Oxfo Business & Technology College

Module for the Course

Introduction to Management
Course Code = BUMA-211
Credit Hour = 3

Oct, 2016

Shire Tigray

0|Page
Course introduction

Dear learner, welcome to the course Introduction to Management. This course provides a
comprehensive introduction to management. Through the lectures students will learn techniques to
inspire teamwork in an organization context, learn the importance of strategic management design to
achieve organizations goals and understand the roles of the manager and the responsibilities this
carries. Furthermore, will enable students to discover leadership skills that will enable them to
motivate and guide a team towards the achievement of an organization’s objectives . The types of
courses are listed below. So you are expected to read the notes and practice the activities carefully. This
course is composed of all units. These are

Unit 1. The Nature of Management

Unit 2. Management though: past and present

Unit 3. Organizational planning

Unit 4. Organizing

Unit 5. Staffing the organization

Unit 6. Directing

Unit 7. Controlling

Course objective

After studying and up on combination of these course students should be able to

 The management process – appreciates the relevance of basic business concepts (planning,
organizing, leadership and control), establish and compare alternative business objectives.
 Understand how and why businesses plan and make decisions, apply the concepts of control,
recognize the value of leadership and human resource management, and understand differences in
organizational structures and behavior.

Icons and what they indicate

Icon Type What indicates

 Indicates pre test

 Indicates post test

 Indicates check lists that enables you trace understanding

of unit concept

 Indicates answer to questions

 Indicates activities to be answered by student

 Indicates assignments to be answered

! Indicates important points need emphasis

1|Page
Table of Contents

UNIT ONE .......................................................................................................................................................... 4

The Nature of Management................................................................................................................................. 4
1.1) Introduction....................................................................................................................................... 4
1.2) Management and Organizations.................................................................................................... 4
1.3) Meaning of management............................................................................................................... 5
1.4) Types of mangers .......................................................................................................................... 6
1.5) Management: art or science .......................................................................................................... 8
1.6) Management Skills........................................................................................................................ 9
1.7) Management Functions ............................................................................................................... 10
1.8) Levels of Management................................................................................................................ 12
1.9) Management Roles...................................................................................................................... 15
UNIT TWO ....................................................................................................................................................... 21
MANAGEMENT THOUGH: PAST AND PRESENT..................................................................................... 21
2.1) INTRODUCTION ...................................................................................................................... 21
2.2) History and Theory of Management ........................................................................................... 21
2.3) The Classical School................................................................................................................... 22
2.4) Behavioral Management Theory................................................................................................. 27
2.5) Contemporary management Thought.......................................................................................... 30
UNIT THREE.................................................................................................................................................... 36
ORGANIZATIONAL PLANNING .................................................................................................................. 36
3.1) PLANNING DEFINED .............................................................................................................. 36
3.2) Basic Planning Processes ............................................................................................................ 37
3.3) Types of planning ....................................................................................................................... 40
3.4) Skills Required in Planning......................................................................................................... 43
3.5) Management by Objectives (MBO)............................................................................................ 47
UNIT FOUR...................................................................................................................................................... 51
ORGANIZING .................................................................................................................................................. 51
4.1) The Nature of Organizing ........................................................................................................... 51
4.2) Organizing process...................................................................................................................... 52
4.3) Departmentalization: Grouping organizational Activities .......................................................... 54
4.4) Coordinating Organizational Activities and Units...................................................................... 59
4.5) Managerial influence: power and Authority ............................................................................... 61
UNIT FIVE........................................................................................................................................................ 68
STAFFING THE ORGANIZATION................................................................................................................ 68

2|Page
5.1) Meaningof staffing...................................................................................................................... 68
5.2) Staffing Environments ................................................................................................................ 69
5.3) Staffing process........................................................................................................................... 71
UNIT SIX .......................................................................................................................................................... 85
DIRECTING ..................................................................................................................................................... 85
6.1) LEADERSHIP ............................................................................................................................ 85
UNIT SEVEN.................................................................................................................................................... 98
CONTROLLING............................................................................................................................................... 98
7.1) The Nature of control.................................................................................................................. 98
7.2) Controlling process: a Traditional control Model....................................................................... 99
7.3) Types of Control ....................................................................................................................... 102
7.4) Characteristics of Effective control systems ............................................................................. 104
7.5) The Impact of Control on organization members ..................................................................... 106

3|Page
 UNIT ONE

The Nature of Management

Student learning objectives:

At the end of this unit, students will be able:

 Define management and what managers do.

 Specify the skills mangers need.
 Understand the different types of managers.
 Discuss the different roles of management.
 List and describe management skills.
 Understand the general functions of management.
 Identify and explain the levels of management.
 List and describe the management functions.

1.1) Introduction
Dear learner! Think for a moment about the organizations you have belonged to. Thing about the
type of management system you have seen. You probably have seen more system than you realize at
your high school, at the place of worship, at your parent’s place of work at your college and
probably at many other place. Did you jalways understand why these organizations were managed as
they were? Did you every say to yourself “there must be a better way to run an organization?” in the
pages of this book, you will explore management. You will examine the functions, skills and levels
of management and the roles of managers. You will come to understand better the organizational
experiences that challenge when you are asked to mange.

1.2) Management and Organizations

 Dear student, what is the relationship between management and organization

_________________________________________________________________________________
________________________________________________________________________

Management in many organizations has received a lot of criticism over the years. Productivity
problems, deteriorating places and machinery, lost ground in research and development, lack of
competitive responsiveness at have and abroad, and increases in worker discontent have become

4|Page
symbolic of many organizations. In fact, poor management is often cited as a major reason for
organizations. In fact, poor management is often cited as a major reason for organizational failure.
There are, however, many effective organizations in different societies from which one can learn.
Effective organizations be they a local high school, a fast food restaurant or a giant international
corporation are characterized by effective communication, strong leadership, appropriate
organization making and competent human resource management.

1.3) Meaning of management

 Dear student, what is management?
________________________________________________________________________

The study of organizational management is relatively young. Consequently, there is no universally

accepted language, set of symbols or theoretical underspinning that manager can use to analyze,
understand, explain, or make predictions about the management of organizations. This lack of
consensus becomes apparent as soon as one tries to define management. Nearly every manager and
writer about management has a favorite way to define the process. Perhaps the best reaction to this
diversity is to take it as grist for the mill, to treat the many definitions as a useful variety that add to a
manger’s stock of knowledge. There is a veariety of approaches to the effective management or
organizations.

In general management can be defined as the process of planning, organizing and controlling
organizational resources (human, financial, physical and information) in the pursuit of organizational
goals.

Managers are organization members who are assigned the primary responsibility of carrying out the
management process. As you will discover, there can be many levels of management and many
activities that manager must plan for, organize, direct and control. Among there are the production
(operation) marketing human resource, finance, and accounting functions of an organization.

 Activity 1

What is the primary responsibility of managers?

5|Page
1.4) Types of mangers
Effective managers are essential to nay organization. Overall success, regardless of whether it is a
global giant or a small start- up enterprise. A manger is a person who plans, organizes, directs and
controls the allocation of human, material, financial and information resources in pursuit of the
organizazational goals. The many different types of managers include department managers, product
managers, account managers, plant mangers, division managers, district managers and task force
managers, what they all have in common is responsibility for the effects of a group of people who
hare a goal and access to resources that the group can cause in pursuing its goal.

This section will review some of the major categories of mangers.

Zones of Responsibility

An organization can be viewed as a cake with three distinct lays, or zones or responsibility: the
institutional zone, the managerial zone and the technical zone managers can be classified according
to the zones in which they operate.

The institutional zone: managers in the institutional zone are primarily responsible for two aspects of
an organization’s external environment .first, they must establish their organization’s importance to
the external community by

By letting people outside it and in other organizations know about its role and significance.

Second, mangers in the institutional zone are responsible for identifying needs of the external
environment and for funding ways for their organization satisfy those needs.

The Technical Core:- managers in the technical core have direct responsibility for producing and
delivering an organization’s good and service. They manage thee day to day activities of the
organization.

The Managerial Zone:- sandwiched between the institutional zone and technical core is the
managerial zone. Here managers create and manage systems to coordinate and integrate the various
parts of the technical core. They also develop the specific operating strategies for implementing the
overall plans and objectives set forth by upper level managers. In general, mangers in the managerial
zone are responsible for translating the vision of the institutional zone managers in to the realities of
the technical core.

6|Page
Line- staff distinction

Another helpful way to classify managers is according to their direct involvement in producing an
organization’s gods and service- that is whether they perform line or staff duties. Line managers-
have a direct responsibility for producing the service or product line of an organization. Line
managers are usually given a considerable amount of command type authority- they are able to tell
subordinates what to do and how to do.

It is the job of staff managers to support the line managers, but staff managers are not directly
involved in the production of goods or services. Staff managers, who can be found in any of the
zones of responsibility, usually are not given command- type authority but must wield influence
based on their personal skill and knowledge.

Hierarchical Distinction

Management is also classified by their position in an organization’s hierarchy. The lowest level of
managers consists of first level managers. They are involved primarily with managing an
organization’s technical core and are the only managers who direct non-managerial organization
member. First- level managers often have such title as “unit manger” or department manager”. Those
who manage first –level managers are referred to as second- level manager Next come third- level
managers, and so on, up to the top level of management.

Functional Areas

Managers are also classified according to their area of specialized activity. They are the
organization’s functional managers. “ I am in accounting. “ saps one manager. “ I have been
transferred from marketing to production, “ says another.

Scope of Management

There are many types of managers and many ways in which managerial jobs differ from each other.
One difference is the scope of activities involved. The scope of activities performed by functional

7|Page
mangers is relatively narrow. Whereas the scope of activities performed by general managers is quite
broad.

Functional Managers supervise employees having expertise in one area, such as accounting, human
resources, sales, finance, marketing, or production. For example, the head or a payroll department is
a functional manger. That person doesn’t determine employee salaries, as a general manager might,
but makessyre that payroll checks are issued on time and in the correct amounts. Usually, functional
mangers have a great deal of experience and technical expertise in the areas of operation they
uspervise. Their success as managers is due in part to the detailed knowledge they have about the
work being done by the people they supervise, the problems those people are likely to face, and the
resources they need to perform effectively.

General managers usually they oversee the work of functional managers. General managers must
have a broad range of well- developed competencies to do their jobs well. These competencies can
be learned through a combination of formal training and various job assignments, or they can be
learned simply in the course of trying to adapt and survive in a chosen area.

 Activity 2
1. Who are managers?
______________________________________________________________________
2. Which managers have a direct responsibility for producing the service or product line of an
organization?
______________________________________________________________________
3. According to zones of responsibility which managers are responsible to create and manage
systems to coordinate and integrate the activities of technical core?
______________________________________________________________________

1.5) Management: art or science

 Dear learner, is management an art or science.
____________________________________________________________________________

The question of whether management is an art or science has often been asked. The answer is
diverse, and debate over issue periodically surface in academic circles. In practice, manager’s job

8|Page
involve both science and art. A science is a body of knowledge that has evolved through controlled
and systematic investigation. It provides descriptions, explanations, and predications about the
phenomenon under investigation. The art in management appears in the application of the
knowledge derived by scientific investigations. Scince discovers and documents; art creates.

Just as artists need to master their crafts, business mangers need to perfect their skill in dealing with
people and in expressing themselves verbally, just as artists need visions and passion to realize them,
managers need imagination and audacity to redesign their organizations; and just as areat master
communicate their vision, great leaders inspire those who work for them.

1.6) Management Skills

 Dear learner, whatskils do managers need to perform management functions?

Performing manement functions and achieving competitive advantage are the cornerstones of a
manager’s job. However, understanding this does not ensure success. Managers need a variety of
skills to do these things wel. Skills are specific abilities that result from knowledge, information,
practice, and aptitude. Although managers need many individual skills, which you will learn about
throughout the text, consider three general categories: technical skill, interpersonal and
communication skill (Human skills) and conceptual skill.

Technical skills

Technical skills are the ability to perform a specialized task that involves a certain method or
process. Most people develop a set of technical skills to complete the activities that are part of their
daily work lives. The technical skill you learn in school will provide you with opportunity to get an
entry-level position; they will also help you as a manager.

For example, your basic accounting and finance courses will develop the technical skill you need to
understand and mange the financial resource of an organization.

Interpersonal and communication skill (Human Skills)

Human skills consist of the abilities to interact and communicate successfully with other persons.
Managers spend the great majority of their time interacting with people, and they must develop their
abilities to lead, motivate and communicate effectively with those around them.

9|Page
As managers more into the international environment and function within a global enterprise, human
skills will become even more important. The ability to communicate with and be sensitive to
different cultures will be at a premium.

Conceptual Skill

It involves the manger’s ability to identify problems and resolve problems for the benefit of the
organization and everyone concerned. Managers use these kill when they consider the overall
objectives and strategy of the firm, the interaction among different parts of the organization and the
role of the business in its external environment.

Well- developed conceptual skill equips manager to identify a problem, develop alternative
solutions, select the best alternative and implement the solution.

 Activity 3
1. What are the important skills manager’s needs for performing management functions?
____________________________________________________________________
2. Which skill is most important at the lower level?
_______________________________________________________________________

1.7) Management Functions

 Dear learner, what are the functions of management
______________________________________________________________________________

General management function

The successful manger capably performs four basic managerial functions: planning, organizing,
leading and controlling. However, as you will see, the amount of time a manger spends on each
function depends on the level of the particular job. After further describing each of the four general
managerial functions, we will highlight the differences among managers at various levels in
organizations.

10 | P a g e
Regardless of their level, most managers perform the four general functions more or less
simultaneously- rather than in a rigid, preset order – to achieve organizational goals. In this section
we briefly examine the four functions without looking at their interrelationships. However,
throughout this book we refer to those interrelationships to help explain exactly how managers do
their jobs.

Planning. In general planning involves defining organizational goals and proposing ways to rach
them. Managers plan for three resons: (1) to establish an overall direction for the organization’s
future, such as increased profit, expanded market share, and social responsibility; (2) to identify and
commit the organization’s resources to achieving its goals; and (3) to decide which tasks must be
done to reach those goals.

Organizing
Leading

Planning

Controlling

Organizing. After managers have prepared plans, they must translate those relatively abstract ideas
into reality. Sound organization is essential to this effort.

Organizing is the process of creating a structure of relationships that will enable employees to carry
out management’s plans and meet organizational goals. By organizing effectively, managmers can
better coordinate human, material, and information resources. An organization’s success depends
largely on management’s ability to utilize those resources efficiently and effectively. Organizing
involves creating a structure by seting up departments and job descriptions.

Leading. After management has made plans, crated a structure, and thired the right personnel,
someone must lead the organization. Leading involves getting others to perform the tasks necessary
to achieve the organization’s goals. Leading isn’t done only after planning and organizing end; it is
crucial element of those functions.

11 | P a g e
Controlling. The process by which a person, group, or organization consciously monitors
performance and takes corrective action is called controlling.

Just as a thermostat sends signals to heating system that the room temperature is too high or too low,
so a management control system sends signals to managers that things aren’t working out as planned
and that corrective action is needed. Set standards of performance.

 Activity 4
Which management function focus on creating structure of relationship that enables employees to
meet organizational goals?

______________________________________________________________________________

1.8) Levels of Management

 Dear learner, what are the levels of management?
_________________________________________________________________________

Although all mangers perform the same set of functions, they actually do so on only three
organizational levels. Generally speak in, managers are found at the top, middle, and first-line
sometimes called the supervisory, front- line, or operating- levels of management. Collectively, these
levels constitute the management hierarchy as shown in Figure 1.1

Show at the left in Figure 1.1 is a pyramid representing management in a medium- or larger- sized
sole proprietorship and partnership. On the right is the model of a traditional management structure
in a similar- size corporation. The latter model includes a board of directors consisting of members
elected by stockholders ( the owners of a corporate enterprise) who, in turn, appoint key members of
a corporation’s top management.

Top management

The tip of the pyramid consists of the organization’s top management: the chief executive officer
(CEO) and/ or president and his, her or their immediate subordinates, usually called vice presidents.
Top management is responsible for overseeing the entire organization. It establishes long-term,

12 | P a g e
companywide goals and oversees the work of middle managers. Top management also creates and
coordinates alliances and partnerships with outsiders.

Middle Management

Middle management includes managers below the rank of vice president but above the supervisor’s
level. The smallest organizations have no middle managers; larger ones have several layers of them.
Along with setting their own goals, middle managers typically translate top management’s long term
ones into shorter-term objectives that the middle managers will be responsible for achieving. They
oversee the work of the middle managers and those on the operating level.

According to a variety of management consultants and industry experts, several trends affect middle
managers. They are becoming less specialized, they are being trained to become team leaders and
facilitators, and their ranks are being thinned or eliminated.

Middle managers like their counterparts at the levels, tar being trained to become team leaders-
leading a group as a member of it and team facilitators. J.D. Bryant is a team facilitator and a middle
manager at a taxes instrument defense plant in Dallas. He oversees several teams and describes his
central purpose as follow: “I’m supposed to each the teams everything I know and them let them
make their own decisions.”

13 | P a g e
First level management

First – line management is the home of supervisors, team laders, and team facilitators who oversee
the work of non-management people, often called operating employees, associates, or team
members. These managers convert middle manager’s goals and objectives into their won sets of
objectives. Of all the levels, the first – line is most concerned with the day-to day execution of
ongoing operations. It executes the tasks that directly affect most of an organization’s external
customers each day.

At outback, the proprietors and their assistant managers are its first- line management. They directly
interface with restaurant patrons each day, thus affecting, more directly than any other level of
management, the company’s image and the quality of meals and service experienced by external
customers.

Functional management

Managers may also be identified by the kind of business functions they are responsible for. Like the
functions of management, business functions fare universal and apply to every type of business. The
most essential business functions are marketing, operations (production of goods and services),
finance, and human resource management. Managers whose expertise lies primarily in one or
another of the especially areas are known as functional mangers. All other managers are usually
referred to as general managers.

Many businesses, such as outback steakhouse, are organized around these functions and execute the
varied activities of each function through both individuals and teams, horizontally or vertically, at all
three management levels.

Marketing managers. The marketing function involves identifying current and potential customers
needs and preferences along with developing goods and services that will satisfy them. Working
with the other functional managers, marketing mangers determine the physical and performance
characteristics for three – dimensional products. In addition, they focus on ways to properly price,
promote, sell, and distribute and organization’s good and services.

Operations Managers. Managers in operations perform the activities needed to manufacture an

item or provide a service. In manufacturing companies, operations mangers and concerned about

14 | P a g e
controlling inventory levels and deliveries, determining factory layout, scheduling production,
maintaining equipment, and meeting quality requirements for all production activities.

Finance mangers. Finance managers are most concerned with managing the flow of funds into and
out of the organization and help to determine how company funds can be most effectively used.
Individual managers in this functional area are responsible for granting and using their company’s
credit, investing company funds, safeguarding the company’s assets, keeping track of the company’s
financial health, and preparing budgets.

Human resource managers. Human resource (HR) managers are responsible for building and
maintaining a competent and stable work force. They execute and assist other managers in executing
the activities connected to these tasks to include forecasting the need for recruiting, selecting and
training people crating performance appraisal and compensation system; overseeing relations with
the company’s unions; and handling all these activities within the limits and demands of federal,
state, and local laws. In most small organizations, HR activities must usually by performed without
the assistance of full-time HR managers.

Most middle managers and all those at the top should be familiar with more than one of these
specialty areas. The higher a person raises in the level of management, the more knowledge about
each of these areas he or she must possess.

