Management Function and Behaviour
Management is the attainment of organizational goals in an effective and efficient manner through planning,
organizing, leading, and controlling organizational resources. There are two important ideas in this definition:
The attainment of organizational goals in an efficient and effective manner; and
The four functions of planning, organizing, leading, and controlling.
Some theorists also list staffing, communicating, or decision-making as functions of management, but this text
covers these functions as subsets of the four primary functions listed above.
Planning is the management function concerned with defining goals for future organizational performance and
deciding on the tasks and resources needed to attain them. It defines where the organization wants to be in the
future and how to get there.
Organizing is the management function concerned with assigning tasks, grouping tasks into departments, and
allocating resources to departments. Organizing follows planning and reflects how the organization tries to
accomplish the plan.
Leading is the management function that involves the use of influence to motivate
employees to achieve the
organization’s goals. It involves motivating entire departments and divisions as well as those individuals working
immediately with the manager.
Controlling is the management function concerned with monitoring employees’ activities, keeping the organization
on track toward its goals, and making corrections as needed. Trends toward employment and trust of employees
have led many companies to place less emphasis on top-down control and more emphasis on training employees to
monitor and correct themselves.
NATURE OF MANAGEMENT
Management is a distinct activity having the following salient features or characteristics
1. Social Process: Management is concerned with interpersonal relations. It is done by the people, through people,
with people and for people. It is the development of people not the direction of things.
2. Distinct Process: Management is a distinct process consisting of functions such as planning, organizing, staffing,
directing and controlling. These functions are so interwoven that it is not possible to lay down exactly the sequence
of various functions or their relative significance. In essence, the process of management involves decision-making
and putting of decisions into practice.
3. Continuous Process: Management is a never ending process. It will remain the part of organization till the
organization itself exists. Management is an unending process as past decisions always carry their impact for the
future course of action.
4. Intangible Force: Management has been called art unseen force, Its presence is evidenced by the result of its
efforts—orderliness, informed employees, buoyant spirit and adequate work output. Thus, feeling of management is
result-oriented. One may not see with the naked eyes the functioning of management but its results are apparently
known. People often remark of the effectiveness (or ineffectiveness) of management on the basis of the end results,
although they can’t observe it during operation.
5. Goal Oriented: Management is a purposeful activity. It coordinates the efforts of workers to achieve the goals of
the organization. The success of management is measured by the extent to which the organizational goals are
achieved. It is imperative that the organizational goals must be well- defined and properly understood by the
managers at various levels.
6. Integrative Force: The essence of management is integration of human and other resources to achieve the
desired objectives. All these resources are made available to those who manage. Managers apply knowledge,
experience and management principles for getting the results from the workers by the use of non-human resources.
Managers also seek to harmonize the individuals’ goals with the organizational goals for the smooth working of the
organization.
7. Economic Resource: Management is one of the factors of production together with land, labour and capital. It is
the most critical input in the success of any organized group activity. It is the force which assembles and integrates
other resources, namely, labour, capital and materials. These factors do not by themselves ensure production; they
require the catalyst of management to produce goods and services required by the society. Thus, management is an
essential ingredient of an organization.
8. Situational: There is no best way of doing things. A successful manager must take into account situational
differences and act accordingly to achieve best results.
9. System of Authority: Management as a team of managers represents a system of authority, a hierarchy of
command and control. Managers at different levels possess varying degrees of authority. Generally, as we move
down in the managerial hierarchy, the degree of authority gets gradually reduced. Authority enables the managers to
perform their functions effectively.
10. Multidisciplinary subject: Management has grown as a field of study (ie. discipline) taking the help of so many
other disciplines such as Engineering, Anthropology, Sociology and Psychology. Much of the management literature
is the result of the association of these disciplines. For instance, productivity orientation drew its inspiration from
Industrial Engineering and human relations orientation from Psychology. Similarly, Sociology and Operation
Research have also contributed to the development of management science.
11. Executive Function: It deals with active direction and control of the activities of people to attain predetermined
activities.
12. Both Science and Art: Management has an organized body of knowledge consisting of well-defined concepts,
principles and techniques which have wide applications. So it is treated as a science. The application of these
concepts, principles and techniques requires specialized knowledge and skills on the part of the manager. Since the
skills acquired by a manager are his personal possession, management is viewed as an art.
13. Universal in Nature: Management is universal in character. The principles and techniques of management are
equally applicable in the fields of business, education, military, government and hospital. Henri Fayol suggested that
principles of management would apply more or less in every situation. The principles are working guidelines which
are flexible and capable of adaptation to every organization where the efforts of human beings are to be coordinated.
The style of management may differ from one organization to other, but in each case it involves the marshalling of
human and physical resources for the attainment of common objectives.
CONCEPTS OF MANAGEMENT
1. An Art of getting things done: Management gets things done through others by performing managerial functions
and also satisfying their needs. The managers cannot do everything themselves. They must have the necessary
ability and skills to get work accomplished through the efforts of others. They must motivate the subordinates for the
accomplishment of the tasks assigned to them.
2 As a Process. Managing involves a series of interrelated functions of planning, organising, staffing and controlling
to achieve stated objectives through the utilization of human resources, capital, technology, materials, etc.
3. As a Discipline. Management has emerged as a field of study or a specialized branch of knowledge which is
taught in various business schools, institutes and universities. It comprises concepts, theories, principles, skills and
problem tackling techniques.
4. As a Group. The term ‘management’ is widely used to identify the group of managers who run the organization.
Management is a vital part of group activity. As no individual can satisfy all his needs himself, he unites with his coworkers and work together as an organized group to achieve what he cannot achieve individually.
5. As a Science and an Art: Management has an organized body of knowledge consisting of well-defined concepts,
principles and techniques which have wide applications. So it is treated as a science. The application of these
concepts, principles and techniques requires specialized knowledge and skills on the part of the manager. Since the
skills acquired by a manager are his personal possession, management is viewed as an art.
6. Management as an Emerging Profession: Over a few decades factors such as growing size of business unit,
growing competition have led to an increased demand for professionally qualified managers.
A profession is an occupation backed by specialized body of knowledge, formal education and training, having an
ethical code of conduct for self regulation and recognition by a national body and society.
As management covers all the above dimensions, it is widely accepted as a profession.
MANAGERIAL SKILLS
A. Conceptual Skills
1.
Conceptual skill is the cognitive ability to see the organization as a whole and the relationships among
its parts. It involves the manager’s thinking, information processing, and planning abilities, and means
the ability to think strategically—to take the broad, long-term view.
2.
Conceptual skill is especially important for top managers.
B. Human Skills
1.
Human skill is the manager’s ability to work with and through other people and to work effectively as
a group member. It is demonstrated in the way a manager motivates, facilitates, coordinates, leads,
communicates, and resolves conflicts. As globalization, workforce diversity, uncertainty, and societal
turbulence increase, human skills become even more crucial.
2.
Human skill is important for managers at all levels, and particularly those who work with employees
directly on a daily basis.
C. Technical Skills
1.
Technical skill is the understanding of and proficiency in the performance of specific tasks. This
includes mastery of the methods, techniques, and equipment involved in specific functions such as
engineering, manufacturing, or finance. Technical skill also includes specialized knowledge,
analytical ability, and competent use of tools and techniques to solve problems in that specific
discipline.
2.
Technical skill is most important at lower organizational levels and become less important than human
and conceptual skills as managers are promoted.
D. When Skills Fail
1.
During turbulent times, managers must use all their skills and competencies to benefit the organization
and its stakeholders.
2.
Many companies falter because managers fail to listen to customers, misinterpret signals from the
market, or can’t build a cohesive team and execute a strategic plan.
3.
Perhaps the biggest blunder is the managers’ failure to comprehend and adapt to the rapid pace of
change in the world around them. A related problem is top managers who create a climate of fear so
that people are afraid to tell the truth; bad news gets hidden and market signals are missed.
4.
Other management missteps include poor communication and failure to listen, treating people as
instruments, suppressing dissent, and the inability to build a management team characterized by mutual
trust and respect.
MANAGERIAL PLANNING AND GOAL SETTING
A goal is defined as a desired future state that the organization attempts to realize. Goals are important because they
define the purpose of an organization. A plan is a blueprint for goal achievement and specifies the necessary
resource allocations, schedules, tasks, and other actions. Goals specify future ends; plans specify today’s means.
The word planning usually incorporates both ideas; it means determining the organization’s goals and defining the
means for achieving them.
Top managers are responsible for establishing strategic goals and plans that reflect a commitment to both
organizational efficiency and effectiveness. Tactical goals and plans are the responsibility of middle managers.
Operational plans identify the specific procedures or processes needed at lower levels of the organization. Frontline managers and supervisors develop operational plans that focus on specific tasks and processes and that help to
meet tactical and strategic goals. Planning at each level supports the other levels.
PURPOSES OF GOALS AND PLANS
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Planning involves selecting missions and objectives and the actions to achieve them; it requires decision
making, that is, choosing from among alternative future courses of action.
Planning is an exercise that determines in advance:
a. The ends (What is to be done or achieved?)
b. The means (How it is to be done?)
c. The timing (When to do what?)
d. The responsibility (Who should do what?)
e. The reason (Why it should be done?)
Planning positively affects a company’s performance. Developing explicit goals and plans at each level is important
because of the messages they send to both external and internal audiences and because of the organizational benefits
they provide.
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Legitimacy. An organization’s mission describes what the organization stands for and its reason for existence.
It symbolizes legitimacy to external and internal audiences such as investors, customers, and suppliers.
Source of motivation and commitment. Goals and plans facilitate employees’ identification with the
organization and help motivate them by reducing uncertainty and clarifying what they should accomplish.
Resource allocation. Goals help managers decide where to allocate resources, such as employees, money, and
equipment.
Guides to action. Goals and plans provide a sense of direction by focusing attention on specific targets and
directing employee efforts toward important outcomes.
Rationale for decisions. Through goal setting and planning, managers learn what the organization is trying to
accomplish and they can then make decisions that align with the plan.
Standard of performance. Because goals define desired outcomes for the organization, they also serve as
performance criteria.
CHARACTERISTICS / NATURE OF PLANNING

Planning is goal oriented – It is a process to determine the vision, mission, goals and objectives of a
business. It prepares plans to help individuals, groups and organizations achieve the agreed upon goals or
performance objectives.
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Planning is an intellectual or Rational process – Planning by nature is an intellectual process. It involves
creative thinking and imagination, foresight, evaluation, sound judgement and decision making about
different activities that are required to be performed to create a desired future state.
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Planning is a primary function – I t is the first fundamental function of management and is performed for
almost every activity or function including organizing, staffing, directing and controlling at every level of
the organization. Therefore, planning is also called the foundation of management.
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Planning is All-pervasive - It is the function of every managerial personnel. The character, nature and scope
of planning may change fro personnel to personnel but the planning as an action remains intact. According
to Billy E. Goetz, "Plans cannot make an enterprise successful. Action is required, the enterprise must
operate managerial planning seeks to achieve a consistent, coordinated structure of operations focused on
desired trends. Without plans, action must become merely activity producing nothing but chaos."
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Planning is future oriented and involves forecasting – Planning is an anticipatory decision making process
that determines a future course of action on the basis of certain estimates. The essence of planning is
forecasting so as to prepare and equip the manager for the future.
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Planning is a perpetual process - Planning is a continuous process and a never ending activity of a manager
in an enterprise based upon some assumptions which may or may not come true in the future. Therefore,
the manager has to go on modifying revising and adjusting plans in the light of changing circumstances.
According to George R. Terry, "Planning is a continuous process and there is no end to it. It involves
continuous collection, evaluation and selection of data, and scientific investigation and analysis of the
possible alternative courses of action and the selection of the best alternative.
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Planning and control are inseparable – They are inseparable because happening of one affects the other and
they act as a pre-condition for one another. If the controlling function is executed on the basis of planning,
then the outcome of controlling helps an organization or an individual to undertake effective planning.
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Planning involves choice – Planning is done to select the future course of action from among various
alternatives. It involves decision making because it is a process to determine and analyse various
alternatives and choose the best possible alternatives under the given circumstances for generating optimum
performance.
ROLE AND SIGNIFICANCE OF PLANNING

Focuses attention on Objectives - It is a basic characteristic of planning that it is related to the
organizational objectives. All the operations are planned to achieve the organizational objectives. Planning
facilitates the achievement of objectives by focusing attention on them. It requires the clear definition of
objectives so that most appropriate alternative courses of action are chosen.

