Principles of Management

Module II
Early Contributions & Ethics in Management
SCIENTIFIC MANAGEMENT

Frederick Winslow Taylor

“Father of Scientific Management”

Contributions of F.W Taylor towards Scientific Management can be described in two parts,

1. Main Features Of scientific management

2. Principles of Scientific Management

Main Features Of scientific management

1. Separation Of Planning and Doing:Taylor emphasized that planning should be left to supervisor and
worker should emphasize only operational work. Before Taylor’s scientific management, a worker used to
plan about how he had to work and what instruments were necessary for that. The worker was put under
the supervision of a supervisor commonly known as gang boss. Thus super visor’s job was merely to see how
the workers were performing

2. Functional Foremanship:Taylor developed a functional organization in which one foreman was made
in-charge for each function.

3. Job Analysis: Job analysis is done to find out the one best way of doing the thing. The best way of doing
a job is one which requires the least movements, consequently less time and cost. The best way can be
determined by conducting Time study, Motion study and Fatigue study.

Time study: Find out the least time required to complete a movement.

Motion study: Find out the necessary movements required to complete the job by eliminating all the
unnecessary movements.

Fatigue study: The amount and frequency of rest required in completing the work

4. Standardization: As far as possible standardization should be maintained in respect of instruments and

tools, period of work, amount of work, working conditions cost of production etc… These things should be
fixed in advance on the basis of job analysis and various elements of cost.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
 5. Scintific Selection and Training of Workers :Taylor has suggested that workers should be selected on
scientific basis by considering their education, work experience, aptitude, physical strength etc. A worker
should be given a work for which he is physically and technically most suitable. Emphasis should also be
given on the training of workers which makes them more efficient and effective.

6. FinancialIncentives :Financial incentives can motivate workers to put in their maximum efforts. If
provisions exists to earn higher wages by putting in extra effort, workers will be motivated to earn more.
Taylor’s Wage incentive system is known as Taylor’s Differential piece rate Plan.

7. Economy:Adequate consideration should also be given to economy and profit. For this purpose
techniques of cost estimation and control should be adopted. The economy and profit can be achieved by
making the resources more productive as well as by eliminating the wastages.

8 Mental Revolution:Scientific management depends on the mutual co-operation between management

and workers. For this co-operation there should be mental change in both parties from conflict to co-
operation . This is the most important part of scientific management.

Principles of Scientific Management

1. Replacing Rule Of Thumb with Science :In scientific management organized knowledge should be
applied which will replace the rule of thumb. Scientific method denotes precision in any aspect of work,
whereas rule of thumb emphasizes estimation.

2. Harmony in group action: Attemptsshould be made to obtain harmony in group action rather than
discord. Group harmony suggests that there should be mutual give and take situation and proper
understanding so that group as a whole contributes to the maximum

3. Co-operation: Scientific Management involves achieving co-operation rather than individualism. It is

based on mutual confidence, co-operation and good will.

4. Maximum Output: Scientific Management involves continuous increase in production and

productivity instead of restricted production either by management or by worker.

5. Development Of workers :All workers should be developed to the fullest extent possible for their own
and for the company’s highest prosperity. Development of workers requires their scientific selection and
providing them training at the work place

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
 Henry Fayol

“Father of Modern Management or Principles Of Management”

Contributions of Henry Fayol

He has used the term ‘Administration’ instead of ‘Management’

He observed that the activities of an industrial organization could be divided in to six groups,

1. Technical: Production related

2. Commercial: Buying, Selling and Exchanging

3. Financial: Search for capital and its optimum use

4. Security: Protection of Property and Person

5. Accounting: Stock taking, Balance sheet, costs, Statistics

6. Managerial: Planning, Organization, Command, Coordination, and Control

Fayol has divided his approach of studying Management in to three parts,

Managerial qualities and training

According to Fayol there are six essential qualities that a manager requires,

1. Physical : Health, Vigor, and address

2. Mental : Ability to understand, learn, and judgment
3. Moral : Energy, Initiative, Loyalty, tact and dignity
4. Educational : General acquaintance with matters
5. Technical : Peculiar to the function being performed
6. Experience: Arising from the work

