UNIT – 1

INTRODUCTION TO MANAGEMENT

Managers are an indispensable part of every organization. They achieve desired results
through efficient and effective utilization of human and physical resources. Infact successful
managers do not wait for future; they make the future by anticipating and adjusting to
changing circumstances in an intelligent manner.

Organizations have a variety of goals. They usually direct their energies and resources
to achieve these goals. Organizations possess human as well as non-human resources (plant,
equipment, land, money, etc.) that are put to use in the service of specific goals. Management
is the force that unifies human as well as non-human resources in the service of
organizational goals. It is a process of getting results with and through people.

Manpower

Money Materials

MANAGEMNT

Methods Machinery

Definitions of Management:-

Management: Management is a process of planning, organizing, staffing, directing and

controlling.

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

Management is a task of planning, coordinating, motivating and controlling the efforts of

others towards a specific objective.
-J.L. Lunday
 Management is process of designing and maintaining and environment in which individuals,
working together in groups, accomplished their aims efficient and effectively.
- Henry Wehrich

Characteristics / Nature of Management:-

Management is an activity holds that human and physical resources are to be guided in such
a manner that organizational goals are achieved efficiently. The main characteristics of
management may be explained as follows:
1. Goal oriented:
Management is always aimed at achieving certain specified objective. It has no
justification to exist without objectives. Human and physical resources are
directed by the management to accomplish the predetermined goals.
2. Integrates human and physical resources :
The key for success lies in integrating human efforts with physical and financial
resources, such as machinery, building, financial assets etc. of an organization.
Management plays a crucial role in this regard.
3. Ongoing activity :
The need for management continues as long as an organization an organized
activity exists. Thus management is a continuous process without breaks and
gaps.

4. Group activity :
Management involves the use of group efforts in the pursuit or predetermined
objectives. It cannot be seen in an activity performed by a single person, though
the management skills are seen in the way the activity is undertaken.
5. Management is universal / pervasive :
The need for management exists for all types of organization, e.g., club, army,
universities, hospitals, government, business. Simply, it can be stated that
wherever more than one person engaged for accomplishing a common goal, the
need for management exits. Management is essential element of organized
activity irrespective of the type or size of an organization.
6. Management is dynamic :
Management is dynamic and growth-oriented function. It tries to visualize problems
before they turn into emergencies and takes suitable steps. It proposes to take
actions to make the desired results to come to pass. According to Drucker,
“managers do not wait for the future, they make the future”.
7. Management is a science and an art :
Management has developed certain principles and laws which have wide
applications. So it is treated as a science. It is also an art, because it is
concerned with the application of knowledge for the solution of organizational
problems.
8. Management is a social process :
According to Newman, management is a social process because it deals with
people. To make the best use of human efforts, managers have to create close
cooperation among employees in an organization. They have to use resources for
the benefits of society as whole. They have to look after the interests of
employees, shareholders, customers, investors and community.

Objectives of Management:
Management as a process, involving the activities of managers, is directed towards among the
following general objectives
1. Getting maximum results with minimum efforts :
The main objective of management is to secure maximum output with minimum
efforts and resources. Management is basically concerned with utilizing the
human and material resources available to an enterprise for deriving the best
 results. This leads to the reduction in the cost of production.
2. Increasing efficiency of factors of production :
Through proper utilization of various factors of production like land, labour and
capital, management leads to avoidance of wastage of time, money and efforts.
This leads to increase in the productivity of all factors of production end. Thus
encourage the growth of an enterprise.
3. Maximum prosperity for employers and employees :
Management aims at securing maximum prosperity for the employers by generating
high profits at least cost. It is also aims at satisfying the employees by providing
adequate remuneration and other benefits for their services.
4. Human betterment and social justice :
Through increased productivity and employment management ensure a better life
in human beings. It raises the standard of living and provides more leisure and
amenities to people. Moreover, management provides justice to all through its
uniform policies.

Significance of Management:

Management is very essential for success running of an enterprise. It ensures proper of physical
and human resources by deriving the best results. It leads to efficient performance and
higher productivity. Arising out these benefits, the importance of management may be
outlined as follows:
1. Helps in achieving group goals :
Management assembles and organizes available sources for the accomplishment of
the goals of an enterprise. It adds effectiveness to the affords of a group persons
organized achieve given objectives.
2. Optimum utilization of resources :
Management utilizes available physical and human resources productively. It
eliminates wastage in all business operations. Thus, it results in effective
running of business activities.
3. Reduces cost :
To secure efficiency operations, management is concerned with reducing costs of
production and increasing the output. Through better planning, organizing and
control, and the use of various cost reduction techniques, efficient management
leads reduced costs and increased output.

4. Establishes a sound organization :

Management lays down a pattern of authority, responsibility relationship. The
structure so formed shows the various inter-related positions for which the right
type of persons with right qualifications and training are selected.

5. Maintains equilibrium :
Management helps in organization to survive in its dynamic environment. Good
management enables an enterprise to adjust to the complex and ever-changing
external environment. Thus, management is responsible for survival and stable
growth of an organization.
6. Effective leadership and motivation :
Management makes group effort more effective. It enables employees to move
cooperatively and achieve goals in a coordinated manner. Management creates
teamwork and motivates employees to work harder and better by providing
necessary guidance, counseling and effective leadership.
7. Provides innovation :
Management infuses an enterprise with new ideals, imagination and vision.
8. Improves standard of living :
Management improves the standard of living of people by (a) using scarce resources
 efficiently and turning out profits, (b) ensuring the survival of the firm in the
face of continued changes, (c) exploiting new ideas for the benefit of society as a
whole, and (d) developing employee talents and capabilities while at work and
prompting them to show peak performance.
9. Role in National Economic Development :
“Management is the crucial factor in economic and social development”, says Peter
F. Drucker. The development of a nation depends on the quality of management
of its resources. It is all the more true in a developing country like India, where
productivity is low and the resources are limited.
10. Social benefits :
Management is beneficial to the society as well. It raises the standard of living of
the people by providing good quality products at the lowest prices. It also
promotes peace and prosperity in the society through optimum use of scarce
resources.

Functions of Management:
Managers are known by the work they do, the functions they perform. According to the
functional approach, originated by Henry Fayol, in every organization managers perform
certain basic functions in order to achieve results. These functions may be broadly classified
into five categories i.e planning, organizing, staffing, directing and controlling. A brief
discussion of the five basic functions is presented here:
1. Planning :-
Planning is the process of making decisions about future. It is the process of
determining enterprise objectives and selecting future courses of actions
necessary for their accomplishment. It is the process of deciding in advance
what is to be done, when and where it is to be done, how it is to be done and by
whom. Planning provides direction to enterprise activities. It is a blue print of
the organization activities. Planning is a fundamental function of management
and all other functions of management are influenced by the planning process.
2. Organizing :-
Organizing is concerned with the arrangement of an organization’s resources
(people, materials, technology and finance) in order to achieve enterprise
objectives. It involves decisions about the division of work, allocation of
authority and responsibility and the coordination of tasks. The function
increases in importance as a firm grows. A structure is created to cope with
problems created by growth. Through this formal structure, the various work
activities are defined, classified, arranged and coordinated. Thus, organizing
refers to certain dynamic aspects: What tasks are to be done? Who is to do
them? How the tasks are to be grouped? Who is to report to whom? Where the
decisions have to be made?
3. Staffing :-
Staffing is the function of employing suitable persons for the enterprise. It may be
defined as an activity where people are recruited, selected, trained, developed,
motivated and compensated for manning (man) various positions. Staffing
involves selection of the right person for the right job in right time. It has four
important elements:
a) Recruitment may be defined as the process of attracting the maximum number of
applications for a particular job.
b) Selection is the process of screening the candidates and choosing the best ones
out of them.
c) Training involves imparting the necessary knowledge and skills required for the
performance of a particular job.
d) Compensation is the price paid to the workers for the services rendered to the
organization.

4. Directing :-
 The function of guiding and supervising the activities of the subordinates is known
as directing. In the words of George R. Terry, “Directing means moving to action
and supplying stimulative power to the group”. Thus directing involves issuing
instructions (or communication) to subordinates. This work involves four
important elements:
a) Leadership is the process of influencing the actions of a person or a group to
attain desired objectives. A manager has to get the work done with and through
people. The success of an organization depends upon the quality of leadership
shown by its managers.
b) Motivation is the work a manager performs to inspire, encourage and impel people
to take required action. In order to motivate employees, manager must provide a
congenial working atmosphere coupled with attractive incentives.
c) Communication is the transfer of information and understanding from one person
to another. It is a way of reaching others with ideas, facts and thoughts.
d) Supervision is seeing that subordinates do their work and do it as directed. It
involves overseeing employees at work.
5. Controlling :-
The objective of controlling is to ensure that actions contribute to goal
accomplishment. In controlling performances are observed, measured and
compared with what had been planned. If the measured performance is found
wanting, the manager must find reasons and take corrective actions. If the
performance is not found wanting, some planning decisions must be made,
altering the original plans. If the controlling function is to be effective, it must be
preceded by proper planning. Thus, controlling includes four things:
i. Setting the standards of performance
ii. Measuring actual performance
iii. Comparing actual performance against the standard and
iv. Taking corrective actions to ensure goal accomplishment.

Successful manager involves active participation by manager in the above basic managerial
functions. These functions are interrelated and most managers use a combination of the four
simultaneously to solve the problems facing their companies. All management functions are
related and interrelated to each other as shown below.

Each function blends into the other and each can be performed in any order or sequence, not
necessarily in the order shown above, but tend to performed(normally) in the planning,
organizing, leading and controlling sequence.
Principles of Management
Fayol made a distinction between "elements of management" and "general principles of
management". Besides a systematic analysis of the management process and management
functions, Fayol formulated a set of fourteen principles as guidelines for implementing the
process of management.
These principles may be listed as follows:

1. Division of Work
In any organized situation, work should be divided into compact jobs to be assigned to
individuals. This applies to managerial work and non-managerial work. Division of labour
facilities specialization and improves efficiency, if it is done within reasonable limits.

2. Authorities and Responsibility

The authority is the official right to a manager to manage people and things. Authority of a
manager goes hand in hand with the responsibility for effective results. In other words, there
should be parity or balance between authority and responsibility vested in a managerial
position.

3. Discipline
Discipline is defined as observance of diligence and respect for seniors and rules and
regulations. Managers as leaders of their work groups should enforce discipline throughout
the organization. Fayol declares that discipline requires good superiors at all levels. He
emphasized the need of discipline among the personnel for the smooth running of
organization. He advocated penalties to prevent in violation.

4. Unity of Command
It means that a subordinate in an organization should be under direct supervision of a single
from whom he should get instructions and to whom be should be accountable. In other
words, every employee should have only one boss. If a subordinate has more than one boss,
to that case conflict and condition in authority and instructions of general bosses would
result.

5. Unity of Direction
Fayol advocates one head, one plan for a group of activities having same objective. In other
words, a set of activities having the same objective should be under the direction of a single
manager. Similarly, there should be one plan of action for such a set of activities because the
objective is the same. This principle promotes smooth coordination of activities, efforts and
resources.

6. Subordination of Individual Interest to Group Interest

The collective good and common interest of the organization should prevail over the narrow,
sectional and self-interest of its members of an organization for the welfare of both the
organization and the members.

7. Remuneration
Compensation for work done should be fair to both employees and employers. Remuneration
as well the methods of payment in an organization should be fair so as to afford maximum
satisfaction both to the organization and its employees.
8. Centralization
According to Fayol, everything which reduces the importance of subordinates role is
centralization and that which increases it, is decentralization. In his opinion, the question of
centralization and optimum degree in particular case. There should be a proper combination
and decentralization in an organization based on a consideration of several internal and
external factors.

9. Scalar Chain (The Hierarchy)

Fayol defines the scalar chain as the chain of superiors ranging from the ultimate
authority (i.e. top authority) to the lowest ranks. It is also known as hierarchy of
management. Every communication should follow the prescribed route, i.e. the proper
channel. Authority relationships are said to be scalar when subordinates report to their
immediate superiors and when their superiors, in turn, directly report as subordinates, to
their superiors.

10. Order
Order relates to both persons and things. It means a systematic arrangement of materials
and systematic placement of people in the organization. In material order, everything should
be in its proper place and there should be a place for everything. For social order there
should be a place assigned to each employee, and each employee should be in the place
assigned. The right man in the right place is the ideal here.

11. Equity
Equity means combination of fairness, kindliness and justice. Equity motivates the workers
to perform their duties. Besides, it promotes a friendly atmosphere between superiors and
subordinates.

12. Stability of Tenure of Personnel

Management should strive to minimize employee turnover (i.e. changes in staff). In other
words efforts should be made to achieve relative stability and continuity of tenure of the
personnel. This could be achieved by attractive remuneration and honorable treatment of
personnel. Stability and continuity of personnel promote teamwork, loyalty and economy.

13. Initiative
It refers to the freedom to propose a plan and execute it. Management should encourage
subordinates to take desirable initiative in thinking out plans and executing them. Extending
opportunities and freedom to contribute their best could do this.

14. Esprit de corps

Esprit de corps means the spirit of loyalty and devotion, which unites the members of a group
or society. It is a sense of respect and belongingness to one's organization. This principle
stresses the need for team spirit, cordial relations, and co-operations among the personnel.
It is to be noted that Fayol made is clear that he had no intention to close the list of
principles or make them inflexible.
Patterns of management

The study of theories is more important as they guide management decisions; they shape our
organization make us aware of the business environment and make a source of new ideas.
Now, we shall study these theories in order to know the management thought is developed;
principles of management are evolved and different approaches to management are designed.
The first among the management theories is scientific management.

Scientific Management:-
Fredrick Winslow Taylor (March 20, 1856 - March 21, 1915) commonly known
as ’Father of Scientific Management’ started his career as an operator and
rose to the position of chief engineer. He conducted various experiments during
this process which forms the basis of scientific management. It implies
application of scientific principles for studying & identifying management
problems.

According to Taylor, “Scientific Management is an art of knowing exactly what you

want your men to do and seeing that they do it in the best and cheapest way”.
In Taylors view, if a work is analyzed scientifically it will be possible to find one
best way to do it.

Hence scientific management is a thoughtful, organized, dual approach towards the

job of management against hit or miss or Rule of Thumb.
According to Drucker, “The cost of scientific management is the organized study of work, the
analysis of work into simplest element & systematic management of worker’s performance of
each element”.

Principles of scientific management:-

1. Time Study
a. It is a technique which enables the manager to ascertain standard time taken
for performing a specified job.
b. Every job or every part of it is studied in detail.
c. This technique is based on the study of an average worker having reasonable
skill and ability.
d. Average worker is selected and assigned the job and then with the help of a
stop watch, time is ascertained for performing that particular job.
e. Taylor maintained that Fair day’s work should be determined through
observations, experiment and analysis by keeping in view an average worker.

Standard Time × Working Hours = Fair Day’s Work

2. Motion Study
a. In this study, movement of body and limbs required to perform a job are closely
observed.
b. In other words, it refers to the study of movement of an operator on machine
involved in a particular task.
c. The purpose of motion study is to eliminate useless motions and determine the
bet way of doing the job.
d. By undertaking motion study an attempt is made to know whether some
elements of a job can be eliminated combined or their sequence can be changed
to achieve necessary rhythm.
 e. Motion study increases the efficiency and productivity of workers by cutting
down all wasteful motions.
3. Development of Science for each part of men’s job (replacement of rule of
thumb)
a. This principle suggests that work assigned to any employee should be observed,
analyzed with respect to each and every element and part and time involved in
it.
b. This means replacement of odd rule of thumb by the use of method of enquiry,
investigation, data collection, analysis and framing of rules.
c. Under scientific management, decisions are made on the basis of facts and by
the application of scientific decisions.
4. Differential Piece Wage Plan
a. This tech of wage payment is based on efficiency of worker.
b. The efficient workers are paid more wages than inefficient one.
c. On the other hand, those workers who produce less than standard no. of pieces
are paid wages at lower rate than prevailing rate i.e. worker is penalized for his
inefficiency.
d. This system is a source of incentive to workers who improving their efficiency in
order to get more wages.
e. It also encourages inefficient workers to improve their performance and achieve
their standards.
f. It leads to mass production which minimizes cost and maximizes profits.
5. Group Harmony
a. F. W. Taylor emphasized upon group harmony which can be achieved through
satisfying the needs of the group members.
b. Eliminating the dissatisfaction and frustration of group members.
c. Maintaining the sound interpersonal relations among the group members and
involving them in various group activities.
6. Cooperation between workers and management
He also advocated sound employee-employer relations which should result in
cooperation between workers and the management. Sound relations can be
achieved in the following ways:

a. Management should understand the workers needs and take steps to satisfy
them.
b. Workers should understand the organizational requirements like increasing
productivity, sales, profitability etc. and maximizing the contribution.

