity in planning and effective communication
technique. Authority is the right to make decisions and give instructions. The authority
can be line, staff or functional. Power is the ability to influence. The five sources of
power are expert power, referent power and reward power, coercive power and
legitimate power. Authority can be delegated, while delegating certain principles should
be kept in mind such as parity of authority and responsibility, unity of command, exception
principles etc. Problems of delegation are due to reluctance on the part of delegator
and subordinate. In centralisation, power remains concentrated at top level and in
decentralization authority is delegated to lower levels .The appropriate mix of
centralization and decentralization depends upon size and complexity of organization,
speed of decision making, degree of diversification , dispersal of operations attitude of
top management etc.
Management Process
& Organisational
Behaviour : 68
Departmentation and
UNIT 5 DEPARTMENTATION AND Structural Formats
STRUCTURAL FORMATS
NOTES
Structure
5.0 Introduction
5.1 Unit objective
5.2 Steps in Designing Organization Structure
5.3 Factors Effecting Organizational Design
5.4 Features of a Good Organization Structure
5.5 Departmentation
5.6 Basis of Departmentation
5.6.1 Departmentation by Function
5.6.2 Departmentation by Product
5.6.3 Departmentation by Territory
5.6.4 Departmentation by Customer
5.6.5 Departmentation by Process
5.7 Types of Organization Structure
5.7.1 Traditional Concept
5.7.2 Modern Concept
5.8 Summary
5.9 Key Terms
5.10 Questions and Exercises
5.11 Further Reading and References
5.0 Introduction
Management Process
5.3 Factors Effecting Organization Design
& Organisational
Behaviour : 70 Organizational structures can tend to be either organic or mechanistic which
represents the two opposite ends of the organizational continuum . Departmentation and
Structural Formats
Organic structure is dynamic one and employs free flow of communication. It is
characterised by decentralized decision making and high integration among various
departments. Integration is mainly achieved through task force and team building. It NOTES
has a wider span of control leading to a flat structure. Departmentalization and degree
of specialization is low.
Mechanistic structure has a rigid structure and works in relatively stable
environment. It is characterized by centralized decision making and high degree of
standardization and formalization. Span of control is generally narrow leading to a tall
structure. Departmentalization is rigid and specialization is high.
Following are various important factors affecting organization design.
— Goals : the very existence of organization is for the achievement of certain
predetermined goals. An organization structure should be designed in such a
way that it facilitates the achievement of its goal effectively and efficiently.
— Strategy : the structure of a business organization bears a relationship with
the strategy a business adopts. Strategy is a conditional plan developed by
top managed with precision keeping in mind SWOT analysis of the business.
Strategy also defines the business environment for the operation of
organization. With the changes in business environment an organization may
shift its structure from centralized pattern to decentralized pattern.
— Size : large organization will be more decentralized, formalized, greater
specialization and will emphasis more on documentation. With increase in
sub divisions levels in hierarchy also increase. Thus the size or scale of operation
effects the organization.
— People : the organization structure should reflect the philosophy of the people
who are a part of the organization. What value system management wish to
inculcate should be taken in due consideration while designing organization
structure. Management having faith in theory X will have a mechanistic
structure while those having belief in theory Y will have organic structure.
— Technology : technological advancement has a great impact on the structure
of the organization as the improvement in the technology reduces cost and
enhances efficiency. Technology comprises employment of various tools and
techniques including human know-how that are used for the achievement of
goals. For customized goods, small batch production is used, while uniform
goods are generally produced in mass scale. In small batch production the
organization have more flexible structures while mass production makes
organization structure rigid. Organization structure is also affected by the
type of business. Some process can work well in organic structure while
some are best suited for mechanistic structures.
— Environment : the atmosphere in which a business operates constitutes its
Management Process
environment. It includes cultural, sub-cultural, political, legal and several other
& Organisational
factors that affect business. Either the environment is static or dynamic. In a Behaviour : 71
Departmentation and static environment customers’ needs can be well predicted. In this condition
Structural Formats the organization tends to have a mechanistic structure. In a dynamic
environment the future remains uncertain hence the demand cannot be
predicted, the organization would prefer an organic structure.
NOTES
5.5 Departmentation
There are different ways in which an organization may form deparments, out of
which some important methods are listed below:
– Departmentation by Functions
– Departmentation by Products
– Departmentation by Territory
– Departmentation by Customer
– Departmentation by Process
CEO/Managing
Director
CEO/Managing
Director
Management Process
& Organisational
Behaviour : 75
Departmentation and Difference between Product and Functional Departmentation:
Structural Formats
Functional Departmentation Product Departmentation
1. Useful for all types of firms. 1. It is only beneficial when the product line
NOTES
is complex and diverse.
Managing
Director/CEO
CEO/Managing
Director
CEO/ Managing
Director
The primary task of the organization structure is to allocate task and delegate
authority and assign responsibilities to form various jobs and position. The distribution
of work and delegation of authority can be done in several ways giving rise to various
organization structures. The organization structure can be divided into Traditional or
Check Your Progress
Modern structure.
1. What are the advan-
tages and disadvan- 5.7.1 Traditional Concept
tages of
This is the oldest method based on functional division and departments. These
departmentation by
organizations follow hierarchical structure. Kinds of structure under traditional structures
process?
2. What are the benefits are:
of departmentation by Line structure
customer? Line and staff structure
Line Structure
Management Process This is the primitive type of organization structure. It follows top down flow of
& Organisational authority often called as scalar or military type. The relationships are in the form of
Behaviour : 78
unbroken vertical levels. The manager had direct authority over the subordinates and Departmentation and
the later are directly accountable to their seniors. In an ideal line type structure there is Structural Formats
no existence of service or support units. These organizations strictly adhere to the
principle of unity of command. In a line structure the manager has a wide span of
NOTES
control. Line structure is generally used in small organization like small accounting
offices, industry with continuous process and law firms. CEO can effortlessly give
information and direction to subordinates and decisions can be made swiftly.
CEO/ Managing
Director
Figure 1
Line-and-Staff Organization
Legal Advisor
Management Process
& Organisational
Behaviour : 81
Departmentation and
Top Level
Structural Formats Management
NOTES
Project Project Project Project
Manager 1 Manager 2 Manager 3 Manager 4
Matrix structure
Matrix structure is a recent concept introduced in USA in 1960. It is a hybrid
structure in which two different lines of authority vertical and horizontal are combined
together. It combines functional structure and project structure to cope with the
Management Process requirements of expansion and complexities in a business organization. In a matrix
& Organisational structure, an employee works not only with the teams and projects but also within their
Behaviour : 82
own department. Departmentation and
Structural Formats
The Functional Manager exerts authority downwards while the Project Manager’s
authority flow horizontal. Consequently, the authority flows downwards and across
making it “Matrix Organisation”. NOTES
Project Manager A
Project Manager B
Project Manager C
Project Manager D
Project Manager E
NOTES 4. Power Conflict: there maybe conflict of power between the project manager
and the functional manager. Both give preference to their own interest which
results in conflict.
5. Low Morale: Because of excessive work burden, the morale of the
employees in matrix structure is very low.
6. Complexity: undoubtedly the hybrid structure such as matrix involves plenty
of complexities and is most difficult structure.
7. Fixation of Responsibility: in case if anything goes wrong with the project
fixation of responsibility cannot be done. The project manager may hold
functional manager liable for this and so on.
