BBM 122: PRINCIPLES OF MANAGEMENT
Contact Hours: 42
Pre-requisites: None
Purpose: To introduce students to the modern theories of business management and its basic
principles
Expected Learning Outcomes of the Course:
By the end of the course unit the learners should be able to:i)
ii)
iii)
Develop managerial skills and knowledge necessary for analysis and interpreting
managerial issues
State the functions of management
Describe management by objectives
Course Content:
Historical origins, theories and development of management; Responsibilities of management;
Functions of management; Management by objectives; Managerial decision making policy
formulation; Interdisciplinary tools for managers; Moral and social dimensions of management
Teaching / Learning Methodologies: Lectures and tutorials; group discussion;
demonstration; Individual assignment; Case studies
COURSE OUTLINE
WEEK 1 : INTRODUCTION TO MANAGEMENT THEORY AND PRACTICE
Historical origins and evaluation of management theory
Classical theories
Neo – classical theories
Contingency theories
Modern theories
WEEK 2 : RESPONSIBILITY OF MANAGEMENT
Meaning of management
Responsibilities of a manager
Distinction between a manager and a teacher
Skills of management
Relationship between management and other disciplines
WEEK 4 : MANAGEMENT FUNCTIONS
Planning
Meaning of planning
Importance of planning
Types of plans
Features & characteristics of planning
Process of planning
Limitation of planning
WEEK 5 : ORGANIZING
Meaning and definition
Organizational structure
Departmentalization
Authority and responsibility
Delegation
Job Design
WEEK 6 : DIRECTING
Motivation
Meaning of motivation
Importance of motivation
Motivation techniques
Theories of motivation
WEEK 7&8: LEADERSHIP
Meaning of leadership
Difference between leadership and management
Approaches to leadership
Leadership styles
Factors affecting leadership effectiveness
WEEK 9: COMMUNICATION
Meaning of communication
Communication process
Types of communication
Barriers to communications
Overcoming barriers to communication
WEEK 10: STAFFING
Recruitment and selection
Training and development
Performance appraisal
WEEK 11: CONTROLLING
Meaning of control
Control process
Importance of control
WEEK 12&13: MANAGERIAL DECISION MAKING
Meaning of decision
Decision making process
Level of managerial decision making
Types of decisions
WEEK 14 : INTERDISCIPLINARY TOOLS FOR MANAGERS
Promotion
Demotion
Transfer
Withdrawal
Warning
Recognition
MORAL & SOCIAL DIMENSIONS OF MANAGEMENT
Theories of social responsibility
Corporate social responsibility
Instructional Materials and Equipment: Projector; test books; design catalogues;
computer laboratory; design software; simulators
Course Assessment
Examination - 70%; Continuous Assessment Test (CATS) - 20%; Assignments - 10%; Total 100%
Recommended Text Books:
i)
ii)
iii)
Koontz H. and O’ Donnelly C. (2005), Essentials of Management, (12th Edition),
McGraw Hill Tokyo
Donnelly J.H et al (2001), Fundamentals of Management, Irwin, Illinois
Donnelly James (2005); Fundamentals of Management; Irwin
Text Books for further Reading:
i)
Drucker P.F (1988), Managing for results, Butterworth London
LECTURE ONE
INTRODUCTION TO MANAGEMENT
Lecture Outline
1.1
Introduction
1.2
Lecture objectives
1.3
Definition of management
1.4
Characteristics of management
1.5
Management functions
1.6
Managerial roles
1.7
Managerial skills
1.8
1.9
1.10
The art and science of management
Importance of management knowledge
Summary
1.1 Introduction
In this lecture we will discuss the significance of management in achieving organizational
objectives efficiently and effectively. Managers do this by carrying out the functions of planning,
organizing, staffing, leading, motivating, communicating and controlling. Managing is an
essential activity at all levels although the managerial skills and roles vary at different
organizational levels. This lecture begins with some background knowledge to the discipline of
management, and the main purpose is to understand the meaning, process, skills and functions of
management.
1.2
Lecture objectives
At the end of this lecture you should be able to:
1. Define the concept of management
2. Describe the characteristics of management
3. State the functions of management
4. Explain the skills of a manager
5. Discuss the roles of management
6. Identify the components of the management environment
7. Discuss how management can respond to a changing environment.
1.3
The meaning of management
Management has been defined in many different ways by different authors. Here is a
sample: 
Management is the art of getting things done through and with people in formally
organized groups.(Haimann, T.)

Management is simply the process of decision-making and control over the actions of
human beings for the express purpose of attaining predetermined goals.(Vance S.)

Management is a social process entailing responsibility for the effective and
economical planning and regulations of the operations of an enterprise in fulfillment
of a given purpose or task (Brech E. F., 1957).

Management is the coordination of all resources through the process of planning,
organizing, directing and controlling in order to attain a given stated objective (Fayol
H. 1916; & Koontz and O’Donnel, 1976)
From the above range of definitions, it is obvious that management is a complex process
with many facets/elements/dimensions.
 Management is both a social and technical process that
comprises a series of actions that lead to the accomplishment
of objectives.
 It is a process by which the resources of production are
transformed from just “resources” to “production” (Peter
Drucker).
 It requires a combination of technical, human and conceptual
skills
 Managers are resources or assets in organizations
Activity 1.1
Write your own definition of management
1.4
Characteristics of Management:
To further enhance our understanding of the term management, we shall now examine
some of its major characteristics.
(i)
Management is an activity.
Management is an activity that concerns the effective use of all resources both
human and non-human. It is the driving force that inspires an undertaking. It
creates the conditions and relationships that bring about the full use of resources.
(ii)
Management is Purposeful and goal-oriented.
The main concern of management is the achievement of clearly defined goals or
objectives. Management is said to be successful only to the extent to which these
objectives are achieved.
(iii)
Management is a Social Process
Organizations are social entities, as they are constituted of people. As such,
management has to control, organize and motivate people and create a favourable
climate for their development.
(iv)
Management is getting things done.
A manager does not usually do the operating work himself, but gets the work
done with and through people. A manager has to direct people, harness talents
through training and procure technical, human, and psychological skills
(intellectual capital).
(vi)
Management is an intangible force.
Though intangible, management is not abstract but a social skill which is evident
by the quality of the organization in terms of the efficiency and effectiveness of
its operations.
(vii)
Management is an Integrating Process.
Management brings together people, machines and materials to carry out the
operation of the organization and achieve a set of given objectives. It is a resultoriented process.
(viii) Management is separate from ownership.
Management and ownership may be the same in small family or individual or sole
proprietorship businesses, but in modern enterprises or corporations, a vast number of
shareholders own the business enterprise or organization, while management is in the
hands of qualified, professional and competent managers, who normally do not
posses any ownership interest.
(ix)
Management is a Universal Activity
The techniques and tools of management are universally applicable. Managers
perform the same functions regardless of their position in the management hierarchy,
type of enterprise or location of enterprise.
(x)
Management is a social science
The science of management is universally accepted as a distinct discipline. It has
assumed professional character, hence requiring the use of specific knowledge, skill
and practice. It utilizes certain fundamental concepts, theories, tools and techniques
that constitute the subject matter of management. It therefore satisfies all the
conditions of a profession.
1.5
The art and science of management
Management can be said to be both a science and an art. First, it is a science because it is
based on a set of organized knowledge founded on proper scientific findings and exact
principles. It is part of the branch of science known as social science just like sociology,
economics or history. The other branches of science are physical science, biological
science etc. Management is also a behavioral science in which its theories and principles
are based on the situation.
Management can also be an art. An art refers to the best way of doing something.
Management can be said to be the process of directing scientific knowledge to the
accomplishment of objectives. Like any other art, management is creative, develops new
situations, new designs and new systems needed to improve performance. Art therefore
is the ‘know-how’ or ‘technique’ to achieve a desired result. The most productive art is
always based on an understanding of the science underlying it.
Art and science therefore are not mutually exclusive but are complementary. As science
improves, so should art. As Koontz and O’Donnell point out ‘physicians without a
knowledge of science become witchdoctors, but with science, they become skillful, artful
surgeons.’ Therefore, managers who operate without scientific knowledge (in the form of
theory) can only trust in luck, intuition, common sense and experience (which may be
wrong experience). However, in utilizing theory and science, managers must learn to
blend knowledge (principles) and practice to achieve desired results.
1.4
The Scientific Method in Management.
The purpose of science is to explain phenomena. Science is based on the belief that
relationships can be found between two or more sets of events. The scientific method
involves determining facts through observation of events and verifying their accuracy
through continued observation.
After classifying and analyzing the facts observed,
scientists establish causal relationships known as hypotheses that they test for accuracy.
When hypotheses are supported, and are found to explain or predict reality they become
principles. However, principles are not permanent they can still be challenged by future
research and analysis and either modified or discarded.
Principles, Theory and Concepts: Principles, theory and concepts form the structural
framework of a science.
Principles are fundamental truths or what are believed to be truths at a given
time, explaining relationships between two or more sets of variables.
For example: Motivation has a positive effect on the performance of employees.
Theory is a systematic grouping of interrelated principles. It ties together significant
knowledge to form a framework.
For example, the theory of attribution which explains the behaviour of an individual on
the basis of whether it was caused by an external or an internal influence. Internal causes
are those believed to be under the personal control of the individual while external causes
are those believed to be beyond the control of the individual. These are judged on the
basis of distinctiveness, consensus and consistency.
Concepts are mental images of something formed by generalization from particulars.
Concepts are the building blocks of theory and principles. However, they tend to always
imply different things to different people. For example concepts such as: management,
organization, technology, labour etc.
1.5 The basic functions of management
The job of management is to help an organization make the best use of its resources to achieve
its goals. They do so by performing essential managerial functions which include:

Planning

Organizing

Directing

Staffing

Controlling
Planning: It is the process of setting goals and objectives and showing how these goals and
objectives will be accomplished.
Organizing: This refers to the process of establishing a structure of working relationships. It
involves grouping people into departments according to specific tasks performed and deciding
how best to coordinate organizational resources.
Directing: This is the process of communicating what has been planned by leading and
motivating the efforts of people towards attainment of goals
Staffing: This function refers to the process of filling positions with the right kind of people in
the right job at the right time.
Controlling: This refers to the process of evaluating how well an organization is achieving its
goals and how to maintain and improve performance.
Figure 1 below illustrates the relationships among these functions. It indicates that all the
functions are interdependent.
Figure 1: Interdependence among managerial functions
1.6 Managerial roles
Managers play several management roles: a role is a set of specific tasks that a person is
expected to perform in the position they hold. According to Henry Mintzberg, managers play
three major roles:
i)

Interpersonal roles:
Figurehead – a manager a representation or a symbol of the organization. They determine
the direction or mission of the organization. They inform stakeholders such as employees
about what the organization is seeking to achieve. They put up appearances on behalf of
the organization eg receiving guests at the workplace or attending an employee’s
wedding.

Leader – a manager occupies a position of influence, hence has to inspire and encourage
others to perform. They train, coach, counsel and mentor subordinates to reach their full
potential

Liason – managers are the link between the organization and the larger society. They deal
with people outside the organization such as suppliers and customers and inside by
coordinating the activities of people in different departments.
ii)
Informational roles: These roles are closely associated with the tasks necessary to
obtain and transmit and transmit information. The roles are:

Monitor – managers analyze information from inside and outside the organization
so that he can effectively control and organize people and other resources.

Disseminator – Managers transmit information to other members in the
organization so as to influence their work attitudes and behaviour

Spokesperson – managers use information to promote the organization so that
people inside and outside the organization can respond positively to it
iii)
Decisional roles: managers plan and lay strategies for achieving goals and utilizing
resources. They act as:

Entrepreneurs: Managers decide which projects or programmes to initiate and
how to invest resources to increase organizational performance

Disturbance handler: managers assume responsibility for handling unexpected
events or crisis that threatens the organizations access to resources. In this
situation a manager also assumes the roles of figurehead and leader to mobilize
employees to help secure the resources needed to avert the problem.

Resource allocator: managers decide how best to use available resources to
increase organizational performance.

Negotiator: managers work out agreements and contracts that will operate in the
best interest of the organization.
The relationships among these roles are illustrated in figure 2 below.
Figure 2: Illustration of managerial roles
Figurehead
Interpersonal
roles
Leader
Liason
Monitor
Informational
roles
Disseminator
Spokesperson
Decisional
roles
Entrepreneurs
Disturbance
handler
Resource allocator
Negotiator
1.11
Managerial skills
Skills is what separates good managers from ordinary managers. Education and experience
enable managers to develop the skills they need to put organizational resources to their best use.
There are three types of skills:
i. Technical skills: These are needed to perform specialized tasks. They involve the
ability to use knowledge, methods, techniques and equipment necessary for the
performance of specific tasks. These skills are acquired from experience, education
and training. They are more useful for lower level management at supervisory
levels because they train others in the actual job.
ii. Human skills: The ability to work with and through people including understanding
of motivation and application of effective leadership. Also includes the ability to
mould individuals into a cohesive team. Human skills are useful for middle
managers as they link the top and the lower levels of employees.
iii. Conceptual skills: This skill is demonstrated in the ability to analyze and diagnose a
situation and to distinguish between cause and effect. Involves understanding the
complexities of the overall organization and the various variables that influence its
operations. It is about seeing the ‘big picture’.
The appropriate mix of these skills varies as an individual advances in management
from supervisory to top management positions. The relationship between
management level and skills needed is illustrated below.
Management
Skills needed
level
Executive……
Conceptual
skills
Managerial……
Human skills
Supervisory….. Technical
skills
Figure 1: Managerial roles
More conceptual skills are needed at executive levels as executives should be able to see how all
operative functions are interrelated in accomplishing organizational goals. Their focus is external
and global. Human skills are therefore crucial to all levels of management as attested by the
following statement:
“I will pay more for the ability to deal with people than any other ability under the sun”
(John D. Rockeffeler, American entrepreneur).
In other surveys, human skill has been rated higher than intelligence, decisiveness and
knowledge and job skills.
1.9
Importance of Management Knowledge
Knowledge of the basic principles and techniques of management is important for a number of
reasons.
(i)
To increase efficiency.
Development and use of management principles improves managerial efficiency.
Managers can apply established guidelines to help solve problems without having
to resort to trial and error – which is risky and costly to the organization.
Although experience is important, it is not enough as no two situations or
problems are the same nor can be solved using the same methods. Hence an
understanding of management theory, principles and concepts allows the manager
to see and understand what otherwise would remain unseen. Awareness of
management principles helps managers avoid mistakes.
(ii)
To understand the nature of management.
An understanding of the concepts, principles and techniques of management
enables managers to analyze the managerial job and train others. The knowledge
of these fundamentals acts as a checklist of the meaning of management. With
the accumulation of management knowledge, management training is simplified.
(iii)
To achieve social goals.
Development of management knowledge and its skillful use in the management of
people and material resources can have a revolutionary impact on society.
For example, it is observed that nations with high levels of material standards of
living tend to have high levels of knowledge and skill in the management of
business. Management has a social responsibility in addition to making profit.
They oversee the operation of the economic systems that fulfills the expectations
of the public such as safeguarding shareholders investment, providing a
reasonable return, keeping employees satisfied and contented by ensuring
payment of fair wages, good working conditions and security of employment.
Management is also responsible for customers’ needs e.g. quality goods and
services.
To the State, it is the major source of income through taxes hence the business
must be conducted in accordance with state policy. It also has responsibility to
the society by maintenance of ethical behaviour. It should also be innovative and
creative to produce goods and services for the increased comfort of mankind. It is
management
knowledge
therefore
that
enables
these
multidimensional
responsibilities of management to be achieved.
The key to successful management is the ability to identify the
right things to be done (effectiveness) and to concentrate
resources on them (efficiency)
Using
examples,
identify
the
consequences
of
poor
management to: employees, customers/clients, suppliers,
government and society
1.10 Environmental influences on management
Although most of a manager’s time is spent in interactions with subordinates inside the
organization, the manager must also deal with issues in the external environment. These consist
of the micro, market and macro environments.
2.1
Composition of the Management Environment
The environmental concept refers to the sum total of the factors or variables that may influence
the continued existence of an organization.
They may be factors inside or outside the
organization. An organization does not exist in a vacuum, but in an environment that provides
resources and limitations. To remain prosperous, therefore, it must continually adapt to its
environment, which is constantly changing.
An organization and its environment are interdependent. The environment provides resources
and feedback to the organization and it, in turn, produces the goods and services required by the
environment.
An organization exists only for as long as activities are
desired and supported by the environment.
The
environment is made up of threats, opportunities
limitations and resources.
1.11
Types of environments
i)
Micro environment
This consists of the organization itself:
o The mission, goals, objectives and strategies of the organization.
o The organization and its management
o The resources of the organization e.g. employees, capital, finance, etc
o The organizational culture.
ii)
Market environment
This is the environment that surrounds the organization also known as the competitive or
industry and comprises of:

Consumers, their needs, purchasing power and behaviour.

Suppliers of materials, capital and labour

Intermediaries e.g. wholesalers and retailers, commercial agents and brokers, banks
etc.

Competitors e.g. new entrants, existing competitors, availability of substitute products
or services and the bargaining power of clients, consumers and suppliers.
iii)
Macro environment
Is that which exists outside the organization. It comprises:

Technological environment: responsible for accelerating change and innovation and
creating opportunities and threats in the environment.

Economic environment: responsible for change in the environment because of
changes in economic growth rate, levels of unemployment, consumer income, rate of
inflation and the exchange rate.

Socio-cultural environment: referring to changes in value systems, family structures,
education, attitudes, ethics, workforce diversity, etc.

Ecological/physical environment: is concerned with the natural resources from
which the organization derives its raw materials and the environment on which the
organization discharges its waste.

The political-governmental environment: refers to the government and its influence
on the organization, e.g. in terms of political risk, legal matters, government
expenditure etc.

The international environment: comprises of the factors emanating from other
countries with which the organization directly or indirectly has business relations.
An organization can therefore be said to be an open system because it is dependent on the
environment in which it operates. (A closed system can exist independently). There is specific
interaction between the system and the environment.
Ways in which management can react to the Environment.

Environmental scanning: refers to the measuring, projection and evaluation of
change in the environment.
Organizations management information systems
should make provision for this.

Strategy response: This may include changes in present strategy or formulation of
new strategies.

Structural Change: The organization structure can be redesigned, adapted or
modified as a response to changes in the environment e.g. a flexible vs.
bureaucratic structure, integration vs. differentiation, decentralized vs. centralize
etc.

Cultural change: change the organizational culture from closed to open etc.
2.4
Organizational culture and environment
Organizational culture is a pattern of shared beliefs and values (Morgan 1986) (Shared meaning,
shared understanding and shared sense making). Handy (1993), notes that organizations have
differing atmospheres, differing ways of doing things, differing levels of energy, individual
freedoms and kinds of personality. Organizations are like mini societies that have their own
distinctive patterns of culture and sub-cultures which can exert a decisive influence on the
overall ability of the organization to deal with its challenges.
The dominant culture that develops in an organization is the product of its founders aims and
styles and their successors in senior management and interaction with a variety of internal and
external forces.
Determinants of organizational culture

Organizational mission and vision

Corporate aims

Policy statements

Rituals, eg dressing, address

Logos, brand names

Rules, procedures

Management attitudes

Peer group attitudes

Structures

Technology etc
Consider a recent event that occurred at any of the three types of
environments described above. State whether it was a social,
political economic or technological event; which businesses were
affected and how; which other environments have been affected by
this event and how?
1.10
Summary
In this lecture we have discussed the meaning and characteristics of management. The five
major functions of management – planning, organizing, directing, staffing and controlling
were briefly introduced. We also discussed the roles of management and skills that mangers
require at different levels. These are technical, human and conceptual skills.
LECTURE TWO
MANAGEMENT THEORY
Lecture outline
2.1 Introduction
2.2 Lecture objectives
2.3 Classical scientific management
2.4 Bureaucratic approach
2.5 Neo-classical approach to management
2.6 Summary
2.1 Introduction
In lecture two, we shall discuss the theories of management. These are divided into the classical,
bureaucratic and neo-classical approaches to management.
2.2 Lecture objectives
At the end of this lecture, you should be able to:
1. Describe the principles of scientific management as advanced by Fredrick Taylor
2. Discuss the rational-economic view in relation to scientific approach to
management
3. Discuss the principles of management as advanced by Henri Fayol
4. Examine the bureaucratic approach to management as advanced by Max Weber
5. Describe the human relations approach to management
2.3 Classical Approach To Management
The history and theory of management are important to managers for various reasons:
 They help managers understand current developments and avoid mistakes of the past
 They foster an understanding and appreciation of current situations and developments
and facilitates the prediction of future conditions
 They help managers organize information and approach problems systematically.
Without knowledge of theory, managers would be using guess work, hunches, intuition
and hopes which may not be useful in the present complex and dynamic organization.
The practice of management can be traced to the beginning of man. Egyptian, Greek, Roman
and Chinese civilizations all have records indicating the importance of management. (The
writings of Sun Tzu on the ‘Art of War’, written 2500 years ago are a lesson on strategic
management)
In Greece, Socrates the famous philosopher observed that “the management of private affairs
such as households is not different from the conduct of public affairs except in magnitude”
The biblical Moses used the Principle of delegation and hierarchy of command to manage the
Israelites during the exodus. (Exodus 18: 1-27). Joshua used the management techniques to
recruit soldiers for war.
The Roman Catholic Church over the centuries has effectively used the principles of division
of labor and hierarchy of authority.
The Roman empire colonized many parts of the world for many centuries by effectively
using basic management ideas such as scalar principle and delegation of authority.
Niccolo Machiavelli in ‘The Prince’ gives relevant ideas on how to develop and use
management skills. He suggests to ‘The Prince’ ideas on – consent of the majority,
inspiration of people to greater achievement, offer of rewards and incentives and taking
advantage of all opportunities.
The above early influences on management, however, do not give much insight
into the principles of management as they are not organized and the relationships
among various variables are not explained. The knowledge is based on trial and
error and experience rather than organized scientific knowledge.
It was only in the late 19th century that large business organizations requiring systematic
administration started to emerge. We shall focus on two early schools of management.
 Classical management theory
 Human relations neo-classical theory
2.4. Classical Management Theory
Classical theory is divided into scientific management and administrative management.
Scientific management theory: Changes in economic and production patterns during the
industrial revolution led a few practicing managers to examine the causes of inefficiency in
production. It is these basic studies that led to a system of management known as scientific
management.
Scientific management has been defined as the application of scientific method
of study, analysis and problem solving in organizations.
2.4.1 The Thoughts of Frederick Taylor (1856-1917)
Taylor, an engineer in an American steel firm was concerned about the best methods of doing
jobs. He saw the main problem to be that of efficiency of workers in relation to existing property
relationships between workers and owners of organizations. He suggested the development of a
true science of management where methods for performing each task could be determined. He
advocated a mental revolution by both management and workers.
His findings were:
(i)
(ii)
(iii)
(iv)
Workers deliberately restricted production in their daily work due to fear
of unemployment and lack of piece rate system.
Lack of work rationalization, hence overlapping of jobs. The method of
working was also too complicated.
Due to poor remuneration, workers formed themselves into groups and
labour unions to press for better wages.
Management left the initiative of working methods to the ingenuity of
workers (rule of thumb).
To solve the above problems, Taylor suggested the following principles to guide
management.
(i)
Each worker should have a clearly defined daily task.
(ii)
Establish standard conditions to ensure the task is more easily
accomplished e.g. work-study and motion studies.
(iii)
High payment for successful completion of tasks and none or lower
payment when standards are down. He believed money was a major
motivator.
For management, he suggested: (i)
The scientific selection, education and development of workers.
(ii)
Friendly, close cooperation between management and workers.
(iii)
Managers should take more supervisory responsibility, arguing that
workers preferred to be given a definite task with clear-cut standards.