Offsets Uncertainty and Risk - Future is always full of uncertainties. A business organisation has to
function in these uncertainties. It can operate successfully if it is able to predict the uncertainties. Some of
the uncertainties can be predicted by undertaking systematic forecasting. Thus, planning helps in foreseeing
uncertainties which may be caused by changes in technology, fashion and taste of people, government rules
and regulations, etc.
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Provides Sense of Direction – Planning sets the direction for the entire organization as well as for the
important functions of management.
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Better Decision making – A systematically undertaken planning can improve the quality of decision
making because it takes into account all factors, and helps in focusing on the critical ones. Planning ensures
that a manger is aware of priorities with respect of the actions to be performed.
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Increases Organizational Effectiveness - Planning ensures organizational effectiveness. Effectiveness
ensures that the organization is in a position to achieve its objective due to increased efficiency of the
organization.
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Provides efficiency in Operations – Planning helps in making the judicious use of available resources
through their efficient utilization. Effective results can be produced with the least cost with the help of
proper planning. It determines the means that would help in optimum realization of the goals and objectives
of the organization.
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Ensures Better Coordination - Good plans unify the interdepartmental activity and clearly lay down the area
of freedom in the development of various sub-plans. Various departments work in accordance with the
overall plans of the organisation. Thus, there is harmony in the organization, and duplication of efforts and
conflict of jurisdiction are avoided.
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Facilitates Control – Planning helps in developing appropriate control mechanisms with respect to
standards, acceptable quality levels, timelines, cost control, reporting, etc. In the absence of planning,
controlling action may not be possible. Control mechanisms help in proper implementation of a plan to
achieve desired goals.
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Encourages Innovation and Creativity - Planning helps innovative and creative thinking among the
managers because many new ideas come to the mind of a manager when he is planning. It creates a
forward-looking attitude among the managers.
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Facilitates Delegation - A good plan always facilitates delegation of authority in a better way to
subordinates.
TYPES OF PLANS
 Plans based on Organizational Level
Strategic Plans – These plans apply to the entire organization. They seek to position the organization I terms of
its environment. Strategic plans tend to cover a longer time frame and impact a broader aspect of the organization.
These plans establish the vision, mission, goals and objectives of the organization.
Tactical Plans – It indicates the actions that major departments and sub-units of the organization should take to
achieve the short-term goals that contribute to the implementation of strategic plans. These plans are more
concerned with actually getting things done than with deciding what to do. Tactical plans cover a shorter time frame
usually (1-2 years).
Operational Plans – They specify the detailed steps necessary for achieving the goals established by tactical
plans. They serve as a guide to the department manager’s day-to-day operations. Operational plans tend to cover
short time periods (monthly, weekly and day-to-day operations) tasks, events and activities. These plans are also
referred to as standing plans.
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Plans based on Frequency of Use
Single-use plans
Programmes – Programmes are large scale single use plans that coordinate a complex set of activities to
achieve important non-recurring goals. They clearly spell out goals, policies, procedures, rules, task assignments,
steps to be taken and resource to be employed to carry out a given course of action.
Budgets – A budget is a statement of expected results and corresponding investments or expenditure
expressed in numerical terms for given period of time in the future. It may be developed in financial terms or manhours or machine-hours or units/batches/lots per hour/day.
Projects – A project is similar to a programme, but it is smaller in scale and less complex. A project may be
a component of a programme, or it may be a self-contained single-use plan. It helps in the precise allocation of
duties and effective control and easy implementation of a plan. Projects represent various activities that are assigned
to individuals or cross-functional teams for elimination of problems, improvement of productivity, etc.
Standing Plans
Policies – They are general statements that provide guidelines for thinking and decision-making in an
organization for recurring situations. Policies are not as stringent as rules. They provide managers some control or
discretion within a specified boundary to facilitate effective decision-making. Policies permit initiatives by
managers who can apply their minds in accordance with the situation. They help managers in deciding day-to-day
issues without having to analyze the same situation every time it comes up for their consideration. They permit
managers to delegate authority and still maintain a broad control over what their subordinates do. Policies are
usually classified along functional lines, like marketing policy, HR policy, etc.
Procedures – Procedures are more specific plans that establish a sequence of steps or operations which must
be followed for carrying out a regularly occurring activity. For example, the induction procedure or the procedure
for filing of a complaint, etc. Procedures offer very less discretion to the concerned manager in its application. If
policies are guide to thinking, then procedures are guide to action. They detail the exact manner in which certain
activities must be accomplished. For example, McDonalds has established detailed procedures with respect to the
entire process from taking an order to finally deliver it to the customer to obtain the desired efficiency.
Rules – Rules constitute an established guide for conduct in a given situation. They allow no discretion.
They include definite of what should be done and what needs to be avoided in a given situation. For example, rules
about coming late to the work or absenteeism clearly guide the supervisor about the disciplinary action he has to
take without any discretion or deviation. ‘No smoking’ is a rule that allows no deviation from a stated course of
action. The difference between a policy and a rule is that policies allow discretion in decision-making where as rules
allow no discretion.
 Plans based on Time frame
Long term plans – They are formulated for the activities that are to be covered for over five years. As
organizational environments have become more uncertain and are changing at an accelerating pace, the plans of 1-3
years are also referred to as long-term plans by some organizations.
Intermediate term plans – These plans are developed generally for a time period ranging from three to five
years.
Short term plans - These plans are meant for guiding day-to-day operations. These plans are generally made for
goals to be achieved within a year or less.
STEPS IN THE PLANNING PROCESS
Analyzing Opportunities – This step forms the basis of planning and usually paves the way for actual planning.
Sometimes, it is not a part of the planning process. The management continuously looks for the opportunities that
can be exploited by the organization. These opportunities may be external to an organization or internal to it, but
they give an indication regarding what needs to be done.
Establishing Objectives - Plans are the means to achieve certain ends or objective. Setting objectives is the most
crucial part of planning. The organizational objectives should be set in key areas of operations.
They should be verifiable i.e., they should as far as possible be specified in clear and measurable terms. The
objectives are set in the light of the opportunities perceived by managers. Establishment of goals is influenced by the
values and beliefs of executives, mission of the organization, organizational resources, etc.
Objectives provide the guidelines (what to do) for the preparation of strategic and procedural plans. One cannot
make plans unless one knows what is to be accomplished. Objectives constitute the mission of an organization. They
set the pattern of future course of action.
The objectives must be clear, specific and informative. Major objectives should be broken into departmental,
sectional and individual objectives. In order to set realistic objectives, planners must be fully aware of the
opportunities and problems that the enterprise is likely to face.
Determining Planning Premises - Before plans are prepared, the assumptions and conditions underlying them must
be clearly defined, these assumptions are called planning premises and they can be identified through accurate
forecasting of likely future events.
They are forecast data of a factual nature. Assessment of environment helps to reveal opportunities and constraints.
Analysis of internal (controllable) and external (uncontrollable) forces is essential for sound planning premises and
are the critical factors which lay down the bounder for planning.
They are vital to the success of planning as they supply pertinent facts about future. They need revision with
changes in the situation. Contingent plans may be prepared for alternate situations.
Identifying Alternatives – This step involves the exploration for alternative ways to achieve the desired objectives.
Ideally, a good number of alternatives should be generated so that the best alternative could be selected through
proper analysis, documentation and quantification of alternatives.
Evaluating Available Alternatives – To select the best possible alternative, all the available alternatives are
evaluated. The evaluation involves weighing the appropriateness of each alternative by analyzing its advantages,
disadvantages, expected results and benefits in accordance with the planning premise and pre-defined goals and
objectives. The common factors taken into consideration while evaluating different alternatives are: risk, capital
requirement, compatibility with long-range objectives, etc.
Selecting the most Appropriate Alternative – After analysis, the manager has to select the best alternative from
various available options. In some situations, managers do not make much effort to select the best alternative, rather
they settle for an alternative that helps them optimize their effort and investment in making a choice. This is usually
done because the paucity of time and limited resources prevent them from carrying out in-depth research and
analysis of all the possible alternatives.
Implementing the Plan – Once the plan has been selected and its necessary details worked out, the manager has to go
all out to implement it. At this stage, there is a need to communicate in clear words the desired objectives of the plan
and why they are important for the organization and to the employees. Any vague communication can mislead the
employees and the results can be negative. Once everybody understands what is expected of them, there is need for
monitoring the execution of the plan so that corrections can be applied, if necessary. The manager may have to
understand and overcome the resistance that might surface at the time of implementation.
Reviewing the Plan – The last step related with planning is to determine whether the work is being executed in the
desired manner or not. The plan has to be regularly reviewed during and after its implementation. A review helps
managers to measure results, evaluate the plan, identify deviations from the established course of action and take
corrective measure, if necessary, by identifying and removing obstacles, solving problems and making changes in
those aspects of the plan that are not giving expected results. The review helps manager to update the plan in the
light of changes in the business environment.
GOALS IN ORGANIZATIONS
Organizational Mission
1. At the top of the goal hierarchy is the mission—the organization’s reason for existence—that describes the
organization’s values, aspirations, and reason for being. The formal mission statement is a broadly stated
definition of purpose that distinguishes the organization from others of a similar type. The content often
focuses on the market and customers and identifies desired fields of endeavor. Some mission statements
describe company characteristics such as corporate values, product quality, location of facilities, and attitude
toward employees.
Goals and Plans
1. Strategic goals are broad statements describing where the organization wants to be in the future. They pertain
to the entire organization rather than to specific divisions or departments. Strategic plans define the action
steps by which the company intends to attain strategic goals. A strategic plan is a blueprint that defines
organizational activities and resource allocations. Strategic planning tends to be long-term.
2. Tactical goals are the results that major divisions and departments within the organization intend to achieve.
Tactical goals apply to middle management and describe what major subunits must do in order for the
organization to achieve strategic goals. Tactical plans define what major departments and organizational
subunits will do to implement the organization’s strategic plan. They tend to be for a shorter time period.
3. Operational goals are the specific results expected from departments, work groups, and individuals.
Operational plans are developed at the lower levels of the organization to specify action plans toward
achieving operational goals and to support tactical plans.
PLANNING TYPES
A. Management by Objectives
1. Management by objectives (MBO) is a method whereby managers and employees define objectives
for every department, project, and person and use them to monitor subsequent performance. Four
major activities must occur in order for MBO to be successful.
a. Setting goals. Setting goals is the most difficult step in MBO and should involve employees at all
levels. A good goal should be concrete and realistic, provide a specific target and time frame, and
assign responsibility. Mutual agreement between employee and supervisor creates the strongest
commitment to achieving goals.
b. Developing action plans. An action plan defines the course of action needed to achieve the stated
goals. Action plans are made for both individuals and departments.
c. Reviewing progress. A periodic progress review is important to ensure action plans are working.
This review allows managers and employees to see if they are on target and if corrective action is
necessary.
d. Appraising overall performance. The final step in MBO is to evaluate whether annual goals have
been achieved for both individuals and departments. Success or failure to achieve goals can be
part of the performance appraisal system and the designation of salary increases and other
rewards.
2. The benefits of the MBO process can be many. Corporate goals are more likely to be achieved when
they focus on manager and employee efforts. Problems with MBO occur when the company faces
rapid change. The environment and internal activities must have some stability for performance to be
measured against goals.
MANAGEMENT BY OBJECTIVES
Management by Objectives (MBO) is a process of defining objectives within an organization so that management
and employees agree to the objectives and understand what they need to do in the organization.
The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of
Management'.
The essence of MBO is participative goal setting, choosing course of actions and decision making. An important
part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards
set. Ideally, when employees themselves have been involved with the goal setting and choosing the course of action
to be followed by them, they are more likely to fulfill their responsibilities.
MBO is a comprehensive managerial system that integrates many key managerial activities in a systematic manner
and that is consciously directed towards the effective and efficient achievement of organizational objectives.
Unique features and advantages of the MBO process
The basic principle behind Management by Objectives (MBO) is for employees to have a clear understanding of the
roles and responsibilities expected of them. They can then understand how their activities relate to the achievement
of the organization's goal. MBO also places importance on fulfilling the personal goals of each employee.
Some of the important features and advantages of MBO are:
1.
2.
3.
4.
5.
Motivation – Involving employees in the whole process of goal setting and increasing employee
empowerment. This increases employee job satisfaction and commitment.
Better communication and Coordination – Frequent reviews and interactions between superiors and
subordinates helps to maintain harmonious relationships within the organization and also to solve many
problems.
Clarity of goals
Subordinates tend to have a higher commitment to objectives they set for themselves than those imposed on
them by another person.
Managers can ensure that objectives of the subordinates are linked to the organization's objectives.
ORGANIZING
•
The process of identifying and grouping the work to be performed, defining and delegating responsibility
and authority and establishing relationships for the purpose of enabling people to work most effectively in
order to accomplish objectives.
TYPES OF ORGANIZATION
•
Formal Organization – The formal organization represents the official organizational structure that is
conceived and established by the top management. It can be represented in the form of an organizational
chart, which displays the organizational structure, job titles, lines of authority and relationships between
department and positions.
•
Informal Organization – The informal organization represents the unofficial network of individuals that
includes social interactions among its employees, which may be unrelated to the firm’s formal authority
structure. It depicts the personal and social relationships that arise spontaneously as people associate with
one another in the work environment.
SPAN OF MANAGEMENT OR SPAN OF CONTROL
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Narrow Span of Control – The narrow span of control involves a hierarchical organizational structure
wherein a small number of subordinates report to a single manager. Thus, it leads to a taller organization
structure with many hierarchical levels.
•
Wide Span of Control – It involves a relatively flat organizational structure with fewer hierarchical levels
and a good number of subordinates reporting to a single manager.
FACTORS DETERMINING SPAN OF CONTROL
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Competence of supervisor and subordinate – The organization can adopt the wide span if the competencies
of the employees are relatively higher. If the employees are not so competent, the organization would have
to implement the narrow span.
•
Degree of interaction between supervisor and subordinate – If the nature of the task is such that frequent
interaction is required between the superior and the subordinates, the organization would have to go for the
narrow span. If little interaction is required between them, the wide span of control can be implemented.
•
Hierarchical level of manager – Lower level managers can have relatively wider span as they have to
manage similar activities whereas the span for top level managers might not be that wide as they have to
manage very diverse activities.
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Nature of activities to be supervised – Wider span is appropriate if the activities to be performed are
similar, and narrow span is more suitable when heterogeneous activities are to be performed by the
subordinates.
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Incidence of new problems in the unit – The narrow span is more effective if there is a higher probability of
new problems occurring during the execution of a task. On the contrary, when the number of problems is
likely to be less, the wider span can be instituted.
•
Degree of standardization – When detailed plans, well-established policies and standardized procedures are
available at the workplace, the organization can go for the wide span. On the other hand, if there is a great
degree of variability and modification, the narrow span has to be developed.
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Physical distribution of the employees – The wider span is possible if the subordinates are present at a
single location. If they are geographically dispersed, then the organization should use the narrow span of
control.
•
Stability or complexity of work – If the nature of tasks to be performed is simple and stable, the
organization can have the wide span of control. If there is a higher degree of complexity or instability, then
it has to implement the narrow span of control.
AUTHORITY
•
•
It is the legitimate right of the person to exercise influence, make decisions, carry out actions and to direct
others.
Authority is the relationship between two individuals- the superior and the subordinate
TYPES OF AUTHORITY
•
Line Authority – It is the direct supervisory authority which flows as a chain of command from the superior
to the subordinates throughout the entire organization as an unbroken line of reporting relationships. It
defines the formal decision-making structure of an organization. It helps employees know to whom they are
accountable and to whom they should report to and go to for a solution in case of a problem.
•
Staff Authority – It is an authority that is based on expertise. It is usually exercised by advising line
managers in making decisions (what to do and how to do) by providing them technical assistance or advice.
This authority is restricted to advice and influence. Staff functionaries are advisers who aid line managers
but do not have the authority to make final decisions themselves.
•
Team Authority – This form of authority is granted to committees, task forces or teams involved in special
projects or the organization’s daily operations. These teams are generally empowered to plan and organize
their own work and to perform that work with a minimum of supervision.
CENTRALIZATION
•
I t is the process by which the decision making authority within an organization becomes concentrated in a
particular location or group, usually at the top management level.
DECENTRALIZATION
•
•
I t is the managerial approach of dispersion of authority throughout the organization to enable the managers
at all levels play assigned roles optimally.
One objective of decentralization is to empower the lower levels of management where the work is actually
performed so that they can take quick decisions to serve the customers effectively.
CHARACTERISTICS OF DECENTRALIZATION
•
•
•
The top executives delegate some of their decision-making authority to the lower tiers of the organizational
structure.
There is an increased bottom-to-top flow of ideas and communication for participatory decision making.
Decentralization breaks the prevailing frustrating bureaucratic ways of doing things by involving a crosssection of employees in deciding the relevant course of action for the organization.
RESPONSIBILITY
Responsibility is the obligation to accomplish the goals related to the position and the organization. Managers, at no
matter what level of the organization, typically have the same basic responsibilities when it comes to managing the
work force: Direct employees toward objectives, oversee the work effort of employees, deal with immediate
problems, and report on the progress of work to their superiors. Managers' primary responsibilities are to examine
tasks, problems, or opportunities in relationship to the company's short-and long-range goals. They must be quick to
identify areas of potential problems, continually search for solutions, and be alert to new opportunities and ways to
take advantage of the best ones. How effectively goals and objectives are accomplished depends on how well the
company goals are broken down into jobs and assignments and how well these are identified and communicated
throughout the organization.
Differences between Authority and Responsibility
Authority
It is the legal right of a person or a
Responsibility
It is the obligation of subordinate to perform the
superior to command his
subordinates.
work assigned to him.
Authority is attached to the
position of a superior in concern.
Responsibility arises out of superior-subordinate
relationship in which subordinate agrees to carry out
duty given to him.
Authority can be delegated by a
superior to a subordinate
Responsibility cannot be shifted and is absolute
It flows from top to bottom.
It flows from bottom to top.
DELEGATION
•
“The delegation of authority is the delivery by one individual to another of the right to act, to make
decisions and to perform other tasks inorder to fulfill job responsibilities”.
• It involves assigning of responsibility with corresponding formal authority by a superior to his/her
subordinates to get a particular task accomplished through them.
Elements of Delegation
1.
Authority - in context of a business organization, authority can be defined as the power and right of a
person to use and allocate the resources efficiently, to take decisions and to give orders so as to achieve the
organizational objectives. Authority must be well- defined. All people who have the authority should know
what is the scope of their authority is and they shouldn’t misutilize it. Authority is the right to give
commands, orders and get the things done. The top level management has greatest authority. Authority
always flows from top to bottom. It explains how a superior gets work done from his subordinate by clearly
explaining what is expected of him and how he should go about it. Authority should be accompanied with
an equal amount of responsibility. Delegating the authority to someone else doesn’t imply escaping from
accountability. Accountability still rest with the person having the utmost authority.
2.
Responsibility - is the duty of the person to complete the task assigned to him. A person who is given the
responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for which he was
held responsible are not completed, then he should not give explanations or excuses. Responsibility without
adequate authority leads to discontent and dissatisfaction among the person. Responsibility flows from
bottom to top. The middle level and lower level management holds more responsibility. The person held
responsible for a job is answerable for it. If he performs the tasks assigned as expected, he is bound for
praises. While if he doesn’t accomplish tasks assigned as expected, then also he is answerable for that.
Accountability - means giving explanations for any variance in the actual performance from the
expectations set. Accountability can not be delegated. For example, if ’A’ is given a task with sufficient
authority, and ’A’ delegates this task to B and asks him to ensure that task is done well, responsibility rest
with ’B’, but accountability still rest with ’A’. The top level management is most accountable. Being
accountable means being innovative as the person will think beyond his scope of job. Accountability, in
short, means being answerable for the end result. Accountability can’t be escaped. It arises from
responsibility.
3.
For achieving delegation, a manager has to work in a system and has to perform following steps : 1.
2.
3.
Assignment of tasks and duties
Granting of authority
Creating responsibility and accountability
Delegation of authority is the base of superior-subordinate relationship, it involves following steps:-
1.
2.
3.
Assignment of Duties - The delegator first tries to define the task and duties to the subordinate. He also
has to define the result expected from the subordinates. Clarity of duty as well as result expected has to be
the first step in delegation.
Granting of authority - Subdivision of authority takes place when a superior divides and shares his
authority with the subordinate. It is for this reason, every subordinate should be given enough independence
to carry the task given to him by his superiors. The managers at all levels delegate authority and power
which is attached to their job positions. The subdivision of powers is very important to get effective results.
Creating Responsibility and Accountability - The delegation process does not end once powers are
granted to the subordinates. They at the same time have to be obligatory towards the duties assigned to
them. Responsibility is said to be the factor or obligation of an individual to carry out his duties in best of
his ability as per the directions of superior. Responsibility is very important. Therefore, it is that which
gives effectiveness to authority. At the same time, responsibility is absolute and cannot be shifted.
Accountability, on the others hand, is the obligation of the individual to carry out his duties as per the
standards of performance. Therefore, it is said that authority is delegated, responsibility is created and
accountability is imposed. Accountability arises out of responsibility and responsibility arises out of
authority. Therefore, it becomes important that with every authority position an equal and opposite
responsibility should be attached.
Therefore every manager,i.e.,the delegator has to follow a system to finish up the delegation process. Equally
important is the delegatee’s role which means his responsibility and accountability is attached with the authority
over to here.
DELEGATION PROCESS
•
•
•
•
•
•
•
•
Identifying the task to be delegated
Determining the results expected as an outcome of delegation
Selecting right individuals to whom the task is to be delegated
Assigning specific duties/tasks to an individual or a team
Granting appropriate authority to the individual or the team for accomplishing the assigned tasks/duties
Creating an obligation or responsibility to perform the assigned duties/tasks
Monitoring the performance of the task and provision of feedback
Evaluation of the final outcome of delegation
TYPES OF ORGANIZATION STRUCTURE