7. Scientific Selection, Training & Development of Workers

a. There should be scientifically designed procedure for the selection of workers.
b. Physical, mental & other requirement should be specified for each and every
job.
c. Workers should be selected & trained to make them fit for the job.
d. The management has to provide opportunities for development of workers
having better capabilities.
e. According to Taylor efforts should be made to develop each employee to his
greatest level and efficiency & prosperity.
8. Standardization
a. It implies the physical attitude of products should be such that it meets the
requirements & needs of customers.
b. Taylor advocated that tools & equipments as well as working conditions should
be standardized to achieve standard output from workers.
c. Standardization is a means of achieving economics of production.
d. It seems to ensure -
 1. The line of product is restricted to predetermined type, form, design, size,
weight, quality. Etc
2. There is manufacture of identical parts and components.
3. Quality & standards have been maintained.
4. Standard of performance are established for workers at all levels.
9. Method study
F.W. Taylor believed that methodological and systematic movements of materials
ensure fast movement of materials in the factory, avoidance of unnecessary
transportation of material from one stage to another stage of production,
reduction of distance from one machine to another machine, reduction of the
transportation time etc.

10. Functional Foremanship

a. Taylor advocated functional foremanship for achieving ultimate specification.

b. This technique was developed to improve the quality of work as single
supervisor may not be an expert in all the aspects of the work.
c. Therefore workers are to be supervised by specialist foreman.
d. The scheme of functional foremanship is an extension of principle pf
specialization at the supervisory level.
e. Taylor advocated appointment of 8 foramen, 4 at the planning level & other 4 at
implementation level.
11. Division of Responsibility
a. This principle determines the concrete nature of roles to be played by different
level of managers & workers.
b. The management should assume the responsibility of planning the work
whereas workers should be concerned with execution of task.
c. Thus planning is to be separated from execution.

12. Fatigue study

Workers are human beings prone (level) to fatigue on account of over work, stress
and strain, etc. Thus fatigue (weakness) of all kinds- physical or mental- has an
adverse effect on the workers health and efficiency. This study helps in
diminishing fatigue among the workers.

Criticism of scientific management

 1. The concept of functional foremanship is not feasible in practice as it violates the
principle of unity of command.
2. Taylorism is confined mostly to production management and fully ignores the areas of
finance, marketing, accounting and personnel.
3. The use of the word ‘scientific’ before ‘management’ is objected to because what is
actually meant by scientific management is nothing but a scientific approach to
management.
4. Trade unionists object to it as the wages of the workers are not increased in direct
proportion to the increase in productivity.

Behavioral science approach:

As management research continued in the 20th century, questions began to come up

regarding the interactions and motivations of the individual within organizations.
Management principles developed during the classical period were simply not useful in
dealing with many management situations and could not explain the behavior of individual
employees. In short, classical theory ignored employee motivation and behavior. As a result,
the behavioral school was a natural outgrowth of this revolutionary management experiment.

The behavioral management theory is often called the human relations movement because
it addresses the human dimension of work. Behavioral theorists believed that a better
understanding of human behavior at work, such as motivation, conflict, expectations, and
group dynamics, improved productivity.

The theorists who contributed to this school viewed employees as individuals, resources, and
assets to be developed and worked with — not as machines, as in the past. Several
individuals and experiments contributed to this theory.

Elton Mayo's contributions came as part of the Hawthorne studies, a series of experiments
that rigorously applied classical management theory only to reveal its shortcomings. The
Hawthorne experiments consisted of two studies conducted at the Hawthorne Works of the
Western Electric Company in Chicago from 1924 to 1932. The first study was conducted by a
group of engineers seeking to determine the relationship of lighting levels to worker
productivity. Surprisingly enough, they discovered that worker productivity increased as the
lighting levels decreased — that is, until the employees were unable to see what they were
doing, after which performance naturally declined.

A few years later, a second group of experiments began. Harvard researchers Mayo and F. J.
Roethlisberger supervised a group of five women in a bank wiring room. They gave the
women special privileges, such as the right to leave their workstations without permission,
take rest periods, enjoy free lunches, and have variations in pay levels and workdays. This
experiment also resulted in significantly increased rates of productivity.

In this case, Mayo and Roethlisberger concluded that the increase in productivity resulted
from the supervisory arrangement rather than the changes in lighting or other associated
worker benefits. Because the experimenters became the primary supervisors of the
employees, the intense interest they displayed for the workers was the basis for the increased
motivation and resulting productivity. Essentially, the experimenters became a part of the
study and influenced its outcome. This is the origin of the term Hawthorne effect, which
describes the special attention researchers give to a study's subjects and the impact that
attention has on the study's findings.

The general conclusion from the Hawthorne studies was that human relations and the social
needs of workers are crucial aspects of business management. This principle of human
motivation helped revolutionize theories and practices of management.

System approach:

A system is a set of interrelated but separate parts working towards a common purpose. The
arrangement of elements must be orderly and there must be proper communication
facilitating interaction between the elements and finally this interaction should lead to
achieve a common goal.

System theory reveals to us that the activity of any segment of an organization, affects in
different degrees, the activity of every other segment.

Key concepts of systems approach

i. Subsystem
ii. Synergy
iii. Open System
iv. Closed System
v. System Boundary
vi. Flows
vii. Feedback
1. Subsystem: subsystems are those parts which make up the whole system. Each
system in turn may be a subsystem of a still larger system. Thus a department is a
subsystem of a factory, which is subsystem of a firm. This is a subsystem of an
industry which is a national economy, which is a subsystem of the world economic
system.

2. Synergy: Synergy is the situation in which the whole is greater than the sum of its
parts. In organization terms synergy means those departments that interact co-
operatively are more productive than they would be, if they operated in isolation.

3. Open System: It is a system that interacts with its environment. All organization
interacts with their environment, but they extent to which they do so varies.

4. Closed System: It is system that does not interact with its environment.

5. System Boundary: It is the boundary that separates each system from its
environment. It is rigid in a closed system from the environment. It is rigid in a closed
system while flexible in an open system.

6. Flows: A system has flows of information, materials and energy. These enter the
system from the environment as inputs (like raw materials), undergo transformation
process within the system (like production services) and exist in the system as outputs
(like products services). (Fig .2.2shows the flows and feedback in an open system).

7. Feedback: It is the part of system control in which the results of actions are returned
to the individual, allowing work procedures to be analyzed and corrected.

System approach helps the dynamic and interrelated nature of organizations to

plan for actions and anticipate consequence and mutual effects. It helps the general
managers to maintain balance among various subsystems and the organization. Thus
 a major contribution of the systems approach results from its strong emphasis on the
interrelatedness or mutuality of various subsystems of the organization. Treatment of
the organization as an open system is another contribution of system of systems
approach.

Contingency approach:

This approach is also called situational approach. This approach was developed by
managers, consultants and researchers who tried to apply the concept of the major schools
to real life situations. Contingency approach is usually be called Situational Approach, where
there is no body universally applicable set of management principles (rules) by which to
manage organizations. It depends on the situation and condition of the organization and
workers.
Organizations are individually different, face different situations and require different ways of
managing. For practicing managers, we can make them benefit by using the Contingency
Approach.
As practicing managers, they will face many differences in organizations. From the
organization size, routines of task technology, environmental uncertainty and individual
differences. By contingency approach, we can make some ways in order to increase the
performance of the practicing managers. For the organization size, we can encourage them
with some approaches that support them in working although there are so many problems of
coordination.
Routine of task technologies that require organizational structures, leadership styles and
control systems can be a motivation for them, because when they are practicing managers,
they will try to find ways to encounter and minimize the problems they will face. Besides,
there are environmental uncertainty and individual differences that practicing managers will
face.
By these happen, they will be motivated and they will do their best in order to keep them
away from those things, they will optimize their tasks and jump into a competition among
them that point to the results of their work so that their output will be good and admitted by
the organizations.
So, by doing contingency approach, giving motivation and some approaches in order to
encourage the practicing managers, they will benefit. The output will be as long as we desire
and the morale of the managers will be increased and triggered to do and give their best in
working. Contingency approach is needed and it make practicing managers can benefit. It is
also helping us in understanding management.
Management by objectives (MBO):

Management by objectives (MBO) is a systematic and organized approach that allows

management to focus on achievable goals and to attain the best possible results from
available resources. It aims to increase organizational performance by aligning goals and
subordinate objectives throughout the organization. Ideally, employees get strong input to
identify their objectives, time lines for completion, etc. MBO includes ongoing tracking and
feedback in the process to reach objectives.

Management by Objectives (MBO) was first outlined by Peter Drucker in 1954 in his book
'The Practice of Management'. In the 90s, Peter Drucker himself decreased the significance of
this organization management method, when he said: "It's just another tool. It is not the
great cure for management inefficiency.

Management by objectives is defined by “A comprehensive managerial system that integrates

many key managerial activities in a systematic manner i.e consciously directed towards the
effective an efficient achievement of organizational & individual objectives.”
Features of MBO:
1. Management by Objectives is a philosophy or a system, and not merely technique.
2. It emphasizes participative goal setting.
3. It clearly defines each individual responsibility in terms of results.
4. If focuses attention on what must be accomplished (goals0 rather than on how it is to be
accomplished.
5. It converts objective needs into personal goals at every level in the organization.
6. It establishes standards or yardsticks (goals) as operation guides and also as basis of
performance evaluation.
7. It is a system intentionally directed toward effective and efficient attainment of
organizational and personal goals.
8. MBO process (or management by Objective cycle or key elements of management by
Objectives or minimum requirements of management by objectives.

Steps in MBO /Process of MBO:

There are four important and essential steps or elements in the management by Objectives
process as follows:
Setting Objectives:

Goal-setting or objective setting is a multistage process. It starts with the examining of the
current stat3e of affaires, level of efficiency, threats, and opportunities. Then the key result
areas are identified, such as product markets, improved services, lowered costs, work
simplification, employee motivation, profitability innovation and social responsibility. The
performance of these areas is critical for organization in the sense that failure in these areas
may result in failure of the organization. And this is why they are known as “key” result
areas. Peter says, objectives are important in every area where performance and results
directly affect the survival and prosperity of business.

Developing Action Plans:

Set objectives must be translated into action plans. It requires assignment of specific
responsibilities to different departments, division, and individuals. It also requires allocation
of necessary resources needed to perform the assigned responsibilities. Time dimensions are
also to be decided in order that targets are reached without any unwarranted delays.

Periodic Review or Monitoring The Progress:

After setting objectives and developing action plans, it is necessary to establish a proper
monitoring system with a view to regularly keeping the activities. He progress is monitored
without day path leading to the ultimate objective. It is ensured that the deviations found, if
any, are thoroughly discussed and immediate corrective actions are taken to set them right
on the course. Such a regular monitoring and periodic review not only provide feedback
which is essential for completion of work in time. But also motivates the managers
accountable for performance. Periodic review and monitoring are done at departmental level
generally.

Performance appraisal:
This is the last phase of MBO program that evaluates performance annually. The annual
review or appraisal is comprehensive and is done at the organization level. The actual annual
results are evaluated against the set objectives. Such assessment is also used for
determining targets for next year, for modification in standards (goals0 if needed, and for
taking corrective actions in order to avoid deviations from predetermined objectives.

Advantages of MBO:
• MBO programs continually emphasize what should be done in an organization to achieve
organizational goals.
• MBO process secures employee commitment to attaining organizational goals.
Disadvantages of MBO:
• It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes.
• It did not address the importance of successfully responding to obstacles and constraints
as essential to reaching a goal.

SWOT Analysis

In order to analyze and understand the external and internal business environments,
organizations turn to SWOT analysis – an acronym for strengths, weaknesses, opportunities,
and threats. The idea is simple, the strengths and weaknesses of an organization are matched
with the threats and opportunities of the environment to formulate an effective strategy. In
this article, we will look at SWOT analysis along with some examples.

In order to create an effective strategy, it is important that the organization capitalizes on the
opportunities by using its strengths. Also, it must avoid the threats by reducing the impact of
the weaknesses.

Elements of SWOT Analysis

 Strengths – are the aspects of an organization that make it better than its competitors.
For example, the strength of a company can be having one of the best technological tools
in the market. A thorough analysis can help the company use it to improve its business.

 Weaknesses – areas where the organization needs to improve to remain competitive in

the industry. Some examples of weaknesses are high debts, lack of capital, inadequate
supply chain, etc.

 Opportunities – are external factors that can help an organization in gaining competitive
advantage. For example, if a country changes its import laws, then a car exporter can
increase his sales by taking advantage of this opportunity.

 Threats – are factors which have the potential to cause harm to an organization. For
example, a drought is a threat to a crop-producing company as it can destroy the crop.
A SWOT Analysis helps an organization identify its core strengths and weaknesses as well as
opportunities and threats and create a strategy to achieve success. It can be used for specific
segments like production, marketing, and sales.

Planning
Planning is the primary function of management. It is the important process of deciding
business objectives and charting out the method to accomplish these goals. This includes
decision of what type of activity is to be done, where to be done and how the results to be
analyzed.
Definition: "Planning is the fundamental management function, which involves deciding
beforehand, what is to be done, when is it to be done, how it is to be done and who is going
to do it".

"It is an intellectual process which lays down an organisation’s objectives and develops
various courses of action, by which the organisation can achieve those objectives. It chalks
out exactly, how to attain a specific goal".

Planning Process

The planning function of management is one of the most crucial ones. It involves setting the
goals of the company and then managing the resources to achieve such goals. As you can
imagine it is a systematic process involving eight well thought out steps. Let us take a look at
the planning process.
1] Recognizing Need for Action
An important part of the planning process is to be aware of the business opportunities in the
firm’s external environment as well as within the firm. Once such opportunities get recognized
the managers can recognize the actions that need to be taken to realize them. A realistic look
must be taken at the prospect of these new opportunities and SWOT analysis should be done.

Say for example the government plans on promoting cottage industries in semi-urban areas. A
firm can look to explore this opportunity.

2] Setting Objectives
This is the second and perhaps the most important step of the planning process. Here we
establish the objectives for the whole organization and also individual departments.
Organizational objectives provide a general direction, objectives of departments will be more
planned and detailed.

Objectives can be long term and short term as well. They indicate the end result the company
wishes to achieve. So objectives will percolate down from the managers and will also guide and
push the employees in the correct direction.3] Developing Premises

Planning is always done keeping the future in mind, however, the future is always uncertain.
So in the function of management certain assumptions will have to be made.
These assumptions are the premises. Such assumptions are made in the form of forecasts,
existing plans, past policies, etc.

These planning premises are also of two types – internal and external. External assumptions
deal with factors such as political environment, social environment, the advancement of
technology, competition, government policies, etc. Internal assumptions deal with policies,
availability of resources, quality of management, etc.

These assumptions being made should be uniform across the organization. All managers
should be aware of these premises and should agree with them.
4] Identifying Alternatives
The fourth step of the planning process is to identify the alternatives available to the managers.
There is no one way to achieve the objectives of the firm, there is a multitude of choices. All of
these alternative courses should be identified. There must be options available to the manager.

Maybe he chooses an innovative alternative hoping for more efficient results. If he does not
want to experiment he will stick to the more routine course of action. The problem with this
step is not finding the alternatives but narrowing them down to a reasonable amount of choices
so all of them can be thoroughly evaluated.

5] Examining Alternate Course of Action

The next step of the planning process is to evaluate and closely examine each of the alternative
plans. Every option will go through an examination where all there pros and cons will be
weighed. The alternative plans need to be evaluated in light of the organizational objectives.

For example, if it is a financial plan. Then it that case its risk-return evaluation will be done.
Detailed calculation and analysis are done to ensure that the plan is capable of achieving the
objectives in the best and most efficient manner possible.

6] Selecting the Alternative

Finally, we reach the decision making stage of the planning process. Now the best and most
feasible plan will be chosen to be implemented. The ideal plan is the most profitable one with
the least amount of negative consequences and is also adaptable to dynamic situations.

The choice is obviously based on scientific analysis and mathematical equations. But a
managers intuition and experience should also play a big part in this decision. Sometimes a few
different aspects of different plans are combined to come up with the one ideal plan.

7] Formulating Supporting Plan

Once you have chosen the plan to be implemented, managers will have to come up with one or
more supporting plans. These secondary plans help with the implementation of the main plan.
For example plans to hire more people, train personnel, expand the office etc are supporting
plans for the main plan of launching a new product. So all these secondary plans are in fact
part of the main plan.

8] Implementation of the Plan

And finally, we come to the last step of the planning process, implementation of the plan. This
is when all the other functions of management come into play and the plan is put into action to
achieve the objectives of the organization. The tools required for such implementation involve
the types of plans- procedures, policies, budgets, rules, standards etc.

Decision Making:

"The process of deciding about something important, especially in a group of people or in an

organization".