He emphasized planning and greater control by managers.
He believed adoption of scientific approach to managing would lead to
prosperity for both managers and workers.
He believed conflict about how to divide profits was retrogressive and
unproductive.
Wages should be scientifically determined and should not be left to the whims
of managers or power of trade unions.
The concepts/ideas advanced by Taylor are not far from the fundamental beliefs
of the modern manager. A number of post Taylor studies are found in the literature e.g.
The Hilbreths, Gault, Emerson, and Filene. They all attempted to improve on Taylor’s
ideas.
The basic assumptions of scientific management were:



Improved results in organizations will come from the application of scientific
methods of analysis to organizational problems. This implies that scientific
approach to problems is superior to other methods eg informal sector
The focus is on the work itself and not the particular person doing the work
Each worker is assumed to be a classical economic man hence interested only in
maximization of his monetary income
Evaluation of Scientific management
While Taylor’s ideas of scientific management contributed to modern management, there were
also a number of limitations.
Limitations
 The revolutionary ideas advocated by Taylor increased productivity but led to layoffs
 It assumed people were rational and therefore motivated only by material gains. Taylor
and his followers overlooked the social needs of workers. They assumed that one had
only to tell workers what to do to increase their earnings and they would do it. However,
people have needs other than money e.g. recognition and acceptance
 They also overlooked the human desire for job satisfaction and workers became more
willing to go out on strike over job conditions rather than salary.

The assumption that human beings are rational creatures who base their decisions on
rationality and logical analysis of their needs is not universally applicable to all human
beings.
Benefits of the Scientific Management Thoughts.
(i)
Its rational approach to organization of work enabled tasks to be measured
with accuracy.
(ii)
Tasks measurement and processes provided useful information on which to
base improvement on working methods.
(iii)
Improvement
productivity.
(iv)
Enabled employees to be paid by results and to take advantage of incentive
schemes.
(v)
Stimulated management into adopting a more positive role in leadership at the
factory level.
(vi)
Contributed to major improvements in physical working conditions.
(vii)
It provided the foundations on which modern work study and other
quantitative techniques are based.
of
working
methods
brought
enormous
increases
in
Disadvantages of the Scientific Management.
(i)
Reduced the role of workers to that of rigid adherence to methods and
procedures over which they have no discretion.
(ii)
Led to fragmentation of work because of emphasis on analysis and
organization of individual operations, hence boring, repetitive jobs.
(iii)
Generated a carrot and stick approach to the motivation of employees
enabling pay to be geared tightly to output.
(iv)
It put the planning and control of workplace activities exclusively in the hands
of management, alienating workers.
(v)
Ruled out any realistic bargaining about wage rates since every job was
measured, timed and rated scientifically.
Fayol, Taylor and their followers have attempted to find rational principles
that can be applied to the development and management of organizations.
However while most have been adopted, some are difficult to implement in
practice because of changes in organizations and environmental conditions.
2.5 Administrative Theory
This theory came out of a need to find guidelines on how to manage complex
organizations such as factories. Henry Fayol is recognized as the father of classical
organization theory since he was the first person to systematize managerial behaviour.
Another contributor is Max Weber (1864-1920) with his bureaucratic model.
2.5.1 HENRI FAYOL (1841-1925).
Fayol was an engineer in a large French Company. Fayol, unlike Taylor started in
management and his ideas therefore are more concerned with the science of management.
As such he drew up a list of principles of management.
Fayol believed that sound managerial practice fell into patterns that could be identified
and analyzed. He also believed that management is not a personal talent but a skill that
can be taught and learnt.
It is notable that Fayol’s observations fit well into the currently developing management
theory.
He defined management in terms of:
(i)
Technical activities (ii)
Commercial “
(iii) Financial
“
(iv)
Security
“
(v)
Managerial “
-
production.
buying and selling.
securing capital.
safeguarding financial information.
planning, organizing, controlling and
directing.
He noted that of all these activities, it is managerial activities that have not been given
much attention and he dealt more with it.
Based on his experience, Fayol listed 14 principles of management.
1. Division of work - Necessary to efficiency of labour as it reduces span of
attention or effort hence increasing specialization.
2. Authority and Responsibility - The right to give orders.
3. Discipline -Respect for formal and informal agreements between firm and
workers and obedience to rules and regulations.
4. Unity of command - One person, one superior, employees should receive
orders from one superior only to reduce confusion.
5. Unity of Direction - One head, one plan for a group of activities with the
same objective.
6. Subordination of the individual interest to general interest -The interests
of one individual or one group should not prevail over the general good.
7. Remuneration - Pay should be fair to both worker and firm.
8. Centralization - Refers to the extent to which authority is concentrated or
dispersed. Circumstances of organization e.g. size will determine the extent to
which an organization is centralized
9. Scalar Chain - “Chain of Superiors” or line of authority from top to bottom.
10. Order - A place for everything i.e. the right person in the right job or place.
11. Equity - Refers to loyalty and devotion from personnel by use of kindliness
and justice on the part of managers.
12. Stability or Tenure of Personnel turnover due to bad management.
Refers to the costs and dangers of
13. Initiative -All levels of personnel should be encouraged to show initiative as
it is a source of satisfaction.
14. Espirit de corps - “In union there is strength”.
teamwork, harmony and communication.
This is an emphasis on
2.6 MAX WEBER (1864-1920)
Max Weber advocated for a bureaucratic approach to management to reduce abuse
of power by people in managerial positions. This is an approach that runs on rules and
regulations.
The concept of bureaucracy is attributed to Max Weber (1864-1920), a German
sociologist. He lived in the period of history as the early pioneers of management
thought such as Fredrick Taylor and Henri Fayol. Weber however, was an academic
and not a practicing manager.
His interest in organizations was from the sociological perspective of why people
obeyed those in authority and why those in authority abused power. He published
“the theory of social and economic organization” which was translated into English in
1947. He used the term bureaucracy to describe the structure of organizations.
Bureaucracy
Is a term that has been used to mean:
 Red tape – an excess of paper work and rules leading to gross inefficieny
 Officialdom – all the apparatus of local and central government
 An organizational form made up of rules and hierarchy of authority.
Characteristics of Bureaucracies
 Specialization – have a high degree of labour division thus ability and not
personal loyalty is the condition for employment
 Rational – official jurisdictional areas are rationally determined by a clear
hierarchy of authority; duties and measures of performance are established
and positions are well defined and formalized in writing.
 Professional - follows formal impersonal procedures of the organization.
Organizational structures are well defined and exist prior to filling
positions with people.
 Impersonal - authority is impersonal and amount of authority corresponds
with rank of office
 Autonomous – officials, because of their expertise and technical
competence are recognized and rarely questioned within their areas of
expertise.
 Stable – performance is encouraged by rewards in form of stable careers,
regular salary, promotion and pensions.
- A bureaucratic organization has a functional structure, clear lines of authority and
obedience is owed to established rules and regulations.
- It has hierarchical levels of authority with firmly ordered superior-subordinate
relationships.
- Terms of employment are based on rank of office rather than amount of work
(performance)
- Bureaucracy is common in large complex organizations which depend on
specialization, rules and procedures for efficiency
Weaknesses
 Works well only in stable environments where the work and information
handled are highly predictable, recurrent, routine and familiar.
 Rules become so important that they become an obstacle to efficiency
 Decision making processes are programmed hence discouraging search for
other alternatives (is rigid)
 Rigid behaviour damages relations with clients or customers as they are
unable to get tailor made services but have to accept the standard provided
within the rules.
 Difficult to change and adapt to new circumstances
 It undervalues the human element by assuming that people are passive and
respond only to rules and incentives. It failed to see the fact that people are
capable of going against rules.

What common features do you see between Fayol’s principles of
management and Weber’s description of bureaucracy?


Discuss the advantages and disadvantages of bureaucratic
structures. Why do you think such structures may not be suitable
for organizations that operate in highly unstable environments?
Discuss the situations in which bureaucratic systems are desirable
2.7 Neo-Classical Theory Of Management
Human relations school of thought
While the scientific management theorists were more concerned with the mechanics and
structure of organization, the human relations school of thought was more concerned with
the human factor i.e. people and their relationship with the organization, fellow workers
and the job.
The emergence of industrial psychology in 1913 provided the impetus in the studies on
human problems in organizations.
The works of Elton Mayo (1880 – 1949).
Elton was an Australian practicing psychologist at Harvard University. He carried out
experiments at the Hawthorne Plant of Western Electric over a period of time and his
findings can be summarized as follows:(i)
(ii)
(iii)
(iv)
Individual workers cannot be treated in isolation but must be seen as
members of a group.
The need to belong to a group and have status within it is more
important than monetary incentives or good working conditions.
Informal groups at work exercise a strong influence over the behaviour
of workers.
Supervisors need to be aware of these social needs and cater for them
if workers are to collaborate with the official/formal organization
rather than work against it.
The studies proved that interpersonal and group values are superior to
managerial and individual values. Managers who do not have the enthusiastic
support of the groups they supervise will be unable to motivate individual
members to a significant degree.
Weaknesses of the human relations school of thought



In viewing people as the most important organizational variable it committed the
mistakes of earlier theories of suggesting one best way of managing
It saw workers as social beings motivated by social needs but this is too simplistic as
human beings are complex and motivated by many variables
It assumed satisfied workers are highly productive but this is not always true
Assumptions about people.
To understand the human factor in organizations, assumptions made about people need to
be understood especially in the superior-subordinate relationship. The major theories of
motivation and leadership were developed after the Hawthorne studies of Elton Mayo.
Edgar Schein (1965)
Schein was an American academic who published a classification of assumptions about
people. Implicit in management ideas is what motivates people.
(i)
Rational – Economic Man
This view or assumption has its roots in the economic theories of Adam Smith (1776). It
states that self-interest and the maximization of gain are the prime motivators of people.
It stresses man’s rational calculation of self-interest especially in relation to economic
needs. Hence people are either untrustworthy and money-motivated or trustworthy and
motivated by broader issues. This appears to have been an important assumption in the
mind of Taylor and his followers.
(ii)
Social Man
This assumption draws from the conclusions of Elton-Mayo. This view sees people as
dominated by social needs. Acceptance of this view means managers need to pay more
attention to people’s needs rather than tasks, groups and a change of role for manager
from organizer and controller to guide and supporter.
(iii) Self-actualizing man
This view is based on Maslows theory of human needs. It sees self-fulfillment needs as
the main driving force behind individuals. The managerial strategy should be one that
provides challenging work, delegation, responsibility and autonomy of work. While this
view is true for managers and professional staff, it is less clear for lower grade
employees.
(vi)
Complex Man
This view sees human beings as complex and variable. People’s motives vary depending
on tasks, work groups or organizational climate. Managers must therefore be able to also
adapt and vary their own behaviour in accordance with the motivational needs of
particular individuals and teams. Schein sees motivation in terms of psychological
contract based on the expectations that employers and employees have of each other.
Hence the relationship between an individual and his organization is an interactive one.
Douglas McGregor (1967)
Like Schein’s classifications, McGregor’s theory X and theory Y are a set of assumptions
about people. After observing the actual practice of managers, he proposed that they
were operating on two levels.
(a)
Theory X
i. The average person has an inherent dislike for work and will avoid it if
possible.
ii. Because of dislike for work, people must be coerced, controlled, directed
and threatened with punishment to get them to work.
iii. The average human being prefers to be directed, wishes to avoid
responsibility, has limited ambition and wants security above all else.
(b)
Theory Y
i. The use of physical and mental effort in work is as natural as play or rest.
ii. People will exercise self-direction and self control in the service of
objectives to which they are committed.
iii. Commitment to objectives is a function of the rewards associated with
achievement.
iv. The average human being learns under proper conditions not only to
accept but to seek responsibility.
v. The capacity to exercise a relatively high degree of imagination, ingenuity
and creativity in the solution of organizational problems is widely and not
narrowly distributed.
vi. Under conditions of modern industrial life, the intellectual potentialities of
the average human being are only partially utilized.
Conclusions
 Attitudes and behaviour towards other people are a reflection of the
assumptions we make about people.
 McGregor’s theory X corresponds closely to Schein’s rational-economic
man, while theory Y corresponds to self-actualizing man.
 McGregor’s assumptions have found wide application in issues of
leadership than in general management.
 Based on these assumptions, managers should consider seriously practices
such as flexibility in working time, job enrichment, performance appraisal,
participation etc.
 In real life, a blend of the two assumptions can be observed.
LECTURE THREE
PLANNING
Lecture outline
3.1 Introduction
3.2 Lecture objectives
3.3 Meaning of planning
3.4 Types of plans
3.5 Strategic planning
3.6 The Planning process
3.7 Objective setting techniques in planning
5.8 Barriers to effective planning
3.9 Summary
Introduction
Planning is the first task of a manager and forms the basis from which all the other tasks are
derived. Management decides the future of the organization, by planning, strategizing and
implementing plans.
3.1 Lecture objectives:
At the end of this topic you should be able to do the following:







Explain why planning is important.
Explain the meaning of planning premises
Describe the nature of goals/objectives
Identify and discuss the steps in planning
Discuss the usefulness of management by objectives (MBO) in planning
Describe the importance of strategic planning
Discuss the barriers to planning
What is Planning?
Planning is deciding what objectives to accomplish, the actions to be taken in order to
achieve them, the organizational position assigned to do them and who would be responsible
for the actions needed.

Planning precedes all other managerial functions as it establishes the
objectives and purpose of the project or enterprise.






It is the ‘star or compass’ which directs the project.
Planning is a pervasive function – as it is performed by all managers at all
levels. It only varies with authority and nature of policies. (A manager is not
a manager if he does not perform a planning function).
Research has shown that effective supervisors even at the lowest levels are
those who have the ability to plan.
Plans must be efficient – where efficiency is measured by the contribution of
the plan to accomplish objectives at the lowest cost. It implies the input-output
ratio and cost-benefit analysis of the of the plan.
Efficiency of plans is not measured only in terms of money but intangible
costs such low morale, hostility by employees, layoffs, and resentment.
A plan becomes inefficient if it cannot accomplish its intended objective or
accomplishes it at high costs e.g. A CEO who adopts a retrenchment plan to
cut costs only to experience lower productivity due to fear, resentment and
loss of morale by the employees thus defeating the objectives of reducing
expenses and making profits.
Organizations function in uncontrollable environments and to survive they must plan to enable
them be proactive. Effective planning requires development of objectives to direct the plans.
Plans can be influenced by:


Values, experiences and personality of the leader of an organization.
Corporate culture – i.e. the beliefs and values shared by people.
Types of Plans
Plans are hierarchical. They range from the broad mission or purpose of the organization to
specific strategies.
Mission or purpose (tend to be
vague)
Goals & objectives (aimed at
specific activity)
Strategies (programme of action
to meet objective)
Major & minor policies
(guides for decision making)
Procedures & rules (customary methods
for handling future activities)
Programmes/projects (specific tasks
with aims, rules etc.)
Budgets in figures (plan of
expected results expressed
numerically)
Scope of plans
Strategic plans - These are broad plans developed by top managers to guide the general direction
of the firm. They follow from major goals of the firm and indicate what business the firm is in or
what business it intends to be in. They show where the firm will position itself within its
environment.
Tactical plans - They have a moderate scope and immediate timeframe. They are concerned with
how to implement the strategic plans that are already developed. They deal with specific
resources and time constraints. They mainly focus on people and action. They are mainly
associated with middle management.
Operational plans
They have the narrowest focus and they fall into many types. They include:
Standing plan- these are developed to handle recurring and relatively routine situations. When
the same situations occur repeatedly, managers have to develop policies, rules and standard
operating procedures to control the way employees perform their tasks.
Single use plans – are developed handle non-programmed decision making in an unusual or
unique situation, e.g. specific action plan to complete a project or programme.
Long-range planning – covers several time periods from 5 years. They are mostly associated
with with activities such as major expansion of facilities, development of top managers, change
of manufacturing systems etc.Top managers are responsible for long range planning
(modernization of Kenyan airports is a KAA long range plan driven by top management)
Intermediate planning – they are less than five years and because of the uncertainty associated
with long-range plans, intermediate plans are the primary concern of most organizations. They
are usually developed by both top and middle management. They are the building blocks in the
pursuit of long range plans.
Short range planning – These cover time periods of one year or less. They focus on day to day
activities and provide a concrete base for evaluating progress towards achievement of
intermediate and long range plans e.g. the economic survey.
Levels of planning
Planning takes place at three levels of management: corporate, business and functional.
Corporate level strategy: The corporate level plan contains top management decisions pertaining
to the organization’s mission and goals, overall strategy and structure. The corporate level
strategy indicates the industry and markets the organization intends to operate in. It also provides
the framework within which managers create their business level plan.
Business level strategy: states the methods the division or business it intends to use to compete
against its rivals in an industry. The business level plan provides the framework within which
functional managers propose to pursue to help the division attain its business level goals which
in turn will allow the organization to avhieve its corporate goals.
Functional level strategy: These set out the actions managers intend to take at the level of
departments such as manufacturing, marketing, and research and development to allow the
organization to attain its goals.
Consistency across the three levels is important for success. Functional strategies should be
consistent with divisional goals while business goals should in turn be consistent with corporate
strategies.
Strategic planning
Strategic planning is the formalized long-range planning process used to define and achieve
organizational goals. It involves: selecting an organizational goal, determining the policies and
strategic programmes necessary to achieve specific objectives, establishing the methods
necessary to ensure that policies and strategic programmes are implemented. A vital component
in strategic planning is organizational goals. They provide a sense of direction for organizational
activities. Goal includes purpose, mission and objectives.
Purpose is the primary role of an organization as defined by the society in which it operates. It is
a broad aim that applies not only to a given organization but to all organizations of its type in
that society. For example, the purpose of all hospitals is to provide healthcare.
Mission is that unique aim that sets the organization apart from others of its type. Although the
purpose of all hospitals is the same, individually, they have different missions.
Objective is the target that must be reached if the organization is to achieve its goals. They are
the translation of its mission into specific corporate terms against which results can be measured.
Strategy refers to the pattern of the organizations response to its environment over time. Thus it
is a broad programme for achieving the organizations objectives and thus implementation of its
vision.
Characteristics of strategic plans
-
deals with fundamentals of basic problems by providing answers questions such as: what
business should we be in? who are our customers or who should they be?
Provides the basis for detailed planning and the day to day managerial decisions
Involves a longer time-frame than other forms of planning
It is a top management activity as they have the information necessary for strategic
decisions
Helps integrate and unify the actions of the organization over time
It provides guidance and boundaries for potential planning
Why organizations employ strategic planning
- Managers find that the definition of the mission of their organizations in specific terms
through strategic planning gives their organization direction and purpose
- It results in better functioning of the organization because it helps managers develop a
clear cut concept of their organization making it possible to formulate plans and activities
that bring the organization closer to its goals
- It helps managers to prepare for and respond to the increasing complex and dynamic
environment. They are able to anticipate changes in the environment and prepare for
them. Such changes include: technological change; growing complexity of managerial
jobs; complex external environment (politics, culture, society etc); time lag between
current decisions and their future results etc. With all these changes managers cannot
afford to take a short-term perspective of their organization. They need to look more into
the future and integrate it with the present if their organizations are going to survive.
Steps in Planning
1) Being aware of opportunities.
 Ability to see clearly future opportunities, and have knowledge of own strengths and
weaknesses.
 Panning requires realistic diagnosis of the opportunity situation.
2) Establishing objectives
 Involves specifying expected results
3) Premising.
Premises are planning assumptions which form the context in which planning takes place.
 Planning premises set the parameters or boundaries within which realistic goals can
be formulated.
 It means the org. cannot set goals and make goals that are unattainable in terms of the
environment and resources at the disposal of the org.
Planning premises are derived from the:
 Purpose of the Org.
 Mission
 Business environment
 Management values – which determine the organizational commitment to
social responsibility
 Experience of management.
4) Determining alternative courses of action.
 Involves search and examination of alternative courses of action.
 Alternatives are many but they have to be reduced and analyzed until only
a few promising ones remain. (Plan A versus Plan B)
5) Evaluating alternative courses of action.



Involves weighing the strengths and weaknesses of a plan against set
objectives.
Evaluation is in terms of risk, profitability, returns, costs, technology,
image etc.
Evaluation is difficult because of the many variables that can influence a
plan.
6) Selecting a course of action.
 This is the point at which a plan is adopted.
 It is the point of decision making on which alternative to follow.
7) Formulating derivative plans.

