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MBA-I Semester

Paper Code: MBAC 1001

Management Concepts & Organisational Behaviour

Unit – I

Nature of Management - Social Responsibili Ties of Business Manager and Environment Levels in Management - Managerial Skills Planning - Steps in Planning Process - Scope and Limitations - Short Range
and Long Range Planning - Flexibility in Planning ¬Characteristics of a
sound Plan - Management by Objectives (MBO) - Policies and Strategies Scope and Formulation - Decision Making - Techniques and Processes
...

Unit – III

Perception and Learning - Personality and Individual Differences
- Motivation and Job Performance - Values, Attitudes and Beliefs - Stress
Management - Communication Types-Process - Barriers - Making
Communication Effective
...

Unit – V

Comparative Management Styles and approaches - Japanese
Management Practices Organisational Creativity and Innovation Management of Innovation - Entrepreneurial Management - Benchmarking
- Best Management Practices across the world - Select cases of Domestic &
International Corporations - Management of Diversity
...


Lesson Outline
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Management As Science
Management As Art
Management As Profession
Professionalisation Of Management In India
Functions Of Management
Review Questions

3

Introduction:

Take a close look at the society around you
...
To mention a few, the business
organizations that produce goods or services, hospitals, religious and
social institutions like charities, schools, colleges and universities
...
They affect our
lives in many ways
...
It must also
be noted that organizations cannot achieve the objectives effortlessly
...
Several activities have to be
performed in a cohesive way
...
As such it is the
function of the management to facilitate the performance of activities such
that the accomplishment of the objectives becomes possible
...

Economists regard it as a factor of production
...
For our understanding, management may be viewed as what a
manager does in a formal organization to achieve the objectives
...
This definition throws light on the fact that managers
achieve organizational goals by enabling others to perform rather than
performing the tasks themselves
...
That is why, it
is often said that there are as many definitions of management as there are
authors in the field
...
F
...

According to him:

“Management is the process of planning, organizing, leading and
controlling the efforts of organization members and of using all other
organizational resources to achieve stated organizational goals”
...


It is evident that the emphasis is on achieving the objectives by
using material, machinery, money and the services of men
...
Whether
an organization is engaged in business or non-business, the various inputs
are judiciously used to produce the outputs
...
1

INPUTS

TRANSFORMATION
PROCESS

OUTPUTS

EXTERNAL
ENVIRONMENT

Figure 1
...

Since a business organization is an economic entity, the justification for
its existence lies in producing goods and services that satisfy the needs of
the people
...
Environment here means the larger
system, i
...
, the society in which the firm exists
...
Effective
management therefore plays a crucial role in this context
...
In fact,
much of the progress of mankind over the centuries may be attributed to
the effective management of resources
...
Similarly, the ancient civilizations of
Mesopotamia, Greece, Rome and Indus-valley displayed the finest practices
of management of those periods
...

That is why, management is often described as “oldest of the arts and
youngest of the sciences”
...
It
has been practiced for thousands of years
...


The traditional management practices remained quite stable
through the centuries until the birth of industrial revolution in the mid
18th century
...

As a result, within a few decades, the landscape of industrial activity
had undergone a metamorphic change
...



Industrial revolution had thus sown the seeds of modern
management
...
Despite the growing importance of management
6

as an academic discipline immensely contributing to the quality of
human life, it is disheartening to know that the concept is still clouded
by certain misconceptions
...
It has grown
in stature and gained acceptance all over the world
...
Certain questions like whether management is a science or art or
profession are yet to be answered in a satisfactory way
...
Any branch of
knowledge to be considered a science, (like the ones we have – physics,
chemistry, engineering, etc
...


Looked at from this angle, management as a discipline fulfils the
above criterion
...
Principles help any
practicing manager to achieve the desired goals
...
Thus, the importance of
personal judgment cannot be undermined in the application of principles
...
It is multi-disciplinary in nature, but a word of caution
...
In other words, it is a science, but an ‘inexact
science’ because:
ӹӹ Firstly, management by definition involves getting the things
done through people
...

Dissimilarities in the behavior pattern are so obvious that standard
research may not be obtained in otherwise similar conditions
...
Hence, readymade and standard solutions cannot be
prescribed
...
As the saying goes, ‘many a slip
between the cup and the lip’, changes in the environment may affect
the plans and render even the most well drawn plans ineffective
...
The organization
influences the environment by its several decisions and in turn
is influenced by the various elements of the environment
...
The whole thing is so complex that
however effective the plans are, one is prone to be taken over by
the unexpected changes in the environment
...
Too many complexities and
uncertainties render management an ‘inexact science’
Management as an Art

Art refers to the ‘know-how’ – the ways of doing things to
accomplish a desired result
...
As the saying goes ‘practice makes a man perfect’,
constant practice of the theoretical concepts (knowledge) contributes for
the formation and sharpening of the skills
...
In a way, the attributes of science
8

and art are the two sides of a coin
...
Management is no exception
...
In both the cases, the application
of the knowledge acquired through formal education, requires ingenuity
and creativity on the part of the practitioner
...


Effective practice of any art requires a thorough understanding of
the science underlying it
...
Executives who attempt to manage without the
conceptual understanding of the management principles and techniques
have to depend on luck and intuition
...
Therefore, it may be concluded that ‘management is both a science
and an art’
...

Therefore, it is appropriate to know whether management is a profession
...



A closer examination of management as a profession reveals
that unlike medicine or law, management has to go a long way to attain
universally acceptable norms of behaviour
...
The apex level body, the
All India Management Association (AIMA) or NIPM [National Institute
9

of Personnel Management] provides only guidelines and does not have any
controlling power over the erring members
...
Many a time, in their obsession with profit, the societal
interests are either neglected or compromised
...
While making decisions, they should
be conscious of the impact of their decisions on the society
...
After all, given the enormous resources they have at their
command, the expectation that managers should address themselves to
the problems of society is not unnatural
...
, the entry to management
profession is not restricted to individuals with a special degree
...
B
...
To quote Peter Drucker, “no
greater damage could be done to an economy or to any society than to
attempt to professionalize management by licensing managers or by
limiting access to management to people with a special academic degree”
...
The successes
achieved by a few visionaries and great entrepreneurs are often sighted
in support of the argument
...
The native wisdom coupled with their vision in understanding
the market and organizing the enterprises helped them earn name and
fame
...
The Marwaris and Parsees in the north and Chettiars, and
Naidus in the south India, the Jews in the west and the Samurai community
in Japan, for instance, offer a classic example of such success stories
...


At the same time, it may be realized that the achievements of the
pioneers of the industrial development need not shadow the importance
10

of management as a profession
...
There has been a sea change in the
environment of the business
...



All these variables which have a significant bearing on the
functioning of a business point to the need for formal training and
acquisition of skills by pursuing management education
...

Professionalisation of Management in India

In the last few years, management as a profession has gained a firm
footing in India
...
Consequently, there has been a manifold
increase in the number of institutes offering MBA and related diploma
courses resulting in a phenomenal increase in the number of students
seeking admission into the management programs
...
Forexample, the
specialized programs to cater to the specific needs of the sectors like Hotel
and Tourism Industry, Transport, Health care, Foreign trade, etc
...
As a consequence, competition has
increased in all the sectors of the economy, forcing the firms to
be efficient;
11

ӹӹ Private industrial houses which were indifferent before, have
fully realized the need for professional managers
...
The Murugappa Group’s infusion of
professional managers, rather than family-based experts, into the
top posts is case in point
...
As a result, qualified managers are
sought after by PSUs than ever before
...
The campus
visits by scheduled banks [in both private and public sector] stand
as a testimony to what is in offing to the demand for professional
managers
...
It is because this approach
lays emphasis on what a manager does
...
There is no consensus among
the management thinkers on the classification of management functions
...
Henry Fayol identifies five functions, viz
...
Newman and
Summer recognize only four functions, namely – planning, organizing,
staffing, and directing
...
For the purpose
of our study, we shall confine the discussion to the following five functions
of management – planning, organizing, staffing, directing and controlling
...
It is preparing for the future
...
Planning makes the things
to happen
...
Planning is unique in that it precedes all the other
managerial functions
...
Effective planning provides
answers to questions like – what to do? How to do? Who is to do? and
when to do?

Planning is a function performed by managers at all levels
...
For example, plans made by top
managers have a wider scope with a focus on the organization as a whole
and normally cover a longer period
...
Systematic planning helps in facing the
uncertainties of future with less embarrassment
...

Organizing

Organizations achieve objectives by using physical and human
resources
...
In
other words, organizing involves establishing authority - responsibility
relationships among people working in groups and creating a structural
framework
...
Organizing therefore
involves:
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ

determination of activities required to achieve goals;
grouping of these activities into departments;
assignment of such groups of activities to a manager;
delegation of authority to carry them out; and
provision for coordination horizontally and vertically in the
organization
...
The
resulting structure varies with the task
...

Similarly, structure of an organization operating in a stable environment
may be different from the one operating in a dynamic environment
...
Staffing involves manning the various positions of the
organisation
...
There is a
debate whether staffing function is to be performed by all managers in the
organisation or handled by human resources department alone
...

For example recruitment and selection, training, fixation of salary, etc
...


Directing

Once plans are made and the organisation is created, the focus shifts
to the achievement of objectives
...
It basically involves
directing or leading the activities of the people
...
In leading the people,
the manager performs the following three distinct tasks:

Communication
:
the process of information flow from

one person to another and across the
organization;

Leadership
:
the process by which a manager

guides and Influences the work of his
subordinates; and

14


Motivation
:
the act of stimulating the people so


that they give their best to the

organisation
...
In
the organizational context many problems arise because of the failure
of managers to understand the people, their aspirations, attitudes, and
behaviour as individuals and in groups
...

Controlling

Planning and controlling – the two functions are closely interrelated
in that while plans specify the objectives to be achieved, control as a
managerial function facilitates to know whether the actual performance
is in conformity with the planned one
...
In the absence of adequate
control mechanism, unexpected changes in the environment may push
the organisation off the track
...
That is
why planning and controlling are often described as the ‘Siamese’ twins of
management
...

Review Questions
1
...

Discuss
2
...

3
...
Briefly describe the functions of management?
15

5
...
]

***

16

Lesson – 2 : Levels In Management

Objectives
After reading this lesson, you should be able to:
ӹӹ Describe The Levels In Management;
ӹӹ Understand The Skills Required At Each Level Of Management;
And
ӹӹ Appreciate The Roles Played By Managers
...
Though their primary task remains the
same – getting the things done by other people, wide variances exist with
regard to the authority and responsibility of managers
...
Based on
the scope of authority and responsibility, management job requires many
skills and talents
...
1
...


TOP LEVEL MANAGEMENT


MIDDLE LEVEL MANAGEMENT


FRONT-LINE/SUPERVISORY
MANAGEMENT

Figure 2
...
Usually the
jobs at this level are the entry level positions into management profession
...
They
are close to the action for their job involves supervising the activities of
operatives
...
For instance, in
a manufacturing concern, in marketing, finance and others departments,
they are called management trainees or junior executives
...

Middle level Management

Middle management level includes in many organizations more
than on level
...
Departmental heads, Regional
managers, Zonal managers and so on fall in this category
...
Their principal responsibilities are to direct the activities of
lower level managers who implement the organization’s policies
...

This is the policy making level in any organization
...
Board of Directors, Chairman, Managing
Director and the top functional heads such as COO, CIO, and such other
C-suite managers, and divisional managers comprise this level
...

They decide the enterprise objectives, policies and strategies to be pursued
to achieve the objectives
...

Managerial Skills

Management job is different from other jobs
...
It involves the obligation
to make prudent use of human and material resources
...
Further, the nature of the job
becomes increasingly complex at each higher level because of the increase
in the scope of authority and responsibility
...


For the purpose of analysis, skills required of a manager are
classified under three heads – technical, human (employee relations
skill) and conceptual skills as shown in Figure 2
...
The exhibit helps in
understanding the levels of management responsibility, the principal skill
requirements, and the extent to which each kind of skill is required at each
level
...
2: Management Levels and Skills

19

Technical Skills

Technical skills refer to the ability to use the tools, equipment,
procedures, techniques and knowledge of a specialized field
...
It implies proficiency in
a specific field of activity
...
Effective supervision and coordination of the work of the
subordinates, therefore, depends on the technical skill possessed by the
lower level manager
...
Such supervisors are not respected by
the subordinates at the shop floor
...

Human Skills

Human skills are primarily concerned with “persons” in contrast
to “things”
...
He accepts as an important fact of
life, the existence of viewpoints and feelings, different from his own
...
It is
the ability to work with, understand and motivate people
...
He can foresee their reactions to possible courses
of action
...

He does not apply it in random or in inconsistent fashion
...
The flair for understanding, empathizing
and working with people are central to the human skills
...



Conceptual skills extend to visualizing the relation of the organization
to industry, to the community and to the political, economic and social
forces of the nation as a whole and even to forces which operate beyond
the national boundaries
...

A high degree of conceptual skill helps in analyzing the environment and
in identifying the opportunities and threats
...


As you have understood by now – the three types of skills discussed
so far are not mutually exclusive
...
There is a gradual shift in the emphasis from
the bottom to the top of the pyramid
...
It is there where you
find most of the people
...
In contrast,
the need for conceptual skill is greatest at the top level of management
...


As evident from the foregoing discussion, at the entry level of
the management job, that is, at the supervisory level, besides technical
skills, a manager has to process human skills and the problem-solving
skills (conceptual)
...
As result, in the event
of promotion to the next higher levels, he/she would feel at home and
discharge the responsibilities with ease
...
Accordingly, appropriate training,
21

development methods and programs are designed to equip them with the
skills required at the respective levels
...
But they are able
to compensate the lack of that skill through superior creative ability and
skill in identifying the talent and empowering the people through effective
human resources development practices and good leadership
...
A
role, according to him, “Is an organized set of behaviors belonging to an
identifiable office or position
...
Through his studies, Mintzberg
identified ten roles that managers play at various times to varying degrees
...
Figure 2
...

MANAGEMENT ROLES AS IDENTIFIED BY MINTZBERG
ROLE

Figure head

Leader

Description

Interpersonal
Symbolic
head;
obligated to perform
routine duties of a legal
or social nature
...


22

Identifiable activities
from the study of Chief
Executives
Ceremony,
status
requests, solicitations
...


Liaison

MONITOR

Disseminator

Spokesman

Nurtures
and
maintains network of
outside contacts
...

Informational
Seeks and receives
wide
variety
of
special
information
from
different
sources
...

Transmits information
received from both
within and outside
the
organization
to members of the
organization;
some
information factual,
some
involving
interpretation
and
integration of diverse
value
positions
of
organizational
influencers
...


All
activities
concerned primarily
with
receiving
and
processing
information
...


Entrepreneur

Disturbance handler

Resource allocator

Negotiator

Decisional
Searches
the
environment
for
opportunities
and
initiates action to
bring about changes;
supervises
design
of
strategy
and
review
sessions
involving
initiation
or improvement of
projects
...

Responsible
for
the
allocation
of
organizational
resources of all kinds;
making or approval
of
all
significant
organizational
decisions
...


Scheduling
requests
for authorization; and
activities
involving
budgeting and the
programming
of
subordinates work
...




As Mintzberg points out, these roles are not independent of one
another
...
The interpersonal roles arise
out of the manager’s authority and status in the organization and involve
interactions with people
...
By playing interpersonal and informational roles, the manager is
able to play the decisional roles; allocating resources, resolving conflict,
24

seeking out opportunities for the organization, and negotiation on behalf
of the organization
...

Review Questions
1
...

2
...

3
...
How do good conceptual skills a firm gain
competitive advantage? Give appropriate examples
4
...


***

25

26

Lesson - 3 : Social Responsibilities Of Business

Objectives
After studying this lesson, you should be able to:
ӹӹ Understand The Concept Of Social Responsibilities Of Business;
ӹӹ Examine Clearly The Interest Of The Various Stakeholders In
The Business; And
ӹӹ Familiarize With The Arguments For And Against The Social
Responsibilities Of Business
...
An organization is understood as
importing various kinds of inputs such as human and capital resources
which are transformed into outputs such as products or services
...
As a result, an
inextricable link between the organization and the society may be seen
...

27


In this connection, it may be understood that in the olden days,
the mission of the business was purely economic in nature
...
Modern societies are increasingly looking up to the
business concerns for the reddressal of many of the social problems
...
,instituted by agencies like FICCI,
FII, Business India and so on
...

Social responsibility-Meaning and Scope

According to Keith Davis’ social responsibilities of business refers
to “the businessman’s decisions and actions taken to reasons at least
partially beyond the firms direct economic or technical interest”
...


H
...
Bowen’s observation on social responsibility is clearer and
point to the specifics of the concept
...
Thus as the above definitions indicate, the concern
for the society on the part of managers imply a particular behavior which
is in line with the societal interests
...

Responsibilities to Various Groups

In a broad sense, business owes a lot to the various groups such
as customers, employees, shareholders, government and the community
at large in which it exists
...
Let us examine
28

how an organization responds in socially responsible ways to cater to the
growing demands of all these interest groups
...
Customer service should be
the motto of the business
...
Therefore every manager in order
to serve the customers in an effective way should restrain from:
ӹӹ making misleading advertisements aimed at deceiving the
consumer;
ӹӹ giving wrong or false information about the ingredients, quality,
origin, etc
...

Towards Employees
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ

proper selection, training and promotion;
recognition of the value of human resource;
maintaining cordial relations with employees;
recognition and encouragement of constructive unionism;
fair wage in relation to the cost of living;
better working conditions;
initiating appropriate measures for the development of human
resource; and
ӹӹ increase in productivity and efficiency by recognition of merit, by
providing opportunities for creative talent and incentives
...
In view of the
several practical limitations for them in overseeing the day-to-day
operations of the business, an organization must strive to provide:
ӹӹ
ӹӹ
ӹӹ
ӹӹ

Security to their funds;
A fair rate of return on their investment;
Correct information about the operations of the company; and
Proper appreciation of the value of their investment in the
company by identifying new opportunities that contributes for
the growth of the business
...

Business has, therefore, certain responsibilities to them
...

Towards Government

Government provides various facilities for the development
of business
...
Therefore, business also in turn owes to the government
in the following ways
...

Towards Society at Large

Any business organization can exist as long as it enjoys societal
sanction
...
such a situation
eventually leads to the promulgation of various acts by the government
...
Some managements conduct their affairs in such a responsible
way where governments intervention is not warranted
...
An organization can act in a socially
responsible way by:
ӹӹ Properly deciding the product policies in line with the national
priorities;
ӹӹ Preventing the creation of monopolies;
ӹӹ Ensuring hygienic disposal of smoke and waste and other
affluents;
ӹӹ Providing to the community accurate information about its
working; and
ӹӹ Preserving the national resources of the nation by not indulging
in reckless exploitation of the resources, etc
...

The views may be broadly classified under two categories: those for and
against the social responsibilities of business
...
According to Friedman, socially responsible business is concerned
primarily with efficiency and providing its owners with the best possible
31

return on investment within the parameters established by law and ethical
conduct
...
If business directly deals with social
problems, the costs of doing will be reflected in the prices of goods and
services
...
Organizations should sacrifice a little for the good of the society
...
One’s
views on the correct role of business in society are influenced by one’s
values
...
All the
view points are presented in the form of arguments for and against social
involvement of business
...
Public needs have changed, leading to different expectations
...

2
...
Society gains through better neighborhoods and
employment opportunities; business benefits from a better
community which is the source of its labor and where it sells its
products and services
...
Social involvement discourages additional government regulation
and intervention
...

4
...

5
...

6
...

7
...
Items that may once have been
considered waste (for example, empty soft drink cans) can be
32

profitably used again
...
Social environment creates a favorable public image
...

9
...
After all, business has a history of coming
up with novel ideas
...
Business has the resources
...

11
...
It may be more effective to help the hard-core
unemployed than to cope with social
...
The primary task of business is to maximize profit and to focus
strictly on economic activities
...

2
...
Social involvement may create
excessive costs to business and keep it from committing its
resources to economic opportunities
...
Business has enough power, and additional social involvement
would further increase its power and influence
...
Business people lack the social skills to deal with the problems of
society
...

5
...
Unless
accountability can be established, business should not get involved
...
There is not complete support for involvement by business in
social actions
...

In spite of the growing concern for the social problems, it has to be
remembered that profit is essential for the survival of business organization
...
As
such, every organization has to strike a balance between making profits
and discharging social responsibilities
...


According to Keith Davis, “Social Responsibilities refer to the
businessman’s decisions and actions taken to reasons at least partially
beyond the firm’s direct economic or technical interest”
...


H
...
Bowen’s observation on social responsibility is more clear and
point to the specifics of the concept
...
Thus, as the above definitions indicate, the concern
for the society on the part of managers implies a particular behaviour
which is in line with the societal interests
...

Responsibilities to Various Groups

In a broad sense, business owes a lot to the various groups such
as customers, employees, shareholders, government and the community
at large in which it exists
...
Let us
examine how an organization responds in socially responsible ways to
cater to the growing demands of all these interest groups
...
Customer service should
be the motto of the business
...
Therefore, every manager in
order to serve the customers in an effective way should restrain from:
ӹӹ making misleading advertisements aimed at deceiving the
consumer;
ӹӹ giving wrong or false information about the ingredients, quality,
34

origin, etc
...

Towards Employees
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ

proper selection, training and promotion;
recognition of the value of human resource;
maintaining cordial relations with employees;
recognition and encouragement of constructive unionism;
fair wage in relation to the cost of living;
better working conditions;
initiating appropriate measures for the development of human
resource;
ӹӹ increase in productivity and efficiency by recognition of merit;
and
ӹӹ providing opportunities and incentives for creative talent
...
In view of the several
practical limitations for them in overseeing the day-to-day operations of
the business, an organisation must strive to provide:
ӹӹ
ӹӹ
ӹӹ
ӹӹ

security to their funds;
a fair rate of return on their investment;
correct information about the operations of the company; and
proper appreciation of the value of their investment by identifying
new opportunities that contribute to the growth of business
...

Business has, therefore, certain responsibilities to them
...

Towards Government

Government provides various facilities for the development
of business
...
Therefore, business also in turn owes to the government
in the following ways;
ӹӹ Business enterprises should act like law-abiding citizens;
ӹӹ Taxes and other duties should be paid timely and honestly;
ӹӹ Compliance with the rules and regulations as stipulated by various
laws of the land; and
ӹӹ Supplementing the governments efforts in the developmental
activities, etc
...
If it fails to safeguard the interests of the society, the pressure
from various segments of the society mounts up
...

That is why, it is always desirable for the business to keep the government
at bay
...
For instance, the
origin of several laws governing the business organizations may be traced
back to the failure of business organizations in protecting the interests
of the various groups in the society
...


Review Questions
1
...

2
...

3
...
Examine the statement and present your views
...

4
...


***

37

38

Lesson – 4 : Manager And Environment

Objectives
After reading this lesson, you should be able to:
ӹӹ Understand The Importance Of Environment In Business;
ӹӹ Explain The Dynamics Of Environment ;And
ӹӹ Explain The Various Forces In The Environment That Affect
Business
...

As explained in Lesson – 1, all organizations whether engaged in business
or non-business draw the inputs from the environment, convert the
inputs into outputs and send them back to the environment
...


A business organization is an open system which is influenced by
the environment and in turn influences the environment
...
The former refers to the various systems inside the
organization such as, technology, structure, processes and people
...
As such, this lesson focuses on the important variables
of the external environment which have a bearing on the successful
functioning and survival of the business
...
It was
one of the major contributions of the systems approach to management
which emphasizes and stresses the need for managers to view their
organization as an entity of interrelated parts intertwined with the outside
world
...
As Alvar Elbing states, “the external environment of
an organization is a subject of increasing challenge for today’s managers”
...
As all these effect the organization’s very survival, management
must be able not only to identify the factors in its environment but also to
cope with them
...

According to Charles Darwin’s theory of evolution, the species that have
survived have done so because they were able to evolve and adapt to
changes in their environment
...

Direct Action versus Indirect Environment

The external environment affecting the organisation may be
divided into two major categories – Direct action and Indirect action
environment
...
These
factors include suppliers, labor unions, and the various laws of the land,
customers and competitors
...
These
include such factors as technology, socio-cultural and political factors,
general economic conditions and so on
...


40

Direct Action Environment
Suppliers

As already understood, an organization is a vehicle for transforming
inputs into outputs
...
The relationship between the organization and
the suppliers of these inputs presents the forces in the environment that
directly influence the operations of a firm
...

Laws

Virtually every aspect of the business is influenced by the laws of
the land
...
For instance, The Companies Act, Factories
Act, Workmen’s Compensation Act, Industrial Disputes Act, Provident
Fund Act, just to name a few, affect the functioning of the business
...

Customers

The justification for the existence of a firm lies in the satisfaction
of customer needs
...

Drucker’s observation on the purpose of business
...
There is no exaggeration
that it is customers in the market place who dictate the fortunes of any
business
...
Customers’ tastes and preferences are not static, but keep on
changing
...
Organizations which are adept in identifying the changes in the
customers’ attitudes and preferences or which can comfortably respond
to the changes would survive and those which fail to take cognizance of
changes would ultimately fall on the way side
...

In a competitive environment, the market place is characterized by moves
and countermoves
...
In the last few years, in almost all the sectors of the Indian
economy, competition has tremendously increased
...
They are forced to unlearn
many of the practices and attitudes of the pre-liberalization/protection era
...

Indirect Environment

Indirect environment of business is usually more complex and
uncertain than the direct
...
Let us,
therefore, examine the impact of these factors on the business
...
It influences various processes
...
Important technological developments that have profoundly
affected the organizations and society in the last two decades are the
computer, cell phone technology, laser, xerography, integrated circuits,
semiconductors, television, satellite communication, nuclear power,
synthetic fuels and foods, etc
...
Therefore, today’s organizations need to
keep abreast of technological changes that affect their operations and
products so as to remain competitive
...
It
endangers the very survival of the organization
...
In some industries where technology is stabilized, the changes
are less frequent and less turbulent
...

changes are frequent
...

Economic Conditions

Managers must also assess how changes in general economic
conditions will affect the operations
...
have far reaching impact on
the prosperity of the business
...
Organizations’
must be able to tackle effectively the inflationary and recessionary trends
in the economy
...
Problems arise
when the economy turns downswing
...
Efficiency
in operations, elimination of wastage, product planning, etc
...
As
business organisations, in terms of size and impact, have grown into mega
institutions, their failure will have disastrous effects on the society
...
Further, it is important to note that a given change in
economic environment may have a positive effect on some organizations
and a negative effect on others
...

Socio-Cultural Factors

Organisations are affected by the culture of the particular society in
many ways
...
Otherwise, they
43

find it difficult to gain the acceptance of the society
...


Culture is a wider concept which includes value systems, beliefs,
likes and dislikes, altitudes and perceptions
...
For instance, in India ‘Miss’ brand cigarette targeted at the
women was a failure because it is against the cultural ethos of the society
...
At the same time, it may be
remembered that certain products and services also affect the culture of
a place
...


As such, an organization cannot insulate itself from the sociocultural factors specific to a community
...
In some countries such practices are seen as normal
and accepted business practices because of differing socio-cultural
factors
...
He states that “organizations must be
able to anticipate the changing expectations of society; and serve them
more effectively than competing firms
...

Political Environment

The performance, growth and survival of business in general,
to a larger extent, depend on the attitude of the government towards
business
...
The continuity of policies is very
much essential
...
For instance, the attitude of the government in India
towards foreign companies has undergone dramatic change in the last two
decades
...
There were several other restrictions on the equity holding of
foreign partners
...


The cooperation that exists between business and government in
Japan has in fact helped the Japanese Companies to conquer the world
markets in the last few decades
...
In India too, of late, we see a lot of change in
the attitude of the government both at central and state level towards the
business
...


The various factors discussed so far highlight the impact of the
environment on the business
...
are able to go global, it
is precisely because of their ability to assess the changing environment
effectively and to adapt to the changes with considerable case
...


Review Questions
1
...

2
...

3
...


***
45

46

Lesson - 5 : Planning

Objectives
After reading this lesson, you should be able to:
ӹӹ
ӹӹ
ӹӹ
ӹӹ

Understand The Principles And Purpose Of Planning;
Explain The Steps In Planning;
Describe The Strategic/Long Range Planning; And
Distinguish Operational Planning From Strategic Planning
...
The choice is only in regard to
the method and techniques used to plan
...
We plan to go on a holiday trip,
plan our careers, and plan our investments and so on
...
Lot of planning is done by managers at all levels
...
Lot of information has to be gathered and
processed before a plan is formulated
...
All the pieces have to be put together properly, so that they make
sense
...
It is looking into the
future
...

It involves visualizing a future course of action and putting it in a logical
way
...

ӹӹ “Failure to plan is planning to fail”
...

ӹӹ “Planning is looking ahead”
...

ӹӹ “Plan is a trap laid down to capture the future”
...
In such a case, you as a manager are depending on luck
...
Organizations
often fail not because of lack of resources, but because of poor planning
...

The following factors further highlight the importance of planning;
a
...

ӹӹ Why am I making this plan?
ӹӹ What am I trying to accomplish?
ӹӹ What resources do I need to execute the plan?
Objectives are the ends sought to be achieved by the organizations
...

In other words, they force you to be clear about the objectives, the time
frame required to achieve them and the resources required
...
The saying that “when a man
doesn’t know what harbour he is making for, no wind is the right wind” is
quite appropriate in the case of planning
...
All the important inputs necessary to
achieve the objectives are carefully thought of
...

48

b
...
They are rather pro-active
...
In any modern business,
the interests of many people are involved
...
Further, the interests and expectations of all these
groups are varied and at times are in conflict
...
In the light of the uncertainties
involved in the environment, your job, as a manager, is to foresee the future
and predict the consequences of actions
...
A well thought out plan solves many of the problems associated
with the future
...
Plans help to cope with change

Organizations are products of environment
...
Alert managements continually tune in to the
environmental forces
...
Therefore, in the managerial job,
you have to constantly analyze the impending changes in the environment
and assess their impact on your business
...
Markets are shifting due to increased competition
...
Expectations of the employees as well
as the consumers are changing
...
All these changes exert a tremendous
pressure on the management
...
Plans double up as tools to control the events

Planning and control are often described as the ‘Siamese’ twins
of management
...
The specific objectives decided in advance themselves
become the standards
...

