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MBA - P79 - Semester - I - MBA104 Final - 16092015 PDF
MBA - P79 - Semester - I - MBA104 Final - 16092015 PDF
MBA - P79 - Semester - I - MBA104 Final - 16092015 PDF
Yashwantrao
Chavan
Maharashtra
Open University
MBA 104
Unit 2
19
Unit 3
Planning
33
Unit 4
49
Unit 5
69
Unit 6
87
Unit 7
Individual Behavior
105
Unit 8
Motivation
117
Unit 9
130
Unit 10 Leadership
146
158
169
D. Prakash Deshmukh
Director (I/C), School of Commerce
& ManagementYashwantrao
Chavan Maharashtra Open
University, Nashik
Production
Shri. Anand Yadav
Manager, Print Production Centre Y. C. M. Open University, Nashik- 422 222
Copyright Yashwantrao Chavan Maharashtra Open University, Nashik.
(First edition developed under DEC development grant)
First Publication : Sept. 2015
Typesetting
: Arya Enterprises, Nashik
Cover Print
:
Printed by
:
Publisher
: Dr. Prakash Atkare, Registrar, Y. C. M. Open University, Nashik- 422 222
-------
UNIT 1
INTRODUCTION TO
MANAGEMENT AND
ORGANISATIONAL BEHAVIOR
Introduction to Management
and Organization Behavior
NOTES
Structure
1.0
Introduction
1.1
Unit Objectives
1.2
Management Defined
1.3
Nature of Management
1.4
Importance of Management
1.5
Managerial Roles
1.6
1.7
1.8
1.9
1.5.1
Interpersonal Roles
1.5.2
Informational Roles
1.5.3
Decisional Roles
Levels of Management
1.6.1
1.6.2
1.6.3
Managerial Skills
1.7.1
Technical Skills
1.7.2
Human Skills
1.7.3
Conceptual Skills
1.7.4
Diagnostic Skills
Scope of Management
1.8.1
1.8.2
Financial Management
1.8.3
Production Management
1.8.4
Marketing Management
Functions of Management
Summary
1.14
Key Terms
1.15
1.16
Management Process
& Organisational
Behaviour : 1
MBA106 unit
Introduction to Management
and Organization Behavior
NOTES
1.0 Introduction
Human beings have variety of needs, that cant be satisfied by their individual
efforts alone. They need to perform numerous activities to satisfy their wants. Hence
organizations are formed to cater to the need of the society. Individuals join organization
and contribute their part for the well- being of the society.
There is one basic organization to which we all belong and that is family. Family is
the basic unit of the society. It has almost all the characteristics of the organization.
Organization is a group of two or more people working together to achieve a common
objective and so is the family. The main aim of the family is to provide mental, physical
and emotional satisfaction to the members of the family along with general survival
goals. Family applies basic economic concepts such as division of labour , planning,
distribution etc. The family as a unit decides as to which member of the family will do
which task. Each person in the family has his or her role for e.g. the mother is expected
to manage the home and take care of children while father is supposed to provide
financial support to the family. The family prepares budget for the month and plans it
various activities like education, shopping, holidaying, socializing etc .
Just like family, management activities and organizations have existed for thousands
of years. Someone in the past always had a plan to accomplish whether it was building
up of Egyptian pyramids or Great Wall of China. In order to accomplish objectives the
people and material were organized, the workers were directed and controls were
imposed on them.
Management Process
& Organisational
Behaviour : 2
Introduction to Management
and Organization Behavior
NOTES
Describe OB Model.
Management Process
& Organisational
Behaviour : 3
Introduction to Management
and Organization Behavior
Productivity can be measured in terms of output input ratio, within a time period
with due consideration for quality. Productivity includes efficiency and effectiveness,
where effectiveness means achievement of objectives and efficiency means achievement
of the output with least amount of resources and efforts.
NOTES
PRODUCT
MACHINE
MATERIAL
INPUT
PROFITA
BILITY
MONEY
PLANNING ORGANIZING
STAFFING
DIRECTING
CUSTOMER
SATISFACTION
OUTPUT
CONTROLLING
SERVICES
MEN
EMPLOYEE
SATISFACTION
Management Process
& Organisational
Behaviour : 4
1.
2.
3.
5.
6.
7.
8.
Introduction to Management
and Organization Behavior
NOTES
Management Process
& Organisational
Behaviour : 5
Introduction to Management
and Organization Behavior
Manager tries to avoid wastage by using the resources efficiently and effectively.
NOTES
LEADERSHIP
LIASON
INFORMATIONAL ROLES
MONITOR
DISSEMINATOR
SPOKESMAN
DECISIONAL ROLES
ENTREPRENEUR
DISTURBANCE HENDLER
RESOURCEALLOCATOR
NEGOTIATOR
with the people inside and outside the organizations. The three interpersonal roles are as
follows:
1.
Figurehead Role: the manager performs duties that are ceremonial in nature.
They represent the organization in all matters of formality for e.g. attending
social functions, greeting visitors, making speeches, hosting receptions,
bestowing honors etc. They perform social and legal duties and act as a
symbolic leader.
2.
3.
Introduction to Management
and Organization Behavior
NOTES
Monitor Role: He seeks internal and external information that are relevant
to the organization through various sources. He usually receives and collects
information about the issues that can affect the organization through reading
magazines, reports and talking to others.
2.
3.
Management Process
& Organisational
Behaviour : 7
Introduction to Management
and Organization Behavior
NOTES
may change the business definition of the organization. Managers look for
the ideas and opportunities in the environment and then design and initiate
change so that the organization is not left behind.
2.
3.
4.
TOP
LEVEL
MIDDLE
LEVEL
FIRST LEVEL
Fig. 1.3 Levels of Management
They develop goals, strategic plans, objectives and broad policies of the
enterprise.
They decide about the structure of the organization. They appoint middle
They decide about the factors that are vital for survival and growth of the
organization ,like shutting down of an unprofitable plant, entering into a new
market, introducing a new product in the market, opening new plant etc.
They maintain liaison with outside world such as government, trade associations
, association of industry etc.
Introduction to Management
and Organization Behavior
NOTES
They perform all the management functions related to their department for
smooth functioning of the department.
They interpret and explain the policies set by the top management to the
lower level managers.
They monitor group level performance and resolve problem within and among
work group.
They control and direct them by assigning task to employees, guiding and
supervising them for day to day activities.
They should have technical skills so that standards set for quality and quantity
of production can be met.
Management Process
& Organisational
Behaviour : 9
Introduction to Management
and Organization Behavior
They make sure that workers have all the resources, tools and materials they
need to accomplish their tasks.
NOTES
l
ica
nc
Co
Te
c
Lower
(Supervisiory)
level
hn
H
Re um
la an
tio
ns
Middle
level
tua
ep
Top level
It is the ability of manager to analyze the cause and effect relationship. It is the
ability to visualize the organization as a whole and see the big picture and understand the
interrelationship among organizational parts. It focuses on problem solving ability of the
managers. This skill is mostly required by top management as they are involved in broad
long term decisions that affect large parts of the organization.
Another important skill required by the management is the ability to visualize most
appropriate response to the situation. Diagnostic skill is not just the ability to specify
why the problem has happened but also the ability to develop certain alternatives to
solve the problem. It requires sound judgment, analytical ability, intelligence and common
sense.
Introduction to Management
and Organization Behavior
NOTES
HR planning : This activity aims at providing the organization the right number
of people with right knowledge, skills and attitude at the right time.
2.
3.
4.
5.
6.
7.
8.
9.
Welfare safety and health : This aspect of HRM is concerned with the
working condition and the amenities at the work place. It makes the
environment worth working by eliminating work place hazards, providing job
safety, medical and health benefits.
Management Process
& Organisational
Behaviour : 11
Introduction to Management
and Organization Behavior
2.
3.
Dividend policy decisions : When the firm earns profit, two alternatives
are available to it. It can either distribute the profit or retain some of the profit
for future growth of the organization or for meeting some contingency. It
includes the decision as to how much profit to retain and how much to distribute.
4.
5.
6.
Taxation : This area deals with various direct and indirect taxes which
organization has to pay.
7.
Management Process
& Organisational
Behaviour : 12
1.
Plant lay out and location : This area deals with deciding a suitable location
where factory will start functioning, designing of plant layout i.e designing of
factory and placing various facilities within the plant.
2.
3.
4.
5.
Introduction to Management
and Organization Behavior
NOTES
2.
3.
Management Process
& Organisational
Behaviour : 13
Introduction to Management
and Organization Behavior
NOTES
2.
3.
4.
The above mentioned functions are discussed in details in the following chapters.
Management Process
& Organisational
Behaviour : 14
1.
2.
The most effective group is the one that do not have any conflict.
3.
All the above generalization do not hold true in every condition. No two individuals
are likely to behave in the same manner under similar set of conditions. There are lots of
individual differences.However, there are certain fundamentals consistencies underlying
the behavior of all individuals. The consistencies can be identified and modified to explain
individual differences.
These fundamentals consistencies allow predictability. If we replace intuition with
systematic study we are in better position to predict behavior. A systematic study attempts
to identify relationship between variables, determine the causes and effects of relationship
and draw conclusion based on scientific evidence.
The objective of organizational behavior is to predict, explain and control individual
behavior, group behavior in team and organization in order to attain organizational
effectiveness. Organizational effectiveness is measured in terms of quantity and quality
of work, satisfaction and commitment of employees.
Introduction to Management
and Organization Behavior
NOTES
1.12 OB Model
A model is a systematic and simplified representation of some real world
phenomenon. OB model identifies its primary dependent and independent variables and
their relationship with each other. The dependent variables are productivity, job satisfaction,
absenteeism and attrition. The independent variables work at three levels. They are as
follows:
1.
2.
Group level: The behavior of people in groups like group norms, group
cohesiveness etc.
3.
Fig. 1.5 depicts the linkages between the three levels and their with dependent
variables.
Management Process
& Organisational
Behaviour : 15
Introduction to Management
and Organization Behavior
Organisational Level
* Organisational Culture
* Organisation Structure
* Work Design
* Human Resource Policies
and Practices
NOTES
Input
independent
variables
Group Level
* Group Norms
* Group Cohesiveness
* Leadership
* Conflict
* Team
* Group Structure
* Group Decision Making
Productivity
Absenteeism
Output
dependent
variables
Individual level
* Personality
* Values
* Attitude
* Perception
* Motivation
* Individual decision making
Attrition
Job
satisfaction
1.13 Summary
Management Process
& Organisational
Behaviour : 16
Introduction to Management
and Organization Behavior
NOTES
Decisional roles: The manager has to make important decisions that have
a significant impact n the organization.
Technical skills It is the ability to perform a job by the use of tools, procedures
or techniques of a specialized field.
Human skills: It is the ability to work with people, understand their needs
and motivate them.
Management Process
& Organisational
Behaviour : 17
Introduction to Management
and Organization Behavior
NOTES
Management Process
& Organisational
Behaviour : 18
UNIT 2
EVOLUTION OF
MANAGEMENT THOUGHTS
Evolution of Management
Thoughts
NOTES
Structure
2.0
Introduction
2.1
Unit Objectives
2.2
Classical Approach
2.2.1 Scientific Approach (1900)
2.2.2 Administrative Theory- Henry Fayol
2.2.3 Bureaucracy- Max Weber
2.3
Neoclassical Approach
2.3.1 Hawthorne Studies- Elton Mayo
2.3.2 Human Relations Approach
2.3.3 Behavioral Approach
2.4
Quantitative Approach
2.5
System Approach
2.6
Contingency Approach
2.7
Modern Approach
2.7.1 Contribution of Peter Drucker
2.8
Summary
2.9
Key Terms
2.0 Introduction
Origin of management can be traced to ancient roots. Many books were produced
during ancient and medieval time that contained advice about how the kings should
administer and govern their territory. The Prince, by an Italian author Nicco Machiavelli
and Arthashatra by chanakya are examples of conceptualization of management
practices during those times. The ancient monuments and irrigation systems of the
medieval period required organized and coordinated efforts of thousands of workers,
artisans, architects etc, which was not possible without the use of sound management
practices. Industrial revolution marked the beginning of modern management thought.
The driving force in shaping what management is today is the urge of the human being
to improve and flourish. After industrial revolution search began to find better ways to
utilize organizational resources. With the rise in use of machine and large scale
mechanized manufacturing new problems were identified which resulted in the
development of classical approach. After classical approach many other school of
Evolution of Management
Thoughts
NOTES
thoughts were developed that added value to the previous school of thought and helped
in aligning management practices to the ever changing dynamic environment. The
classical approach was followed by neoclassical approach, quantitative approach,
systems approach, contingency approach and modern approach.
SCIENTIFIC
ADMINISTRATIVE
BUREAUCRACY
The major contributors of classical approach were F.W Taylor, Max Weber and
Henry fayol.
Management Process &
Organisational
Behaviour : 20
famous management pioneer. He rose from the position of common laborer to chief
engineer in just 6 years. The goal of Taylor was to find out one best way to perform
a task. In order to do so he did time and motion studies. One of his experiments was the
study of workers loading pig iron to rail car. Taylor first tried to break tasks into elementary
movements like walking speed, carrying positions, bending etc. and noted the time of
each elementary movement with a stop watch. After that Taylor tried various
combinations of procedures, tools and technique to arrive at one best way. He also
used rest periods of specific duration and interval to improve the output. Taylor also
developed incentive plans for workers to improve their performance. With his efforts
Taylor was able to increase the efficiency of workers from 12 to 47 tons per day.
Evolution of Management
Thoughts
NOTES
Science, not rule of thumb- People should develop logical and scientific
methods to do a job.
2.
3.
4.
5.
6.
Limitations
Evolution of Management
Thoughts
NOTES
1.
Technical (manufacturing).
2.
3.
4.
5.
Managerial
6.
Planning
2.
Organizing
3.
Commanding
4.
Coordinating
5.
Controlling
(8) Centralization: when authority is concentrated and subordinates have less role
in decision making it is centralization. When authority is disbursed and subordinates
Evolution of Management
Thoughts
NOTES
(9) Scalar chain: it is the chain of line of authority ranging from highest rank to the
lowest rank. This also represents the chain of communication.
2.2.3 Bureaucracy
Max Weber, a professor of political economy in Germany propagated the concept
of highly formalized structure. He argued that organizations can reduce variability through
formalization of behavior by introducing bureaucratic organization. This will make the
activities of the organizations predictable and easy to control. The main features of
Evolution of Management
Thoughts
NOTES
1.
2.
3.
Rules and regulations are formed after deliberate discussions. Pros and cons
of every rule are discussed. The decisions taken are more rational and not
subjective.
4.
Disadvantages of Bureaucracy
1.
is strict adherence to rules. The rules are not changed frequently. The
environment in which the organization function is very dynamic, thus making
rules redundant sometime. In the name of following rules people may also
avoid their responsibility.
2.
Too much emphasis on rules gives no space for emotions and needs of people.
This is a highly mechanized structure where innovative ideas of people do
not get much attention.
3.
4.
Superiors try to increase their power and status by adding more people and
more resources to their departments, even if they are not necessary for the
organization. Such approach of superiors leads to empire building.
5.
Evolution of Management
Thoughts
NOTES
Classical theory made available a scientific base for management studies. It laid a
foundation for education and training of managers. It was for the first time that universal
nature of management was recognized. But the limitation of this approach is that role of
humans and their contribution towards organizational effectiveness has been discounted.