Line - This is the kind of structure has a very specific line of command. The approvals and orders in this
kind of structure come from top to bottom in a line. Hence the name line structure. This kind of structure is
suitable for smaller organizations like small accounting firms and law offices. This is the sort of structure
allows for easy decision-making, and is also very informal in nature. They have fewer departments, which
makes the entire organization a very decentralized one.

Line & Staff – Though line structure is suitable for most organizations, especially small ones, it is not
effective for larger companies. This is where the line and staff organizational structure comes into play.
Line and structure combines the line structure where information and approvals come from top to bottom,
with staff departments for support and specialization. Line and staff organizational structures are more
centralized. Managers of line and staff have authority over their subordinates, but staff managers have no
authority over line managers and their subordinates. The decision-making process becomes slower in this
type of organizational structure because of the layers and guidelines that are typical to it, and lets not forget
the formality involved.
•
Functional – The functional organization structure, prevalent in traditional organizations, group related
occupational specialties or processes under different specializations, such as finance, marketing, accounts,
research, etc. This structure, based on occupational specialization, leads to efficiency and economy, but the
organization risks losing sight of its overall interests and objectives as different departments focus on their
own goal and objectives.
•
Divisional – In divisional organization design, the corporate house or group is divided into different
divisions that are relatively autonomous and operate as self-contained strategic business units (SBUs). For
example, General Motors’ autonomous divisional included Chevrolet, Pontiac, Buick, Cadillac and Saturn.
•
Matrix – The matrix organization structure is developed by superimposing a project structure upon the
functional structure. It utilizes both the functional as well as divisional chains of command simultaneously
in the same part of the organization. This structure assigns specialists from different functional departments
to work together on one or more projects as a cross-functional team that is led by a project manager.
•
Network - Another modern structure is network. While business giants risk becoming too clumsy to proact
(such as), act and react efficiently the new network organizations contract out any business function that
can be done better or more cheaply. In essence, managers in network structures spend most of their time
coordinating and controlling external relations, usually by electronic means.
MANAGERIAL DECISION MAKING
A decision is a choice made from available alternatives. Decision making is the process of identifying problems
and opportunities and then resolving them. Decision making involves effort both before and after the actual choice.
A. Programmed and Non-programmed Decisions
1. Programmed decisions involve situations that have occurred often enough to enable decision rules to
be developed and applied in the future. Once managers formulate decision rules, subordinates and
others can make decisions freeing managers for other tasks.
2. Nonprogrammed decisions are made in response to situations that are unique, poorly defined, largely
unstructured, and likely to have important consequences for the organization. Nonprogrammed
decisions often involve strategic planning because uncertainty is great and decisions are complex.
B. Certainty, Risk, Uncertainty, and Ambiguity
1. One difference between programmed and nonprogrammed decisions relates to the degree of certainty
or uncertainty that managers have in making the decision. In a perfect world, managers have all the
information necessary for making decisions. In reality, some things are unknowable and some
decisions will fail. Every decision situation can be organized on a scale according to the availability of
information and the possibility of failure. The four positions on the scale are certainty, risk,
uncertainty, and ambiguity.
a. Certainty means that all the information the decision maker needs is fully available. Few
decisions are certain in the real world. Most contain risk or uncertainty.
b. Risk means a decision has clear-cut objectives and good information available. The future
outcomes associated with each alternative are subject to chance; however, enough information is
available to allow the probability of a successful outcome for each alternative to be estimated.
c. Uncertainty means managers know which goals they wish to achieve, but information about
alternatives and future outcomes is incomplete. Factors that may affect a decision, such as price,
production costs, volume, or future interest rates, are difficult to analyze and predict. Managers
may have to come up with creative approaches to alternatives and use personal judgment to
determine which alternative is best. Many decisions made under uncertainty do not produce the
desired results, but managers face uncertainty every day.
d. Ambiguity means that the goals to be achieved or the problem to be solved is unclear, alternatives
are difficult to define, and information about outcomes is unavailable. Ambiguity has been called
a wicked decision problem, with conflicts over goals and decision alternatives, changing
circumstances, fuzzy information, and unclear linkages among decision elements. Some managers
come up with a “solution” only to realize that they hadn’t clearly defined the real problem.
Ambiguity is by far the most difficult decision situation.
A. Recognition of Decision Requirement
1. Managers confront a decision requirement in the form of either a problem or an opportunity. A
problem occurs when organizational accomplishment is less than established goals. Some aspect of
performance is unsatisfactory. An opportunity exists when managers see potential accomplishments
that exceed current goals.
2. Awareness of a problem or opportunity is the first step in the decision sequence and requires
surveillance of the internal and external environment for issues that merit executive attention.
Recognizing decision requirements is difficult because it often means integrating information in novel
ways.
B. Diagnosis and Analysis of Causes
1. Diagnosis is the step in which managers analyze the underlying causal factors associated with the
decision situation. Managers make a big mistake if they jump right into generating alternatives
without first exploring the cause of the problem more deeply. Studies recommend that a series of
questions be asked.
a. What is causing this situation?
b. When did it occur?
c. Where did it occur?
d. How did it occur?
e. To whom did it occur?
f. What is the urgency of the situation?
g. What is the interconnectedness of events?
h. What result came from which activity?
C. Development of Alternatives
1. Once the problem or opportunity has been recognized and analyzed, decision makers begin to consider
taking action. The next step is to develop possible alternative solutions that will respond to the needs
of the situation and correct the underlying causes.
2. For a programmed decision, feasible alternatives are often available within the organization’s rules and
procedures. Nonprogrammed decisions require developing new courses of action that will meet the
needs of the company.
D. Selection of Desired Alternative
1. The best alternative is one in which the solution best fits the firm’s overall goals and values and
achieves the desired results using the fewest resources. The manager tries to select the choice with the
least amount of risk and uncertainty. Making choices also depends on managers’ personality factors
and willingness to accept risk and uncertainty. Risk propensity is the willingness to undertake risk
with the opportunity of gaining an increased payoff.
E. Implementation of Chosen Alternative
1. The implementation of a chosen alternative involves the use of managerial, administrative, and
persuasive abilities to ensure that the chosen alternative is carried out. The success of the chosen
alternative depends on whether or not it is translated into action. Sometimes an alternative never
becomes reality because managers lack resources or energy needed to make things happen.
Communication and leadership skills must be used to see that the decision is carried out.
F. Evaluation and Feedback
1. In the evaluation step, decision makers gather information or feedback to determine how well the
decision was implemented and whether it achieved its goals. Feedback is important because decision
making is a continuous, never-ending process. Feedback provides decision makers with information
that can start a new decision cycle.
2. By learning from decision mistakes, managers can turn problems into opportunities.
CONTROLLING
Controlling establishes standards of performance and compares the actual results with the planned results to
determine whether organizational activities are progressing according to plan.
1.
2.
3.
4.
5.
Controlling is an end function- A function which comes once the performances are made in confirmities
with plans.
Controlling is a pervasive function- which means it is performed by managers at all levels and in all type
of concerns.
Controlling is forward looking- because effective control is not possible without past being controlled.
Controlling always look to future so that follow-up can be made whenever required.
Controlling is a dynamic process- since controlling requires taking reviewal methods, changes have to be
made wherever possible.
Controlling is related with planning- Planning and Controlling are two inseperable functions of
management. Without planning, controlling is a meaningless exercise and without controlling, planning is
useless. Planning presupposes controlling and controlling succeeds planning.
Controlling as a management function involves following steps:
1.
Establishment of standards- Standards are the plans or the targets which have to be achieved in the course
of business function. They can also be called as the criterions for judging the performance. Standards
generally are classified into twoa. Measurable or tangible - Those standards which can be measured and expressed are called as
measurable standards. They can be in form of cost, output, expenditure, time, profit, etc.
b. Non-measurable or intangible- There are standards which cannot be measured monetarily. For
example- performance of a manager, deviation of workers, their attitudes towards a concern.
These are called as intangible standards.
Controlling becomes easy through establishment of these standards because controlling is exercised on the
basis of these standards.
2.
Measurement of performance- The second major step in controlling is to measure the performance.
Finding out deviations becomes easy through measuring the actual performance. Performance levels are
sometimes easy to measure and sometimes difficult. Measurement of tangible standards is easy as it can be
expressed in units, cost, money terms, etc. Quantitative measurement becomes difficult when performance
of manager has to be measured. Performance of a manager cannot be measured in quantities. It can be
measured only bya. Attitude of the workers,
b. Their morale to work,
c. The development in the attitudes regarding the physical environment, and
d. Their communication with the superiors.
It is also sometimes done through various reports like weekly, monthly, quarterly, yearly reports.
3.
Comparison of actual and standard performance- Comparison of actual performance with the planned
targets is very important. Deviation can be defined as the gap between actual performance and the planned
targets. The manager has to find out two things here- extent of deviation and cause of deviation. Extent of
deviation means that the manager has to find out whether the deviation is positive or negative or whether
the actual performance is in conformity with the planned performance. The managers have to exercise
control by exception. He has to find out those deviations which are critical and important for business.
Minor deviations have to be ignored. Major deviations like replacement of machinery, appointment of
workers, quality of raw material, rate of profits, etc. should be looked upon consciously. Therefore it is
said, “ If a manager controls everything, he ends up controlling nothing.” For example, if stationery charges
increase by a minor 5 to 10%, it can be called as a minor deviation. On the other hand, if monthly
production decreases continuously, it is called as major deviation.
Once the deviation is identified, a manager has to think about various cause which has led to deviation. The
causes can bea.
b.
c.
d.
4.
a.
b.
Erroneous planning,
Co-ordination loosens,
Implementation of plans is defective, and
Supervision and communication is ineffective, etc.
Taking remedial actions- Once the causes and extent of deviations are known, the manager has to detect those
errors and take remedial measures for it. There are two alternatives hereTaking corrective measures for deviations which have occurred; and
After taking the corrective measures, if the actual performance is not in conformity with plans, the manager can
revise the targets. It is here the controlling process comes to an end. Follow up is an important step because it is
only through taking corrective measures, a manager can exercise controlling.
Planning and controlling are two separate fuctions of management, yet they are closely related. The scope of
activities if both are overlapping to each other. Without the basis of planning, controlling activities becomes baseless
and without controlling, planning becomes a meaningless exercise. In absense of controlling, no purpose can be
served by. Therefore, planning and controlling reinforce each other. According to Billy Goetz, " Relationship
between the two can be summarized in the following points
1.
2.
3.
4.
Planning preceeds controlling and controlling succeeds planning.
Planning and controlling are inseperable functions of management.
Activities are put on rails by planning and they are kept at right place through controlling.
The process of planning and controlling works on Systems Approach which is as follows :
Planning
→
Results
→
Corrective Action
Planning and controlling are integral parts of an organization as both are important for smooth running of
an enterprise.
5. Planning and controlling reinforce each other. Each drives the other function of management.
In the present dynamic environment which affects the organization, the strong relationship between the two is very
critical and important. In the present day environment, it is quite likely that planning fails due to some unforeseen
events. There controlling comes to the rescue. Once controlling is done effectively, it give us stimulus to make better
plans. Therfore, planning and controlling are inseperate functions of a business enterprise.
TYPES OF CONTROL

On the basis of managerial level
Strategic control - Strategic control can be defined as process of monitoring as to whether the various
strategies adopted by the organization are helping its internal environment to be matched with the external
environment. Strategic control processes allow managers to evaluate a company's program from a critical long-term
perspective. This involves a detailed and objective analysis of a company's ability to maximize its strengths and
market opportunities. This control measure is performed by the top management.
Managerial control – It is derived from strategic controls and is implemented by the middle-level
management of an organization. Managerial controls are designed to measure the performance in terms of the
attainment of results by a responsibility centre and the efficient usage of resources for their accomplishment.
Operational control – These controls are derived from the requirements of the managerial control system,
and they focus on events in a recent or concurrent period. These controls, implemented by the frontline managers or
supervisors, ensure that the operational or day-to-day tasks are carried out effectively and efficiently in accordance
with the established performance standards.

