Course title

Leadership and Management

Theories and Practices
MLG 5031
4.2 cr.hr (7 ECTS)

2013 E.C (2020/21 G.C)

Chapter Five
Leading
(Directing)
5.1. What is directing or leading?
• Planning, organizing & staffing are
– merely the preparation for doing the work and
– the actual work starts when managers start performing
the directing function.
• People are the most important source in an
organization.
• The successful achievement of organizational
objectives is greatly the manifestation of the
managers’ ability to lead employees.
• Every manager
– gives direction to his subordinates as superior and
– receives directions as subordinate from his superior.
• Directing
– is a management function
– also called ‘management-in-action’.
– the heart of managerial functions because it is
involves with initiating actions.
– performed by the top level management.
– the interpersonal aspect of management
– a challenging function of management because it
deals with human elements of the organization.
– requires the integration of organizational &
individual goals.
• Directing
– aimed at
• getting the members of the organization to move in
the direction that will achieve organizational
objectives.
– the process of integrating the people with the
organization, so as to obtain
• their willingness and
• enthusiastic co-operation for the achievement of its
goals.
• Directing is simply defined as
– the process of influencing people so that they
will contribute to the organization & group
goals or
• Influencing means
– motivating people to contribute their maximum
efforts for the achievement of organizational
goals;
– but it does not to mean coercing/ forcing,
imposing sanctions or pushing people at the
behind.
5.2. Elements of directing
• Managers to direct individuals require
three basic elements. They are
1. Leadership
2. Motivation &
3. Communication
• While directing a manager should
understand the
– needs,
– motives and
– attitudes of his subordinates.
5.1. What is leadership?
• A leader is one who guides and directs other
people.
• The term leadership used as
– is putting into effect decisions, plans & programs that
are previously worked out to achieve organizational
goals.
– articulating a clear organizational vision for its members
to accomplish, and energize and enable employees so
that everyone understands the part they play in
achieving organizational goals
– involves using power, personality, and influence,
persuasion, and communication skills
Leadership is not about size; it is about
knowledge and wisdom.
Definitions of leadership
• Leadership
– is an art of influencing others to act in order to
accomplish objectives.
– is the function of management involving the
process of influencing people, so that they will
contribute to the organization’s goals.
– is getting people to do their work willingly, ever
when they don’t really want to do it all.
– is the art of influencing people so that they strive
willingly & enthusiastically towards the
accomplishment of group goals.
• The outcome of leadership is highly
motivated and committed workforce
• Leadership
– is necessary for achieving individual, group
and organizational performance.
• You can lead your horse to the water, but
you cannot manage him to drink. If you
want to manage somebody, manage
yourself.
• Leadership/ Leading
– concerns with the manners in which a manager
influences actions of subordinates.
– includes activities such as:
• issuing of clear, complete & practicable orders.
• motivating workers to meet the expectation of managers
• maintaining discipline & rewarding those who perform
properly.
– involves 3 major partners.
• Leader
• follower and
• organizational context/ situation
• As there are leaders there must be followers.
– every leader has followers.
– If managers can’t influence people to become
followers, they will have nothing to manage.
• All organizations need people to carry out their
work.
– A manager who has no follower finds that the work of
the organization is not getting done.
• The function of leading is
– to induce (make) or persuade all followers
(subordinated) to contribute willingly to organizational
goals with their maximum capabilities.
• Leadership has to give attention simultaneously to
two things, namely
– the tasks
• to be accomplished by groups /individuals
– the people (needs & expectations )
• the groups /individuals
• These attempts are intended to achieve two
functions:
– Task – oriented functions
• Achieved by specifying work activated & work gals of the group
as a whole & of each individual members of the group.
– People – orientated functions
• Requires leaders to maintain group processes & to support
individual’s needs & aspirations.
The Nature / features of Leadership
• Leadership
– is the relationship between two or more people in
which power & influence are inevitably distributed.
– is a function of the leader, the follower & other
situational variables.
– is a matter of removing barriers in a situation so that
subordinates work with freedom and interdependence.
– is essentially a continuous process influencing behavior.
– is something a person does, not something he has.
• leadership is something that emerges, grows & and
achieved.
Importance of Leadership
• Importance of Leadership
– Perfect organizational structure
– Directing group activity
– Technological, economical and social changes
– Better utilization of manpower
– Avoiding imbalance
– Source of information
– Reconciliation of goals
– Developing good human relations
– Promoting the sprit of co-ordination
– Fulfilling social responsibilities
• Perfect organizational structure
– Organizational structure is complete or perfect with the help of
effective leadership.
• Directing group activity
– a personal conduct of a leader can direct others to achieve
organizational goals
• Technological, economical and social changes
– organizations should change their operational & styles.
– This is possible with the help of effective leadership.
– If change doesn’t take place the organization can’t survive.
• Better utilization of manpower
– plans, policies and programs do not work themselves. There is
need for a leader.
– He helps to utilize the available manpower effectively and get
highest production with minimum cost.
• Avoiding imbalance
– An organization grows in size & complexity with imbalance/ disparity.
– Complexity arises due to the introduction of new functions that increase levels
of management.
– So, there is a problem of command, co-ordination and control.
– A leader can tackle these problems and maintain balance.
• Source of information
– simply the existence of leadership doesn’t motivate employee, but the
leadership style should be utilized to motivate the workers according to the
prevailing situations.
– The achievement of goals is doubtful in the absence of leadership.
• Reconciliation of goals
– an organization has its goals, and also workers in the organization have their
own goals.
– They work mainly to achieve their goals instead of achieving organizational
goals.
– Therefore, effective leadership reconciles both goals which is necessary for the
success of an organization.
• Developing good human relations
– human relations represent the relations between the leader
and the subordinate.
– Efficient leader develops the skills of the followers and
promote self-confidence apart from motivation.
• Promoting the sprit of co-ordination
– dynamic leader co-ordinate the activities of the subordinates.
• Fulfilling social responsibilities
– social responsibilities refers to the
• high standard of living to workers,
• high productivity and income to the organization,
• more revenue to the government,
• reasonable price to consumers and
• fair return on investment to the investor.
– These are achieved with the help of effective leadership.
Leadership roles
• All managers are required to perform the four basic
leadership roles in the interaction with employees.
– Educator role
• teaching employees necessary skills that enable them to perform the job,
acceptable behavior & organizational values.
• be a good exemplary for the employees
– Counselor role:
• listening to employee’s problems and providing advice that enable them to
alleviate the problems and also preventing the problems before they occur.
– Judge role
• appraisal of employee’s performance, enforcing policies, procedures, rules
regulations, taking disciplinary measures, etc..
• To perform this task, managers must possess knowledge & information.
– Spokesperson role
• acting on the behalf of employees
– whenever their intervention is sole means & demanded.
Management Vs Leadership