Evolution of Management
Thoughts
NOTES
productivity increased. In the second group i.e. control group no variation in the light
was done. The intensity of illumination was kept constant.
However the productivity of control group was also increased though it received
no added light. It was felt that some other factor is also influencing productivity besides
lightening. The reason for increased productivity can be attributed to informal social
relations that were developed among the members of work group during the experiment.
skill in handling the human element in the organization. The quality of leadership is
another critical factor in determining the success of organization. The limitation of this
approach is that it lacks scientific validity. It is criticized for its simplistic and manipulative
assumptions about relationship between workers attitude and productivity.
Evolution of Management
Thoughts
NOTES
Evolution of Management
Thoughts
NOTES
The major contributors of the system are Chester Bernard, R.A Johnson, Nesbit
Wiener and E. L. Trist.
Evolution of Management
Thoughts
NOTES
Manager should develop diagnostic and problem solving skills. Manager must first try
to comprehend the variables in the situation. After understanding the situation, he should
attempt to match specific concepts and techniques of management with the situation.
The contingency theory is more pragmatic and action oriented and forces the
manager to be more alert and adaptive to environmental variables while choosing their
styles and techniques. This approach makes the work of the manager more challenging
as he is required to think through all possible alternatives to deal with the situation and
then choose the one that best fits the situation. It provides freedom of choice and
opportunity for innovation and creativity.
The drawback of this approach is that it lacks theoretical frame work. Moreover
it is a reactive approach rather than proactive. The managerial actions are reactive to
environmental dynamics. He has to first analyze the environment thoroughly and then
try to find best possible solution.
Open system view: Organizations are open system that continuously interacts
with the environment. They receive input from environment, process them and
then sends output to the environment. The change in the environment can affect
their input, process or output.
2.
Dynamic and adaptive: in order to survive the organization should change according
to the changes in environment.
3.
Multi motivated: managers has to satisfy the interest of various stakeholders i.e.
shareholders, consumer, employees government and community. At the same time
manager should adopt different methods of motivating employees. He has to strike
Evolution of Management
Thoughts
a judicious balance between financial and non financial rewards so that employees
are motivated.
4.
Multi disciplinary: management discipline draws its input from various other disciplines
like economics, sociology, commerce, mathematics, engineering psychology etc.
5.
6.
NOTES
1.
Market Standing
2.
Innovation
3.
Productivity
4.
5.
Profitability
6.
7.
Evolution of Management
Thoughts
NOTES
(7) Decentralization : Drucker has emphasized that manager should create independent
product division rather than division according to function. Departments based
according to product make manager accountable for results. He suggested federal
decentralization where there is centralization in decentralized structure.
Apart from Peter Drucker many management gurus have contributed their part in
the field of management Michael and Porter has given valuable concepts in competitive
strategy and competition advantage. Tom peter became popular by publishing a book In
search of excellence in which he has described Mckinsey 7s Model focusing on staff,
system ,structure, strategy, shared value, skill and style. Henry Mintzberg has contributed
towards strategic planning and organization structuring.
2.8 Summary
Many Academician and practicing manager have contributed to the discipline of
management with different approaches towards it. Industrial revolution triggered the
search of one best method of doing work . Scientific management aimed at introducing
systematic study of work methods in order to improve efficiency. Bureaucracy advocated
mechanistic structure comprising of legal authority rules, regulation and procedure for
formalizing organizations behavior. Administrative management proposed process and
principles of management. Neoclassical approach focused on human behavior and group
behavior. They emphasized that a motivated and satisfied work force contribute more to
the organizations objectives. Quantitative approach argued that decision making can be
highly improved through the use of operations research, mathematics and statistics
.Systems approach emphasized that manager should have an eagle view of the situation.
Proper balance should be sought between requirements of various interrelated parts of
the enterprise and the goal of the enterprise as a whole. According to contingency approach
appropriate management action depends upon the situation. Every situation has unique
characteristics and hence there cannot be a universal management practice. Modern
management picks up important valuable concepts from all the previous approaches and
combines them to make it relevant to the present business scenario.
Evolution of Management
Thoughts
NOTES
(3) C.B.Gupta, ``Management Theory and Practice, Sultan Chand & Sons ,
eleventh edition
(4) V.S.P Rao, V. Harikrishnan, ``Management Text and cases, excel books ,
fourth edition
Planning
UNIT 3
PLANNING
Structure
NOTES
3.0 Introduction
3.1 Unit objectives
3.2 Meaning of Planning
3.3 Nature of Planning
3.4 Importance of Planning
3.5 Essentials of a Sound Plan
3.6 Planning Premises
3.7 Steps in Planning
3.8 Limitation of Planning
3.9 Types of Plan
3.9.1
Standing Plan
3.9.2
3.11.2
Process of MBO
3.11.3
Importance of MBO
3.11.4
Limitation of MBO
3.12 Summary
3.13 Key Terms
3.14 Questions and Exercises
3.15 Further Reading and References
3.0 Introduction
Planning is the essence of management. It is such a fundamental activity that
almost all human beings are engrossed in planning for their day to day activities. Planning
is the foremost function of management. The importance of planning can be understood
with the statement that well planned job renders half of the work done. Planning being
the primary function of management involves various steps and has to be done keeping
in view several factors/premises.
Planning
Planning
NOTES
Planning
NOTES
(4) Develop accurate forecast: the planning is future oriented and its success
depends upon the precision of our forecast about the future.
Planning
NOTES
Planning
Securing
Coperation and
Particpation
Establishing
Objectives
Develop
Planning
Premises
Determine
Alternative
course of action
Formulate
Derivative Plan
Evaluate
Alternatives
Planning
They support the main plan and usually keep track of time schedule and
sequencing of various tasks.
(7) Securing co-operation and participation: once the plan to achieve the
goal is ready with desired course of action, the important aspect related to it
is to seek cooperation from the employees who are actually going to execute
it. Once the plan is clear the workforce can jointly participate and contribute
towards its achievement with a raised morale level and motivation.
NOTES
Planning
most, couple of times, as the key area for such plan is a unique or exceptional situation.
(1) Mission: Every enterprise must mandatorily have a mission describing about its
purpose. Mission statement describes the reason for the existence of the
organization. In the words of Mintzberg, A mission describes the organizations
basic function in society, in terms of the products and services it produces for its
customers. The mission of a business organization must carry:
Purpose
Standards of behavior
Strategic scope
To understand, we can take the mission statement of TCS, To direct all our
organizational efforts at building upon the existing organizational strengths and brand
recognition to achieve enhanced levels of profitable growth in the core business, and
diversify into new areas that compliment and supplement the core business, with the
diversification aimed at achieving excellence and industry leader status in the new
areas. The TCS People will however be encouraged to be open to unconventional
ideas and services and recognize new trends at very early stages. The statement not
only states the purpose of existence but also the future strategy and expectation from
employees.
The mission expresses the benefits the customers and society at large will derive
from the operations of the organization. Mission is customer oriented as well as future
oriented. The mission statement should hold its validity for a longer period of time. The
mission statement is defined in a broader way. It should be dynamic in approach so that
business can grab new opportunities and ward off threats that may emanate from
competitive business situation that may arise in future.
(2) Objectives: The specific purpose to be achieved by the organization is called its
objective. In the words of Dalton E, McFarland Objectives are the goals, aims or
purposes that organizations wish to achieve over varying periods of times it is a
wider term of which mission statement is a part. Objectives are predefined, clear,
plural, realistic and purposeful. They are the end result that organization wants to
achieve. The objectives are accomplished by channelizing all the resources efforts
and energies towards them. Objectives translate mission statement into action.
The significance of objective can be understood with the lines of Drucker, The
search for one objective is essentially a search for a magic formula that will make
judgment unnecessary. Objectives are needed in every area where performance
and results directly and vitally affect the survival and prosperity of the
business. Objectives are framed keeping in mind the present external
environmental factors internal resources and constraints, at the same time they
are future oriented. Future growth prospects and risk associated with business
should be anticipated and incorporated in organizational objectives.
Planning
(A) An organization can have multiple objectives for e.g. providing services and
products to the customers, quality improvement, earning profit, improving
growth rate, survival etc.
(B) Objectives form a hierarchical structure. At the top there are organizational
objectives that percolate down the level. After the formation of organizational
objectives departmental objectives are formed which are followed by group
objectives. At the bottom of hierarchy individual objectives are set.
NOTES
Planning
of the policy lies with the fact that they throw light on the values and philosophy of the
company.
(4) Procedures: the techniques or means to be used for achieving the objectives set
NOTES
The word strategy is used to signify the general concept and salient aspect of
gamesmanship as an administrative course designed to bring success. The purpose
Planning
NOTES
(2)
Planning
NOTES
(3) Strategic alternatives and choice: various alternatives are generated and
strategic options identified for e.g. diversification, expansion, merger and acquisition
etc. The alternatives that are generated are then compared and evaluated. After
comparing, their effect on the health of the organization is analyzed and the best
option is chosen.
(4) Strategy implementation and control: this involves resource mobilization and
allocation, development of appropriate system and procedure and designing of
organization structure. Programs, schedules, tactical and operational plans are
developed. Various controls are developed to monitor the progress of strategy
implementation and its contribution towards organizational goals is evaluated. If
required the strategy should be molded to suit the changes in the external
environment.
These plans can be either reactive or proactive. They are made to counter a
contingent situation which was not assumed. These situations are special and a business
might confront such situation occasionally.
Planning
NOTES
Planning
NOTES
developed to bring the things into force. Procedures are formed for
achievement of set goals. Under MBO the subordinates and superior jointly
and interactively perform a given task. The superior gives suggestion and the
subordinates perform. The objectives are so formed that every objective
accomplished at lower level contributes to the fulfillment of the greater goal.
For the evaluation of key areas check points are also established.
(4) Periodic performance review: at specified time interval evaluation of the
work is done with joint participation to identify shortcomings or deviations if any.
Subordinate and superior sit and discuss about the problem areas identified.
Feedbacks and suggestions are made available for the potential development.
The main purpose is to improve the quality instead of focusing on criticism.
(5) Final appraisal: at the end of the year, performance of the individual is
evaluated on the basis of task completed. The standards which are set are
compared with the actuals. The actual work is evaluated based on which the
appraisal or rewards of the subordinate is decided.
Planning
NOTES
3.13 Summary
Planning is a primary and crucial function of management which is followed by
other functions such as staffing, directing, organizing and controlling. To plan is to forecast
about what is to be done, how it is to be done, when it is to be done and who will do it.
Planning is goal oriented, continuous, forward looking and intellectual process. It provides
direction, facilitates control, reduces risk, improves morale and aids in coordination. A
sound plan should be realistic, flexible and should contribute towards organizational
objectives. Planning starts with determination of objectives and development of planning
premises. Alternative courses of actions are identified and evaluated. The best course
of action is chosen and implemented. Planning is costly and time consuming. Its strength
depends upon the accuracy of data and managers acumen. Planning may sometimes
become redundant because of changing environmental conditions. The plans can be
either standing plans or single use plan. The standing plans include strategy, policies,
rule and procedures. The single use plans are programs and budget. The planning can
be done at the operational level or strategic level. Planning can be classified according
to time frame also; they can be short term or long term.
Management by objective is a management tool in which measurable goals are
set jointly by superior and subordinate and the contribution of the subordinate is measured
in terms of his accomplishment of the goals. The goals set in MBO are not thrust on the
subordinate by supervisor. The superior subordinate then develop actions plan followed
by periodic performance review. MBO is result oriented; it helps in minimizing of wastage
and motivates subordinates. It is very time consuming and requires managerial skills on
part of the supervisor.
Planning: It is deciding in advance what to do, how to do it, when to do it, and who will
do it.
Planning Premises: They are the basic assumptions regarding the business
environment that provide broad frame work within which plans have to be formulated.
Mission: A mission is a statement describing about the organizations purpose and the
reason of its existence.
Planning
NOTES
Policies: Policies are basic pre-defined guidelines and directions for decision making.
Procedure: It is a standing plan detailing about the succession of associated acts that
are required to perform the task.
Rule: It is a rigid, distinct, clear statement regarding what one needs to do and what
one should refrain from in a certain situation, therefore the infringement of rules carries
a penalty.
Programs: An action based, result-oriented and unique plan to meet a specific business
condition is termed as programs.
SWOT analysis
2. Mission
4.
Rules
3. Program
UNIT 4
COORDINATING AND
ORGANISING
NOTES
Structure
4.0 Introduction
4.1 Unit objective
4.2 Concept of Coordination
4.3 Difference between Coordination and Cooperation
4.4 Need and Significance of Coordination
4.5 Principles of Coordination
4.6 Approaches and Techniques for Achieving Effective Coordination
4.7 Concept of Organizing
4.8 Steps in Organizing Process
4.9 Span of Control
4.9.1
4.9.2
4.10 Authority
4.11 Power
4.12 Difference between Authority and Power
4.13 Delegation of Authority
4.13.1 Principles of Delegation
4.13.2 Problems in Delegation
4.14 Centralization
4.15 Decentralization
4.16 Difference between Centralization and Decentralization
4.17 Factors responsible for Centralization and Decentralization
4.18 Summary
4.19 Key Terms
4.20 Questions and Exercises
4.21 Further Reading and References
4.0 Introduction
Coordination is performed at each stage of management. It focuses on integrating
and synchronizing the efforts of team members to make sure enterprise goals are
attained efficiently and effectively. It is the embryonic force that unifies all other functions
of management. After planning the second and crucial function of management is
Management Process
& Organisational
Behaviour : 49
NOTES
organizing. It develops the interrelation between the work facilities and employees of
the organization. It helps in designing the organization. The function helps in establishing
authority and responsibility relationship. It helps in enabling the people work in the most
effective manner by developing a structure for it.
Management Process
& Organisational
Behaviour : 50
Coordination and cooperation are often mixed up, but these two although sounds
alike are different things. Cooperation can be defined as combined efforts of people
who unite willingly to attain particular objectives. It indicates purely the eagerness of
individuals to facilitate each other.
Cooperation is a voluntary effort; coordination is a conscious and deliberate effort.
NOTES
Management Process
& Organisational
Behaviour : 51
NOTES
NOTES
Management Process
& Organisational
Behaviour : 53
Figure 4.2
(1) Identification of activities: the process starts with fixing the objectives to
be achieved. For the purpose of achievement of objectives various activities
are identified. Unless the work done is identified, goal achievement is not
possible. The total work is then divided and distributed among different
departments. For the proper identification of various activities grouping is
done so that work is not duplicated. It also enables top manager to concentrate
more on important issues.
(2) Grouping of activities: once the work is divided it should be closely
coordinated among different working groups. Groups with similar activity
should be aligned together so that double incidence of work could be reduced.
This also helps in reducing wastage and smooth flow of work. This activity is
generally performed under the supervision of senior managers.
(3) Assignment of duties: the duties and responsibilities of every member or
employee are distinctly defined. This would lead to the selection of appropriate
person for the job. This helps employee to understand precisely what is
expected out of him. Consequently, this enhances efficiency.
Management Process
& Organisational
Behaviour : 54
comprises two terms, span and control. While the term span here means the utmost
limit of supervising number of men, control means legitimate authority to order or
direct them. Span of Control in management therefore means the maximum number of
people (to be more precise, subordinates or employees) that a manager can efficiently
direct, control and supervise. Although there is no consensus on the number of
subordinates a supervisor should have.Most management experts hold the opinion that
at the top level of management, it should not exceed 1:6 while at the lower level of
management, it should not go beyond 1:20. This implies that the senior at the top level
can have a maximum of 6 subordinates under his control and that at lower level the
manager can have 20. The span of control can be narrow or wide according to the
organization preference.