General Principles of Management

(1)Division of Labor (2) Authority and Responsibility (3) Discipline (4) Unity of Command

(5) Unity of Direction (6) Subordination of individual to general interest (7) Remuneration of Personnel

(8) Centralization (9) Scalar Chain (10) Order(11) Equity(12) Stability of Tenure (13)Initiative

(14) Espirit de Corps

1. Division of Work. Specialization allows the individual to build up experience, and to continuously improve his
skills. Thereby he can be more productive.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
2. Authority. The right to issue commands, along with which must get the balanced responsibility for its function.

3. Discipline. Employees must obey, but this is two-sided: employees will only obey orders if management play
their part by providing good leadership.

4. Unity of Command. Each worker should have only one boss with no other conflicting lines of command.

5. Unity of Direction. People engaged in the same kind of activities must have the same objectives in a single plan.
This is essential to ensure unity and coordination in the enterprise. Unity of command does not exist without unity
of direction but does not necessarily flows from it.

6. Subordination of individual interest (to the general interest). Management must see that the goals of the
firms are always paramount.

7. Remuneration. Payment is an important motivator although by analyzing a number of possibilities, Fayol

points out that there is no such thing as a perfect system.

8. Centralization (or Decentralization). This is a matter of degree depending on the condition of the business and
the quality of its personnel.

9. Scalar chain (Line of Authority). A hierarchy is necessary for unity of direction. But lateral communication is
also fundamental, as long as superiors know that such communication is taking place. Scalar chain refers to the
number of levels in the hierarchy from the ultimate authority to the lowest level in the organization. It should not
be over-stretched and consist of too-many levels.

10. Order. Both material order and social order are necessary. The former minimizes lost time and useless handling
of materials. The latter is achieved through organization and selection.

11. Equity. In running a business a ‘combination of kindliness and justice’ is needed. Treating employees well is
important to achieve equity.

12. Stability of Tenure of Personnel. Employees work better if job security and career progress are assured to
them. An insecure tenure and a high rate of employee turnover will affect the organization adversely.

13. Initiative. Allowing all personnel to show their initiative in some way is a source of strength for the
organization, even though it may well involve a sacrifice of ‘personal vanity’ on the part of many managers.

14. Esprit de Corps. Management must foster the morale of its employees. He further suggests that: “real talent is
needed to coordinate effort, encourage keenness, use each person’s abilities, and reward each one’s merit without
arousing possible jealousies and disturbing harmonious relations.”

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
 Gilbirth’s Contributions

Frank and Lillian Gilbreth were a husband-and-wife team who worked as engineers in the early part of the 20th
century. Lillian carried on this work after the death of Frank in 1924. Their main focus was on the fields of motion
study and time study, combined with an interest on the psychology of efficiency and work.
The Gilbreth theory held that there was a “one best way” to do any task. Efficiency, according to the Gilbreth
business management theory, could therefore be improved by finding this “one best way” and replicating it
throughout the manufacturing process. Gilbrethused new technologies such as film to break motions down into
incremental parts, which she called “therbligs.

” By reducing the number of “therbligs” for any task, one could increase the efficiency of the worker.

The management theory of Frank and Lillian Gilbreth can be summed up by the following:

1. Reduce the number of motions in a task to increase efficiency.

2. Focus on the incremental study of motions and time to understand an entire task.
3. The goal of increased efficiency is both increased profit and greater worker satisfaction.

with some technical details about her work, is available from the San Diego Supercomputer Center. A brief
biography and look at the Lillian and Frank Gilbreth management theory is provided by Accel-Team. One major
aspect of the Gilbreth theory, the concept of therbligs, is explained in an article on the Gilbreth Network. The
Internet Archive offers an edited version of the Gilbreths’ original films of their motion study techniques.