• What are leadership and management?

– leadership is actually a much bigger and deeper in role
than management
– Leadership and management are quite similar concepts, yet
they have different definitions.
– First, leadership is the ability to influence or guide people
within an organization or business.
• Effective leaders know how to motivate and inspire their team.
• While in a leadership role, you need to set a good example for
others and define the expectations of your company or
department.
– Next, management is the ability to control or deal with
people and processes.
• Those in management roles can effective delegate work and
ensure employees are meeting their goals and expectations.
• A clear distinction can be made between a
leader and a manager.
– A leader emerges out from situations where as
A manager is put into his position by
appointment.
– A leader has informal power and
A manager has formal power.
– A leader seeks those objectives which are the
objectives of his subordinates where as
A manger seeks those objectives which his
subordinates do not regard their own.
• Leadership vs. Management
– Leaders conquer the context, while managers submit to it
– The manager administrates; the leader innovates.
– The manager is a copy; the leader is an original
– The manager maintains; the leader develops.
– The manager has an eye on the bottom line; the leader has
eye on the horizon.
– The manager imitates; the leader originates
– The manager accepts the statuesque; the leader challenges
it.
– The manager focuses on system and structure; the leader
focuses on people.
– The manager relies on control the leader inspires trust.
– The manager has a short-range view, the leader has long-
range perspective.
– The manager asks how and when the leader asks what and
why.
Leadership Vs Boss
 The difference between a boss and a leader
Boss Leader
 Drives others  Coaches others
 Inspires fear  Inspires enthusiasm
 Blames others  Helps to fix it
 Says ‘I’  Says ‘We’
 Knows how it is done  Shows how it is done
 Depends on authority  Depends on goodwill
 Uses people  Develops people
 Takes credit  Gives credit
 Commands  Asks
 Says ‘go !’  Says ‘Let us go !’