Once a decision is made and a course of action taken, derivative plans are
required to support the basic plan. E.g. KQ decides to acquire a new fleet,
hence derivative plans would be needed for expansion of runways, hiring
and training new pilots, crew, acquisition of spare parts, scheduling and
advertising, insurance etc.
8) Numbering plans by budgeting.
 After decisions are made and plans set, they have to be given meaning.
 Done by converting the plans into budgets representing income and
expenses, profit and losses, etc.
 Budgets are an important of measure and control of plans.
Planning is a rational, systematic approach to accomplishing an
objective.
EFFECTIVE PLANNING
Lack of effective planning is the major cause of many management failures.
Organizational Objectives and Plans
These are important because they:
 Serve as reference points for the efforts of the organization.
 Necessary for coordination.
 Good for effective competition and growth.
 Objectives are prerequisites to determining effective policies, procedures, strategies and
rules.
 Defines the destination of the organization- where it wants to go.
 Analogous to a star/compass used by ships for navigation.
Other advantages

Objectives encourage members to work towards the same goal thus reducing conflict.



Gives an objective yardstick for measuring, comparing and evaluating performance.
Provides rational bases for settling disputes.
A good motivator as individuals are able to link performance and personal goals with the
work of organization.
THE ROLE OF OBJECTIVE/GOAL FORMULATION IN PLANNING
Objectives are the ends towards which organizations and individual activities are
directed. Objectives are usually supported by sub objectives – hence a hierarchy of
objectives.
EXAMPLE
Relationship between objectives and org. hierarchy (A dairy processing
organization)
1. Socio economic purpose and mission
Supply healthy milk products to all parts of Kenya
2. Overall objective
Gain 50% of market share
3. Specific overall objectives
Process one ml litres/year
4. Division objectives
Produce One ml. Kg. Of butter per month
5. Dept and Unit objectives[
Produce x units per day
6. Individual objectives on performance and
Personal development.
Produce x units per hour with 2% wastage
Objectives are interdependent and interlinked with plans. They also do not work linearly
but in a network. It is possible for a manager to pursue more than one objective at any one time
but must have the ability and skill to prioritize so that minor objectives do not overshadow major
and more important objectives. E.g. attending meetings at the expense of answering
correspondence – Many objectives can be accomplished by delegating to subordinate.
Goal Setting Technique
Management By Objectives (MBO)
MBO owes its importance to Peter Drucker (1954). He emphasized the importance of setting
objectives in all areas where performance affects the survival of an enterprise.
-
In 1957, Douglas McGregor suggested a new approach to performance appraisal
based on the MBO concept.
Research has shown that specific objectives are related to higher performances as
in studies on goal setting by individuals.
Goal setting is an element in employee motivation.
Definition.
MBO is a comprehensive managerial system that integrates many key managerial activities in a
systematic manner, consciously directed towards the effective and efficient achievement of
Organization and individual objectives.
MBO – is a technique designed to achieve the integration of individual and organizational goals.
The process of MBO involves: 1. Planning premises should have support of top management and subordinates should
understand the process.
2. Subordinates should have clear understanding of Org. purpose, mission, goals and
strategies.
3. Initial discussion between managers and subordinates to formulate goals.
4. Check points established to measure progress.
5. Evaluation of degree of goal attainment to analyze results achieved.
Benefits of MBO.
1. Better managing – MBO forces managers to think of planning for results rather than
merely planning for activities.
e.g. on communication, good objective would be “to issue a two page newsletter
“beginning April 1, 2002 to all employees”.
2. Clarify organization roles and structures. Forces managers to make use of the people
around them through delegation, decentralization to work e.t.c.
3. Encourages personal commitment:
a. Clearly defined objectives encourage commitment as people know exactly what is
expected from them.
b. People become masters of their own fate.
4. Development of effective controls.
Involves measuring results and taking action to correct deviations from plans to
ensure goals are reached.
5. Improved communication because of the process of goal discussion between managers
and subordinates.
Weaknesses of MBO.
1) Failure to teach the philosophy of MBO.
Not all managers are familiar with MBO and may not be able to explain it to
subordinates.
2) Failure to give guidelines to goal-setters.
Cannot work if Org. goals, mission and purpose are not clear to the managers who are
expected to implement MBO. Managers need planning premises – i.e. assumptions as
to the future, knowledge of major Org. policies.
3) Difficulty of setting goals.
Goal setting can be technical and complex, requires thorough knowledge and study.
4) Dangers of inflexibility.
Managers are reluctant to change objectives or allow subordinates to change them due
to obsolescence.
CASE STUDY
Adored No More
Two years ago, Hoechst was one of Germany’s most watched companies. Harvard-educated boss, Jurgen
Dormann was loudly preaching the value of American-style shareholder capitalism and promising to
apply them to the lumbering, 135-year-old chemical group after taking the helm in 1994, he announced a
huge restructuring programme, selling poorly performing or marginal parts of his empire, floating others
on the stock market, adopting transparent accounting standards and even forcing managers to hold
meetings and send memos in English. Hoechst, he used to say, needed “de-rusting and defrosting”. Many
Germans found this incendiary stuff. But investors loved it.
It now seems they were too quick to believe Mr. Dormann’s sermons. Formerly a Hoechst corporate
treasurer (and the first non-chemist to run the company), the new boss came to the top fizzing with bright
ideas. Noting how inefficient it was to have one huge firm whose stronger divisions cross-subsidized the
weaker ones, he vowed to split Hoechst into individual companies, each obliged to earn a return on its
capital, and each answerable to a central holding company. He also promised to move out of stodgy
commodity chemicals and into fashionable “life sciences” (drugs, agrichemicals, biotechnology and so
on). These grand schemes have proved tricky to put into practice.
A lean, ascetic man, Mr. Dormann gives the impression of polite frustration with the irrationality of the
world. Admittedly, his own experience outside Hoechst is limited: he joined the company at the age of 23.
unlike some of Germany’s other industrial modernizers, he has never been based abroad. Hoechst, he now
concedes, has a corporate culture more entrenched than that of almost any other German firm. Its
sprawling Frankfurt Headquarters resembles a small town, rather than the nerve center of a global
corporation. Most of the 20,000 people who work there joined when Hoechst was somewhere between a
university and a government department. Changing their ideas about costs, flexibility, performance and
profits was always going to be hard.
The bubble burst last March, when Mr. Dormann abruptly discarded his original plan to turn Hoechst into
a holding company. Citing lack of cash, he broke his promise to float its key pharmaceutical division,
Hoechst Marion Roussel (HMR), on the stock market. Since then, Hoechst’s profits have lagged dismally
behind those of its German rivals, BASF and Bayer. Measured against the world’s top ten pharmaceutical
companies, its shares have done badly in recent months. Mr. Dormann’s clumsiness in explaining what is
going on made matters worse. “I simply don’t trust that man anymore,” says one German fund manager.
All this is a shame. Hoechst’s initial sell-offs were spectacularly successful. But the momentum is
flagging. “The early divestures were the easy ones”, admits Mr. Dormann. The Hoechst portfolio remains
cluttered with sluggish subsidiaries, producing fibres and specialty plastics. Finding buyers for these may
be tricky, although a week ago Mobil, an oil firm, announced plans for a plastic film joint venture with
Hoechst.
Then there are worries about those exciting life sciences. In particular the expensive centerpiece of Mr.
Dormann’s plan – creating a world-class drug company out of French and American acquisitions, plus
Germany’s pill makers – is proving tough. Researchers in Frankfurt, fearing that their jobs might be lost
to lower-cost laboratories in America, are not co-operating with their American colleagues. The
announcement of 600 layoffs in Germany sparked the biggest workers’ protest in the history of the
company. Hoechst’s agrichemical business, AgrEvo (a joint venture with Schering, a Berlin-based
pharmaceutical company) looks more promising – but will probably have to make an acquisition to keep
ahead in plant genetics.
Mr. Dormann faces a difficulty. Eager to soothe jangled German nerves, he rules out firing workers,
insisting that Hoechst will honour its “social responsibilities”. This is not enough to reassure trade unions,
who still see him as a heartless apostle of alien ideas. But nor does it please investors, who worry that
Hoechst still behaves like a German company, rather than an international company.
Mr. Dormann would probably be in less trouble with investors if he had not promised so much in the first
place. “Our experience in managing expectations is pretty new,” he concedes. This is a serious failing.
Other German firms, such as Veba (an energy and chemical conglomerate) have maintained credibility
with fund managers by promising less. Its senior managers emphasize that change will come gradually.
Big transformations take time.
REQUIRED: 1) Identify Mr. Dormanns problem(s) at Hoechst
2) State why you think his plans did not have the desired outcomes
Barriers to effective planning
Plans sometimes fail because of:1. Lack of commitment to planning.
Results in fighting fires, meeting crises e.t.c. Management by crises.
2. Confusion of planning studies with plans.
Having plans without decision are just planning decisions – shelved.
3. Failure to develop and implement sound strategies.
Fear of failure.
4. Lack of meaningful objectives and goals.
Are goals clear, can they be accomplished and are they actionable?
5. Tendency to underestimate the importance of planning premises – by ignoring the
environment.
6. Failure to see the scope of plans i.e. neglecting other types of plans e.g. strategies,
policies, rules e.t.c.
7. Failure to see planning as a rational process.
8. Excessive reliance on experience the past is not the same as the future.
9. Lack of top right support.
10. Lack of clear delegation.
11. Lack of adequate control techniques and information – need for feedback and evaluation.
12. Resistance to change.
13. Time consuming and expensive. Planning is hence neglected in favour of short-term
activities.
Avoiding barriers to planning
1.
Start at the top – to ensure commitment top managers should set the goals and strategies
that lower level managers will follow
2.
Planners should recognize limits – no planning system is perfect
3.
Communication – vertical communication within the organizational hierarchy
4.
Participation – involvement leads to motivation and ownership of the plans
6. Integration – of the long-term, intermediate and short-range plans must be properly
integrated for effective overall planning
7. Contingency planning – develop alternative plans of action if conditions change
8. Planning must not be left to chance
9. Planning must be organized
10. Goals, strategies and policies must be communicated clearly
11. Planning must include awareness and acceptance of change
LECTURE FOUR
ORGANIZING
Lecture outline
4.1 Introduction
4.2 Lecture objectives
4.3 Principles of organizational design
4.4 Departmentalization
4.5Delegation
4.6 Line and staff functions
4.7 Span of control
4.8 Summary
4.1 Introduction
Organizing is the second function of management.
4.2 Lecture objectives
At the end of this lecture you should be able to do the following:

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Define the term organizing
Describe the purpose of organizing
Outline the basic principles of organizing
Distinguish between the various types of organizational design
State the factors influencing organizational design
Explain the usefulness of organizational charts
Discuss relationships between authority, power, accountability and responsibility in
relation to organizational hierarchy
Explain the concepts of line and staff functions
Discuss the significance of delegation as a managerial activity
Explain the meaning and factors influencing span of control
Discuss the influence of the environment on the structure of organizations
Case study
Njoroge saved some money and with the help of his parents opened a small vegetable
shop in the nearby shopping center. Njoroge worked very hard and soon he had regular
customers coming to buy their weekly supply of vegetables and fruits from his grocery.
He went to the wholesale market every morning to buy his fresh produce then he loaded
his little truck and headed back to his grocery to unpack the fruit and vegetables, clean
the shop and does some bookkeeping before the shop started to get busy. Njoroge also
wanted to attract working women to his grocery and therefore he closed his shop at
9.00pm on weekdays. Although his shop did well and Njoroge could start paying back
the money he owed his parents he was always tired. He also found the bookkeeping hard
to do especially at the end of the month when there were always so many other things to
do. Eventually Njoroge decided to hire an assistant to help in the shop and also a
bookkeeper working half-day.
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List all the tasks that Njoroge had to do when he first opened his grocery. Is a
structure necessary?
Draw a diagram to illustrate how the different tasks at the shop were divided
among Njoroge, the assistant and the bookkeeper. In your diagram show who
is reporting to whom.
This simple activity illustrates the concept of organizing
DEFINITIONS OF TERMS
Organizing is the managerial function of designing and maintaining a system of roles. An
organizational role must include: objectives; major activities of role; authority; availability of
necessary information and other resources.
Organizing: is the process of creating a structure for the organization that will enable the various
players to work together effectively towards its objectives.
Organizational structure: is the basic framework of formal relationships among responsibilities,
tasks and people in the organization. It can be seen as the division of activities into manageable
units where everyone knows who is to do what and who is responsible – it removes confusion
and conflict.
Organizational design: design of an organizational structure involves the task of dividing up the
work, allocating responsibility and establishing chains of command.
Organizational Chart: Is a diagrammatic explanation of an organization’s structure. It depicts
the organization as a whole, the various components and their interrelationships. It can be
compared to a road map – thus a chart is not the organization, but a representation of it.
Reasons for organizing
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Organizing is necessary to avoid confusion of roles, tasks etc.
Organizing clarifies the responsibilities of the employees of the organization
It allocates accountability to each employee for the outcomes of the work they are
responsible for
It establishes clear channels of communication
It enables managers to deploy resources (human, financial, informational, and physical)
meaningfully and synergy can be reached
It enables monitoring of organizational activities
Allows for co-ordination of different parts of the organization and different areas of work
It provides the flexibility needed to respond to future demands and developments
ORGANIZATIONAL DESIGN
Organizational design is the decision-making process through which managers construct an
organizational structure appropriate to the plans and strategies of the organization.
Steps in organizational design are:
 Reflecting on the plans and objectives of the organization
 Establishing major tasks
 Dividing the major tasks into sub-tasks
 Allocating resources for sub-tasks
 Evaluating the results of the organizing strategy
Basic principles of organizing
Effective organizations are guided by the following principles:
 Division of work and specialization – involves dividing total workload into tasks
that can be logically and effectively performed by individuals with specialized
knowledge
 Departmentation – refers to the logical grouping into manageable sizes of
organizational activities belonging together. The departments created constitute the
organization’s structure and appear on the organizational chart. (A department is a
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distinct area, division or branch over which a manager has authority over
performance e.g. production, accounts or sales)
Coordination - the process of integrating departments both horizontally and
vertically. It is achieved through authority relationships, which involve allocation of
responsibility and authority to each position in the organizational structure.
Chain of command – defines the reporting lines of individuals and groups in the
organizations
Unity of command – implies that each subordinate must have only one manager to
report to
Span of control – refers to the number of subordinates working under one manager
THE ORGANIZING PROCESS
Organizing creates a vertical hierarchy of positions, which involves structuring authority,
responsibility and accountability. The hierarchy is a channel or conduit through which authority,
power and accountability flow. While authority and power flow downwards, accountability
flows upward and responsibility rests with individuals.
Authority
It is the right to do something – it is the right of a manager to make a subordinate do something
in order to accomplish organizational goals. Managerial authority is the right to command others
by making decisions, assigning tasks to subordinates and expecting and requiring satisfactory
performance from subordinates. However, being able to enforce this right is a different matter.
Delegation of authority
This refers to the process by which a supervisor gives a subordinate the authority to do the
supervisors job. A manager, however, cannot delegate the functions of planning, organizing,
leading and control as this would lead to breakdown in organizational performance.
Power
While authority is the right to do something, power is the ability to do it. The sources of a
manager’s power are:
 Ability to give or withdraw rewards
 Ability to punish or threaten to punish
Power is subjective and is influenced by moral and ethical considerations. The perception that
people have about the power of another is more important than the actual power possessed.
People in authority sometimes bluff, pretending they have more power than they actually do.
Authority and power must be balanced to avoid conflict. Too much power leads to abuse while
less authority leads to ineffectiveness.
Responsibility
This is closely related to authority and power. It refers to the obligation to do something. It is the
duty to perform organizational tasks, functions etc. In formal organizations everyone has a
responsibility
Delegation of responsibility
Responsibility cannot be delegated. A supervisor’s responsibility is not diminished because of
delegation of authority to a subordinate. In fact, responsibility may increase because in addition
to ensuring that the delegated work is done, he has to supervise the subordinate. Whether a
manager does the work or chooses to delegate to a subordinate, he retains complete
responsibility for the accomplishment of the task.
Source of responsibility
Responsibility is created within a person when accepting an assignment together with the
appropriate responsibility. The act of responsibility is created internally when a person agrees to
perform a task. Refusal to be responsible for a task leads to disciplinary action or dismissal.
Responsibility is not a flow as in accountability and authority but is retained within the person
assigned. It is an internal obligation to perform tasks.
Accountability
In addition to personal responsibility to oneself, an employee is accountable to higher authority.
Accountability comes into being because the manager has a right to require an accounting for the
authority and power delegated and tasks assigned to a subordinate. The subordinate must
account/answer to the manager the stewardship of the power and authority granted. “Each
employee is obliqued to report to his superiors how well he has exercised his responsibility and
the use of the authority delegated to them”
Just as a manager cannot reduce responsibility by delegating, accountability cannot also be
reduced.
Problems with imbalance between authority, power, responsibility and accountability
For the sake of organizational stability there must be equilibrium between the above four factors.
 If authority and power exceed responsibility and accountability there is likely to be
abuse of power. Power can be used arbitrarily with little regard on its impact on
others. It creates fear of the potential acts of the holder of excessive authority e.g. a
dictatorship form of government or the police.
 If responsibility and accountability exceeds authority and power, then people would
be held accountable for actions beyond their control. People will eventually object
and seek additional authority.
DEPARTMENTALIZATION
Departmental specialization can take many forms such as functional, product, geographical or
matrix designs.
What are the advantages and disadvantages of each design? What factors would organizations
consider when choosing a particular design?
Functional design: Each major function reports to the CEO and other sub functions report to the
major functional heads. The idea is to group specialists with similar interests and training
together e.g. marketing, HRM, finance or IT. This is the most common design
Product design: this is common in organizations that deal in multiple products. It is a
modification of the functional design. Each major product or line is managed by an executive
who reports to the CEO. The product manager has control over the functions in his division such
as sales, marketing, HR and finance.
Geographical design: Where an organization operates in a wide geographical area, territorial
groupings are designed. A company’s activities are divided into regions with a manager for each
with a home office for coordinating the activities of the geographical units.
Customer design: Activities are structured to respond to specific groups of customers. For
example, the lending activities in banks that are tailored to meet the needs of different customers
say business/corporate clients, personal, mortgage or small business.
Matrix design: this involves a grid or matrix of authority flows. Authority flows both vertically
and horizontally while vertical authority is exercised by functional managers, horizontal
authority is vested in project managers so that some employees find themselves reporting to two
managers. Project managers have formal authority over budgetary funds, time and tasks.
Advantages
Matrix designs are useful when:
 The activity has a definite completion date
 Cost constraints are a critical factor
 Specialized skills are required for the completion of a project
 Activity is new or unfamiliar to the participants
 When a high degree of competence is required and flexibility is needed
 The need to share resources and reduce costs
Disadvantages
 Conflict over allocation of resources and division of authority
 Dilution of functional authority
 Divided loyalty for project teams
 It sacrifices the principle of unity of command
i)
As a practicing manager, how would you justify the use of a matrix
design since it potentially violates the principle of unity of command?
ii) Identify the consequences of poorly designed organizational structures
NB: It is rare to find organizations that use only one of these designs. Most use combinations of
two or more forms.
THE PROCESS OF DELEGATION
Delegation is risky. Why are many managers reluctant to delegate full
authority? What kind of risks do you think they fear?
Delegation is the process by which managers assign a portion of their total workload to others. It
includes assigning formal authority and responsibility for completion of specific activities.
Why delegate?
 Get more work done
 Subordinates may have some unique expertise which the manager lacks
 Helps develop subordinates managerial skills
 Enhances prompt action
 Superiors can take higher level tasks
 Better decisions as they are made lower down where the problems are
What are the barriers to delegation?
 Reluctance/inability to delegate due to lack of planning what to and not to delegate
 Insecurity due to fear that subordinates may do better and threaten their positions
 Lack of confidence in the subordinate to do the job
 Reluctance by subordinate to accept delegation due to fear of failure, lack of rewards,
risk avoidance tendencies etc.
 Incompetent subordinates
Some guidelines to effective delegation
 Free communication to ensure subordinates understand their responsibility, authority and
accountability
 Balance responsibility and authority- give enough authority to achieve desired results
 Define the expected results clearly
 Evaluate the experience and competence of the subordinate before delegating
 Be flexible with delegation- modify, increase, decrease or withdraw
 Supportive managerial climate free from fear, frustration and threats
 Put in place checks and controls to ensure delegated authority is not abused
LINE AND STAFF RELATIONSHIPS
The concepts of line and staff can be viewed both as functions and as authority relationships.
Line functions: Refers to those functions that have direct responsibility for accomplishing the
objectives of the firm. The managers responsible are line managers and the others are line
employees.
Line authority: refers to the chain of command where line officials have authority over
subordinates e.g. a manager and a subordinate. This is exercised by all managers irrespective of
whether they are line or staff.
Staff functions: refer to those functions that support the line functions by providing expertise,
advice and support. Examples are HRM, finance or research and development
What are some of the likely sources of conflict between line and staff
employees?
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Status conflict- who is more important or strategic to the organization than the other
in terms of contribution
Failure to understand the line–staff roles - e.g. forcing policies that make the line to
feel that their authority to manage is being undermined
Lack of clear responsibility between line and staff
Staff see line management as resistant to attempts to provide assistance and guidance
NB: The distinction between a line manager and staff manager is not absolute. There is a fine
line between offering professional advice and giving instructions
CENTRALIZATION AND DECENTRALIZATION
This refers to the extent to which decision-making power and authority is dispersed to lower
levels. It also refers to the degree of delegation of duties, power and authority to lower levels of
an organization.
Centralization
High degree of retention of duties,
power and authority by top
management
- suitable in stable environments
hence few people can make
decisions
- culture of control by top managers,
lack of training for people at lower
levels
- need for uniformity is crucial
Decentralization
High degree of delegation of
duties, power and authority to
lower levels of the organization
- occurs when environment is
changing rapidly
- top level managers are
comfortable with leadership styles
- emphasizes delegation
- uniformity is not critical
What factors determine an organizations position on the decentralization-centralization
continuum?
 External environment – the greater the complexity and uncertainity, the greater the need
to decentralize
 Tradition – tendency to do things the way they have always been done
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The nature of the decision – the costlier and riskier they are, the greater the pressure to
centralize
The abilities of lower level managers – the more qualified and competent they are the
greater the tendency for top management to take advantage of their talents by
decentralizing
The size of the organization – large organizations tend to be more decentralized
SPAN OF CONTROL/MANAGEMENT
Span of control management refers to the number of subordinates who report directly to a given
superior. A manager’s ability to manage a larger number of subordinates is limited by time,
knowledge, energy, personality and the tasks. Research has shown that managers at the top can
handle up to four subordinates while the lower level can be as high as twenty.
Factors determining an effective span of control
 Subordinate training – level of knowledge and experience possessed to handle the job
 Degree of hazard or danger associated with the job
 Clarity of the delegation of authority in terms of scope
 Clarity of plans – clear policies, rules and procedures to guide decisions and reduce
supervision time
 Cost of possible mistakes to the individuals and to the organization
 Rate of change – change determines the degree of policy formulation and stability.
Stability is associated with wide spans of control e.g. catholic church and the reverse
is true.
 Extent to which the job is complex
 Communication techniques – written versus oral communication
 Number of levels in the organizational structure
 Level of technology
 Type of production system
 Physical dispersion of subordinates
 Availability of a set of standard procedures
 Similarity of tasks
Think of more factors that are likely to determine the span of control. What are
some of the problems associated with wide and narrow spans of control
COORDINATION
This is the process of linking the activities of the various departments of the organization.
Coordination is maintained through rules and procedures such as standard procedures.
Liason roles – act as a common point of contact e.g. a spokesperson who facilitates flow of
information between units.
Task force – involves representatives from various groups coming together to work on a
common project and dissolve thereafter.
LECTURE SIX
THE DIRECTING FUNCTION
Lecture outline
6.1 Introduction
6.2 Lecture objectives
6.3 Meaning of leadership
6.4 Types of leaders
6.5 Importance of leadership
6.6 Approaches to leadership styles
6.7 Contemporary leadership models
6.8 Summary
INTRODUCTION
The difference between successful and unsuccessful organizations is the presence or
absence of dynamic and effective leadership. The function of management is being
viewed as not simply a set of practices and policies, but a crucial component in the total
organization strategy. To play its role of enabling the organization gain and sustain
competitive advantage, all managers have to play a leadership role especially in the
present business environment which is getting increasingly flexible, innovative and
dynamic.
Leadership is a concept that has generated much interest among academics and practicing
managers, politicians and sociologists among others. In this lecture we shall examine
some key aspects of leadership. To do so the following set of objectives will be the main
focus.
Learning Objectives.
 Define and explain the meaning of leadership.
 Explain the nature and importance of leadership.
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Explain the difference between a leader and a manager
Identify and distinguish among the various research approaches to leadership.
Identify and discuss the various theories of leadership.
Explain the importance of leadership styles to management.
WHAT IS LEADERSHIP ?
Leadership is an important aspect of management and the ability to lead is one of the
keys to being an effective manager. The difference between success and failure whether
in war, business, a protest movement or a soccer game can be attributed largely to
leadership.
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A large number of definitions can be found in the literature e.g.
Leadership is the art or process of influencing people so that they will strive willingly and
enthusiastically toward achievement of group goals.
Leadership is the ability of management to induce subordinates to work towards group
goals with confidence and keenness.
Leadership is the ability of a person to influence the thoughts and behaviour of others
towards the accomplishment of some goals or goal.