On the basis of timing
Feed forward control - sometimes called preliminary or preventive controls, attempt to identify and prevent
deviations in the standards before they occur. Feedforward controls focus on human, material, and financial
resources within the organization. These controls are evident in the selection and hiring of new employees. For
example, organizations attempt to improve the likelihood that employees will perform up to standards by identifying
the necessary job skills and by using tests and other screening devices to hire people with those skills.
Concurrent control - Concurrent controls monitor ongoing employee activity to ensure consistency with
quality standards. These controls rely on performance standards, rules, and regulations for guiding employee tasks
and behaviors. Their purpose is to ensure that work activities produce the desired results. As an example, many
manufacturing operations include devices that measure whether the items being produced meet quality standards.
Employees monitor the measurements; if they see that standards are not being met in some area, they make a
correction themselves or let a manager know that a problem is occurring.
Feedback control - It involve reviewing information to determine whether performance meets established
standards. For example, suppose that an organization establishes a goal of increasing its profit by 12 percent next
year. To ensure that this goal is reached, the organization must monitor its profit on a monthly basis. After three
months, if profit has increased by 3 percent, management might assume that plans are going according to schedule.

On the basis of control systems and techniques
Budgetary control - A budget depicts how much an organization expects to spend (expenses) and earn
(revenues) over a time period. Amounts are categorized according to the type of business activity or account, such as
telephone costs or sales of catalogs. Budgets not only help managers plan their finances, but also help them keep
track of their overall spending.
A budget, in reality, is both a planning tool and a control mechanism. Budget development processes vary among
organizations according to who does the budgeting and how the financial resources are allocated. Some budget
development methods are as follows:

Top-down budgeting. Managers prepare the budget and send it to subordinates.

Bottom-up budgeting. Figures come from the lower levels and are adjusted and coordinated as they move
up the hierarchy.

Zero-based budgeting. Managers develop each new budget by justifying the projected allocation against its
contribution to departmental or organizational goals.

Flexible budgeting. Any budget exercise can incorporate flexible budgets, which set “meet or beat”
standards that can be compared to expenditures.
Financial control - After the organization has strategies in place to reach its goals, funds are set aside for
the necessary resources and labor. As money is spent, statements are updated to reflect how much was spent, how it
was spent, and what it obtained. Managers use these financial statements, such as an income statement or balance
sheet, to monitor the progress of programs and plans. Financial statements provide management with information
to monitor financial resources and activities. The income statement shows the results of the organization's
operations over a period of time, such as revenues, expenses, and profit or loss. The balance sheet shows what the
organization is worth (assets) at a single point in time, and the extent to which those assets were financed through
debt (liabilities) or owner's investment (equity).
Financial audits, or formal investigations, are regularly conducted to ensure that financial management practices
follow generally accepted procedures, policies, laws, and ethical guidelines. Audits may be conducted internally or
externally. Financial ratio analysis examines the relationship between specific figures on the financial statements
and helps explain the significance of those figures:

Liquidity ratios measure an organization's ability to generate cash.

Profitability ratios measure an organization's ability to generate profits.

Debt ratios measure an organization's ability to pay its debts.

Activity ratios measure an organization's efficiency in operations and use of assets
Quality control – The quality control techniques help an organization to achieve operational efficiency
and customer satisfaction by maintaining and monitoring quality levels. The knowledge of the quality related
standards help the manager and his/her team to prepare a product according to the specifications and market
requirements.
Inventory control – This control measure focuses on attaining higher efficiency and operational
productivity in material management of an organization. It is applied to areas like raw materials, work-in-progress,
finished goods and goods in the entire delivery chain. The inventory control is becoming increasingly important due
to the criticality of cost cutting and elimination of wasteful expenditure in the face of intense price competition.
Companies are implementing different types of inventory controls to identify and eliminate all possible wastages
and variations in the entire supply chain to be competitive in the market.
Operational control - Operational controls are aimed at evaluating the performance of the organization as
a whole and also of its different divisions and departments. These controls generally deal with short-term goals and
are mainly exercised by the middle level management. The implementation of the operational control ensures the
following results:
 Products and services are produced at the required time.
 The cost incurred to produce a good or service is optimum and as per the budget.
 The desired level of quality is obtained.
COORDINATING

Coordination is balancing and keeping together the team by ensuring suitable allocation of tasks to its
various members and seeing that the tasks are performed with harmony among the members.
TECHNIQUES FOR ENABLING EFFECTIVE COORDINATION
 By outlining a clear purpose
 By assigning clear roles and responsibilities to different employees,departments,leaders
 Establishing an agreed framework and a forum for considering different issues
 Building agreement for plans in advance
 Creating interdependency among departments and individuals
 Creating a framework for measuring, reporting and rewarding the collective performance of an
organization
 Sharing of information and regular monitoring of the progress.
TERMINOLOGIES
GOAL : Goal is a state of affairs, or a state of concrete activity, which an organization or system wishes to achieve
or obtain. It is a broad plan. Goals may not be strictly measurable or tangible.
OBJECTIVE: An objective is a subgoal. It identifies a short-term, measurable step within a designated period of
time that is moving toward achieving a long-term goal. Objective is the plan, to involve and implement specific
actions which must be taken to close the gap between the current realities and the ideal state.
VISION: It involves the foresight needed to acquire the necessary expertise to organize existing resources, to
accomplish the desired results.
Defines the way an organization or enterprise will look in the future. Vision is a long-term view, sometimes
describing how the organization would like the world to be in which it operates. For example, a charity working
with the poor might have a vision statement which reads "A World without Poverty."
A Vision statement outlines what the organization wants to be, or how it wants the world in which it operates to be.
It concentrates on the future. It is a source of inspiration. It provides clear decision-making criteria. Vision is a longterm view, sometimes describing how the organization would like the world to be in which it operates. For example,
a charity working with the poor might have a vision statement which reads "A World without Poverty."
MISSION: Defines the fundamental purpose of an organization or an enterprise, precisely describing why it exists
and what it does to achieve its Vision. It is basically the process of defining objectives and developing strategies to
reach those objectives.
A Mission statement tells you the fundamental purpose of the organization. It defines the customer and the
critical processes. It informs you of the desired level of performance.
STRATEGY: A method or plan chosen to bring about a desired future, such as achievement of a goal or
solution to a problem.
MANAGEMENT LEVELS AND HIERARCHY
 Top Level / Strategic Managers
 Middle Level / Tactical Managers
 Lower Level or First Level / Operational Managers
Top Level: They are usually appointed, elected or designated by the organization’s governing body. They
are a few in number and they include job classifications such as the Chief Executive Officer (CEO),
President, Senior Vice-President, Vice- President, COO. Top level managers are responsible for taking
major decisions for the organization as a whole. They are responsible for the overall activities of the
business and are accountable for its impact on the society at large. They work to some extent with the
middle level managers in implementing the plans and maintaining the overall control on the organizational
performance.
Strategic Managers
 Develop and review long range goals and strategies.
 Evaluates overall performance of various departments and ensures cooperation.
 Involved in selection of key personnel.
 Consults subordinate managers on subjects or problems of general scope.
Middle Level: Middle level managers report to the top managers and are in charge of relatively large
departments or divisions consisting of several smaller units. They are directly responsible for the managers
at lower level. Their typical titles include manager, divisional head, department head. These managers are
responsible for implementing the plans and strategies developed by top management for the
accomplishment of organizational goals. In many organizations middle level managers serve as a source of
innovation and creativity. Thus, they a play a vital role in the success of the organization.