Leadership is not bossism

5.5. Leadership theories
• Leadership is a complex interpersonal process of
influencing behavior, and is crucial ingredient in
organizational effectiveness.
• Theories have practical value because
– they are used to better understand, predict, and
control successful leadership.
• A leadership theory
– is an explanation of the aspect of leadership.
• The earliest theories
– focus mostly on the characters and personality of
successful leaders and how they behaved.
• The recent theories
– focus on what leaders actually do rather than on them
needing to have certain innate qualities or traits.
• There are three main leadership theories.
1. Trait theory
2. Behavioral theory &
3. Situational theory
Trait theory
• According to this theory, leadership is
– largely a matter of personality,
– a function of specific traits.
– Leaders differ from followers with respect to some key
traits, which remain unchangeable across time.
• There exists some basic trait or set of traits that
differentiate leaders form non-leaders.
• Leaders are different from other people. If they
were not different, we wouldn’t be interested in
them
• Leadership is to be found in the characteristics of
leadership.
Trait theory is based on the belief that
– “Great leaders are born, they are not
made.”
• born with innate qualities, with inherited traits,
destined to lead.
– Leaders are different from other people. If they
were not different, we wouldn’t be interested in
them.
– leaders are exceptional people
• i.e. traits of leadership are intrinsic.
• Limitation / Short coming of Trait theory
– No single trait or group of characteristics has been
isolated which set off (differentiate) the leader from the
members of this group.
– Not all leaders possess all the traits; and many non-
leaders may possess most or all of them.
– There is no uniformity of identified traits or any
significant correlation of traits with actual instance of
leadership.
– In general, Leaders traits have not been a very fruitful
approach to explain leadership. Traits are important but
they are only one part of the picture.
– Trait theory ignores situational facts in the environment
that influence the effectiveness of leadership. Its
limitations accounted for the decline of its importance.
Behavioral theory
• Behavioral theory
– is in contrast to trait theory,
– attempts to describe leadership in terms of
what leaders do.
• According to this approach
– Leadership is the result of effective role
behavior.
– What matters a lot is not person’s traits
rather his acts.
• According to this approach
– Leadership is the result of behavior.
–“Leaders are made, rather than
born.”
• leadership is learned.
• behavior can be changed through training.
– Leadership is not something you are born
with, nor do you need a set of commonly
accepted traits. Effective leadership is
dependent on the right behavior.
• The two general types of behavior exhibited
by leaders are:
– Concern for People
– Concern for task/ result
• Different researches are conducted about
behavioral studies.
• Some of them are:
1. Michigan studies
2. Ohio State Studies and
3. Managerial /leadership Grid
Situational / Contingency theory
• Trait theory explained some of the desirable
characteristics that leaders have or should
have.
But what makes a style effective or
ineffective is the situational dimension.
• Situational theory of leadership
– is also called Contingency theory of
leadership
– is more recent theory
– based on the environment, or situation
• According to Situational theory
– There is no one-best way to lead.
• The best way to lead varies with the forces that exist
in specific situations.
• Effective leader must be flexible enough to adapt to
the differences among subordinates & situations.
– Leadership is strongly affected by a situation
• from which a leader emerges and
• in which he works.
– Hence, leadership is a function of
• the leader,
• the followers and
• the situations.
• Leaders are products of a given situation;
what is effective in one situation may not
be effective in other situation.
• Leadership theories developed based on
situational theory are:
– Fiedler’s contingency theory
– The path –Goal theory
– Vroom – Yetton theory
5.6. Leadership styles
• Different styles are needed for different
situations and each leader needs to know
when to exhibit a particular approach.
• Leadership style
– implies the way in which the leaders
exercise leadership.
– is the way in which the functions of
leadership are carried out.
• Leadership style
– is the typical pattern of behavior a leader
uses to influence employees to achieve
organizational goals.
– is the behavior exhibited by a leader during
influencing subordinates to accomplish
organizational objectives.
– is the way how the leaders behave towards
their subordinated in the accomplishment
of the work.
• The leadership style varies with
– the kind of people the leader interacts and deals
with.
• A perfect/ standard leadership style is
– one which assists a leader in getting the best out
of the people who follow him.
• The most appropriate leadership style
depends on the function of
– the leader,
– the followers and
– the situation.
• Research has identified a variety of
leadership styles based on the nature of
followers.
• The are four basic leadership styles.
1. Autocratic leadership style (Authoritarian)
2. Bureaucratic leadership style
3. Laissez-faire leadership style (Delegative)
4. Democratic leadership style (Participative)
Transactional and Transformational leadership
– Transactional leadership
• use reward systems to achieve organizational
goals
• Linking job performance to valued rewards
• employees have the resources needed to
complete the job.
• is managing/ helping organizations to achieve
their current objectives by linking the job
performance to valued rewards,
– i.e. it improves organizational efficiency.
•In the transactional type of leadership process,
– followers simply obey the orders (implicit or explicit) of
their leaders and,
• in doing so, meet certain standards of behavior because of a
contractual arrangement
– gives something to get something in return;
– transactional leaders trade benefits with their followers.
– followers needs can be met if their performance is
contracted with their leader.
– the success of change depends on the leader’s power to
reinforce subordinates for their successful completion of
the bargain.
– trust is low;
– information is shared on a limited basis;
– participation is controlled and has little influence
on outcomes;
– decision making rests with one powerful leader
not with the group as a whole;
– divergent thinkers are viewed as “trouble
makers” and
– often removed from the organization; and
– roles are determined by the head of the
organization – usually not open for revision by
the group.
– While every mental structure has its exception,
transactional leadership engages the world with
low levels of shared governance.
• Transformation leadership
– guide their subordinates by establishing goals which can be
achieved by role identity & task requirement.
– is in which leader
• intellectually stimulate, excites, arouses & inspire subordinates to
perform beyond their expectation.
• convince subordinate to achieve goals voluntarily
• by providing new vision, the transformational leader transforms the
followers into people who want self-actualize
• broaden & elevate the interests of the followers
• generate awareness & acceptance about the mission of the group
• stir their followers to look beyond their own self interests for the good of
others.
• changing the organization strategies & culture
• create better fit with the environment
• persuades followers to work hard
• are change agents who energize & direct employees to a new values
/vision/
•Transformational leadership,
– Also known as charismatic leaders,
– have an exceptional impact on their organizations and people
– capture their follower’s imagination and commitment through
• their personal vision,
• energy,
• values, and integrity and so on,
– transform situations by generating excitement about the change
among their followers
– Mahatma Gandhi, Martin Luther King, Nelson Mandela and so on.
– Such leaders are examples and have often served as key agents of
social change,
– transforming entire society through their words and actions.
– Such leadership creates a special kind of leader-follower
relationship
– followers become emotionally involved with the leader’s vision
and plans
– emotional commitment is usually a very solid one.
– It’s said that charismatic leaders make ordinary people do
extraordinary things in the face of adversity.
– the leader inspires the followers to reach standards of
performance
– they would not otherwise have reached were it not for the impact
of the leader.
– employees behavior has been ‘transformed’ by the actions and,
perhaps, charisma of the leader.
– in contrast with transactional leaders, they work for higher order
of change (Bass, 1985)
– motivate their followers to work for transcendental goals and
– for higher-level self-actualization needs than for that just
contracted with their leader.
• Qualities of leadership
– A leader should have some leadership qualities in
order to provide effective leadership.
– According to Henery Fayol, qualities of leadership
should have:
• Health and physical fitness
• Mental vigor and energy
• courage to accept responsibility
• steady, persistent and thoughtful determination
• should have general educational and
• management ability embracing foresight and the art
of handling men
• In general, the important qualities of
leadership are
• physical appearance and strength
• Mental vigor
• Emotional stability
• Sense of judgment
• Good will
• Motivation
• Communication skill
• Guiding ability
• Sociability
• Technical knowledge
• Be honest, sincere and fair
5.7. Motivation
– Management is the art of getting things done by
others.
– Getting work done is a difficult task; because it is
related to human behavior.
– Organizations can’t achieve their objectives unless
their employees are committed & willing to exert all
their efforts in carrying out their work.
– People in the organization don’t perform the same.
Some perform better than others.
– To guide people’s activities in desired directions
requires knowing what motivates them.
• Motivation
– is a behavioral concept
– ‘will to work’.
– is the set of forces that causes people to behave
in certain ways.
– is the energizing of human behavior or the
process of stimulating action.
– involves a complex combination of individual
needs, drives, tensions, discomforts &
expectations.
– is to create a need and a desire on the part of
employee to better his performance.
• Human behavior is directed towards certain goals &
objectives, b/se peoples have reasons for doing
what they do.
• Such goal directed behavior revolves around the
desires for satisfaction.
• A need
– is physiological, psychological or sociological want or
desire that can be satisfied by receiving a desired goal.
• Motivation
– starts with unsatisfied need & drives behavior towards
satisfaction.
Nature of motivation
• Motivation is concerned with the direction of functions
of management,
• So the nature of motivation can be understood from
the following points.
• Motivation is:-
• Unending process
• A psychological concept
• The individual is wholly motivated
• Motivation may be financial or non-financial
• Frustrated man can't be motivated.
• Goals are motivators
• Unifying force
• Motivation can be positive or negative
• motivation & job satisfaction are different
Importance of motivation
• Performance of an employee depends on two
factors,
– ability to work and willingness to work, i.e. to perform
any jobs, the two necessary things are:
1. people - having ability to work (ability), and
2. Willingness to work
– Mathematically,
Performance = Ability × willingness (motivation)
• Motivation
– is needed to create willingness in the minds of workers to
do a job.
– is enhancing the willingness to work which improves the
performance.
• The importance of motivation are
– maximum utilization of factors of production
– influences/ creates willingness to work
– reduces absenteeism
– reduces labor turnover
– availability of the right personnel
– building of good labor relationships
– increases efficiency & output
– sense of belongingness
– basis of co-operation
– helps to realize organizational goals
– improvement upon skills & knowledge
Types of motivation
• Some of the types of motivation are
– Extrinsic motivation and Intrinsic motivation
– Financial motivation and Non-financial motivation
The processes of motivation
• The steps of motivation are three, namely:
1. Unsatisfied need
• The starting point in the process of motivation.
• is the deficiency of something within the individual
• the first link in the chain of events leading to behavior.
2. Goal – directed behavior
• causes tension (physical or psychological) within an individual and leading
the individual to engage in some kind of behavior.
• revolves around the desires for need satisfaction.
3. Need satisfaction
• achieving the goal that satisfies the need, and the process of motivation is
complete.
Theories of Motivation
• Human behavior is complex in nature.
• Motivation theories
–help managers to improve their understanding of why people behave as they
do.
–enable managers understand motivated behavior of employees so that pay
their attention to meet those methods.
• What can enhance the willingness to work are explained by motivational
theories.
• Theories of motivation focus on
1.Needs
2.Behavior
• Every person has a variety of needs, some of these needs are satisfied and
others are unsatisfied.
–An unsatisfied need is the starting point in the motivation process.
–When a person has an unsatisfied need, he attempts to identify something
that will satisfy the need. This is called as goal.
• Needs are basically classified as
1.innate needs & acquired needs, and
2.primary needs & secondary needs
–Innate needs
•are inherent in nature. e.g. hunger, sexual desire, sleep, etc
•are also called natural needs.
–Acquired needs
•are based upon experiences. e.g. If one has a nice car, the other
needs the same car.
–Primary needs
•are necessary to survive & for preservation of life. e.g. food,
water, air, etc..
–Secondary needs
•are concerned with mind & sprit. E.g. love, recognition,
affection, etc…
• Motivational theories based on Employee Needs
– is also called Content Theory
– are
• Maslow’s Hierarchy of needs.
• The ERG theory of motivation
• The Herzberg’s two –factor theory
• The Mc Cleland’s need achievement theory
– Maslow’s Hierarchy of needs
• It is one of the earliest & best known content theories that
explain why people have different needs at different times.
• Suggests that the people must satisfy five groups of needs in the
following order:
– physiological,
– security/ safety,
– belongingness/ social,
– esteem, and
– self actualization.
 – Maslow identified five basic categories of human needs
and placed them in a hierarchy.