Elton Mayo Contributions:

1. Human Relations Approach:

Mayo is rightly called the father of human relations movement. His ideas were a milestone and a turning point in
human relations approach of the management. He recognised the importance of human beings in management. He
said that human beings are complex and influential input into organisational performance. The social and
psychological needs of human beings cannot be ignored, if management wants to enhance productivity.

2. Non-Economic Awards:

The earlier assumption was that workers will work more if they are offered more monetary incentives. Taylor was
the main proponent of this approach. Elton Mayo said that the techniques of economic incentives were not only
inadequate but also unrealistic.

He was able to show that humane and respectful treatment, sense of participation and belonging,
recognition, morale, human pride and social interaction are sometimes more important than pure monetary
rewards.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
3. Social Man:

Mayo developed a concept of ‘social man’. He said that man is basically motivated by social needs and obtains his
sense of identity through relationships with others. He is more responsive to the social forces of the informal group
rather than managerial incentives and controls. He also related productivity to a social phenomenon.

4. Organization as a Social System:

Mayo was of the view that informal relationships in the organization are more effective than formal relationships.
People form informal groups to give a bent to their feelings and seek guidance for action from such groups.In
Mayo’s words, “An organization is a social system, a system of cliques, grapevines, informal status systems, rituals
and a minute of logical, non-logical and illogical behavior.” He was of the opinion that managers should maintain
an equilibrium between the logic of efficiency’ demanded by the formal organization. He thought that besides logic
and facts people are also guided by sentiments and feelings.

Subject Matter of Elton Mayo’s Human Relations Approach:

According to Human Relations Approach, management is the Study of behavior of people at work.

This approach had its origin in a series of experiments conducted by Professor Elton Mayo and his associates at the
Harvard School of Business at the Western Electric Company’s Hawthorne Works, near Chicago.

These studies brought out for the first time the important relationships between social factors and productivity.
Before it, productivity of the employees was considered to be a function only of physical conditions of work and
money wages paid to them. It was realized that productivity depended largely upon the satisfaction of the employees
in work situations.

Features of Elton Mayo’s Human Relations Approach:

The main features of the Human Relations Approach to management are the following:
1. Since management is getting things done through and with people, a manager must have a basic
understanding of human behavior in all respects—particularly in the context of work groups and
organizations.
2. The managers must study the inter-personal relations among the people at work.
3. Larger production and higher motivation can be achieved only through good human relation.
4. The study of management must draw the concepts and principles of various behavioral sciences like
Psychology and Sociology.

Contribution of Elton Mayo to Management Thought:

George Elton Mayo (1880-1949) was a professor at the Harvard Business School. He published the books —
‘Human Problems of an Industrial Civilisation’ (1933),

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
‘Social problems of an Industrial Civilisation’ (1945), ‘Training for Human Relations’ (1949) etc. He conducted the
famous ‘Hawthorne Experiments’ at the Hawthorne plant of the Western Electric Company in the USA during
1927-32 with his associates.

These experiments are described below:

1. Illumination Experiments:

This experiment was conducted to establish relationship between output and illumination. When the intensity of
light was increased, the output also increased. But the output showed an upward trend even when the illumination
was gradually brought down to the normal level.

CONCLUSION:

It was concluded that there is no consistent relationship between output of workers and illumination in the factory.
There must be some other factor which affected productivity.

2. Relay Assembly Test Room Experiment:

This phase aimed at knowing the impact of illumination and other factors on production, such as length of the
working days, rest hours, physical conditions…etc.A small homogeneous work-group of six girls was selected.
These girls were friendly to each other and were asked to work in a very informal atmosphere under the supervision
of a researcher. Productivity and morale increased considerably during the period of the experiment. Productivity
went on increasing and stabilized at a high level.