Tactical Managers
Makes plans of intermediate range and prepares long range plans for review by top management.
Establishes departmental policies.
Review daily and weekly reports on production or sales.
Selects and recruits personnel.
Lower Level/ First Line: The initial management job that most people attain is typically a first line
management position i.e. the lower level such as the team leader or supervisor. First level managers
implement the operational plans developed by the middle managers and take corrective actions when
needed. They are responsible for output variables such as number of units produced, labour costs, inventory
levels and quality control.
Operational Managers
 Make detailed short range operational plans.
 Review performance of subordinates.
 Supervise day-to-day operations.
 Maintain close contact with employees involved in operations.
MANAGEMENT TYPES
A. Vertical Differences
1.
Top managers are at the top of the organizational hierarchy and are responsible for the entire
organization, with titles such as president, chairperson, executive director, CEO, and executive vice
president. They are concerned with long-range planning. Responsibilities of top managers include:
a. setting organizational goals;
b. defining strategies for achieving them;
c. monitoring and interpreting the external environment;
d. making decisions that affect the entire organization;
e. communicating a shared vision for the organization;
f. shaping corporate culture; and
g. nurturing an entrepreneurial spirit.
2.
Middle managers work at the middle levels of the organization and are responsible for business units
and major departments, with titles such as department head, division head, manager of quality control,
and director of the research lab. They are concerned with near-future planning. Responsibilities of
middle managers center on implementing strategies and policies defined by top managers.
a. Research shows that middle managers play a critical role in facilitating change and enabling
organizations to respond in rapid shifts in the environment.
b. Successful middle managers are constructively critical of the status quo, have a significant
personal power, are versatile, and rate high in emotional intelligence.
3.
Project managers are responsible for temporary work projects that involve the participation of people
from various functions and levels of the organization, and perhaps from outside the company as well.
4.
First-line managers are at the first or second management level and are directly responsible for the
production of goods and services, with titles such as supervisor, line manager, section chief, and office
manager. Their focus in on accomplishing day-to-day objectives. Responsibilities of first-line
managers include:
a. applying rules and procedures to achieve efficient production;
b. providing technical assistance; and
c. motivating subordinates.
B. Horizontal Differences
1.
Horizontal differences in management jobs occur across the organization in the different functional
areas such as advertising, sales, finance, human resources, manufacturing, and accounting.
2.
Functional managers are responsible for departments that perform a single functional task and have
employees with similar training and skills.
a. Line managers are responsible for employees who make or provide a product or service.
b. Staff managers are in charge of departments such as finance and personnel that support line
departments.
3.
General managers are responsible for several departments that perform different functions.
A. Manager Roles
A role is a set of expectations for a manager’s behavior. Managers’ activities can be organized into ten roles. The
ten roles are divided into three categories: informational, interpersonal, and decisional.
1.
Informational roles include the functions used to maintain and develop an information network.
a. The monitor role involves seeking current information from many sources.
b. The disseminator role is the opposite of the monitor role. In the disseminator role, the manager transmits
information to others, both inside and outside the organization.
c. The spokesperson role pertains to making official statements to people outside the organization about
company policies, actions, or plans.
2.
Interpersonal roles refer to relationships with others and are related to human skills.
a. The figurehead role involves the handling of ceremonial and symbolic functions for the organization.
b. The leader role is the relationship with subordinates including motivation, communication, and influence.
c. The liaison role is the development of information sources both inside and outside the organizations.
3.
Decisional roles come into play when managers must make choices. These roles often require both conceptual
and human skills.
a. The entrepreneur role involves the initiation of change. Managers seek ways to solve problems or improve
operations.
b. The disturbance handler role involves resolving conflict among subordinates, between managers, or
between departments.
c. The resource allocator role pertains to allocating resources in order to attain desired outcomes.
d. The negotiator role involves formal negotiations and bargaining to attain outcomes for the manager’s unit
of responsibility.
I. RECENT HISTORICAL TRENDS
Elements of each of the three previously discussed management perspectives are still in use today. The most
prevalent of these is the human resources perspective. Major contemporary extensions of the human resource
perspective include systems theory, the contingency view, and total quality management.
A. Systems Theory
A system is a set of interrelated parts that function as a whole to achieve a common purpose. A system functions by
taking inputs from the external environment, transforming them, and then discharging the transformed input back
into the environment.
1. Systems theory describes organizations as open systems that are characterized by entropy, synergy, and
subsystem interdependence. Components of systems theory include:
a. Inputs—the material, human, financial, or informational resources used to produce goods or services;
b. The transformation process—management’s use of production technology to change inputs into outputs.
c. Outputs—the goods or services produced.
d. Feedback—knowledge about the outputs that influences the selection of inputs during the next cycle of the
process.
e. The environment surrounding the organization that includes the social, political, and economic forces noted
earlier in this chapter.
2. Ideas in systems theory that have had a substantial influence on management thinking include:
a. Open systems must interact with the external environment to survive. Closed systems do not. All
organizations are open systems and the cost of ignoring the environment may be failure.
b. Entropy is the tendency for a system to run down and die. Systems must receive inputs from the
environment or they will cease to exist.
c. Synergy means that the whole is greater than the sum of its parts. Individuals, groups, and organizations
can accomplish more working together than working alone.
d. Subsystems are parts of a system that depend on one another to function.
3. Changes in one part of an organization affect other parts as the organization must be managed as a coordinated
whole.
B. Contingency View
1. The classical management perspective assumed a universalist view; concepts that would work in one
organization would work in another. In business education, an alternative view exists, known as the
case view, in which each situation is believed to be unique and there are no universal principles. One
learns about management by experiencing a large number of case problem situations.
2. The contingency view states that the successful resolution of organizational problems depends on a
manager’s identification of key variations in the situation. Management’s job is to search for
important contingencies in their industry, technology, the environment, and international cultures.
C. Total Quality Management (TQM)
1. Total quality management (TQM) focuses on managing the total organization to deliver quality to
customers. The ideas of W. Edwards Deming, "father of the quality movement” were scoffed at in
America but embraced in Japan, which then became an industrial world power.
2. Japanese management shifted from an inspection-oriented approach to quality control, emphasizing
employee involvement in the prevention of quality problems. The preventive approach to quality control
infuses quality values throughout every activity, with front-line workers intimately involved in the process.
There are four significant elements:
a. Employee involvement. TQM requires company-wide participation in quality control.
b. Focus on the customer. TQM companies find out what the customer wants.
c. Benchmarking. A process whereby companies find out how others do something better and imitate or
improve it.
d. Continuous improvement. The implementation of small, incremental improvements in all areas of the
organization on an ongoing basis.
INNOVATIVE MANAGEMENT THINKING FOR TURBULENT TIMES
New ways of managing more adequately respond to the demands of today’s environment and customers. Two
current directions in management thinking include a shift to the learning organization and managing the technologydriven workplace.
D. The Learning Organization
1. In a learning organization, everyone identifies and solves problems, enabling continuous experimentation,
change, and improvement, thus increasing capability. The essential idea is problem solving, as opposed to
efficiency; all employees look for problems, such as understanding special customer needs. To develop a
learning organization, changes on all subsystems are made.
a. Team-based structure. Self-directed teams are the fundamental unit in a learning organization. People on
the team are given the skills, information, tools, motivation, and authority central to the team’s performance
and to respond creatively.
b. Employee Empowerment. Empowerment means unleashing the power and creativity of employees by
giving them freedom, resources, information and skills to make decisions and perform effectively.
Empowerment may be reflected in self-directed work teams, quality circles, job enrichment, and employee
participation groups. Empowerment means decision-making authority, training, and information so that
people can perform jobs without close supervision. In a learning organization, people a manager’s primary
source of strength, not a cost to be minimized.
c. Open information. A learning organization is flooded with information. Formal data about budgets,
profits, and departmental expenses are available to everyone.
THE ENVIRONMENT AND CORPORATE CULTURE
I. MANAGER’S CHALLENGE
A dominant market position is never guaranteed, even for a company like Microsoft. For many years, Microsoft
exerted strict control over the software that came preloaded on nearly every PC. Recently, however, PC makers are
beginning to take back control by selling desktop space to competing software and service providers, ultimately
giving end users more control over the software they use. In high-tech industries, environmental conditions are
volatile, and Microsoft is currently in a position similar to the one Xerox faced in the early 1990s. Government
actions and red tape can also affect an organization’s environment and create problems. The 2002 Sarbanes-Oxley
corporate governance law is making life more complicated for managers in all organizations. Environmental
changes often catch managers by surprise, leaving them unable to adapt their companies to new competition,
shifting consumer interests, or new technologies. To avoid getting caught off guard, managers must continuously
monitor and respond to the environment because the events that have the greatest impact on an organization
typically originate in the external environment.
II. THE EXTERNAL ENVIRONMENT
The organizational environment includes all elements existing outside the boundary of the organization that have
the potential to affect the organization. The environment includes competitors, resources, technology, and economic
conditions that influence the organization. It does not include those events so far removed from the organization
that their impact is not perceived. The organizational environment can be conceptualized as having two layers
surrounding the organization: the general environment and the task environment. The organization also has an
internal environment that includes the elements within the organization’s boundaries. It is composed of current
employees, management, and corporate culture.
A. General Environment
1.
The general environment represents the outer layer of the environment and will influence the organization
over time, but often is not involved in day-to-day operations. The dimensions of the general environment
include international, technological, sociocultural, economic, and legal-political.
a. The international dimension represents events originating in foreign countries and opportunities for
American companies in other countries. This dimension influences all other aspects of the external
environment. This provides new competitors, customers, and suppliers and shapes social, technical, and
economic trends. Today, every company has to compete on a global basis; high-quality, low-priced cars
from Japan have changed the U.S. auto industry. Managers in the U.S. have been slow to understand issues
and competition in foreign countries.
b. The technological dimension includes scientific and technological advancements in a specific industry as
well as society at large. Technology has created massive changes for organizations and industries. Today,
computer networks, Internet access, videoconferencing, cell phones, and laptops are taken for granted.
Other technology will affect organizations and managers; the decoding of the human genome could lead to
revolutionary medical advances.
c. The sociocultural dimension represents the demographic characteristics, norms, customs, and values of
the general population.
Important sociocultural characteristics are population and geographical
distribution, population density, age, and education levels. Today’s demographic profiles are the
foundation of tomorrow’s work force and customers. Forecasters see increased globalization of both
consumer markets and labor supply with increasing diversity in organizations and consumer markets.
d. The economic dimension represents the general economic health of the country or region in which the
organization operates. Components of the economic dimension include consumer purchasing power, the
unemployment rate, and interest rates. The frequency of mergers and acquisitions represents a recent trend
in the economic environment, but there is vitality in the small business sector. Entrepreneurial start-ups are
a significant aspect of the U.S. economy today.
e. The legal-political dimension includes federal, state, and local government regulations and political
activities designed to influence company behavior. Government regulations influence organizations
through a variety of legislation such as Occupational Safety and Heath Administration (OSHA), the
Environmental Protection Agency (EPA), fair trade practices, and others. Pressure groups are interest
groups that work within the legal-political framework to influence companies to behave in socially
responsible ways. For example, tobacco companies are feeling the power of anti-smoking groups.
B. Task Environment
1.
The task environment is the layer closest to the organization and includes those sectors that have a direct
working relationship with it. The task environment includes customers, competitors, suppliers, and the
labor market.
a. Customers are those people and organizations in the environment that acquire goods or services from the
b.
organization. Customers are important because they determine the organization’ success.
Competitors are organizations in the same industry or type of business that provide goods or services to
the same set of customers. Specific competitive issues characterize each industry. The recording industry
differs from the steel industry and the pharmaceutical industry.
c. Suppliers are people and organizations that provide the raw materials that the organization uses to produce
its output. Many companies are using fewer suppliers and building good relationships with them so that
they will receive high-quality goods at lower prices. These companies are also finding that being
cooperative, rather than adversarial, is the key to saving money, maintaining quality, and speeding products
to market.
d. The labor market represents people in the environment available for hire by the organization. Labor
market factors that impact organizations include:



the growing need for computer-literate information technology workers;
the necessity for continuous investment in human resources through recruitment, education, and
training to meet competitive demands of the borderless world; and
the effects of international trading blocs, automation, and shifting plant location upon labor
dislocations, creating unused labor pools in some areas and labor shortages in others.
MANAGING IN A GLOBAL ENVIRONMENT
I. MANAGER’S CHALLENGE
Dell Computer Corporation is working hard to duplicate its success in the U.S. personal computer market in China,
but is meeting with a variety of obstacles from language barriers and cultural resistance to tough competition from
the Chinese computer company Lenova. Dell’s core U.S. market is saturated, and its biggest potential for growth
lies in emerging markets such as China. But managers at Dell are learning, as other companies have, that they may
have to adjust how the company operates to succeed in a new country or region. All organizations face special
problems in trying to tailor their products, services, and business management to the unique needs of foreign
countries. The future of our businesses and our societies will be shaped by global rather than local relationships.
II. A BORDERLESS WORLD
Globalization provides a competitive edge at all stages of developing, manufacturing, and marketing products, and
domestic markets are saturated for many firms. The reality of today’s borderless companies means consumers can
no longer tell from which country they’re buying (e.g., U.S.-based Ford owns Sweden’s Volvo). The process of
globalization typically passes through four distinct stages:




Domestic. Market potential is limited to the home country with all production and marketing facilities located
at home.
International. Exports increase and the company adopts a multidomestic approach with marketing in several
countries individually.
Multinational. Company has marketing and production facilities located in many countries, with more than
one-third of its sales outside the home country.
Global (or stateless). International development transcends any single home country.
III. GETTING STARTED INTERNATIONALLY
Organizations can become involved internationally in a couple of different ways. One way is to seek cheaper
sources of material or labor offshore, which is called offshoring or global outsourcing. Another way is to implement
market entry strategies such as exporting, licensing, and direct investment.
A. Outsourcing
1. Global outsourcing, or offshoring, means engaging in the international division of labor so that work
activities can be done in countries with the cheapest sources of labor and supplies.
a. The maquiladora industry along the Texas-Mexico boarder is a variation on outsourcing.
B. Exporting
1. Exporting is a strategy in which the corporation maintains its production facilities within the home
nation and transfers its products for sale in foreign countries. Exporting enables a company to market
its products in other countries at modest resource cost and with limited risk.
a. Countertrade is a form of exporting to less-developed countries that involves the barter of
products for products rather than the sale of products for currency.
C. Licensing
1. Licensing is a strategy in which the corporation (the licensor) in one country makes certain resources
available to companies in another country (the licensees). These resources can include technology,
managerial skills, and/or patent and trademark rights that enable the licensee(s) to produce and market
a product similar to what the licensor has been producing.
a. Franchising is a special form of licensing that occurs when the franchisee buys a complete
package of materials and services, including equipment, products, product ingredients, trademark
and trade name rights, managerial advice, and a standardized operating system.
D. Direct Investing
1. Direct investing is a strategy in which the corporation is involved in managing the productive assets,
which distinguishes it from other entry strategies that permit less managerial control. The most
popular form of direct investment is to engage in strategic alliances and partnerships.
a. In a joint venture, a company shares costs and risks with another firm, typically in the host
country, to develop new products, build a manufacturing facility, or set up a sales and distribution
network.
b. A second option for direct investing is to create a wholly owned foreign affiliate, over which the
company has complete control. Direct acquisition of an affiliate may provide cost savings over
exporting by shortening distribution channels and reducing storage and transportation costs.
c. The most costly and risky direct investment is a greenfield venture, which occurs when a
company builds a subsidiary from scratch in a foreign country. The advantage is that the
subsidiary is exactly what the company wants and has the potential to be highly profitable. The
disadvantage is the company has to acquire all market knowledge, materials, people, and knowhow in a different culture, and mistakes are possible.
E. China Inc.
1. Many companies today are going straight to China or India as a first step into international business.
Business in both countries is booming and U.S. and European companies are taking advantage of
opportunities for all of the strategies discussed above. Outsourcing is probably the most widespread
approach to international involvement in China and India, but many companies are also developing
joint ventures or building subsidiaries in these two countries.
IV. THE INTERNATIONAL BUSINESS ENVIRONMENT
International management is the management of business operations conducted in more than one country. The
fundamental tasks of business management do not change in any substantive way when a firm is transacting
business across international borders; however, managers will experience greater difficulties and risks when
performing these management functions on an international scale. The economic, legal-political, and sociocultural
sectors present the greatest difficulties in comparing one country to another.
V. THE ECONOMIC ENVIRONMENT
A. Economic Development
1. Economic development differs widely among the countries and regions of the world, and countries can
be categorized as developing or developed countries. Developing countries are referred to as lessdeveloped countries (LDCs). The criterion traditionally used to classify countries is per capita income.
Most international firms are headquartered in economically advanced countries; however, many
companies are investing in Asia, Eastern Europe, and Latin America.
B. Infrastructure
1. Infrastructure refers to a country’s physical facilities support economic activities such as
transportation, energy producing facilities, and communications. Companies operating in LDCs must
contend with lower levels of technology and perplexing logistical, distribution, and communication
problems.
C. Resource and Product Markets
1. When operating in another country, company managers must evaluate the market demand for their
products. If market demand is high in a country, a firm may choose to export products to that country.
If the firm wants to develop manufacturing plants, however, resource markets for raw materials and
labor must also be available.
D. Exchange Rates
1. Exchange rates are the rates at which one country’s currency is exchanged for another country’s
currency. Volatility in exchange rates is a major concern for companies doing business internationally.
Changes in the exchange rate can have major implications for the profitability of international
operations that exchange millions of dollars into other currencies every day.
VI. THE LEGAL-POLITICAL ENVIRONMENT
A. Political Risk and Instability
1. Political risk is a company’s risk of loss of assets, earning power, or managerial control due to
politically-based events or actions by host governments. It includes government takeovers of property
and acts of violence directed against a firm’s properties or employees. Some companies buy political
risk insurance, and political risk analysis has emerged as a critical component of environmental
assessment for global firms.
a. The Index of Economic Freedom ranks countries according to the impact political intervention has
on business decisions.
b. The Corruption Perception Index assesses 91 countries according to perceived level of corruption
in government and public administration.
2. Political instability refers to events such as riots, revolutions, civil disorders or government upheavals
that affect the operations of an international company. Although most companies would prefer to do
business in stable countries, some of the greatest growth opportunities lie in areas characterized by
instability.
B. Laws and Regulations
1. Government laws and regulations differ from country to country and present a challenge for
international firms. Host government laws cover many different items such as libel, consumer
protection, information and labeling, employment and safety, wages. The Internet has increased the
impact of foreign laws on U.S. companies because it expands the potential for doing business on a
global basis.
VII. THE SOCIOCULTURAL ENVIRONMENT
A. Social Values
Culture is intangible, pervasive, and difficult for outsiders to learn. One way managers can comprehend local
cultures is to understand differences in social values. There are four dimensions of national social value
systems as well as other cultural characteristics that influence organizational and employee working
relationships.
Hofstede’s Value Dimensions