Self
actualization

Esteem

Social

Security

Physiological

Mallow’s Hierarchy of need’s theory

• The hierarchical effect
– the key aspect of the model is the hierarchical
nature of the needs.
• Physiological needs
– are the basic needs of an individual
– needs relate to the survival and maintenance of human
life.
– includes food, clothing, shelter, air, water, etc.
• Safety needs
– are also important for human beings.
– Everybody wants job security, protection against danger,
safety of property, etc.
• Social needs
– needs emerge from society.
– Man is a social animal.
– E.g. love, affection, belongingness, friendship,
conversation, etc.
• Esteem needs
– needs relate to desire for self-respect, recognition and
respect from others.
• Self-actualization needs
– are the needs of the highest order
– are found in those person whose previous four needs are
satisfied.
– include need for social service, meditation.
– The ERG theory of motivation
• This theory suggests that people’s need is grouped in to three
overlapping categories such as existence, relatedness and
growth.
– The Herzberg’s two –factor theory
• also known as: Herzberg's motivation theory of need or
Maintenance theory of motivation or Hygiene theory
• suggests that people’s satisfaction and dissatisfaction are
influenced by two independent sets of factors as:
– Maintenance or hygiene factors - dis-satisfiers and not motivators, and
– Motivational factors or satisfiers - job content factors or real motivators
– The Mc Cleland’s need achievement theory
• uses need as the central focus.
• proposed that organization offers an opportunity to satisfy at
least three needs: Needs for achievement, Needs for affiliation
& Needs for power
 Comparison of content theories of motivation
Maslaw’s Needs Alderfer’s ERG Herzberg’s McCelland’s
Hierarchy Theory Motivation – Learned Needs
Hygiene Theory Theory
Self-actualization Growth Motivators Need for achievement
 achievement Need for power
 personal growth
Esteem  responsibility
 Advancement
 recognition