CONCLUSION

The researchers concluded that socio-psychological factors such as feeling of being important, recognition, attention
and participation, resulted in higher productivity.

3. Mass Interviewing Program:

The researchers interviewed a large number of workers with regard to their opinions on work, working conditions
and supervision. Initially, a direct approach was used whereby interviewers asked questions considered important
by managers and researchers. Later, this approach was replaced by an indirect technique, where the interviewer
simply listened to what the workmen had to say.

CONCLUSION

The findings confirmed the importance of social factors at work in the total work environment.

4. Bank Wiring Observation Room Experiment:

The experiment was conducted to study a group of 14 workers under conditions which were as close as possible to
normal. After the experiment, the production records of the group were compared with their earlier records.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
It was observed that the group evolved its own production norms for each individual worker, which was made lower
than those set by the management. Because of this, workers produced only that much, thereby defeating the
incentive system. Those workers who tried to produce more than the group norms were isolated, harassed or
punished by the group.

CONCLUSION:

1. Each individual was restricting output.

2. The group had its own “unofficial” standards of performance.
3. Individual output remained fairly constant over a period of time.
4. Informal groups play an important role in the working of an organization.

The conclusions of the Hawthorne Experiments are pointed out below:

(i) A factory is not only a techno-economic unit but a psycho-social organization also.

(ii) The workers spontaneously form small informal groups. The norms and values of such groups have significant
influence on the behavior and performance of the workers.

(iii) Physical conditions of work have some influence on the workers’ morale and pro­ductivity. But their inter-
personal relations, attitude of the supervisors and other social and psychological factors have a far greater influence.

(iv) Usually, the workers act or re-act not as individuals but as the members of a group.

(v) The workers are not mere economic men motivated by money alone. They respond to the total work situation
including recognition, participation etc.

(vi) The informal leaders play an important role in setting and enforcing group norms.

(vii) The managers must understand and recognize the inter-personal and group rela­tions on the job.

Elton Mayo is known as the ‘Father of Human Relations Movement’.

The findings of Hawthorne Experiments are, however, accepted even today. Mayo’s work was a turning point in
the development of management thought. His work challenged the basic postulates of the classical approach. His
studies revealed the over-whelming signifi­cance of human and social factors in industry. He is rightly called the
‘Founder of the Human Relations Approach’ to management.

McGregor - Theory X and Theory Y

Theory X and Theory Y are theories of human motivation and managementwasinitially presented at a
management conference in 1957. They were created and developed by Douglas McGregor at the MIT Sloan School
of Management.They are two sets of assumption about the nature of people. He wanted a neutral terminology
without any connotation of being good or bad.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
 Theory X Assumptions
1. The average human being has an inherent dislike of work and will avoid it if he can. Because of their dislike
for work, most people must be controlled and threatened before they will work hard enough.
2. The average human prefers to be directed, dislikes responsibility, is unambiguous, and desires security above
everything.
3. These assumptions lie behind most organizational principles today, and give rise both to “tough”
management with punishments and tight controls, and “soft” management which aims at harmony at work.
Both these are “wrong” because man needs more than financial rewards at work, he also needs some deeper
higher order motivation - the opportunity to fulfil himself. Theory X managers does not give their staff this
opportunity so that the employees behave in the expected fashion.

Theory Y Assumptions

1. The expenditure of physical and mental effort in work is as natural as play or rest. Control and punishment
are not the only ways to make people work, man will direct himself if he is committed to the aims of the
organization.
2. If a job is satisfying, then the result will be commitment to the organization.
3. The average man learns, under proper conditions, not only to acceptbut to seek responsibility.
4. Imagination, creativity, and ingenuity can be used to solve work problems by a large number of employees.
5. Under the conditions of modern industrial life, the intellectual potentialities of the average man are only
partially utilized.