 Activity 5
1. Outline the three levels of management.
_______________________________________________________________________
2. Which level of management translates long-term objectives in to short-term objectives?
________________________________________________________________________

1.9) Management Roles

 Dear learner, what are the roles played by managers?
__________________________________________________________________________

A role is a set of expectations for a manager’s behavior. Like professional actors throughout their
careers, managers play different roles as circumstances dictate. Professor and management

15 | P a g e
researcher henry Mintzberg defines ten roles managers are expected to play and group them into
three categories: interpersonal, informational, and decisional. Ach is examined her Figure 12
describes the roles and provides brief examples of how a typical chief executive officer plays them.

Interpersonal Roles

A manger’s interpersonal roles are the result of the position he or she holds in management
(Mintzberg, 1975). The three interpersonal roles are

 Figurehead. As head of work unit (division, department or section), and manager routinely
performs certain ceremonial duties. Examples of ceremonial duties include entertaining visitors,
attending a subordinate’s wedding, and officiating at a group luncheon.
 Leader. As a leader, a manager creates the environment, works to improve employee’s
performances and reduce conflict, provides feedback, and encourages individual growth.
 Liaison. In addition to superiors and subordinates, managers interact with others peer- level
managers in other departments, staff specialists, other department’s employees, and suppliers and
client. In this role, the manager builds contacts.

Informational Roles

 Partly as a result of contacts inside and outside the organization, a manager normally has more
information than do other members of the staff (Mintzberg,1975) three key roles derive from the sue
and dissemination of information: monitor. While constantly monitoring the environment to
determine what is going on, the manager collects information both directly (by asking questions) and
indirectly (by receiving unsolicited information)
 Disseminator. As a disseminator, a manager passes on to subordinates some information that
would not ordinarily be accessible to them.
 Spokesperson. A manager speaks for the work unit to people outside the work unit. Sometimes a
spokesperson informs superiors; sometimes he or she communicates with people outside the
organization.

Decisional Roles

In playing four decisional roles, managers make choices, alone or with others, or influence the
choices or others (Mintzberg, 1975). The decisional roles are
16 | P a g e
  Entrepreneur. In sharing and initiating new ideas or methods that may improve the work unit’s
operations, a manager assumers the entrepreneur’s role. Disturbance handler. As a disturbance
handler, a manager deals with schedule problems, equipment failure, strikes, broken contracts, and
any other feature of the work environment that decreases productivity.
 Resource allocator. A manager determines who in the stork unit gets what resource money,
facilities, equipment, and access to the manager.
 Negotiator. A manager must spend a significant portion of time negotiating, because only a
manager has the information and authority required to do so. Items to be negotiated include contracts
with suppliers, tradeoffs for resources inside the organization, and agreements with labor
organizations.

Role Description Identifiable Activities from study of

Chief Executive

INTERPERSONAL

Figurehead Performs symbolic routine duties public of legal or Attending ceremonies or other

social nature

Leader Motivates subordinates, ensures Hiring and training of staff Legal, or social functions; officiating interacting with
subordinates.
Maintains self-developed network of contact and informers who
provide favors and information Acknowledging mail and interacting with outsiders
Liaison

INFORMATIONAL

Monitor Seeks and receives wide variety of special Handling all mail and contracts

information to develop thorough understanding of the concerned primarily with receiving

organization and environment

Transmits information received from outsiders or subordinates to

Forwarding mail into the organization for informational
members of the organization (some information is factual, some
purposes. Maintaining verbal contacts involving flow to
involves interpretation and integration)
Disseminator
subordinates
Transmits outsides information about
Attending board meetings, handling

17 | P a g e
 organization’ plans, policies, action, results, and mail and contacts involving transmission contacts
involving transmission to outsiders
so forth, serves as expert on organization industry of information

Spokesman

DECISIONAL

Searches organization and its environment Implementing strategy and review

Entrepreneur For opportunities and initiates projects to bring sessions involving improvement

about changes

Disturbance Handler Initiates corrective action when organization Implementing strategy to resolve disturbances and crises

faces important unexpected disturbances

Resource Allocator Initiates corrective action when organization faces important scheduling, requesting authorization, budgeting,
unexpected disturbances programming of subordinates work
Negotiator
Represents the organization in major negotiations Negotiating

Roles and Managerial Functions

By effectively discharging these multiple roles, managers accomplish their managerial functions. In
planning and organizing, and manager performs the resource allocator. In staffing, managers play the
leadership role by providing subordinates with feedback on performance. In leading, mangers
perform as disseminators, entrepreneurs, and disturbance handlers; in controlling, the perform as
monitors

 Activity 6
1. Enumerate the interpersonal role of managers.
__________________________________________________________________________
2. A manager that transmit information received from outsiders or subordinates to members of the
organization is
________________________________________________________________________

18 | P a g e
3. What is the role of a negotiator?
_________________________________________________________________________

 Self- Test Questions

PART I choose the best answer
1. Managers whose primary responsibility is for producing and delivering an organization’s good
and service is found at ___________ zones
a. Institutional zone c. managerial zone
b. Technical core d. None of the above
2. Levels of managers who are responsible for overseeing the entire organization and establishing
long-term, companywide goals are
a. Top managers C. First line managers
b. Middle level managers D. a and b
3. A manager that play the role of interacting with others like peer – level managers, staff
specialists, suppliers, clients etc are called
a. Figure head C. Liaison
b. Leader D. Monitor
4. A manger who determines who gets what resource in a work is called
a. Spokes person C. figurehead
b. Entrepreneur D. Resource allocate
5. A management skill that consist of the abilities to interact and communicate successfully with
other persons is
a. Technical skill C. conceptual skill
b. Interpersonal skill D. a and b
6. Managers who are not directly involved in the production of goods or services but support other
managers are
a. Line managers C. staff managers
b. First line manager’s D. Unit managers

7. A management function they involve getting others to perform the task necessary to achieve the
organization’s goal is _________
a. Planning C. Directing (leading)

19 | P a g e
b. Organizing D. Staffing
8. Managers whose expertise lies primarily in one or another of the specialty areas are known as
_________________
a. Line managers C. Staff managers
b. General managers D. Functional managers
9. Which of the following is a functional manger
a. Marketing manager C. Formal manager
b. Line manager D. Staff manager
10. Which of the following is not an information manager’s role
a. Monitoring the environment
b. Speaking to people outside the work
c. Handle disturbances
d. Passing some information to subordinates.

Part II True/false Questions

1. Managers job involves only science.

2. Managers in the technical core have direct responsibility for producing and delivering and
organizational goods and service.
3. Technical skills are more essential at the first line of managers and least important at the top.
4. General Managers supervise employees having expertise in one area.
5. Middle level managers are responsible for overseeing the entire organization.

Part III Matching

1. Transmit information to outsiders about organizations policies and plans

2. In fiat correction action when organization faces important unexpected disturbances.
3. Performs symbolic duties of legal or social nature.
4. Fulfills responsibility for the allocation of organizational resource of all kind.

a. Figure head e. Disseminator

b. Negotiator f. disturbance Handler
c. Resource allocation
d. Spokesman

20 | P a g e
 UNIT TWO

MANAGEMENT THOUGH: PAST AND PRESENT

Student learning objectives

At the end of this unit students will be able to:

 Understand the major elements of Taylor’s approaches to scientific management

 Explain the significance of Hawthorne studies
 Understand the early management pioneers, their view of organization and their contribution to
the classical school of management
 Discuss the emergence of the human relations movement and describe how it view of
organization and their contribution to the management literature
 Discuss the contemporary schools of management

2.1) INTRODUCTION
Dear learner! For many generations people believed that the earth was flat and the center of the
universe. No educated person believes this today. Throughout history one generation’s “fact” has
become, in part or in total, the next generation’s fiction. The conventional wisdom of every ear
evolves as its cherished believes are challenged by the new, leaving behind only those elements that
have survived the test of times. So it is with the various schools of through about the ways in which
organizations, their resources, and their processes should be managed. As the president of the
Washington, D.C based healthy companies group puts it, “ (Leaders for the twenty first century) will
need to enlightened pragmatists who will look for things that work and be willing to challenge past
precepts and practices.”

2.2) History and Theory of Management

Each generation of managers need to understand the lessons learned by its predecessors and build on
them. As you shall see throughout this text, preceding generations of managers have much to teach.

Graphic records from ancient times; the Bible, Egyptian tomb painting, and Babylonian clay tablets
– record how early civilizations though about management and how they managed their affairs.

21 | P a g e
Management began when the earliest humans handed together in clans and tribes. Their survival
depended on effective hunting and gathering. Such activities needed both skilled individuals and
cooperative efforts. In time strong individuals with the ability to manage emerged with in each
community to take over the management of specialized tasks and of the community as a whole.

Value of Theory

A theory is a part of an art or science that attempts to explain the relationships between and among
its underlying principles. Theories give people a reason for doing things one way rather than another.
Various management theories have arisen over past decades; some aspects of each have failed the
test fo time, others have survived if and are used by managers today.

2.3) The Classical School

 Dear learner, what are the theories advocated by the classical school of thought?
__________________________________________________________________
2.3.1) The Scientific Management School
Scientific management theory arose in part from the need to increase productivity. In the United
States especially skilled labor was in short supply at the beginning of the twentieth century. The only
way to expand productivity was to raise the efficiency of workers. Therefore, Frederick W. Taylor,
HencryL.Gantt, ad Frank and Lillian Gibrethsdevised the body of principles known as scientific
management theory.

Frederick W. Taylor

Frederick W.Taylor (1856-1915) rested his philosophy on four basic principles.

1. The development of a true science of management, so that the best method for performing
each task could be determined
2. The scientific selection of worker, so that each worker would be given responsibility for the
task for which he or she was best suited.
3. The scientific education and development of the worker.
4. Intimate, friendly cooperation between management and labor.

Taylor contend that the success of these principles required a “ complete mental revolution on the
part of management and labor. Rather than quarrel over profits, both sides should try to incrase

22 | P a g e
production; by so doing, he believed, have to fight over them. In short, taylor believed that
management and labor had a common interest in increasing productivity.

Taylor used time – and – motion studies to analyze workflows, supervisory techniques, and worker
fatigue. A time- and- motion study involves identifying and measuring a worker’s physical
movements when performing a task and then analyzing the results. Movements that slow production
are dropped. One goal of a time- and – motion study is to make a job highly routine and efficient.
Eliminating waste4d physical effort and specifying and an exact sequence of activities reduce the
amount of time, money, and effort needed to make a product. Taylor was convinced that having
workers perform routine tasks that didn’t require them to make decisions could increase efficiency.
Performance goals expressed quantitatively (e.g. number of units produced per shift) addressed a
problem that had begun to trouble managers how to judge whether an employee had put in a fair
day’s work. Advocates of scientific management stress speciation. They believe that expertise is the
only source of authority and that a single foreman couldn’t be an expert at all the tasks supervised.
Each foreman’s particular area of specialization therefore should become an area of authority. This
solution is called functional foremanship, a division of labor that assigned eight foremen to each
work area. Four of the foremen would handle planning, production scheduling, time – and- motion
studies, and discipline. The other four would deal with machinery maintenance, machine speed,
feeding material into the machine, and production on the shop floor.

What motivates employees to work to their capacity? Taylor believed that money was the answer.
He supported the individual piecework system (differential rate) as the basis for pay. If workers met
certain production standard, they were to be paid at a standard wage rate. Workers who produced
more than the standard were to be paid at a higher rate for all the pieces they produced, not just for
those exceeding the standard. Taylor assumed that workers would be economically rational; that is,
they would follow management’s orders to produce more follow management’s orders to produce
more in response to financial incentives that allowed them to earn more money. Taylor argued that
mangers should use financial incentives if they were convinced that increases in productivity would
more than offset higher employee earnings.

Henry L.Gantt

Henry L.Gantt (1861-1919) worked with Taylor on several projects. But when he went out on his
own as a consulting industrial engineer, Gantt began to reconsider Taylor’s incentive system.

23 | P a g e
Abandoning the differential rate system as having too little motivational impact Gantt came up with
a new idea. Every worker who finished a day’s assigned workload would win a 50-cent bonus. Then
he added a second motivation. The supervisor would earn a bonus for each worker who reached the
daily standard, plus an extra bonus if all the workers reached it. This, ganttrasoned, would spur
supervisors to train their workers to do a better job.

Every worker’s progress was rated publicly and recorded on individual bar charts in black on days
the worker made the standard, in red when he or she full below it. Going beyond this, gantt
originated a charting system for production scheduling; the “Gantt chart” is still in suede today. In
fact, the Gantt chart was translated into eight languages and used throughout the world.

The Gilbreths

Frank B. and Lillian M. Gilbreth (1868-1924 and 1878-1972) made their contribution to the
scientific management movement as a husband- and – wife team. Lillian and Frank collaborated on
fatigue and motion studies and focused on ways of promoting the individual worker’s welfare. To
them, the ultimate aim of scientific management was to help workers reach their full potential as
human beings.

In their conception, motion and fatigue were intertwined-every motion that was eliminated reduced
fatigue. Using motion picture cameras, they tried to find the most economical motions for each task
in order to upgrade performance and reduce fatigue. The Gilbreths argued that motion study would
raise worker morale because of its obvious physical benefits and because it demonstrated
management’s concern for the worker.

 Activity 7
1. What is the philosophy behind time and motion study?
_________________________________________________________________________________
_____________________________________________________________
2. Every worker who finished a day’s assigned workload would win a 50 – cent bonus this is the
philosophy of ____________________________________
3. Unity of direction one head and one plan should lead a group of activities having the same
objectives

24 | P a g e
4. Subordination of the individual to the general interest the interest of one person or group in a
business general not prevails over that of the organization.
5. Remuneration of personnel the price of services rendered shoulder fair and satisfactory to both
employees and employer. A level of pay depends on an employee’s value to the organization and on
factors independent of an employee’s worth- cost of living, availability of personnel, and general
business condition, for example.
6. Centralization everything that serves to reduce the importance of an individual subordinate’s role
is centralization. Everything that increases the subordinate’s importance is decentralization. All
situations call for a balance between these two positions.
7. Scalar Chain the chain formed by managers from the highest to the lowest is called a scalar
chain, or chain of command. Managers are the links in the chain. They should communicate to and
through the links as they occur in their chain. They should communicate to and through the links as
they occur in their chains. Links may be skipped only when superiors approve and real need exists to
do so.
8. Order there should be a place for everyone and everyone is his or her place; a place for
everything, and everything in its place. The objective of order is to avoid loss and waste.
9. Equity kindliness and justice should be practiced by persons in authority to extract the best that
their subordinates have to give.
10. Stability of tenure of personnel reducing the turnover of personnel will result in more efficiency
and fewer expenses.
11. Initiative people should be allowed the freedom to propose and execute ideas at all levels of an
enterprise. A manager able to permit the exercise of initiative by subordinates is far superior to one
unable to do so.
12. Esprit de corps in unity there is strength. Managers have the duty to promote harmony and to
discourage and avoid those things that disturb harmony.

Max Weber

Reasoning that any goal- oriented organization consisting of thousands of individuals would require
the carefully controlled regulation of its activities, the German sociologist max weber (1864-1920)
developed a theory of bureaucratic management that stressed the need for a strictly defined
hierarchy governed by clearly defined regulations and lines of authority. He considered the ideal
organization to be a bureaucracy whose activities and objectives were rationally thogy out and
whose divisions of labor were explicitly spelled out. Weber also believed that technical competence

25 | P a g e
should be emphasized and that performance evaluations should be made entirely on the basis of
merit.

Today we often think of bureaucracies as vast, impersonal organizations that put impersonal
efficiency ahead of human needs. We should be careful, though, not to apply our negative
connotations of the word bureaucracy to the term as weber used it. Like the scientific management
theorists, weber sought to improve the performance of socially important organizations by making
their operations predictable and productive .although we now value innovation and flexibility as
much as efficiency and predictability, weber’s model of bureaucratic management clearly advanced
the formation of huge corporations such as ford. Bureaucracy was a particular pattern of
relationships for which weber saw great promise.

Mary Parker Follett

Mary parker Follett (1868-1933) was among those who built on the basic framework of the classical
school. However, she introduced many new elements, especially in the area of human relations and
organizational structure. In this, she initiated trends that would be further developed by the emerging
behavioral and management science schools.

Follett was convinced that no one could become a whole person except as member of group; human
beings grew through their relationships with others in organizations. In fact, she called management”
the art of getting things done through people”. She took for granted Taylor’s assertion that labor and
management shared a common purpose as members of the same organizations, but she believed that
the artificial distinction between managers (order givers) and subordinates (order takers) obscured
this natural partnership. She was a great believer in the power of the group, where individuals could
combine their diverse talents into something bigger. Moreover, follett’s“holistic” model of control
took into account not just individuals and groups, but the effects of such environmental factors as
politics, economics, and biology.

Chester I Barnard

Chester barnard (1886-1961), like follett, introduced elements to classical theory that would be
further developed in larter schools. Barnard, who became president of New Jersey Bell in 1927, used
his work experience and his extensive readings in sociology and philosophy to formulate theories
about organizations. According to barnard, people come together in formal organizations to achieve

26 | P a g e
ends they cannot accomplish working alone. But as they pursue the organization’s goals, they must
also satisfy their individual needs. And so Barnard arrived at his central thesis: an enterprise can
operate efficiently and survive only when the organization’s goals are kept in balance with the aims
and needs of the individuals working for it. Barnard believed that individual and organizational
purposes could be kept in balance if manger understood an employee’s Zone of indifference that is
what the employee would do without questioning the manager’s authority. Obviously, the more
acitivities that fell within an employee’s zone of indifference (what the employees would accept),
the smoother and more cooperative an organization would be .barnard also believed that executives
had a duty to instill a sense or moral purpose in their employees. To do this, they would have to learn
to think beyond their narrow self- inertest and make an ethical commitment to society.

 Activity 8
1. What do you understand by unity of command?
_________________________________________________________________________________
__________________________________________________________________
2. Define bureaucracy?
_________________________________________________________________________________
__________________________________________________________________

2.4) Behavioral Management Theory

 Dear student, what is the main idea behind the behavioral school of thought?
_____________________________________________________________________

The behavioral school took management thinking one step further. Its proponents recognized
employees as individuals with concrete human needs, as parts of work group, and as members of a
larger society. Enlightened managers were to view their subordinates as assets to be developed, not
as nameless or bots expected to follow orders blindly.

2.4.1. The Human Relations Movement

Human relations are frequently used as a general term to describe the ways in which managers
interact with their employees. When “employee management stimulates more and better work, the

27 | P a g e
organization has effective human relations; when moral and efficiency deteriorate, its human
relations are said to be ineffective. The human relations movement arose from early attempts to
systematically discover the social and psychological factors that would create effective human
relations. The Hawthorn Experiment. The human relations movement grew out of a famous series
of studies conducted at the western Electric Company from 1924 to 1933. These eventually became
known as the: Hawthorn Studies” because many of them were performed at westen Electric’s
hawthorn plant near Chicago. The hawthorn Studies began as an attempt to investigate the
relationship between the level of lighting in the workplace and worker productivity- the type of
question Frederick Taylor and his colleagues might well have addressed.

In some of the early studies, the western Electric researchers divided the employee test groups, who
were subjected to deliberate changes in lighting, and control groups, whose lighting remained
constant throughout the experiments. The results of the experiments were ambiguous. When the test
group’s lighting was improved, productivity tended to increase, although erratically. But when
lighting conditions were made worse, there was also a tendency for productivity to increase in the
test group. To compound the mystery, the control group’s output also rose over the course of the
studies, even though it experienced no changes in illumination. Obviously, something besides
lighting was influencing the workers’ performance.

In a new set of experiments, a small group of workers was placed in a separate room and a number
of variables were altered: wages were increased; rest periods of varying length were introduced; the
workday ad work week was shortened. The researchers, who now acted as supervisors, also allowed
the groups to choose their own rest periods and to have a say in order suggested changes. Again, the
results were ambiguous. Performance tended to increase over time, but it also rose and fell
erratically. Partway through this set of experiments, Elton mayo (1880-1949) and some associates
from Harvard including Fritz j.Roethlisberger and William J.Dickson, became involved.