In summary, leadership is:

The activity of influencing people to strive willingly towards group objectives.

The process of influencing the activities of an individual or group towards goal
achievement in a given situation.

A process of giving purpose (meaningful directions) to collective effort and causing
willing effort to be expended to achieve such a purpose.

Getting people to move in certain directions, make decisions and support paths they
would typically not have selected.

The process of making sense of what people are doing together, so that they will
understand and be committed to the goal.

The process of articulating visions, embodying values and creating the environment
within which things can be accomplished.
-Leadership is a process not an individual position.
-It involves a relationship between a leader and followers in a given situation.
-Leadership is a complex concept involving the leader, the followers and the
situation.
-Leadership consists of activities and is directional.
From the above definitions, we can say that managers lead by giving orders, handling
disputes, supervising, disciplining and taking steps to improve employee performance. In
so doing they use influence, power, authority, delegation of responsibility and be
accountable. It is these components of leadership that managers use to direct the actions
of their subordinates.
DIFFERENCE BETWEEN LEADERSHIP AND MANAGEMENT
Leadership and management are closely related activities but distinguishable. Leaders
and managers are not different people, but can be the same individual performing both
roles. In recent years, theorists and practitioners in management have noted that, “to
survive in the 21st century, organizations need a new generation of leaders, not
managers”.
The fundamental difference between leaders and managers is that a manager focuses on
the implementation of company policy while the leader tries to lead and inspire people to
do their best for the company. A leader tries to cultivate a sense of commitment to the
vision and mission of the company by inspiring the subordinates to willingly strive for
the achievement of organizational objectives. A manager on the other hand manages
employees by the power and authority delegated to him by his superiors. While leaders
strive to conquer the volatile, turbulent and ambiguous surroundings that seem to
conspire against business organizations, managers tend to surrender to them. In other
words while managers administer, control, and accept the status quo, leaders innovate,
inspire and change the status quo.
From the foregoing it is obvious that to increase the performance of any
organization, all managers should also be good leaders. The goal of leadership studies
and leadership training is to turn managers into leaders so that they can become better
managers.
The Complementarity of management and leadership.
According to Brewster (1999), leadership and management qualities are complementary.
These characteristics may be summarized as follows.
Management characteristics
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Administers and problem-solves.
Works within a system.
Focuses on control.
Short range view.
Accepts the status quo.
Sets things in motion by means
of methods and techniques.
 Attitude of doing.
Leadership Characteristics
 Innovates- means alertness to
opportunities, uses imagination
and vision to capitalize on them.
 Works on the system
 focuses on people.
 Inspires trust.
 Long range view.
 Challenges the status quo.
 Is a natural unforced ability to
inspire people.
 Attitude of serving
From the above characteristics, we can see that leadership is a broader
concept than management.
Effective Leadership.
To be effective, a leader must win the hearts and minds of the followers. This requires a
guiding vision and clear idea of what is to be accomplished. Effective leaders must be
able to communicate their vision. Knowing what to do, but not being able to
communicate this to others can be a major drawback to effective leadership.
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Communication means understanding each other as individuals and as members of larger
groups.

Often communication is not effective because of barriers such as poor communication
skills, distortion or omission of information, wrong interpretation and lack of trust
between the sender and the recipient.

Successful organizations are associated with leaders who are able to communicate
effectively their vision and strategy.
TYPES OF LEADERS.
Writers identify various types of leaders.
Charismatic Leaders – These are those whose influence is derived form the personality
e.g. Napoleon, Kenyatta, Billy Graham, Nelson Mandela, Desmond Tutu etc. This type
resides only in a few people and cannot be acquired by training – it is natural.
Traditional Leaders –These are those whose position is assured by birth e.g. Kings,
Queens, tribal chieftains etc. It is limited and not applicable to workplaces except in
family businesses.
Situational Leaders -Their influence is effective by being in the right place at the right
time – It is impromptu and temporary eg. One who steps to direct traffic in a jam.
Appointed Leaders –Refers to those whose influence arises from position e.g. managers
and supervisors. It is a bureaucratic type of leadership where legitimate power
comes from the position in the hierarchy.
Functional Leaders – Are those whose influence comes from the work done rather than
position such as experts.
LEADERSHIP AND POWER
The concepts of leadership and power are closely related.
Power is the capacity to influence others through the control of instruments of reward and
punishment – which can be tangible or intangible. Sources of Power are:
(vi)
(vii)
Legitimate power – derived from the position e.g. kingship, managerial
Reward Power – derived from control of resources e.g. promotion,
recommendation, training etc
(viii) Referent power– derived from association with powerful people
(ix)
Coercive power – uses the ability to force other people to act against their
wishes through the fear of punishment.
(x)
Expert power – derived from the possession of expert knowledge or
information that others need but have no alternative access.
IMPORTANCE OF LEADERSHIP
Leadership is important as it can make a difference to organizational performance.
Leadership provides the spark that can raise morale of employees. Peter F. Drucker
noted that:
“Leadership is a human characteristic which lifts a person’s vision to highest
heights, raises performance to higher standards and builds personality beyond its
normal situations”.
Leadership can be said to be important in the following ways:
1) Leaders not only guide, but provide a psychological shield to their followers (Managers –
employees) as the average person prefers to be led by an efficient and effective leader.
The presence of a leader (manager), makes followers (subordinates) behaviour consistent,
and raises morale, thus high quality of work.
2) Creates and sustains teamwork and groups. The will to work and accomplish a task is
triggered by effective leadership. Usually without leadership, a group disintegrates,
destroys its team spirit and fritters away its energy. Leadership inspires and motivates the
group.
3) Leaders are role models who set examples.
4) Leaders create confidence in the workers.
5) Promotes morale which leads to high productivity and organizational stability.
6) Maintains unity and cohesiveness of the group.
7) Maintains discipline of the group and among group members.
APPROACHES TO LEADERSHIP STUDIES
Three approaches have been used in the study of leadership. These are:
(i)
(ii)
(iii)
Trait
Behavioural
Situational/contingency
(i) Trait Approach
The earliest studies on leadership focused on the qualities of effective leaders such as
bravery, loyalty, honesty, and compassion. However, as traits are many, research
findings often disagreed on which are the most important traits. Keith Davis (1972), in
human behaviour at work, summarized the traits and gave four general characteristics
namely:(i)
(ii)
(iii)
(iv)
Intelligence – leaders tend to have higher intelligence than their followers.
Social maturity and breadth – leaders tend to be emotionally mature and have
broad range of interests.
Inner motivation and achievement drives – leaders want to accomplish things,
achieve goals and are intrinsically motivated.
Human Relations attitudes - leaders are able to work with others, and tend to
respect others.
NB: Not all leaders have these traits, and followers can also have them (they are not
exclusive to leaders). Although positive correlations have been found between the above
traits and effective leaders, examples of effective leaders exist who do have these traits.
The trait approach was used before 1949, when the ‘Great Man’ theory of ‘leaders are
born not made’, a belief originating from the Greeks and Romans was in vogue.
However, this school of thought was no longer acceptable after the rising influence of the
behaviourist school of Psychology which emphasized that people are not born with traits,
but made.
Criticisms of the Trait Approach
Not all leaders possess all the traits.
Many non-leaders possess most of the traits.
The trait approach gives no guidance as to how much of any trait a person
should have.
Research findings do not agree as to which are leadership traits and what their
relationships are to instances of leadership.
The so called traits are nothing but patterns of behaviour.
(ii)
Behaviourist Approach
As a result of the failure of the trait approach to leadership, the focus shifted on the
individual behaviours of leaders. The main concern was on the leadership styles of
leaders. Leadership styles refer to the way a leader typically behaves towards his
followers/group members. These styles have been classified into:
(i)
Autocratic Leadership – This approach refers to where all authority centers
around the leader. The manager enforces decisions by use of rewards and
punishments (ability to withhold or give rewards and punishment),
communication is in one direction - from manager to subordinate and conformity
and obedience on the part of followers is expected.
lead
er
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One way communication
Compliance and obedience
Advantages:
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Decisions are made speedily as leader does not have to obtain group’s approval.
Useful where decision is unfavourable.
Useful in cases where followers are incompetent.
Disadvantages:


Has negative effect on group morale – decisions may not be supported.
Can create ‘yes’ mentality among group members.
(ii)
Democratic/Participative Leadership.
Considers the suggestions of members and leader. It is a human relations approach
where all group members are seen as important contributors to decision.
Democratic communication which allows an
interchange of ideas between all involved.
persons
leader
Advantages:
-
increased morale of members.
support for final decision.
better decisions through shared ideas.
Disadvantages:
-
Slower decision.
Diluted accountability for decisions.
Possible compromises designed to please all.
(iii)
Laisser Faire Leadership
‘Allow (them) to do’ style – leadership exercises very little control or influence over group
members. Members are given a goal and left alone to decide how to achieve it. Role of leader is
facilitative.
leader
Advantages


Increased opportunity for individual development.
All persons are given a chance to express themselves and function independently.
Disadvantages



Lack of group cohesion and unity toward org. goals.
Lack of direction and control.
Inefficiency and chaos.
WHICH IS THE BEST LEADERSHIP APPROACH?
It is not possible to say which style is best as it depends on the situation. A leader may be
autocratic in one situation and democratic in another.
LEADERSHIP STYLE THEORIES
There are several theories of leadership styles and a few will be considered in this lecture.
(i)
Rensis Likert’s Systems of Management.
Likert developed four styles of management. As a proponent of participative management, he
saw the effective manager as strongly oriented to subordinates where all group members
including the manager adopt a supportive relationship. His four styles are based on differing
assumptions about human behaviour e.g. McGregor’s Theory X & Y.
System 1
Management Style: Exploitative – Authoritative
-
System 2
Managers are highly autocratic.
Have little trust in subordinate.
Motivate people through fear and punishment.
Engage only in downward communication.
Limit decision making to the top.
Relationships with subordinate are distant.
Management Style – Benevolent – Authoritative.
System 3
Managers are paternalistic.
Have a condescending confidence and trust in subordinates.
Motivate with rewards and some fear and punishment.
Limited upward communication.
Limited delegation of decision making, but with close policy control.
Management Style – Consultative.
-
decisions are made after discussion with subordinates.
Substantial confidence and trust in subordinates.
Managers try to make constructive use of subordinate’s ideas and opinions.
Two way communication.
System 4
Teamwork is encouraged and initiative
Controls are much looser.
Management Style – Participative – Group System
-
Most participative style.
Complete trust and confidence in subordinates.
Get economic rewards on basis of group participation.
Communication is up, down and lateral.
Encourage decision making at all levels.
Excellent productivity, low absenteeism and turnover.
According to Likert, system 4 approach is the best. Leaders applying this
system have had greatest success, departments are most effective in setting and achieving goals.
Criticisms:



Research focus was on small groups yet findings have been applied to the total
organization.
Research was conducted at lower organizational levels and is not supported when data
from top level managers is separated.
System 4 is more applicable when companies are profitable and not when in turbulence.
-The situation must be considered before making conclusion.
-System 1 and 2 are derived from the Scientific School of Management, while system 3 and 4
are developed form the Human Relations School of Thought.
-Management styles fall within a continuum ranging from total authoritarian to total
democratic.
(ii)
The Managerial Grid
This is a dramatized approach to leadership styles developed by Robert Blake and Jane Mouton
in 1954 to show the importance of the manager’s concern for production and for people. The
managerial grid is widely used for managerial training and identifying leadership styles.
9,9
1,9
5,5
9,1
1,1
Concern for production
The Grid Dimensions:
Concern for production conveys the attitudes managers have towards a variety of things e.g.:
Quality of policy decisions, procedures and processes, work efficiency, volume of output etc
Concern for people refers to degree of personal commitment toward goal achievement, self
esteem of workers, responsibility and recognition, trust rather than obedience, good working
conditions, satisfying interpersonal relations, job enrichment etc.
1.1
Management Style – (Impoverished Management).
-
9.9
Management Style – (Team managers – executives).
-
1.9
Managers have little concern for both people and production
Job involvement is minimal
The managers has practically abdicated the job and at best acts as a messenger
conveying information along the chain of command.
It is basically an inefficient management style.
Possesses high concern for both people and production.
Manager is able to integrate production needs and people needs
It is considered the ideal or optimum style.
Management Style – (country club management or missionary).
-
9.1
Management Style – (autocratic, task managers).
-
5.5
Has low concern for production and efficiency but emphasizes human relations
and pays attention to human needs.
Manager promotes an environment where everyone is happy, relaxed, and
friendly.
No one is concerned about putting forth coordinated effort to accomplish
organization goals.
Manager is concerned with developing efficient operations.
Has little concern for human feelings.
Manager is autocratic in leadership style.
Management Style – (Compromiser or benevolent autocratic)
-
Manager has medium concern for people and production.
Adequate but not outstanding morale and production.
Manager has a benevolent – autocractic – paternalistic attitude towards people.
Manager balances production and concern for people.
Criticisms of the management grid
The grid does not say why a manager falls in one part of the grid and not
another.
Or why one is an autocrat and not a compromiser.
(iii) Situational or Contingency Approaches to Leadership.
As a result of failure of the trait approaches, leadership studies turned to the study of situations
and the belief that leaders are the products of given situations. This approach supports the
follower theory that people follow those in whom they perceive (accurately or inaccurately) a
means of accomplishing their own goals. E.g. The rise of Hitler, Jomo Kenyatta, student leaders,
F.D. Roosevelt during the American great depression in the 1930’s. Museveni in Uganda in
1985-86, Corazon Aquino in the Philipines and Nelson Mandela.
Robert Tannenbaum and Warren Schmidt (1958) saw leadership as involving a variety of styles
ranging from boss-centered to subordinate-centered. Their approach suggests a range of styles
without preference for any.
The concept of the continuum recognizes that a style of leadership depends on the situation e.g.
(i)
Forces operating within the manager’s personality such as value system,
confidence/trust in subordinates, feelings of security etc.
(ii)
Forces in subordinates that will affect manager’s behaviour e.g. need for
independence, readiness to assume responsibility for decision making, tolerance
for ambiquity, interest in problem, understanding goals of organization,
knowledge and experience levels, sharing decisions.
(iii) Forces in the situation e.g organization values and traditions, nature of the
problem, pressure of time, trade unions, civil rights etc.
(iv)
Forces in the external environment: In a revised publication Tannebaum and
Schmidt, recognized the forces in the external environment such as government
legislation, political, social awareness and economic considerations as having an
effect upon leadership style.
Manager’s therefore have to consider these forces before choosing an appropriate
management style.
Continuum of leadership style
Area of manager’s authority
Area of subordinate freedom
The continuum suggests 5 basic styles: Tell, sell, consult, join, delegate.
This approach emphasizes flexibility and sensitivity to the situation in which the leader and the
group find themselves.
Other variables in the situation are:





The job, or tasks.
Organizational environment.
Characteristics of people/demographic differences.
History/culture of the organization.
The community in which the organization operates.




Psychological climate of the group.
Cultural influences.
Time required to make decision.
Nature of the decision/task.
Situation:
Condition:
circumstances/conditions under which a leader operates.
consists of anything that affects leadership.
CRITICAL DIMENSIONS OF THE LEADERSHIP SITUATION - FIEDLER F. E. (1967)
According to Fiedler, people become leaders because of various situational factors and the
interaction between leaders and the situation. He describes these as:
1. Position Power:-refers to the degree to which the power of the position enables group
members to comply with leader’s directions i.e. organizational authority.
A leader with position power can obtain better followership than one without.
2. Task Structure:refers to the degree to which tasks are structural. Where tasks are
clear, the quality of performance can be easily controlled and group members held
responsible than where they are unclear.
3. Leader- member relations:- refers to the extent to which group members like and trust
the leader and are willing to follow. The better the relations, the easier it is for the leader
to exercise influence.
Based on the three dimensions, Fiedler postulated two styles of management – task
oriented and interpersonal relations oriented. Measures were carried out on these
elements using the least preferred coworker scale indicating a favourable or unfavourable
situation continuum.
Findings
 Favourable situation in which the leader has power, informal backing and a structured
task – then the group is ready to be directed.

When leader position power is weak, task structure is unclear, and leader-member
relations are poor, the situation is unfavourable for the leader and a task-oriented
leader is most effective.

Where the situation was moderately favourable – middle of the scale, then
interpersonal oriented leader was most effective.
Usefulness of Leadership Theories to Managers

Participative/democratic styles of management are better than autocratic styles but
extremes are not effective thus the continuum.

Autocratic styles of management allow employees to satisfy lower level needs
e.g. physiological, safety, but participative styles allow higher level needs to be
satisfied e.g. recognition, responsibility and self-actualization.

In reality people prefer to have control over work they do and seek opportunities
to put into practice their ideas.

Employees have valuable expertise, experience and initiative that is often
untapped by management.

Appropriate training in leadership can change a manager’s style of management if
done early in the career. However, it is not easy as style is rooted in attitudes.
The most difficult to change is the authoritarian, task-centred manager.
Management can transfer such managers to an appropriate section to make full
use of their abilities or restructure the work to suit their styles.
LECTURE SEVEN
MOTIVATION
Lecture outline
7.1
7.2
7.3
7.4
7.5
7.6
Introduction
Lecture objectives
Explain the meaning of motivation
Discuss the content and process theories of motivation
Illustrate the application of motivation theories in the workplace
Identify the challenges associated with employee motivation
7.1 Introduction
7.2 Lecture Objectives
At the end of this lecture you should be able to:
1. Define motivation
2. Explain the consequences of unsatisfied needs
3. Discuss the content and process theories of motivation
4. Illustrate the application of motivation theories to the workplace
5. Explain the challenges associated with employee motivation
The study of motivation is a search for answers about human nature. Motivation is:
 ‘a concern with why people do or refrain form doing something’;
 ‘an individual’s internal process that energizes, directs, and sustains behaviour’
 a personal force that causes one to behave in a certain way’.
 ‘the willingness to exert high levels of effort to reach or achieve a predetermined reward
or goal’.
 a force that kindles a burning desire for work or action and the readiness to work towards
a goal or satisfy a need.
Terms used in motivation
Motivators: These refer to those things which induce an individual to perform e.g. higher pay,
prestigious title, name tag, praise, recognition, responsibility etc – It can be tangible or
intangible. There are limitless ways in which managers can be innovative in the use of
motivators.
Satisfaction: Refers to the sense of contentment experienced when a need is satisfied.
Intrinsic motivation: Refers to self-generated factors that influence people to behave in a
certain way or to move in a particular direction. These factors may include responsibility, which
involves the feeling that work is important, freedom to act, scope to use and develop abilities,
interesting and challenging work and opportunities for advancement.
Extrinsic Motivation: Refers to what is done by others to motivate people. For example
rewards such as increased pay, praise, promotion and punishments such as disciplinary action,
withholding pay or criticisms.
Extrinsic motivators have short-term effects while intrinsic motivators which are more
concerned with the quality of working life are likely to have deeper and longer-term
effects because they are inherent in individuals and not imposed from outside.
Reward is the use of inducement in the form of money, promotion or security. It is a strong
motivator, which should not be overlooked by managers.
Punishment is the denial of a reward, use of threats and fear e.g. fear of loss of a job, loss of
income, reduction of bonus etc. Punishment is a strong motivator but not sustainable because: It can give rise to defensive or retaliatory behaviour such as union organization, poor
quality work, indifference, dishonesty etc.
 It can create compliance from subordinates even for wrong decisions because managers
have the power of their positions to give or withhold rewards or impose penalties.
Reinforcement: Reinforcement suggests that success in achieving goals and rewards act as
positive incentives and reinforces successful behaviour which is repeated next time a similar
need emerges. The more powerful and frequent the reinforcement, the more likely it is that the
behaviour will be repeated until it becomes an unconscious reaction to an event. Conversely,
failures or punishments provide negative reinforcements, suggesting seeking alternative means
of achieving goals
Consequences of unsatisfied needs.
Some needs are impossible to satisfy and this may result in some types of negative behaviours.
Such irrational behaviours are as a result of failure to accomplish an individual goal.