“Decision-making involves the selection of a course of action from among two or more
possible alternatives in order to arrive at a solution for a given problem”.
Decision making is the process of making choices by identifying a decision, gathering
information, and assessing alternative resolutions.
Using a step-by-step decision-making process can help you make more deliberate,
thoughtful decisions by organizing relevant information and defining alternatives. This
approach increases the chances that you will choose the most satisfying alternative
possible.

Step 1: Identify the decision

You realize that you need to make a decision. Try to clearly define the nature of the
decision you must make. This first step is very important.
Step 2: Gather relevant information
Collect some pertinent information before you make your decision: what information is
needed, the best sources of information, and how to get it. This step involves both
internal and external “work.” Some information is internal: you’ll seek it through a
process of self-assessment. Other information is external: you’ll find it online, in books,
from other people, and from other sources.
Step 3: Identify the alternatives
As you collect information, you will probably identify several possible paths of action, or
alternatives. You can also use your imagination and additional information to construct
new alternatives. In this step, you will list all possible and desirable alternatives.
Step 4: Weigh the evidence
Draw on your information and emotions to imagine what it would be like if you carried
out each of the alternatives to the end. Evaluate whether the need identified in Step 1
would be met or resolved through the use of each alternative. As you go through this
difficult internal process, you’ll begin to favor certain alternatives: those that seem to
have a higher potential for reaching your goal. Finally, place the alternatives in a priority
order, based upon your own value system.
Step 5: Choose among alternatives
Once you have weighed all the evidence, you are ready to select the alternative that seems
to be best one for you. You may even choose a combination of alternatives. Your choice in
Step 5 may very likely be the same or similar to the alternative you placed at the top of
your list at the end of Step 4.
Step 6: Take action
You’re now ready to take some positive action by beginning to implement the alte rnative
you chose in Step 5.
Step 7: Review your decision & its consequences
In this final step, consider the results of your decision and evaluate whether or not it has
resolved the need you identified in Step 1. If the decision has not met the identified need,
you may want to repeat certain steps of the process to make a new decision. For example,
you might want to gather more detailed or somewhat different information or explore
additional alternatives.

UNIT-II
Organizing, Staffing ,Directing & Controlling

Organizing is the function of management which follows planning. It is a function in

which the synchronization and combination of human, physical and financial
resources takes place. All the three resources are important to get results. Therefore,
organizational function helps in achievement of results which in fact is important for
the functioning of a concern. According to Chester Barnard, “Organizing is a function
by which the concern is able to define the role positions, the jobs related and the co-
ordination between authority and responsibility. Hence, a manager always has to
organize in order to get results.

Classification of Organizations

Organizations are basically clasified on the basis of relationships. There are two types
of organizations formed on the basis of relationships in an organization

1. Formal Organization - This is one which refers to a structure of well defined

jobs each bearing a measure of authority and responsibility. It is a conscious
determination by which people accomplish goals by adhering to the norms laid
down by the structure. This kind of organization is an arbitrary set up in which
each person is responsible for his performance. Formal organization has a
formal set up to achieve pre- determined goals.
2. Informal Organization - It refers to a network of personal and social
relationships which spontaneously originates within the formal set up.
Informal organizations develop relationships which are built on likes, dislikes,
feelings and emotions. Therefore, the network of social groups based on
friendships can be called as informal organizations. There is no conscious
effort made to have informal organization. It emerges from the formal
organization and it is not based on any rules and regulations as in case of
formal organization.

A manager performs organizing function with the help of following steps:-

1. Identification of activities - All the activities which have to be performed in a

concern have to be identified first. For example, preparation of accounts,
making sales, record keeping, quality control, inventory control, etc. All these
activities have to be grouped and classified into units.
2. Departmentally organizing the activities - In this step, the manager tries to
combine and group similar and related activities into units or departments.
This organization of dividing the whole concern into independent units and
departments is called departmentation.
3. Classifying the authority - Once the departments are made, the manager
likes to classify the powers and its extent to the managers. This activity of
giving a rank in order to the managerial positions is called hierarchy. The top
 management is into formulation of policies, the middle level management into
departmental supervision and lower level management into supervision of
foremen. The clarification of authority help in bringing efficiency in the running
of a concern. This helps in achieving efficiency in the running of a concern.
This helps in avoiding wastage of time, money, effort, in avoidance of
duplication or overlapping of efforts and this helps in bringing smoothness in a
concern’s working.
4. Co-ordination between authority and responsibility - Relationships are
established among various groups to enable smooth interaction toward the
achievement of the organizational goal. Each individual is made aware of his
authority and he/she knows whom they have to take orders from and to whom
they are accountable and to whom they have to report. A clear organizational
structure is drawn and all the employees are made aware of it.

Importance of Organizing Function:

1. Specialization - Organizational structure is a network of relationships in

which the work is divided into units and departments. This division of work is
helping in bringing specialization in various activities of concern.
2. Well defined jobs - Organizational structure helps in putting right men on
right job which can be done by selecting people for various departments
according to their qualifications, skill and experience. This is helping in
defining the jobs properly which clarifies the role of every person.
3. Clarifies authority - Organizational structure helps in clarifying the role
positions to every manager (status quo). This can be done by clarifying the
powers to every manager and the way he has to exercise those powers should
be clarified so that misuse of powers do not take place. Well defined jobs and
responsibilities attached helps in bringing efficiency into managers working.
This helps in increasing productivity.
4. Co-ordination - Organization is a means of creating co-ordination among
different departments of the enterprise. It creates clear cut relationships among
positions and ensure mutual co-operation among individuals. Harmony of
work is brought by higher level managers exercising their authority over
interconnected activities of lower level manager.
5. Effective administration - The organization structure is helpful in defining
the jobs positions. The roles to be performed by different managers are
clarified. Specialization is achieved through division of work. This all leads to
efficient and effective administration.
6. Growth and diversification - A company’s growth is totally dependant on how
efficiently and smoothly a concern works. Efficiency can be brought about by
clarifying the role positions to the managers, co-ordination between authority
and responsibility and concentrating on specialization. In addition to this, a
company can diversify if its potential grow. This is possible only when the
organization structure is well- defined. This is possible through a set of formal
structure.
7. Sense of security - Organizational structure clarifies the job positions. The
roles assigned to every manager is clear. Co-ordination is possible. Therefore,
clarity of powers helps automatically in increasing mental satisfaction and
thereby a sense of security in a concern. This is very important for job-
satisfaction.
8. Scope for new changes - Where the roles and activities to be performed are
clear and every person gets independence in his working, this provides enough
space to a manager to develop his talents and flourish his knowledge. A
 manager gets ready for taking independent decisions which can be a road or
path to adoption of new techniques of production. This scope for bringing new
changes into the running of an enterprise is possible only through a set of
organizational structure.

Line organization :

It is the most oldest and simplest method of administrative organization. According to

this type of organization, the authority flows from top to bottom in a concern. The
line of command is carried out from top to bottom. This is the reason for calling this
organization as scalar organization which means scalar chain of command is a part
and parcel of this type of administrative organization. In this type of organization, the
line of command flows on an even basis without any gaps in communication and co-
ordination taking place.

Line and Staff Organization:

Line and staff organization is a modification of line organization and it is more

complex than line organization. According to this administrative organization,
specialized and supportive activities are attached to the line of command by
appointing staff supervisors and staff specialists who are attached to the line
authority. The power of command always remains with the line executives and staff
supervisors guide, advice and council the line executives. Personal Secretary to the
Managing Director is a staff official.

MANAGING DIRECTOR

↓ ↓ ↓

Production Marketing Finance

Manager Manager Manager

↓ ↓ ↓

Market
Plant Supervisor Chief Assisstant
Supervisor

↓ ↓ ↓

Foreman Salesman Accountant

Features of Line and Staff Organization

1. There are two types of staff :
a. Staff Assistants- P.A. to Managing Director, Secretary to Marketing
 Manager.
b. Staff Supervisor- Operation Control Manager, Quality Controller, PRO
2. Line and Staff Organization is a compromise of line organization. It is more
complex than line concern.
3. Division of work and specialization takes place in line and staff
organization.
4. The whole organization is divided into different functional areas to which
staff specialists are attached.
5. Efficiency can be achieved through the features of specialization.
6. There are two lines of authority which flow at one time in a concern :
a. Line Authority
b. Staff Authority
7. Power of command remains with the line executive and staff serves only as
counselors.

Merits of Line and Staff Organization

1. Relief to line of executives- In a line and staff organization, the advice and
counseling which is provided to the line executives divides the work between
the two. The line executive can concentrate on the execution of plans and they
get relieved of dividing their attention to many areas.
2. Expert advice- The line and staff organization facilitates expert advice to the
line executive at the time of need. The planning and investigation which is
related to different matters can be done by the staff specialist and line officers
can concentrate on execution of plans.
3. Benefit of Specialization- Line and staff through division of whole concern
into two types of authority divides the enterprise into parts and functional
areas. This way every officer or official can concentrate in its own area.
4. Better co-ordination- Line and staff organization through specialization is
able to provide better decision making and concentration remains in few
hands. This feature helps in bringing co-ordination in work as every official is
concentrating in their own area.

Demerits of Line and Staff Organization

1. Lack of understanding- In a line and staff organization, there are two

authority flowing at one time. This results in the confusion between the two. As
a result, the workers are not able to understand as to who is their commanding
authority. Hence the problem of understanding can be a hurdle in effective
running.
2. Lack of sound advice- The line official get used to the expertise advice of the
staff. At times the staff specialist also provide wrong decisions which the line
executive have to consider. This can affect the efficient running of the
enterprise.
3. Line and staff conflicts- Line and staff are two authorities which are flowing
at the same time. The factors of designations, status influence sentiments
which are related to their relation, can pose a distress on the minds of the
employees. This leads to minimizing of co-ordination which hampers a
concern’s working.
4. Costly- In line and staff concern, the concerns have to maintain the high
remuneration of staff specialist. This proves to be costly for a concern with
limited finance.
Delegation of Authority

A manager alone cannot perform all the tasks assigned to him. In order to meet the
targets, the manager should delegate authority. Delegation of Authority means
division of authority and powers downwards to the subordinate. Delegation is about
entrusting someone else to do parts of your job. Delegation of authority can be
defined as subdivision and sub-allocation of powers to the subordinates in order to
achieve effective results.

Elements of Delegation

1. Authority - in context of a business organization, authority can be defined as

the power and right of a person to use and allocate the resources efficiently, to
take decisions and to give orders so as to achieve the organizational objectives.
Authority must be well- defined. All people who have the authority should
know what is the scope of their authority is and they shouldn’t misutilize it.
Authority is the right to give commands, orders and get the things done. The
top level management has greatest authority.

Authority always flows from top to bottom. It explains how a superior gets work
done from his subordinate by clearly explaining what is expected of him and
how he should go about it. Authority should be accompanied with an equal
amount of responsibility. Delegating the authority to someone else doesn’t
imply escaping from accountability. Accountability still rest with the person
having the utmost authority.

2. Responsibility - is the duty of the person to complete the task assigned to

him. A person who is given the responsibility should ensure that he
accomplishes the tasks assigned to him. If the tasks for which he was held
responsible are not completed, then he should not give explanations or
excuses. Responsibility without adequate authority leads to discontent and
dissatisfaction among the person. Responsibility flows from bottom to top. The
middle level and lower level management holds more responsibility. The person
held responsible for a job is answerable for it. If he performs the tasks assigned
as expected, he is bound for praises. While if he doesn’t accomplish tasks
assigned as expected, then also he is answerable for that.
3. Accountability - means giving explanations for any variance in the actual
performance from the expectations set. Accountability can not be delegated.
For example, if ’A’ is given a task with sufficient authority, and ’A’ delegates
this task to B and asks him to ensure that task is done well, responsibility rest
with ’B’, but accountability still rest with ’A’. The top level management is most
accountable. Being accountable means being innovative as the person will
think beyond his scope of job. Accountability, in short, means being
answerable for the end result. Accountability can’t be escaped. It arises from
responsibility.

For achieving delegation, a manager has to work in a system and has to perform
following steps : -

1. Assignment of tasks and duties

2. Granting of authority
3. Creating responsibility and accountability
Delegation of authority is the base of superior-subordinate relationship, it
involves following steps:-

1. Assignment of Duties - The delegator first tries to define the task and duties
to the subordinate. He also has to define the result expected from the
subordinates. Clarity of duty as well as result expected has to be the first step
in delegation.
2. Granting of authority - Subdivision of authority takes place when a superior
divides and shares his authority with the subordinate. It is for this reason,
every subordinate should be given enough independence to carry the task
given to him by his superiors. The managers at all levels delegate authority and
power which is attached to their job positions. The subdivision of powers is
very important to get effective results.
3. Creating Responsibility and Accountability - The delegation process does
not end once powers are granted to the subordinates. They at the same time
have to be obligatory towards the duties assigned to them. Responsibility is
said to be the factor or obligation of an individual to carry out his duties in
best of his ability as per the directions of superior. Responsibility is very
important. Therefore, it is that which gives effectiveness to authority. At the
same time, responsibility is absolute and cannot be shifted. Accountability, on
the others hand, is the obligation of the individual to carry out his duties as
per the standards of performance. Therefore, it is said that authority is
delegated, responsibility is created and accountability is imposed.
Accountability arises out of responsibility and responsibility arises out of
authority. Therefore, it becomes important that with every authority position
an equal and opposite responsibility should be attached.

Importance of Delegation:
Delegation of authority is a process in which the authority and powers are divided
and shared amongst the subordinates. When the work of a manager gets beyond his
capacity, there should be some system of sharing the work. This is how delegation of
authority becomes an important tool in organization function. Through delegation, a
manager, in fact, is multiplying himself by dividing/multiplying his work with the
subordinates. The importance of delegation can be justified by -

1. Through delegation, a manager is able to divide the work and allocate it to the
subordinates. This helps in reducing his work load so that he can work on
important areas such as - planning, business analysis etc.
2. With the reduction of load on superior, he can concentrate his energy on
important and critical issues of concern. This way he is able to bring
effectiveness in his work as well in the work unit. This effectivity helps a
manager to prove his ability and skills in the best manner.
3. Delegation of authority is the ground on which the superior-subordinate
relationship stands. An organization functions as the authority flows from top
level to bottom. This in fact shows that through delegation, the superior-
subordinate relationship become meaningful. The flow of authority is from top
to bottom which is a way of achieving results.
4. Delegation of authority in a way gives enough room and space to the
subordinates to flourish their abilities and skill. Through delegating powers,
the subordinates get a feeling of importance. They get motivated to work and
this motivation provides appropriate results to a concern. Job satisfaction is an
important criterion to bring stability and soundness in the relationship
 between superior and subordinates. Delegation also helps in breaking the
monotony of the subordinates so that they can be more creative and efficient.
5. Delegation of authority is help to both superior and subordinates. This, in a
way, gives stability to a concern’s working. With effective results, a concern can
think of creating more departments and divisions flow working. This will
require creation of more managers which can be fulfilled by shifting the
experienced, skilled managers to these positions. This helps in both virtual as
well as horizontal growth which is very important for a concern’s stability.

Decentralization:

Decentralization refers to a specific form of organizational structure where the

top management delegates decision-making responsibilities and daily operations to
middle and lower subordinates. The top management can thus concentrate on taking
major decisions with greater time abundance. Business houses often feel the
requirement of decentralization to continue efficiency in their operation.

Advantages of Decentralisation

Motivation of Subordinates

Decentralization improves the level of job satisfaction as well as employee morale,

especially amongst the lower level managers.

Furthermore, it strives to satisfy the varying requirements for participation,

independence, and status. Decentralization also promotes a spirit of group
cohesiveness and spirit.

Growth and Diversification

Under decentralization, every single product division attains sufficient autonomy to

exercise their creative flair. In this way, the top-level management can create healthy
competition amongst different divisions.

While carrying out a discussion on the advantages and disadvantages of

decentralization, it is imperative to note that it aids subordinates in exercising their
own judgment.

They even develop managerial skills and help in solving the succession problem which
ultimately ensures the growth and continuity of an organization.

Quick Decision Making

Another important pointer in the advantages and disadvantages of decentralization is

that decisions are taken and executed by authorized personnel. This, in turn, results in
faster and accurate decisions which are well aware of the real scenario.
Efficient Communication

The wider span of management under decentralization leads to fewer hierarchical level.
This makes the communication system more efficient as intimate relationships develop
between superiors and subordinates.

Ease of Expansion

Decentralization can add inertia to the expansion process of a growing business. This
might often result in the opening of new business units in varying geographical
locations.

Decentralization unleashes the fullest potential of the organization and can react easily
to area-specific requirements.

Better Supervision And Control

Lower level managers can alter production schedules and work assignments with
adequate authority. They can even take disciplinary actions and recommend the
promotion of their peers.

This, in turn, leads to greater efficiency in supervision. Performance evaluation of each

decentralized unit helps in exercising adequate control.