NOTES
Subordinate
Employee
Employee
Subordinate
Employee
Employee
Limitation of tall structure: A tall structure has its own limitation as there is a
Management Process
& Organisational
Behaviour : 55
NOTES
Subordinate
Employee
Employee
Employee
Subordinate
Employee
Subordinate
Employee
Subordinate
Subordinate
Subordinate
Employee
Management Process
& Organisational
Behaviour : 56
Limitation of flat structure: A flat structure has its own limitation. It tends to
be loose in establishing control and supervision, consequently reducing
efficiency.
NOTES
Management Process
& Organisational
Behaviour : 57
NOTES
No. of relationships
18
44
100
Criticism:
4.10 Authority
Management Process
& Organisational
Behaviour : 58
Types of Authority
Staff authority- staff personnel have the right to advise line personnel and
assist them in their main function. They cannot force obedience from the line
staff.
NOTES
Sources of authority
According to this theory all authority originates at the top and flow downwards in
the formal structure of the organization. The authority flows down through the process
of delegation. The ultimate authority in the company lies with the shareholders.
Shareholders delegate most of the authority to the Board of Directors. The Board
delegate the authority to Chief Executive Officer who in turn delegates it to departmental
heads and so on. Every manager has been delegated authority from his or her superior.
Acceptance theory
According to this theory formal authority exists only when subordinates are willing
to accept it. The basis of authority is the subordinates willingness to be directed.. In the
words of Barnard Formal authority is in effect, nominal authority. It becomes real only
when it is accepted.
Competence theory
According to this theory manager derives authority from his technical competence.
Subordinate obey managers and accept his authority because of his seniority, skill,
intelligence and social prestige in the organization. Subordinate seeks guidance from
the manager because of his expertise.
4.11 Power
Power is the ability to influence and is a broader concept than authority. It refers
to the ability and capacity of influencing the behaviour and attitude of others so that
they do those things that they would not do otherwise.
Sources of power
French and Raven identified five sources of power. They are as follows
Legitimate Power
It is also known as positional power that a person derives from his or her position
in the formal hierarchy of an individual. Job description gives the power to the manager
to assign duties and supervise the work of subordinates.
Expert Power
Individual derives expert power from possessing expertise, special skills, or
Management Process
& Organisational
Behaviour : 59
NOTES
knowledge. Due to his problem solving abilities he may be highly valued by the
organizational members. Dependency is the key to power. If other members are
dependent on the person to perform a critical task then the person becomes indispensable.
His decision and opinion are highly valued and he becomes powerful and influential.
Referent Power
Coercive Power
It is based on the fear of the negative outcome that the individual perceives if he
fails to obey the orders or decision of the person possessing coercive power. It is
derived from persons ability to threaten, punish, demote, dismiss etc.
Reward Power
Authority
Power
Nature
Flow
Presence
Authority is given to a
position. Can be shown in
organizational chart as
subordinate-superior relation.
Cannot be shown in
organizational chart.
4.
Level of
Higher the level of manager
Management higher is the authority he
possess.
taken by top management as they have several other crucial job to perform therefore
they may assign it among the subordinates so that they can perform their task. The
mechanism of distribution of work among the subordinates is called delegation of authority.
Delegation of authority implies allocation of authority among subordinate to do a task.
NOTES
Management Process
& Organisational
Behaviour : 61
NOTES
common problems of delegator. The superiors often tend to think that they
are more capable of handling things and the job. The approach that I can do
it better myself by superior acts as hindrance in the process of delegation.
For an autocratic manager, delegation is always viewed negatively as it tends
to reduce his power. There might be managers who are afraid that the
subordinate may outperform a given task reducing his value. This entire attitude
acts as an obstacle in delegation.
(2) Fear of competition: Many a times manager feels that if he delegates
power to his subordinates, the subordinate may perform the task better than
him. This fear of competition also acts as a barrier to delegation.
(3) Lack of confidence in subordinates: the lack of confidence can be either
on the capabilities of the subordinate or the fear of losing control. This in
turn acts as an obstacle in efficient delegation.
(4) Lack of ability to direct: Not every manager can identify the critical factors
of a plan. This problem in turns affects his capabilities to direct and
communicate the plan of action to his subordinates.
(5) Sceptical nature of the manager: most of the managers have conformist
and sceptical approach, which acts as a psychological barrier in delegation.
Managers evade delegation of power if he tends to feel every time that there
may be negative outcomes of every action even when every plan of action is
clearly defined.
(6) Tendency to control subordinates: managers are generally desirous to
dominate their subordinates working under them. They avoid delegation so
that they do not lose their control over their subordinates. They might also be
under impression that delegation reveals their managerial deficiencies.
Therefore to uphold their senior position and to dominate their subordinates,
they are reluctant to delegate.
On the Part of Subordinate
(1) Excessive dependence on the manager for decisions: most of the
subordinates tend to avoid responsibility even if superior is ready to delegate
authority. They do it so because they do not wish to face problem and take
decisions. If the subordinate lacks confidence even though he has been
delegated due power, he may have excessive dependence on the superior.
Management Process
& Organisational
Behaviour : 62
power if he believes that he will underperform because he will not get the
NOTES
4.14 Centralization
Centralization means the concentration of power, authority and decision making
in limited hands. All the significant decision and actions are taken by top management
and the lower management depend on the approval of top management. In the words
of Louis Allen, Centralization is the systematic and consistent reservation of authority
at central points in the organization. Key elements of centralization are:
1.
2.
Merits
Management Process
& Organisational
Behaviour : 63
NOTES
Demerits
Centralized power may be abused : the management at the top may use
the authority for individual benefits rather than organization good. This results
in abuse of power.
4.15 Decentralization
Decentralization advocates diffusion of power and control at various levels. It
aims at delegation of authority at all levels of management. In decentralization the top
management retains its authority for taking vital decisions and framing policies for the
entire organization and remaining authority is delegated to the middle and lower level of
management. According to Allen, Decentralization refers to the systematic effort to
delegate to the lowest level of authority except that which can be controlled and exercised
at central points. Often mixed with delegation, Decentralization and delegation are not
the same. Decentralization involves delegation and has wider scope and. In fact when
delegation is extended it becomes decentralization.
Management Process
& Organisational
Behaviour : 64
Merits
Demerits
NOTES
Centralization
Decentralization
Concentration of power
Scattered, authority
diffused at various levels.
Employee morale
Economies of scale
management, no
management
importance in performance
of the activities.
It provides advantage of
economies of scale.
economies of scale.
Management Process
& Organisational
Behaviour : 65
(1) Size and complexity of the organization : When the organization is large
and decisions to be taken are complex in nature it becomes difficult for top
management to handle everything. In such a situation decentralization is
desirable.
(2) Speed of decision making : Due to hierarchical structure in centralization
the decision making is very slow as most of the time is spent on seeking
approval. But if the situation or task calls for a quick decision making then
decentralization is preferred.
(3) Need for coordination : Where high degree of coordination is an essential
factor for attainment of objective centralization is appropriate in such cases.
(4) Effectiveness of the communications system : If the communication
system is adequate coordination becomes easier hence decentralization does
not pose problem. But in absence appropriate communication system
centralization should be advocated.
(5) Attitude of top management : When top management have full faith in
employees capability and believe in individual freedom and innovation; it is
very likely that the organization will have a decentralized structure.
(6) Degree of diversification : Decentralization provides flexibility, innovation
and creativity. When the company is involved in diverse business it is advisable
to have decentralised structure. Every product division will get full autonomy
to decide for innovation and creativity. It will also instil competition among
various product lines.
(7) Dispersal of operations : If the manufacturing operations and target
customers are scattered geographically it will become difficult to control
through centralization.
(8) Nature of functions and task : Line functions like production and marketing
are mostly decentralized while staff functions like finance, HR and Research
and development are usually centralized.
(9) Availability of competent Personnel : If the lower level managers are
skilful, mature and experienced to handle a division independently then
decentralization can prove to be effective.
(10) Clear and precise standing plans : Existence of clear cut objectives , well
formulated plans procedures and policies can guide subordinates to make
decision independently. Decentralization in such case does not pose any
problem.
4.18 Summary
Management Process
& Organisational
Behaviour : 66
to ensure that the organisation goals are achieved with efficiency. Coordination is a
deliberate effort as compared to cooperation which is voluntary. Coordinates promote
team work, efficiency and interdepartmental harmony. Coordination should start at
early stage and should be a continuous process. Effective communication, integration
of plans, appointment of special coordinator, sound leadership and direct personal contact
is essential for achieving effective coordination.
NOTES
Organising lay down the formal relationship among employees and resources to
achieve organisational goals. Steps in organising include identification of activities ,
grouping of activities , assignment of duties and delegation of authority. Span of control
refers to the number of subordinates that work under the supervisor. It can be narrow
or wide depending upon nature of work, type of technology, ability of managers and
subordinates, degree of decentralisation, clarity in planning and effective communication
technique. Authority is the right to make decisions and give instructions. The authority
can be line, staff or functional. Power is the ability to influence. The five sources of
power are expert power, referent power and reward power, coercive power and
legitimate power. Authority can be delegated, while delegating certain principles should
be kept in mind such as parity of authority and responsibility, unity of command, exception
principles etc. Problems of delegation are due to reluctance on the part of delegator
and subordinate. In centralisation, power remains concentrated at top level and in
decentralization authority is delegated to lower levels .The appropriate mix of
centralization and decentralization depends upon size and complexity of organization,
speed of decision making, degree of diversification , dispersal of operations attitude of
top management etc.
Authority: It is the right to make decisions and issue orders and determine the
use of resources to achieve goals.
Power: It refers to the ability and capacity of influencing the behavior and attitude
of others so that they do those things that they would not do otherwise.
Centralization: All the significant decision and actions are taken by top management
and even the lower management depend on the approval of top management.
Management Process
& Organisational
Behaviour : 67
Management Process
& Organisational
Behaviour : 68
UNIT 5
DEPARTMENTATION AND
STRUCTURAL FORMATS
Departmentation and
Structural Formats
NOTES
Structure
5.0 Introduction
5.1 Unit objective
5.2 Steps in Designing Organization Structure
5.3 Factors Effecting Organizational Design
5.4 Features of a Good Organization Structure
5.5 Departmentation
5.6 Basis of Departmentation
5.6.1 Departmentation by Function
5.6.2 Departmentation by Product
5.6.3 Departmentation by Territory
5.6.4 Departmentation by Customer
5.6.5 Departmentation by Process
5.7 Types of Organization Structure
5.7.1
Traditional Concept
5.7.2
Modern Concept
5.8 Summary
5.9 Key Terms
5.10 Questions and Exercises
5.11 Further Reading and References
5.0 Introduction
Organization structure draws a network of relationships among duties,
responsibilities, authority and lines of communication. It provides a framework for
hierarchical arrangement of jobs and position. It enables the organization in coordination
and carrying various activities by providing a blueprint for it. The outcome of designing
an organization is organization structure which results in determination of various job
profiles and hierarchical relationship between them. Organization structure formalizes
the behaviour of the organization. People with different personalities may join or leave
the organization but it does not significantly affect the ways things are done unless the
structure is changed or modified.
Management Process
& Organisational
Behaviour : 69
Departmentation and
Structural Formats
NOTES
Management Process
& Organisational
Behaviour : 70
Departmentation and
Structural Formats
NOTES
People : the organization structure should reflect the philosophy of the people
who are a part of the organization. What value system management wish to
inculcate should be taken in due consideration while designing organization
structure. Management having faith in theory X will have a mechanistic
structure while those having belief in theory Y will have organic structure.
Management Process
& Organisational
Behaviour : 71
Departmentation and
Structural Formats
NOTES
Management Process
& Organisational
Behaviour : 72
Unity of Direction : It states that those activities that are grouped together
for one common purpose should be managed by the one person. In other
words there should be one plan one head. This is true for organizational
objectives too. All the departments and functions should ultimately be managed
by one single person and that is Chief Executive Officer. It provides integration
and facilitates in achieving the overall objective of the firm.
whenever needs arise. The structure is designed not only for a time period
but for a distant future also. As such continuity must be maintained in the
organization structure over the period of time.
Departmentation and
Structural Formats
NOTES
5.5 Departmentation
The process of grouping of activities into various departments or groups is termed
as departmentation. In Departmentation process identification of activities and their
simplification is followed by grouping the task into small jobs, formation of work groups
. By combining jobs or homogeneous groups into small administrative units departments
are formed. According to Koontz and ODonnell , A department is a distinct area,
division or branch of an enterprise over which a manager has authority for the
performance of specified activities. In the words of Louis Allen, Departmentation is
a means of dividing the large and monolithic functional organisation into smaller flexible
administrative units. Departmentation provides several benefits to the organization
like:
Benefits of specialization.
Departmentation by Functions
Departmentation by Products
Departmentation by Territory
Departmentation by Customer
Departmentation by Process
Management Process
& Organisational
Behaviour : 73
Departmentation and
Structural Formats
NOTES
marketing sales etc, are referred as separate departments. The focus is on collectively
putting individuals on the basis of resources, skills and action. Each functional units
performs varied and different sets of duties and responsibilities. The simple logic in
grouping makes it most popular form of departmentation.
The functional unit can go for further subdivisions of activity like finance department
may divide its activity in accounts department, audit and control and so on. Various
coroporations like Modi Xeror, Bata India, Britania follow functional departmentation.
CEO/Managing
Director
Production
Personal
Finance
Sales
Marketing
Market
Research
After Sale
Service
2.
3.
4.
The sub division of various departments provide better training and experience
for the managers.
5.
Disadvantages
Management Process
& Organisational
Behaviour : 74
1.
2.
3.
4.
5.
Departmentation and
Structural Formats
NOTES
CEO/Managing
Director
Product Manager
(Soap)
Finance Manager
Production
Manager
Product Manager
(Detergent)
Personal
Manager
Product Manager
(Body Wash)
Product Manager
(Shaving Cream)
Purchase
Manager
It gives greater stress and attention to the individual product line which helps
in its growth and diversification.
2.
3.
4.
5.
6.
Disadvantages
1.
2.
3.
4.
It raises man power cost as more managers with general ability are required.
Management Process
& Organisational
Behaviour : 75
Departmentation and
Structural Formats
NOTES
Product Departmentation
3. It is economical
Branch I
North Zone
East Zone
Branch II
Branch III
West Zone
South Zone
Management Process
& Organisational
Behaviour : 76
1.
The division on the basis of region provides with regional expertise which
helps managers to undertake competition better.
2.
3.
Departmentation and
Structural Formats
5.
6.
NOTES
Disadvantages
1.
2.
3.
Manager for
Industrial good
Marketing
Finance
Manager
Wholesaling
Manager
Retailing
Personal
Production
2.
3.
Disadvantages
1.
2.
It is very uneconomical.
3.
Management Process
& Organisational
Behaviour : 77
Departmentation and
Structural Formats
NOTES
Steaming
Liquefaction
Fermentation
Distillation
2.
Advantages of specialisation.
3.
4.
Disadvantages
1.
2.
The primary task of the organization structure is to allocate task and delegate
authority and assign responsibilities to form various jobs and position. The distribution
of work and delegation of authority can be done in several ways giving rise to various
organization structures. The organization structure can be divided into Traditional or
Modern structure.