In these and subsequent experiments, mayo and his associates decided that a complex chain of
attitudes had touched off the productivity increases. Because they had been singled out for special
attention, both the test and the control groups have developed a group pride that motivated them to
improve their work performance. Sympathetic supervision had further reinforced their motivation.
The researchers concluded that employees would work harder if they motivation. The researchers
concluded that employees would work harder if they believed management was concerned about
their welfare and supervisors paid special attention to them. This phenomenon was subsequently

28 | P a g e
labeled the Hawthorne effect. Since the control group received no special supervisory treatment or
enhancement of working conditions but still improved performance, some people (including mayo
himself) speculated that the control group’s productivity gains resulted from the special attention of
the researchers themselves.

The researchers also concluded that informal work groups- the social environment of employees –
have a positive influence on productivity. Many of western Electric’s employees found their work
dull and meaningless, but their associations and friendships with co-workers, sometimes influenced
by a shared and provided some protection from management. For these reasons, group pressure was
frequently a stronger influence on worker productivity than management demands..

To Mayo, then, the concept of “social man”- motivated by social needs, wanting rewarding on – the
– job relationships, and responding more to work- group pressures than to management control- was
necessary to complement the old concept of “ rational man” motivated by personal economic needs.
All these findings might seem unremarkable today. But compare what mayo and his associates
considered relevant with what ford and weber found relevant, and you see what a change these ideas
brought to management theory.

2.4.2. Follett’s Contributions

Mary parker Follett (1868-1933) made important contributions to the behavioral viewpoint of
management. She believed that management is flowing continuous process, not a static one, and that
if a problem has been solved; the method used to solve it probably generated new problems. She
stressed (1) involvement of workers in solving problems and (2) the dynamics of management,
rather than static principle. Both ideas contrasted sharply with the views of weber, taylor, and Fayol.

Follett studied how managers did their jobs by observing them at work. Based on this observation,
she concluded that coordination is vital to effective management. She developed four principles of
coordination for managers to apply.

1. Coordination is best achieved when the people responsible for making a decision are in direct
contract.
2. Coordination during the early stages of planning and project implementation is essential.
3. Coordination should address all the factors in a situation.
4. Coordination must be worked at continuously.

29 | P a g e
Follett believed that the people closest to the action could make the best decsiions. For example, she
was convinced that first- line managers are in the best position to coordinate production tasks. And
by increasing communication among themselves and with workers, these mangers can make better
decisions regarding such tasks than managers up the hierarchy can. She also believed that first- line
managers should not only plan and coordinate workers’ activities, but also involve them in the
process. Simply because managers told employees to do something a certain way, follett argued,
they shouldn’t assume that the employees would do it. She argued further that managers at all levels
should maintain good working relationships with their subordinates. One way to do so is to involve
subrdinates in the decision- making process whenever they will be affected by a decision. Drawing
on psychology and sociology folletturged managers to recognize that each person is a collection of
beliefs, emotions, and feeling.

 Activity 9
1. What was the result of Hawthorne effect?
_________________________________________________________________________________
_______________________________________________________________
2. Write down the four principles of coordination for managers to apply developed by mary parker
Follett.
_________________________________________________________________________________
_______________________________________________________________

2.5) Contemporary management Thought

 Dear student, what are the thoughts advocated by the contemporary management school?
________________________________________________________________________

2.5.1. The systems Approach

Rather than dealing separately with the villous segments of an organization, the systems approach to
management views the organization as a unified, purposeful system composed of interrelated parts.
This approach gives managers a way of looking at the organization as a whole and as a part of the
larger, external environment. Systems theory tells us that activity of any segment of an organization
affects, in varying degrees, the activity of every other segment.

30 | P a g e
Production managers in a manufacturing plant, for example, prefer long uninterrupted production
runs of standardized products in order to maintain maximum efficiency and low costs. Marketing
managers, on the other hand, who want to offer customers quick delivery of a wide range of
products, would like a flexible manufacturing schedule that can fill special orders on short notice.
Systems oriented production managers make scheduling decisions only after they have identified the
impact of these decisions on other departments and on the entire organization. The point of the
systems approach is that managers cannot function wholly within the confines of the traditional
organization chart. They must mesh their department with the whole enterprise. To do that, they
have to communicate not only with other employees and departments, but frequently with
representative of other organizations as well. Clearly, systems managers grasp the importance of
webs of business relationships to their efforts.

Some Key Concepts

Many of the concepts of general systems theory are finding their way into the language of
management. Mangers need to be familiar with the systems vocabulary so they can keep pace with
current development.

Subsystems. The parts that make up the whole of a system are called subsystems. And each system
in turn may be a subsystem of a still larger whole. Thus a department is a subsystem of a plant,
which may be a subsystem of company, which may be a subsystem of a conglomerate or an industry,
which is a subsystem of the national economy, which is a subsystem of the world system.

Synergy. Synergy means that the whole is greater than the sum of its parts. In organizational terms,
synergy means that as separate departments within an organization cooperate and interact, they
become more productive than if each were to act in isolation. For example, in a small firm, it is more
efficient for each department to deal with one finance department than for each department to have a
separate finance department of its own.

Open and closed Systems. A system is considered an open system if it interacts with its
environment; it is considered a closed system if it does not. All organizations interact with their
environment, but the extent to which they do so varies. An automobile plant, for example, is a far
more open system than a monastery or a prison.

31 | P a g e
System Boundary. Each system has a boundary that separates if from its environment. In a closed
system, the system boundary is rigid; in an open system, the boundary is more flexible. The system
boundaries of many organizations have become increasingly flexible in recent years.

Flow. A system has flows of information, materials, and energy (including human energy). These
enter the system from the environment as inputs (raw materials, for example), undergo
transformation processes within the system (operations that alter them), and exit the system as
outputs (goods and services).

Feedback. Feedback is the key to system controls. As operations of the system proceed, information
is fed back to the appropriate people, and perhaps to a computer, so that the work can be assessed
and if necessary, corrected.

 Activity 10
1. What do you understand by the term synergy?
________________________________________________________________________
2. What is a closed system?
________________________________________________________________________

2.5.2. Contingency Management Theory

The essence of the contingency viewpoint (sometimes called the situational approach) is that
management practices should be consistent with the requirement of the external environment, the
technology used to make a product provide a service, and capabilities of the people who work for the
organization. The contingency viewpoint of management emerged in the mid 1960s in response to
the frustration of managers and others who had tried unsuccessfully to apply traditional and systems
concepts to actual managerial problems. For example why did providing workers with a bonus for
being on time decrease lateness at Dila hotel but have little impact at another? Proponents of the
contingency viewpoint contend that different si8tuations require different practices. As one manager
put it, the contingency viewpoint really means, “ it all depaends.”

Proponents of the contingency viewpoint advocate using the other three management viewpoint
independently or in combination, as necessary, to deal with various situations. However, this
viewpoint doesn’t give managers free rein to indulge their personal biases and whims. Rather

32 | P a g e
managers are expected to determine which methods are likely to be more effective than others in a
given situation.

Contingency variables

The relative importance of each contingency variable- external environment, technology, and
people- depends on the type of managerial problem being considered. For example, in designing an
organization’s structure a manager should consider the nature of the company’s external
environment and the corresponding information processing requirements.

Technology is the method used to transform organizational inputs into outputs. It is more than
machinery; it also is the knowledge, tools, techniques, and actions applied to change raw materials
into finished goods and service. The technologies that employees use range from the simple to the
highly complex. A simple technology involves decision- making rules to help employees do routine
jobs.

 Activity 11
State the major components of the contingency viewpoint.

_________________________________________________________________________________
___________________________________________________________________________

 Self –Test Questions

Part One: Choose the Best Answer

1. According to Taylor, the main motivator for employees work to their capacity is
a. Work environment d. Social relatedness
b. Money e. All of the above
c. Satisfaction
2. A principle (Fayol’s) that proposes, that people should be allowed the freedom to propose and
execute idea at the levels of an organization is.
a. Order c. Initiative

33 | P a g e
b. Equity d. Discipline
3. What does differential rate (piece work) system mean
a. Workers who produced more than standard should be paid a higher rate
b. More production may not result to more payment
c. Mangers should be economically rational
d. Workers would be economically rational
e. All except b
f. All of the above
4. The man who considered the ideal organization to be a bureaucracy whose activities and
objectives were rationally though out and whose division of labor were explicitly spelled out is
__________________
a. Taylor c. Fayol
b. Weber d. Gantt
5. A school of management thought that recognized employees as individuals with concrete human
needs and as members of a large society is
a. Scientific school of thought d. The system perspective (theory)
b. Behavioral school of through e. None
c. Quantitative management theory
6. According to Mary parker Follett coordination for effective management could be achieved.
a. When people responsible for marketing a decision are indirect contact
b. It must be worked continuously
c. It should address all factors in a situation
d. All of the above
7. A management thought that tells us that activity of any segment of an organization affects, the
activity of every other segment is
a. The contingency perspective
b. Quantitative theory
c. The system perspective
d. Qualitative management thought
8. According to the hawthorne studies,
a. Employees work hard if they believe managers are concerned about their welfare
b. Social environment of employees have a positive influence on productivity
c. Productivity is the result of complex chain of attitudes

34 | P a g e
d. All are correct
9. One of the following is not a contemporary management thought
a. The human relation movement c. The contingency perspective
b. The system perspective d. Qualitative management theory
10. A school of thought which believe that management proactive should be consistent with the
requirement of the external environment is
a. The contingency perspective
b. The systems perspective
c. Qualitative management theory

Part II True or False Questions

1. According to Taylor, Workers should be selected scientifically and given responsibility for the
task.
2. According to the proponents of classical administrative school management don’t require
specific skill that could be learned and thought.
3. The scientific management schools recognized employee as individual with converted human
needs and as members of a large society.
4. The systems theory views organizational as a unified purposeful system composed of interrelated
parts.
5. The essence of contingency theory is that management practice should be consistent with the
requirement of the external environment.

35 | P a g e
 UNIT THREE

ORGANIZATIONAL PLANNING
Introduction

If you are good enough, it isn’t realty necessary to set aside time for formal planning. After all, “
planning time” takes away from ‘ doing time’ managers often make such statements to avoid
developing a formal planning program; however, these are not valid claims.

Planning can influence the effectiveness of entire organizations, not just that of individual manager.
This section will define planning and discuss why managers should plan. It will also introduce you
to decision making and will also discuss decision making by individuals and groups.

Student learning objectives

At the end of this unit students will be able to:

 Understand the basic definition of planning

 Identify the basic planning process.
 Explain the different types of planning
 Understand the techniques of planning
 Discuss the kinds of decision-making
 Understand what management by objective is and its processes and the problems associated with
it.

3.1) PLANNING DEFINED

 Dear student, do you have any idea about what planning is and why do managers plan?
________________________________________________________________________
Planning is the process by which managers establish goals and define the methods by which these
goals are to be attained. Plans have two basic components: goals and action statements. Goals
represent an end state- the target and outcomes- that managers hope to attain. Action statements
reflect the means by which an organization moves forward to attain its goals.
Planning is an intellectual activity- a conscious act through which managers determines a course of
action for pursuing a specific goal. While planning, managers have to think about what has to be

36 | P a g e
done, who is going to do it, and how and when they will do it. Planning also involves thinking about
past events (retrospectively) and about future opportunities and impending threats (prospectively). It
involves thinking about organizational strengths and weaknesses and involves decision- making and
planning are not the same however. Decisions can be made without planning, but planning cannot
exist without decision- making.
Why should managers plan?
The essence of planning is to see opportunities and threats in the future and, respectively, exploit or
combat them as the case may be---- planning is a philosophy, not so much in the literal sense of that
word but as an attitude, a way of life.
Planning for organizational events, whether in the internal or external environments, should be an
ongoing process. Mangers should monitor their plans routinely. They should check to see if their
plans need to be modified to accommodate changing conditions, new conditions or new situations
that will affect their organization’s future.
Managers have several reasons for formulating plans for themselves, their employees and various
organizational units: (1) to offset uncertainty and change; (2) to focus organizational activity on a set
of consciously created objectives; (3) to provide a coordinated, systematic road map for future
activities; (4) to increase economic efficiency via efficient operation and consistency; and

 Activity 12
1. What are reasons for managers to formulate plans?
_________________________________________________________________________________
_________________________________________________________

3.2) Basic Planning Processes

 Dear learner, how do managers make plan?
________________________________________________________________________
When developing a plan, al managers, regardless of their organizational level, follow some kind of
step- by- step process to guide their efforts. The following details a recommended basic planning
process that can be used to create tactical and operational plans. As each step is explained, consult
them for applications.

37 | P a g e
Step 1. Setting objectives
Establishing targets for the short or long- range future
Step 2. Analyzing and Evaluating the Environments
Analyzing the present positions, the internal and external environment and resources available
Step 3. Identifying the alternatives
Construct a list of possible courses of action that will lead to goals.
Step 4. Evaluating the Alternatives
Listing and considering the advantages and disadvantages of each possible course of action.
Step 5. Selecting the Best solution
Selecting the course of action that possesses the most advantages and the fewest serious
disadvantages
Step 6. Implementing the plan
Determining who will be involved what resources will be assigned how the plan will be
evaluated and how reporting will be handled.
Step 7. Controlling and Evaluating the Results
Ensuring that the plan is proceeding according to expectations and making necessary adjustments

Setting objectives

When setting objectives, middle and operating managers focus and commit the attention and
energies of their respective personnel, divisions, and departments for several months into the future.
The selection of objectives ( and the courses of action to achieve them) are influenced in part by the
organization’s mission and values; the strategic plans and goals; the standing plans; the
environmental conditions; the strategic plans and goals the standing plans, the environmental
conditions, the availability of resources; and the philosophies, ethics, accumulated experience, and
expertise of its managers.

Analyzing and Evaluating the Environment

Once objectives are established, managers must analyze their present situations and environments to
determine what resources they will have available and what other limiting factors such as company
polices they must consider as they evaluate possible courses of action, or tactics. When assessing the
internal environment, managers must consider what human, material, financial, time and
informational resources are available and what the needs of internal customers are. When assessing
the external environment, managers must consider such elements as the strengths and weaknesses of
38 | P a g e
suppliers and partner, the availability of additional labor and technology, and the needs of external
customers.

Identifying the Alternatives

Courses of action available to manager to reach a goal represent alternate paths to a destination.
When developing alternatives, a manager should try to create as many roads to each objective as
possible. These alternatives may be entirely separate ways to reach a goal as well as variations of
one or more separate alternatives. When listing alternatives, mangers usually invite any persons who
have the relevant knowledge and experience to contribute suggestions. Those who will have to
execute a chosen alternative to be part of the process help to ensure a commitment on their part to
make the alternative work.

Evaluating the Alternatives

Each alternative must be evaluated to determine which one or combination is most likely to achieve
the objective. Managers then return to the second step to make certain that each alterative fits with
the resources available and within the identified limits.

Selecting the Best solution

The analysis of each alternative’s benefits and costs should result in determining on course of action
that appears better than the others. If no single alternative emerges as a clear winner- the one with
the most advantages and the fewest serious disadvantages – managers should consider combining
two or more of them, either in part or in their entirety. The alternatives not selected may be
considered as possible fallback positions – as choices for a contingency plan.

Implementing the plan

After they have completed the tactical or operational plan, their creators need to develop an action
plan to implement it. Among the issues to be resolved: who will do what? By what date will each
task be initiated and completed: what resources will each person have to perform the task?

Controlling and Evaluating the Results

Once the plan is implemented, managers must monitor the progress being made and be prepared to
make any necessary modification. Since environmental conditions are constantly changing, plans

39 | P a g e
must often be modified. Modifications may also be required because of problems with a plan’s
implementation.

 Activity 13
Write down the stapes of planning process?

_________________________________________________________________________________
_________________________________________________________________________________
_______________________________________________________________________

3.3) Types of planning

 Dear student, what are the different types of planning
______________________________________________________________________________

Managers create many different types of plans to guide operations and to monitor and control
organizational activities. In this section several commonly used plans are discussed: hierarchical,
frequency- of- use (repetitiveness), time frame and organizational scope.

1. Hierarchical plans

Strategic planning

Strategy is the art and science of combining the many resources available to achieve the best match
between an organization and its environment. Top mangers’ active, conscious attempts to design a
scheme to position an organization within its external environment are known as strategic planning
.an organization’s strategic plan outlines a long-term vision for the organization. It specifies the
organization’s reason for existing its strategic objectives, and its operational strategies. An
organization’s strategic plan, thus, answers a set of fundamental questions. What business is it in or
does it want to be in? What kind of organization is it or does it want to be? How is it goin to operate
to achieve this strategic position? A strategic plan, therefore, is a comprehensive framework that
guides the decisions that determine the nature and direction of organizational activities.

An organizational mission, a statement that specifies an organization’s reason for being, answers the
question “what business should be undertaken?” this mission is set forth in a mission statement.

40 | P a g e
Note that a particular mission statement does not necessarily dictate specific strategic objectives or
operational strategies. In fact, two different organizations can have almost identical mission
statements ( and even strategic objectives ) but very different operational strategies.

Characteristics of strategic plans

Strategic plans have several characteristics:

1. They are long- term and position an organization within its external environment.
2. They are pervasive and cover many organizational activities
3. They integrate, guide, and control organizational activities for the immediate and long- range
future.
4. They establish boundaries for managerial decision- making. Strategic plans are an organization’s
primary document and require that all managerial decisions be consistent with its goals. Thus,
strategic plans set forth an organization’s long-term goals; its intermediate objectives; and its
purpose, or basic role, in society.
Strategy components as managers construct a strategic plan; they must consider several important
factors that relate to their organization:
 Scope – an organization’s present and planned interactions with its environment. Scope also
identifies and organization’s domain, such as the markets in which it expects to compete, and the
nature and character of these interactions, such as methods of competition.
 Resource deployment- the internal distribution of an organization’s resources, including how
much money it will spend on research and development, for production, and so on in pursuit of its
goals.
 Competitive advantages – an organization’s unique position, compared to other organizations in
its task environment, such as exceptional skill in direct mail marketing.
 Synergy- the positive results that will come from the combination of scope resource deployment
and competitive advantages.

41 | P a g e
 Scope of Organization

Resource Deployment
Synergy
within organization
Strategic
Plan

Organization’s
competitive
Advantage

Tactical plans

Developed by middle managers, a tactical plan is concerned with what each of the major
organizational subsystem must do, how they must do it, when things must be done, where activities
will be performed, what resources are to be utilized and who will have the authority needed to
perform each task. Tactical plans have more details, shorter time frames, and narrower scopes than
strategic plans; they usually span year or less.

Strategic and tactical plans are usually but not always related. Every strategy requires a series of
tactical and operational plans linked to each other to achieve strategic goals; middle managers,
however, do create plans to reach what is uniuquely department, division or team goals, both for the
short and long term. Tactical objectives following logically from the strategic goals are tactical
objectives: short term goals set by middle managers that must be achieved in order to reach top
mangers’ strategic goals and the short and long term goals of middle managers.

Operational plans

First- line managers- supervisors, team leaders, and team facilitators in support of tactical plans,
develop an operational plan. It is first-line manager’s tool for executing daily, weekly and monthly
activities.

Operational objectives: first level managers, work groups, and individuals in these groups have
specific results expected from them in the form of operational objectives. Mesfin industrial

42 | P a g e
Engineering (MIE) first line managers in charge of a specific assembly operation has regular daily,
weekly, and monthly objectives to achieve in areas such as scheduling overtime, completing work on
time and on budget, protecting and allocating various resources, and reducing waste and scrap.