Satisfaction of Human needs

Decentralization serves as an important tool for satisfying our basic need of

independence, power, prestige, and status. A cadre of satisfied manager is build up by
this satisfaction as they feel responsible towards the company’s betterment.

Relief to top executives

Top executives can focus more on more on the executive level work like planning and
decision making if the lower level employees take all the responsibilities on their own.
This relieves their workload which eventually is for the greater good of the organisation.

Disadvantages of Decentralization

Difficult To Co-Ordinate

While talking about the advantages and disadvantages of decentralization, it is

imperative to note that substantial autonomy is enjoyed by every single division. This,
in turn, makes it difficult to coordinate the overall activity.

External Factors

The trade union movement, market uncertainties, and government intervention might
make it impossible to benefit the most out of decentralization.
Narrow Product Lines

Decentralized product lines need to be adequately broad so that autonomous units can
flourish within the same. This might not be of much help in small business houses
having narrow product lines. Lower levels in the organization also lack competent
managers thus adding to the difficulty quotient.

Expensive

In decentralisation, every employee takes responsibility for the better of the

organisation so they work harder to achieve all the organisational objective. In return,
they have to be paid more which sometimes proves to be very expensive for the
company.

Staffing Function of Management

The managerial function of staffing involves manning the organization structure

through proper and effective selection, appraisal and development of the personnels
to fill the roles assigned to the employers/workforce.

According to Theo Haimann, “Staffing pertains to recruitment, selection, development

and compensation of subordinates.”

Nature of Staffing Function

1. Staffing is an important managerial function- Staffing function is the most

important mangerial act along with planning, organizing, directing and
controlling. The operations of these four functions depend upon the manpower
which is available through staffing function.
2. Staffing is a pervasive activity- As staffing function is carried out by all
mangers and in all types of concerns where business activities are carried out.
3. Staffing is a continuous activity- This is because staffing function continues
throughout the life of an organization due to the transfers and promotions that
take place.
4. The basis of staffing function is efficient management of personnels-
Human resources can be efficiently managed by a system or proper procedure,
that is, recruitment, selection, placement, training and development, providing
remuneration, etc.
5. Staffing helps in placing right men at the right job. It can be done
effectively through proper recruitment procedures and then finally selecting the
most suitable candidate as per the job requirements.
6. Staffing is performed by all managers depending upon the nature of
business, size of the company, qualifications and skills of managers,etc. In
small companies, the top management generally performs this function. In
medium and small scale enterprise, it is performed especially by the personnel
department of that concern.

Staffing Process / Steps involved in Staffing :

1. Manpower requirements- The very first step in staffing is to plan the

manpower inventory required by a concern in order to match them with the job
 requirements and demands. Therefore, it involves forecasting and determining
the future manpower needs of the concern.
2. Recruitment- Once the requirements are notified, the concern invites and
solicits applications according to the invitations made to the desirable
candidates.
3. Selection- This is the screening step of staffing in which the solicited
applications are screened out and suitable candidates are appointed as per the
requirements.
4. Orientation and Placement- Once screening takes place, the appointed
candidates are made familiar to the work units and work environment through
the orientation programmes. placement takes place by putting right man on
the right job.
5. Training and Development- Training is a part of incentives given to the
workers in order to develop and grow them within the concern. Training is
generally given according to the nature of activities and scope of expansion in
it. Along with it, the workers are developed by providing them extra benefits of
indepth knowledge of their functional areas. Development also includes giving
them key and important jobsas a test or examination in order to analyse their
performances.
6. Remuneration- It is a kind of compensation provided monetarily to the
employees for their work performances. This is given according to the nature of
job- skilled or unskilled, physical or mental, etc. Remuneration forms an
important monetary incentive for the employees.
7. Performance Evaluation- In order to keep a track or record of the behaviour,
attitudes as well as opinions of the workers towards their jobs. For this regular
assessment is done to evaluate and supervise different work units in a
concern. It is basically concerning to know the development cycle and growth
patterns of the employeesin a concern.
8. Promotion and transfer- Promotion is said to be a non- monetary incentive in
which the worker is shifted from a higher job demanding bigger responsibilities
as well as shifting the workers and transferring them to different work units
and branches of the same organization.

Directing Function of Management

DIRECTING is said to be a process in which the managers instruct, guide and
oversee the performance of the workers to achieve predetermined goals. Directing is
said to be the heart of management process. Planning, organizing, staffing have got
no importance if direction function does not take place.

Directing initiates action and it is from here actual work starts. Direction is said to be
consisting of human factors. In simple words, it can be described as providing
guidance to workers is doing work. In field of management, direction is said to be all
those activities which are designed to encourage the subordinates to work effectively
and efficiently. According to Human, “Directing consists of process or technique by
which instruction can be issued and operations can be carried out as originally
planned” Therefore, Directing is the function of guiding, inspiring, overseeing and
instructing people towards accomplishment of organizational goals.

Nature/characteristics of Directing:

1. Pervasive Function - Directing is required at all levels of organization. Every

manager provides guidance and inspiration to his subordinates.
 2. Continuous Activity - Direction is a continuous activity as it continuous
throughout the life of organization.
3. Human Factor - Directing function is related to subordinates and therefore it
is related to human factor. Since human factor is complex and behaviour is
unpredictable, direction function becomes important.
4. Creative Activity - Direction function helps in converting plans into
performance. Without this function, people become inactive and physical
resources are meaningless.
5. Executive Function - Direction function is carried out by all managers and
executives at all levels throughout the working of an enterprise, a subordinate
receives instructions from his superior only.
6. Delegate Function - Direction is supposed to be a function dealing with
human beings. Human behaviour is unpredictable by nature and conditioning
the people’s behaviour towards the goals of the enterprise is what the executive
does in this function. Therefore, it is termed as having delicacy in it to tackle
human behaviour.

Importance of Directing Function:

Directing or Direction function is said to be the heart of management of process and
therefore, is the central point around which accomplishment of goals take place. A
few philosophers call Direction as “Life spark of an enterprise”. It is also called as on
actuating function of management because it is through direction that the operation
of an enterprise actually starts. Being the central character of enterprise, it provides
many benefits to a concern which are as follows:-

1. It Initiates Actions - Directions is the function which is the starting point of

the work performance of subordinates. It is from this function the action takes
place, subordinates understand their jobs and do according to the instructions
laid. Whatever are plans laid, can be implemented only once the actual work
starts. It is there that direction becomes beneficial.
2. It Ingrates Efforts - Through direction, the superiors are able to guide, inspire
and instruct the subordinates to work. For this, efforts of every individual
towards accomplishment of goals are required. It is through direction the
efforts of every department can be related and integrated with others. This can
be done through persuasive leadership and effective communication.
Integration of efforts bring effectiveness and stability in a concern.
3. Means of Motivation - Direction function helps in achievement of goals. A
manager makes use of the element of motivation here to improve the
performances of subordinates. This can be done by providing incentives or
compensation, whether monetary or non - monetary, which serves as a “Morale
booster” to the subordinates Motivation is also helpful for the subordinates to
give the best of their abilities which ultimately helps in growth.
4. It Provides Stability - Stability and balance in concern becomes very
important for long term sun survival in the market. This can be brought upon
by the managers with the help of four tools or elements of direction function -
judicious blend of persuasive leadership, effective communication, strict
supervision and efficient motivation. Stability is very important since that is an
index of growth of an enterprise. Therefore a manager can use of all the four
traits in him so that performance standards can be maintained.
 5. Coping up with the changes - It is a human behaviour that human beings
show resistance to change. Adaptability with changing environment helps in
sustaining planned growth and becoming a market leader. It is directing
function which is of use to meet with changes in environment, both internal as
external. Effective communication helps in coping up with the changes.
6. Efficient Utilization of Resources - Direction finance helps in clarifying the
role of every subordinate towards his work. The resources can be utilized
properly only when less of wastages, duplication of efforts, overlapping of
performances, etc. doesn’t take place. Through direction, the role of
subordinates become clear as manager makes use of his supervisory, the
guidance, the instructions and motivation skill to inspire the subordinates.
This helps in maximum possible utilization of resources of men, machine,
materials and money which helps in reducing costs and increasing profits.

Controlling

Controlling consists of verifying whether everything occurs in conformities with the

plans adopted, instructions issued and principles established. Controlling ensures
that there is effective and efficient utilization of organizational resources so as to
achieve the planned goals. Controlling measures the deviation of actual
performance from the standard performance, discovers the causes of such
deviations and helps in taking corrective actions.

According to Allen,
"Control means to guide something in the direction it is intended to go."
"Controlling is the process of ensuring that actual activities conform to the planned
activities." ---- James Stoner,

According to Brech, “Controlling is a systematic exercise which is called as a

process of checking actual performance against the standards or plans with a view to
ensure adequate progress and also recording such experience as is gained as a
contribution to possible future needs.”

According to Donnell, “Just as a navigator continually takes reading to ensure

whether he is relative to a planned action, so should a business manager continually
take reading to assure himself that his enterprise is on right course.”

Controlling has got two basic purposes

1. It facilitates co-ordination
2. It helps in planning

Features of Controlling Function

Following are the characteristics of controlling function of management-

1. Controlling is an end function- A function which comes once the

performances are made in conformities with plans.
2. Controlling is a pervasive function- which means it is performed by
managers at all levels and in all type of concerns.
3. Controlling is forward looking- because effective control is not possible
without past being controlled. Controlling always look to future so that follow-
up can be made whenever required.
 4. Controlling is a dynamic process- since controlling requires taking reveal
methods, changes have to be made wherever possible.
5. Controlling is related with planning- Planning and Controlling are two
indispensible functions of management. Without planning, controlling is a
meaningless exercise and without controlling, planning is useless. Planning
presupposes controlling and controlling succeeds planning.

Controlling Process:
The control process involves carefully collecting information about a system, process,
person, or group of people in order to make necessary decisions about each.
Managers set up control systems that consist of five key steps:

1. Fixing the Control Standards / Objectives / Targets

A standard is a criterion (base) which is used to measure the performance of the
subordinates. Standards may be of two types, i.e. Quantitative Standards and
Qualitative Standards.

Quantitative Standard can be easily defined and measured. For e.g. number of
products, number of customers, cost, net profit, time limits, etc.
Qualitative Standard cannot be easily defined and measured. For e.g. measurement
of morale, measurement of job satisfaction, measurement of effect of a training
programme, advertisement programme, etc. It is better to have quantitative
standards because they are measurable. However, today there are many new
techniques for measuring qualitative standards.
The standards should be as clear as possible. It should be easily understood by both
superiors and subordinates. The responsibility of each individual should also be
clearly defined i.e. everyone should be responsible for achieving a particular goal,
objective, target, etc. For e.g. The marketing department fixes a standard - "We will
sell 20,000 units of product X in one month". So here the standard is 20,000 units.

2. Measuring the Actual Performances

After establishing the standards, the subordinates should be provided with all the
resources for performing the job. They should be properly directed and motivated to
perform the job. Similarly, they should be properly supervised. If the subordinated
come under Theory X they require maximum supervision. However, if they come,
under Theory Y then they require minimum supervision. After they complete the job
their performance should be carefully measured. There are many traditional and
modern techniques for measuring the performances of subordinates.
For e.g. After one month, the marketing department sold only 10,000 units of
product X. So, their actual performance is only 10,000 units.

3. Comparison
The actual performances of the subordinates are compared with established
standards, and then the deviations are found out. The deviations which are found
out may be positive or negative.
Positive Deviation means that the actual performances are better than the
established standards. Positive deviations should be appreciated.
Negative Deviation means that the actual performance is less than the established
standards. The management should pay special attention to the negative deviation.
They should find out the causes of negative deviations.
Generally, minor (small) deviations are ignored. However, major deviations should be
immediately addressed and reported to the top management. PERT, Budgetary
Control, Observation, Inspection, Reports, etc. are some of the methods used for
comparison.
For e.g. 10,000 units (Standard) - 9,000 units (Actual Performance) = 1,000 units
(Negative Deviation).

4. Corrective Action
After finding out the negative deviations and their causes, the managers should take
steps to correct these deviations. Corrective actions should be taken promptly.
Corrective action may include, changing the standards, providing better motivation,
giving better training, using better machines, etc. The management should take
essential steps to prevent these deviations in the future.
For e.g. the cause of the negative deviation was less advertising and untrained
salesmen. So, the company must spend reasonable money on advertising and
training.

5. Follow-up
After taking corrective action, the management must do a follow-up. Follow-up is
done to find out whether the corrective actions are taken properly. It also finds out
whether the deviations and their causes are removed. If follow-up is done properly,
then the actual performance will be equal to or better than the established
standards.

These steps must be repeated periodically until the organizational goal is achieved

Controlling Techniques:
The ten types of traditional techniques of controlling are discussed below:-

1. Direct Supervision and Observation

'Direct Supervision and Observation' is the oldest technique of controlling. The
supervisor himself observes the employees and their work. This brings him in direct
contact with the workers. So, many problems are solved during supervision. The
supervisor gets first hand information, and he has better understanding with the
workers. This technique is most suitable for a small-sized business.

2. Financial Statements
All business organizations prepare Profit and Loss Account. It gives a summary of the
income and expenses for a specified period. They also prepare Balance Sheet, which
shows the financial position of the organization at the end of the specified period.
Financial statements are used to control the organization. The figures of the current
year can be compared with the previous year's figures. They can also be compared
with the figures of other similar organizations.
Ratio analysis can be used to find out and analyze the financial statements. Ratio
analysis helps to understand the profitability, liquidity and solvency position of the
business.

3. Budgetary Control
A budget is a planning and controlling device. Budgetary control is a technique of
managerial control through budgets. It is the essence of financial control. Budgetary
control is done for all aspects of a business such as income, expenditure, production,
capital and revenue. Budgetary control is done by the budget committee.

4. Break Even Analysis

Break Even Analysis or Break Even Point is the point of no profit, no loss. For e.g.
when an organization sells 50K cars it will break even. It means that, any sale below
this point will cause losses and any sale above this point will earn profits. The Break-
even analysis acts as a control device. It helps to find out the company's
performance. So the company can take collective action to improve its performance in
the future. Break-even analysis is a simple control tool.

5. Return on Investment (ROI)

Investment consists of fixed assets and working capital used in business. Profit on
the investment is a reward for risk taking. If the ROI is high then the financial
performance of a business is good and vice-versa.
ROI is a tool to improve financial performance. It helps the business to compare its
present performance with that of previous years' performance. It helps to conduct
inter-firm comparisons. It also shows the areas where corrective actions are needed.

6. Management by Objectives (MBO)

MBO facilitates planning and control. It must fulfill following requirements:-
 Objectives for individuals are jointly fixed by the superior and the subordinate.
  Periodic evaluation and regular feedback to evaluate individual performance.
 Achievement of objectives brings rewards to individuals.

7. Management Audit
Management Audit is an evaluation of the management as a whole. It critically
examines the full management process, i.e. planning, organizing, directing, and
controlling. It finds out the efficiency of the management. To check the efficiency of
the management, the company's plans, objectives, policies, procedures, personnel
relations and systems of control are examined very carefully. Management auditing is
conducted by a team of experts. They collect data from past records, members of
management, clients and employees. The data is analyzed and conclusions are drawn
about managerial performance and efficiency.

8. Management Information System (MIS)

In order to control the organization properly the management needs accurate
information. They need information about the internal working of the organization
and also about the external environment. Information is collected continuously to
identify problems and find out solutions. MIS collects data, processes it and provides
it to the managers. MIS may be manual or computerized. With MIS, managers
can delegate authority to subordinates without losing control.

9. PERT and CPM Techniques

Programme Evaluation and Review Technique (PERT) and Critical Path Method (CPM)
techniques were developed in USA in the late 50's. Any programme consists of
various activities and sub-activities. Successful completion of any activity depends
upon doing the work in a given sequence and in a given time.
CPM / PERT can be used to minimize the total time or the total cost required to
perform the total operations.
Importance is given to identifying the critical activities. Critical activities are those
which have to be completed on time otherwise the full project will be delayed.
So, in these techniques, the job is divided into various activities / sub-activities.
From these activities, the critical activities are identified. More importance is given to
completion of these critical activities. So, by controlling the time of the critical
activities, the total time and cost of the job are minimized.

10. Self-Control
Self-Control means self-directed control. A person is given freedom to set his own
targets, evaluate his own performance and take corrective measures as and when
required. Self-control is especially required for top level managers because they do
not like external control.
The subordinates must be encouraged to use self-control because it is not good for
the superior to control each and everything. However, self-control does not mean any
control by the superiors. The superiors must control the important activities of the
subordinates.
Effective Control System:
12 important needs of an effective control system in management are:

(1) Objectives:
A system of control can work more effectively when it is based on the main objectives
or goals of the organization. It should be related to the persons. It becomes essential
that the standards, which are set by the management, should not be too high or too
low. These should be told to the workers in time so that the standards can be judged
with the actual performance.