Line structure
Line Structure
Management Process
& Organisational
Behaviour : 78
This is the primitive type of organization structure. It follows top down flow of
authority often called as scalar or military type. The relationships are in the form of
unbroken vertical levels. The manager had direct authority over the subordinates and
the later are directly accountable to their seniors. In an ideal line type structure there is
no existence of service or support units. These organizations strictly adhere to the
principle of unity of command. In a line structure the manager has a wide span of
control. Line structure is generally used in small organization like small accounting
offices, industry with continuous process and law firms. CEO can effortlessly give
information and direction to subordinates and decisions can be made swiftly.
Departmentation and
Structural Formats
NOTES
CEO/ Managing
Director
Staff
Staff
Staff
Staff
Staff
Staff
Quick decision: manager has all the authority to take decision without
consulting other; this avoids unnecessary delay in decisions.
2.
Simple: the structure is simple, direct and easy to establish. It has ease in
operation also.
3.
4.
5.
6.
Economical: the span of control is large reducing man power cost, thus
making it economical.
Disadvantages
1.
Overloading: managers are too engaged with day to day work. They hardly
find time to devote for crucial decision of the firms. It also restricts creativity
and innovation.
2.
3.
Lack of participation and low morale: the subordinates do not play any
role in decision making; neither are they asked to participate. This makes
their job mundane and they lack motivation.
4.
Rigidity: too much discipline makes it inflexible and rigid for any changes.
Management Process
& Organisational
Behaviour : 79
Departmentation and
Structural Formats
NOTES
b.
President
Line Authority
Staff Authority
Legal Advisor
Vice President
Sales
Vice President
Production
Production
Supervisor
Production
Supervisor
Vice President
Finance
Department
Head
Department
Head
Management Process
& Organisational
Behaviour : 80
1.
Benefits to line of executives : The line executives gets the advise and
counselling from the staff thus can focus on several other critical issues.
2.
Specialist advice : At the time of need the line and staff organization provides
practical and specialist advice to the line executive. The planning and
investigation which is related to different matters can be done by the staff
specialist and line officers can concentrate on execution of plans.
3.
4.
Training : The specialist staff renders expert advice which provides training
to line officials. Further line executive can focus on decision making which
again provides grounds for learning and development.
Disadvantages
1.
Departmentation and
Structural Formats
i.
ii.
Impractical suggestion: most of the time staff fails to give sound suggestions.
They have acquired knowledge through learning which are most of the time
not very practical and lack realistic approach
iii.
Staff snatches the credit: whatever goes well the staff takes the credit. They
take all the praise and ignore the fact that it was proper execution which led
to the success.
iv.
Staffs suffer from superiority complex: line managers are not given due
concern while giving suggestions as staff believes their knowledge is above
the knowledge of line managers.
b.
Grievances of staff:
i.
No power makes them frustrated: the role of staff is advisory. All the ideas
they suggest, however good depend on the line executive for implementation.
This makes them feel frustrated as the worth of the idea depends on the
choice of line executive.
ii.
Services not properly utilised: until and unless the situation goes worst and
the advices of staff are the only resort, they are not consulted. They face
resentment because of the superior knowledge.
iii.
Ego problem: the line executives often do not seek advice because of the ego
problem. Sometimes they do not implement a plan because of the same reason.
iv
NOTES
Departmentation and
Structural Formats
Top Level
Management
NOTES
Project
Manager 1
Project
Manager 2
Project
Manager 3
Project
Manager 4
Functional
Area 1
Employee
Functional
Area 1
Employee
Functional
Area 1
Employee
Functional
Area 1
Employee
Functional
Area 2
Employee
Functional
Area 2
Employee
Functional
Area 1
Employee
Functional
Area 2
Employee
Functional
Area 3
Employee
Functional
Area 4
Employee
Functional
Area 2
Employee
Functional
Area 3
Employee
Very useful and beneficial for new and risky venture. It provides focused
approach and expert services.
Disadvantages
Greater risk as the project manager deals with different experts of different
field with different approach and interest.
The projects are not permanent. People feel lost and insecure when projects
are abandoned.
Matrix structure
Management Process
& Organisational
Behaviour : 82
Departmentation and
Structural Formats
own department.
The Functional Manager exerts authority downwards while the Project Managers
authority flow horizontal. Consequently, the authority flows downwards and across
making it Matrix Organisation.
Project/Function
NOTES
Project Manager A
Project Manager B
Project Manager C
Project Manager D
Project Manager E
Figure 5.9 : Matrix Structure
Advantages
1.
2.
3.
4.
5.
6.
7.
Disadvantages
1.
Excessive Work Load: the managers and team members apart from their
regular work have to attend various meetings and discussions. Besides every
team member has other functional responsibilities also which increase work
load.
2.
High Operational Cost: the paper work, meetings, report making are more
frequent in matrix structure which leads to high operational cost.
Management Process
& Organisational
Behaviour : 83
Departmentation and
Structural Formats
NOTES
3.
4.
Power Conflict: there maybe conflict of power between the project manager
and the functional manager. Both give preference to their own interest which
results in conflict.
5.
6.
7.
Network structure
These are often termed as virtual organizations. In this structure the main firm
outsources most of its functions to other organizations and coordinates their activities.
With the development of business environment, the market place has expanded and the
boundaries have been decreasing. It lays emphasis on decentralization of work and
gaining specialization and economies. These organizations do not have any boundaries
to perform their functions. Digital technology and specialized employees are the core
strength of this structure. However it lacks any formal hierarchy line. The
critical management functions are deciding on what to outsource and whom to outsource.
Distribution
Firm
(Korea)
Logisitc
Firm
(Japan)
Core
Company
(India)
Design
Company
(USA)
Technology
(China)
Management Process
& Organisational
Behaviour : 84
1.
Low operational cost: the outsourcing is done keeping in mind from where
task can be done at cheapest and best possible way. This reduces the
operational cost.
2.
No physical boundary: work can be done from any part of the world.
4.
Departmentation and
Structural Formats
NOTES
Disadvantages
1.
2.
3.
5.8 Summary
Organization structure describes the relationship between work and people and
among people indicating the flow of work, authority and responsibility. The designing of
organization structure involves; activities analysis, decision analysis and relational
analysis. Organizational structure can be mechanistic or organic depending upon goals,
strategy, technology, size, employees and external environment of the organization. A
good organization structure should have unity of direction and command, parity of
authority and responsibility, balance between centralization and decentralization, division
of work, flexibility etc. Organization is divided into small administrative units known as
departmentation. The departmentation can be done on the basis of certain key factors
like function, process, product, territory, customer etc. The traditional organization
structure were line and line and staff structure. The disadvantage of the line and staff
structure is that it gives rise to line and staff conflict. The three modern alternatives of
organization structure are project, matrix and network structure.
Management Process
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Departmentation and
Structural Formats
high integration among various departments that is achieved through task force
and team building.
Departmentation :It is the process of dividing the large enterprise into smaller
flexible administrative units over which a manager has authority for the
performance of specified activities.
NOTES
Network structure
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UNIT 6
Structure
NOTES
6.0 Introduction
6.1 Unit objectives
6.2 Concept of Directing
6.3 Significance of Directing
6.4 Principles of Directing
6.5 Concept of Controlling
6.6 Significance of Controlling
6.7 Limitation of Controlling
6.8 Controlling Process
6.9 Essentials of Effective Control
6.10 Techniques of Control
6.10.1 Supervision
6.10.2 Analysis and Interpretation of Financial Statements
6.10.3 Budgetary Control
6.10.4 Breakeven Analysis
6.10.5 Return on Investment
6.10.6 Management by Objectives
6.10.7 PERT /CPM Techniques
6.10.8 Management Information System
6.10.9 Management Audit
6.10.10 Human Resource Accounting
6.10.11 Responsibility Accounting
6.11 Human Resistance to Control
6.12 Overcoming Resistance to Control
6.13 Summary
6.14 Key Terms
6.15 Questions and Exercises
6.16 Further Reading and References
6.0 Introduction
Once planning is complete, organisation structure is designed and the organization
is manned through staffing the next steps that comes is directing. Directing is a human
relation function in which the manager instructs, guide, motivates, leads and supervises
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NOTES
the employee. In this process the plans are put to action. Once the employee starts
performing the next function of the management is to control. It aims to see that employee
is working according to the planned activities or not. The actual performance is appraised
and it is verified that everything occurs in conformity with the plan. If there are deviations
from the targets set, corrective actions are taken. The basic purpose of control is to
make sure that results are achieved according to plan.
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2.
3.
4.
5.
NOTES
2.
Harmony of objective : every individual joining the organization may have his
own personal goals or purpose which may differ from what the organization has.
It is the role of supervisor to align the goals of subordinates with that of the
organization. The superior must explain the need and importance of achieving
organizational goals to him so that he feels satisfied and understands the importance
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NOTES
4.
5.
6.
7.
8.
9.
Principle of follow up : directing is a never ending process. It does not end after
the superior issues orders and instructions. In fact the manager has to keep a
track on the activities of the subordinates such as their performance, the problems
they are confronting and so on. In the light of his observation he can make changes
in his orders.
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controlling process.
Henri Fayol is attributed with the credit of pioneering the definitions of control for
management science. . In the words of Henry Fayol, (this is often called as the first
definition of controlling), Management control can be defined as a systematic effort
by business management to compare performance to predetermined standards and
address deficiencies. It can also be defined as that function of the system that adjusts
NOTES
operations as needed to achieve the plan, or to maintain variations from system objectives
within allowable limits. In the words of Terry and Franklin Controlling is determining
what is being accomplished - that is, evaluating performance and, if necessary, applying
corrective measures so that performance takes place according to plans.
Characteristics of Controlling
Achievements of goals: with regular control, one can easily trace out what has
to be done and what is being done. If the actual work is not being done on set
standards, corrective measures can be taken which helps in the achievements of
goals.
2.
3.
4.
5.
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NOTES
move towards the common goal.Control acts as a middleman between the workers
and management to make available the necessary information and input to the
workers.
6.
7.
Brings order and discipline : control function keep a check on the mistakes of
the subordinate which usually happen due to laxity and negligence. Due to controlling
process subordinates are aware that they are being monitored and hence they
become cautious while performing their duties. They tend to correct mistakes
before they become serious.
External factors: an organization can control all internal factors, but there are
factors which are external to the organization such as government policy, tax
structure, input rates and so on. These factors cannot be controlled by the
organization.
2.
3.
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A. Setting of standards
Establishing the criterion for judging the actual result is termed as standards.
These standards are the benchmark against which the actual performances are
compared. The standard setting should be realistic. It should be clearly defined.
Standards can be qualitative or quantitative standards. Qualitative standards are nonmeasurable or intangible like managers decision making skill and human skills, attitude
of workers etc. Quantitative standards are measurable like time standard, cost standard,
income standard, output standard, quality standards, profit, etc. Controlling turns out to
be simple through establishment of these standards. The standards form the basis for
controlling.
NOTES
Quantitative Standards
Revenue standards : they set standards for value the organization derives
from its sales. They can take the following form
Qualitative Standards
There are certain intangible items that cannot be quantified such as goodwill,
employee morale etc. Though qualitative factors pose some difficulty in specifying the
standards as they cannot be easily measured; psychological tests, survey and sampling
techniques are sometimes used to specify limits or benchmark for them.
Important things to be considered while setting standards
(a) The standards should be precise and clear.
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NOTES
(b) The standards should be objective and practical. It should be within the reach
of the enterprise and not something hypothetical.
(c) The standards should essentially be flexible and should be able to adopt the
changes.
(d) The standards should have the main focus on attainment of goals and should
be revised periodically according to the need of the organization.
B. Measuring Performance
The subsequent major step in controlling is to measure and monitor the performance.
Finding out variation becomes simple by measuring the real performance. The levels of
performance may sometimes be easy to measure or sometimes difficult. Measurement
of tangible standards is easy as it can be expressed in units, cost, money terms, etc. The
performance can also be measured through mechanical devices. These mechanical
devices help in quality check. Other way is through personal observation of the manager.
Statistical reports can also be employed to measure performance. It include the use of
bar charts, graphs etc. Qualitative measurement becomes difficult when performance
of manager has to be measured. Performance of a manager cannot be measured in
quantities. It can be measured only by their level of motivation and attitude towards
work. This can be done by viewing reports of the organization; superior-subordinate
interaction can also be used for measurement of their attitude.
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a.
Positive deviation: when the performance is better than the standards the
deviations are termed as positive deviations.
b.
Negative deviation: when the actual result shows a variance from the standard
which is not favourable. For example the actual expenditure can be more
than estimated cost; the actual time taken is more than the standard time and
so on.
The deviation needs to be thoroughly evaluated before making any correction.
For e.g.
Whether the equipment and tools being used are of standard quality?
NOTES
b.
c.
Periodic revision and the impact of the dynamic environment in the revision
of standards.
Focus on objective: the control system should be such that the central aim
is always to achieve the objectives. It should strictly concentrate and should
be tailored in such a way that they lead to the achievements of organizational
goal.
2.
Simple: the control technique employed should be simple and easy to use. It
should refrain itself from any form of complexity so that all those using the
control system should comprehend it clearly and completely. Besides one
must set up standards that are understood by the employees. Simplicity is the
essence of success.
3.
4.
Flexible: the control system should not be very rigid. It should be flexible
and should adopt changes in programs, policies, plans, environments, etc. A
system which cannot cope with changes is bound to fail. Hence a flexible
control system is must.
5.
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be more than the cost involved in it. In other words the cost incurred should
always be less than the benefits derived from the use of controlling techniques.
6.
7.
8.
9.
NOTES
10. Acceptable: the control system should be such that the subordinates
understand the need and appropriateness of the system. The controls should
be accepted by the people on whom the controls are applied.
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Every business organizations prepare final accounts. Profit and loss account gives
details of the income and expenses for a specified period and Balance Sheet shows the
financial position of the organization on a specified date. Financial data can act as a tool
to control the organization. Various analysis tools like common size statement, comparative
statement help in comparison of the current year with the previous years figures.
These figures can also be compared with the industry benchmarks and similar firms.
Ratio analysis is used to analyse the financial statements. Absolute figures are
unfit for comparison. Ratios express the relationship of one business variable with
other business variable in form of mathematical expression. The ratios can be divided
into four categories, they are
Liquidity Ratios: It aims to identify that whether the firm has enough working
capital to run day to day operations. Liquidity ratios are the indicators of
firms ability to pay short term obligation when they become due. Some of
the important ratios in this category are current ratio, quick ratio and super
quick ratio.
Turnover ratios: it indicates the efficiency with which the assets of the
firm are utilised for e.g. fixed asset turnover ratio, inventory turnover ratio
etc.
NOTES
The disadvantage of this technique is that ratios can be used for window
dressing. If the account statements are misleading ratios too can be misleading.
3. Budgetary Control
Budgetary control is often referred as traditional control technique. A budget is an
estimation done for the purpose of planning and controlling. According J.A. Scott It is
the system of management control and accounting in which all operations are forecasted
and so far as possible planned ahead , and the actual results are compared with the
forecasted and planned ones. Budgetary control is a technique of establishing control
with the help of budgets. In fact budgets are most important constituents of financial
control .Budget is a statement of planned events expressed in quantitative and monetary
terms. Budgetary control can be done for every facet of a business ranging from income,
production, and so on. The various budgets are cash budget, sales budget production
budget, purchase budget, master budget etc. A budget committee is established for
budgetary control. Budgetary control has several advantages likes:
a.
b.
c.
d.