Network structure
These are often termed as virtual organizations. In this structure the main firm
outsources most of its functions to other organizations and coordinates their activities.
With the development of business environment, the market place has expanded and the
boundaries have been decreasing. It lays emphasis on decentralization of work and
gaining specialization and economies. These organizations do not have any boundaries
to perform their functions. Digital technology and specialized employees are the core
strength of this structure. However it lacks any formal hierarchy line. The
critical management functions are deciding on what to outsource and whom to outsource.
Distribution
Firm
(Korea)
Technology
(China)
5.8 Summary
Organization structure describes the relationship between work and people and
among people indicating the flow of work, authority and responsibility. The designing of
organization structure involves; activities analysis, decision analysis and relational
analysis. Organizational structure can be mechanistic or organic depending upon goals,
strategy, technology, size, employees and external environment of the organization. A
good organization structure should have unity of direction and command, parity of
authority and responsibility, balance between centralization and decentralization, division
of work, flexibility etc. Organization is divided into small administrative units known as
departmentation. The departmentation can be done on the basis of certain key factors
like function, process, product, territory, customer etc. The traditional organization
structure were line and line and staff structure. The disadvantage of the line and staff
structure is that it gives rise to line and staff conflict. The three modern alternatives of
organization structure are project, matrix and network structure.
Management Process
& Organisational
Behaviour : 86
Directing and Controlling
UNIT 6 DIRECTING AND CONTROLLING
Structure NOTES
6.0 Introduction
6.1 Unit objectives
6.2 Concept of Directing
6.3 Significance of Directing
6.4 Principles of Directing
6.5 Concept of Controlling
6.6 Significance of Controlling
6.7 Limitation of Controlling
6.8 Controlling Process
6.9 Essentials of Effective Control
6.10 Techniques of Control
6.10.1 Supervision
6.10.2 Analysis and Interpretation of Financial Statements
6.10.3 Budgetary Control
6.10.4 Breakeven Analysis
6.10.5 Return on Investment
6.10.6 Management by Objectives
6.10.7 PERT /CPM Techniques
6.10.8 Management Information System
6.10.9 Management Audit
6.10.10 Human Resource Accounting
6.10.11 Responsibility Accounting
6.11 Human Resistance to Control
6.12 Overcoming Resistance to Control
6.13 Summary
6.14 Key Terms
6.15 Questions and Exercises
6.16 Further Reading and References
6.0 Introduction
NOTES 3. Direct supervision : directing becomes efficient if there is direct personal contact
of supervisor and subordinate. It removes doubt, enhances confidence and morale
of the subordinates. Thus, wherever possible direct supervision should be employed.
4. Managerial communication and comprehension : effective communication
is the key to successful direction. The system of communication employed should
be such that a two way channel can be established. It is also important that the
employee understand and comprehend what is expected. This will remove
confusion and fewer queries.
5. Maximum individual contribution : the objectives of organization can be
achieved at the level when each and every individual in the organization makes
utmost contribution towards its achievement. Therefore, the managers should make
an effort to bring forth maximum feasible input from each subordinate.
6. Strategic use of informal communication : the various informal groups present
should be utilised in such a way so that it strengthen formal relationships. The
quality of effectiveness of direction improves with better relations.
7. Effective leadership : an effective leader inspires the followers to perform their
activities without any dissatisfaction. Managers should presume the role of effective
leaders to ensure proper direction. They should guide the subordinates not only
professionally but in their personal problems too. It establishes better relations.
8. Appropriate motivation technique : the direction techniques employed by the
manager should be such that it ensures efficiency of direction. The techniques
used should be appropriate according to the need of the subordinates. It can be
financial rewards , praise, promotion or job enrichment. It should be apt according
to the situation.
9. Principle of follow up : directing is a never ending process. It does not end after
the superior issues orders and instructions. In fact the manager has to keep a
track on the activities of the subordinates such as their performance, the problems
they are confronting and so on. In the light of his observation he can make changes
in his orders.
Henri Fayol is attributed with the credit of pioneering the definitions of control for
management science. “. In the words of Henry Fayol, (this is often called as the first
definition of controlling), “Management control can be defined as a systematic effort NOTES
by business management to compare performance to predetermined standards and
address deficiencies.” It can also be defined as “that function of the system that adjusts
operations as needed to achieve the plan, or to maintain variations from system objectives
within allowable limits.” In the words of Terry and Franklin “Controlling is determining
what is being accomplished - that is, evaluating performance and, if necessary, applying
corrective measures so that performance takes place according to plans.’’
Characteristics of Controlling
Control is not a onetime phenomenon instead it is a continuous process.
Control is one of the crucial management processes.
Control is all pervasive. It is entrenched in every stage of organizational
hierarchy.
Control is progressive. It tends to look forward.
Control is strongly correlated with planning.
Control is a mechanism for accomplishment of organizational functions.
1. Achievements of goals: with regular control, one can easily trace out what has
to be done and what is being done. If the actual work is not being done on set
standards, corrective measures can be taken which helps in the achievements of
goals.
2. Measurement of progress: it acts as a measure of progress. The time, expense
and resources involved in doing a particular task are estimated before the work
begins. The actual work done is then compared with these standards. This helps
in knowing to what extent the work has been done.
3. Uncover deviations and take corrective actions : it helps to compare and
find out the deviations of the actual and standard. The deviations are then corrected
to bring the performance of the enterprise as expected.
4. Revision of plans: the business environment is no more a static phenomena. It is
ever changing. Therefore the need to revise the plans as per the changing needs
of the business should be given due consideration. Business plans should be
carefully revised for effective control and this is an essential step of controlling
process.
5. Promotes coordination : coordination is an important function of management
and the coordinated function play a crucial role in business activities and work. It Management Process
& Organisational
connects the workers and their activities and encourages them with team spirit to
Behaviour : 91
Directing and Controlling move towards the common goal.Control acts as a middleman between the workers
and management to make available the necessary information and input to the
workers.
6. Psychological pressure : an effective control system motivates and inspires
NOTES
employees to give better performance. It acts as an inspiration to them, especially
when they are aware of the fact that there performance is being monitored and
their rewards are linked to better level of work performance.
7. Brings order and discipline : control function keep a check on the mistakes of
the subordinate which usually happen due to laxity and negligence. Due to controlling
process subordinates are aware that they are being monitored and hence they
become cautious while performing their duties. They tend to correct mistakes
before they become serious.
Management Process
& Organisational
Behaviour : 92 Figure 6.1: Controlling Process
A. Setting of standards Directing and Controlling
Establishing the criterion for judging the actual result is termed as standards.
These standards are the benchmark against which the actual performances are
compared. The standard setting should be realistic. It should be clearly defined. NOTES
Standards can be qualitative or quantitative standards. Qualitative standards are non-
measurable or intangible like managers’ decision making skill and human skills, attitude
of workers etc. Quantitative standards are measurable like time standard, cost standard,
income standard, output standard, quality standards, profit, etc. Controlling turns out to
be simple through establishment of these standards. The standards form the basis for
controlling.
Quantitative Standards
Time standards : It states the duration of time in which a particular activity
or a task should be performed for e.g. a pilot has to make a trip to the
destination in a predetermined time duration. Time standard can also be
expressed in units produced per hour, pages typed per hour etc.