(2) Suitability:
A business organization should adopt such a system of control which suits its
requirement.-There is no hard and fast rule and readymade system of control which
give the correct and most favourable, results in all type of organizations and in all
circumstances.
Suitability of a system of control differs from organization to organization and to
make it favourable, it is necessary to know the nature of the business, needs of the
workers a circumstances prevailing inside the organization.

(3) Forward looking:

The system of control should be forward looking which enables the managers to keep
a control on operations in advance. Each and every deviation from the standards
should be noted in time to take corrective action before the task is completed. This
will avoid or minimize the deviation in future.
(4) Feedback:
The success of a business depends on a system of control and for a systematic
control advance planning is needed. This advance planning should be based on
actual accurate post information collected through investigation.
The control system should be such that it is based on past information and. which
would also adjust if necessary to future actions.
(5) Quick action:
Management gets the information from various line managers or supervisors about
the deviation in standards and these should be suggested to the planner to take a
correct and quick action to avoid future wastage. Actually speaking, the success of
control depends entirely on quick action and its implementation.
(6) Directness:
In order to make the system of control more effective, it is necessary that the relation
between the workers and management should be direct. It is quite obvious that if the
number of line supervisors is less in the organization then workers would work
effectively and objectives may be achieved in time because they will not take much
time in getting the correct information.
(7) Flexibility:
The system of control should be such that it accommodates all changes or failures in
plans. If plans are to be revised due to change in its objectives, the system of control
should also be adjusted to suit the changed circumstances.
(8) Economy:
The system of control must be economical. In simple words, cost of the control
system should not exceed its benefits. A system of control to be adopted by the
organization should be cheaper in terms of expenses.
(9) Regular revision:
The system of control should be based art objective results, after proper technical
and analytical studies. They must be revised regularly and kept to meet the
objectives of the organization.
(10) Active Participation:
All members in the organization should participate in the effective implementation of
the control system. This is only possible when each and every worker in the
organization is asked to take active part in the discussions and exchange views while
selecting the system of control.
(11) Suggestive:
The control system should also be suggestive. A system which detects deviations only
should not be held good, but should also tell the accurate and correct alternative.
(12) Competent and talented staff:
Controlling A system of control can work more effectively if it has talented and
competent people to work in the organization.

Importance of Controlling:
The major benefits of a good control system may enlist as follow:

1. Control improves Goodwill

Quality control improves the quality of the products. Cost control decreases
the cost of the products. Therefore, the organization can supply good
quality products at lower prices. This increases the goodwill of the
organization.
2. Control minimizes Wastage
Control helps to reduce the wastage of human, material and financial
resources. This increases the profits of the organization.
3. Control ensures optimum utilisation of resources
Control helps the organization to make optimum utilisation of the available
resources. This also increases the profit of the organisation.
4. Control helps to fix responsibility
Control helps to fix responsibility of a particular job on a particular person
or a particular department. So, if there are any mistakes then a
particular person or a particular department will be held responsible for
it.
5. Control guides operations
Control fixes certain standards. All the work has to be done according to
these standards. So control, acts like a traffic signal. It guides all the
operations of the organization in the right direction.
6. Control motivates employees
In control, the employees' performances are evaluated regularly. Those who
 show good performances are rewarded by giving them promotions, cash
prizes, etc. This motivates the employees to work hard, and it also
improves their morale.
7. Control minimizes deviations
Control minimizes the deviations between a planned performance and actual
performance.
8. Control facilitates Delegation
Control helps the superiors to evaluate the work of their subordinates. So,
the superior can concentrate on the very important work, and they can
delegate the less important work to their subordinates. Thus, it facilitates
delegation.
9. Control facilitates Co-ordination
Control facilitates co-ordination between the different departments of the
organization. Whenever, there are any deviations, different departments
come together to take collective and corrective steps.
10. Control increases efficiency
Efficiency is the relation between returns and cost. If there is a high return
at low cost then there is efficiency and vice-versa. Control leads to high
returns and low cost. Therefore, it increases efficiency.

UNIT III : UNDERSTANDING ORGANISATION BEHAVIOUR

NATURE AND SCOPE OF OB

Organizational Behaviour is concerned with the understanding, prediction and control of

human behaviour in organizations. It focuses on the individuals, the groups and the
organization and also on their interactional relationships. It is the study and application of
knowledge about how people act with organizations.

It is a human tool for human benefit. It applies broadly to the behaviour of people in all types
of organizations. Wherever organizations are, there is a need to understand organizational
behaviour.

Features (Characteristics) of OB

1. OB is a part of general management and not the whole of management. It represents

behavioural approach to management.

2. OB contains a body of theory, research and application associated with a growing

concern for people at the work place. It helps in understanding human behaviour in
work organizations.

3. OB is a human tool for human benefit. It helps in predicting the behaviour of

individuals.
 4. OB is inter-disciplinary field of study. It tries to synthesize knowledge drawn from
various behavioural and social sciences such as Psychology, Sociology, Anthropology,
Political-science, Economics, etc. In fact, OB is an applied behavioural sciences.

5. OB involves three levels of analysis of behaviour-individual behaviour, group

behaviour and behaviour of the organization itself.

6. OB is an action-oriented and goal-directed discipline. It provides a rational thinking

about people and their behaviour

7. OB is both a science and an art. The systematic knowledge about human behaviour is
a science. The application of behvioural knowledge and skills clearly leans towards
being an art.

8. OB seeks to fulfil both employees’ needs and organizational objectives.

Scope of OB

The scope of OB may be summed up in the words of S.P.Robbins as follows:

“OB is a field of study that investigates the impact that individuals, groups, and
structure have on behaviour within organizations, for the purpose of applying such
knowledge towards improving an organisation’s effectiveness”.

The scope of OB involves three levels of behaviour in organizations: individuals,

groups and structure.

1. Individual Behaviour
(i) Personality
(ii) Perception
(iii) Values and Attitudes
(iv) Learning
(v) Motivation

2. Group Behaviour
(i) Work groups and group dynamics
(ii) Dynamics of conflict
(iii) Communciation
(iv) Leadership
(v) Morale

3. Organization: Structure, Process and Application

(i) Organizational Climate

(ii) Organizational Culture
(iii) Organizational Change
(iv) Organizational Effectiveness
(v) Organizational Development
Key Elements in OB

The key elements in organizational behaviour are people, structure technology and the
environment in which the organizations operates. When people join together in an
organisation to accomplish an objective, some kind of structure is required. People also use
technology to help get the job done, so there is an interaction of people, structure and the
technology as shown in fig.1. In addition, these elements are influenced by the external
environment, and they influence it.

People

Environment Environment
Fig. 1:Key elements in
organizational behaviour

Structure
Organization
Technology
Each of the four elements of organizational behaviour will be considered briefly.
Environment
People: People make up the internal social system of the organisation. They consist of
individuals and groups. There are formal and informal groups. Groups are dynamic. They
form, change and disband. Organizations exist to serve people, rather than people existing to
serve organizations.

Structure: Structure defines the formal relationships of people in organisations. Different

jobs are required to accomplish all of an organisation’s activities. There are managers and
employees, accountants and assemblers. These people have to be related in some structural
way so that their work can be effectively co-ordinated. These relationships create complex
problems of co-operation, negotiation and decision-making.

Technology: Technology provides the resources with which people work and affects the
tasks that they perform. The technology used has a significant influence in working
relationships. The great benefit of technology is that it allows people to do more and better
work, but it also restricts people in various ways. It has costs as well as benefits.

Environment: All organizations operate within an external environment A single

organisation does not exist alone. It is part of a larger system that contains many other
elements such as Govt, the family, and other organizations.
All of these mutually influence each other in a complex system that creates a context for a
group of people. Individual organizations, such as factory or a school, cannot escape being
influenced by this external environment. It influences the attitudes of people, affects working
conditions, and provides competition for resources and power. It must be considered in the
study of human behaviour in organizations.

MODELS OF ORGANISATIONAIZATIONAL BEHAVIOUR

Since the dawn of industrial revolution, four models of organizational behaviour have been
followed by managers of different organizations at different times. These are autocratic,
custodial, supportive and collegial as shown in table 1.
Models of Organizational Behaviour

Model Autocratic Custodial Supportive Collegial

Basis of Power Economic Leadership Partnership

Model resources

Managerial Authority Money Support Teamwork

orientation

Employee Obedience Security Job Responsible

orientation and benefits performance behaviour

Employee Dependence Dependence Participation Self –

psychological on boss on discipline
result organization

Employee Subsistence Security Status and Self –

needs met recognition actualization

Performance Minimum Passive co- Awakened Moderate

result operation drives enthusiasm
CONTRIBUTING DISCIPLINES TO THE OB FIELD

Behavioural Science Contribution

Learning

Motivation
Psychology
Personality

Emotions

Perception

Training

Contributing Discipline to the OB field

Leadership effectiveness
Group dynamics
Job satisfaction
Work teams
Individual decision making

Sociology Communication
Performance appraisal
Power
Attitude measurement
Formal Organisation theory
Conflict
Employee selection
Organisational technology
Intergroup behaviour
Work design
Orgnaisational
Behavioural change
change
Work Stress
Social
Psychology Organizational
Attitude changecutlure
Pschology
Communication

Group processes
Comparative Values
Group decision making
Comparative Attitudes
Anthropology
Sociology
Cross-cultural analysis
Organizational culture

Organizational Development

Conflict
Political Science
Intraorganisational

Politics

Power
PERSONALITY

Personality refers to the sum total of ways in which an individual reacts and interacts with
others. Personality determinants include heredity, environment and situation.

Personality traits: The early work in the structure of personality revolved around attempts
to identify and label enduring characteristics that describe an individual’s behaviour.
Popular characteristics include shy, aggressive, submissive, lazy, ambitious, loyal, or timid.
These characteristics, when they are exhibited in a large number of situations, are called
traits.

1. Reserved Outgoing
2. Less Intelligent More intelligent
3. Affected by feelings Emotionally stable
4. Submissive Dominant
5. Serious Happy-go-luck
6. Expedient Conscientious
7. Timid Venturesome
8. Tough-minded Sensitive
9. Trusting Suspicious
10. Practical Imaginative
11.Forthright Shrewd
12. Self-assured Apprehensive
13. Conservative Experimenting
14. Group-dependent Self-sufficient
15. Uncontrolled Controlled
16. Relaxed Tense
Sixteen source traits

Determinants of Personality

(1) Biological Factors:

(i) Heredity: It means the transmission of the qualities such as physical stature,
facial attractiveness, sex, temperament, muscle composition, reflexes etc, from
the ancestors and parents to the descendants. Heredity is generally more
important in determining a person’s temperament than his values and ideals.

(ii) Brain: There is a general feeling that brain plays an important role in the
development of one’s personality. However, no conclusive proof is available so
far about the nature of relationship between the brain and personality.

(iii) Physical features: An individual’s external appearance may have a

tremendous effect on his personality. Such factors include height, weight,
colour, facial features, etc. of the individual.

(2) Family and Social factors: The development of individual’s personality is also influenced
by his family and other social groups. The infant acquires those behaviour patterns that are
customary and acceptable to the standards of the family and the community where the
family lives. The status of the family in the society influences individual’s perception about
self, others, work, money, etc.,

(3) Situational factors: An individual’s personality may change in different situations. The
demands of different situations may call for different aspects of one’s personality. Therefore,
we should not look at the personality factor in isolation.

Group and culture are the early environmental factors that influence later behaviour. Family
and the social setting during early stages of education are the important factors which
influence the initial formation of personality. Whatever the child learns lasts for life time.
Later in life, it is the peer groups of primary affiliations at work, social activities etc. which
shape the personality of an individual.

(4) Other factors:

a) Temperament: Temperament is the degree to which one responds emotionally.

b) Interest: An Individual normally has many interests in various areas. The successful
persons in the same occupation have to a large extent, the same interests.

c) Character: Character primarily means honesty. It is resistance to stealing and cheating

others.

d) Schema: It is an individual’s belief, frame of reference, perception and attitude which the
individual possesses towardss the management, the job, working conditions, pay, fringe
benefits, incentive system, and development programmes in the organization.

e) Motives: Motives are the inner drives of an individual. They represent goal directed
behaviour of individual.

Immaturity – Maturity Continuum

Immaturity Characteristics Maturity Characteristics

Passivity Activity
Dependence Independence
Few ways of behaving Diverse behaviour
Shallow interests Deep interests
Short-time perspective Long-time perspective
Subordinate position Super ordinate position
Lack of self awareness Self awareness and control
 Chris Argyris further contended that:

(i) The seven dimensions represent only one aspect of the total personality. Much also
depends upon individual’s perception, self-concept and adaptation and
adjustment.

(ii) The seven dimensions continually change in degree from the infant to the adult
end of the continuum

(iii) The model, being only a construct, cannot predict specific behaviour.

(iv) The seven dimensions are based upon latest characteristics of personality which
may be quite different from the observable behaviour.

Big Five Model

Five personality traits (the so called big five) have recently emerged from research as being
especially related to job performance. Characteristics of these traits can be summarized
briefly as follows:

(1) Extraversion – Sociable, talkative and assertive

(2) Agreeableness – Good natured, co-operative, and trusting

(3) Conscientiousness – Responsible, dependable, persistent and achievement-

oriented

(4) Emotional Stability -- Viewed from a negative stand point:

tense, insecure and nervous
(5) Openness to experience – Imaginative, artistically sensitive and
intellectual

Friedman and Rosenman’s studies

Profiles of Type A and Type B Personalities

Type A Profile Type B Profile

Is always moving Is not concerned about time
Walks rapidly Is Patient
Talks rapidly Doesn’t brag
Eats rapidly Plays for fun, not to win
Is impatient Relaxes without guilt
Does two things at once Has not pressing deadlines
Can’t cope with leisure time Is mild-mannered
Is obsessed with numbers Is never in a hurry
Measures success by quantity
Is aggressive
Is competitive
Constantly feels under time
pressure
The Self concept: Self – Esteem and Self – efficacy

People’s attempts to understand themselves are called the self-concept in personality theory.
The self is a unique product of many interacting parts and may be thought of as the
personality viewed from within. This self is particularly relevant to the concepts of self esteem
and self-efficacy in the field of organizational behaviour.
People’s self esteem has to do with their self-perceived competence and self-image. There is
considerable research on the role that self-esteem may play in organizational behaviour and
its outcomes. Employees with high self esteem feel unique, competent, secure, empowered,
and connected to the people around them.

Self-efficacy is concerned with self –perceptions of how well a person can cope with situations
as they arise. Those with high self-efficacy feel capable and confident of performing well in a
situation.

LEARNING
Meaning:

Learning refers to any relatively permanent change in behaviour that occurs as a result of
experience. Ironically, we can say that changes in behaviour indicate that learning has taken
place and that learning is a change in behaviour. Our definition has several components that
deserve clarification. First, learning involves change. This may be good or bad from an
organizational point of view. People can learn unfavourable behaviours-to hold prejudices or
to restrict their output, for ex-as well as favourable behaviours. Second, the change must be
relatively permanent. Temporary changes may be only reflexive and fail to represent any
learning. Therefore, this requirement rules out behavioural changes caused by fatigue or
temporary adaptations. Third, our definition is concerned with behaviour. Learning takes
place where there is a change in actions. A change in an individuals thought processes or
attitudes, if accompanied by no change in behaviour, would not be learning. Finally, some
form of experience is necessary for learning. This may be acquired directly through
observation or practice.

The Learning Process

The learning process is a mental and habit formation process. Attention is paid to certain
stimuli used for learning which are recognized and translated into reinforcement and
behaviour. If the learner gets a reward for his improved behaviour, he forms it into
behaviour. Proper habits motivate the employee who makes efforts in the right direction. The
efforts result in satisfaction and become a stimulus for further learning. This process
continues and the employee learns in the process.
 Stimuli Attention Recognition Translation

Reinforcement

Behaviour

Efforts Motives Habit Reward

The Learning Process

REINFORCEMENT: Reinforcement is the crucial factor in the learning process. This is also
known as the method of shaping employees’ behaviour. Perception becomes learning only
through reinforcement.

Perception = Stimuli Attention Recognition Translation Behaviour

Learning = Stimuli Attention Recognition Translation

Reinforcement Behaviour Habit.

Reinforcement is the instrument or process of learning

Learning = Input Process Output

= Stimuli Reinforcement Behaviour

Types of Reinforcement (Learning):

Types of Learning Contingent Consequences

Positive reinforcement Favourable and Favourable and
pleasant stimuli desirable behaviour
Negative Favourable and Unfavourable and
reinforcement pleasant stimuli undesirable
behaviour avoided
Punishment Undesirable stimuli Undesirable
behaviour prevented
Extinction Stimuli avoided (no Undesirable
reinforcement) behaviour ignored.
THEORIES OF LEARNING
There are four theories which explain how individuals learn new patterns of behaviour.