Comments on Theory X and Theory Y Assumptions These assumptions are based on social science research which
has been carried out, and demonstrate the potential which is present in man and which organizations should
recognize in order to become more effective. McGregor sees these two theories as two quite separate attitudes.
Theory Y is difficult to put into practice on the shop floor in large mass production operations, but it can be used
initially in the managing of managers and professionals.
In “The Human Side of Enterprise” McGregor shows how Theory Y affects the management of promotions and
salaries and the development of effective managers. McGregor also sees Theory Y as conducive to participative
problem solving.
It is part of the manager's job to exercise authority, and there are cases in which this is the only method of achieving
the desired results because subordinates do not agree that the ends are desirable.
However, in situations where it is possible to obtain commitment to objectives, it is better to explain the matter
fully so that employees grasp the purpose of an action. They will then exert self-direction and control to do better
work - quite possibly by better methods - than if they had simply been carrying out an order which the y did not
fully understand. The situation in which employees can be consulted is one where the individuals are emotionally
mature, and positively motivated towards their work; where the work is sufficiently responsible to allow for
flexibility and where the employee can see his own position in the management hierarchy. If these conditions are
present, managers will find that the participative approach to problem solving leads to much improved results
compared with the alternative approach of handing out authoritarian orders. Once management becomes persuaded

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
that it is under estimating the potential of its human resources, and accepts the knowledge given by social science
researchers and displayed in Theory Y assumptions, then it can invest time, money and effort in developing
improved applications of the theory.
Ouchi’s Z Theory

William G. Ouchi - American professor and author in the field of business management.

Theory Z has been called a sociological description of the humanistic organizations. “Theory Z is an
approach to management based upon a combination of American and Japanese management philosophies”.
Proponents of Theory Z suggest that it leads to improvements in organizational performance.

The Japanese management style popularized in the 1980s that assumes employees have an interest in good
working relationships with management and other employees. Management generally has high confidence in
employees, who are encouraged to participate in the management decision making. Employees are viewed as long-
term assets who will stay with the same firm throughout their careers
Theory Z

 Japanese consensus management style based on the assumptions that

 Employees want to build cooperative relationships with their employers, peers, and other
employees in the firms.
 They require high degree of support in the form of secure employment and facilities for
development of multiple skills through training and job rotation,
 They value family life, culture and traditions, and social institutions as much as material
success,
 They have well-developed sense of dedication, moral obligations, and self-discipline.
 They can make collective decisions through consensus.

History

"Theory Z." can be traced to the work of Douglas McGregor in the 1950s and 1960s.In the 1970s and
1980s, many U.S industries lost market share to international competitors, particularly Japanese companies. Ouchi
contrasted American types of organizations (Type A) that were rooted in the United States' tradition of
individualism with Japanese organizations (Type J) that drew upon the Japanese heritage of collectivism.

Modified American approach to management with the best characteristics of Japanese organizations while
retaining aspects of management that are deeply rooted in U.S. traditions of individualism, Ouchi proposed that a
Theory Z management approach could lead to;

1. Greater employee job satisfaction

2. Lower rates of absenteeism and turnover
3. Higher quality products
4. Better overall financial performance for U.S. firms.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
 Strategies to Transform the Organization
1. Skeptics have to be allowed to exist.
2. Audit its philosophy.
3. Define desired philosophy and be able to involve company leaders.
4. Create structure and incentive in the company.
5. Develop interpersonal skills.
6. Test themselves and the system.
7. Stabilize employment.
8. Slow evaluation and promotion.
9. Broaden the people’s career paths.
10. Working into the lower level.
11. Employee participation is allowed in decision making.
12. Create a sense of family between everyone.

Features

1. LONG-TERM EMPLOYMENT

Type Z organizations generally make life-long commitments to their employees and expect loyalty in
return, but Type Z organizations set the conditions to encourage this. This promotes stability in the
organization and job security among employees.