2. Frequency- of – use plans

Another category of plans is frequency- of use, or repetitiveness, plans. Some plans. Some plans are
used repeatedly and others are used for a single purpose

 Activity 14
1. Outline the frequency of use plan.
___________________________________________________________________
2. What are the kinds of plans categorized under time frame plan?
________________________________________________________________________
3. What are the components of strategic planning?
________________________________________________________________________

 Activity 15
1. What are the two types of decision- making?
________________________________________________________________________
2. What are the decision- making situations?
________________________________________________________________________

3.4) Skills Required in Planning

 Dear learner, what are the skills required in planning?
__________________________________________________________________________
Skills required in planning are
(i) Forecasting
(ii) Decision Making

43 | P a g e
(i) Forecasting: is the attempt to predict outcomes and future trends that can serve as basis for
planning, by inferences from known facts. By relating the past and the present information or data,
management should be able to anticipate the future environment.
In developing premises, the kind of markets, volume of sales, prices products, technical
developments, costs, tax rates, policies, policies related to dividends, the social and political
environment, long-term trends, and act of the future should be predicted with the help of forecasting.
Effective planning is made with the help of forecasting because planning itself is a future oriented
course of action. Accordingly, we have to assess the dynamism of both the internal and external
environment. When managers assess the alternatives, they try to forecast how events both within and
outside the organization will affect each alternative and what the outcome of each will be.
Forecasting Methods
We can use both qualitative & quantitative forecasting methods to predict future situations.
Qualitative Forecasting:- it is a judgment- based forecasting technique used when hard data are
scarce or difficult to use. It is appropriate when hard data are scarce or difficult to use. It thus
involves the use of subjective judgments and rating schemes to transform qualitative information
into quantitative estimates. Example includes the jury of executive opinion, market research and the
survey of expert opinion.
Quantitative Forecasting: - is a technique used when enough hard data exist to specify
relationships between variables. It is used when there is sufficient “hard” or statistical data to specify
relationships between key variables. Extrapolation forecasting, such as time- series analysis, uses
past or content trends to project future events. Sales records of the past several years, for example,
could be used to extend the sales pattern into the coming year. It disregards political considerations,
action of competitors, technological changes. It merely depends on the past and current trends.
Quantitative forecasting can be used if information exists about the past, if information exists about
the present, if information exists about the present, if this information can be specified numerically
and if it can be assumed that the pattern of the past will continue. To the contrary, inputs to
qualitative forecasts are mainly the results of intuitive thinking, judgment, and accumulated
knowledge. However, it is believed that quantitative techniques are generally more accurate than
qualitative ones. To conclude, our forecasting should be accurate, up to date, applicable and less
costly as much as possible.
(ii) Decision Making: is defined as the process of selecting or choosing based on some criteria, the
best course of action from number alternatives. Because managers are continually confronted with

44 | P a g e
opportunities and problems, they must constantly analyze the effect of different decisions on their
organizations and select the alternative that will move the firm toward its stated objectives.
Types of decisions: Several authors believe that there are two types of decisions: programmed &
non- programmed decisions.
Programmed decisions: are the kinds that managers face time and again. These decisions are
“programmable” because of a specific procedure can be worked out to resolve them based on
experience in similar situations.
 Once a standard procedure has been established, it can be used to treat all like situations.
 They usually involve an organization’s every day operational and administrative activities.
 They are primarily found at the middle and lower levels of management
 Data used in making a programmed decision usually are complete and well defined.
 Participants know the details and agree on how to resolve the problem. Non-programmed
Decisions: are used to solve nonrecurring problems.
 No well- established procedure exists for handling them, primarily because managers do not
have experience to draw upon.
 In contrast to programmed decisions, available data are usually incomplete
 Non programmable decisions are commonly found at the middle and top levels of management
and often are related to an organization’s policy- making activities such as whether to add a product
to the existing product line, to reorganize the company, or to acquire another firm, are examples.

The Decision making Process

The steps in decision- making process include the following:

1. Ascertain the need for a decision/ identify the problem:

The decision making process begins by determining that a problem exists; that is, there is an
unsatisfactory condition.
2. Establish decision criteria:
Once the need for a decision has been determined, there comes a need to establish decision criteria,
which requires identifying those characteristics that are important in making the decision.
3. Allocate weights to criteria
The identified criteria should be weighted based on their importance and arranged in priority. This is
because some are obviously more important than others and we need to weight each criterion to
reflect its importance in the decision.

45 | P a g e
4. Develop alternatives
This involves developing a list of the alternative that may be viable in dealing with the stated
problem.
5. Evaluate Alternative
Once the alternatives are enumerated, the decision maker must critically evaluate each one and
identify the strong and weak points when compared against the criteria and the weights established.
In evaluating each alternative, we not only consider things that can be measured in numberical terms
such as time and various types of fixed & operating costs, but also consider intangible or qualitative
factors such as the quality of labor relations, the risk of technological change or the international
political climate.
6. Select the Best Alternative
After we evaluate the alternatives, the next logical step is to select the best alternative that suits to
solve our decision problem. In selecting the best alternative, factors such as risk, economy of efforts,
timing and limiting factors should be considered adequately.
7. Putting Decision into Action
After selecting the best alternative, we implement or put it into action. This requires communication
of decisions to subordinates, getting acceptance of the decisions, and getting support and cooperation
for converting the decision in to effective action. The decision should be effective at proper time and
in proper way to make the action effective to achieve desired objectives.
8. Following up decisions
Having implemented the decision, the manager should compare the results of that course of action
with the desired out come. If necessary, take corrective action. Since decisions are made based on
forecasts about the future, the best decision that we select may not suit absolutely to achieve our
objectives. Therefore, managers should adjust, modify or take any other correctives if necessary.
Decision making situations.
1. Decisions under certainty:- decisions made in which the external conditions are identified and
very predictable /whenever there is complete data & information/
2. Decisions under risk :- those decisions in which probabilities can be assigned to the expected
outcomes of each alternative
3. Decisions under uncertainty:- it is a case where neither there is complete data not probabilities
can be assigned to the surrounding conditions. Conditions that are uncontrollable by management
include competition government regulations, technological advances, the overall economy, and the
social and cultural tendencies of society.

46 | P a g e
 Activity 15
1. What are the two types of decision making?
________________________________________________________________________
2. What are the decision- making situations?
______________________________________________________________________

3.5) Management by Objectives (MBO)

 Dear learner, what is your understanding about management by objective?
_________________________________________________________________________
Management expert Peter Drucker first popularized management by objectives. MBO addresses the
need to involve managers at all levels in the goals setting process. MBO may be defined as a process
hereby the superior and the subordinate managers jointly establish objectives, define areas of
responsibility in terms of expected results, and use these measures as guides for operating the unit
and assessing the contribution of each member of the organization. The essence of MBO is the
practice of goal setting at every level of management. MBO, programs are designed to improve
employees’ motivation through their participation in setting their objectives and knowing in advance
precisely how they will be evaluated. MBO usually results in employees more committed to the
achievement of the objectives than they may be if they were not involved in setting them.
While employees are working toward the accomplishment of their objectives, managers
(supervisors) should hold periodic review sessions. A supervisor may authorize modifications to the
objectives or their timetables as circumstance dictate. At the end of agreed time period, the manager
and subordinate hold a final review session to evaluate the results and repeat the process. The
subordinate is evaluated on the basis of whether the objectives were accomplished, how effectively
and efficiency they were achieved and what was learned in the process. Rewards are usually linked
to each of these elements.
Steps in MBO process
Since MBO is a method where by managers and employees define goals for every department,
project, and person and use them to monitor subsequent performance, it involves the following steps:
1. Setting goals
- A goal that should be concrete, realistic that provides a specific target and time frame and assign
responsibility.

47 | P a g e
- Goals that can be quantitative – described in numerical terms or qualitative expressed with the
use of statements.
2. Developing action plans
 An action plan defines the course of action and resources needed to achieve the stated goals. An
action plan is a detailed plan made for both departments and individuals.
3. Reviewing progress
 A periodic progress review is important to insure that action plane is working. This review can
occur informally between managers and subordinates, where the organization may wish to conduct
three, six or nine month’s review during a year. This periodic review allows managers and
employees to see whether they are on target or whether corrective action is necessary.
4. Appraising overall performance
 Careful evaluation should be made to see whether annual goals have been achieved for both
departments and individuals. Success or failure to achieve goals can become part of the performance
appraisal system and the designation of salary increases and other rewards. The specific application
of MBO must fit the needs of each company.

The benefit of MBO is the linking of objective setting with individual motivation since the employee
participates in own goals setting there is commitment to them. Improved morale may also result
regular face-to face communications between subordinates are evaluated on the extent to which their
goals have been met. It forces think for results.

Problems with MBO

MBO may fail due to one or more of the following problems.

1. Lack of adequate resources: It has to be made sure that a person who is held responsible for
results has access to the resources needed to achieve them.
2. Since every manager at every level runs his/ her won objectives, there may not be support and
involvement by top management.
3. Lack of optimal coordination- because everyone strive for the attainment of his/her own unit
goals.
4. Over emphasis one appraisal.
5. Over emphasis of paper work.

Emphasis on short – term objectives strategic goals may be displaced by operational goals.

48 | P a g e
 Activity 16
1. Enumerate the steps in MBO?
________________________________________________________________________
2. What are the specific problems that arise in applying MBO?
________________________________________________________________________

 Self – Test Questions

PART 1 Choose the best answer

1. Which of the following is correct about planning

a. Planning is not an intellectual activity
b. Planning don’t involve thinking about past events
c. Planning involve thinking about organizational strength and weakness
d. All are correct
2. Plans that are developed for unique situations or problems and are replaced after one use are
a. Standing plan c. Short range plan
b. Single use plan d. Tactical plan
3. Which of the following is a characteristic of strategic plan
a. They are long term plans
b. They integrate, guide and control organizational activities
c. They establish boundaries for decision making
d. All are correct e. a and b
4. Plans that are developed by first line managers such as team leaders supervisors etc are
a. Strategic plan c. operational plan
b. Tactical plan d. Single use plan
5. Plans that focus on the day to day operation of lower level organizational units is
a. Divisional level plan
b. Unit or functional level plan
c. Short range plan
d. Tactical plan

N.B given below are the steps in the process of planning

49 | P a g e
 Analyzing and evaluating the environment

Identifying alternatives

Identifying alternatives

Evaluating alternatives

Controlling results

Selecting the best solution

Implementing the plan

6. Based on the above information which of the following show the correct sequential order in
planning processes.
a. 2134675 c. 3124675
b. 3124765 d. 1325476
7. Which of the following is a single use plan
a. Policies c. Rules
b. Programs d. procedures
8. Decisions that are routines, which deals with frequency occurring situations are
a. Programmed decision c. Non-programmed decision
b. Semi- programmed decision d. a and b
9. A condition of decision- making when a decision maker is not aware of all possible course of
action is
a. Certainty c. uncertainty
b. Risk d. a and b

Part II True or False Questions

1. Planning is a one-time process.

2. Standing plans are designed to be used to cover issues that managers face repeatedly.
3. Programs are frequently created to support or completed a program.
4. Top-level managers develop operational plans.
5. Programmed decisions are used to solve nonrecurring problems.

50 | P a g e
 UNIT FOUR

ORGANIZING
Student Learning Objectives

Dear learner! At the end of the unit this unit, students will be able to:

 Understand what managers do when they engage in the organizing activity.

 Understand the difference between the formal and informal organization
 Outline the process of organizing
 Identify and differentiate the various approaches to departmentalizing jobs.
 Distinguish among influence, power and authority
 Identify the ways managers coordinate units at the same level in an organization hierarchy
 Discuss how, when and why organizations use delegation
 Explain the managerial influence of power in organizing activities
 Distinguish between centralized and decentralized authority

4.1) The Nature of Organizing

 Dear Learner, what is organizing?
___________________________________________________________________________

Organizations are systems created to achieve a set of goals through people-to- people and people –
to-work relationships. Each system has its own external and internal environments that define the
nature of those relationships according to its specific needs. A hospital, for example, has
organizational needs that are different from those of a university, which are different from those of a
museum or of the federal government.

Organizing is what managers do when they design, structure, and arrange the components of an
organization’s internal environment to facilitate attainment of organizational goals. Within any
organization, there are both formal and informal components. The formal organization exists are a
result of the official structures and systems designed by managers through the organizing activity.
The formal organization usually contains a structured communication and command system that
helps people pool their time, energy, and talents to reach common objectives.

The informal organization, in contrast, exists when two or more people interact for a purpose or in a
manner beyond that specified by mangers. Often, informal organizations evolve in a natural,
unplanned manner, but they may also form, intentionally, as when nurses in the

51 | P a g e
In the formal organization, managers prescribe expected behaviors through job descriptions’, rules,
policies, and operating procedures. In contract, informal behaviors arise from the needs, norms,
value, and standards of organization members.

Managers need to recognize that both formal and informal organizations exist and that both
influence the overall efficiency and effectiveness of their organization. Rather than fight the informal
organization, managers should try to benefit from it. Informal norms requiring ethical behavior, for
example, can be useful, as can the informal communication “grapevine” that keeps people abreast of
happenings at all level of the formal organization.

 Activity 17
1. What is your understanding about formal and informal organization?
____________________________________________________________________

4.2) Organizing process

 Dear Learner, how do you think managers organize their activities?
________________________________________________________________________

Dear students in this section we are going to discuss the organizing processes that we find in many
organizations. It includes the following five steps.

1. Reviewing plans and goals

2. Determining work activities
3. Classifying and grouping activities
4. Assigning work and delegating authority
5. Designing a hierarchy of relationships
1. Reviewing plans and Goals
A company’s goals and its plans to achieve them dictate its activities. Some purposes, and thus some
activities, are likely to remain fairly constant once a business is established. For example, the
business will continue to seek a profit and it will continue to employ people and other resources. In
time and with new plans, however, the ways in which it carries out basic activities will change.
2. Determining Work Activities
In the second step, mangers ask what work activities are necessary to accomplish these goals.
Creating a list of tasks to be accomplished begins with identifying ongoing tasks and ends with

52 | P a g e
considering the tasks unique to this business. Hiring, training, and record keeping are part of the
regular routine for running any business.
3. Specializations or Division of Labor
An important concept in specifying tasks is specialization of labor or division of labor. Both terms
refer to the degree to which organizational tasks are subdivided into separate jobs. When using
specialization of labor, a manager breaks a potentially complex job down into simpler tasks or
activity or a related group of activities.
An advantage or work specialization is that work can be performed more efficiently if employees are
allowed to specialize. In addition, because employees are allowed to specialize in one area, they can
gain skill and expertise. Specialization facilitates the process of selecting employees as well as
decreasing training requirements. Finally, it allows managers to supervise more employees. Because
each job is simplified, mangers know what performance standard to expect and can detect job-
related performance problems quickly.
Disadvantages of Work Specialization: - Despite its advantages, specialization can create
problems. When specialization is overdone, jobs can become too simplified. When employees do
one simple task for eight hours a day, five days a week, they become bored and tried. In turn, when
employees become bored and tried, safety problems and accident rates increase, absenteeism rises,
and the quality of work may suffer.
4. Classifying and Grouping Activities
Once managers know what tasks must be done, they classify and group these activities into
manageable work units. When manager group tasks those are similar in terms of tasks. Processes, or
skills, they are grouping them by the principle of functional similarity or similarity of activity. This
guideline is simple t5o apply and logical.
5. Assigning work and Delegating Authority
After identifying the activities necessary to achieve objectives and classifying the activities
necessary to achieve objectives and classifying and grouping them departmentally, managers must
assign these activities to individuals and give these employees the appropriate authority to authority
to accomplish the task.
This step, critical to the success of organizing, is based on the principle of functional definition – in
establishing a department, its nature, purpose, tasks, and performance must first be determined as a
basis for authority. This principle means that the activities to be performed determine the type and
quantity of authority necessary.

53 | P a g e
Designing a Hierarchy of Relationships
The last step requires managers to determine the vertical and horizontal operating relationships or
the organization as a whole. In effect, this step puts together all the parts of the organizing puzzle.
The vertical structuring of the organization results in a decision-making hierarchy that shows that is
in charge of each task, each specialty area, and the organization as a whole. Levels create the chain
of command, or hierarchy of decision-making levels, in the company.
The horizontal structuring has two important effects:(1) it defines the working relationships between
operating departments, and (2) it makes the final decision on the span of control of each manager.
Span of control is the number of subordinates under the direction of a manager.

 Activity 18
Outline the steps in the organizing process?
________________________________________________________________________

4.3) Departmentalization: Grouping organizational Activities

Dear learner, why do you think organizations departmentalize their activities?

______________________________________________________________________________

Just as individual tasks need to be organized into jobs, jobs must be organized into larger units (such
as workgroup and department) and work units into divisions. Otherwise, the control of jobs and the
coordination and integration of work is extremely difficult. The process of grouping jobs into
organizational unit and those units into larger unit is referred to as departmentalization.

Organizations use departmentalization to answer the question “What activities do we want to

coordinate at one place in the organizational hierarchy” should the purchasing department be
coordinated with operations or with marketing?

4.3.1 Traditional Approaches

Mangers group activities by organization function, common products or services categories,

geographical territories, customer or client groups, common processes or equipment used, or unique
projects. These six family groupings represent the most traditional approaches to achieving
departmentalization. The second approach to departmentalization groups activities based on the
degree to which they are interdependent.

54 | P a g e
Departmentalization by Function managers creates functional departments by grouping activities
according to the nature of the work performed. Activities that support an organization’s operations
system are placed in an operations department. Sales, marketing research, and advertising are
grouped in a marketing department although the names given to functional departments may vary
from one organization to another, common terms in for- profit organizations are operations,
marketing, finance, accounting, human resources, engineering, and research and development.

Functional departments offer a number of other advantages. Because people who perform similar
functions work together, they can specialize and benefit from one another’s expertise. Decision-
making and coordination are easier, because managers need to be familiar with only a relatively
narrow set of activities. Functional departments, at high levels of the hierarchy use and organization
resources more efficiently because a department’s activity does not have to be repeated across
several organizational divisions. On the negative side, strong functional groping may prevent people
from seeing the totality of an organization. Communication and coordination across departments can
be problematic, and, often, conflicts emerge as each functional department attempts to protect its
own turf.

Departmentalization by product/service in product/service departmentalization, activities related

to the development and delivery of a single product (or closely related group of products) are
grouped together.

Product/service departments also are useful when an organization wishes to treat product/service
lines as independent business units. Managers can more readily assess the profitability of each
product line; however, this approach has the potential disadvantage of creating destructive
competition between departments for organizational resources. People within product groups have a
difficult time seeing the organization as a whole and, in fact, are encouraged to be responsible for
their product line.

Departmentalization by Territory Territorial (geographical) departmentalization is often used

when organizations have widely dispersed operations or offices. Retail outlets commonly have stores
in communities throughout the nation (see Figure 10.8). many Ethiopian insurance companies also
have regional offices through Ethiopia Niyala, for example, has many separate territories, and the
regional office in each handles the insurance issues that arise in its particular region.

55 | P a g e
Departmentalization by customer/ client base customer/ client departmentalization organize
organization activities around the type of customer or customer needs served by an organization.
Banks for example organize their services around different types of customer groups. It is common,
for example, for banks to have personal banking, small business, and commercial (big business)
departments. A drawback to departmentalization by customer is that sharing knowledge and
resources among various departments can be difficult.

Departmentalization by process/Equipment somewhat related to functional departmentalization is

process/equipment departmentalization. Consider an organization that manufactures a variety of
paper products for home, office, and industrial use. One approach would be to form a department for
each of these customer groups. Another approach would be to form departments by product types
cleaning, wrapping, writing – but either of these strategies would to redundancy.