Cost standards : it expresses the standard for input in terms of financial
expenditure. It includes the expenses incurred in performing a particular task.
It includes material cost per unit, labour cost, overhead cost per hour etc.
Cost standards specify the limits for expenditure.
Productivity standards : productivity standards set benchmark for output
input ratio. It is a measure of efficiency and can be expressed as output in
units per man hour or service to customers per hour.
Revenue standards : they set standards for value the organization derives
from its sales. They can take the following form
Income standards: this would include setting sales generated per
department, sales target per person etc.
ROI : Return on Investment is a comprehensive way of knowing the
performance of the business. It measures how efficiently capital employed
is being used for generating returns.
Quality Standards : standards for quality can be based on strength, hardness,
dimension, finish, chemical composition etc. which ensure the customer
satisfaction. Quality standards can set tolerance limit within which the quality
can be acceptable.
Qualitative Standards
There are certain intangible items that cannot be quantified such as goodwill,
employee morale etc. Though qualitative factors pose some difficulty in specifying the
standards as they cannot be easily measured; psychological tests, survey and sampling
techniques are sometimes used to specify limits or benchmark for them.
Important things to be considered while setting standards Management Process
& Organisational
(a) The standards should be precise and clear.
Behaviour : 93
Directing and Controlling (b) The standards should be objective and practical. It should be within the reach
of the enterprise and not something hypothetical.
(c) The standards should essentially be flexible and should be able to adopt the
NOTES changes.
(d) The standards should have the main focus on attainment of goals and should
be revised periodically according to the need of the organization.
B. Measuring Performance
The subsequent major step in controlling is to measure and monitor the performance.
Finding out variation becomes simple by measuring the real performance. The levels of
performance may sometimes be easy to measure or sometimes difficult. Measurement
of tangible standards is easy as it can be expressed in units, cost, money terms, etc. The
performance can also be measured through mechanical devices. These mechanical
devices help in quality check. Other way is through personal observation of the manager.
Statistical reports can also be employed to measure performance. It include the use of
bar charts, graphs etc. Qualitative 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 their level of motivation and attitude towards
work. This can be done by viewing reports of the organization; superior-subordinate
interaction can also be used for measurement of their attitude.
3. Budgetary Control
Budgetary control is often referred as traditional control technique. A budget is an
estimation done for the purpose of planning and controlling. According J.A. Scott “ It is
the system of management control and accounting in which all operations are forecasted
and so far as possible planned ahead , and the actual results are compared with the
forecasted and planned ones”. Budgetary control is a technique of establishing control
with the help of budgets. In fact budgets are most important constituents of financial
control .Budget is a statement of planned events expressed in quantitative and monetary
terms. Budgetary control can be done for every facet of a business ranging from income,
production, and so on. The various budgets are cash budget, sales budget production
budget, purchase budget, master budget etc. A budget committee is established for
budgetary control. Budgetary control has several advantages likes:
a. It makes planning precise and realistic.
b. It saves time and cost and establishes coordination among various
departments.
c. It helps in optimum utilization of resources.
d. It provides useful data that can be employed for filling tenders and quotation.
e. It prevents buck passing as it establishes responsibility.
f. It facilitates management by exception as it enables the management to
consider only those items that do not go according to the budget.
The budgetary control technique suffers from following disadvantages:
a. The efficiency of budgetary technique depends on how well the budgets
Management Process
have been prepared. The estimation, prediction and the data expressed in & Organisational
budget requires lot of precision failing to which the technique loses its Behaviour : 97
Directing and Controlling significance.
b. It restricts creativity and innovation and people are directed to work according
to the budgeted guidelines.
NOTES c. Creating budget is a time taking process and an exhaustive one.
d. The management should understand that the technique is tool used for effective
management, a means to an end, not an end in itself.
4. Break-even Analysis
BEP (break-even point) is a state at which the cost is equivalent to sales (the
state of no profit and no loss). The Break-even analysis is used as a control device. It
helps to find out the company’s performance and the minimum level of sales the company
needs to attain in order to avoid loss. If the sales are less than the minimum level the
company may not be able to recover cost. Subsequently the company can employ
collaborative steps to progress its performance in the given line.
BEP = Fixed Cost/Sale price per unit-Variable cost per unit
Advantages
(a) Helps in identifying minimum requirement of sales at which cost can be
recovered. Helps in analyzing the cost behavior with sales and its effect on
profit, thus profit can be estimated at various levels.
(b) The breaking up of cost component into fixed and variable cost helps
management to control cost.
Disadvantages
(a) Classification of cost is not possible every time.
(b) It assumes that cost and revenue function have a linear relationship which
may not hold true every time. The economies of scale may result in
disproportionate varying of cost.
(c) It assumes that technology, factor prices and product mix are fixed where as
in reality this may not hold true.
5. Return on Investment
This is also a financial tool. Investment consists of net working capital and fixed
asset employed in the business. The income or the profit generated is the premium that
the entrepreneur gets for his risk taking. Higher the ROI better is the performance of
the business and vice versa. The comparison of current year ROI with that of previous
years’ performance helps to know the progress of the business. It also facilitates inter-
firm comparisons. The area needing rectification can also be traced.
Advantages
(a) It focuses on most important aspect of business and that is profit.
(b) The departmental ROI can be established which help in better control and
Management Process facilitates decentralization.
& Organisational
Behaviour : 98 (c) It focuses on the efficiency in use of capital.
Disadvantages Directing and Controlling
(a) With fluctuation in prices, the ROI becomes difficult to estimate.
(b) The long term investment aspect is ignored. It is a short term phenomena.
MBO is a planning and controlling device and it can only be effective if it has
following features:
(a) The goals are fixed with the joint effort of the subordinates and supervisor.
(b) The performance of employee is periodically evaluated and regular feedback
for improvement is provided to the employee.
(c) Once the task is accomplished, due reward is given to the employee.
The success of this measure depends on the coordinated efforts of superior and
subordinates. Elements of biasness, lack of trust between superior-subordinate
relationships can significantly affect the working of the technique.
9. Management Audit
It is a process of evaluating performance of entire management. It reviews and
examines the entire management process and every function of management i.e planning,
organizing etc. Audit is done to find out the efficiency of the management. Therefore,
the company’s plans, objectives, policies, procedures, and all related aspect forming a
part of management are examined very vigilantly. This is generally done by a team of
experts. Data from different sources is collected and is analyzed. The findings detail
about managerial performance and efficiency.
Advantages
(a) It is an independent process, which means it has a very less element of
biasness or favouritism. It reflects true picture of business organization.
(b) Auditors usually are well qualified professional, there advises and suggestions
can benefit the overall organization.
Disadvantages
(a) It requires well qualified professional which are not easily available.
(b) There is absence of well defined set of principle or procedures for auditing
which make audit challenging and difficult.
Employees in the organization perceive control in a negative way and try to resist
controls. The main reasons to oppose controls are as follows:
(1) As an instrument to curb freedom : Employee perceive control as a
measure to curtail their freedom. Their performance should confirm to the
standards. They cannot afford laxity and negligence. Moreover tight controls Management Process
do not give space for creativity and innovation. & Organisational
Behaviour : 101
Directing and Controlling (2) Unrealistic Standards : Sometimes the standards set are too high that it
becomes difficult for employees to achieve them. Employees lose faith in the
control system.