2. CONSENSUAL DECISION MAKING

The Type Z organization emphasizes communication, collaboration, and consensus in decision making

3. INDIVIDUAL RESPONSIBILITY

Type Z organizations retain the emphasis on individual contributions that are characteristic of most
American firms by recognizing individual achievements, albeit within the context of the wider group.

4. SLOW EVALUATION AND PROMOTION

The Type Z organization, conversely, adopts the model of slow evaluation and promotion.

5. MODERATELY SPECIALIZED CAREER PATH

The Type Z organization adopts a middle-of-the-road posture, with career paths that are less specialized
than the traditional U.S. model but more specialized than the traditional Japanese model.

6. HOLISTIC CONCERN

The Type Z organization is characterized by concern for employees that goes beyond the workplace.
This philosophy is more consistent with the Japanese model than the U.S. model.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
 7. INFORMAL CONTROL WITH FORMALIZED MEASURES
The Type Z organization relies on informal methods of control, but does measure performance through
formal mechanisms. This is an attempt to combine elements of both the Type A and Type J organizations.

Companies following Theory Z. in U.S

• IBM, Procter and Gamble , Hewlett Packard , Eastman Kodak , The US Military

The Mckinsey 7S Model

It was first mentioned in “The Art of Japanese Management” by Richard Pascale & Anthony Athos in
1981. They have beeninvestigating how Japanese Industry has been so successful.At around the same time that
Tom Peters & Robert Watermanwere exploring what made a company excellent.The 7s model was born at a
meeting of these four authors.
It is a management model that describes 7 factors to organize acompany in a holistic & effective way...

Where 7S model can be used?

 To improve the performance of a company,

 To examine the likely effects of future changes within a company,
 To align departments and processes,
 To determine what is the best way to implement a proposed strategy.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
 Hard elements Soft elements

Strategy Shared values

Structure Skills

Systems Style

Staff

"Hard" elements are easier to define or identify and management can directly influence them: These are strategy
statements; organization charts and reporting lines; and formal processes and IT systems.

"Soft" elements, on the other hand, can be more difficult to describe, and are less tangible and more influenced by
culture. However, these soft elements are as important as the hard elements if the organization is going to be
successful.

The Seven Elements

The key point of the model is that all the seven areas are interconnected and a change in one area requires change in
the rest of them for it to function effectively.

1. Strategy: the plan devised to maintain and build competitive advantage over the competition.
2. Structure: the way the organization is structured and who reports to whom.
3. Systems: the daily activities and procedures that staff members engage in to get the job done.
4. Shared Values: these are the core values of the company that are evidenced in the corporate culture and the
general work ethic.
5. Style: the style of leadership adopted.
6. Staff: the employees and their general capabilities.
7. Skills: the actual skills and competencies of the employees working for the company

Apple Inc

1. Shared Values - business is aligned around the values of design and user experience
2. Strategy - focus on a small number of products and to make them innovative and excellent – enabling the
business to capture a huge market share relative to its size, and build a loyal customer following
3. Staff - offers their employees huge benefits
4. Skills - highly qualified and creative employees
5. Systems - supply chain with built capacity for launching and supplying huge new market-dominating
products
6. Style - people are free to innovate – as long as they met Jobs’ high standards

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
How to use the tool?

 Step 1. Identify the areas that are not effectively aligned

 Step 2. Determine the optimal organization design
 Step 3. Decide where and what changes should be made
 Step 4. Make the necessary changes
 Step 5. Continuously review the 7s

Contingency approach to management

The contingency approach to management holds that management techniques should be dependent upon the
circumstances. In this lesson, you will learn what the contingency approach to management is and the key elements
of contingency management.

Definition

A contingency approach to management is based on the theory that management effectiveness is

contingent, or dependent, upon the interplay between the application of management behaviours and specific
situations. In other words, the way you manage should change depending on the circumstances. One size does not
fit all.