One of the advantages of process/equipment departmentalization is that it can reduce equipment

costs. Furthermore, when a given process is centralized in one department, an organization can
usually be more responsive to technological changes. This approach is not without potential
drawbacks, however. Having three product lines share one machine can create production-
scheduling problems. What happens, for example, if two product lines have rush orders at the same
time? For these reasons, process/equipment oriented departments often cause conflict among those
who rely on them.

Departmentalization by project departments is generally created to address specific, often unique

organizational goals. They may, for example, have a design or developmental mission. A medical
equipment manufacturer might form a project department to design and artificial heart. An
engineering consulting firm might form a project department to report on the feasibility of
constructing a rail system under the Ethiopian Channel.

Managers can create a project department in a number of ways. One approach is to hire or transfer a
group of employees to form a new department solely to work on the project at hand. In a second
approach organizations use members of a standing project participant pool, whose purpose is to
work on an organization’s special projects. Depending on their expertise and the time constraints
involved, some pool members may be assigned to more than one project department at the same
time. A third method managers use to create a project department at the same time. A third method
managers use to create a project department involves the matrix approach. (the term matrix refers to
an organizational arrangement in which two overlapping structures are used this type of project
department is staffed with employees from various parts of the organization who may be released,

56 | P a g e
either on a part-time or full-time basis, from their regular responsibilities. When they are required to
perform their regular duties in addition to those of the project department, these individuals are
accountable to their home department as well as to the project department.

The Hybrid Approach to Departmentalization rather than limiting themselves to just one
departmentalization strategy, managers in most organizations use a number of approaches. The
hybrid approach calls for the simultaneous use of two or more departmentalization strategies.

 Activity 19
1. What are the traditional approaches managers used to departmentalize activities
________________________________________________________________________
2. Which approach of departmentalization is suitable when organizations have widely dispersed
operation or offices?
________________________________________________________________________
4.1.1. The Interdependence Approach

You will recall from chapter 2 that the systems- theory perspective views each part of an
organization as dependent on and interrelated with other organizational units. Operations managers,
for example, need market information and financial resources from other departments to produce
their organization’s goods and services. As interdependence between jobs and organizational units
increases, so do the costs and burdens of coordinating and controlling. Managers using an
interdependence approach try to minimize these problems by grouping highly interdependent
activities so that they are coordinated from a common point in the organizational hierarchy.

There are four types of interdependence that can exist between employees and organizational units.
The lowest form of interdependence is pooled interdependence, in which employees or departments
basically act independently, each doing their own work within an organization and depending only
minimally on others. A group of secretaries, for example, is likely to have pooled interdependence.

A second, and higher, form of interdependence represents a more complex relationship. Under
sequential, or serial, interdependence, the object being worked on is passed from one worker or
department to the next. The output of the first worker becomes the input for the second, whose
output becomes the input for the third worker, and so on. This type of interdependence characterizes
the assembly line.

57 | P a g e
A third form is reciprocal interdependence, in which the object being worked on is passed back and
forth among workers before the process is completed.

Team interdependence is formed when a group of workers interact simultaneously with one another
and the object or person on which they are working.

 Activity 20
1. State the four types of interdependence approach to departmentalization.
______________________________________________________________________
2. When a group of workers interact simultaneously with one another and the object or person on
which they are working, what kind of interdependence is this?
_______________________________________________________________________
4.1.2. Span of Control

How many individuals and activities can one manager coordinate? For example, how large a sales
force can one sales force can one sales manger supervise? How many managers of various personnel
activities can a vice- president of human resources manage effectively? How many executive vice-
presidents and their departments should the president of an organization?

Certainly there is limit to the number of people and activities that any one manager can effectively
manage, but what is the limit? Span of control, also referred to as span of management and span of
supervision, refers to the number of subordinates and activities that a manager oversees. For
example, a manager should not group all functionally similar or all reciprocally interdependent
activities if it would create a span of control that was too large to handle.

During the classical management period, many people tried to determine and ideal span of control.
Most argued, in favor of greatly limited manager span of control. Some proposed that limitations on
a manager’s attention, energy, and knowledge should restrict the span of control to five or six
employees. Others argued that the nature of work and the limitations of the human brain should
reduce the span of control as one moves up in an organization’s hierarchy so that, at the top, a
manager would be responsible for no more than six people but, at lower levels, a wider span would
be acceptable.

If a span is too limited, a manager’s talent may be underutilized. Having an experienced, highly
skilled managers supervise only a handful of employees per forming routine work would not take
advantage of the manager’s capabilities. If the span is tool arge, a manager may have too much work

58 | P a g e
to perform any of it effectively. Asking one manager to directly supervise the work of fifty staff
accountant would be a mistake. It would be virtually impossible to effectively manage so many
individuals and all of their projects at the same time.

From the perspective of subordinates, a span that it too large may prevent then from getting needed
supervisory support. None of the fifty accountants mentioned earlier would be likely to get the
training and deport needed to perform effectively and to grow if one manager supervised then all on
the other hand, too small a span might result in too much supervision. In such cases, managers often
bubby-sit subordinates, not allowing then enough freedom to be effective.

4.4) Coordinating Organizational Activities and Units

 Dear learner, what is the need for coordination in management?
__________________________________________________________________________

When work is divided and various jobs and departments are crated, one must integrate and
coordinate these organizational subsystems. Many management scholars consider the coordinating
activity to be the essence of organizing. After all the purpose of organizing, is to achieve integration
among the diverse organizational parts and systems. Coordinating links two or more organizational
units so that they work harmoniously together. Coordinating for example, links the production of
text books with the sale of text books; it connects the admission of students to the university with the
supply of services needed to provide a high-quality education. Organizations have two basic
coordination needs: vertical and horizontal.

4.4.1. Vertical Coordination

To meet organizational goals, managers must coordinate the institutional level with the technical
core. Vertical coordination links organizational units that are separated by hierarchical level.

Managers can achieve vertical coordination in a number of ways. Some of the methods used include
direct supervision, standardization, and goal statements.

Direct supervision in small, uncomplicated organizations or within individual organizational units,

superiors and subordinates can meet face-to-face. This direct supervision enables people to

59 | P a g e
communicate, offers them direction and assistance, and integrates activities across organizational
levels. Thus, the president of marketing whom, in turn, talks to the director of sales.

Standardization Another way managers coordinate work across levels in the hierarchy is by
standardizing activities. Large spans of control, high communication needs, desire for uniformity in
operations, and physical dispersion all create pressure to standardize activities.

Goal statements when the nature of work makes it difficult to designate the specific behaviors that
are needed, managers can create a hierarchy of goals rather than specifying the behaviors that
employees are to enact.

4.4.2. Horizontal coordination

Horizontal coordination occurs within a single hierarchical level. At most levels in the hierarchy,
jobs and organizational units have varying degrees of dependency on one another and require
coordination. Through horizontal coordination, for example, the efforts of manufacturing and sales
departments are integrated, and shared resources are allocated. Horizontal coordination mechanisms,
thus, make it possible for managers to coordinate organization members and units that do not have a
hierarchical relationship with one another. Horizontal coordination can be achieved in several ways.
In many instances, managers can use the same direct supervision, standardization, and goal
statement techniques that bring about vertical coordination. Additional techniques include direct
contact, liaisons, task forces/teams, integrators, managerial linking roles, and multiple command
systems.

Direct control perhaps the simplest way to achieve horizontal coordination is for two managers that
have a common problem to communicate directly with one another. Direct contact is the simplest
application of Fayol’s gangplank principles.

Liaison Roles when the volume of contact between two organizational units becomes extremely
heavy, management may assign an employee to act as a liaison to facilitate communication between
the units

Task forces and teams Direct contact and liaison roles work well in coordinating a limiting number
of organizational units, but when problems arises involving a number of organizational units,
managers may have to form a task force. The task force is a temporary group that comes into
existence to tackle a particular problem and dissolves when the problem is resolved.

60 | P a g e
4.5) Managerial influence: power and Authority
 Dear learner, what is power and authority?
_________________________________________________________________________________
___________________________________________________________________________

Inexperienced managers often assume that their organization’s work will be successfully
accomplished because formally defined jobs and departments specify how the work should be done.
Things work this way for some people, in some jobs, at some times, but usually they don’t in most
situations, formal job definitions and coordinating strategies are not enough to get the work done
organizations must somehow galvanize their workers in to action and to do so, they must influence.
Influence, therefore, is a person’s ability to produce result and to being about a change in his or her
environment. People derive influence from interpersonal power and authority.

 Activity 21
1. State the ways managers can achieve vertical and horizontal coordination
_______________________________________________________________________
2. When does management assigns an employee to act as a liaison to facilitate communication
between the units?
________________________________________________________________________

4.5.1 Interpersonal power and its source

The people inside organizations influence one another shape organizational events. Managers, for
example, can tell subordinates what to do and, in many cases, how to do it. Non-managers can share
ideas for cost-cutting measures with supervisors or encourage co-workers to form a union. It is
interpersonal power that enables individual organization members to exert influence over others and
over their organization. There are several types and sources of interpersonal power, some of the
more visible forms of power in the work environment include:

 Reward power- the power a person has because people believe that he or she can bestow rewards
or outcomes, such as money or recognition, that others desire. To Weber, this perception that
someone has sources as legal systems, situational demands, relationships between people, tradition
and charismatic personalities

61 | P a g e
It has been said, “Authority comes with the territory, “meaning that authority is vested in a manager
because of the position he or she occupies in the organization. Thus authority is defined in each
manager’s job description or job charter. The person who occupies a position has its formal authority
as long as he or she remains in that position.

Authority Relationships

As part of the organizing activity, mangers must design organization’s authority system. This design
crates authority relationships between people and between people and their work. There are three
different types of authority found in these relationships line staff and functional authority.

Line Authority

Line authority is a command authority. Line authority gives a manager the organizational right to
make decision and to commit the organization to action. Line authority it represented by the chain of
command: and individual positioned above another individual in the organizational hierarchy has the
institutional right to make decisions issue directives, and expect compliance from the lower- level
employees in his or her span of control.

Staff Authority

Staff authority is advisory authority. It is the authority that comes in the form of counsel. Unlike line
mangers with formal command authority, people with staff authority- for example, staff manager-
derive their power primarily from their expert knowledge and from the legitimacy they can establish
for themselves in their relationship with line mangers. A hospital’s lawyer, for example, cannot
dictate a contract that is negotiated between the personnel department and its unionized employees.
Instead the lawyer, in a staff capacity, advises the hospital’s contract negotiators about the
advisability of the language contained in the contract.

Functional authority

The third way of expanding staff authority is to vest staff members with functional authority, which
also may be given to line managers.

Functional Authority- is the right to direct or control specific activities that are under the span of
control of other managers. Functional authority allows a manager to command specific process,
practices, and policies related to the activities undertaken by personnel in other departments. The
human resource department, for example, may create policies guiding an organization’s complains
62 | P a g e
with equal employment regulation. As managers in such departments as marketing and operations
promote and hire employees, the human resource department makes all final decisions to assure
compliance with the organization’s equal employment opportunity policies.

 Activity 23
1. What are the types of authority relationship crated between people and between people and their
work?
________________________________________________________________________
2. What is functional authority?

__________________________________________________________________________

4.4.3. Delegation of Authority

 Dear learner, what is delegation?

________________________________________________________________________

Delegation author5ity takes place as accompany grows and more demands are placed on a manager
or because a manager wishes to develop subordinates’ skills, Delegation is the downward transfer of
formal authority to subordinates to facilitate the accomplishment of work.

Importance of Delegation

No person can do it all in an organization. Therefore, managers should delegate authority to free
themselves from some management areas to be able to focus better on more critical concerns.
Having capable subordinates can increase the ability of a manager. Delegation is also a valuable tool
in training subordinates.

When authority is truly shifted to the hands of non managers and is accompanied by shared
information, needed training, and relationships based on mutual trust and respect, delegation
becomes empowerment. Employees are given ownership of their tasks, along with the freedom to
experiment and even fail, without fear of reprisal.

63 | P a g e
Fear of Delegation.“ when you fail to delegate, the monkey on your back gets fatter and fatter until it
squashes you, “ says Paul Maguire, a senior partner of a management consulting firm. Even when
they know the potential of empowerment, some managers still do not delegate. Some managers fear
giving up authority or lack confidence in subordinates. Others worry that the employee may perform
the job better than they can, are impatient, or are too details oriented to let go. Some manages simply
don’t know how to delegate.

Delegation process When managers choose to delegate authority, they create a sequence of events.

 Assignment of tasks. The manager identifies tasks or duties to assign to the subordinate, then
approaches him or her with those tasks.
 Delegation of authority. For the subordinate to complete the duties or tasks, the manager should
delegate to the subordinate the authority necessary to do them. A guideline for amount of authority
to be delegated is that it be adequate to complete the task- on more and no less.
 Acceptance of responsibility. Responsibility is the obligation to carry out one’s assigned duties
to the best of one’s ability. A manager does not delegate responsibility to an employee; rather, the
employee’s acceptance of an assignment crates an obligation to do his or her best.
 Creation of accountability. Accountability has to answer to someone for your actions. It means
accepting the consequences either credit or blame- of these actions. When a subordinate accepts an
assignment and the authority to carry out that assignment, he or she is accountable, or answerable,
for his or her actions.

Delegation does not relieve managers of responsibility and accountability. Managers are responsible
and accountable for the use of their authority and for their personal performance as well as for the
performance of subordinates.

The sequence of events outlined here should ensure that the process of delegation produces clear
understanding on the part of the manager and the subordinate. The manager should take the time to
think through what is being assigned and to confer the authority necessary to achieve results. The
subordinate, in accepting the assignment, becomes obligated (responsible) to perform; knowing that
he or she is accountable (answerable) for the results provides some quick tips for successful
delegation of authority.

64 | P a g e
 Activity 24
1. What is the need for delegation?
________________________________________________________________________
2. Why do some managers fail to delegate authority?
______________________________________________________________________
3. Write down the process of delegation
______________________________________________________________________
4.4.4. Centralization versus decentralization

The terms centralization and decentralization refer to a philosophy of organization and management
that focuses on either systematically retaining authority in the hands of higher level managers
(centralization) or systematically delegating authority throughout the organization to middle- and
lower- level managers (decentralization) management’s operating philosophy determines where
authority resides. Management can decide either to concentrate authority for decision making in the
hands of one or a few or to force it down the organization structure into the hands of many.

Centralization and decentralization are relative concepts when applied to organizations. Top
management may decide to centralize all decision making: purchasing, staffing, and operations. Or it
may decide to decentralize in part setting limits on what can be purchased at each level by dollar
amounts, giving first-level managers authority to hire clerical workers, and letting operational
decisions be made where appropriate.

 Self-Test Questions
PART 1 Choose the best answer

1. Which of the following is correct about formal organizations

a. It evolves as a result of natural, unplanned manner.
b. Managers prescribe expected behavior through job descriptions, rules etc.
c. Behaviors arise from needs, norms, value and standards of organization members.
d. All are correct
2. Breaking a potentially complex job down in to simpler tasks or activities represent
a. Organizing c. Delegating
b. Specialization of labor d. Grouping
65 | P a g e
3. Identify the advantage of specialization of work.
a. Work can be performed efficiently
b. It enables employees to gain skill and experience
c. If it is overdone, jobs can become too simplified
d. It facilitates process of selecting employees
e. All of the above
4. Span of control means
a. Number of managers controlling activities
b. Number of subordinates that a manager oversees
c. Kind of control managers exercise
d. Relationship between managers and subordinates

5. Process of grouping jobs into organizational units and those units into larger units is__________
a. Coordinating c. Departmentalizing
b. Standardizing d. specialization
6. Departmentalization by function is good because
a. People who perform similar function work together
b. There can be specialization
c. Decision making and coordination are easier
d. All are correct
7. Which of the following cannot be a basic for departmentalization
a. Customer c. project
b. Process/equipment d. customer
8. A kind of departmentalization used when organizations have widely dispersed operations or
offices is.
9. A kind of interdependence formed when a group of workers interact simultaneously with one
another is
a. Sequential interdependence
b. Team interdependence
c. Reciprocal interdependence
d. Pooled interdependence
10. Which of the following is not a method of achieving vertical coordination
a. Direct supervision

66 | P a g e
b. Direct contact
c. Standardization
d. Goal statements
11. A kind of authority that allows a manager to command specific process, practices and policies
related to the activities under taken by personnel in other departments is
a. Line authority c. functional authority
b. Staff authority d. a and b
12. Which of the following can be a reason for delegating authority
a. It frees managers from some management areas and focus on more critical concerns
b. Employees get ownership of their task
c. It facilitate accomplishment of work
d. All of the above
13. Decentralization is good because
a. It result in increasing productivity
b. It allows managers to get closer to the consumers
c. It allows to be participant in decision making
d. All of the above

Part II True of False Questions

1. Span of control means breaking a potentially complex job down into simpler tasks or activities
2. Departmental ion by function is good because it creates specialization
3. Matrix departmentalization means creating two overlapping structures in organizational
arrangement.
4. Under reciprocal farm of interdependence objects being worked on are passed back & forth
among workers before the process is completed.
5. Line authority is an advisory authority.
6. Accountability is the obligation to carry out one’s assigned duties to the best of one’s ability.
7. Decentralization is always better than centralization.

67 | P a g e
 UNIT FIVE

STAFFING THE ORGANIZATION

Student learning objective

At the end of this unit students will be able to :

 Discuss the elements of staffing
 Explain the steps in human resource planning
 Identify elements of staffing
 Discuss the trade – off between recruiting, selection, and placement on the one hand, and training
and development on the other.
 Identify approaches to selection and hiring and explain their relative benefits and problems.
 Explain why training is needed and identify training methods.
 Discuss why performance appraisal is important to the firm and how employee performance can
be measured.
 Describe how job worth, labor market conditions, pay systems, and employee performance
determine levels of employee compensation.

5.1) Meaning of staffing

 Dear learner, what is staffing?
______________________________________________________________________________

Staffing involves bringing new people into the organization and making sure that they serve as
valuable additions to the work force. It is a vital part of personnel management. The aim of staffing
is to match, or align, the abilities of the job candidate with the needs of the firm.

In staffing, management is face with a balancing act. As one option, it can work especially hard to
recruit, select, and place individuals who are very well suited to the firm’s needs. The alternative is
to put less emphasis on these processes and focus instead on training and development. Figure 5.1
illustrates this balancing act.

68 | P a g e
Balancing the staffing options

Recruitment Training and

selection and Development
placement

Fitting the new Making sure that

Employee and Employees grow
job together with their jobs

RESPONSIBILITY FOR STAFFING

In small organizations, every manager is responsible for the staffing function even worker teams can
participate. A large firm usually establishes a separate department dedicated to staffing. A subunit
that focuses on staffing is usually called a personnel or human resource managers, or personnel
managers assist others by planning, organizing, staffing, coordinating, controlling, and sometimes
executing specific personnel and human resource management functions.

 Activity 26
1. Who is responsible for staffing?
________________________________________________________________________

5.2) Staffing Environments

 Dear learner, what are the outside events that influences staffing?
_____________________________________________________________________

Staffing, like other managerial functions, is subject to outside influences. Events and pressures from
many sources in an organization’s external environment customers, suppliers, and competitors, for

69 | P a g e
example-influence staffing and dictate the human resource plans and strategies necessary to carry
them out.

Legal Environment

The laws and principles that govern a community inevitably affect the way companies do business.
Consider just a few of the legal issues that pertain to even the smallest company: contracts, criminal
law, negligence, and equity. A legal concept that has a great impact on organizations today is the
idea that the law is a tool to correct and prevent wrongs to individuals and groups. Laws and legal
principles act as controls on managers who discharge staffing responsibilities.

Equal Employment opportunity Federal laws prohibit discrimination in employment decisions.