Power distance. High power distance means people accept inequality in power among institutions,
organizations, and people. Countries that value high power distance include Malaysia, the Philippines, and
Panama. Low power distance means people expect equality in power. Countries that value low power
distance include Denmark, Austria, and Israel.
Uncertainty avoidance. High uncertainty avoidance means that members of a society feel uncomfortable
with uncertainty and ambiguity and thus support beliefs that promise certainty and conformity. Countries that
value high uncertainty avoidance include Greece, Portugal, and Uruguay. Low uncertainty avoidance means



people have high tolerance for the unstructured and unpredictable. Countries that value low uncertainty
avoidance include Singapore and Jamaica.
Individualism and Collectivism. Individualism reflects a value for a loosely knit social framework in which
individuals are expected to take care of themselves. Countries with individualist values include the United
States, Canada, and Australia. Collectivism is a preference for a tightly knit social framework in which
individuals look after one another and organizations protect their members’ interests. Countries with
collectivist values are Guatemala, Ecuador, and Panama.
Masculinity and Femininity. Masculinity stands for preference for achievement, heroism, assertiveness, work
centrality (with resultant high stress), and material success. Societies with strong masculine values are Japan,
Austria, Mexico, and Germany. Femininity reflects the values of relationships, modesty, caring for the weak,
and quality of life. Countries with feminine values include Sweden, Norway, Denmark and Yugoslavia. Both
men and women subscribe to the dominant value in masculine and feminine cultures.
Long-term orientation and Short-term orientation. Long-term orientation includes a greater concern for the
future and highly values thrift and perseverance. Short-term orientation is more concerned with the past and
the present and places a high value on tradition and meeting social obligations.
B. Other cultural characteristics
Other cultural characteristics that influence international organizations are language, religion, attitudes, social
organization, and education.
a. An attitude called ethnocentrism means that people have a tendency to regard their own culture as superior and
to downgrade other cultures. Strong ethnocentric attitudes within a country make it difficult for foreign firms
to operate there. Other factors include social organization, such as status systems, kinship and families, social
institutions, and opportunities for social mobility.
b. American managers are regularly accused of an ethnocentric attitude that assumes that the American way is the
best way.
VIII.
MANAGING IN A GLOBAL ENVIRONMENT
A. Developing Cultural Intelligence
1. Working in a foreign country makes the need for personal learning and growth critical. Managers will be most
successful in foreign assignments if they are culturally flexible and easily adapt to new situations and ways of
doing things.
2. Cultural intelligence (CQ) refers to a person’s ability to use reasoning and observation skills to interpret
unfamiliar gestures and situations and devise appropriate behavioral responses. Rather than a list of global “dos
and don’ts,” CQ is a practical learning approach that enables a person to ferret out clues to a culture’s shared
understandings and respond to new situations in culturally appropriate ways. CQ includes three components
that work together: cognitive, emotional, and physical.
3. Culture shock refers to the frustration and anxiety that result from constantly being subjected to strange and
unfamiliar cues about what to do and how to do it. A person with high CQ is able to move through quickly
through this initial period of culture shock.
B. Managing Cross-Culturally
1. There are cultural differences in how people see the world, and these differences affect working relationships.
To be effective on an international level, managers need to interpret the culture of the country and organization
in which they are working and develop sensitivity. The following examples give some clues to how cultural
differences can be significant for expatriate managers.
a. Leading

In relationship-oriented societies, managers develop strong personal relationships with their employees. For
example, in China any relationship is a personal relationship.
b. Decision making

In the U.S., mid-level managers may discuss a problem and give the boss a recommendation. In South Asia,
managers are expected to make the decision. In Mexico, employees don’t understand participatory decision
making. Mexico ranks extremely high on power distance. In contrast, managers in Arab and African nations
are expected to use consultative decision making in the extreme.
c. Motivating

Motivation must fit the incentives within the culture. Intrinsic factors such as challenge, recognition, and the
work itself are less effective in countries with high power distance. In Japan, which highly values collectivism,
employees are motivated to satisfy the company. Managers in Latin America, Africa, and the Middle East
improve motivation by showing respect for employees as individuals with needs and interests outside of work.
d. Controlling

When performance suffers, managers in foreign countries often are unable to get rid of employees who do not
work out. In Europe, Mexico, and Indonesia, to hire and fire based on performance seems unnaturally brutal.
Workers in some countries are protected by labor laws and unions.
CORPORATE SOCIAL RESPONSIBILITY
Social responsibility means distinguishing right from wrong. It means being a good corporate citizen. Corporate
social responsibility is management’s obligation to make choices and take actions that will contribute to the welfare
and interests of society as well as the organization. Social responsibility can be a difficult concept to grasp because
people have different beliefs as to which actions improve society’s welfare. Social responsibility covers a wide
range of issues that are ambiguous with regard to what is right or wrong.
EVALUATING CORPORATE SOCIAL RESPONSIBILITY
A. Economic Responsibilities
1. The first criterion of social responsibility is economic responsibility. The business institution is the basic
economic unit of society. Its responsibility is to produce the goods and services that society wants and to
maximize profits for its owners and shareholders.
2. Economic responsibility carried to extreme is called the profit-maximizing view, advocated by Nobel economist
Milton Friedman. This view argues that the corporation’s sole mission is to increase its profits so long as it
stays within the rules. This approach means that economic benefit is the only social responsibility and can lead
companies into trouble.
B. Legal Responsibilities
1. Legal responsibility defines what society deems important with respect to appropriate corporate behavior.
Businesses are expected to fulfill their economic goals within the law. Legal requirements are imposed by local
governments, state legislators, and federal regulatory agencies.
C. Ethical Responsibilities
1. Ethical responsibility includes behaviors that are not necessarily codified into law and may not serve the firm’s
direct economic interests. To be ethical, decision makers should act with equity, fairness, and impartiality,
respect the rights of individuals, and treat individuals differently only when relevant to the organization’s goals.
Unethical behavior occurs when decisions enable an individual or company to gain at the expense of society.
D. Discretionary Responsibilities
Discretionary responsibility is voluntary and guided by a company’s desire to make social contributions not
mandated by economics, law, or ethics. Discretionary activities include philanthropic contributions that offer
no direct financial payback to the company and are not expected. Discretionary responsibility is the highest
criterion of social responsibility.
What is an organization culture?
An organization is nothing but a common platform where individuals from different backgrounds come together and
work as a collective unit to achieve certain objectives and targets. The word organization derived from the Greek
work “organon” is a set up where people join hands to earn a living for themselves as well as earn profits for the
company. An organization consists of individuals with different specializations, educational qualifications and work
experiences all working towards a common goal. Here the people are termed as employees.
The employees are the major assets of an organization and contribute effectively in its successful functioning. It is
essential for the employees to be loyal towards their organization and strive hard in furthering its brand image. An
organization can’t survive if the employees are not at all serious about it and treat their work as a burden. The
employees must enjoy whatever they do for them to deliver their level best.
What is culture ?
The attitude, traits and behavioral patterns which govern the way an individual interacts with others is termed as
culture. Culture is something which one inherits from his ancestors and it helps in distinguishing one individual
from the other.
What is organization culture ?
Every human being has certain personality traits which help them stand apart from the crowd. No two individuals
behave in a similar way. In the same way organizations have certain values, policies, rules and guidelines which
help them create an image of their own.
Organization culture refers to the beliefs and principles of a particular organization. The culture followed by the
organization has a deep impact on the employees and their relationship amongst themselves.
Every organization has a unique culture making it different from the other and giving it a sense of direction. It is
essential for the employees to understand the culture of their workplace to adjust well.
Organization A
In organization A, the employees are not at all disciplined and are least bothered about the rules and regulations.
They reach their office at their own sweet time and spend their maximum time gossiping and loitering around.
Organization B
This organization follows employee friendly policies and it is mandatory for all to adhere to them. It is important for
the employees to reach their workplace on time and no one is allowed to unnecessarily roam around or spread
rumours.
Which organization do you feel would perform better ? — Obviously organization B
The employees follow a certain culture in organization B making it more successful than organization A.
No two organizations can have the same culture. The values or policies of a non-profit organization would be
different from that of a profit making entity or employees working in a restaurant would follow a different culture as
compared to those associated with education industry or a manufacturing industry.
Broadly there are two types of organization culture:

Strong Organization Culture: Strong organizational culture refers to a situation where the employees adjust
well, respect the organization’s policies and adhere to the guidelines. In such a culture people enjoy working
and take every assignment as a new learning and try to gain as much as they can. They accept their roles and
responsibilities willingly.