It provides useful data that can be employed for filling tenders and quotation.
e.
f.
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NOTES
significance.
b.
It restricts creativity and innovation and people are directed to work according
to the budgeted guidelines.
c.
d.
The management should understand that the technique is tool used for effective
management, a means to an end, not an end in itself.
4. Break-even Analysis
BEP (break-even point) is a state at which the cost is equivalent to sales (the
state of no profit and no loss). The Break-even analysis is used as a control device. It
helps to find out the companys performance and the minimum level of sales the company
needs to attain in order to avoid loss. If the sales are less than the minimum level the
company may not be able to recover cost. Subsequently the company can employ
collaborative steps to progress its performance in the given line.
BEP = Fixed Cost/Sale price per unit-Variable cost per unit
Advantages
(a) Helps in identifying minimum requirement of sales at which cost can be
recovered. Helps in analyzing the cost behavior with sales and its effect on
profit, thus profit can be estimated at various levels.
(b) The breaking up of cost component into fixed and variable cost helps
management to control cost.
Disadvantages
(a) Classification of cost is not possible every time.
(b) It assumes that cost and revenue function have a linear relationship which
may not hold true every time. The economies of scale may result in
disproportionate varying of cost.
(c) It assumes that technology, factor prices and product mix are fixed where as
in reality this may not hold true.
5. Return on Investment
This is also a financial tool. Investment consists of net working capital and fixed
asset employed in the business. The income or the profit generated is the premium that
the entrepreneur gets for his risk taking. Higher the ROI better is the performance of
the business and vice versa. The comparison of current year ROI with that of previous
years performance helps to know the progress of the business. It also facilitates interfirm comparisons. The area needing rectification can also be traced.
Advantages
(a) It focuses on most important aspect of business and that is profit.
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(b) The departmental ROI can be established which help in better control and
facilitates decentralization.
(c) It focuses on the efficiency in use of capital.
Disadvantages
NOTES
MBO is a planning and controlling device and it can only be effective if it has
following features:
(a) The goals are fixed with the joint effort of the subordinates and supervisor.
(b) The performance of employee is periodically evaluated and regular feedback
for improvement is provided to the employee.
(c) Once the task is accomplished, due reward is given to the employee.
The success of this measure depends on the coordinated efforts of superior and
subordinates. Elements of biasness, lack of trust between superior-subordinate
relationships can significantly affect the working of the technique.
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NOTES
about the entire working of the organization which includes both internal and external
working. Information is gathered so that problems could be identified and solution could
be provided. The task of collecting data and processing is done by MIS. It can be done
manually or computerized. The managers can delegate subordinates with the help of
MIS without losing control.
9. Management Audit
It is a process of evaluating performance of entire management. It reviews and
examines the entire management process and every function of management i.e planning,
organizing etc. Audit is done to find out the efficiency of the management. Therefore,
the companys plans, objectives, policies, procedures, and all related aspect forming a
part of management are examined very vigilantly. This is generally done by a team of
experts. Data from different sources is collected and is analyzed. The findings detail
about managerial performance and efficiency.
Advantages
(a) It is an independent process, which means it has a very less element of
biasness or favouritism. It reflects true picture of business organization.
(b) Auditors usually are well qualified professional, there advises and suggestions
can benefit the overall organization.
Disadvantages
(a) It requires well qualified professional which are not easily available.
(b) There is absence of well defined set of principle or procedures for auditing
which make audit challenging and difficult.
Disadvantages
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Behaviour : 100
NOTES
Investment centre-it is use to check the ROI and proper utilization of invested
capital.
Advantages
(a) It provide managers with due autonomy of their responsibility centres which
helps in attainment of goal promptly.
(b) Every responsibility centres have a realistic target to be achieved which
helps the employees to perform as per the expectations.
(c) Detection of error becomes easy.
(d) It promotes participation of different levels of management thereby resulting
in effective decision making.
Disadvantages
(a) Forming responsibility centres in todays modern business organization with
a clear cut role is a difficult exercise.
(b) In practical managers do not get the required autonomy in decision making.
(c) It should be understood that responsibility accounting is a tool and not a
substitute for effective management.
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Behaviour : 101
NOTES
(2) Unrealistic Standards : Sometimes the standards set are too high that it
becomes difficult for employees to achieve them. Employees lose faith in the
control system.
(3) Over control : Control over too many things concerning employee may
lead to frustration. Too much emphasis on standardization of behavior such
as dress code, parking rules, coffee breaks can be unacceptable to the
employee.
(4) Exposes their limitations : Controls monitor the progress of employees
performance and identify the deviations from the standards set for them.
Such deviations may reveal lack of skill and ability of the employee in
performing the task. Employees avoid controls as they expose their weakness.
(5) Uncontrollable variables : Sometimes the standards are not met due to
the factors that are not in control of the employee or the variables for which
he is held responsible are not under his control. In such a situation employees
feel that the controls are not justified.
(6) Penalizing : Some control focus on fault finding rather than evaluating
their efforts. Employees resist such kind of approach in implementation of
controls.
6.13 Summary
The directing function includes leadership, supervision, motivation and
communication. Directing initiates action motivates people and facilitates coordination.
In order to make directing effective there should be unity of command, harmony of
objectives, effective leadership, appropriate motivation techniques and direct supervision
wherever possible. Control is a crucial, continuous and forward looking process. It
focuses on the achievement of planned goals of the organization. It helps in coordination
and put psychological pressure on employees to work hard and brings order and discipline.
Control is a process of establishing standards and measuring the actual performance.
The standards can be quantitative or qualitative. The quantitative standards are
measurable and include time standard, cost standard, productivity standard and revenue
standard. Then the actual performance is compared to standards in order to identify
deviations. If the deviations are unfavorable corrective actions are taken. Controlling is
expensive and time consuming. The techniques of controlling are supervision, analysis
and interpretation of financial statements, budgetary control, breakeven analysis, return
on investment, management by objectives, PERT /CPM, management information
system, management audit, human resource accounting, responsibility accounting. In
order to make control effective they should be made simple, flexible, and objective. The
main focus of controls should be on achievement of organizational objectives. They
should be forward looking and acceptable to the employees. The standards should be
reasonably set. Resistance to control can be overcome through participation and positive
reinforcement.
NOTES
Standards: They are the benchmark against which the actual performances are
compared.
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NOTES
Management Audit
(3) Define the term direction. What are the chief elements of directing?
Long Answer type questions
(1) Explain the process of control.
(2) What are the essentials features of a sound control system? How can
employees resistance towards control be reduced?
(3) Explain the importance and principles of direction.
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Behaviour : 104
Individual Behavior
UNIT 7
INDIVIDUAL BEHAVIOR
Structure
7.0 Introduction
NOTES
7.0 Introduction
Every individual is different from others. They respond to different situation in
different manner. People possess certain unique characteristics that influence their
attitude, behavioral reaction to organizational settings. The study of individual behavior
includes knowing about personality traits, attitude, perception and emotional intelligence
of a person that greatly influence his or her decision making skills, interpersonal relations
and job satisfaction. Knowledge of individual behavior will help in developing appropriate
selection process and proper placement of individuals at work place. It will help in
predicting and controlling human behavior so that goals of organization can be achieved.
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Behaviour : 105
Individual Behavior
NOTES
7.2 Perception
Perception is the individuals own or personal view of the world. It is the intellectual
process by which the individual give meaning to their environment. The raw data that
they receive from the environment are organized and interpreted in order to understand
the environment. Two people may understand the same situation differently. . e.g. one
may interpret the glass having fifty percent water in it as half filled while the other may
interpret it as half empty.
According to S.P. Robbins: Process by which individuals organize and
interpret their sensory impressions in order to give meaning to their environment.
(1) Perceiver
The personal characteristics of the perceiver play a very important role in his
perception about the reality. The relevant personal characteristics influencing perception
are motives, attitude, past experience and expectations.
A theist may find daily morning ritual of offering prayer as a best way to start the
day, while an atheist may consider it a waste of time. This is because their attitude
towards God is different. Researches have found that motives are also instrumental in
shaping perception. We see what we want to see. Let us see the following picture
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Behaviour : 106
In the above figure one can see an old woman or a young woman depending upon
his or her interpretation. Young people have a tendency to see young woman while
older people perceive it as a picture of elderly woman. One can switch from one to
another with little effort. If we perceive the image as the picture of young woman we
can see the old woman by focusing on the picture with a different angle. While doing so
the young woman chin becomes the old womans nose.
Individual Behavior
NOTES
A research that aimed to study the effect of different intensities of hunger drive
on perception demonstrated that hunger influenced the perceptions of the subjects
dramatically. The subjects who had not eaten for 16 hours were shown blurred images.
These respondents perceived the blurred image as pictures of food more frequently
than those subjects who were not hungry. Role expectation can also influence the
perception. We may expect a doctor to be sympathetic, a policeman to be authoritative,
a minister to be power hungry and we may perceive them this way irrespective of their
actual traits. Our experience with events will also influence our perception. If our past
experience about things, events or person was bad we will perceive them negatively
and may continue to hold this perception for long for e.g.: if an individual tried a new
dish that he disliked in a restaurant, there is likelihood he may not try it again in another
restaurant. While the reality may be that cook of the previous restaurant was not having
an expertise in cooking such dish.
(2) Target
Characteristics of the target that is being observed also influence the perception.
Objects that are new or moving or having large size are perceived more than compared
to those that are old, small and not moving. Objects that are in physical proximity tend
to be perceived together, background also play an important role.
Let us see the following figure. At the first look we may perceive it as a vase, if
we see black portion as background. But if we see white as background then the
picture will reveal two people face to face.
Fig. 7.2
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Individual Behavior
NOTES
(3) Situation
The time at which the object is seen as well as the work and social settings
influence our perception. If we see a worker in the factory working late evening we
may perceive him to be hardworking. A student who is wearing casual dress in school
will catch more attention of the teacher.
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(3) Contrast effect: this distortion particularly happens during the selection
process. We do not evaluate individuals in isolation but in comparison to
others. If we encounter people possessing brilliant qualities just before
evaluating the person in question, then there is likelihood that this person may
be rated poorly and if the same person is evaluated after encountering people
possessing poor qualities, then we may rate the person fairly better. This is
called contrast effect.
(4) Projection: An individual may perceive others assuming that the others are
very much like him for e.g. if the individual is honest and truthful he may
perceive that others are also honest and truthful. Projection is the perception
made by individual about others as he tends to see people as more homogenous
than they really are.
Individual Behavior
NOTES
7.3 Personality
It is a set of unique psychological and behavioral attributes in a person that are
consistent overtime. It is the sum total of ways in which the individual behave, responds
and interacts with others.
According to Gordon Allport: ``The dynamic organization within the individual of
those psychophysical systems that determine his unique adjustments to his environment.
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Behaviour : 109
Individual Behavior
NOTES
Primary Factor
Reserved
Warmth
Outgoing
Less intelligent,
Reasoning
More intelligent,
Affected by feelings,
Emotional Stability
Emotionally stable
Submissive
Dominance
Dominant
Serious
Liveliness
Lively
Disregards rules,
Rule-Consciousness
Conscientious
Timid
Social Boldness
Venturesome
Tough minded
Sensitivity
Sensitive
Trusting
Vigilance
Suspicious
Practical
Abstractedness
Imaginative
Forthright
Privateness
Nondisclosing
Self-Assured
Apprehension
Fearful
Conservative,
Openness to Change
Experimental
Group-oriented,
Self-Reliance
Independent
Perfectionism
Relaxed
Tension
Tense
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and achievement oriented. They are hardworking and well organized. They have a
drive and sense of direction. While the person low on conscientiousness can easily get
distracted, is unorganized and irresponsible.
(4) Openness to experience: the tendency to be imaginative, intellectually
curious and artistic. The people high on openness to experience are creative and are
more likely to hold unconventional beliefs. They have broad range of interest and
appreciate variety of experience. The people low on openness are more conventional
and conservative. They prefer familiarity over novelty and resist change.
Individual Behavior
NOTES
Machiavellianism
It is tendency of the person to be selfish, deceptive and manipulative. The person
high on mach does manipulate others for personal gain. The high machs demonstrate
pragmatism are more dettached emotionally and believe that ends justify means. They
can inflict greater harm to people directly or indirectly to achieve their own goal. Low
machs tend to be truthful, honest and empathetic. They are trusting and agreeable.
High machs do well in jobs that require bargaining skills. High machs flourish when
there is face to face interaction, minimum rules and regulations and less emotional
involvement.
Self Monitoring
Self monitoring is an ability of an individual to monitor ones own behavior to fit
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Behaviour : 111
Individual Behavior
NOTES
different situations. Person high on self monitoring change their behavior to suit the
situation. They closely monitor themselves in order to ensure appropriate public image
of themselves. They are highly sensitive to social cues and can easily blend into social
situations. They may not be true to themselves while modifying their behavior and
hence there can be striking contradiction between their public images and their private
self. While persons who are low self monitors are less likely to change their behavior
from one situation to another. They tend to display their true disposition and attitude an
hence they have a greater consistency between their attitude and behavior. High self
monitors are more successful in managerial position as they are required to play multiple
roles which are sometimes contradictory in nature.
1.
Type A people are excessively competitive and want to achieve more and
more in less and less of time. They feel threatened and challenged by the
success of others.
2.
They are always in a hurry, they are always moving, walking and eating
rapidly.
3.
4.
They feel guilty when they get time to relax as they are not able to cope with
leisure time.
5.
They keep on trying to do faster and feel impatient with the rate at which
most event take place.
6.
They want to acquire money and personal possessions and measure their
success in terms of how much of everything they have.
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1.
2.
3.
They are wise and not hasty. They are concerned with quality rather than
quantity.
4.
They do not exhibit unnecessary competition and play for fun and recreation.
5.
6.
Dont feel the need to discuss their achievement unless situation demands.
Types A are productive workers but they are not creative. Type A people can
become excellent salesperson. Inspite of the hardwork of type A, senior executives are
usually type B. Type B are the ones who make it to the top. The reason is that they are
creative as they are able to allocate time to develop unique solution to problem. They
are tactful unlike type A who are hostile.
Self Esteem
It is the individuals degree to which they like or dislike themselves. People high
on self esteem have confidence in their ability to achieve goal. They are not vulnerable
to external influence. They are more likely to take unconventional jobs than people
having low self esteem. They are open minded, outgoing, responsible and optimistic.
They have the ability to inspire others.
Individual Behavior
NOTES
The people with low self esteem are pessimistic, close minded, introvert. They do
not come forward to take responsibility. People who are high on self esteems are more
satisfied with their job than the people who are low on self esteem.
7.4 Attitude
It is the belief and feeling, the individual have about object, people or events,
which can be favorable or unfavorable. These beliefs and feelings determine how
employee will perceive and intend to behave towards the object or a situation. The
attitude has three components: cognitive, affective and behavioral. If I say that one
should not use abusive language it is a value statement and such opinion is cognitive
component of attitude. If I say that I dislike Mr. shyam because he uses abusive
language, then it is affective component of the attitude. It represents my feeling
towards attitude object. Cognitive and effective component influences the behavior of
the individual towards the attitude object. If they are negative then the behavior towards
the attitude object will also be negative. If I start avoiding interaction with shyam then
it is behavioral component of the attitude.
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Individual Behavior
NOTES
(2) Reasoning with emotions: The next step involves cognitive activity such
as thinking and problem solving.