Discrimination means using illegal criteria in staffing. Laws that prohibit discrimination are
designed to guarantee equal employment opportunity.

Protected Groups

Many governments have created several protected groups people against whom it is illegal to
discriminate. These groups are women, the handicapped or differently disabled and minorities.

Affirmative Action

Some laws go beyond prohibiting discrimination. Laws that mandate affirmative action require
employers to make an extra effort to employ protected groups. Affirmative action laws apply to
employers that have, in the past, practiced discrimination or failed to develop a workforce that is
reprehensive of whole population of their community.

Sexual Harassment

Sexual harassment includes unwelcome sexual advances, requests for sexual favors and other verbal
or physical conduct of a sexual nature.

Sexual harassment creates anger, suspicion, fear, stress, mistrust, victims and costs in a workplace.
Costs are both psychotically and financial companies experience losses in employee morale, loyalty,
company reputation and corresponding reduction in quality and productivity.

Collective bargaining In collective bargaining negotiators from management and union sit down
together and try to agree on the terms of a contract that will apply to the union’s members for a fixed
period of time. Beth parties prepare for these negotiations by analyzing past problems and
70 | P a g e
agreements, polling their constituents, building a list of demands, and creating strategies. Both want
what they perceive to be the best deal for themselves, given their respective needs and priorities.
Negotiations usually begin before and existing contract expires, and negotiators try to reach a new
agreement while the contract is still in effect.

Grievance processing A labor agreement (contract) provides a process by which managers and
workers can file grievances: complaints alleging that a contract violation has taken place. The
process of filing a grievance usually begins at the lowest level. If no settlement can be reached at
that level, the complaint is brought before those at successively higher levels. A grievance can
progress to the point that it becomes a focus for top managers and union officials. When these parties
cannot agree, a third party may be called in. third parties are usually neutral professionals hired to
recommend or enforce a settlement. A third party can be a mediator or an arbitrator. Mediators make
recommendations. Arbitrators suggest settlements that are enforced. Arbitrators have the power to
hold hearings, gather evidence, and render a decision to which both parties agree in advance to
adhere.

 Activity 27
1. What are the external environments that influence staffing?
_______________________________________________________________________
2. What are the legal environments that influence the activity of staffing?
________________________________________________________________________

5.3) Staffing process

The following summarizes the eight elements of the staffing process. The list that follows briefly
describes each element.

1. Human resource planning. This aspect of staffing involves assessing current employees,
forecasting future needs, and making plans to add or remove workers. To adapt to changing
strategies and changing needs, managers must continually update their plans.
2. Recruiting. In this step, managers with positions to fill look for equalified people inside or
outside the company.
3. Selection. This step involves testing and interviewing candidates and hiring the best available.

71 | P a g e
4. Orientation. In this phase of staffing, new employees learn about their surroundings, meet their
co-workers, and learn about the rules, regulations, and benefits of the company.
5. Training and development. To train and develop employees, employers establish programs to
help workers learn their jobs and improve their skills.
6. Performance appraisal. As part of controlling function of management, managers must establish
the criteria for evaluating work, schedule formal sessions to discuss evaluations with employees, and
determine how to reward high achievers and motivate others to become high achievers. All these
tasks are part of the performance-appraisal element of staffing.
7. Compensation. This aspect of staffing relates to establishing pay and, in some cases, benefits.
8. Employment decisions, workers careers involve transfers, promotions, demotions, layoffs, and
firings. Making decisions about this career development is part of the staffing process.

Not all the elements of the staffing process are components of every staffing problem. Recruiting,
for example, is not necessary unless new employees are needed. Some elements are constants,
however. Planning, training, and appraisal a company the primary management functions. Therefore,
every manager must be concerned about staffing.

Activity 28
1. List the eight elements of staffing
________________________________________________________________________
5.3.1 HUMAN RESOURCE PLANNING

In planning to meet staffing needs, managers must know their organization’s plans and what human
resources are available. They study existing, jobs by performing job analyses. They review their
firm’s past staffing needs, inventory current human resources, forecast personnel needs in light of
strategic plans, and compare their human resource inventory to the forecast

Job Analysis

Before managers can determine personnel needs, they must perform a job analysis for each job. The
first step in a job analysis is to prepare up-to-date descriptions that list the duties and skills required
of each job holder. Then managers must compare all the analyses to ensure that some job holders are
not duplicating the efforts of others. This comparison enhances effectiveness and effectiveness in the
organization.

72 | P a g e
To prepare an in-depth study of jobs, some companies employ job analysts. To do their work, job
analysts (1) observe the job holder executing his or her duties. (2) Review questionnaires completed
by the job holder and supervisor; (3) conduct interviews with both; or (4) form a committee to
analyze, review, and summarize the results. Job analysts may study more than one job holder in a job
category over several months.

The job analysis produces two coordinated documents: a job description and a job speciation. A job
description cites the job title and the purpose of the job. It lists major work activates, the levels of
authority above and below the job holder, the equipment and materials the job holder must use, and
any physical demands or hazardous conditions the job may involve.

A job specification lists the human dimensions that a position requires. These include education,
experience, skills, training, and knowledge. To avoid even the appearance of discrimination, those
who create job specifications must take care to list only those factors directly linked to successful
work performance.

Managers should review job descriptions and specifications regularly (usually each year) to ensure
that they continue to reflect the positions they refer to. Jobs evolve with time as changes in duties,
knowledge bases, and equipment take place; the documents should reflect that evolution. When new
positions are added to the organization, job descriptions and specifications must be created.

Activity 29
1. Define job analysis
______________________________________________________________________
2. What are the two documents produced by job analysis
_______________________________________________________________________
3. State the components of job specification
_______________________________________________________________________
5.3.2 Recruitment, selection, and orientation

 Dear learner, what is your understanding about recruitment and selection?

__________________________________________________________________________

73 | P a g e
With the forecast and inventory complete and job description and specifications in hand, mangers
begin recruiting- the process of locating and soliciting a sufficient number of qualified candidates.
Source of applicants should include employed and unemployed prospects and temporary-help
services. Managers may also want to investigate the option of leasing employees. This option
involves working with a company that hires workers to lease to a client firm. The lease company
hires, fires, complies with all government regulations, pays the leased employees, and is responsible
for all human relations functions.

Company policy defines strategies for and limits on filling vacancies. Among the concerns many
companies have are the issues of nepotism- employing spouses or other relatives of existing
employees and of employing friends of employees.

Strategies for recruiting

At our fictitious furniture-making company, managers decide to look outside for the needed
applicants. This decision presents several options. They can call private or state-operated
employment services. They can run ads newspapers and other publications, including trade journals
and papers that appeal to racial and ethnic minorities. They can ask current employees to recommend
qualified friends and relatives. (Many companies offer bonuses to employees who refer people who
are eventually hired). They can contact schools and offer training programs, and they can participate
in job fairs. The managers can ask neighborhood and community groups to help them reach
minorities and other protected groups and encourage them to apply for the jobs. If the company
employs union labor, managers can contract trade unions in their search for skilled workers.

Selection process

Selection is the process of deciding which candidate out of the pool of applicants possesses the
qualifications for the job to be filled. Selection begins where recruiting ends .its goal is to eliminate
unqualified candidates through use of the screening devices .(show in Figure 5.2)

Application Form Usually, a prospective employee must fill out and application form as part of the
selection process. An application from summarizes the candidate’s, skills, and experiences relating
to the job he or she is applying for. To avoid discrimination in the selection process, employers must
not ask for information that is unrelated to the candidate’s ability to perform the job successfully.
Questions regarding home ownership, marital status, age, ethnic or racial background, and place of
birth are usually irrelevant. When used properly, the completed application yields needed

74 | P a g e
information. In addition, it indicates a person’s ability to follow simple instructions and use basic
language skills.

Applicant Poll

Application Form Reject

Preliminary Reject
Interview

Reject
Testing (if appropriate)

In –Depth Checks Reject

Reject
Reference Checks

Physical Exams Reject

Checks

Offer of Employment

Figure 5.2.Screening devise of selection process.

Preliminary interview: in small firms a job candidate’s first interview at a firm may be conducted by
the very manager for whom the person hired will work. In large companies someone forms the
human resource staff may be the designated screening interviewer. In a very large or sophisticated
firm, a human relation specialist may conduct the preliminary interview. Someone should explain
work rules, company policies, benefits, and procedures and fill out the paperwork necessary to get
the new person on the payroll. All employee assistance programs should be explained, and the new
hire should be told who to take advantage of them.

75 | P a g e
All this can be done in stages and by several different people. Human resource specialists may
handle the paperwork; team members or a supervisor may take charge of introductions to the work
area and co-workers. All equipment, tools, and supplies that the newcomer needs should be in place
when he or she reports for work.

A new employee’s first impressions and early experiences should be realistic and as positive as
possible. Orientation is the beginning of a continuing socialization process that builds and cements
employees’ relationships, attitudes, and commitment to the company. Orientation should be
thoroughly planned and skillfully executed.

 Activity 30
1. Differentiate recruitment and selection.
________________________________________________________________________
2. What is meant by orientation?
________________________________________________________________________

5.3.3 TRAINING AND DEVELOPMENT

Dear learner, what is training and its purpose?

___________________________________________________________________________

Development focuses on the future. Both involve teaching the particular attitudes, knowledge and
skills a person needs. Both are designed to give people something new, and both have three
prerequisites for success: (1) those who design training or development programs must create needs
assessments to determine what the content and objectives of the programs should be; (2) the people
who execute the programs must know how to teach, how people learn, and what individuals need to
be taught; and (3) all participants- trainers, developers, and those receiving the training or
development- must be willing participants.

76 | P a g e
Purposes of Training

Training has five major aims: to increase knowledge and skills, to increase motivation to succeed, to
improve changes for advancement, to improve morale and the sense of competence and pride in
performance, and to increase quality and productivity.

Techniques of Training

A company can train employees in various places. A trainee can be sent to a job site, a corporate
training center, a college classroom, or various workshops, seminars, and professional gatherings.
When training is done by the employer in house, it commonly takes the following forms:

 On –the job training (OJT). In this approach, an employee learns while performing the job.
Training proceeds through coaching or by the trainee observing proficient performers and then doing
the work. Apprenticeships and internships are on-the-job training programs.
 Machine- based training. In this technique, trainees interact with computer, simulator, or other
types of machine. The environment is usually controlled and the interaction is one-on-one. The
trainees proceed at their worn pace or at a pace set by the training equipment.
 Vestibule training. This system simulates the work environment by providing actual equipment
and tools in a laboratory setting. The noise and is tractions of a real work area and the pressure of
meeting production goals are absent, so the trainee can concentrate on learning.
 Job rotation. In a job-rotation program, trainees move from one job to another. The temporary
assignments allow them to learn various kills and acquire an awareness of how each job relates to
others. In the process, trainees become more valuable because they develop the flexibility to perform
many tasks. Internships utilize this form of training. (Job rotation is also used as a development
technique).

Regardless of the techniques used, training must be realistic. It must teach what in necessary in ways
that can be directly applied to the work setting once training ends. Progress must be monitored to
determine how well trainees are mastering the materials.

Purposes of development

Development is a way of preparing someone for the new and greater challenges he or she will
encounter in another more demanding job. Workers seek development opportunities to prepare for
management positions; supervisors need development to prepare to move into middle management.

77 | P a g e
All development is really self-development without a personal commitment, development cannot
occur. People can be pressured into training just to keep their jobs, but development, when offered,
can be rejected. Employees cannot depend on their employers for development opportunities. Small
companies cannot afford it, and many large employers will not pay for development when it is not
directly related to an employee’s current job or career track.

Techniques of Development

Development techniques include job rotation, sending people to professional workshops or seminars,
sponsoring memberships in professional associations, paying for an employee’s formal education
courses, and granting a person a leave of absence to pursue further education or engage in
community service. An employee should regard a company- sponsored program as a reward and as a
clear statement about his or beer worth to the company.

Development efforts should never end; indeed, they can be part of a daily routine. By reading
professional journals ad business publications regularly and by interacting with experts at
professional meetings, employees can help keep themselves up-to date.

 Activity 31
1. Enumerate the techniques of training
________________________________________________________________________
2. Why do workers and supervisors need development?
________________________________________________________________________
5.3.4 IMPLEMENTATION OF EMPLOYMENT DECISIONS

As you recall, employment decisions include decisions about promotions, transfers, demotions, and
separations (voluntary or involuntary). These changes are influenced by appraisals and by how an
organization recruits, hires, orients, and trains. All employment decisions mean change- change that
has a ripple effect throughout an organization’s subsystems and its ability to interact with the
external environment.

Promotions

Promotions are job changes that lead to higher pay and greater authority and that reward devoted,
outstanding effort. They serve as incentives as well, offering the promise of greater personal growth

78 | P a g e
and challenges to those who seek them. Employees usually earn a promotion by exhibiting superior
performance and going beyond that which is expected.

Sometimes past performance is not the sole criterion for a promotion. Affirmative action requires
that underrepresented groups such as women and minorities be better represented at all levels within
an organization. Therefore, affirmative action goals may dictate that members of these groups b
given special status in hiring and promotion decisions. In many union agreements, seniority is the
most significant factor influencing promotion decisions.

Transfers

Transfer is moving and employee to a job with similar levels of status, compensation, and
responsibility.

Demotions

A demotion is a reassignment to a lower rank in an organization’s hierarchy. In the business climate

of today, demotions are rarely used as punishment. (Ineffective performers are fired, not retained.)
demotions are used to retain employees who lose their positions through no fault of their own. Some
people prefer taking a lower-status, lower- paying job to the alternative of being laid off. Others
choose a demotion to decrease stress, allow themselves more freedom to pursue outside interests, or
meet challenges such as having to care for children or an elderly parent.

Separations

A separation, the departure of an employee from an organization, may be voluntary or involuntary.

Voluntary separations include resignations and retirements. Involuntary separations include layoffs
and firings. Employer sometimes encourages voluntary separation by offering incentives to
encourage employees to retire early.

Layoffs although downsizing can make companies more competitive, it can also undermine the
loyalty of employees threatened with layoffs.

As alternatives to layoffs, many companies are implementing other strategies. Some have enacted
hiring freezes. Which allow normal attrition to reduce the work force? Other strategies include job
sharing, restricting the use of overtime, retraining and re-deploying workers, reducing hours, and
converting managers to paid consultants.

79 | P a g e
 Activity 32
1. Define promotion, transfer and demotion
_______________________________________________________________________
2. State the voluntary and involuntary separation of an employee from an organization
________________________________________________________________________
5.3.5 PERFORMANCE APPRAISALS

 Dear student, why do you think organizations measure performance of employees

______________________________________________________________________________

Performance appraisal is the measurement of employee performance. There are many reasons to
measure how well employees are performing. First, many administrative decisions, such as those
dealing with promotions, salary increases, and layoffs, depend on performance appraisals. Second, if
employees are to do their jobs better in the future; they need to know how well they have done them
in the past. Then, they can make adjustments in their work patterns. Finally, performance appraisal is
necessary as a check on new policies and programs. For example, if a new pay system has been
implemented, it would be useful to see whether it has a positive effect on employee performance.

Pitfalls in performance Appraisal

Performance appraisal is a difficult process. Problems may occur due to the nature of the job, the
rater, or the situation. For instance, accurate appraisal is particularly difficult when work is non-
routine, when the rater and rates have differing perspectives, and when the appraisal system is
incompatible with organization structure or technology. Clearly, great care needs to be exercised in
selection, use and refinement of performance appraisal systems.

Type of performance Measures

There are three major ways by which performance may be appraised. Appraiser can focus on traits,
behaviors, or accomplishments.

Trait Approaches. Under these approaches, a manager or performance appraiser rates an employee
such traits as friendliness, efficiency, and obedience to commands. These trait approaches are very
popular, but they suffer from a number of problems. For instance, words such as “superior” and

80 | P a g e
“average” may means different things to different people. The people appraising performance may
fell uncomfortable giving someone a low score on such traits as efficiency, decisiveness, or
supervisory ability, especially if their ratings will be shown to the person being rated. They may also
be prone to various biases and rating errors.

Behavioral approaches. These approaches involve the recording of specific employee actions. With
the critical incidents method, for example, the performance appraiser keeps a list of all the things
that the employee did which were especially good or bad. Sometimes, such incidents are gathered
from job incumbents and/or supervisors, and a list of incidents discriminating between high and low
performers is developed.

Outcome Approaches. Rather than consider traits or actions, some appraisal techniques rate what
the employee is supposed to accomplish on the job. Such approaches may be time-consuming and
may cause people to focus only on objectives that can be easily expressed in numbers. They do,
however, get directly at the things that the company cares most about, and they let the employee
know specifically which outcomes are most important.

 Activity 33
1. Enumerate the approaches to performance measures

________________________________________________________________________

5.3.6 COMPENSATIONG EMPLOYEES

Dear learner, what is your understanding about compensation?

_____________________________________________________________________________

The salary or wages paid to employees, as well as other job benefits, depend in part on how well
employees perform on the job. Other factors influencing employee compensation are the relative
worth of each job within the firm, labor market conditions and prevailing wage rates, and the type of
pay system used. Let’s take a look at these determinant of employee compensation.

Job Analysis

The systematic study of a job to determine its characteristics is call job analysis. How is the
information gathered for a job analysis? One common method is to observe workers on the job,

81 | P a g e
noting which tasks they perform, the order in which the tasks are performed, and the time it takes to
perform each task. Another method is to interview employees about the nature of their work.

Job Description

A job description is a short summary of the basic tasks making up a job. A job description usually
includes the title of the job, work activities and procedures, work conditions, and hours and wages.

Labor Market Conditions

Supply and demand cause the wages for some jobs to be higher than for others, even though the jobs
may be of similar difficulty, responsibility, and so on. The level of wages is also influenced by the
competitive wage in the local area. For example, machine shops in the same town will all tend to pay
the same wage, especially if a union contract is in effect. Because of this tendency, some companies
conduct surveys of local wages to make sure that their own are in line.

Pay systems

Even after the value of a job is determined (and the local and regional wage differences are taken
into consideration), one person may be paid more for the same job than another person. We can
identify at least five other factors that may account for wage differentials. They include seniority,
individual performance group performance, plant-wide productivity, and profit sharing.

Seniority. Seniority refers to the number of years spent with the company. In some companies the
more years of seniority, the greater the level of pay. Wage and salary increases are automatic
rewards for duration of service. The idea is that seniority reflects loyalty to the company as well as
experience.

Individual performance. How many individual employees are paid may also be based on how well
they do on the job. Under a piece- rate system of compensation, total wages are tied directly to
output.

Group performance Workers performing similar or related tasks are sometimes organized into
work groups. In such situations, pay scales are often tied to group performance. How much each
person takes home therefore; is based on how well the group as whole does. Because wages for one
worker are determined by the efforts of others, group members have an incentive to push slow
workers to do better. Again, we see that compensation systems and job motivation are related.

82 | P a g e
Plant- Wide productivity Employee rates of pay can be based on how well the entire organization
does. If the company has a good year, each worker receives a bonus. One popular plan of this type is
the scnlonplam under which groups of employees suggest to management how productivity might be
improved. Then, at regular intervals,. Such as once a year, the productivity of the organization is
evaluated. If productivity is up, each worker is rewarded with a bonus.

Profit sharing. Many companies today feature profit- sharing plans. The idea is simple: if company
profits are high, employees are given a bonus in the form of either a cash payment or company stock.
Unlike a plant-wide productivity plan in which payment are tied to productivity standards, here they
are tied to profit. Such plans have the nice feature than firms make payments only when they can
best afford them.

 Activity 34
1. State the determinates to employee compensation
________________________________________________________________________
2. Outline five factors that may account for wage differentials among employees.