Weak Organization Culture: In such a culture individuals accept their responsibilities out of fear of superiors
and harsh policies. The employees in such a situation do things out of compulsion. They just treat their
organization as a mere source of earning money and never get attached to it.
The practices, principles, policies and values of an organization form its culture. The culture of an organization
decides the way employees behave amongst themselves as well as the people outside the organization.
Let us understand the various types of organization culture:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Normative Culture: In such a culture, the norms and procedures of the organization are predefined and the
rules and regulations are set as per the existing guidelines. The employees behave in an ideal way and
strictly adhere to the policies of the organization. No employee dares to break the rules and sticks to the
already laid policies.
Pragmatic Culture: In a pragmatic culture, more emphasis is placed on the clients and the external parties.
Customer satisfaction is the main motive of the employees in a pragmatic culture. Such organizations treat
their clients as Gods and do not follow any set rules. Every employee strives hard to satisfy his clients to
expect maximum business from their side.
Academy Culture: Organizations following academy culture hire skilled individuals. The roles and
responsibilities are delegated according to the back ground, educational qualification and work experience
of the employees. Organizations following academy culture are very particular about training the existing
employees. They ensure that various training programmes are being conducted at the workplace to hone the
skills of the employees. The management makes sincere efforts to upgrade the knowledge of the employees
to improve their professional competence. The employees in an academy culture stick to the organization
for a longer duration and also grow within it. Educational institutions, universities, hospitals practice such a
culture.
Baseball team Culture: A baseball team culture considers the employees as the most treasured possession
of the organization. The employees are the true assets of the organization who have a major role in its
successful functioning. In such a culture, the individuals always have an upper edge and they do not bother
much about their organization. Advertising agencies, event management companies, financial institutions
follow such a culture.
Club Culture: Organizations following a club culture are very particular about the employees they recruit.
The individuals are hired as per their specialization, educational qualification and interests. Each one does
what he is best at. The high potential employees are promoted suitably and appraisals are a regular feature
of such a culture.
Fortress Culture: There are certain organizations where the employees are not very sure about their career
and longevity. Such organizations follow fortress culture. The employees are terminated if the organization
is not performing well. Individuals suffer the most when the organization is at a loss. Stock broking
industries follow such a culture.
Tough Guy Culture: In a tough guy culture, feedbacks are essential. The performance of the employees is
reviewed from time to time and their work is thoroughly monitored. Team managers are appointed to
discuss queries with the team members and guide them whenever required. The employees are under
constant watch in such a culture.
Bet your company Culture: Organizations which follow bet your company culture take decisions which
involve a huge amount of risk and the consequences are also unforeseen. The principles and policies of
such an organization are formulated to address sensitive issues and it takes time to get the results.
Process Culture: As the name suggests the employees in such a culture adhere to the processes and
procedures of the organization. Feedbacks and performance reviews do not matter much in such
organizations. The employees abide by the rules and regulations and work according to the ideologies of
the workplace. All government organizations follow such a culture.
Culture represents the beliefs, ideologies, policies, practices of an organization. It gives the employees a sense of
direction and also controls the way they behave with each other. The work culture brings all the employees on a
common platform and unites them at the workplace.
There are several factors which affect the organization culture:
 The first and the foremost factor affecting culture is the individual working with the organization. The
employees in their own way contribute to the culture of the workplace. The attitudes, mentalities,
interests, perception and even the thought process of the employees affect the organization culture.
Example - Organizations which hire individuals from army or defence background tend to follow a
strict culture where all the employees abide by the set guidelines and policies. The employees are
hardly late to work. It is the mindset of the employees which forms the culture of the place.
Organizations with majority of youngsters encourage healthy competition at the workplace and
employees are always on the toes to perform better than the fellow workers.
 The sex of the employee also affects the organization culture. Organizations where male employees
dominate the female counterparts follow a culture where late sitting is a normal feature. The male
employees are more aggressive than the females who instead would be caring and softhearted.
 The nature of the business also affects the culture of the organization. Stock broking industries,
financial services, banking industry are all dependent on external factors like demand and supply,
market cap, earning per share and so on. When the market crashes, these industries have no other
option than to terminate the employees and eventually affect the culture of the place. Market
fluctuations lead to unrest, tensions and severely demotivate the individuals. The management also
feels helpless when circumstances can be controlled by none. Individuals are unsure about their career
as well as growth in such organizations.
 The culture of the organization is also affected by its goals and objectives. The strategies and
procedures designed to achieve the targets of the organization also contribute to its culture.
Individuals working with government organizations adhere to the set guidelines but do not follow a
procedure of feedback thus forming its culture. Fast paced industries like advertising, event
management companies expect the employees to be attentive, aggressive and hyper active.
 The clients and the external parties to some extent also affect the work culture of the place.
Organizations catering to UK and US Clients have no other option but to work in shifts to match their
timings, thus forming the culture.
 The management and its style of handling the employees also affect the culture of the workplace.
There are certain organizations where the management allows the employees to take their own
decisions and let them participate in strategy making. In such a culture, employees get attached to their
management and look forward to a long term association with the organization. The management must
respect the employees to avoid a culture where the employees just work for money and nothing else.
They treat the organization as a mere source of earning money and look for a change in a short span of
time.
Managing Change
The business landscape of the 21st century is characterized by rapid change brought about due to technological,
economic, political and social changes. It is no longer the case that the managers and employees of firms in this
decade can look forward to more of the same every year. In fact, the pace of change is so rapid and the degree of
obsolescence if organizations resist change is so brutal that the only way out for many firms is to change or perish.
In this context, it becomes critical that organizations develop the capabilities to adapt and steer change in their
advantage.
The role of senior managers becomes crucial in driving through change and ensuring that firms are well placed with
respect to their competitors. However, it is the case that in many organizations, senior managers actively resist
change and in fact thwart change initiatives due to a variety of reasons which would be explored in subsequent
sections. This essay examines the barriers to change by senior managers and discusses approaches to mitigate such
resistance. The essay begins with a discussion n the role of senior managers as barriers to change and then outlines
some approaches on how to get the senior managers on board for change.
It goes without saying that “he who rejects change is the architect of decay and the only human institution that
rejects progress is the cemetery.” With this axiom in mind, it is critical to understand that unless change is actively
embraced, organizations in the 21st century risk obsolescence.
To resist change is as basic as human nature and hence the change managers must adopt an inclusive approach that
considers the personality clashes and the ego tussles. It is often the case that in large organizations, there tend to be
power centres and fiefdoms and hence the issue of organizational change must address the group dynamics as well
as the individual behavioural characteristics.
Only by an understanding of the means by which managers can be brought on board can there be a foundation for
suitable approaches. The approaches include a combination of pressure tactics and coordination instead of
competition and cooption as well as cooperation. Change agents must realize that wherever possible, they must deal
with consensual decision making and if that is not possible, they must walk the talk and be firm in their approach.
Managers at all levels have a tendency to resist change and in the high stakes game of change management, it is the
ones that can articulate and communicate the change in a clear and coherent manner who succeed.
In conclusion, change is the only constant in business and the landscape of the 21st century is littered with
companies that have not adapted to the changing times. Hence, organizations must and should embrace change and
the approaches discussed in this paper are part of the solution.
There are different kinds of change that an organization might undertake or be forced to undertake because of
internal and external factors. The internal factors for change include reorganization and restructuring to meet the
challenges of the future and also to act proactively to initiate change as a means of staying ahead of the competition.
The external factors include change that is forced upon the organization because of falling revenues, changing
market conditions and the need to adapt to the ever changing business landscape.
Change can be organic which means that it evolves slowly and is like meandering up the gentle slope of a
mountain. In this case, the organization and the management have enough time to prepare for change and reorient
themselves accordingly. This is the kind of change that is adaptive meaning that firms have the opportunity to adapt
themselves to the change.
Change can be radical which is rapid, sudden and uncertain. This is the kind of change that is disruptive and
often forces organizations to reorient themselves without adequate notice and warning. It is better for organizations
to anticipate change rather than be forced into accepting change that is rapid and sudden.
We have seen how managers at different levels resist change and how this resistance manifests itself. Apart from the
ideological and personality issues, there is the very real possibility of change being resisted because the “visibility”
of what comes next is not clear. For instance, many managers tend to resist change because the change initiators
have not clearly spelt out the outcomes of the changes and the possible impacts that such changes have on the
organization. This is the realm of the “known unknowns” and the “unknown unknowns” which arise because of
ambiguity, complexity and uncertainty. Hence, the resistance to change can come about due to the lack of coherence
in the vision and mission and because the change is not clearly communicated as well.
Finally, the rapidity with which change is introduced can upset the organization structures that are usually rigid and
bureaucratic with bean counters at all levels resisting and actively thwarting change. Hence, it needs to be
remembered that change initiators take into account all these factors when introducing changes. The possible
approaches in dealing with these resistances would be discussed in the next section.
Managing Resistance to Change
Research has shown that the best way to get the senior managers at all levels interested in the change initiatives is by
engaging them and seeking their buy-in for the change management process. Studies have proved that the managers
in the upper echelons buy into the change from a strategic perspective where the accent is on performance and hence
radical or disruptive change is seen as part and parcel of an organizations development. Managers at the middle level
can be made to see the value inherent in change and hence they can be brought on board. The frontline managers’
views and inputs can be sought and thereby their cooperation and participation in the change obtained. These are the
broad outlines and the following detailed sets of approaches can be pursued as well.
Make Them the Hero
By making the managers the change drivers and change initiators is often the best way of securing their buy-in. The
point here is that by getting the managers to be the ones who are implementing change and by giving them centre
stage, it is possible to secure their participation.
By definition, senior managers are highly capable, motivated and ambitious. By making them the stars of the change
process, their innate abilities can be harnessed to the benefit of the organization. It is often better to have a close
association with the senior managers to achieve the desired results.
Show them the potential of Change
By selling change and the value of such change to the organizations and themselves the senior managers can be
persuaded to accept change. The point to note is that senior managers must be told what their role in the post change
scenario would be and by making them see themselves in the future vision, they can be made to play a key part in
the change management. As has been mentioned earlier, if the benefits of the change are explained and by
persuading that the change does not involve downsizing or other reduction in roles and responsibilities, the senior
managers can be expected to be partners rather than resisters in the change management process.
Painting the Alternatives
This is the stick part of the carrot and stick approach wherein senior managers are told of the urgent need for change
and by indicating to them what the consequences for themselves and the organization would be if the change does
not succeed. By painting harsh alternative scenarios like declining market share and repercussions of layoffs and
downsizing if the change does not succeed would make the senior managers realize the flip side of resistance. In this
way, they can be persuaded to accept the business realities behind the change process.
Involving Them in the Change
By adopting a “hands on” approach that would involve “all hands” and including all the stakeholders, senior
managers can be brought on board. The point is that by adopting an inclusive approach and giving a sense of
ownership to the senior managers and taking their inputs and feedback would ensure that the key aspect of
“engagement” is achieved. As has been pointed out throughout this paper, the key to senior manager participation in
the change initiatives is through engagement and only by communicating clearly the benefits of change and by
positing the alternatives would it be possible to engage with senior managers. A suitable narrative of the changes
and the impact that they have on the senior managers must be communicated to all levels and there must be a
process in place to bring on board as many managers as possible. Personality clashes and power politics can be
addressed by consensual approaches to decision making and by adopting a carrot and stick approach as described
above.
Interpersonal Relationship
A strong bond between two or more people refers to interpersonal relationship. Attraction between individuals
brings them close to each other and eventually results in a strong interpersonal relationship.
Forms of Interpersonal relationship
An interpersonal relationship can develop between any of the following:
 Individuals working together in the same organization.
 People working in the same team.
 Relationship between a man and a woman (Love, Marriage).
 Relationship with immediate family members and relatives.
 Relationship of a child with his parents.
 Relationship between friends.
Relationship can also develop in a group (Relationship of students with their teacher, relationship of a religious guru
with his disciples and so on)
Must have in an Interpersonal Relationship
 Individuals in an interpersonal relationship must share common goals and objectives. They should have
more or less similar interests and think on the same lines. It is always better if individuals come from
similar backgrounds.
 Individuals in an interpersonal relationship must respect each other’s views and opinions. A sense of
trust is important.
 Individuals must be attached to each other for a healthy interpersonal relationship.
 Transparency plays a pivotal role in interpersonal relationship. It is important for an individual to be
honest and transparent.
Interpersonal Relationship between a man and a woman
A strong interpersonal relationship between a man and a woman leads to friendship, love and finally ends
in marriage.
 A sense of commitment is essential in marriages and love affairs.
 Partners must feel attached to each other and most importantly trust each other.
Famous psychologist Robert Sternberg proposed the triangular theory of love in interpersonal relationship.
According to triangular theory of love following three components lay the foundation in love affairs and marriages.
1.
2.
3.
Passion
Intimacy
Commitment
The amount of love in any relationship is directly proportional to the above three components. More the three
components, stronger the relationship is.
1.
2.
3.
Passion: Passion refers to the physical and sexual attraction between two individuals. Individuals must feel
physically attracted to each other for the charm to stay in relationship for a much longer period of time.
Intimacy: The amount of closeness between two individuals in a relationship refers to intimacy. Partners
must gel with each other and a strong bond between them is essential.
Commitment: The decision of two individuals to stay together forever is called commitment. Commitment
is nothing but two people deciding to be with each other life-long either by staying together or by entering
the wedlock.
If any of the above factors is missing from a relationship, love fades away in a short span of time giving rise to
troubles and sorrows.
Relationship between friends
 Friends must be honest to each other.
 Stand by your friends at times of need.
 Avoid leg pulling, criticism and making fun of your friends.
 Try not to mix friendship with love as it creates problems and misunderstandings.
Interpersonal relationship between children and their parents, brother and sister, immediate family members or
relatives revolve around trust, commitment and care.
When two individuals feel comfortable in each other’s company and decide to be with each other, they enter into a
relationship.
A close association between individuals who share common interests and goals is called interpersonal relationship.
Individuals who are compatible with each other enter into an interpersonal relationship. People must gel well for a
strong and healthy relationship.
Let us go through the various types of interpersonal relationship:
1.
Friendship
Friendship is an unconditional interpersonal relationship where individuals enter into by their own sweet
will and choice.
Friendship is a relationship where there are no formalities and individuals enjoy each other’s presence.
Friendship can be between:
 Man and a woman
 Man and man
 Woman and woman
Must have in friendship:
Transparency is the most essential factor for a stable friendship. Do not hide things from your friends. Be
honest to them.
Guide them whenever required. Never give them any wrong suggestions or advice.
Feelings like ego, jealousy, hatred, anger do not exist in friendship.
The entire relationship of friendship revolves around trust and give and take. No relationship can be one
sided and same with friendship. Try to do as much as you can for your friends.
2.
Love
An interpersonal relationship characterized by passion, intimacy, trust and respect is called love.
Individuals in a romantic relationship are deeply attached to each other and share a special bond.
3.
Platonic Relationship
A relationship between two individuals without any feelings or sexual desire for each other is called a
platonic relationship.
In such a relationship, a man and a woman are just friends and do not mix love with friendship.
Platonic relationships might end in romantic relationship with both the partners developing mutual love and
falling for each other.
4.
Family Relationship
Individuals related by blood or marriage are said to form a family.
5.
Professional Relationship (Work Relationship)
Individuals working together for the same organization are said to share a professional relationship.
Individuals sharing a professional relationship are called colleagues. Colleagues may or may not like each
other.
Interpersonal relationship refers to individuals with similar tastes and mindsets entering into an association.
Individuals who share identical goals and interests enter into an interpersonal relationship. It is essential for
individuals in a relationship to get along well.
Let us go through various factors affecting interpersonal relationship:
1.
Compatibility
Two individuals in a relationship must be compatible with each other. There should be no scope of
conflicts and misunderstandings in a relationship. Individuals from similar backgrounds and similar goals
in life do extremely well in relationships. People with different aims, attitudes, thought processes find it
difficult to adjust and hence fail to carry the relationship to the next level.
2.
Communication
Communication plays a pivotal role in all types of relationships whether it is personal or professional.
Feelings must be expressed and reciprocated in relationships. Individuals need to communicate with each
other effectively for better understanding. Do not stay mum as it leads to problems and misunderstandings.
Two people in love must interact with each other on a regular basis through various modes of
communication such as telephone, emails, letters (though exchanging letter is now considered an outdated
form of communication). Staying in touch is essential for the love to grow especially in long distance
relationships where individuals can’t meet quite often.
In professional relationships as well, colleagues must communicate well for a better bonding. Sit with your
co workers and discuss issues face to face to reach to a mutually acceptable solution.
The recipient must understand what the sender intends to communicate and vice a versa. Clarity of thoughts
is essential in relationships.
3.
Honesty
Be honest in relationships. Do not lie or hide things from your partner. Remember every problem has a
solution. Think before you speak. Transparency is important in relationships.
4.
Stay calm
Do not overreact on petty things in relationships. Stay calm. Be a little more adjusting. Be the first one to
say “Sorry”. It will solve half of your problems.
5.
Forgiving
An individual needs to be a little more forgiving in relationships. Do not drag issues unnecessarily.
Fighting over small issues is foolish and makes the situation all the more worse.
6.
Smile
As they say “Smile is a curve that makes everything staright.” Flash your smile more often. It works. Take
care of your facial expressions while interacting with the other person.
7.
Time
Time plays an important role in relationships. Individuals in love must spend adequate time to know each
other better. Frustrations arise when people do not have time to meet or interact with each other. Even in
organization, individuals must spend quality time with their co workers to strengthen the bond amongst
themselves. Married couples must take time out for each other for the charm to stay in relationship forever.
Make the other person feel important. Appreciate your partner whenever he/she does something for you.
Praise him/her in front of others.
Every relationship needs time and an individual’s effort to grow. Sit with your partner and try to sort out
the differences amicably. Don’t be too rigid.
A strong association between individuals with similar interests and mindsets is called as interpersonal relationship.
No one on this earth can ever stay alone and it is really important for people to have trustworthy friends around.
Interpersonal Relationship Development
Every relationship needs time to grow. One needs time to come really close to someone and trust him/her.
Miracles do not happen in a single day. One needs to be patient enough to understand the other person for the
relationship to grow and reach to the next level.
Various models have been proposed in the field of interpersonal relationship development. All the models suggest
how relationship grows between friends, partners, couples, colleagues and so on.
Let us go through the models one by one:
Knapp’s Relationship Escalation Model
According to Knapp’s relationship escalation model, every relationship goes through the following stages:
Every relationship begins with a stage where two individuals not knowing each other before meet and instantly get
attracted towards each other. In this stage, both the participants try their level best to create an everlasting first
impression on the other person. Individuals show their best side to mark the beginning of a relationship. In this stage
physical appearance, grooming, manners, etiquette play an essential role as individuals do not know each other
much.
In the second stage individuals try to know each other more. They share their likes and dislikes and also try to find
out about the other person’s interests. This stage is characterized by extensive meetings and phone calls so that
individuals get to check their compatibility level.
Case 1 - Individuals are not compatible with each other.
Result - Individuals do not take the relationship forward and decide to end it for a better future.
Case - 2 Individuals are compatible with each other
Result - Individuals decide to continue the relationship
In the third stage, individuals make regular efforts to strengthen their relationship. People make commitments and
prepare themselves for a long term relationship.
The fourth stage begins when individuals in a relationship start doing things together. They are often seen together
shopping, dining, going for movies and so on.
When individuals are really sure about their relationship, they decide to stay together for ever. Individuals enter the
wedlock in the fifth stage.
What is important for relationship Development ?
 Effective communication between partners - It is important for individuals to stay in touch on a regular basis.