49

Planning ensures the events to conform to plans
...
Control assumes
significance in a dynamic environment as of today, where several forces
push you away from reaching the goal
...

Principles of Planning

Systematic planning is essential for the success and survival of any
organization
...
An understanding of the following
principles helps one to achieve effectiveness in planning, so that you can
guard yourself against the possible mistakes that are often committed by
managers
...
Take Time to Plan

As the plan is a decision regarding a future course of action,
it specifies the sequence of events to be performed
...
Therefore, if
a plan is not conceived well, the resources would be put to wrong use
...
To avoid
such unpleasant outcomes, several probing questions have to be asked
...

Otherwise, you may save some time in quickly developing a plan, but in the
event of things going wrong, you are hard pressed for time and resources
to correct yourself
...

ii
...
These plans are wider in scope and provide the
direction to the whole organization
...
The overall plan thus formulated by the
top management is split into departmental plans
...
The other operational plans at various levels
down the organization flow from the departmental plans
...


In contrast, bottom-up approach involves information emanating
from the lower levels – that is, top management collects information from
lower levels
...
The
underlying assumption is that people at the operational level are closer to
the action and they possess valuable information
...

This approach makes use of the rich experience of the subordinates
...
However,
the choice of the method depends on the size of the organization, the
organizational culture, the preferred leadership style of the executive and
the urgency of the plan
...
Involve and communicate with all those concerned

Modern business organizations are so complex that various
operations are highly interrelated
...
For instance, a plan to improve the quality of the products (Quality
control plan) may require the cooperation of the people in the production
...
They also in turn gain a sense of pride for having been a party
in deciding the plan
...
If concerned people are not involved, there may be
unnecessary gaps in the execution because of lack of understanding of the
plans
...
Plans must be flexible and dynamic

Your managerial career indeed would be a “bed of roses” if there
are no unexpected changes in the environment
...
Most of such problems are caused by unexpected events in
the environment
...
In a static environment, of course, there may not be a
51

problem with a rigid plan
...

Otherwise, the plan itself becomes a limiting factor
...
Evaluate and revise

While building into the plans the required flexibility, you should
not lose sight of the additional costs involved to buy such flexibility
...

For example, a plan for a petroleum refinery may not offer any flexibility
because the machinery can hardly be used for any other purpose
...
Like a pilot, who in the high skies checks
the course to make sure that he is flying in the right direction and at the
right altitude, the manager has to evaluate and review the plan
...
This depends on the accuracy of the information systems in
the organization
...
Setting of goals

Planning begins with decisions about what the organization wants
to achieve during a specified period
...
It is always
desirable to express the goals in quantitative terms for all the key areas of
the business like production, profit, productivity, market share, employee
relations, social responsibilities, etc
...
The time frame in which the objectives have to be achieved
must also be specified
...
Thus what to achieve, when,
how and with what resources are a few important questions that should be
answered at this stage
...
If Telco is able
to retain its dominance in the Heavy Commercial Vehicle (HCV) segment,
it is because all the employees of the organization know clearly that the
primary objective is retaining the leadership in the industry
...
The mission of the
organization, the corporate values, experience, polices provide adequate
guidance to the managers in goal setting
...
Outlining Planning premises

Planning premises, in simple, are the assumptions about the various
elements of the environment
...
Appropriate assumptions
have to be made on various aspects of the environment – both internal
and external to the organization
...

i
...
Each one of these elements is a critical
success factor
...
Similarly, however
effective the objectives are, it is the people who have to perform and
achieve
...

ii
...
They include issues
related to technology, general economic conditions, government policies
and attitude towards business, demographic trends, socio-cultural changes
in the society, political stability, degree of competition in the market,
availability of various resources and so on
...
For example, material and human resources availability,
etc
...
On
the other hand factors like political stability, attitudes of the people,
certain other sociological factors are intangible, in that they cannot be
53

measured quantitatively
...
Though accurate premising
is difficult, anticipating future situations, problems and opportunities
would undoubtedly help the managers in reducing the risk, though not
completely eliminating it
...
Decide the planning period

How far in the future should a plan be made is another pertinent
question in the process of planning
...
In some cases plans are made for a short period, varying from a
few months to a year, while in some other cases, they are made to cover
a longer period, to cover a period of more than a year
...
Companies normally plan for a
period that can be reasonably anticipated
...
Again, in the same organization, different plan periods
may exist for different purposes
...
While operational
plans focus on the short-term, strategic plans focus on the long-term
...
Develop alternatives and select the course of action

The next logical step in planning involves the development of various
alternative courses of action, evaluating these alternatives and choosing
the most suitable alternative
...
For example, technical know-how may be
developed by in-house research, collaboration with a foreign company or
by tying up with a research laboratory
...

Technical feasibility, economic viability and the impact on the society
are the general thumb rules to select the course of action
...

e
...
To make it operational, it has to
be split into departmental plans
...
The plans thus developed
for the various levels down the organization are called derivative plans
...
Its effective execution is possible
only when specific plans are finalized for the various departments like
production, marketing, finance, personnel and so on with clear-cut
objectives to be pursued by these departments
...
Review periodically

Success of the plan is measured by the results and the ease with
which it is implemented
...
To make
sure that the plan is contributing for the results, its review at regular
intervals is essential
...

Why plans fail?
Effective planning is not an easy task
...
Planning suffers from the following limitations
...
Cost and time
Planning is quite a costly and time consuming process
...
By the
time a plan is established, the environment might change and this requires
a complete revision of the plan
...

2
...
As the period
of planning increases, the accuracy of forecasting diminishes
...


55

3
...

This reduces individual initiative and causes delay in decision making
...

4
...
These are very difficult to predict and make
execution of plans very difficult
...

5
...

The human element in an organization always resists change
...

Planning being forward looking is always affected by this resistance to
change
...
The reasons for failure of people in planning may
be due to a number of reasons like lack of commitment to planning, lack
of delegation of authority, excessive reliance on past experience, tendency
to overlook premises, etc
...
So as to avoid the
pitfalls in planning, make sure of the following;
ӹӹ Set realistic and achievable goals;
ӹӹ Communicate the assumptions on which plans are formulated to
all the people and departments concerned;
56

ӹӹ Encourage and make people participate in the planning program
so as to ensure the right commitment;
ӹӹ Ensure proper coordination between the short-term and longterm plans
...
Creativity helps in identifying
the best alternatives; and
ӹӹ Pay attention to the resources position of the organization so as to
ensure the availability as and when required
...
Obviously, without setting the goals
to be reached and the lines of actions to be followed, there is nothing to
organize, to direct, or to control in the enterprise
...


(b) Continuity: Planning is a continuous and never ending activity
of a manager to keep the enterprise as a going concern
...

Actually, a hierarchy of plans operates in the enterprise at any time
...
Again, the incessant changes make
re-planning a continuous necessity
...
This confinement to one
course takes away flexibility
...
Accordingly, when the future cannot be molded
to conform to the course of action, the flexibility is to be ingrained in
planning by way of adapting the course of action to the demands of current
situations
...
Maintenance of consistency or the unity of planning is one
of its essential requirements
...
Moreover, policies and procedures
introduce a consistency of executive behaviour and action in matters of
planning
...
As guides to action, planning is to be framed
in intelligible and meaningful terms by way of pinpointing the expected
results
...
As planning errors are far more serious and
cannot be offset by effective organizing or controlling, the accuracy and
precision is of outmost importance
...
Planning is not the
exclusive responsibility of top management only
...
Although top managers are mostly
preoccupied with planning because of the wider scope of operational
and decision making authority, planning is of equal importance to every
manager
...
Plans always
has some time frame-the period in future that a plan covers
...
Operational plans
provide details as to how strategic plans will be accomplished
...
We will first discuss strategic
planning and then proceed to operational planning
...
Strategic planning
has its origin in military organizations where the objective is to envisage
a variety of contingencies that may arise when large forces move into
58

operation
...

Strategic Planning helps the Management in:
ӹӹ
ӹӹ
ӹӹ
ӹӹ

coping effectively with future contingencies
...

making decisions about the right things at the right time: and
understanding what actions to take in order to shape the future
...
Strategic plans reflect the socio-economic
purpose of the organisation and the values and philosophy of the top
management
...
In India, many subsidiaries of the multinational
corporations made a beginning in this direction
...
As a result,
every company has now begun to speak in terms of corporate mission,
strategic planning and organisational vision
...

a
...
Business environment is changing so
fast these days that a deliberate corporate effort is called for to keep abreast
with the changes
...
The investment in large business enterprise
today runs into thousands of crores of rupees
...
During this period many things may change
...
For instance, when the crude oil prices were hiked in
1973 by the OPEC countries, it created havoc on petro-based industries
...
In this case, the threat was converted into an excellent
opportunity
...
Similarly,
ITC in India, continuously hounded by excise levies and taxes on their
main tobacco products cigarettes , had to think of diversification into
hotels, paper, agro products and aquaculture – which ultimately turned
out to be a God sent opportunity
...
Provide Clarity of Purpose and Direction

As a result of the overall increase in the size of companies, the
internal departments (production, marketing, finance, personnel etc
...
With growing specialization in each of these
areas, these departments are prone to become watertight compartment
giving rise to inter-departmental rifts
...
Strategic
planning provides unity of purpose and direction, the much emphasized
management principle
...

Similarly, the design department may often specify certain change in the
product which may raise the cost of production
...



The manager’s success depends largely on understanding the trends
in the environment
...
Many organizations have
paid a heavy price for their failure to draw the right meanings from the
signals
...

60


Take the case of the public sector gaint, HMT which prided itself,
for a long time on its dominance in the Indian wrist watch market
...

It was so complacent that it took the market for granted
...
TITAN with its innovative marketing strategies has, no doubt,
changed the face of the Indian watch market
...

Short Range Planning / Operational Planning

Strategic planning is the prerogative of the top management which
is the highest policy making body in any organisation, where as operational
planning is done at the lower levels
...
The focus in strategic planning is on longterm, while it is on short-term in operational planning
...


However, Operational plans stem or originate from strategic plans
...
Effective management, therefore, must have a
strategy and must operate on the day- to- day level to achieve it
...

For example, if the strategic plan is to face competition with new and
innovative products, major tasks to achieve this goal would be clarified by
operational planning
...


61

Types of Plans

Different types of plans are developed by an organisation, namely
mission, strategies and policies, procedures, rules, programmes and
budgets
...

However, some variances in respect of the scope and operation are found
in the implementation
...
They are discussed below:
Mission or Purpose

Organisations exist in society
...

Mission may be defined as “a statement which defines the role that an
organisation plays in the society”
...
An organisation’s mission statement includes its
philosophy and basic purpose for which it exists
...
Mission
statement suggests how an organisation is going to conduct its business
...
A Clear definition of ‘mission’ or
‘purpose’ is necessary to formulate meaningful objectives
...

Policies

Koontz and O’Donnel define policy as “a general statement of
understanding which guides the thinking and action in decision-making
...
Policies
exist at all levels in the organisation
...


Policies are laid down by the management for all the important
functional areas
...

For instance, in the personnel area, specific policies may be formulated
62

for recruitment, training, compensation, etc
...
Thus it is evident that the personnel manager operates
within the broad policy of the company in recruiting the people
...

Procedures

Policies are subdivided and stated in terms of procedures – A series
of related steps or tasks to be performed in a sequential way
...
The procedure
may explain how to decide which product is obsolete and what percentage
of discount is to be offered
...
Though procedures exist at
all levels in an organisation, they are more detailed at the lower levels
...


Procedures for placing orders for material and equipment, for
sanctioning different types of employee’s leave, for handling grievances
at the shop floor level, etc
...

Policies and procedures are closely interrelated
...

But the operational part of the policy is specified by the procedure –
the formalities to be fulfilled to effect the promotion are dictated by the
procedure
...
A rule is a prescribed course of action that
explicitly states what is to be done under a given set of circumstances
...
A rule requires
that a definite action has to be taken in a particular way with respect to
a situation
...
For example, ‘no
smoking’ is a rule
...


63


Rules should not be confused with policies and procedures
...
Similarly, procedures though different
form rules may contain rules regarding the do’s and don’t’s
...
The procedure may contain a rule that free service is
available only for a period of two years after the sale
...

Terry and Franklin define program as “a comprehensive plan that includes
future use of different resources in an integrated pattern and establishes
a sequence of required time schedules for each in order to achieve stated
objectives”
...
For instance, launching Prithvi satellite
is a program “Jawahar Rojgar Yojana” is a programm
...
For instance, a company may embark upon modernization
program of the plant and machinery and other manufacturing systems in a
big way
...
Similarly, a large
organisation may start computerizing all its activities
...

Budgets

A budget is a plan statement for a given period of time in future
expressed in financial or physical units
...
A budget is a quantitative expression of a plan
...
Master budget which contains the
consolidated plan of action of the whole enterprise is in a way the translated
version of the overall business plan of the enterprise
...
Again, capital
expenditure budget, raw material budget, labour budget, etc
...
One of the advantages of
budgets is they facilitate the comparison of actual results with the planned
ones by providing yardsticks for measuring performance
...

2
...

4
...

6
...

Explain the planning
...

“Failure to plan is planning to fail”
...

Take any two Indian companies and examine how they have
succeeded or failed due to poor strategic planning
...
Identify and explain the strategic planning process in an MNC like
Google drawing from the public domain
...


Lesson Outline
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ

Process Of Mbo
Prerequisites Of Mbo
Advantages Of Mbo
Reasons Why Mbo Fails
Types Of Policies
Principles Of Polices
Policy Formation
Strategies
Appropriateness Of Business Strategy
Review Questions


Management guru Peter Drucker is credited with being the first
to introduce Management by Objectives (MBO) as an approach for
increasing organizational effectiveness
...
According to him, such a process would enable each
manager to have a clear understanding of what the organisation expects
of him or her and how their individual objectives are integrated with the
overall organizational objectives
...

67


To quote George Odiorne, “MBO is a process whereby the superior
and subordinate managers of an organisation jointly identify the common
goals, define each individual’s major areas of responsibility in terms of the
results expected of him, and use these resources as guides for operating the
unit and assessing the contribution of each of its members”
...
MBO, as a management tool, thus, is so versatile
that it is used;
ӹӹ to integrate the organizational goals with the individual goals;
ӹӹ as a motivational technique wherein individuals are driven
towards the achievement of goals;
ӹӹ to appraise the performance of managers; and
ӹӹ to control the activities as they are performed
...
A key result area may be understood as one the
performance of which, directly and vitally affect the success and survival
of the business
...
It may be
understood that the KRAs vary from business to business
...

Prerequisites of MBO
ӹӹ MBO is not merely a goal-setting tool
...

ӹӹ Top management must be willing to implement the system
wholeheartedly
...
The necessary democratic climate has to be
created in the organisation for setting the goals in a realistic way
...
To the extent
possible, they must be made realistic because goals motivate
employees towards better performance
...
All the
important areas of the business must be covered with meaningful
goals
...
It is only a means to achieve organizational
effectiveness
...

ӹӹ Appropriate organisation structure has to be designed with wellunderstood relationships among people such that every goal
becomes some individual’s responsibility
...
Otherwise, goals by
themselves, however effective they are, do no assure performance
...
Nonavailability or inadequate access to the resources frustrates the
individuals concerned with the achievement of goals
...
They provide
meaning to the existence of an organisation
...
They are the end-points towards
which all management activities like organising, staffing, directing and
controlling are directed
...

1
...
For
example, in the areas of market standing, productivity and physical
and financial resources quantification is possible
...
cannot exactly quantified
...
Thus, quantitative objectives are gauged by ‘how
much’ while qualitative objectives by ‘how well’
...
Objectives have hierarchy in that objectives which have wider scope
and are relevant for the whole organisation are known as enterprise
objectives
...
Thus, objectives at all levels in the organisation are
interrelated and form a network
...
Short-term and Long-term Objectives: Short-term objectives are
those which are sought to be achieved by the organisation in the
immediate future, while long-term objectives are those which are
aimed to be achieved over a longer period, say five to ten years or even
more
...

4
...
Each department
considers that its goals are more important
...

Such conflicts have to be resolved amicably
...
As a process, management by objectives
begins at the top of the organisation with the establishment of specific
organizational objectives
...

The process of MBO includes the following steps:
ӹӹ establishment of goals for the whole organisation,
ӹӹ preparation by subordinates, of specific goals within the
framework provided by the superior,
ӹӹ joint discussion of an agreement upon the goals by the superior
and subordinate,
ӹӹ joint review of progress at regular intervals in the light of the
predetermined goals, and
ӹӹ corrective measures, if necessary, as revealed by the review
...
Unlike in the traditional system where goals are decided
for the subordinates by the superiors, in the MBO system, goals are set on
the basis of consensus reached in the discussions between superiors and
subordinates
...
Superiors act as facilitators
and create a favourable climate where subordinates freely express their
opinions, viewpoints and perceptions about what they believe could be
achieved
...
As a result, there is ample possibility for the subordinates to
feel that they are working for their own goals and not for somebody else’s
...
As they participate in the
goal setting exercise actively, they in turn get motivated to achieve them
...
Thus, MBO serves as a motivational technique
...

ӹӹ Accomplishes consistency in objectives as each department’s
objectives are consistent with the organizational objectives, the
possibility for the various departments working at cross purposes
is very less
...

ӹӹ Facilitates objective performance appraisal
...

ӹӹ Contributes for the installation of a democratic and participative
setup essential for the success of an organisation in a complex
business environment of today
...


71

Reasons why MBO Fail

Inspite of many advantages, MBO may not be considered as a
panacea for all the evils of the organisation
...
If the program fails, it is largely due to the
following reasons:
ӹӹ Lack of top management involvement and support
...

ӹӹ Lack of understanding of the philosophy behind MBO
...

ӹӹ Difficultly in setting realistic and meaningful objectives
...

ӹӹ Increased time pressure
...

ӹӹ Lack of relevant skills
...

ӹӹ Lack of individual motivation
...
Ambiguity
or uncertainty regarding the outcome of the efforts is one of the
reasons for the non-performance
...
Objective setting and review
phases must be performed in conjunction with other activities
such as budgeting, forecasting and the like
...
In such cases,
each department ends up going its own way, and the results are
counterproductive to the overall organisaiton
...
Explain the characteristics of objectives and how well defined
objectives influence business success
...
Distinguish between short term and long term objectives
...
Explain the process of Management by Objectives
...

4
...

5
...


Lesson Outline
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ

Types Of Policies
Principles Of Policies
Policy Formulation
Strategies
Review Questions


Decision-making is the primary task of a manager
...
Policies provide the basic frame work
within which managers operate
...

Some may be major company policies affecting the whole organisation
while others may be minor in nature affecting the departments or sections
within the departments
...
It may be remembered that a policy is
also a decision
...

TYPES OF POLICES

Polices come into being in any organization in different ways
...

75

1
...
The objective is to help the concerned managers in decision
making in their respective areas
...
These policies are formulated in the light
of organizational objectives
...
If they are broad, they
allow the subordinates some operational freedom
...

2
...
The policies regarding some issues may be unclear or may
be totally absent
...

In such a case, he appeals the matter to the superiors for their thinking
...
Depending upon the nature of issues involved, after a thorough
examination, policy decision would be taken at the appropriate level
...
For example, during
festival seasons, the manager at the branch level may be in a dilemma
to offer discount to the customers
...
But to meet competition in the market management, on
the basis of an appeal made by the branch manager may allow him to
offer discount on such occasions
...

3
...
Managers draw meanings from the actions and behaviour
of their superiors
...
There may not be any
76

objection from the top management to the stand taken by the lower level
manager in support of the customer
...

4
...
They are rather imposed on the organizations by the
agencies in the external environment like government, trade unions,
industry associations, consumer councils, etc
...
As the interaction of the business
with external environment is increasing, one can find many policies thus
coming into being
...

For instance, the recruitment policy of the organisation is influenced by
the government’s policy towards reservations to weaker sections
...

Importance of Policies
Provide the Framework for decisions

Policies provide the broad framework within which decisions are
made
...
For example: a
policy on internal promotions greatly helps the manager in filling the
vacancies
...
Sound policies thus save lot of time
in decision-making and avoid confusion
...
When
decisions are actually made, they conform to the policy relevant to the
decision
...
All the decisions that affect the product quality
77

are normally taken in the light of the explicit policy
...

Principles of Policy Making

Policies help to ensure that all units of an organisation operate under
the same ground rules
...
This is possible because policies
make consistency in action
...
In
fact, policy formulation is one of the important executive responsibilities
...

1
...
Gramophone record companies for long did not realize that
they are in the entertainment business
...
In contrast, Hallmark Incorporation of USA defines its
business as “social expression” and not as greeting cards
...
To define the business,
a company must take a close look at its basic operations and analyze it’s
major strengths and weaknesses in all the functional areas like marketing,
product development, finance and public relations
...

2
...
, is
essential for policy formulation
...
That is why for some
managers, forecasting is a highly unpleasant task
...
The ‘sintex’ water
tank is a classic example where the product defied the gloom predicted by
the experts
...
On
the other hand, quite the opposite is also possible
...
Ensure availability of Resources

While formulating policies the resources required to implement
the policies have to be assessed
...
As a result, policies do not serve the intended
purpose
...
You have to assess yourself as to how strong you
are in terms of resources required
...

That is how, “close to the knitting”, building on “core – competencies” are
very much talked about these days
...
Communicate the Policies

If policies are to serve the desired purpose, they have to be
communicated to all those who are to implement them
...
Otherwise there will not be
proper synchronization between the policy and action
...
Policies are formulated for all
the key functional areas of business like production, marketing, finance,
personnel and so on
...
A
policy is a plan
...
Though policies vary in respect of scope,
the process of policy formulation usually involves the following steps
...
Corporate Mission

Corporate mission specifies the purpose for which the organisation
exists
...

It is natural, therefore that all the activities of the organisation are geared
towards the achievement of the mission
...
As such, thorough understanding of the
corporate mission is the starting point for policy formulation
...
Appraisal of the Environment

Environment appraisal in a systematic way is the key for successful
formulation of the policies
...

As such, the nature of the environment, the various dynamics of it have
to be analysed
...

c
...

Corporate analysis discloses strengths and weaknesses of the organisation
and points out the areas that have potential
...

d
...
For
example, the objective of the organisation is expansion
...

Again, if diversification is chosen, it has to be decided whether it is into
related or unrelated business
...


80

e
...
The
Corporate history, personal values and attitude of the management and
the compulsions in the environment, if any, influence the choice of the
policy
...
Policy Implementation

Effective implementation of the policy requires designing suitable
organisational structure, developing and motivating people to contribute
their best, designing effective control and information systems, allocation
of resources, etc
...
Further, Polices need to be monitored
constantly during the implementation stage so that inadequacies if any,
may be corrected at the appropriate time
...
Some of the important areas for which policies
are required are discussed here
...
Thus,
in the area of production, make or buy decision is an important policy
...
This type of policy
enables the organization to concentrate on the basic product
...


Another important policy pertains to the production run
...
The demand for the
product in terms of orders, costs of tooling, economies of scale are some of
the factors that influence the production run
...
while some companies may produce in anticipation
of demand, during slack season, there are companies which produce some
fill-in-products to make good use of facilities
...

Marketing

As the business world has become increasingly competitive,
marketing has acquired tremendous importance in the recent times
...
The success of any organization therefore depends on
how strong it is in these two basic functions
...
The
questions include;
1
...

3
...

5
...

Among these, pricing policy is our utmost significance
...
For
instance, weather to indulge in price competition or non-price competition
are the two basic issues in this regard
...
the emphasis is on
non-price variables
...
The required funds for the business may be furnished by the
owners or borrowed from outside sources
...

82


Important policy decision pertains to the proportion of the equity
to the debt capital
...
Further in the case of a
growing concern, funds may also be raised through retaining a portion of
the profits in the business
...


Working capital management is another area which requires policy
direction
...
Policies regarding working
capital vary from company to company depending upon the size and
nature of the business
...
Similarly, a company operating on
strictly cash basis requires less working capital than one operating on
predominantly credit scales
...
This is equally influenced by factors includingthe desire of the shareholders, the company’s future plans of expansion
,availability of other sources of obtaining capital, the urgency of the
need for additional capital and availability of re-investable profits
...
,
enjoy tremendous investor clout and emerged as blue chip companies, it
is because of investor friendly policies relating to dividends and frequent
capitalization of resources
...
Many
problems in the organizations are obviously people related in nature
...
Important policies in this area relate to
recruitment and training, compensation and other employee benefits and
the attitude of the management towards labor unions
...
On the whole, good employee-oriented personnel policies
encompassing the above mentioned issues would contribute to employee
83

motivation and morale
...
In the context of business, strategy refers to the firm’s overall
plan of dealing with its environment
...
Strategies are plans made in the light of the competition because
modern business entreprise operates in a competitive environment
...
For
instance, a company may follow a strategy of charging a lower price or
using more sales force than competitors and advertising more heavily than
competitors
...
They do not attempt to outline exactly how the
enterprise is to accomplish its objectives since this is the task of countless
major and minor supporting programmes
...

Appropriateness of Business Strategy

A business strategy is a pragmatic plan of action to achieve certain
objectives
...
Internal Consistency:
A business strategy in a particular area
of business should be consistent with strategies in other areas and
objectives and polices of business
...

2
...

Therefore, it should aim at meeting the threats and pressures of
external forces
...
Appropriateness in the light of available Resources:
Formulation of a strategy requires a realistic assessment of the resources
of the enterprise-men, money and materials – both existing resources
and the resources it can command
...
It is
desirable that the every enterprise formulates its strategy within the
limitations imposed by its resources
...

4
...
The
degree of risk inherent in a strategy should be within the bearable
capability of the enterprise
...
Also, there should be a match between risk and
returns, financial and otherwise
...
Appropriate Time Horizon: Time is the essence of any strategy
...
How far in the future can top management predict with
credibility is a measure of its capability An optional time span cannot
be mathematically determined; it is a matter of environmental
conditions, the objectives to be sought and the judgment of
management
...
Workability: A strategy should be feasible and produce desired
results within the constraints and parameters known to the
management
...
Certain quantitative measures like volume of sales
and profit, growth rate, asset formation, market share, introduction
of new products and so on are to be set
...

Review Questions
1
...

2
...

3
...

4
...

5
...


***

86

Lesson -8 : Decision Making

Objectives
After reading this lesson, you should be able to:
ӹӹ Understand The Meaning And Characteristics Of Decision
Making;
ӹӹ Explain The Types Of Decisions;
ӹӹ Examine The Process Of Decision Making; And
ӹӹ Understand The Techniques Of Decision Making
...

Review Questions


It is said that decisions are the principal diet on which a manager
thrives
...
Hardly a day passes without making some
decision or other in the executive’s life
...
As such, decision-making constitutes the
most exciting and eventful part of any executive’s career
...


In the course of managing an organisation, the manager is
confronted with several problems which require immediate and
appropriate solutions
...

For instance, break-down of machinery, customers’ complaint on quality,
delay in collection of receivables, some industrial relations problem at the
shop-floor level leading to unrest among the employees, just to mention a
few call for timely solutions
...
Thus, a manager has to make
decisions covering several aspects of the organisation
...
It presupposes the
existence of various alternatives
...

In other words, if there are no alternatives, there is no choice
...

Thus, the following characteristics emerge from the definition of decisionmaking
...


Type of Decisions

Decisions taken by managers may be classified under various
categories depending upon the scope, importance and the impact that
they create in the organisation
...
Programmed and Non-programmed Decisions


Programmed decisions are normally repetitive in nature
...
Usually these decisions are taken in consultation
with the existing policy, rule or procedure which are already laid down
in the organisation
...
Managers in dealing with such issues of routine nature usually follow
the established procedures
...
They are related to some exceptional
situations for which there are no established methods of handling such
things
...
Problems like these have to be handled in a different way
...
As
one moves up in the hierarchy, many of the decisions that managers make
are non-programmed in nature
...
Such situations call for ingenuity
and sound judgment
...
The saying that
“routine drives out the non-routine” instead of the other way round is true
in many organizations
...

2
...
The primary
purpose is to achieve high degree of efficiency in the company’s ongoing
operations
...
, fall in this
category
...
, are strategic in nature
...
Usually, operating decisions do not need intensive
deliberations and huge resources and are taken by managers at the lower
levels while strategic decisions require extensive deliberations and huge
resources and are taken by top level managers
...

3
...
For example: decisions regarding introducing
a new incentive system, transferring an employee, reallocation or
redeployment of employees etc
...
As against such decisions, managers do take some decisions
which are purely personal in nature
...

For example: the manager’s decision to quit the organization, though
personal in nature, may impact for the organization
...
Individual and Group Decisions


It is quite common that some decisions are taken by a manager
individually while some decisions are taken collectively by a group of
managers
...
Group
decision making is preferred these days because it contributes for better
coordination among the people concerned with the implementation of the
decision
...
However, a detailed description
of these types is not necessary because they are almost all similar to the
already discussed programmed and non-programmed decisions in respect
of importance and impact
...
Define the Problem


Problem definition is the most crucial step in the entire decisionmaking process
...
This is also called
diagnostic stage
...
The problem has to be examined from different angles
so as to identify the exact causes
...

b
...
The past events that
contributed to the problem, the present situation and the impact of the
problem on the future have to be examined
...
The genesis of the problem and the various contributing factors
need to be analysed
...
As far as possible, an objective assessment of the situation is
useful to arrive at right decisions
...
If the problem is of minor nature,
he can authorize his subordinates to solve it
...
Interestingly, at times some of the problems may not warrant any
decision
...

c
...
Effective decision-making depends on the development of as
many alternative solutions as possible
...