Belongingness Relatedness Hygienes Need for affiliation

 supervisor
Safety Existence relations
 co-worker
relations
Physiological
 Job security
 company policies
working conditions
• Motivational theories based on Behavior
– is also called Process Theory
– are motivational theories that focus on behavior
concentrate on how motivation occurs,
– i.e. how behavior is initiated, directed, sustained
& stopped.
– includes
• The expectancy theory
• the reinforcement theory (goal –setting
theory) &
• The equity theory
– The expectancy theory
• Based on the
– Effort
– Performance
– Reward
• has three primary variables: Choice, expectancy and
preference
– The reinforcement theory
• considers the use of positive or negative reinforces to
motivate or create an environment of motivation.
• It is based on the belief that all human behavior is shaped by
its consequences,
• i.e a person behaves in a certain way what he received in the
past for the behavior.
– The Equity theory
• is the central factor in determining the effectiveness of a pay
plan.
• tries to explain fairness of financial incentive planes.
3.8. Communication
• Every management function involves
communication. Therefore, understanding & proper
use of communication are essential to successful
management.
• Communication is essential because, it integrates
the managerial function.
– communication facilities the managerial functions and
also that communication relates an enterprise to its
external environment.
• Communication
– is the exchange of facts, ideas, opinions or emotions by
two or more people.
– is the act of influencing & inducing others to interpret an
idea in a manner trended by the speaker or writer.
• Communication
– is the transfer of information from the sender to the
receiver with the information being understood by the
receiver.
• Managers at any level should know
– elements of communication,
– methods of communication,
– barriers of communication &
– ways overcoming them.
The communication process
– To be effective communicator, a manager should
understand the basic framework of communication
process.
– The basic elements of communication are
communicator (source); encoding; message; medium;
receiver; & feedback.

Noise

Coded
Receiver or
Source message
Medium of
Decoded
audiences
message
transmission

Feed back
Importance of Communication
• Communication is the means by which people
are linked together in an organization to
achieve a common purpose.
• The importance of communication are
– An aid to managerial performance/ functions.
– Achieving coordination
– Helps in smooth working/ functioning
– Increases managerial efficiency
– Helps in decision making
Communication Methods
• Organizations used different methods of
communications depending on
– the nature & purpose of the message needed to be
communicated
– the characteristics of the receiver
– the nature of the channel, etc
• Therefore, the most common communication
methods are
– Verbal communication
– Non-verbal communication
• Verbal communication
– Oral communication
• in which the sender's voice is used as a channel
• takes place during conversations, meetings, phone calls.
• are fast & used full when the sender wants rapid feed back
– Written communication
• involves written languages
• is slower because of the time involved to encode the message
• Non-verbal communication
– Communication that doesn't use words.
– include
• body language (gestures, facial expressions, other movements
& positions of the body),
• as well as other signals such as what people wear, what objects
they use or surround themselves with.
Types of Communication
• Formal communication
– follows the hierarchy of authority & chain of command of the organization.
– he paths of communication which are deliberately created and officially
recognized connecting various positions in the organization hierarchy
– All orders, instructions etc., are communicated to the subordinates through this
channel.
– can be
• downward communication
• Upward communication
• Lateral/ horizontal communication
• Diagonal
• External
• Informal communication
– commonly called grapevine - path along which information spreads
– not officially created/ recognized by management, mostly between informal
group members. - carries the type of personal information
– grows out of the social interactions among people who work together.
Barriers to effective communication
• Barriers are obstacles to the free flow of
communication.
• The main barriers of effective communication are
– Physical barriers
• Noise, distance, time, source,…
– Semantic barriers
• Language defects – bad translation and expression.
– Human barriers
• Results of human being rather than technology
• Culture, organizational barriers, psychological,…
• More specifically the barriers could be:
– Perception
• person's view of reality
– Semantic barriers/ language
• problems in determining common meaning or referent for symbols used in
communication.
– Value judgment (preconception)
• judging the value of message prior to receiving the intended meaning of the
message
– Motivation & interest
• receivers should have interest in communication
– Perfunctory action
• marginal listening
• paying only marginal attention to incoming communication
– Source credibility
• if the communicator is unreliable, his message can not be trusted and reject his
message/ communication
– Hidden agenda
• people don't say what they have in mind, they try to hide their intentions
behind wards.
– Filtering
• human mind doesn’t register all the incoming messages. It filters the irrelevant from relevant,
reject the former & respond to the latter.
• the filter are gates that let in only the desired communication & prevent the rest from coming in
– Value laden words
• words those arouse emotions.
– Omission
• deletion of the parts of incoming communication during summarization. The summarizer
consider, in his judgment, to be less relevant or unfavorable to him.
– context
• wards have meaning only in context
– hoarding
• instinctive aversion to pass on information
– information overload
• information load also act as barrier as lack of it because screening & shifting of information
causes omissions & distortions.
– Pressure of time
• top managers work under great pressure of time. They can't afford to interact & communicate
frequently with their subordinates. Hence this creates gap between the top and the lower
echelons of management.
– Hierarchical differentiation
• status differences in organizations act as a communication barriers.
How to make communication effective
• To make communication effective
– create an environment of trust & confidence
– be clear about the objective of communication
– be sensitive to communication
– be sensitive to the receivers frame of reference
– listen empathetically
– use feed back
– utilize grapevine
– introduce redundancy & repeat
The principles of communication
• Besides to the above mentioned points, applying
principles of communication make communication
effective.
• The principles of communication are commonly
called the “7Cs”.
– Clarity
– Completeness
– Correctness
– Concreteness
– Conciseness
– Courtesy and
– Consideration/ candidness
• Clarity
– Getting the message that the receiver to interpret and understand the same
as the sender.
– clarity of thought and expression - avoid jargons & ambiguity
• Completeness
– Containing all the facts the receiver needs.
• Correctness
– Using the right language, accuracy of figures, facts and words.
• Concreteness
– Being specific, definite and vivid rather than vague and general.
• Conciseness
– Saying the fewest possible words.
• Courtesy and
– Be sincere, factful, thoughtful and appreciative.
– Omitting irritating and belittling expression/words.
• Consideration/ candidness
– Preparing every message with the recipient in mind.
• Besides 7Cs, others are:
– Integrity
• be in conformity with organizational objectives &
policies
– Timeliness
• update information, outdated information has no
importance
– Brevity and attentiveness
– Objectivity
• be factual, avoid emotion & prejudice
– Adaptability
• suit the information to the audience
Chapter Five
Controlling
What and why controlling?
• Organizational resources are limited. Their acquisition
& use are critical to one survival of the organization.
• Planning, organizing, staffing & directing must be
monitored to maintain their effectiveness & efficiency.
• Managerial control
– is an important tool to ensure organization is making
progress towards its goal and efficient use of the available
recourses.
• Controlling
– is the last management function and
– it affects or is affected by the other four functions.
• In the controlling function, a manager undertakes
activities that
– enable him ensure whether the actual results conform
to planned results.
• To make control more effective
– standards must be established and corrective actions
should be taken when there is deviation so as to make
the necessary adjustment.
• Managers
– must continually monitor whether organizations perform
their tasks per the plan.
– review performances of employees daily, weekly, and
monthly to determine actual performances.
• Control
– is checking current performance against predetermined
standards.
– is the regulation of organizational activities so that some
targeted elements of performance remains within
acceptable limits.
• Without this regulation organizations have no indication how well
they perform in relation to their goals.
• Control, like a ship rudder,
– keeps the organization moving in the proper direction;
– provides an organization with a mechanism for adjusting its
course if performance fails outside of acceptable
boundaries.
• An organization without effective control procedures is
not likely to reach its goals.
• Controlling acts in relation to other management
functions.
– Planning sets directions and allocates resources;
– Organizing and staffing bring people and material
resources together in working condition;
– Leading directs people in the utilization of these resources;
and
– Controlling sees that the right things happen in the right
way and at the right time as a result of those functions of
management.
• In general, the control function involves and provides
answers to the three basic questions.
1. How the actual results compared against planned results?
2. What corrective actions are appropriate? and
3. Who is to take it?
• Task of managers is
– to evaluate how well an organization has
achieved its goals and
– to take any corrective actions needed to maintain
or improve performance
• The outcome of the control process
– is the ability to measure performance accurately
and regulate organizational efficiency and
effectiveness
• Management control/ controlling
– is the measurement and correction of performance in
order to ensure that the objective of the organization
and the plans devised to attain them are accomplished.
– is a systematic effort
• to set performance standards with planning objectives
• to design information feedback systems,
• to compare actual performances with those predetermined
standards,
• to determine whether there are any deviations & to measure
their significance, &
• to take any action required to assure that all organizational
resources are being used in the most effective & efficient way
in achieving organizational objectives.
The purpose of controlling
– Proper controls help managers make sure that the
people in the organizations do what is necessary,
when it is necessary, and in the way it is required.
– Controlling determines whether people & the
various parts of an organization are on target,
achieving the progress towards their objectives
that they planned to achieve.
– Control has four basic purposes
• Control provides an organization with ways:
1. To adapt to environmental change.
2. To limit the accumulation of errors.
3. To cope with organizational complexity, and
4. To minimize costs.
 Adapt the Limit the
environmental accomplishment of
change errors