Trust

Care

Loyalty

Understanding

Respect for each other
A relationship does not survive if any of the above is missing.
Knapp’s Relationship Termination Model
A relationship ends when individuals do not communicate with each other effectively. Misunderstandings and
confusions arise leading to unnecessary conflicts.
Remember there is no place for ego and jealousy in relationships. One needs to be forgiving for the relationship to
grow. The stagnating stage is often characterized by individuals avoiding each other and not interacting much.
Individuals are no longer interested in each other and physical intimacy also decreases. People decide to move on
from the relationship and opt for mutual separation.
Duck’s Relationship Filtering Model
As the name suggests, Duck’s relationship filtering model consists of many filters, a relationship has to pass
through.
Distance
It is convenient for individuals to start a relationship with someone who stays close by or works with him/her.
Distance does matter in relationships. People staying far off often find it difficult to meet and eventually their
relationship suffers. This explains why long distance relationships are not very successful.
Perception
What one thinks about the other person also affects relationship. Individuals might make wrong perception towards
someone and not decide to continue the relationship.
Physical appearance
How individuals look, speak and present themselves also affect the relationship. Individuals tend to get attracted
towards someone who is charming and confident
Leadership
What is Leadership
Leadership is a process by which an executive can direct, guide and influence the behavior and work of others
towards accomplishment of specific goals in a given situation. Leadership is the ability of a manager to induce the
subordinates to work with confidence and zeal.
Leadership is the potential to influence behaviour of others. It is also defined as the capacity to influence a group
towards the realization of a goal. Leaders are required to develop future visions, and to motivate the organizational
members to want to achieve the visions.
According to Keith Davis, “Leadership is the ability to persuade others to seek defined objectives enthusiastically. It
is the human factor which binds a group together and motivates it towards goals.”
Characteristics of Leadership
1.
2.
3.
4.
5.
It is a inter-personal process in which a manager is into influencing and guiding workers towards
attainment of goals.
It denotes a few qualities to be present in a person which includes intelligence, maturity and personality.
It is a group process. It involves two or more people interacting with each other.
A leader is involved in shaping and moulding the behaviour of the group towards accomplishment of
organizational goals.
Leadership is situation bound. There is no best style of leadership. It all depends upon tackling with the
situations.
Following are the main roles of a leader in an organization :
1.
Required at all levels- Leadership is a function which is important at alllevels of management. In the top
level, it is important for getting co-operation in formulation of plans and policies. In the middle and lower
level, it is required for interpretation and execution of plans and programmes framed by the top
management. Leadership can be exercised through guidance and counseling of the subordinates at the time
of execution of plans.
2.
3.
4.
5.
Representative of the organization- A leader, i.e., a manager is said to be the representative of the
enterprise. He has to represent the concern at seminars, conferences, general meetings, etc. His role is to
communicate the rationale of the enterprise to outside public. He is also representative of the own
department which he leads.
Integrates and reconciles the personal goals with organizational goals- A leader through leadership
traits helps in reconciling/ integrating the personal goals of the employees with the organizational goals. He
is trying to co-ordinate the efforts of people towards a common purpose and thereby achieves objectives.
This can be done only if he can influence and get willing co-operation and urge to accomplish the
objectives.
He solicits support- A leader is a manager and besides that he is a person who entertains and invites
support and co- operation of subordinates. This he can do by his personality, intelligence, maturity and
experience which can provide him positive result. In this regard, a leader has to invite suggestions and if
possible implement them into plans and programmes of enterprise. This way, he can solicit full support of
employees which results in willingness to work and thereby effectiveness in running of a concern.
As a friend, philosopher and guide- A leader must possess the three dimensional traits in him. He can be
a friend by sharing the feelings, opinions and desires with the employees. He can be a philosopher by
utilizing his intelligence and experience and thereby guiding the employees as and when time requires. He
can be a guide by supervising and communicating the employees the plans and policies of top management
and secure their co-operation to achieve the goals of a concern. At times he can also play the role of a
counselor by counseling and a problem-solving approach. He can listen to the problems of the employees
and try to solve them.
A leader has got multidimensional traits in him which makes him appealing and effective in behavior. The
following are the requisites to be present in a good leader:
1.
Physical appearance- A leader must have a pleasing appearance. Physique and health are very important
for a good leader.
2. Vision and foresight- A leader cannot maintain influence unless he exhibits that he is forward looking. He
has to visualize situations and thereby has to frame logical programmes.
3. Intelligence- A leader should be intelligent enough to examine problems and difficult situations. He should
be analytical who weighs pros and cons and then summarizes the situation. Therefore, a positive bent of
mind and mature outlook is very important.
4. Communicative skills- A leader must be able to communicate the policies and procedures clearly,
precisely and effectively. This can be helpful in persuasion and stimulation.
5. Objective- A leader has to be having a fair outlook which is free from bias and which does not reflects his
willingness towards a particular individual. He should develop his own opinion and should base his
judgement on facts and logic.
6. Knowledge of work- A leader should be very precisely knowing the nature of work of his subordinates
because it is then he can win the trust and confidence of his subordinates.
7. Sense of responsibility- Responsibility and accountability towards an individual’s work is very important
to bring a sense of influence. A leader must have a sense of responsibility towards organizational goals
because only then he can get maximum of capabilities exploited in a real sense. For this, he has to motivate
himself and arouse and urge to give best of his abilities. Only then he can motivate the subordinates to the
best.
8. Self-confidence and will-power- Confidence in himself is important to earn the confidence of the
subordinates. He should be trustworthy and should handle the situations with full will power. (You can read
more about Self-Confidence at : Self Confidence - Tips to be Confident and Eliminate Your
Apprehensions).
9. Humanist-This trait to be present in a leader is essential because he deals with human beings and is in
personal contact with them. He has to handle the personal problems of his subordinates with great care and
attention. Therefore, treating the human beings on humanitarian grounds is essential for building a
congenial environment.
10. Empathy- It is an old adage “Stepping into the shoes of others”. This is very important because fair
judgement and objectivity comes only then. A leader should understand the problems and complaints of
employees and should also have a complete view of the needs and aspirations of the employees. This helps
in improving human relations and personal contacts with the employees.
From the above qualities present in a leader, one can understand the scope of leadership and it’s importance for
scope of business. A leader cannot have all traits at one time. But a few of them helps in achieving effective results.
All leaders do not possess same attitude or same perspective. As discussed earlier, few leaders adopt the carrot
approach and a few adopt the stick approach. Thus, all of the leaders do not get the things done in the same manner.
Their style varies. The leadership style varies with the kind of people the leader interacts and deals with. A
perfect/standard leadership style is one which assists a leader in getting the best out of the people who follow him.
Some of the important leadership styles are as follows:
Autocratic leadership style: In this style of leadership, a leader has complete command and hold over their
employees/team. The team cannot put forward their views even if they are best for the team’s or organizational
interests. They cannot criticize or question the leader’s way of getting things done. The leader himself gets the
things done. The advantage of this style is that it leads to speedy decision-making and greater productivity under
leader’s supervision. Drawbacks of this leadership style are that it leads to greater employee absenteeism and
turnover. This leadership style works only when the leader is the best in performing or when the job is
monotonous, unskilled and routine in nature or where the project is short-term and risky.
The Laissez Faire Leadership Style: Here, the leader totally trusts their employees/team to perform the job
themselves. He just concentrates on the intellectual/rational aspect of his work and does not focus on the
management aspect of his work. The team/employees are welcomed to share their views and provide suggestions
which are best for organizational interests. This leadership style works only when the employees are skilled, loyal,
experienced and intellectual.
Democrative/Participative leadership style: The leaders invite and encourage the team members to play an
important role in decision-making process, though the ultimate decision-making power rests with the leader. The
leader guides the employees on what to perform and how to perform, while the employees communicate to the
leader their experience and the suggestions if any. The advantages of this leadership style are that it leads to
satisfied, motivated and more skilled employees. It leads to an optimistic work environment and also encourages
creativity. This leadership style has the only drawback that it is time-consuming.
Bureaucratic leadership: Here the leaders strictly adhere to the organizational rules and policies. Also, they make
sure that the employees/team also strictly follows the rules and procedures. Promotions take place on the basis of
employees’ ability to adhere to organizational rules. This leadership style gradually develops over time. This
leadership style is more suitable when safe work conditions and quality are required. But this leadership style
discourages creativity and does not make employees self-contented.
Situational Leadership
Leaders are essentially people who know their goals and have the power to influence the thoughts and actions of
others to garner their support and cooperation to achieve these goals. In-case of leaders these goals are rarely
personal and generally to serve the larger good. Ever since man was a hunter gatherer and lived in closely knit
groups, they had leaders who led the hunting expeditions and took greater risk than the rest of the group members.
In turn they were bestowed with larger share of hunting, respect and a higher position in the group. With changing
times, how leadership is perceived has also changed, but, it remains an important aspect of social fabric
nevertheless.
The initial theories proposed that leaders are born and cannot be created, there are certain distinct characteristics
possessed by few men which make them leaders. [Read Great Man Theory and the Trait Theory]. However, for the
current discussion we would try and take a closer look at another interesting theory which was proposed called
Situational Leadership Theory. This theory says that the same leadership style cannot be practiced in all situations,
depending upon the circumstance and environmental context the leadership style also changes. The pioneers of this
theory were Kenneth Blanchard and Paul Hersey.
The model encourages the leaders to analyze a particular situation in depth and then lead in the most
appropriate manner, suitable for that situation. The three aspects that need could be considered in a situation
are:
 Employees’ competences
 Maturity of the employees
 Complexity of the task
 Leadership style
In the Situational Leadership model, the leadership style has been divided into 4 types:

S1: Telling - Telling style is associated with leaders who minutely supervise their followers, constantly
instructing them about why, how and when of the tasks that need to be performed.

S2: Selling - Selling style is when a leader provide controlled direction and is a little more open and allows
two way communication between him/herself and the followers thus ensuring that the followers buy in the
process and work towards the desired goals.

S3: Participating - This style is characterized when the leaders seeks opinion and participation of the
followers to establish how a task should be performed. The leader in this case tries creating relationship
with the followers

S4: Delegating - In this case, the leader plays a role in decisions that are taken but passes on or delegates
the responsibilities of carrying out tasks to his followers. The leader however monitors and reviews the
process.
Conflict Management
Whenever two individuals opine in different ways, a conflict arises. In a layman’s language conflict is nothing but
a fight either between two individuals or among group members. No two individuals can think alike and there is
definitely a difference in their thought process as well as their understanding. Disagreements among individuals
lead to conflicts and fights. Conflict arises whenever individuals have different values, opinions, needs,
interests and are unable to find a middle way.
Let us understand conflict in a better way
Tim and Joe were working in the same team and were best of friends. One fine day, they were asked to give their
inputs on a particular project assigned to them by their superior. There was a major clash in their understanding of
the project and both could not agree to each other’s opinions. Tim wanted to execute the project in a particular way
which did not go well with Joe. The outcome of the difference in their opinions was a conflict between the two and
now both of them just can’t stand each other.
The dissimilarity in the interest, thought process, nature and attitude of Tim and Joe gave rise to a conflict between
the two.
Conflict is defined as a clash between individuals arising out of a difference in thought process, attitudes,
understanding, interests, requirements and even sometimes perceptions. A conflict results in heated
arguments, physical abuses and definitely loss of peace and harmony. A conflict can actually change relationships.
Friends can become foes as a result of conflict just as in the case of Tim and Joe.
A Conflict not only can arise between individuals but also among countries, political parties and states as well. A
small conflict not controlled at the correct time may lead to a large war and rifts among countries leading to major
unrest and disharmony.
It is a well known fact that neighbours are our biggest assets as they always stand by us whenever we need them.
Let us take the example of India and China or for that matter India and Pakistan. India and Pakistan are twin sisters
as there is hardly any difference in the culture, religion, climatic conditions, eating habits of the people staying in
both the countries, but still the two countries are always at loggerheads and the reason is actually unknown. Small
issues between the two countries have triggered a conflict between them which has now become a major concern
for both the countries.
Misunderstandings as well as ego clashes also lead to conflicts. Every individual has a different way to look at
things and react to various situations.
Mike wanted to meet Henry at the church. He called up Henry and following was the conversation between them.
Mike - “Henry, I want to meet you tomorrow at 9”
Henry tried Mike’s number a several times but could not speak to him. Mike waited the whole day for Henry and
finally there was a major fight between them. For Mike 9 meant 9 in the morning whereas Henry misunderstood it
for 9 in the evening and hence a major conflict between the two. It is always advisable to be very clear and very
specific to avoid misunderstandings and conflicts. Any feedback or suggestion by an individual might not go very
well with other individual leading to severe displeasure. It might hurt the ego of the other person resulting in a fight
and major disagreement.
Phases of conflict
A conflict has five phases.
1.
2.
3.
4.
5.
Prelude to conflict - It involves all the factors which possibly arise a conflict among individuals. Lack of
coordination, differences in interests, dissimilarity in cultural, religion, educational background all are
instrumental in arising a conflict.
Triggering Event - No conflict can arise on its own. There has to be an event which triggers the conflict.
Jenny and Ali never got along very well with each other. They were from different cultural backgrounds, a
very strong factor for possibility of a conflict.Ali was in the mid of a presentation when Jenny stood up
and criticized him for the lack of relevant content in his presentation, thus triggering the conflict between
them.
Initiation Phase - Initiation phase is actually the phase when the conflict has already begun. Heated
arguments, abuses, verbal disagreements are all warning alarms which indicate that the fight is already on.
Differentiation Phase - It is the phase when the individuals voice out their differences against each other.
The reasons for the conflict are raised in the differentiation phase.
Resolution Phase - A Conflict leads to nowhere. Individuals must try to compromise to some extent and
resolve the conflict soon. The resolution phase explores the various options to resolve the conflict.
Conflicts can be of many types like verbal conflict, religious conflict, emotional conflict, social conflict, personal
conflict, organizational conflict, community conflict and so on.
Conflicts and fighting with each other never lead to a conclusion. If you are not on the same line as the other
individual, never fight, instead try your level best to sort out your differences. Discussion is always a better and
wiser way to adopt rather than conflicts.
Conflict management plays a very important role in preventing conflicts among individuals. How does a conflict
arise? When individuals strongly oppose each other’s opinions and ideas, the probability of a conflict arises. A
conflict starts when individuals think on different lines and find it very difficult to accept each other’s ideas.
Conflict must be avoided as it destroys the peace, lowers the productivity as well as demotivates the individuals.
All the factors leading to a fight must be explored and efforts must be made to prevent a conflict. A conflict is not
very easy to control; an individual needs certain skills for the same.
Let us study the skills in detail.
1.
Effective communication Skills
Effective communication skills are of utmost importance to prevent conflicts. While interacting with
others, you have to take special care of your speech and the way you speak. Never ever shout on anyone,
even if you do not agree with him. Always speak in a polite but convincing manner. Greet others with a
warm smile. It works. Be very specific and precise in your speech. Do not use complicated words and
confuse others. Keep a control on your tongue and do not use words which might hurt the sentiments of
others. Avoid using abusive languages.
2.
Listening Skills
An individual must not give his expert comments unless and until he is very clear what the other person
wants. Always be a good listener. Don’t just jump to conclusions and assume things on your own. Always
listen to the other side of the story as well.
3.
Discussion
Don’t just follow the rumor mills blindly, do discuss with others as well. Differences can crop up anytime
but fighting would provide no solution. It is always better to sit and discuss the issues on an open forum.
All the participants must give their inputs and efforts must be made to find out an alternative. Invite all the
members involved and never ignore anyone as it would never solve the problem. Everyone has a right to
express his views and a middle way has to be found.
4.
Patience
One needs to be very patient to avoid conflicts. There would be people at your workplace and even home
who would try to provoke you to fight. Never ever get influenced. Always follow your instincts and
support what is right. Be very sensible and patient. Learn to keep a control on your emotions. Do not ever
lose your temper as it would only make the situation worse.
5.
Impartial
An individual has to be impartial to avoid conflicts. Do not always support your friend. Stand by what is
correct and never support what is wrong. Any individual, even if he is your friend must be corrected if you
feel he is wrong. Listen to everyone and never ignore anyone just because you don’t know him.
6.
Never Criticize
Make the other person understand if he is wrong. Don’t criticize him as it would definitely hurt his
sentiments. The other person might not be as intelligent as you are, but you have no right to make fun of
him. Others will look up to you if you guide the other person well and make him realize his mistakes.
7.
Positive Attitude
Positive attitude is essential to avoid fights and conflicts. In offices, never ever play the Blame game. No
one is perfect and if you have done anything wrong, have the courage to accept it. Human Beings are
bound to make mistakes but never try to put the blame on anyone else’s shoulders. Avoid backbiting as it
only spoils the relationships. If you don’t agree with anyone’s views, discuss with him on his face, he will
like it. Don’t always find faults in others and be a little more adjusting as life is all about adjustments.
8.
Ignore others
Individuals must try to adopt the middle path approach which considers the interests of one and all. Don’t
unnecessarily waste your energy for a person who is too adamant and is not willing to compromise at all.
Ignore the person who is too demanding as it would solve half of your problems.