The ability to identify and develop alternative courses of action depends
on the manager’s creativity and imagination
...

91

d
...

Alternatives have to be evaluated in the light of the objectives to be achieved
and the resources required
...

e
...
After weighing the pros and cons in detail, the
best alternative has to be selected and implemented
...
In such a case, the manager has
to satisfy with limited information and optimize the yields under a given
set of circumstances
...
The required resources for
the implementation and the necessary cooperation from the people
concerned with or affected by the decision have to be ensured
...

f
...

Adequate follow-up measures have to be taken
...
The decision may not yield the desired results
...
Further, such
a follow-up enables to identify the shortcomings or negative consequences
of the decision
...


92

Rationality in Decision-Making

Rationality in decision making implies maximization of the
values in a given situation by choosing the most suitable course of action
...
Though it is
very much desirable, for a variety of reasons complete rationality is not
always possible
...
In reality they confine
themselves to a few important alternatives which have limited risks
combined with favourable consequences
...
Hence, the
decision-maker is forced to strike a balance between the ideal and
real situations
...

ӹӹ Human factors like value systems, perceptions, prejudices, social
factors, etc
...
Managers,
being human beings, are greatly influenced by their personal
beliefs, attitudes and bias
...
These barriers
impede the process of identification of problem, its analysis and the
development of the solution
...
Some of them are listed below:
ӹӹ The tendency to respond to the problem instantaneously without
proper information and thinking
...

ӹӹ The tendency to resist new and innovative solutions
...


Awareness of the above factors will surely help the managers in
arriving at pragmatic decisions
...

ӹӹ Avoid premature evaluation
...

ӹӹ Develop a sound system that can supply adequate information for
making decisions
...

ӹӹ Encourage innovative thinking among the subordinates so as to
identify the crux of the problem without waste of time and money
...
For this, the problem is to be presented
to the group members first and they are asked to develop as many
solutions as possible in a free environment
...
These techniques, if used properly, would contribute for the
effectiveness of the decisions
...

1
...
It was originally
developed by A
...
Osborn
...
The success
of the technique lies in creating a free and open environment where
members of the group participate without any inhibitions
...
The larger are the number of solutions, the fairer are
the chances in locating an acceptable solution
...
Of course most of them may be impracticable; at least,
some of them merit serious consideration
...
It consumes lot of time and therefore is an
expensive exercise
...
By overcoming
the above limitations, a modern manager can use this as an effective
tool
...
Synectics:
Synectics is a new concept developed by William
J
...
Gordon
...
It starts on the premise
of encouraging that this concept encourages novel thinking for the
development of alternatives through putting together different ideas
which are distinct from each other
...


It is the responsibility of the group leader to present the
problem and lead the discussion in order to stimulate creative
solutions
...

The leader who is a technical expert assists the group in evaluating
the feasibility of their ideas
...
When the problem is tough and
challenging, this approach is used for effective decision-making
...
Operations Research: The origin and development of operations
research is attributed to military operations and applications during
Second World War
...

The success of operations research in developing effective options
is instrumental in making this approach dependable in decisionmaking process
...


Operations Research is the systematic method of studying
the basic structure, functions and relationships of an organisation as
an open system
...


95

The six steps in its approach to problem solving are:
(a) identification of a problem;
(b) construction of a mathematical model to investigate the problem;
(c) developing a good solution;
(d) testing of the model in the light of the data available;
(e) identifying and setting up of control points;
(f) implementation of the option as a solution to a critical problem
(putting a solution to work)
In essence, Operations Research attempts to develop the best solution that
will contribute to organisational goals
...
Define decision-making? Explain the basic characteristics of decision
making process
...
What are different types of decisions and explain their managerial
implications
...
Explain steps involved in the rational decision-making process
...
“Absolute rationality in decision making is an illusion”
...


***

96

Case Study

The day has finally come: Mr
...
Metro is a widely respected producer
of high quality control mechanisms
...
He was
respected for his competence in the field and for his ability to work with
employees at all levels of operations
...
As he sits behind his new
executive desk, drinking a cup of coffee, his thoughts go back to his early
days with Metro
...
He
was hired as an assistant foreman and was placed immediately on the
production line
...
“Seems like there
was a problem that required solving every minute”
...
But I sure was putting out a lot of daily fires”
...
“Things sure did change then”, he thought
...
As a foreman, Rajesh
was primarily concerned with meeting daily production requirements
...
The human and
communication problems remained although it seems like the reports
he had to write were longer
...
Laughing to
himself he thought about the time he went to the files to pull out on SOP
for an unusual problem he had to confront and there was none
...
But,
as his analytical, decision-making, and conceptual ability increased, he
found himself using his technical skills less and less
...
It
was a major hurdle in his life because he had been in heavy competition
97

with five well-qualified managers
...

But, even his past training did not fully prepare Rajesh for the demands of
the job; he had to learn much of it on his own
...
Grinning, he
remembered that at first he did not realize that there were so many people
outside of production that he had to coordinate activities with
...
His conceptual and
decision-making skills continued to increase
...


But now, as Rajesh looks at his desk plate which says “President”
new thoughts run through his mind
...
He wonders what new requirements will be placed on him
...

What skills will be now needed to be successful?
Questions
1
...
How do the demands of different levels of responsibility change as
manager progresses up the hierarchy of an organisation?
3
...


Lesson Outline
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ

Steps In Organizing Process
Organisation Structure
Chain Of Command
Span Of Management
Functional Departmentation
Product Depart Mention
The Matrix Structure
Review Questions


The managerial function organizing may be understood as “defining
and grouping the activities of the enterprise and establishing authority,
responsibility and relationships among them”
...
The best structure is the one that enables
the organization to interact effectively with its environment, to efficiently
channelize the efforts of its people, to make efficient use of its resources
...


99

Steps in Organizing Process
Organizing is a multi-step process consisting of the following:
-- Detailing all the work that must be done to attain the objectives;
(identification of tasks involved);
-- Dividing the total work into activities that can logically and
comfortably be performed by one person or by a group of persons;
(differentiation);
-- Grouping the related tasks in a logical manner (departmentation);
-- Setting up a mechanism to coordinate the work of members into a
unified whole by establishing authority – responsibility relationships,
(delegation and decentralis ation of authority); and
-- Monitoring effectiveness of the organization and making adjustments
to maintain or increase its effectiveness
...
The resulting
structure, however, is not a static form, like the structure of a building
...

As such, organizing
and reorganizing are ongoing processes
...
It is anybody’s
knowledge that many Indian companies are restructuring their activities
to meet the new challenges in the present liberalization era
...
Management expert Tom Peters estimates that about 50
percent of organization problems arise from inappropriate organization
structure
...
For this
reason, selecting an organization structure might best be described as an
evolutionary, trial-and-error process
...
It illustrates an organization’s overall
100

shape and the levels of management in a comprehensible manner
...


Chairman

Manager

Manager

Manager

Production

Marketing

Finance

Manufacturing

Quality Sales

Advertising

Accounting

Taxes

Figure 9
...

However, an organization chart does not show:
-- Interactions between people who have no official reporting
relationships, that is, the informal organization;
101

-----

The ongoing dynamics of workplace behavior;
Personal preferences and coalitions;
Informal communication channels; and
Interference by outsiders
...
, chain
command, unity of command and span of control
...
The chain of command exists
wherever an individual is made subordinate to another
...
The
resulting hierarchy is found in every company or in any human system
including a family
...
In addition to defining different degrees
of authority of people, Chain of Command also suggests the routes through
which information flows within an organization
...
2: Chain of Command
102

Unity of Command

The Chain of Command principle implies another feature of
organizing: one subordinate-one boss
...
Unity of command principle avoids
the confusion as to who should report to whom and who should issue
orders to whom
...
This is because of the
limitations of time, energy and skills
...

But for this limit, organizations would have not taken the pyramid shape
...
The traditional thinking was that an effective span
involved some definite number of subordinates
...
Often, one of the first things done by an organizational
analyst or consultant was to count the number of subordinates reporting
to each manager
...
Thus, the thinking of the classical theorists about the span revolved
around a definite number
...
For instance, Lyndall Urwick suggests that no
executive should attempt to supervise directly more than five
...


The contribution of V
...
Graicunas was however, significant to
the span of management theory
...
As such, if A has two
subordinate B and C, the following relationships would emerge
...
Direct one-to-one relationships: These relationships relate the
superior directly with his subordinates, A in this case will have two
direct relationships with B and C, viz
...

ii
...

In the above example, A may interact with B in the presence of C
or with C in the presence of B
...

iii
...
In our example, the two cross
relationships are B with C and C with B
...
One can easily ascertain
how the number of relationships increases as the number of subordinates
rises by applying this formula
...
Though Graicunas formula explains the complexities involved
as the number of subordinates increase, it suffers from the following
inadequacies
...


104

Span of Management and the Levels

The limitation on the part of a manager to manage an infinite number
of subordinate obviously results in the levels in the organization
...
That is, if an organization has wide
span, the resulting structure will be flat, with few levels of management
...
Both the situations of wide as well
as narrow spans and the resulting flat and tall structures are shown in
Figure
...

(Span of control: 8, management layers: 2)

S

S

S

S

S

S

S

S

Figure 9
...
4: Span of control and Management layers

105

S

S


As presented in the above figures, in Company A, each supervisor’s
span covers four subordinates, and four department heads report to the
chairman
...
In contrast, in company B, each of the eight supervisors exercise
controls over eight subordinates
...
In this case, by increasing the span from four to eight, one layer of
management is eliminated
...

i
...
Too many levels involve lot of expenditure
...
In many
organizations substantial expenditure has been saved by increasing
the span
...
Communication:
Successive layers of management act as
communication filters distorting the transmission of information
...
More often, the information also looses clarity
...
Omissions and misinterpretations usually occur
as information passes through too many levels in the scalar chain
...
Managerial control: The distance between the top and bottom
levels of an organization also affects control
...

Consequently, at the implementation stage of the plan, control
becomes difficult
...
Thus, the emphasis has shifted to the variables in the situation
...

Factors Influencing Span of Management
i
...
On the other hand, some
managers feel threatened because they cannot oversee the activities
of too many people
...

ii
...

iii
...
They
do not take much of the time of the superior
...

iv
...
There are only so many hours in a day, and only
so many things can be done at a time
...

v
...

Moreover, there also exist differences between the various units of an
organization
...
Thus, the more active the pace and pattern of a manager’s
work, the narrower the appropriate span of control
...
Non-supervisory activities: If a manager spends more time on
non-supervisory activities like long-range planning and outside
assignments, he tends to have less time to supervise the subordinates
...

vii
...
On the other hand, if unique and non-routine
problems are more frequent, the span is limited
...
Complexity of work: Simple job assignments are usually easier to
supervise than complex ones
...
Thus, less
107

supervision will be necessary, contributing for a wider span
...
Availability of sophisticated facilities: Availability of more advanced
and sophisticated facilities like high speed telecommunication
devices, modern office equipment, etc
...

x
...
The span
of control in such a case will be narrow
...
As an enterprise
grows, the increase in organization levels cannot be completely
avoided
...
Widening spans and reducing levels may be the
answer in some cases, while the opposite may be true in others
...
May be operating in small geographic
area or different areas in the world
...
Departmentation is the process of dividing the
organization’s overall task into manageable submits
...
By whatever name
the units are called, the process of creation of such sub-units to facilitate
the performance of activities is known as departmentation
...

Functional departmentation is the process of creating organizational units
on the basis of the firm’s major activities
...
Normally separate departments
are created for all the key activities of the business
...

However, in non-manufacturing concerns the primary activities may
differ
...
Thus, public utility concerns like electricity, transport, banking,
108

insurance and hospitals have their own distinct key functional areas
...


If the organization is large, or in other words, as the organization
grows, major departments can be subdivided
...
The essential idea is to
take advantage of specialization
...

CHAIRMAN

MANAGING DIRECTOR

MANAGER
MARKETING

ADVRTISING

SELLING

MANAGER
PRODUCTION

MANUFACTURING

PURCHASING

MANAGER
FINANCE

ACCOUNTING

TAXES

Figure 9
...

Advantages:
-- It is the most logical and simple form of departmentation;
-- It makes efficient use of specialized resources and skills;
-- It makes supervision easier, since each manager has to be an expert
in only his or her functional area of operation; and
-- It fosters development of expertise in specialized areas
...
If a product fails, the question as to who is responsible
cannot be easily answered; and
-- Functional managers tend to develop narrow perspective and loose
sight of the bigger picture
...
For example, manufacturing
department may be obsessed with cost reduction and meeting the
delivery dates neglecting the quality control
...

Product/ Market Departmentation

As organizations are not static, they grow in size either by
broadening its product line, or by expanding geographically
...
The organization is rather forced to look for other models
in tune with the requirements
...
Three patterns are adopted generally
by organizations depending on the specific requirements to overcome
the limitations of functional structure
...

i
...
If the organization is successful in expansion,
several product lines may attain such high sales volume that each product
category or line may be a separate division
...
Under product departmentation, a single manager,
110

often referred to as the product manager, is delegated authority over all
activities required to produce and market that product
...
As
against functions in the functional departmentation, basic products
or services become the primary or major departments in the product
departmentation as could be seen in the following figure
...
6: Structure of Product Departmentation
Advantages:
-- Product departmentation places emphasis on the basic products, the
success of which is critical to the survival of the organization;
-- Since all revenues and costs are assigned to a particular product, cost
centres can be established
...
Thus, responsibility
for cost reduction and profits can be established at the division level;
-- Proper coordination of all functional areas can be achieved as all
the functional managers work as a team under close supervision
of the product manager
...

Disadvantages:
-- Requires adequate availability of persons with general management
abilities as more and more departments are created for the various
products;
-- The product departments may try to become too autonomous
thereby making top management control difficult; and
-- It is also common to find product departments engaged in the
duplication of efforts
...
These may not be sufficiently large to make maximum
use of facilities
...

ii
...
Each customer group may have to be addressed
differently
...
For instance, commercial banks organize their activities around
customer groups to cater to their specific needs
...
Similarly, we find an air-conditioning company like Blue Star
organizing its business around domestic and industrial air-conditioning
units
...
7: Structure of Customer Departmentation
Advantages:
-- Customer departmentation facilitates concentration on customer
needs
...
For
example, the manufacturer may sell to wholesalers and industrial
buyers
...
The industrial buyer wants products of high quality
plus a service that includes installation and repair of the product and
specific training of the company’s employees; and
-- Helps the organization to get the correct feel of the market dynamics
in terms of preferences of the customers, degree of competition,
competitors’ strategies, etc
...
Small organizations
particularly cannot afford the expenditure involved because some
amount of duplication of the facilities is inevitable
...
Territorial Depart mentation

The process of creating departments along the geographical areas
that the enterprise serves is termed territorial depart mentation
...
Territorial Depart mentation
makes it easier for the organization to cope with variations in laws, local
customs and customer needs
...
, adopt territorial depart mentation
...
Again,
different departments or divisions may be created for different regions of
the world
...


Figure 9
...

Disadvantages:
-- In this type of depart mentation, there are problems in training
people to think in terms of markets rather than products;
-- Requires more persons with general managements abilities; and
-- Increases problem of top management control because of the distance
between the corporate headquarters and the regional officers
...
All the three patterns have advantages and
disadvantages
...

Project Organization

The use of the project form organization has increased in the last few
years
...
The project organization can take various forms,
but the important characteristic that distinguishes it from other forms is:
once the project is completed the organization is disbanded or phased out
...
The group members then
go on to another project, return to their permanent home department in
the organization, are given jobs elsewhere in the organization, or, in some
cases, phased entirely out of the firm
...
In consumer
goods industries, it could contain the characteristics of both product and
functional departments
...
One part contains all the responsibilities
associated with the management of an independent business and it’s given
to an individual who is called “business manager” or “product manger”
...
The person responsible for
these is the “functional manager” or “resource manager” in charge of the
functions like production, marketing, finance, personnel and so on
...
Thus, project
staff members in a matrix structure have a dual responsibility
...

But the project manager exercises what is called project authority over the
project staff
...


Figure 2
...
The vertical pattern is brought about by the typical line
authority flowing down from superior to subordinate
...


Companies like Larsen & Tourbro (L&T), U
...
Construction
Corporation, Afcons-Pauling, etc
...
For instance, L&T’s construction of Jawaharlal Football
Stadium in Chennai and Afcons-Pauling’s laying the East Coast Road are
big projects themselves
...
The
overall responsibility for the project lies with project manager
...
The matrix may be
temporary or permanent
...

Advantages of Matrix Organization:
-- Specialized knowledge is available to all projects or products on an
equal basis
...
These specialists
can be deployed to the various projects for optimum use of their
services;
-- Responsibility for the overall execution, management, and profit is
with the project manager who acts like a chief executive;
-- Project people have a functional home when they are no longer
needed on a given projects; and
-- A better balance between time, cost and performance can be obtained
through the built-in checks and balances and the continuous
negotiations carried on between the project and the functional
organization
...
Mangers have to learn to deal effectively with them
...
Uncontrolled growth of matrix structures often
results in power struggles between managers;
-- The major disadvantage relates to power struggles
...
The inevitability of group
cooperation at times delays decision making; and
-- Matrix structure may be expensive
...


Despite the drawbacks, matrix structure is preferred by many
organizations because of the overriding advantages
...
Variations of matrix are also used
by hospitals and other professional organizations
...
The emphasis in these
systems is on flexibility
...
This
approach basically led to the development of a contingency theory of
organization
...

William F
...

Review Questions
1
...

2
...
Examine this
statement
...
What do you understand by levels in the organization? Examine the
implications of too few and too many levels
...
What do you mean by span of control? Examine the traditional as
well as modern view points on the span of control
...
What are the basic characteristics of functional depart mentation?
Analyze its merits and demerits
...
Suggest a method of depart mentation for a large multi-product
organization with a huge market spread over the whole country
...

7
...

Examine its advantages and disadvantages
...
Explain the statement: “A matrix structure is a hybrid form of
organization, containing characteristics of both product and
functional structure”
...
Do you agree with the view that there is no one best way of depart
mentation applicable to all organizations? Substantiate your answer
and explain what factors influence depart mentation
...


Lesson Outline
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ

Process Of Delegation
Barriers To Effective Delegation
Overcoming The Barriers
Decentralization Of Authority
Factors Influencing Decentralization
Review Questions


Delegation is the process by which authority is granted to a
subordinate by his superior
...
Delegation is the only solution to cope with
the increasing work load of managers as the organization grows
...
Therefore, he delegates certain of the tasks to the subordinate and
gets them done
...


Authority is the right to command
...
Managers acquire
authority by virtue of the rank or title associated with their position
...

It flows from the top to down in the organization structure
...
It is implied that
an individual is expected to fulfill certain job requirements when he or
she accepts a position in the organization
...
In contrast to
authority, responsibility of an individual in the organization is always
upwards, that is, the subordinate is responsible to his or her superior
...
The effectiveness of delegation depends on how clearly these
questions are answered
...
For this, he must be able to distinguish
between the routine and non-routine tasks
...

Granting of Authority

When the subordinates are assigned certain tasks or responsibilities,
it goes without saying that they need authority also to perform the tasks
...
The superior, therefore, parts with his authority
to enable the subordinates to perform
...
One of the important principles of organizing is parity of
authority and responsibility which emphasizes the need for a proper
balance between the two
...
The superior has to create an obligation on the
part of the subordinate to perform
...
Thus, while authority
flows downwards, responsibility flows upwards
...

Barriers to Effective Delegation

To make delegation effective, the spirit and willingness of both the
parties are crucial
...
Following are some of the reasons why delegation often fails
in organizations to which both superiors and subordinates are responsible
...
Lack of Confidence in Subordinates: Lack of trust and confidence
on subordinates’ abilities and skills make the superiors reluctant to
delegate
...

ii
...
Consequently two
things happen
...

Second, unless the manager allows subordinates to attempt new
tasks, the subordinates will be unable to develop their skills
...

iii
...

Unable to understand the long term perspective of the work flow,
they do not fully realize the importance of distributing work among
subordinates
...


iv
...
Further, those superiors who see a threat in the
subordinates always try to avoid delegation
...

v
...
It gives the superior the opportunity
of knowing the problem before much damage takes place
...

vi
...

Some managers with a view to let down their subordinates may
deliberately make the delegation unclear
...
The motive of the superior in such
cases may be to make the subordinate fail in the execution
...
Insecurity, aversion to risk, lack of
self confidence, inability to trust another to perform a task are all different
types of manifestations of human behavior
...
In order
to overcome many of these barriers, both superiors and subordinates must
take a hard look at themselves, recognize their own fears and try to come
out of the inhibitions
...
Effective Communication: When a subordinate does not perform
the tasks as expected by management, the problem can be faulty
communication
...
The
subordinate may also hesitate to ask questions for looking stupid
...

124

Consequently, both the parties may think they understand what was
assigned and expected
...
Thus, effective communication to
subordinates of their responsibilities, tasks, and authority reduces
the chances of misunderstandings between the two and thus paves
the way for fruitful accomplishment of the tasks
...
Parity of Authority and Responsibility: For delegation to be
effective, it is necessary for authority and responsibility to be
commensurating, that is, superior must delegate sufficient authority
for the subordinate in order to enable him to accomplish the task
for which he has assumed responsibility
...
Absence of
such an authority to use the organizational resources lands him in
frustration
...
In such a
case you would let the superior know as soon as possible the actual
situation and get the situation corrected
...
Incentives for additional responsibility: Additional responsibility
usually means additional work
...
But unfortunately,
many organizations fail to offer positive rewards
...

The rewards may be in many forms
...

Though delegation broadly involves assignment of duties and
granting of necessary authority to subordinates the actual practices vary
...

Harvey Sherman categorized the following six degrees of delegation:
i
...

ii
...
Look into this problem – Let me know what you intend to do; do it
unless tell you not to
...
Look into this problem – Let me know what you intend to do; delay
action until I give approval
...
Look into this problem – Let me know alternative actions available
with pros and cons and recommend one for my approval
vi
...

Decentralization of Authority

The terms ‘delegation’ and ‘decentralization’ are often confused
...
Thus, the
greater the amount of authority delegated throughout the organization, the
more decentralized the organization is
...


It must also be understood that both absolute centralization
and absolute decentralization are undesirable, for, the former refers an
autocratic structure/approach while the latter results in a chaotic situation
...
Ernest Dale, a well-known management writer, has
described the following conditions where decentralization is greater:
-- The greater the number of decisions made lower down the
management hierarchy;
-- The more important the decisions made lower down the management
hierarchy
...
Thus,
companies which permit only operational decisions to be made at
branch/ plant levels are less decentralized than those which permit
financial and personnel decisions at branch/ plat level;
-- The less checking required on the decision
...
The
fewer the people to be consulted, and the lower they are on the
management hierarchy, the greater the degree of decentralization
...
More flexibility and faster
decision making are some of the advantages of decentralization
...
But total decentralization, as
mentioned earlier with no coordination from the top would be undesirable
...


However, the degree of decentralization in an organization will vary
with time and circumstances
...
For example, production and sales department, in general,
have gained a high degree of decentralization in many organizations,
whereas financial related functions have tended to remain relatively
centralized
...
Philosophy of Top Management: The leadership style, attitudes,
values and beliefs of the top management team have a bearing on
the degree of decentralization
...
For instance, if Tata Group
Companies have registered a phenomenal growth over the years, it is
partly because of the operational freedom and autonomy the various
units in the group enjoy
...

2
...

If subordinates want decentralization, top management can not
hold every thing in their hands for too long a period
...

As against this, shortage of lower level managers who are willing to
assume responsibility may encourage top management to maintain a
centralized structure
...
This is in line with greater employee empowerment
...

Employee empowerment helps in fostering an entrepreneurial
spirit in the organization, by encouraging employees at lower levels
to accept responsibility, to unleash their full potential, and most
important, to think and innovate
...
However, the extent of decentralization depends on the
unique requirements of an organization
...

3
...
As a rule of thumb, the greater the cost involved, the
more likely it is that the decision will be made at the upper levels
...

4
...
Further,
as an organization grows in size and complexity, the need for
decentralization is obviously felt
...
This is the principal reason why organizations often
engage in reorganizing their units and operations as they grow in
size
...


128

Review Questions
1
...

3
...

5
...

What measures do you suggest to make delegation effective?
Distinguish between Delegation and Decentralization of authority
...


***

129

130

Lesson - 11: Line And Staff Relationships
Objectives
After studying this lesson, you should be able to:
ӹӹ Understand The Concept Of Line And Staff;
ӹӹ Identify The Reasons For The Conflicts Between Line And Staff
Managers; And
ӹӹ Suggest Ways And Means To Achieve Proper Harmony Between
The Two
...

Though the
concepts have been present in management literature for many years, they
still remain to be clouded with conflict and confusion
...

Line and Staff Concepts

Koontz and Weirich have defined line and staff authority as follows:
“Line authority becomes apparent from the scalar principle as the relationship
in which superior exercises direct supervision over a subordinate an authority
relationship in direct line or steps
...

The function of people in a pure staff capacity is to investigate, research, and
give advice to line managers to whom they report”
...

One approach lays emphasis on the basic functions of the business
...
To quote Louis Allen: “Line functions are those which have
direct responsibility for accomplishing the primary objectives of the
enterprise and staff functions refer to those elements of the organization
that help the line to work most effectively in accomplishing the primary
objectives of the enterprise”
...
A line function in one
organization may be a staff function in another
...

In a manufacturing organization whose
basic objective is to produce and sell goods, production and marketing are
line functions and others such as public relations, personnel, legal, etc
...
Further, within a department, there many are line and
staff functions, for example, in marketing department, selling may be a
line function whereas market research is a staff function
...
According to this approach, line authority is defined as a
direct authority which a superior exercises over his subordinates to carry
out orders and instructions
...
Staff authority
involves giving advice to line managers to carry on the operation
...
It is common that in actual practice some variations may
exist
...


The distinction between line and staff though not rigid, is important
because staff must be provided if the growing organization is to accomplish
its goals
...

Line Authority

In the organization process, authority is delegated to the individuals
to perform the activities
...
This process goes on, creating superior – subordinate
132

relationships in the organization
...
Such a relationship works as follows:
As a Chain of Command

A command relationship exists between each superior and
subordinate
...

As a Channel of Communication

Line authority can be treated as a channel of communication
between the members of the organization
...
Barnard has
emphasized the role of line relationship as a channel of communication by
suggesting that every member of the organization should be tied into the
system of communication by having someone to report to and others to
report him
...

As a Carrier of Responsibility

The line relationship carries ultimate responsibility for the work
assigned
...

Staff Authority

The relation between a staff manager and the line manager largely
depend on the type of duties performed
...
Such
variations between line and staff relationships as discussed earlier, run
along a continuum with only advice at one extreme point and functional
authority at other extreme point
...
Thus,
variations are often found in respect of staff authority and responsibility in
133

organizations
...
An advisory staff manager provides advice, assistance,
and information and it depends on the line manager whether these are
put into action or not
...
In the absence of power of command, he must build
confidence in his opinions
...

Compulsory Staff Consultation

Some organizations prescribe the practice of compulsory staff
consultation
...
However, line manage is free to take action of his
choice after consulting staff
...

Concurring Authority

At times, a staff man may be granted authority so that no action
can be taken until he agrees to it
...
The idea of concurring authority is that the staff view point is
incorporated into operating decisions
...
For example, it may be prescribed that a finance manager
can not withhold capital expenditure simply because of his disapproval
of capital expenditure plan, but he can withhold it when funds are not
available or funds can not be arranged
...

134

Line and Staff Conflict

Line and staff relationship implies that both are complimentary in
nature
...
The various factors leading
to line-staff conflict can be grouped into three categories: apprehensions of
line managers, apprehensions of staff, and nature of line-staff relationship
...

Apprehensions of Line Managers:

Line managers who are responsible for the final results leading
to the achievement of organizational objectives, often criticize the staff
manages on the following grounds:
i
...
They perceive that staff people encroach
upon their authority by advising on matters which fall within their
jurisdiction
...

ii
...
Line managers fear that their
responsibility will be reduced because of the addition of staff thereby
making their job less challenging
...

iii
...
Line managers often allege that
staff people are not directly accountable for the results, but enjoy
authority
...
Further,
line managers contend that they will be criticized if things go wrong,
while the staff will get the rewards if things go well
...
Theoretical Bias: Often the advice and recommendation of staff
people suffer from theoretical bias because of two reasons, First, they
135

tend to think within the context of their won specialty, Second, as
staff people are away from the actual operational scene, they are not
able to fully appreciate the actual dimensions of the problems and
their recommendations may not be practicable
...
They find fault with line managers on the following grounds:
i
...
Line managers often resist such ideas because
new ideas mean that there is something wrong with their present
way of working
...
Because line people are reluctant to new ideas,
many of the efforts of staff people go waste
...
Lack of Proper Use of Staff: Staff people content that line managers
do not make proper use of their services and decisions are made
without inputs from staff
...
By virtue of his position, a line manager can accept,
amend, or reject the advice of staff irrespective of its quality and
practicability
...

iii
...
Line managers clearly hold most of the cards and enjoy
enormous authority
...
As a result, staff specialists feel that if they have the best
solution to a problem, they should have authority over line managers
to force the solution
...

136

i
...
In practice,
they are neither clearly understood nor practiced
...

ii
...
Staff
people are generally younger, better educated, more poised in social
interaction, more articulate and individualistic
...
These differences
create an atmosphere of mistrust and hatred between them
...
Staff people are needed in the organizations because
line people may not able to solve the problems which require specialized
knowledge
...
Staff people should be involved right from the initial stages of
planning of an activity rather than when the problem becomes
critical
...

ii
...
Instead, they should be assigned critical work in the area
of their specialty
...
There should be encouragement and education to line people as to
how to make maximum use of staff effectively
...

At the same time, staff people also have a responsibility to let line
people know how they can contribute for the better performance of
line activities
...
If line people take some actions directly affecting staff activities
without consulting staff people, they should be informed immediately
137

about such actions
...