Control helps the

organization

Cope with Minimize costs

organizational
complexity

The purpose of control

– Control also fulfills the following purposes in the
organizations.
• Control helps to ensure that the overall direction is
consistent with short and long range plans.
• It also provides a means for monitoring performance
under plans as time passes.
• It helps to ensure that objectives and
accomplishments throughout are consistent with one
another in proper means – end fashion.
• It helps to ensure individual compliance with basic
organizational rules and policies.
Situations those make controlling importance
– Uncertainty
• Plans and objectives deal with the future which is uncertain.
• There is a need for control points and control systems that allow for constructive
adjustments in activities, plans, and even objectives overtime.
– Complexity
• As organization grows in size and diversity, it becomes increasingly complex.
• Adequate controls are required to coordinate activities and accomplish
integration in the face of such complexity.
– Human limitation
• People make mistakes.
• Forecasting errors are common in complex and unpredictable environments;
errors in judgment can occur in any problem situation.
• Therefore, control helps to identify such mistakes.
– Delegation and decentralization
• Both increase the decision making authority of the lower personnel.
• As authority to act moves from top to bottom level, control mechanisms are
required to ensure that accountability for results will be in place.
• Control helps managers delegate and decentralize while accountability for results.
The control process
– The emphasis of control is on action designed to
• prevent problems,
• correct problems and
• explore opportunities.
– The process of controlling involves the following steps.
1. Establishing Standards
2. Measuring and comparing actual performance
with standards
– Measuring Performance and
– Comparing performance and standards
3. Taking corrective action
• Steps in controlling