Aggression: This is destructive behaviour such as hostility (physical/verbal) and striking
out. The feelings of rage or hostility are directed against the person or object that is felt to be
the cause of the frustration. As it is not possible sometimes to attack the causes of frustration
directly people may look for scapegoats.

Rationalization: Means making excuses such as blaming someone else for inability to
accomplish a goal e.g. “I was not even interested in it anyway”.

Regression: Means not acting one’s age by resorting to immature acts e.g. unreasonable
complaining or crying. It relieves some of the tension, but has adverse effects on associates
e.g. a person kicking a car when it cannot start.

Fixation: Occurs when a person exhibits the same behaviour pattern several times even
though the experience has shown that it can accomplish nothing. Research has shown that
frustration can maintain old and habitual responses and prevent the use of new and more
effective methods. Although habits can be broken when they bring no satisfaction or lead to
punishment, fixation actually becomes stronger under such circumstances, e.g. the inability
to accept change even when the facts show otherwise penalties even when they make the
situation worse.

Resignation (apathy): occurs when people lose hope of accomplishing their goals and
withdraw from reality and the source of their frustration. Involves complete surrender and
borders on serious mental disorders. This phenomenon is characteristic of people in boring,
routine jobs, where they resign themselves to the fact that there is little hope for improvement
of their goals.
Why managers should understand human behaviour.
(i)
Be able to explain the behaviour of their subordinates.
(ii)
Knowledge will form the basis for people management activities such as
performance appraisal and disciplinary action.
(iii) Search for logic behind any behaviour though it may appear insane to the
manager.
THEORIES OF MOTIVATION
The theories of motivation can be classified into content and process theories.
Content or needs theories: These are the theories that focus explicitly on the content of
motivation in the form of fundamental human needs. They are more concerned with the
quantitative aspects of motivation i.e. what motivates people and what people seek in their work.
Examples:

Maslow’s Hierarchy of needs theory


Herzberg’s two-factor theory
McClellands three basic needs
Process or contemporary theories of motivation: These are the theories which attempt to
develop understanding of the psychological processes involved in motivation. They are more
concerned with the qualitative aspects and the dynamics of motivation i.e. how people are
motivated and how rewards influence behaviour. They focus on the why and how of motivation.
Examples:
o Latham and Locke’s goal-directed theory
o Porter and Lawler’s expectancy theory
o Adams equity theory
o Bandura’s self-efficacy theory
Maslow’s Hierarchy of Needs (1943)
Maslow was a psychologist and his theory has found wide application in many fields including
management. He proposed that:

Behaviours of human beings are motivated by needs.

Individual needs can be classified into 5 broad categories.

These 5 categories operate in a hierarchical manner, flowing from low
order to high order needs as shown below:
High order needs
Social status
Low order needs
Safety needs
Physiological needs
Physiological, safety and social needs are referred to as lower order or deficiency needs, because
the absence of them make individuals deficient and existence as a human being is threatened. On
the other hand, esteem and self-actualization are referred to as high order needs or growth needs
as these make an individual become better at doing what they are expected to do: gain control
and mastery over their environment in terms of technology, services etc.
Maslow’s theory of motivation therefore states that: “when a lower order need is satisfied, the
next highest becomes dominant and the individuals attention is turned to satisfying this
higher need.” The most difficult need to satisfy is that of self-fulfillment. Psychological
development takes place as people move up the hierarchy of needs, but not necessarily in a
straightforward progression. The lower needs still exist even if temporarily dormant as
motivators, and individuals constantly return to previously satisfied needs.
The lowest unsatisfied need in the hierarchy is the one that motivates behaviour e.g. a deprived
individual without basic needs will be directed towards finding food. The need for safety is
dormant at that time. A satisfied need does not motivate behaviour. Once satisfied, it ceases to
be a motivator, instead the next higher level need becomes active and motivates behaviour.
Application of Maslow’s Hierarchy of Needs Theory.
Physiological needs : Involves mainly payment of wages and salaries to enable people pay for
their basic needs of food shelter and clothing.
Safety needs: .Provision of protective clothing, insurance and medical cover, pension schemes,
housing and transport (in relation to safety), and job security.
Social needs: .Promoting family feeling, intimacy and closeness, use of first names, to break
formality and reduce social distance, sharing facilities e.g. cafeterias, sports club etc, casual
dressing to identify with each other and recognition of trade unions.
Esteem needs: Supporting education, delegation of responsibility, titles and other status
symbols, fringe benefits e.g. Cars; bonus; shares; office size and equipment.
Self fulfillment needs: This is the apex of human needs and involves the need for realizing ones
potentialities, continued self-development, feelings of accomplishment and attainment and being
creative in the broadest sense possible. Organizations can facilitate and create an environment in
which individuals can realize their potentialities e.g. writing, inventions, occupying important
positions etc.


There are limits to how much organizations can provide to meet these needs as
they are limited by resources
Esteem needs are mainly applicable to managers as they sometimes make
important business deals informally through informal networks such as clubs. As
such, status symbols become important. It is also notable that as one moves up
the ladder, fewer people benefit.
Research findings have shown that:
 Managers generally have high order needs compared to those at lower levels.
 Employees in developed countries generally have higher order needs than those in
poor countries.
It appears, however, that Maslow never considered the above dimensions as he was concerned
with individual employees.


Do employees in developed countries have higher order needs than those in poor
countries?
Do managers have higher order needs compared to lower level employees?
Explain
Weaknesses of the need hierarchy theory







The five categories of needs are not mutually exclusive
The order in which the needs must be satisfied is not supported by real life
situations.
The model only applies to typical healthy people. A sick person is
unlikely to be satisfied by basic social or self-esteem needs.
Research conducted to test the model have not supported its assumptions and
predictions.
Some of the basic concepts of the theory such as self-actualization are vague.
HERZBERG’S TWO-FACTOR THEORY OF MOTIVATION
Herzberg (1959) conducted a study, which focused on job satisfaction primarily to find out the
factors associated with job satisfaction. He collected data from a sample of 203 accountants and
engineers based in Pittsburg, USA.
From these findings he proposed that human beings have two basic needs;
 The need to avoid pain and survive.
 The need to grow, develop and learn.
He also found that factors associated with feelings of happiness or satisfaction were concerned
with the job itself while those associated with dissatisfaction were related to the environment in
which the job was done.
He came up with two sets of factors from which the theory was coined. Different
terminologies have been used to refer to this theory.
Satisfaction-related factors




Satisfiers
Motivators
Job content factors
Intrinsic factors
Motivators
Dissatisfaction related factors





Dissatisfiers
Hygiene factors
Job Context factors
Maintenance
Extrinsic factors
Hygiene or maintenance
Herzberg’s findings showed that motivation can be explained by two factors:
A group of needs which he called hygiene or maintenance needs as they serve to
remove dissatisfaction. They are related to the job context e.g.










Supervision
Company policy and administration.
Peer relations
Working conditions
Status
Job security
Pay
Status
Job title
Job security, etc
He explained that if these factors exist, then there is no dissatisfaction, if they do not then
dissatisfaction results, but they are not motivators as such.
A second group of needs he called satisfiers or motivators and these are related to the job
content. They tend to increase job satisfaction e.g.






Achievement
Recognition
Work itself
Responsibility
Advancement
Possibility of growth etc.
Application of Herzberg’s two-factor theory- Job enrichment and job enlargement
Herzberg suggested that jobs should be made more interesting and challenging so as to motivate
employees. A great deal of interest has been directed at job satisfaction over the last decades as
a popular technique for increasing employee’s motivation. The concept of job enrichment has
been found to provide employees with an opportunity to:





Perform more challenging and meaningful work.
Utilize knowledge and skills more fully.
Assume more authority and responsibility for planning, organizing, directing and
controlling of work.
Receive feedback on performance.
Grow and develop
Principles of Job Enrichment.
 Removing controls while retaining accountability
 Giving a complete unit of work
 Giving more authority
 Giving regular feedback to employees
 Giving new, difficult and challenging tasks
This theory assumes that employees are only motivated by enriched jobs and that
every employee desires an enriched job.
 In your view are these assumptions true?
 What are the limitations of job enrichment as a motivator?
Limitations of Job Enrichment
Research findings have shown that not all employees are motivated by job enrichment as some:
 Are unable to tolerate responsibility.
 Dislike complex duties.
 Uncomfortable with group work.
 Dislike relearning new skills.
 Prefer security and stability.
 Uncomfortable with supervisory authority
 Skills are not adaptable.
 Prefer to quit their jobs.
For organizations, enriched jobs may result in the following problems
 Supervisor’s roles may be reduced because of shared responsibility hence causing
dissatisfaction.
 Enriched jobs may increase pay dissatisfaction because of increased responsibility.
 Costs in terms of training and development, new technology and more equipment e.g.
computers may increase.
 Unions may oppose some job enrichment efforts for fear of loss of employment or
decreased membership due to reduced desire to join unions by satisfied employees.
Strengths of the two-factor theory
 Easy to comprehend.
 It was developed from an empirical study, hence has some validity.
 There are clear guidelines for applying it in the job setting.
Weaknesses
 It uses too many and confusing terminologies.
 The research instrument was defective.
 Motivators and hygiene factors are not mutually exclusive, but interdependent e.g. salary
can be both hygiene and a motivating factor.
Further research findings on job enrichment have shown that it is only those people
with a strong need for personal growth, power and achievement that job enrichment
will have some impact. For further reading, see the works of David McClelland and
Arch Patton.(Koontz, O’Donnel & Weihrich, Management-1984)
Comparison of Maslow’s Needs Hierarchy with
Herzberg’s Two-factor Theory.
Maslow’s needs theory and Herzberg’s two-factor theory are similar in many ways. The high
order needs of the need hierarchy represent motivators in Herzeberg’s theory, while lower order
needs are similar to Herzeberg’s hygiene factors.
Herzeberg’s two-factor theory




Challenging work
Achievement
Growth in job
Responsibility
Maslow’s hierarchy of needs
Self-actualization



Advancement
Recognition
Status







Inter personal relations
Company policy and administration
Quality of supervision
Working conditions
Job security
Salary
Personal life
Esteem or ego
Social
Safety/securirty
Physiological
PROCESS THEORIES OF MOTIVATION
Process theories of motivation were proposed as alternatives and to fill the gaps not explained by
the content theories. Process theories are more concerned with the cognitive antecedents that go
into the motivation process. This include: expectancy theory by Victor Vroom (1964) and the
Porter-Lawler Model (1968); Equity theory by Stacy Adams and Attribution theories and others.
In this section we shall only discuss a few of these.
Expectancy Theory of Motivation
Victor Vroom developed this theory in 1964 as an alternative to the content theories of
motivation. It refers to any situation or context where people have expectations from whatever
they do. It states that “motivated behaviour is increased if a person perceives a positive
relationship between effort and performance – i.e. the outcome.
Based on this theory, extrinsic financial motivation works only when if the link between effort
and reward is clear and the value of the reward is worth the effort.
Managerial Implications of Expectancy Theory
 Strengthen employees effort and performance expectations by providing resources such as
training, that enable employees to perform.
 Strengthen performance–outcome–rewards by linking performance with reward e.g. pay.
Managers should be consistent and transparent about criteria used for promotion.
 Match rewards with employee’s performances.
 Recognize employee’s ability and ensure that it is used optimally.
 Provide employees with opportunity to perform e.g. enabling environment, resources, etc.
 Develop appropriate procedures for evaluating employee performance by measuring actual
performance, aptitude and criteria for promotion.
Equity Theory of Motivation
This is a process theory advanced by Stacy Adams (1968). Equity refers to perception of
fairness and justice in the treatment of people. If people feel that they are not being treated
equitably, they feel aggrieved and this grief will affect their levels of motivation in different
ways.
In the workplace, employees compare themselves with their peers in terms of their contribution
to the organization and in relation to what they get from the organization. They compare their
ratio of inputs and outcomes with that of another person.
Inputs: refer to the contributions made by an individual e.g. effort – both physical and mental,
time, education, training, experience, loyalty, useful contacts age, gender etc..
Outcome: refers to what is received in return for effort e.g. salary, fringe benefits, travel
allowances, medical insurance cover, status symbols, autonomy, recognition, friendly
environment etc.
Examples of ratios of outcomes to inputs
(i)
Outcomes of ‘A’
Inputs of ‘A’
= Outcomes of ‘B
Inputs of ‘B’
=
Satisfaction
(Equity)
(ii)
Outcomes of ‘A’ < Outcomes of ‘B’
Inputs of ‘A’
Inputs of ‘B’
=
Underpayment
(Inequity)
(iii)
Outcomes of ‘A’ > Outcomes of ‘B’
Inputs of ‘A’
Outcomes of ‘B’
=
Overpayment
(Inequity)
Reactions of ‘A’

In situation (ii), ‘A’ will act on outcomes to restore equity i.e. where there is perception
of underpayment by stealing from the organization, taking kickbacks, undermining ‘B’,
joining trade unions or reducing effort.

In (iii) ‘A’ will attempt to restore balance by decreasing or increasing effort, e.g. working
longer hours, producing quality work, being loyal and committed to organization etc, or
by rationalizing or justifying the higher outcomes on the basis of experience, educational
levels etc. (resorting to subjective distortion of ‘A’s or ‘B’s inputs).
In situation (i), there is perception of equity, hence no problems.