1. When do individuals
undergo dissonance
and how do they try to
resolve it?
(3) Understanding emotions: If someone is expressing some emotion the observer should interpret the cause of emotions. The individual should be able
to comprehend emotion and understand complicated relations between them.
(4) Managing emotions: The ability to manage emotions include monitoring
emotions, regulating them and then responding appropriately. It also includes
the ability to manage emotions of others.
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Individual Behavior
(2) Self regulation : The ability to control impulsive behavior, handling distressing emotions in an effective way
(3) Social skill : The ability to network and manage relationship, to move people
in a particular direction.
NOTES
(4) Empathy : The ability to know what someone else is feeling and considering
other persons feeling when making a decision.
(5) Motivation : The ability to pursue goal persistently for non monetary gains(
intrinsic rewards) than just for money or status only.
Goleman emphasized that emotional competencies can be learnt .They must be
worked on and developed to achieve outstanding performance.
Our emotional intelligence determines our success in work, relationship and physical
well being. A person with high emotional quotient can understand other peoples needs
and feelings in a better way. Such understanding helps him satisfy those needs. People
with high EQ experience more positive social and interpersonal interaction. They are in
better position to avoid conflict and fight.
A person with high EQ will find it easier to satisfy other persons need and make
them feel good. It helps him to handle all kind of people. A person with high EQ can
motivate, instill enthusiasm and courage in others leading to better performance. He
can become an effective leader.
7.6 Summary
Individuals characteristics like personality, perception, attitude and emotional
intelligence greatly influence his or her work place behavior. Personality traits are
enduring characteristics of the individual. The researchers have identified sixteen primary
personality traits. Big five model has proposed five dimensions for assessing individuals
personality. They are agreeableness, extraversion, openness to experience,
conscientiousness and neurotism. Personality traits relevant to workplace are locus of
control, self monitoring, machiavellianism, type A and type B personality. Perception is
dependent on the characteristics of the perceiver, target and the situation. Manager
should try to avoid distortion in perception like hallo effect, stereotyping, projection etc.
Job attitude like Job satisfaction, Organizational commitment and Job involvement are
relevant to organizational effectiveness. Emotional intelligence is the individuals ability
to understand, monitor and manage ones own emotions and emotions of others. Person
having high emotional intelligence have better interpersonal relationships and can prove
to be a effective leader.
Attribution theory: It is concerned with how individuals interpret events and try
to determine the cause of peoples behaviour.
Management Process
& Organisational
Behaviour : 115
Individual Behavior
Attitude: It is the belief and feeling, the individual have about object, people or
events, which can be favourable or unfavourable
Emotional Intelligence: The ability to examine emotions of self and others and
then responding appropriately and wisely in order to manage human relations.
NOTES
Motivation
UNIT 8
MOTIVATION
Structure
8.0 Introduction
NOTES
8.0 Introduction
Organizations need motivated people in workplace. No matter how skilled the
workers are, the goal of the organization will not be achieved if the employee is not
willing and motivated to do their job. Motivated employees help the organization to
survive and grow. Managers expect people in the organization to put their best efforts
in work. Motivation helps achieve this target. Motivation acts as a driving force that
forces the individual to exert high level of efforts. Of all the duties of manager motivating
employees is more complex and challenging. Unsatisfied need inspires the individual to
exert effort in a direction that would satisfy his need The manager should understand
what motivates the employees, what prompts them to initiate a particular action and
why they persist in their action over time. Appropriate incentive scheme, effective
interpersonal communication, smooth relationship with coworkers, status , quality of
supervision, good working conditions, job security and job designs are some of the
variables that will help the manager to develop an environment that motivates people.
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& Organisational
Behaviour : 117
Motivation
NOTES
Management Process
& Organisational
Behaviour : 118
Motivation can be divided into two categories: negative and positive motivation.
Negative motivation takes place when an individual feels a fear of failure or other
negative consequences. The individual expects being punished if some performance or
behavior standards are not met by him. The punishments at workplace can be fear of
being criticized, fired or demoted. The individual works hard in order to escape punishment.
Positive motivation is said to occur when an employee expects a certain reward
when some performance or behavior standards are met. The rewards can be both
financial and non financial in nature. It can include a pay raise or praise and recognition
for the work done.
Motivation
NOTES
It is advisable that both the forms of motivation should be used by the manager to
get desired result. However overuse of negative motivation in long run can have
unfavorable side effects on the mental and emotional health of employee as well as on
the relationship between the employee and manager.
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Motivation
Self
Actual
isation
Esteem
Needs
Self-esteem
status
NOTES
Social Needs
Sense of belonging
Love
Safety Needs
Security
Protection
Physiological Needs
Hunger
Thirst
(5) Self actualization: It is the drive to become what one is capable of becoming.
It includes the need for growth, believing in ones potential and self fulfillment. Since
this need is at the peak of the pyramid the individuals other needs are reasonably
satisfied. They feel contented and more in command of their lives. They have a realistic
perception of self, other people and environment around them. They desire for continual
growth and creativity so that they can achieve what they are capable of achieving
Motivation
NOTES
1.
2.
In order to satisfy safety needs the manger should provide the employees
safe and hygienic work environment, job security, freedom to join unions,
retirement benefits etc.
3.
4.
In order to satisfy esteem need, the manager should recognize and encourage
high performers. The manager should appreciate and reward employees on
achieving over and above their targets. Manager should give employees
challenging jobs and should allow them to participate in decision making
process. The manager can elevate the status of deserving employees by
promoting them or by giving them special privileges that enhance their status
for e.g. a company car.
5.
Though Maslows hierarchy is fairly rigid in its linear nature of progression i.e
from bottom to top of pyramid, but Maslow noted that the needs may not follow in the
same sequence always, for eg some people give more importance to their career than
family and friends. Their need for self esteem is more important than social need. The
limitation of Maslow motivation of hierarchy of need theory is that it lacks empirical
evidence.
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Behaviour : 121
Motivation
NOTES
Growth
Intrinsic Esteem
Needs
Frustration->Regression
Self
Actualization
Relatedness
Social Needs
Safety Needs
Existence
Physiological Needs
Management Process
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Behaviour : 122
1.
Employee dislikes work and will attempt to avoid it whenever they get the
chance.
2.
3.
4.
Employee need security above all needs. Maslows Lower level needs
dominate employees.
Managers who believe in X theory will be production centric. They will exhibit
autocratic and directive behavior towards their employees. They will try to control their
employees by way of coercion, threats and punishment. Manager feels that since security
is their primary need they can be easily motivated by economic gains.
Motivation
NOTES
According to theory Y
1.
2.
Employee will exercise self control and self direction in service of the
organization goal to which they are committed. Employee can pursue goal
without supervision.
3.
Employee will not shirk responsibility. They will be ready to accept and even
seek responsibility.
4.
Manager holding this view tend to be democratic in their leadership style. They
are supportive and employee centric. Theory Y assumes that most of the individuals are
dominated by higher order needs. Hence human beings can be motivated through
appropriate reward system, participative decision making and autonomy. They try to
make the job more enriching and satisfying to the employee by redesigning them.
The form of organization structure reflects managements attitude towards human
beings. The managers who believe in X theory will form an organization structure that
will be more centralized with highly specialized job. The communication will be mostly
from top to bottom. The managers who believes in Y theory will emphasis on decentralized
organization structure and challenging jobs that provide growth opportunities to the
subordinates. The direction of communication will be two ways i.e from top to bottom
and from bottom to top.
2.
Needs that leads to satisfaction are known as motivators. These are those
Management Process
& Organisational
Behaviour : 123
Motivation
NOTES
job factors that drive the employees for superior performance. They act as
satisfiers. Motivational factors include recognition, sense of achievement,
growth responsibility, advance etc.
Employees
dissatisfied and
demotivated
Employees not
dissatisfied but not
motivated
Hygiene factors
Employee satisfied
and motivated
Motivators
Status
Recognition
Responsibility
Challenging Job
Personal
achievement
Personal Growth
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Behaviour : 124
(1) Need for achievement: The individual who has high need for achievement
desires to excel and to succeed . Such individuals set challenging and realistic
goal for themselves and accept personal responsibility. They have a strong
desire to obtain feedback on their performance and progress. They have a
desire to do things better and more efficiently than others.
(2)
Need for power: The need for power reflects the desire to control the
behavior of others. The individual high on need for power wants to be
influential, exercise authority over others in order to make an impact . They
prefer to be placed in status oriented situation.
(3) Need for affiliation: It is the desire to have satisfying interpersonal relationship
with others.They desire relationship based on co-operation and mutual
understanding. They tend to adhere to group norms because of their strong
Motivation
NOTES
Managers can make use of TAT in order to identify which need is prominent in
the individual. He will then understand how the individual can be motivated and for
which job the person will be well suited. The individuals who are high on power and low
on affiliation generally perform better as managers than those who are high on affiliation.
Individuals having high affiliation need, want to be in the good books of all. Since they
want to be liked by others, their decisions lack objectivity. They are good team players.
High achievers should be given challenging but attainable goals. They should be provided
feedback at regular interval. High achievers do best in entrepreneurial activities such
as managing their own business or self contained unit in large organization. The implication
of McClellands theory of needs to managers is that the manager should understand
which need is dominating the employees behavior and should try to structure their jobs
accordingly so that job satisfy them.
Performance
Reward
The employee
believes that effort
will result in
acceptable
perofrmance
The employee
believes that
acceptable
perofrmance will
produce the
desired reward
The employee
values the reward
Management Process
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Behaviour : 125
Motivation
NOTES
reward attractive.
The theory explains that even after having sound incentive systems employees
are not motivated. The reason is that the existing incentive system may not be satisfying
their personal needs. The implication of V room expectancy theory to managers is that
they should understand the individuals needs of the employees. It is emphasized that
reward should be tailored to individuals need. It is also true that managers have limited
ways of rewarding the employees so it becomes all the more difficult to motivate
employees by personalizing the reward.
Perception Equity
Person
Ratio Comparison
Referent
Output
Input
Management Process
& Organisational
Behaviour : 126
Output
Input
Under rewarded
Equity
Output
Input
<
Output
Input
Over rewarded
Equity
Output
Input
>
Output
Input
O
I
Individuals attempt to lower inequity in various ways. They may change their
input, the under rewarded employee is likely to work less hard or he may change the
output for e.g. if the person is compensated by piece rate system, he may produce more
low quality output. Inequalities created by over payment dont seem to have a very
significant effect on behavior.
Motivation
NOTES
Manager may think that if he gives pay raise to one employee he will get motivated.
But such a pay raise may de motivate others if they perceive it unfair. In most work
situations for managers equity theory emphasizes the importance of a reward system
that employees perceive as fair. The manager should set up incentive system in such a
way that it does not create any inequities,
Goals
Clear
Challenging
Attainable
Goal Commitment
Motivation
Regular Feedback
Goal Accomplishment
Self efficacy
Management Process
& Organisational
Behaviour : 127
Motivation
8.5 Summary
NOTES
Management Process
& Organisational
Behaviour : 128
Intrinsic motivation: The individual derives pleasure and enjoyment from the
work due to his interest in task itself rather than being influenced by external
factors.
Social need: It includes the need for affection, love, care and friendship.
Self actualization need: It includes the need for growth, believing in ones potential
and self fulfilment.
Hygiene factors They are those job factors that prevent employees from
becoming dissatisfied like supervision, salary working conditions, company policy
and administration etc.
Motivation
NOTES
UNIT 9
NOTES
Structure
9.0 Introduction
9.1 Unit objectives
9.2 Group Defined
9.3 Formal Group
9.4 Informal Group
9.5 Stages in Group Development
9.6 Group Properties
9.6.1
Group Norms
9.6.2
Roles
9.6.3
Status
9.6.4
Group size
9.6.5
Group Cohesiveness
9.0 Introduction
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Behaviour : 130
Groups form the basic building blocks of the organization hence it becomes imperative
for the manager to understand group behavior and group properties. Most of the decisions
about the organizations are taken in meetings. Meetings are actually a platform for
interaction of group members. The individual decision making is different from group
decision making. Most of the important decisions taken by the organization are taken
by group.
NOTES
Management Process
& Organisational
Behaviour : 131
NOTES
organizational forces.
(1) Authority and structure : The authority structure determines the right to
take decision of the individual in the work group. It defines who among the
work group will take decision and who will report whom.
(2) Formal regulations : The workgroup has to abide by the rules and regulations
laid down by the organization to standardize the behaviour of employees.
These regulation lead to consistent and predictable behaviour of employees.
(3) Organizational Resources : Some organization that are profitable have
abundance of resources in terms of fund, equipment, facilities etc. while
other organization may not be that fortunate. The abundance and lack of
resources influence group behaviour.
(4) Performance evaluation and reward system : Whether the system reward
individual performance or group performance? Such decisions greatly
influence the group behaviour.
(5) Physical work settings : The work settings and physical layout like
arrangement of machines, proximity, illumination, acoustic system, can create
obstacles or opportunities for work group interaction.
(6) Organization strategy : The type of strategy the organization is pursuing
for e.g. expansion or retrenchment, greatly influence the amount of resources
that are made available to the groups, work environment, emotional well
being etc. During retrenchment the group experience shrinkage in resources
and the employees will be under stress and anxiety.
(7) Organization culture : Every organization has a culture which is a unique
set of relatively stable characteristics. Organization culture is a set of shared
values, understanding, assumptions that controls the behavior of organizational
members.
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Behaviour : 132
(1) Sense of Belonging : A formal group has a rigid structure having formal
authority and predetermined duties where the employee does not feel the
sense of belongingness and does not derive personal satisfaction. This gap is
filled by joining an informal group. People join group because of their need
for affiliation and security. Group provides warmth and support to its group
members. Group also provides people with the feeling of self worth.
(2)
NOTES
(3) Aid on the Job : The informal group members share a close relation. They
may help each other in case accident or illness. Often, the group members
exchange work assignments on the basis of specialization of group members
rendering better performance which at times is more than what is expected
from them.
(4) Power : People feel strong and powerful when they join group as there is
power in number. A goal that cannot be achieved by an individual alone
becomes possible through group actions. They are able to pool knowledge,
power, and talents in order to achieve their goal.
Advantage to the management
(1) Less supervision : Informal group has its own policies and favorable group
norms for organization that act as a check on the behavior of the employees.
It substantially reduces the supervision load of the management.
(2) An aid to management : The informal group helps in bridging the short
coming in a managers abilities. The group members may help the manager
without making others to know about his weaknesses.
(3) Feedback : The informal group provides the manager much valued feedback
about employees and experiences which helps them better understanding of
their expectation from the management. It also helps in developing employees
trust in management.
Disadvantages
(1) Resistance to change: An informal organization is bound by customs,
conventions and culture. They are so much habituated that they resist change.
(2) Sub-objectives: The group gives more preference to group objectives than
to organizations objective.
(3) Rumour: An informal group often create information which does not have
any strong base. They create rumour. This type of grapevine can be
unfavourable for management.
(4) Displaced loyalty: Workers are more influenced by the informal group and
become more loyal to them than to the organization.
Management Process
& Organisational
Behaviour : 133
NOTES
Management Process
& Organisational
Behaviour : 134
Performance norms : These norms set standards for the level of the output,
method of doing job, quality of efforts to be put in etc. Performance norms
are one of the major contributing factors in employees productivity apart
from employees ability or level of motivation.
Appearance norm : They set standards for appropriate dress code, arrival
and departure time as well as their leisure periods (when to look busy).