Review Questions:
1
...

2
...
Examine the following
adages; “staff should be on tap, not tap”, and “staff should sell, not
tell”
...
Describe the difference between the advisory authority, concurrent
authority and functional authority
...
What are the important sources of conflict between line and staff
managers? How do you resolve the conflicts?

***

138

Lesson - 12 : Emerging Trends In Corporate Structure
Objectives
After reading this lesson, you should be able to:
ӹӹ Understand The Influence Of Strategy And Culture On The
Design Of Organization Structure;
ӹӹ Capture The Impact Of Technology On The Organization
Structure; And
ӹӹ Know The Differences Between Mechanistic And Organic
Structures
...
Organic Structure
Review Questions


For many years the fundamental structure underlying organization
design has been the classic pyramid
...
As
a result, the time it takes to respond to major changes may be much longer
than necessary, causing organizations to be reactive rather than proactive
(the forefront of change)
...


Organization of the future will seek to reduce the physical and
psychological distance from the top to the bottom of their structure
...
John Sculley at Apple moved
in this direction by adjusting Apple’s design so that territorial managers
have greater discretion in deciding how Apple can meet the needs of major
customers (educational or business) in their areas
...
This team has the authority
to make significant decisions about how Apple will price, produce, and
supply products for customers whose needs exceed certain levels
...
One of
the major reasons for the success of the corporate raiders of the 1980s was
the efficiencies to be gained by simply buying highly diversified companies
and breaking them apart into their individual, separate businesses
...


140

Organizations of the future will accept adhocracy:

Federations of relatively autonomous units each of which can
operate entrepreneurially
...
Arbitrary barriers between and within departments
will be less important – may even be removed – to allow people to “float”
more between units, contribute to decisions, and get key jobs done
...
They stay in
place for many years
...


If flexible structures such as adhocracy and fewer levels of
management evolve, the supporting systems will have to stand alone
...
Compensation must be linked to more than unit-related criteria
...
Systems generally exist today to protect the company
from human error
...

Sharing Rather than Dividing of Resources

The systems that many organization use to make decision about the
future and to commit resources to support those decisions is budgeting
...
Then, on the basis of that, they decide what
they can do in the future
...


Another system or orientation that many organizations are
beginning to take seriously looks at the opportunities dictated by changing
141

environments as the true starting point for making future decisions
...
The manager who takes this approach
seeks to borrow or temporarily use resources, not to own and control
them
...
Manages in firms that employ this type of systems use company
resources (people, facilities, money, capacity, technology, and marketing
capability) only as long as they are needed
...

Many people feel that this orientation – sharing rather than owning
resources will be the most effective orientation for organization designs of
the future
...
A well developed design enhances the accomplishment
of strategic objectives, and these strategic objectives should be carefully
selected to ensure successful organizational performance
...
Thus the ultimate goal of organization design is to facilitate
performance
...

In a well-managed organization, the connection among strategy, design
and performance is strong
...
For example, the design places power in the hands
of a certain group of people, so there is a tendency among the members
of this group to formulate strategies that preserve the status quo
...

142

Informal Organization and Culture

The informal organization consists of the personal relationships
and means of communication that are often necessary to accomplishing
the work of the organization but are not a part of the formal organization
structure
...
The
informal organization and the organization’s culture are created by people
throughout the company rather than being controlled by top management
...
In designing or redesigning an
organization, management must always take the informal organization and
the prevailing culture into account
...
And
where the design specifically attempts to frustrate part of the informal
organization, harmful conflict may result
...
The most appropriate design for an organization seems
to be contingent on such variables as its environment, the complexity of
its technology and its size
...

Impact of Environment on Organization Design

Organizations are influenced by the broader environment in which
they exist
...
And every
business must adjust to its customers, competitors, suppliers and creditors
– all of which are part of its immediate environment
...
Most of the studies investigated the relationship
between organization design and its environment and concluded that the
best design for a given organization is contingent on the characteristics of
its environment
...
It
must consider the frequency of change, the magnitude of change, and the
predictability of change
...

Stable Environment

A stable environment is one that experiences little or not unexpected
or sudden changes
...
For whatever reasons, the product
attracts neither regulatory attention nor technological innovation
...
But stable environments are becoming scarcer
...


Arms & Hammer is one organization with stable environment
...
The markets have grown, outlets for selling baking soda have
changed, and additional uses for the product have been found, but the
overall level and rate of change in the product and its markets have been
minimal
...
Thus organizations can be prepared to adjust to the changes
when they occur
...
Trends in demand for services often
144

depend on the social fabric of society
...
The characteristic
flexibility of service firms helps them adapt rapidly to such changes
...
For
example, Apple’s decision to position itself more strongly in the business
computer market was motivated in part by the overall decline in the student
population (Apple’s traditional strength), which resulted from changes in
demographic trends that were apparent well before they actually affected
the number of students
...
In this case, changes in the social
characteristics of potential lodging customers
...
And the
declining number of families has reduced the emphasis on family centered
accommodation
...
In the early stages of
development of an industry, its environment is often turbulent as a new
technology quickly emerges to replace an older one, new products or models
are rapidly introduced to supersede yesterday’s and (often) regulations are
imposed to reign in the rapidly changing industry
...
The computer industry, however, is an
exception
...


Consumer electronic products constitute one of the most rapidly
changing industries worldwide
...


145

Mechanistic Vs
...
M
...
They found that successful organizations were designed
differently in different environments
...


A mechanistic Design follows Weber’s bureaucratic model very
closely in that it is characterized by specialized activities, specific rules
and procedures, an emphasis on formal communication and a well-defined
chain of command
...
The U
...
Army offers a good example of a mechanistic
design
...
There are
very few rules and procedures, and great emphasis is laid on self-control,
participative problem solving and horizontal communication
...
Apple’s early organization design was
organic
...

Comparison of Mechanistic and Organic Organizations
Mechanistic

Organic

1
...

2
...
Tasks
are
more
interdependent
...

2
...


3
...
Hierarchical
structure
of control, authority and
communication
...

5
...

6
...

7
...

8
...
Importance and prestige
attached to identification
with organization and its
members
...
Generalized role definition
(members accept general
responsibility
for
task
accomplishment
beyond
individual role definition
4
...
Sanctions
derive more from community
of interest than from
contractual relationship
...
Leader not assumed to be
omniscient;
knowledge
centers identified where
located
throughout
organization
...
Communication is both
vertical
and
horizontal,
depending on where needed
information resides
...
Communications primarily
take the form of information
and advice
...
Commitment
to
organization’s tasks and goals
more highly valued than
loyalty or obedience
...
Importance and prestige
attached
to
affiliations
and expertise in external
environment
...
They recognized that
the environment surrounding each firm is unique and that each firm must
design its structure accordingly
...


Later work by Paul Lawrence and Jay Lorsch supported Burns and
Stalker’s findings
...
The effective firms in stable industries had
mechanistic organization designs, whereas the most effective firms in
turbulent industries had organic designs
...
There is a tendency to associate technology only with
factories and machines, but in terms of organization design, its meaning
is much broader
...
This definition makes it possible for such diverse activities
as teaching students, dry cleaning clothes and assembling automobiles all
to be considered technologies
...
A Professor can teach a course with three hundred students in
one class; another course might be restricted to thirty-five students
...
Similarly, a dry
cleaner can choose among several ways to provide dry cleaning services
...
And
different technologies affect the degree of specialization or standardization
necessary, the type of coordination mechanism needed the levels at which
decisions should be made and the optimal size of organizational units
...
She found that
differences in technological complexity accounted for differences in
the way effective organizations were designed
...
Woodward assigned a firm’s technological
complexity to one of these three categories on the basis of the extent to
which its manufacturing processes were automated and standardized
...
Custom-made items (such as tailored clothing) and items
only one of which is produced (such as portraits) are examples of unit
production
...
Print shops wherein each customer’s
order must be set and run separately utilize small-batch technology
...
Most of the work done by professionals such as doctors,
lawyers and managers could be considered unit technology
...
This kind of
production utilizes mechanization and standardized parts
...


Continuous-Process Technology utilizes fewer workers than does
mass production, because most of the process is automated
...
The process often
changes the material composition of the inputs
...
This category is the most complex in Woodward’s scheme,
because the processes involved are almost always completely automated
...
As technological complexity increased,
the number of levels of management increased (that is, the organization
structure became taller), the span of control of top management increased,
and the ratio of line to staff workers increased
...
This is probably because large-batch and mass-production
149

technologies require numbers of workers than do either unit or continuousprocess technologies
...

Organizations exhibiting technologies in the middle range of complexity
(large-batch and mass-production technologies) had more mechanistic
designs
...
Therefore, it is evident that technology is an
important determinant of appropriate structure
...
Thompson divided technologies into three categories
on the basis of years of observation in different organizations
...

Long-Linked Technology:

Thompson’s long-linked technology is characterized by a series of
sequential tasks that must be performed in a specified order
...
This category closely parallels
Woodward’s large-batch and mass-production technology
...
For example, banking
is a mediating technology; it facilitates the interaction between depositors
and borrowers
...
This type of technology is
intermediate in flexibility
...


150

Intensive Technology:

An intensive technology involves the application of specific skills,
techniques or services in order to make a change in an input
...
The value of an intensive technology is its
flexibility
...
The sheer size of an organization
often plays a central role in organization design
...
It seems obvious that
organizations change as they get larger and that more complex designs
become necessary
...
This may
be due in part to the fact that size has been measured in a variety of ways
...
What are they emerging trends in corporate structure? Explain
...
Explain the relationship between strategy and organization design
...
Explain the role of culture in acceptable formal and informal
organization
...
Describe the impact of environment on organization design
...
What are environmental variables that will have impact on
organization design?
6
...
Explain the impact of Technology on organization design
...

Lesson Outline
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Formal Organization
...

Differences Between Formal And Informal Organization
...
It needs the help of informal organization for this purpose
...

Formal Organization

Chester I Barnard defined formal organization as “a system of
consciously coordinated activities or forces of two or more persons”
...

It refers to the structure of well defined jobs, each bearing a definite
measure of authority, responsibility and accountability
...
Thus, formal organization
is more or less an arbitrary structure to which the individual must adjust
...
Coordination also
proceeds to a prescribed pattern in the formal organization structure
...
Division of Labour,
ii
...
Structure, and
iv
...


These may also be called principles of formal organization
...

The whole work is divided into a number of small operations and each
operation is performed by a different person so that there is maximum
specialization
...
The structure of the
organization refers to the overall arrangement in the organization which
ensures proper balance between difference parts of the organization
and secures the execution of all operations and the achievement of
organizational objectives
...


Formal organization is the official hierarchy as it appears on paper
...
Formal organization
possesses the following characteristics:
1
...
It is based on ideal relationships; and
3
...

These characteristics have also been criticized by many authors
...
But human beings cannot live without
social relations and, that is why, they develop informal relations
...
Further, it is assumed that there would be no
unofficial channel of communication
...
Lastly, it is based on the rabble hypothesis
of the nature of man
...

But the
individuals are not always motivated by the same rewards or punishments
in the same manner
...

It sticks to the goals (as laid down by the originators)
...
This is another point of criticism put
forward by its critics
...
Moreover, formal
organization does not consider the goals of the individuals
...
As a matter of fact, there is a close
relationship between the formal and informal organizations
...
,) but it should use it to achieve the
organizational goals
...
These relations are not developed according to procedures
and regulations laid down in the formal organization structure
...
These
groups may be based on some similarities that people of a large group see
among the members of the group with respect to tastes and preferences,
socio-cultural background, temperaments, attitudes, etc,
...


Informal organizations are small groups and these groups can
overlap because a person may be a member of several different informal
groups
...
Informal relations will always support and supplement
the formal one
...
They put resistance to change and conform to old practices
...
Sometimes, it
155

creates rumors which may prove dangerous to the enterprise
...
e
...
It is
true that while laying out an organization plan, management can only
develop formal structure of relationships, but organization is not only a
form chart or structure of relationships
...
But informal organization is
also not less important
...
In short,
informal relations are complementary to formal relations and procedures
laid down in the organization structure
...

Making Better Use of Informal Organisation

The management should not look down upon the informal
organization as it arises spontaneously along with the formal organization
and fills in some of the vital gaps in the formal organization
...
g
...
) of its members
...


Informal organization may act to fill in gaps in a manager’s abilities
...
Management may also make use
of informal group leaders by taking them into confidence to mediate as
bridges of understanding between the management and the employees
...
Therefore, management should adopt a
positive attitude towards informal organization
...


156


Most informal groups tend to be small
...
However, in large informal organizations, there
may be more than one leader whom the group will follow under given
circumstance
...
He may
be asked to speak for the group in dealings with management, the union, or
other informal groups
...
A manager should identify informal leaders and work with them
...
He can consult the leaders and seek their advice on technical
matters or human relations problems
...
Open, two-way
communication can be encouraged on a continuing basis for mutual
benefit
...
Informal communication system though
may have certain ill consequences, can also be used by an enlightened
manager to plug the loopholes of the formal communication system
...
It is the duty of every manager to see that informal
communication does not produce rumors and if a rumor spreads, it should
not be allowed to damage the functioning of the organization
...

Differences between Formal and Informal Organization

The formal and informal organizations differ from each other in
the following respects:
i
...
Formal organizations
are created by conscious managerial decisions
...

Management has no hand either in emergence or in abolition of
informal groups
...
Purpose: Formal organizations are created for realizing certain welldefined objectives
...
There may
be a conflict between the goals of the formal organizations and those
of the informal groups
...
Activities: Activities in case of formal organization are differentiated
and integrated around the objectives of the enterprise and are
formalized into work units or departments on a horizontal basis
...
In case of informal organization,
there are no specific activities
...
Informal groups
may be based on common taste, language, culture or any other factor
...
Structure: Formal organization is hierarchical, pyramid shaped
and bureaucratic in structure with well defined positions, rigid
delineation of roles and superior – subordinate relationships on
impersonal basis, enforcement of organizational order through
a set of policies, procedures, and rules, conscious emphasis on
status, differential based on authority, narrow and downward
oriented communication system, etc
...
Informal organization is loosely
structure, with only unwritten norms of behavior enforced by
consent
...
There
are no rigid status differentials
...
Membership
...
But in case of
informal organization, one person can be a member of more than one
group, according to his choice
...
There is no rigidity about group membership
...
Orientation: In case of formal organization, values, goals and tasks
are dominantly economic and technical and they are concerned with
productivity, profitability, efficiency, survival and growth
...

vii
...

They are expected to behave in a rational manner
...
There is also a system of rewards
and punishments
...
Behavior is more
natural and social
...
An informal
organization develops its own norms of behavior and a system of rewards
and punishments to ensure adherence of group norms
...
Define formal organization and explain its features
...
Give a comparative assessment of the importance of formal and
informal organization
...
Distinguish between formal and informal organization
...
How Can informal organization undermine and distort the formal
organization? Explain

159

Case Study

Mr
...
While he had good vice-presidents in charge of finance, sales,
advertising, manufacturing, purchasing, and product research, he realized
he could not hold any of them responsible for company profits, as much as
he would like to
...
The sales
vice-president, for example, had rather reasonably complained that he
could not be fully responsible for sales when the advertising was ineffective,
when the products wanted by customers were not readily available from
manufacturing, or when he did not have the new products he needed to
meet competition
...


Mr
...
But he found that this would not be feasible
or economical since many of the company’s branded food products were
produced on the same factory equipment and used the same raw materials
and a sales person calling on a store or supermarket could far more
economically handle a number of related products than one or a few
...
Raghavan came to the conclusion that the best
thing to do was to set up six product managers reporting to a product
marketing manager
...


Mr
...
He was concerned with this problem but knew
that some of the most successful larger companies in the world had used
the product manager system
...



Mr
...
But he wondered how he
could avoid the problem of confusion in reporting relationships
...
Do you agree with Mr
...

2
...
Do you suggest any other organisation model for this business? If so,
present the organisation chart of the same
...

Lesson Outline
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The Perceptual Process
Factors Influencing Selection Of Stimuli
Factors Influencing Perception
Managing The Perception Process
Learning Theories
Learning Reinforcement
Review Questions


Perception is how people look at and understand the things
...
Perception
is a complex cognitive process of understanding the world, sometimes not
in its real form
...
As a result, the same stimuli may produce different
behaviours and responses
...
It is in this context, an attempt is made here
to explain the perceptual process, factors influencing perceptions and
managing the perceptions to the advantage of the organization
...
This information
is obtained through the senses namely, seeing, hearing, touch, taste and
smell
...
It is also
defined as ‘a process by which individuals organize and interpret their
sensory impressions in order to give meaning to their environments
...


Stimuli


Observation

Perceptual
Selection

Perceptu

Interpretation

Response

Organization

Figure 14
...
Different people perceive an
object differently both in terms of what they selectively perceive and how
they organize and interpret the things perceived
...

It is, in fact, a complex set of factors that determine the perception of an
individual
...
The interpretation of what is perceived may vary
widely
...
Therefore,
quite often the people perceive things differently and behave on the basis
of those perceptions
...


164

External Factors Influencing Selection

The external factors influencing selection are nature, intensity, size,
contrast, repetition, motion, and novelty and familiarity
...
Is it a visual
object? Does it have words, pictures, people or animals? Pictures attract
attention more than words and a picture with human beings attracts
attention more than a picture with inanimate objects
...

Intensity

The intensity principle conveys that if the external stimulus is more
intense in nature, the more it is likely to be perceived by the individual
...
At work places, superiors speak loudly to subordinates for
this reason only
...
Larger objects are
likely to be perceived more by the individuals than the smaller ones
...

Contrast

The contrast principle suggests that the external stimulus that
stands out distinctly against the background or the one that is quite
unusual will receive greater attention of the people
...
The several advertisements
of various products shown daily on TVs are based on the principle of
repetition only
...

165

Motion

According to this principle, people pay greater attention to moving
objects rather than stationary objects
...

Novelty and Familiarity

This principle states that either a novel or a familiar external
situation can better serve to draw attention
...
Job rotation is followed in organizations for this reason
...

Internal Factors Influencing Selection

Internal factors influencing selection of stimuli are personality,
learning, and motivation
...

Personality

It cannot be disputed that personality has a significant impact
on what and how people perceive
...
A conscientious person is likely to pay
greater attention to external environmental stimuli than a less conscientious
person who is likely to be careless, impulsive and irresponsible
...
They are careful and methodical in their perceptual selection
and organization
...
Learning
determines the development of perceptual sets
...
This is also known as cognitive awareness by which the minds
166

organizes information and form images and compare them with previous
exposures to similar stimuli
...
In making decisions,
managers are also influenced by their functional background
...
Individual differences
lead to perceptual bias
...

Motivation

Motivation also plays an important role in influencing the process
of perception
...
Likewise if the
person is deprived of sleep, he looks for a situation in which he can have a
comfortable sleep
...
The relationship
between motivation and perception is explained through Collenyannia
Principle which states that people process pleasant events more efficiently
and accurately than the unpleasant events
...
These factors emanate from three sources – the perceiver, the
perceived and the situation
...
A person with a strong need for ego
satisfaction may select out from a situation and emphasize signals that tend
to satisfy the desire for self esteem
...
These and other personal
factors will determine what a person gives attention to in a situation and
how these cues are interpreted as a basis for decision-making and action
responses
...
The physical attributes, appearance, and
behaviour of other persons in the situation also influence how the object
is perceived
...
A young person exercising authority in a situation is viewed
differently from an older person doing the same thing
...

The Situation

The context in which we see the objects or events is important
...
A subordinate calling his boss by the
first name may be perceived quite differently when observed in a typical
Indian office as opposed to in a social reception
...
Such
background characteristics of the situation or context are additional factors
that can affect how the situation is perceived by the different persons
...



Figure 14
...
They are aware
of perceptual distortions and accept that perceptual differences are likely
to exist in any situation
...
The perceptual
skills of a manager will help him in the following ways
...
The successful manager understands this and
is able to identify when he is inappropriately distorting a situation because
of such perceptual tendencies
...
These insights are used to gain
additional perspective on situations and the problems or opportunities
they represent
...
The successful manager rises above the personal impressions
and tries to understand problems as felt by other people
...
If felt necessary,
the successful manager influences the perceptions of others in such a way
that the work events are interpreted as accurately as possible and to the
advantage of all concerned
...
Successful managers are
self disciplined and sufficiently aware that the adverse impact of these
distortions is minimized
...
The successful manager is wise
enough to establish the real reasons for the things that happen and avoid
169

the tendency of making quick or inappropriate attributions
...
Learning is any relatively permanent change in behaviour that
occurs as a result of experience
...
Change must be relatively permanent
...

If a person learns car driving, it will last for a long time indicating
the changed behaviour
...
Therefore, this requirement
rules out behavioural changes caused by fatigue or other temporary
adaptations
...
The second element is that the change of behaviour should take place
as a result of some kind of experience
...
The experience may be
direct or indirect
...


You may note that learning itself cannot be observed
...
This kind
of change in behaviour should be differentiated from change in behaviour
caused by other factors
...

A change in the individual’s thought process or attitudes, if accompanied
by no change in behaviour, would not be learning
...
It can give insights into how to best develop the skills and
talents of employees for performing the jobs effectively
...
The manager
who undertakes to produce such changes acts like a teacher
...
When the employees are late for work, lazy, disobey
the rules or engage in any type of dysfunctional behaviour, the manager
attempts to teach behaviours of functional nature
...


You may understand that individuals enter an organization with
a host of learned attitudes and behaviours
...
Learning is a continuous experience
for employees
...
The employer presumes that
not only education or experience provides learning, but that learning will
lead to higher job performance
...
The manager’s task is to provide sufficient learning
experiences to employees in an environment that will facilitate learning
process and promote desired behaviours
...
The following are the important
theories of learning
...
This response may not be under an individual’s conscious
control
...

This meat is unconditioned stimulus or unlearned stimulus
...
This kind of response was
instinctive or unconditioned
...
Ringing the bell without offer of meat
was not connected to any responses
...
With the continuation of the
process, the ringing of the bell alone acted like a stimulus to evoke the
response of salivating even without presentation of meat
...


171

Operant Conditioning

B
...
Skinner coined the term operant conditioning to refer to
a process by which individuals learn voluntary behaviour
...
Learning occurs from the consequences of
behaviour, and many employee work behaviours are operant behaviours
...
Managers are interested in operant behaviours because they
can influence the results of such behaviours
...
That is how
the behaviour can be controlled by manipulating its consequences
...

-- The behaviour that results in positive rewards is likely to be repeated
and behaviour with negative consequences is likely to be extinguished
...


Therefore, some consequences can be used to increase the
recurrence of desired behaviour and some other consequences can be used
to decrease the recurrence of undesired behaviour
...
Reinforcer may be any stimulus that prompts a behaviour
to be repeated or stopped
...
By the appropriate use of reinforcers, the organizations are able
to maintain or increase the probability of behaviours like quality oriented
performance, wise decision making, regular attendance and punctuality
and so on
...


172

Positive Reinforcement

Positive reinforcement is provided by offering rewards for desired
behaviours
...
Money, as
you understand, is the most powerful reinforcement for positive behaviour
since money can be used for a number of other purposes
...
As individuals have different
motivations of performance, positive reinforcers should be individually
tailored with a view to facilitate the repetition of desired behaviour
...
For example, money
would be a less reinforcer who values praise for his performance more
...

Negative Reinforcement

In negative reinforcement, an unpleasant event that precedes the
employee behaviour is removed when the desired behaviour occurs
...

Negative reinforcement is sometimes confused with punishment because
both use unpleasant events to influence behaviour
...
Managers frequently use negative reinforcement when an
employee hasn’t done something that is desired
...
While
reinforcement increases the frequency of a desirable behaviour, omission
decreases the frequency and eventually extinguishes an undesirable
behaviour
...
The
omission procedure consists of three steps
...
identifying the behaviour to be reduced or eliminated,
2
...
stopping the reinforcer
...

Punishment

Punishment is an unpleasant event that follows a behaviour and
decreases its frequency
...
While a positive consequence of reinforcement
encourages the frequency of a desired behaviour, a consequence of
punishment decreases the frequency of an undesired behaviour
...
They may be a wage cut, a suspension without pay,
a demotion, or a transfer
...
In general, organizations use punishments
of unpleasant nature sparingly for cases of serious behavioural problems
...
The use of punishment should be limited to those undesirable
behaviours that cause a significant damage to the organizational operations
...

Punishment may cause undesirable emotional reactions
...
Such reactions may lead to retaliatory
behaviour harmful to the organization
...
It is clear that
punishment leads to short-term suppression of the undesirable behaviour,
rather than to its elimination
...
High absenteeism is a form
of avoidance and quitting is the final form of escape
...
Overusing punishment produces apathetic employees, who
are not assets to an organization
...
Low self-esteem, in turn, undermines the employee’s selfconfidence, which is necessary for performing most of the jobs
...
Explain the perceptual process and the factors influencing the
perception?
2
...
What is learning? Explain any two learning theories you are familiar
with?
4
...

Lesson Outline
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Meaning And Definition Of Personality
Determinants Of Personality
Theories Of Personality
Personality Traits And Their Impact On Behaviour
Review Questions

Meaning and Definition of Personality
Personality is a complex phenomenon and difficult understand
...
Personality refers to
the personal characteristics that lead to consistent patterns of behaviour
...
Personality combines a set
of physical and mental characteristics that reflect how a person looks,
thinks, acts and feels
...
External
traits are observable behaviours on the basis of which we can understand
one’s personality
...
According
to Hogan, personality refers to the relatively stable pattern of behaviours and
consistent internal states that explain a person’s behavioural tendencies
...

Each employee in an organization is unique and he may or may not act
similarly in a similar situation
...

The above definition does not mean that people do not ever change
...
Personality changes in individuals occur slowly over an extended
period of time
...

Determinants of Personality

Having understood the concept of personality, now we can
move further to know how an individual’s personality is determined? Is it
inherited (genetically determined) or is it formed after years of experience?
There are no simple answers to these questions
...
Primarily, there are two sources
contributing for personality differences
...
heredity and ii
...
Environment has several factors within it like culture,
family background, life experiences and the groups we interact with
...

ENVIRONMENT
HEREDITY

•

Culture

•

Family
background

•

Life experiences

•

Socialisation
process

PERSONALITY
Figure 15
...

For example, whether we are fair or dark, tall or short, strong or weak are
all characteristics that have something to do with heredity
...
Some traits may have strong genetic component while
others may be largely learned
...
Hence people belonging to different societies will have
different cultural orientations
...
People in the West and those
in the East have cultural differences between themselves
...
These differences are primarily due
to variations in cultural norms and expectations of acceptable behaviours
in the respective societies
...
Managers should keep this in mind when they are
dealing with the employees
...
Factors like the socio-economic status
of the family, the number of children in the family and birth order,
and education of the parents and extended members of the family such
as cousins, uncles and aunts influence personality formation
...
Through their own behaviours they influence children’s behaviours;
ii
...
They selectively reward and punish the behaviour of children
...

A complex set of events and interactions with other people determine the
level of self esteem of a person
...

Groups we interact with

The first group of people, a person interacts with is the family
...
The
roles and experiences people have as members of different groups lead to
personality differences
...

The interactions begin first with patents and siblings, then teachers and
classmates, later on friends and colleagues
...
For example,
if a person wants to become a member of a work group, he has to change
himself to conform to the values and norms of that group
...

Theories of Personality
Trait Theory
Trait theory presents an approach to understand personality
...
However, there are many other traits
that are unique to a person
...
A person does not possess emotion but
he acts emotionally in some circumstances
...
Traits are the basic
elements of personality and can be used to summarize the behaviour of
a person
...


180

Psychoanalytical Theory
The psychoanalytical theory of personality is based on the Freudian
concept of unconscious nature of personality
...
This prompted him to believe that the personality
structure is primarily founded on unconscious framework and that
human behaviour and motivation are the outcomes of such conflicting
psychoanalytic concepts as the id, the ego and the super ego
...
It strives
for sexual and other biological pleasures and has animal instincts of
aggression, power and domination
...
It
keeps the id in check through the realities of the external environment
...
Because of difficulty in keeping the id under control,
ego is supported by super ego
...
The conscience
creates standards of what is right and what is wrong and is generally
subconsciously developed by the absorption of cultural and ethical values
of the social environment
...
In order to create a
“normal” personality, there must be a balance in the relationship among
these three forces
...
First, it is believed that personality development is more a
result of social variables than biological drives
...
Thus, learning theory looks at personality as the sum
total of all that a person has learned
...
The social learning
theory uses “reinforcement and punishment” approach in understanding
personality
...
Thus, behaviour and
181

external environment have mutual interaction
...


Learning may also take place simply from observation rather than
interaction with the environment
...
Unlike
trait theory or psychoanalytical theory, social learning theory considers
situation as an important variable in determining human behaviour
...
Personality trait
means the basic components of personality
...
These are briefly explained below
...
They are the needs for achievement,
affiliation, autonomy, and dominance
...
Those who are high in need for
affiliation tend to work cooperatively with others
...
Those high in
their need for dominance prove to be effective in situations where they can
enforce their legitimate authority
...
People who have moderately
strong internal locus of control are likely to perform better at work places
...

Internals are more suitable for leadership positions and are likely to be
182

more satisfied with the jobs
...

Introversion and Extroversion
Personality traits are commonly understood in terms of introversion
and extroversion
...
Extroversion refers to the tendency in
individuals to turn outward searching for external stimuli with which
they can interact
...
Extroverts are sociable, lively, gregarious,
and seek outward stimuli or external interactions
...
They interact with a
few intimate people
...
Since managers have to constantly interact
with individuals both within and outside the organization and be able to
influence them to achieve organization’s goals, it is expected that extroverts
prove to be better managers than introverts
...
Some managers are prepared to take risk and act on little
information and quickly also
...

Self – Monitoring
It refers to a person’s level of sensitivity and ability to adapt to
situational cues
...
Self monitoring personality trait is important in carrying
out organizational activities
...


