MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
UNIT - I
Management in all business and human organization activity is simply the act of
getting people together to accomplish desired goals and objectives. Management comprises
planning, organizing, staffing, leading or directing, and controlling an organization (a group
of one or more people or entities) or effort for the purpose of accomplishing a goal.
Resourcing encompasses the deployment and manipulation of human resources, financial
resources, technological resources, and natural resources.
Management can also refer to the person or people who perform the act(s) of
management.
The verb manage comes from the Italian maneggiare (to handle — especially a
horse), which in turn derives from the Latin Manus (hand). The French word mesnagement
(later ménagement) influenced the development in meaning of the English word management
in the 17th and 18th centuries.
Definitions:
Management is creative problem solving. This creative problem solving is
accomplished through four functions of management: planning, organizing, leading and
controlling. The intended result is the use of an organization's resources in a way that
accomplishes its mission and objectives.
“The art of getting things done through other people”:-Louis Allen
“Management is to know exactly what you want men to do & then seeing that they do
it in the best & cheapest ways”.
:-F.W. TAYLOR
“Management is to forecast, to plan, to organize, to control, to co – ordinate and to
command”
:-HENRI FAYOL (Father of Modern Management)
FUNCTIONS OF MANAGEMENT
Management operates through various functions, often classified as planning, organizing,
leading/motivating, and controlling.
Planning is the ongoing process of developing the business' mission and objectives
and determining how they will be accomplished. Planning includes both the broadest view of
the organization, e.g., its mission, and the narrowest, e.g., a tactic for accomplishing a
specific goal.
Organizing is establishing the internal organizational structure of the organization.
The focus is on division, coordination, and control of tasks and the flow of information
within the organization. It is in this function that managers distribute authority to job holders.
Staffing is filling and keeping filled with qualified people all positions in the
business. Recruiting, hiring, training, evaluating and compensating are the specific activities
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
included in the function. In the family business, staffing includes all paid and unpaid
positions held by family members including the owner/operators.
Directing is influencing people's behavior through motivation, communication, group
dynamics, leadership and discipline. The purpose of directing is to channel the behavior of all
personnel to accomplish the organization's mission and objectives while simultaneously
helping them accomplish their own career objectives.
Controlling is a four-step process of establishing performance standards based on the
firm's objectives, measuring and reporting actual performance, comparing the two, and taking
corrective or preventive action as necessary.
Types of Managers
General Managers: Plan, organize, lead and control operation of an entire organization.
Financial Managers: Plan, organize, lead and control collection and payment of money and
compliance with state and federal laws governing money management.
Marketing Managers: Plan, organize, lead and control product research, development,
advertisement and delivery.
Human Resources Managers: Plan, organize, lead and control the hiring, training and
compensation of employees.
Operations Managers: Plan, organize, lead and control the production and delivery of
products and services as needed to keep external paying customers satisfied.
MANAGERIAL ROLES
Henry Mintzberg, a prominent management researcher, says that what mangers do can
best be described by looking at the roles they play at work. From his study of actual mangers
at work, Mintzberg developed a categorization scheme for defining what managers do.
Role is defined as the pattern of behavior which is defined for different positions. It
refers to the expected behavior of the occupant of a position.
Managerial roles depend on the formal authority which is delegated to the manager in an
organization. The degree of authority determines his status and different roles. Mintzberg’s
10 managerial roles can be grouped as those primarily concerned with interpersonal
relationships, the transfer of information, and decision making.
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
Mintzberg’s 10 Managerial Roles.
INTERPERSONAL ROLE:
Interpersonal role of a manager is concerned with his interacting with other persons
both the organizational members and outsiders. There are three types of interpersonal roles:
Figurehead role; leader role; and liaison role. In Figurehead role, the manager performs
activities which are of ceremonial and symbolic nature. This includes greeting the visitors,
attending social functions, involving employees, handing out merit certificates and others.
Manager’s Leader role, involves leading his subordinates and motivating them for willing
contributions. In Liaison role, the manager serves as a connecting link between his
organization and outsiders or b/w his unit and other organizational units.
INFORMATIONAL ROLE:
Informational role of a manger includes communication – giving and receiving
information – both within and outside the organization. Information is required to make
decisions effective. There are three types of informational roles of a manager: such as
monitor, disseminator, and spokesperson. In Monitoring role, the manager constantly collects
information about those factors which affect his activities. Such factors may be within the
organization as well as outside it. In Disseminator role, the manager distributes the
information to his subordinates who may otherwise not be in a position to collect it. As a
Spokesperson, the manager represents his organization or unit while interacting with
outsiders. These may be customers, financiers, government, suppliers, or other agencies of
the society.
DECISIONAL ROLE:
Decisional role of a manger involves choosing the most appropriate alternative out of
the available ones so that the organization achieves its objectives when the chosen alternative
is put into action. In decisional role the manager performs four roles: such as entrepreneur,
disturbance handler, resource allocator, and negotiator. In Entrepreneur role, the manager
assumes certain risk which is involved in terms of the outcomes of an action because these
are affected by a variety of external factors. Since these factors are dynamic and change
constantly. In Distribution handler role, the manager is required to contain those forces and
events which tend to disturb the organizational equilibrium and normal functioning. These
forces and events may be strike by employees, shortage of raw material, employee’s
complaints and grievances. In Resource allocator role, the manager allocates resources –
human, physical, and financial – to various organizational units according to their needs. In
Negotiator role, the manager negotiates with various interest groups in the organization. Such
interest groups are shareholders, employees, and outside agencies.
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
ADMINISTRATION vs. MANAGEMENT
In business, administration consists of the performance or management of business
operations and thus the making or implementing of major decisions. Administration can be
defined as the universal process of organizing people and resources efficiently so as to direct
activities toward common goals and objectives.
The word is derived from the Middle English word administracioun, which is in turn
derived from the French administration, itself derived from the Latin administratio — a
compounding of ad ("to") and ministratio ("give service"). Administrator can serve as the
title of the general manager or company secretary who reports to a corporate board of
directors. This title is archaic, but, in many enterprises, this function, together with its
associated Finance, Personnel and management information systems services, is what is
intended when the term "the administration" is used.
Management
Is simply the act of getting people together to accomplish desired goals and
objectives? Management is an executive function which is primarily concerned with carrying
out broad policies laid down by the administration
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
Difference between Administration & Management
BASIC OF DIFFERENCE
ADMINISTRATION
1. Level of authority in Top Level
the Organization
2. Major Focus
Policy
Formulation
Object Determination
3. Nature of Functions
Determinative
4. Scope of Functions
MANAGEMENT
Middle & Lower level
& Policy
Execution
Objective Achievement
Executive
Broad & Conceptual
Narrow & Operational
5. Factors Affecting the Mostly External
Decisions
6. Employer – Employee Entrepreneurs & Owners
Relation
7. Qualities Required
Administrative
Mostly Internal
8. Nature of Usage
Business Enterprise
9. Decision Making
10. Abilities
11. Main Functions
Popular with Government,
military, Religious and
Education organizations
Decisions are influenced by
public
opinions,
government polices, social
& religious factors
It needs administration
rather than technical
Planning & Organization
functions are involved in it
&
Employees
Technical
Decisions are influenced by
the values, opinions and
beliefs of Managers.
Technical activities
Motivating & Controlling
functions
THE EVOLUTION OF MANAGEMENT THOUGHT
We began our discussion of management by suggesting that every one of us is already
a manager in terms of our daily activities. Historically, we can also find many examples of
management. The Great Wall of China could not have happened without a great deal of
management expertise. The same could be said of the construction of the pyramids in Egypt.
Without management, Columbus could not have made his journeys of discovery. Napoleon’s
march across Europe required considerable management. Nonetheless, the systematic study
of management is a fairly recent phenomenon.
The need to study management arose with the industrial revolution in Europe (more
specifically, England). The industrial revolution and the systematic study of management are
the result of a remarkable confluence of ideas and events.
The industrial revolution was the result of a remarkable confluence of ideas and events
The industrial revolution required an unprecedented increase in scientific and
technological knowledge. It further required enormous inputs of human capital (workers) to
operate the factories made possible by the new technology. Not only did new technologies
bring about newer, more efficient ways of producing goods, technological developments in
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
agriculture also ensured that workers, no longer needed on farms, became available as cheap
labor to urban factories. But the industrial revolution was not simply a technological and
economic (increased supply of labor resulting in cheap labor) phenomenon. The emergence
of the industrial revolution also required a philosophical shift.
Without a new way of thinking about the role of human beings in society, the
industrial revolution would likely not have happened; at least not in the way that it did. The
period just prior to the industrial revolution was marked by a changing philosophical
paradigm. Not only was it economically convenient for wealthy land owners to let their
peasants go (now that new technologies made them superfluous on the farms), new ways of
thinking about the rights of humans made it seem morally right. With the emergence of
liberal philosophies, which spoke of individual rights, land owners no longer needed to feel a
sense of obligation to the day laborers on their lands. It became quite right and proper to
"give these people their freedom". And that they did.
...land owners no longer felt a sense of obligation to the day laborers on their lands...
Thousands of recently unemployed peasants flocked to the cities in search of work.
Thousands of recently unemployed peasants flocked to the cities in search of work. The lives
of these workers were clearly governed by the economics of supply and demand. And the
principles of economics, as part of this new philosophical paradigm, had been articulated by
Adam Smith. For purposes of this course, we'll dispense with the bulk of Adam Smith's
learned writings and concentrate on his astute observations about job specialization through
division of labor. Smith described the transition from a craft approach to the manufacture of
goods, to the factory approach.
Craft manufacture describes the creation of products by one (or a few) person(s) in
disparate locations. The solitary cabinetmaker, slowly crafting a dining room cabinet, which
he will later take to the village market to sell, provides an example of craft manufacturing. On
the other hand, the factory approach to cabinet making would involve a number of people
who have specialized in small, discrete elements of the process. Likely one person would be
responsible for the purchase of the wood and other materials required. Another person might
be required to cut all wood to the appropriate dimensions.
Craft manufacture describes the creation of products by one (or a few) person(s)...
...the factory approach involves a number of people who have specialized in small, discrete
elements of the process. The genius in job specialization lies, of course, in increased
efficiency. The productivity per worker is naturally significantly higher than that of the craft
worker.
Yet another worker might glue and fasten the pieces of wood according to plan.
Finishing the cabinet through sanding and painting could constitute one or more other jobs.
Sales would be left to someone else. The genius in job specialization lies, of course, in
increased efficiency. The productivity per worker is naturally significantly higher than that of
the craft worker. Adam Smith's logic set the scene for the industrial revolution. In a way, this
insight was the first modern managerial principle.
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
PLANNING
Nature of Planning
Planning is a tool in the hands of a manager who wants to face problems created by
change. Successful managers deal with foreseen problems and unsuccessful managers’
struggle with unforeseen problems. The difference lies in planning.
Planning helps in determining the course of action to be followed for achieving
various organizational objectives. It is a decision in advance; what to do, when to do, how to
do, and who will do a particular task. Planning is a process, which involves ‘thinking before
doing’.
Planning involves selecting missions and objectives and the actions to achieve them. It ends
with decision-making, i.e., choosing the best alternative from the available future courses of
actions. Plans, thus, provide a rational approach to predetermined objectives.
Definitions:
Planning is based on certain assumptions which are required to formulate policies of
business”
:– George Terry.
“The selection from among alternatives for future courses of action for the enterprise as a
whole and each department with it.”
: – Koontz & O’Donnell
“Planning is essentially deciding about future”: – Louis A. Allen.
Steps in Planning:
It is not necessary that a particular planning process is applicable for all the
organizations and for all types of plans because the various factors that go into planning
process may differ from plan to plan or from one organization or another.
The sequences of various steps in planning are in such a way that they lead to the
translation of an idea into action by reaching to the state of establishing of sequences of
activities. Each stage contributes to plan formulation in the following ways: 1. Perception of Opportunities: Perception of opportunities is not strictly a planning
process. However, this awareness is very important for planning process because it
leads to formulation of plans by providing clue whether opportunities exist for taking
up particular plans. Perception of opportunities includes a preliminary look at possible
opportunities and the ability to see them clearly and completely, knowledge of where
the organization stands in the light of its strengths and weaknesses, an understanding
of why the organizations want to solve uncertainties, and a vision of what it expects to
gain.
2. Establishing Objectives: At this stage, major organizational and unit objectives are
set. Objectives specify the results expected and indicate the end points of what is to be
done, where the primary emphasis is to be placed, and what is to be accomplished by
the various types of plans. The organizational objectives should be specified in all key
result areas. Key result areas are those, which are important for organization in
achieving its objectives.
3. Planning Premises: After determination of organizational goals, the next step is
establishing planning premises, that is, the conditions under which planning activities
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4.
5.
6.
7.
8.
will be undertaken. Planning premises are planning assumptions – the expected
environmental and internal conditions. Thus, planning premises are external and
internal. External premises include total factors in task environment like political,
social, technological, competitor’s plans and actions, government policies, etc.
Internal factors include organizations policies, resources of various types and the
ability of the organization to withstand the environmental pressure.
Identification of Alternatives: Based on organizational objectives and planning
premises, various alternatives can be identified. The concept of various alternatives
suggests that a particular objective can be achieved through various actions.
Evaluation of Alternatives: Various alternatives, which are considered feasible in
terms of preliminary criteria, may be taken for detailed evaluation. At this stage, an
attempt is made to evaluate how each alternative contributes to the organizational
objectives in the light of its resources and constraints. This presents a problem
because each alternative may have certain positive points on one aspect but negative
on others.
Choice of Alternative: After the evaluation of various alternatives, the fit one is
selected. Sometimes evaluation shows that more than one alternative is equally good.
In such a case, a planner may choose more than one alternative. There is another
reason for choosing more than one alternative. Alternative course of action is to be
undertaken in future, which is not constant.
Formulation of Supporting Plans: After choosing the alternatives, the organization has
to formulate the basic plan; various plans are derived so as to support the main plan.
In an organization there can be various derivative plans like planning for buying
equipments, buying raw materials, recruiting and training personnel, developing new
product, etc. These derivative plans are formulated out of the main plan and,
therefore, they support it.
Establishing Sequence of Activities: After formulating basic and derivative plans, the
sequence of activities is determined so that plans are put into actions. Based on plans
at various levels, it can be decided who will do what and at what time. Budget for
various periods can be prepared to give plans more concrete meaning for
implementation.
Types of Planning
The planning process cannot be effective unless the types of plans are properly
understood. It is easy to see that a major program, such as one to build and equip a new
factory, is a plan. The types of planning are classified as follows:
1. Purpose or Missions: The mission or purpose identifies the basic function or task of
an enterprise or agency, or of any part of it. Every kind or organized operation has, or
at least should have if it is to be meaningful, purpose or mission. For example: the
purpose of a state highway department is the design, building, and operation of a
system of state highways. The purpose of the courts is the interpretation of laws and
their applications.
2. Objectives or Goals: These are the ends toward which activity is aimed. They
represent not only the end point of planning but also the end towards which
organizing, staffing, leading, and controlling are aimed.
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3. Strategies: For years, the Military used the word Strategies to mean grand plans made
in light of what it was believed an adversary might or might not do. Strategy is
defined as the determination of the basic long-term objectives of an enterprise and the
adoption of courses of action and allocation of resources necessary to achieve these
goals.
4. Policies: These are also plans, they are general statement or understandings that guide
or channelize thinking in decision-making. Not all policies are “statements”; they are
often merely implied from the actions of managers. Policies define an area within
which a decision is to be made and ensure that the decision will be consistent with,
and contribute to, and objective. Policies help decide issues before they become
problems.
5. Procedures: These are plans that establish a required method of handling future
activities. The chronological sequences of required actions. They are guides to action,
rather than to thinking and they detail the exact manner in which certain activities
must be accomplished.
6. Rules: Rules spell out specific required actions or non-actions, allowing no discretion.
They are usually the simplest type of plan. “No Smoking” is a rule that allows no
deviation from the stated course of action. The essence of a rule is that it reflects a
managerial decision that a certain action must – or must not – be taken.
7. Programs: These are a complex of goals, policies, procedures, rules, task assignments,
steps to be taken, resources to be employed, and other elements necessary to carry out
a given course of action; they are ordinarily supported by budgets.
8. Budgets: A budget is a statement of expected results expressed in numerical terms. It
may be called a “quantified” plan. In fact, the financial operating budget is often
called a profit plan. A budget is expressed in financial terms; in terms of labor –
hours, units of product, or machine – hours; or in any other numerically measurable
terms.
LEVELS OF PLANNING
There are 3 levels of planning, which were discussed as follows: 1. Corporate - Level Planning: This is formulated by Top Management top oversee the
interests and Operations of organizations made up of more than one line of business.
The major questions at this level are: What kind of business should the company is
engaged in? What are the goals and expectations for each business? How should
resources be allocated to reach these goals?
2. Business – Unit Planning: This is concerned with managing the interests and
operations of a particular line in the business. It deals with questions such as these:
How will the business compete within its market? What products/services should it
offer? Which customers does it seek to serve? How will resources be distributed
within the business? BUP attempts to determine what approach to its market the
business should take, and how it should conduct itself, given its resources and the
conditions of the market.
3. Functional – Level Planning: It creates a framework for managers in each function
such as marketing or production – to carry out business – unit strategies and corporate
planning. Thus Functional – level planning compete the hierarchy of planning.
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
DECISION MAKING
The word Decision has been derived from the Latin word ‘decider’ which means ‘a
cutting away or a cutting off, or in a practical sense’. Thus a decision involves a cut off
alternatives between those that are desirable and those that are not desirable. The decision is a
kind of choice of a desirable alternative.
Decision making is an indispensable component of management process and
managers’ life is filled with making decisions after decisions. Managers see decision making
as their central job because they constantly choose what is to be done, which is to do, when to
do, where to do, and how to do. Decision making, though permeates all managerial functions,
is at the core of planning because it is the planning where the major decisions regarding
setting of organizational tone. It is the stage at which major decisions regarding setting of
organizational objectives, formulating major plans, lying down of policies, procedures, rules,
etc.
Decision making is both managerial function and organizational process. It is
managerial function because it is a fundamental responsibility of every manager. It is an
organizational process because many decisions transcend the individual managers and
become the product of groups, teams, committees, etc.
Managers should develop decision making skills and acquaint themselves with the
dynamics of decision making because of the following reasons:
1. Managers spend a great deal of their time in making decisions. In order to develop
their decision – making skills, it is necessary that they know how to make effective
decisions.
2. Managers are evaluated on the basis of quality of their decision making to improve
the quality of decisions; they should know how quality of decision making can be
improved.
Definitions
“ A decision represents a judgment; a final resolution of a conflict of needs means or
goals; and a commitment to action made in face of uncertainty, complexity and even
irrationally.” : - Lopez.
“Decision making can be thought of as premising, identifying alternatives, evaluation
of alternatives in terms of goals sought and the choosing of an alternative.” It is the core of
planning.
: - Koontz and O’Donnell.
“Decision making is a choice between two or more alternatives. It is the process of
thought and deliberation that leads to a decision”
: - Glueck.
“A solution selected after examining several alternatives chosen because the decider
forces that the course of action he elects will do more than the other to his goals and will be
accompanied by the fewest possible objectionable consequences.” : - Jones.
“Decision making describes the process which a course of action is selected as the
way to deal with a specific problem”
: - Stoner.
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Decision Making Process
Decision making is a creative process of an individual. Management decision making
involves the use of organizational resources in the pursuit of predetermined goal. As it
involves the use of organizational resources in the pursuit of predetermined goal and involves
human mental process, it requires a scientific process by which a rational decision is made.
The steps involved in the decision making process are described below:I. Defining the Problem: A problem is an opportunity. Manager must first aware of the
problem sometimes an apparent problem may be only a symptom of an inner state of
affairs. Problems may relate to either internal or external environment. A well defined
problem is often considered as half solution.
II. Analyzing the Problem: A problem may be a symptom. The real problem may hide
in and cause disturbance, hence, simple identification of problem do not lead to
solution. An identified problem must be analyzed in depth.
a) What is the Problem?
b) Which Problem to solve?
c) What is the real cause of the Problem?
A manager needs to assemble all relevant facts for diagnosing the problem.
Information collected is carefully perceived and understood in order to find the crux
of the problem. This enables a manger to identify the real course of the problem for
which a solution is needed.
III. Developing Alternative Courses of Action: One solution seldom exists for solving
organizational problem. Decisions are not made without analyzing alternative course
of action. Developing alternatives is not an easy task. It requires careful thinking
analysis, imagination, creative and innovative abilities, judgment and experience of
managers. A good decision emerges out of consideration of a number of alternatives,
though alternatives do not assure right decisions.
IV. Evaluating Alternative Courses of Action: In the process of generation of
alternatives all possible alternative solutions are gathered. All of them are not feasible
for selection. In many cases alternatives are mutually exclusive. As such decision
maker tries to evaluate them by examining their relative merits and shortcomings to
eliminate undesirable alternatives. The evaluation is aimed at the selection of the best
courses of action with help of certain standards or criteria for evaluation. They are: d) Financial Criteria: Alternatives which meet the financial objectives of the
enterprise are selected. Financial criteria is a quantitative standard, it includes
sales, profit, revenue, cost etc.
e) Risk: Elimination of alternatives in the process of evaluation lands decision
maker in risk of loosing viable alternatives who do not meet the criteria. This
apart, decision maker analyze the alternative on the basis of risk involved in
their implementation.
f) Resource Criteria: The evaluation is done on the basis of resource
requirements. A comparative analysis of resources required for alternatives
enable the decision maker to best appraise the pros and cons of the alternative
courses.
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V.
Selection of the best Alternative Course of Action: The crux of the decision lies
in the selection of the best alternative courses of action. The alternative selected
then becomes the decision. Decision maker is confronted with the selection of a
course of action to maximize his objectives and solve the problem. Similarly
decision makers use their experience, intuition, experimentation, ability to forecast
the results, vision, skill, judgment and competence in the process of selection.
VI.
Implementing the decision, follow – up and control: Selection of the best
course does not ensure goodness of the decision. A good decision is one which is
effectives implemented. Effective implementation requires communication of the
decision, securing acceptance of employees, and provision of adequate resources.
Every decision requires communication to the levels of execution in a clear manner. This
enables the employees better understand the decision. Decision maker is required to
supplement all information and personal touch to make people avoid misunderstandings of
communication. As implementation of decision involves human resources, resistance is not
uncommon.
TOOLS & TECHNIQUES OF DECISION MAKING
Every manager makes decisions in the organization, either in his individual capacity
or as member of a group. In fact, organizational decisions are combination of individual and
group decisions. Both types of decisions have their positive and negative aspects. When
manager makes a decision as an individual, he has to consider the steps involved in decisionmaking process and uses techniques for decision making. However, when he has to make
decision as a group member, he has to consider group behavior also. In group decision
making, there can be either consensus among the members of the group, or the decision can
be arrived at through simple majority unless the group prescribes any other mode of majority.
To improve or to solve the problem or to make decisions it is necessary to follow some tools
and techniques which are as follows:
1. BRAINSTORMING. Brainstorming is a technique to stimulate idea generation for
decision-making. This concept was developed by Osborn in 1938 in an American Company;
the technique is now widely used by many companies, educational institutions, and other
organizations for building ideas. Osborn has defined brainstorming simply as ‘using the brain
to storm the problem’. For brainstorming, a group of 10 to 15 persons is constituted. The
participants should be connected with the problem directly or closely, though they need not
necessarily be from the same discipline. The process in brainstorming goes in the following
ways:
(i) The problem on which decision is required is given to the group. Problem is stated
clearly and precisely so that members of the group can focus their direct attention on it.
(ii) Each member is asked to give ideas through which the problem can be solved. Here the
brainstorming session is meant to be a free, frank, and relaxed one to generate
maximum numbers of ideas irrespective of qualities.
(iii) The members are expected to put their ideas for problem solution without taking into
consideration any limitations – financial, procedural, legal, organizational or
otherwise. Such limitations only act as deterrent to free flow of ideas because the
participants will limit themselves in these limitations.
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(iv) Idea – evaluation is deferred to a later stage because it does not flow in the direction of
idea generation. Hence, any criticism, judgment, or comment is strictly prohibited and
the members are told to abstain from it.
2. NOMINAL GROUP TECHNIQUE: NGT is a structured group meeting which restricts
verbal communication among members during the decision-making process. It is meant to
resolve differences in group opinion by having individuals generate and then rank a series of
ideas in the problem exploration, alternative generation, or choice-making states of group
decision-making. The process of NGT goes as follows:
i. The group leader outlines the problem requiring decisions
ii. Each member writes down his ideas silently and independently and presents his
best single idea on the problem
iii. When all the members write their ideas, these are presented for discussion and
evaluation among the group members.
iv. The members are asked to rank the various ideas of decision making and the
decision is arrived at on the basis of his ranking.
The NGT is widely used in health service, industry, education and government
organizations. Where this technique encourages creativity, prevents strong personality types
from dominating the group, encourages continued exploration of the issues, provides a forum
for the expression of the minority view points, and gives individuals sometime to think about
the issue before offering solutions.
3. DELPHI TECHNIQUE: The name Delphi indicates a shrine at which the ancient Greeks
used to pray for information about the future. In DT of decision making, members do not
have face-to-face interaction for group decision. The decision is arrived at through written
communication in the form of filling up questionnaires often through mail. The results are
then tabulated and used in developing a revised questionnaire which is completed by the
larger group. DT is quite useful where the problem does not lend itself to precise analytical
techniques but can benefit from subjective judgments on a collective basis and members who
may be experts in the area of the problem may not be able to have face-to-face interaction.
However, this technique is quite time-consuming and, therefore, can be used only in those
cases where timing for decision making is not of prime importance.
Prepared by
Siva Rama Krishna. V
Asst. Professor, Dept of MBA, SBIT
13
MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
UNIT – II
An organization is a social arrangement which pursues collective goals, which
controls its own performance, and which has a boundary separating it from its environment.
The word itself is derived from the Greek word ὄργανον (organon) meaning tool
In the social sciences, organizations are studied by researchers from several
disciplines, the most common of which are sociology, economics, political science,
psychology, management, and organizational communication. The broad area is commonly
referred to as organizational studies, organizational behavior or organization analysis.
Therefore, a number of different theories and perspectives exist, some of which are
compatible, and others that are competing



Organization – process-related: an entity is being (re-)organized (organization as task
or action).
Organization – functional: organization as a function of how entities like businesses
or state authorities are used (organization as a permanent structure).
Organization – institutional: an entity is an organization (organization as an actual
purposeful structure within a social context)
Nature of Organizations
New forms of organizations are geared to make organizations more receptive,
adaptive and generative -- always focused on meeting the needs of stakeholders. New forms
of organizations often exhibit the following characteristics:
1. Strong employee involvement - input to the system starts from those closest to the
outcome preferred by the system, from those most in-the-know about whether the
organization is achieving its preferred outcomes with its stakeholders or not. This way, the
organization stays highly attuned and adaptive to the needs of stakeholders.
2. Organic in nature - less rules and regulations, sometimes no clear boundaries and alwayschanging forms
3. Authority based on capability - ensures the organization remains a means to an end and
not an end in itself
4. Alliances -takes advantage of economies of scale, e.g., collaborations, networks, strategic
alliances/mergers, etc.
5. Teams -shares activities to take advantage of economies of scale at the lowest levels of
activities and ensures full involvement of employees at the lowest levels
6. Flatter, decentralized organizations - less middle management, resulting in top
management exchanging more feedback with those providing products and services; also
results in less overhead costs
7. Mindfulness of environments, changes, patterns and themes - priority on reflection and
inquiry to learn from experience; develop "learning organizations"
Prepared by
Siva Rama Krishna. V
Asst. Professor, Dept of MBA, SBIT
14
MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
Organization levels and the Span of Management
The purpose of organizing is to make human cooperation effective, the reason for levels
of organization is the limitation of the span of management. In other words, organizational
levels exist because there is a limit varies depending on situations. The span of management
refers to the number of subordinates who report directly to the superior. It is also known as
the number of subordinates who are efficiently managed by a single superior manager. If the
subordinates who report to a superior are more in number, it is called ‘wide span’ and vice
versa is called ‘narrow span’ The relationship between the span of management and
organizational levels are as follows:i.
ii.
A wide span of management (associated with few organizational levels)
A narrow span of management (associated with many levels)
Factors affecting span of management
The problem of nay manager is to decide the proper number of subordinates to be
managed or controlled. It is basically a behavioral question and varies with such factors
like:
Ability, leadership skills and styles of the manager;
Position of manager in the organization structure;
Possible conflicts between superior and subordinates;
Faith in subordinate’s performance;
Degree of team work;
Nature of the work to be performed by the subordinates;
Training received by the subordinates;
Clarity of delegation of authority and responsibility;
Clarity of plans, polices and programs;
Use of communication techniques and
Amount of personal contact needed.
Organizational Design and Structure
Organization is only a means to an end. It takes certain inputs from the environment
and converts them into specified outputs desired by the society. Organization design deals
with structural aspects of organizations. It aims at analyzing roles and relationships so that
collective effort can be explicitly organized to achieve specific ends. The design process
leads to the development of an organization structure consisting of units and positions.
Organizational design is “the process of systematic and logical grouping of activities,
delegation of authority and responsibility and establishing working relationships that will
enable both the company and employee to realize their mutual objectives.”
Organizational structure is an established pattern of relationships among the
component parts of an organization. Structure is made up of three component parts viz.,
complexity, formalization and centralization.
Complexity refers to horizontal differentiation, vertical differentiation and locational
differentiation. Horizontal differentiation is horizontal separation between units based on
occupations and specializations. Vertical differentiation is the potential for communication
Prepared by
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15
MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
distortion. Locational differentiation refers to the degree of which the location of an
organizations offices, plants and personnel.
Formalization refers to the degree to which the jobs within the organization are
standardized. Centralization refers to the degree to which the decision making is concentrated
at a single point in an organization.
Organization with narrow span
Advantages:
 Close supervision
 Close control
 Fast communication between subordinates and superiors
Disadvantages
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Superiors tend to get too involved in subordinate’s work
Many levels of management
High costs due to many levels
Excessive distance between lowest level and top level
Organization with wide span
Advantages
 Superiors are focused to delegate
 Clear policies must be made
 Subordinates must be carefully selected.
Prepared by
Siva Rama Krishna. V
Asst. Professor, Dept of MBA, SBIT
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
Disadvantages
 Tendency of overloaded superiors to become decision bottlenecks
 Danger of superior’s loss of control
 Requires exceptional quality of managers.
DEPARTMENTATION
The limitation on the number of subordinates that can be directly managed would
restrict the size of enterprises if it were not for the device of departmentation. Grouping
activities and people into departments makes it possible to expand organization.
Bases of Departmentation:
Departmentation by Function:
Functional organization structure is most widely used structure. Each functional
department consists of those jobs in which employees perform similar jobs at different levels.
The commonly used functions are: marketing, finance and accounting, human resource,
manufacturing, research and development and engineering.
Managing Director
General Manager
Production
Manager
Marketing
manager
Manager
Training &
Development
Prepared by
Siva Rama Krishna. V
Asst. Professor, Dept of MBA, SBIT
HR Manager
Manager
Salary &
Admin
Finance
Manager
Manager
Industrial
Relations
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
Advantages
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Permits centralized control of strategic results.
Very well suited for structuring a single business
Promotes in-depth functional expertise.
Well suited to developing a functional based distinctive competence
Enhances operating efficiency where tasks are routine and repetitive
Encourages collaborative work
Results in economies of scale
Minimizes duplication
Permits congruence of goals
Disadvantages
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Poses problems of functional coordination
Can lead to inter functional rivalry and conflict rather than cooperation
Forces profit responsibility to the top
Effective only in stable environment
Results in slower response to change
Results in poor coordination
Result in absence of accountability
Overspecializes and narrows viewpoints of key personnel
Slow adoption to changes in the environment
Limits development of general managers.
Departmentation by Product
Companies producing more than one product structure their organizations, based on products
structure. Activities are divided on the basis of individual products, product line, services
and are grouped into departments in product organization structure.
Managing Director
General Manager
Manager
Motor cycles
Manager
Scooters
Manager
Cars
Manager
Vans
Advantages
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Places attention and effort on product line
Facilitates use of specialized capital, facilities, skills and knowledge
Permits growth and diversity of products and services
Improves coordination of functional activities
Places responsibility for profits at the division level
Furnishes measurable training ground for general managers.
Prepared by
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
Disadvantages
 Requires more persons with general manager abilities
 Tends to make maintenance of economical central services difficult
 Presents increased problem of top management control
Departmentation by Geography
Companies operating in various geographical regions of the country / world structure their
organizations based on geographical structure. The activities functions are grouped into
departments based on the activities performed in the geographical areas / regions.
Managing Director
General Manager
Corporate Managers
Production, Marketing, Finance, HR and R & D
Manager
Northern
Region
Manager
Southern
Region
Manager
Central
Region
Manager
Eastern
Region
Manager
Western
Region
Advantages
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places responsibility at a lower level
places emphasis on local markets and problems
improves coordination in a region
Takes advantage of economies of local operations
Better fact – to – face communication with local interests
Disadvantages
 Requires more persons with general manager abilities
 Tends to make maintenance of economical central services difficult and may require
services difficult and may require services such as personnel or purchasing at a
regional level
 Increases problem of top management control.
Departmentation by Customer Group
Grouping activities so that they reflect a primary interest in customers is common in a variety
of enterprises. Customers are the key to the way activities are grouped when each customer
group is managed by one department head.
Prepared by
Siva Rama Krishna. V
Asst. Professor, Dept of MBA, SBIT
19
MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
President
Community –
City Banking
Advantages
Corporate
Banking
Real Estate &
Mortgage Loans
Institutional
Banking
Agriculture
Banking
 Encourages concentration on customer needs
 Gives customers feeling that they have an understanding supplier (banker)
 Develops expertness in customer area
Disadvantages
 May be difficult to coordinate operations between competing customer demands
 Requires managers and staff expert in customers’ problems
 Customer groups may not always be clearly defined (for example, large corporate
firm Vs. other corporate businesses)
Strategic Business Unit
A single chief executive cannot control a number of decentralized units of a broadly
diversified company. The business can be effectively controlled, if the related businesses are
grouped into strategic units and the efficient and senior executive is delegated with the
authority and responsibility for its management.
A strategic business unit is a grouping of business subsidiaries based on some
important strategic elements common to each. The common or related elements could be an
overlapping set of competitors, a closely related strategic mission.
Managing Director
General Manager
Marketing
Corporate Level Managers
Finance
Human Resource
Production
Group Manager
SBU I
Prepared by
Siva Rama Krishna. V
Asst. Professor, Dept of MBA, SBIT
Group Manager
SBU II
Group Manager
SBU III
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
Advantages
 Provides a strategically relevant way to organize the business unit portfolio of a
broadly diversified company
 Facilitates the coordination of related activities within an SBU.
 Promotes more cohesiveness among the new initiatives of separate but related
businesses
 Allows strategic planning to be done at the most relevant level within the total
enterprise
 Makes the task of strategic review by top executives more objective and more
effective
 Improves coordination among businesses facing similar strategic issues
Disadvantages
 The SBUs can still be biased in charting their future direction
 The roles and authority of the managing director, general manager, SBU level
managers have to be carefully worked out.
 Increases layers of management
 May result in SBU goals that differ from corporate goals
 Conflicts between the SBU managers for greater share of corporate resources.
LINE AND STAFF CONCEPTS
The relationships with which the managers in an organization deal with one another are
broadly classified into two categories, viz. line and staff. Line and staff are often used in
ways that are loose and unclear. Line and staff are characterized by relationships but not by
departments.
Line relationship:
The relationship that exists between two managers due to delegation of authority and
responsibility and giving instructions or orders is called line relationship. Thus, line
relationship generally exists between the superior and his subordinate. Line refers to those
positions of an organization which have responsibility, authority and are accountable for
accomplishment of primary objectives.
Line authority represents an interrupted series of authority and responsibility delegating
down the management hierarchy. In other words, the board of directors delegates a part of its
authority to the general manager. The general manager in turn delegates part of his authority
to different departmental heads and through them, to the next level managers. However, the
line managers are completely responsible and accountable for the results achieved by the
employees of the respective departments and sections.
Staff relationship:
The staff concept is probably as old as organization itself. It is virtually importance for
the busy line managers to perform all their functions and concentrate on all the activities,
including management of the people in their respective departments. This gives rise to
securing advice and help from specialists. This creates staff relationships. The relationship
between two managers is said to be staff relation when it is created due to giving and taking
advice, guidance, counsel, information, help or assistance etc.,
Prepared by
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
Thus, staff managers analyze problems, collect information and develop alternative
suggestions and help the line managers to make the right decision quickly. They reduce the
work load of the line managers and allow them to concentrate on their operative issues.
Managers identified as line are not subjected to command by staff positi8ons. The line
managers do not have authority over staff.
Managing
Director
General Manager
Marketing
Manager
Finance
Manager
Deputy
Marketing
Manager
Deputy
Finance
Manager
Deputy
Production
Manager
Deputy HR
Manager
Officers
Officers
Officers
Officers
Salesmen
Assistants
Workforce
Assistants
Note:
“
“
“
Production
Manager
HR
Manager
Denotes line relationship
“Denotes staff relationship
DELEGATION OF AUTHORITY
Every manager in the organization has to perform certain tasks which are assigned to him.
Managers require authority in order to perform the activities assigned to him by his superiors.
Authority is delegated when a superior gives a subordinate discretion to make decisions. The
process of giving authority to a subordinate in order to perform the assigned activities by a
superior is called delegation of authority
“Delegation is the process a manager follows in dividing the work assigned to him so that
he performs only that part which he can perform effectively and so get others help him with
the remaining work”.
Nature of delegation:
This includes:
 It gives direction to a manager in performing his duties
Prepared by
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
 It has dual characteristics in the sense that though the authority is delegated, it is still
retained with the superior
 It can be modified even after the action is over
 Manager cannot delegate authority which he does not possess
 It may be specific or general and
 It is an art rather than science.
Benefits of delegation
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Relieves the managers form routine work
Helps the managers to concentrate on policy issues
Basis for effective functions
Effective and timely decision
Empower and develops subordinates
Satisfaction to subordinates
Barriers of delegation
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Fear of loss of power
Avoidance of risk
Lack of confidence in subordinates
Autocratic style
Fear of misuse of authority
Overconfidence of subordinates
CENTRALIZATION AND DECENTRALIZATION OF AUTHORITY
The concept of organizational centralization and decentralization is closely related to
the concept of span of control, which affects the span of management and therefore,
influences management.
Centralization is the systematic and consistent reservation of authority at the central
point within the organization. If a manager reserves work, he has to reserve the authority also.
In some cases, managers delegate work without delegating authority necessary to carry out
the work. In such cases, the decisions are taken by those people who do not actually perform
the work
Advantages:
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Facilitates personal supervision
Provides personal leadership
Promotes integration and co-ordination
Promotes uniform action
To handles emergent situation
Disadvantages:
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Delay in communication
Delay in decision-making
Fail to pay proper alternative on policy issues
Employee dissatisfaction
Prepared by
Siva Rama Krishna. V
Asst. Professor, Dept of MBA, SBIT
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
DECENTRALIZATION
It refers to the systematic effort to delegate to the lowest levels all authority except
that which can only be exercised at central points. It proceeds at different rates to different
levels and for different functions within the same company. Decentralization can be
accomplished to a certain extent in a functional type of organization structure. The decision
to decentralize is complex as it involves a major change in the company’s philosophy of
management.
Factors determining the degree of decentralization are:
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Cost pertaining to the decision
Desire for uniformity of policy
Size of the organization
Number of levels in the organization structure
History of the enterprise
Philosophy of the management
Decision for independence
Availability of mangers with skill, knowledge and ability
Benefits of decentralization
Decentralization benefits the superiors, subordinates and the organization in general. These
benefits include:
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Effective communication
Reduces Red – tapism. (Reduces the supervisory levels)
Fast decision making
Enhances employee job satisfaction
Executive development
Competitive advantage.
Advantages:
 Relieves top management of some burden of decision making and forces upper level
managers to let go
 Encourages decision making and assumption of authority and responsibility
 Gives managers more freedom and independence in decision making
 Promotes establishment and use of broad controls that may increase motivation
 Facilitates setting up of profit centers
 Facilitates product diversification
 Promotes development of general managers
 Aids in adaptation to fast – changing environment.
Limitations:
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Makes it more difficult to have uniform policy
Increases complexity of coordination of decentralized organizational units
May result in loss of some control by upper level managers
May be limited by inadequate control techniques
May be constrained by inadequate planning and control system
Can be limited by the lack of qualified managers
Prepared by
Siva Rama Krishna. V
Asst. Professor, Dept of MBA, SBIT
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
 Involves considerable expenses for training managers
 May be limited to external forces (labor unions, governmental controls, tax policies)
POWER
Power is the potential to change others’ attitude or behavior. The ability of individuals
or groups to induce or influence the beliefs or actions of other persons or groups.
“The capacity of a person, team, department or organization to influence others.”- J. Pfeffer
Power may be:
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
An act of one person (realized potentiality) or
Potentiality or capacity of one person
In order to influence the behavior of the other person to act in accordance with the
organizational requirements or the wishes of the person who has the power.
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People many times do not use the power they have and
Some people may not know that they have power.
Normally, the subordinate depends on his superior for some favors in work allotment,
work schedules, job security, transfers, promotions, information etc. therefore, the superior
can have power over his subordinate and control his behavior.
TYPES OF POWER
Several types of power can influence the outcome of a negotiation. We emphasize the
word “can,” because if you have power but don’t use it, the power adds no value to the
negotiation.
1. Position. Some measure of power is conferred on the basis of one’s formal position in an
organization. For example, a marketing manager can influence the decisions that affect the
marketing department. However, the marketing manager has little power to influence the
decisions that affect the finance department.
2. Knowledge or expertise. People who have knowledge or expertise can wield tremendous
power. Of course, knowledge in itself is not powerful. It is the use of knowledge and
expertise that confers power. Thus, you could be an incredibly bright person and still be
powerless.
3. Character or ethics. The more trustworthy individuals are the more power they have in
negotiations. The big issue here is whether they do what they say they are going to do—even
when they no longer feel like doing it.
4. Rewards. People who are able to bestow rewards or perceived rewards hold power.
Supervisors, with their ability to give raises, hold power over employees. Money can have
power. But money, like anything else, holds very little power if it is not distributed.
Prepared by
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
5. Punishment. Those who have the ability to create a negative outcome for a counterpart
have the power of punishment. Managers who have the authority to reprimand and fire
employees hold this type of power. State troopers and highway patrol officers who have the
ability to give out speeding tickets also have this power.
6. Gender. Dealing with someone of the opposite sex can confer power. We have videotaped
many negotiation case studies in which the turning point came when a woman casually
touched a man’s hand or arm to make her point.
7. Powerlessness. In some instances, giving up all power can be very powerful. If a
kidnapper threatens a hostage with death enough times, the hostage may just challenge the
kidnapper to go ahead and kill him. At the point that the hostage gives up power, or control
over his own death, the kidnapper actually loses power.
8. Charisma or personal power. When we ask participants in our seminars for examples of
leaders who have had charisma or personal power, invariably the names of Mother Teresa,
John F. Kennedy, and Ronald Reagan come up. When we ask, “What do all three of these
leaders have in common?” participants usually respond, “Passion and confidence in what
they believe in.”
9. Lack of interest or desire. In negotiations, as in many other areas of life, the side with the
least interest in what is being negotiated holds the most power. If you are buying a house and
you really do not care if you purchase the house you are currently negotiating for or the one
down the street, you will most likely hold more power in the negotiation—unless, of course,
the sellers could care less if they sell the house today or live in it for another ten years!
10. Craziness. This may sound funny, but bizarre or irrational behavior can confer a
tremendous amount of power. Every organization has someone who blows up or behaves
irrationally when confronted with problems. Those who have been exposed to this type of
behavior tend to avoid such individuals. As a result, these individuals are not given many
tasks to accomplish because others are afraid to ask them.
Power in organizations
Legitimate power
Job description for each job specifies not only the duties and responsibilities, but also
the rights of the jobholder. These rights include right to request or order the subordinates to
behave in a specific way in order to perform organizational activities and contribute to the
organizational goal.
Reward power
People mostly prefer to be influenced by positive approach. Reward power influences
the people through positive approach. People are influenced to follow instructions of the
executives with a pre assumption that they will get positive outcome by following the
instructions. These rewards include increase in salary, bonus, promotion, transfer to a better
job, convenient work shifts etc.
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
Coercive power
It is the ability to apply punishment. Superiors have coercive power through their
authority to reprimand, demote and retrench employees. This power is dependent on fear.
Expert power
Some people possess in depth knowledge, understanding and talented skills in certain
well defined areas. Such persons are regarded as experts in the area concerned. People would
like to follow the instructions and influence of such experts. Thus, expert power is the
individual’s capacity to influence others by possessing expert skills and knowledge that they
need. Thus, expert power is the influence based on special skills or knowledge.
Referent power
It is the individual’s ability to influence the others’ behavior though interpersonal
relations, amicable, pleasing personalities and charisma. Charisma is a form of interpersonal
attraction where by followers develops a respect for and trusts in the charismatic individual.
GROUP VS TEAM
The purpose of assembling a team is to accomplish bigger goals than any that would be
possible for the individual working alone. The aim and purpose of a team is to perform, get
results and achieve victory in the workplace and marketplace. The very best managers are
those who can gather together a group of individuals and mould them into a team. Here are
ten key differentials to help you mould your people into a pro-active and productive team.
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Understandings. In a group, members think they are grouped together for
administrative purposes only. Individuals sometimes cross purpose with others. In a
team, members recognize their independence and understand both personal and team
goals are best accomplished with mutual support. Time is not wasted struggling over
"Turf" or attempting personal gain at the expense of others.
Ownership. In a group, members tend to focus on themselves because they are not
sufficiently involved in planning the unit's objectives. They approach their job simply
as a hired hand. "Castle Building" is common. In a team, members feel a sense of
ownership for their jobs and unit, because they are committed to values-based
common goals that they helped establish.
Creativity and Contribution. In a group, members are told what to do rather than
being asked what the best approach would be. Suggestions and creativity are not
encouraged. In a team, members contribute to the organization’s success by applying
their unique talents, knowledge and creativity to team objectives.
Trust. In a group, members distrust the motives of colleagues because they do not
understand the role of other members. Expressions of opinion or disagreement are
considered divisive or non-supportive. In a team, members work in a climate of trust
and are encouraged to openly express ideas, opinions, disagreements and feelings.
Questions are welcomed.
Common Understandings. In a group, members are so cautious about what they say,
that real understanding is not possible. Game playing may occur and communication
traps be set to catch the unwary. In a team, members practice open and honest
communication. They make an effort to understand each other's point of view.
Prepared by
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Asst. Professor, Dept of MBA, SBIT
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
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Personal Development. In a group, members receive good training but are limited in
applying it to the job by the manager or other group members. In a team, members are
encouraged to continually develop skills and apply what they learn on the job. They
perceive they have the support of the team.
Conflict Resolution. In a group, members find themselves in conflict situations they
do not know how to resolve. Their supervisor/leader may put off intervention until
serious damage is done, i.e. a crisis situation. In a team, members realise conflict is a
normal aspect of human interaction but they view such situations as an opportunity
for new ideas and creativity. They work to resolve conflict quickly and constructively
Participative Decision Making. In a group, members may or may not participate in
decisions affecting the team. Conformity often appears more important than positive
results. Win/lose situations are common. In a team, members participate in decisions
affecting the team but understand their leader must make a final ruling whenever the
team cannot decide, or an emergency exists. Positive win/win results are the goal at
all times.
Clear Leadership. In a group, members tend to work in an unstructured environment
with undetermined standards of performance. Leaders do not walk the talk and tend to
lead from behind a desk. In a team, members work in a structured environment, they
know what boundaries exist and who has final authority. The leader sets agreed high
standards of performance and he/she is respected via active, willing participation.
Commitment. In a group, members are uncommitted towards excellence and
personal pride. Performance levels tend to be mediocre. Staff turnover is high because
talented individuals quickly recognize that
(a) Personal expectations are not being fulfilled
(b) They are not learning and growing from others and
(c) They are not working with the best people.
In a team, only those committed to excellence are hired. Prospective team members
are queuing at the door to be recruited on the basis of their high levels of hard and soft skill
sets. Everyone works together in a harmonious environment
UNIT – III
The study of human behavior, attitudes, and performance in organizations is known as
organizational behavior.
Organizational Behavior (OB) is the study and application of knowledge about how
people, individuals, and groups act in organizations. It does this by taking a s y s t e m
a p p r o a c h . That is, it interprets people-organization relationships in terms of the whole
person, whole group, whole organization, and whole social system. Its purpose is to build
better relationships by achieving human objectives, organizational objectives, and social
objectives.
The organization's base rests on management's philosophy, values, vision and goals.
This in turn drives the organizational culture which is composed of the formal organization,
informal organization, and the social environment. The culture determines the type of
leadership, communication, and group dynamics within the organization. The workers
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perceive this as the quality of work life which directs their degree of motivation. The final
outcomes are performance, individual satisfaction, and personal growth and development. All
these elements combine to build the model or framework that the organization operates from.
Definition
Organizational behavior is an academic discipline concerned with describing,
understanding, predicting, and controlling human behavior in an organizational environment.
‘Organizational Behaviour’ can be defined as the study of what people think, feel, and do in
and around organizations. The study of Organizational Behavior facilitates the process of
explaining, understanding, predicting, maintaining, and changing employee behavior in an
organizational setting. The value of organizational behavior is that it isolates important
aspects of the manager’s job and offers specific perspective on the human side of
management:
- People as organizations,
- People as resources,
- People as people.
In other words, it involves the understanding, prediction and control of human
behavior and factors affecting their performance and interaction among the organizational
members. And because organizational behavior is concerned specifically with employment –
related situations, you should not be surprised to find that it emphasizes behavior as related to
concerns such as jobs, work, absenteeism, employment turnover, productivity, human
performance and management
Nature of Organizational Behavior (OB)
Organizational behavior is an applied behavioral science that is built on contributions
from a number of behavioral disciplines such as psychology, sociology, social psychology,
anthropology and economics.
• Psychology. Psychology is the study of human behavior which tries to identify the
characteristics of individuals and provides an understanding why an individual behaves in a
particular way. This thus provides us with useful insight into areas such as human motivation,
perceptual processes or Personality characteristics.
• Sociology. Sociology is the study of social behavior, relationships among social groups and
societies, and the maintenance of social order. The main focus of attention is on the social
system. This helps us to appreciate the functioning of individuals within the organization
which is essentially a socio- technical entity.
• Social psychology. Social psychology is the study of human behavior in the context of
social situations. This essentially addresses the problem of understanding the typical
behavioral patterns to be expected from an individual when he takes part in a group.
• Anthropology. Anthropology is the science of mankind and the study of human behavior as
a whole. The main focus of attention is on the cultural system, beliefs, customs, ideas and
values within a group or society and the comparison of behavior among different cultures. In
the context of today’s organizational scenario. It is very important to appreciate the
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differences that exist among people coming from different cultural backgrounds as people are
often found to work with others from the other side of the globe.
• Economics. Any organization to survive and sustain must be aware of the economic
viability of their effort. This applies even to the non-profit and voluntary organizations as
well.
• Political Science Although frequently overlooked, the contributions of political scientists
are significant to the understand arrangement in organizations. It studies individuals and
groups within specific conditions concerning the power dynamics. Important topics under
here include structuring Of Conflict, allocation of power and how people manipulate power
for individual self-interest etc.
PERCEPTION
"Perception is a mirror not a fact. And what I look on is my state of mind, reflected
outward."
In philosophy, psychology, and the cognitive sciences, perception is the process of
attaining awareness or understanding of sensory information. The word "perception" comes
from the Latin words perceptio, percipio, and means "receiving, collecting, action of taking
possession, apprehension with the mind or senses”
.
What one perceives is a result of interplays between past experiences, including one’s
culture, and the interpretation of the perceived. If the percept does not have support in any of
these perceptual bases it is unlikely to rise above perceptual threshold.
Perception, in psychology, mental organization and interpretation of sensory
information. The psychologists studied extensively the ways in which people organize and
select from the vast array of stimuli that are presented to them, concentrating particularly on
visual stimuli.
Perception is influenced by a variety of factors, including the intensity and physical
dimensions of the stimulus; such activities of the sense organs as effects of preceding
stimulation; the subject's past experience; attention factors such as readiness to respond to a
stimulus; and motivation and emotional state of the subject. Stimulus elements in visual
organization form perceived patterns according to their nearness to each other.
ATTRIBUTION THEORIES
Attribution theory is a social psychology theory developed by Fritz Heider, Harold Kelley,
Edward E. Jones, and Lee Ross.
The theory is concerned with the ways in which people explain (or attribute) the behavior of
others or themselves (self-attribution) with something else. It explores how individuals "attribute"
causes to events and how this cognitive perception affects their usefulness in an organization.
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TYPES OF ATTRIBUTION:
The two main types of attributions are Internal and External attributions. When an internal
attribution is made, the cause of the given behavior is assigned to the individual's personality,
attitudes, character or disposition. When an external attribution is made, the cause of the given
behavior is assigned to the situation in which the behavior was seen (that the individual producing the
behavior did so because of the surrounding environment or the social situation). These two types of
attribution lead to very different perceptions of the individual engaging in a behavior (Personal is
Internal and Situational is external).
PERSONALITY
The word personality can be traced to the Latin words “per sona” which means “to speak
through”. According to Gordon Allport, personality is “the dynamics organization within the
individual of those psychological systems that determine his unique adjustments to his environment”.
“How people affect others and how they understand and view themselves, as well as their
pattern of inner and outer measurable traits and the person – situation intervention”. : - Fred Luthans
“The sum total of ways in which an individual reacts to and interacts with other”. : - Robbins.
While there are many different theories of personality, the first step is to understand exactly
what is meant by the term personality. A brief definition would be that personality is made up
of the characteristic patterns of thoughts, feelings, and behaviors that make a person unique.
In addition to this, personality arises from within the individual and remains fairly consistent
throughout life.
Some of the fundamental characteristics of personality include:




Consistency - There is generally a recognizable order and regularity to behaviors.
Essentially, people act in the same ways or similar ways in a variety of situations.
Psychological and physiological - Personality is a psychological construct, but research
suggests that it is also influenced by biological processes and needs.
Impact behaviors and actions - Personality does not just influence how we move and
respond in our environment; it also causes us to act in certain ways.
Multiple expressions - Personality is displayed in more than just behavior. It can also be
seen in out thoughts, feelings, close relationships, and other social interactions.
JOHARI WINDOW
A Johari window is a cognitive psychological tool created by Joseph Luft and Harry Ingham
in 1955 in the United States, used to help people better understand their interpersonal communication
and relationships. It is used primarily in self-help groups and corporate settings as a heuristic exercise
When performing the exercise, the subject is given a list of 55 adjectives and picks five or six
that they feel describe their own personality. Peers of the subject are then given the same list, and each
pick five or six adjectives that describe the subject. These adjectives are then mapped onto a grid.
Charles Handy calls this concept the Johari House with four rooms. Room 1 is the part of
ourselves that we see and others see. Room 2 is the aspect that others see but we are not aware of.
Room 3 is the most mysterious room in that the unconscious or subconscious bit of us is seen by
neither ourselves nor others. Room 4 is our private space, which we know but keep from others
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Known
Self
Known
Others
to Not Known
to Self
to
Not Known
to Others
Transactional Analysis
Transactional Analysis (or TA as it is often called) is a model of people and relationships that
was developed during the 1960s by Dr. Eric Berne. It is based on two notions: first that we have three
parts or 'ego-states' to our 'personality. The other assumption is that these converse with one another
in 'transactions' (hence the name). TA is a very common model used in therapy and there is a great
deal written about it
Parent, Adult and Child
We each have internal models of parents, children and also adults, and we play these
roles with one another in our relationships. We even do it with ourselves, in our internal
conversations.
Parent
There are two forms of Parent we can play.
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The Nurturing Parent is caring and concerned and often may appear as a motherfigure (though men can play it too). They seek to keep the Child safe and offer
unconditional love, calming them when they are troubled.
The Controlling (or Critical) Parent, on the other hand, tries to make the Child do as
the parent wants them to do, perhaps transferring values or beliefs or helping the Child to
understand and live in society. They may also have negative intent, using the Child as a
whipping-boy or worse.
Adult
The Adult in us is the 'grown up' rational person who talks reasonably and
assertively, neither trying to control nor reacting. The Adult is comfortable with themselves
and is, for many of us, our 'ideal self'.
Child
There are three types of Child we can play.
The Natural Child is largely un-self-aware and is characterized by the non-speech
noises they make (yahoo, etc.). They like playing and are open and vulnerable.
The cutely-named Little Professor is the curious and exploring Child who is always
trying out new stuff (often much to their Controlling Parent's annoyance). Together with the
Natural Child they make up the Free Child.
The Adaptive Child reacts to the world around them, either changing themselves to
fit in or rebelling against the forces they feel.
ATTITUDES
Attitude is the underlying way we think, feel and act -- how we react to the world
around us. It determines the quality and effectiveness of all of our thinking, emotions and
behavior ... and, thereby, the positive or negative consequences of that behavior.
Attitude is the one thing we can count on as a lifetime companion. Jobs and
relationships come and go, but your attitude is always with you. You can't take a vacation
from yourself! Attitude is based upon our expectations and perceptions -- our definition of
reality.
Attitudes have two basic components: beliefs and values. Beliefs are, roughly,
statements of facts. Beliefs are potentially verifiable. We say a belief is true or correct when it
seems to reflect the world and false or incorrect when it seems contradicted by the world.
Values are judgments of worth, like good or bad, useful or useless, expensive or cheap,
efficient or inefficient. Together, these cognitions (thoughts), beliefs and values, form
attitudes
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l
Attitudes are judgments. They develop on the ABC model (affect, behavior, and
cognition). The affective response is an emotional response that expresses an individual's
degree of preference for an entity. The behavioral intention is a verbal indication or typical
behavioral tendency of an individual. The cognitive response is a cognitive evaluation of the
entity that constitutes an individual's beliefs about the object. Most attitudes are the result of
either direct experience or observational learning from the environment.
UNIT – 4
MOTIVATION AND LEADING:
Motivation is derived from the word motive. The term motive is derived from the
Latin word ‘movere’ which means ‘to move’. Motive is defined as an inner stage that
energises, activates and directs the behaviour of individual towards certain goals. Motives are
certain important needs of human beings. Theses needs have different degrees of potency or
strength. Motivation is a general term applying to the entire class of drives, desires, needs,
wishes, and similar forces. According to the Encyclopedia of Management, “Motivation
refers to the degree of readiness of an organization to pursue some designated goal and
implies the determination of the nature and locus of the forces, including the degree of
readiness”.
Motivation is a process that starts with a physiological or psychological deficiency or
need that activates behaviour or a drive that is aimed at a goal or incentive. Thus the process
of motivation lies in the meaning of and relationship among needs, drives and incentives.
Managers are responsible for providing an environment conducive to performance. But
the individuals themselves are responsible for self – motivation. One approach is through
strategic career management. George Odiorne, a management professor, scholar, and
experienced consultant, made specific recommendations for motivating your self. Here are
some:
 Set a goal for yourself and do not lose sight of it.
 Supplement your long – term objective with short – term goals and specific actions. It
has been said that to get something done is to begin.
 Learn a challenging new task each day. Learning to become a manager does not stop
with a bachelor or a master’s degree
 Make your job a different one. Set improvement objectives for your position, with
some imagination, you probably can considerably increase your productivity.
 Develop an area of expertise. Build your strengths or develop one of your
weaknesses into strength.
 Give yourself feedback and reward yourself.
 Setting verifiable goals provides you with a standard against which you can measure
your performance.
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INTRINSIC AND EXTRINSIC MOTIVATION
INTRINSIC MOTIVATION
Intrinsic motivation comes from rewards inherent to a task or activity itself - the
enjoyment of a puzzle or the love of playing basketball, for example. One is said to be
intrinsically motivated when engaging in an activity "with no apparent reward except for the
activity
itself".
This
form
of
motivation
has
been
studied
by social and educational psychologists since the early 1970s. Research has found that it is
usually associated with high educational achievement and enjoyment by students. Students
are likely to be intrinsically motivated if they:



attribute their educational results to internal factors that they can control (e.g. the amount
of effort they put in),
believe they can be effective agents in reaching desired goals (i.e. the results are not
determined by luck),
Are interested in mastering a topic, rather than just rote-learning to achieve good grades.
EXTRINSIC MOTIVATION
Extrinsic motivation comes from outside of the performer. Money is the most obvious
example, but coercion and threat of punishment are also common extrinsic motivations.
In sports, the crowd may cheer the performer on, and this motivates him or her to do
well. Trophies are also extrinsic incentives. Competition is often extrinsic because it
encourages the performer to win and beat others, not to enjoy the intrinsic rewards of the
activity.
Social psychological research has indicated that extrinsic rewards can lead to over
justification and a subsequent reduction in intrinsic motivation.
THEORIES OF MOTIVATION
MASLOW’S NEED HIERARCHY THEORY
Abraham Harold Maslow (April 1, 1908 – June 8, 1970) was an American
psychologist. He is noted for his conceptualization of a "hierarchy of human needs", and is
considered the father of humanistic psychology.
Abraham Maslow developed the Hierarchy of Needs model in 1940-50's USA, and
the Hierarchy of Needs theory remains valid today for understanding human motivation,
management training, and personal development. Indeed, Maslow's ideas surrounding the
Hierarchy of Needs concerning the responsibility of employers to provide a workplace
environment that encourages and enables employees to fulfill their own unique potential
(self-actualization) are today more relevant than ever.
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1.
Physiological Needs
These include the most basic needs that are vital to survival, including the need for
water, air, food, and sleep. Maslow believed that these needs are the most basic and
instinctive needs in the hierarchy because all needs become secondary until these
physiological needs are met.
2. Security Needs
These include needs for safety and security. Security needs are important for survival,
but they are not as demanding as the physiological needs. Examples of security needs
include a desire for steady employment, health insurance, safe neighborhoods, and
shelter from the environment.
3. Social Needs
These include needs for belonging, love, and affection. Maslow considered these
needs to be less basic than physiological and security needs. Relationships such as
friendships, romantic attachments and families help fulfill this need for companionship
and acceptance, as does involvement in social, community or religious groups.
4. Esteem Needs
After the first three needs have been satisfied, esteem needs becomes increasingly
important. These include the need for things that reflect on self-esteem, personal worth,
social recognition, and accomplishment.
5. Self-actualizing Needs
This is the highest level of Maslow’s hierarchy of needs. Self-actualizing people are selfaware, concerned with personal growth, less concerned with the opinions of others, and
interested fulfilling their potential.
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HERTZBERG TWO FACTOR THEORY OF MOTIVATION
Frederick Irving Herzberg (1923 - 2000) was a noted psychologist who became one of the
most influential names in business management. He is most famous for introducing job
enrichment and the Motivator-Hygiene theory
Herzberg proposed the Motivation-Hygiene Theory, also known as the two factor theory
(1959) of job satisfaction. According to his theory, people are influenced by two factors:
Motivator factors or satisfiers:







Achievement
Recognition
Work Itself
Responsibility
Promotion
Growth
Job content
Hygiene or Dis-satisfiers or Maintenance Factors








Pay and Benefits
Company Policy and Administration
Relationships with co-workers
Physical Environment
Supervision
Status
Job Security
Salary
1. People are made dissatisfied by a bad environment, but they are seldom made
satisfied by a good environment.
2. The prevention of dissatisfaction is just as important as encouragement of motivator
satisfaction.
3. Hygiene factors operate independently of motivation factors. An individual can be
highly motivated in his work and be dissatisfied with his work environment.
4. All hygiene factors are equally important, although their frequency of occurrence
differs considerably.
5. Hygiene improvements have short-term effects. Any improvements result in a shortterm removal of, or prevention of, dissatisfaction.
6. Hygiene needs are cyclical in nature and come back to a starting point. This leads to
the "What have you done for me lately?" syndrome.
7. Hygiene needs have an escalating zero point and no final answer
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JOB DESIGN
Job design is defined as the process of deciding on the content of a job in terms of its
duties and responsibilities; on the methods to be used in carrying out the job, in terms of
techniques, systems and procedures and on the relationship that should exist between the job
holder and his superiors, subordinates and colleagues.
When you are making the decision to employ a new employee, you should also determine
the design of the job. Job design includes details such as:





How many hours per week the job is for?
Will the job be ongoing or short term?
Where will the job be located?
What will the wage be?
Can the job be completed in a flexible way?
Flexibility with job design
A flexible workplace allows you to work with your employees to decide on hours of
work, work location and the way work is carried out. It involves thinking creatively about
how working lives can be better structured to match individual and business needs.
Flexible workplace arrangements can assist you and your employees improve the way
your workplace operates. With the ageing of the population and skills shortages, adopting a
flexible approach to work and job design will assist in attracting a diverse workforce
including people with disability.
Job Rotation
Job rotation is an approach to management development where an individual is
moved through a schedule of assignments designed to give him or her breadth of exposure to
the entire operation.
Job rotation is also practiced to allow qualified employees to gain more insights into
the processes of a company, and to reduce boredom and increase job satisfaction through job
variation. The term job rotation can also mean the scheduled exchange of persons in offices,
especially in public offices, prior to the end of incumbency or the legislative period.
Job Enlargement
Job enlargement means increasing the scope of a job through extending the range of
its job duties and responsibilities. This contradicts the principles of specialization and the
division of labor whereby work is divided into small units, each of which is performed
repetitively by an individual worker. Some motivational theories suggest that the boredom
and alienation caused by the division of labor can actually cause efficiency to fall. Thus, job
enlargement seeks to motivate workers through reversing the process of specialization.
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Job Enrichment
Job Enrichment is an attempt to motivate employees by giving them the opportunity to
use the range of their abilities. It is an idea that was developed by the American psychologist
Frederick Herzberg in the 1950s. It can be contrasted to job enlargement which simply
increases the number of tasks without changing the challenge. As such job enrichment has
been described as 'vertical loading' of a job, while job enlargement is 'horizontal loading'. An
enriched job should ideally contain:



A range of tasks and challenges of varying difficulties
A complete unit of work - a meaningful task
Feedback, encouragement and communication
LEADERSHIP
Leadership can be defined as “The art or process of influencing people so that they
will strive willingly and enthusiastically toward the achievement of group goals”. Ideally
people should be encouraged to develop not only willingness to work but also willingness to
work with zeal and confidence.
Leadership involves the exercise of influence on the part of the leader over the
perception, motivation, communication, personality and ultimately over he behaviour of other
people. Leadership is therefore, the study of leader’s influence over the thoughts, feelings,
opinions, beliefs, attitudes and actions of followers.
LEADERSHIP THEORIES
TRAIT THEORY
“People are born with inherited traits. Some traits are particularly suited to
leadership. People who make good leaders have the right (or sufficient) combination of
traits”.
Trait is defined as a relatively enduring quality of an individual. The ‘trait approach’
seeks to determine what makes a successful leader from the leaders own personal
characteristics. This theory is based on the Great man theory, but it is more systematic in its
analysis of leaders.
Trait approach leadership method was to select leaders of eminence and their
characteristics were studied. It was the hypothesis that the persons having certain traits
could become successful leaders.
Stogdill (1974) identified the following traits and skills as critical to leaders.
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Traits













Adaptable to situations
Alert to social environment
Ambitious and achievementorientated
Assertive
Cooperative
Decisive
Dependable
Dominant (desire to influence
others)
Energetic (high activity level)
Persistent
Self-confident
Tolerant of stress
Willing to assume responsibility
Skills









Clever (intelligent)
Conceptually skilled
Creative
Diplomatic and tactful
Fluent in speaking
Knowledgeable about group task
Organized(administrative
ability)
Persuasive
Socially skilled
McCall and Lombardo (1983) researched both success and failure identified four primary
traits by which leaders could succeed or 'derail':

Emotional stability and composure: Calm, confident and predictable, particularly
when under stress.
 Admitting error: Owning up to mistakes, rather than putting energy into covering up.
 Good interpersonal skills: Able to communicate and persuade others without resort to
negative or coercive tactics.
 Intellectual breadth: Able to understand a wide range of areas, rather than having a
narrow (and narrow-minded) area of expertise.
There have been many different studies of leadership traits and they agree only in the
general saintly qualities needed to be a leader. For a long period, inherited traits were
sidelined as learned and situational factors were considered to be far more realistic as
reasons for people acquiring leadership positions.
Paradoxically, the research into twins who were separated at birth along with new
sciences such as Behavioral Genetics have shown that far more is inherited than was
previously supposed. Perhaps one day they will find a 'leadership gene'.
BEHAVIORAL THEORY
“Leaders can be made, rather than are born. Successful leadership is based in
definable, learnable behavior” Behavioral theories of leadership do not seek inborn traits
or capabilities. Rather, they look at what leaders actually do.
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If success can be defined in terms of describable actions, then it should be relatively
easy for other people to act in the same way. This is easier to teach and learn then to adopt
the more ephemeral 'traits' or 'capabilities'.
Behavioral is a big leap from Trait Theory, in that it assumes that leadership
capability can be learned, rather than being inherent. This opens the floodgates to
leadership development, as opposed to simple psychometric assessment that sorts those
with leadership potential from those who will never have the chance.
A behavioral theory is relatively easy to develop, as you simply assess both
leadership success and the actions of leaders. With a large enough study, you can then
correlate statistically significant behaviors with success. You can also identify behaviors
which contribute to failure, thus adding a second layer of understanding.
CHARISMATIC LEADERSHIP THEORY
A charismatic leadership characteristic was done by Robert J. House. He indicates
that charismatic leaders may have certain characteristics, such as being self – confident,
having strong convictions, articulating a vision, being able to initiate change, communicating
high expectations, having a need to influence followers and supporting them, demonstrating
enthusiasm and excitement, and being in touch with reality.
Charismatic leaders, thus, lure and motivate the subordinates towards performance
beyond expectations, innovations, creations and create the work culture among the followers.
CONTINGENCY APPROACH
It is developed by Fiedler and probably known as fiedler’s contingency model. He is
the first researcher who recognized the need for a broader explanation of leadership
phenomena. In this model there are mainly three major situational variables
i)
ii)
iii)
Leader – member relations
Task structure
Leader position power.
LEADING VS MANAGING
The term “manager” and “leader” are often used inter changeably. However
leadership is not same as manager ship. A manager is more than a leader. All managers are
leaders but all leaders are not mangers.
The following table summarizes the above (and more) and gives a sense of the
differences between being a leader and being a manager. This is, of course, an illustrative
characterization, and there is a whole spectrum between either ends of these scales along
which each role can range. And many people lead and manage at the same time, and so may
display a combination of behaviors.
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MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR (M O B)
Subject
Leader
Manager
Essence
Change
Stability
Focus
Leading people
Managing work
Have
Followers
Subordinates
Horizon
Long-term
Short-term
Seeks
Vision
Objectives
Approach
Sets direction
Plans detail
Decision
Facilitates
Makes
Power
Personal charisma
Formal authority
Appeal to
Heart
Head
Energy
Passion
Control
Dynamic
Proactive
Reactive
Persuasion
Sell
Tell
Style
Transformational
Transactional
Exchange
Excitement for work
Money for work
Likes
Striving
Action
Wants
Achievement
Results
Risk
Takes
Minimizes
Rules
Breaks
Makes
Conflict
Uses
Avoids
Direction
New roads
Existing roads
Truth
Seeks
Establishes
Concern
What is right
Being right
Credit
Gives
Takes
Blame
Takes
Blames
LEADERSHIP BEHAVIOUR AND STYLES
The behaviour exhibited by a leader during the supervision of subordinates is known as
leadership styles. Basically there are three types namely Directive, Paricipative and Laissez
faire.
1. Directive, Autocratic or Authoritarian Style:
The autocratic leaders commands and expects compliance, is dogmatic and positive,
and leads by the ability to withhold or give rewards and punishment. He centralized
power and decision making in him. Orders are issued and subordinates are expected to
execute these orders. The leaders take full authority and full responsibility. Autocratic
leaders are classified into:
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a) Strict autocrat who follows autocratic style completely where the method of
influencing subordinates is thoroughly negative.
b) Benevolent autocrat who typically gives awards to the followers; and
c) Incompetent autocrat who adopts autocratic style with a view to hide his
incompetency.
2. Participative or Democratic Style:
The democratic leader consults with subordinates and encourages their
participation. He consults them before taking any decisions. There is an open, two-way
communication; good rapport is maintained with members of the group. The leader does
not dominate. He gives lot of freedom to subordinates. Decisions are made by the leader
and his subordinates.
3. Laissez – Faire or Free – Rein Leadership:
The free – rein leader uses power very little, if at all, giving subordinates a
high degree of independence. These leaders avoid authority and responsibility. They
mostly depend upon the group to establish objectives and goals, formulate policies and
programs. The group members train and motivate themselves.
TRANSFORMATIONAL AND TRANSACTIONAL LEADERSHIP
TRANSFORMATIONAL LEADERSHIP
“People will follow a person who inspires them. A person with vision and passion can
achieve great things. The way to get things done is by injecting enthusiasm and energy”
Transformational leadership is a leadership approach that is defined as leadership that
creates valuable and positive change in the followers. A transformational leader focuses on
"transforming" others to help each other, to look out for each other, to be encouraging and
harmonious, and to look out for the organization as a whole. In this leadership, the leader
enhances the motivation, morale and performance of his follower group
James Macgregor Burns (1978) first introduced the concepts of transformational
leadership in his descriptive research on political leaders, but this term is now used in
organizational psychology as well. According to Burns, transformational leadership is a
process in which "leaders and followers help each other to advance to a higher level of
morale and motivation". Burns related to the difficulty in differentiation between
management and leadership and claimed that the differences are in characteristics and
behaviors. He established two concepts: "transformational leadership" and "transactional
leadership". According to Burns, the transformational approach creates significant change in
the life of people and organizations. It redesigns perceptions and values, changes expectations
and aspirations of employees. Unlike in the transactional approach, it is not based on a "give
and take" relationship, but on the leader's personality, traits and ability to make a change
through vision and goals
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TRANSACTIONAL LEADERSHIP
“People are motivated by reward and punishment. Social systems work best with a
clear chain of command. When people have agreed to do a job, a part of the deal is that
they abandon all authority to their manager. The prime purpose of a subordinate is to do
what their manager tells them to do”
The transactional leader works through creating clear structures whereby it is clear
what is required of their subordinates, and the rewards that they get for following orders.
Punishments are not always mentioned, but they are also well-understood and formal
systems of discipline are usually in place.
The early stage of Transactional Leadership is in negotiating the contract whereby
the subordinate is given a salary and other benefits, and the company (and by implication
the subordinate's manager) gets authority over the subordinate. When the Transactional
Leader allocates work to a subordinate, they are considered to be fully responsible for it,
whether or not they have the resources or capability to carry it out. When things go wrong,
then the subordinate is considered to be personally at fault, and is punished for their failure
(just as they are rewarded for succeeding).
The transactional leader often uses management by exception, working on the
principle that if something is operating to defined (and hence expected) performance then it
does not need attention. Exceptions to expectation require praise and reward for exceeding
expectation, whilst some kind of corrective action is applied for performance below
expectation. Transactional leadership is based in contingency, in that reward or punishment is
contingent upon performance.
The main limitation is the assumption of 'rational man', a person who is largely
motivated by money and simple reward, and hence whose behavior is predictable.
EVALUATING LEADER
There are 10 factors for evaluating the qualities of a leader. The factors are as follows:
1. Reinforcing contributions and achievements; giving timely, positive, and specific feedback
2. Uncovering employees' interests; encouraging them to develop and pursue personal and
professional goals
3. Developing employees; providing opportunities for acquiring or enhancing desirable
knowledge, skills, and abilities
4. Encouraging two-way communication; seeking input from employees and acting on that
input
5. Acting as a positive role model; talking positively to peers, talking positively about the
organization, and talking positively about customers
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6. Displaying emotional intelligence; ensuring that physical reactions, body language, and
personal statements promote constructive dialogue among subordinates, peers, and superiors
7. Facilitating positive interactions among employees; encouraging a pleasant atmosphere
and reducing conflicts
8. Delegating authority effectively; giving employees autonomy while simultaneously
establishing check points to monitor performance
9. Maximizing employee performance; matching employee tasks with capabilities, and giving
emotional support that matches employee needs
10. Coaching employees; providing advice about individual performance, goal achievement,
and career development
UNIT – V
COMMUNICATION & CONTROLLING
Communication is a process of transferring information from one entity to another.
Communication processes are sign-mediated interactions between at least two agents which
share a repertoire of signs and semiotic rules. Communication is commonly defined as "the
imparting or interchange of thoughts, opinions, or information by speech, writing, or signs".
Although there is such a thing as one-way communication, communication can be perceived
better as a two-way process in which there is an exchange and progression of thoughts,
feelings or ideas (energy) towards a mutually accepted goal or direction (information).
Communication is a process whereby information is enclosed in a package and is
channeled and imparted by a sender to a receiver via some medium. The receiver then
decodes the message and gives the sender a feedback. All forms of communication require a
sender, a message, and a receiver. Communication requires that all parties have an area of
communicative commonality. There are auditory means, such as speech, song, and tone of
voice, and there are nonverbal means, such as body language, sign language, paralanguage,
touch, eye contact, and writing.
PRINCIPLES OF COMMUNICATION:
Communication is based upon following seven principles,
These are known as 7 C’s of communication.
1. Conciseness: It should be notified that the message should be concise in nature so that
it will be easy to catch the readers’ attention.
2. Concreteness: Message should be concrete as having all the meanings conveyed in it
but should be shorter in length.
3. Clarity: It must give appropriate and explicit meaning that would not diversify and
confuse the reader at any instance. By placing prominence and consequences with all
the facts and figures.
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4. Completeness: Also it is important that the message must have complete meaning
that will providing the sufficient information to its reader.
5. Courtesy: Another important feature is that the sender must be emphasizing on the
courteous tone and must give some compliments and benefits to its readers.
6. Correctness: The message conveyed must be checked for correctness and should be
free from all grammatical errors
7. Consideration: There must be proper consideration in the message and it should
emphasize on you attitude rather than ‘I’ and ‘we’ kind of words.
PROCESS AND COMPONENTS OF COMMUNICATION:
Here are following components on which communication is preceded in any organization.
1. Context: It is the theme that a message must have.
2. Sender: Sender acts as encoder from where the message is sourced.
3. Message: The purpose of context and detail information is provided in this component.
4. Medium: It is the channel from where the message is bypassed and information flows
towards receiver.
5. Receiver : It acts as an encoder that understands the message, sent by the sender and where
information sinks.
6. Feedback: The final phase where the sender gets its audience and readers response in form
of criticism or appreciation.
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TYPES OF COMMUNICATION
Communication of information, messages, opinions, speech and thoughts can be done
via different forms of modern communication media, like, e-mail, telephone and mobile.
Some of the basic ways of communication are by speaking, singing, sign language, body
language, touch and eye contact. These basic ways of communication are used to transfer
information from one entity to other. There are many different types of communication but
they can be classified into four basic types of communication. These four types of
communication are as follows
Verbal Communication
Verbal communication includes sounds, words, language and speaking. Language is
said to have originated from sounds and gestures. There are many languages spoken in the
world. The bases of language formation are: gender, class, profession, geographical area, age
group and other social elements. Speaking is an effective way of communicating and is again
classified into two types viz. interpersonal communication and public speaking
Good verbal communication is an inseparable part of business communication. In a
business, you come across people from various ages, cultures and races. Fluent verbal
communication is essential to deal with people in business meetings. Also, in business
communication self-confidence plays a vital role which when clubbed with fluent
communication skills can lead to success.
Public speaking is another verbal communication in which you have to address a
group of people. Preparing for an effective speech before you start is important. In public
speaking, the speech must be prepared according to the type of audience you are going to
face. The content of your speech should be authentic and you must have enough information
on the topic you have chosen for public speaking
Non-Verbal Communication
Non-verbal communication involves physical ways of communication, like, tone of
the voice, touch, smell and body motion. Creative and aesthetic non-verbal communication
includes singing, music, dancing and sculpturing. Symbols and sign language are also
included in non-verbal communication. Body language is a non-verbal way of
communication. Body posture and physical contact convey a lot of information. Body posture
matters a lot when you are communicating verbally to someone. Folded arms and crossed
legs are some of the signals conveyed by a body posture. Physical contact, like, shaking
hands, pushing, patting and touching expresses the feeling of intimacy. Facial expressions,
gestures and eye contact are all different ways of communication. Reading facial expressions
can help you know a person better.
Written Communication
Written communication is writing the words which you want to communicate. Good
written communication is essential for business purposes. Written communication is
practiced in many different languages. E-mails, reports, articles and memos are some of the
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ways of using written communication in business. The written communication can be edited
and amended many times before it is communicated to the second party to whom the
communication is intended. This is one of the main advantages of using writing as the major
means of communication in business activity. Written communication is used not only in
business but also for informal communication purposes. Mobile SMS is an example of
informal written communication.
Visual communication
The last type of communication out of the four types of communication, is the visual
communication. Visual communication is visual display of information, like, topography,
photography, signs, symbols and designs. Television and video clips are the electronic form
of visual communication
BARRIERS OF COMMUNICATION
No matter how good the communication system in an organization is, unfortunately
barriers can and do often occur. This may be caused by a number of factors which can usually
be summarized as being due to physical barriers, system design faults or additional barriers.
Physical barriers are often due to the nature of the environment. Thus, for example,
the natural barrier which exists, if staff is located in different buildings or on different sites.
Likewise, poor or outdated equipment, particularly the failure of management to introduce
new technology, may also cause problems. Staff shortages are another factor which
frequently causes communication difficulties for an organization.
Whilst distractions like background noise, poor lighting or an environment which is too hot
or cold can all affect people's morale and concentration, which in turn interfere with effective
communication.
Attitudinal barriers come about as a result of problems with staff in an organization.
These may be brought about, for example, by such factors as poor management, lack of
consultation with employees, personality conflicts which can result in people delaying or
refusing to communicate, the personal attitudes of individual employees which may be due to
lack of motivation or dissatisfaction at work, brought about by insufficient training to enable
them to carry out particular tasks, or just resistance to change due to entrenched attitudes and
ideas.
Psychological factors such as people's state of mind. We all tend to feel happier and
more receptive to information when the sun shines. Equally, if someone has personal
problems like worries about their health or marriage, then this will probably affect them.
Different languages and cultures represent a national barrier which is particularly important
for organizations involved in overseas business.
Individual linguistic ability is also important. The use of difficult or inappropriate
words in communication can prevent people from understanding the message.Poorly
explained or misunderstood messages can also result in confusion. We can all think of
situations where we have listened to something explained which we just could not grasp.
Physiological barriers may result from individuals' personal discomfort, caused, for example,
by ill health, poor eye sight or hearing difficulties.
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COMMUNICATION IN ORGANISATIONS:
THERE ARE THREE TYPES OF COMMUNICATION.
1. Internal Communication.
2. External Communication.
3. Interpersonal Communication.
1. Internal Communication
When an organization communication in side the organization this types of
communication is called internal communication.
There are three types of internal communication.
1. Upward Communication.
2. Downward Communication.
3. Lateral Communication.
1. Upward Communication
Flow of documentation upward direction from sender to reviver inside the
organization is called upward communication. E.g. staff communicates with his
management.
2. Downward communication.
Flow of documentation downward direction from sender to receiver inside
the organization is called downward communication. Example management
communication with there employees.
3. Lateral communication.
Means transfer for or sharing of information between co. Equal authorities
or in the same agencies in side the same organization is called lateral
communication.
2. EXTERNAL COMMUNICATION:When an organization communication out side the organization this types of
communication is called external communication it is also called public
relationship the excellent example of external communication is advertising.
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3. INTERPERSONAL COMMUNICATION:Way of interpersonal communication is called the informal communication
in which different individual’s communication to each others examples.
Interests groups friendship groups.
USING COMMUNICATION SKILLS TO MANAGE CONFLICTS:
Conflict in a relationship is virtually inevitable. In itself, conflict isn’t a problem; how
it’s handled, however, can bring people together or tear them apart. Poor communication
skills, disagreements and misunderstandings can be a source of anger and distance, or a
springboard to a stronger relationship and happier future. Next time you’re dealing with
conflict, keep these tips on effective communication skills in mind and you can create a more
positive outcome.
Stay Focused: Sometimes it’s tempting to bring up past seemingly related conflicts when
dealing with current ones. Unfortunately, this often clouds the issue and makes finding
mutual understanding and a solution to the current issue less likely, and makes the whole
discussion more taxing and even confusing.
Listen Carefully: People often think they’re listening, but are really thinking about what
they’re going to say next when the other person stops talking. Truly effective communication
goes both ways. While it might be difficult, try really listening to what your partner is saying.
Don’t interrupt.
Try To See Their Point of View: In a conflict, most of us primarily want to feel heard and
understood. We talk a lot about our point of view to get the other person to see things our
way. Ironically, if we all do this all the time, there’s little focus on the other person’s point of
view, and nobody feels understood.
Respond to Criticism with Empathy: When someone comes at you with criticism, it’s easy
to feel that they’re wrong, and get defensive. While criticism is hard to hear, and often
exaggerated or colored by the other person’s emotions, it’s important to listen for the other
person’s pain and respond with empathy for their feelings.
Own What’s Yours: Realize that personal responsibility is a strength, not a weakness.
Effective communication involves admitting when you’re wrong. If you both share some
responsibility in a conflict (which is usually the case), look for and admit to what’s yours.
Use “I” Messages: Rather than saying things like, “You really messed up here,” begin
statements with “I”, and make them about yourself and your feelings, like, “I feel frustrated
when this happens.” It’s less accusatory, sparks less defensiveness, and helps the other person
understand your point of view rather than feeling attacked.
Look for Compromise Instead of trying to ‘win’ the argument, look for solutions that meet
everybody’s needs. Either through compromise, or a new solution that gives you both what
you want most, this focus is much more effective than one person getting what they want at
the other’s expense. Healthy communication involves finding a resolution that both sides can
be happy with.
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Take a Time-Out: Sometimes tempers get heated and it’s just too difficult to continue a
discussion without it becoming an argument or a fight. If you feel yourself or your partner
starting to get too angry to be constructive or showing some destructive communication
patterns, its okay to take a break from the discussion until you both cool off. Sometimes good
communication means knowing when to take a break.
Don’t Give Up: While taking a break from the discussion is sometimes a good idea, always
come back to it. If you both approach the situation with a constructive attitude, mutual
respect, and a willingness to see the other’s point of view or at least find a solution, you can
make progress toward the goal of a resolution to the conflict. Unless it’s time to give up on
the relationship, don’t give up on communication.
Ask For Help If You Need It: If one or both of you has trouble staying respectful during
conflict, or if you’ve tried resolving conflict with your partner on your own and the situation
just doesn’t seem to be improving, you might benefit from a few sessions with a therapist.
CONTROLLING
Control is one of the managerial functions like planning, organizing, staffing and
directing. It is an important function because it helps to check the errors and to take the
corrective action so that deviation from standards are minimized and stated goals of the
organization are achieved in desired manner.
According to modern concepts, control is a foreseeing action whereas earlier concept
of control was used only when errors were detected. Control in management means setting
standards, measuring actual performance and taking corrective action. Thus, control
comprises these three main activities.
Definitions:
“Control of an undertaking consists of seeing that everything is being carried out in
accordance with the plan which has been adopted, the orders which have been given, and the
principles which have been laid down. Its object is to point out mistakes in order that they
may be rectified and prevented from recurring”:- Henri Fayol
“Controlling is the measurement and correction of performance in order to make sure that
enterprise objectives and the plans devised to attain them are accomplished”:- Harold
Koontz
“Control is checking current performance against pre-determined standards contained in the
plans, with a view to ensure adequate progress and satisfactory performance”:- EFL Breach
Characteristics of Control:






Control is a continuous process
Control is a management process
Control is embedded in each level of organizational hierarchy
Control is forward looking
Control is closely linked with planning
Control is a tool for achieving organizational activities
Process of controlling
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




Setting performance standards.
Measurement of actual performance.
Comparing actual performance with standards.
Analyzing deviations.
Correcting deviations
Establish standards to measure performance. Within an organization's overall strategic
plan, managers define goals for organizational departments in specific, operational terms that
include standards of performance to compare with organizational activities.
Measure actual performance. Most organizations prepare formal reports of performance
measurements that manager’s review regularly. These measurements should be related to the
standards set in the first step of the control process. For example, if sales growth is a target,
the organization should have a means of gathering and reporting sales data.
Compare performance with the standards. This step compares actual activities to
performance standards. When managers read computer reports or walk through their plants,
they identify whether actual performance meets, exceeds, or falls short of standards.
Typically, performance reports simplify such comparison by placing the performance
standards for the reporting period alongside the actual performance for the same period and
by computing the variance—that is, the difference between each actual amount and the
associated standard.
Take corrective actions. When performance deviates from standards, managers must
determine what changes, if any, are necessary and how to apply them. In the productivity and
quality-centered environment, workers and managers are often empowered to evaluate their
own work. After the evaluator determines the cause or causes of deviation, he or she can take
the fourth step—corrective action. The most effective course may be prescribed by policies or
may be best left up to employees' judgment and initiative
Establish
Standards &
Methods for
Measuring
Performance
Measure
Performance
Does
Performance
Match the
Standards
No
Take
Corrective
actions
Yes
Do Nothing
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Requirements for Effective Control
1. A focus on critical points. For example, controls are applied where failure cannot be
tolerated or where costs cannot exceed a certain amount. The critical points include all
the areas of an organization's operations that directly affect the success of its key
operations.
2. Integration into established processes. Controls must function harmoniously within
these processes and should not bottleneck operations.
3. Acceptance by employees. Employee involvement in the design of controls can
increase acceptance.
4. Availability of information when needed. Deadlines, time needed to complete the
project, costs associated with the project, and priority needs are apparent in these
criteria. Costs are frequently attributed to time shortcomings or failures.
5. Economic feasibility. Effective control systems answer questions such as, “How
much does it cost?” “What will it save?” or “What are the returns on the investment?”
In short, comparison of the costs to the benefits ensures that the benefits of controls
outweigh the costs.
6. Accuracy. Effective control systems provide factual information that's useful,
reliable, valid, and consistent.
7. Comprehensibility. Controls must be simple and easy to understand
CONTROL TECHNIQUES
Control techniques provide managers with the type and amount of information they
need to measure and monitor performance. The information from various controls must be
tailored to a specific management level, department, unit, or operation.
To ensure complete and consistent information, organizations often use standardized
documents such as financial, status, and project reports. Each area within an organization,
however, uses its own specific control techniques, described in the following sections.
Financial controls
After the organization has strategies in place to reach its goals, funds are set aside for
the necessary resources and labor. As money is spent, statements are updated to reflect how
much was spent, how it was spent, and what it obtained. Managers use these financial
statements, such as an income statement or balance sheet, to monitor the progress of
programs and plans. Financial statements provide management with information to monitor
financial resources and activities. The income statement shows the results of the
organization's operations over a period of time, such as revenues, expenses, and profit or loss.
The balance sheet shows what the organization is worth (assets) at a single point in time, and
the extent to which those assets were financed through debt (liabilities) or owner's investment
(equity).
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Financial audits, or formal investigations, are regularly conducted to ensure that financial
management practices follow generally accepted procedures, policies, laws, and ethical
guidelines. Audits may be conducted internally or externally. Financial ratio analysis
examines the relationship between specific figures on the financial statements and helps
explain the significance of those figures:




Liquidity ratios measure an organization's ability to generate cash.
Profitability ratios measure an organization's ability to generate profits.
Debt ratios measure an organization's ability to pay its debts.
Activity ratios measure an organization's efficiency in operations and use of assets.
In addition, financial responsibility centers require managers to account for a unit's
progress toward financial goals within the scope of their influences. A manager's goals and
responsibilities may focus on unit profits, costs, revenues, or investments.
Budget controls
A budget depicts how much an organization expects to spend (expenses) and earn
(revenues) over a time period. Amounts are categorized according to the type of business
activity or account, such as telephone costs or sales of catalogs. Budgets not only help
managers plan their finances, but also help them keep track of their overall spending.
A budget, in reality, is both a planning tool and a control mechanism. Budget
development processes vary among organizations according to who does the budgeting and
how the financial resources are allocated. Some budget development methods are as follows:




Top-down budgeting. Managers prepare the budget and send it to subordinates.
Bottom-up budgeting. Figures come from the lower levels and are adjusted and
coordinated as they move up the hierarchy.
Zero-based budgeting. Managers develop each new budget by justifying the projected
allocation against its contribution to departmental or organizational goals.
Flexible budgeting. Any budget exercise can incorporate flexible budgets, which set
“meet or beat” standards that can be compared to expenditures.
Marketing controls
Marketing controls help monitor progress toward goals for customer satisfaction with
products and services, prices, and delivery. The following are examples of controls used to
evaluate an organization's marketing functions:

Market research gathers data to assess customer needs—information critical to an
organization's success. Ongoing market research reflects how well an organization is
meeting customers' expectations and helps anticipate customer needs. It also helps
identify competitors.
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

Test marketing is small-scale product marketing to assess customer acceptance. Using
surveys and focus groups, test marketing goes beyond identifying general requirements
and looks at what (or who) actually influences buying decisions.
Marketing statistics measure performance by compiling data and analyzing results. In
most cases, competency with a computer spreadsheet program is all a manager needs.
Managers look at marketing ratios, which measure profitability, activity, and market
shares, as well as sales quotas, which measure progress toward sales goals and assist
with inventory controls.
Human resource controls
Human resource controls help managers regulate the quality of newly hired personnel,
as well as monitor current employees' developments and daily performances.
On a daily basis, managers can go a long way in helping to control workers' behaviors
in organizations. They can help direct workers' performances toward goals by making sure
those goals are clearly set and understood. Managers can also institute policies and
procedures to help guide workers' actions. Finally, they can consider past experiences when
developing future strategies, objectives, policies, and procedures.
Common control types include performance appraisals, disciplinary programs,
observations, and training and development assessments. Because the quality of a firm's
personnel, to a large degree, determines the firm's overall effectiveness, controlling this area
is very crucial.
Computers and information controls
Almost all organizations have confidential and sensitive information that they don't
want to become general knowledge. Controlling access to computer databases is the key to
this area.
Increasingly, computers are being used to collect and store information for control
purposes. Many organizations privately monitor each employee's computer usage to measure
employee performance, among other things. Some people question the appropriateness of
computer monitoring. Managers must carefully weigh the benefits against the costs—both
human and financial—before investing in and implementing computerized control
techniques.
Although computers and information systems provide enormous benefits, such as
improved productivity and information management, organizations should remember the
following limitations of the use of information technology:

Performance limitations. Although management information systems have the
potential to increase overall performance, replacing long-time organizational
employees with information systems technology may result in the loss of expert
knowledge that these individuals hold. Additionally, computerized information systems
are expensive and difficult to develop. After the system has been purchased,
coordinating it—possibly with existing equipment—may be more difficult than
expected. Consequently, a company may cut corners or install the system carelessly to
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

the detriment of the system's performance and utility. And like other sophisticated
electronic equipment, information systems do not work all the time, resulting in costly
downtime.
Behavioral limitations. Information technology allows managers to access more
information than ever before. But too much information can overwhelm employees,
cause stress, and even slow decision making. Thus, managing the quality and amount
of information available to avoid information overload is important.
Health risks. Potentially serious health-related issues associated with the use of
computers and other information technology have been raised in recent years. An
example is carpal tunnel syndrome, a painful disorder in the hands and wrists caused
by repetitive movements (such as those made on a keyboard).
Regardless of the control processes used, an effective system determines whether employees
and various parts of an organization are on target in achieving organizational objectives
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