________________________________________________________________________

 Self Test Questions

Part I choose the best answer

1. Which of the following involves testing and interviewing candidates and hiring the best
available.
a. Recruiting
b. Human resource planning
c. Selection
d. Training and development
2. Which of the following is not a legal environment that influences staffing?
a. Protected groups
b. Collective bargaining
c. Sexual harassment
d. Affirmative action

83 | P a g e
3. A study that determines the duties associated with a job and human qualities needed to perform
it.
a. Job analysis
b. Recruiting job description
c. None of the above
4. Moving an employee to a job with similar levels of status compensation and responsibility is
a. Transfer
b. Promotion
c. Demotion
d. Separation
5. Which of the following is not a determinant of employee compensation
a. Job analysis
b. Job description
c. Labor market
d. Behavior

Part II say True or False

1. The aim of staffing is to match the abilities of the job candidate with the need firm.
2. Performance appraisal is the measurement of employee behaviors.
3. The purpose of development is to prepare workers for management positions.
4. Physical examination is not made in selecting candidates.
5. Orientation is always necessary for new employees

84 | P a g e
 UNIT SIX

DIRECTING
Student Learning Objectives

 Understand the nature of leadership and leadership process

 Explain and describe the trait perspective on leadership
 Understand the behavioral perspective on leadership
 Discuss how situational theories of leadership can help managers
 Explain the different theories of motivation
 Understand the need of effective organizational communication for management

6.1) LEADERSHIP
6.1.1. The Nature of Leadership

 Dear students what do you understand by the term leadership and a leader?
______________________________________________________________________________

There are many definitions of leadership. Most people agree that leadership is an interpersonal
process involving the exercise of influence within a social system, such as a group, famu8ly,
community, or work organization. In work organization, effective leadership influences individuals
and /or groups to achieve organizational goals. The source of this influence may be formal, such as
that provided by the possession of managerial rank in the organization. So a person may assume a
leadership role simply because of the position he/ she holds in the organization. But not all leaders
are managers; nor, for that matter, are all managers’ leaders.

The Leadership process

The leadership process is a complex and dynamic exchange consisting of four components: leaders,
followers, the context within which the process takes place, and resulting by- product. A leader, as
defined by Webster’s, is a person who takes charge of or guides a performance or activity. A
follower is a person who performs under the guidance and instructions of a leader. The context is the
situation – formal, informal, social, military, emergency, routine and so on- surrounding a leader
follower relationship. The nature of the leadership process varies substantially with the context in
which it occurs. For example, the context is very different for the leader of a recreational softball
team than it is for a military commander on a battlefield, and leadership tactics that work in the first

85 | P a g e
context might fail miserably in the later. The byproducts of the leadership can include animosity
produced by a punitive leader’s action and respect for an able leader’s decision.

Leaders

Leaders hold a unique position in their groups, exercising influence and providing direction. Two
kinds of leaders can usually be identified in organizations: formal and informal. A formal, or
designated, leader is an individual appointed by the organization to serve in a formal capacity as an
agent of the organization. As you learned in chapter 1, practically every manager is called on the act
as a formal leader as part of his or her interpersonal role assigned by formal organization.

An informal leader, in contrast becomes a leader because group members choose him or her as their
natural leader. Athletic teams often have informal leaders, who exert considerable influence on team
members, even though they hold no official (formal) leadership position. In fact, most organizational
work group contain at least one informal leader. Informal leader can benefit or harm an organization
depending on whether their influence encourages group members to behave consistently with
organizational goals.

 Activity 35
1. State the four components of leadership
________________________________________________________________________
2. Differentiate formal and informal leaders
________________________________________________________________________

Power and Leadership styles

Dear student, what is power?

_________________________________________________________________________

Because leadership includes influencing others, power is an essential ingredient for effective
leadership. So important is power to the exercise of effective leadership that many leaders (and
writers about management) treat leadership as little more than the development and application of
interpersonal power. Power is not always based entirely on the authority derived from a formal
position within an organizations hierarchy. As you can remembers\, there are at least five sources of
power aside from legitimate power: reward, referent, coercive, expert and resource. Good leader,

86 | P a g e
whether formal or informal, develop many source of power. Consider the ways in which the use of
power is reflected in leadership styles.

Decision – Making Styles

Another element in a manager’s leadership style is the degree to which he or she shares decision-
making authority with subordinates. Manager’s styles range from not sharing at all to completely
delegating decision- making authority with the range of style categorized in three groups: autocratic
style, participative style and free-rein style.

Autocratic style A manager who uses the autocratic style does not share decision- making authority
with subordinates. The manager makes the decision and then announces it. Autocratic managers may
ask for subordinates’ ideas and feedback about the decision, but the input does not usually change
the decision unless it indicates that something vital has been overlooked.

Under certain conditions, the autocratic style is appropriate. When manager is training a subordinate,
for instance, the content, objective, pacing, and execution of decisions properly remain in the hands
of the trainer. Some subordinates do not want to share authority or become involved in any way
beyond the performance of their routine duties. Managers should respect these preferences but also
make incentives and growth opportunities available.

Participative style Managers who use the participative style share decisions making authority with
subordinates. The degree of sharing can range from the manager’s presenting a tentative decision
that is subject to change, to letting the group or subordinate participate in making the decision.
Sometimes called the “we” approach, participative management involves others and lets them brings
their unique viewpoints, talents, and experiences to bear on an issue. This style is strongly
emphasized today because of the trends toward downsizing, employee empowerment, and worker
teams.

A consultative and democratic approach works best for resolving issues that affect more than just the
manager or decision maker. People affected by decisions support them more enthusiastically when
they participate in the decision making than when decisions are imposed on them. Also, if others in a
manager’s unit know more than the manager does about an issue, common sense urges their
inclusion in decisions concerning it.

87 | P a g e
Free- Rein Style often called the “they” approach, or spectator style, the free-rein style empowers
individuals or groups to function on their own, without direct involvement from the managers to
whom they report. The style relies heavily on delegation of authority and works best when the
parties have expert power, when participants have and know how to use the tools and techniques
needed for their tasks. Under this style, managers set limi9ts and remain available for consultation.
The managers also hold participants accountable for their actions by reviewing and evaluating
performance.

Activity 36
1. Describe the three decision- making styles used by leaders.
________________________________________________________________________
2. A leadership style (approach) in which a manager shares decision- making authority with
subordinates is _________________________________
6.1.2. Trait Approaches to Leadership

One of the oldest approaches to the study of leadership is known as the trait approach. Those who
follow a trait approach attempt to identify physiological, psychological, attitudinal, and ability traits
associated with effective leaders proponents of this approach believe that certain people are “born
leaders,” and organizations should, therefore, select leaders who possess the appropriate physical
and intellectual characteristics.

Leader Trait Research

In the late nineteenth century, researchers began a serious search for the specific traits that
characterized “the great person.” The great person approach to leadership states that some people are
born with the necessary attributes to be great ladders. Alexander the Great, Julius Caesar, joan of
Arc, Napoleon, Mahatma Gandhi, and Mao Zedong are cited as naturally great leaders, supposedly
born with a set of personal qualities which enabled them to become effective leaders.

Three questions guided the research efforts of the trait theorists during the 1930s and 1940s. First,
they asked whether specific traits of great leaders could be identified. Second, they asked whether it
was possible to select people for leadership positions by identifying those who possess the
appropriate traits. Finally, they asked whether someone could learn the traits that characterize an
effective ladder. It was assumed that a finite set of individual traits- age, height, social status, fluency

88 | P a g e
of speech, self- confidence, need for achievement, interpersonal skills, attractiveness and so on-
distinguished leaders from non ladders and successful leaders from unsuccessful leaders.

Theory X and Theory Y

During the 1950s, Dougas McGregor presented a unique view on leadership that quickly became
very popular among managers. McGregor’s work resembled that of earlier trait theorists in that he
argued that effective leaders had certain identifiable characteristics. Unlike the earlier trait theorists,
however, McGregor focused on the attitude and belief structures of leaders. He felt that most leaders
adopted one of two basic attitude and belief structures about employees, which, in turn, influenced
how they fulfilled their leadership (see Table 6.1).

Theory X and Theory y Assumptions

Theory X

1. The average human being has an inherent dislike of work and will avoid it if possible
2. Because of their dislike of work, most people must be coerced, controlled, directed, or threatened
with punishment to get them to put forth adequate effort toward the achievement of organizational
objectives.
3. The average human being prefers to be directed, wishes to avoid responsibility, has relatively
little ambition, and wants security above all.

Theory Y

1. The expenditure of physical and mental efforts in work is as natural as play or rest.
2. External control and the threat of punishment are not the only means for bringing about effort
toward organizational objectives. Workers will exercise self-direction and self- control in the service
of objectives to which they are committed.
3. Commitment of objectives is a function of the rewards associated with their achievement.
4. The average human being learns under proper conditions, not only to accept but also to seek
responsibility.
5. The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the
solution of organizational problems is widely, not narrowly, distributed in the population.
6. Under the conditions of modern industrial life, the intellectual potentialities of the average
humans being are only partially utilized.

89 | P a g e
 Activity 37
1. What is the philosophy behind trait approach to leadership
________________________________________________________________________
2. Describe the view of mc Gregory’s theory x & y
________________________________________________________________________
6.1.3. Behavioral Approaches to Leadership

Rather than arguing that effective leadership was a function of which a leader was or with which
traits a leader had been endowed, researchers suggested that effective leadership was a function of a
leader’s behavior.

The Ohio State University Studies

During the late 1940s a group of ohio state University researchers, began an extensive and
systematic set of studies that attempted to identify leader behaviors associated with effective group
performance. Data were collected from a large number of civilian and military employees describing
the behavior of their supervisors. These data led to the identification of two major sets of leader
behaviors consideration and initiating structure.

Consideration is the “relationship – oriented” behavior of a leader. It is instrumental in creating and

maintaining good relationships with subordinates. Consideration behaviors include being supportive
and friendly, representing subordinates’ interests, communicating openly with subordinates,
recognizing subordinates, respecting their ideas, and sharing concern for their feelings.

Initiating structure involves “task- oriented” leader behavior. It is instrumental in the efficient use
of resources to attain organizational goals. Initiating structure behaviors include scheduling work,
deciding what is to be done (and how and when to do it), providing direction to subordinates,
planning coordinating, problems solving, maintaining standards or performance, and encouraging
the use of uniform procedures.

The university of Michigan studies

At about the same time that the Ohio state studies were under way, researchers at the University of
Michigan also began to investigate leader behaviors. As at Ohio State, the Michigan researchers
attempted to identify behavioral elements that differentiate effective from ineffective leaders.

90 | P a g e
The two types of leader behavior that stood out in these studies were job-centered and employee-
centered. Job-centered behaviors were devoted to supervisory functions, such as planning,
scheduling, coordinating work activities, and providing the resources needed for task performance.
Employee- centered behaviors included consideration and support for subordinates.

System 4 leadership

Influenced heavily by the work of his university of Michigan colleagues, Rensis likert identified the
system 4 approach to organization design according to Likert, a system 4 leader should provide.

 Supportive behavior. This includes understanding, supporting, dealing with subordinate’s

problems, providing recognition, and keeping subordinates informed, and showing appreciation. A
supervisor should deal with each subordinate in such a way that the subordinate will view experience
as supportive and one which builds and maintains his or her sense of personal worth and importance.
 Group methods of supervision. Supervision is exercised through group meeting instead of one-
on-one relationships. Likert suggested that effective leadership is group rather than individual
oriented. Managers should guide group discussions along paths that are supportive, constructive, and
problems oriented.
 High performance goals. For effective group performance a leader should guide the group
toward setting high (although realistic) and specific performance goals.
 Technical expertise functions. The leader serves as a source of expert knowledge for
subordinates, thereby making their work more effective. Likert reasoned that the leadership
behaviors associated with system 4 would produce factorable attitudes toward leadership, open
channels of communication, create group cohesiveness and cooperation, motivate employees, and
ensure a high level of reciprocal influence between leaders and subordinates.

 Activity 38
1. What were the two major sets of leader behaviors according to the Ohio State university studies
________________________________________________________________________
2. Describe the two types of leader behavior that stood out in the university of Michigan studies.
________________________________________________________________________
3. According to linker’s a system 4, what behaviors should leaders have
________________________________________________________________________

91 | P a g e
6.1.4. Situational Approach to Leadership

Fielder’s contingency Model

One of the earliest and best-known situation-contingent leadership theories was set forth by Fred E.
Fiedler from the University of Washington. This theory is known as the contingency theory of
leadership. Fiedler classified leaders according to an underlying trait, described situations that
leaders face, and identified optimal matches between leaders and situation. According to Fiedler,
organizations must do the same thing: assess the leader, assess the situation, and construct proper
matches between the two.

The leader Trait Fielder measured traits by asking leaders about their least preferred co- worker
(LPC). Leaders described the person with whom they least wanted to work along a number of
dimensions, such as pleasant / unpleasant, friendly/unfriendly, cold/warm, open/closed,
untrustworthy/trustworthy, Kind/ unkind, and sincere/insincere.

The situational factor some situations favor leaders more than others do. To Fiedler, situational
favorableness is the degree to which a leader has control and influence and, therefore, feels that he or
she can determine the outcomes of a group interaction. These factors work together to determine
how favorable a situation is to a leader:

 Leander-member relations. The quality of the relationship between a leader and followers is the
strongest determinant of situation favorability. This relationship reflects the leader’s degree of
acceptance by the group and the member’s level of loyalty to the leader.
 Task structure. The second most important determinant of situation favorability is the degree of
structure of the task to be performed. A highly structured task provides a detailed, unambiguous
goal, and this structured task provides detailed, unambiguous goals, and this structure clarifies how
to achieve this goal, situational favorableness rises as the amount of task structure increases.
 Position power. Fielder uses the term position power to refer to a leader’s direct ability to
influence subordinates. Position power may include legitimate, reward, coercive, expert, resource,
and referent power. The presence of position power enhances situational favorableness.

The path- goal theory

Currently, one of the most respected approaches to leadership is the path- goal theory. Developed by
Robert House path- goal theory is a contingency model of leadership that extract key elements from

92 | P a g e
the Ohio state leadership research on initiating structure and consideration and expectancy theory of
motivation.

The essence of the path theory is that it is the leader’s job to assist followers in attaining their goals
and to provide the necessary direction and / or support to ensure that their goals are compatible with
the overall objectives of the group or organization. The term path goal is derived from the belief that
effective leaders clarify the path to help their followers get from where they are to the achievement
of their work goals and make the journey along the path easier by reducing roadblocks.

According to path- goal theory, there are four important dimensions of leader behavior, each of
which is suited to particular set of situational demands.

Supportive Leaders: set goals and performance expectations, let subordinates know what is expected,
provide guidance, and establish rules and procedures to guide work, and schedule and coordinate the
activities of employees. Directive leadership is called for when there is high level of role ambiguity,
such as when the ultimate goal and /or the means to achieve that goal are unclear.

The participative leader- consults with subordinates about job-* related activities and consider their
opinion and suggestions when making decisions.

The achievement:- oriented leaders set challenging goals, and expect followers to perform at their
highest level.

 Activity 39
1. What is the philosophy behind fielder contingency approach to leadership?
________________________________________________________________________
2. Identify three factors that work to gather to determine how favorable a situation is to a leader.
________________________________________________________________________
3. State the essence of the path goal theory of leadership

93 | P a g e
Self- Test Questions
PART I: Choose the best answer

1. A kind of leader that group members choose him/her as their natural leader is.
a. Formal leader c. Informal leader
b. Designated leader d. All of the above
2. A leadership approach in which a manager shares decision-making authority with subordinates is
a. Autocratic c. Free-rein
b. Participative d. b and c
3. According to trait approach to leadership
a. Certain people are born leaders
b. Certain physical and intellectual characteristics are associated with leaders
c. Supportive and friendly individuals are good leaders
d. A and b e. all of the above
4. Leaders who devote to supervisory functions, such as planning, scheduling,
a. Considerate c. Employee centered
b. Job centered d. Initiative
5. Which of the following is not a situational approach to leadership
a. Managerial grid c. Path goal theory
b. Fielder’s contingency model d. b and c
6. According to fielder’s contingency model
a. Leaders are born
b. It is situational favorableness that makes a leader good leader.
c. Initiative individuals are good leaders.
d. Physical characteristics are factors for good leadership
7. Which of the following is not a factor that determine how favorable a situation is
a. Leader- member relations c. position power
b. Task structure d. none
8. Leaders who set challenging goals, and expect followers to perform at their highest level are
a. Supportive leaders c. participative leaders
b. Directive leaders d. Achievement leaders

94 | P a g e
9. A commu8nication channel that connect people of similar rank and status within and
organization is
a. Formal horizontal channel c. Formal upward channel
b. Formal down ward channel d. Formal communication network
10. Which of the following information is transmitted through informal communication channel
a. Rumors c. official message
b. Gossips d. All of the above
11. Which of the following could be a barrier to organizational communication
a. Too much information
b. Communication that pass through several hands
c. Lack of trust
d. Impropriate span of control
e. All of the above
f. None of the above
12. People with a need for affiliation likes to,
a. Control others and influence their behavior
b. Please people and to win their respect and affection
c. Accomplish difficult and challenging job
d. All are correct
13. People perceive a situation to be inequitable (unfair) if
a. Their outcome- to input ratio is greater than that of the people with where they compare
themselves
b. Workers fell that those to whom they compare themselves are getting a better deal
c. People perceive their ratio of outcome to input equal to the ratio of others
d. A and b e. All of the above

Part II: Say True or False

1. All managers exercise a formal leadership.

2. In autocratic styles a manager share decision- making authority with subordinates.
3. According to behavioral approach to leadership some people ar born with necessary attributives
to be great leaders.
4. Job contered behaviors of leaders include consideration and support for subordinates.

95 | P a g e
5. Horizontals channel of communication connects people of similar rank and status with in an
organization.

Part III: Marching

1. Managers shave decision- making authority with subordinate’s particle

2. The desire to accomplish difficult and challenging object
3. Achievement, recognition, responsibility and advancement.
4. States that for choosing a behavior and individual will evaluate various possibilities on the basis
of anticipated work and reward.
5. Rank or status in the company
B
a. Equity Theory e. The need for achievement
b. Expectance Theory f. participative leadership
c. Hygiene g. barriers to communication
d. Motivators

96 | P a g e
97 | P a g e
 UNIT SEVEN

CONTROLLING
Student learning objective

After reading this chapter you should be able to:

 Define the managerial function of controlling and discuss the levels at which controlling
activities take place
 Identify the target of activity
 Distinguish among the four steps of the integrated control process
 Understand the advantages and disadvantages of cybernetic and non cybernetic control system
 Discuss the types of controlling.
 Recognize the specific characteristics of good control systems and explain how each can
improve the effectiveness of the control system.
 Identify some of the most important positive and negative effect of control systems and
organization members.
 Discuss the need for personal control.

7.1) The Nature of control

 Dear learner, what is controlling?
_________________________________________________________________________

Dear students, in this section we are going to study about the other functions of management,
controlling. What do you understand about this concept? I hope you have some idea about it, so lest
discuss it in detail starting from its definition. Controlling is defined as the process of monitoring
and evaluating organizational effectiveness and initiating the actions needed to maintain or improve
effectiveness. This management function sets and communicates performance standard for people,
processes and devices, standard in any guideline or bench mark established as the basis for the
measurement of capacity, quantity, content, value, cost, quality or performance.

The need for control

Like the managerial functions of planning, organizing, and directing, controlling is a complex
activity that managers must perform at many organizational levels. Upper-level managers, for
example, must monitor their organization’s overall strategic plans, which can only be implemented if

98 | P a g e
middle- level managers control the organization’s divisional and departmental plans, which, in turn
rely on lower- level manager’s control of groups and individual employees.