183

Self – Esteem and Self-Concept
Self esteem is the result of a person’s continuing self-evaluation
...
Self-esteem is an
important personality factor that determines how managers perceive
themselves and their role in the organization
...
High self-esteem leads to a high
sense of self-concept, which in turn, reinforces high self-esteem
...
As a trait, a person high in self-esteem
is likely to take on more challenging assignments and be successful, thus
enhancing their self-concept
...
The higher the
self-concept and self-esteem of a person, the more he contributes to the
goals of the organization
...
Type A persons feel a chronic sense of time urgency, are highly
achievement oriented, exhibit a competitive drive, and are impatient when
their work get slowed down for any reason
...
Type A individuals are more prone to heart attacks
than Type B individuals
...

Goal - Orientation
An important personality difference affecting behaviour at work is
goal orientation
...
A person with learning orientation develops
by acquiring new competencies whereas a person with performance
orientation demonstrates competencies by seeking favorable judgments
from others
...
The extremely work oriented person gets greatly involved in
184

the job and lives up to being described as “living, eating, and breathing the
job”
...
Though a
high level of work orientation of members is good for the organization to
achieve its goals, too much of it may lead to premature burnout and health
problems
...

With personality differences, we are able to understand, how they affect
the behaviour of the people in organizations
...

2
...

4
...


***

185

186

Lesson - 16 : Motivation

Objectives
After studying this lesson, you should be able to:
ӹӹ Understand The Meaning Of Motivation And Its Importance In ;
ӹӹ Acquaint With The Various Theories On Motivation; And
ӹӹ Learn And Practice The Techniques In Your Own Operational
Area
...
By motivating the workforce, management creates ‘will to work’
which is necessary for the achievement of organisational goals
...
The following results may be expected if the employees are
properly motivated:

187

-- The employees will cooperate voluntarily with the management and
will contribute their maximum towards the goals of the enterprise
...
This will also result in
increased productivity
...

-- There will be good human relations in the organisation as friction
among the workers and the management will decrease
...
Accident
rate will also be low
...
Better
quality of products will increase the public image of the business
...

Whatever may be the behaviour of a man, there is some stimulus behind it
...
Motive
can be known by studying his needs and desires
...
The management should try to understand the motives of
individuals which cause different types of behaviour
...
Motivation is
something that moves the person to action, and continues him in the
course of action already initiated”
...


According to Dalton E
...
Motivation has close
relationship with the behaviour of human beings
...
Thus, motivation is a term which applies to
the entire class of urges, derives, desires, needs and similar forces
...
An unsatisfied need
creates tension that stimulates drives within the individual
...
The action taken by the individual
will lead to reward which satisfies the need and reduces tension
...
1: Drivers of Motivation
Management can do its job effectively only through motivating people
to work for the accomplishment of organisational objectives
...

Human needs may be classified as: (1) basic physiological or primary
needs, and (2) social and psychological or secondary needs
...
These needs arise out of the basic physiology of life and are
important for the survival of a man
...
Needs are also influenced by
the social environment
...


Secondary needs are related to mind and spirit rather than to the
physiology of life
...
Instances
are belongingness, recognition, self-esteem, sense of duty, self-assertion
and so on
...

189

Motivational Sources
Having understood the concept of motivation, now let us understand
the various sources of motivation
...
It may be recognized that under the same
set of external factors, all employees are not equally motivated
...
The motivational sources are explained
below
...
Negative Motivation
Motivation may be either positive or negative
...
It is positive because, this kind
of motivation increases the level of performance, promotes team spirit,
a sense of cooperation and generates a feeling of belongingness and
happiness
...

Concern for the well being of an employee
...

Delegation of authority
Scope of participation given in the decision making
...
You may note that fear of punishment also affects
motivation and thereby the behaviour of a person
...
This fear of punishment prompts the person to work hard and
achieve the goals
...
Hence, it is
desirable to motivate the employees by positive means
...
Intrinsic Motivation

Motivation may be either extrinsic or intrinsic
...
It is expected
that the behaviour caused by positive rewards is likely to be repeated
...
Money acts as a significant incentive for positive behaviour
of employees
...
for motivating the employees
...

It is an inner feeling
...
Since this kind
of motivation comes from within, it is called intrinsic motivation
...
Some of the intrinsic
motivators include praise, status, recognition, esteem, challenge, risk and
responsibility in job
...
First set of assumptions
are known as “Theory X” and the second set of assumption are known
as “Theory Y”
...
They, according to McGregor, are
intuitive deductions
...

-- The average human being is lazy and avoids responsibility
...

-- The average human being prefers to be directed, wishes to avoid
responsibility, has relatively little ambition and wants security above
all
...
Management can
offer rewards to a worker who shows higher productivity and can punish
him if performance is below standard
...
It suggests that threats of punishments and strict
control are ways to control the people
...

Depending upon controllable conditions, work may be a source of
satisfaction or a source of punishment
...

-- Commitment to objectives is a function of the rewards associated
with their achievement
...

-- The capacity to exercise a relatively high degree of imagination,
ingenuity and creativity in the solution of organisational problems is
widely, not narrowly, distributed in the population
...
Worker’s commitment is
directly related to the satisfaction to their needs
...
It does not rely heavily on the use of authority as an
instrument of command and control
...

192

Application of Theory X and Theory Y

Theory X and Theory Y are important tools in understanding
the behaviour of human beings and in designing the incentive schemes
to motivate the employees
...
It appears
that Theory X is more applicable to unskilled and uneducated lower
level workers who work for the satisfaction of their basic needs of food,
clothing and shelter
...
However, there can be exceptions
...
The examples of employees at higher levels in modern
organisations shirking responsibility are not uncommon
...

Theories of Motivation

There are two types of motivational theories - content theories
and process theories (cognitive theories)
...
Some of these theories are explained below
...
Maslow points out that human beings have divergent
needs and they strive to fulfill those needs
...
These needs range from biological needs at
lower level to psychological needs at the highest level
...

Maslow postulates five basic needs arranged in an hierarchical fashion as
follows:

193



Self-actualization

5

Needs


Esteem Needs



Social Needs



Safety and Security Needs



Physiological Needs

4


3
2
1



Figure 16
...
The top two
levels of needs are called higher order needs as they are concerned with
personal development and realization of one’s potential
...

Physiological Needs

The physiological needs are the basic needs having the highest
strength in terms of motivation
...
If these basic needs are gratified, then the next level needs become
important and act as motivators
...
These are the needs for self-preservation
while physiological needs are for survival
...

Safety and security needs arise out of the concern for the fulfillment of
physiological needs in the future
...
If once
these needs are gratified, they fail to serve as motivators any more
...

194

Social Needs

At the third level, social needs or love needs become important
...
A sense of affiliation becomes
important for a meaningful life
...
We know very well that
at home the child needs the love of parents and at school he needs the
friendship of his classmates
...
It is an urge for
status, prestige and power
...
People who are able to
fulfill this need feel that they are useful and have some positive influence
on their surrounding environment
...
This need gets activated as
motivator when all other needs have been reasonably fulfilled
...

As a result, he seeks challenging work assignments that require creativity
and talent
...
A self-actualizing person is creative, independent, content, and
spontaneous and has a good perception of reality
...


In conclusion, it may be said that Maslow’s model explains human
behaviour in general
...
Further, human needs may not necessarily have the
hierarchy as shown by him
...


Maslow felt that the human needs have a definite sequence of
domination
...
The other side of the need hierarchy is that
195

man is a wanting animal, he continues to want something or the other
...
As said above (according to
Maslow), needs arise in a certain order of preference and not randomly
...
Another point to note is that once
a need or a certain order of needs is satisfied, it cases to be a motivating
factor
...
In the
absence of air one can’t live, but there is it is plenty of air which ceases to
be motivating
...
This has been proved by
various studies
...
S
...
highly value self-realisation, while
service and manual workers in India reported that they give to priority to
job security, earnings and personal benefits all lower order needs
...
Surveys in
European countries and Japan have shown that the model does not apply
very well to their managers
...
For example, workers in
Spain and Belgium felt that their esteem needs are better satisfied than
their security and social needs
...
Thus, need hierarchy may not follow
the sequence postulated by Maslow
...
Man’s behaviour at any time mostly guided
by multiplicity of motives
...


There are always some people in whom, for instance, need for
self-esteem seems to be more prominent than that of love
...
In certain people, the level of operation may be permanently
196

lower
...

HERZBERG’S Two Factor theory of MOTIVATION

A significant development in motivation theory was distinction
between motivational and maintenance factors in job situation
...
These men were asked to recall specific incidents in
their experience which made them feel particularly bad about jobs
...
To this group of engineers and
accountants, the real motivators were opportunities to gain expertise and
to handle more demanding assignments
...
Thus, hygiene factors provide no motivation
to the employees, but the absence of these factors serves as dissatisfies
...

Their presence does not motivate employees in a strong way
...
They are called maintenance
factors in job because they are necessary to maintain a reasonable level
of satisfaction among the employees
...
They are also known as ‘dissatisfiers’ or ‘hygienic factors’
because they support employees’ mental health
...
These conditions are ‘Motivational
Factors’
...


197

Herzberg’s Maintenance and Motivational Factors
Maintenance or Hygienic Factors
1
...

2
...

3
...

4
...

5
...

6
...

7
...

8
...

9
...

10
...


Motivational Factors
1
...

2
...

3
...

4
...
Responsibility
...
The
presence of these factors at a satisfactory level prevents job dissatisfaction,
but they do not provide motivation to the employees
...
They are also known as
satisfiers and include such factors as recognition, feeling of accomplishment
and achievement, opportunity of advancement and potential for personal
growth, responsibility and sense of job and individual importance, new
experience and challenging work etc
...
A close examination of Herzberg’s model indicates that some
employees may have achieved a level of social and economic progress in
the society and for them higher level needs of Maslow (esteem and selfactualization) are the primary motivators
...
Thus, we
can say that money might still be a motivator for operative employees and
198

for some managerial employees
...
Most of
the maintenance factors come under comparatively lower order needs
...


As shown in the following diagram Maslow’s Physiological, security
and social needs come under Herzberg’s maintenance factors whereas selffulfillment comes under motivating factors
...
The esteem needs are divided because there are some
distinct differences between status per se and recognition
...
This position may be gained
through family ties or social pressures and so this may not be a reflection
of personal achievement or recognition
...
It is earned and granted by others
...

Motivational factors




Esteem




Self- fulfillment

Social

Safety

Physiological

Maintenance factors
Figure 16
...
They are stated
below:
(i)
(ii)
(iii)


Need for achievement (n Ach): a drive to excel, advance and grow
Need for power (n Pow): a drive to influence others and situations
Need for affiliation (n Aff): a drive for friendly and close
interpersonal relationships
...
This
drive is called the need for achievement (n ach)
...

They seek situations where they can attain personal responsibility for
finding solutions to problems, where they can receive rapid feedback on
their performance so they can set moderately challenging goals
...
They
prefer the challenge of working at a problem and accepting the personal
responsibility for success or failure, rather than leaving the outcome to
chance or the actions of others
...
Individuals high in n pow enjoy being “in charge”,
strive for influence over others, prefer to be placed into competitive and
status oriented situations, and tend to be more concerned with gaining
influence over others than with effective performance
...


200

Affiliation Motivation

This need has received the least attention of the researchers
...
It is the drive to relate to people on a social basis
...


People possess the above needs in varying degrees
...

Individuals with a high need for achievement thrive on jobs and projects
that tax their skills and abilities
...
Individuals
with high power seek to dominate, influence or have control over others
...
In other words, motivating forces for managers lie
in the challenge and potential of the job
...
There seems to be
some over-lapping between the security, social and physiological need
...
With these points in mind, Clayton Alderfer condensed
Maslow’s need categories into three sets:
-- Existence needs
...
e
...

-- Relatedness needs
...
The examples include anger and
hostility as well as friendship
...

Relatedness needs cover Maslow’s social needs and that of esteem
needs which are derived from other people
...
It is like Maslow’s highest level need of
self-actualization
...
He argued that the three need categories form a hierarchy only in
the sense of decreasing concretions
...

2
...
Growth needs become more important as we successfully satisfy
them
...

3
...
In this sense,
Alderfer sounds somewhat like Maslow, suggesting a pattern of
satisfaction progression- that is, as one need is satisfied, we progress
to next higher need
...
Different types of needs can operate simultaneously
...
In this way, Alderfer distinguishes between chronic needs which
persist over a period of time and the episode needs which are situational
and can change according to the environment
...
F
...
Reinforcement theory argues that the behavior of people is largely
determined by its consequences
...
The reinforcement
theory suggests that managers should try to structure the contingencies of
rewards and punishments on the job in such a way that the consequences
of effective job behaviour are positive while the consequences of ineffective
work behaviour are negative or unpleasant
...
That is
why it is also labeled as organizational behaviour modification
...
An event is said to be reinforcing if the event
following some behaviour makes the behaviour more likely to occur
again in the future
...

Positive reinforcers can be money, praise, promotion, recognition,
etc
...
It implies the use of unpleasant consequences
to condition individuals to avoid behaving in undesirable ways
...
In work environments, training, safety warnings,
orientation sessions and counseling help alert employees against
negative consequences of undesirable behaviour
...
For instance, a disruptive employee
who is punished by his supervisor for his undesirable behaviour may
continue the disruptions because of the attention they bring
...

(iv)
Punishment: This tool is used when an unpleasant or
undesirable behaviour needs to be reduced or eliminated
...

Financial and Non-Financial Incentives

The term ‘incentives’ means an inducement which arouses
or stimulates one to action in a desired direction
...
In modern organizations, a
large variety of incentives are used to motivate the people
...


The financial incentives may be distinguished from the nonfinancial incentives on the following grounds:
1
...
The needs for food, clothing, and shelter can be
fully satisfied by money, but the needs for security, social affiliation
and status can be partially satisfied by money
...
The examples are higher level needs such as
status, ego, sense of responsibility, career advancement, autonomy
...
Financial incentives are tangible, i
...
visible and measureable; they
have a direct effect on the organization and the members
...

3
...

Non-financial incentives are based on the nature of jobs, strength of
aspirations and urges of employees and behavioural orientation of
management
...
Financial incentives are generally used to motivate workers and
other non-managerial employees
...
They
are also used to supplement and support the pecuniary incentives in
the organization
...
As a matter of fact, when the physiological and security needs
204

are fulfilled with the help of money, money ceases to be the motivating
force; it becomes the maintenance factor as said by Herzberg
...
They have other needs also
...
In order to
motivate the employees having these needs, management can take the help
of following non-financial incentives:
1
...
Sometimes, praise is more
effective than another incentive
...
However,
this incentive should be used with greater degree of care because
praising an incompetent employee would create resentment among
competent employees
...

2
...
If
there is a healthy competition among the individual employees or
groups of employees, it will lead them to achieve their personal or
group goals in a better way
...
Opportunity for Growth: Opportunity for growth is another kind
of incentive
...

4
...
A worker likes to know the result of his performance
...

5
...
It
gives them psychological satisfaction that their voice is being heard
...
Suggestion System: Suggestion system in an incentive which satisfies
many needs of the employees
...

205

They, sometimes, publish the worker’s name with his photograph in
the company’s inhouse magazines/reports/brochures
...

Review Questions
1
...
Comment
...
Explain Maslow’s need hierarchy
...

3
...
List out the assumptions of McGregor’s Theory X and Theory Y
...
“Motivation is based on rewards”
...

6
...
” Discuss and give also the role of non-financial
incentives in motivation
...
“Non-financial incentives are as strong motivators as the financial
ones”
...

which they welcome and accept the managerial philosophy is very crucial to
the development of sound and favorable organizational climate
...

Structure: Structure is the framework that establishes formal relationship
and delineates authority and functional responsibility
...
In sharp contrast, if the
management feels the necessity of maintaining greater degree of consistency
in operations regarding decision-making, it will be wedded to centralized
structure
...

Communication, decision making, motivation and leadership are some
of the important processes through which management achieves the tasks
...
A leader has to be aware of the possible influence
of his actions on the climate while deciding about the most appropriate
supervisory technique for a given situation
...

Physical Environment: the external conditions of environment, the size,
location of the work place etc
...
An
employee performing his job in relatively clean, quiet, safe environment
will undoubtedly have a favorable perception of the organizational climate
...

System Values and Norms: Every organization has discernible and fairly
formal value system where certain kinds of behaviors are rewarded and
encouraged and certain kinds of behavior forces an individual to formal
sanctions
...
But informal value system is very difficult to
ascertain
...


In general, organisational climate provides certain stimuli, offers
certain opportunities and raises certain expectations among its members;
at the same time, it also creates certain constraints, threats, problems and
frustrations
...

Perceived ability is influenced by the nature and clarity of the job, the scope
of responsibility, degree of freedom, supervisory support and training, safety
and other physical working conditions, previous experience and so on
...
It may be
consciously created by its key members, or it may have simply evolved over
time
...
A culture may exist across an entire organization, or it
may refer to the environment within a single division, branch, plant, or
department
...
Like the air in a room,
it surrounds and affects everything that happens in an organization
...
They give an organizational identity to
employees – a defining vision of what the organization represents
...


207

Characteristics of Cultures

Each organization has its own history, patterns of communication,
systems and procedures, mission statements and visions, stories and myths
which, in their totality, constitute its distinctive culture
...
Most organizational cultures have historically been
rather implicit rather than explicit
...

Measuring Organizational Culture
Systematic measurement and comparison of cultures is difficult
...
Others have used interviews and open ended
questionnaires in an attempt to assess employee values and beliefs
...
Another approach is to survey employees directly and seek their
perceptions of the organization’s culture
...

Characteristics of organizational cultures
--------

Distinctive
Stable
Implicit
Symbolic
Integrated
Accepted
A reflection of top management

Communicating Culture

If organizations are to consciously create and manage their cultures,
they must be able to communicate them to employees, especially the newly
hired ones
...

These cultural communication acts may be lumped under the umbrella of
organizational socialization, which is the continuous process of transmitting
key elements of an organization’s culture to its employees
...


208

Review Questions
1
...
What are some of the implicit or explicit norms, values
and assumptions?
2
...
Explain various characteristics of Organisational Climate
...
Distinguish between

a
...


b
...


c
...

5
...
Describe the factors determining organisational structure
...


Lesson Outline
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ

Importance, Sources & Types Of Values
Values At Workplace
Attitudes And Their Formation
Types Of Attitudes
Implications Of Attitudes
Review Questions


At the outset, let us examine a few definitions of values
...

Chakravarti defines values as “the manner in which an individual tends
to make judgements or choices, both about goals and means, at different
stages of one’s life, in different facets of it, as are deemed to lead to the well
being and happiness of oneself and society”
...
Values are stable and long-lasting beliefs about
what is important in a variety of situations
...
Values do not represent what we need but they indicate what we
211

ought to do to achieve the need in a socially desirable way
...
Some people value frugality
while others value generosity
...
Value systems represent prioritizing of individual values
in relation to their relative importance
...
This system is identified by the relative importance
assigned to such values as pleasure, self-respect, honesty, freedom, equality,
and so on
...

Importance of Values

In the organisational context, values are important because
they influence employee conduct and behaviour
...
Now-a-days, employees resent the traditional command-andcontrol supervision and expect a lot of autonomy and operational freedom
...
It has
something to do with the values of that organization
...
If an employee
feels that payment of wages on the basis of performance is right, he / she
cannot accept payment of wages on the basis of seniority, he becomes
indifferent to such a system followed in the organization
...

Sources of Values

Values are learnt right from the childhood
...
Early ideas of what is right and wrong were probably
formulated from the views expressed by the parents
...
We derive the values from the people we love or respect like our
parents, teachers, friends, and other famous celebrities in movies, sports,
business, and politics
...


You may remember that in our culture itself, certain values have
been developed over time and they are continuously reinforced
...


It is interesting to know that values are relatively stable and
enduring
...

In childhood, you are told that a certain behavior is always desirable or
always undesirable
...
It is this absolute learning of values which ensures their
stability and endurance
...
The process of questioning our values may
lead to change in the existing values system
...
Several values
interact with each other to form value system in a society
...
Terminal values reflect the desired end states of existence whereas
instrumental values are related to the choice of behaviour in reaching those
end states
...
Preferences like duty, equality and wisdom and a compatible life
are some of the terminal values
...
Being
polite, courageous, logical, self controlled, ambitious etc
...

Values can be categorized on the basis of the level at which they operate
...

213


Values may also be classified as the espoused values and enacted
values
...
Values are socially desirable and so people create a positive
public image by claiming to believe in values that others expect them
to hold
...
These values, in fact, guide our decisions and behaviours
...
The
most important early work in categorizing values was done by Allport and
his associates
...
They are:
1
...

2
...

3
...

4
...

5
...

6
...

Allport and his associates developed a questionnaire that describes a
num¬ber of different situations and asked respondents to rank fixed set
of answers
...
The result is a value system for a specific individual
...
Work values are expected to be an integral
part a nation’s cultural system and hence we notice differences between
the work values of American organizations and Japanese organizations
...
In global organizations, now-a-days, it is
becoming difficult to achieve congruence between the diverse values of
employees and those of the organization
...
It is reported in a study that the most important goals of an ethical
Indian manager are customer satisfaction, achievement of organizational
goals within scheduled time, employee motivation and career progress
...
They tend to take credit for work
done by them rather than share it with individual members of the team
...

Therefore, new generations of employees may bring into the organizations
new set of values
...
Young employees give importance
to more autonomy at work place, instant gratification, quick growth,
individualism, and openness compared to older employees
...
Hence, management should understand those new values
and accordingly deal with them for good performance
...

Attitudes and their Formation

Having understood the values, let us try to understand the attitudes
and their formation
...
They indicate how one feels about something
...

Attitudes are different from values
...
Values indicate the rightness
or desirability of something
...
On the other
hand, a statement “I prefer women to be given an equal place with men
in recruitment” represents the attitude of a person
...



While, attitudes and values are different, there are also some
similarities
...
Both are learned and acquired from the same
sources – people and objects
...
Both values and attitudes influence each other and are used
interchangeably
...
However, we cannot
determine which values underlie which attitudes and behaviours
...
It may be noted
that they are only acquired but not inherited
...
We observe the way family
members and friends behave and we shape our attitudes and behavior to
align with theirs
...
Attitudes may also be developed from a
personally rewarding or punishing experience with an object or event
...


In contrast to values, attitudes are less stable
...
If Maruti Company is able to create a favorable opinion towards
their car, that attitude may lead to a desirable behavior i
...
, the purchase of
Maruti car
...
Manager’s knowledge can serve
two purposes
...
Secondly, it helps him in changing unfavorable
attitudes into favorable attitudes
...
These job-related
attitudes are positive or negative evaluations held by employees about
various aspects of their work environment
...

Job Satisfaction

One of the tasks of a manager is to provide job satisfaction to
the employees
...
A person with a high level of job satisfaction holds
positive attitudes toward the job, while a person with low job satisfaction
holds negative atti¬tudes towards the job
...
As a matter of fact, the two are
closely related
...
There is no complete agreement over what the term means
...
Individuals who express high involvement in their jobs are
likely to be more productive, have higher satisfaction, and are less likely to
resign than employees with low involvement
...
Individuals who are highly committed
see their identity as closely attached to that of the organization
...


It may be understood that when people talk about job attitudes and
their impact on behav¬ior, obviously they are referring to the positive or
negative appraisals that people make about their job or organization
...
All these attitudes are measured with
a view to predict employee behaviours like performance, productivity,
217

absenteeism, turnover and unionization
...
Bradfield
and Crock¬ett in 1955 made an extensive study of this relationship and
concluded that there was minimal or no relationship between attitudes
and performance
...
However, they noted that
in many cases the correlations, although positive were low
...
It is clear that the studies on the relationship between
attitudes and productivity give rise to mixed findings
...
The higher the job satisfaction on
the part of an employee, the lower is the scope for employee’s withdrawal
behavior
...
Vroom
found a consistent negative relationship between job satisfaction and
turnover, but a less consistent negative relationship between satisfaction
and absenteeism
...
However, the conclusion that employee
satisfaction and absenteeism are inversely related has come under attack in
the recent times
...
If this is true, efforts to
develop valid measures of organizational commitment may be of greater
importance to managers
...

218

Attitudes and Satisfaction

Attitudes towards job and job satisfaction are closely related
...
In studies
of job attitudes, it is generally thought that the result is some measure
of job satisfac¬tion or dissatisfaction
...
As a
result, if attitudes are positive, job satisfaction tends to be positive
...

Therefore, if a manager wants to have employees satisfied with their jobs,
he should strive to create in them positive attitudes toward their job and
the organization
...

2
...

4
...


***

219

220

Lesson - 18 : Stress Management
Objectives
After going through this lesson, you should be able to:
ӹӹ Know The Meaning Of Stress And Its Causes;
ӹӹ Understand How Stress Levels Change On The Basis Of
Occupational And Individual Differences;
ӹӹ Acquaint With The Consequences Of Stress On Employee
Performance And Behaviour; And
ӹӹ Appropriate Strategies For Managing Stress
...
For example, a family
member becomes ill, a student fails to get admission into the desired course
or an employee is scolded by his superior for late coming
...
However, there is a positive side of stress caused by good things
like a student securing admission into medicine or an employee getting
promoted as a manager
...
The Greek word eu means
good
...

In fact, there are numerous definitions of job stress
...
They give a more detailed definition of stress as “an adaptive
221

response, motivated by individual differences and/or psychological processes
that are a consequence of any external (environmental) action, situation,
or event that places excessive psychological and/or physical demands on a
person”
...

As such, stress is an adaptive response to a situation that is challenging or
threatening to the person
...

Causes of Stress

Let us examine the causes of stress now
...
Stressors exist in the environment and they
make a physical or emotional demand on the person
...


Figure 18
...
In fact, they have a greater impact on stress
...

External stressors stem from societal changes, globalization, family
222

economic conditions, relocation, race, religion and community conditions
...
In the changing
situation, inspite of the advancement in medical sciences modern living
is associated with increased stressful conditions
...
The life styles have changed
significantly giving rise to several anxieties and tensions
...


Outside the organization, a person’s family also plays an
important role in contributing to stress conditions
...
Not able to properly balance the family responsibilities and
the job responsibilities, employees experience a lot of stress
...
It is pointed
out that in the first three months after a spouse walks out, the employee
becomes incapable of focusing on work
...
Living in such an environment, a person
is exposed to a variety of stressful situations
...
You may note that any change in organization is stressful
...

Mergers and acquisitions are increasingly resorted to
...
Layoff survivors also experience stress due to higher workloads,
feeling of guilt, job insecurity, and the loss of friends at work
...
A study observed that in a
noisy plant, level of stress significantly decreased when they were supplied
223

with ear protectors
...

Group Stressors
As you are aware, within an organization, there are several groups
that function at different levels
...

Lack of Group Cohesiveness:
Cohesiveness means “togetherness”
...
If the cohesiveness does not exist among employees, it may lead
to job stress
...

Lack of Social Support:
Employees have different social groups for different purposes
...
By sharing
their joy and sorrow with others, they feel comfortable and happy
...
There are research studies indicating that lack of social
support is so stressful that it results in health care costs
...
A study indicated
that organizational politics was a potential source of stress in the work
environment
...
The more an employee is required to interact with other
people, the more is the scope for stress
...

224

Individual Stressors
At individual level, there are many factors that contribute
to stress, most of which are role related
...
The four main role-related
stressors are role conflict, role ambiguity, workload, and task control
...
Interrole conflict exists when employees have two roles to play which are
conflicting
...
Role conflict
also occurs when an employee receives contradictory messages from two
superiors about how to perform a task or work with organizational values
and work obligations that are incompatible with his or her personal values
...

Role Ambiguity

Role ambiguity exists when employees are uncertain about their
job duties, performance expectations, level of authority, and other
job conditions
...
This is because they are uncertain about task and social
expectations that go with the new positions
...
But you remember that
work under-load, receiving too little work or having tasks that do not
sufficiently use your talents, is also a possible stressor
...
Long work hours may lead to unhealthy lifestyles,
which, in turn, cause heart disease, back pain or eye sight
...

Occupational Differences and Stress
Several studies have attempted to identify which jobs have more
stressors than others
...
The job of a police officer may be less stressful
in a small town than in a large city where crime rates are higher and the
organizational hierarchy is more formal
...
We cannot conclude that
people in high-stress occupations actually experience higher stress than
people in other occupations
...

Individual Differences and Stress

You have already understood that individuals differ in their
personality characteristics
...
Two people may be exposed to the same sources
of stress like meeting a deadline for achieving a goal
...


Some individuals are more prone to stress than others
...

Demographic differences are related to age, health, education and
occupation
...
As they grow, they have to shoulder
greater responsibilities
...

Healthy people can cope with stress more than sick people
...
If the person is not educated, he feels
unworthy and that may cause stress
...


Cognitive differences are satisfaction, locus of control and type of
personality
...
This may lead to overwork and also burnout
...
The greater the person’s perception of control over the
environment, the lesser is his proneness to stress
...
As explained earlier, there are two types of personalities –
Type A and Type B
...
Therefore, they are more prone for stress
...
They
are interested in achieving goals but follow different ways for the purpose
...

Consequences of Stress

Stress has serious consequences on health as well as job performance
...

Physiological Consequences

Stress takes its toll on the human body
...
As you are aware, many people experience tension or
headache due to stress
...

These physiological ailments are attributed to muscle contractions that
occur when people are exposed to stressors
...
Emotional fatigue is another
psychological consequence of stress which is called job burnout
...
The term “job burnout” was not known 50 years ago; but it’s a
much talked about phenomenon these days
...
Burnout is caused by excessive demands made on people
who serve or frequently interact with others
...


There are three components of job burnout
...
It is
characterized by lack of energy and a feeling that your emotional resources
are exhausted
...


The second one is depersonalization, which is identified by the
treatment of others as objects rather than people
...
This detachment reaches the point of callousness far
beyond the level of detachment normally required in execution of tasks,
more particularly in service sector
...

The third component of job burnout is reduced personal
accomplishment
...

In other words, the person’s self-efficacy declines
...