1. Classical conditioning: Classical conditioning deals with the association of one event
with another desired event resulting in a desired behaviour or learning. It is a type of
conditioning where an individual responds to some stimulus that would invariably
produce such a response. Learning through classical conditioning was first studied by
Ivan Pavlov, a famed Nobel Prize winning Physiologist, at the turn of the 20th century.

Pavlov conducted an experiment on a dog to study the relation between the dog’s
salivation and the ringing of a bell. A simple surgical procedure helped him to
measure accurately the amount of saliva secreted by the dog. When Pavlov presented
a piece of meat to the dog, he noticed a great deal of salivation. He termed the food an
unconditioned response. When the dog saw the meat, it salivated. During the second
stage, Pavlov merely rang a bell (neutral stimuls), the dog did not salivate. Pavlov
subsequently introduced the sound of the bell each time the meat was given to the
dog. Thus meat and ringing of the bell were linked together. The dog eventually learnt
to salivate in response to the ringing of the bell even when there was no meat. Pavlov
conditioned the dog to respond to a learned stimulus.

Thorndike called this the “law of exercise” which states that behaviour can be learned
by repetitive association between a stimulus and a response.

Stages in classical conditioning

I Before conditioning

US UR
(Meat) (salivation)
Neutral stimulus No response
(Bell)

II During conditioning

CS
(Bell)

US UR
(Meat) (salivation)

III After conditioning

CS CR
(Bell) (salivation)

The meat was an unconditioned stimulus (US). It invariably caused the dog to react in a
specific way, i.e, noticeable increase in salivation. This reaction is called the unconditioned
response (UR). The bell was a conditioned stimulus (CS). It was originally neutral. But when
the bell was linked with the meat (an unconditioned stimulus), it eventually produced a
response. After conditioning, the dog started salivating in response to the ringing of the bell
alone. In other words, conditional stimulus (CS) led to conditioned response (CR).
Classical conditioning represents only a very small part of total human learning. So it has a
limited value in the study of organizational behaviour. In the words of S.P.Robbins, “Classical
conditioning is passive”. Something happens and we react in a specific or particular way. It is
elicited in response to a specific identifiable event and as such it explains simple and
reflexible behaviours. But behaviour of people in organizations is emitted rather than elicited.

The learning of complex behaviours can be better understood by looking at operant

conditioning”.

2. Operant Conditioning: Operant is defined as behaviour that produces effect. Operant

conditioning is based on the work of B.F. Skinner who advocated that individuals emit
responses that are rewarded and will not emit responses that are either not rewarded or are
punished. Operant conditioning is voluntary or learned behaviour and it is determined,
maintained and controlled by its consequence.

Operant conditioning is based on the premise that behaviour is a function of its

consequences. People learn to behave to get something they desire or to avoid something
they do not like. Behaviour is likely to be repeated if the consequences are favourable and it
is not likely to be repeated if the consequences are unfavourable. Thus, the relationship
between behaviour and consequences is the essence of operant conditioning.

3. Cognitive Learning: Cognitive learning is learning achieved by thinking about the

perceived relationship between events and individual goals and expectations. For instance,
the process motivation theories deal with explaining “why” people decide to do things. They
do so by examining how people come to view various work activities as perceived
opportunities to satisfy needs, pursue desired rewards, and eliminate felt inequities.

Cognition refers to an individual’s ideas, thoughts, knowledge, interpretations,

understandings, etc, about himself and his environment. Cognitive theorists argue that the
learner forms a cognitive structure in memory, which preserves and organizes information
about the various events that occur in a learning situation. The cognitive theory recognizes
the role of an organism in receiving, memorizing, retrieving and interpreting the stimulus
and reacting to it.

4. Social Learning: Social learning is learning achieved through the reciprocal interactions
between people, behaviour and their environment. Social learning theory integrates the
cognitive and operant approaches to learning. It recognizes the importance of consequences
as determinants of behaviour. It also emphasizes that people acquire new behaviours by
observing and imitating others in the social setting.

People learn through observation and direct experience. Social learning can also take place
via (i) Modeling or vicarious learning; (ii) symbolism and (iii) self control. Through vicarious
learning or modeling, people acquire behaviours by directly observing and imitating others.
When the “models” such as the manager or a co-worker, demonstrate desirable behaviours it
can have major impact on a person’s work efforts. Many patterns of behaviours are learned
by watching the behaviour of models such as parents, teachers, superiors, film starts etc.

PERCEPTION

Perception is much more complex and much broader than sensation. The perceptual process
can be defined as a complicated interaction of selection, organisation, and interpretation.
Although perception depends largely upon the sense for raw-data, cognitive process may
filter, modify, or completely change these data. A simple illustration may be seen by looking
at one side of a stationary object, for ex, a statue or a tree. By slowly turning the eyes to the
other side of the object, the person probably senses that the object is moving. Yet the person
perceives the object as stationary. The perceptual process overcomes the sensual process
and the person “sees” the object as stationary.

PERCEPTUAL SELECTIVITY

External Attention Factors: Various external and internal attention factors affect
perceptual selectivity. The external factors consist of outside environmental influences such
as intensity, size, contrast, repetition, motion and novelty and familiarity.

1. Intensity: The intensity principle of attention states that the more intense the external
stimulus, the more likely it is to be perceived. A loud noise, or bright light will be noticed
more than a soft sound or dim light.

Advertisers use intensity to gain the consumers’ attention. Examples include bright
packaging and television commercials that are slightly louder than the regular
programme.

2. Size: Closely related to intensity is the principle of size. It says that the larger the
object, the more likely it will be perceived. The maintenance engineering staff may pay
more attention to a big machine than to a smaller one, even though the smaller one costs
as much and is as important to the operation. In advertising, a full page spread is more
attention-getting than a few lines in the classified section.

3.Contrast: The contrast principle states that external stimuli which stand out against
background or which are not what people are expecting will receive their attention. The
following figure 11 demonstrates this perceptual principle.
The black circle on the right appears much larger than the one on the left because of the
contrast with the background circles. Both black circles are exactly the same size.

4. Repetition: The repetition principle states that a repeated external stimulus is more
attention-getting than a single one. Thus, a worker will generally “hear” better when
directions for a dull task are given more than once. Advertisers trying to create a unique
image for a product which is undifferentiated from its competitors – such medicine, soap
and deodorant – rely heavily on repetitious advertising.

5. Motion: The motion principle says that people will pay more attention to moving
objects in their field of vision than they will to stationary objects. Workers will notice
materials moving by them on a conveyor belt, but they may fail to give proper attention to
the maintenance needs of the stationary machine next to them.

6. Novelty and Familiarity: The novelty and familiarity principle states that either a
novel or a familiar external situation can serve as an attention getter. New objects or
events in a familiar setting or familiar objects or events in a new setting will draw the
attention of the perceiver. Job rotation is an example of this principle. Changing workers’
jobs from time to time will tend to increase the attention they give to the task.

Internal set factors:

The concept of set is an important cognition in selectivity. It can be thought of as an internal
form of attention-getting and is based largely on the individual’s complex psychological make
up. People will select out stimuli or situations from the environment that appeal to and are
compatible with their learning, motivation, and personality. A brief discussion of these
factors will help in the understanding of perception.

1. Learning and Perception: Although inter-related with motivation and personality,

learning may play the single biggest role in developing perceptual set. Read the sentence in
the triangle below. (Fig.12)

TURN OFF THE THE

ENGINE
It may take several seconds to realise there is something wrong. Because of familiarity with
the sentence from prior learning, the person is perceptually set to read “Turn off the engine”.
This illustration shows that learning affects set by creating an expectancy to perceive in a
certain manner. Such expectancies are a vital element in the cognitive explanations of
behaviour.
This view states simply that people see and hear what they expect to see and hear. This can
be further demonstrated by pronouncing the following words very slowly.

M-A-C-T-A-V-I-S-H

M-A-C-D-O-N-A-L-D

M-A-C-B-E-R-T-H

M-A-C-H-I-N-E-R-Y

If the last word was pronounced “Mac-Hinery” instead of “Machinery”, the reader was caught
in a verbal response set.

2. Perceptual set in the workplace: Perceptual set has many direct implications for
organizational behaviour. In organizational life, some employees have learned to perceive the
world around them in the same way. For example, the single sentence “I cannot recommend
this young man too highly” was reproduced and distributed to several managers in the same
organization. Although this statement is ambiguous and unclear, without exception all the
managers interpreted this to be a positive recommendation. They had all learned to perceive
this statement the same way – positive and favourable.
 3. Motivation and Perception: Besides the learned aspects of perceptual set, motivation
also has a vital impact on perceptual selectivity. The primary motives of sex and hunger
could be used to demonstrate the role that motivation plays in perception.

In traditional Amercian culture, the sex drive has been largely suppressed, with the result
being an unfulfilled need for sex. Accordingly, any mention of sex or a visual stimulus
dealing with sex is very attention-getting to the average American.

The secondary motives also play an important role in developing perceptual set. A person
who has a relatively high need for power, affiliation or achievement will be more attentive to
the relevant situational variables.

4. Personality and Perception: Closely related to learning and motivation is the personality
of the perceiving person, which affects what is attended to in the confronting situation. For
example,. Senior-level executives often complain that the new young “hot shots” have trouble
making the “tough” personnel decisions concerning terminating or reassigning people and
paying attention to details and paperwork. The young managers, in turn, complain about the
“old guard” resisting change and using rules and paper works as ends in themselves. The
Senior – and Junior-level executives personalities largely explain these perceptions. There is
also a generation gap that may contribute to differing perceptions. An example can be found
in the perceptions of modern movies. Older people tend either to be disgusted by or to not
understand some of the popular movies of recent years. Those in the 35-45 age group tend to
perceive these movies as “naughty but neat”. Young, college-age people tend to perceive them
as “Where it’s at”.

Transactional Analysis - Understanding Individuals

Transactional analysis is based on psychoanalysis and considers an individual’s behaviour

in terms of their unconscious ego state. In order to understand how this works consider the
following questions:
 have you ever thought that you were communicating in one way and later learned that you
were perceived in a completely different way?
 have you ever asked a question at a meeting and then felt about two years old?
 have you ever told someone off and then felt like kicking yourself for it later?
 have you ever used the same technique to get what you want from your boss that you used
as a child?
 do you often find yourself being defensive about your ideas or point of view?
 do you feel that you have to take care of too many people who should be taking care of
themselves?
 do you see yourself as calm, cool and collected most of your working day?
 do you suddenly have a 'bright idea' that seems to solve a problem?
Everyone has experienced some of these feelings or situations at some time or other. What
you may not realise is that these feelings are related to different parts of your personality.
Transactional Analysis (TA) was developed by Dr Eric Berne in the 1950s, and can be used
to analyse the structure of your personality using a simple and common sense approach.
 Ego states
According to Transactional Analysis we can observe quite distinct types of behaviour which
seem to come from different sources within ourselves. These three 'ego states' are called:
 parent
 adult
 child

The Parent
This state contains the attitudes, feelings and behaviour incorporated from external sources,
primarily parents. In outward behaviour it is divided into two parts:

 nurturing parent: concerned with caring, loving, helping

 controlling parent: criticising, censoring, punishing
When in your parent state, you respond automatically, almost as if you had a tape recording
playing in your head. Everyone has Parent tapes - some are helpful - they enable us to carry
out routine tasks automatically without having to think too much about them. Other tapes
can create problems - if a Parent tape is triggered automatically in an inappropriate
situation.

The Adult
The state has nothing to do with the person's age. It contains those behaviours concerned
with collecting information, organising and analysing. It operates dispassionately and
without emotion.

The Child
This state contains all the impulses that come naturally to an infant. But just as the Parent
has different aspects, so does the Child. The Child develops into three parts - the Natural
Child, Adapted Child and Little Professor.
 Natural Child is spontaneous, energetic, curious, loving and uninhibited, the part of you
that feels free and loves pleasure. In the natural child you transact freely and openly with
others. It is just like the new born baby that responds with love and affection when its
needs are met, and angry rebellion when they aren't. Many adults repress their natural
Child and exaggerate the Parent.

 Adapted Child: your Adapted Child developed when you learned to change (adapt) your
feelings and behaviour in response to the world around you. Learned feelings of guilt, fear,
depression, anxiety, envy and pride are all characteristic of the Adapted Child. It is
through such adaptations that we become socialised and learn, for example, to share, to
take turns and be friendly. We must learn these skills to get along socially - saying 'please',
'thank you' and 'I'm sorry'. The Adapted Child can become the most troublesome part of
our personality.
 In the Adapted Child state people often react to external demands by:
 complying
 sulking
 avoiding situations
It is the Adapted Child that may:
 try to please everyone
 turn its back on people with problems
 put off work until a deadline passes
It is the part of us that may feel not OK (see OK corral below) if we are:
 frightened of speaking before a group
 depressed when someone criticises our work
 hurt when things don't go our way at a meeting
 anxious when important deadlines confront us
Little Professor is the 'thinking' part of the Child - it is creative, intuitive and manipulative.
The Little Professor can:
 dream up new ideas
 intuitively sense how to solve a problem
 imagine new ideas
It is the part that knows when to cry, when to look pathetic or winsome to get what it wants.
Recognising Ego States
With a little practice and basic understanding of the Parent Adult Child states (PAC) outlined
above it is not too difficult. Once you begin to identify your own ego states it is easy to
recognise the PAC states of others.
The following table may help you to begin the process of recognising ego states.

Controlling Nurturing Natural Adapted Little

Adult
parent parent child child professor

Can't,
How, why, Fun, wish,
Bad, should, Good, nice, I've got
Words who, yes, want, please,
ought, don't well done an idea
no mine thank
you

Gestures Pointing
Straight Slumped,
finger, Energetic,
posture, dejected, Batting
Postures pounding Open arms loose
level eye nail eyelashes
table, shaking limbed
contact biting
head

Loving, Calm, Whining,

Tone of Sneering,
encouraging, clear, even, Loud, free sulking, Teasing
voice condescending
concerned confident defiant

Joyful, Wide
Facial Scowl, hostile, Thoughtful, Fearful,
Smiling twinkling eyed,
expression disapproving alert eyes pouting
eyes 'innocent'
 How to use Ego states

It is possible not only to recognise ego states, but also to develop the ability to switch ego
states at will - moving from a caring parent to an analytical adult, to a fun loving child
without too much difficulty. Some people find this easier than others. Often people have
favourite ego states and tend to stick with those. For example:
 some people are always criticising or helping people: the constant parents
 some people continually analyse, and prefer facts to feelings: the constant adults
 some people operate with strong feelings all the time - they are consumed with anger,
aggression, or guilt - looking for kicks, or feeling helpless: the constant child.

Transactions
A transaction is an exchange between two people. In a transaction each person speaks from
one of their three ego states - and it is this inter-relationship between ego states which is the
focus of Transactional Analysis.
To be successful, transactions must be complimentary; if they are crossed then the
conversation either changes its nature or ends - often abruptly.
Stroking
A stroke is a 'stimulation' one person gives to another and exchanging strokes is one of the
most important activities people engage in. It may or may not involve physical touching. The
need for 'stroking' develops from infancy when most strokes are physical. For adults physical
stroking is replaced by symbolic stroking such as praise or criticism. Since we all have a
basic need for strokes we will work hard to get them - either positive (warm fuzzy) or negative
(cold prickly) - any stroke is better than no stroke at all!
Yet it is positive strokes that develop emotionally healthy people with a feeling of confidence
in themselves and trust in others.
Your pattern of giving and receiving strokes is often conditioned by what kind of strokes you
received as a baby and child. If you were used to negative strokes - being smacked, criticised
and shouted at - you will probably go on looking for and giving negative strokes.
Life positions
There are four psychological positions - our position usually reflects our experiences as a
baby and young child, and the strokes, or lack of strokes, we received from parents, teachers
and other adults.
The OK Corral

I'm OK I'm OK

You're not OK You're OK

I'm not OK I'm not OK

You're not OK You're OK

I'm OK - You're OK
Most constructive position - accepts own worth and that of others. People here are happy,
productive, energetic and are at peace with themselves.
I'm not OK - You're OK
Many people develop this position because of the subtle cold pricklies as a child:
 'let your brother do that for you'
 'don't worry if you can't do it'
 'those nasty shoelaces, let me tie them'
Grownups who adopt this position often feel inadequate and compare themselves
unfavourably to others. They seek approval from others unnecessarily and admire them
enormously.
I'm OK - You're not OK
Some children develop this position because their parents treat them as if they are always
right. Such children develop a false sense of power and superiority over their parents and
others. They don't accept responsibility for their problems and project blame on to others.
I'm not OK - you're not OK
Children develop this position if parents ignore them, put them down and give them lots of
cold prick lies. The 'I'm not OK' position develops first, only later do children decide that their
parents are being unkind, unfair or even cruel. This position is very difficult and can in
extreme cases lead to suicide or murder. Fortunately, most people adjust their position to I'm
OK - You're not OK, blaming the other party.
Most of us do not consistently act from a single life position and our positions can change
from situation to situation.

UNIT - 4
Group Dynamics

Group dynamics deals with the attitudes and behavioral patterns of a group. It can be used as
a means for problem-solving, teamwork, and to become more innovative and productive as an
organization. The concept of group dynamics will also provide you with the strengths, success
factors and measures along with other professional tools.
The term ‘group dynamics’ means the study of forces within a group. Since human beings have
an innate desire for belonging to a group, group dynamism is bound to occur. In an
organization or in a society, we can see groups, small or large, working for the well-being.
"The social process by which people interact with one another in small groups can be called
group dynamism. A group has certain common objectives & goals. Because of which members
are bound together with certain values and culture".
Importance of Group Dynamism

1. Firstly, a group can influence the way the members think. The members are always
influenced by the interactions of other members in the group. A group with a good leader
performs better as compared to a group with a weak leader.

2. The group can give the effect of synergy, that is, if the group consists of positive thinkers
then its output is more than double every time.

3. Group dynamism can furthermore give job satisfaction to the members.

4. The group can also infuse the team spirit among the members.

5. Even the attitude, insights & ideas of members depend on group dynamism. For
example, negative thinkers convert to positive thinkers with the help of the facilitator.
 6. Also, if the group works as a cohesive group, the cooperation and convergence can result
in maximization of productivity

7. Furthermore, group dynamism can reduce labor unrest. Lastly, it reduces labor turnover
due to emotional attachment among the group members.

Group:

According to Stephen Robbind, “A group may be defined as two or more individuals,

interacting and interdependent, who have come together to achieve particular objectives”.
According to Marvin Shaw, “A group comprises, of two or more persons who interact with
one another in such a manner that each person influences and is influenced by each other
persons”.

Nature of Group

1. Two or more persons

2. Collective Identity
3. Interaction
4. Shared goal interest

Reasons for Joining Group

a. Personal attraction
b. Group activities
c. Group goals
d. Security and social affiliations
e. Status and self-esteem
f. Power

Need or Benefits for Forming a Group

1. Security
2. Empowerment through sharing of resources
3. Becoming a leader

4. Synergy
5. Goal achievement
6. Status
7. Affiliation needs
8. Self-esteem

Stages of Group Formation

Stages of group formation can be a rather exciting and effective process. Before heading into the
intricacies of group formation, it is important to learn about the basic group dynamics. These
group dynamics provide a strong base for a clear understanding of the different stages in the
process of group formation.

What is a group?

A group refers to two or more individuals who have come together with a common objective. The
members of a group interact and are interdependent on each other with the view of achieving a
particular objective.
Groups are of 2 broad categories: formal group and informal group.

An organizational structure defines the formal groups with establishing a set of tasks and jobs.
The main purpose of forming formal groups is to help the organization achieve certain
objectives. Examples of formal groups are departmental teams, project groups who work as a
group until the completion of the project, etc.

Informal groups are those groups that do not get their definition and formation by an
organization. Informal groups are neither formal structures or have an organizational
determination.

They are simply a group of people who have come together in an informal manner to achieve a
particular goal. Examples of informal groups are family and related groups, friend groups,
social peer groups, etc.

Why do people join groups?

People join groups and want to be a part of a group for one or more of the following reasons:

 To receive a sense of social security and safety.

 Being excluded from a group or not being a part of a group can pull down one’s status.
Therefore, one of the reasons is to satisfy the status demands.

 To have self-esteem is crucial for everyone in every part of the social strata.

 Affiliation to the idea of having a system to provide you with moral support and help you
achieve goals.

 Being a part of a group often gives you a subtle sense of power.

 Last but not least, a group can help in the process of successful goal achievement.

Classification / Types of Group

With the advancement of societies, several social groups emerged over the course of time. Since
every such group has its own ideologies and attitudes, each one functions differently. Individual
members with differing thought processes exert even more influence in their functioning. This is
why we need to study the classification of groups to understand how they operate.

Classification/ Types of Group

We can classify groups into the following general categories:

1) Primary v. Secondary Groups

Primary groups are those which are generally small in size and emerge due to feelings of
intimacy or friendship. For example, family groups, groups of friends in offices, etc.
On the other hand, secondary groups are much larger and are based on the mutual beliefs of
members. The members of these groups might not interact with each other personally. For
example, associations of people belonging to a profession, like doctors or lawyers, are secondary
groups.

2) Membership v. Reference Groups

Membership groups are those to which people belong, while reference groups are those to
which they wish to belong.

3) Command v. Task Groups

Command groups involve a hierarchical structure wherein a member with a superior rank
oversees other members. For example, the manager of a shop and his subordinate sales staff
will become a command group.

In a task group, members perform the same functions but they do not share a hierarchical
command structure. For example, all the sales staff members together subordinate to the
manager of the shop.

4) Interest v. Friendship Groups

An interest group always involves members sharing common and mutual goals. For example, a
firm of partners will be an interest group. A friendship group, however, need not have common
interests but members share mutual attributes. For example, they may belong to the same
place or support the same sports team.

5) Psychological v. Social Groups

In a psychological group, two or more members interdependent on each other together

influence other members as well. For example, parents in a family might dictate how all family
members will behave.

A social group comprises of interrelated psychological groups that have the same objectives. For
example, members of regional offices of a company along with those at its headquarters.

6) Formal v. Informal Groups

Formal groups are those which emerge out of a formal authority that has specific objectives. For
example, a trade union will be a formal group. The members of formal groups behave according
to their mutual goals.

Informal groups emerge not from formal authorities but rather from personal or social
interactions. The members of these groups might or might not have specific common goals.
These groups generally emerge from feelings of friendship or camaraderie.

Various management theorists and thinkers have further studied informal groups into
more sub-categories. The following are some such classifications.
Informal Groups according to Mayo and Lombard

a) Natural Groups: These groups generally do not require internal structures.

b) Family groups: These groups always involve a few members who influence the functioning of
other members.

c) Organized groups: These groups involve the leadership of a few members. Furthermore,
these few members use their intelligence and skills to maintain group integrity and unity.

Stages of Group Formation and development

Tuckman was responsible for coining the 5 main stages in the process of group discussion.
They are also known as Tuckman’s 5 stages of group development. Moreover, these stages of
group formation are meant to be followed in the exact sequence as they are below:

Forming

This is a beginning stage and lasts only a few days (or weeks). Members begin by planning their
work and their new roles. Moreover, the emotions here are positive. The groups should begin by
learning about team processes in preparation for the rough times ahead.

However, it is crucial for them to learn the aspects of conflict resolution, communication, group
decision-making and time management.

Storming

There exists a considerable amount of fights and arguments in this stage. People begin to feel
the stress of frustration, resentment, and anger. Moreover, as the problem festers, the job
remains undone.

Managers also experience frustration and are worried about the situation, thereby, are tempted
to intervene. Members experience a drastic emotional roller coaster from elation to depression.

Moreover, the situation seems bleak. Usually, the storming period may last 1-2 months. Also,
without effective training and support, the team may experience retarded growth.

Conflicts are usually frowned upon. However, they are the definition of normal, natural, and
even necessary events in an organization. It is critical for the group to handle it well because
they are great in helping to build skill and confidence for the next stage

Norming

In the norming stage, the group works through individual and social issues. The group
establishes its own norms of behaviour and begin to trust each other. Moreover, as the group
develops interpersonal skills, it becomes all the more skilled.
Members begin the art and knack of problem-solving. They also cross-train and learn new and
adequate job skills. This stage usually lasts for 4-12 months.

Performing

In this stage, the group is ready to begin performing its respective task and assigned jobs. In
this stage, the group has become well acquainted with one another and has clarity with regard
to what needs to and has to be done. The performing stage begins when the group is
comfortable to work and ends when the job is completed.

Adjourning

Post the performing stage, the group is adjourned. The adjourning stage ends the process of
group formation. Because the group is adjourned once the task that is assigned to the group is
completed.
  Little Agreement
Forming
 Unclear Purpose

 Guidance & Direction

 Conflict

Storming  Increased clarity of

Purpose

 Power Struggles

 Agreement & Consensus

Norming  Clear Roles and

Responsibility

 Facilitation

 Clear Vision and Purpose

Performing  Focus on Goal

Achievement

 Delegation

 Task Completion

Adjourning  Good feeling about

Achievement

 Recognition

MOTIVATION
Meaning : Motivation is a basic psychological process, Technically, the term ‘motivation’
can be traced to the Latin word ‘movere’, which means “to move”. This meaning is evident in
the following comprehensive definition: “A motive is an inner state that energizes, activates or
moves (hence) motivation” and that directs or channels behaviour towards goals”. The key to
understanding motivation lies in the meaning of, and relationship between, needs, drives,
and goals.

THE BASIC MOTIVATION PROCESS

NEEDS ------------------------ DRIVES -------------------------------- GOALS (Deprivation)

(Deprivation with (Reduction of

Direction) drives)

1. Needs: The best one-ward definition of a need is deficiency. For example, a need
exists when a cell in the body is deprived of food and water.

2. Drives: Drives or motives are set up to alleviate needs. A drive can simply be
defined as a deficiency with direction. The examples of the needs for food and water
are translated into the hunger and thirst drives, and the need for friends becomes a
drive for affiliation.

3. Goals: At the end of the motivation cycle is the goal. A goal in the motivation cycle can
be defined as anything which will alleviate a need and reduce a drive. Food, Water
and Friends are the goals in our examples.

TYPES OF MOTIVES

Primary Motives: Hunger, thirst, sleep, avoidance of pain, sex etc, are classified as primary
motives.

General Motives: The motives of competence, curiosity, manipulation activity, and

affection are called general motives.

Secondary Motives: Power, achievement, affiliation, security and status are important
secondary motives.

FINANCIAL REWARDS:
1. Basic pay

2. Dearness Allowance (DA)

3. House Rent Allowance (HRA)

4. City Compensatory Allowance (CCA)

5. Overtime Allowance (OT)

6. Leave Travel Concession (LTC)

7. Incentive Plans (Piece rates, Bonus or Profit sharing)

8. Medical benefits

9. Provident Fund

10. Gratuity

11. Pension Fund

12. Group – linked insurance scheme

13. Accident and death compensation while on duty

14. ESI benefits

15. Leave with pay

16. Education allowances

 Non – Financial Rewards

Consuma Manipulata Visual Tokens Social Job

bles bles and Rewards Design
Auditory
Rewards

Coffee – Desk Office Early Friendly Jobs with

break Accessories with a time off greetings more
treats window with pay responsibi
Wall plaques Informal lity
Free Stocks recognition
Lunches Company Job
Car Watches Piped – in Stock rotation
Food music options
Baskets Trophies Special
Redecorat Movie Formal
assignme
Festival Commendati ion of passes nts
turkeys ons work acknowledge
Rings/tie environm Trading Cross -
Dinners pins ent stamps ment of training
for the
family on Appliances Company Paid-up Knowledg
and insuran achievement
the literature e training
company furniture for ce
the home Private policies Authority
Company office to
Picnics Home shop Dinner Solicitation of schedule
tools Garden Popular and suggestions own work
After – tools speakers theatre
work wine or tickets Solicitation of Flexible
and Clothing lecturers advice hours
cheese Vacation
Club Book club trips Compliment Flexible
parties
privileges discussio on work breaks
Use of ns Coupon progress
company s Job
recreation redeema Recognition sharing
facilities ble at in house
local organ. Participati
Use of stores on in
company Pat on the discussio
convenience back ns
center
Smile Participati
Use of on in
company Verbal or non teams
facilities for – verbal
personal recognition or
projects praise
THEORIES OF MOTIVATION

1. Maslow’s Hierarchy of Needs: Abraham Maslow thought that a person’s

motivational needs can be arranged in a hierarchical manner. In essence, he believed that
once a given level of need is satisfied, it no longer serves to motivate. The next higher level of
need has to be activated in order to motivate the individual Maslow identified five levels in
his need hierarchy.

Self - actualization

Esteem Needs

Love Needs

Safety Needs

Physiological Needs

Maslow’s hierarchy of Needs

1. Physiological needs: The needs of hunger, thirst, sleep and sex are physiological needs.
According to the theory, once these basic needs are satisfied, they no longer motivate.

2. Safety needs: Maslow stressed emotional as well as physical safety. The whole
organization may become a safety – seeking mechanism. For example, membership in a
trade union is a safety need. Once these safety needs are satisfied, they no longer motivate.

3. Love needs: Maslow’s use of the word love has many misleading connotations, such
as sex, which is actually a physiological need. Perhaps a more appropriate word describing
this level would be belongingness or affiliation. Membership in formal and informal work
groups is a belongingness need.

4. Esteem needs: The esteem level represents the higher needs of humans. The needs for
power, achievement, and status can be considered to be part of this level.

5. Needs for self – actualization: This level represents the culmination of all the lower,
intermediate, and higher needs of humans. People, who have become self – actualized, are
self fulfilled and have realized all their potential. Self – actualization is the person’s
motivation to transform perception of self into reality.
2.Herzberg’s Two – Factor Theory

According to Herzberg, there are satisfiers and dis-satisfiers in a job for the individuals.
Herzberg labeled satisfiers motivators, and he called the dissatisfiers hygiene factors. Taken
together, they became known as Herzberg’s two – factor theory of motivation.

Herzberg’s theory is closely related to Maslow’s need hierarchy. The hygiene factors are
preventive and environmental in nature, and they are roughly equivalent to Maslow’s lower –
level needs.

Herzberg’s Two – factor theory:

Hygiene Factors Motivators

Company policy and

Achievement
Administration
Recognition
Technical supervision
Work itself
Salary
Responsibility
Inter-personal relations
Advancement
Working conditions

These hygiene factors prevent dissatisfaction, but they do not lead to satisfaction. By
themselves, the hygiene factors do not motivate. Only the motivators motivate humans on
the job. They are roughly equivalent to Maslow’s higher – level needs. According to the
Herzberg theory, an individual must have a job with a challenging content in order to be
truly motivated.
3.The Porter – Lawler Model:

Porter and Lawler start with the premise that motivation (effort or force) does not equal
satisfaction and/or performance. Motivation, satisfaction, and performance are all separate
variables and relate in ways different from what was traditionally assumed. The following
Figure 19 depicts the porter and Lawler model.

Intrinsic Rewards

Satisfaction
Efforts Performance

Extrinsic Rewards

Porter and Lawler Model

Effort: Effort is defined as the amount of energy exerted by an employee on a given

task.

Performance: Effort leads to performance. But both may not be equal.

Rewards and Satisfaction: According to Vroom, there are two types of rewards, viz.,
intrinsic rewards and extrinsic rewards. Intrinsic rewards refer to a sense of self –
accomplishment and self – actualization. Extrinsic rewards include working conditions and
status. Both intrinsic and extrinsic rewards lead to satisfaction.

4. McGregor’s ‘Theory X’ and ‘Theory Y’

Douglas McGregor propounded two contrasting theories of human behavior which he called
theory X and theory Y.

Theory X: Theory X indicates the traditional approach to managerial motivation and

control. It represents old stereotyped and authoritarian management style of motivation. It
suggests that threats of punishment and strict control are the ways to manage people.

Theory Y: Theory Y indicates that if people are properly motivated, they could really be
creative. The main task of management is to unleash the potential in the employees. An
employee who is properly motivated can achieve his goals by directing his own efforts and,
thus, he can help in accomplishing the organizational goals. This theory emphasizes the
satisfaction of need of the workers. It does not rely heavily on the use of authority as an
instrument of command and control. It suggests that decentralization and delegation, job
enlargement, participation and consultative management style are the ways to motivate
people.

Comparison of Theory X and Theory Y

Theory X Theory Y

Based on the assumption that Based on the assumption that

people are basically lazy and so people like work as children like
shirk work play

People do not take initiative. People like to take initiative. They

They like to be directed. seek self – direction.

People avoid responsibility People assume responsibility

whenever possible gladly if conditions are
favourable.

For getting things done, people People do not require close and
must be supervised strictly. strict supervision for properly
performing their jobs.

Autocratic style of leadership is Democratic or participative style

likely to be more effective of leadership is likely to be more
effective.

Applicable to illiterate, unskilled Applicable to educated and skilled

and lower – level workers employees who occupy high
positions in the organizations.

Believes in mental sickness and Believes in mental health and so

so negative motivation of positive and intrinsic motivation
employees of employees

LEADERSHIP

Leadership is an integral part of management and plays a vital role in managerial operations. It
provides direction, guidance, and confidence to the employees and helps in the attainment of goals in
much easier way. In business and industrial organizations, managers play the role of leader and
acquire leadership of subordinates, their efforts towards the achievement of organizational goals and
activate the individuals of an organization to make them work. Leadership influences behavior of the
individuals. It has an ability to attract others and potential to make them follow the instructions.
Individuals can be induced to contribute their optimum towards the attainment of organizational goals
through effective leadership. Leadership acquires dominance and the followers accept the directives
and control of a leader. Leadership provides direction and vision for future to an organization.

DEFINITION
Leadership is the art of influencing and inspiring subordinates to perform their duties willingly,
competently and enthusiastically for achievement of groups objectives.

According to Wendell French, "Leadership is the process of influencing the behavior of others in
the direction of a goal or set of goals or, more broadly, toward a vision of the future”,

According to Keith Davis, “Leadership is the process of encouraging and helping others to work
enthusiastically towards objectives”.

According to Koontz and O'Donnell, "Leadership is the art or process of influencing people so
that they will strive willingly towards the achievement of group goals".

According to Peter Drucker, "Leadership means the lifting of man's visions to higher sights, the
raising of man's performance to higher standard, the building of man's personality beyond its normal
limitations".

According to Grey and Starke, "Leadership is both a process and a property. As a process, it is
used for non-coercive influence lo shape up the goals of a group or organization, to motivate behavior
toward the achievement of those goals and to help define group or organizational culture. As a
property, leadership is the set multi characteristics attributed to those who are perceived to be
leaders".

Thus, leaders are people who are able to influence the behavior of others without recourse to
threats or other forms of force towards the individuals. Leaders are the people who are accepted by
the other individuals, as a superior person to them.

FEATURES OF LEADERSHIP

The features of leadership are as follows:

 Leadership is the process of influencing behavior of individuals of an organization.

 Leadership uses non-coercive methods to direct and coordinate the activities of the
individuals of an organization.
 Leadership directs the individuals to attain the tasks assigned to them by following the
instructions of their leaders.
 A leader possesses qualities to influence others.
 Leadership gives the individuals, a vision for future.
 Leadership is a group activity. Leader influences his followers and followers also exercise
influence over his leader.
 Leadership is meant for a given situation, given group for a pre-determined period of lime.
 Leadership is continuous process of influencing behavior. It encourages liveliness in the group.

Importance of Leadership
The following points can judge the importance of leadership:

 A leader should act as a friend of the people whom he is leading.

 A leader must have the capacity to recognize the potentials of the individuals and transform
them into realities.
 A leader should have the confidence of the individuals of the organization.
 A leader must be able to unite the people as a team and build up team spirit.
 A leader should be able to maintain discipline among his group and develop a sense of
responsibility.

 A leader must be able to build up a high morale among the individuals of the organization.
 A leader should motivate his people to achieve goals.
  A leader should try to raise the morale of the individuals and should maintain ethical standards
among the individuals.
 A leader should act as a link between the work groups and the forces outside the organization.

STYLES OF LEADERSHIP

Following are the main types of leadership:

Autocratic
In this type of leadership, there is a complete centralization of authority in the leader, i.e., authority is
centered in the leader himself. He has all the powers to make decisions. He uses coercive measures
and adopts, negative method of motivation. He wants immediate obedience of his orders and
instructions. Any negligence on the part of subordinates results in punishment. There is no
participation from the subordinates in decision-making. A leader thinks that he is the only competent
person in the organization.

Democratic or Participative
Democratic or Participative leadership is also known as group centered or consultative leadership. In
this type of leadership, leaders consult their groups and consider their opinion in the decision-making
process. Leaders encourage discussion among the group members on the problem under consideration
and arrive at a decision depending on their consent. Participation or involvement of the employees in
the decision-making process is also rewarded. Exchange of ideas among subordinates and with the
leader is given encouragement. Leaders give more freedom to their group members, who feel that,
their opinions arc honored and they are given importance. It develops a sense of confidence among
subordinates and they derive job satisfaction. It improves quality of decision as it is taken after due
consideration of valued opinions of the talented group members.

The demerit of this type of leadership is that it takes more time to arrive at a decision, as a lot
of time is wasted while taking the views from the employee. It is, therefore, very time consuming.

Laissez-faire or Free Rein

In this type of leadership, there is virtual absence of direct leadership. It is, therefore, known
as "no leadership at all". There is complete delegation of authority to subordinates so that they can
make decisions by themselves. Absence of leadership may have both positive and negative effects.
Free rein leadership may be effective if members of the group are highly committed to their work. The
negative aspect shows that the leader is not competent enough to lead his group effectively. Members
may feel insecure and develop frustration for lack of decision-making authority.

THEORIES OF LEADERSHIP

Trait Theory of Leadership

The trait model of leadership is based on the characteristics of many leaders - both successful and
unsuccessful - and is used to predict leadership effectiveness. The resulting lists of traits are then
compared to those of potential leaders to assess their likelihood of success or failure.

Scholars taking the trait approach attempted to identify physiological (appearance, height, and
weight), demographic (age, education and socioeconomic background), personality, self-confidence,
and aggressiveness), intellective (intelligence, decisiveness, judgment, and knowledge), task-related
(achievement drive, initiative, and persistence), and social characteristics (sociability and
cooperativeness) with leader emergence and leader effectiveness.
Successful leaders definitely have interests, abilities, and personality traits that are
different from those of the less effective leaders. Through many researches conducted in the last
three decades of the 20th century, a set of core traits of successful leaders have been identified.
These traits are not responsible solely to identify whether a person will be a successful leader or not,
but they are essentially seen as preconditions that endow people with leadership potential.

Among the core traits identified are:

 Achievement drive: High level of effort, high levels of ambition, energy and initiative
 Leadership motivation: an intense desire to lead others to reach shared goals
 Honesty and integrity: trustworthy, reliable, and open
 Self-confidence: Belief in one’s self, ideas, and ability
 Cognitive ability: Capable of exercising good judgment, strong analytical abilities, and
conceptually skilled
 Knowledge of business: Knowledge of industry and other technical matters
 Emotional Maturity: well adjusted, does not suffer from severe psychological disorders.
 Others: charisma, creativity and flexibility

Strengths/Advantages of Trait Theory

 It is naturally pleasing theory.

 It is valid as lot of research has validated the foundation and basis of the theory.
 It serves as a yardstick against which the leadership traits of an individual can be assessed.
 It gives a detailed knowledge and understanding of the leader element in the leadership
process.

Limitations of The Trait Theory

 There is bound to be some subjective judgment in determining who is regarded as a ‘good’ or

‘successful’ leader
 The list of possible traits tends to be very long. More than 100 different traits of successful
leaders in various leadership positions have been identified. These descriptions are simply
generalities.
 There is also a disagreement over which traits are the most important for an effective leader
 The model attempts to relate physical traits such as, height and weight, to effective leadership.
Most of these factors relate to situational factors. For example, a minimum weight and height
might be necessary to perform the tasks efficiently in a military leadership position. In business
organizations, these are not the requirements to be an effective leader.
 The theory is very complex

Implications of Trait Theory

The trait theory gives constructive information about leadership. It can be applied by people at all
levels in all types of organizations. Managers can utilize the information from the theory to evaluate
their position in the organization and to assess how their position can be made stronger in the
organization. They can get an in-depth understanding of their identity and the way they will affect
others in the organization. This theory makes the manager aware of their strengths and weaknesses
and thus they get an understanding of how they can develop their leadership qualities.

Conclusion

The traits approach gives rise to questions: whether leaders are born or made; and whether
leadership is an art or science. However, these are not mutually exclusive alternatives. Leadership
may be something of an art; it still requires the application of special skills and techniques. Even if
there are certain inborn qualities that make one a good leader, these natural talents need
encouragement and development. A person is not born with self-confidence. Self-confidence is
developed, honesty and integrity are a matter of personal choice, motivation to lead comes from
within the individual, and the knowledge of business can be acquired. While cognitive ability has its
origin partly in genes, it still needs to be developed. None of these ingredients are acquired overnight.
The managerial /Leadership grid model

The managerial grid model (1964) is a style leadership model developed by Robert R.
Blake and Jane Mouton.
This model originally identified five different leadership styles based on the concern for people and
the concern for production.
The optimal leadership style in this model is based on Theory Y.
The grid theory has continued to evolve and develop. The theory was updated with two additional
leadership styles and with a new element, resilience.
In 1999, the grid managerial seminar began using a new text, The Power to Change.
The model is represented as a grid with concern for production as the x-axis and concern for
people as the y-axis; each axis ranges from 1 (Low) to 9 (High). The resulting leadership styles are as
follows:

 The indifferent (previously called impoverished) style (1,1): evade and elude. In this style,
managers have low concern for both people and production. Managers use this style to preserve
job and job seniority, protecting themselves by avoiding getting into trouble. The main concern for
the manager is not to be held responsible for any mistakes, which results in
less innovation decisions.
 The accommodating (previously, country club) style (1,9): yield and comply. This style has a
high concern for people and a low concern for production. Managers using this style pay much
attention to the security and comfort of the employees, in hopes that this will
increase performance. The resulting atmosphere is usually friendly, but not necessarily very
productive.
 The dictatorial (previously, produce or perish) style (9,1): in return. Managers using this style
also pressure their employees through rules and punishments to achieve the company goals. This
dictatorial style is based on Theory X of Douglas McGregor, and is commonly applied by companies
on the edge of real or perceived failure. This style is often used in cases of crisis management.
 The status quo (previously, middle-of-the-road) style (5,5): balance and compromise. Managers
using this style try to balance between company goals and workers' needs. By giving some
concern to both people and production, managers who use this style hope to achieve suitable
performance but doing so gives away a bit of each concern so that neither production nor people
needs are met.
 The sound (previously, team) style (9,9): contribute and commit. In this style, high concern is
paid both to people and production. As suggested by the propositions of Theory Y, managers
choosing to use this style encourage teamwork and commitment among employees. This method
relies heavily on making employees feel themselves to be constructive parts of the company.
 The opportunistic style: exploit and manipulate. Individuals using this style, which was added to
the grid theory before 1999, do not have a fixed location on the grid. They adopt whichever
behaviour offers the greatest personal benefit.
 The paternalistic style: prescribe and guide. This style was added to the grid theory before 1999.
In The Power to Change, it was redefined to alternate between the (1,9) and (9,1) locations on
the grid. Managers using this style praise and support, but discourage challenges to their thinking.

Transactional Leadership theory

Transactional theories, also known as exchange theory of leadership, are characterized by a

transaction made between the leader and the followers. In fact, the theory values a positive and
mutually beneficial relationship.

For the transactional theories to be effective and as a result have motivational value, the leader must
find a means to align to adequately reward (or punish) his follower, for performing leader-assigned
task. In other words, transactional leaders are most efficient when they develop a mutual reinforcing
environment, for which the individual and the organizational goals are in sync.

The transactional theorists state that humans in general are seeking to maximize pleasurable
experiences and to diminish un-pleasurable experiences. Thus, we are more likely to associate
ourselves with individuals that add to our strengths.

This is a straightforward leadership style with a focus on work, reward and processes that drive

consistent results. While Transactional leaders tends to lack the hype and charisma found in

Transformative leadership, they are very much results-oriented, which is great for business. The style

is not harsh, as an autocratic leadership type is, but it does punish poor performance. On the flip side,

a transactional leader provides incentive for positive performance. In many cases, better performance

means more money through bonus and commission structures. Financial incentive is enough to

motivate many employees into productive work habits. In addition to utilizing a rewards system, the

Transactional leader is focused on proven processes that produce consistent results.

Transformational Leadership theory

The Transformational Leadership theory states that this process is by which a person interacts with
others and is able to create a solid relationship that results in a high percentage of trust, that will later
result in an increase of motivation, both intrinsic and extrinsic, in both leaders and followers.
The essence of transformational theories is that leaders transform their followers through their
inspirational nature and charismatic personalities. Rules and regulations are flexible, guided by group
norms. These attributes provide a sense of belonging for the followers as they can easily identify with
the leader and its purpose.

Qualities Of a Good Leader

Honesty

One of the leadership qualities that define a good leader is honesty. When you are responsible for a

team of people, it is important to be straightforward. Your company and its employees are a reflection

of yourself, and if you make honest and ethical behaviour as a key value, your team will follow. So

remember to lead by example.

Delegate

Regardless of the situation and position you are in, always remember that you can’t do everything on

your own. Good leaders recognise that delegation does more than simply passing the task to someone

else. It is trusting and believing that your employees are able to handle the task given to them.

Delegating to others shows that you have confidence in their abilities, and this can result in a positive

morale in the workplace. Your employees want to feel appreciated and trusted. So by giving them a

task, they would generally feel honoured that they got selected and they would feel the importance of

having them around.

Communication

Communication is the key to success, said everyone. Without clear communication, your employees

will have trouble to understand your mission, goals, and vision.

Good communication is a leadership attribute for a number of reasons. Communication should be

consistent when it comes to establishing work expectations or giving constructive feedback. With great

communication, your employees will have a broad understanding to what they are working for.

Confidence

Another one of the leadership qualities, is having confidence. Admit it, there may be days where the

future of your brand is cloudy or the monthly sales do not look promising. Any company or businesses

would have gone through these issues before; so it is not something new.

As a leader, it is your responsibility to maintain the team morale and keep moving forward. Keep your

confidence level up and assure everyone that setbacks being looked into. By staying calm and

confident, the team would not worry as they put their trust in you.
Commitment

Nothing shows commitment like getting your hands dirty with the rest of the employees. There is no

greater motivation than seeing their leader working alongside everyone else. By proving your

commitment to the company and especially your team, you will not only earn the respect of your

team, but will also instil that same hardworking drive among your staff.

Showing your commitment sets the example for others to follow, and leads to greater loyalty and

respect for you as a leader. Set the tone of commitment, and others will follow suit. Remember that if

you expect your team to work hard and produce quality work, you would need to lead by example.

Positive attitude

You want to keep your team motivated towards the continued success of the company, and keep the

energy levels up. Whether that means providing snacks, coffee, relationship advice, or even just an

occasional beer in the office, remember that everyone on your team is a person. Keep the office mood

a fine balance between productivity and playfulness.

If your team is feeling happy and upbeat, chances are they won’t mind staying that extra hour to

finish a report, or devoting their best work to the brand.

Creativity

As a good leader is someone the team could look up to for answers or solutions, it is up to you to

think outside the box when any issues arise.

You could also gather the team and start brainstorming ideas to build upon some of your ideas. When

you get your employees involved in a decision or an idea, they often the importance of their existence

in the company. They feel respected and wanted and at times, even looking forward to work!

Inspire

Another quality that defines a good leader is being inspiring. Being able to inspire your team is great

for focusing on the company’s vision and goals, but it is also important for the team during their

current projects.

When your team are drowning in workload or their morale is low, you as a leader need to be inspiring

and start finding ways to inspire your team. It is your job to keep spirits up, and that begins with an

appreciation for the hard work that they have put in. Start off by giving words of encouragement once

in a while.
Empathy

Having empathy as a leader goes a long way. Empathy is the ability to understand or feel what other

people are experiencing. In other words, they put themselves in other people’s shoe. Extraordinary

leaders praise in public and address problems in private.

At times, leaders need to look after their team‘s feelings. The best leaders guide employees through

challenges and are always on the lookout for a solution. Instead of making things personal when they

encounter problems, or assigning blame to individuals, good leaders look for constructive solutions

and focus on moving forward.

Accountability

A good leader takes responsibility for everyone’s performance as well as their own. When things are

going well, they praise. However when problems arise, they identify them quickly, seek solutions, and

get the team back on track.

Enthusiastic

A good leader is enthusiastic about their work or cause and also about their role as leader. People will

respond more openly to a person of passion and dedication. Leaders need to be able to be a source of

inspiration, and be a motivator towards the required action or cause.

Although the responsibilities and roles of a leader may be different, the leader needs to be seen to be

part of the team working towards the goal. This kind of leader will not be afraid to roll up their sleeves

and get dirty.

Focus and drive

A good leader is generally focused and they are able to think rationally. Not only does a good leader

view a situation as a whole, but is able to narrow down the cause as well as find the solution to the

problem.

Leaders should also be self-driven to work harder in wanting to achieve better results for the

company. They are the driving force in the team and also someone the team could look up to and

encourage the rest to work together.

Responsible

The last quality that defines a good leader is being responsible. Great leaders know that when it

comes to their company or workplace, they need to take personal responsibility for failure.
A good leader does not make excuses; they take the blame regardless and then work out how to fix

the problem as soon as possible. Responsibility is definitely a key leadership attribute.

In Summary

To recap, these thirteen leadership qualities that every good leader should strive for, are;

 Honesty
 Delegate
 Communication
 Confidence
 Commitment
 Positive attitude
 Creativity
 Inspire
 Empathy
 Accountability
 Enthusiastic
 Focus and drive
 Responsible

These qualities are the foundation of a good leadership. While some of these leadership qualities may

be more naturally present in the personality of a leader, it is definitely something you can develop and

strengthen over time.