Organizations that operate with relatively stable external environments usually need to change very
little, so managers eventfully are able to control such organizations using a set of routine procedures.
Routines are not necessarily simple, however. In fact, the rigid control systems usually incorporated
into the bureaucratic model often can be put in place and used for a long time. Consider, for
example, the controls used to regulate the means goals of a large bank and its branch offices. There
are rules and procedures governing loan- making decisions, cash handling, dress codes, treatment of
customers and so forth

With greater levels of environmental change, however, controlling requires more continual attention
from managers. Traditional routines and rigid control systems are simply not adequate for such
conditions.

 Activity 46
Why do upper level managers need to control

______________________________________________________________________________

7.2) controlling process: a Traditional control Model

Traditional control models suggest that control is a process consisting of four steps (see figure 7.2)
the first step in the control process consists of establishing standards. Standards are the ends and
means goals against which organizational activities are compared and are established during the
planning process; thus, planning provides the basis for the control process by providing standards of
performance.

The second step in the control process consists of monitoring actual organizational behavior and
results by measuring what has actually taken place. Questions to be answered at this step include
determination of what should be measured, who should do the measuring, when, and how.

The third step in the controlling process consists of comparing actual behavior and results against
standards. Similar to the gap analysis performed during the strategic planning process, this third step
in the control process provides managers with the input (information) needed for the fourth and final
step.

99 | P a g e
The final step consists of evaluation and action initially, this step of the control process in
judgmental in nature as managers interpret the meaning of the comparative information provided by
the third step. Based on their conclusions about the relationships between expectations and reality,
managers make decisions. They might, for example, decide to maintain the status quo, change the
standard, or take corrective action.

Establish Monitor ongoing Compare actual behavior Evaluate and

standards. activity& results and results & results take action.
against standards.

Organizational Targets

In essence, control affects every part of an organization the resources it receives, the output it
generates, its environmental relationships, and all managerial activities. Some of these managerial
activities- operations, marketing, financial, and human resources- are conducted in all organizations.
Consider the targets of control in each of these essential functional areas.

Operations control managers in charge of an organization’s operations function control the

activities necessary to transform resources into goods and services. Two common targets of
operations control are productivity and quality. To control productivity and quality, managers have
devised a number of operations control systems, such as design have devised a number of operations
control systems, such as design controls, product controls, service and use controls, materials
controls, inventory controls, production controls, and employee behavioral controls.

Marketing control managers in charge of an organization’s marketing function control activities that
place its goods and services into the market. Marketing control systems often focus on regulating
sales, prices, costs, and market share.2 quantitatively based quotas, for example, are commonly used
to define sought after market share, sales volume, and units to be sold by the marketing department.

Financial and Budgetary control managers who oversee financial, operating, and non monetary
budget control activities at a number of different levels within an organization.

Managers create budgets with a number of characteristics to facilitate control. Usually, for example,
budgets are created by upper- level managers, who distribute them to managers at the appropriate

100 | P a g e
operating levels. This top-down approach is one means by which upper-level managers control the
activities of subordinates and lower-level organizational units. A more participatory alternative is the
“bottom-up” approach, in which unit managers prepare budget requests and submit them to
department heads. The department heads integrate requests into a departmental budget request,
which they submit to division heads, had so on up the organizational hierarchy until the requests
reach upper level managers for action.

Human resource control managers who oversee the human side of organizations control activities
involving individuals, groups, and the nature of people-to-people and people-to-work interactions.
Two common targets of human resource control are the regulation of managerial and non managerial
activities carried out on behalf of an organization and the improvement of its human resources so
that its people can response to and initiate new organizational ventures. 3

Controlling Ends and means Goals

Whether the need for control is high or low, whether the target is marketing or operations, the
essential purpose of the controlling function is to monitor and enhance organizational effectiveness.
Both ends goals (what and organization is trying to accomplish) and means goals (how an
organization and it members behave) contribute to the overall effectiveness of organizations. Good
control systems allow managers to evaluate effectiveness based on the degree to which both ends
goals and means goals are met.

Managers who monitor and evaluate the effectiveness of an organization by assessing the degree to
which it is meeting ends and means goals must arrive at one of four conclusions based on the use of
their control systems. Figure 7.3 shows the four possible conclusions and the ways in which
managers should respond to their findings.

Both ends and means goals are met in this situation, the control system has shown managers that
their organization is getting where it wants to go (achieving ends goals) by following the planned
policies and procedures for doing so (meeting means goals). This is a confirmation that the
organization’s strategic and operational plans are appropriate, and no corrective action is needed.

Neither ends nor means goals are met. This conclusion indicates that an organization is not getting
where it wants to go and that it is not following the policies and procedures specified by its strategic
and operational plans. Clearly, correction is needed. From a control perspective the appropriate
response is for managers to get the organization back on track.

101 | P a g e
 Not Met Met

Not
Get back to the plan to
Revise the plan to correct
Met correct

Verify that the plan works

Revise the plan to be
and continue to follow the
consistent or
plan to maintain
Met Ger back to the plan to effectiveness
improve

7.1.

Means goals are met but ends goals are Not in these situations, the control system has revealed
that the organization is following its operational plans, but ends goals are not being met. This would
be the case, for example, if Marianne and her manager were to abide by all of the policies and
practices but nevertheless fail to meet profit goals.

Ends goals are met but means goals are not in these situations, ends goals are being met, but the
policies and practices ad practices specified by means goals are not being followed. Sometimes this
is referred to as “succeeding in spite of you,” because an organization achieves its ends goals even
though it “does everything wrong.”

 Activity 47
1. State the four steps of traditional control model
2. What are the organizational targets where managers are in charge of controlling.

7.3) Types of Control

This section will discuss the three types of control. Each will focus on a different point of process-
before the process begins, during the process, or after it ceases. Most experts agree that control “are
most economic and effective when applied selectively at the crucial point most likely to determine
the success or failure of an operation or activity. The three types of control include:

102 | P a g e
1. Pre controls (Feed forward control)
2. Concurrent control
3. Post action control (feedback)

Pre-control

Control activities that occur before input enters the system or prior to the beginning of an activity are
usually referred to as per controls. These control system consists of taking steps before the
transformation stage of organizational activity. In other words, pre control one designed to prevent
deviation from a desired plan of action or standard before work actually begins. Employee selection
procedures, employee- training programs and budgets are all pre controls. When a manufactures
works closely with it supplier to ensure that the supplier deliver goods and services that meets
standards, the manufacturer is implementing a pre control.

Concurrent controls

Managers use concurrent control to be certain that deviation from the planned curse of action does
not occur while work is in progress. Two common forms of concurrent control are steering controls
and screening controls. Steering controls occur after work has begun but before it is completed. They
are intended to keep the work operation on track and to make adjustments if deviation occurs.

The primary advantage of steering controls is that they help managers discover deviations quickly
and reduce the impact of mistakes. The primary drawback is that steering controls require substantial
resources. Clearly, it takes greater resources to have a supervisor monitor the entire work process
than it does to have that supervisor work on other tasks and merely confirm that the work was done
correctly. Another limitation is the steering controls are reactive rather than preventive in nature.

Post action controls

Post action controls are exercised after the entire set of work activities has been completed to
produce a product or service. Managers use post action controls to examine the output and answer
such questions as “does the engine perform as planned?” “Was the strategic plan followed?” and
“was the desired level of effectiveness achieved?” although post action controls play an important
role in future planning, their primary function is to provide feedback by describing the degree to
which previous activities have succeeded.

103 | P a g e
A Hybrid control system

Although pre control, concurrent, and post action control systems are important, in practice most
managers use multiple control systems to govern work activities at many different points in time.

A hybrid control system is used by most managers to integrate pre control, concurrent, and post
action control systems. Pre-controls help an organization prepare for tasks that have not yet begun.
Concurrent controls provide guidance while work is underway. Post action controls assess the
effectiveness of the entire process, thus preventing flawed work from leaving the organization nad
/or reducing the likelihood of similar errors being repeated in the future. There are only two potential
drawbacks, they are costly due to their complexity and they may create dysfunctional reaction if
workers feel they are being overly controlled.

 Activity 48
1. Enumerate the three types of control
2. A kind of current control that occur after work has began but before it is completed is
3. _______ Control are exercised after the entire set of work activities has been completed to
produce a product or service.

7.4) Characteristics of Effective control systems

 Dear student, how do you think controlling be effective?
________________________________________________________________________

As you have learned, good control systems should monitor organizational effectiveness by assessing
the degree to which an organization has met both ends and means goals. Successful control systems
have certain common characteristics. First, a good control system systematically incorporates each
of the four steps of the control process described in this chapter and adequately addresses each of the
organizational targets discussed earlier. Nexzt, to the extent possible and effective control system
takes a hybrid approach so that pre control. Concurrent, and post action control systems can be used
to monitor and correct activities at all points in an organization’s operations. Consider some of the
other characteristics of a good control system.6

104 | P a g e
Information Characteristics

Without good information, managers cannot assess whether ends and means goals are met. They
cannot determine the relationship between them or provide feedback to strategic planners. The
control process itself- and certainly all effective control systems- are thus based on timely, accurate,
objective information that can be sent to the appropriate organization members.

Accuracy:-if information provided by a control system is not accurate, all subsequent control
actions are at risk. In accuracies can occur due to imprecise or in appropriate information collection
techniques, carelessness in handling information, intentional distortion, unintentional distortion or a
variety of other factors.

Objectivity:- whenever possible, control systems should use objective information, whenever
subjective information is used, the possibility of distortion is increased.

Timeliness:- no matter how accurate or objective a managers information is, it is not very useful
unless it can be obtained and used on a timely basis.

Distribution:- accurate, objective and timely information is of little use unless it arrives at its
destination.

Appropriateness of Focus

Many managers seem to become almost obsessed with the need for control systems: they develop
control procedures for virtually all work activities and outcomes. Such an approach is dysfunctional
for two reasons. First, it wastes resources. An organization that tries to control every behavior of
every employee, for example, might require one supervisor to watch over every non managerial
organization member. Would this be economical? Second a control system that is too “ nitpicky”
often creates negative feelings and reactions among employees.

Practicality

In designing a control system, managers must keep a firm grip on reality. Something may have
worked well for another organization or look wonderful in print, bur unless it is applicable to the
organization in question, it will not work well there. Some practical characteristics to look for in a
control system include feasibility, flexibility, the likelihood of acceptance by organization members,
and the ease with which the system can be integrated with planning activities.

105 | P a g e
Feasibility No matter how well designed, control systems must be feasible. End and means goals
must be reachable and perceived to be realistic by the people responsible of achieving them. The
control system must also be economically viable.

Flexibility as you have learned, some organizations can get by with a rigid control system because
they change relatively little over time. Most organizations and their environments, however, change
substantially and, thus, need flexible control systems that can adapt to additional product lines,
modified production procedures, updated sales methods, and altered management technician
procedures, updated sales methods, and altered management techniques.

Acceptance control systems do not work well unless they are accepted by organization members.
Managers must agree that the ends and means goals focused on by the control system are
appropriate, that the information collected and used by the control system is fitting and proper, and
that the specific techniques used to exercise contr5ol are suitable. No managers most believe that the
control system is functional, desirable and fair.

 Activity 49
1. State the characteristics of effective control system
2. The practical characteristics of controlling system include
_________________,__________________ and___________________

7.5) The Impact of Control on organization members

 Dear learner, what impacts can control have on organizational members
__________________________________________________________________________

This chapter has stressed the importance of the controlling function to an organization. Control
systems enforce an organization’s strategic plan, monitor effectiveness, identify the need for change,
and guide the planning and implementation of such change. What does the controlling function do
for or to the organization’s members, however? If designed well, control systems can have many
positive effects both for organizations and for the people who work in them.7unfortuntely,
sometimes a number of dysfunctional effect are also achieved (see table 7.1)

106 | P a g e
Positive effects

In the directing section of this book you learned about a wide range of factors that influences the
motivation and performance of organization members, as well as their satisfaction ad such behaviors
as absenteeism and turnover. Many of the techniques discussed in those chapters can be enhanced by
control systems that provide adequate structure, appropriate feedback, and effective goal-setting
programs.

Structure both pre controls and concurrent controls provide employees with information that
describes what is expected of them by their organization. As you learned in chapter 6 when workers
want clarification of what they are expected to do, a leader can improve both their performance by a
structured control system can likewise be received favorably. Feedback it has long been known that
most employees react quite favorably to the timely provision of accurate feedback about their
effectiveness. Feedback provides the guidance employees need to correct ineffective behaviors.
Perhaps more importantly, feedback can be very rewarding. People who have needed to succeed are
gratified when feedback tells them that they are, in fact, succeeding. Feedback can improve job
performance if workers use it to adjust their goals appropriately. Both concurrent and post action
controls provide employees with feedback about the appropriateness of their behavior and the degree
to which their work is producing successful results.

Goal setting you have already seen that goal setting can be an important contributor to effective
management. A good control system is very useful for identifying appropriate goals. Consider the
control system used by the sales company at which Helen works. It specifies an expected sales goal
(means goal). Pre controls help her understand how to achieve the desired sales level by proving
such means goals as specific sales calls to make and promotional specials to offer concurrent
controls and post contr5ols provide feedback that helps Helen monitor her progress. The combined
effects of goal setting and feedback about goal progress are particularly powerful.

Dysfunctional Effects

Unfortunately, control systems can also produce dysfunctional side effects. Excessive controls are
quite simply a waste of money and energy. G/medhin for example, needs a larger travel budget
because he must personally inspect bridges under a new control system his inspectors spend the time

107 | P a g e
they could have used to inspect bridges in login entries, painting numbers, and grouping about the
unfairness of the situation. Not only do excessive controls waste money because they fail to enhance
effectiveness, abut they can also create additional problems. For example, Senay and his co- workers
have changed from good corporate citizens who kept accurate records and conducted comprehensive
inspections into harried workers who falsify log entries. Worse, unsuspecting motorists travel over
what might be unsafe bridges.

The vast amount of paperwork and documentation called for by an excessive control system usually
also caused the dysfunctional effects of frustration and helplessness. The “red tape” create by many
universities” control systems, for example, wastes students’ time. Standing in lines for hours-
sometimes in different buildings- they wait to pay dorm fees, purchase meal tickers, rent parking
spaces, pay tuition and register for classes. Their frustration and dissatisfaction is mirrored by many
organization members who question the competence, the reasonableness, and perhaps even the
intelligence of supervisors who insist on maintaining excessive control.

Another dysfunctional result of poor control systems can be seen in their effect on goal- setting
programs. Whereas a good control system can help design and monitor valuable goal-setting
programs a poor control ends and means goal can motivate workers to establish inappropriate
individual goals.

Table 7.1.The impact of control on organization members

Potential positive effects of control

 Clarifies expectations
 Reduces ambiguity
 Provides feed back
 Facilitates goal setting
 Enhances satisfaction
 Enhances performance

Potential dysfunctional effects of control

 Consumes resources
 Creates feeling of frustration and helplessness

108 | P a g e
 Creates “red tape”
 Creates inappropriate goals
 Fosters inappropriate behavior
 Decreases satisfaction
 Increases absenteeism
 Increases turnover
 Creates stress

The Need for Personal control

Organizations clearly have a need to control their members and operations, but individuals also have
a need for personal control a need to believe that they have the “ability to effect a change, in a
desired direction, on the environment. “Sometimes organizations make people feel they have too
little control. Colleges and universities, for example, tell students which classes they are allowed to
take and when, what grades they have to maintain, how to behave outside the classroom, and so on.
Work organizations tell members when to come to improve performance, and may other things. The
challenge facing managers is to strike a balance between the amount of control the organization
needs to assert and the amount of personal control needed by its members.

 Activity 50
State at least three potential positive and negative effects of control.

______________________________________________________________________

 Self –test Questions

PART I : Choose the best answer

1. Controlling system become increasingly important when

a. Complexity of organizations increase
b. Organizations grow larger
c. Organizations are diversified
d. All are correct

109 | P a g e
N.B. The following are the traditional control processing

1. Monitoring 3. Evaluation and action

2. Establishing standards 4. Comparison

2. Which of the following is the correct order of controlling process

a. 1 2 34 c. 2 1 43
b. 2 1 34 d. 1 2 43
3. Which of the following is not an organizational targets control
a. Operations control d. Budgetary control
b. Marketing control e. None of the above
c. Humana resource control
4. Control that is exercised after the entire set of work activities has been completed to produce a
product or service is _____________
a. Pre control c. post action control
b. Concurrent control d. Hybrid control
5. A practical characteristics to look for in a control system include all except
a. Feasibility d. Acceptance
b. Flexibility e. None
c. Accuracy
6. A controlling process where both ends and means goals are met shows to managers that
a. Their organization is not getting where it wants to go
b. Their organization is getting where it wants to go
c. Their organization is not following strategic and operational plans
d. A and C e. none of the above
7. Control systems that are operated completely independently from the work system itself involve.
a. Concurrent control c. Cybernetic control
b. Pre control d. Non- cybernetic control
8. Which of the following is not an information characteristics of effective control system
a. Accuracy c. Timeliness
b. Objectivity d. Acceptance
9. Which of the following could not be a potential dysfunctional effect of control
a. Decreases satisfaction

110 | P a g e
b. Create feeling of frustration
c. Increase absenteeism
d. Foster in appropriate behavior
e. None of the above
10. Which of the following control systems provide the guidance employees need to correct
ineffective behavior?
a. Structure c. Goal setting
b. Feedback d. All of the above

Part II say True or False

1. Control enhance performance of organizational members

2. Whenever possible control systems should use objective information, subjective information
increase distractive
3. Control activity that occurs prior to the beginning of an activity is feed aback control.
4. Production controls focus on regulating sales, prices, cost and market share.
5. Routine procedure of control is needed hen organization operate at relatively stable external
environment.

Unit – Four True/ False

multiple choice

1. B 1. False
2. B 2. True
3. C 3. True
4. B 4. True
5. C 5. False
6. D 6. False
7. E 7. False
8. B
9. B
10. B
11. C
12. D

111 | P a g e
13. D

Unit – Fvie True/ False

multiple choice

1. C 1. TRUE
2. C 2. FALSE
3. A 3. TRUE
4. A 4. FALSE
5. D 5. TRUE

Unit – Six True/ False Maching

multiple choice

1. C 1. True1. F
2. B 2. False 2. E
3. D 3. False 3. D
4. B 4. False 4. B
5. A 5. True 5. G
6. B
7. D
8. D
9. A
10. E
11. E
12. B
13. D

Reference

 Aldag Roman J and stearns Timothy M, Management, south- western publishing Co. U.S.A 1987
 Chung kae H. Mangement: critical sucessfactor, Allyn and Bacon Inc 1987 , U.s.A
 Duncan Jack, management: progressive responsibility in Administration, 1 st edition, r Random
House, Inc 1983.

112 | P a g e
 Dunham Randal B. and prerce Jon L. Management, scotl, foresman and compay U.S.A 1989.
 Hampoton David R., summer Charles E. and webber Ross A, organizational behavior and the
practice of management 3rd edition, scott, foresman and company 1968, U.S.A
 Kreitnerrboert, management 4th edition; Houghton Mifflin company U.S.A 1989.
 Plunkett waren Rand Attner Raymond F. management, 6th edition, south-western college
publishing U.S.A 1997
 Rue leslie. W and Byars Lloyd L. management: Theory and application, 5 th edition, Richard D,
Irwin, inc 1989,U.S.A
 Steers Richard m. ungson Gerardo R. and Mow day Richard T. managing effective
organizations: An introduction; kent publishing company 1985, U.S.A
 Williams j. cliftion, dubrin Andrew j. and sisk Henry L;.Mangement and organizations, 5 th
edition; south-western publishing co. 1985, U.S.A
 Stoner jamesA,f. Mnagement,2nd edition, prentile hall, Inc./ Englewood cliffs, new jersey, 1982.

113 | P a g e