NOTES (3) Over control : Control over too many things concerning employee may
lead to frustration. Too much emphasis on standardization of behavior such
as dress code, parking rules, coffee breaks can be unacceptable to the
employee.
(4) Exposes their limitations : Controls monitor the progress of employee’s
performance and identify the deviations from the standards set for them.
Such deviations may reveal lack of skill and ability of the employee in
performing the task. Employees avoid controls as they expose their weakness.
(5) Uncontrollable variables : Sometimes the standards are not met due to
the factors that are not in control of the employee or the variables for which
he is held responsible are not under his control. In such a situation employees
feel that the controls are not justified.
(6) Penalizing : Some control focus on fault finding rather than evaluating
their efforts. Employees resist such kind of approach in implementation of
controls.
In order to reduce negative feelings towards controls the following guidelines can
be used
(1) Participation : Standards must be set in consultation with the employees. If
employees are involved in planning and implementation of control systems
they are likely to accept them and follow them whole heartedly.
(2) Reasonable and understandable standards : The standards should be
achievable. They should not be perceived by the employees as beyond their
reach. They should be explained the need and value of controls. The employees
should perceive standards as justified.
(3) Focus on behavior : The controls should aim at bringing improvement in
behavior of the employees rather than concentrating upon the deviations
only. It should also recognize the efforts put by the employee.
Check Your Progress
(4) Objective and fair : The evaluation process should eliminate subjectivity.
1. What are the main
reasons of employees There should be no room for discrimination among the employees.
to oppose control? (5) Timely feedback : The process of controls should be such that it gives
2. How does responsibility timely feedback to the employees at periodic intervals so that employees are
accounting helps in able to take appropriate remedial actions at the right time before the problems
controlling? become big.
(6) Positive reinforcement : There should be proper integration between
Management Process
& Organisational organizational controls and reward system. Employee should perceive controls
Behaviour : 102 as a source of rewards rather than a source of penalty.
Directing and Controlling
6.13 Summary
Management Process
& Organisational
Behaviour : 104
Individual Behavior
UNIT 7 INDIVIDUAL BEHAVIOR
Structure
NOTES
7.0 Introduction
7.1 Unit Objective
7.2 Perception
7.2.1 Factors Affecting Perception
7.2.2 Attribution Theory
7.2.3 Distortions in Perception
7.3 Personality
7.3.1 Determinants of Personality
7.3.2 Personality Traits
7.3.3 The Big Five Model
7.3.4 Important Personality Characteristics Relevant to Organisational Behaviour
7.4 Attitude
7.4.1 Attitude and Behaviour : Cognitive Dissonance Theory
7.4.2 Major Job Attitude
7.5 Emotional Intelligence
7.6 Summary
7.7 Key Terms
7.8 Questions and Exercises
7.9 Further Reading and References
7.0 Introduction
Every individual is different from others. They respond to different situation in
different manner. People possess certain unique characteristics that influence their
attitude, behavioral reaction to organizational settings. The study of individual behavior
includes knowing about personality traits, attitude, perception and emotional intelligence
of a person that greatly influence his or her decision making skills, interpersonal relations
and job satisfaction. Knowledge of individual behavior will help in developing appropriate
selection process and proper placement of individuals at work place. It will help in
predicting and controlling human behavior so that goals of organization can be achieved.
7.2 Perception
Perception is the individual’s own or personal view of the world. It is the intellectual
process by which the individual give meaning to their environment. The raw data that
they receive from the environment are organized and interpreted in order to understand
the environment. Two people may understand the same situation differently. . e.g. one
may interpret the glass having fifty percent water in it as half filled while the other may
interpret it as half empty.
According to S.P. Robbins: “Process by which individuals organize and
interpret their sensory impressions in order to give meaning to their environment”.
(1) Perceiver
The personal characteristics of the perceiver play a very important role in his
perception about the reality. The relevant personal characteristics influencing perception
are motives, attitude, past experience and expectations.
A theist may find daily morning ritual of offering prayer as a best way to start the
day, while an atheist may consider it a waste of time. This is because their attitude
towards God is different. Researches have found that motives are also instrumental in
shaping perception. We see what we want to see. Let us see the following picture
Management Process
& Organisational Old woman or young lady?
Behaviour : 106 Fig. 7.1
In the above figure one can see an old woman or a young woman depending upon Individual Behavior
his or her interpretation. Young people have a tendency to see young woman while
older people perceive it as a picture of elderly woman. One can switch from one to
another with little effort. If we perceive the image as the picture of young woman we
NOTES
can see the old woman by focusing on the picture with a different angle. While doing so
the young woman chin becomes the old woman’s nose.
A research that aimed to study the effect of different intensities of hunger drive
on perception demonstrated that hunger influenced the perceptions of the subjects
dramatically. The subjects who had not eaten for 16 hours were shown blurred images.
These respondents perceived the blurred image as pictures of food more frequently
than those subjects who were not hungry. Role expectation can also influence the
perception. We may expect a doctor to be sympathetic, a policeman to be authoritative,
a minister to be power hungry and we may perceive them this way irrespective of their
actual traits. Our experience with events will also influence our perception. If our past
experience about things, events or person was bad we will perceive them negatively
and may continue to hold this perception for long for e.g.: if an individual tried a new
dish that he disliked in a restaurant, there is likelihood he may not try it again in another
restaurant. While the reality may be that cook of the previous restaurant was not having
an expertise in cooking such dish.
(2) Target
Characteristics of the target that is being observed also influence the perception.
Objects that are new or moving or having large size are perceived more than compared
to those that are old, small and not moving. Objects that are in physical proximity tend
to be perceived together, background also play an important role.
Let us see the following figure. At the first look we may perceive it as a vase, if
we see black portion as background. But if we see white as background then the
picture will reveal two people face to face.
Management Process
& Organisational
Fig. 7.2 Behaviour : 107
Individual Behavior (3) Situation
The time at which the object is seen as well as the work and social settings
influence our perception. If we see a worker in the factory working late evening we
NOTES may perceive him to be hardworking. A student who is wearing casual dress in school
will catch more attention of the teacher.
7.3 Personality
It is a set of unique psychological and behavioral attributes in a person that are
consistent overtime. It is the sum total of ways in which the individual behave, responds
and interacts with others.
According to Gordon Allport: ``The dynamic organization within the individual of
those psychophysical systems that determine his unique adjustments to his environment.’’
7.4 Attitude
It is the belief and feeling, the individual have about object, people or events,
which can be favorable or unfavorable. These beliefs and feelings determine how
employee will perceive and intend to behave towards the object or a situation. The
attitude has three components: cognitive, affective and behavioral. If I say that “one
should not use abusive language” it is a value statement and such opinion is cognitive
component of attitude. If I say that “I dislike Mr. shyam because he uses abusive
language”, then it is affective component of the attitude. It represents my feeling
towards attitude object. Cognitive and effective component influences the behavior of
the individual towards the attitude object. If they are negative then the behavior towards
the attitude object will also be negative. If I start avoiding interaction with shyam then
it is behavioral component of the attitude.
7.4.1 Attitude and Behaviour : Cognitive Dissonance Theory
Cognitive Dissonance theory was given by Leon Festinger. Whenever there is
incompatibility between two or more attitudes or between attitude and behavior
dissonance is said to have occur. Dissonance causes discomfort in the individual.
Individuals try to reduce this dissonance by reconciling the attitudes in such a manner
that that they appear to be consistent and highly rational. for eg . Mr X is in need of
money as he wants to admit his son who is very bright in studies in a very prestigious
college. He holds a very favorable attitude towards the college in terms of education.
He also feels that taking bribery is a crime. He has been offered a bribe that can help
him in providing better education to his son. Mr. X is experiencing high degree of
cognitive dissonance. Mr X can choose one among many alternatives to reduce cognitive
dissonance. Mr X can change the behavior and start taking bribe. Mr X can change his
attitude towards the prestigious college by telling to himself that there are other colleges
also that can give good placements though not very good education. So he can admit his
son in those colleges and not take bribe .A third alternative would be by concluding that
dissonant behavior is not so important, and that he has a duty as a father also and
almost everyone takes bribe in the present scenario.
Thus when individuals undergo cognitive dissonance because of the incompatibility
between job demands and personal attitude, they will try to modify their attitude or
behavior in order to reduce dissonance. This is easily done when they perceive that the Management Process
dissonance is externally imposed and is beyond his or her control. Dissonance is easily & Organisational
resolved when the rewards are significant enough to offset the dissonance. Behaviour : 113
Individual Behavior 7.4.2 Major Job Attitude
Job satisfaction: it is individual’s general attitude with job. If the job satisfaction
is high then the person may hold positive attitude towards job satisfaction. Job Satisfaction
refers to the emotional state of the worker about specific job factors. Job factors like
NOTES
mentally challenging work, equitable rewards and pay system, understanding and friendly
supervisor, supportive colleagues, comfortable working conditions etc. lead to favorable
evaluation of the job. Moreover people with personality type matching with the job
requirement get high satisfaction from work. Dissatisfaction results in absenteeism,
low productivity and more complaints. Job satisfaction improves productivity.
Job involvement: it is the degree to which employees identify with their jobs,
actively participate in it. It tells about how much they really care about the kind of work
they do. People high on job involvement consider performance level of job as a source
of fulfillment. Job involvement reduces absenteeism and employee turnover.
Organization commitment: it is the degree to which the employee is able to
identify with the organization and its goal. The more commited they are towards the
organization’s goal the less is the likelihood of leaving the organization.
7.6 Summary
Individual’s characteristics like personality, perception, attitude and emotional
intelligence greatly influence his or her work place behavior. Personality traits are
enduring characteristics of the individual. The researchers have identified sixteen primary
personality traits. Big five model has proposed five dimensions for assessing individual’s
personality. They are agreeableness, extraversion, openness to experience,
conscientiousness and neurotism. Personality traits relevant to workplace are locus of
control, self monitoring, machiavellianism, type A and type B personality. Perception is
dependent on the characteristics of the perceiver, target and the situation. Manager
should try to avoid distortion in perception like hallo effect, stereotyping, projection etc.
Job attitude like Job satisfaction, Organizational commitment and Job involvement are
relevant to organizational effectiveness. Emotional intelligence is the individual’s ability
to understand, monitor and manage ones own emotions and emotions of others. Person
having high emotional intelligence have better interpersonal relationships and can prove
to be a effective leader.
8.0 Introduction
Organizations need motivated people in workplace. No matter how skilled the
workers are, the goal of the organization will not be achieved if the employee is not
willing and motivated to do their job. Motivated employees help the organization to
survive and grow. Managers expect people in the organization to put their best efforts
in work. Motivation helps achieve this target. Motivation acts as a driving force that
forces the individual to exert high level of efforts. Of all the duties of manager motivating
employees is more complex and challenging. Unsatisfied need inspires the individual to
exert effort in a direction that would satisfy his need The manager should understand
what motivates the employees, what prompts them to initiate a particular action and
why they persist in their action over time. Appropriate incentive scheme, effective
interpersonal communication, smooth relationship with coworkers, status , quality of
supervision, good working conditions, job security and job designs are some of the
variables that will help the manager to develop an environment that motivates people.
Intrinsic motivation is within the individual rather than relying on external factors.
The individual derives pleasure and enjoyment from the work due to his interest in task
itself. Individuals who are intrinsically motivated are more likely to engage in the
task willingly and would like to improve their skills so that they are able to master the
task.
NOTES Esteem
Needs
Self-esteem
status
Social Needs
Sense of belonging
Love
Safety Needs
Security
Protection
Physiological Needs
Hunger
Thirst
Management Process (5) Self actualization: It is the drive to become what one is capable of becoming.
& Organisational It includes the need for growth, believing in one’s potential and self fulfillment. Since
Behaviour : 120
this need is at the peak of the pyramid the individual’s other needs are reasonably Motivation
satisfied. They feel contented and more in command of their lives. They have a realistic
perception of self, other people and environment around them. They desire for continual
growth and creativity so that they can achieve what they are capable of achieving
NOTES
Implications of Maslow’s hierarchy of need theory for manager
Though Maslow’s hierarchy is fairly rigid in its linear nature of progression i.e
from bottom to top of pyramid, but Maslow noted that the needs may not follow in the
same sequence always, for eg some people give more importance to their career than
family and friends. Their need for self esteem is more important than social need. The
limitation of Maslow motivation of hierarchy of need theory is that it lacks empirical
evidence.
Frustration->Regression
Self Growth
Actualization
Intrinsic Esteem
Needs
Safety Needs
Existence
Physiological Needs
Goals
Goal Commitment
• Clear
• Challenging
• Attainable
Management Process
& Organisational
Behaviour : 129
Groups and Decision Making
UNIT 9 GROUPS AND DECISION
MAKING
NOTES
Structure
9.0 Introduction
9.1 Unit objectives
9.2 Group Defined
9.3 Formal Group
9.4 Informal Group
9.5 Stages in Group Development
9.6 Group Properties
9.6.1 Group Norms
9.6.2 Roles
9.6.3 Status
9.6.4 Group size
9.6.5 Group Cohesiveness
9.7 Relationship between Group Productivity, Norms and Cohesiveness
9.8 Understanding Difference between Work Groups and Teams
9.9 Creating effective Teams
9.10 Decision Making
9.11 Types of decisions
9.12 Steps in Scientific Decision Making
9.13 Alternative Models in Decision Making
9.14 Techniques of Group Decision Making
9.15 Difference between Individual and Group Decision Making
9.16 Committee
9.17 Summary
9.18 Key Terms
9.19 Questions and Exercises
9.20 Further Reading and References
9.0 Introduction
Informal groups do not have any formal structure and are made by the members
voluntarily. Such relations are formed between people at their own discretion. Informal
groups are formed due to personal bonding between people. Personal bonding develops
due to similar likes and dislikes. Even while working in a formal group people tend to
form informal group depending upon their personal liking. Informal organization not
only benefits the employees but benefits the management as well, the benefits are as
follows:
Advantages to employees
(1) Sense of Belonging : A formal group has a rigid structure having formal
authority and predetermined duties where the employee does not feel the
Management Process sense of belongingness and does not derive personal satisfaction. This gap is
& Organisational
Behaviour : 132 filled by joining an informal group. People join group because of their need
for affiliation and security. Group provides warmth and support to its group Groups and Decision Making
members. Group also provides people with the feeling of self worth.
(2) Emotional support : Work life involves various frustration and tensions.
As in an informal group people might share the same problem, they collectively NOTES
deal with situation At times employee may need a person as friend to hear
his problem and support him emotionally. In the informal group people can
easily share their feelings.
(3) Aid on the Job : The informal group members share a close relation. They
may help each other in case accident or illness. Often, the group members
exchange work assignments on the basis of specialization of group members
rendering better performance which at times is more than what is expected
from them.
(4) Power : People feel strong and powerful when they join group as there is
power in number. A goal that cannot be achieved by an individual alone
becomes possible through group actions. They are able to pool knowledge,
power, and talents in order to achieve their goal.
Advantage to the management
(1) Less supervision : Informal group has its own policies and favorable group
norms for organization that act as a check on the behavior of the employees.
It substantially reduces the supervision load of the management.
(2) An aid to management : The informal group helps in bridging the short
coming in a manager’s abilities. The group members may help the manager
without making others to know about his weaknesses.
(3) Feedback : The informal group provides the manager much valued feedback
about employees and experiences which helps them better understanding of
their expectation from the management. It also helps in developing employees’
trust in management.
Disadvantages
(1) Resistance to change: An informal organization is bound by customs,
conventions and culture. They are so much habituated that they resist change.
(2) Sub-objectives: The group gives more preference to group objectives than
to organization’s objective.
(3) Rumour: An informal group often create information which does not have
any strong base. They create rumour. This type of grapevine can be
unfavourable for management.
(4) Displaced loyalty: Workers are more influenced by the informal group and
become more loyal to them than to the organization.
9.6.2 Roles
They are the expectation of behavior from group member occupying a given
position in the group for e.g. manager in the organization is expected to play role of
spokesperson, resource allocator, disturbance handler etc. In private life he may also
be a chairman of a golf club. The goals can be either compatible or contradicting. In
group every member is supposed to play a role. The degree of success of any group
member in a group depends upon the extent to which group member’s role perception
fulfills the expectation of other group member about his role. In other words when
individual is able to act in a way that others expect him to act in a given situation, he will
be evaluated positively by group members.
9.6.3 Status
A formally or informally defined position or rank given to a group member by
other in a group is called status. For eg in formal context principal has a higher status
than the teacher. In informal context variables like education, age, sex , experience etc
play an important in determining the status of individual in a group. Studies have shown
that high status group members enjoy more freedom to deviate from norms than low
status group members. Status also influences interaction among members of the group.
The lower status member tends to be less vocal in group discussion as compared to
high status group members.
Management Process
& Organisational
Behaviour : 136
Groups and Decision Making
Moderate
High
to low NOTES
Productivity
W productivity
High
o
r
k
N Moderate
Low
o to low
r Productivity
productivity
m Low
High Low
Group Cohesiveness
Figure 9.1 Relationship between productivity, cohesiveness and
group norms
A work team is a group of individuals that generates positive synergy through co-
ordinate efforts and complementary skills. The members of the group primarily interact
to share information so as to aid group members in making decision. The need for
significant improvement in performance necessitates collective performance and joint
efforts of the team members. Team has greater performance potential as compared to
work groups. Team requires more deliberate efforts and monitoring as compared to
work groups. Group of clerks in departmental store is an example of work group. They
have similar individual objectives and there is some level of coordination between them.
They are neither interdependent or have shared accountability. Team is characterized
by true interdependency and shared accountability. If during cricket match the fielder
misses a catch the whole team faces failure. The players have to play according to the
strategy laid down by the captain necessitating high degree of coordination and joint
effort. There is individual accountability in work group but in teams there is both individual
and mutual accountability. Team demonstrates the old saying. The whole is greater
than the sum of its part. The differences between work group and work team can be
best understood through the following figure. Management Process
& Organisational
Behaviour : 137
Groups and Decision Making GROUP Basis TEAM
Decision making is a process that aims at choosing the best alternative among
various alternative to achieve desired objective. According to Haynes and Massie,
“Decision making is a process of selection from a set of alternative courses of action
which is thought to fulfill objective of the decision problem more satisfactorily than
others.”
Administrative Model
According to this model it is not possible for decision maker to be completely
rational. To identify and diagnose a given problem accurately is a difficult task. Decision
maker does not have perfect knowledge regarding all alternative solution to the problem,
nor does he know their consequences perfectly. The power of decision maker is limited
by his cognitive abilities and knowledge. Moreover the constraints of resources in terms
of time and cost do not allow him to go for comprehensive analysis of situation and
alternatives. Decision maker operates under the condition of bounded rationality. Instead
Management Process
& Organisational of going for exhaustive search he simplifies the decision making model by limiting the
Behaviour : 140 number of alternatives and the consequence is, that he chooses good enough solution
rather than best solution as propagated by rational model. Groups and Decision Making
Decision making involves selection of a course of action from among two or more
alternatives to arrive at a solution for a given problem. Group decision making happens
when group members collectively make a choice from the alternatives before them
through census or consultation. Decision making without the group input or group opinion
is individual decision making.
Advantages of Group Decision Making Management Process
& Organisational
1. A group has the potential of generating more complete information and Behaviour : 141
Groups and Decision Making knowledge as compared to individual decision making.
2. Group offers increased diversity of views since there are many members in
a group and so are many views leading to better decision, while in individual
NOTES decision making approach the person has to rely on his own intution and
views.
3. In group decision making there is increased acceptance of a solution by
group members because the group members are involved in the process of
decision making. Group decision making is effective when the solution directly
affects the group member while in individual decision making person will not
take into consideration the interest of every member.
Disadvantages of Group Decision Making
1 Group decision making is very time consuming while individual can make
prompt decisions in individual decision making. So in terms of speed individual
decision making fairs better than group decision making.
2 In individual decision making the decision maker can be held accountable
for his/her decision, while in a group it is difficult to hold any one person
accountable for a wrong decision.
3 The group makes riskier decision as compared to individual.
Group Shift
The shift in the position of the members towards an extreme position that can be
either conservation or risky, depending on the dominant view the members hold during
pre discussion. The group discussion tends to exaggerate the initial position of the group.
The conservative type becomes more cautions and risk averse, while aggressive types
take on more risk. It has been found that more often the shift is towards greater risk.
9.16 Committee
9.17 Summary
Manager should understand the group dynamics because group forms the basic
unit of the organization. A group consists of two or more individual interdependent and
interacting with each other for common objective. The groups can be formal or informal.
People join groups because it gives them support, power and a sense of belongingness.
Group members help each other in discharging their duties. The stages in group
development process include; forming, storming, norming performing and adjourning.
Group properties include group norms, group size, group cohesiveness, status and role.
Group properties affect group productivity. Teams are different from groups in terms
of purpose, accountability, synergy and composition of skill. Effective team can be
created through clarifying goals, right mix of skills, appropriate size and reward system,
trust, commitment, leadership and structure. Decision making involves choosing the
best alternatives from the available alternatives to achieve desired goals. The decision
making models are rational/scientific and administrative model. The various techniques
of group decision making are brainstorming, nominal and Delphi techniques. Group
decision making offers better decisions as compared to individual decision making. It
suffers from group think and group shift. Speed of decision and accountability pose a
problem for group decision making.
10.0 Introduction
If we look into the past, we will find exemplary examples of effective leadership.
Mahatma Gandhi, Karl Marx, Abraham Lincoln, Bill Gates, JRD Tata and many more
have brought revolution, innovation and transformation in different fields of‘ business
and politics through their intellect and personalities. The world that we see today is the
outcome of their courage, ability and power to influence people towards the goal they
pursue. Leadership plays a central role in the organization by influencing and inspiring
people towards goal attainment.
Trait theory
Traits are specific personality, physical or intellectual characteristics in a leader
that differentiate leaders from non leaders .Every individual endures certain traits.
Effective leaders have right combination of traits that are particularly suited to leadership.
The researchers studied the characteristics of many successful and unsuccessful
leaders and tried to identify those characteristics that lead to leader’s effectiveness.
They evaluated leaders based on the following traits:
1. Physiological characteristics like appearance, height , weight ,energy levels
etc.
2. Demographic characteristics like age, education , socio economic background
etc.
3. Personality characteristics like self confidence, conscientiousness, emotional
stability etc.
4. Intellectual characteristics like decisiveness, knowledge, judgment, indulgence,
creativity etc.
5. Task related characteristics like persistence, openness to experience,
achievement orientation, initiative etc. Management Process
6. Interpersonal characteristics like agreeableness, extraversion, communication & Organisational
Behaviour : 147
Leadership skills etc.
According to Trait Theory leaders are born and not made. Below are some of the
traits identified by the researchers
NOTES
Researcher Traits
High (1,9)
(1,9)Country
CountryClub
Club (9,9)
(9,9)Team
Team
Concern for People
(5,5)
(5,5)
Middle of
Middle of the
the road
road
(1,1)Impoverish
(1,1) Impoverish (9,1)
( 9,1) Task
Task master
master
Low High
Concern for Production
Management Process
& Organisational
Behaviour : 151
Leadership Situation \ SituationsI II III IV V VI VII VIII
Variables
Leader member Good Good Good Good Poor Poor Poor Poor
NOTES Relations
Task Structure High High Low Low High High Low Low
Position Power Strong Weak Strong Weak Strong Weak Strong Weak
Participating Selling
High
This style is effective for This style is effective for
followers, who are able and followers, who are unable
Relationship behavior
Delegating Telling
This style is effective for This style is effective for
followers, who are able and followers, who are unable
willing (R4). and unwilling (R1).
Low
Low High
Task behavior
R4 R3 R2 R1
10.4 Summary
Leadership determines the quality of organization by providing vision and direction
, motivation to the employee of the organization. According to Trait theory of Leadership
leaders are born and not made. Successful leaders have certain qualities in them that
make them different from non leaders or unsuccessful leaders. Behavioral approach to
leadership focuses on the manner and the behavior exhibited by the leader during
supervising their employees. The various leadership style proposed by researcher of
behavior theory are autocratic, democratic, participative, lazes’ fair.
Contingency theory of leadership emphasize the fact that situation also plays a
very vital role in determining which leadership style will be effective in a given situation.
It calls for a proper match between leader and situation. Path goal theory proposed that
the effective leadership is a function of leadership style, situational factors and follower’s
characteristics. The modern approaches have included more heroic and visionary
approach to leadership like charismatic leadership and transformational leadership.
Management Process
& Organisational
Behaviour : 157
Organizational Conflict
UNIT 11 ORGANISATIONAL CONFLICT
NOTES Structure
11.0 Introduction
11.1 Unit objective
11.2 Conflict Defined
11.3 Functional and Dysfunctional Conflict
11.4 Process of Conflict
11.5 Causes of Conflict
11.5.1 Intra Individual Conflict
11.5.2 Interpersonal Conflict
11.5.3 Group Conflict
11.6 Managing Conflict
11.6.1 Conflict Resolution strategies
11.6.2 Conflict Stimulation strategies
11.7 Summary
11.8 Key Terms
11.9 Questions and Exercises
11.10Further Reading and References
11.0 Introduction
According to Robbins: Conflict is processes that begins when one party perceives
that another party has negatively affected or is about to negatively affect, something
that the first party cares about. It is a process in which an effort is purposefully made by
one person or unit to block another that results in frustrating the attainment of other’s
goals or furthering of his or her interest.
Conflict is not necessarily bad, conflict can act as a force to improve performance
and decision making by preventing stagnation and group think. People having different
ideas may argue over a decision that aims at solving a problem or meeting a challenge.
This diversity in opinion may lead to critical appraisal of the alternatives brought forward
for solving the problem. Such appraisal contributes to sound decision making process as
it forces the group to analyze the decision from every angle. This improves the quality
of decision and benefits the organization as a whole. When conflict leads to positive
outcome it is known as functional conflict, where as when conflict hinders group
performance it is known as dysfunctional conflict. Dysfunctional conflict creates an
atmosphere of hostility, stress, anxiety and frustration. Conflict may lead to irrational
behavior and parties may indulge in non co- operation. Parties may give priority to their
narrow interest above the organizational interest. If the conflict is personal in nature
then the outcomes is even worse. Personal conflict is hard to resolve.
Management Process
& Organisational
Behaviour : 159
Organizational Conflict
Conflict intensity increases as we move upward along the continuum. The upper
level of continuum is always dysfunctional while functional conflict usually confine to
lower range of continuum. Till overt questioning conflict can give positive result but if it
moves upward towards the continuum it may lead to hostile environment in the
organization that has a very negative effect on the organizational effectiveness.
The conflict process comprise of five stages. These stages are explained below:
Management Process
& Organisational
Behaviour : 160
Organizational Conflict
NOTES
Causes of conflict
1. IN TERPERSONAL
CONFLICT Perceived
Conflict Conflict handling
Difference in values,
approaches
interest, perceptions,
personality and status AVOIDING
2. GROUP CONFLICT ACCOMODATING
Incompatible goals,
COMPETING
resource allocation and
task interdependence COMPROMISING
Competition COLLABORATING
Felt Conflict
3. COMMUNICATION
4. AFTERMATH OF
PRECEDING CON-
FLICT
There are certain conditions that act as a stimulant to conflict. These are the
necessary antecedent conditions for conflict to arise. Intrapersonal conflict is internal to
the person, Interpersonal conflict is a conflict between two or more individuals and
group conflict arises between two or more groups. Conflict arises due to many reasons;
some of them are discussed below.
Management Process (1) Role ambiguity: when individual is unsure of his duties and responsibilities
& Organisational regarding job he may face problem in enacting the role due to which job
Behaviour : 162
performance may be adversely affected. He may not know what is expected Organizational Conflict
from him.
(2) Person role conflict : when a person is expected to do a job which goes
against his belief and values he faces a personal conflict for e.g. A judge may NOTES
not be willing to give capital punishment to the criminal on moral grounds
though the law may be supporting it.
(3) Inter role conflict: in this type of conflict the individual is asked to perform
a task for which the individual may lack the ability and knowledge that is
necessary to accomplish it . He may also feel helpless due to lack of resources
and time that is required to do the job.
(4) Inter sender role conflict: when two or more parties put different role
demands in front of an individual then he or she faces inter sender role conflict.
Role conflict seriously effect job satisfaction and productivity. For e.g. an HR
manager may experience a role conflict. He is responsible for motivating the
employees at the same he is accountable to top management also. If the
employees ask for a pay raise while top management is against it then the
manager will be in dilemma.
Conflict can have both negative and positive outcomes. Functional conflict is
desirable while dysfunctional conflict should be resolved. There are basically two
Management Process approaches of managing conflict. One is to create and stimulate constructive conflict
& Organisational and other is to resolve destructive conflict.
Behaviour : 164
Unmanaged poorly handled dysfunctional conflict can prove to be disastrous to Organizational Conflict
the organization. The disagreement should be managed in such a way that healthy
interpersonal relations are formed that aid in decision making and smooth conduct of
operations. Effective conflict resolution style can lead to personal and professional growth.
NOTES
11.6.1 Conflict Resolution Strategies
Kenneth Thomas and Ralph Kidman has identified five conflict resolution strategies
that vary in their degrees of co- cooperativeness and assertiveness. Which one is the
best in a given situation depends on various factors. There is no one best strategy for
resolving conflict. The five styles are as follows:
The Thomas Kidmann Conflict Mode Instrument is a model for handling conflict:
High
Competing Collaborating
ASSERTIVE
Compromising
Avoiding Accommodating
Low
NOTES (4) Compromising (win some-lose some): this style has moderate level of assertive
and co- operation. The parties try to find a middle path which partially satisfies
everyone and everyone gives up something. This style suits best when both sides
have equally important goal and time can be saved by reaching intermediate
settlements due to looming deadline.
(5) Collaborating ( I win you win): This style is both high on cooperation and high on
assertiveness. The parties try to reach a solution which is equally beneficial to both
parties. Collaborative style tries to meet everyone’s need through teamwork and
co-operation. This style works well when there is high level of trust between two
parties. The drawback of this style is that it requires a lot of time and effort to
reach a consensus.
11.7 Summary
Conflict is a disagreement between two or more parties. It is an inevitable part of
the organization. Traditionalist view conflict as bad and that it should be avoided while
modern interactionist view it as positive if it exists at a optimum level . Minimum level of
conflict is essential to bring about change, creativity and to make good quality decision.
Conflict beyond a point can be dangerous can lead to hostility and infighting among the
members. It creates tension and stress. No one is able to grow as the parties try to
Management Process create hindrances in the path of other party. Such negative and aggressive behavior
& Organisational adversely affects organizational effectiveness.
Behaviour : 166
Conflict can be created at individual level as well at the group level. Intra individual Organizational Conflict
conflict occurs due to conflict in the goals set by the individuals and the roles he or she
is supposed to act. Conflict between two or more individuals is caused due to difference
in values, interest, perceptions, personality and status inequity. Group conflict arises due
NOTES
to incompatible goals, task interdependence, scarcity and allocation of resources, poor
communication and organizational ambiguities. The conflict process consists of five
stage , they are- potential opposition, cognition and personalization, conflict handling
intentions, overt behavior and outcome. Depending upon the requirement of the situation
the conflict can be handled through any of the five styles: competing, avoiding,
collaborating, compromising and accommodating. Conflict can be stimulated through
strategic use of grapevine, introducing competition and bringing in outsider and
reorganizing the work groups.
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& Organisational
Behaviour : 168
Organizational Culture and
UNIT 12 ORGANISATIONAL CULTURE Change Management
12.0 Introduction
Organizational culture develops over several years and is made of relatively stable
characteristics. The characteristics are a set of shared values that employees hold in
common. Employees are strongly committed to organizational culture. It brings
predictability and uniformity in behavior of the employees. Organizational culture can
become a liability because it is very difficult to change.
Management has always stressed on the importance of change. “Change or die”
is the philosophy to survive. Environment is dynamic and ever changing. There are
various external and internal forces that act as a stimulant to change. Change is mostly
perceived as threat. Employees resist change. Manager should intelligently plan for
introduction and implementation of change. Change process should be dealt with wisely
and appropriate measures should be taken to overcome resistance and implement change.
Organizations too have personalities just like individuals have. Every organization
has a culture which is a unique set of relatively stable characteristics. Organization
culture is a set of shared values, understanding, assumptions that controls the behavior
of organizational members.
(1) Innovation and risk taking: the degree to which organizational employees are
encouraged to be creative and take risk.
(2) Attention to details: the degree to which the organizational members focus on
precision and attention to details.
(3) Outcome orientation: the degree to which organizational members focus on
results and goals rather than methods, techniques process to achieve the goals.
(4) Team orientation: the degree to which the activities are structured around team
rather than individuals.
(5) Customer orientation: the degree to which managers are concerned about
customer satisfaction.
(6) Employee orientation: the degree to which managers are concerned about the
effect of their decisions on employees within organization.
Management Process (7) Basis of motivation: the degree to which the organizational members value
& Organisational different sources of motivation like pay, status, achievement, recognition etc.
Behaviour : 170
(8) Aggressiveness: the degree to which people are competitive vs cooperative. Organizational Culture and
Change Management
(9) External orientation: the degree to which organization is responsive and adaptive
to changes in its environment.
(10) Power distance: the degree of difference to authority, the rigidity of chain of NOTES
command.
Appraising the organization on these characteristics gives a composite picture of
organization’s culture.
Change means modifying the existing system by adopting new ideas, methods or
NOTES
behavior by an organization. Change in context of an organization can have many forms.
It can be change in organizational structure, change in level of technology, change in
strategy etc. Change is inevitable as the environment around is dynamic. There are a
plenty of socio-economic, political, technological and legal factors which make
organizational change unavoidable. An organization which does not mould itself according
to the changing external scenarios is left behind. Change might also be forced by internal
factors like expansion, change in employee compositions, incoming of a new leader.
Requirement Analysis
The management of the company needs to identify if a change is required. The
Management Process
management shall do a SWOT (Strengths-Weaknesses-Opportunities-Threats) analysis
& Organisational
so as to understand the problems confronting the company. It should subsequently Behaviour : 175
Organizational Culture and conceive changes which are necessary to solve those problems. The management should
Change Management answer the question “Is the change justified”. The management should also identify the
factors to be changed, whether it is the people, technology or structure that is to be
changed.
NOTES
Planning for Change
The management needs to answer questions like: How to introduce the change?
When to introduce the change? Who will introduce the change? What will be the response
to change? How to overcome resistance to change ? The impact that change would
have on different stakeholders should also be assessed.
Implementation of change
It refers to making change a part of day to day activities of the organization. The
management needs to encounter and diffuse the resistance that follows a change so as
to achieve desired implementation. It is natural human tendency to resist any form of
change. Hence no change can be brought about completely without addressing the
resistance that accompanies it. Hence resistance management forms a pivotal and an
indispensable part of change management.
Feedback System
Feedback must be collected through different channels to understand as to how
efficiently have the employees coped up with the change. Deficiencies must be identified
and taken care off as they might result in resistance if left unaddressed. Employees
might be encouraged to share constructive ideas which can further enhance the change.
step1
Unfreezing
step2 Moving
step3
Refreezing
Step 2 : Moving
Once people acknowledge change and accept it, the change should be implemented NOTES
in a systematic manner. Various alternatives of behavior should be made available to the
members of the organization. The individual choose the best one out of the alternatives
provided to them.
Step 3 : Refreezing
The changed behavior patterns, methods or procedures need to be made permanent.
They should be refrozen, so that the change can be sustained overtime. If the last step
is not implemented seriously, the change will be short lived. The individuals may attempt
to revert to the old behavior pattern.
12.4 Summary
Management Process
& Organisational
Behaviour : 180