Theory

The contingency approach to management finds its foundation in the contingency theory of leadership
effectiveness developed by management psychologist Fred Fielder. The theory states that leadership effectiveness,
as it relates to group effectiveness, is a component of two factors: task motivation, or relation motivation, and
circumstances. You measure task motivation, or relation motivation, by the least preferred co-worker (LPC)
scale.

The LPC scale asks the manager to think of the person they least like working with and then rate that person
on a set of questions, each involving an 8-point scale. For example, a score of one would be uncooperative, and a
score of eight would be cooperative. Fielder believed that people with a higher LPC score try to maintain harmony in
their work relationships, while people with a lower LPC score are motivated to focus on task accomplishment.

The theory states that task or relations motivations are contingent upon whether the manager is able to both control
and affect the group's situational favourability, or outcome. According to the theory, you can assess situational
favourability by three factors:

1. Leader-member relations - This factor addresses the manager's perception of his cooperative relations
with his subordinates. In other words, is the cooperation between you and your employees good or bad?

2. Task structure - This factor relates to whether the structure of the work task is highly structured, subject
to standard procedures, and subject to adequate measures of assessment. Certain tasks are easy to structure,
standardize and assess, such as the operation of an assembly line.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
 3. Position power - This factor asks if the manager's level of authority is based on punishing or rewarding
behaviour. For example, does the manger derive his authority from providing bonuses for meeting sales
goals or terminating employees for failure to meet the goals?

The combination of leader-member relations, task structure and position power create different situations that have
been coined octants one through eight. You can divide these eight situations into three broad categories: favorable
situations, intermediate situations and unfavourable situations. According to the theory, each situation is handled
the best by either high or low LPC managers. The theory argues that high LPC managers are most effective at
influencing employee group behaviour in intermediate situations, while low LPC managers are most effective in
favourable or unfavourable situations.

Managerial Ethics and Corporate Social responsibility

What is managerial ethics?

Ethics is a code of moral principles and values that governs the behaviours of a person or group with respect
to what is right or wrong. Ethics sets standards as to what is good or bad in conduct or decision-making.Ethical
issues occur when the action of a person may harm or benefit others.

Views of ethics

1. Utilitarian approach

2. Individualism

3. Moral rights view approach

4. Justice approach

1. Utilitarian approach

The ethical concept says that moral behaviours produce the greatest good for the greatest number. This
approach views decision-making as selecting alternatives that optimizes the satisfaction for the greatest
number of people.

2. Individual approach

This view contends that acts are moral and ethical when they promote the individual’s long-term interest,
which leads to the greatest good.

3. Moral-rights approach

The ethical concept or rights view is concerned with respecting and protecting individual liberties, and
privileges, including the right to privacy, freedom of conscience, free speech, and due process.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
 4. Justice approach

The ethical concept denotes that moral decisions must be based on standards of equity, fairness, and
impartiality.

Factor affecting ethical choices

1. Managers

Ethical choices of a manager are determined by the manager’s level of moral development. There are three level of
moral development:-

i. Pre-conventional level – concerned with external rewards and punishment and obeying
authority to avoid detrimental personal consequences.

ii. Conventional level – focus is on good behaviour as defined by colleagues, family, friends, and
society.

iii. Post-conventional level – concerned with individual set of values and standards to the point
of disregarding rules or laws that violate principles.

2. The organization

• The corporate culture of the organization can establish and engender ethical behaviour. Culture is a
major force that defines the company’s values. If ethical behaviour is encouraged, it becomes routine.

Guide lines for Ethical Behaviour by James O’ Toole

Though every individual and group has a set of ethical values, the following guidelines are prescribed by James
O’Toole in this regard:

1. Obey the law:

Obeying legal practices of the country is conforming to ethical values.

2. Tell the truth:

Disclosing fair accounting results to concerned parties and telling the truth is ethical behaviour of managers.

3. Respect for people:

Ethics requires managers to respect people who contact them.

4. The golden rule:

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
The golden business principle is ‘Treat others as you would want to be treated’. This will always result in ethical
behaviour.