Establishing Standards

Measuring performance

Comparing performance
and Standards

Evaluating performance
and take action

Maintaining the Correct the Change the

Status quo Deviation Standards
• Establishing Standards/ Performance standards
– The first step in control involves establishing performance
standards and methods for measuring performance.
– Standards
• are measuring devices, qualitative or quantitative, designed to help
monitor the performance of people, capital goods, or processes.
– Standards can be:-
• Managerial Standards
• Technical Standards
– Managerial Standards
• are such as reports, regulations, and performance evaluations.
• focus only on the key areas & the kind of performance required reaching
specific goals.
– Technical Standards
• specify what & how of the business; and applied to production methods &
processes; to materials, machinery, safety equipments, parts & supplies.
• can come from internal & external sources control system.
• Performance standard summarized into four
categories:
1. Quality
2. Quantity;
3. Time and
4. Cost
– Physical standards (quality and quantity)
• include quantity of products; number of customers; and quality of
products
– Monetary standards (cost)
• standards expressed in terms of money. Includes material/
production cost; selling cost; net profit; etc..
– Time standard
• refers to the speed with which the job is done, e.g. fixing the dead
line with in which the job is to be performed or completed.
• Standards must not be rigid but rationally flexible.
• Every objective, goal, policy, procedure and budget
becomes a standard against which actual
performance might be measured.
• However, in practice different types of standards
used are:
1. Physical standards such as units of production per
hour.
2. Cost standards, such as direct and indirect cost per
unit.
3. Revenue standards such as sales per customer.
4. Capital standards such as rate of return of capital
invested.
5. Intangible standards such as competency of managers
and employees.
• Measuring Performance
– It is measuring the performance & determining the
performance in line with the set of standards.
– It is comparison between ‘what is’ & ‘what should be’.
– It is discovering the deviation.
• Taking corrective action
– Determining precise action to be taken depends on three
things.
1. the standard
2. accuracy of the measurements that determine the existence
of deviation &
3. the diagnosis of the person or device investigating the causes
of deviation.
– Control process would be incomplete if corrective action
would not be taken.
Areas of control
• Organizations practice control in a number of
different areas and different levels.
• Control focuses on any areas of an organization.
• Most organizations define areas of control in terms
of four basic types of resources they use as:
1. Control of Physical Resources
2. Control of Human Resources
3. Control of Financial Resources
4. Control of Information Resources
• Control of Physical Resources
– include inventory management (stocking); quality control
(maintaining appropriate levels of output quality) and
equipment control (supplying necessary facilities and
machinery)
• Control of Human Resources
– include selection and placement; training and development;
performance appraisal and compensation
• Control of Financial Resources
– Involve managing organizational debt so that it doesn’t become
expensive; ensuring that the organization has enough cash on
hand to meet its obligation.
• Control of Information Resources
– Include sales and marketing forecasting; environmental analysis;
economic forecasting; public relations and production
scheduling.
Levels of control
• Strategic control
– Focuses how effective the organization’s corporate,
business and functional strategies are succeeding in
helping the organization to meet its goals and objectives.
• Structural control
– Concerned with how the elements of the organization’s
structure are serving their intended purposes.
• Financial control
– Concerned with the organization’s financial resources.
• Operations control
– Focuses on the processes an organization uses to
transform resources into product and services.
Types of control
• Work performed by organizations & their employees
has
– a starting point (Where inputs takes place)
– a period of performance (where inputs are processed) &
– a final product (output)
• Based on the nature of work & work flow, various
types of control have been developed.
• Depending on the time applied and focuses of
corrective actions, control is classified into three
categories.
1. Prevention control
2. feed forward control
3. feedback control
• Prevention control
– It is sometimes called pre-action control.
– It is established to prevent problems from occurring rather
than to fix them after they happen.
• feed forward control
– It is designed to detect deviations from some standard or goal
to allow corrections to be made before a particular sequence
of action completed.
– The focus of control is on the ongoing activities in feed
forward control.
• feedback control
– it is sometimes called post-action control
– it focuses on end results as opposed to input and activities.
– It takes place after an action is completed.
– In feedback control the focus is on the end results.
Control Methods
• Control methods are broadly classified into two types
namely
– Past-oriented controls and
– Future-oriented controls
• Past-oriented control
– also known as post action controls.
– measure results after the process.
– examines what has happened in the past for a particular period.
– used to plan future behavior in the light of post errors or
successes.
– used for rewarding, disciplining, training or promoting individuals.
– Examples of past-oriented controls are
• accounting records,
• school grade reports etc.
• Future-oriented controls
– also known as feed-forward controls or steering
controls.
– are designed to measure results during the process, so
that action can be taken before the job is done or the
period is over.
– Feed-forward control
• serve as warning-posts principally to direct attention rather
than to evaluate
• examples of such controls are
– cash flow and funds flow analysis,
– network planning etc
• which help managers to see that they will have problems in
such areas of cash or on time delivery unless they take prior
action.
Characteristics of control
• Managers are required to design a control system
that provides accurate feedback timely, which are
– economical and
– acceptable by the members of the organization.
• Control characteristics help managers in designing
a control system.
• To use the control process, managers must
– recognize the characteristics of effective control and
– understand how to identify and overcome occasional
resistances to control.
• The important characteristics of control are
– It is an end function
– It is a continuous process
– it is mainly a forward-looking
– it is a universal function
– it is a normative and positive force
– It guides behavior
– it allows all organization to cope with uncertainty
– acceptance by members of the organization
– Focus on critical control point.
– economic feasibility
– timeliness
– easy to understand
• Control systems are effective when they are
– integrated with planning
– Flexible
– Accurate
– Timely and
– Objective
• Hence, they also the characteristics of
effective control.
Making control effective
• Good plan cannot guarantee the attainment of the
desired results unless effective control system is
designed and implemented.
• An effective control system requires the following essentials.
– control must be understandable
– control must be flexible
– control must be economical
– control must be objective
– control should recognize the importance of time element
– control system should provide useful and understandable information
– Control should be forward-looking
– control should be selective
– control should reflect the organization structure and needs
– control should lead to corrective action
• Resistance to control
– Over control
• Controlling too many things
– Inappropriate focus
– Reward for inefficiency and
– Too much accountability
• Overcoming resistance to control
– Encouraging employee participation
– developing verification process
 Chapter Six
Performance Management
Performance Management
• Performance
• is a result of employee’s efforts, abilities
and role perception.
• The term “performance management”
– has come to replace the phrase
“performance appraisal” in many
organizations.
• Performance Management
– is the process of managing an organization’s
strategy.
– is the translation of plans into results -
execution.