Equity is taken seriously by employees and management decisions and
actions must be seen to be fair
The striving to restore the outcome/input ratio to equity is used as the explanation of
work motivation.
Workers prefer equitable payment to over-payment. Research has shown workers on a
piece rate system who felt overpaid reduced their productivity to restore equity.
Goal Theory (Latham and Locke, 1979)
It states that motivation and performance are higher when:
 Individuals are set specific goals
 Goals are difficult but accepted
 There is feedback on performance
Goal theory is aligned to the concept of management by objectives (MBO) and it forms the
foundation for performance management process.
MOTIVATIONAL STRATEGIES AND CHALLENGES
(Further reading- Armstrong, 2001, page 168-169)
Strategies
Money: It is an important motivator as it reflects on other motivators e.g.
status, esteem, achievement etc. Hence it is complicated as it is entangled
with other needs.
 Money has symbolic power – its value comes from what it can buy.
 To increase the motivational value of money, an incentive plan/system should be
introduced, as the extra money is usually spent on high-value ‘extra’ items.
 Equitable salary structures in organizations lessens the importance of money as a
motivator, hence Herzberg’s contention that money is hygiene, not a motivator.
Positive reinforcement: This idea was advocated by B.F. Skinner. He suggests that individuals
can be motivated by designing their jobs well, praising good performance so that it can be
repeated and removing barriers to performance and good communication.
Participation: Having knowledge of what is happening and being asked to participate in solving
problems is motivating to employees as it appeals to the need for recognition, affiliation and
acceptance and it gives people a sense of accomplishment.
Job Enrichment: Involves making a job more challenging and important by increasing scope of
authority and responsibility. These can be achieved by:
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giving workers more say in deciding about work methods, task sequencing etc.
encouraging subordinate participation and interaction among workers.
Giving workers a feeling of personal responsibility for their tasks.
Ensuring that people see the contribution of their tasks in the overall result.
Giving feedback on performance.
Job enrichment appeals mainly to higher level needs such as status, esteem and
self-fulfillment.
Other strategies of motivation may include; promotion to higher responsibility, personal
interest by manager, status symbols, training and development, monitoring, leadership style
etc.
Negative reinforcement or punishment: These should be avoided as it has the tendency of
stimulating anger, hostility, aggression, and rebellion in workers. The motivational effects
are only short term.
In your view to what extent do you think money can be used as a motivator?
Challenges
Motivation is a psychological and a social process. Although the theoretical concepts appear
simple and straightforward, they are difficult to implement in real life because of the following:Differences among people: People differ in their expectations; hence require different types of
incentives. For example, while scientists, engineers and other professionals may have a stronger
need for achievement, managers and politicians have a stronger need for power. Needs also
differ because of demographic characteristics of employees such as gender, age, race, education,
personal ambition, cultural background, occupation etc.
Social and economic change: Changes that impact on people’s lifestyles, such as increased
education, tastes and preferences, cross-cultural interactions mean that motivating techniques
which worked a decade ago may not work today.
Employees’ personal problems: Motivation can be effective only to a limited extent as people
may have problems that are beyond management and cannot be solved by motivation.
Lack of resources: Organizations may be willing to motivate its employees, but may lack the
resources to do so. This is especially so for financial motivators.
Motivation is an internal instinct: motivation by nature is an internalized process that comes
from within the individual. Reinforcements are only needed to activate it. Thus a manager can
give only encourage it, but the actual and effective motivation will depend upon the internal will
of the employee.
Motivation is situation oriented: Variables in motivation situation are, the motivator, the
motivated, the motivational technique and the motivational circumstances all of which affect the
motivational outcome. To achieve a positive outcome, all four must be in congruence- which
almost impossible.
Given the complexity of motivation in the light of varying
personalities and situations it is clear that risks of failure exist when any group of
motivators are applied without taking into account all the variables.
Lecture summary
Human behaviour is complicated and must be looked upon as a system of variables and
interactions. Motivating factors do not exist in a vacuum. In an organization people operate in a
field of restraining and driving forces. The actual behaviour will depend on the strength of these
counteracting forces. Managers can improve productive effort by reducing restraining forces or
by strengthening driving forces. Individual desires are conditioned by physiological and cultural
needs and the organizational climate in which they operate. Climate may repress or arouse
motives.
Managers who, if effective would certainly also be leaders must respond to the motivational
needs of individuals by designing a climate that will arouse motivation. Managers can design an
environment for performance by setting goals, developing and communicating strategies and
making plans to achieve objectives. In short managers can motivate employees by carrying out
effectively their core functions of planning, organizing, leadership, control and staffing.
LECTURE EIGHT
COMMUNICATION
Lecture outline
8.1 Introduction
8.2 Lecture objectives
8.3 Explain the meaning of communication
8.4Describe the process of communication
9.2 Discuss the importance of communication in organizations
9.3 Discuss the channels of communication
9.4 Explain the barriers to communication
8.9 Summary
8.1 Introduction
8.2 Lecture objectives:
At the end of this unit you should be able to:
 Explain the meaning of communication
 Describe the process of communication
 Discuss the importance of communication in organizations
 Discuss the channels of communication
 Explain the barriers to communication
8.3 The Meaning of Communication
Communication is a human skill and the ability to communicate effectively is one of the major
skills of a manager. According to research, managers spend between 70% - 90% of their
working hours in communication broken down as follows: 5% writing, 10% reading., 35%
talking, 50% listening. Such communication plays a vital role in managerial decision-making.
People often communicate through signals such as facial expressions, gestures etc.
Communication is a word derived from the Latin word ‘communis’, which literally means
‘common’, ‘to share’, ‘impart’, ‘convey’ or ‘transmit’. It is the process through which two or
more persons come to exchange ideas and understanding among themselves.
Communication is the sum of all the things one person does when he wants to create
understanding in the mind of another. It involves a continuous process of telling, listening and
understanding.
The word communication describes the process of conveying messages (facts, ideas, attitudes
and opinions) from one person to another so that they are understood.
Communication involves:
 More than one person.
 Deals with the transmission of both facts and feelings.
 Many media of communication.
 A continuous process.
 Depends upon proper understanding of message, and response.
Communication involves more than transmission and receipt of message. Correct interpretation
and understanding are more important. Hence the greater the degree of understanding, in the
communication, the more likelihood the human action intended will proceed in the desired
direction.
The Communication Process
The Shannon Weaver Model of Communication
This model was developed in electronic communications and has been adapted by
behavioural scientists very successfully to explain human communications.
Their model had five elements.
Noise zone
Source
Transmission
Signal
Receiver
Destination
Feedback
The communication process is dynamic rather than static. The relationships in the process are
continuous and flexible and are subject to change. It affects and is affected by many variables.
The communication process is often depicted as having the following elements.
SOURCE
RECEIVING
SENDER
DECODING
IDEAS
ENCODING
CHANNELS
FEEDBACK
Sender: The person who intends to make contact with the objective of passing information
and ideas to another Person.
Idea: The subject matter of communication e.g. an opinion, attitude, feelings, views,
orders, or suggestions.
Encoding: Since the subject matter of communication is abstract and intangible, its
transmission requires the use of symbols such as words, actions or pictures; conversion of
the subject into symbols is the process of Encoding.
Channel: Medium through which message is transmitted.
Receiver: The person to whom message is directed.
Decoding: The process by which the receiver converts the symbols received by the sender
to give meaning to the message.
Feedback: Process of ensuring that the receiver has received the message,
understood and interpreted it in the sense that the sender has meant.
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TOPIC 2: IMPORTANCE AND GROWTH OF COMMUNICATION
Topic objectives:
At the end of this topic you should be able to:
Explain the importance of communication to management
Discuss the factors that have led to the growth of communication in organizations
The importance of communication in organizations, is well recognized, - “it serves as
the lubricant fostering the smooth operations of the management process”. Some of
the important reasons are:
Forms the basis for coordination
Increasingly large and complex organizations with high degree of specialization and
division of labour with large number of employees require effective coordination
which can only be achieved through communication.
Smooth working of the enterprise
Process of communication makes cooperative action of people possible. Without
communication organized activity ceases to exist.
Basis for Decision-making
Communication is the primary requirement for decision-making. In its absence, it
may not be possible to take any meaningful decision, as information must be received
before any decision can be made or implemented.
Increases managerial efficiency
Communication is essential for quick and systematic performance of managerial
functions. Management conveys the goals, targets, instructions, job allocations and
responsibilities, and performance of subordinates through communication.
Promotion of cooperation and industrial peace
High productivity is the aim of management. This can only be achieved when there is
industrial peace in the organizations and mutual cooperation between management
and workers. Downward communication helps management tell workers their
expectations while upward communication helps workers put their grievances,
suggestions or reactions to management.
Establishment of effective leadership
Communication is the basis of direction and leadership. It is a process of influencing
others behaviour. By developing communications skills and using them, managers
become effective leaders.
Morale building and motivation
Communication is the basis of participative and democratic pattern of management.
It improves good human relations in industry. An efficient system of communication
enables management to change attitudes, motivate and build morale – hence
employee satisfaction.
Most of the conflicts in business are not basic, but are caused by misunderstood motives and
ignorance of the facts. Proper and timely communication between the interested parties, reduce
the points of friction and minimize those that are inevitable. Bernard Chester wrote. “The first
executive function is to develop and maintain a system of communication.”
Factors Responsible for Growing Importance of Communication
Growth in size of organizations
Complex and large organizations have several levels in the hierarchy, and many
employees. Direct contact is not possible, hence a communication system to direct all their
activities.
Growth of trade unions
Cooperation between organizations and trade unions is essential for industrial peace. This
can only be achieved through an efficient communication system e.g. collective bargaining
process, negotiations etc.
Technological Developments
Rapid change in technology affects the composition of groups, relationships between
managers and subordinates, and methods of work. The necessary adjustments in the social,
organizational and physical aspects of work can only be possible through communication.
Emphasis of human relations in industry
The growing importance of human relations in industry and the desire of management to
maintain it has necessitated communication. The change of employer relationship from
master-servant to partnership or associates helps in the attitude change process.
The work of research psychologists and sociologists
Their findings and conclusions have increased knowledge of the nature and process of
communication.
Activity: In what ways do you think lack of effective communication can be a
source of conflict between managers and employees?
CHANNELS OF COMMUNICATION
Topic objectives:
At the end of this topic you should be able to:
 State the major channels of communication
 Explain the advantages and disadvantages of the various channels of communication
Communication Channels
The major channels of communication are:
 Words
 Actions
 Pictures
 Numbers
Words.
Words are like a map that purports to represent a certain territory. The map is not the
territory but the representation and so are words. The meaning of a word is easy
when it represents a tangible object e.g. cup or book but more difficult when it refers
to abstract concepts such as management, labour, levels etc. People will assign
different meanings to the same word because they have different frames of reference
due to background, culture, education, experience or associates. Words constitute the
most important symbols in the communication process. They can be oral or written.
The important skills required are: Reading, writing, speaking and listening.
Verbal/Oral Communication
Refers to exchange of ideas between sender and receiver through oral words – face to
face or telephone, radio call e.t.c
In Organizations this can take the form of;
personnel instructions, management conferences, interviews e.t.c.
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Advantages.
Easy to clarify a point.
High degree of potential for speedy exchange of information – timely.
Effective as can be used together with non-verbal communication e.g. gestures, guttural
sounds, tone of voice etc.
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Popular – preferred by managers and supervisors. Gives opportunity to employees to ask
questions and participate in the discussion – boosts morale.
Disadvantages.
Absence of any permanent record of communication.
Not taken seriously by receiver hence objective of communication is not achieved.
Possibility of misquoting or misinterpretation especially where relations may be strained
between superior and subordinate.
Written Communication
When communication is put in written form it becomes written communication. In
organizations, these appear in the form of; - letters, circulars newsletters, reports, budgets, rulers,
orders, regulations, policies, schedules, manual, etc. Includes other symbols such pictures,
graphs, charts etc
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Advantages.
Stored as record for future reference.
Communication effort is minimized by simultaneous communication to various points e.g. a
circular to all employees.
Enables communication between distantly placed parties without much cost.
Orderly and binding on subordinates.
Enable superiors to take suitable actions based on recorded communications.
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Disadvantages.
Time consuming in preparation and understanding (reading and interpreting).
Chance of misunderstanding.
Can be more costly than oral communication.
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Actions
Actions can be used as a non-verbal form of communication e.g. body language,
facial expressions, gestures, tone of voice/pitch of voice, etc. It can also take the
form of physical actions such as location of one’s desk, removal of equipment or
furniture, searching drawers/opening ones cabinet/office, delays etc
A manager is the center of attention to subordinates. All observable acts
communicate something to the observer whether intended or not by the supervisor.
When unexplained actions by management occur, a vacuum of meaning is thereby
created which is filled by the receiver’s own interpretation of the actions. If an action
is not explained, the receiver will supply the missing signal by creating one of his
own.
Pictures
Pictures are powerful means of conveying meaning and understanding to other
people. This is demonstrated by cartoons, films, TV, photographs etc.
Important, accurate and comprehensive reports, have been given little attention
because of the complexities of reading, but the use of charts, graphs, posters etc. can
convey more meaning sometimes than volumes of long, uninterrupted passages of
writing.
A chart or graph has the advantage of depicting many complex relationships in one
picture, contrasts, trends, etc can be seen and grasped more clearly.
Common Pictures in Business are: curves, bar graphs, columns, circles, pie charts,
pictorial, maps, organization charts, ranking and frequency distributions.
Numbers.
It has generally been found that people are impressed by numbers – figures and
statistics. Acceptance and belief – also confidence tend to rise for a report that has
data statistics e.g. percentages, proportions, etc.
Numbers however can be
misleading as they can be manipulated by unscrupulous people. Skillful use of
numbers can be applied to lead or mislead.
Listening
Listening is the process of receiving communication signals. People speak at the rate
of 120-160 words per minute and the discrepancy between the speeds of speaking and
listening and thinking speed is four times faster i.e. 480-640 words per minute.
However, this is an obstacle to effective communication because:
o Leads the listener to only listen marginally/poorly.
o Fast thinking makes people think ahead on what they are going to reply.
o Listening is not passive but active.
Effective listening results in 50% retention immediately after a 10-minute talk,
and 25% decline after 48 hours.
Three types of listening have been identified.
 Marginal
 Evaluation
 Projective
Marginal
A process of giving the listener a small degree of one’s attention. It is dangerous as it
can lead to misunderstanding of the speaker and can be seen as an insult also.
Managers who pretend to listen while their minds are on other things eventually get
into trouble with their subordinates.
What are the likely repercussions of an unattentive manager?
Rebellion and low morale.
Evaluative
Process of attentive listening, involves judging and evaluating the remarks,
disapproving or approving what is being said from our own point of view. This way
we have two ideas, the speakers and the listeners, neither of which is communicated
to the other. The task of understanding what the other is trying to say is not achieved.
Projective
The process of purposely avoiding to criticize, approve or disapprove the speakers
ideas. It is attempting to project oneself into the mind of the speaker and try to
understand their viewpoint without evaluation. As Carl Rogers puts it;
“Each person can speak for himself after restating the ideas and feeling of the
previous speakers accurately and to that speakers satisfaction”. E.g. what I hear you
say is ---------- is that correct. The quality of empathy is essential to good listening.
TOPIC 4: TYPES OF COMMUNICATION
Topic objectives:
At the end of this topic you should be able to:
 State the various types of communication
 Discuss the benefits and weaknesses of grapevine communication
Several types of communication can be identified in a business organization.
According to organizational structure.
Formal communication.
Associated with the formal organizational structure. Information travels through the
officially recognized positions in the organization chart. E.g. orders, instructions,
decisions, rules, procedures, policies etc maybe written or oral.
Informal communication
Also known as the ‘grapevine’. They are free from all sorts of formalities. Based on
friendship, membership of a group/club, or origin of place, e.g. opinions, views,
comments, suggestions, complaints, rumours, whispers, gossip etc may use symbols
such as glance, gestures, nod or silence, anonymous letters etc.
According to direction of communication.
Downward communication
Communications that flow from superiors to subordinates.
Include orders,
instructions, ruled, policy directives etc. They are directive in nature.
Upward communication
Reverse of downward communication, flows form subordinates to superiors.
Includes reaction and suggestions from workers, grievances, and disputes. They
maybe in the form of reports, proposals, memorandums, etc. Upward communication
is now considered to be a main source of motivation.
Horizontal communication
Refers to communication between persons at the same level in the management
hierarchy. Also known as lateral or cross-wise communication e.g. meeting of
general managers, Divisional heads etc. can be oral or written.
According to way of expressions
Oral/verbal communication.
Exchange of ideas/information occurs through face to face conversation or
mechanical media e.g. Telephone, loud speaker, radio call etc conferences, seminars,
workshops, interviews, consultations are other media.
Written communication.
Takes the written form (black & white) includes written words, pictures, graphs,
diagrams, maps, etc. They may take the form of circulars, personal letters, memos,
manuals, reports etc.
Grapevine Communication
The informal channel of communication is also known as the grapevine. It results
from the operation of social forces at the workplace. The term arose during the days
of the American Civil war when intelligence telephone lines were strung loosely from
tree to tree like grapevine plants and the message was usually distorted, hence any
rumour was popularly referred to as the grapevine. Today all types of informal
communication are referred to as the grapevine.
Although the grapevine exists outside the official network, it continuously interacts
with it.
Advantages.
-Operates with much greater speed than the formal communication network.
-Appropriate for some subject matters which do not require the formal channel e.g.
when management wants to sound out the feelings of employees before formalizing a
rule or policy.
-Satisfies the needs of persons who like to mix up with others freely and ‘chat’.
-Can compensate for an inadequate or non-existent formal communication network.
Disadvantages.
-Disorderly and unreliable hence cannot be acted on.
-Difficult to assign responsibility for false information as it is hard to pinpoint the
source.
-Negatively affect productivity as rumours can lower morale and much time is taken
in “rumour mongering”.
Evaluation of Communication Network.
There are several methods for evaluating the effectiveness of communication:
 Attitude surveys.
 Employee relations index – a measure of the smooth flow of
communication.
 Clarity – Fog index and reading ease – measures of readability and
understanding.
 Communication Audit- measures of information known to different
individuals.
 Records – safety, accidents and labour turnover may indicate
understanding of communication by employees.
 Observing practice
Activity: Using examples from an organization of your choice, explain some of the
ways in which the effectiveness of communication can be evaluated?
TOPIC 5: BARRIERS TO COMMUNICATION
Topic objectives:
At the end of this topic you should be able to:
 State the barriers to communication
 Discuss the obstacles to effective management in organizations
Communication does not always give the desired results due to certain barriers or
obstacles. These are classified as follows:
Semantic Barriers
These arise from the linguistic capacity of the parties e.g.
Badly expressed message – lack of clarity and precision, poorly chosen and
empty words, phrases, careless omission, lack of coherence, bad organization of
ideas, bad sentence structure, inadequate vocabulary, jargon, etc.
Faculty Translation – managers often receive communications from superiors
which must be translated into appropriate language suitable for lower levels of
employees e.g. policy decisions etc. If the translation is faulty or inaccurate, it is
misunderstood.
Unclarified assumptions – uncommunicated assumptions are common in most
messages, so others have to “read between the lines”.
Specialists language (jargon) – some groups eg. Legal, insurance or personnel
develop a special, peculiar and technical language of their own. This increases
their isolation thus building a communication barrier.
Emotional/psychological barriers.
The meaning ascribed to a message depends upon the emotional or psychological
status of the parties involved e.g.
Premature Evaluation – the tendency to evaluate (judge) communications
instead of being neutral during the interchange of ideas. Such evaluation
interferes with the transfer of information form the sender.
Inattention – the pre-occupied mind of the receiver and resultant non-listening
is a major chronic psychological barrier. It is the reason why people fail to
respond to notices, circulars, memos etc.
Loss by transmission and retention – when communication passes through
various levels in the organization, successive transmission of the same message
decreases accuracy. In oral communication about 30% of the message is lost.
Poor retention is also common. Employees retain about 50% of information
which superiors retain about 63%.
Undue reliance on the written word – written word cannot substitute for faceto-face relationships. Employees do not accept management’s views through
publications unless level of trust and confidence is very high.
Distrust of Communication – arises out of illogical decisions or frequent
changes of the original communication by the communicator. Repeated
experience of this kind gradually conditions the receiver to delay action or to act
unenthusiastically, hence making communication unsuccessful.
Failure to communicate – managers may fail to transmit needed messages
because of laziness, procrastination, hoarding information to embarrass, or
assuming that everybody knows.
Organizational barriers.
Organizational Policy – general organizational policy regarding communication
acts as an overall guideline to all. However if the policy is not supportive to the
flow of communication in different directions, communication flow would not be
smooth and adequate.
Organizational rules regulations – These affact the flow of communication by
prescribing the subject matter to be communicated, the channel of
communication, restrictions on what and who to communicate, etc. These
specifications may cause delays and work against the willingness of persons to
convey the message.
Status Relationships – the superior – subordinate relationship may block
particularly upward communication. The greater the difference between
hierachical positions, the greater the possibility of communication breakdown.
Organizational facilities/communication infrastructure.
Personal barriers.
Barriers in superior: e.g.
Attitude of superiors – this affects the flow of messages in different directions.
Unfavourable attitude means messages would not flow properly to and from
superiors/subordinates.
Fear of challenge to authority – superiors, when ambitious and want to maintain
their power and authority may withhold information coming down the line or going
up if it will expose their weaknesses.
Insistence on proper channel – in exercise their authority superiors insist on
communication passing through them. However, if by passed they may block other
communication as they see this as thwarting of their authority.
Lack of confidence in subordinates – generally, superiors perceive their
subordinates as less competent and incapable, hence their suggestions, advice etc are
ignored. This works against upward communication.
Ignoring communication – sometimes superiors consciously and deliberately ignore
communication from their subordinates to maintain their importance. This works
against the willingness of subordinates to communicate.
Lack of time – superiors feel whether correct or otherwise that their workload is
heavy and have little time to talk to subordinates.
Lack of awareness – superiors sometimes lack awareness about the significance and
usefulness of communication in different directions in general, hence blocking the
flow of communication.
Barriers in Subordinates: e.g.
Unwillingness to communicate – subordinates may feel that the information may
have adverse effect on their future relations with the superior, or there is no mutual
trust and confidence with superior etc. He would not be willing to communicate.
Lack of incentive
What do you think are some of the actions that a human resource
manager can take to overcome the obstacles to communication in an organization?
LECTURE TEN: GROUP DYNAMICS
10.1 Lecture outline
10.2 Introduction
10.3 Lecture objectives
10.4 Group processes
10.5 Formal and informal groups
10.6 Summary
LESSON 5
CONTROLLING
The controlling function finds out how far actual performance deviates from standards, analyses the
causes of such deviations and attempts to take corrective actions based on the same. This process helps
in formulation of future plans in the light of the problems that were identified and, thus, helps in better
planning in the future periods.
Importance of Controlling
Control is an indispensable function of management. Without control the best of plans can go awry. A
good control system helps an organization in the following ways:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Accomplishing organizational goals: The controlling function measures progress towards
the organizational goals and brings to light the deviations, if any, and indicates corrective
action. It, thus, guides the organization and keeps it on the right track so that organizational
goals might be achieved.
Judging accuracy of standards: A good control system enables management to verify
whether the standards set are accurate and objective. An efficient control system keeps a
careful check on the changes taking place in the organization and in the environment and
helps to review and revise the standards in light of such changes.
Making efficient use of resources: By exercising control, a manager seeks to reduce wastage
and spoilage of resources. Each activity is performed in accordance with predetermined
standards and norms. This ensures that resources are used in the most effective and
efficient manner.
Improving employee motivation: A good control system ensures that employees know well
in advance what they are expected to do and what are the standards of performance on the
basis of which they will be appraised. It, thus, motivates them and helps them to give better
performance.
Ensuring order and discipline: Controlling creates an atmosphere of order and discipline in
the organization. It helps to minimize dishonest behaviour on the part of the employees by
keeping a close check on their activities. The box explains how an import export company
was able to track dishonest employees by using computer monitoring as a part of their
control system.
Facilitating coordination in action: Controlling provides direction to all activities and efforts
for achieving organizational goals. Each department and employee is governed by
predetermined standards which are well coordinated with one another. This ensures that
overall organizational objectives are accomplished.
1
Limitations of Controlling
Although controlling is an important function of management, it suffers from the following
limitations.
(i)
Difficulty in setting quantitative standards: Control system loses some of its
effectiveness when standards cannot be defined in quantitative terms. This makes
measurement of performance and their comparison with standards a difficult task.
Employee morale, job satisfaction and human behaviour are such areas where this
problem might arise.
(ii)
Little control on external factors: Generally an enterprise cannot control external
factors such as government policies, technological changes, competition etc
(iii)
Resistance from employees: Control is often resisted by employees. They see it as a
restriction on their freedom. For instance, employees might object when they are
kept under a strict watch with the help of Closed Circuit Televisions (CCTVs).
(iv)
Costly affair: Control is a costly affair as it involves a lot of expenditure, time and
effort. A small enterprise cannot afford to install an expensive control system. It
cannot justify the expenses involved. Managers must ensure that the costs of
installing and operating a control system should not exceed the benefits derived
from it
Controlling Process
Controlling is a systematic process involving the following steps.
1. Setting performance standards -The first step in the controlling process is setting up of performance
standards. Standards are the criteria against which actual performance would be measured. Thus,
standards serve as benchmarks towards which an organization strives to work.
2. Measurement of actual performance-Once performance standards are set, the next step is
measurement of actual performance. Performance should be measured in an objective and reliable
manner. There are several techniques for measurement of performance. These include personal
observation, sample checking, performance reports, etc. As far as possible, performance should be
measured in the same units in which standards are set as this would make their comparison easier.
3. Comparison of actual performance with standards -This step involves comparison of actual
performance with the standard. Such comparison will reveal the deviation between actual and desired
results. Comparison becomes easier when standards are set in quantitative terms. For instance,
performance of a worker in terms of units produced in a week can be easily measured against the
standard output for the week.
4. Analysing deviations -Some deviation in performance can be expected in all activities. It is, therefore,
important to determine the acceptable range of deviations. Also, deviations in key areas of business
need to be attended more urgently as compared to deviations in certain insignificant areas.
2
5. Taking corrective action
The final step in the controlling process is taking corrective action. No corrective action is required when
the deviations are within acceptable limits. However, when the deviations go beyond the acceptable
range, especially in the important areas, it demands immediate managerial attention so that deviations
do not occur again and standards are accomplished. Corrective action might involve training of
employees if the production target could not be met. Similarly, if an important project is running behind
schedule, corrective action might involve assigning of additional workers and equipment to the project
and permission for overtime work.
3
COORDINATION FUNCTION
Everything you need to know about coordination. Coordination is the force that
binds all the other functions of management.
Coordination is the common thread that runs through all activities such as – purchase,
production, sales, and finance to ensure continuity in the working of the organization.
Sometimes it is considered as a separate function of management.
Coordination is the essence of management or manager ship, for the achievement of
harmony of individual effort towards the accomplish-ment of group goals is the
purpose of management.
It is a process by which the manager achieves harmonious group effort and unity of
action in the pursuit of a common purpose. The manager brings about this process as
he performs the basic managerial functions of planning, organizing, staffing, directing
and controlling.
Coordination – Introduction
Various departments or sections are assigned different tasks to perform. They are
assigned on the basis of their specialization. Employees of each department perform
their duties with a view to achieving common objectives collectively. It is coordination. Co-ordination is the process which ensures smooth interplay of the
functions of management. Common objectives are achieved without much wastage of
time, efforts and money with the help of co-ordination.
A modern enterprise consists of a number of departments. In olden days, the
enterprise was divided into departments such as – purchase, production, sales, finance
and accounts. But, now a days, the enterprise is divided into the following
departments – purchase, production, sales, finance, account, personnel, research and
development, public relations and the like. The classification of departments is very
large at present. So the importance of co-ordination has subsequently increased.
A manager has to perform five interrelated functions in the process of managing an
organization, which is s system made up of different inter linked and interdependent
subsystems. A manager has to link these diverse groups towards the achievement of a
common goal. The process by which a manager synchronizes the activities of
different department is known as coordination.
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Coordination is the force that binds all the other functions of management. It is the
common thread that runs through all activities such as – purchase, production, sales,
and finance to ensure continuity in the working of the organization. Sometimes it is
considered as a separate function of management.
It is however the essence of management for achieving harmony among individual
efforts towards the accomplishment of group goals. Each Managerial function is an
exercise contributing individually to coordination. Coordination is implicit and
inherent in all functions of an organization.
Coordination – Meaning and Definitions Provided by Newman, Henry Fayol,
Ordway Tead, George Terry, Koontz and O’Donnell
Coordination is the essence of management or manager ship, for the achievement of
harmony of individual effort towards the accomplish-ment of group goals is the
purpose of management. It is a process by which the manager achieves harmonious
group effort and unity of action in the pursuit of a common purpose. The manager
brings about this process as he performs the basic managerial functions of planning,
organizing, staffing, directing and controlling.
“In administration”, says Newman, “coordination deals with synchronizing and
unifying the actions of a group of people. A coordinated operation is one in which the
activities of the employees are harmonious, dovetailed, and integrated towards a
common objective.” McFarland defines co-ordination as “the process whereby an
executive develops an orderly pattern of group effort among his subordinates and
secures unit of action in the pursuit of a common purpose.”
A number of authors have defined co-ordination differently. The views of some of
them are given here in order to know its exact nature.
Henry Fayol, “To co-ordinate is to harmonize all the activities of a person in order to
facilitate its working and its success.” Co-ordination is necessary to enable a person to
improve his functions. Without co-ordination, working cannot be harmonized.
Ordway Tead, “Co-ordination is the effort to assure a smooth interplay of the
function and forces of all the different component parts of an organization to the end
that its purposes will be realized with minimum of friction and a maximum of
collaboration effectiveness.” The purpose of co-ordination is to synchronize the
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functions of various departments for achieving organizational goals with minimum
efforts.
George Terry, “Co-ordination deals with the task of blending efforts in order to
ensure successful attainment of an objective. It is accomplished by means of planning,
organizing, actuating and controlling.” The aim of co-ordination is to achieve better
results and this may be done in different ways. Different managerial functions are also
used to attain organizational goals.
Newman, “Co-ordination is a part of all phases of administration and that it is not a
separate and distinct activity.” Administration is possible only when various activities
of the enterprise are properly co-ordinated. In the absence of co-ordination,
administration will not be possible. Administration and co-ordination are one and the
same thing; one is not possible without the other.
Koontz and O’Donnell, “It seems more accurate to regard co-ordination as the
essence of managership for achievement of harmony of individual efforts towards the
accomplishment of group goals is the purpose of management. Each of the
managerial functions is an exercise in co-ordination.” Managerial functions are related
to co-ordination. Without co-ordination, managerial function will not be performed
properly. In fact the undertaking of various functions is itself co-ordination.
The discussion of various definitions of co-ordination leads to the following
inferences:
1. Co-ordination is to harmonize various activities of the enterprise to ensure smooth
working.
2. It is an effort to ensure the objections of the business with minimum friction and
maximum co-ordination among various segments of the business.
3. Co-ordination is an effort to reach business goals by means of planning, organizing,
actuating and controlling various activities.
4. It is not a separate managerial function.
5. The exercise of each managerial function involves co- ordination.
Coordination – Need
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Modern organizations depend upon specialization of functions and activities
delegated to different participating individuals. If each individual is allowed to
perform his own function efficiently without taking note of the connected function
performed by another individual, there will result a chaos in the organization. It is
essential that there be complete coordination, so that unity of action on the part of all
is achieved.
Also, conflict between the line executives and the staff poses the problem of
coordination by the chief executive. Hence, the chief executive has to coordinate not
only functions and activities but also individuals performing different functions. For
example, to ensure harmonious functioning of the organization, it is essential that the
functions of purchasing, designing, production and sales departments are coordinated.
If the sales manager procures a huge order to be executed within a specified period of
time without reference to the production manager or the buyer, it may turn out that
the goods cannot be produced in quantities ordered within the specified time. Or,
even if they can be produced, the suitable raw material may not be available.
Therefore, the inter-relationship between the purchasing department and production
department as well as the sales department demands the establishment of
coordination.
1. Constant changes
2. Poor leadership and
3. Inherent complexity of large scale organization give rise to problems of coordination and controls.
Diversified and specialized activities under the principle of division of labour leading
to an extreme specialization, demand special attention to co-ordination.
Departmentation also leads to co-ordination. Human nature of competition, rivalries
and jealousies in large business organizations create special need for co-ordination.
Large number of employees works in big business organization.
It therefore becomes essential to co-ordinate, that differences in efforts, approaches
or interests are reconciled and individual goals and actions are harmonized so that
they may bring about common objectives. Co-ordination promotes efficiency, unity of
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command, team spirit, subordinates, individual interests of general interests of the
enterprise, boost to good relations and enhancement of employee morale.
Co-ordination avoids duplication of work or efforts, interpersonal conflicts,
controversies, misunderstandings, delay, wastages and confusions. It harmonizes,
unifies and blends all activities and thus, ensures the achievement of predetermined
objectives.
Although for the success of any organization co-ordination must exist between
different departments, groups and activities.
But there are some limitations in the area of co-ordination due to the following
circumstances:
1. Uncertainty of future is the greatest challenge to effective co-ordination. Every
forecast is not cent percent perfect and accurate, due to some natural calamities like
heavy rains, floods, droughts, earth quakes and certain abnormal changes in the
behaviour of individuals and groups in organization. These create obstacles in
successful co-ordination.
2. Incomplete knowledge, consciousness, capability, talent, experience, bad character
of the managers are also the constraints in effective co-ordination.
3. Lack of administrative and managerial skills and technique, on the part of
executives and managers limits the degree of co-ordination in a business organization.
4. Lack of systematic method of developing and adopting new ideas and programmes
act as a constraint in effective co-ordination.
5. A vast number of variables due to the incompleteness of human knowledge limit
the degree of co-ordination.
6. Large number of units with the larger number of people in it who possess varying
skills and personal specialization creates problem in securing co-ordination, because it
is very difficult to co-ordination all of them.
7. Due to Subordination of general interest to individual interest, it is difficult to
achieve co-ordination in the absence of proper motivation. Individual interest of
people become more important and works as a barrier to co-ordination.
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8. If the authorities have not been properly delegated and responsibilities fixed, more
conflicts and confusions may arise which limit the degree of co-ordination.
9. Party politics, desire for self-importance, dual superiors, lack of unity of command,
lack of co-ordination, defective control are some other constraints in effective coordination.
Coordination – Objectives
The main purposes which are sought to be realized through coordination are as
follows:
(a) Reconciliation of Goals:
This can be done by the coordination only. The conflict of goals arises because
everybody perceives the organizational goals differently and tries to achieve them in
his own way. This may lead to confusion and chaos in the organization. Therefore,
coordination is necessary to bring unity of action in the organization.
(b) Total Accomplishment:
Through coordination it is possible to bring about total accomplishment which will be
far in excess of the sum of the individual parts. It has been observed that the total
accomplishment of ten employees of a department whose efforts are properly
coordinated will be far greater than the mathematical sum of their individual
accomplishment. This happens because through coordination, duplication of efforts is
prevented and the time and energy thus saved are better utilized in more creative
tasks.
(c) Economy and Efficiency:
Through coordination, it is possible to bring about economy and efficiency in the
organization. Coordination will avoid duplication of efforts due to which there will be
economy in labour, time and equipment. When the activities are properly integrated,
there will be lest delays which will bring efficiency in the business organization.
(d) Good Personal Relations:
Coordination is achieved through systematic efforts. Good coordination gives job
satisfaction to the employees which keep their morale high. Moreover, there are good
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human relations because the authority-responsibility relationships are clear. The
conflict between line and staff personnel can also be avoided through proper
coordination of their efforts.
(e) Retention of Managerial and Other Personnel:
It has been pointed out that sound coordination has a significant effect on the
development and retention of good personnel in business. If the total organization is
so designed and patterned that each executive and employees derives job satisfaction,
there will be tendency on the part of the executive and employees and employees to
stay with the organization. The absence of this will create suffocating conditions in
which it would be difficult for any person to stay r for long in the organization.
Coordination – Features
i. Co-ordination is not a separate function but the very essence of management. It is
present in all the functions.
ii. Need for co-ordination arises due to inter-dependency of various functional
departments.
iii. Co-ordination is a dynamic process and it is to be exercised all the time to ensure
smooth functioning of departments.
iv. The managers across the level have to consciously exercise co-ordination.
v. It is required in group efforts and not in individual effort. Hence it involves orderly
arrangement of group effort.
vi. The objective of coordination is to facilitate accomplishment of overall objectives.
It works on the fulcrum of unity of purpose.
Coordination – Importance: Views of Henry Fayol, James D. Mooney, Ralph
C. Davis, George R. Terry and Theo Haimann
The basic function of coordination in an enterprise is the same as that of an orchestra
conductor who directs the activities of the orchestra party in such a manner that it
produces harmony in music.
Likewise the coordinator of an enterprise also directs the activities of the group in
such a manner that it brings harmonious and unified actions to achieve common
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purpose. Like the orchestra conductor, a manager also performs the function of
securing and maintaining unity of direction throughout the organization.
Coordination has been viewed by different management experts in different ways.
Henry Fayol considers coordination as a function of Manager. Louis A. Allen also
regards coordination as one of the separate managerial functions. James D. Mooney
considers coordination as the first principle of the organization. Ralph C. Davis looks
upon coordination primarily as a vital phase of controlling.
George R. Terry and Theo Haimann consider coordination as a permeating function
of management passing through the managerial functions of planning, organizing,
staffing, directing and controlling. Thus, Terry and Theo Haimann are not in favour
of regarding coordination as a separate function of management. According to them,
coordination is a part of the managerial functions of planning, organizing, staffing,
directing and controlling. It traverses the entire process of managing. In short, it is the
essence of management.
Coordination – Principles of Coordination according to Mary Parker Follet
Mary Parker Follet has enunciated the following fundamental principles of
coordination:
1. Direct Contact:
Coordination can be achieved by direct contact among the individuals concerned.
Direct personal communications bring about agreement on methods, actions and
ultimate achievement. It also eliminates red-tapism and ensures prompt action.
2. Early Beginning:
Coordination can be achieved more readily in the early stages of planning and policy
making. Therefore direct contact must begin in the very early stages of the process. If
an order for the supply of a particular variety of the goods has been booked and the
raw materials to produce them are not available, there will be trouble. Contact among
the three functional managers at an earlier stage would have made it possible to know
whether the order could be executed.
3. Reciprocity:
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All factors in a situation are reciprocally related and should be coordinated. For
example, when A works with B and B in turn works with C and D, each of the four
finds himself influenced by the others, influenced by all the persons in the total
situation.
4. Continuity:
Coordination is a continuing process, something which must go on all the time. It
cannot be left to chance, but the manager must constantly work at it.
Coordination – Effective Co-Ordination Principles
Co-ordination will be effective, when the following principles are followed:
1. Early Start:
Coordinating activity should commerce from the planning stage itself. Before
finalizing the plan, mutual consultation among he concerned people will facilitate the
smooth implementation of the plan. This will avoid resistance from the workers.
2. Direct Contact:
Co-ordination is easier by direct personal contact among the people concerned. This
avoids misunderstanding or misrepresentation and the tasks are successfully
implemented. This is a self-control technique.
3. Other Principles:
Continuity of activities from the stage of planning through the life span of the
organization, dynamism of leaders and workers to adopt themselves to change in
internal and external environment, flexible operations, simple organizational structure
to rearrange the tasks and activities which are similar or dissimilar, clear-cut objectives
that are to be properly understood by managers and employees as well, defining
clearly the authority and responsibility to minimise conflicts, violations etc., effective
communication system throughout the organization to develop harmonious
relationship amongst workers and effective leadership and supervision are the other
principles of effective co-ordination.
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Effective co-ordination of programmes tasks and functions of various departments of
an organization will be an inbuilt control technique, which takes care of effective
implementation of plans.
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Coordination-Contd
Coordination – The Essence of Management
Co-ordination brings unity of action and integrates different activities. Every
managerial function needs co-ordination and synchronization of various activities.
Co-ordination is necessary for the following reasons:
1. Co-Ordination Needed to Perform all Functions:
Managerial functions are performed in a better way with the help of co-ordination.
(i) Planning needs co-ordination among main plan and sub-plans. The plans of
different departments or sections will be co-ordinated to prepare a plan for the whole
organization.
(ii) While performing organizing function, there is a need to have co-ordination
between authority, responsibility and accountability at different levels.
(iii) Co-ordination in staffing function is needed between nature of job and
qualifications of employees and between nature of work and compensation fixed.
(iv) In directing function, co-ordination is required between superior and subordinate,
between orders, instructions, guidelines, etc.
(v) In controlling function, co-ordination is required between standards set and actual
performance.
2. Co-Ordination Needed at all levels:
(i) At top level co-ordination is needed to synchronise the activities of the
organization for achieving overall goals of the firm.
(ii) At middle level, co-ordination is needed to balance the activities of different
departments for attaining the organizational objectives.
(iii) At lower level of management, the activities of workers and others are coordinated for achieving departmental goals.
3. Co-Ordination is the Most Important Function:
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Co-ordination is the most important function of every organization. The integration
of various functions will be done through co-ordination. In the absence of coordination there will be chaos and mismanagement. There will be a need of coordination for setting the things right. It was with this reason that classical school of
thought considered co-ordination as a separate function. All managerial functions try
to achieve integration of various efforts and co-ordination becomes the essence of
management.
9 Aims of Coordination
Some of the important aims of co-ordination are as follows:
(a) To ensure a smooth interplay of the functions and forces of all the different
component parts of the organization.
(b) Operation of business activities in a systematic sequence.
(c) To complete the various activities of the enterprise as per planned schedule.
(d) To avoid inconsistencies in priorities, objectives and policies which may adversely
affect the realization of overall objectives of the company.
(e) To avoid interruptions in operations due to reasons such as delay in the supply of
materials, tools or vague directions or omissions or wrong allocation of duties etc.
(f) Elimination of overlapping or duplication of work.
(g) To ensure proper synchronization of the activities of the enterprise, i.e., the
actions of different departments are properly scheduled or timed, so that the various
operations and processes are completed in a planned way. For example, if an
engineering concern opens a new branch; its personnel department must be ready
with personnel to run it.
(h) To remove the possible causes of difference of views and conflict of interests
among the personnel of the concern.
(i) To develop team spirit among the staff and to canalize their efforts in the direction
of reaching the chosen goals of business.
Coordination – Process
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Co-ordination cannot be achieved through orders. It is a process which can be
achieved through managerial functions. It is a by-product of good management.
When all the functions are carried out properly then co-ordination will come by itself.
Co-ordination may be achieved through following processes:
Process # 1. Through Planning:
The planning is the elementary stage of achieving co-ordination. When various
functions are properly planned and various policies are integrated then co-ordination
will be easily achieved. If production manager is to plan for his development then it
will be better to consult purchase manager, personnel manager, finance manager, sales
manager also. When production is planned with the consent of other concerned
managers then co-ordination takes place at planning level.
If other managers feel some difficulties then they will explain it and mutually accepted
decisions will resolve the difference. Co-ordination can certainly be achieved at
planning stage. According to Mary Follett, planning stage is the ideal time to bring
about co-ordination and they must see to it that various plans are properly
interrelated.
Process # 2. Through Organization:
Co-ordination is an essential part of organization. Mooney considers co-ordination as
the very essence of organization. When a manager groups and assigns various
activities to subordinates, the thought of coordination will be upper most in his mind,
the related activities are placed together to avoid delays and confusion.
In the process of organization, the authority and responsibility of various persons is
defined and even the relationship among different jobs is also specifically given. The
whole process of organization will lead to effective co-ordination. A well thought-out
organization will ultimately lead to co-ordination.
Process # 3. Through Directing:
When a manager directs his subordinates he will be co-ordinating their work. He will
give them directions, guidelines and instructions for doing a job assigned to them. He
will direct in such a way that the achievement of overall organizational objectives is
ensured. The manager should use a group system to take decisions.
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Everybody should be free to express his option. This will create a sort of moral
binding on the employees to work for the proper implementation of these decisions.
The co-ordination work of the manager will also become easy. So direction of
employees will also lead to co-ordination.
Process # 4. Through Controlling:
The manager is required to control the work of everyone in the organization so that
all efforts are directed towards main goals. There may be instances when performance
of subordinates is not up to the mark or it is not in the direction in which it should
have been. The manager will take corrective measures as and when required.
He will synchronize the work of his subordinates so that the goals are achieved easily.
The controlling function itself will facilitate co-ordination because it will require the
evaluation of performance of subordinates and will enable the manager to make
changes if there are deviations between standards set and results achieved.
Process # 5. Through Staffing:
The staffing function can also help in proper co-ordination. While staffing, the
manager should keep in mind the nature of jobs and the type of persons required for
managing them. He should ensure the right number of executives in various positions
for proper performance of their functions. The executives are of such a quality or are
given such a training that they are able to co-operate and co-ordinate their efforts.
Process # 6. Through Proper Communication:
Effective communication is of utmost importance for achieving better co-ordination.
There should be a regular flow of information among various persons so that they are
given required information for proper co- ordination. The personal contact is the
most effective type of communication. Other methods like reports, procedures,
bulletins, etc., can also be used properly. The development of data processing devices
are of utmost use for facilitating quick communication.
The subordinates must get proper information at the right time for enabling them to
co-ordinate their work. According to Newman, “Since co-ordination is concerned
with the inter-relationships of separate activities, it can be no better than the transfer
of information about those activities to some common point or points, where the
dovetailing takes place.”
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Coordination – Steps for Effective Coordination
Following steps are advocated for overcoming the constraints in co-ordination:
i. There should be proper delegation of authority and responsibility.
ii. An effective communication should be in place.
iii. The entire organizational activities should be properly divided department wise and
section wise.
iv. Management should persuade the employees to actively take pan in committees,
conferences, seminars and the like.
v. Management should provide opportunities for employees across the levels to attend
training in the areas of leadership, team building coordination, etc.
vi. Putting in place a grievance cell.
Coordination – Techniques
The important techniques of coordination are as follows:
1. Clearly Defined Goals – The goals of the organization must be defined clearly. The
objectives of the organization must be understood by the individuals. Well aware
people will be able to contribute in achieving organizational goals.
2. Cooperation – When the individuals of the organization help each other voluntarily,
coordination become easier. This is known as cooperation. Cooperation takes place in
the organization by ensuring harmonious relations among the peoples. The informal
relations speed up the activity of the cooperation. Therefore, this should be promoted
in the organization.
3. Harmonized Policies and Practices – Policies, procedure and rules serve as
guidelines for decision- making in a constant manner. Only the harmonized policies
and procedure are helpful to achieve the goals of the organization.
4. Sound Organizational Structure – Sound organizational structure are also known as
a technique of the coordination. This is due to well defined authorities and
responsibilities. Such organization does not create any problem and almost dispute
free.
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5. Managerial Hierarchy – Managerial Hierarchy in the organization is also responsible
for coordination. At each level superior coordinate the activities and efforts of
subordinates by means of authority.
6. Communication System – A good communication system promotes cooperation
and mutual understandings among individuals and groups. This is helpful in effective
coordination because every aspect regarding organization clear to each and every
employee.
7. Liaison officer – Liaison officers are appointed in the organization to enhance the
coordination between different sections, units and groups. These officers iron out the
barriers of smooth coordination.
Coordination and Managerial Functions
1. Planning:
To the extentrules, regulations, policies, procedures and programmes are clearly laid,
there would be consistency in action. This would help in achieving co-ordination.
2. Organizing:
Where the authority and responsibility of superiors and subordinates is clearly
defined, co-ordination can be achieved. There would not be any misunderstanding
among employees across the cadre.
3. Directing:
When the manager gives clear instructions, motivates the employees, coaches them
and mentors them, there will be greater co-ordination.
4. Staffing:
Where right men are appointed for the right job, co-ordination can be achieved with
ease.
5. Control:
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To the extent deviations from the standard are addressed and the performance is
aligned to the target, there is co-ordination. Thus co-ordination is inherent in all
managerial functions.
Coordination – Steps for Effective Coordination
In order to overcome the above mentioned problems of co-ordination and get
effective co-ordination, the management should follow the following steps –
1. There should be a proper delegation of authority and responsibility at all levels of
management.
2. The whole or entire activities of the organization should be divided departmentwise or section-wise according to the size of the organization.
3. Preparing and adherence to rigid rules and regulations, procedures, policies, etc.
4. Establishment of an effective communication system.
5. Establishment of employees’ grievances cell.
6. There should be a proper system for reporting.
7. Skilled workers are to be rewarded adequately.
8. The management should induce the employees to take active part in meetings,
committees, conferences, seminars and the like.
9. The management should encourage the employees to have friendly relationship
with others.
10. Managers should have opportunities to get training in the area of leadership,
co-ordination, planning, staffing and the like.
Coordination – Attaining Coordination
Coordination is not easy to attain. No order to coordinate can achieve coordination.
Each functional interest in the enterprise stresses its own opinion of how the
purposes should be accomplished. Each of them tends to stress one or another
different policy or method depending upon the experience of the department. Similar
problem arises between functional managers at the same levels. The chief executive or
the manager must secure harmonious action between different elements.
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He must synchronize the efforts of all the members of a group and see to it that there
is willing cooperation of both managers and workers. An organization is people. He
must lead them by goals which they accept as justifiable, worthy, and fair to all
concerned. This means human relations, and good human relations “pay off” through
cooperative coordination. Good human relations, in turn, depend upon understanding
of the goals of the organization. In order that there be understanding among people,
there must be effective means of communication among them.
The method of achieving coordination is largely horizontal, alth-ough vertical
coordination in a large organization cannot be ignored. Vertical coordination takes
place between the various links of the different levels of the organizational unit. For
example, take the case of production department, where we have the works manager,
and under him the superintendent and then the foreman and last the workmen.
In this situation, levels of authority are super-imposed upon each other, and the
activities assigned to the several levels must be coordinated. This vertical coordination
is secured by delegated authority, together with the means and manner of directing,
supervising and controlling.
Horizontal coordination refers to coordination between horizontal departments on
the same level in the managerial hierarchy. For example, coordination is necessary
between the sales manager, the works manager, the finance manager and the buyer, so
that when the sales department is ready to sell the new product, the production
department will be in a position to fill the orders, and the financial arrangements have
been made so that the necessary funds are available to have the suitable raw materials,
etc.
Coordination of various functions between independent managers calls for a greater
understanding between the departmental managers so that they may cooperate.
People cooperate as a result of understanding one another’s tasks. Communication
brings about good understanding. This may be illustrated as follows –
Commun-ication – Understanding – Good human relations – Cooperation –
Coordin-ation.
Problems Encountered in Achieving Co-Ordination
1. Conflict of Objectives:
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Objectives may overlap. For instance, while sales department is concerned with
consumer satisfaction, production department may be concerned with adhering to
production schedules. Line authorities may prefer to cling to conservatism but staff
officers may like to introduce an innovation.
2. The Growing Size:
The growing size of an organization may cause problems as mentioned below:
If the divisions or departments grows beyond a stage, there will be lack of personal
contact among the departmental managers. Co-ordination is difficult to be achieved
under such circumstances.
i. Compartmentalization arising from lack of understanding.
ii. Lack of cooperation on account of jealousy.
iii. Too much centralization or too much decentralization.
3. Undefined Authority:
Vague and undefined authority and bitter subordinate relationships cause confusion
and conflict of authority. Co-ordination becomes difficult to achieve.
4. Empire Building Tendencies:
Taking advantage of the vague and undefined delegation of authority, departmental
managers tend to care only for the interests of their own departments, thus throwing
overboard the interests of the organization. This empire building tendency makes coordination difficult.
5. Resolving Conflict:
To resolve conflicts by domination leaves one party the victor and the other
vanquished. It is not successful in the long run. Conflicts resolved by compromise
(i.e., each side giving up a little) only postpones settlement of the dispute. The real and
lasting solution lies in coordination and integration. It creates synthesis of interests. It
does not involve sacrifice on any party.
6. Independence of Thinking and Action:
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When people in an organization is capable of independent and self-directed action
and if their actions lie in different directions, coordination becomes difficult to
achieve.
7. Lack of Co-Operative Spirits:
Where there is no cooperative spirit among the departments/employees, achieving
co-ordination is a challenge.
8. Individual Differences:
Where the magnitude of individual differences is significant in an organization in
terms of perception, values and beliefs, co-ordination is difficult to achieve.
Coordination Advantages
1. Higher Efficiency and Economy:
By awarding overlapping efforts and depletion of work co-ordination helps to
improve the efficiency of operations. Coordination is a creative force which makes
possible a total result which is greater than the sum of individual achievements. This is
the synergetic effect of co-ordination. This helps to make use of optimum resources.
This is first principle of organization and it expresses the principle in toto. The quality
of co-ordination is the crucial factor in the survival of an organization.
2. Good Human Relations:
Co-ordination not improves the morale and job satisfaction of employees and
improves the efficiency of operations. Composite and orderly effort established
through team spirit and executive leadership enables employees to derive a sense of
security and personal satisfaction from the job. A well co-ordinated organization can
attract, retain and utilize better personnel and improve human relations by reconciling
individual and organizational objectives.
3. Unity of Direction:
In the face of disruptive forces co-ordination helps to ensure unity of action. By
joining different units and sections into one, co-ordination ensures stability and
development of an organization and make executive to see organization as a whole.
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Individual interests are subordinated to the common interest more easily and
effectively.
4. Quintessence of Management:
Co-ordination is an all-inclusive concept. Management is nothing more than coordination of all activities efforts and forces that affect the organization from within
and without. It is a key of all managerial functions. According to Mary Parker Follett,
“the First test of a business administration should be whether you have a business
with all its parts so co-ordinated, so moving together in their closely knit and adjusting
activities, so linking, inter-locking, interrelating, that they make a working unit that is
not a congenic of separate pieces, but a functional whole or integrated unit.”
5. Organizational Effectiveness:
Co-ordination makes employees loyal and committed to enterprise which increases
effectiveness and stability of the enterprise. According to McFarland “if job
satisfaction are present, executives will tend to remain longer with the company. They
will feel that they have a place in the organization. They will feel that have earned that
place. The presence of coordination becomes part of their job experience and hence
can form a very useful part of their training”. Lack of co-ordination results in
inefficiency poor morale and greater wastage of resources.
Coordination Limitations
Co-ordination suffers due to following limitations:
1. Lack of Administrative Capability – Co-ordination has to be achieved at
administrative level. Lack of administrative capability in the top officers and managers
of the enterprise become a problem in establishing co-ordination.
2. Diversification in Managerial Qualities – Managers differs in thinking and qualities.
There is a difference in knowledge, experience, character and wisdom of managers.
They may have conflicting objectives and ideas and co-ordination becomes a problem
in those situations.
3. Uncertainties of future – The uncertainties of future pose a serious challenge to
effective co-ordination. Natural phenomenon like rains, floods, droughts, earth quake
21
and abnormal changes in human behaviour of individuals and groups in the
organization are the examples of uncertain future.
4. Variation in Managerial Functions – Managerial functions are not static and
constant. There are many variations in these functions which may create problems in
the establishment of co-ordination.
5. Lack of Infrastructure Facilities – Co-ordination requires some infrastructure
facilities like effective leadership. If these are not available then co-ordination cannot
be established in the activities of the enterprise.
6. Lack of Proper Development of Ideas – There may be a lack of orderly method of
development of new ideas and programmes. Under such a situation co-ordination
becomes a problem.
22
Principles of Management
Chapter 5: Staffing
Staffing Function of Management
The managerial function of staffing involves manning the organization structure through
proper and effective selection, appraisal and development of the personnel’s to fill the
roles assigned to the employers/workforce.
According to Theo Haimann, “Staffing pertains to recruitment, selection, development
and compensation of subordinates.”
Nature of Staffing Function
1. Staffing is an important managerial function- Staffing function is the most
important managerial act along with planning, organizing, directing and
controlling. The operations of these four functions depend upon the manpower
which is available through staffing function.
2. Staffing is a pervasive activity- As staffing function is carried out by all
mangers and in all types of concerns where business activities are carried out.
3. Staffing is a continuous activity- This is because staffing function continues
throughout the life of an organization due to the transfers and promotions that
take place.
4. The basis of staffing function is efficient management of personnel’sHuman resources can be efficiently managed by a system or proper
procedure, that is, recruitment, selection, placement, training and
development, providing remuneration, etc.
5. Staffing helps in placing right men at the right job. It can be done
effectively through proper recruitment procedures and then finally selecting
the most suitable candidate as per the job requirements.
6. Staffing is performed by all managers depending upon the nature of
business, size of the company, qualifications and skills of managers, etc. In
small companies, the top management generally performs this function. In
medium and small scale enterprise, it is performed especially by the personnel
department of that concern.
Staffing Process - Steps involved in Staffing
1. Manpower requirements- The very first step in staffing is to plan the manpower
inventory required by a concern in order to match them with the job requirements
and demands. Therefore, it involves forecasting and determining the future
manpower needs of the concern.
2. Recruitment- Once the requirements are notified, the concern invites and solicits
applications according to the invitations made to the desirable candidates.
3. Selection- This is the screening step of staffing in which the solicited applications
are screened out and suitable candidates are appointed as per the requirements.
4. Orientation and Placement- Once screening takes place, the appointed
candidates are made familiar to the work units and work environment through the
orientation programs. Placement takes place by putting right man on the right job.
5. Training and Development- Training is a part of incentives given to the workers
in order to develop and grow them within the concern. Training is generally given
according to the nature of activities and scope of expansion in it. Along with it,
the workers are developed by providing them extra benefits of in-depth
knowledge of their functional areas. Development also includes giving them key
and important jobs as a test or examination in order to analyze their performances.
6. Remuneration- It is a kind of compensation provided monetarily to the
employees for their work performances. This is given according to the nature of
job- skilled or unskilled, physical or mental, etc. Remuneration forms an
important monetary incentive for the employees.
7. Performance Evaluation- In order to keep a track or record of the behavior,
attitudes as well as opinions of the workers towards their jobs. For this regular
assessment is done to evaluate and supervise different work units in a concern. It
is basically concerning to know the development cycle and growth patterns of the
employees in a concern.
8. Promotion and transfer- Promotion is said to be a non- monetary incentive in
which the worker is shifted from a higher job demanding bigger responsibilities as
well as shifting the workers and transferring them to different work units and
branches of the same organization.
Manpower Planning
Manpower Planning which is also called as Human Resource Planning consists of putting
right number of people, right kind of people at the right place, right time, doing the right
things for which they are suited for the achievement of goals of the organization. Human
Resource Planning has got an important place in the arena of industrialization. Human
Resource Planning has to be a systems approach and is carried out in a set procedure. The
procedure is as follows:
1.
2.
3.
4.
Analyzing the current manpower inventory
Making future manpower forecasts
Developing employment programs
Design training programs
Steps in Manpower Planning
1. Analyzing the current manpower inventory- Before a manager makes forecast
of future manpower, the current manpower status has to be analyzed. For this the
following things have to be noted Type of organization
 Number of departments
 Number and quantity of such departments
 Employees in these work units
Once these factors are registered by a manager, he goes for the future forecasting.
2. Making future manpower forecasts- Once the factors affecting the future
manpower forecasts are known, planning can be done for the future manpower
requirements in several work units.
The Manpower forecasting techniques commonly employed by the organizations
are as follows:
a. Expert Forecasts: This includes informal decisions, formal expert
surveys and Delphi technique.
b. Trend Analysis: Manpower needs can be projected through extrapolation
(projecting past trends), indexation (using base year as basis), and
statistical analysis (central tendency measure).
c. Work Load Analysis: It is dependent upon the nature of work load in a
department, in a branch or in a division.
d. Work Force Analysis: Whenever production and time period has to be
analyzed, due allowances have to be made for getting net manpower
requirements.
e. Other methods: Several Mathematical models, with the aid of computers
are used to forecast manpower needs, like budget and planning analysis,
regression, new venture analysis.
3. Developing employment programs- Once the current inventory is compared
with future forecasts, the employment programs can be framed and developed
accordingly, which will include recruitment, selection procedures and placement
plans.
4. Design training programs- These will be based upon extent of diversification,
expansion plans, development programs, etc. Training programs depend upon the
extent of improvement in technology and advancement to take place. It is also
done to improve upon the skills, capabilities, knowledge of the workers.
Importance of Manpower Planning
1. Key to managerial functions- The four managerial functions, i.e., planning,
organizing, directing and controlling are based upon the manpower. Human
resources help in the implementation of all these managerial activities. Therefore,
staffing becomes a key to all managerial functions.
2. Efficient utilization- Efficient management of personnel’s becomes an important
function in the industrialization world of today. Setting of large scale enterprises
requires management of large scale manpower. It can be effectively done through
staffing function.
3. Motivation- Staffing function not only includes putting right men on right job,
but it also comprises of motivational programs, i.e., incentive plans to be framed
for further participation and employment of employees in a concern. Therefore,
all types of incentive plans become an integral part of staffing function.
4. Better human relations- A concern can stabilize itself if human relations
develop and are strong. Human relations become strong trough effective control,
clear communication, effective supervision and leadership in a concern. Staffing
function also looks after training and development of the work force which leads
to co-operation and better human relations.
5. Higher productivity- Productivity level increases when resources are utilized in
best possible manner. Higher productivity is a result of minimum wastage of time,
money, efforts and energies. This is possible through the staffing and it's related
activities ( Performance appraisal, training and development, remuneration)
Need of Manpower Planning
Manpower Planning is a two-phased process because manpower planning not only
analyses the current human resources but also makes manpower forecasts and thereby
draw employment programs. Manpower Planning is advantageous to firm in following
manner:
1. Shortages and surpluses can be identified so that quick action can be taken
wherever required.
2. All the recruitment and selection programs are based on manpower planning.
3. It also helps to reduce the labor cost as excess staff can be identified and thereby
overstaffing can be avoided.
4. It also helps to identify the available talents in a concern and accordingly training
programs can be chalked out to develop those talents.
5. It helps in growth and diversification of business. Through manpower planning,
human resources can be readily available and they can be utilized in best manner.
6. It helps the organization to realize the importance of manpower management
which ultimately helps in the stability of a concern.
Obstacles in Manpower Planning
Following are the main obstacles that organizations face in the process of manpower
planning:
1. Under Utilization of Manpower: The biggest obstacle in case of manpower
planning is the fact that the industries in general are not making optimum use of
their manpower and once manpower planning begins, it encounters heavy odds in
stepping up the utilization.
2. Degree of Absenteeism: Absenteeism is quite high and has been increasing since
last few years.
3. Lack of Education and Skilled Labor: The extent of illiteracy and the slow pace
of development of the skilled categories account for low productivity in
employees. Low productivity has implications for manpower planning.
4. Manpower Control and Review:
a. Any increase in manpower is considered at the top level of management
b. On the basis of manpower plans, personnel budgets are prepared. These
act as control mechanisms to keep the manpower under certain broadly
defined limits.
c. The productivity of any organization is usually calculated using the
formula:
Productivity = Output / Input
. But a rough index of employee productivity is calculated as follows:
Employee Productivity = Total Production / Total no. of employees
d. Exit Interviews, the rate of turnover and rate of absenteeism are source of
vital information on the satisfaction level of manpower. For conservation
of Human Resources and better utilization of men studying this condition,
manpower control would have to take into account the data to make
meaningful analysis.
e. Extent of Overtime: The amount of overtime paid may be due to real
shortage of men, ineffective management or improper utilization of
manpower. Manpower control would require a careful study of overtime
statistics.
Few Organizations do not have sufficient records and information on manpower. Several
of those who have them do not have a proper retrieval system. There are complications in
resolving the issues in design, definition and creation of computerized personnel
information system for effective manpower planning and utilization. Even the existing
technologies in this respect are not optimally used. This is a strategic disadvantage.
Types of Recruitment
Recruitment is of 2 types
1. Internal Recruitment - is a recruitment which takes place within the concern or
organization. Internal sources of recruitment are readily available to an organization.
Internal sources are primarily three - Transfers, promotions and Re-employment of
ex-employees. Re-employment of ex-employees is one of the internal sources of
recruitment in which employees can be invited and appointed to fill vacancies in the
concern. There are situations when ex-employees provide unsolicited applications
also.
Internal recruitment may lead to increase in employee’s productivity as their motivation
level increases. It also saves time, money and efforts. But a drawback of internal
recruitment is that it refrains the organization from new blood. Also, not all the
manpower requirements can be met through internal recruitment. Hiring from outside has
to be done.
a. Transfers
b. Promotions (through Internal Job Postings) and
c. Re-employment of ex-employees - Re-employment of ex-employees is one of
the internal sources of recruitment in which employees can be invited and
appointed to fill vacancies in the concern. There are situations when exemployees provide unsolicited applications also.
2. External Recruitment - External sources of recruitment have to be solicited from
outside the organization. External sources are external to a concern. But it involves
lot of time and money. The external sources of recruitment include - Employment at
factory gate, advertisements, employment exchanges, employment agencies,
educational institutes, labor contractors, recommendations etc.
a. Employment at Factory Level - This a source of external recruitment in
which the applications for vacancies are presented on bulletin boards
outside the Factory or at the Gate. This kind of recruitment is applicable
generally where factory workers are to be appointed. There are people
who keep on soliciting jobs from one place to another. These applicants
are called as unsolicited applicants. These types of workers apply on their
own for their job. For this kind of recruitment workers have a tendency to
shift from one factory to another and therefore they are called as “badli”
workers.
b. Advertisement - It is an external source which has got an important place
in recruitment procedure. The biggest advantage of advertisement is that it
covers a wide area of market and scattered applicants can get information
from advertisements. Medium used is Newspapers and Television.
c. Employment Exchanges - There are certain Employment exchanges
which are run by government. Most of the government undertakings and
concerns employ people through such exchanges. Now-a-days recruitment
in government agencies has become compulsory through employment
exchange.
d. Employment Agencies - There are certain professional organizations
which look towards recruitment and employment of people, i.e. these
private agencies run by private individuals supply required manpower to
needy concerns.
e. Educational Institutions - There are certain professional Institutions
which serve as an external source for recruiting fresh graduates from these
institutes. This kind of recruitment done through such educational
institutions is called as Campus Recruitment. They have special
recruitment cells which help in providing jobs to fresh candidates.
f. Recommendations - There are certain people who have experience in a
particular area. They enjoy goodwill and a stand in the company. There
are certain vacancies which are filled by recommendations of such people.
The biggest drawback of this source is that the company has to rely totally
on such people which can later on prove to be inefficient.
g. Labor Contractors - These are the specialist people who supply
manpower to the Factory or Manufacturing plants. Through these
contractors, workers are appointed on contract basis, i.e. for a particular
time period. Under conditions when these contractors leave the
organization, such people who are appointed have to also leave the
concern.
Employee Selection Process
Employee Selection is the process of putting right men on right job. It is a procedure of
matching organizational requirements with the skills and qualifications of people.
Effective selection can be done only when there is effective matching. By selecting best
candidate for the required job, the organization will get quality performance of
employees. Moreover, organization will face less of absenteeism and employee turnover
problems. By selecting right candidate for the required job, organization will also save
time and money. Proper screening of candidates takes place during selection procedure.
All the potential candidates who apply for the given job are tested.
But selection must be differentiated from recruitment, though these are two phases of
employment process. Recruitment is considered to be a positive process as it motivates
more of candidates to apply for the job. It creates a pool of applicants. It is just sourcing
of data. While selection is a negative process as the inappropriate candidates are rejected
here. Recruitment precedes selection in staffing process. Selection involves choosing the
best candidate with best abilities, skills and knowledge for the required job.
The Employee selection Process takes place in following order1. Preliminary Interviews- It is used to eliminate those candidates who do not meet
the minimum eligibility criteria laid down by the organization. The skills,
academic and family background, competencies and interests of the candidate are
examined during preliminary interview. Preliminary interviews are less
formalized and planned than the final interviews. The candidates are given a brief
up about the company and the job profile; and it is also examined how much the
candidate knows about the company. Preliminary interviews are also called
screening interviews.
2. Application blanks- The candidates who clear the preliminary interview are
required to fill application blank. It contains data record of the candidates such as
details about age, qualifications, reason for leaving previous job, experience, etc.
3. Written Tests- Various written tests conducted during selection procedure are
aptitude test, intelligence test, reasoning test, personality test, etc. These tests are
used to objectively assess the potential candidate. They should not be biased.
4. Employment Interviews- It is a one to one interaction between the interviewer
and the potential candidate. It is used to find whether the candidate is best suited
for the required job or not. But such interviews consume time and money both.
Moreover the competencies of the candidate cannot be judged. Such interviews
may be biased at times. Such interviews should be conducted properly. No
distractions should be there in room. There should be an honest communication
between candidate and interviewer.
5. Medical examination- Medical tests are conducted to ensure physical fitness of
the potential employee. It will decrease chances of employee absenteeism.
6. Appointment Letter- A reference check is made about the candidate selected and
then finally he is appointed by giving a formal appointment letter.
Difference between Recruitment and Selection
Basis
Recruitment
Selection
Meaning
It is an activity of establishing
contact between employers and
applicants.
It is a process of picking up
more competent and suitable
employees.
Objective
It encourages large number of
Candidates for a job.
It attempts at rejecting
unsuitable candidates.
Process
It is a simple process.
It is a complicated process.
Hurdles
The candidates have not to
cross over many hurdles.
Many hurdles have to be
crossed.
Approach
It is a positive approach.
It is a negative approach.
Sequence
It precedes selection.
It follows recruitment.
Economy
It is an economical method.
It is an expensive method.
Time
Consuming
Less time is required.
More time is required.
Orientation and Placement
Once the candidates are selected for the required job, they have to be fitted as per the
qualifications. Placement is said to be the process of fitting the selected person at the
right job or place, i.e. fitting square pegs in square holes and round pegs in round holes.
Once he is fitted into the job, he is given the activities he has to perform and also told
about his duties. The freshly appointed candidates are then given orientation in order to
familiarize and introduce the company to him. Generally the information given during the
orientation program includes Employee’s layout
 Type of organizational structure
 Departmental goals
 Organizational layout
 General rules and regulations
 Standing Orders
 Grievance system or procedure
In short, during Orientation employees are made aware about the mission and vision of
the organization, the nature of operation of the organization, policies and programs of the
organization.
The main aim of conducting Orientation is to build up confidence, morale and trust of the
employee in the new organization, so that he becomes a productive and an efficient
employee of the organization and contributes to the organizational success.
The nature of Orientation program varies with the organizational size, i.e., smaller the
organization the more informal is the Orientation and larger the organization more
formalized is the Orientation program.
Proper Placement of employees will lower the chances of employee’s absenteeism. The
employees will be more satisfied and contended with their work.
Training of Employees - Need and Importance of Training
Training of employees takes place after orientation takes place. Training is the process of
enhancing the skills, capabilities and knowledge of employees for doing a particular job.
Training process moulds the thinking of employees and leads to quality performance of
employees. It is continuous and never ending in nature.
Importance of Training
Training is crucial for organizational development and success. It is fruitful to both
employers and employees of an organization. An employee will become more efficient
and productive if he is trained well.
Training is given on four basic grounds:
1. New candidates who join an organization are given training. This training
familiarizes them with the organizational mission, vision, rules and regulations
and the working conditions.
2. The existing employees are trained to refresh and enhance their knowledge.
3. If any update and amendments take place in technology, training is given to cope
up with those changes. For instance, purchasing new equipment, changes in
technique of production, computer impartment. The employees are trained about
use of new equipments and work methods.
4. When promotion and career growth becomes important. Training is given so that
employees are prepared to share the responsibilities of the higher level job.
The benefits of training can be summed up as:
1. Improves morale of employees- Training helps the employee to get job security
and job satisfaction. The more satisfied the employee is and the greater is his
morale, the more he will contribute to organizational success and the lesser will
be employee absenteeism and turnover.
2. Less supervision- A well trained employee will be well acquainted with the job
and will need less of supervision. Thus, there will be less wastage of time and
efforts.
3. Fewer accidents- Errors are likely to occur if the employees lack knowledge and
skills required for doing a particular job. The more trained an employee is, the
less are the chances of committing accidents in job and the more proficient the
employee becomes.
4. Chances of promotion- Employees acquire skills and efficiency during training.
They become more eligible for promotion. They become an asset for the
organization.
5. Increased productivity- Training improves efficiency and productivity of
employees. Well trained employees show both quantity and quality performance.
There is less wastage of time, money and resources if employees are properly
trained.
Ways/Methods of Training
Training is generally imparted in two ways:
1. On the job training- On the job training methods are those which are given to
the employees within the everyday working of a concern. It is a simple and costeffective training method. The in proficient as well as semi- proficient employees
can be well trained by using such training method. The employees are trained in
actual working scenario. The motto of such training is “learning by doing.”
Instances of such on-job training methods are job-rotation, coaching, temporary
promotions, etc.
2. Off the job training- Off the job training methods are those in which training is
provided away from the actual working condition. It is generally used in case of
new employees. Instances of off the job training methods are workshops,
seminars, conferences, etc. Such method is costly and is effective if and only if
large number of employees have to be trained within a short time period. Off the
job training is also called as vestibule training, i.e., the employees are trained in a
separate area (may be a hall, entrance, reception area, etc. known as a vestibule)
where the actual working conditions are duplicated.
Employee Remuneration
Employee Remuneration refers to the reward or compensation given to the employees for
their work performances. Remuneration provides basic attraction to a employee to
perform job efficiently and effectively. Remuneration leads to employee motivation.
Salaries constitute an important source of income for employees and determine their
standard of living. Salaries affect the employee’s productivity and work performance.
Thus the amount and method of remuneration are very important for both management
and employees.
There are mainly two types of Employee Remuneration
1. Time Rate Method
2. Piece Rate Method
These methods of employee remuneration are explained below in detail
Methods of Employee Remuneration
1. Time Rate Method: Under time rate system, remuneration is directly linked with
the time spent or devoted by an employee on the job. The employees are paid a
fixed pre-decided amount hourly, daily, weekly or monthly irrespective of their
output. It is a very simple method of remuneration. It leads to minimum wastage
of resources and lesser chances of accidents. Time Rate method leads to quality
output and this method is very beneficial to new employees as they can learn their
work without any reduction in their salaries. This method encourages employees
unity as employees of a particular group/cadre get equal salaries.
There are some drawbacks of Time Rate Method, such as, it leads to tight
supervision, indefinite employee cost, lesser efficiency of employees as there is
no distinction made between efficient and inefficient employees, and lesser
morale of employees.
Time rate system is more suitable where the work is non-repetitive in nature and
emphasis is more on quality output rather than quantity output.
2. Piece Rate Method: It is a method of compensation in which remuneration is
paid on the basis of units or pieces produced by an employee. In this system
emphasis is more on quantity output rather than quality output. Under this system
the determination of employee cost per unit is not difficult because salaries differ
with output. There is less supervision required under this method and hence the
per unit cost of production is low. This system improves the morale of the
employees as the salaries are directly related with their work efforts. There is
greater work-efficiency in this method.
There are some drawbacks of this method, such as; it is not easily computable,
leads to deterioration in work quality, wastage of resources, lesser unity of
employees, higher cost of production and insecurity among the employees.
Piece rate system is more suitable where the nature of work is repetitive and
quantity is emphasized more than quality.