According to Feldman the group norms that are enforced by group ensure group
NOTES
9.6.2 Roles
They are the expectation of behavior from group member occupying a given
position in the group for e.g. manager in the organization is expected to play role of
spokesperson, resource allocator, disturbance handler etc. In private life he may also
be a chairman of a golf club. The goals can be either compatible or contradicting. In
group every member is supposed to play a role. The degree of success of any group
member in a group depends upon the extent to which group members role perception
fulfills the expectation of other group member about his role. In other words when
individual is able to act in a way that others expect him to act in a given situation, he will
be evaluated positively by group members.
9.6.3 Status
A formally or informally defined position or rank given to a group member by
other in a group is called status. For eg in formal context principal has a higher status
than the teacher. In informal context variables like education, age, sex , experience etc
play an important in determining the status of individual in a group. Studies have shown
that high status group members enjoy more freedom to deviate from norms than low
status group members. Status also influences interaction among members of the group.
The lower status member tends to be less vocal in group discussion as compared to
high status group members.
Time spent together : If the group members get enough time to spend
time together they get closer to each other. It helps them to know each other
Management Process
& Organisational
Behaviour : 135
well which facilitates friendship. Physical proximity also plays a very important
role.
Gender of member : It has been found through research studies that women
form much cohesive group as compared to males. The reason can be attributed
to the fact that the women are less competitive and more cooperative than
their male counterparts.
NOTES
Management Process
& Organisational
Behaviour : 136
Studies have found that cohesiveness is related to group productivity. Most of the
research has indicated that there is a positive relationship between group productivity
and group cohesiveness. In cohesive group, group members act as stress busters by
providing emotional support and helping hand. The second important thing that influences
group productivity are the group norms, specially performance related norms. Group
norms act as a moderating variable. It has been found if performance related norms
are high, then a cohesive group will be more productive than a less cohesive group. If
performance related norms are low then a cohesive group will perform very low than a
less cohesiveness group. The following figure explain the relationship
Moderate
High
W
o
Productivity
High
to low
NOTES
productivity
r
k
Moderate
Low
Productivity
r
m
Low
High
to low
productivity
Low
Group Cohesiveness
Figure 9.1 Relationship between productivity, cohesiveness and
group norms
Management Process
& Organisational
Behaviour : 137
GROUP
NOTES
Basis
Share
Information
Neutral
TEAM
Purpose to form
group
Collective
Synergy
Positive
Individual
Accountability
Individual and
mutual
Random and
varied
Composition of
Skills
Complementary
Performance
Management Process
& Organisational
Behaviour : 138
Clarify and establish specific goals : Articulate teams purpose into specific
measurable and realistic performance goals. Also communicate how the team
contributes to the companys success.
Skills and role of the members : It is important for the team leader to
identify strength and weakness of its team member and assign them the jobs
that best fit their skills. There are two types of role worth mentioning: task
specialist role and socio emotional role. For a team to be effective it must
have people in both task specialist role and socio role. People who play task
specialist role provide information, opinion and relate various ideas to the
problem in hand. While people who play socio emotional role encourage
members of the group , harmonious interpersonal relations and reduce tension
in the group. Effective team requires three types of skills: decision making
skills, technical skills and interpersonal skills. The right mix of the skills is
crucial to the success of the team. Too much of one at the expense of others
may hamper the effective performance of the team.
Size : The high performing team tends to be small. Large teams do not give
adequate opportunity to its member to interact and understand each other
which is very important to build trust and rapport. Group cohesiveness is
instrumental in achieving high performance.
Trust and commitment : The leader should develop trust in the minds of
the members. The members should have a belief in the integrity, character
and ability of others. High performance teams are characterized by high
mutual trust among members. The effective team has common meaningful
purpose that provides direction and commitment for members.
NOTES
Management Process
& Organisational
Behaviour : 139
NOTES
(3) Develop alternatives : The next step is to make a list of various options
that can be used to resolve the problem. For eg. if the person wants to buy a
car he should make a list of various model of car of different companies
available in the market.
(4) Evaluation of alternatives : The manager should be able to identify strength
and weakness of each alternative. The decision criteria should be prioritized
and assigned weights accordingly. Various criterion of each alternative should
be given score. Peter Druker has suggested few criteria to evaluate
alternatives which are risk, economy, timing and limitation of resources. If
we refer to the above example of buying car the decision criteria can be
capital outlay, mileage, safety, power, aesthetic, space etc. The weights should
be assigned to these criteria depending on the priority. If budget is the main
limitation then mileage and capital outlay should be given highest weight.
Then various models should be given scores for every criterion say at a
rating scale of ten. These scores should be multiplied by weights and total
should be obtained.
(5) Select best alternative : Once the alternatives are evaluated the best course
of action that maximize results under conditions are chosen. In the above
example the model for which total score is the highest should be chosen.
(6) Implementation : The decision should be communicated and people should
be identified who will execute the decision. Adequate authority should be
delegated and necessary support and resources should be allocated to them.
They should be held responsible for results.
Administrative Model
Management Process
& Organisational
Behaviour : 140
(1) Brainstorming
This technique was developed by A.F. Hosborn. This technique aims at encouraging
group members to generate ideas for alternatives of solutions to the problem given by
way of interaction, withholding criticism. In this technique the group leader presents the
problem in a clear manner in front of the group members and encourages them to
produce alternatives. They are permitted to interact freely and criticism is not allowed.
All the alternatives are recorded, analyzed and discussed at a later stage. This technique
fosters creativity as group members are free to think and present their ideas.
Management Process
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Behaviour : 141
Group offers increased diversity of views since there are many members in
a group and so are many views leading to better decision, while in individual
decision making approach the person has to rely on his own intution and
views.
3.
NOTES
Group decision making is very time consuming while individual can make
prompt decisions in individual decision making. So in terms of speed individual
decision making fairs better than group decision making.
9.16 Committee
Management Process
& Organisational
Behaviour : 142
which the committee members think best. The duration of such a committee can be for
a limited. The member of the committee can be assigned other responsibilities of the
organization other than the activities of the committee. The basic ideology of setting a
committee is to generate an autonomous opinion about any function or activity of the
business. It comprises of people of various departments that are representative of their
department. This is done to render an improved analysis of business operations.
NOTES
Advantages of committee
(1) Better decision making : It renders a suitable means of exchange of ideas
and information between large groups of people. The intelligence of large
number people helps in better decision making. By pooling the opinion of
people having different background, interest and specialization wider knowledge
base is generated. This helps in analyzing the problem from different angles
leading to more appropriate decision.
(2) Innovativeness and Creativity : It provides access to a wide range of
ideas, expertise and interests of people who belong to various departments,
which brings creativity and innovativeness in doing things. Brainstorming
sessions are conducted during discussion process due to which new ideas
emerge.
(3) Effective coordination : Since people of various departments meet to solve
the problem the committee facilitates integration. After decision is made the
managers of the respective department try to unify the efforts so that
implementation of the decision can be done smoothly.
(4) Consolidation of authority : Some problems cannot be solved due to
splintered authority. So the managers have to meet and pool their authority to
take decision as no manager has adequate authority to implement the decision.
(5) Motivation : The participation in decision making improves the morale and
motivation of committee members. They give their whole hearted support
during implementation of decision. Participation enhances loyalty and
commitment towards organization.
(6) Check against abuse of power : Since the decision has to be made by
committee members jointly the authority gets dispersed among committee
members. No individual member can act according to his or her wish and
fancy. Thus committee keeps a check on misuse of power.
(7) Training Base : Committee provide a strong training ground for the
executives. They understand human relations, group dynamics etc. It also
helps them to visualize the organization as a system. This helps them in
understanding the various facets of the organization and their relationship with
each other as well as their impact on the overall objective of the organization. It
widens their knowledge and facilitate general management ability.
Disadvantages of committee
(1) Expensive : Pooling of manpower at a large scale requires considerable
expenditure. The executives have to spend time in the meeting and time
Management Process
& Organisational
Behaviour : 143
NOTES
(3) No clear cut authority : In the absence of any clear cut authority any
group which tends to occupy power becomes decision maker. Dominance of
a particular individual or group can lead to group think that may fail the very
purpose of forming a committee.
(4) Poorly defined accountability : Since the decision is jointly made it becomes
very difficult to hold any one person responsible for the decision. This also
leads to the problem of group shift.
9.17 Summary
Manager should understand the group dynamics because group forms the basic
unit of the organization. A group consists of two or more individual interdependent and
interacting with each other for common objective. The groups can be formal or informal.
People join groups because it gives them support, power and a sense of belongingness.
Group members help each other in discharging their duties. The stages in group
development process include; forming, storming, norming performing and adjourning.
Group properties include group norms, group size, group cohesiveness, status and role.
Group properties affect group productivity. Teams are different from groups in terms
of purpose, accountability, synergy and composition of skill. Effective team can be
created through clarifying goals, right mix of skills, appropriate size and reward system,
trust, commitment, leadership and structure. Decision making involves choosing the
best alternatives from the available alternatives to achieve desired goals. The decision
making models are rational/scientific and administrative model. The various techniques
of group decision making are brainstorming, nominal and Delphi techniques. Group
decision making offers better decisions as compared to individual decision making. It
suffers from group think and group shift. Speed of decision and accountability pose a
problem for group decision making.
Management Process
& Organisational
Behaviour : 144
Informal Groups: They do not have any formal structure and are made by the
members voluntarily.
Group norms: They are the acceptable standard of behaviour that are established
and shared by group members.
Roles: They are the expectation of behaviour from group member occupying a
given position in the group.
Group shift: The shift in the position of the members towards an extreme position
that can be either conservation or risky, depending on the dominant view the
members hold during pre discussion.
NOTES
Management Process
& Organisational
Behaviour : 145
Leadership
UNIT 10
NOTES
LEADERSHIP
Structure
10.0 Introduction
10.1 Unit objectives
10.2 Leadership Defined
10.3 Leadership Theories
10.3.1 Trait Based Approach
10.3.2 Behavioral Approach
10.3.3 Contingency Approach
10.3.4 Modern Theory of Leadership
10.4 Summary
10.5 Key Terms
10.6 Questions and Exercises
10.7 Further Reading and References
10.0 Introduction
If we look into the past, we will find exemplary examples of effective leadership.
Mahatma Gandhi, Karl Marx, Abraham Lincoln, Bill Gates, JRD Tata and many more
have brought revolution, innovation and transformation in different fields of business
and politics through their intellect and personalities. The world that we see today is the
outcome of their courage, ability and power to influence people towards the goal they
pursue. Leadership plays a central role in the organization by influencing and inspiring
people towards goal attainment.
Management Process
& Organisational
Behaviour : 146
Leadership
NOTES
Trait theory
Traits are specific personality, physical or intellectual characteristics in a leader
that differentiate leaders from non leaders .Every individual endures certain traits.
Effective leaders have right combination of traits that are particularly suited to leadership.
The researchers studied the characteristics of many successful and unsuccessful
leaders and tried to identify those characteristics that lead to leaders effectiveness.
They evaluated leaders based on the following traits:
1.
2.
3.
4.
5.
6.
Management Process
& Organisational
Behaviour : 147
Leadership
skills etc.
According to Trait Theory leaders are born and not made. Below are some of the
traits identified by the researchers
NOTES
Researcher
Traits
Stogdil(1948)
Mann(1956)
Bass (1990)
Kirk Patrick and Locke(1991) Achievement drive, Ambition, Energy, Initiative, Self
confidence, Honesty, Integrity, Emotional stability
Hogan(1994)
Management Process
& Organisational
Behaviour : 148
Production oriented leader tends to emphasize on the task aspect of the job. The
leader structures his role or her role as well as the roles of the subordinates towards
achieving the goals. They strictly make sure that deadlines are met and target is
Leadership
NOTES
Blake and Mouton proposed five different leadership style through a managerial
grid. The grid depicted two dimensions of leader behavior with concern for production
as x-axis and concern for people as y-axis, each axis ranges from 1(low) to 9(high).
(1,9)
(1,9)Country
CountryClub
Club
High
(5,5)
(5,5)
Middle
the road
road
Middle of
of the
(1,1)Impoverish
Impoverish
(1,1)
Low
(9,9)
(9,9)Team
Team
(9,1)
Task
master
( 9,1)
Task
master
High
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Behaviour : 149
Leadership
NOTES
Management Process
& Organisational
Behaviour : 150
Leaders allow their group members to make decision and work on their own. The
leader follows the policy of non interference. Their group members have complete
freedom to do their work. The leaders provide resources and advice only if needed.
This style leads to high job satisfaction and increased productivity of the group members.
This style gives more room for development to the followers. The downside is that it
can be damaging if the employees are not knowledgeable and do not have willingness
to work.
not be effective in another situation. Thus it becomes imperative that leadership style
should change according to the situation in which the leader is leading. The notable
model in this category is Fiedlers model, Hersey Blanchard situational theory and path
goal theory.
Leadership
NOTES
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& Organisational
Behaviour : 151
Leadership
NOTES
Situation \ SituationsI
Variables
II
III
IV
VI
VII
VIII
Leader member
Relations
Poor
Poor
Task Structure
Low
Low
Low
Position Power
Appropriate
Leader
behaviour
Most Favourable
Taskoriented
High High
Moderate
Relationship oriented
Strong Weak
Most Unfavourable
Task oriented
Hersey Blanchard proposed four levels of maturity of the followers( R1, R2, R3,
R4) and tried to match them with the four leadership style
At the stage R1, the followers are neither motivated nor possess necessary skills.
They require guidance and directions and hence telling leadership style is most
appropriate.
At the stage R2, the followers are motivated but lack skills. They require direction
and support from their leader selling leadership style is best suited for these kinds of
followers.
Leadership
NOTES
At the stage R3, the followers are competent but lack the drive to work. The
participative leadership style can be helpful in this situation as it will try to address the
motivational problems of the followers.
At the stage R4 , the followers can do the job and are motivated too. The followers
need very less support or direction and hence the leader doesnt have to do much. The
delegating leadership style is appropriate while interacting with followers having high
maturity level.
Relationship behavior
High
Low
Participating
This style is effective for
followers, who are able and
unwilling (R3).
Selling
This style is effective for
followers, who are unable
and willing (R2).
Delegating
This style is effective for
followers, who are able and
willing (R4).
Low
Telling
This style is effective for
followers, who are unable
and unwilling (R1).
High
Task behavior
High
R4
* Able and
Willing
R3
* Able and
unwilling
Low
R2
R1
* Unable and
Willing
* Unable and
unwilling
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Leadership
NOTES
path goal theory. The leader task is to clarify path by eliminating confusion that the
subordinate have and by providing the guidance and support to reach goals. The behavior
of the leader should be instrumental in attainment of subordinates immediate or future
satisfaction. The theory identifies four leader behaviors:
(1) Directive : The leader gives clear directions sets performance standards and
controls the behavior through judicious use of rewards and disciplinary action
when performance standards are not met.
(2) Supportive : The leader reduces the efforts of emotional obstacles or stress on
the path to the goal by being friendly and helpful. He shows concern to the need of
subordinates. This style is similar to employee oriented leadership style.
(3) Participative : The leader shares decision making responsibility with the subordinates and incorporates their suggestions in the decision.
(4) Achievement Oriented : Leader sets challenging goals for sub-ordinates and
shows confidence in them. The followers draw strength from the leaders belief
that the individual follower is competent enough to achieve demanding targets.