– is a process that helps an organization to
formulate, implement, and change its strategy in
order to satisfy its stakeholders’ needs.
– Translation of plans into results—execution. It is
the process of managing an organization’s
strategy /Cokins, 2009/.
– a process that helps an organization to formulate,
implement, and change its strategy in order to
satisfy its stakeholders’ needs.
• Performance Management
– tools leaders use to strategically lead their
organizations and achieve their vision,
– Helps to create alignment between organizational
vision and the goals and activities of workers.
– to lead organizations effectively
– essential tool to articulate vision; plan goals and
activities; and communicate the intention of the
leadership to the rest of the employees.
• Generally, the process of performance
management helps leaders to
– set and align goals;
– coach and develop employees;
– provide informal feedback;
– formally evaluate performance, and
– link performance with recognition and rewards.
• The ultimate goal of performance
management is
– to achieve sustainable organizational
performance.
• Performance Management
– is a broader and a complex function
– is a comprehensive management process
– is a continuous process of
• identifying,
• measuring,
• developing the performance of individuals and teams
and
• aligning performance with the strategic goals of the
organization (Aguinis, 2009).
• Performance Management
– has the following stages (Aguinis and Grote,
1996):
1. prerequisites;
2. performance planning;
3. performance execution;
4. performance assessment;
5. performance review; and
6. performance renewal and reconstructing.
• Stage 1: Prerequisites
– The two important prerequisites that are needed
before a performance management system is
implemented:
1. knowledge of the organization’s mission and
strategic goals
2. knowledge of the job in question
– If there is lack of clarity regarding where the
organization wants to go, there will be a lack of
clarity regarding what each employee needs to
do and achieve to help the organization get there.
• Stage 2: Performance Planning
– This stage has
• the goal for employees to have a thorough knowledge
of the performance management system;
• the supervisor and the employee meet to discuss, and
agree on, what needs to be done and how it should
be done.
– This performance planning discussion includes a
consideration of
• development plan /developing the plan/
• behaviors, and
• results,
• Stage 3: Performance Execution
– This stage includes
• the actual performance and
• employees striving to produce the results and display the
behaviors agreed on earlier and to work on development
needs.
– Business observers here more and more convinced that
• the ability to execute strategy is more important than
the quality of the strategy itself.
• The ability to execute the strategy has a bigger
management challenge than determining the right
vision and strategy in the first place.
• Stage 4: Performance Assessment
– It is an evaluation of the extent to which the goals
stated in the development plan have been
achieved.
– In this phase, both the employee and the
manager are responsible for evaluating
• the extent to which the desired behaviors have
been displayed, and
• whether the desired results have been
achieved.
• Stage 5: Performance Review
– This stage involves the meeting between the
employee and the manager to review their
assessments.
– Such meeting is usually called the appraisal
meeting or discussion.
– It is important because
• it provides a formal setting in which the
employee receives feedback on his/her
performance.
• Stage 6: Performance Renewal and Reconstructing
– This is the final stage in the performance process.
– is identical to the performance planning
component.
– The main difference is that
• the renewal and reconstructing stage uses the
insights and information gained from the other
phases.
• For example, some of the goals might have been set
unrealistically.
Major Challenges in PM
• Performance management can be applied
– at any level in an organization, as well as
– to business processes, products and projects.
• The application could encounter a number of
challenges that emanate from different
angles such as
– the existing system,
– the employees,
– lack of the necessary skills and competencies.
• The main challenges in Performance
Management are:
• Appraisal Process
• Measuring Performance
• Integrating Business Processes
• Errors in rating and evaluation
• Managing feedback
• Resistance
• Appraisal Process
– Some of the challenges within the actual appraisal
process are related to
• employee file review,
• assessing the strength of past performance ratings versus
current performance, or
• determining if an employee's disciplinary records are still
relevant and
• worth discussing in the current evaluation period.
– The process itself can be lengthy and confusing because
• there is no substantial preparation for supervisors and
managers before conducting an employee's performance
appraisal meeting.
• Measuring Performance
– The challenge in assessing performance is
• identifying indicators that directly measure results, while at the
same time measuring progress toward high-level strategic
objectives.
– Measures that are not linked to the strategic objectives
will not provide a meaningful assessment of
performance for the organization, department or
employee.
– Employees need
• to understand the indicators and have the ability to directly
influence the outcome.
• If the ability to influence the indicators is affected by outside
factors, employees will become frustrated and unmotivated.
• Integrating Business Processes
– Business processes are required to accurately measure
results over time.
– Existing processes are not always capable of providing
relevant data that is consistent across the organization.
• In these situations management needs to invest in developing
the processes.
– If an organization sets its objectives to work within the
limitations of the available data, then the processes are
driving the strategy.
• Simply developing the initial processes is not enough.
• Continually assessing and refining the processes is needed to
accommodate changes in strategic direction and performance
indicators.
• Errors in rating and evaluation
– Many errors may creep in the appraisal process
based on the personal bias like
• stereotyping,
• halo effect (i.e. one trait influencing the evaluator’s
rating for all other traits) etc..
– Therefore the rater should exercise objectivity
and fairness in evaluating and rating the
performance of the employees.
• Managing feedback
– Key elements of performance management are
• employee development and
• process improvement.
– Information is required in a time frame that allows
management to develop skills and invest in the relevant
resources.
• If data is not gathered in a timely manner, management will
not respond quickly enough to impact results.
– A further challenge is to ensure feedback flows in both
directions.
• Managers require timely feedback to monitor organizational
results.
• Employees require feedback to validate, or to improve
individual performance.
• Resistance
– The appraisal process may face resistance from
• the employees and
• the trade unions for the fear of negative ratings.
– Therefore,
• the employees should be communicated and clearly
explained the purpose as well the process of
appraisal.
• the standards should be clearly communicated and
every employee should be made aware that what
exactly is expected from him/her.
Performance Management, Balanced Score Card
• Balanced Scorecard for Performance
Management
– developed in the early 1990s/ Robert Kaplan
and David Norton/businesses based solely upon
financial measures
– What is the Balanced Scorecard?
– It’s a management system that enables your
organization to set, track and achieve its key
business strategies and objectives.
– helps managers translate the company’s mission,
goals and strategies into measures;
Benefits of using the Balanced Scorecard
• It helps to communicate the strategy throughout
the company,
– align unit and individual goals with the company
strategy;
– finally, it links strategic objectives to long-term targets
and
– identify cause-and-effect relationships among
objectives
– tells you the knowledge, skills and systems that your
employees will need (learning and growth);
– to innovate and build the right strategic capabilities
and efficiencies (internal processes);
– that deliver specific value to the market (customer);
and
– which will eventually lead to higher shareholder value
(financial).
 The End
for this course
but not the end for
Further studying
Thank
You!!