Behavioral Consequences

When stress becomes distress, job performance comes down and
workplace accidents increase
...
You probably experience this kind of distress in exams
...


Overstressed employees also tend to absent from work frequently
...
Sometimes absenteeism is used
as a stress coping mechanism
...
Absenteeism is a form of flight-temporarily withdrawing from the
stressful situation so that we find time to re-energize ourselves
...

Aggression represents the fight reaction to stress
...
They are not likely to empathize
with co-workers
...


Managing Work-Related Stress
In managing work related stress, both the organization and the
employees have joint responsibility
...
These are shown in the following diagram
...
2: Stress Management Strategies
Remove the Stressor

An important way companies can effectively manage stress is by
removing the stressors that cause unnecessary tension and job burnout
...
“Stress-fit”, but
they don’t solve the fundamental causes of stress
...
For example, you may ask employees
to complete confidential questionnaires to identify when and how they
experience stress
...
Placing
employees to positions that match their competencies can minimize role
related stressors
...

Family-Friendly and Work-Life initiatives

The most common work-life balance initiatives are flexible work
time, job sharing, telecommuting, personal leave programs, and childcare
support
...


Job sharing splits a career position between two people so that they
experience less time-based stress between work and family
...


Telecommuting reduces the time and stress of commuting to
work and makes it easier to fulfill family obligations, such as temporarily
leaving the office to pick up the kids from school
...
Employers with
strong work-life values offer extended maternity, paternity, and personal
leaves to care for a new family or elderly parents who need assistance
...

Withdraw from the stressor

Removing the stressor may be an ideal solution, but that is not
always possible
...
Permanent withdrawal occurs
when employees are transferred to other jobs
...

Therefore, changing perceptions of the situation can minimize stress
...
Rather, it
involves strengthening the self-efficacy and self-esteem of a person so that
job challenges are not perceived as threatening
...
Research studies show that physical exercise reduces the
physiological consequences of stress by helping employees lower their
respiration, muscle tension, heartbeat and stomach acidity
...
Another way to control the physiological
consequences of stress is through relaxation and meditation
...
Personal problems and family problems are solved
through these programs
...

Receive Social Support

Receiving social support from co-workers, supervisors, family,
friends, and others is one of the more effective stress management
strategies
...


Social support reduces stress in at least three ways
...
This, in turn,
increases their self-esteem and perceived ability to cope with the stressor
...
Finally, emotional support
231

from others can directly help buffer the stress experience
...

Review Questions
1
...

3
...


What is job stress?
What are organisational stressors?
How do stress levels change from one individual to another?
What strategies do you adopt for managing job stress?

***

232

Lesson - 19 : Communication
Objectives
After reading this lesson, you should be able to:
ӹӹ Understand The Process Of Communication;
ӹӹ Know The Types Of Communication;
ӹӹ Familiarize With The Barriers To Communication And How To
Overcome Them
...
Its
origin can be traced to the growth of the human society
...
Life was
isolated and there was little communication
...
He lived in constant danger
...
Communication was in the
form of codes, indications, signals and expressions
...
Science entered the field and means of oral communication
developed
...


233

Meaning

The term ‘communication’ is derived from the Latin word ‘communis’
which means common
...
In an organisation managers have
to communicate constantly
...
Managerial functions are discharged through communication
...
,
are done through communication
...

Definition of Communication

The term “communication” is freely used by everyone
...
According to Louis Allen, Communication is the sum of all
things, a person does when he wants to create an understanding in the
mind of another
...


According to Keith Davis, “It is the process of passing information
and understanding from one person to another
...
By using this bridge of meaning, a person can
safely cross the river of misunderstanding that separates all people”
...
Even silence is an effective form of
communication
...
Tone very often than not, conveys the meaning of the
words uttered
...

1
...
, are directed or communicated
downwards while suggestions, complaints, grievances etc
...
This not only involves giving ideas but
also receiving them
...
No business organisation can exist without communication
because it is necessary to have a congenial relationship between
the different employees working at different levels and that is why
it is a continuous process
...
The communication process continues to the extent that ideas
and messages are communicated and received
...
It may be formal or informal and it may be in different mediums
...
1: The Communication Process

1
...
He is the
sender of the message
...
A communicator or the sender is the source of
235

communication
...

2
...
A message is initiated
by encoding a thought
...
It is done by translating into a series of symbols or gestures
...
The sender of the message should establish
mutuality of meaning with the receiver
...


3
...
It is the physical form
of the encoded message
...
But it must be unambiguously understood by the receiver
...
Written words may be read
...

Message must be clear and precise
...
The Medium

The communicator can communicate the message through a
medium
...
The communication
channel is the mode of transmission
...

The medium is inseparable from the message
...
The message may be conveyed through a memorandum, letter,
telegram, the telephone, a computer or T
...
, but the channel or the medium
must be appropriate for the message
...
A telephone talk may be confirmed by a letter
later
...

5
...
It is the process by which the receiver interprets the message
...
The recipient has to be ready for the message
...
In decoding, the receiver converts
the message into thoughts
...
Thus,
decoding is very important for understanding the message
...
The Receiver

Communication requires atleast a couple of people, the sender and
the receiver
...
It will be
complete only when the receiver perceives the message intact
...
If the message does not reach
a receiver, communication cannot be said to have taken place
...
Feed Back

Feedback refers to the reaction of the receiver
...
Feedback enables the communicator to
know whether his message is received and interpreted correctly or not
...
The
importance of Feedback is incalculable
...
It makes communication a two-way process
...
Noise

“Noise” is the enemy of Feedback
...
Interference may occur in all the above
stages of the communication process
...

Importance of Communication

Civilization will cease without communication
...
The following points bring out the
importance of communication in management
...
Smooth Running of the Enterprise
Effective communication ensures the smooth running of an
enterprise
...
In the case of complex organisations, effective
communication solves lot of problems
...
Similarly, successful completion of the task by the
superior depends upon the nature and flow of communication from
the subordinates to the superiors
...
Quick Decisions and Implementation
Communication greatly facilitates decision making
...
Effective implementation of decisions depends upon the
nature of communication
...

3
...

Participation in planning is essential in order to successfully execute
it and this is secured by communication
...

4
...
Communication
helps in minimizing costs and friction and maximizing production
...
Morale Building and Democratic Management
When there is an effective system of communication, employees
238

will have the opportunity to present their ideas, suggestions and
complaints
...
It is pointed out that many
conflicts arise because of lack of communication or mis-understood
motives
...

Types of Communication

We spend a great deal of our time in communication
...
It is
often very difficult to determine which communication is necessary and
which is not necessary
...
The method of presentation is also to be
decided - narrative, statistical or graphical form
...

Verbal or Oral Communication

In this method of communication the two parties exchange their
ideas or the message with the help of word of mouth
...
, is conveyed through spoken words
...
Some of the advantages of verbal
communication are as follows:
-- It saves time and money
...

-- Because of the face contact or personal touch, it is effective
...
Even when there are
doubts
they can be cleared on the spot
...
Suitable changes can also be
done immediately
...


239

However, oral communication is not suitable in the following cases:
-- When the communicator and the recipient are far off, (beyond the
telephone range) oral communication will not serve the purpose
...

-- Oral communication does not serve as a record or as evidence
...

-- There are chances of misunderstanding and mis-interpreting the
communication
...
It is a very common
form of communication in most of the organisations and is suitable for
many situations
...
These can be of
three types
...
General
b
...
Definite
General orders are given by the top management, specific orders by the
middle level management to lower level managers and definite orders by
the supervisor to workers
...

-- Reports submitted by the authorized persons
...

(a)Routine reports- which are prepared periodically and are a regular
feature
...

(c)Special circumstances reports
...

-- They serve as permanent record and as a source or reference
...

-- When the communicator and recipient are far off, written
communication is the
best method
...

The disadvantages are listed below:
-- As everything is to be translated into black and white, it consumes
a lot of time and money
...

Consequently, poor messages are to be followed by clarifications
and explanations
...

Any omission
will call for additional communication
...

-- It is very difficult to keep some communications up to date
...
All these relationships involve communication
...
Formal communications are in black and white
...
Informal communication is based on
the informal relationship among the organisation members
...
For instance, when
the worker approaches the manager and informs about the completion of
the job entrusted to him, and if the manger simply nods his head or gives
an approving smile, then it amounts to informal communication
...
Though
this relationship is structureless, it comes into existence when formal
organizational members who know each other pass on information
relating to the enterprise
...
This may be due to the fact that information
is regarded as confidential
...
The Grape vine is inevitable and
valuable, because all forms of informal organisation serve essential human
communication needs
...

Downward, Upward or Horizontal Communication

Communications are classified as downward, upward or horizontal
...
It is horizontal when it flows between individuals at the same
level (e
...
between two depar tmental or section heads)
...
The Classical theorists
emphasized downward communication
...
The purposes of downward communication are:
a
...
To create an understanding of the work and its relations with
other tasks
...
To inform about procedures
...
To inform sub-ordinates about their performance
...
To indoctrinate the workers to organizational goals
...

Similarly suggestions, reports, advice, recommendations, complaints, etc
...
In any case, the objectives of communication are
defeated
...

It is obstructed by many obstacles
...
It refers to those factors which cause disturbance either
in the mind of the communicator or the communicatee or in the process,
which will create distortion of the message, leading to lack of the response,
ignoring or mis-understanding
...
This means that the messages suffer from
omissions, uncertainty, inaccuracies, verbosity, repetitions, ambiguity,
lack of clarity and precision
...
This will save
time because otherwise much time has to be devoted in giving subsequent
clarifications
...

The superiors are known for their specialised knowledge
...
Even if they are able to
understand, they may not be able to convey it further down the line in
simple words
...
e
...
But the translation may be done
inaccurately
...
With the result, the translation leads to further
confusion
...


243

Inattention

Inattention is a very common and chronic human failing
...
It can be illustrated
with the help of the following example: a superior is giving a message on
the telephone
...

Superiors have to face this problem of inattention quite frequently
...
The communicator should choose the appropriate
time for communicating
...
Holding a meeting at an odd
time or calling the worker over for a talk on a holiday are some other
examples
...
When messages are conveyed from the
higher to the lower level step by step, much of it is likely to be lost in transit
...
At every
level the superior will interpret the message which is likely to be distorted
...
Harold Koontz and Cyril O’Donnell estimate that about 30%
of the information is lost in each transmission
...
It is no wonder that enterprises
often operate in a cloud of ignorance
...
If the message is not clear in meaning, assumptions
are not clear to the personnel; communication will lose its purpose
...

Inadequate Adjustment Period

Certain messages affect a large number of people in their personal life
...
This requires sufficient lead time for the workers to make an adjustment
...

244

Similarly communications regarding changes in the rules about bonus, over
time should allow an adjustment period
...

Distrust

It arises if the superior is known for making frequent changes in the
communication, quite often even reversing the original message
...
Repeated experience of this
type will damage employee’s interest in the communication
...
This arises in
upward communication and creates a barrier in communication
...
A subordinate is not sure if the information conveyed
by him to the superior will be useful or not
...
He requests another subordinate to transmit the information on his behalf
...
But at
the same time noise is a big menace
...
And noise proves a great barrier to communication
...
If somehow the noise is not controlled, it may not be possible for
communicatee to listen anything or make out the sense
...

Let us consider the following example:
a
...
But the subordinate is not able to get it properly because of the noise of the traffic
...
There is a strike in a factory
...
The
factory manager calls a meeting of their representatives and wants to
tell them certain things
...
Distances act as barriers in the
process of communication
...
Telephone solves this
difficulty in many cases
...
Thus because of
these two barriers the message is not communicated properly at the
right time
...


245

Impression

Sometimes in an effort to impress others, the communicator starts
talking in a confused manner or speaks with a changed pronunciation
...
It leads to wastage of time, resources and
energy and causes misunderstanding
...


Clarity of Thoughts

The idea to be transmitted must be absolutely clear in the mind of the
communicator
...
Hence the process of communication
to be complete must spring out from a clear head
...
, should also be taken into
account
...

Attach Importance to Actions Rather Than Words

In all communications, actions are more significant than words
...
A boss who is not punctual cannot succeed in enforcing
the timing-rules on the subordinates
...
It is a common complaint of the workers that proper and patient
hearing is not given to their voice
...
But this listening is
not merely passive hearing
...

a
...

c
...


Some of such important principles are;
Respect the personality of employees
...

Avoid moralizing
...

e
...
g
...

f
...

Transmission

The communicator must plan carefully what to communicate, whom
to communicate and how to communicate
...

Keep the channel Always Alive

The channel of communication should be kept open and alive
...

Cordial Superior-Subordinate Relationship

Effective communication requires good quality of relationship between
people immediately connected with each other
...
Under such
conditions only, the meaning of communication is grasped quickly and
correctly
...

Review Questions
1
...

2
...
Distinguish between formal and informal communication
...
What are the different barriers of communication?
5
...
One day
a foreman noticed Bhola, one of the workers, at the time-clock punching out
two cards – his own and the card of Nathu, a fellow worker
...

247


The two workers came to see the Personnel Director on the following
day
...
He had
been offered a ride by a friend who had already punched out and who could
not wait for him to go through the punch-out procedure
...
He planned to take his card to the foreman the next morning for
reinstatement, a provision sometimes exercised in such cases
...
He claimed that he had
punched Nathu’s card the same time he punched his own, not being conscious
of any wrongdoing
...
He recognised that
these men were good workers and had good records prior to this incident
...
He also reminded them that it was the policy of the company to
enforce the rules without exception
...
The Sales Manager reported that he
was faced with the necessity of notifying one of their best customers that his
order must be delayed because of the inability of one department to conform
to schedule
...
Not only had it been impossible to replace
these men to date, but disgruntlement over the incident had led to significant
decline in the cooperation of other workers
...
They pointed out
that the incident was costly to the company in the possible loss of a customer,
in the dissatisfaction within the employee group and in the time and money
that would be involved in recruiting and training replacements
...
“We must
have rules if we are to have efficiency and the rules are no good unless we
enforce them
...
He admitted that the grievances wee frequent but countered
with the point that they could be of little consequences if the contract agreed
to by the union was followed to the letter
...
Place yourself in the position of the Personnel Director in this situation
...
Would you have discharged both men?
b
...
Would you have discharged Nathu only?
d
...
Justify your choice of decision
...
What policy and procedural changes would you recommend for the
handling of future cases of this type? How do you see the loss to the company?
Examine
...

Lesson Outline
ӹӹ
ӹӹ
ӹӹ
ӹӹ

Types Of Groups
Theories Of Group Formations
Reasons For Formation Of Groups
Review Questions


The behavior of people as an individual and as a member of a group
widely differs
...
It is also true
that individuals in an organization do not work in isolation
...
Therefore, it is important for a
manager to understand how groups are formed in the organization and the
performance and expectations of the members of various groups
...
Hawthorne experiments conducted
by Elton Mayo and his team established that people at the work place behave
as members of a group and the membership shapes their work behavior and
attitudes towards organizations
...
Group dynamic focuses
on team work where small groups contact with each other and share common
ideas to accomplish the goals
...
The members influence the group and in turn are influenced by
others in the group
...


251

In order to be called a group, an aggregation of persons must satisfy the
following conditions:
I
...
People must be psychologically aware of one another, and
III
...

Groups are useful for organizations as they provide norms of behavior
for its members
...
They provide a feeling of
camaraderie, companionship and understanding
...
A sound understanding of the group dynamics at the
work place keeps the manager in a good stead so that appropriate initiatives
for behavior modifications and to introduce change can be implemented
...


i
...
They are created deliberately by the management to perform the
assigned duties
...
These groups are characterized by clear-cut authority-responsibility
relationships
...
Rules are
laid down to regulate the behavior of group members
...
Informal Groups: Informal groups arise spontaneously at the work
place because of social interaction between the people
...
They are based on common interest,
language, taste, religion, background, etc
...
These groups are natural entities in the work
environment
...
Since
they concentrate on personal contacts between the members, they represent
the human side of enterprise as compared to technical side represented by the
formal groups
...
Command and Task Groups: Formal groups may be subclassified into command and task groups
...
Thus, a supervisor and
the operative employees reporting to him form a command group
...
A task group or teams, say for the introduction of a new product or
service, is usually formed to complete an assignment that involves a number
of departments
...


252


iv
...
An interest group consists of
people having a specific objective and not aligned to common command or
task groups
...

But a friendship group includes close friends or relatives
...
The group members know each other very
well and have good relations
...
Its purpose is to gain and control power
...
Some members of a clique may also form another group which may
even consist of some persons who are not members of the organization
...

Datton has identified three types of cliques as follows:

i
...
For example, superior may be a
member in a group consisting mainly of subordinates
...


ii
...
This is the most common kind of informal
group
...


iii
...
The members may be residing in the same locality and
travelling by the common bus, or they may be members of the common club
...
In an organization, employees who work in the same area of the
plant or office would more probably form into groups than those who are not
physically located together
...
e
...

This phenomenon is observed in daily practice by all of us
...
There may be several other reasons for the formation of groups
...

Homans’ Theory

According to George C
...
The
Homans theory has contributed a great deal to the understanding of group
formation
...
The members of a group
share activities and interact with one another not just because of physical
proximity, but also to accomplish group goals
...

Balance Theory

The theory as proposed by Theodore Newcomb states that “persons
are attracted to one another on the basis of similar attitudes towards
commonly relevant objects and goals
...
If an imbalance occurs, attempts are made to restore the balance
...
” Both propinquity
and interaction play a role in the balance theory
...
There must be a balance in the
relationship between the group members for the group to be formed and for
its survival
...

They will strive to maintain a symmetrical balance between the attraction and
the common attitudes
...
To be
attracted towards a group, a person thinks in terms of what he will get in
exchange of interaction with the group members
...
A
minimum positive level (rewards greater than costs) of an outcome must exist
in order for attraction of affiliation to take place
...

Propinquity, interaction and common attitudes all have roles in the exchange
theory
...
Economically, workers may form a group into work on a
project that is paid for on a group incentive plan or form a union to demand
higher wages
...

Reasons for Formation of Groups


Companionship
...
Many research studies have
indicated that the employees who have no opportunity for close social contacts
find their work unsatisfying and this lack of satisfaction often reflects itself
in low productivity and high rate of absenteeism and turnover
...
But when the company permitted
these workers to take rest period as a group, production and satisfaction both
increased
...
Workers get identity in small groups and
so small groups tend to enjoy high morale
...


Source of Information
...
Informal communication is very fast
...

The group may develop a special code or language for speedy communication
...


Job satisfaction
...
Shortcuts
are evolved and informal channels of communication are established to cut
across department boundaries
...


Protection of members
...
Groups often resist management’s demands for additional
output, increased working hours, and higher quality
...


Outlet for frustration
...
If he shares his feelings and anxieties with
someone, his tension is released to a great extent
...
An informal group serves as a safety valve
which helps release tension and frustration and checks the mental breakdown
of the individual
...
Sometimes, groups are formed by
individuals belonging to a common cultural background
...
Maintenance
of cultural values will also provide them psychological satisfaction
...
Informal groups are a breeding ground for
new ides as they provide a supportive environment in which the members can
engage themselves in creative thinking
...
are important examples in this regard
...
For example, if a manager is weak in
planning, one of his subordinate may help him informally in such a situation
...
It allows them sharing job knowledge and taking
decisions which affect a number of jobs
...
They facilitate smooth flow of information and quick decision
making
...


Channel communication: Informal groups act to fill up the
communication gaps which arise in the organization
...
Informal communication can be of great use
to the organization, if it is handled by the management properly
...
They restrict them from acquiring unlimited power and
from using their power injudiciously
...
He can consult the informal leaders
and seek their cooperation in getting the things done from the workers
...
Informal groups develop certain norms of
behaviour which differentiate between good and bad conduct and between
legitimate and illegitimate activities
...


Satisfied workforce: Cohesive informal groups provide satisfaction
to the workers
...


Developing future executives: Informal groups recognize talented
workers as their leaders
...

Problems Created by Informal Groups

Negative attitude of informal leaders: The informal leaders may
turn out to be a troublemaker for the organization
...
Thus, he can be a source of conflict between the
management and the workers
...
If such a leader is promoted to the rank of an
executive, he may turn out to be a work shirker and an arrogant and autocratic
boss
...
The members may become so loyal to their group
that following the group norms becomes a part of their life
...


Resistance to change: Informal group generally have a tendency to
resist change
...
But groups want to maintain status quo
...
This is not
desirable from organization’s point of view
...
Maliciousness, employee’s anxiety and insecurity are the prominent
reasons
...
Sometimes, there may be role conflict
...
And if an
individual member wants to follow the formal instructions of his boss, he may
be snubbed by the informal leader and compelled to conform informal group
norms
...
The only option left with management is to identify groups with
their own dynamics, leadership, goals and cultural moorings and manage the
same so that the informal organization aids management in the realization of
organizational goals
...

Review Questions
1
...

2
...

3
...

4
...

Lesson Outline
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ

Meaning, Definition & Nature Of Leadership
...
Effective leadership is necessary for inspiring the people to work for
the accomplishment of objectives
...
Chester Bernard viewed
leadership as the quality of behavior of individuals whereby they guide people
and their activities
...
He also
creates and sustains enthusiasm among them for superior performance
...
Allen, “A leader is one who guides and directs other people
...
Managers at all levels must perform leadership function in
order to lead the subordinates towards organizational goals
...
In other words,
leadership is the process by which an executive imaginatively directs, guides,
and influences the work of others in choosing and attaining specified goals by
mediating between the individuals and the organization in such a manner that
both will obtain maximum satisfaction
...
Leadership is a process of influence: Leadership is a process whose
important ingredient is the influence exercised by the leader on the
group members
...
Successful leaders are able to influence the
behavior, attitudes and beliefs of their followers
...
Leadership is related to a situation: When we talk to leadership,
it is always related to a particular situation at a given point of time
and under a specific set of circumstances
...
At one point
of time, the subordinates may accept the autocratic behavior of the
leader while at a different point of time and under a different situation
participative leadership style may be successful
...
Leadership is the function of stimulation: Leadership is
the function of motivating people to strive willingly to attain
organizational objectives
...
A successful leader allows
his subordinates to have their individual goals set up by themselves
in such a way that they do not conflict with the organizational
objectives
...
Behavioral pattern
which the leader reflects in his role as a leader is often described as the style
of leadership
...
It also depends upon the types of followers and
the organizational atmosphere prevailing in the enterprise
...
Autocratic leadership;
ii
...
Free rein leadership; and
iv
...

i
...
He determines policies for the group without consulting them
and does not give detailed information about future plans, but simply tells
the group what immediate steps they must take
...
Thus, under this style, all decisionmaking power is centralized in the leader
...

Autocratic leadership may be negative because followers are uniformed,
insecure and afraid of leader’s authority
...
Leadership can be positive also because the leader
may use his power to disperse rewards to his group
...
The benevolent
autocrat is effective in getting high productivity in many situations and he
can develop effective human relationships
...
An autocratic leader assumes that people basically work
for money they and want security
...
But
these assumptions do not hold good in all the situations
...
Frustration, low morale and conflict
develop easily in autocratic situations
...
Participative or Democratic Leadership

A democratic leader is one who gives instructions only after consulting
the group
...
Participative manager decentralizes
managerial authority
...
Unlike an autocratic manager who controls through the authority ,
a participative manager exercises control mostly by using forces within the
group
...

-- It improves the attitude of employees towards their jobs and the
organization
...

-- It leads to reduction in the number of complaints and grievances
...

iii
...
The free rein leader avoids power
...
Group members
work themselves and provide their own motivation
...
This is also known as permissive
style of leadership, where there is least intervention by the leader
...
This mode of direction can produce
good and quick results if the subordinates are highly educated, responsible
and brilliant who have a strong desire and committment to give their best to
the organization
...
Paternalistic Leadership

In this style, the leader assumes that his function is paternal or
fatherly
...
He works
to help, guide, protect, and keep his followers happily working together as
members of a family
...
This style has been successful, particularly in
Japan because of its cultural background
...

Likert’s Management Systems and Leadership

Rinses Likert and his associates of the University of Michigan, had
conducted extensive survey of management and leadership patterns in a large
number of organizations
...
These patterns of leadership are termed Systems of management
and are assigned numbers from 1 to 4 to indicate the stages of evolution in the
patterns of management in terms of leadership styles :





System 1 – Exploitative authoritative
System 2 – Benevolent authoritative
System 3 – Consultative
System 4 – Participative (Democratic)

SA brief description of these systems is given below:
System 1 - Management

System 1 managers make all the work – related decisions, and order
their subordinates to carry them out
...
The communication between the managers and
the subordinates is highly formal in nature and downward in direction
...
Such
managers are highly autocratic who believe in threats and punishment to get
the things done
...


262

System 2 - Management

Managers under this system are also autocratic, but they are not fully
authoritative
...
Subordinates who meet or exceed
their goals may be rewarded
...
They are very harsh
with the subordinates who do not carry out the tasks
...
They take only major decisions and
leave the routine decisions to be taken by the subordinates
...
Thus, there exists
a two-way communication in the organization
...
More emphasis is placed on rewards than on
punishments to motivate the subordinates
...

The relations between managers and subordinates are cordial and friendly
...
The goals are set and work
related decisions are taken by the subordinates
...
Thus, system 4 presents true democratic styles of
leadership
...
Performance standards are mutually set by the superior and
subordinates
...


Likert sought to measure and evaluate the actual patterns of management
in a wide range of organizations within the frame work of his four systems
...
Likert also sought to
relate his systems of management with certain performance characteristics
like productivity, quality, wastage, and employee turnover and absenteeism
...
He strongly recommended System 4 and regarded it as the
best way to develop and utilize human assets of the organization
...
For
such organizations, he suggested extensive and intensive leadership training
at all levels of management so as to move into System 4 – management
...
Numerous physical, mental, and personality traits were
researched during the period from 1930 to 1950
...
In
the late 1940s, Ralph Stogdill reported on the basis of at least fifteen studies
that leaders possess intelligence, scholarship, dependability in exercising
responsibilities, activity and social participation and socio-economic status
...
Persons who are
leaders are presumed to display better judgment and engage themselves in
social activities
...


Trait studies have not produced clear results because they do not
consider the whole leadership environment
...
Though a certain trait exists, it will not become
active until a certain situation calls for it
...
Leadership is always related to a particular
situation
...


Another shortcoming of the trait theory is the failure of its supporters
to formulate a common list of traits found in all successful leaders
...

There are so many exceptions to any general statement about leadership traits
...
Measurement of a trait usually occurs after a person becomes
a leader and it is difficult to suggest the traits which are pre- requisites of
successful leader
...
The behavioural approach is based on the premise that effective
leadership is the result of effective role behavior
...


Many behavioural scientists have attempted to identify appropriate
behavioural patterns of leadership styles
...
The behavioural scientists don’t
concentrate on the traits of leaders; rather they study the activities of leaders
to identify their behavioural patterns
...
The studies identified two
distinct styles of leadership
...
Leaders who are described as employee oriented stress the
relationship aspects of the job
...

Production centred leadership is more concerned with maximizing regardless
of the employees needs, welfare and aspirations
...


The Michigen Studies found that both the styles of leadership led to
increase in production, but it was slightly more in case of production centred
style
...
The employee centred
approach led to improved work flow and more cohesion in interactions
resulting in increased satisfaction and decreased turnover and absenteeism
...

Evaluation of Michigan Studies

The value of Michigan studies lies in the analysis of two leadership
styles, task and employee oriented leadership
...
These studies are
criticized on the following grounds:
i
...
They did not clarify whether the employee centred
leadership makes the group productive or whether the highly
productive group induces the leader to be employee centred
...
The Michigan Studies did not consider the nature of the subordinates’
tasks or their personal characteristics
...

iii
...
A leader is supposed to follow either of the two
styles, viz
...
But in
practice, a particular style may succeed in one situation and fail in
another
...
They adopt both the orientations in varying degrees to suit the
particular situation
...

Chart : OHIO STUDIES: LEADERSHIP

LOW

HIGH
CONSIDERATION
AND LOW
STRUCTURE

HIGH
CONSIDERATION
AND HIGH
STRUCTURE

LOW
CONSIDERATION
AND LOW
STRUCTURE

LOW
CONSIDERATION
AND HIGH
STRUCTURE

BEHAVIOUR)

(RELATIONSHIP

CONSIDERATION

HIGH

INITIATING STRUCTURE (TASK BEHAVIOUR)

HIGH

Figure 21
...


Initiating Structure refers to the leader’s behavior in delineating
the relationship between himself and members of the work group and
of communication, and methods or procedures
...
The research studies also showed that initiating
structure and consideration are two distinct dimensions and not mutually
exclusive
...
Thus,
leadership behavior can be plotted on two separate axes rather than on a single
continuum
...
16
...
In each quadrant, there is a relative
mixture of initiating structure and consideration and a manager can adopt
any one style
...
concern for people and concern
for production have been demonstrated by Robert R
...

Mouton in the form of a grid
...


Figure 21
...
It is, however, important to point out these basic styles
are a matter of convenience rather than a fact
...

1
...
It is an autocratic style of leadership
...
Human relationships and
interactions are minimized
...
They are taken as merely means for doing
the tasks assigned to them
...
If
there is a conflict between a subordinate and the boss, the goal of the boss is to
win
...
The 1, 9 Managerial style (Country Club)

Under this style of management, work is done leisurely
...
Subordinates are expected to turn out
some work to avoid trouble
...
Social relationships are more important
...
The aim is to achieve friendliness
and harmony among the members of the organization
...
The 1, 1 Managerial Style (Impoverished)

A manager with this orientation exerts minimum influence on the
contacts with group members
...
In a supervisory position, he is most likely to be found executing
messenger – carrier functions, communicating orders from the layer above to
the layer below
...

His criticism is strictly in self defense
...
Through minimum contact
and non- involvement, the 1, 1 style reduces the need to take active steps with
respect to managerial responsibilities
...

4
...
The 5, 5 style seeks to maintain a balance between
the two
...
However, just
enough is communicated so that people have a general sense of what is going
on
...
Enough concern is
shown for the people so that adequate production may be achieved
...
Meetings are held to listen to their suggestions and to
create a sense of participation in decision - making
...
The 9, 9 Managerial Style (Team)

A major difference between 9, 9 style and other managerial styles is
in goal setting and its use as a basic management approach to a large variety
of problems
...
In other words, the 9, 9 orientation aims
at integrating the people and production dimensions of work under conditions
of high concern for growth
...
This brings about
the kind of team spirit that leads to high organization accomplishment
...
e
...
It may be noted that the five positions emphasized in the Managerial
grid are rarely found in their pure form in actual life
...
Nevertheless, Managerial Grid is
widely used as a technique of managerial training and for identifying various
combinations of leadership styles
...

However, there is one basic difference between the two
...

268

Thus, managerial Grid tends to be an attitudinal model that measures the
predispositions of a behavioural model that examines how leader actions are
perceived by others
...
For example Rensis Likert suggested democratic
leadership
...
The selection of a leadership
style will depend on the consideration of a number of factors
...

Forces in the Subordinates : These include readiness of subordinates
to assume responsibility for making decisions, need of subordinates for
independence, interest in the problem at hand, knowledge to deal with the
problem, etc
...
It is based on
the assumptions that there exists an interaction between a group and its leader
and that people tend to follow the person (known as leader) who is capable of
fulfilling their aspirations
...
The leader recognizes the needs of the situation and
then acts accordingly
...
In other words, the emphasis is on the behavior of the leaders
and their followers and the type of situation
...

Review Questions
1
...

2
...
” Comment on the statement
...
“Leaders are born and not made”
...
“A good leader is one who understands his subordinates, their needs
and their sources of satisfaction
...

5
...
Is there one best style of leadership?
Case Study
New Boss and his Leadership Style

For Several months employees of a large corporation have been very
dissatisfied with the new division head
...
The new division head has very
strong idea about the types of environment his employees should have
...
No longer
are occasional informal gatherings during office hours
...
Grass-root employees as well as supervisory personnel are very
upset about the changes in structure, and their dissatisfaction is beginning
to show up in their performances
...
The frustration and anger is
now beginning to come to a full boil and the supervisors have decided to meet
to discuss the situation
...
Identify the leadership style of the division head from the angle of
Managerial Grid
...
From the view point of theory of X and Y, what assumption did the
new head make about the way in which people work most effectively?
***

270

Lesson - 22 : Organisational Power & Politics

Objectives
After reading this lesson, you should be able to:
ӹӹ
ӹӹ
ӹӹ
ӹӹ

Appreciate The Importance Of Power In The Organizational Context;
Distinguish Power From Authority And Influence;
Identify Sources Of Organisational Power And Its Uses; And
Relate Power To Organisational Politics
...
Then
it identifies sources of power and explains how power is used in organisations
...

The underlying premise of this lesson is that acquisition
...
These, in
turn, have far reaching implications for organisation members’ performance,
satisfaction and organisational effectiveness
...
Power has
more diverse meanings than any other concept in oranisational behaviour
...


However, few of the definitions on power are presented here to capture
the wide range of the meanings it has assumed over a period of time
...
He defines power as “the probability that one actor within a social
relationship will be in a position to carry out his own will despite resistance”
...


Pfeiffer, an organizational behavior theorist, defines power as “ the
271

ability to influence behaviour, to change the course of events, to overcome
resistance, and to get people to do things that they would not otherwise do ”
...
Chester Barnard defined power as “informal authority”
...

To have better understanding of power, we bring out clearly the distinctions
between power and authority and power and influence
...
Authority legitimizes
and is a source of power in the organisation
...
Distinction can be made between top-down classical, bureaucratic
authority and Barnard’s acceptance theory of authority
...
Power is different from such acceptance theory of the
authority in the words of Grimes who notes: “what legitimizes authority is
the promotion of pursuit of collective goals that are associated with group
consensus”
...
It is a process of affecting the
potential behaviour of others
...
Thus, authority
is different from power because of former’s legitimacy and acceptance, and
influence, though broader than power, is closer to it conceptually
...

Sources of Organisational Power

French and Raven’s Classification of sources of power includes reward
power, coercive power, legitimate power, referent power and expert power
...
This distinction is not
maintained by French and Raven
...
In other words, sources of power tell us
wherefrom the power holders get their power bases
...


272

Position Power

The source of position power is almost identical to authority
...
e
...
According
to French and Raven this power stems from the internalized values of the other
persons which give legitimate right to the power holder to influence them
...
Again
there are three major source of legitimate power
...
In orgnisational context, managers have
legitimate power because employees believe in private property laws
and in the hierarchy where persons holding higher positions wield
power over lower position holders
...
In an organisation,
for example, when blue collar workers accept employment, they are
in effect accepting its hierarchical structure and thereby granting
legitimate power to their superiors
...
A member of the board
of directors or management committee is examples of this source
...

Personal Power or Referent Power

One’s personal characteristics can be a source of power
...
Others want to identify with a powerful person, regardless of
consequences
...

Expert Power

Expertise is the means by which the power holder controls specialized
information
...

In a technology-oriented or knowledge society, expert power is one of the
most powerful sources of influence
...
Besides credibility, the person
holding expert power must be trustworthy, that is, he must have reputation for
being honest and straightforward
...
One need not hold a formal position in an
organisation to have access to information which others value most
...
Though a superior has legitimate power
over subordinate, he must depend on the subordinate to get the job done
correctly and on time
...

Bases of Organisational Power
Coercive Power

The coercive power depends on fear
...
One reacts to this power out of fear of the negative ramifications
that might result from non-compliance
...
In other words, managers control through force or hitting at
the basic physiological or safety needs
...

Reward Power

Reward power is the opposite of coercive power
...
The type of rewards
includes material rewards like pay increase, fringe benefits, commissions, etc
...
The strength of the reward power depends on whether
the subordinates look at rewards offered to them as rewards or otherwise
...
The reverse may also be true
...
If a person can decide who is hired, control the allocation of resources,
or influence group norms, he is said to have persuasive power
...

Knowledge Power

Knowledge or access to information is the final use or base of power
...

Influenceability of Targets of Power

So far our discussion has confirmed the unilateral influence of power
from the agent (power holder) to targets (other persons)
...
Influenceability of targets depends on the following:
Dependency

Power is a function of dependency
...
Dependency increases when the resources
controlled by the agent are important, scare and non-substitutable
...

Uncertainty

When people have a feeling of uncertainty about the correctness of
their behaviour, they are more susceptible to influence
...

Intelligence

Relationship between intelligence and influenceability is complex
...

Gender

It is traditionally believed that women are more likely to be influenced
than men, because of the way the former are brought up
...

275

Culture

Western cultures that emphasize individuality, dissent and diversity
tend to decrease influenceability whereas Asian cultures that emphasize
cohesiveness, agreement and uniformity promote influenceability
...

In order to gain compliance to work, the superiors must be able to reward and
punish subordinates and keep surveillance over them
...
The agent must also be in the
forefront of targets awareness
...
For people to internalize the agent must have
expert or legitimate power and be relevant
...

Power Tactics

Let us understand how employees in oranisations translate their power
bases into specific actions
...
reason;
ii
...
collation (getting the support of other people in the organisation to
back up the support);
iv
...
assertiveness;
vi
...
sanctions (using organizationally derived rewards and punishments)
...

They also change their tactics depending upon their objectives in the upward
and downward influences
...
Assertiveness and sanctions are used when success is less predictable
...

Power Dynamics in Organisations

Power dynamics in organisation relate to political realities of power
acquisition in organisations and the specific political strategies in power
acquisition
...

Political behaviour in the organisation refers to those activities not required
by one’s formal role definition in the organisation
...

Four postulates of power by Walter Nod focus on political realities in the
organisation
...

Second, various coalitions seek to protect their interests and positions
...
Fourth, exercising
power within organisation
...

Individual Factors

High self-monitors being sensitive to social cues and social
conformity, are more skillful in political behaviour than low self-monitors
...

A person having high expectation of increased future benefits will lose if
forced out; hence he is more likely to use illegitimate means (extreme political
behaviour)
...

Organisational Factors
(i) Resources

Degree of politics, criticality and scarcity of resources in organisation
are directly related
...
Infusion of new and unclaimed resources will
lead to high political behaviour
...

(iii) Cultural Factors

Role ambiguity (lack of clarity in role definition), ambiguous decisions
and decisions on which there is a lack of agreement and uncertain, long range
strategic decision, zero-sum reward allocation practices (one man’s gain
is other man’s loss), democratic decision-making, performance evaluation
systems and self-seeking senior managers, will be sources of conflicts and
thereby high politicking
...

277

(iv) Technology and External Environment

Complex technology and turbulent external environment lead to high
political behaviour
...

Specific Political Strategies for Power Acquisition

Organisational members adopt different strategies to acquire power
...

a
...

b
...
To
make them powerless it is better to sack them than to downgrade them
...

c
...

d
...

e
...
Once this positive attention is gained, power
is acquired to do more difficult and long-range projects
...
Collect and Use IOUs
Do favours to others with clear understanding that they should pay in
return when asked
...
Avoid decisive engagement
Also called Fabianism: Be slow, but sure to become entrenched and
gain cooperation and trust of others
...
Progress one step at a time
One small change can be a foothold for power seeker to use it as a basis
to get other major things accomplished
...
Wait for a crisis
It is based on the assumption things must get worse before they turn
better
...

j
...
For
example, prescriptions like participative management and empowerment
are to be taken with caution as they erode the power base of managers
...
Each of the objectives of defensive behaviour is illustrated in the
following lines
...

i
...

ii
...

iii
...

iv
...
This distancing from them avoids problems and the need
for considering their idiosyncrasies and impact of events on them
...
Stretching and Smoothing
Stretching is prolonging task
...
Both are designs to give semblance of
being busy and productive
...
Stalling
Being supportive publicly while doing little or nothing privately
...

i
...
Playing Safe

Taking only profitable projects, having risky decisions approved
by superiors, qualifying judgements and taking neutral positions
in conflict situations- all are to evade situations pregnant with
unfavourable outcomes
...
Justifying
Developing explanations to minimize responsibility for negative
result and/ or apologizing to demonstrate remorse
...
Scapegoating
279

Shifting the blame for negative results on external factors
...
Misrepresenting

Manipulating of information by distorting, embellishing and
selectively representing it
...
Escalation of Commitment By throwing good money (additional
resources) after bad money (poor decisions and failing courses of
action) to demonstrate confidence in the past actions and consistency
over time
...
Resisting Change: This is a catch-all phase under which many
defensive bahaviours are covered
...
Protecting Turf: Fencing the job territory to avoid encroachment
...
Their long-term consequences
are organisational stagnation, detachment from organisational
environment, highly politicized organisational culture and low
morale
...
Define Power, authority and influence
...
Explain the importance of power and its characteristics?
3
...

4
...

5
...
What are its determinants?
6
...

7
...

8
...
From your over-all understanding of the working of power, authority
and influence and general awareness, explain your understanding on
the process of ‘empowerment
...


Lesson Outline
ӹӹ
ӹӹ
ӹӹ
ӹӹ

Factors Determining Organizational Structure
Bases Or Forms Of Departmentalization
Horizontal & Vertical Dimension Of Organizational Structure
Traditional, Modern, Commercial & Non Commercial Organizational
Structure
ӹӹ Major Dimensions Of Organizational Climate
ӹӹ Meaning & Characteristics Of Organizational Culture
ӹӹ Review Questions

Organizational structure provides the framework for managers
and others for performing the various functions expected of them and for
facilitating the work flow in the organisation
...
The managerial process of organising results in the creation of a
formal organisational structure which is defined as a system of patterned and
interrelated task units with well defined authority-responsibility relationships
...
The formal organisational structure has two
‘dimensions’
...


The horizontal and vertical dimensions of the organisational
structure,viz
...

The managerial positions are not created in a vacuum; they are created
around the sub-divided task units
...
technology, external
environment and the people in the organization greatly influence the design
of the structure
...
In a manufacturing enterprise, the activity structure consists of the
various tasks or activity spheres
...

Departmentation: The concept of departmentation, is one of the important
steps in the design of formal structure of an organisation
...
The departments so created have lateral relations to each other
...
There are several alternative ways in which organisational
activities are grouped into work units
...
The major bases or forms are: Function, process or
equipment, product, customer and geographical area
...
The concepts
of authority, responsibility and accountability have particular relevance
for understanding the process of delegation of authority
...
In one sense, it is the set of tasks or duties
assigned to a person
...
Accountability is often used as a synonym
to responsibility
...
Some others, however, distinguish between accountability
and responsibility by defining accountability as personal answerability for
decisions, actions and results on the part of a subordinate to his superior
...
The hierarchy of
management is established through the process of vertical differentiation and
integration of authority
...
Attempts are hence made to modify the traditional
structures so as to evolve refined forms of structure
...
These
modern structures are regarded as more organic, adaptive, and flexible and
are suitable for complex organisations which employ highly sophisticated
technology and which encounter a very diverse and volatile environment
...
It is the totality of interacting and interrelated internal dimensions or characteristics which significantly influence
the motivation of members
...
Since the dimensions of climate are
internal, they can be measured, controlled and changed by the organisation,
if it so decides
...

The major dimensions or characteristics of organisational climate are
listed below:
-- Organisational values, goals and priorities which are pursued in
practice as against those which are professed
...

-- Competence, character, commitment and dynamism of management
...

-- The power structure - the extent of concentration or dispersal of
authority, the extent to which and the manner in which formal
authority is exercised, the extent of status disparities, social distance
between managers at various levels and between managers and nonmanagers and so on
...
flexibility,
clarity of the structure, communication and control systems,
superior-subordinate relations, informal social relationships, etc
...

-- Degree of freedom and control – requirements of conformity
and compliance to organisational norms and the extent to which
behaviour of employees is structured
...

-- Reward structure – reward levels and interrelations, equity in reward
283

structures, monetary and non-monetary rewards
...

-- The physical working conditions in the organisation
...
In some organizations certain factors like structure, or process
plays a major role and in some other organizations, technology might be the
major factor influencing the climate
...
The climate
is said to be highly favorable when the existing management techniques are
such that employees goals are perfectly matched to the ideas of organizations
...
It is generally believed
that decentralized structure results in sound climate
...

Process: In every organization certain processes are vital so that it functions
...

For instance, if we consider leader-follower relationship, leadership process,
it is leader’s choice whether to allow subordinates in decision-making,
give assignments, etc
...
It should be noted that failure
to give consideration to the effect on climate could cause great harm to the
organization
...
, will also affect organizational climate
...

Noise has also been considered instrumental in influencing the climate of an
organizational
...
The formal value system is communicated to employees through
rules, regulations and policies
...
But both exert influence on organizational climate
...
Organisational climate influences the perceived ability of the
individual employee, which in turn has a decisive effect on his motivation
...

Organizational Culture
Organizational culture is the set of assumptions, beliefs, values and
norms that are shared by the members of an organization
...
It represents a key element of the work environment in which employees
perform their jobs
...
The idea of organizational culture is somewhat intangible, for we
cannot see it or touch it, but it is present and pervasive
...
Because
it is a dynamic systems concept, culture is also affected by almost everything
that occurs within an organization
...
They are
also an important source of stability and continuity to the organization which
provides a sense of security to its members
...
Cultures are also
relatively stable in nature
...
A defining characteristic of most culture is
that they are seen as symbolic representations of underlying beliefs and values
...
Most of the
early attempts by researchers relied on examination of stories, symbols, rituals,
and ceremonies to obtain clues
...
In some
cases, examination of corporate philosophy statements has provided insights
into the espoused cultures (the beliefs and values that the organizations state
285

publicly)
...
Another interesting method is to
become a member of the organization and engage in participant observation
...
Individuals are generally more willing to adapt when they want
to please others, gain approval, and learn about their new work environment
...
Individualization
occurs when employees successfully exert influence on the social system
around them at work by challenging the culture or deviating from it
...
Describe the organisational culture that seems to exist in your
organisation
...
Discuss the bases or forms of departmentalisation in an organisation?
3
...

4
...
Horizontal & Vertical dimension of organisational structure
...
Commercial & Non – Commercial dimension of

organisational structure
...
Traditional & Modern dimension of organisatonal structure
...
What are the major dimensions of organisational structure?
6
...

***

286

Lesson - 24 : Organisational Change
Objectives
After reading this lesson, you should be able to:
ӹӹ Explain Steps In The Change Process;
ӹӹ Know Why Change Is Resisted; And
ӹӹ Understand Strategies Management Uses To Make The Change
Effective;
Lesson Outline
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ

Pressures for change
Sources of resistance to change
Change process
Management of change
Review Questions


Changes are taking place all around without exception
...
What remains constant is change itself?
Therefore, it’s the responsibility of the manager to appreciate the change, assess
its impact on the organization and prepare to adopt it, if necessary
...
By scanning the environment and deciphering how
changes in the environment are likely to widen the gap between desired and
actual state of affairs of organization such as productivity, customer and
employer satisfactions ,the degree and impact of change could be gauged
...

Meaning and Nature of Change

The term change in the organization context refers to any alteration
that occurs in the work environment
...
A
planned change is also called proactive change
...
For
proactive or planned change to be initiated, manager shall be sensitive to the
environmental changes affecting the organization so that organizational crisis
situations can be averted
...
There are two widely recognized goals of the planned change
...
Second, it seeks to change employee knowledge, attitude and
behavior
...
Change is a human as well as a technical problem
...
When
change occurs in the organization, it requires employees to make new
adjustments as the organization seeks new equilibrium
...
Thus, tension points in the organization are identified when
the gap between the desired and the actual results is noticed
...
In other words, these changes are precursors for
organizational change, which are explained in the following pages
...
The work force composition is
fast changing with increasing proportion of the woman, minorities, physically
challenged
...
The present generation of work force wants quantification and
seeks external reinforcement
...
Increasing participation
of woman means dual-career couples
...
On the whole, there has been an increase in the formal education
levels of work force
...
Training programs need to be fine
tuned aiming at upgradation of skills
...
Computers,
telecommunication systems, robotics, and flexible manufacturing systems,
flexi time mode are some of the 21st century changes that have brought
unimaginable changes at work place with respect to the time, comfort
required for the execution of tasks
...
Hence, heavy investments become imperative
...
Information technology makes organizations
more responsive to consumer demands
...


288


Economic conditions: this is an age of discontinuity
...
, hit some industries and firms much harder than
others
...
The problem
with these shocks is that it is impossible to predict what the future shocks will
be and from where they come from
...

Higher education as a sector provides a mass market product
...
Considerable proportion of
woman students, part time students, outnumbering regular students has
become the order of the day
...


Work place diversity: Emergence of global markets, mobility of
factors of production across the globe, integration of economic systems
imposes certain demands on employees who have to interact with people
in other countries and work with persons brought up in different cultures
...


Competition: Competition is intensifying by the day in every product
category
...
Competitors may come
from anywhere in the world, at times even from quite unexpected quarters
...
Therefore, in order to meet competition, successful organizations in
future rely on short production runs, short product cycles and a stream of
innovative products
...

Sources of Resistance to Change

Any change is complicated by the fact that it does not produce a direct
adjustment
...
The following chart known as
Roethlisberger’s x-chart explains how attitudes affect the response to change
...
1
...
People as individuals interpret
change with attitudes in the back ground
...
All changes have some costs, economic, psychological
and social costs
...
Hence, cost benefit
analysis of change is required
...
Organizational members are affected in different ways by a change
...
This is the reason why employees
tend to resist work change because of the associated costs
...

Three Types of Resistance to Change
They are Logical, psychological and sociological

Logical: arises from the time and effort needed to adjust to change
...
These are short run costs to be paid
by employee, though in the long term they are benefited by change
...
They fear the uncertainty, mistrust the management and feel
insecurity
...


Sociological: political conditions, opposing union values, narrow
outlook, vested interests, and desire to retain existing friendship are some of
the reasons for resisting change
...

290

Individual resistance: The source of resistance resides in basic human
characteristics, which are presented hereunder in a summary form:

Habit: To cope with life complexity, human beings rely on habits or
programmed responses
...


Security: persons with high need for security resist change
...
Hence, they resist change
...
When pay is tied to performance, people fear
that they may lose their income by not being successful in performing their
new job, more so when they need to apply new set of skills
...
The need for this security blanket also makes them apprehensive
about the change that characterizes ambiguity and uncertainty
...


Selective information processing: people see the world through their
perceptions
...
They ignore information that challenges the wolld they
wish to operate in
...


Resistance is stemming from retooling and retraining: knowing
that one has to learn new things is a source of resistance to change as any
learning involves unlearning
...

Resistance due to sunk costs: older employees seem to resist change
more than younger ones
...
This is otherwise known as ‘sunk cost’ of energy and time
...
They also become blindfolded and resist change
...
When change confronts organizations, their structural inertia
acts as a counter force to organizational stability
...

Group inertia: here group norms act as constraints for change
...
For example, decentralized end user
computer was a threat to the specialized skills held by the centralized
information systems departments
...
For example, participative management is a kind of
change seen as a threat to the authority of middle level managers
...

Consequences of Resistance to change: consequences are both positive and
negative
Positive consequences
-- Resistance may force management to reexamine change proposals so
that they are appropriate
...

-- It also encourages management to communicate change which in the
long run ensures acceptance of change
...
Change of greater magnitude introduced without gaining employee
acceptance may lead to overt consequence such as employee unrest leading to
strike, gherao, sabotage, etc
...
e
...

Change Process

Since management initiates more changes in the organization, its
primary responsibility is to implement change successfully
...

Many changes also originate in external environment
...
Stable environment means less change
...


Kurt Lewin, the father of change process, stated three stages in
initiating and establishing any change unfreezing, changing and refreezing
...
This
is the initial stage where change agents sense need for something new
and are impatient with status quo
...

Changing (or moving): In this stage planned change is initiated and
carried out
...

With the participation of members affected by change, changes have
to be carefully implemented
...
If the refreezing phase is neglected, the change
will not bring desired result and may be even total disaster
...
The organization system is in a state of relative
equilibrium
...

Change is introduced with in a group by increasing the supporting forces for
it and/or reducing the restraining forces
...

Normative – Reeducative Strategy: In this strategy, the belief is that people
are guided by the socio-cultural norms they subscribe to
...

Power – Coercive strategies: are used by the change agents assuming that
people with less power will accept change brought by people with more power
in the system
...
Since there is no one
best way of dealing with resistance to change in all situations, the following
general approaches are used in handling resistance
...

Once the employees are educated and enlightened about the positive
aspects of change, they accept change
...
Greater the participation, lesser
the resistance to change
...


Figure 24
...
To overcome it, the support in terms
of empathic listening and training help the individuals to deal more
effectively with their adjustment problems
...
In such situations incentives or special benefits
are offered to those resisting change so that they cannot block change
...

294

(vi)Manipulation and co-optation: Covert attempts (manipulation)
such as selective sharing of information and consciously structuring
certain type of events would win the support for change
...

(vii)Leadership for Change: effective leadership reinforces a
climate of psychological support to change
...

(viii)Use of Group Forces: The idea is to help the group join with
management to encourage and support desired change
...
Most unions support change that is carefully
planned to protect member interests
...

Review Questions
1
...
” Discuss the pros and cons of this
statement
...
Resistance to change is often viewed negatively
...

3
...

4
...

5
...
Was
there resistance of the change? Discuss
...


Lesson Outline
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ

Definition Of Od And Its Characteristics
Process, Benefits And Limitations Of Od
Approaches Of Od
Od Programs And Techniques
Review Questions


As a logical extension of the previous lesson which focused on
organizational change, this lesson deals with OD as an applied, macro-level
approach to planned change and development of organizations
...

A few Definitions on OD:

Keith Davis defines OD “as an integrated strategy that uses group
process to focus on the whole culture of organization in order to bring about
planned change
...



According to Fred Luthans, OD represents “an applied, macro-level

approach to planned change and development of complex organizations”
...

They differ substantially from those of a typical training program which are
summarized in the following lines
...

In contrast, traditional training programs tend to focus quite narrowly on
specific jobs or small work groups
...
It lays emphasis on how parts relate, not on the parts themselves
...
This focus on real ongoing problems, not artificial ones, is
called action research
...
”
Experiential learning: OD offers experiential learning which means
participants learn by experiencing in the training environment the kind of
human problems they actually face on the job
...
Unlike traditional training approaches which emphasize one best
way to solve the problems, OD is flexible and pragmatic, adapting actions to
fit particular needs
...
OD attempts to integrate four elements- people, structure,
technology and environment
...

Initial diagnosis: OD program is decided after the consultant
meets the top management
...
Data collections and surveys may be made
to know the organizational climate and organizational behavioral problems
...

Action planning and problem solving: groups use the data to develop
specific recommendations for change
...
Plans made are specific pinpointing who is responsible
and by what time the action shall have been completed
...
He also helps them to see the
value of open communication and trust as pre-requisites for improved group
functioning
...

Evaluation and follow- up: the consultant helps the organization
evaluate results of OD efforts and develops additional programs in areas where
additional results are needed
...

Benefits of OD: primary advantage of OD as a useful method of organizational
intervention is that it tries to deal with change in the whole organization or
major unit of it
...
Other
benefits include high motivation, productivity, quality of work, job satisfaction
and conflict resolution
...

Limitations (or problems) of OD: It is time consuming and expensive
...
There are problems of invasion of privacy and psychological
harm in some of the OD techniques
...
Yet
another criticism is that OD emphasizes too much on behavioral processes
rather than on job performance
...

Approaches to OD
OD development can be traced back to the application of behavioral
science and social psychology and to subsequent efforts to apply laboratory
training survey-feedback insights into social system
...

Two important ways of theorizing for OD according to Burke and
Litwin, are organizational functioning and organizational change
...
Transformational changes occurring in response
to external environment directly affects organizational mission and strategy
leadership and culture
...


299

A theoretical model for planned organization change and development is
presented below:

Intervention activity
Organizing arrangements

social factors

physical setting

Technology
Individual behavior
Organizational outcomes

Figure 25
...
The three implications of this model are:
1
...

2
...

3
...

Potential areas of OD Intervention: Areas where OD Interventions help
include people side of the organizations, the technical and job related aspects
and structural aspects
...

OD techniques used to address “people concerns” are sensitivity training,
transactional analysis, process consultation, third-party peacemaking, team
building, individual counseling, life and career planning, role clarification,
and workshops
...

Some of the techniques that come handy are socio-technical system analysis,
flexible production, job evaluation techniques and role analysis techniques
(JET and RAT)
...
Other techniques used
to increase the effectiveness of the organization are the management grid and
Likert’s system in techniques
...
The most established and popular
techniques are presented below
...

Laboratory training methods:
(a) Role playing: it is spontaneous acting of a real situation involving two
or more people under class room conditions
...
Role playing is a substitute
for experience
...
In role playing, trainees can
broaden their experience by trying different approaches while in real situation
they have only one chance
...
It is time-consuming and expensive
...
Some trainees resent it as being a childish approach to
serious problems
...
Yet
some others focus more on acting than in problem solving
...
It differs from role playing in the sense
that it focuses more on administrative problems while role playing tends
to emphasis on feelings and tone between people
...
Participants
work in small groups, each group in competition with others
...
Decisions
are processed through a computer according to the model, thus providing
feedback for subsequent decisions
...
For example
quarter year operations may be covered in a single morning or afternoon
session
...
The learning
process can be hastened through feedback and discussion with a trainee after
each decision unit
...
Encounter groups are not role
playing, because participants act their own true roles
...

Encounter groups seek to improve understanding of self, others, group
processes, culture and general behavioral skills
...

Transactional analysis: first introduced by Eric Berne, it analyses the nature
of people’s verbal interactions with each other
...

The three Ego stages:
The parent state: it reflects our feelings of superiority, authority, being
judgmental, etc
...
We operate from all three ego states from
different times
...


Complementary transactions: they come from compatible states
where expected responses naturally occur
...


Ulterior transactions: they take place when the two parties say
things to each other which circumvent the main issue
...
He to perceive, understand and act upon process events
with which he must deal
...

The essence of PC is the skilled consultant’s work with the managers, other
individuals, groups in the system to develop their process skills i
...
, diagnose
and resolve process-related problems
...
Attitude surveys of individuals and groups at all
levels in the organization serve as data points to trace ends
...
First, persons holding primary positions in
the organization plan what data need to be collected
...
Third, each superior call for a meeting in which data are fed to
the subordinates
...

Survey feedback is a good diagnostic tool used for several types of
interventions
...
In other
words they ‘own’ the data which spurs them on to initiate and implement the
needed changes
...

It aims at improving intra-and inter-group effectiveness
...
When combined with survey feedback, team
building is more effective
...
Key representatives
from the various outside organizations are invited to participate
to mirror to the host organization on how it is perceived, what it
can do to improve its effectiveness, and the plan of action to rectify
the issues
...
Sub-groups of
both host organization and invited organizations work together
during the meetings to identify the problems and changes needed
...

Review Questions
1
...
Discuss how
its skills and intervention methods would be different if those values
were not important
...
Create a list of the kinds of organisational behaviour skills that would
be useful to an OD consultant
...
How role playing, simulation and behaviour modeling do differs as
training methods? Do they have similarities also?
4
...
Which of these do you agree or
disagree most strongly with? Explain your feelings
...
Discuss the strengths and weaknesses of encounter groups?
6
...
What are the benefits and limitations of OD?

304

Case Study
Implementing New Ideas

Industrial Hydraulics Ltd
...
The Assembly and
test shops of the company are headed by Mr
...
Singh under him for both the shops
...
Mr
...
Mehta report
directly to Singh
...
Singh, the Assistant
Superintendent (27) has above five years of service in the company which he
joined as a management trainee (tech
...
Mehta,
the test shop supervisor (40) is an old timer in the company and is known to
most of the old employees including senior officers
...
He is very well known to Murthy, under
whom he served for a long time as a technician and later as asst
...

Verghese, the other supervisor in test sop is a young person, around 25, with
a diploma in mechanical engineering and about 3 years of service in the
company
...


The test shop is the bottleneck area of the department where a large
accumulation of units, awaiting testing generally exists,
...
The components with high and medium cycle time have generally
complex test schedules and considerable effort if required to rig up test circuits
...
No realistic assessment of assembly
and test timings exist
...


One fine morning, Murthy was summoned by the factory manager
and given 10 days time to rectify the situation
...
Murthy in turn, immediately asked for Singh and gave him
one week to clear the back log in test shop
...
He was of the opinion that Mehta the “B” shifts supervisor
was mainly responsible for the situation
...
He was, in the opinion of Singh, deliberately avoiding
difficult and urgently required components to show higher output from his
shift
...
He found nothing wrong of ”B” shift and
complimented Mehta for giving high output
...
Singh knew that
his reasoning at this stage, either with Murthy or Mehta will not out much
ice
...
The idea centered around giving
weightage to each item in terms of number of points depending upon the
degree of complexity in setting to test circuits and associated cycle time
...


Singh presented his scheme to the two shift supervisors
...

After a lot of discussion, Mehta offered to try the scheme for a limited period
but he expressed his reservations about the success of the scheme
...
Singh overcame the resistance from workers
primarily because of his reputation for fair dealing and straight forwardness
...
The scheme was informally introduced and was quite effective
...
He gave his blessings for the continuation of the
scheme
...

As it happened, quite a few of the good workers from test shop were ignored
for promotion
...

The workers overlooked from test shops were those with a consistent high
accumulation of points
...
Singh tried to take up the issue of promotions
with Murthy but was quietly told that there is nothing wrong with promotions
as senior workers have been promoted
...
Meanwhile, some of the disgruntled workers approached the
union and represented objected to the scheme and demanded its immediate
withdrawal stating that no such scheme can be introduced without the
union’s concurrence and the whole basis of allotting weightage is untenable
...
Murthy in turn put the entire blame of
Singh
...
Identifying the problem faced by the organisation as against the
symptoms seems easily in the case
...
Generating the solution/ alternate solutions to the solution perceived
by Mr
...

306

3
...

***

307

308

UNIT – V
Lesson - 26 : MANAGING DIVERSITY

Objectives
After reading this lesson, you should be able to:
ӹӹ Appreciate Diversity At The Work Place;
ӹӹ Understand The Reasons For Work Place Diversity; And
ӹӹ Equip Yourself With The Strategies To Manage Diversity
...
The
integration of the global economy contributed by the development in transport
and telecommunication facilities apart from the economic compulsions has
changed the composition of workforce in many organisations
...
There is no exaggeration that one would find himself entering
totally a different cultural zone for every 200 – 300 kms
...
The same is reflected now in the business organisations
also due to increased levels of literacy, job opportunities and mobility of the
people
...
The emerging situation in many workplaces with respect to diversity
poses a challenge to the modern manager
...

Meaning of Diversity

Diversity exists in a group or organisation when its members differ
from one another along one or more important dimensions
...
It has to be viewed as
a continuum
...
Similarly, if everyone in the group is completely
different from the other, it implies total diversity
...
Most of the work groups are characterized by a level of
diversity somewhere between these extremes
...


The various dimensions of diversity include gender, age, ethnic origin,
colour, among others
...
If one member
is replaced by a young female from Tamil Nadu, the group becomes a bit more
diverse
...
Further, if a third member is replaced by a young man
from Assam, the group becomes even more diverse
...

Reasons for Diversity

Modern organisations are becoming increasingly diverse along
many characteristics dimensions
...

i
...
With the spread of higher education and as many segments of
the society which are hitherto outside the reach of higher education, there is
also a perceptible shift of people to professional education like Information
Technology, Biotechnology, Material sciences, Management and so on
...
Similarly, the proportion of
women employees in the workforce is also increasing at a faster rate
...
Further,
due to the spread of non-formal and distance mode of education, even the
middle aged people are acquiring necessary academic credentials and joining
the workforce
...

ii
...
They are casting the net very wide
...
In
order to groom and encourage diverse thinking and diverse perspectives,
which constitute an essential prerequisite for organizational creativity and
innovation, many a business, deliberately planning for diversity in the work
force
...
Modern organizations
are structured and managed to encourage diversity as divergent thinking/
perspectives of people in the work group setting facilitate and foster creative
ideas/solutions that provide the basic ingredients to new product development
and exploration of new markets
...
To meet the legal and regulatory requirements

In order to meet the constitutional obligations and for balanced
development of people of various denominations and regions, the government
makes it obligatory on the part of businesses to address some of the issue related
to the employment of people from minorities, weaker sections, physically
challenged, backward regions, etc
...

iv
...
The size and scope of the
operations have enormously increased
...
Takeovers, mergers and strategic alliances of the
companies located in different parts of the world have become every day’s
corporate buzz
...
As such the need for people familiar with the local culture to man
the global operations has also increased
...
Consequently, as employees move from one assignment to
other across the global organisations and their outfits in different parts of the
world, the work force becomes more and more diverse
...
Management
of diversity involves initiatives at two levels, viz
...

Individual Strategies for Dealing with Diversity


One important element of managing diversity in an organization
consists of those things that individuals at their level can attend to such as:
better understanding, empathy, tolerance, and willingness to communicate
...
Some managers take the basic concepts
of equity and justice in employment opportunities to an unnecessary extreme
...
Thus in following this mandate they come to believe
that they must treat everyone the same
...
Although people need to be treated fairly and equitably, managers
must understand that differences among people do, in fact, exist
...
Managers must understand
that cultural factors cause people to behave in different ways and that these
differences should be accepted
...
People in an organization should try to understand
the perspective of others
...
Each man may be a little self conscious as
how to act towards the new member and may be interested in making her
feel comfortable and welcome
...
For example, she may feel
disappointed or elated about her new assignment; she may be experienced
or inexperienced in working with male colleagues
...

Tolerance

A third related individual approach to dealing with diversity is
tolerance
...
The intolerance for others increases where
the economic and job opportunities are fewer
...

Willing to Communicate

A final individual approach to dealing with diversity is communication
...
For example,
a young employee has a habit of making jokes about the age of an elderly
colleague
...
But the older employee may find
312

the jokes offensive
...
Eventually, what started as a minor problem
may erupt into a much bigger one!

For communication to work, it must be two way
...
As long as such exchanges are friendly, low key, and nonthreatening,
they will generally have a positive outcome
...
At this point, third parties within the organization may have to
intervene
...
We
now turn our attention to various ways that organizations can indeed better
manage diversity
...
Through its various policies
and practices, People in the organization come to understand what behaviours
are and are not appropriate
...
Therefore, the organization’s culture is the ultimate
context from which diversity must be addressed
...

Obviously, for instance, the extent to which an organization embraces the
premise of equity and justice in employment opportunities will to a large
extent determine the potential diversity within an organization
...


Another aspect of organizational policies that affects diversity is
how the organization addresses and responds to problems that arise from
diversity
...
If the organization’s policies put an excessive burden
of proof on the individual being harassed and invoke only minor sanctions
against the guilty party, it is sending a clear signal as to the importance of such
matters
...


313

Organizational Practices

Organizations can also help manage diversity through a variety
of ongoing practices and procedures
...


Benefits/incentives packages, for example, can be structured to better
accommodate individual situations
...
The convenience in scheduling vacations
also differs in both the cases
...
Differences in family
arrangements, religious holidays, cultural events, and so forth may each
warrant some sort of flexibility at the work place
...

Diversity Training

Many organizations are finding that diversity training is an effective
means for managing diversity and minimizing its associated conflicts
...
This training
can take a variety of forms
...

Men and women can be taught to work together more effectively and can gain
insights into how their own behaviours affect and are interpreted by others
...
In the same organization, female
managers learned how to point out their discomfort with those remarks
without appearing overly hostile
...
Regardless of what managers say or put in writing,
unless there is a basic and fundamental belief that diversity is valued, it cannot
ever become truly an integral part of an organization
...
With top management support,
however, and reinforced with a clear and consistent set of organizational
policies and practices, diversity can become a basic and fundamental part of
an organization
...
Explain the concept of work place diversity with examples
...
What factors contribute for diversity at the work place? Explain the
emerging trends in the Indian corporate sector with regard to the
diversity
...
What initiatives do you propose to manage diversity in organisations?
Present any anecdotes that you are familiar with either from your
own organisation or any other that you have heard of
...

Lesson Outline
ӹӹ
ӹӹ
ӹӹ
ӹӹ

Unique Features Of Japanese Management
...

Weaknesses Of Japanese Management
...



It is anybody’s knowledge that Japanese economy was reduced to
scrambles during the Second World War
...
Looking back, it is
quite amazing to note how Japan as a nation could achieve such a tremendous
development in all the sectors of the economy in the span of about 60 years
...
As such,
there is no wonder that captains of the industry, management thinkers and
practitioners all over the world began to examine the factors that contributed
to the Japanese success -often described as ‘Japanese miracle’
...
They have developed
a comprehensive system that combines structure and people in the way that
when integrated with Japanese culture, generates a highly productive and
efficient organisation
...


317

Focus

The essence of management in large Japanese organisations is its focus
on human resources
...
The Japanese organisations go all out to
develop the human resources
...
Such a focus on the
human resources helped the Japanese industry to achieve so much inspite of
the poor endowment of the natural resources
...
First, employees are offered long-term employment
...
Second, the
organisation’s philosophy concerning employee needs and the values of
cooperation and teamwork are well articulated
...

i
...
S
...
In Japan, except in the most severe economic
circumstances, employees are assured of permanent employment
...

The organisations then train them, make promotions from their
internal pool, and emphasises seniority in the allocation of rewards
...
For the
organisation, the benefits are : low employee turnover, low training
costs, and high organisational cohesiveness
...
Organisational philosophy
Each Japanese organisation has a specific philosophy that presents
a clear picture of its objectives and values
...
A common theme among Japanese companies is
a heavy emphasis on cooperation and teamwork
...
The theme spirit and cooperation
characteristic of a family are possible with the security provided by
the strategy of permanent employment
...
Intensive socialisation
Employees once hired undergo an initial training programme, the
purpose of which is to familiarise the employee with the organisation
...
He
is socialised very intensively
...
Job rotation and slow promotion
In Japan, life-time employment means limited upward mobility
...
Promotions
are based on seniority
...
Complex appraisal system
In addition to the output, employees are appraised on the basis of traits
such as creativity, honesty, seriousness, maturity and cooperation
with others
...
Employees are naturally motivated to
demonstrate loyalty and commitment by their attitudes and actions
...
Emphasis on work groups

The Japanese system gives far greater attention to organising
tasks around groups than around individuals
...
Tasks are assigned to such teams and the group
members of the team then decide among themselves the best way for
performing the tasks
...
Open communication

The Japanese system is inherently designed to foster open
communication
...
The physical work setting is also designed
to foster communication
...

vi
...
When all are
familiar with the proposal, a formal request for a decision is made,
and as a result of the previous informal preparations, it is easily
ratified
...
Concern for the employee

Managers spend a great deal of time talking to employees
about everyday matters
...
In fact, the concern for employees is one
of the parameters on which managers performance is appraised
...

Beyond the usual incentives, a comprehensive offering of cultural,
athletic, and recreational activities are very common
...
In addition, welfare
measures like subsidized family housing for married, dormitories for
the unmarried, nurseries for pre-school children, scholarships for
children, mortgage loans and the like speak a lot about the concern
for employees
...
He strongly advocated for
the adaptation of Japanese practices for the American companies
to improve productivity
...


320

Comparison of Japanese & U
...
Management practices
Japanese management

U
...
management

Planning
Long term orientation
Collective decision making
Many people are involved in decision
making
Decisions flow bottom up and back
Decision making takes a long time, but
implementation is fast
People share decision power &
responsibility
Individual goal ambiguity
...

lacking
Identification with company
Identification with profession
Organisational change by internal
Change prompted by external
change agent
...

Slow promotions through ranks
...


Extensive use of quality circles
...

- The employment system discriminated against non-life time employees
and prevented the formation of a free horizontal labour market
...

- By the mid -1980s the entire system of Japanese management faced
three major challenges:
- After the dramatic rise in the value of Yen, the problem of cost
containment became much more difficult
...

- How to continue to motivate employees in a new environment in which
the system of evaluation and rewards, as well as employee attitudes and
expectations are fast changing;
- How to redesign employment relationships in a way that would blend
the advantages of the order system of dependence in the company with
the necessity to promote employees self-reliance, initiative and creativity
...

- Extensive use of job rotation and employee reassignments
...

- Erosion of seniority and promotions based on seniority
...

- Relative contributions of merit factors to pay raises
- As a result, performance appraisal systems and wage structures are
undergoing changes
...

- Life time employment is undergoing change
...

- Mobility among Japanese managers and professionals is also increasing
...

- Creation of multi-trade employment system
...

The changes going on are not designed to destroy the old system,
but to increase its flexibility
...
Continuity with the
uniquely Japanese “essence” must be maintained
...
Yet like the modern Japanese home
which usually retains a Japanese style room among western style rooms and
furniture, the Japanese company will retain a core of Japanese practices
...
Discuss the salient features of the Japanese management practices
...
Distinguish between Japanese and American management systems
...

3
...

***

324

Lesson – 28 : Creativity And Innovation
Objectives
After reading this lesson, you should be able to:
ӹӹ Know The Process Of Creativity And Its Importance In Developing
New Products;
ӹӹ Understand The Role Of Innovation In The Modern Organizations;
And
ӹӹ Infuse Entrepreneurial Spirit In The Organization That You Are
Working For
...
Organizations
must be always in the lookout for new opportunities and exploiting them by
creating new products and services
...
New
products do not come about on their own
...
As such, it is obvious that new product
development is the function of organizational creativity
...
It
may be understood any organization can be as creative as its people
...

Creativity

Creativity, in general, may be defined as an “escape from mental
stuckness”
...
It involves a departure from
conventional thinking to non-conventional thinking
...
A
close examination of many products enables us to understand how apparently
325

unrelated things are related to produce a new product
...

Similar is the case with the electric bulb and the lens that are combined to
develop the overhead projector used in the classrooms
...

Creativity and Innovation

Though, at times creativity and innovation are used
interchangeably, it is appropriate to know that both are different
...
In Lawrence B
...
According to Rosabeth
Kanter, “Innovation is the generation, acceptance and implementation of
new ideas, processes, products or services”
...
Since both creativity and innovation are
two different functions, organizations need people good at both the functions
...
A new
idea, however good it is, must be capable of implementation and must actually
be implemented for the organization to benefit from it
...

Many products and services that we take for granted these days are the result of
their creative thinking
...
P
...
Accordingly, Convergent thinking is the sort of thinking most
of us are trained to do
...
It is intuitive thinking and is quite different from convergent thinking
...


Physiologically, our brain has two distinct hemispheres: one on the left
side, and the other on the right side
...
The function of the left side
of the brain is linear thought process- the type of thinking involved when you
solve a mathematical problem
...
Its functions are connected with imagery, and with intuition or
‘gut-feel’
...
In other words, convergent thinking takes
place in the left brain while, divergent thinking in the right brain
...
This is the starting point for the
new product development indeed
...

Preparation: The individual becomes obsessed with the idea/ problem,
recalling and collecting information that seems relevant and dreaming up
hypothesis without evaluating them
...

Incubation: After assembling the available information, the individual relaxes
and the subconscious mind becomes active
...
Psychological
freedom and safety are important at this stage
...
Often,
when least expected – while eating, falling asleep or walking- the new
integrative idea will flash into the individual’s mind
...

Verification and Application: The individual sets out to prove by logic or
experiment that the idea can solve the problem and can be implemented
...
It is at this state the individual switches
over to the logical, analytical or convergent thinking
...
This is also known as
assessing the scalability
...
To make
the organization creative, managers need to know the steps involved in the
creativity process presented above and take appropriate initiatives to encourage
the process
...
The following
aspects, if practiced, would contribute to fostering creativity in organization
...
Some resistance to change is found in many
organizations for fear of losing position, learning new skills, etc
...
The adage that routine drives out the non-routine has to be revisited
and must be seen the other way
...
To
encourage creativity, managers must listen to their subordinates ideas and
suggestions/ways of doing things
...

Permit more interaction: A permissive, creative climate can be fostered if
individuals have the opportunity to interact with other members of the
group and other groups in the organization
...

Tolerate failure: Inspite of the best efforts and intentions, failure is not
uncommon
...
Failure has to be
understood as a learning experience
...
Organisation members must be
properly guided towards achievement
...

Offer recognition: Creative individuals are motivated to work hard on tasks
that interest them
...
By offering
recognition in such tangible forms as salary increase, recognition, the message
gets conveyed that creative behavior is valued and rewarded
...
Such attitudes will have a dampening effect on organizational
creativity and innovation
...

-- Viewing any new idea from below with suspicion- because it is new,
and because it is from below
...

Asking departments or individuals to challenge and criticize each
other’s proposals
...

(Keeping the people on their toes)
...

Treating identification of problems as signs of failure in order to
discourage people from letting you know when something in their
area is not working
...
Make sure people count anything
that can be counted frequently
...

Making sure that requests for information are fully justified, and
making doubly sure that it is not given out to managers freely
...

And above all, never forget that you the higher - ups, already know
everything important about this business
...
Entrepreneurs are the
people who identify new opportunities and exploit them
...
Basically, entrepreneur sees a need and then brings together the
manpower, materials, and capital required to meet that need
...

Needless to say that in the absence of entrepreneurship, which acts as a catalyst
agent, resources would remain simply unexploited and noting worthwhile
happens in any economic system
...
Managership

Entrepreneurship involves initiating changes
...
It refers to creation of a new organization
...

It involves managing an existing business
...
As a result, the axiomatic truth
‘survival of the fittest’ has become the reality in the Indian corporate sector too
...
In the wake of profound changes in the various segments
329

of the environment – technologists, economic, socio-cultural and political –
Indian industry has to unlearn its older practices and prepare itself to meet
the challenges
...
As such the need for entrepreneurial
managers with innovative outlook who always search for change, respond to
it, and exploit it as an opportunity is now greater than ever before
...

Characteristics of Entrepreneurial Managers

Let us, in this context, understand the psychological attributes that
characterize entrepreneurial managers
...

Fostering Entrepreneurial spirit

Fostering entrepreneurial spirit in organizations is no easy task
...
Creation of such a congenial climate depends
on the ability of the top management to redefine the following organizational
parameters
...
All the
bureaucratic tendencies have to be avoided
...
Hence the trend now is
towards simple and flat structures
...

-- wider span of control with fewer levels
...
This is often
described as creating ‘companies within companies’;
-- Job descriptions are made less detailed unlike in the traditional
structures;
330

-- Controls are loose rather than tight; for, too many controls stifle
entrepreneurial spirit of the people
...
Business history is fully replete with such leader-toloser stories
...
The direction of
the strategy in which the organizational resources are deployed should centre
on innovation
...

Organizational Culture

Culture, in the organizational context, refers to a set of values,
dominant beliefs and the guiding norms shared by the members of the
organisation
...

On the other hand, a confused value system with internal disharmony, poor
work ethics and weak morale mars the spirit
...

-- Strong commitment and support of the top management for
innovation;
-- Adequate freedom for the organizational members by pushing down
autonomy for down the line;
-- Tolerance for failure to boost up the morale, for new product ideas,
as Peter Drucker points out, is like “frog’s eggs”
...
No individual in the organisation
volunteers to experiment with new ideas, if failure involves career
risks;
-- Adequate reward systems to motivate innovative people through
various reinforcing devices
...
The entrepreneurial activities in
the existing business as such collectively called ‘corporate entrepreneurship’
or ‘intrapreneurship’
...

331

Review Questions
1
...

2
...

3
...
Also describe the factors that stifle innovation
...
How is entrepreneurship different from managership? Make a logical
presentation of what you understand about entrepreneurship in the
existing business
...

Lesson Outline
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ
ӹӹ

Evolution Of Benchmarking
Advantages Of Benchmarking
Limitations Of Benchmarking
Pitfalls Of Benchmarking
Approaches Of Benchmarking
Types Of Benchmarking
Phases Of Benchmarking
Review Questions


Benchmarking is a systematic method by which organizations can
measure themselves against the best industry practices
...
Benchmarking
helps a company learn its strengths and weaknesses and those of other industrial
leaders and incorporate the best practices into its own operations
...
It is a tool for continuous improvement
...
” Or more simply, “the
search of industry best practices that lead to superior performance”
...

333

What is a benchmark? : A benchmark is a point of reference against which
things are measured
...
They are measured by questions about the product or service
(e
...
how many, how much time, how much money, how reliable or how well
it is made of?)
...


As a result, you will be able to set new goals and adapt the best practices
for your organization
...

Evolution of the concept of Benchmarking

The concept of benchmarking is not new
...
Henry Ford created the assembly line
after taking tour of a Chicago slaughterhouse and watching carcasses hung on
hooks mounted on a monorail move from one workstation to another
...
S
...
Modern benchmarking was initiated by Xerox (in the
1980s), an eventual winner of the Malcolm Balridge National Quality Award
for quality
...
Xerox initially studied their direct competitors and
discovered that:
-- their unit manufacturing cost equalled the Japanese selling price in
the United States
...

-- assembly line rejects were 10 times higher
...


These results helped them to understand the amount of change that
would be required to set targets to all the functional areas of the business
...
e
...

-- Benchmarking process involves imitation and adaptation of the
practices of superior competitors, rather than invention, thereby saving
time and money for the company practicing benchmarking
...

-- Benchmarking enables comparison of performance measures in
334

--

---

--

different dimensions, each with best practices for that particular
measure
...
(Some common performance measures
are return on assets, cycle time, percentage of on-time delivery,
proportion of defects, percentage of damaged goods and time spent on
administrative functions)
...
Thus, it is not restricted to the industry to which the
company belongs
...

Benchmarking allows organizations to set realistic, rigorous new
performance targets and this process helps convince people of the
credibility of these targets
...
It enables the
company to redesign its products and services to achieve outcomes
that meet or exceed customer expectations
...


Limitations of Benchmarking
-- The primary limitation or weakness of benchmarking is the fact that
best-in-class performance is not a static but a moving target
...

-- Benchmarking is not an “instant pudding’
...

-- Relating process improvement to strategy and competitive
positioning
...

-- Perceiving benchmarking as an ongoing process and not as a onetime project with a finite start and completion dates
...

-- Perceiving benchmarking as a means to process improvement, rather
than an end in itself
...

335

-- Empowering employees to achieve improvements that they identify
and for which they solve problems and develop action plans
...
They are:
-- Internal benchmarking ,
-- Competitive benchmarking,
-- Non-competitive benchmarking, and
-- World-class benchmarking
...
Internal benchmarking is
the easiest to conduct since data and information should be readily available
and confidentiality concerns are minimized
...
Their performance becomes a benchmark
to which a firm can compare its own performance and their practices are used
to improve that firm’s practices
...
This type of information can often be obtained through a confidential
survey of all competitors, usually conducted by a third party, quite often by a
consulting firm
...



An advantage of this type of benchmarking is that new processes
which could easily be adapted to one’s organization might be discovered
...
It involves looking towards the recognized leader for the process
being benchmarked – an organization that does it better than any other
...
Performance benchmarking or operational benchmarking,
ii
...
Strategic benchmarking
...

Performance benchmarking is usually performed by direct comparisons
or “reverse engineering” in which competitor’s products are taken apart
and analyzed
...

Process Benchmarking centres on work processes such as billing, order
entry or employee training
...
For example, the warehousing and distribution practices of
L
...
Bean were adapted by Xerox for its spare parts distribution system
...

Companies should not aim benchmarking solely at direct competitors and it
would be mistake if they do so
...
However, if benchmarks are adopted from outside the
industry, a company may learn ideas and processes as well as new applications
that allow it to surpass the best within its own industry and to achieve distinct
superiority
...

One way to determine how well a company is prepared to compete in a
segment and to help define a best-in-class competitor is to construct a Key
Success Factor (KSF) matrix similar to the one shown in figure
Success Factor Matrix
Competitive Analysis – Computer Industry… Segment
Key Success

Performance Rating
Weight Our company Competitor A Competitor B Competitor C
Factors
Sales force
Distribution
Suppliers
R & D



Service
Cost structure


Figure 29
...


Guidelines to Benchmarking: Companies approach benchmarking in
different ways
...
AT & T has a nine step approach
and Xerox a ten step approach
...
This may be quality, customer satisfaction, accounts
payable or delivery time
...

-- Use Company people: The people who are going to implement
changes need to see and understand for themselves, so it is they who
should make the visits to other firms which are benchmarked and
have the discussions with the concerned people
...

-- Exchange information: You should be ready to exchange information
and provide answers in turn to any questions you might ask another
company
...
This could lead to problems
...
Most benchmarking missions focus on existing products,
business practices, human resources and customer satisfaction
...

Companies that agree to share information may strongly object if
that information leaks out to a competitor
...

-- Analysis: Determine the gap between the firm’s current performance
and that of the firm(s) benchmarked and identify the causes of
significant gaps
...

-- Action: Develop cross-functional teams of those most affected by the
changes, develop action plans and team assignments, implement the
plans, monitor progress and recalibrate benchmark as improvements
are made
...
One
company’s benchmarking may not work at another organization because of
differences in their operating concerns
...

The Seven Step Benchmarking Model
Benchmarking is an ongoing process that requires data gathering, goal setting
and analysis
...
The seven steps
are:
Step 1: Identify what to benchmark
Step 2: Determine what to measure
Step 3: Identify who to benchmark
Step 4: Collect the data
Step 5: Analyze data and determine the gap
Step 6: Set goals and develop action plan and
Step 7: Monitor the process
...

Management should also be actively involved
...

-- Benchmarking should be a team activity
...

-- Benchmarking is an ongoing process
...
If well monitored, it serves
as an important segment of a total quality management system
...
It is a structured approach and requires planning and
monitoring just like any other management tool
...
Used correctly, benchmarking can lead you to
the competitive edge in today’s market place
...
What is meant by benchmarking? Describe the process of
benchmarking
...
Trace the evolution of benchmarking
...
S
...

3
...
How would you overcome
those pitfalls?
4
...
Given the
Indian context, which of the approaches would you think give better
results?
***

340

Case Study
If Something Can Do Wrong – It Will

Mr
...
His
basic degree is B
...
The engineering background
coupled with the management education aroused in him new spirits to strike
on his own and thus developed a penchant to start an enterprise
...
The location of a fairly good number of
units of these two industries in the South (for instance, of the about 95 cement
units nearly 40 are concentrated in the four Southern States) influenced his
decision of the product choice
...


To reap certain locational advantages, he preferred to set up the unit
in a fast growing district headquarters town connected with a good network
of transport and communication facilities
...
With the limited funds at his disposal, he could
not afford to buy land and construct the unit which involves the commitment
of substantial portion of his meagre funds
...
The machinery in a few
such units having been already auctioned, the sheds were available for sale
lease
...
Ravi
...


He started contacting the suppliers for the plant and machinery
...
But at the same time, he is also confused
of the multiplicity of organisations/ agencies that have come up to cater to
the needs of small scale entrepreneurs
...


Further, even though he doesn’t for see any problems in the technical
aspects relating to production, he is rather apprehensive of marketing the
product
...
To add to his bother, Government of India, of late, is
understood to have been contemplating to insist the use of gunny bags to
protect the jute industry which has been languishing and is likely to vanish
...
Ravi who is fully
341

determined and bent on going ahead
...
Was Mr
...
Whose did Mr
...
Assuming that govt
...
Ravi at this stage?
***

342

Further Reading
1
...
, 1981
...

2
...
, 1986, Management Theory: process and
Practice, Academic Press, London
...
Stoner, James
...
F
...
E
...
, 1989
...

4
...
L
...
Skills of an Effective Administrator, Harvard
Business Review, 52(5) 90- 102
...
Newman, William Hsummer, Charles E
...
The
Process of Management: Concepts, Behaviour and Practice, Prentice
Hall of India; New Delhi
...
Alvin Toffler, 1970
...

7
...
The Coming of Post – Industrial Society, Basic
books, New York
...
John B
...
The Management Process, Macmillan, New
York
...
Richard T
...
Athos, 1981
...

10
...
Terry and Stephen G
...

11
...
Capitalism and Freedom, Chicago Unit
Press, Chicago
...
Keith Davis, “The Meaning and scope of Social Responsibility”
in McGuire(ed), Contemporary management, Prentice – Hall,
Eaglewood Cliffs, 1974
...
Massie, Joseph L
...
Essentials of Management, Practice Hall,
Eaglewood Cliffs, N
...

14
...
1969
...

15
...
1980
...
Graw – Hill, New York
...
Barnard, Chester I
...
The Function of the Executive, Harvard
University Press, Cambridge
...
Chandler, Alfred D
...
Strategy and Structure, MIT Press
Cambridge
...
Chandler, Alfred D
...
Strategy and Structure, MIT Press
Cambridge
...
1972, Business Policy; Strategy
Formulation and Management Action, Mc Graw – Hill, New York
...

I
...

19
...
R
...
Systems Analysis and
Project Management
...

20
...
F
...
, and J
...
Rsenzweig, 1973
...

21
...
1978
...

22
...
1982
...

23
...
R
...
Studies in Organisation
343

Design, Richard D
...

24
...
George, Jr
...
The History of Management Thought,
Prentice – Hall, England Cliffs, N
...

25
...
P
...
The Bases of Social
Power in Dorwin Cartwright (ed), Studies in Social Power, Instutute
for Social Research, University of Michigan
...
Harey Sherman, 1966
...
F
...

27
...
Drucker, 1985
...

28
...
Organisational Behaviour
...

29
...
Organisational Behaviour, Prentice – Hall,
India, New Delhi
...
Umasekaran, 1989
...

31
...
Principles of Management, Tata McGraw –
Hill, New Delhi
...
Laurie Mullins, 2007
...

33
...
Principles of Management, PHI Learning,
New Delhi
...
Ricky Griffin, 2008
...

***

344

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---