House s theory mentioned four ways of behaving to different situations. The
situations in a path goal theory are driven by two contingency variable: followers
characteristics and workplace characteristics.
1.
2.
The specific leadership style according to house that works best is determined by
these two situational variables.
Management Process
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Behaviour : 154
Supportive style works best when followers have high ability to perform. Directive
style will be acceptable to the sub-ordinates when task is unstructured and complex and
sub-ordinates lack requisite skill, experience and posses external locus of control.
Directive leader will bring better results when there is substantive conflict within the
group. Subordinates with internal locus of control will find participative style more
satisfying. When tasks are ambiguously structured achievement oriented style is best
suited.
goal. Charismatic leaders are perceived as larger than organization. People working
for charismatic leader are motivated to put extra effort because they like and respect
their leader. They are enthusiastic and express greater job satisfaction.
The charismatic leaders lose credibility when they fail to deliver promises that
they made to their followers. The power of charismatic leader is very much dependent
on perceptions and need of followers.
Leadership
NOTES
Transformational leaders
Most of the traditional theories for e.g. Michigan, fielder models, path goal theory
etc are closed to transactional leadership style that guides and motivates their followers
by telling style i.e. by clarifying role and task requirement. Transformational leaders
style on the other hand focuses on selling companys vision which is usually a departure
from established one. A transformational leader inspires followers to achieve their goals
through higher ideals and moral values. They motivate their followers to focus on higher
order intrinsic need. They promote intelligence, rationality and careful problem solving.
They give personal attention to each employee, coaches and advices them.
Transformational leader has much in common with charismatic leader, but while the
latter wants the follower to adopt charismatics world view the former attempt to instill
in followers the ability to question not only established views but eventually those
established by the leader.
10.4 Summary
Leadership determines the quality of organization by providing vision and direction
, motivation to the employee of the organization. According to Trait theory of Leadership
leaders are born and not made. Successful leaders have certain qualities in them that
make them different from non leaders or unsuccessful leaders. Behavioral approach to
leadership focuses on the manner and the behavior exhibited by the leader during
supervising their employees. The various leadership style proposed by researcher of
behavior theory are autocratic, democratic, participative, lazes fair.
Contingency theory of leadership emphasize the fact that situation also plays a
very vital role in determining which leadership style will be effective in a given situation.
It calls for a proper match between leader and situation. Path goal theory proposed that
the effective leadership is a function of leadership style, situational factors and followers
characteristics. The modern approaches have included more heroic and visionary
approach to leadership like charismatic leadership and transformational leadership.
Trait theory : This theory emphasis that traits that are specific to personality, physical,
or intellectual characteristics in a leader differentiate leaders from non leaders.
Management Process
& Organisational
Behaviour : 155
Leadership
Production Oriented Leader: The leader tends to emphasize on the task aspect
of the job and structures his role or her role as well as the roles of the subordinates
towards achieving the goals.
Autocratic Leader: Leaders have complete control over their people. They make
decisions without seeking advice from their followers.
Delegating Leader: Leaders follow the policy of non interference and allow
their group members to make decision and work on their own.
Achievement Oriented Leader: The leader sets challenging goals for subordinates and shows confidence in them.
NOTES
(1) Explain the trait theory of leadership? What are the major limitations of the
theory?
(2) What are the different styles of leadership? What are the major differences
between autocratic, democratic and free rein style of leadership?
(3) Discuss some of the personality traits that are useful to a leader.
(4) Leadership style is contingent upon the situation Discuss.
(5) Explain the five main leadership styles in managerial grid.
Short answer questions
Management Process
& Organisational
Behaviour : 156
Leadership
NOTES
Management Process
& Organisational
Behaviour : 157
Organizational Conflict
UNIT 11
NOTES
ORGANISATIONAL CONFLICT
Structure
11.0 Introduction
11.1 Unit objective
11.2 Conflict Defined
11.3 Functional and Dysfunctional Conflict
11.4 Process of Conflict
11.5 Causes of Conflict
11.5.1 Intra Individual Conflict
11.5.2 Interpersonal Conflict
11.5.3 Group Conflict
11.6 Managing Conflict
11.6.1 Conflict Resolution strategies
11.6.2 Conflict Stimulation strategies
11.7 Summary
11.8 Key Terms
11.9 Questions and Exercises
11.10Further Reading and References
11.0 Introduction
Conflict is an inevitable and natural part of any organization. Managers devote
substantial part of their time in resolving workplace conflict. Conflict is a disagreement,
discord arising between two or more parties that result in mutual opposition. One school
of thought i.e traditional approach says that conflict is evil and should be avoided at any
cost, while human relations approach argues that conflict is unavoidable and hence
acceptance of conflict is advocated. The third school of thought i.e Interactionist view
that conflict can sometimes prove to be very healthy for organizations growth and
hence optimum level of conflict should be encouraged in the organization.
Organizational Conflict
NOTES
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& Organisational
Behaviour : 159
Organizational Conflict
7
NOTES
6
5
4
73
4 verbal attacks
3 overt questioning
2 minor desagreement
1 no conflict
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& Organisational
Behaviour : 160
Organizational Conflict
NOTES
Causes of conflict
1. IN TERPERSONAL
CONFLICT
Difference in values,
interest, perceptions,
personality and status
2. GROUP CONFLICT
Incompatible goals,
resource allocation and
task interdependence
Competition
3. COMMUNICATION
4. AFTERMATH OF
PRECEDING CONFLICT
Perceived
Conflict
Conflict handling
approaches
AVOIDING
ACCOMODATING
COMPETING
COMPROMISING
Felt Conflict
COLLABORATING
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& Organisational
Behaviour : 161
Organizational Conflict
NOTES
Stage V : Outcome
The outcome of the conflict can be functional or dysfunctional. The outcome of
the conflict depends upon how wisely the conflict was handled by the parties. If it
improves the group performance by improving quality of decisions, stimulating creativity
it may lead to functional outcome. A dysfunctional conflict leads to lowering of group
performance; reduced communication and cooperation. Personal infighting supersede
group and organizational goals.
(1) Role ambiguity: when individual is unsure of his duties and responsibilities
regarding job he may face problem in enacting the role due to which job
Organizational Conflict
NOTES
(3) Inter role conflict: in this type of conflict the individual is asked to perform
a task for which the individual may lack the ability and knowledge that is
necessary to accomplish it . He may also feel helpless due to lack of resources
and time that is required to do the job.
(4) Inter sender role conflict: when two or more parties put different role
demands in front of an individual then he or she faces inter sender role conflict.
Role conflict seriously effect job satisfaction and productivity. For e.g. an HR
manager may experience a role conflict. He is responsible for motivating the
employees at the same he is accountable to top management also. If the
employees ask for a pay raise while top management is against it then the
manager will be in dilemma.
Management Process
& Organisational
Behaviour : 163
Organizational Conflict
do their job. Resources are important for their job performance and
achievement of their group or departmental targets.
When there is conflict between two or more groups it is called group conflict. The
potential reasons for the group conflict are
(1) Incompatible goals and interest: high horizontal differentiation and task
specialization often lead to clashes in goals and interest. The groups give
priority to their task rather than giving due attention to the collective outcome
of the groups. For e.g. marketing department may bring huge orders for sales
in order to improve their departments image and take benefits of incentive
without giving due consideration to the production capacity of the production
department.
(2) Task interdependence: it implies dependence of one unit on another for
inputs like resources or information. For e.g. output of process A is input to
process B, hence performance of process B depends largely on the
performance of A in terms of quality and completion of task in time. This is an
example of serial independence. Reciprocal independence occur when two
or more groups are mutually interdependent in accomplishing goals for eg
group of nursing staff , surgeons,doctors etc. They have to coordinate and
communicate quite frequently.
(3) Scarcity and allocation of resources: departments in the organization
compete for resources. Resources include men, material, machine etc. Groups
draw resources from a common pool and if the common pool is inadequate to
satisfy the demand of all the units then conflict can arise.
(4) Organizational ambiguities : lack of formalization, ambiguous job
responsibilities can create problem and conflict between departments. If proper
system of communication and coordination is not incorporated in the system
frequent clashes can occur among groups.
(5) Resistance to change: Change is inevitable as the environment around is
dynamic. There are a plenty of socio-economic, political, technological and
legal factors which make organizational change unavoidable. Change faces
resistance from the employees who fear being shaken out of their comfort
zone. Change can lead to conflict; people have an inherent tendency to resist
change.
Management Process
& Organisational
Behaviour : 164
Conflict can have both negative and positive outcomes. Functional conflict is
desirable while dysfunctional conflict should be resolved. There are basically two
approaches of managing conflict. One is to create and stimulate constructive conflict
and other is to resolve destructive conflict.
Organizational Conflict
NOTES
High
ASSERTIVE
Competing
Collaborating
Compromising
Avoiding
Accommodating
Low
Low
COOPERATIVE
High
Management Process
& Organisational
Behaviour : 165
Organizational Conflict
NOTES
11.7 Summary
Management Process
& Organisational
Behaviour : 166
Conflict can be created at individual level as well at the group level. Intra individual
conflict occurs due to conflict in the goals set by the individuals and the roles he or she
is supposed to act. Conflict between two or more individuals is caused due to difference
in values, interest, perceptions, personality and status inequity. Group conflict arises due
to incompatible goals, task interdependence, scarcity and allocation of resources, poor
communication and organizational ambiguities. The conflict process consists of five
stage , they are- potential opposition, cognition and personalization, conflict handling
intentions, overt behavior and outcome. Depending upon the requirement of the situation
the conflict can be handled through any of the five styles: competing, avoiding,
collaborating, compromising and accommodating. Conflict can be stimulated through
strategic use of grapevine, introducing competition and bringing in outsider and
reorganizing the work groups.
Organizational Conflict
NOTES
Management Process
& Organisational
Behaviour : 167
Organizational Conflict
(3) What are the reasons for conflict within the individuals and conflict between
the individuals?
(4) State the reasons of group conflict.
NOTES
Management Process
& Organisational
Behaviour : 168
UNIT 12
ORGANISATIONAL CULTURE
AND CHANGE MANAGEMENT
NOTES
Structure
12.0 Introduction
12.1 Unit objectives
12.2 Organization Culture
12.2.1
12.2.2
12.2.3
Forces of Change
12.3.2
Response to Change
12.3.3
12.3.4
12.3.5
12.4 Summary
12.5 Key Terms
12.6 Questions and Exercises
12.7 Further Reading and References
12.0 Introduction
Organizational culture develops over several years and is made of relatively stable
characteristics. The characteristics are a set of shared values that employees hold in
common. Employees are strongly committed to organizational culture. It brings
predictability and uniformity in behavior of the employees. Organizational culture can
become a liability because it is very difficult to change.
Management has always stressed on the importance of change. Change or die
is the philosophy to survive. Environment is dynamic and ever changing. There are
various external and internal forces that act as a stimulant to change. Change is mostly
perceived as threat. Employees resist change. Manager should intelligently plan for
introduction and implementation of change. Change process should be dealt with wisely
and appropriate measures should be taken to overcome resistance and implement change.
Management Process
& Organisational
Behaviour : 169
NOTES
(7) Basis of motivation: the degree to which the organizational members value
different sources of motivation like pay, status, achievement, recognition etc.
(10) Power distance: the degree of difference to authority, the rigidity of chain of
command.
NOTES
Management Process
& Organisational
Behaviour : 171
NOTES
Management Process
& Organisational
Behaviour : 172
NOTES
Management Process
& Organisational
Behaviour : 173
NOTES
products, services and methods of doing work which are not capable of
achieving organizations objective should be amended. The organization
structure may also undergo transformation in order to make it more responsive
to the environment.
(3) Changes in Managerial Personnel : Many changes are brought by chief
executives. Every manager has his own philosophies and styles. Change in
chief executive may lead to reevaluation of the present organization design,
procedures, objectives etc. This may lead to modification if the present system
does not match with the philosophies of the newly appointed chief executive.
(6) Peer pressure : An individual may resist change just because he belongs to
the group that is resisting change. The group norms play a vital role in
influencing the individual.
NOTES
Requirement Analysis
The management of the company needs to identify if a change is required. The
management shall do a SWOT (Strengths-Weaknesses-Opportunities-Threats) analysis
so as to understand the problems confronting the company. It should subsequently
Management Process
& Organisational
Behaviour : 175
NOTES
conceive changes which are necessary to solve those problems. The management should
answer the question Is the change justified. The management should also identify the
factors to be changed, whether it is the people, technology or structure that is to be
changed.
Implementation of change
It refers to making change a part of day to day activities of the organization. The
management needs to encounter and diffuse the resistance that follows a change so as
to achieve desired implementation. It is natural human tendency to resist any form of
change. Hence no change can be brought about completely without addressing the
resistance that accompanies it. Hence resistance management forms a pivotal and an
indispensable part of change management.
Feedback System
Feedback must be collected through different channels to understand as to how
efficiently have the employees coped up with the change. Deficiencies must be identified
and taken care off as they might result in resistance if left unaddressed. Employees
might be encouraged to share constructive ideas which can further enhance the change.
Unfreezing
step2
Moving
step3
Refreezing
step1
Management Process
& Organisational
Behaviour : 176
Step 1 : Unfreezing
It involves aggressive approach to discard old ways and established behavior
pattern. The objective is that the individual should see change and accept it. Members
of the organization are made to realize that their old attitude, behavior and methods to
work are unworthy and require alteration to meet the ever changing demand of the
dynamic environment. This can be done by
(1) Augmenting driving forces: The factors that are making change essential
should be identified and communicated to the people concerned.
(2) Reducing restraining forces: The factors that hinder the change movement
should be reduced for e.g. to deal with resistance from employees the
Step 2 : Moving
Once people acknowledge change and accept it, the change should be implemented
in a systematic manner. Various alternatives of behavior should be made available to the
members of the organization. The individual choose the best one out of the alternatives
provided to them.
NOTES
Step 3 : Refreezing
The changed behavior patterns, methods or procedures need to be made permanent.
They should be refrozen, so that the change can be sustained overtime. If the last step
is not implemented seriously, the change will be short lived. The individuals may attempt
to revert to the old behavior pattern.
(4) Negotiation
If few powerful individuals are resistant to change then they can be offered specific
reward packages. The resistance can be reduced through negotiations. Benefits in the
form of increased compensation, deployment on challenging projects, recognition from
the boss etc can motivate an employee to undergo the hardship associated with bringing
out the change.
Management Process
& Organisational
Behaviour : 177
NOTES
attain dangerous proportions later on. It is necessary that the potential points of origination
of resistance be identified in advance. Plan must be developed to tackle resistance that
might originate from different areas within the company.
(8) Coercion
Managers can force people to accept change by the application of direct threat or
force on the resistors. The various explicit and implicit threats can be, threats of transfer,
negative performance appraisal, pay cuts, demotion, termination etc.
12.4 Summary
Management Process
& Organisational
Behaviour : 178
NOTES
Lewins Three Step Model: It proposes three steps that the organization should
follow in order to bring about change successfully. They are unfreezing, moving
and refreezing.
Social displacement: It means dislodging people from their work groups and
teams thereby disrupting the personal bonding which they may have developed
over a period of time.
Cooptation: It includes buying off the leader of the resistance group and giving
him desirable role in the design and implementation of change.
Management Process
& Organisational
Behaviour : 179
(4) What are the steps in managing planned change? Describe the process of
planned change proposed by Kurt Lewin.
Short answer questions
NOTES
Management Process
& Organisational
Behaviour : 180