5. Above all, do no harm:

Even if law does not prohibit use of chemicals in producing certain products, managers should avoid them if they
are environment pollutants.

6. Practice participation – not paternalism:

Managers should not decide on their own what is good or bad for the stakeholders. They should assess their needs,
analyse them in the light of business needs and integrate the two by allowing the stakeholders to participate in the
decision­-making processes.

7. Act when you have responsibility:

Actions which cannot be delegated and have to be taken by managers only (given their competence and skill) must
be responsibly taken by them for the benefit of the organisation and the stakeholders.

Social responsibility
What is social responsibility?

It is a firm’s obligation, beyond that required by law and economics, to pursue long-term goals that will
enhance the welfare and interest of the society and the organization as well.

Levels of social responsibility

1. Economic responsibility: A business is first an economic unit in society, its economic responsibility is to
make a profit.

2. Legal responsibility: Businesses must play by the rules and obey government laws. Government can
affect businesses through legislation, judicial action, and agency administration.

3. Ethical responsibility:Demonstrating behaviour that fit within the norms of society, the organization,
the individual, and the profession that have not been made by law.

4. Discretionary responsibilities: Discretional responsibilities are the highest form of social responsibilities
because they are voluntary. Discretionary responsibilities are those for which there are no societal laws,
rules, or ethical statements, but for which expectations might exist.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
 Corporate Social Responsibility

What is Corporate Social Responsibility?

Corporate social responsibility, often abbreviated "CSR," is a corporation’s initiatives to assess and take
responsibility for the company's effects on environmental and social wellbeing. The term generally applies to efforts
that go beyond what may be required by regulators or environmental protection groups.

CSR may also be referred to as "corporate citizenship" and can involve incurring short-term costs that do
not provide an immediate financial benefit to the company, but instead promote positive social and environmental
change.
Companies can invest in local communities in order to offset the negative impact their operations might
have. A natural resources firm that begins to operate in a poor community might build a school, offer medical
services or improve irrigation and sanitation equipment. Similarly, a company might invest in research and
development in sustainable technologies, even though the project might not immediately lead to increased
profitability.

Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship or responsible
business is a form of corporate self-regulation integrated into a business model. CSR policy functions as a self-
regulatory mechanism whereby a business monitors and ensures its active compliance with the spirit of the law,
ethical standards and national or international norms. With some models, a firm's implementation of CSR goes
beyond compliance and statutory requirements, which engages in "actions that appear to further some social good,
beyond the interests of the firm and that which is required by law"

Corporate social initiatives

Corporate social responsibility includes six types of corporate social initiatives

1. Corporate philanthropy: Company donations to charity, including cash, goods, and services, sometimes via
a corporate foundation
2. Community volunteering: Company-organized volunteer activities, sometimes while an employee receives
pay for pro-bono work on behalf of a non-profit organization
3. Socially-responsible business practices: Ethically produced products which appeal to a customer segment
4. Cause promotions: Company-funded advocacy campaigns
5. Cause-related marketing: Donations to charity based on product sales
6. Corporate social marketing: Company-funded behavior-change campaigns

Common actions
Common CSR actions include,

1. Environmental sustainability:
i. Recycling
ii. Waste management,
iii. Water management
iv. Renewable energy

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram
 v. Reusable materials,
vi. ‘Greener' supply chains,
vii. Reducing paper use
viii. Adopting Leadership in Energy and Environmental Design (LEED) building standards
2. Community involvement: This can include,
a. Raising money for local charities
b. Providing volunteers
c. Sponsoring local events
d. Employing local workers
e. Supporting local economic growth
f. Engaging in fair trade practices
3. Ethical marketing: Companies that ethically market to consumers are placing a higher value on their
customers and respecting them as people who are ends in themselves. They do not try to manipulate or
falsely advertise to potential consumers. This is important for companies that want to be viewed as ethical.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram