KMBN 101 Management Concepts and Organizational Behavior

UNIT - 1 Share Matrix (BCG) and SWOT were used to formalize strategic
planning processes. After several decades of ‘best practice’ and ‘one
size fits all’ solutions, academics began to developing contingency

Management Practices from theories.

Past to Present 1980s: Competitive Advantage

As the business environment grew increasingly competitive and

The evolution and growth of change management as a discipline has connected, and with a blooming management consultancy industry,
seen a meteoric rise over the three main eras of the definitive past, Competitive Advantage became a priority for Organizations in the
evolving present and the formalized and expanding future. The 1980’s. Tools like Total Quality Management (TQM), Six Sigma and
foundational years before the 1990’s saw academics beginning to Lean were used to measure processes and improve productivity.
define and understand the very basics of change management and Employees were more involved by collecting data, but decisions were
systems experiencing, reacting and learning to adapt to change. still made at the top, and goals were used to manage people and
maintain control.
1910s-1940s: Management as Science
1990s: Process Optimization
Management as Science was developed in the early 20th century and
focused on increasing productivity and efficiency through Benchmarking and business process reengineering became popular in
standardization, division of labour, centralization and hierarchy. A the 1990’s, and by the middle of the decade, 60% of Fortune 500
very ‘top down’ management with strict control over people and companies claimed to have plans for or have already initiated such
processes dominated across industries. projects. TQM, Six Sigma and Lean remained popular and a more
holistic, organization-wide approach and strategy implementation took
1950s-1960s: Functional Organizations the stage with tools such as Strategy Maps and Balance Scorecards.

Due to growing and more complex Organizations, the 1950’s and 2000s: Big Data
1960’s saw the emergence of functional Organizations and the Human
Resource (HR) movement. Largely driven by the consulting industry under the banner of Big
Data, Organizations in the 2000’s started to focus on using technology
Managers began to understand the human factor in production and for growth and value creation. Meanwhile, oversaturation of existing
productivity and tools such as goal setting, performance reviews and market space drove to concepts such as Blue Ocean Strategy and
job descriptions were born. Value Innovation.

1970s: Strategic Planning It’s 2013. Globalization, advances in technology and increased
diversity have put Organisational challenges into hyper drive. Despite
In the 1970’s we changed our focus from measuring function to the inspirational stories we read about companies like Zappos,
resource allocation and tools like Strategic Planning (GE), Growth Innocent Drinks and Google, the truth is that most of us are using out-
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dated management practices and failing to get the most out of our (a) Determining the objectives of the enterprise. The top level
people. Not convinced? Consider this: 65% of people are unhappy at managers formulate the main objectives of the organization. They
work, only 14% understand their company’s strategy, and 75% are form long term as well as short term objectives.
seeking jobs as we speak. Now, what do you think that does for your
bottom line? (b) Framing of plans and policies. The top level managers also frame
the plans and policies to achieve the set objectives.

Managerial Levels, Skills, (c) Organizing activities to be performed by persons working at

Functions and Roles middle level. The top level management assigns jobs to different
individuals working at middle level.

The Levels of Management (d) Assembling all the resources such as finance, fixed assets etc. The
top level management arranges all the finance required to carry on day
Segmenting the management of an organization into levels is vital to to day activities. They buy fixed assets to carry on activities in the
maintaining the productivity and work performance of employees. organization.
Although when there is a change in the size of the business or the
workforce, there would also be a change in the number of levels of the (e) Responsible for welfare and survival of the organization—Top
management. level is responsible for the survival and growth of the organization.
They make plan to run the organization smoothly and successfully.
The main levels of management are:
(f) Liaison with outside world, for example, meeting Government

1. Top level management.

officials etc. The top level management remains in contact with
government, competitors, suppliers, media etc. Jobs of top level are

2. Middle level management.

complex and stressful demanding long hours of commitment towards
organization.

3. Supervisory level, operational or lower level of (g) Welfare and survival of the organization.
management.
2. Middle Level Management
1. Top Level Management
This level of management consists of departmental heads such as
Top level management consists of Chairman, Board of Directors, purchase department head, sales department head, finance manager,
Managing Director, General Manager, President, Vice President, marketing manager, executive officer, plant superintendent, etc.
Chief Executive Officer (C.E.O.), Chief Financial Officer (C.F.O.) People of this group are responsible for executing the plans and
and Chief Operating Officer etc. It includes group of crucial persons policies made by top level.
essential for leading and directing the efforts of other people. The
managers working at this level have maximum authority. They act as a linking pin between top and lower level management.
They also exercise the functions of top level for their department as
Main functions of top level management are:- they make plans and policies for their department, organise and collect
the resources etc.
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Main functions of middle level management are:- They are also responsible for maintaining discipline among the
workers.
(a) Interpretation of policies framed by top management to lower
level. Middle level management act as linking pin between top level Functions of lower level management are:
and lower level management. They only explain the main plans and
policies framed by top level management to lower level. (a) Representing the problems or grievances of workers before the
middle level management. The supervisory level managers are
(b) Organizing the activities of their department for executing the directly linked with subordinates so they are the right persons to
plans and policies. Generally middle level managers are the head of understand the problems and grievances of subordinates. They pass
some department. So they organize all the resources and activities of these problems to middle level management.
their department.
(b) Maintaining good working conditions and developing healthy
(c) Finding out or recruiting/selecting and appointing the required relations between superior and subordinate. The supervisory managers
employees for their department. The middle level management selects provide good working conditions and create supportive work
and appoints employees of their department. environment which improve relations between supervisors and
subordinates.
(d) Motivating the persons to perform to their best ability. The middle
level managers offer various incentives to employees so that they get (c) Looking to safety of workers. Supervisory level managers provide
motivated and perform to their best ability. safe and secure work environment for workers.

(e) Controlling and instructing the employees, preparing their

performance reports etc. The middle level managers keep a watch on Managerial Skills, Rolls &
the activities of low level managers. They prepare their performance
appraisal reports. Function
(f) Cooperate with other departments for smooth functioning. Managerial Skills

(g) Implementing the plans framed by top level. Managers at every level in the management hierarchy must exercise
three basic types of skills: technical, human, and conceptual. All
3. Supervisory Level/Operational Level managers must acquire these skills in varying proportions, although
the importance of each category of skill changes at different
This level consists of supervisors, superintendent, foreman, sub- management levels.
department executives; clerk, etc. Managers of this group actually
carry on the work or perform the activities according to the plans of
top and middle level management.

Their authority is limited. The quality and quantity of output depends

upon the efficiency of this level of managers. They pass on the
instruction to workers and report to the middle level management.

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  Conceptual skills are especially important for top-level managers,
who must develop long-range plans for the future direction of their
organization.

Managerial Roles

To meet the many demands of performing their functions, managers

assume multiple roles. A role is an organized set of behaviors. Henry
Mintzberg has identified ten roles common to the work of all
managers.
1. Technical skills
The ten roles are divided into three groups:
 Technical skills refer to the ability and knowledge in using the
equipment, techniques and procedure involved in performing
specific tasks.
1. Interpersonal

 These skills require specialized knowledge and proficiency in the

mechanics of a particular.
2. Informational

 Technical skills lose relative importance at higher levels of the

management hierarchy, but most top executives started out as
3. Decisional

technical experts.
The performance of managerial roles and the requirements of these
roles can be played at different times by the same manager and to
2. Human skills different degrees depending on the level and function of management.
The ten roles are described individually, but they form an integrated
whole.
 Human skills refer to the ability of a manager to work effectively
with other people both as individual and as members of a group.
 Human skills are concerned with understanding of people.
 These are required to win cooperation of others and to build
effective work teams.

3. Conceptual skills

 Conceptual skills involve the ability to see the whole organization

and the interrelationships between its parts.
 These skills refer to the ability to visualize the entire picture or to
consider a situation in its totality.
 These skills help the managers to analyze the environment and to
identify the opportunities.

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 It defines the relationships between the manger and employees.

2. Informational Roles

The informational roles ensure that information is provided. The three

informational roles are primarily concerned with the information
aspects of managerial work.

(a) Monitor Role

The manager receives and collects information about the operation of

an enterprise.

(b) Disseminator Role

The manager transmits special information into the organization. The

top level manager receives and transmits more information from
1. Interpersonal Roles people outside the organization than the supervisor.

The interpersonal roles link all managerial work together. The three (c) Spokesperson Role
interpersonal roles are primarily concerned with interpersonal
relationships. The manager disseminates the organization’s information into its
environment. Thus, the top level manager is seen as an industry
(a) Figurehead Role expert, while the supervisor is seen as a unit or departmental expert.

The manager represents the organization in all matters of formality.

The top level manager represents the company legally and socially to
3. Decisional Roles
those outside of the organization. The supervisor represents the work
group to higher management and higher management to the work The decisional roles make significant use of the information and there
group. are four decisional roles.

(b) Liaison Role (a) Entrepreneur Role

The manger interacts with peers and people outside the organization. The manager initiates change, new projects; identify new ideas,
The top level manager uses the liaison role to gain favors and delegate idea responsibility to others.
information, while the supervisor uses it to maintain the routine flow
of work. (b) Disturbance Handler Role

(c) The leader Role

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The manager deals with threats to the organization. The manager takes  Has a preference for issues which are current, specific and
corrective action during disputes or crises; resolve conflicts among non-routine
subordinates; adapt to environmental crisis.  Prefers verbal rather than written means of communication
 Acts within a web of internal and external contacts
(c) Resource Allocator Role  Is subject to heavy constraints but can exert some control over
the work.
The manager decides who gets resources; schedule, budget set
priorities and chooses where the organization will apply its efforts. In for-profit work, management has as its primary function the
satisfaction of a range of stakeholders. This typically involves making
(d) Negotiator Role a profit (for the shareholders), creating valued products at a reasonable
cost (for customers) and providing rewarding employment
The manager negotiates on behalf of the organization. The top level opportunities (for employees). In nonprofit management, add the
manager makes the decisions about the organization as a whole, while importance of keeping the faith of donors. In most models of
the supervisor makes decisions about his or her particular work unit. management/governance, shareholders vote for the board of directors,
and the board then hires senior management. Some organizations have
experimented with other methods (such as employee-voting models)
Nature of Managerial Work of selecting or reviewing managers; but this occurs only very rarely.

Managers have a vision of themselves — which they largely persist in From these observations, Mintzberg identified the manager’s ‘work
believing and propagating — that they sit in solitude contemplating roles’ as:
the great strategic issues of the day; that they make time to reach the
best decisions and that their meetings are high-powered, concentrating 1. Interpersonal Roles
on the meta-narrative rather than the nitty-gritty.
 Figurehead: representing the organization/unit to outsiders
The reality largely went unexplored until Henry Mintzberg’s The  Leader: motivating subordinates, unifying effort
Nature of Managerial Work published in 1973. Instead of accepting  Liaiser: maintaining lateral contacts
pat answers to perennial questions, Mintzberg went in search of the
reality. He simply observed what a number of managers actually did. 2. Informational Roles
The resulting book blew away the managerial mystique.
 Monitor: of information flows
Instead of spending time contemplating the long-term, Mintzberg  Disseminator: of information to subordinates
found that managers were slaves to the moment, moving from task to  Spokesman: transmission of information to outsiders
task with every move dogged by another diversion, another call. The
median time spent on any one issue was a mere nine minutes. In The 3. Decisional Roles
Nature of Managerial Work, Mintzberg identifies the characteristics of
the manager at work:  Entrepreneur: initiator and designer of change
 Disturbance handler: handling non-routine events
 Performs a great quantity of work at an unrelenting pace  Resource allocator: deciding who gets what and who will do
 Undertakes activities marked by variety, brevity and what
fragmentation  Negotiator: negotiating.
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Planning: Objective of planning 2. Monitoring Routine Objectives

Planning can be defined as “thinking in advance what is to be done, Some objectives don’t have a specific time frame but deal with
when it is to be done, how it is to be done and by whom it should be expected results from routine, continuous activities. Normal
done”. In simple words we can say, planning bridges the gap between production levels translate into routine objectives. Monitoring safety
where we are standing today and where we want to reach. to prevent the accident rate from rising involves routine objectives.
Such objectives typically remain at a constant rate.
Planning involves setting objectives and deciding in advance the
appropriate course of action to achieve these objectives so we can also Management monitors routine objectives for deviations from the norm
define planning as setting up of objectives and targets and formulating and to institute corrective action if necessary. Planning specifies
an action plan to achieve them. routine objectives and assumes the company will meet them as it has
in the past.
Another important ingredient of planning is time. Plans are always
developed for a fixed time period as no business can go on planning
endlessly. 3. Development Objectives for New Initiatives

Keeping in mind the time dimension we can define planning as While time-related objectives deal with normal activities within a time
“Setting objectives for a given time period, formulating various frame and routine objectives deal with regular activities, development
courses of action to achieve them and then selecting the best possible objectives result from new initiatives. External change imposed on a
alternative from the different courses of actions”. business or internal changes motivated by new goals result in planning
for new development. Such plans specify new activities and estimate
Objective of planning the results. These desired results translate into objectives at the
various organizational levels.

1. Time-Related Objectives Since the activities are new, the objectives may not be realistic and
managers have to be ready to make adjustments to this type of
One type of objective includes a time factor. These objectives are objective.
short-term, medium-term or long-term, ranging from one month to
several years. Planning that includes short-term objectives specifies
what immediate results are expected from actions currently in Planning Process
progress. These objectives focus on day-to-day activities.
Recognizing Need for Action
Medium-term objectives are results that influence the annual budgets,
reports and strategies. They deal with monthly action plans. Long- An important part of the planning process is to be aware of the
term objectives look at results the company needs to meet its overall business opportunities in the firm’s external environment as well as
goals. They focus on results from yearly reviews. Planning specifies within the firm.  Once such opportunities get recognized the managers
time-related objectives as an overall framework for plan can recognize the actions that need to be taken to realize them. A
implementation. realistic look must be taken at the prospect of these new opportunities
and a SWOT analysis should be done.
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Say for example the government plans on promoting cottage alternative courses should be identified. There must be options
industries in semi-urban areas. A firm can look to explore this available to the manager.
opportunity.
Maybe he chooses an innovative alternative hoping for more efficient
2. Setting Objectives results. If he does not want to experiment he will stick to the more
routine course of action. The problem with this step is not finding the
This is the second and perhaps the most important step of the planning alternatives but narrowing them down to a reasonable amount of
process. Here we establish the objectives for the whole organization choices so all of them can be thoroughly evaluated.
and also individual departments. Organizational objectives provide a
general direction, objectives of departments will be more planned and 5. Examining Alternate Course of Action
detailed.
The next step of the planning process is to evaluate and closely
Objectives can be long term and short term as well. They indicate the examine each of the alternative plans. Every option will go through an
end result the company wishes to achieve. So objectives will percolate examination where all there pros and cons will be weighed. The
down from the managers and will also guide and push the employees alternative plans need to be evaluated in the light of the organizational
in the correct direction. objectives.

3. Developing Premises For example, if it is a financial plan. Then it that case its risk-return
evaluation will be done. Detailed calculation and analysis are done to
Planning is always done keeping the future in mind, however, the ensure that the plan is capable of achieving the objectives in the best
future is always uncertain. So in the function of management certain and most efficient manner possible.
assumptions will have to be made. These assumptions are the
premises. Such assumptions are made in form of forecasts, existing 6. Selecting the Alternative
plans, past policies etc.
Finally, we reach the decision making stage of the planning process.
These planning premises are also of two types – internal and external. Now the best and most feasible plan will be chosen to be
External assumptions deal with factors such as political environment, implemented. The ideal plan is the most profitable one with the least
social environment, advancement of technology, competition, amount of negative consequences and is also adaptable to dynamic
government policies etc. Internal assumptions deal with policies, situations.
availability of resources, quality of management etc.
The choice is obviously based on scientific analysis and mathematical
These assumptions being made should be uniform across the equations. But a managers intuition and experience should also play a
organization. All managers should be aware of these premises and big part in this decision. Sometimes a few different aspects of
should agree with them. different plans are combined to come up with the one ideal plan.

4. Identifying Alternatives 7. Formulating Supporting Plan

The fourth step of the planning process is to identify the alternatives Once you have chosen the plan to be implemented, managers will
available to the managers. There is no one way to achieve the have to come up with one or more supporting plans. These secondary
objectives of the firm, there is a multitude of choices. All of these plans help with the implementation of the main plan. For example
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plans to hire more people, train personnel, expand the office etc. are anywhere from the next two years to the next 10 years. Important
supporting plans for the main plan of launching a new product components of a strategic plan are vision, mission and values.

8. Implementation of the Plan (iii) Tactical Planning

And finally, we come to the last step of the planning process, “Tactical plans are about what is going to happen,” Story said.
implementation of the plan. This is when all the other functions of “Basically at the tactical level, there are many focused, specific, and
management come into play and the plan is put into action to achieve short-term plans, where the actual work is being done, that support the
the objectives of the organization. The tools required for such high-level strategic plans.”
implementation involve the types of plans- procedures, policies,
budgets, rules, standards etc. Tactical planning supports strategic planning. It includes tactics that
the organization plans to use to achieve what’s outlined in the

Types of Planning strategic plan. Often, the scope is less than one year and breaks down
the strategic plan into actionable chunks. Tactical planning is different
from operational planning in that tactical plans ask specific questions
The 4 Types of Planning about what needs to happen to accomplish a strategic goal; operational
plans ask how the organization will generally do something to
(i) Operational Planning accomplish the company’s mission.

“Operational plans are about how things need to happen,” (iv) Contingency Planning
motivational leadership speaker Mack Story said at LinkedIn.
“Guidelines of how to accomplish the mission are set.” Contingency plans are made when something unexpected happens or
when something needs to be changed. Business experts sometimes
This type of planning typically describes the day-to-day running of the refer to these plans as a special type of planning.
company. Operational plans are often described as single use plans or
ongoing plans. Single use plans are created for events and activities Contingency planning can be helpful in circumstances that call for a
with a single occurrence (such as a single marketing campaign). change. Although managers should anticipate changes when engaged
Ongoing plans include policies for approaching problems, rules for in any of the primary types of planning, contingency planning is
specific regulations and procedures for a step-by-step process for essential in moments when changes can’t be foreseen. As the business
accomplishing particular objectives. world becomes more complicated, contingency planning becomes
more important to engage in and understand.
(ii) Strategic Planning

“Strategic plans are all about why things need to happen,” Story said. Types of Plans 8 Important
“It’s big picture, long-term thinking. It starts at the highest level with
defining a mission and casting a vision.” Types of Plans
Strategic planning includes a high-level overview of the entire
business. It’s the foundational basis of the organization and will 1. Objectives
dictate long-term decisions. The scope of strategic planning can be
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Objectives are plans for the future that will serve to provide direction Rules are the simplest type of plan chosen from alternatives. A rule
for subsequent activity. We have a hierarchy of objectives. Primary or requires that a specific action be taken or not taken with respect to a
basic objectives are determined by the top management. Each situation. It is more rigid and more specific than a policy. It guides
department has its own objectives within the framework of basic action but provides no discretion in its strict application.
goals.
Of course, rules are essential for discipline and smooth operations of
the business. No smoking rule in a factory is applicable to all
including the top executives. A rule is designed to define in advance,
what alternative must be selected, or what decision must be made. In
effect it dictates the way an activity is to be (or is not to be) done. A
rule is related to procedure.

4. Procedure

It is a standing plan acting as a means of implementing a policy. For

example the sales department lays down a policy to execute all orders
within 48 hours. The procedure of execution of orders will prescribe a
sequence of steps that must be followed after the receipt of an order
2. Policies till the dispatch of goods to the customer.

A policy is a standing plan or answer to recurring questions. It is a These chronological series of steps or tasks constitute a procedure. A
continuing decision which applies to repetitive situations. It is a guide procedure lays down the manner or method by which work is to be
to action or decision of a manager. A policy helps keep work in line performed in a standard and uniform way.
with objective.
Once a procedure is established, it ensures uniformly high level of
Policies are directives providing continuous framework for executive performance. It results in work simplification and eliminates overlap
actions on recurrent managerial problems. Policies take the form of or duplication of efforts. Policy guides thinking and action, whereas
general statements to lead managerial activity through proper channel procedure guides action only to fulfil the objectives.
towards the objective. For instance, a firm has a policy of promotion
from within. 5. Programme

If a vacancy arises, naturally the first preference is given to existing

employees if they meet the job requirements. A policy assists decision It is a single use plan. It is a sequence of activities designed to
making. But deviations may be needed, of course, as exceptions and implement policies and accomplish objectives. It gives step-by step
under some extraordinary circumstances. In other words, there is a approach to guide action necessary to reach predetermined targets. It
limited scope for discretion in dishonouring a policy. is an instrument of co-ordination, i. e., a timetable of action. A good
programme ensures smooth and efficient operation. A procedure tells
how it is to be done, whereas a programme tells what is to be done.
3. Rules
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It enables a manager to prepare carefully and systematically for (a) Extrapolation,
difficulties, before they arise. We have detailed programmes of
personal selling advertising, and sales promotion in our marketing (b) Economic forecasting, and
campaign to accomplish the set goals in sales and to reach the
particular market. (c) Marketing research.

6. Schedules
Forecasting is based on statistical data and marketing research.
Economic forecasting is the basis of planning. Forecasting is a
systematic attempt to probe the future on the basis of known
Scheduling is the process of establishing time sequence of the work to information. Planning decisions are based upon intelligent and rational
be done. It is an integral part of programming. A schedule specifies forecasting the future trend of specified events, e.g., price trend.
the time when each of a series of actions should take place. Once the
tasks to be done and the persons who must do them are clear
according to our standing plans, scheduling may be the only element Corporate Planning
needing immediate management attention.
Corporate planning is creating a strategy for meeting business goals

7. Budget
and improving your business. A corporate plan is a roadmap that lays
out your business’s plan of action. It is imperative to write down goals
and plan for how they will be achieved. Without planning, business
A budget is a projection (and a plan) defining anticipated costs of operations can be haphazard, and employees are rarely on the same
attaining an objective. It is an appraisal of expected expense against page. When you focus on corporate planning, you set achievable goals
anticipated income or a future period. It may be stated in time, and bring your business one step closer to success.
materials, money or other units required to perform work and secure
specified result. Corporate planning is the act of creating a long-term plan to improve
your business. A corporate plan examines a business’s internal
Since most values are denoted in money, we have usually money capabilities and lays out strategies for how to use those capabilities to
budgets. E budget is a type of plan. It is also used as a control device. improve the company and meet goals. Think of a corporate plan as a
However, the budget begins as a forecast and therefore, requires roadmap laying out everything you need to do to achieve your future
planning. goals and reach new levels of success. The plan looks at each sector of
a business and makes sure that all parts are aligned, working towards
The master budget of the company is a formal expression of plans, similar goals. Corporate planning is often looked at through a SWOT
objectives and goals prescribed by the top management in advance for analysis (strengths, weaknesses, opportunities, threats). Further, it
the enterprise as a whole. We also have budget for each subdivision of usually starts with broad goals and works its way towards a much
the enterprise. It indicates the amount of money to be spent for…. by more detailed analysis, laying out exactly how objectives will be
each department. reached.

8. Forecasting
The following elements tend to be in a corporate plan:

(i) Vision Statement

We have three types of forecasting:
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Your company’s vision statement broadly defines what goals you are Now, it’s time to illustrate the strategies you plan to use to meet the
working to achieve. This statement is where you hone in on your objectives of your company. These strategies could be anything from
business’s focus and what you want to accomplish over the next three- introducing new products to reducing labor costs by 25 percent,
to-five years. Think big, but remember that you will have to create a depending on the goal. Your strategies should directly address the
strategic plan to back these goals up. So always make sure that your objectives you have laid out in your corporate plan, and include a plan
goals can be defined as SMART goals (strategic, measurable, of action for how you will implement them.
achievable, realistic and time-based). 
CORPORATE PLANNING EXAMPLES
(ii) Mission Statement
The needs of your corporate planning will vary depending on your
A good mission statement lays out how you will achieve your vision business and industry. For example, for automotive giant GM, CEO
statement in a few sentences. It should illustrate what you plan to offer Mary Barra’s corporate turnaround strategy included several
or sell, the market you are in, and what makes your company unique. objectives. The main ones included becoming a leader in product and
A mission statement is like an elevator pitch for your entire strategy. It technology, growing the Cadillac brand, continuing to grow the GM
effectively communicates who you are and what you want to do in a brand in China, continuing to improve GM’s finances and becoming
few lines.   more efficient from an operational standpoint. These objectives are, of
course, tailored to GM’s specific needs as a company.
(iii) Resources and scope
The following are a few examples of corporate planning objectives:
Part of corporate planning is taking stock of everything you currently
have going on in your organization. You’ll look at your systems, (i) Financial objectives
products, employees, assets, programs, divisions, accounting, finance
and anything else that is critical to meeting your vision. This part is Presumably, you went into business to make money. Your corporate
almost like making a map of your current organization. It gives you a planning financial objectives are your money-oriented goals. These
bird’s eye view of everything your company has going on, which objectives can include growing shareholder value, increasing profits
helps you create a plan for moving towards the future. and generating more revenue, to name a few. However, not all
financial objectives are about revenue and profits. There are also
(iv) Objectives objectives on cutting costs, balancing budgets, maintaining proper
budget ratios and more. Another financial objective example might be
Next, you need to lay out your business objectives and how you plan diversifying or creating new revenue streams. Your specific goals will
to measure success. This is a good time to hone in on that SMART depend on your company’s individual needs, but most corporate plans
planning to ensure that your objectives are strategic, measurable, include at least a few financial objectives.
achievable, realistic and time-based. A vague goal such as “improve
brand reputation” is meaningless without a solid measure of success in (ii) Customer objectives
place. A SMART goal would instead be “improve brand reputation by
placing the product in five positive media stories by the end of Q1.” Your customer objectives center on what you plan to do for your
customers. A customer-centered objective could be giving your
(v) Strategies consumers the best value for the price they pay. Or, you could aim to
improve product reliability. Another customer objective is increasing
your market share or offering the best possible customer service.
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These objectives will vary, but they all center around meeting able to achieve your goals. Goals must be written down and broken
customer demand. into parts to be efficiently achieved. Further, they must have clear
timelines and deliverables. Corporate planning helps you create a
(iii) Internal objectives roadmap for success by asking you to answer three crucial questions:

It’s important to consider internal objectives when doing corporate  What is the purpose of this business? (Mission)
planning. Internal objectives include three areas: innovation,  Where do we want to go and what do we hope to achieve? (Vision)
operations and customer service. Innovation objectives might consist  How will we achieve our objectives? (Plan)
of improving a product or growing the percentage of sales of a
particular product. Another innovation objective might be to invest x Another reason you need corporate planning is because it can help
dollars in the innovation of products. Operations objectives focus on align your organization and its values. A corporate plan does more
reducing waste, investing in quality, improving workplace safety and than simply keep your employees on a timeline for success. It also
reducing errors in manufacturing, to name a few. Another potential defines who you are as a company, and what you stand for. Likewise,
operations objective is streamlining. Finally, customer service when employees get a say in the direction of a business and its
objectives center on improving customer service, retention and objectives, your company culture will improve. Planning for the future
satisfaction. brings everyone to the table, promotes the exchange of ideas and
creates effective solutions to organizational problems. Making and
(iv) Learning and growth objectives sticking to a plan ensures that everyone in the organization is on the
same page. Small business owners especially will find that strategic
Every organization needs learning and growth objectives when planning is a great way to get feedback from employees and improve
corporate planning. Learning and growth objectives are those that overall culture.
involve employees, your company culture and your business’s
organizational capacity. One possible example of a learning and Finally, a corporate plan helps communicate your brand’s message to
growth objective is boosting company culture, increasing employee employees, shareholders, creditors, partners, investors and customers.
retention and improving productivity. Taking the time to hone your vision and mission statements is
extremely important for messaging, which is essentially
Why You Need Corporate Planning? communicating what you are and what you want to be as a company.
When your purpose as a company is boiled down to its bare bones and
Every business needs to do corporate planning. Creating a strategic made widely available, the message sticks. Everyone immediately
plan gives your company direction and actionable goals to see knows what your brand stands for and who it hopes to serve. A solid,
through. Without a plan, how will you know your priorities or where clear corporate plan can be used to attract investors, customers and
to place your resources? A business with a plan achieves better results employees.
than one that does not have any direction.
How to Do Corporate Planning?
The first reason you need corporate planning is because it provides
clear objectives for your organization. You wouldn’t leave for a road There are no hard-and-fast rules for how to do corporate planning.
trip without mapping out your route. Similarly, it’s not advisable to Each company has unique needs when it comes to planning for the
run a business without mapping out your route. Corporate planning future. However, there are a few tips to keep in mind for corporate
puts on paper your focus, and allows you to move forward with planning success. First, gather input from employees from all different
purpose. If your business is operating without a plan, you will not be
13
divisions of the company to go into the plan. You can do this through  Monitoring and evaluation: How do you plan to evaluate if your
an open forum or employee meetings. goals are being met? This section illustrates how you will measure
progress for your objectives.
Next, a crucially important step is to bring the right people together to  Communication of the plan: A description of how you will
write the plan. Even if you involve many people in the brainstorming communicate your corporate plan to employees, stakeholders,
process, only a few should be involved in the actual writing process. customers and any other important parties.
Wording can become arduous when too many people are involved.
For the first draft of the plan, it’s important not to obsess over every
word. That will come later as you revise drafts and bring in more Management by Objectives
players, such as your board members. At first, only concern yourself
with getting the main ideas and objectives written down. Management by objectives (MBO) is a strategic management model
that aims to improve the performance of an organization by clearly
After writing your first draft, show your employees, the board of defining objectives that are agreed to by both management and
directors and senior management as soon as possible. They will all employees. According to the theory, having a say in goal setting and
have valuable insight and feedback as to how you should move action plans encourages participation and commitment among
forward. Ultimately, your corporate planning draft should include: employees, as well as aligning objectives across the organization.

 Executive summary: This is the quick version of what your Management by objectives (MBO) is the establishment of a
corporate plan includes. An executive summary should concisely management information system to compare actual performance and
cover your brand values, mission, vision, objectives and key achievements to the defined objectives. Practitioners claim that the
strategies. major benefits of MBO are that it improves employee motivation and
 Signature page: This page will include board member signatures, commitment and allows for better communication between
stating that they agree with and are committed to your goals and management and employees. However, a cited weakness of MBO is
vision. that it unduly emphasizes the setting of goals to attain objectives,
 Company description: Include your company’s biography, including rather than working on a systematic plan to do so.
its history, products and any significant achievements.
 Mission, vision and value statements: These statements outline In his book that coined the term, Peter Drucker set forth several
who your company is, what you do and where you plan to go in the principles. Objectives are laid out with the help of employees and are
future. This is where you communicate your most important meant to be challenging but achievable. Employees receive daily
priorities. feedback, and the focus is on rewards rather than punishment.
 Strategic analysis of your company: This is the section that covers a Personal growth and development are emphasized, rather than
SWOT analysis (strengths, weaknesses, opportunities, threats) of negativity for failing to reach objectives.
your company and its divisions. The strategic analysis also lays out
issues you plan to address in the coming months and years. Drucker believed MBO was not a cure-all but a tool to be utilized. It
 Strategies and tactics: In this section, lay out your strategies and gives organizations a process, with many practitioners claiming that
how exactly you plan to accomplish them. the success of MBO is dependent on the support from top
 Action plan: Your action plan lays out the responsibilities you plan management, clearly outlined objectives, and trained managers who
to take on, as well as a timeline for accomplishing them.
can implement it.
 Budget and operations plans: Of course, to accomplish your
company’s goals, you will need to have money in the budget. Lay
out the financials and your specific plan for operations.
14
Management by Objectives in Practice  The strategy was formulated by Peter Drucker in the 1950s,
following five steps that organizations should follow.
Management by objectives outlines five steps that organizations
should use to put the management technique into practice.
Decision Making Types
1. The first step is to either determine or revise organizational Programmed and non-programmed decisions:
objectives for the entire company. This broad overview should be
derived from the firm’s mission and vision. Programmed decisions are concerned with the problems of repetitive
nature or routine type matters.
2. The second step is to translate the organizational objectives
to employees. Drucker used the acronym SMART (specific, A standard procedure is followed for tackling such problems. These
measurable, acceptable, realistic, time-bound) to express the decisions are taken generally by lower level managers. Decisions of
concept. this type may pertain to e.g. purchase of raw material, granting leave

3. Step three is stimulating the participation of employees in

to an employee and supply of goods and implements to the
employees, etc. Non-programmed decisions relate to difficult
setting individual objectives. After the organization’s objectives are situations for which there is no easy solution.
shared with employees, from the top to the bottom, employees
should be encouraged to help set their own objectives to achieve These matters are very important for the organisation. For example,
these larger organizational objectives. This gives employees greater opening of a new branch of the organisation or a large number of
motivation since they have greater empowerment. employees absenting from the organisation or introducing new
4. Step four involves monitoring the progress of employees. In
product in the market, etc., are the decisions which are normally taken
at the higher level.
step two, a key component of the objectives was that they are
measurable in order for employees and managers to determine 2. Routine and strategic decisions:
how well they are met.

5. The fifth step is to evaluate and reward employee progress.

Routine decisions are related to the general functioning of the
organisation. They do not require much evaluation and analysis and
This step includes honest feedback on what was achieved and not can be taken quickly. Ample powers are delegated to lower ranks to
achieved for each employee. take these decisions within the broad policy structure of the
organisation.
Conclusion
Strategic decisions are important which affect objectives,
 Management by objectives (MBO) is a strategic management organisational goals and other important policy matters. These
model that aims to improve the performance of an organization by decisions usually involve huge investments or funds. These are non-
clearly defining objectives that are agreed to by both management repetitive in nature and are taken after careful analysis and evaluation
and employees.
of many alternatives. These decisions are taken at the higher level of
 According to the theory, having a say in goal setting and action
management.
plans encourages participation and commitment among
employees, as well as aligning objectives across the organization.
3. Tactical (Policy) and operational decisions:
15
Decisions pertaining to various policy matters of the organisation are Group decisions are taken by group of individuals constituted in the
policy decisions. These are taken by the top management and have form of a standing committee. Generally very important and pertinent
long term impact on the functioning of the concern. For example, matters for the organisation are referred to this committee. The main
decisions regarding location of plant, volume of production and aim in taking group decisions is the involvement of maximum number
channels of distribution (Tactical) policies, etc. are policy decisions. of individuals in the process of decision- making.
Operating decisions relate to day-to-day functioning or operations of
business. Middle and lower level managers take these decisions.
Process and Techniques of
An example may be taken to distinguish these decisions. Decisions
concerning payment of bonus to employees are a policy decision. On Decision Making
the other hand if bonus is to be given to the employees, calculation of
bonus in respect of each employee is an operating decision. Decision making is a daily activity for any human being. There is no
exception about that. When it comes to business organizations,
4. Organisational and personal decisions: decision making is a habit and a process as well.

When an individual takes decision as an executive in the official Effective and successful decisions make profit to the company and
capacity, it is known as organisational decision. If decision is taken by unsuccessful ones make losses. Therefore, corporate decision making
the executive in the personal capacity (thereby affecting his personal process is the most critical process in any organization.
life), it is known as personal decision.
In the decision making process, we choose one course of action from a
Sometimes these decisions may affect functioning of the organisation few possible alternatives. In the process of decision making, we may
also. For example, if an executive leaves the organisation, it may use many tools, techniques and perceptions.
affect the organisation. The authority of taking organizational
decisions may be delegated, whereas personal decisions cannot be In addition, we may make our own private decisions or may prefer a
delegated. collective decision.

5. Major and minor decisions: Usually, decision making is hard. Majority of corporate decisions
involve some level of dissatisfaction or conflict with another party.
Another classification of decisions is major and minor. Decision
pertaining to purchase of new factory premises is a major decision.
Major decisions are taken by top management. Purchase of office
stationery is a minor decision which can be taken by office
superintendent.

6. Individual and group decisions:

When the decision is taken by a single individual, it is known as

individual decision. Usually routine type decisions are taken by
individuals within the broad policy framework of the organisation.

16
Process of Decision Making In the process of solving the problem, you will have to gather as much
as information related to the factors and stakeholders involved in the
Following are the important steps of the decision making process. problem. For the process of information gathering, tools such as
Each step may be supported by different tools and techniques. ‘Check Sheets’ can be effectively used.

Step 3: Principles for judging the alternatives

In this step, the baseline criteria for judging the alternatives should be
set up. When it comes to defining the criteria, organizational goals as
well as the corporate culture should be taken into consideration.

As an example, profit is one of the main concerns in every decision

making process. Companies usually do not make decisions that reduce
profits, unless it is an exceptional case. Likewise, baseline principles
should be identified related to the problem in hand.

Step 4: Brainstorm and analyse the different choices

For this step, brainstorming to list down all the ideas is the best
option. Before the idea generation step, it is vital to understand the
causes of the problem and prioritization of causes.

Step 1: Identification of the purpose of the decision For this, you can make use of Cause-and-Effect diagrams and Pareto
Chart tool. Cause-and-Effect diagram helps you to identify all
In this step, the problem is thoroughly analysed. There are a couple of possible causes of the problem and Pareto chart helps you to prioritize
questions one should ask when it comes to identifying the purpose of and identify the causes with highest effect.
the decision.
Then, you can move on generating all possible solutions (alternatives)
 What exactly is the problem? for the problem in hand.
 Why the problem should be solved?
 Who are the affected parties of the problem? Step 5: Evaluation of alternatives
 Does the problem have a deadline or a specific time-line?
Use your judgement principles and decision-making criteria to
Step 2: Information gathering evaluate each alternative. In this step, experience and effectiveness of
the judgement principles come into play. You need to compare each
A problem of an organization will have many stakeholders. In alternative for their positives and negatives.
addition, there can be dozens of factors involved and affected by the
problem. Step 6: Select the best alternative

17
Once you go through from Step 1 to Step 5, this step is easy. In result by adding one extra unit of any input variable, other factors
addition, the selection of the best alternative is an informed decision being held constant.
since you have already followed a methodology to derive and select
the best alternative. Marginal analysis is particularly useful for evaluating alternatives in
the decision-making process.
Step 7: Execute the decision
Decision-Making: Technique # 2. Financial Analysis
Convert your decision into a plan or a sequence of activities. Execute
your plan by yourself or with the help of subordinates. This decision-making tool is used to estimate the profitability of an
investment, to calculate the payback period (the period taken for the
Step 8: Evaluate the results cash benefits to account for the original cost of an investment), and to
analyze cash inflows and cash outflows.
Evaluate the outcome of your decision. See whether there is anything
you should learn and then correct in future decision making. This is Investment alternatives can be evaluated by discounting the cash
one of the best practices that will improve your decision-making inflows and cash outflows (discounting is the process of determining
skills. the present value of a future amount, assuming that the decision-
maker has an opportunity to earn a certain return on his money).
Conclusion
Decision-Making: Technique # 3. Break-Even Analysis
When it comes to making decisions, one should always weigh the
positive and negative business consequences and should favour the This tool enables a decision-maker to evaluate the available
positive outcomes. alternatives based on price, fixed cost and variable cost per unit.
Break-even analysis is a measure by which the level of sales necessary
This avoids the possible losses to the organization and keeps the to cover all fixed costs can be determined.
company running with a sustained growth. Sometimes, avoiding
decision making seems easier; especially, when you get into a lot of Using this technique, the decision-maker can determine the break-
confrontation after making the tough decision. even point for the company as a whole, or for any of its products. At
the break-even point, total revenue equals total cost and the profit is
But, making the decisions and accepting its consequences is the only nil.
way to stay in control of your corporate life and time.
Decision-Making: Technique # 4. Ratio Analysis
Techniques of Decision-Making
It is an accounting tool for interpreting accounting information. Ratios
Decision-Making: Technique # 1. Marginal Analysis define the relationship between two variables. The basic financial
ratios compare costs and revenue for a particular period. The purpose
This technique is used in decision-making to figure out how much of conducting a ratio analysis is to interpret financial statements to
extra output will result if one more variable (e.g. raw material, determine the strengths and weaknesses of a firm, as well as its
machine, and worker) is added. In his book, ‘Economics’, Paul historical performance and current financial condition.
Samuelson defines marginal analysis as the extra output that will

18
Decision-Making: Technique # 5. Operations Research maintain facilities to provide quick service all the time since the cost
Techniques of idle service facilities have to be borne by the company.

One of the most significant sets of tools available for decision-makers The firm, therefore, has to strike a balance between the two. The
is operations research. An operation research (OR) involves the queuing technique helps to optimize customer service on the basis of
practical application of quantitative methods in the process of quantitative criteria. However, it only provides vital information for
decision-making. When using these techniques, the decision-maker decision-making and does not by itself solve the problem. Developing
makes use of scientific, logical or mathematical means to achieve queuing models often requires advanced mathematical and statistical
realistic solutions to problems. Several OR techniques have been knowledge.
developed over the years.
Decision-Making: Technique # 8. Game Theory
Decision-Making: Technique # 6. Linear Programming
This is a systematic and sophisticated technique that enables
Linear programming is a quantitative technique used in decision- competitors to select rational strategies for attainment of goals. Game
making. It involves making an optimum allocation of scarce or limited theory provides many useful insights into situations involving
resources of an organization to achieve a particular objective. The competition. This decision-making technique involves selecting the
word ‘linear’ implies that the relationship among different variables is best strategy, taking into consideration one’s own actions and those of
proportionate. one’s competitors.

The term ‘programming’ implies developing a specific mathematical The primary aim of game theory is to develop rational criteria for
model to optimize outputs when the resources are scarce. In order to selecting a strategy. It is based on the assumption that every player (a
apply this technique, the situation must involve two or more activities competitor) in the game (decision situation) is perfectly rational and
competing for limited resources and all relationships in the situation seeks to win the game.
must be linear.
In other words, the theory assumes that the opponent will carefully
Decision-Making: Technique # 7. Waiting-line Method consider what the decision-maker may do before he selects his own
strategy. Minimizing the maximum loss (minimax) and maximizing
This is an operations research method that uses a mathematical the minimum gain (maximin) are the two concepts used in game
technique for balancing services provided and waiting lines. Waiting theory.
lines (or queuing) occur whenever the demand for the service exceeds
the service facilities. Decision-Making: Technique # 9. Simulation

Since a perfect balance between demand and supply cannot be This technique involves building a model that represents a real or an
achieved, either customers will have to wait for the service (excess existing system. Simulation is useful for solving complex problems
demand) or there may be no customers for the organization to serve that cannot be readily solved by other techniques. In recent years,
(excess supply). computers have been used extensively for simulation. The different
variables and their interrelationships are put into the model.
When the queue is long and the customers have to wait for a long
duration, they may get frustrated. This may cost the firm its When the model is programmed through the computer, a set of
customers. On the other hand, it may not be feasible for the firm to outputs is obtained. Simulation techniques are useful in evaluating
19
various alternatives and selecting the best one. Simulation can be used Draw on your information and emotions to imagine what it would be
to develop price strategies, distribution strategies, determining like if you carried out each of the alternatives to the end. Evaluate
resource allocation, logistics, etc. whether the need identified in Step 1 would be met or resolved
through the use of each alternative. As you go through this difficult
Decision-Making: Technique # 10. Decision Tree internal process, you’ll begin to favor certain alternatives: those that
seem to have a higher potential for reaching your goal. Finally, place
This is an interesting technique used for analysis of a decision. A the alternatives in a priority order, based upon your own value system.
decision tree is a sophisticated mathematical tool that enables a
decision-maker to consider various alternative courses of action and Step 5: Choose among alternatives
select the best alternative. A decision tree is a graphical representation
of alternative courses of action and the possible outcomes and risks Once you have weighed all the evidence, you are ready to select the
associated with each action. alternative that seems to be the best one for you. You may even
choose a combination of alternatives. Your choice in Step 5 may very

Making Decision Effective likely be the same or similar to the alternative you placed at the top of
your list at the end of Step 4.

Step 1: Identify the decision Step 6: Take action

You realize that you need to make a decision. Try to clearly define the You’re now ready to take some positive action by beginning to
nature of the decision you must make. This first step is very implement the alternative you chose in Step 5.
important.
Step 7: Review your decision & its consequences
Step 2: Gather relevant information
In this final step, consider the results of your decision and evaluate
Collect some pertinent information before you make your decision: whether or not it has resolved the need you identified in Step 1. If the
what information is needed, the best sources of information, and how decision has not met the identified need, you may want to repeat
to get it. This step involves both internal and external “work.” Some certain steps of the process to make a new decision. For example, you
information is internal: you’ll seek it through a process of self- might want to gather more detailed or somewhat different information
assessment. Other information is external: you’ll find it online, in or explore additional alternatives.
books, from other people, and from other sources.

Step 3: Identify the alternatives

UNIT – 2
As you collect information, you will probably identify several ORGINIZING STAFF
possible paths of action, or alternatives. You can also use your
imagination and additional information to construct new alternatives.
In this step, you will list all possible and desirable alternatives. Meaning of Organization
Step 4: Weigh the evidence An entrepreneur organizes various factors of production like land,
labour, capital, machinery, etc. for channelizing them into productive

20
activities. The product finally reaches consumers through various organization as a coordinating point among various persons in the
agencies. Business activities are divided into various functions, these business.
functions are assigned to different individuals.
Oliver Sheldon, “Organization is the process so combining the work
Various individual efforts must lead to the achievement of common which individuals or groups have to perform with the facilities
business goals. Organization is the structural framework of duties and necessary for its execution, that the duties so performed provide the
responsibilities required of personnel in performing various functions best channels for the efficient, systematic, positive and coordinated
with a view to achieve business goals through organization. application of the available effort”. Organization helps in efficient
Management tries to combine various business activities to utilization of resources by dividing the duties of various persons.
accomplish predetermined goals.
Spriegel, “In its broadest sense organisation refers to the relationship
Present business system is very complex. The unit must be run between the various factors present in a given endeavor. Factory
efficiently to stay in the competitive world of business. Various jobs organisation concerns itself primarily with the internal relationships
are to be performed by persons most suitable for them. First of all within the factory such as responsibilities of personnel, arrangement
various activities should be grouped into different functions. The and grouping of machines and material control. From the standpoint
authority and responsibility is fixed at various levels. All efforts of the enterprise as a whole, organisation is the structural relationship
should be made to co-ordinate different activities for running the units between the various factors in the enterprise”.
efficiently so that cost of production may be reduced and profitability
of the unit may be increased. Spriegel has given a wide definition of the organization. He has
described it as the relationship among persons, factors in the
Louis Allen, “Organization is the process of identifying and grouping enterprise. All factors of production are coordinated in order to
work to be performed, defining and delegating responsibility and achieve Organisational objectives.
authority and establishing relationships for the purpose of enabling
people to work most effectively together in accomplishing George Terry, “Organizing is the establishing of effective authority
objectives.” In the words of Allen, organization is an instrument for relationships among selected work, persons, and work places in order
achieving organizational goals. The work of each and every person is for the group to work together efficiently”. According to Terry
defined and authority and responsibility is fixed for accomplishing the organisation is the creation of relationship among persons and work so
same. that it may be carried on in a better and efficient way.

Wheeler, “Internal organization is the structural framework of duties C.H. Northcott, ‘The arrangement by which tasks are assigned to
and responsibilities required of personnel in performing various men and women so that their individual efforts contribute effectively
functions within the company………… It is essentially a blue print to some more or less clearly defined purpose for which they have been
for action resulting in a mechanism for carrying out function to brought together”. According to Northcott the purpose of organisation
achieve the goals set up by company management”. In Wheeler’s is to co-ordinate the activities of various individuals working in the
view, organization is a process of fixing duties and responsibilities of organisation for the attainment of enterprise goals.
persons in an enterprise so that business goals are achieved.
L.H. Haney, “Organisation is a harmonious adjustment of specialised
Koontz and O’Donnell, ‘The establishment of authority relationships parts for accomplishment of some common purpose or purposes”.
with provision for co-ordination between them, both vertically and Organisation is the adjustment of various activities for the attainment
horizontally in the enterprise structure.” These authors view of common goals.
21
Types of Organizations function. The only drawback to adopting a functional organization is
the fact that there’s delay in decision-making. All the functional
managers must be consulted when making major decisions, which can
Flat Organization take time.

A flat organization is unlike any other corporate structure. It’s exactly

as its name suggests. While individuals may keep an expertise, 3. Divisional Organization
hierarchy and job titles are not stressed among general employees,
senior managers, and executives. In a purely flat organization, A divisional organization structures its activities around a market,
everyone is equal. product, or specific group of consumers. For instance, a firm can
operate in the United States or Europe or sell products focused on a
Flat organizations are also described as self-managed. The idea behind specific group of customers. Gap Inc. is the perfect case in point. It
this organizational structure is to reduce bureaucracy so as to runs three different retailers – Banana Republic, Gap and Old Navy.
empower employees to make decisions, become creative problem Although each one operates as a separate entity that caters to different
solvers, and take responsibility for their actions. Since there are consumer segments, they are all under the company Gap Inc. brand.
minimal or no levels of middle management, a company that adopts
this structure well can end up being more productive by speeding up
the decision-making processes. 4. Matrix Organization

Apart from increased productivity, firms with flat organizations have A matrix organizational structure is a bit more complex in that there’s
leaner budgets since they don’t involve any pricey middle- more than one line of reporting managers. It simply means that the
management salaries. The only thing to keep in mind is that this employees are accountable to more than one boss. Most firms that
structure works best for small to medium-sized companies. This way, take on this organizational structure often have two chains of
a firm can decentralize decision-making while still maintaining its command – functional and project managers. However, this
corporate integrity. organization works best for companies with large-scale projects.

2. Functional Organization
A matrix organization offers several benefits. They include a clear
articulation of the company’s mission and objectives, effective use of
limited resources, and retention of professionals throughout the life of
Also referred to as a bureaucratic structure, a functional organization a company. Additionally, a matrix structure provides a practical way
is one that divides a firm’s operations based on specialties. Ideally, of integrating the firm’s objectives with operations.
there’s an individual in charge of a particular function. It’s like any
typical business that consists of a sales department, human relations,
and marketing department. It means that every employee receives Structure and Design
tasks and is accountable to a particular specialist.
Organization Structure
A functional organization confers several benefits. For one, there’s a
total specialization of work meaning that every employee gets An organizational structure is a system that outlines how certain
professional guidance from a specialist. Secondly, work is performed activities are directed in order to achieve the goals of an organization.
more efficiently since each manager is responsible for a single These activities can include rules, roles, and responsibilities.
22
The organizational structure also determines how information flows Types of Organizational Structures
between levels within the company. For example, in a centralized
structure, decisions flow from the top down, while in a decentralized Four types of common organizational structures are implemented in
structure, decision-making power is distributed among various levels the real world.
of the organization.
1. The first, and most common, is a functional structure
Businesses of all shapes and sizes use organizational structures
heavily. They define a specific hierarchy within an organization. A This is also referred to as a bureaucratic organizational structure and
successful organizational structure defines each employee’s job and breaks up a company based on the specialization of its workforce.
how it fits within the overall system. Put simply, the organizational Most small-to-medium sized businesses implement a functional
structure lays out who does what so the company can meet its structure. Dividing the firm into departments consisting of marketing,
objectives. sales and operations is the act of using a bureaucratic organizational
structure.
This structuring provides a company with a visual representation of
how it is shaped and how it can best move forward in achieving its
goals. Organizational structures are normally illustrated in some sort 2. The second type is common among large companies with
of chart or diagram like a pyramid, where the most powerful members many business units
of the organization sit at the top, while those with the least amount are
at the bottom. Not having a formal structure in place may prove It is Called the divisional or multidivisional structure, a company that
difficult for certain organizations. For instance, employees may have uses this method structures its leadership team based on the products,
difficulty knowing to whom they should report. That can lead to projects, or subsidiaries they operate. A good example of this structure
uncertainty as to who is responsible for what in the organization. is Johnson & Johnson. With thousands of products and lines of
business, the company structures itself so each business unit operates
Having a structure in place can help improve efficiency and provide as its own company with its own president.
clarity for everyone at every level. That also means each and every
department can be more productive, as they are likely to be more
focused on energy and time. 3. Flatarchy, a newer structure

Centralized vs. Decentralized Organizational Structures It is the third type and is used among many startups. As the name
alludes, it flattens the hierarchy and chain of command and gives its
An organizational structure is either centralized or decentralized. employees a lot of autonomy. Companies that use this type of
Traditionally, organizations have been structured with centralized structure have a high speed of implementation.
leadership and a defined chain of command. The military is an
organization famous for its highly centralized structure, with a long
and specific hierarchy of superiors and subordinates. 4. The fourth and final organizational structure is a matrix
structure
There has been a rise in decentralized organizations, as is the case
with many technology startups. This allows companies to remain fast, It is also the most confusing and the least used. This structure matrixes
agile, and adaptable, with almost every employee receiving a high employees across different superiors, divisions, or departments. An
level of personal agency.
23
employee working for a matrixed company, for example, may have  Redundancies in effort (“we don’t have time to do things right, but
duties in both sales and customer service. do have time to do them over”)
 Fragmented work with little regard for good of the whole
ORGANIZATION DESIGN (Production ships bad parts to meet their quotas)
 Lack of knowledge and focus on the customer
Organizational design is a step-by-step methodology which identifies  Silo mentality and turf battles
dysfunctional aspects of work flow, procedures, structures and  Lack of ownership (“It’s not my job”)
systems, realigns them to fit current business realities/goals and then  Cover up and blame rather than identifying and solving problems
develops plans to implement the new changes. The process focuses on  Delays in decision-making
improving both the technical and people side of the business.  People don’t have information or authority to solve problems when
and where they occur
 Management, rather than the front line, is responsible for solving
For most companies, the design process leads to a more effective
problems when things go wrong
organization design, significantly improved results (profitability,
 It takes a long time to get something done
customer service, internal operations), and employees who are
 Systems are ill-defined or reinforce wrong behaviors
empowered and committed to the business. The hallmark of the design
 Mistrust between workers and management
process is a comprehensive and holistic approach to organizational
improvement that touches all aspects of organizational life, so you can
achieve: Span of Management
 Excellent customer service
The Span of Management refers to the number of subordinates who
 Increased profitability
 Reduced operating costs
can be managed efficiently by a superior. Simply, the manager having
 Improved efficiency and cycle time the group of subordinates who report him directly is called as the span
 A culture of committed and engaged employees of management.
 A clear strategy for managing and growing your business
The Span of Management has two implications:
By design we’re talking about the integration of people with core
business processes, technology and systems. A well-designed
organization ensures that the form of the organization matches its
1. Influences the complexities of the individual manager’s job
purpose or strategy, meets the challenges posed by business realities
and significantly increases the likelihood that the collective efforts of
2. Determine the shape or configuration of the Organization
people will be successful.
The span of management is related to the horizontal levels of the
As companies grow and the challenges in the external environment organization structure. There is a wide and a narrow span of
become more complex, businesses processes, structures and systems management. With the wider span, there will be less hierarchical
that once worked become barriers to efficiency, customer service, levels, and thus, the organizational structure would be flatter.
employee morale and financial profitability. Organizations that don’t Whereas, with the narrow span, the hierarchical levels increases,
periodically renew themselves suffer from such symptoms as: hence the organizational structure would be tall.

 Inefficient workflow with breakdowns and non-value-added steps

24
 expense in terms of remuneration is saved. Also, the subordinates feel
relaxed and develop their independent spirits in a free work
environment, where the strict supervision is absent.

The Span of Management refers to the number of subordinates who

report directly to a manager.

Factors Determining Span of Management

The span of management can be determined on the basis of a number

of relationships that a manager can manage. These are:

Both these organizational structures have their advantages and the

disadvantages. But however the tall organizational structure imposes
more challenges:

 Since the span is narrow, which means less number of subordinates

under one superior, requires more managers to be employed in the
organization. Thus, it would be very expensive in terms of the
salaries to be paid to each senior.
 With more levels in the hierarchy, the communication suffers
drastically. It takes a lot of time to reach the appropriate points,
and hence the actions get delayed.
 Lack of coordination and control because the operating staff is far
away from the top management.

The major advantage of using this structure is that the cross

communication gets facilitated, i.e., operative staff communicating
1. Capacity of Superior: Here the capacity means the ability of
a superior to comprehend the problems quickly and gel up with the
with the top management. Also, the chance of promotion increases
staff such that he gets respect from all. Also, the communication
with the availability of several job positions.
skills, decision-making ability, controlling power, leadership skills
are important determinants of supervisory capacity. Thus, a
In the case of a flatter organizational structure, where the span is wide
superior possessing such capacity can manage more subordinates
leads to a more complex supervisory relationship between the
as compared to an individual who lack these abilities.
manager and the subordinate. It will be very difficult for a superior to
manage a large number of subordinates at a time and also may not
listen to all efficiently.
2. Capacity of Subordinate: If the subordinate is trained and
efficient in discharging his functions without much help from the
superior, the organization can have a wide span. This means a
However, the benefit of using the wider span of management is that superior can manage a large number of subordinates as he will be
the number of managers gets reduced in the hierarchy, and thus, the
25
 required just to give the broad guidelines and devote less time on
each. 8. Communication Techniques: The mode of communication

3. Nature of Work: If the subordinates are required to do a

also determines the span of management. If in the manager is
required to do a face to face communication with each
routine job, with which they are well versed, then the manager can subordinate, then more time will be consumed. As a result, the
have a wider span. But, if the work is complex and the manager is manager cannot have a wider span. But in case, the communication
required to give directions, then the span has to be narrower.Also, is in writing and is collected through a staff personnel; the manager
the change in the policies affects the span of management. If the can save a lot of time and can have many subordinates under him.
policies change frequently, then the manager needs to devote
more time and hence the span would be narrow whereas if the The span of management is also called as the span of
policies remain stable, then a manager can focus on a large number supervision or span of control, which influences the complexity of
of subordinates. Likewise, policies technology also plays a crucial the individual manager’s job and determine the shape or configuration
role in determining the span. of the organization.
4. Degree of Decentralization: If the manager delegates
authority to the subordinates then he is required to give less Line and Staff Relationship
attention to them. Thus, higher the degree of decentralization, the
wider is the span of management. But in case, subordinates do not Line and staff organization is a modification of line organization and
have enough authority, then the manager is frequently consulted it is more complex than line organization. According to this
for the clarifications, and as a result superior spends a lot of time in administrative organization, specialized and supportive activities are
this. attached to the line of command by appointing staff supervisors and
5. Planning: If the subordinates are well informed about their
staff specialists who are attached to the line authority. The power of
command always remains with the line executives and staff
job roles, then they will do their work without consulting the supervisors guide, advice and council the line executives. Personal
manager again and again. This is possible only because of the Secretary to the Managing Director is a staff official.
standing plans that they follow in their repetitive decisions.
Through a proper plan, the burden of a manager reduces manifold Features of Line and Staff Organization
and can have a wider span of management.
1.     There are two types of staff :
6. Staff Assistance: The use of staff assistance can help the
a.     Staff Assistants- P.A. to Managing Director, Secretary to
manager in reducing his workload by performing certain managerial
tasks such as collecting information, processing communications Marketing Manager.
and issuing orders, on his behalf. By doing so, the managers can
save their time and the degree of span can be increased b.     Staff Supervisor- Operation Control Manager, Quality
Controller, PRO
7. Supervision from Others: The classical approach to the
span of management, i.e., each person should have a single 2.     Line and Staff Organization is a compromise of line
supervisor is changing these days. Now the subordinates are being organization. It is more complex than line concern.
supervised by other managers in the organization such as staff
personnel. This has helped the manager to have a large number of 3.     Division of work and specialization takes place in line and staff
subordinates under him. organization.
26
4.     The whole organization is divided into different functional areas
to which staff specialists are attached. 5. Benefits of Research and Development: Through the
advice of specialized staff, the line executives, the line executives
5.     Efficiency can be achieved through the features of specialization. get time to execute plans by taking productive decisions which are
helpful for a concern. This gives a wide scope to the line executive
6.     There are two lines of authority which flow at one time in a to bring innovations and go for research work in those areas. This is
concern : possible due to the presence of staff specialists.

a.     Line Authority 6. Training: Due to the presence of staff specialists and their
expert advice serves as ground for training to line officials. Line
b.     Staff Authority executives can give due concentration to their decision making.
This in itself is a training ground for them.
7.     Power of command remains with the line executive and staff
serves only as counselors.
7. Balanced decisions: The factor of specialization which is
achieved by line staff helps in bringing co-ordination. This
Merits of Line and Staff Organization relationship automatically ends up the line official to take better
and balanced decision.

1. Relief to line of executives: In a line and staff organization,

8. Unity of action: Unity of action is a result of unified control.
Control and its effectivity take place when co-ordination is present
the advice and counseling which is provided to the line executives
in the concern. In the line and staff authority all the officials have
divides the work between the two. The line executive can
got independence to make decisions. This serves as effective
concentrate on the execution of plans and they get relieved of
control in the whole enterprise.
dividing their attention to many areas.

2. Expert advice: The line and staff organization facilitates Demerits of Line and Staff Organization
expert advice to the line executive at the time of need. The
planning and investigation which is related to different matters can
be done by the staff specialist and line officers can concentrate on
1. Lack of understanding: In a line and staff organization,
execution of plans. there are two authority flowing at one time. This results in the
confusion between the two. As a result, the workers are not able to
3. Benefit of Specialization: Line and staff through division of understand as to who is their commanding authority. Hence the
problem of understanding can be a hurdle in effective running.
whole concern into two types of authority divides the enterprise
into parts and functional areas. This way every officer or official can
concentrate in its own area.
2. Lack of sound advice: The line official get used to the
expertise advice of the staff. At times the staff specialist also
4. Better co-ordination: Line and staff organization through provide wrong decisions which the line executive have to consider.
This can affect the efficient running of the enterprise.
specialization is able to provide better decision making and
concentration remains in few hands. This feature helps in bringing
co-ordination in work as every official is concentrating in their own
3. Line and staff conflicts: Line and staff are two authorities
area. which are flowing at the same time. The factors of designations,
status influence sentiments which are related to their relation, can
27
 pose a distress on the minds of the employees. This leads to Importance of Departmentation:
minimizing of co-ordination which hampers a concern’s working.
1. Organisation structure:
4. Costly: In line and staff concern, the concerns have to
maintain the high remuneration of staff specialist. This proves to be Division of work into units and sub-units creates departments.
costly for a concern with limited finance. Supervisors and managers are appointed to manage these departments.

5. Assumption of authority: The power of concern is with the

People are placed in different departments according to their
specialised skills. The departmental heads ensure efficient functioning
line official but the staff dislikes it as they are the one more in of their departments within the broad principles of organisation (scalar
mental work. chain, unity of command, unity of direction etc.).

6. Staff steals the show: In a line and staff concern, the higher Thus, organisation structure is facilitated through departmentation. If
returns are considered to be a product of staff advice and there are no departments, it will be difficult to keep track of who is
counseling. The line officials feel dissatisfied and a feeling of doing what and who is accountable to whom.
distress enters a concern. The satisfaction of line officials is very
important for effective results. Departmentation creates departments, assigns tasks to people, fixes
their responsibility and accountability to their departmental heads,
Departmentation creates a span of management so that work can be easily supervised.
This network of authority- responsibility relationships is the basis of
designing a sound organisation structure.
Departmentation is the foundation of organisation structure, that is,
organisation structure depends upon Departmentation. 2. Flexibility:
Departmentation means division of work into smaller units and their
re-grouping into bigger units (departments) on the basis of similarity In large Organizations, one person cannot look after all the managerial
of features. functions (planning, organising etc.) for all the departments. He
cannot adapt the organisation to its internal and external environment.
As the organisation grows in size, the work is divided into units and Such an organisation would become an inflexible organisation.
sub-units. Departments are created and activities of similar nature are Creating departments and departmental heads makes an organisation
grouped in one unit. Each department is headed by a person known as flexible and adaptive to environment. Environmental changes can be
departmental manager. incorporated which strengthen the organisation’s competitiveness in
the market.
Departmentation, thus, helps in expanding an organisation and also
promotes efficiency by dividing the work on the basis of 3. Specialisation:
specialisation of activities and appointing people in various
departments on the basis of their specialised knowledge. Division of work into departments leads to specialisation as people of
one department perform activities related to that department only.
They focus on a narrow set of activities and repeatedly performing the
same task increases their ability to perform more speedily and
efficiently. Specialisation promotes efficiency, lowers the cost of
production and makes the products competitive.
28
4. Sharing of resources: provides scope for organisational growth (along the same product
lines) and expansion (adding new product lines).
If there are no departments, organisational resources; physical,
financial and human, will be commonly shared by different work 9. Responsibility:
units. Departmentation helps in sharing resources according to
departmental needs. Priorities are set and resources are allocated Since similar activities are grouped in one department headed by
according to the need, importance and urgency regarding their use by departmental managers, it becomes easy for top managers to fix
different departments. responsibility of respective managers for achieving the desired results.
If planned performance is not achieved, the department responsible
5. Co-ordination: becomes answerable. When responsibility is clear, authority can also
be delegated to managers. Clear identification of responsibility and
“The organisation is a system of integrated parts, and to give undue authority increases efficiency of the departmental activities.
emphasis to any functional part at the expense of the entire
organisation creates organisational islands, thus, resulting in 10. Development of Managers:
inefficiency and significant behavioural problems”. Creating
departments focuses on departmental activities and facilitates co- Departmentation enables departmental heads to be creative in making
ordination. decisions with respect to their departmental activities. Training needs
can also be identified because manager’s task is clear and specific.
6. Control: There are opportunities to improve performance in their area of
specialisation.
Managers cannot control organisational activities if they have to be
collectively supervised. Departmentation facilitates control by This develops their potential to be promoted to higher managerial
departmental manager over the activities of his department only. positions in the organisation. It also facilitates recruitment and
Activities are divided into smaller segments, standards of performance selection of top managers from within the organisation rather than
can be framed, factors affecting performance can be identified and depending on outside sources.
control can be more objective in nature.
Basis of Departmentation:
7. Efficiency:
The form of organisation structure depends upon the basis of
Flow of work from one level to another and for every department, i.e., departmentation. Creating departments and sub-dividing the work of
vertical and horizontal flow of work in the organisation increases departments into smaller units creates organisation structure. With
organisational efficiency. growing size of Organizations, departments are created for activities
of similar nature.
8. Scope for Growth and Diversification:
There are two broad forms of departmentation:
In the absence of departmentation, managers can supervise a limited
number of activities, depending upon their skills and abilities.
Departmentation enables them to expand their area of operation into 1. Functional departmentation, and 
new product lines and geographical divisions. Departmentation
2. Divisional departmentation.
29
a. Functional Departmentation:
2. Specialisation:
Functional organisation creates departments along activities or
functions of the undertaking (functions do not refer to managerial Since workers in one functional area focus on that area only, they
functions of planning, organising , staffing, directing and controlling). acquire expertise and specialised skills in performing their duties. This
It is grouping of activities on the basis of similarities of functions. offers the benefits of specialisation; efficiency and speed.

The nature of activities performed by different Organizations is

different. For example, activities carried by a manufacturing 3. Co-ordination:
organisation are production, finance, personnel and sales. For a trader,
the major activities are buying and selling, a bank performs borrowing People working in one department are closely knitted and work
and lending functions. Functional departmentation is, “the grouping of collectively towards achievement of departmental goals. The
jobs and resources within the company in such a way that employees departmental manager can co-ordinate various derivative activities.
who perform the same or similar activities are in the same
department”.
4. Training and control:
It is the simplest, logical and most widely accepted form of creating
departments. It is suitable for Organizations where limited number of The departmental manager is accountable for functions performed by
products are produced. The major functional departments further have his department. He ensures that activities are performed strictly
derivative departments. Production department, for example, has sub- according to rules and procedures laid down for the department. He
departments to manage purchase, production planning and control, can, thus, exercise control over his departmental activities. If workers
manufacturing etc. Finance department creates departments to look are not able to carry out the activities efficiently, managers can train
into capital budgeting (fixed assets) and current assets, cash them to do so.
management and budgets.

Personnel department has sub-departments to take care of 5. Supervision:

appointments, training, placement and promotion of employees. These
sub-departments can be further sub-divided if needed. Advertising It is easy for managers to supervise the departmental activities as they
department (sub-department of marketing department), for example, have to supervise a narrow set of functional skills.
can further have sub-departments like advertising in Newspapers,
Radio, TV etc.
6. Suitable for stable Organizations:
Merits of Functional Departmentation:
Organizations which do not frequently change their work units and
work force are suitable for creating departments on the basis of
1. Simple and logical basis of creating departments: functional activities.

Production, marketing, finance and personnel are widely accepted and

recognised functions of a manufacturing organisation and, therefore, it 7. Suitable for small Organizations:
is a simple basis of departmentation.
30
This basis of departmentation is suitable for small sized Organizations (v) Control:
which produce a limited line of products. Even for large
Organizations, it is suitable only for top levels. Thereafter, some other Every product manager wants to maximise profits of his product, for
basis of departmentation has to be used. Marketing department, for which he delegates authority to people of his department and
instance, can be further branched out on the basis of territorial or establishes authority-responsibility relationships amongst them.
geographical departmentation. Subordinates are trained to carry out functions related to each product.
He, thus, controls activities of his department to ensure that the
Merits of Product Departmentation: product contributes to the organisational goals.

(i) Better performance: (vi) Responsibility:

One manager may not have skills to carry out all operations for Product managers are accountable for results of their product
different product lines. By creating departments where each product departments. This promotes performance and profitability of different
department looks after one product or product line only, decision- product departments.
making, fixing responsibilities and assessment of performance can be
done efficiently. Sales people for one product will concentrate on (vii) Efficiency:
sales promotion of that product only. This ensures better performance
of employees of each department. The costs and revenues of all the products can be compared. This
helps in eliminating the unprofitable products and promoting the
(ii) Flexibility: profitable ones thereby increasing organisational efficiency.

Firms operating in the dynamic environment are well suited for this
form of departmentation as it helps them respond to environmental Delegation: Centralization and
changes, analyse competitors’ products and change their product line,
if necessary. The focus is completely on one product and all Decentralization of Authority
functional activities related to that product rather than one functional
activity related to all products. This promotes product specialisation A manager alone cannot perform all the tasks assigned to him. In
which helps in product growth. order to meet the targets, the manager should delegate authority.
Delegation of Authority means division of authority and powers
(iii) Fast decisions: downwards to the subordinate. Delegation is about entrusting
someone else to do parts of your job. Delegation of authority can be
Since all decisions related to a product are taken by product manager defined as subdivision and sub-allocation of powers to the
(under the guidance of General Managers of different functional subordinates in order to achieve effective results.
areas), decisions are taken quickly.
Elements of Delegation
(iv) Co-ordination:

All the primary and auxiliary activities are managed by one manager. 1. Authority: In context of a business organization, authority
He can co-ordinate the efforts of people working under him. can be defined as the power and right of a person to use and
allocate the resources efficiently, to take decisions and to give

31
 orders so as to achieve the organizational objectives. Authority
must be well- defined. All people who have the authority should 1. Assignment of tasks and duties
know what is the scope of their authority is and they shouldn’t
misutilize it. Authority is the right to give commands, orders and get 2. Granting of authority
the things done. The top level management has greatest authority.
3. Creating responsibility and accountability
Authority always flows from top to bottom. It explains how a superior
gets work done from his subordinate by clearly explaining what is Delegation of authority is the base of superior-subordinate
expected of him and how he should go about it. Authority should be relationship, it involves following steps:-
accompanied with an equal amount of responsibility. Delegating the
authority to someone else doesn’t imply escaping from accountability.
Accountability still rest with the person having the utmost authority. 1. Assignment of Duties: The delegator first tries to define the
task and duties to the subordinate. He also has to define the result

2. Responsibility: Is the duty of the person to complete the

expected from the subordinates. Clarity of duty as well as result
expected has to be the first step in delegation.
task assigned to him. A person who is given the responsibility
should ensure that he accomplishes the tasks assigned to him. If 2. Granting of authority: Subdivision of authority takes place
the tasks for which he was held responsible are not completed, when a superior divides and shares his authority with the
then he should not give explanations or excuses. Responsibility subordinate. It is for this reason, every subordinate should be given
without adequate authority leads to discontent and dissatisfaction enough independence to carry the task given to him by his
among the person. Responsibility flows from bottom to top. The superiors. The managers at all levels delegate authority and power
middle level and lower level management holds more which is attached to their job positions. The subdivision of powers
responsibility. The person held responsible for a job is answerable is very important to get effective results.
for it. If he performs the tasks assigned as expected, he is bound for
praises. While if he doesn’t accomplish tasks assigned as expected, 3. Creating Responsibility and Accountability: The delegation
then also he is answerable for that. process does not end once powers are granted to the subordinates.

3. Accountability: Means giving explanations for any variance

They at the same time have to be obligatory towards the duties
assigned to them. Responsibility is said to be the factor or
in the actual performance from the expectations set. Accountability obligation of an individual to carry out his duties in best of his
cannot be delegated. For example, if ’A’ is given a task with ability as per the directions of superior. Responsibility is very
sufficient authority, and ’A’ delegates this task to B and asks him to important. Therefore, it is that which gives effectiveness to
ensure that task is done well, responsibility rest with ’B’, but authority. At the same time, responsibility is absolute and cannot
accountability still rest with ’A’. The top level management is most be shifted. Accountability, on the others hand, is the obligation of
accountable. Being accountable means being innovative as the the individual to carry out his duties as per the standards of
person will think beyond his scope of job. Accountability, in short, performance. Therefore, it is said that authority is delegated,
means being answerable for the end result. Accountability can’t be responsibility is created and accountability is imposed.
escaped. It arises from responsibility. Accountability arises out of responsibility and responsibility arises
out of authority. Therefore, it becomes important that with every
For achieving delegation, a manager has to work in a system and has authority position an equal and opposite responsibility should be
to perform following steps: attached.

32
Therefore every manager,i.e.,the delegator has to follow a system to Centralization is said to be a process where the concentration of
finish up the delegation process. Equally important is the delegatee’s decision making is in a few hands. All the important decision and
role which means his responsibility and accountability is attached with actions at the lower level, all subjects and actions at the lower level
the authority over to here. are subject to the approval of top management. According to Allen,
“Centralization” is the systematic and consistent reservation of
Relationship between Authority and Responsibility authority at central points in the organization. The implication of
centralization can be:
Authority is the legal right of person or superior to command his
subordinates while accountability is the obligation of individual to
carry out his duties as per standards of performance Authority flows 1. Reservation of decision making power at top level.
from the superiors to subordinates,in which orders and instructions are
given to subordinates to complete the task. It is only through 2. Reservation of operating authority with the middle level
authority, a manager exercises control. In a way through exercising managers.
the control the superior is demanding accountability from
subordinates. If the marketing manager directs the sales supervisor for 3. Reservation of operation at lower level at the directions of
50 units of sale to be undertaken in a month. If the above standards are the top level.
not accomplished, it is the marketing manager who will be
accountable to the chief executive officer. Therefore, we can say that Under centralization, the important and key decisions are taken by the
authority flows from top to bottom and responsibility flows from top management and the other levels are into implementations as per
bottom to top. Accountability is a result of responsibility and the directions of top level. For example, in a business concern, the
responsibility is result of authority. Therefore, for every authority an father & son being the owners decide about the important matters and
equal accountability is attached. all the rest of functions like product, finance, marketing, personnel,
are carried out by the department heads and they have to act as per
Differences between Authority and Responsibility instruction and orders of the two people. Therefore in this case,
Authority Responsibility decision making power remain in the hands of father & son.
It is the legal right of a person
It is the obligation of subordinate to perform On the other hand, Decentralization is a systematic delegation of
or a superior to command his
the work assigned to him. authority at all levels of management and in all of the organization. In
subordinates.
a decentralization concern, authority in retained by the top
management for taking major decisions and framing policies
Responsibility arises out of superior-
Authority is attached to the concerning the whole concern. Rest of the authority may be delegated
subordinate relationship in which to the middle level and lower level of management.
position of a superior in
subordinate agrees to carry out duty given to
concern.
him. The degree of centralization and decentralization will depend upon
the amount of authority delegated to the lowest level. According to
Authority can be delegated by Responsibility cannot be shifted and is Allen, “Decentralization refers to the systematic effort to delegate to
a superior to a subordinate absolute the lowest level of authority except that which can be controlled and
exercised at central points.
It flows from top to bottom. It flows from bottom to top.

33
Decentralization is not the same as delegation. In fact, decentralization
is all extension of delegation. Decentralization pattern is wider is 6. In the case of decentralization structure, there is greater
scope and the authorities are diffused to the lowest most level of motivation and morale of the employees since they get more
management. Delegation of authority is a complete process and takes independence to act and decide.
place from one person to another. While decentralization is complete
only when fullest possible delegation has taken place. For example, 7. In a decentralization structure, co-ordination to some
the general manager of a company is responsible for receiving the extent is difficult to maintain as there are lot many department
leave application for the whole of the concern. The general manager divisions and authority is delegated to maximum possible extent,
delegates this work to the personnel manager who is now responsible i.e., to the bottom most level delegation reaches. Centralization
for receiving the leave applicants. In this situation delegation of and decentralization are the categories by which the pattern of
authority has taken place. On the other hand, on the request of the authority relationships became clear. The degree of centralization
personnel manager, if the general manager delegates this power to all and de-centralization can be affected by many factors like nature of
the departmental heads at all level, in this situation decentralization operation, volume of profits, number of departments, size of a
has taken place. There is a saying that “Everything that increasing the concern, etc. The larger the size of a concern, a decentralization set
role of subordinates is decentralization and that decreases the role is up is suitable in it.
centralization”. Decentralization is wider in scope and the
subordinate’s responsibility increase in this case. On the other hand, in
delegation the managers remain answerable even for the acts of
Staffing: Concept, Nature and
subordinates to their superiors.
Importance of Staffing
Implications of Decentralization
Staffing

1. There is less burden on the Chief Executive as in the case of The managerial function of staffing involves manning the
centralization. organization structure through proper and effective selection,
appraisal and development of the personnel’s to fill the roles assigned
2. In decentralization, the subordinates get a chance to decide to the employers/workforce.
and act independently which develops skills and capabilities. This
way the organization is able to process reserve of talents in it. According to Theo Haimann, “Staffing pertains to recruitment,
selection, development and compensation of subordinates.”
3. In decentralization, diversification and horizontal can be
easily implanted. CONCEPTS:

4.
1.
In decentralization, concern diversification of activities can
place effectively since there is more scope for creating new Staffing is an important managerial function- Staffing
departments. Therefore, diversification growth is of a degree. function is the most important managerial act along with planning,
organizing, directing and controlling. The operations of these four
5. In decentralization structure, operations can be functions depend upon the manpower which is available through
coordinated at divisional level which is not possible in the staffing function.
centralization set up.

34
 2. Staffing is a pervasive activity- As staffing function is
Staffing is a basic function of management. Every manager is
continuously engaged in performing the staffing function. He is
carried out by all mangers and in all types of concerns where actively associated with recruitment, selection, training and appraisal
business activities are carried out. of his subordinates. These activities are performed by the chief

3. Staffing is a continuous activity- This is because staffing

executive, departmental managers and foremen in relation to their
subordinates. Thus, staffing is a pervasive function of management
function continues throughout the life of an organization due to the and is performed by the managers at all levels.
transfers and promotions that take place.

4. The basis of staffing function is efficient management of

It is the duty of every manager to perform the staffing activities such
as selection, training, performance appraisal and counseling of
personnel’s- Human resources can be efficiently managed by a employees. In many enterprises. Personnel Department is created to
system or proper procedure, that is, recruitment, selection, perform these activities.
placement, training and development, providing remuneration, etc.

5. Staffing helps in placing right men at the right job- It can

But it does not mean that the managers at different levels are relieved
of the responsibility concerned with staffing. The Personnel
be done effectively through proper recruitment procedures and Department is established to provide assistance to the managers in
then finally selecting the most suitable candidate as per the job performing their staffing function. Thus, every manager has to share
requirements. the responsibility of staffing.
6. Staffing is performed by all managers depending upon the
(iii) Human Skills
nature of business, size of the company, qualifications and skills of
managers, etc. In small companies, the top management generally Staffing function is concerned with training and development of
performs this function. In medium and small scale enterprise, it is human resources. Every manager should use human relations skill in
performed especially by the personnel department of that concern.
providing guidance and training to the subordinates. Human relations
skills are also required in performance appraisal, transfer and
Nature of Staffing
promotion of subordinates. If the staffing function is performed
properly, the human relations in the organization will be cordial.
Staffing is an integral part of human resource management. It
facilitates procurement and placement of right people on the right (iv) Continuous Function
jobs.
Staffing function is to be performed continuously. It is equally
The nature of staffing function is discussed below: important in the established organizations and the new organizations.
In a new organization, there has to be recruitment, selection and
(i)  People Centred training of personnel. In a running organization, every manager is
engaged in various staffing activities. He is to guide and train the
Staffing is people centred and is relevant in all types of organizations. workers and also evaluate their performance on a continuous basis.
It is concerned with all categories of personnel from top to bottom of
the organization.

(ii) Responsibility of Every Manager

35
Importance of Staffing
5. Motivation of Human Resources
It is most importance for the organization that right kinds of people
are employed. They should be given adequate training so that wastage The behaviour of individuals is shaped by many factors such as
is minimum. They must also be induced to show higher productivity education level, needs, socio-cultural factors, etc. that is why, the
and quality by offering them incentives. human aspect of organization has become very important. The
workers can be motivated through financial and non-financial
In fact, effective performance of the staff function is necessary to incentives.
realize the following benefits:

6. Building Higher Morale

1. Efficient Performance of Other Functions
Right type of climate should be created for the workers to contribute
Staffing is the key to the efficient performance of other functions of to the achievement of the organizational objectives. By performing the
management. If an organization does not have competent personnel, it staffing function effectively, management can show the significance it
can’t perform planning, organization and control functions properly. attaches to the personnel working in the enterprise. This will increase
the morale of the employees.

2. Effective Use of Technology and Other Resources

Recruitment & Selection
It is the human factor that is instrumental in the effective utilization of
latest technology, capital, material, etc. the management can ensure Process: Introduction
right kinds of personnel by performing the staffing function.
Recruitment and Selection is an important operation in HRM,
designed to maximize employee strength in order to meet the
3. Optimum Utilization of Human Resources employer’s strategic goals and objectives. In short, Recruitment and
Selection is the process of sourcing, screening, shortlisting and
The wage bill of big concerns is quite high. They also spend money selecting the right candidates for the filling the required vacant
on recruitment, selection, training and development of employees. In positions.
order to get the optimum output from the personnel, the staffing
function should be performed in an efficient manner. The Scope of Recruitment and Selection

The scope of Recruitment and Selection is very wide and it consists of

4. Development of Human Capital a variety of operations. Resources are considered as most important
asset to any organization. Hence, hiring right resources is the most
The management is required to determine the manpower requirements important aspect of Recruitment. Every company has its own pattern
well in advance. It has also to train and develop the existing personnel of recruitment as per their recruitment policies and procedures.
for career advancement. This will meet the requirements of the
company in future. The scope of Recruitment and Selection includes the following
operations:
36
  Dealing with the excess or shortage of resources 12 The HR team negotiates the package and compensation
 Preparing the Recruitment policy for different categories of
employees 13 Final confirmation and agreements
 Analyzing the recruitment policies, processes, and procedures of
the organization 14 Send offer letter
 Identifying the areas, where there could be a scope of
improvement 15 Offer accepted
 Streamlining the hiring process with suitable recommendations
 Choosing the best suitable process of recruitment for effective
hiring of resources
Placement and induction
Any organization wants it future to be in good and safe hands. Hence,
hiring the right resource is a very important task for any organization. Placement

Step Activity Placement is a process of assigning a specific job to each of the

Sending the resignation communication message to HR with request selected candidates. It involves assigning a specific rank and
1
for initiating the recruitment process responsibility to an individual. It implies matching the requirements of
a job with the qualifications of the candidate.
2 Manager-HR directs the hiring team to start the recruitment process
Significance of placement are as follows:
Logging into the employment website and contacting different
3
recruiters  It improves employee morale.
 It helps in reducing employee turnover.
4 Sourcing, identifying, and collecting the resumes of the candidates  It helps in reducing absenteeism.
 It helps in reducing accident rates.
5 Receiving relevant resumes  It avoids misfit between the candidate and the job.
 It helps the candidate to work as per the predetermined objectives
6 Shortlisting the resumes of the organization.

7 Sending the shortlisted resumes to the department manager Induction

8 Schedule interview dates Once an employee is selected and placed on an appropriate job, the
process of familiarizing him with the job and the organization is
9 Calling the candidates for interview known as induction.
Interviewers complete the feedback form and the feedback is shared Induction is the process of receiving and welcoming an employee
10
with the HR when he first joins the company and giving him basic information he
needs to settle down quickly and happily and stars work.
This process repeats for many candidates till the best candidates are
11
finalized.

37
Objectives of induction  Standing orders and disciplinary procedures.
 Opportunities for training, promotions, transfer etc.
 To help the new comer to overcome his shyness and overcome his  Suggestion schemes.
shyness nervousness in meeting new people in a new environment.  Rules and regulations
 To give new comer necessary information such as location of a café,


rest period etc.
To build new employee confidence in the organization. Training & Development
 It helps in reducing labor turnover and absenteeism.
 It reduces confusion and develops healthy relations in the Training and development is vital part of the human resource
organization. development. It is assuming ever important role in wake of the
 To ensure that the new comer do not form false impression and advancement of technology which has resulted in ever increasing
negative attitude towards the organization. competition, rise in customer’s expectation of quality and service and
 To develop among the new comer a sense of belonging and loyalty a subsequent need to lower costs. It is also become more important
to the organization. globally in order to prepare workers for new jobs. In the current write
up, we will focus more on the emerging need of training and
The advantages of formal induction are: development, its implications upon individuals and the employers.

 Induction helps to build up a two-way channel of communication

between management and workers.
 Proper induction facilitates informal relation and team work among
employee.
 Effective induction helps to integrate the new employee into the
organization and to develop a sense of belonging.
 Induction helps to develop good relation.
 A formal induction programme proves that the company is taking
interest in getting him off to good start.
 Proper induction reduces employee grievances, absenteeism and
labor turnover.
 Induction is helpful in supplying information concerning the
Training & Development
organization, the job and employee welfare facilities.

Contents of induction Programme Noted management author Peter Drucker said that the fastest growing
industry would be training and development as a result of replacement
 Brief history and operations of the company. of industrial workers with knowledge workers. In United States, for
 The company’s organization structure. example, according to one estimate technology is de-skilling 75 % of
 Policies and procedure of the company. the population. This is true for the developing nations and for those
 Products and services of the company. who are on the threshold of development. In Japan for example, with
 Location of department and employee facilities. increasing number of women joining traditionally male jobs, training
 Safety measures. is required not only to impart necessary job skills but also for
 Grievances procedures. preparing them for the physically demanding jobs. They are trained in
 Benefits and services of employee. everything from sexual harassment policies to the necessary job skills.
38
The need for Training and Development programs they use to improvise performance and productivity and not
just how much they simply spend on learning.
Before we say that technology is responsible for increased need of
training inputs to employees, it is important to understand that there
are other factors too that contribute to the latter. Training is also Directing & Controlling
necessary for the individual development and progress of the
employee, which motivates him to work for a certain organisation Directing
apart from just money. We also require training update employees of
the market trends, the change in the employment policies and other Directing is the heart of management function. All other functions of
things. management such as planning, organizing, and staffing have no
importance without directing. Leadership, motivation, supervision,
The following are the two biggest factors that contribute to the communication are various aspects of directing.
increased need to training and development in Organizations:
Directing refers to a process or technique of instructing, guiding,
Change: The word change encapsulates almost everything. It is one inspiring, counselling, overseeing and leading people towards the
of the biggest factors that contribute to the need of training and accomplishment of organizational goals.  It is a continuous managerial
development. There is in fact a direct relationship between the two. process that goes on throughout the life of the organization. Main
Change leads to the need for training and development and training characteristics of Directing are as follows:
and development leads to individual and organisational change, and
the cycle goes on and on. More specifically it is the technology that is 1. Initiates Action
driving the need; changing the way how businesses function, compete
and deliver. A directing function is performed by the managers along
with planning, staffing, organizing and controlling in order to
Development: It is again one the strong reasons for training and discharge their duties in the organization. While other functions
development becoming all the more important. Money is not the sole prepare a platform for action, directing initiates action.
motivator at work and this is especially very true for the 21st century.
People who work with Organizations seek more than just employment 2. Pervasive Function
out of their work; they look at holistic development of self.
Spirituality and self awareness for example are gaining momentum Directing takes place at every level of the organization. Wherever
world over. People seek happiness at jobs which may not be possible there is a superior-subordinate relationship, directing exists as every
unless an individual is aware of the self. At ford, for example, an manager provides guidance and inspiration to his subordinates.
individual can enrol himself / herself in a course on ‘self awareness’,
which apparently seems inconsequential to ones performance at work 3. Continuous Activity
but contributes to the spiritual well being of an individual which is all
the more important. It is a continuous function as it continues throughout the life of
organization irrespective of the changes in the managers or
The critical question however remains the implications and the employees.
contribution of training and development to the bottom line of
Organizations performance. To assume a leadership position in the
market space, an organisation will need to emphasise on the kind of
39
4. Descending Order of Hierarchy 5. Coping up with the Changes

Directing flows from a top level of management to the bottom level. Employees have a tendency to resist any kind of change in the
Every manager exercises this function on his immediate subordinate. organization. But, adapting the environmental changes is necessary
for the growth of the organization. A manager through motivation,
5. Human Factor proper communication and leadership can make the employees
understand the nature and contents of change and also the positive
Since all employees are different and behave differently in different aftermaths of the change. This will help in a smooth adaptation of the
situations, it becomes important for the managers to tackle the changes without any friction between the management and employees.
situations appropriately. Thus, directing is a significant function that
gets the work done by the employees and increases the growth of the 6. Effective Utilization of Resources
organization.
It involves defining the duties and responsibilities of every
Importance of Directing subordinate clearly thereby avoiding wastages, duplication of efforts,
etc. and utilizing the resources of men, machine, materials, and money
1. Initiates Action in the maximum possible way. It helps in reducing costs and
increasing profits.
Each and every action in an organization is initiated only through
directing. The managers direct the subordinates about what to do, how Principles of Directing
to do when to do and also see to it that their instructions are properly
followed. 1. Maximum Individual Contribution

2. Ingrates Efforts One of the main principles of directing is the contribution of

individuals. Management should adopt such directing policies that
Directing integrates the efforts of all the employees and departments motivate the employees to contribute their maximum potential for the
through persuasive leadership and effective communication towards attainment of organizational goals.
the accomplishment of organizational goals.
2. Harmony of Objectives
3. Motivates Employees
Sometimes there is a conflict between the organizational objectives
A manager identifies the potential and abilities of its subordinates and and individual objectives. For example, the organization wants profits
helps them to give their best. He also motivates them by offering them to increase and to retain its major share, whereas, the employees may
financial and non-financial incentives to improve their performance. perceive that they should get a major share as a bonus as they have
worked really hard for it.
4. Provides Stability
Here, directing has an important role to play in establishing harmony
Stability is significant in the growth of any organization. Effective and coordination between the objectives of both the parties.
directing develops co-operation and commitment among the
employees and creates a balance among various departments and
groups.
40
3. Unity of Command 8. Follow Through

This principle states that a subordinate should receive instructions As per this principle, managers are required to monitor the extent to
from only one superior at a time. If he receives instructions from more which the policies, procedures, and instructions are followed by the
than one superiors at the same time, it will create confusion, subordinates. If there is any problem in implementation, then the
conflict, and disorder in the organization and also he will not be able suitable modifications can be made.
to prioritize his work.
Controlling
4. Appropriate Direction Technique
Controlling is one of the important functions of a manager. In order to
Among the principles of directing, this one states that appropriate seek planned results from the subordinates, a manager needs to
direction techniques should be used to supervise, lead, communicate exercise effective control over the activities of the subordinates. In
and motivate the employees based on their needs, capabilities, other words, the meaning of controlling function can be defined as
attitudes and other situational variables. ensuring that activities in an organization are performed as per the
plans. Controlling also ensures that an organization’s resources are
5. Managerial Communication being used effectively & efficiently for the achievement of
predetermined goals.
According to this principle, it should be seen that the instructions are
clearly conveyed to the employees and it should be ensured that they  Controlling is a goal-oriented function.
have understood the same meaning as was intended to be  It is a primary function of every manager.
communicated.  Controlling the function of a manager is a pervasive function.

6. Use of Informal Organization How Controlling Function Helps Managers

Within every formal organization, there exists an informal group or Managers at all levels of management Top, Middle & Lower – need to
organization. The manager should identify those groups and use them perform controlling function to keep control over activities in their
to communicate information. There should be a free flow of areas. Therefore, controlling is very much important in an educational
information among the seniors and the subordinates as an effective institution, military, hospital, & a club as in any business organization.
exchange of information are really important for the growth of an
organization. Therefore, controlling function should not be misunderstood as the
last function of management. It is a function that brings back the
7. Leadership management cycle back to the planning function. Thus, the controlling
function act as a tool that helps in finding out that how actual
Managers should possess a good leadership quality to influence the performance deviates from standards and also finds the cause of
subordinates and make them work according to their wish. It is one of deviations & attempts which are necessary to take corrective actions
the important principles of directing. based upon the same.

This process helps in the formulation of future plans in light of the

problems that were identified &, thus, helps in better planning in the
future periods.  So from the meaning of controlling we understand it
41
not only completes the management process but also improves in advance what they expect & what are the standards of performance
planning in the next cycle. on the basis of which they will be appraised. Therefore it helps in
motivating and increasing their potential so to make them & helps
Importance of Controlling them to give better performance.

After the meaning of control, let us see its importance. Control is an 5. Ensuring Order & Discipline
indispensable function of management without which the controlling
function in an organization cannot be accomplished and the best of Controlling creates an atmosphere of order & discipline in the
plans which can be executed can go away. A good control system organization which helps to minimize dishonest behavior on the part
helps an organization in the following ways: of the employees. It keeps a close check on the activities of employees
and the company can be able to track and find out the dishonest
1. Accomplishing Organizational Goals employees by using computer monitoring as a part of their control
system.
The controlling function is an accomplishment of measures that
further makes progress towards the organizational goals & brings to 6. Facilitating Coordination in Action
light the deviations, & indicates corrective action. Therefore it helps
in guiding the organizational goals which can be achieved by The last important function of controlling is that each department &
performing a controlling function. employee is governed by such pre-determined standards and goals
which are well versed and coordinated with one another. This ensures
2. Judging Accuracy of Standards that overall organizational objectives are accomplished in an overall
manner.
A good control system enables management to verify whether the
standards set are accurate & objective. The efficient control system
also helps in keeping careful and progress check on the changes which Directing Principles and
help in taking the major place in the organization & in the
environment and also helps to review & revise the standards in light Processes
of such changes.
DIRECTING is said to be a process in which the managers instruct,
3. Making Efficient use of Resources guide and oversee the performance of the workers to achieve
predetermined goals. Directing is said to be the heart of management
Another important function of controlling is that in this, each activity process. Planning, organizing, staffing have got no importance if
is performed in such manner so an in accordance with predetermined direction function does not take place.
standards & norms so as to ensure that the resources are used in the
most effective & efficient manner for the further availability of Directing initiates action and it is from here actual work starts.
resources. Direction is said to be consisting of human factors. In simple words, it
can be described as providing guidance to workers is doing work. In
4. Improving Employee Motivation field of management, direction is said to be all those activities which
are designed to encourage the subordinates to work effectively and
Another important function is that controlling help in accommodating efficiently. According to Human, “Directing consists of process or
a good control system which ensures that each employee knows well technique by which instruction can be issued and operations can be
42
carried out as originally planned” Therefore, Directing is the function Direction as “Life spark of an enterprise”. It is also called as on
of guiding, inspiring, overseeing and instructing people towards actuating function of management because it is through direction that
accomplishment of organizational goals. the operation of an enterprise actually starts. Being the central
character of enterprise, it provides many benefits to a concern which
Direction has got following characteristics: are as follows:-

1. Pervasive Function – Directing is required at all levels of 1. It Initiates Actions – Directions is the function which is the
organization. Every manager provides guidance and inspiration to starting point of the work performance of subordinates. It is from
his subordinates. this function the action takes place, subordinates understand their

2. Continuous Activity – Direction is a continuous activity as it

jobs and do according to the instructions laid. Whatever are plans
laid, can be implemented only once the actual work starts. It is
continuous throughout the life of organization. there that direction becomes beneficial.

3. Human Factor – Directing function is related to 2. It Ingrates Efforts – Through direction, the superiors are
subordinates and therefore it is related to human factor. Since able to guide, inspire and instruct the subordinates to work. For
human factor is complex and behaviour is unpredictable, direction this, efforts of every individual towards accomplishment of goals
function becomes important. are required. It is through direction the efforts of every department
can be related and integrated with others. This can be done
4. Creative Activity – Direction function helps in converting through persuasive leadership and effective communication.
plans into performance. Without this function, people become Integration of efforts bring effectiveness and stability in a concern.
inactive and physical resources are meaningless.
3. Means of Motivation – Direction function helps in
5. Executive Function – Direction function is carried out by all achievement of goals. A manager makes use of the element of
managers and executives at all levels throughout the working of an motivation here to improve the performances of subordinates. This
enterprise, a subordinate receives instructions from his superior can be done by providing incentives or compensation, whether
only. monetary or non – monetary, which serves as a “Morale booster”
to the subordinates Motivation is also helpful for the subordinates
6. Delegate Function – Direction is supposed to be a function to give the best of their abilities which ultimately helps in growth.
dealing with human beings. Human behaviour is unpredictable by
nature and conditioning the people’s behaviour towards the goals 4. It Provides Stability – Stability and balance in concern
of the enterprise is what the executive does in this function. becomes very important for long term sun survival in the market.
Therefore, it is termed as having delicacy in it to tackle human This can be brought upon by the managers with the help of four
behaviour. tools or elements of direction function – judicious blend of
persuasive leadership, effective communication, strict supervision
Importance of Directing Function and efficient motivation. Stability is very important since that is an
index of growth of an enterprise. Therefore a manager can use of
all the four traits in him so that performance standards can be
Directing or Direction function is said to be the heart of management
maintained.
of process and therefore, is the central point around which
accomplishment of goals take place. A few philosophers call

43
 5. Coping up with the changes – It is a human behaviour that
(ii) Motivation– means inspiring, stimulating or encouraging the sub-
ordinates with zeal to work. Positive, negative, monetary, non-
human beings show resistance to change. Adaptability with monetary incentives may be used for this purpose.
changing environment helps in sustaining planned growth and
becoming a market leader. It is directing function which is of use to (iii) Leadership– may be defined as a process by which manager
meet with changes in environment, both internal as external. guides and influences the work of subordinates in desired direction.
Effective communication helps in coping up with the changes. It is
the role of manager here to communicate the nature and contents (iv) Communications– is the process of passing information,
of changes very clearly to the subordinates. This helps in experience, opinion etc from one person to another. It is a bridge of
clarifications, easy adaptions and smooth running of an enterprise. understanding.
For example, if a concern shifts from handlooms to powerlooms, an
important change in technique of production takes place. The » Nature and Characteristics of Directing
resulting factors are less of manpower and more of machinery. This
can be resisted by the subordinates. The manager here can explain » Principles of Directing
that the change was in the benefit of the subordinates. Through
more mechanization, production increases and thereby the profits.
» Motivational Concepts
Indirectly, the subordinates are benefited out of that in form of
higher remuneration.
» Motivational Theories
6. Efficient Utilization of Resources – Direction finance helps
Meaning and Definition of Directing
in clarifying the role of every subordinate towards his work. The
resources can be utilized properly only when less of wastages,
duplication of efforts, overlapping of performances, etc. doesn’t Directing is said to be a process in which the managers instruct, guide
take place. Through direction, the role of subordinates become and oversee the performance of the workers to achieve predetermined
clear as manager makes use of his supervisory, the guidance, the goals. Directing is said to be the heart of management process.
instructions and motivation skill to inspire the subordinates. This Planning, organizing, staffing have got no importance if direction
helps in maximum possible utilization of resources of men, function does not take place. Directing initiates action and it is from
machine, materials and money which helps in reducing costs and here actual work starts. Direction is said to be consisting of human
increasing profits. factors. In simple words, it can be described as providing guidance to
workers is doing work. In field of management, direction is said to be
Direction has following elements: all those activities which are designed to encourage the subordinates
to work effectively and efficiently. According to Human, “Directing
• Supervision consists of process or technique by which instruction can be issued
• Motivation and operations can be carried out as originally planned” Therefore,
• Leadership Directing is the function of guiding, inspiring, overseeing and
• Communication instructing people towards accomplishment of organizational goals.

(i) Supervision– implies overseeing the work of subordinates by their Directing means giving instructions, guiding, counselling, motivating
superiors. It is the act of watching & directing work & workers. and leading the staff in an organisation in doing work to achieve
Organisational goals. Directing is a key managerial function to be
performed by the manager along with planning, organising, staffing
44
and controlling. From top executive to supervisor performs the enterprise is what the executive does in this function. Therefore, it is
function of directing and it takes place accordingly wherever superior termed as having delicacy in it to tackle human behaviour.
– subordinate relations exist. Directing is a continuous process
initiated at top level and flows to the bottom through organisational Nature and Characteristics of Directing
hierarchy.
Directing is characterized by the following distinguishing features:
It is that part of managerial function which actuates the organizational
methods to work efficiently for achievement of organizational
purposes. It is considered life-spark of the enterprise which sets it in 1. Element of management. Directing is one of the important
motion the action of people because planning, organizing and staffing functions of management. It is through direction that management
are the mere preparations for doing the work. Direction is that inert- initiates action in the organization.
personnel aspect of management which deals directly with
influencing, guiding, supervising, motivating sub-ordinate for the 2. Continuing function. Direction is continuous process and it
achievement of organizational goals. continues throughout the life of an organization. A manager never
ceases to guide, inspire and supervise his subordinates. A manager
Direction has got following characteristics: can not get things done simply by issuing orders and instruction. He
must continually provide motivation and leadership to get the
Pervasive Function – Directing is required at all levels of orders and instructions executed.
organization. Every manager provides guidance and inspiration to his
subordinates. 3. Pervasive function. Direction initiates at the top and follows
right up to the bottom of an organization. Every manager in the
Continuous Activity – Direction is a continuous activity as it organization gives direction to his subordinates as superior and
continuous throughout the life of organization. receives direction as subordinates from his superior. Direction
function is performed at every level of management and in every
Human Factor – Directing function is related to subordinates and department of the organization.
therefore it is related to human factor. Since human factor is complex
and behaviour is unpredictable, direction function becomes important.
4. Creative function. Direction makes things happen and
converts plans into performance it is the process around which all
performance revolves. Without direction, human forces in an
Creative Activity – Direction function helps in converting plans into
organization become inactive and consequently physical factors
performance. Without this function, people become inactive and
become useless. It breathes life into organization.
physical resources are meaningless.

Executive Function – Direction function is carried out by all

5. Linking function. Planning, organizing and staffing are
merely preparation for doing the work and work actually starts
managers and executives at all levels throughout the working of an
when managers perform the directing function. Direction puts
enterprise, a subordinate receives instructions from his superior only.
plans into an action and provides performance for measurement
and control. In this way, directing serves as a connecting link
Delegate Function – Direction is supposed to be a function dealing between planning and control.
with human beings. Human behaviour is unpredictable by nature and
conditioning the people’s behaviour towards the goals of the 6. Management of human factor. Direction is the
interpersonal aspects of management. It deals with the human
45
 aspect of organization. Human behavior is very dynamic and is 6. Managerial communication. A good system of communication
conditioned by a complex of forces about which not much is between the superior and his subordinates helps to improve mutual
known. Therefore, direction is a very difficult and challenging understanding. Upwards communication helps a manager to
function. understand the subordinates to express their feeling.

Principles of Directing Motivational Concepts

Directing is a complex function as it deals with people whose Concept of Motivation:-

behaviour is unpredictable. Effective direction is an art which a
manager can learn and perfect through practice. However, managers Technically, the term motivation can be traced to Latin word Movere,
can follow the following principles while directing their subordinates. which means ‘to move’. In order to understand the concept of
motivation, we have to examine three terms: motive, motivating and
1. Harmony of objectives. Individuals join the organization to satisfy motivation and their relationship.
their physiological and psychological needs. They are expected to
work for the achievement of organizational objectives. They will Motive:
perform their tasks better if they feel that it will satisfy their personal
goals. Therefore, mar agreement should reconcile the personal goals Based on the Latin word Movere, motive (need) has been defined as
of employees with the organizational goals. follows: according to Bernard Berelson and Garry A. Steiner, ” A
motive is an inner state that energizes, activates, or moves (hence
2. Maximum individual contribution. Organizational objectives are motivation), and that directs behavior towards goals.”
achieved at the optimum level when every individual in the
organization makes maximum contribution towards them. Managers Motive has also been defined by Fillmore H. Sanford and Larence S.
should, therefore, try to elicit maximum possible contribution from Wrights man as, “A motive is restlessness, a lack, a yen, a force. Once
each subordinate.  in the grip of a motive an organism does something to reduce
restlessness, to remedy the lack, to alleviate the yen, to mitigate the
3. Unity of command. A subordinate should get orders and force.”
instruction from one superior only. If he is made accountable to two
bosses simultaneously, there will be confusion, conflict, disorder and Here, we can differentiate between needs and wants. While needs are
indiscipline in the organization. Therefore, every subordinate should more comprehensive and include desires- both physiological and
be asked to report to only one manager. psychological, wants are expressed in narrow sense and include only
those desires for which a person has money and also the desire to
4. Appropriate techniques. The manager should use correct direction spend the money to satisfy the wants. There are many psychological
techniques to ensure efficiently of direction. The technique used needs, like social needs, recognition needs etc. which does not fall
should be suitable to the superior, the subordinates and the situation. under the category of wants.

5. Direct supervision. Direction becomes more effective when there Motivating:

is a direct personal contact between the superior and his subordinates.
Such contact improves the morale and commitment of the employees. Motivating is a term which implies that one person (in the
Therefore, whenever possible direct supervision should be used. organizational context, a manager) includes another, (say, employee)
to engage in action (work behaviour) by ensuring that a channel to
46
satisfy the motive becomes available and accessible to the individual. obligation refers to motivation based on what an individual thinks
In addition to channelizing the strong motives in a direction that is ought to be done. For instance, a feeling of responsibility for a
satisfying to both organization and employees, the manager can also mission may lead to helping others beyond what is easily observable,
activate the latent motives in individuals and harness them in a rewarded, or fun.
manager that would be funtional for the organization.
A reinforcer is different from reward, in that reinforcement is intended
Motivation: to create a measured increase in the rate of a desirable behavior
following the addition os something to the environment.
While motive is energizer of action, motivating is the channelization
and activation of motives, motivation is the work behavior itself. Intrinsic motivation
Motivation depends on motives and motivating, therefore, it becomes
a complex process. For example, Dublin has defined motivation as Intrinsic motivation occurs when people engage in an activity, such
follows: “Motivation is the complex force starting and keeping a as a hobby, without obvious external incentives. This form of
person at work in an organization. Motivation is something that moves motivation has been studied by social and educational psychologists
a person to action, and continues him in the course of action already since the early 1970s. Research has found that it is usually associated
initiated.” with high educational achievement and enjoyment by students.
Intrinsic motivation has been explained by Fritz Heider’s attribution
According to McFarland, “Motivation refers to the way in which theory, Bandura’s work on self-efficacy, and Ryan and Deci’s
urges, drives, desires, aspirations, striving, or needs direct, control, or cognitive evaluation theory. Students are likely to be intrinsically
explains the behavior of human beings.” motivated if they:

The Incentive Theory of Motivation • attribute their educational results to internal factors that they can
control (e.g. the amount of effort they put in),
A reward, tangible or intangible, is presented after the occurrence of
an action (i.e. behavior) with the intent to cause the behavior to occur • believe they can be effective agents in reaching desired goals (i.e.
again. This is done by associating positive meaning to the behavior. the results are not determined by luck),
Studies show that if the person receives the reward immediately, the
effect would be greater, and decreases as duration lengthens. • are interested in mastering a topic, rather than just rote-learning to
Repetitive action-reward combination can cause the action to become achieve good grades.
habit. Motivation comes from two things: you, and other people.
There is extrinsic motivation, which comes from others, and intrinsic In knowledge-sharing communites and organizations, people often
motivation, which comes from within you. cite altruistic reasons for their participation, including contributing to
a common good, a moral obligation to the group, mentorship or
Rewards can also be organized as extrinsic or intrinsic. Extrinsic ‘giving back’. In work environments, money may provide a more
rewards are external to the person; for example, praise or money. powerful extrinsic factor than the intrinsic motivation provided by an
Intrinsic rewards are internal to the person; for example, satisfaction enjoyable workplace.
or a feeling of accomplihment.
In terms of sports, intrinsic motivation is the motivation that comes
Some authors distinguish between two forms of intrinsic motivation: from inside the performer. That is, the athelete competes for the love
one based on enjoyment, the other on obligation. In this context, of the sport.
47
Extrinsic motivation element of restraint and has nothing to do with drive theory. Also, the
food will either be nicer after it is cooked, or it won’t be edible at all
Extrinsic motivation comes from outside of the performer. Money is before it is cooked.
the most obvious example, but coercion and threat of punishment are
also common extrinsic motivations. Cognitive dissonance theory

In sports, the crowd may cheer the performer on, and this motivates Suggested by Leon Festinger, this occurs when an individual
him or her to do well. Trophies are also extrinsic incentives. experiences some degree of discomfort resulting from an
Competition is often extrinsic because it encourages the performer to incompatibility between two cognitions. For example, a consumer
win and beat others, not to enjoy the intrinsic rewards of the activity. may seek to reassure himself regarding a purchase, feeling, in
retrospect, that another decision may have been preferable.
Social psychological research has indicated that extrinsic rewards can
lead to over justification and a subsequent reduction in intrinsic Another example of cognitive dissonance is when a belief and a
motivation. behaviour are in conflict. A person may wish to be healthy, believes
smoking is bad for one’s health, and yet continues to smoke.
Motivational Theories
Affective-Arousal Theories
Drive Reduction Theories
Need Achievement Theory
There are number of drive theories. The Drive Reduction
Theory grows out of the concept that we have certain biological David McClelland’s achievement motivation theory envisions that a
needs, such as hunger. As time passes the strength of the drive person has a need for three things, but differs in degrees to which the
increases as it is not satisfied. Then as we satisfy that drive by various needs influence their behavior: Need for achievement, Need
fulfilling its desire, such as eating, the drive’s strength is reduced. It is for power, and Need for affiliation.
based on the theories of Freud and the idea of feedback control
systems, such as a thermostat. Interest Theory

There are several problems, however, that leave the validity of the Holland Codes are used in the assessment of interests as in Vocational
Drive Reduction Theory open for debate. The first problem is that it Preference Inventory (VPI; Holland, 1985). One way to look at
does not explain how Secondary Reinforcers reduce drive. For interests is that if a person has strong interest in one of the six Holland
example, money does not satisfy any biological or psychological need areas, then obtaining outcomes in that area will be strongly reinforcing
but reduces drive on a regular basis through a pay check second-order relative to obtaining outcomes in areas of weak interest.
conditioning. Secondly, if the drive reduction theory held true we
would not be able to explain how a hungry human being can prepare a Need Theories
meal without eating the food before they finished cooking it.
Need Hierarchy Theory
However, when comparing this to real life situation such as preparing
food, one does not get hungrier as the food is being made (drive Abraham Maslow’s hierarchy of human needs theory is the one of the
increases), and after the food has been consumed the drive decreases. most widely discussed theories of motivation.
The only reason the food does not get eaten before is the human
48
The theory can be summarized as follows: The name Hygiene factors is used because, like hygiene, the presence
will not make you healthier, but absence can cause health
• Human beings have wants and desires which influence their deterioration.
behaviour: Only unsatisfied needs influence behavior, satisfied needs
do not. The theory is sometimes called the “Motivator-Hygiene Theory.”

• Since needs are many, they are arranged in order of importance, Alderfer’s ERG theory
from the basic to the complex.
Clayton Alderfer, expanding on Maslow’s hierarchy of needs, created
• The person advances to the next level of needs only after the lower the ERG theory (existence, relatedness and growth). Physiological
level need is at least minimally satisfied. and safety, the lower order needs, are placed in the existence category,
while love and self esteem needs are placed in the relatedness
• The further the progress up the hierarchy, the more individuality, category. The growth category contains our self-actualization and self-
humanness and psychological health a person will show. esteem needs.

The needs, listed from basic (lowest, earliest) to most complex Self-determination theory
(highest, latest) are as follows:
Self-determinaation theory, developed by Edward Deci and Rihcard
• Physiological Ryan, focuses on the importance of intrinsic motivation in driving
• Safety human behavior. Like Maslow’s hierarchial theory and others that
• belongingness built on it, SDT posits a natural tendency toward growth and
• Esteem development. Unlike these other theories, however, SDT does not
• Self actualization include any sort of “autopilot” for achievement, but instead requires
active encouragement from the environment. The primary factors that
Herzberg’s two-factor theory encourage motivation and development are autonomy, competence
feedback, and relatedness.
Fredrick Herzberg’s two-factor theory, aka intrinsic/extrinsic
motivation, concludes that certain factors in the workplace result in Broad Theories
job satisfaction, but if absent, lead to dissatisfaction.
The latest approach in Achievement Motivation is an integrative
He distinguished between: perspective as lined out in the “Onion-Ring-Model of Achievment
Motivation” by Heinz Schuler, George C. Thornton III, Andreas
• Motivators; (e.g. challenging work, recognition, responsibility) Frintrup and Rose Mueller-Hanson. It is based on the premise that
which give positive satisfaction, and performance motivation results from way broad components of
personality are directed towards performance. As a result, it includes a
• Hygiene factors; (e.g. status, job security, salary and fringe range of dimensions that are relevant to success at work but which are
benefits) that do not motivate if present, but, if absent, result in not conventionally regarded as being part of performance motivation.
demotivation. Especially it integrates formerly separated approaches as Need for
Achievement with e.g. social motives like Dominance. The
Achievement Motivation Inventory AMI (Schuler, Thornton, Frintrup
49
& Mueller-Hanson, 2003) is based on this theory and assesses three Psychotherapists point out that some behavior is so automatic that the
factors (17 separated scales) relevant to vocational and professional reasons for it are not available in the individual’s conscious mind.
success.  Compulsive cigarette smoking is an example. Sometimes maintaining
self-esteem is so important and the motive for an activity is so
Cognitive theories threatening that it is simply not recognized and, in fact, may be
disguised or repressed. Rationalization, or “explaining away”, is one
Goal-setting theory such disguise, or defense mechanism, as it is called. Another is
projecting or attributing one’s own faults to others. “I feel I am to
Goal-setting theory is based on the notion that individuals sometimes blame”, becomes “It is her fault; she is selfish”. Repression of
have a drive to reach a clearly defined end state. Often, this end state powerful but socially unacceptable motives may result in outward
is a reward in itself. A goal’s efficiency is affected by three features: behaviour that is the opposite of the repressed tendencies. An example
proximity, difficulty and specificity. An ideal goal should present a of this would be the employee who hates his boss but overworks
situation where the time between the initiation of behaviour and the himself on the job to show that he holds him in high regard.
end state is close. This explains why some children are more
motivated to learn how to ride a bike than mastering algebra. A goal unconscious motives add to the hazards of interpreting human
should be moderate, not too hard or too easy to complete. In both behavior and, to the extent that they are present, complicate the life of
cases, most people are not optimally motivated, as many want a the administrator. On the other hand, knowledge that unconscious
challenge (which assumes some kind of insecurity of success). At the motives exist can lead to a more careful assessment of behavioral
same time people want to feel that there is a substantial probability problems. Although few contemporary psychologists deny the
that they will succeed. Specificity concerns the description of the goal existence of unconscious factors, many do believe that these are
in their class. The goal should be objectively defined and intelligible activated only in times of anxiety and stress, and that in the ordinary
for the individual. A classic example of a poorly specified goal is to course of events, human behavior – from the subject’s point of view –
get the highest possible grade. Most children have no idea how much is rationally purposeful.
effort they need to reach that goal.

Unconscious motivation Coordination as Essence of

Some psychologists believe that a significant portion of human Management
behaviour is energized and directed by unconscious motives.
According to Maslow, “Psychoanalysis has often demonstrated that Coordination can be defined as “Synchronization of efforts from the
the relationship between a conscious desire and the ultimate stand-point of time and the sequence of execution”. In general
unconscious aim that underlies it need not be at all direct.” In other coordination means bringing together the activities and resources of
words, stated motives do not always match those inferred by skilled organisation and bringing harmony in them.
observers. For example, it is possible that a person can be accident-
prone because he has an unconscious desire to hurt himself and not Coordination is the base or primary function of every manager
because he is careless or ignorant of the safety rules. Similarly, some because various departments of an organisation are working
overweight peoples are not hungry at all for food but for attention and independently and there is need to relate and integrate their activities.
love. Eating is merely a defensive reaction to lack of attention. Some
workers damage more equipment than others do because they harbour
unconscious feelins of aggression toward authority figures.

50
Coordination: The Essence of Management

Coordination brings unity of action and integrates different activities

of organisation. Coordination is considered as the essence of
management because of following reasons

1. Coordination is needed to perform all the functions of

management

(i) In planning coordination is required between main plan and

supportive plans of different departments.

(ii) In organising coordination is required between different resources 3. Coordination is the most important function of an organization
of an organization and also between authority responsibility and
accountability. Any company which fails to coordinate its activities cannot survive
and run successfully for a long period of time.
(iii) In staffing coordination is required between skill of a person and
job assigned to him, between efficiency and compensation etc. For example, Allwyn Company, established in 1942, was the first
company to produce a double-decker bus. It was running successfully
(iv) In directing function coordination is required between superior as a leading electronic industry, especially in refrigeration industry.
and subordinates, between orders, instructions, guidelines and By the end of 1980 the company faced the problem of coordination.
suggestions etc. There was lack of balance and integration of different activities; as a
result the company started facing huge losses and by 1993 company
(v) In controlling function coordination is required between standards had an accumulated loss of Rs. 168 crore. Company failed to balance
and actual performance. its departmental activities and product folios.

2. Coordination is required at all the levels So in short we can say without coordination no company can work
efficiently and earn profit.
(i) Top level requires coordination to integrate all the activities of
organisation and lead the efforts of all the individuals in one common Need of coordination
direction.
(i) Growth in size: As organizations grow in size, the number of
(ii) Coordination is required at middle level to balance the activities of people in the organization also increases. They may work for cross
different departments so that these can work as a part of one purposes. So, coordination is needed to integrate their efforts and
organisation only. activities, i.e., to bring unity of action.

(iii) Lower level requires coordination to integrate the activities of (ii) Functional differentiation: In an organization, there may be
workers towards achievement of organisational objectives. separate departments of production, finance, marketing and human
resources. All departments have their own objectives, policies,
strategies, etc. So, there may arise a conflict between them. For
51
example, the marketing department’s objective may be to increase Diagnostic controls seek to determine what deviation is taking (or has
sales by 10 percent by offering discounts. But the financial department taken) place. The sales manager, for instance, who receives the
may not approve such discounts as it means loss of revenue. monthly sales figures (showing sales quota results) is virtually
Therefore, coordination is necessary to link the activities of various working with a diagnostic control device. It will no doubt indicate
departments and to avoid conflicts among them. deviations from the acceptable standard (i.e., what is wrong) but not
why. Discovering the ‘why’ is often the most difficult part of the
(iii) Specialization: In modern organizations, there is a high degree of process.
specialization, arising out of the complexities of modern technology
and the diversity of tasks to be performed. So, organizations employ a Therapeutic controls tell us both what and why, and then proceed to
number of specialists, who think that they only are members, which take corrective action. For example, engines having internal control
leads to conflict between them. Therefore, coordination is required to system such as an engine speed governor and automatic transmission
avoid conflict between the specialists and the other members. are designed to take necessary corrective actions when warranted by
the conditions.
In the absence of coordination, there will be chaos and conflicts in the
organization as shown in figure. There will be no synergies among An example of utilisation of such control can be found in case of a
production, sales, accounts, stores and other departments and the manager who conducts employee training using the coaching method.
customers will not get timely delivery of goods. When, for instance, the trainee is performing the task, the manager
observes him closely by standing on his side. The objective is to

Types of Control, Control discover if any deviations from the intended processes take place.

Process In case a deviation occurs, the manager observes it, diagnoses the
reason for the incorrect technique, and corrects the deviation
immediately (i.e., without any loss of time). Thus the control and
Types of Control correction take place during the process itself, not after a few days.

1. Feed-Forward Controls 2. Concurrent (Prevention) Control

Feed forward controls are future-directed: they attempt to detect Concurrent control, also called steering control because it allows
and anticipate problems or deviations from the standards in advance people to act on a process or activity while it is proceeding, not after it
of their occurrence (at various points throughout the processes). They is proceeding, nor after it is completed. Corrections and adjustments
are in-process controls and are much more active, aggressive in can be made as and when the need a rises. Such controls focus on
nature, allowing corrective action to be taken in advance of the establishing conditions that will make it difficult or impossible for
problem. deviations from norms to occur.

Feed forward controls thus anticipate problems and permit action to An example of concurrent control is the development by companies of
be taken before a problem actually arises. job descriptions and job specifications. It may be recalled that job
description identifies the job that has to be done, thus clarifying
Feed forward control devices are of two broad categories: diagnostic working relationships, responsibility areas, and authority
and therapeutic.
52
relationships. It thus assists in preventing unnecessary duplication of Examples of Quantitative Standards:-
effort (work) and potential organisational conflict.
 Revenue to be earned.
In a like manner job specification identifies the abilities, training,  Units to be produced and sold.
education and characteristics needed of an employee to do the work. It  Cost to be incurred.
is control device inasmuch as it works to prevent a person who is  Time to be spent in performing a task.
totally unqualified and unfit from being selected for the job, thereby  Amount of inventories to be maintained etc.
saving money and time, and thus precluding potential poor
performance. Examples of Qualitative Standards:-

Improving motivation level of employees.

3.

Feedback Controls  Improving labour relations.
 Improving quality of products.
Feedback control is future-oriented. It is historical in nature and is  Improving goodwill etc.
also known as post-action control. The implication is that the
measured activity has already occurred, and it is impossible to go back
and correct performance to bring it up to standard. Rather, corrections 2. Measurement of Actual Performance
must occur after the act.
Once the standards have been determined, the next step is to measure
Such post-action controls focus on the end results of the process. The the actual performance. The various techniques for measuring are
information derived is not utilised for corrective action on a project sample checking, performance reports, personal observation etc.
because it has already been completed. Such control provides However, in order to facilitate easy comparison, the performance
information for a manager to examine and apply to future activities should be measured on same basis that the standards have.
which are similar to the present one. The basic objective is to help
prevent mistakes in the future. Following are some of the ways for measuring performance:

Controlling Process in Business Management (a) Superior prepares a report regarding the performance of an
employee.

1. Setting Performance Standards (b) Various ratios like gross profit ratio, debtor turnover ratio, return
on investment, current ratio etc. are calculated at periodic intervals to
The first step in the process of controlling is concerned with setting measure company’s performance.
performance standards. These standards are the basis for measuring
the actual performance. (c) Progress made in areas like marketing can be measured by
considering the number of units, increase in market share etc.
Thus, standards act as a lighthouse that warns & guides the ships at
sea. Standards are the benchmarks towards which efforts of entire (d) In small Organizations, each unit produced can be checked
organization are directed. These standards can be expressed both in personally to ensure the quality standards.
quantitative and qualitative terms.

53
(e) In large organisation, the technique of sample checking is used.
Under this technique, some pieces are checked at random for quality 1. Traditional Techniques
specifications.
Traditional techniques refer to the techniques that have been used by

3. Comparing Actual Performance with Standards

business organisation for longer period of time and are still in use.

Such techniques are:

This step involves comparing the actual performance with standards
laid down in order to find the deviations. For example, performance of  Personal Observation
a salesman in terms of unit sold in a week can be easily measured  Statistical Reports.
against the standard output for the week.  Breakeven Analysis.
 Budgetary Control.

4. Analysing Deviations (a) Personal Observation: This is the most traditional technique of
control. It helps a manager to collect first hand information about the
Some deviations are possible in all the activities. However, the performance of the employees. It also creates psychological pressure
deviation in the important areas of business needs to be corrected on the employees to improve their performance as they are aware that
more urgently as compared to deviation in insignificant areas. they are being observed personally by the manager. However, this
Management should use critical point control and management by technique is not to be effectively used in all kinds of jobs as it is very
exception in such areas. time consuming.

(b) Statistical Reports: Statistical analysis in the form of

5. Taking Corrective Action percentages, ratios, averages etc. in different areas provides useful
information regarding performance of an organisation to its managers.
The last step in the process of controlling involves taking corrective When such information is presented in the form of tables, graphs,
action. If the deviations are within acceptable limits, no corrective charts etc., it facilitates comparison of performance with the standards
measure is required. However, if the deviations exceed acceptable laid and with previous years’ performance.
limits, they should be immediately brought to the notice of the
management for taking corrective measures, especially in the (c) Breakeven Analysis: The technique used by managers to study
important areas. the relationship between sales volume, costs and profit is known as
Breakeven Analysis. This technique helps the managers in estimating
profits at different levels of activities. The following figure shows
Control Techniques: Traditional breakeven chart of a firm.

and Modern The point at which the total revenue and total cost curves intersect is
breakeven point. The figure shows that the firm will have the
6-7 minutes breakeven point at 60,000 units of output. At this point, there is
neither profit nor loss. The firm starts earning profit beyond this point.
Techniques of Managerial Control: Traditional and Modern
Techniques
54
Breakeven Point= Fixed Cost/ (Selling Price per unit- Variable (d) Management Audit.
cost per unit).
(e) PERT and CPM.

(f) Management Information System.

(a) Return on Investment: Return on investment is very useful

technique for determining whether the capital invested in the business
has been effectively used or not for generating reasonable amount of
return.
Through breakeven analysis, a firm can keep a check on its variable Return on Investment= (Net Income / Total Investment) X 100 Net
cost and can also determine the level of activity at which it can earn Income before or after tax can be used for calculating ROI. Total
its profit target. investment includes investment in fixed Assets as well as working
capital.
(d) Budgetary Control: Under this technique, different budgets are
prepared for different operations in an organization in advance. These It acts as an effective control device in measuring and comparing the
budgets act as standards for comparing them with actual performance performance of different departments. It also helps departmental
and taking necessary actions for attaining organizational goals. managers to find out the problems which adversely affect ROI.
A budget can be defined as a quantitative statement of expected result, (b) Ratio Analysis: Ratio Analysis is a technique of analyzing the
prepared for a future period of time. The budget should be flexible so financial statements of a business firm by computing different ratios.
that necessary changes, if need be, can be easily made later according
to the requirements of the prevailing environment. (c) Responsibility Accounting: Under this system of accounting,
various sections, departments or divisions of an organization are set
2. Modern Techniques
up as ‘ Responsibility Centers’. Each centre has a head who is
responsible for attaining the target of his centre.
Modem techniques are those techniques which are very new in (d) Management Audit: Management Audit is a process of judging
management world. These techniques provide various new aspects for the overall performance of the management of an organisation. It aims
controlling the activities of an organisation. at reviewing the efficiency and effectiveness of management and
improving its future performance. Its basic purpose is to identify the
These techniques are as follows: deficiencies in the performance of management functions. It also
ensures updating of existing managerial policies.
(a) Return on Investment.
(e) PERT and CPM: PERT (Programme Evaluation and Review
(b) Ratio Analysis. Technique) and CPM (Critical Path Method) are two important
techniques used in both planning and controlling. These techniques
(c) Responsibility Accounting. are used to compute the total expected time needed to complete a
project & it can identify the bottleneck activities that have a critical
55
effect on the project completion date. Such techniques are mainly used pay less attention to less critical problems which better be handled by
in areas like construction projects, aircraft manufacture, ship building his subordinates.
etc.
Under this system the manager should receive only condensed,
The various steps involved in using these techniques are as follows: summarised and invariable comparative reports covering all the
elements, and he should have all the exceptions to the past averages or
(i) The project is first divided into various activities and then these standards pointed out, both the specially good and the specially bad
activities are arranged in a logical sequence. exceptions.

(ii) A network diagram is prepared showing the sequence of activities. This gives him a full view of the progress in a few minutes of time.
Thus by using the experience in a systematic way (i.e., having the
(iii) Time estimates are laid down for each activity. PERT prepares knowledge of past attainments), a careful analysis is made with
three time estimates-(1) Optimistic (shortest time) (2) Most likely time reference to existing records and standards of performances.
& (3) Pessimistic (longest time).In CPM, only one time estimate is
prepared. Along with this, CPM also lays down the cost estimates for Advantages of Management by Exception:
completing the project.

(iv) The most critical path in the network is the longest path. Longest 1. It saves time. Manager attends to real problems at a
path consists of those activities which are critical for completing the particular point of time.
project on time; hence the name CPM.
2. Concentrated efforts are possible, as this system enables
(v) If required, necessary changes are made in the plan for completing the manager to decide when and where he should pay his
the project on time. attention. It identifies crisis and critical problems.

(f) Management Information System (MIS): Management 3. Lesser number of decisions is required to be taken, which
Information System (MIS) is a computer based information system enables the manager to go into detail.
which provides accurate, timely and up-to-date information to the
managers for taking various managerial decisions. Thus, it is an 4. This enables to increase span of control and increase the
important communication tool as well as an important control activities for a manager.
technique. It provides timely information to the managers so that they
can take appropriate corrective measures in case of deviations from 5. Use of past trends, history and available data can be made
standards. fully.

6. It alarms the management about the good opportunities as

Management by Exception well as difficulties.

It is a system of identification and communication that signals the 7. Qualitative and quantitative yardsticks are provided for
manager as to when and where his attention is needed. The main judging the current position.
object of this system is to enable the manager to identify and isolate
the problems that call for decision and action, and avoid or ignore or 8. It prevents management from over managing.

56
Limitations of Management by Exception: carried out. Past and present data are projected by using the statistical
concept like probability, standard deviation, confidence, correlation,
Management by exception is not a solution to all management sample size, significance etc.
problems; it has its limitations as well.
Examine the potential effect of changes expected as per forecast. Then
Some of them are: the projections are modified by the forecasts to decide the ‘goals’. At
this stage complete planning is thoroughly looked at from the angle of
existing policies and procedures, organisation structure, adequacy and
1. It requires a comprehensive observing and reporting capability of the existing staff and equipment. If need arises necessary
system. changes are made.

2. It increases paper work. III Phase: Selection Phase:

3. The system is silent till the problem becomes critical. In this phase, those vital and economical available measures are
selected, which will best indicate the progress towards its objectives.
4. Some important factors, like human behaviour, are difficult Thus the criteria are selected, which the management would like to
to measure. use to follow the progress or performance towards predicted
objectives.
System of Management by Exception:
IV Phase: Observation Phase:
I Phase: Measurement Phase:
In this phase, current status of performance is periodically observed
In this phase, facts of operational situation are collected and assessed, and measured. The system should be reliable, automatic and adequate.
i.e., use of performance of its whole range inputs such as efforts Adequate means of observations should neither be too less nor too
contributing to the goals of the organisation; its productivity, money more, and only necessary information at desired frequency is
flow, effectiveness of financial resources being used to produce obtained.
goods, services and profits; availability and wastage of material and
its economy from its purchase through processing and storing to V Phase: Comparison Phase:
delivery for finished products utilisation, capability and productivity
of the machines. In this phase, comparison is made between the actual and expected
performance and progress in order to identify the exception, analyse
The information about all these factors are utilised by way of causes and report the need for action to the appropriate authority about
quantitative measurements like using time standards, balance sheet the exceptions that required priority of attention.
data, inventory data, inspection results of finished products, inventory
accumulation for sales, current assets, equipment utilisation data. VI Phase: Action Phase:

II Phase: Projection Phase: This is the phase, where decisions are taken and implemented with a
view to bring the performance to the desired level or adjust in
In this phase, analysis of those measurements which are meaningful to anticipations to reflect changing conditions or take full advantage of
the objectives of the organisation for future outlook or expectations is better performance or opportunity.
57
Thus the Management by Exception compromise as systematic Those initial findings inspired a series of wide-ranging studies
approach of handling the management problems and free the manager between 1924 and 1933. They included the effects on productivity of
from the demands of routine work, which enables him to devote more work breaks, isolation, and lighting, among many other factors.
time for creative efforts directed towards “improving the overall
efficiency of the organisation”. This also provides necessary The best known of the results is called the Hawthorne Effect, which
information readily available, for taking timely and qualitative describes the way test subjects’ behavior may change when they know
decisions, which would require lot of time. they are being observed. Researchers are taught to consider whether
and to what degree the Hawthorne Effect is skewing their findings on
UNIT - 3 human behavior.

Organizational behavior was not fully recognized by the American

Introduction to OB: The meaning of Psychological Association as a field of academic study until the
1970s. However, the Hawthorne research is credited for validating
OB organizational behavior as a legitimate field of study, and it’s the
foundation of the human resources profession as we now know it.
Organizational behavior (OB) is the academic study of the ways
people act within groups. Its principles are applied primarily in Goals of Organizational Behavior Study
attempts to make businesses operate more effectively.
The leaders of the Hawthorne study had a couple of radical notions.
The study of organizational behavior includes areas of research They thought they could use the techniques of scientific observation
dedicated to improving job performance, increasing job satisfaction, to increase an employee’s amount and quality of work. And, they did
promoting innovation, and encouraging leadership. Each has its own not look at workers as interchangeable resources. Workers, they
recommended actions, such as reorganizing groups, modifying thought, were unique in terms of their psychology and potential fit
compensation structures, or changing methods of performance within a company.
evaluation.
Over the following years, the concept of organizational behavior
The study of organizational behavior has its roots in the late 1920s, widened. Beginning with World War II, researchers began focusing
when the Western Electric Company launched a now-famous series of on logistics and management science. Studies by the Carnegie School
studies of the behavior of workers at its Hawthorne Works plant in of Home Economics in the 1950s and 1960s solidified these rationalist
Cicero, Illinois. approaches to decision-making.

Researchers there set out to determine whether workers could be made Today, those and other studies have evolved into modern theories of
to be more productive if their environment was upgraded with better business structure and decision-making.
lighting and other design improvements. To their surprise, the
researchers found that the environment was less important than social The new frontiers of organizational behavior are the cultural
factors. It was more important, for example, that people got along components of organizations, such as how race, class, and gender
with their co-workers and felt their bosses appreciated them. roles affect group building and productivity. These studies take into
account the ways in which identity and background inform decision-
making.

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Important Points Organizational Behavior studies the power and organizational politics.
If you don’t understand these topics, you will struggle as an employee,
 Organizational behavior is the study of how people behave within especially in large organizations.
groups.
 Early studies determined the importance of group dynamics in Stanford professor Jeff Pfeffer has summarized the status of the
business productivity. Organizational Behavior approach to real-world management as a
 The study of organizational behavior is a foundation of corporate “one-eighth” situation, and “the knowing doing gap”.
human resources.
OB applies the knowledge gained from individuals, groups, and the
effect of structure on behavior in order to make organizations work
more effectively.

It is concerned with the study of what people do in an organization

and how that behavior affects the performance of the organization.

There is increasing agreement as to the components of OB.

But there is still considerable debate as to the relative importance of

each: motivation, leader behavior and power, interpersonal
communication, group structure and processes, learning, attitude
development and perception, change processes, conflict, work design,
Why Study Organizational and work stress.

Behaviour OB draws heavily from behavioral and social sciences, most

importantly from psychology. It studies the interrelation between an
The reason Organizational Behavior studies are uniquely useful for individual and an organization by the following ways:
succeeding as a leader of a large business (or other organization).
1. OB helps to learn about thyself and how to deal with others
OB teaches you what makes people make decisions, why employees 2. Organizational Behavior is a way of thinking.
are not motivated to do what you want them to do and why people are 3. Organizational Behavior is multidisciplinary and it helps us
productive or not productive. multiple ways.
4. There is a distinctly humanistic orientation with OB.
Making good decisions and creating an environment where people can 5. The field of organizational behavior is performance oriented.
be creative and motivated, are very important for a Successful 6. Organizational Behavior satisfies the need to understand and
business. predict.
7. It helps us to test personal theories.
So studying and understanding Organizational Behavior is one of the 8. OB helps the managers to understand the basis of motivation
truly important ingredients of business success. and what he should do to motivate his subordinates.
9. OB helps to maintain cordial industrial relations which help to
increase the overall productivity of the industry.
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 10. The subject of organizational behavior is useful in the field of Individual Behavior Framework
marketing.
11. This helps greatly in improving bur inter-personal relations in On the basis of these elements, psychologist Kurt Lewin stated the
the organizations. Friendly and cordial relations between Field theory and outlined the behavior framework. This psychological
employees and management and also among the employees theory studies the patterns of interaction between an individual and
create a congenial work environment in organizations. the environment. The theory is expressed using the formula.
12. It helps managers apply appropriate motivational techniques in
accordance with the nature of individual employees who B = F(P,E)
exhibit a glaring difference in many respects.
13. One of the basic characteristics of OB is that it is human in Where, B: Behavior, F: Behavior Function, P: Person, and E:
nature. So to say, OB tackles human problems humanely. It Environment around the person.
helps understand the cause of the problem, predicts is the
future course of action and controls its evil consequences. Say for example, a well payed person who loses his job in recession
14. Another popular reason for studying OB is to learn how to may behave differently when unemployed.
predict human behavior ‘ and, then, apply it in some useful
way to make the organization more effective. Causes of Individual Behavior
15. OB implies that effective utilization of people working in the
organization guarantees the success of the organization. Certain individual characteristics are responsible for the way a person
16. The most popular reason for studying organizational behavior behaves in daily life situations as well as reacts to any emergency
is that the reader is interested in pursuing a career in situations. These characteristics are categorized as −
management and wants to learn how to predict behavior and
apply in some meaningful way to make organizations more
effective. 1. Inherited characteristics

OB has a great impact on individuals and also in organizations which 2. Learned characteristics
cannot be ignored. In order to run the businesses effectively and
efficiently, the study of organizational behavior is very essential.
1. Inherited Characteristics

Fundamentals of Individual The features individuals acquire from their parents or from our
Behaviour forefathers are the inherited characteristics. In other words, the gifted
features an individual possesses by birth is considered as inherited
characteristics.
Individual behavior can be defined as a mix of responses to external
and internal stimuli. It is the way a person reacts in different situations Following features are considered as inherited characteristics −
and the way someone expresses different emotions like anger,
happiness, love, etc.  Color of a person’s eye
 Religion/Race of a person
 Shape of the nose
 Shape of earlobes
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 2. Learned Characteristics
embraces the total “organized aggregate of psychological processes
and status pertaining to the individual.”

Nobody learns everything by birth. First our school is our home, then According to Anderson and Parker, “Personality is the totality of
our society followed by our educational institutions. The habits, attitudes, and traits that result from socialization and
characteristics an individual acquires by observing, practicing and characterizes us in our relationships with others.” According to N.L.
learning from others and the surroundings is known as learned Munn, “Personality may be defined as the most characteristic
characteristics. integration of an individual’s structure modes of behaviour, interests,
attitudes, capacities, abilities and aptitudes.” According to Morton
It consists of the following features: Prince, “Personality is the sum total of all the biological innate
dispositions, impulses tendencies and instincts of the individual, and
 Perception: Result of different senses like feeling, hearing etc. the acquired disposition and tendencies acquired by experience.”
 Values: Influences perception of a situation, decision making According to Young, “Personality is the totality of behaviour of an
process. individual with a given tendency system interacting with a sequence
 Personality: Patterns of thinking, feeling, understanding and of situations.”
behaving.
 Attitude: Positive or negative attitude like expressing one’s Lawrence A. Pewin has given a working definition of personality in
thought. these words, “Personality represents those structural and dynamic
properties of an individual or individuals as they reflect themselves in
Determinants of Personality characteristic responses to situations.”

Personality Determinants
The term ‘personality’ is derived from the Latin word ‘persona’
which means a mask. According to K. Young, “Personality is a Personality is not determined by a single factor, but by an
patterned body of habits, traits, attitudes and ideas of an individual, as accumulation of many factors. Some of those factors are
these are organised externally into roles and statuses, and as they psychological, while others are physical, biological, and hereditary. I
relate internally to motivation, goals, and various aspects of selfhood.” have compiled some of the most influential factors when it comes to
G. W. Allport defined it as “a person’s pattern of habits, attitudes, and determinants of personality.
traits which determine his adjustment to his environment.”
(a) Heredity
According to Robert E. Park and Earnest W. Burgess, personality is
“the sum and organization of those traits which determine the role of Heredity refers to those factors that were determined at conception.
the individual in the group.” Herbert A. Bloch defined it as “the
characteristic organization of the individual’s habits, attitudes, values, Physical stature, facial attractiveness, sex, temperament, muscle
emotional characteristic which imparts consistency to the behaviour of composition and reflexes, energy level, and biological rhythms are
the individual.” According to Arnold W. Green, “personality is the characteristics that are considered to be inherent from one’s parents.
sum of a person’s values (the objects of his striving, such as ideas, The heredity approach argues that the ultimate explanation of an
prestige, power and sex) plus his non- physical traits (his habitual individual’s personality is the molecular structure of the genes,
ways of acting and reacting).” According to Linton, personality located in the chromosomes.

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Research on animals has showed that both physical and psychological A vital ingredient of the personality, an individual’s external
characteristics can be transmitted through heredity. But research on appearance, is biologically determined. The fact that a person is tall or
human beings is in adequate to support this view point. However, short, fat or skinny, black or white will influence the person’s effect
psychologists and geneticists have accepted the fact that heredity on others and this in turn, will affect the self-concept. Practically all
plays an important role in one’s personality. would agree that physical characteristics have at least some influence
on the personality. According to Paul H Mussen “a child’s physical
(b) Brain characteristics may be related to his approach to the social
environment, to the expectancies of others, and to their reactions to
The second biological approach is to concentrate on the role that the him. These, inturn, may have impacts on personality development”.
brain plays in personality. Though researchers make some promising
inroads, the psychologists are unable to prove empirically the Personality Traits
contribution of human brain in influencing personality. The most
recent and exciting possibilities come from the work done with These are characteristics that determine an individual’s behavior. The
electrical stimulation of the brain (ESB) and split-brain psychology. traits are grouped into 16 sets called as primary traits. The primary
traits are as follows:
Preliminary results from the electrical stimulation of the brain (ESB)
research give indication that better understanding of human
personality and behaviour might come from the study of the brain. 1. Reserved vs. Outgoing.
Work with ESB on human subjects is just beginning.
2. Less intelligent vs. More intelligent.
There seem to be definite pleasurable and painful areas in the human
brain. This being true, it may be possible physically to manipulate 3. Affected by feelings vs. emotionally stable.
personality through ESB.
4. Submissive vs. Dominant.
(c) Biofeedback
5. Serious vs. happy go lucky.
Until recently, physiologists and psychologists felt that certain
biological functions such as brainwave patterns, gastric secretions, 6. Expedient vs. consdentious.
and fluctuations in blood pressure and skin temperature were beyond
conscious control. Now some scientists believe that these involuntary 7. Timid vs. venturesome.
functions can be consciously controlled through biofeedback. In BFT
the individual learns the internal rhythm of a particular body process 8. Tough minded vs. sensitive.
through electronic signals feedback from equipment that is wired to
the body area. From this biofeedback the person can learn to control 9. Trusting vs. suspicious.
the body processing question. More research is needed on biofeedback
before any definitive conclusions can be drawn. But its potential 10. Practical vs. imagination.
impact could be extremely interesting for the future.
11. Forthright vs. strand.
(d) Physical features
12. Self assured vs. apprehensive.

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13. Conservative vs. experimenting.
ENFJs are people-focused individuals. They are extroverted,
idealistic, charismatic, outspoken, highly principled and ethical,

14. Group-dependent vs. self-sufficient.

and usually know how to connect with others no matter their
background or personality. Mainly relying on intuition and

15. Uncontrolled vs. controlled.

feelings, they tend to live in their imagination rather than in the
real world. Instead of focusing on living in the “now” and what is

16. Relaxed vs. tense.

currently happening, ENFJs tend to concentrate on the abstract
and what could possibly happen in the future.

17. Types of Personality 5. The Craftsman – ISTP Personality

1. The Inspector – ISTJ Personality
At first glance, ISTJs are intimidating. They appear serious, ISTPs are mysterious people who are usually very rational and
formal, and proper. They also love traditions and old-school logical, but also quite spontaneous and enthusiastic. Their
values that uphold patience, hard work, honor, and social and personality traits are less easily recognizable than those of other
cultural responsibility. They are reserved, calm, quiet, and types, and even people who know them well can’t always
upright. These traits result from the combination of I, S, T, and anticipate their reactions. Deep down, ISTPs are spontaneous,
J, a personality type that is often misunderstood. unpredictable individuals, but they hide those traits from the
outside world, often very successfully.
2. The Counselor – INFJ Personality
6. The Provider – ESFJ Personality
INFJs are visionaries and idealists who ooze creative imagination
and brilliant ideas. They have a different, and usually more ESFJs are the stereotypical extroverts. They are social butterflies,
profound, way of looking at the world. They have a substance and and their need to interact with others and make people happy
depth in the way they think, never taking anything at surface level usually ends up making them popular. The ESFJ usually tends to
or accepting things the way they are. Others may sometimes be the cheerleader or sports hero in high school and college. Later
perceive them as weird or amusing because of their different on in life, they continue to revel in the spotlight, and are primarily
outlook on life. focused on organizing social events for their families, friends and
communities. ESFJ is a common personality type and one that is
3. The Mastermind – INTJ Personality liked by many people.

INTJs, as introverts, are quiet, reserved, and comfortable being 7. The Idealist – INFP Personality
alone. They are usually self-sufficient and would rather work
alone than in a group. Socializing drains an introvert’s energy, INFPs, like most introverts, are quiet and reserved. They prefer
causing them to need to recharge. INTJs are interested in ideas and not to talk about themselves, especially in the first encounter with
theories. When observing the world they are always questioning a new person. They like spending time alone in quiet places where
why things happen the way they do. They excel at developing they can make sense of what is happening around them. They love
plans and strategies, and don’t like uncertainty. analyzing signs and symbols, and consider them to be metaphors
that have deeper meanings related to life. They are lost in their
4. The Giver – ENFJ Personality imagination and daydreams, always drowned in the depth of their
thoughts, fantasies, and ideas.
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8. The Performer – ESFP Personality ESTJs for guidance and counsel, and ESTJs are always happy that
they are approached for help.
ESFPs have an Extraverted, Observant, Feeling and Perceiving
personality, and are commonly seen as Entertainers. Born to be in 12. The Commander – ENTJ Personality
front of others and to capture the stage, ESFPs love the spotlight.
ESFPs are thoughtful explorers who love learning and sharing An ENTJ’s primary mode of living focuses on external aspects
what they learn with others. ESFPs are “people people” with and all things are dealt with rationally and logically. Their
strong interpersonal skills. They are lively and fun, and enjoy secondary mode of operation is internal, where intuition and
being the center of attention. They are warm, generous, and reasoning take effect. ENTJs are natural born leaders among the
friendly, sympathetic and concerned for other people’s well-being. 16 personality types and like being in charge. They live in a world
of possibilities and they often see challenges and obstacles as great
9. The Champion – ENFP Personality opportunities to push themselves. They seem to have a natural gift
for leadership, making decisions, and considering options and
ENFPs have an Extraverted, Intuitive, Feeling and Perceiving ideas quickly yet carefully. They are “take charge” people who do
personality. This personality type is highly individualistic and not like to sit still.
Champions strive toward creating their own methods, looks,
actions, habits, and ideas — they do not like cookie cutter people 13. The Thinker – INTP Personality
and hate when they are forced to live inside a box. They like to be
around other people and have a strong intuitive nature when it INTPs are well known for their brilliant theories and unrelenting
comes to themselves and others. They operate from their feelings logic, which makes sense since they are arguably the most logical
most of the time, and they are highly perceptive and thoughtful. minded of all the personality types. They love patterns, have a
keen eye for picking up on discrepancies, and a good ability to
10. The Doer – ESTP Personality read people, making it a bad idea to lie to an INTP. People of this
personality type aren’t interested in practical, day-to-day activities
ESTPs have an Extraverted, Sensing, Thinking, and Perceptive and maintenance, but when they find an environment where their
personality. ESTPs are governed by the need for social interaction, creative genius and potential can be expressed, there is no limit to
feelings and emotions, logical processes and reasoning, along with the time and energy INTPs will expend in developing an insightful
a need for freedom. Theory and abstracts don’t keep ESTP’s and unbiased solution.
interested for long. ESTPs leap before they look, fixing their
mistakes as they go, rather than sitting idle or preparing 14. The Nurturer – ISFJ Personality
contingency plans.
ISFJs are philanthropists and they are always ready to give back
11. The Supervisor – ESTJ Personality and return generosity with even more generosity. The people and
things they believe in will be upheld and supported with
ESTJs are organized, honest, dedicated, dignified, traditional, and enthusiasm and unselfishness. ISFJs are warm and kind-hearted.
are great believers of doing what they believe is right and socially They value harmony and cooperation, and are likely to be very
acceptable. Though the paths towards “good” and “right” are sensitive to other people’s feelings. People value the ISFJ for their
difficult, they are glad to take their place as the leaders of the consideration and awareness, and their ability to bring out the best
pack. They are the epitome of good citizenry. People look to in others.

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 15. The Visionary – ENTP Personality Our personal effectiveness depends on our innate characteristics –
talent and experience accumulated in the process of our personal
Those with the ENTP personality are some of the rarest in the development.
world, which is completely understandable. Although they are
extroverts, they don’t enjoy small talk and may not thrive in many Talents first are needed to be identified and then developed to be used
social situations, especially those that involve people who are too in a particular subject area (science, literature, sports, politics, etc.).
different from the ENTP. ENTPs are intelligent and
knowledgeable need to be constantly mentally stimulated. They Experience includes knowledge and skills that we acquire in the
have the ability to discuss theories and facts in extensive detail. process of cognitive and practical activities. Knowledge is required
They are logical, rational, and objective in their approach to for setting goals, defining an action plan to achieve them and risk
information and arguments. assessment. Skills also determine whether real actions are performed
in accordance with the plan. If the same ability is used many times in
16. The Composer – ISFP Personality the same situation, then it becomes a habit that runs automatically,
subconsciously.
ISFPs are introverts that do not seem like introverts. It is because
even if they have difficulties connecting to other people at first, Here are some skills that will greatly increase the efficiency of any
they become warm, approachable, and friendly eventually. They person who owns them:
are fun to be with and very spontaneous, which makes them the
perfect friend to tag along in whatever activity, regardless if 1. Determination
planned or unplanned. ISFPs want to live their life to the fullest
and embrace the present, so they make sure they are always out to It allows you to focus only on achieving a specific goal without being
explore new things and discover new experiences. It is in distracted by less important things or spontaneous desires. It may be
experience that they find wisdom, so they do see more value in developed with the help of self-discipline exercise.
meeting new people than other introverts.
2. Self-confidence

Personal Effectiveness It appears in the process of personal development, as a result of

getting aware of yourself, your actions and their consequences. Self-
Personal effectiveness is a branch of the self-help movement dealing confidence is manifested in speech, appearance, dressing, gait, and
with success, goals, and related concepts. Personal effectiveness physical condition. To develop it, you need to learn yourself and your
integrates some ideas from “the power of positive thinking” and capabilities, gain a positive attitude and believe that by performing
positive psychology but in general it is distinct from the New Thought right actions and achieving right goals you will certainly reach
Movement. A primary differentiating factor is that Personal success. Check out these practical tips on how to increase self-
Effectiveness proponents generally take a more systematic approach confidence.
including a number of factors beside simple positive thinking. Some
proponents take an approach with similarities to business process 3. Persistence
management techniques. Others may take a holistic spiritual and
physical wellness approach. It makes you keep moving forward regardless of emerging obstacles –
problems, laziness, bad emotional state, etc. It reduces the costs of

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overcoming obstacles. It can also be developed with the help of self- According to Gordon Allport, “An attitude is a mental and neural state
discipline exercise. of readiness, organized through experience, exerting a directive or
dynamic influence upon the individual’s response to all objects and
4. Managing Stress situations with which it is related.”

It helps combat stress that arises in daily life from the environment According to Si P. Robbins – “Attitude is manner, disposition, feeling
and other people. Stress arises from the uncertainty in an unknown and position with regard to a person or thing, tendency or orientation
situation when a lack of information creates the risk of negative especially in the mind.”
consequences of your actions. It increases efficiency in the actively
changing environment. It requires problem-solving skills. Frank Freeman said, “An attitude is a dispositional readiness to
respond to certain institutions, persons or objects in a consistent
5. Problem-solving skills manner which has been learned and has become one’s typical mode of
response.”
They help cope with the problems encountered with a lack of
experience. It increases efficiency by adopting new ways of achieving Thurstone said, “An attitude denotes the sum total of man’s
goals when obtaining a new experience. inclinations and feelings, prejudice or bias, pre-conCeived notions,
ideas, fears, threats and other any specific topic.”
6. Creativity
Anastasi defined attitude as, “A tendency to react favorably or
It allows you to find extraordinary ways to carry out a specific action unfavorably towards a designated class of stimuli, such as a national
that no one has tried to use. It can lead to a decrease or an increase of or racial group, a custom or an institution.”
costs, but usually, the speed of action is greatly increased when using
creative tools. It requires the ability to generate ideas. According to N.L. Munn, “Attitudes are learned predispositions
towards aspects of our environment. They may be positively or
7. Generating ideas negatively directed towards certain people, service or institution.”

It helps you achieve goals using new, original, unconventional ideas. Types of Attitude
The idea is a mental image of an object formed by the human mind,
which can be changed before being implemented in the real world.
For generating ideas you can use a method of mental maps, which 1. Positive Attitude
allows you to materialize, visualize and scrutinize all your ideas,
which in turn contributes to the emergence of new ideas. This is one type of attitude in organizational behaviour. One needs to
understand how much a positive attitude it takes to keep the work
These are just some, but the most important personal effectiveness moving and progressing. It means that keeping a positive mindset and
skills which make the achievement of any goal easier and less costly. thinking about the greater good, no matter whatever the circumstances
are. A positive attitude has many benefits which affect out other kinds

Attitudes Meaning and Types of behaviour in a good way. For example, a person who has a positive
attitude and mindset will look for the good in other person’s no matter
how bad they behave or how bad is their attitude. The former person

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thinks about the greater good and that is why he is called a person
with a positive attitude. 2. Negative Attitude

These persons generally don’t care about the hurdles in life. They A negative attitude is something that every person should avoid.
nurture their skills daily and overcome almost anything and Generally, people will negative attitude ignore the good things in life
everything that comes in their way. The best way to maintain a and only think about whether they will fail. They often find a way out
positive attitude for the beginners is to avoid naysayers and believe in of tough situations by running away from it. They often compare
themselves. These persons know about their earlier mistakes and themselves with other persons and find the bad in them only. In short,
instead of being ashamed of them, they have vowed not to repeat the he is exactly the opposite of the one with a positive mindset. There are
same thing. If you have a positive attitude, then you should have some certain bad effects that a person with a negative mindset has to face.
list of attitudes.
(a) Anger: A person with a negative mindset is often found to be
let’s follow them: angry most of the time. Sometimes there might not be any kind of
specific reason behind their anger. Anger is the root cause of self-
(a) Confidence: Confidence is good attitude and one of the basic destruction. While some amount of anger is good, extreme cases of
things in the list of positive attitudes. Generally, people with a plus or anger only lead to destruction.
positive mindset are rewarded with this automatically. Confidence is
necessary to approach life with zest. Looking at things confidently and (b) Doubt: A person can question himself but he or she should never
saying “I’m up for this’, is enough to reflect your attitude towards life doubt themselves. Unfortunately, if you have a negative mindset, then
in general and attitude in particular. Confidence in other elements in you will often doubt yourself. Self-doubt will lead to no progress and
the world will start with being confident with self. will often lead to low confidence.

(b) Happiness: Happiness is the next type of attitude in the list of (c) Frustration: A negative person is a frustrated person. As said
positive attitudes and behaviours. A happy mind is an abode for all the earlier, attitude defines the person and that is why if you are frustrated
good things to self. Confident people are quite happy as they are not that will show on your face and you will be facing some serious
worried about results, interviews, etc and other similar things in life difficulties. Frustration will not help you build your career. It is an
that are meant to test us. Look within yourself; you will find irritant and will keep preventing you from taking any positive step
happiness. forward.

(c) Sincerity: An individual with a positive mindset is often found to

be quite sincere. He or she is aware of the work to be done, and they 3. Neutral Attitude
know that the only way out of a situation is through it. Sincerity is one
trait that you should never let go off or compromise. This is another type of attitude that is common. That mindset is a
neutral one. There is no doubt. Neither is there any kind of hope. The
(d) Determination: A determination is one of the primary rewarding people generally tend to ignore the problems in life. They wait for
points for a person with a positive attitude. A right dose of hard work, some other individual to take care of their problems. They generally
effort and determination are essential to get things the way you want. have a lazy life and they are often unemotional. It is as if they don’t
A person who is driven and properly determined will overcome all think about anything that much and doesn’t care for the same as well.
impossibilities. They never feel the need to change themselves as they can simply live
with the way they are.
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He or she will feel disconnected quite often and that is why having a objects, or events. Such evaluations are often positive or negative, but
neutral attitude is very bad and should be fixed as soon as possible. they can also be uncertain at times.
However, a person with neutral attitude if changes can only go to the
path of a positive attitude. In most cases, it has been seen that the 3 components of attitude are:
attitude adjustment metal therapies have led persons to a road filled
with positive feelings only.  Cognitive Component.
 Affective Component.

4. Sikken Attitude
 Behavioral Component.

One of the most dangerous types of attitude and different is the sikken 1. Cognitive Component
attitude. The sikken attitude has the calibre to destroy every image
that comes in connection with a positive image. This type of attitude is The cognitive component of attitudes refers to the beliefs, thoughts,
more of a negative attitude and is very destructive. It often reflects the and attributes that we would associate with an object. It is the opinion
mind’s negativity. It is necessary to let go off this kind of attitude for or belief segment of an attitude. It refers that part of attitude which is
the betterment of the self and the people around you. They are often related in general knowledge of a person.
difficult to be mended because the attitude is deep-rooted within one’s
personality. However, with time, it nevertheless is possible to change Typically these come to light in generalities or stereotypes, such as
the course of direction of this attitude. ‘all babies are cute’, ‘smoking is harmful to health’ etc.

Attitude will either define you or destroy you. What generally follows
is, your attitude will be an inspiration for many in your team. 2. Affective Component
Therefore, companies look for people with a positive attitude. People
in general seem to stick around the positive vibration, as that will Affective component is the emotional or feeling segment of an
motivate them enough to progress in life. Bad or good, attitude has the attitude.
power to change people’s thoughts and therefore, their behaviour. Be
an example of a good one! It is related to the statement which affects another person.

Components of Attitude It deals with feelings or emotions that are brought to the surface about
something, such as fear or hate. Using the above example, someone
might have the attitude that they love all babies because they are cute
Attitudes are simply expressions of much we like or dislike various or that they hate smoking because it is harmful to health.
things. Attitudes represent our evaluations, preferences or rejections
based on the information we receive.
3. Behavioral Component
It is a generalized tendency to think or act in a certain way in respect
of some object or situation, often accompanied by feeling. It is a Behavior component of an attitude consists of a person’s tendencies to
learned predisposition to respond in a consistent manner with respect behave’in a particular way toward an object. It refers to that part of
to a given object.This can include evaluations of people, issues, attitude which reflects the intention of a person in short run or long
run.
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Using the above example, the behavioral attitude maybe- ‘I cannot The cognitive consistency theories are concerned with inconsistencies
wait to kiss the baby’, or ‘we better keep those smokers out of the that arise between related beliefs, bits of knowledge and evaluation
library, etc. about an object or an issue. Though various consistency theories differ
in several respects, all of them have a common object that is reducing
Attitude is composed of three components, which include a cognitive the inconsistency and returning the individual to the equilibrium state.
component, effective or emotional component, and behavioral
component. Basically, the cognitive component is based on the
information or knowledge, whereas the affective component is based 2. Functional Theory
on the feelings.
The functional theory considers how attitudes and efforts are related
The behavioral component reflects how the attitude affects the way to the motivational structure of the individual.
we act or behave. It is helpful in understanding their complexity and
the potential relationship between attitudes and behavior. This theory focuses on two things:

But for clarity’s sake, keep in mind that the term attitude essentially (i) The meaning of the influence situation in terms of both the kinds of
refers to the affected part of the three components. motives that it arouses and

In an organization, attitudes are important for their goal or objective to (ii) The individual’s method of coping and achieving his goals.
succeed. Each one of these components is very different from the
other, and they can build upon one another to form our attitudes and, An understanding of the functions served by attitudes is important for
therefore, affect how we relate to the world. attitude change procedures since a particular method may produce
change in individuals whose attitudes serve one particular function,

Theory of Attitude Formation but may produce no change in individuals for whom the attitudes
serve a different function.

and Attitude Change The most prominent person who visualized functional theory is Katz
and he suggested four functions of attitudes. However, Katz functional
THEORY OF ATTITUDE FORMATION theory has not stimulated much research except for the work on
changing ego defensive attitudes.

1. Cognitive Consistency Theories Kelman has given another approach about the functional approach of
attitudes.
Research has generally concluded that people seek consistency among
their attitudes and between their attitudes and their behaviour. This He has distinguished three processes of attitude formation and change:
means that people seek to reconcile divergent attitudes and align their
attitudes and behaviour so that they appear rational and consistent. (i) Compliance
When there is an inconsistency, forces are initiated to return the
individual to an equilibrium state where attitudes and behaviour are (ii) Identification and
again consistent. This can be done by either altering the attitude or the
behaviour or by developing a rationalization for the discrepancy. (iii) Internalisation.
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This theory is directed towards the types of social relationships that ATTITUDE CHANGE
occur in social influence situations.
Attitudes are associated beliefs and behaviors towards some object.
Compliance occurs when an attitude is formed or changed in order to They are not stable, and because of the communication and behavior
gain a favourable impression from other person or group. of other people, are subject to change by social influences, as well as
by the individual’s motivation to maintain cognitive consistency when
Identification occurs when a person forms or changes his attitude cognitive dissonance occurs—when two attitudes or attitude and
because this adoption helps him establish or maintain a positive self behavior conflict. Attitudes and attitude objects are functions of
defining relationship with the influencing agent. affective and cognitive components. It has been suggested that the
inter-structural composition of an associative network can be altered
Internalization involves adopting an attitude because it is congruent by the activation of a single node. Thus, by activating an affective or
with one’s overall value systems. emotional node, attitude change may be possible, though affective and
cognitive components tend to be intertwined.
This approach makes an important contribution towards an
understanding of the conditions that influence the maintenance and These three processes represent the different levels of attitude
stability of attitude change. change:-

3. Social Judgment Theory 1. Compliance

The social judgment theory was originally formulated by Sherif and Compliance refers to a change in behavior based on consequences,
Hoveland. This theory attempts to explain how existing attitudes such as an individual’s hopes to gain rewards or avoid punishment
produce distortions of attitude related objects and how these from another group or person. The individual does not necessarily
judgments mediate attitude change. Thus, a person’s initial attitude experience changes in beliefs or evaluations of an attitude object, but
towards an issue, serves as an anchor for the judgment of attitude rather is influenced by the social outcomes of adopting a change in
related stimuli. The person’s initial attitude on an issue provides a behavior. The individual is also often aware that he or she is being
point of reference against which he evaluates other opinions. urged to respond in a certain way.

These views can be considered in terms of attitudinal continuum and Compliance was demonstrated through a series of laboratory
can be considered as comprised of latitudes. The latitude of experiments known as the Asch experiments. Experiments led by
acceptance, which is the range of opinions the individual finds Solomon Asch of Swarthmore College asked groups of students to
acceptable, encompasses the opinion that best characterises his own participate in a “vision test”. In reality, all but one of the participants
stand. The attitude of rejection, which is the range of opinions the were confederates of the experimenter, and the study was really about
individual finds objectionable, encompasses the opinion he finds most how the remaining student would react to the confederates’ behavior.
objectionable. The attitude of non-commitment is the range of Participants were asked to pick, out of three line options, the line that
opinions that the person finds neither acceptable nor unacceptable. is the same length as a sample and were asked to give the answer out
loud. Unbeknown to the participants, Asch had placed a number of
confederates to deliberately give the wrong answer before the
participant. The results showed that 75% of responses were in line
with majority influence and were the same answers the confederates
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picked. Variations in the experiments showed that compliance rates employee’s job influences the degree to which that employee will be
increased as the number of confederates increased, and the plateau judged as an effective performer by the boss. To the extent that the
was reached with around 15 confederates. The likelihood of employee’s role perception fulfills the boss’s role expectations, the
compliance dropped with minority opposition, even if only one employees will receive a higher performance evaluation.
confederate gave the correct answer. The basis for compliance is
founded on the fundamental idea that people want to be accurate and Norms control group member behavior by establishing standards of
right. right and wrong. The norms of a given group can help to explain the
behaviors of its members for managers. When norms support high

2. Identification
output, managers can expect individual performance to be markedly
higher than when group norms aim to restrict output. Similarly, norms
that support antisocial behavior increase the likelihood that
Identification explains one’s change of beliefs and affect in order to be individuals will engage in deviant workplace activities.
similar to someone one admires or likes. In this case, the individual
adopts the new attitude, not due to the specific content of the attitude Status inequities create frustrations and can adversely influence
object, but because it is associated with the desired relationship. productivity and the willingness to remain with an organization.
Often, children’s attitudes on race, or their political party affiliations Among individuals who are equity-sensitive, incongruence is likely to
are adopted from their parents’ attitudes and beliefs. lead to reduced motivation and an increased search for ways to bring
about fairness (that is, taking another job). In addition, because lower

3. Internalization
status differences among members are likely to inhibit input from the
lower status members and to under perform their potential.

Internalization refers to the change in beliefs and affect when one The impact of size on a group’s performance depends on the type of
finds the content of the attitude to be intrinsically rewarding, and thus task in which the group is engaged. Larger groups are more effective
leads to actual change in beliefs or evaluations of an attitude object. to fact finding activities. Smaller groups are more effective at action
The new attitude or behavior is consistent with the individual’s value taking tasks. Our knowledge of social loafing suggests that if
system, and tends to be merged with the individual’s existing values management uses larger groups, efforts should be made to provide
and beliefs. Therefore, behaviors adopted through internalization are measures of individual performances within the group.
due to the content of the attitude object.
We found that cohesiveness can play an important function in
The expectancy-value theory is based on internalization of attitude influencing a group’s level of productivity. Whether or not it does
change. This model states that the behavior towards some object is a depends on the group’s performance related norms.
function of an individual’s intent, which is a function of one’s overall
attitude towards the action. Satisfaction: As with the role perception-performance relationship,
high congruence between a boss and employee as to the perception of

Foundation of Group Behaviour the employee’s job shows a significant association with high
employee satisfaction. Similarly, role conflict is associated with job
induced tension and job dissatisfaction.
There is a positive relationship between role perception and an
employee’s performance evaluation. The degree of congruence that Most people prefer to communicate with others at their own status
exists between an employee and the boss in the perception of the level or a higher one rather than with those below tem. As a result we
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should expect satisfaction to be greater among employees whose job my business partner can attest to the fact that we have definitely gone
minimizes interaction with individuals who are lower in status than through our storming phase (or a few of them!).  Bruce explains that
themselves. this phase can be a bit uncomfortable and/or unpleasant but it’s still
quite necessarily for the growth and development of the team. 
The group size satisfaction relationship is what one would intuitively Usually companies go through serious problems when they cannot
expect; larger groups are associated with lower satisfaction. As size leave this phase thus making the entire relationship very tense and
increases, opportunities for participation and social interaction difficult for everyone.
decrease, as does the ability of members to identify with the group’s
accomplishments. At the same time having more members also 3. Norming
prompts dissension, conflict, and the formation of subgroups, which
all act to make the group a less pleasant entity of which to be a part. This is the phase where the team really starts to function and work
together as a team.  Individuals start to understand each others work
Groups generally pass through standardized sequence in their habits and ethic and everything seems much more natural. 
evolution. We call this sequence five-stage model of group Responsibility and roles are much more clearly defined, expectations
development. Recent studies, however, indicate that temporary groups are set, and collaboration is in full swing.  Most people are familiar
with task-specific deadlines follow a very different pattern. In this with this and oftentimes we refer to this as being in the “zone.”
article, we describe the five-stage general model and an alternative
model for temporary groups with deadlines. 4. Performing

The five-stage group development model characterizes groups as According to Bruce not all teams will reach this phase but those that
proceeding through five distinct stages: too are the high-performing teams which have grown to become both
knowledgeable and efficient at what they do.  Supervision goes down
Forming, Storming, Norming, Performing and Adjouring. as individuals are now capable of making appropriate decisions.  This
is essentially where your team really starts shining and delivering
1. Forming superior results.

This is the initial stage of putting the team together where individuals 5. Adjourning and Transforming
learn about each other and the team requirements as well as the
challenges, expectations, and the organizational structure of the team.  These are two additional phases that Bruce later added to his team
This is also the information gathering and exploratory stage.  If you development.  Adjourning refers to the team breaking up after the task
have ever been put into a team or have been asked to form one then has been completed.  Transforming involves the team not breaking up
you are most definitely familiar with this phase and should be able to but instead moving onto other tasks and objectives (from what I
relate to it. understand).

2. Storming I found these stages of team development quite relevant.  As Bruce

mentions, these stages can be cyclical once changes occur, such as the
This is probably the more tumultuous phase during which the introduction of a new team member or the change of some other team
members of the team all have their own ideas and directions that they variable that can modify how the team works.  Some of you may be
want to go in.  Oftentimes team members debate, critique, and familiar with this model of group development but for those that
confront each other to decide on the best course of action.  I’m sure aren’t I highly recommend that you take these phases into
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consideration and explore them within your current organizations.  I
especially see these phases applicable towards Enterprise 2.0 5. Interaction: The interaction between the group members
initiatives where many companies are introducing new teams and can occur in several ways, i.e. face to face, telephonic, in writing or
strategies to help make the initiatives worthwhile. in any other manner.

6. Collective Identity: A group is an aggregation of individuals,

Group: Meaning and Types which are separately called as members, and collectively called as a
group.
A Group is basically an assemblage of people. It can be understood as
a collection of individuals (two or more), who come together and Types of Groups
interact with each other, so as to achieve the objectives of the
organization.

Characteristics of Groups

1. Size: To form a group, it must be having at least two

members. Practically, the number of group members ranges from 1. Formal Groups
15 to 20. The more the members in the group, the more complex it
is to manage. Groups that are formed consciously by the management, with an aim
2. Goals: Every group has certain goals, that are the reasons
of serving an organizational objective. These are further classified as:
for its existence. (i) Self-directed teams: The group of employees which are so
authorised to make decisions, on their own, as it is independent and
Norms: A group has certain rules, for interacting with the group self-governing in nature.
members.
(ii) Quality Circles: A number of employees classed together
3. Structure: It has a structure, based on the roles and
belonging to the same field, who meet every week for an hour, to talk
about their problems, identify the causes and find out solutions, to
positions held by the members.
take necessary steps in this regard.
4. Roles: Every member of a group has certain roles and
responsibilities, which are assigned, by the group leader.
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(iii) Committees: An association of people created by the Group dynamics is relevant to groups of all kinds – both formal and
management for different matters to identify and discuss the issues of informal. If the UPA government has set up Group of Ministers for
the company and arrive at a conclusion. It can be: every governance issue, the Supreme Court of India has 27 Group of
Judges committees overseeing all manner of non-judicial work in the
 Standing Committee apex court. In an organizational setting, the term groups are a very
 Advisory Committee common and the study of groups and group dynamics is an important
 Audit Committee area of study.
 Grievance Committee
 Adhoc Committee Group dynamics is a system of behaviors and psychological processes
occurring within a social group (intragroup dynamics), or between
(iv) Task force: It is a temporary committee, wherein people social groups (intergroup dynamics). The study of group dynamics
belonging to different fields are grouped together for the performance can be useful in understanding decision-making behaviour, tracking
of the task. the spread of diseases in society, creating effective therapy techniques,
and following the emergence and popularity of new ideas and
2. Informal Groups
technologies. Group dynamics are at the core of understanding racism,
sexism, and other forms of social prejudice and discrimination. These
applications of the field are studied in psychology, sociology,
The social and psychological variables operating at the workplace, anthropology, political science, epidemiology, education, social work,
results in the formation of informal groups. The creation of these business, and communication studies.
groups is spontaneous due to the common interest, social needs,
physical proximity and mutual attraction. There are many types of teams you could use in the workplace. The
type you choose depends very much on the nature of the results that
Apart from the two broad classifications of the group, they are also the team is to accomplish.
divided into the primary groups, secondary groups, membership
groups, reference groups and interest groups. 1. Formal and informal teams

Group Dynamics These are usually small groups of employees who come together to
address some specific goal or need. Management appoints formal
teams, that is, teams that are intentionally organized and resourced to
Group dynamics can be used as a means for problem-solving, team address a specific and important goal or need. Informal teams are
work, and to become more innovative and productive as an usually loosely organized groups of people who come together to
organization as whole. The concept will provide you with the address a non-critical, short-term purpose.
strengths, success factors and measures of group dynamics, along with
other professional tools. 2. Committees

Group dynamics deals with the attitudes and behavioral patterns of a Committees are organized to address, major ongoing functions or
group. Group dynamics concern how groups are formed, what is their tasks in an organization, and the membership of the committees often
structure and which processes are followed in their functioning. Thus, is based on the official position of each of the members, for example,
it is concerned with the interactions and forces operating between committees in Boards of Directors.
groups.

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 3. Problem-solving teams group norms. The greater the conformity, the greater the identity of
the members to the group and the greater the group cohesiveness.
These teams are formed to address a particular, major problem
currently faced by the organization. Often, their overall goal is to Consequences of Cohesiveness
provide a written report that includes recommendations for solving the
problem. Membership often is comprised of people who perceive Group cohesiveness has only positive consequences.
and/or experience the problem, as well as those who can do something
about it. These positive outcomes are explained in detail as follows:

4. Self-directed and self-managed teams

1. More Participation
These types of teams are increasingly used where a) team members
are working to address a complex challenge in a rapidly changing Higher the degree of group cohesiveness, closer will be the
environment, and b) the strong ownership and participation of interpersonal relationships among the members. As a result members
members are extremely important. These types provide great latitude will participate actively in group affairs and activities. As the
in how members achieve the overall results to be achieved by the members consider the group as their own, just like a family, they will
teams. The role of leader in a team might change during the team help other members of the group in times of need which will further
activities depending on where the team is in its stage of development strengthen their bonds. The turnover of members will be very low. If
(see below) and/or achieving is results. possible, all the members attend the group meetings and group
activities and take active part in discussions relating to preparing of
Group Cohesiveness strategies for achieving individual and group goals.

Group cohesiveness is one of the characteristic features of the 2. More Conformity

groups, which is very important from behaviouristic point of view.
Cohesiveness is the degree to which the group members are attracted One of the factors which influence cohesiveness is similarity of
to each other and are motivated to stay in the groups. Cohesiveness attitudes and values. As a result, members tend to like each other and
defines the degree of closeness that the members feel with the groups. perceive themselves as similar. These characteristics lead members to
It is understood as the extent of liking each member has towards be relatively dependent on the group for satisfaction and, thus, they
others in the group and how far everyone wants to remain as a are susceptible to being influenced. For example, if any member is
member of the group. getting involved in organisational politics for enhancing his personal
goals, the group might put social pressure on him and make him
“Cohesiveness refers to the extent of unity ‘in the group and is comply with the group norms.
reflected in members’ conformity to the norms of the group, feeling of
attraction for each other and wanting to be co-members of the group.”
Attraction, cohesiveness and conformity are all intertwined. The more 3. More Success
the members feel attracted to the group, the greater will be the group
cohesiveness. The greater the cohesiveness, the greater the influence Cohesiveness and success are mutually dependent upon each other.
of the group members to persuade one another to conform to the Cohesiveness makes the goal achievement easier and goal
achievement adds to success. The reason for this relationship is that
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higher degree of cohesiveness leads to high degree of communication, Managerial Actions for Increasing or Encouraging Cohesiveness
participation and conformity to group norms. Such coordinated efforts
result in agreement about the goals to be achieved, the methods of A manager can follow any one or more of the following suggestions
achieving them and finally achieving the final goals. to encourage cohesiveness:

4. More Communication 1. Make the group smaller

Members of cohesive groups communicate with each other more than 2. Encourage agreement with group goals
the members of non-cohesive groups. Because the members share
common ideologies, goals, backgrounds or attitudes, they are inclined 3. Increase the time members spend together
to greater communicativeness. Such communication is reinforcing as
it tends to foster and cement positive social relations as well as depth 4. Increase the status of the group and the perceived difficulty
in personal relationships. of getting membership of the group

5. Stimulate competition with other groups.

5. More Personal Satisfaction
6. Give rewards to the group rather than to members.
Members of cohesive groups are more satisfied as compared to
members of non-cohesive groups. Thus is understandable because if 7. Physically isolate the group
members are not satisfied they will leave the group and join some
other group. Members are more satisfied due to so many factors which 8. Increase membership homogeneity
include friendliness, respect, support, achievement, protection and a
feeling of security. 9. Increase interaction among members

6. High Productivity
Managerial Actions to Decrease or Discourage Cohesiveness

Sometimes high cohesiveness adversely affects the productivity. In

Cohesiveness may contribute to increased productivity because: such cases managers have to reduce the cohesiveness of the groups.

(i) People in cohesive groups experience fewer work related anxieties Following are some of the actions which can be taken by the
and tensions managers:

(ii) Highly cohesive groups tend to have lower absenteeism and

turnover and 1. Induce disagreement on group goals

(iii) Cohesiveness decreases productivity differences among groups. 2. Increase membership heterogeneity

3. Restrict interactions among members

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 4. Increase group size
would be in terms of reduction in the time lag, better quality work,
and excellence in working procedures. Even in an educational

5. Reduce the time members spend together

institution such behaviours have a chain reaction. If two people do not
get together and are forced together in a group assignment, it might

6. Allocate rewards to individuals rather than to group

just be completed half-heartedly by the two and not achieve desired
results. This will have two consequences. First, it will affect the other
member. group members and their grades. Second, it will foster hatred and

7. Remove physical isolation

mistrust within which will have long term effects on those two and
those surrounding them.

8. Disband the group Intrapersonal communication is a type of communication that a person

9. Introduce a dominating member

carries with him or herself. That does not mean talking loudly and
crazily in the literary context but figuratively it is a methodology of
communicating to oneself that is important in the psychological
Meaning of Interpersonal development of a person, for developing openness to his/ her ideas
and gaining access into the psychodynamic dimension of the
Behaviour & Interpersonal Skills personality. Its purpose is to think, reason, analyze and reflect the
thought procedure.
7-9 minutes The skills that are required for effective intrapersonal communication
are include enhancing self-esteem, along with increasing the extent of
Interpersonal behavior is the behavior and actions that are present in self-awareness (meaning knowing yourself well enough and being
human relationships. The way in which people communicate, and all sensitive to your attributes). It also requires improving problem-
that this entails, is considered interpersonal behavior. solving skills and analyzing abilities. Moreover the need for
increasing self-control and reducing the level of stress is a vital one.
Interpersonal behavior may include both verbal communication and Lastly the effective management of intrapersonal conflicts (quagmires
nonverbal cues, such as body language or facial expressions. Verbal in general) is important in the carriage of a smooth intrapersonal
interpersonal behavior consists of joking, relating to one another via communication.
the art of storytelling, and taking or following orders. Interpersonal
skills are highly desirable in many situations, specifically careers that Interpersonal behaviour is a topic that is widely studied by many
rely on personal relationships such as the health care industry or sales. academics. Basically, the term ‘interpersonal’ focuses on the bond
between two people, and the behaviour between these two individuals
Interpersonal Behaviour is basically how “two persons” interact in any will depend on the context of their relationship. For example, the way
setting. It is extremely important in organizations or even schools and that a boyfriend and a girlfriend behave with one another will be
other education institutions to strengthen interpersonal relationships. different to the communication between a mother and a daughter.
When at a basic level, that is, between two people the relationship is
strong and pleasant, it will lead to proper behaviour. This behaviour Of course, interpersonal behaviour isn’t just explored in the
will result in productive work which is ultimately what organizations environment of friends and family, as it is widely believed that a
are looking for. At the employee level if trust and passion for work strong partnership between an employer and their staff can result in
exists, the unity between them can achieve great results. These results higher levels of efficiency in the workplace. This is why character
77
building courses have become a key part of business, as it allows While many people believe interpersonal skills are, to some extent,
interpersonal behaviour to become stronger as co-workers trust one innate in each person or acquired at an early age, job seekers and
another further. those looking for promotions can take steps to improve their
interpersonal skills and make themselves more valuable to an
There are different theories that surround interpersonal behaviour, and organization.
it’s widely believed that the more people collaborate with each other,
the better they will be at appreciating each other’s skills. It doesn’t Steps for improving interpersonal skills include expressing
just benefit the results that companies can publish, but it improves appreciation for team members and support staff, practicing empathy,
levels of happiness in the workplace. Because people are working moderating disputes quickly to contain them, and planning rather than
with their friends and enjoying one another’s company, they are going saying or writing the first item that comes to mind. Active listening
to be chirpier and less likely to get involved with conflict that can can be practiced by repeating back to a speaker what they said to
damage overall productivity. make sure true communication is taking place. There are also classes
and training that teach these skills.
INTERPERSONAL SKILLS
Interpersonal Skills in the Workplace
Interpersonal skills are the qualities and behaviors a person uses to
interact with others properly. In the business domain, the term refers In this competitive marketplace, businesses seek to employ those who
to an employee’s ability to work well with others while performing not only have the proper experience and knowledge but have strong
their job. Interpersonal skills range from communication and listening interpersonal skills that fit well within a company’s culture. Strong
to attitude and deportment. Strong interpersonal skills are a interpersonal skills, such as negotiating, problem-solving and
prerequisite for many positions in an organization. knowledge-sharing, are the main job requirement, as employees must
be able to work well with others to achieve company objectives.
Interpersonal skills cannot be learned solely from a textbook. They Interpersonal skills may also include:
come naturally to some people, while other people have to work at
cultivating them. In many organizations, employees with strong  Teamwork
interpersonal skills are valued for their pleasant demeanor and  Verbal and written communication
positive, solution-oriented attitude. These employees are team players,  Dependability
who work well with others to achieve a goal.  Responsibility
 Empathy
Interpersonal skills relate to the knowledge of social expectations and
customs. Individuals with these skills consider others’ reactions to These interpersonal skills can lead to productivity and success and,
adjust tactics and communication as needed. Some describe therefore, contribute to your company’s growth.
interpersonal skills as social intelligence, which relies on paying
attention to the actions and speech of others and interpreting them Important Points
correctly as part of forming a response. While these skills are based,
in part, on an individual’s personality and instincts, they also develop  In the business domain, interpersonal skills refer to an employee’s
with experience and knowledge. ability to work well with others while performing their job.
 Among the interpersonal skills often required in business are active
Improving Interpersonal Skills listening and negotiation.

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  Job seekers and those looking for promotions can take steps to of his death in 1970,he had become a, in some ways, a critic of Freud.
improve their interpersonal skills and make themselves more Transactional Analysis though does have its roots in Psycho dynamic
valuable to an organization. theory.

Transactional Analysis Contractual Relationships

The transactional analysis approach cannot work unless there is a

Transactional analysis, a theory that combines elements of contractual relationship involving different parties. An organization
psychology into a therapeutic approach, can benefit a workplace. In an arranges training and therefore becomes a party in a contractual
organization, people need better communication to break down relationship with employees and trainers. Employees can participate in
barriers between managers and employees and between competing transactional analysis to learn more about themselves and increase
departments. Using transactional analysis to develop communication their autonomy. As parties to such a transaction, employees will have
among workers helps the organization become more focused and rights and responsibilities that they accept in the beginning of the
higher-achieving. training process.

Transactional Analysis is first and foremost a therapeutic tool for Ego States
positive change and growth. It can be used either in therapy for the
individual concerned or on a more surface level for problem solving in Transactional analysis rests on analyzing interactions between at least
everyday life. two people. People will interact using one of the three ego states. The
Child ego state acts according to emotions, such as fear and anxiety.
TA is basically the study of how people take on certain behaviors, The Adult ego state describes rational thought processes including
either by accident or from their early caretakers or authority figures problem-solving. The Parent ego includes rules learned about society
and then continue to play them out in their adult lives. It is a model for and life in the early part of life; a person accepts rules without
people to use to work towards ‘autonomy’, a place from where they question.
can choose to live the way they want to and not to be still acting as if
they are controlled by past events or messages. Use in Organizations

Transactional Analysis then is a modern psychotherapy model, which A trainers can use transactional analysis to help participants
has; it’s own particular language and theory of personality. It states understand how we communicate in dysfunctional patterns such as
that the person transacts with a person in certain ways, structures their from a Parent or Child ego state instead of an Adult ego state. When
time between life and death in a particular way, plays their own people become more aware, they can communicate more openly at
particular games and lives out their own unique script. work. This awareness on the part of many individuals promotes
functional communication and eradication of dysfunctional behavior
An understanding of Transactional Analysis can give hope for the patterns. Following transactional analysis, professionals can work
person in that they can change their script and choose the way they together to identify organizational needs and problem-solving
want to re-write their own life plan, without hanging on to methods.
inappropriate behaviors of the past.

The creator of Transactional Analysis Was Eric Berne, a Psychiatrist Johari Window
and a man who was largely influenced by Freud, though by the time
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Generally, it is believed that we have in a group based on our
perception of others. And that is why to improve communication in a
group it is important to develop the perception of an individual in the
group.

Johari window model is based upon two things – to acquire the

trust of others by revealing your information to them and by
learning about yourself through feedback by others.

Johari Window is a technique for improving self-awareness within

an individual. It helps in understanding your relationship with yourself
and others. Johari Window model can be a useful tool if you want to
improve your communication skills.
1. Open Area or Arena
It was developed by American psychologists Joseph Luft and Harry
Ingham in 1955, hence the name Johari. Johari Window is generally This area or pane is called open area because the information in this
used in Self-help groups in exercises which help a person to learn and pane about the behavior, feelings, emotions about the person is known
discover things about themselves, like heuristic exercise. to that person itself as well as the other members in this group.

The Johari window model is used to enhance the individual’s In this arena, all the communication occurs through a two-way
perception on others. This model is based on two ideas- trust can be process. Such that the person socializes about himself with others and
acquired by revealing information about you to others and learning constantly receives feedback from the other members of the group. As
yourselves from their feedbacks. Each person is represented by the a result, the group becomes more effective and the relationship in this
Johari model through four quadrants or window pane. Each four group is very dynamic.
window panes signifies personal information, feelings, motivation and
whether that information is known or unknown to oneself or others in In this group, the process of feedback solicitation is very common.
four viewpoints. This process occurs in the group that has an understanding and the
feedbacks of the other person are heard.
Johari Window Model Description
So, the open area through this group can be increased horizontally
There are four questions in the model just like panes in a window and such that the blindspot area is reduced and vertically it is increased so
each person fits into one of this pane. Each window in Johari window that the hidden and unknown areas of a person are reduced when that
model signifies feelings, personal information, and motivation. person reveals about his feeling to the other person.

Also, the important point to know here is that through window panes 2. Blindspot or BlindSelf
one must determine whether one is known or unknown to oneself as
well as the others. Blindspot is the area in which the certain information on your
personality is known to others but that information is not known to
you.

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In simple terms, other people may interpret your personality different inclusion. Schutz developed a measuring instrument that contains six
than you might have expected. For efficient communication, this area scales of nine-item questions, and this became version B (for
must be reduced. “Behavior”). This technique was created to measure how group
members feel when it comes to inclusion, control, and
One way to do it is through feedback that you get from other members affection/openness or to be able to get feedback from people in a
in the group. group.

3. Hidden Area or Hidden Self The FIRO-B instrument identifies three areas of interpersonal need.

Hidden area is the information that you hide from others. Here, the
information is known to you but the others are unknown to this 1. INCLUSION
information.
This need indicates how individuals generally include other people in
The reason for this may be the information might be personal to you their life and how much attention, contact, and recognition they want
so that you are reluctant to share it with others. This includes secrets, from others. Inclusions is about them in relation to groups – small or
past experiences, feelings, etc. Many people keep their information large.
private and do not share it with others.

4. Unknown Areas or Unknown Self 2. CONTROL

In this area, the information is unknown to you as well as the others. This need indicates how much influence and responsibility an
Generally, certain feelings, talents, information, etc fall in this area. individual want and how much they want others to lead and influence
them. Control is about both their one-to-one relationships and their
The reason for this might be some traumatic experience in the past behavior as part of a group.
about a particular event or experiences which might be unknown for
your ever.
3. AFFECTION
The person, as well as the group, is unaware about this till he or she
discovers it. One way to reduce this area is through open This need indicates how close and warm someone is with others and
communication. how close and warm they want others to be with them. Affection is
about the need to establish comfortable one-to-one relationships
(whereas Inclusion measures your needs for interacting with groups).
FIRO- B
USES FOR FIRO-B
Fundamental Interpersonal Relations Orientation (FIRO) is a
theory of interpersonal relations, introduced by William Schutz in (i) Team Building: Can be integrated in team-building initiatives and
1958. This theory mainly explains the interpersonal interactions of a communication workshops by building success on the fundamental
local group of people. The theory is based on the belief that when awareness that different people have different needs
people get together in a group, there are three main interpersonal
needs they are looking to obtain – affection/openness, control and
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(ii) Leadership Development: help leaders and executives unlock The MBTI was constructed for normal populations and emphasizes
improvement in performance by better meeting the needs of peers the value of naturally occurring differences. “The underlying
assumption of the MBTI is that we all have specific preferences in the
(iii) Individual Development: provides critical insights into how an way we construe our experiences, and these preferences underlie our
individual’s need for inclusion, control and affection can shape their interests, needs, values, and motivation.”
interaction with others.
Although popular in the business sector, the MBTI exhibits significant

Myers Briggs Type Indicator scientific (psychometric) deficiencies, notably including poor validity
(i.e. not measuring what it purports to measure, not having predictive

(MBTI) power or not having items that can be generalized), poor reliability
(giving different results for the same person on different occasions),
measuring categories that are not independent (some dichotomous
The Myers–Briggs Type Indicator (MBTI) is an introspective self- traits have been noted to correlate with each other), and not being
report questionnaire with the purpose of indicating differing comprehensive (due to missing neuroticism). The four scales used in
psychological preferences in how people perceive the world around the MBTI have some correlation with four of the Big Five personality
them and make decisions. Though the test superficially resembles traits, which are a more commonly accepted framework.
some psychological theories it is commonly classified as
pseudoscience, especially as it pertains to its supposed predictive The MBTI Manual states that the indicator “is designed to implement
abilities. a theory; therefore, the theory must be understood to understand the
MBTI”. Fundamental to the MBTI is the theory of psychological type
The MBTI was constructed by Katharine Cook Briggs and her as originally developed by Carl Jung.: Jung proposed the existence of
daughter Isabel Briggs Myers. It is based on the conceptual theory two dichotomous pairs of cognitive functions:
proposed by Swiss psychiatrist Carl Jung, who had speculated that
humans experience the world using four principal psychological  The “rational” (judging) functions: thinking and feeling
functions – sensation, intuition, feeling, and thinking – and that one of  The “irrational” (perceiving) functions: sensation and intuition
these four functions is dominant for a person most of the time. The
test has consistent problems with repeatability, in addition to problems Jung believed that for every person, each of the functions is expressed
of whether or not it has exhaustive and mutually exclusive primarily in either an introverted or extraverted form. Based on Jung’s
classifications. The four categories are Introversion/Extraversion, original concepts, Briggs and Myers developed their own theory of
Sensing/Intuition, Thinking/Feeling, Judging/Perception. Each person psychological type, described below, on which the MBTI is based.
is said to have one quality from each category, producing 16 unique However, although psychologist Hans Eysenck called the MBTI a
types. The Center for Applications of Psychological Type claims that moderately successful quantification of Jung’s original principles as
the MBTI is scientifically supported, but most of the research on it is outlined in Psychological Types, he also said, “[The MBTI] creates 16
done through its own journal, Journal of Psychological Type, raising personality types which are said to be similar to Jung’s theoretical
questions of bias. As with the suggestion of ‘which chakra or zodiac concepts. I have always found difficulties with this identification,
sign is dominant’, the tests use of binary questioning and the similar which omits one half of Jung’s theory (he had 32 types, by asserting
popularity of the MBPT, specifically relies on the exploitation of the that for every conscious combination of traits there was an opposite
Barnum effect, a mix of flattery, followed by confirmation bias, to unconscious one). Obviously, the latter half of his theory does not
retroactively ‘fit the prediction’. admit of questionnaire measurement, but to leave it out and pretend
that the scales measure Jungian concepts is hardly fair to Jung.” In any
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event, both models remain hypothetical, with no controlled scientific Dubin
studies supporting either Jung’s original concept of type or the
Myers–Briggs variation. “Motivation is the complex of forces starting and keeping a person at
work in an organization.”
Motivation: Meaning & Definition Vance

Motivation is an important factor which encourages persons to give “Motivation implies any emotion or desire which so conditions one’s
their best performance and help in reaching enterprise goals. A strong will that the individual is properly led into action.”
positive motivation will enable the increased output of employees but
a negative motivation will reduce their performance. A key element in Vitiles
personnel management is motivation.
“Motivation represents an unsatisfied need which creates a state of
According to theintactone, “It is the core of management in which tension or disequilibrium, causing the individual to make in a goal-
shows that every human being gives him a sense of worth in face-to directed pattern towards restoring a state of equilibrium by satisfying
face groups which are most important to him….A supervisor should the need.”
strive to treat individuals with dignity and a recognition of their
personal worth.” Memoria

Definitions of Motivation “A willingness to expend energy to achieve a goal or reward. It is a

force that activates dormant energies and sets in motion the action of
Motivation has been variously defined by scholars. the people. It is the function that kindles a burning passion for action
among the human beings of an organization.”
Some definitions are discussed as follows:
Nature of Motivation
Berelson and Steiner
Motivation is a psychological phenomena which generates within an
“A motive is an inner state that energizes, activates, or moves and individual. A person feels the lack of certain needs, to satisfy which
directs or channels behaviour goals.” he feels working more. The need satisfying ego motivates a person to
do better than he normally does.
Lillis
From definitions given earlier the following inferences can be derived:
“It is the stimulation of any emotion or desire operating upon one’s
will and promoting or driving it to action.”
1. Motivation is an inner feeling which energizes a person to
The Encyclopedia of Management work more.

“Motivation refers to degree of readiness of an organism to pursue 2. The emotions or desires of a person prompt him for doing a
some designated goal and implies the determination of the nature and particular work.
locus of the forces, including the degree of readiness.”

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 3. There are unsatisfied needs of a person which disturb his
Negative or fear motivation is based on force or fear. Fear causes
employees to act in a certain way. In case, they do not act accordingly
equilibrium. then they may be punished with demotions or lay-offs. The fear acts

4. A person moves to fulfill his unsatisfied needs by

as a push mechanism. The employees do not willingly co-operate,
rather they want to avoid the punishment.
conditioning his energies.

5. There are dormant energies in a person which are activated

Though employees work up-to a level where punishment is avoided
but this type of motivation causes anger and frustration. This type of
by channelizing them into actions. motivation generally becomes a cause of industrial unrest. In spite of
the drawbacks of negative motivation, this method is commonly used
Types of Motivation to achieve desired results. There may be hardly any management
which has not used negative motivation at one or the other time.
When a manager wants to get more work from his subordinates then
he will have to motivate them for improving their performance. They
will either be offered incentive for more work, or may be in the space Traditional Theory of
of rewards, better reports, recognition etc., or he may instill fear in
them or use force for getting desired work. Motivation: Maslow’s
The following are the types of motivation: Maslow’s Need Hierarchy Theory

1. Positive Motivation
It is probably safe to say that the most well-known theory of
motivation is Maslow’s need hierarchy theory Maslow’s theory is
based on the human needs. Drawing chiefly on his clinical experience,
Positive motivation or incentive motivation is based on reward. The he classified all human needs into a hierarchical manner from the
workers are offered incentives for achieving the desired goals. The lower to the higher order.
incentives may be in the shape of more pay, promotion, recognition of
work, etc. The employees are offered the incentives and try to In essence, he believed that once a given level of need is satisfied, it
improve their performance willingly. no longer serves to motivate man. Then, the next higher level of need
has to be activated in order to motivate the man. Maslow identified
According to Peter Drucker, the real and positive motivators are five levels in his need hierarchy as shown in figure.
responsible for placement, high standard of performance, information
adequate for self- control and the participation of the worker as a
responsible citizen in the plant community. Positive motivation is
achieved by the co-operation of employees and they have a feeling of
happiness.

2. Negative Motivation

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 4. Esteem Needs

These needs refer to self-esteem and self-respect. They include such

needs which indicate self-confidence, achievement, competence,
knowledge and independence. The fulfillment of esteem needs leads
to self-confidence, strength and capability of being useful in the
organisation. However, inability to fulfill these needs results in feeling
like inferiority, weakness and helplessness.

5. Self-Actualisation Needs
1. Physiological Needs
This level represents the culmination of all the lower, intermediate,
These needs are basic to human life and, hence, include food, and higher needs of human beings. In other words, the final step under
clothing, shelter, air, water and necessities of life. These needs relate the need hierarchy model is the need for self-actualization. This refers
to the survival and maintenance of human life. They exert tremendous to fulfillment.
influence on human behaviour. These needs are to be met first at least
partly before higher level needs emerge. Once physiological needs are The term self-actualization was coined by Kurt Goldstein and means
satisfied, they no longer motivate the man. to become actualized in what one is potentially good at. In effect, self-
actualization is the person’s motivation to transform perception of self
into reality.
2. Safety Needs
According to Maslow, the human needs follow a definite sequence of
After satisfying the physiological needs, the next needs felt are called domination. The second need does not arise until the first is
safety and security needs. These needs find expression in such desires reasonably satisfied, and the third need does not emerge until the first
as economic security and protection from physical dangers. Meeting two needs have been reasonably satisfied and it goes on. The other
these needs requires more money and, hence, the individual is side of the need hierarchy is that human needs are unlimited.
prompted to work more. Like physiological needs, these become However, Maslow’s need hierarchy-theory is not without its
inactive once they are satisfied. detractors.

The main criticisms of the theory include the following:

3. Social Needs
(i)  The needs may or may not follow a definite hierarchical order. So
Man is a social being. He is, therefore, interested in social interaction, to say, there may be overlapping in need hierarchy. For example, even
companionship, belongingness, etc. It is this socialising and if safety need is not satisfied, the social need may emerge.
belongingness why individuals prefer to work in groups and especially
older people go to work. (ii) The need priority model may not apply at all times in all places.

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(iii) Researches show that man’s behaviour at any time is mostly dissatisfies hygiene or maintenance factors. Taken together, the
guided by multiplicity of behaviour. Hence, Maslow’s preposition that motivators and hygiene factors have become known as Herzberg’s
one need is satisfied at one time is also of doubtful validity. two-factor theory of motivation

(iv) In case of some people, the level of motivation may be Herzberg’s motivational and hygiene factors have been shown in the
permanently lower. For example, a person suffering from chronic Fig.
unemployment may remain satisfied for the rest of his life if only
he/she can get enough food.

Notwithstanding, Maslow’s need hierarchy theory has received wide

recognition, particularly among practicing managers. This can be
attributed to the theory’s intuitive logic and easy to understand. One
researcher came to the conclusion that theories that are intuitively
strong die hard’.

Herzberg’s Motivation Hygiene

Theory
The psychologist Frederick Herzberg extended the work of Maslow
and propsed a new motivation theory popularly known as Herzberg’s
Motivation Hygiene (Two-Factor) Theory. Herzberg conducted a
widely reported motivational study on 200 accountants and engineers
employed by firms in and around Western Pennsylvania.

He asked these people to describe two important incidents at their

jobs:
According to Herzberg, the opposite of satisfaction is not
(i) When did you feel particularly good about your job, and dissatisfaction. The underlying reason, he says, is that removal of
dissatisfying characteristics from a job does not necessarily make the
(ii) When did you feel exceptionally bad about your job? He used the job satisfying. He believes in the existence of a dual continuum. The
critical incident method of obtaining data. opposite of ‘satisfaction’ is ‘no satisfaction’ and the opposite of
‘dissatisfaction’ is ‘no dissatisatisfaction’.
The responses when analysed were found quite interesting and fairly
consistent. The replies respondents gave when they felt good about According to Herzberg, today’s motivators are tomorrow’s hygiene
their jobs were significantly different from the replies given when because the latter stop influencing the behaviour of persons when they
they felt bad. Reported good feelings were generally associated with get them. Accordingly, one’s hygiene may be the motivator of
job satisfaction, whereas bad feeling with job dissatisfaction. another.
Herzberg labelled the job satisfiers motivators, and he called job
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However, Herzberg’s model is labeled with the following criticism This is the drive to excel, to achieve in relation to a set of standard,
also: and to strive to succeed. In other words, need for achievement is a
behaviour directed toward competition with a standard of excellence.
1. People generally tend to take credit themselves when things go McClelland found that people with a high need for achievement
well. They blame failure on the external environment. perform better than those with a moderate or low need for
2. The theory basically explains job satisfaction, not motivation. achievement, and noted regional / national differences in achievement
3. Even job satisfaction is not measured on an overall basis. It is motivation.
not unlikely that a person may dislike part of his/ her job, still
thinks the job acceptable. Through his research, McClelland identified the following three
4. This theory neglects situational variable to motivate an characteristics of high-need achievers:
individual.
1. High-need achievers have a strong desire to assume personal
Because of its ubiquitous nature, salary commonly shows up as a responsibility for performing a task for finding a solution to a
motivator as well as hygine. problem.

Regardless of criticism, Herzberg’s ‘two-factor motivation theory’ has 2. High-need achievers tend to set moderately difficult goals and take
been widely read and a few managers seem untaminar with his calculated risks.
recommendations. The main use of his recommendations lies in
planning and controlling of employees work. 3. High-need achievers have a strong desire for performance feedback.

McClelland’s Need Theory Need for Power

The need for power is concerned with making an impact on others, the
Another well-known need-based theory of motivation, as opposed to desire to influence others, the urge to change people, and the desire to
hierarchy of needs of satisfaction-dissatisfaction, is the theory make a difference in life. People with a high need for power are
developed by McClelland and his associates’. McClelland developed people who like to be in control of people and events. This results in
his theory based on Henry Murray’s developed long list of motives ultimate satisfaction to man.
and manifest needs used in his early studies of personality.
McClelland’s need-theory is closely associated with learning theory, People who have a high need for power are characterized by:
because he believed that needs are learned or acquired by the kinds of
events people experienced in their environment and culture. 1. A desire to influence and direct somebody else.

He found that people who acquire a particular need behave differently 2. A desire to exercise control over others.
from those who do not have. His theory focuses on Murray’s three
needs; achievement, power and affiliation. In the literature, these three 3. A concern for maintaining leader-follower relations.
needs are abbreviated “n Ach”, “n Pow”, and “n Aff” respectively’.

They are defined as follows:

Need for Achievement

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Need for Affiliation
Contemporary Theories of
The need for affiliation is defined as a desire to establish and maintain
friendly and warm relations with other people’. The need for Motivation: Self-Determination
affiliation, in many ways, is similar to Maslow’s social needs.
Theory, Self-Efficacy Theory,
The people with high need for affiliation have these characteristics:
Vroom’s Expectancy Theory
1. They have a strong desire for acceptance and approval from others.
Early motivation theories were based on the assumptions and
2. They tend to conform to the wishes of those people whose sometime these theories were not supported by strong evidence.
friendship and companionship they value. Maslow’s hierarchy of needs is a good example of this approach.
Therefore, alternative theories of motivation have been put forward
3. They value the feelings of others. over time.

Three Need Theories of Motivation 1. Self-determination Theory

Self-determination theory suggests that people are motivated to grow

and change by three innate and universal psychological needs.

This theory suggests that people are able to become self-determined

when their needs for competence, connection, and autonomy are
fulfilled.

The concept of intrinsic motivation, or engaging in activities for the

inherent rewards of the behavior itself, plays an important role in self-
determination theory.

Self-determination theory grew out of the work of psychologists

Edward Deci and Richard Ryan, who first introduced their ideas in
their 1985 book Self-Determination and Intrinsic Motivation in
Human Behavior. They developed a theory of motivation which
suggested that people tend to be driven by a need to grow and gain
This Figure  is a summary chart of the three need theories of fulfillment.
motivation just discussed. The chart shows the parallel relationship
between the needs in each of the theories. Maslow refers to higher- Two key assumptions of the theory
lower order needs, whereas Herzberg refers to motivation and hygiene
factors. (i) The need for growth drives behavior

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The first assumption of self-determination theory is that people are
actively directed toward growth. Gaining mastery over challenges and
taking in new experiences are essential for developing a cohesive
sense of self.

(ii) Autonomous motivation is important

While people are often motivated to act by external rewards such as

money, prizes, and acclaim (known as extrinsic motivation), self-
determination theory focuses primarily on internal sources of
motivation such as a need to gain knowledge or independence (known
as intrinsic motivation).
(i) Experience
According to self-determination theory, people need to feel the
following in order to achieve psychological growth:
Experience refers to your past experience of completing similar tasks.
This is the most important factor in self-efficacy.
 Competence: People need to gain mastery of tasks and learn
different skills. When people feel that they have the skills
If you performed a similar task well in the past, then you are more
needed for success, they are more likely to take actions that
likely to be confident that you can complete similar tasks well in the
will help them achieve their goals.
future.
 Connection or Relatedness: People need to experience a
sense of belonging and attachment to other people.
(ii) Vicarious Experience
 Autonomy: People need to feel in control of their own
behaviors and goals. This sense of being able to take direct
action that will result in real change plays a major part in You can develop self-efficacy vicariously by watching other people
helping people feel self-determined. perform a task.

Imagine a person who fails to complete an important project at work. If you watch someone similar to you perform a task and succeed at
If this person is high in self-determination, they will admit their fault, that task then your self-efficacy will increase. Conversely, if you
believe that they can do something to fix the problem and take action watch someone similar to you perform a task and fail then this can
to correct the mistake. have a negative effect on your self-efficacy.

If that same person was low in self-determination, they might instead (iii) Social Persuasion
look for other things that they can blame. They might make excuses,
assign blame, or refuse to admit that their own role. Most importantly, You can increase your self-efficacy if others give you encouragement
perhaps, is that this person won’t feel motivated to fix the mistake. that you can perform a task. Likewise, your self-efficacy will decrease
Instead, they might feel helpless to control the situation and believe if you receive discouraging or disparaging remarks about your ability
that nothing that they do will have any real effect. to perform a task.

2. Self-efficacy Theory (iv) Physiological Feedback

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When confronted with a task you experience a sensation from your It refers to the value that an individual places on a particular outcome
body. How you interpret these signals will impact you self-efficacy. or a strength of an individual’s preference for the expected rewards of
the outcome. To have a positive valence, one should prefer attaining
For example, if you are due to perform a presentation to a large crowd the outcome to not attaining it. For example, if an employee gets
of people you might experience butterflies in your stomach. motivated by promotions, then he might not value offers of increased
incentives. The valence is zero if an individual prefers not attaining
3. Vroom’s expectancy Theory outcomes to attaining it. In the above example, an employee agrees
with the increased incentives.
Vroom’s Expectancy Theory was proposed by Victor. H. Vroom, who
believed that people are motivated to perform activities to achieve (ii) Instrumentality
some goal to the extent they expect that certain actions on their part
would help them to achieve the goal. Another major input into the valence is the instrumentality of first
level outcome in obtaining the second level outcome, i.e. a degree to
Vroom’s Expectancy Theory is based on the assumption that an which the first level leads to the second level outcome. For example,
individual’s behavior results from the choices made by him with suppose an employee desires promotion and he feel that superior
respect to the alternative course of action, which is related to the performance is a key factor to achieve the goal. Thus, his first level
psychological events occurring simultaneously with the behavior. This outcomes are superior, average and poor performance and the second
means an individual selects a certain behavior over the other level outcome is the promotion.
behaviors with an expectation of getting results, the one desired for.
Hence, the first level outcome of high performance acquires the
Thus, Vroom’s Expectancy Theory has its roots in the cognitive positive valence so as to have the expected relationship with the
concept, i.e. how an individual processes the different elements of second level outcome of the promotion. Thus, an employee will be
motivation. This theory is built around the concept of valence, motivated to perform efficiently with a desire to get promoted.
instrumentality, and Expectancy and, therefore, is often called as VIE
theory. (iii) Expectancy

The algebraic representation of Vroom’s Expectancy theory is: Expectancy, another factor that determines the motivation, refers to
the probability that a particular action will lead to the desired
Motivation (force) = ∑Valence x Expectancy outcome. The expectancy is different from the instrumentality in the
sense; it relates efforts to the first level outcome, whereas the
instrumentality relates to first and second-level outcomes to each
other. Thus, expectancy is the probability that a particular action will
lead to a particular first-level outcome.

Equity Theory
Equity theory is based in the idea that individuals are motivated by
fairness, and if they identify inequities in the input or output ratios of
(i) Valence themselves and their referent group, they will seek to adjust their input
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to reach their perceived equity. Adams suggested that the higher an Individuals decide whether or not a particular exchange is satisfactory,
individual’s perception of equity, the more motivated they will be and by comparing their inputs and outcomes to those of others, in the form
vice versa: if someone perceives an unfair environment, they will be of a ratio. Equity exists when an individual concludes that his/her own
de-motivated. outcome/input ratio is equal to that of other people.

The easiest way to see the equity theory at work, and probably the The essential aspects of the equity theory may be shown by an
most common way it does impact employees, is when colleagues equation;
compare the work they do to someone else that gets paid more than
them. Equity theory is at play anytime employees say things like, There should be a balance of the outcomes/inputs relationship for one
‘John gets paid a lot more than me, but doesn’t do nearly as much person in comparison with that for another person. If the person thinks
work,’ or ‘I get paid a lot less than Jane, but this place couldn’t that the rewards are greater than what is considered, he/she may work
operate without me!’ In each of those situations, someone is harder.
comparing their own effort-to-compensation ratio to someone else’s
and is losing motivation in the process. If the person perceives the rewards as equitable, he/she probably will
continue at the same level of output.
This Theory show:

 Inputs: Inputs include all the rich and diverse elements that
employees believe they bring or contribute to the job – their
education, experience, effort, loyalty, commitment.
 Outcomes: Outcomes are rewards they perceive they get from
their jobs and employers outcomes include- direct pay and
bonuses, fringe benefit, job security, social rewards and
If the person feels that he/she is inequitably rewarded, he/she may be
psychological. dissatisfied, reduce the quantity or quality of output, or even leave the
 Over rewarded: if employees fell over-rewarded equity theory organization.
predicts then they will feel an imbalance in their relationship with
their employee and seek to restore that balance. The three situations of equity theory are illustrated in the following
 Equity: if employees perceive equity then they will be motivated to figure:
continue to contribute act about the same level.
 Unrewarded: unrewarded who feel they have been unrewarded
and seek to reduce their feeling in equity through the same types of
strategies but same of this specific action are now reverse.

This theory is based on the following two assumptions about human

behavior:

Individuals make contributions (inputs) for which they expect certain

outcomes (rewards). Inputs include such things as the person’s past
training and experience, special knowledge, personal characteristics Roles played by equity in motivation:-
etc. Outcomes include pay, recognition, promotion, prestige, fringe
benefits etc.
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1. Employees make comparisons between their job inputs and 6. Upper-level employees tend to be more cosmopolitan and
outcomes relative to those of others. have better information about people in other organizations.
Therefore, these types of employees will make more other- outside
 If we perceive our ratio to be equal to that of the relevant others comparisons.
with whom we compare ourselves, a state of equity is said to exist.
We perceive our situation as fair. 7. When employees perceive an inequity, they can be
 When we see the ratio as unequal, we experience equity tension. predicted to make one of six choices:

2. Additionally, the referent that an employee selects adds to



Change their inputs.
Change their outcomes.
the complexity of equity theory. There are four referent  Distort perceptions of self.
comparisons that an employee can use:  Distort perceptions of others.
 Choose a different referent.
 Self-inside: An employee’s experiences in a different position inside  Leave the field.
his or her current organization.
 Self-outside: An employee’s experiences in a situation or position
outside his or her current organization. 8. The theory establishes the following propositions relating
 Other-inside: Another individual or group of individuals inside the to inequitable pay:
employee’s organization.
 Other-outside: Another individual or group of individuals outside  Given payment by time, over-rewarded employees will produce
the employee’s organization. more than will equitably pay employees.
 Given payment by the quantity of production, over-rewarded

3. Which referent an employee chooses will be influenced by

employees will produce fewer, but higher quality, units that will
equitably pay employees.
the information the employee holds about referents, as well as by  Given payment by time, under-rewarded employees will produce
the attractiveness of the referent. There are 4 moderating less or poorer quality of output.
variables: gender, the length of tenure, level in the organization, 
and the amount of education or professionalism. Men and women
prefer same-sex comparisons. This also suggests that if women are
tolerant of lower pay, it may be due to the comparative standard 9. Given payment by the quantity of production, under-
they use. Employees in jobs that are not sex-segregated will make rewarded employees will produce a large number of low-quality
more cross-sex comparisons than those in jobs that are either units in comparison with equitably paid employees.
male- or female-dominated.
10. These propositions have generally been supported with a
4. Employees with a short tenure in their current few minor qualifications.
organizations tend to have little information about others.

5. Employees with long tenure rely more heavily on

 Inequities created by over-payment do not seem to have a very
significant impact on behavior in most work situations.
coworkers for comparison.  Not all people are equity-sensitive.

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 11. Employees also seem to look for equity in the distribution
the change in the behavior caused due to the reinforcement (Positive
reward or punishment) given after the response.
of other organizational rewards.

12. Finally, recent research has been directed at expanding

The reinforcement theory lay emphasis on the environmental factors
that shape the behaviors and thus, Skinner believed that environment
what is meant by equity or fairness. external to the organization must be designed effectively so as to
increase the motivation among the employees.
 Historically, equity theory focused on distributive justice or the
perceived fairness of the amount and allocation of rewards among Thus, the reinforcement theory of motivation mainly focuses on what
individuals. happens when an individual takes some action. It is observed, that
 Equity should also consider procedural justice, the perceived people tend to repeat those activities which gives them pleasure and
fairness of the process used to determine the distribution of avoid the activities with negative consequences.
rewards.
 The evidence indicates that distributive justice has a greater
influence on employee satisfaction than procedural justice,
 Procedural justice tends to affect an employee’s organizational
commitment, trust in his or her boss, and intention to quit.
 By increasing the perception of procedural fairness, employees are
likely to view their bosses and the organization as positive even if
they are dissatisfied with pay, promotions, and other personal
outcomes.

Reinforcement Theory
4-5 minutes Behavior that elicits consequences is called as the operant behavior
and the reinforcement theory works on the relationship between the
The Reinforcement Theory of Motivation was proposed by B.F. operant behavior and the associated consequences. This process is
Skinner and his associates. This theory posits that behavior is the called the Operant Conditioning and the change in the behavior is
function of its consequences, which means an individual develops a caused due to the reinforcement given after the response.
behavior after performing certain actions.
This theory of motivation totally focuses on what happens to an
The reinforcement theory of motivation is based on the “Law of individual when he/she takes some action. It is no way related to the
Effect” concept, i.e. an individual is likely to repeat those actions internal state of an individual i.e., inner feelings and drives of an
having the positive consequences, and will avoid those behaviors that individual is ignored.
result in negative or unpleasant outcomes.
Thus, the external environment of the organization should be designed
The behaviors that elicit consequences is called as operant behavior positively and effectively so as to motivate the employees. This theory
and reinforcement theory work on the relationship between the is a strong tool for analyzing controlling mechanism for individual’s
operant behavior and the associated consequences and, therefore, is behavior.
often called as Operant Conditioning. Operant conditioning means,
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Following are the methods for controlling the behavior of the OB Mod in simple words can be defined as a technique for modifying
employees: the modifying or behaviour of the organizational members so that they
are engaged in desirable undesirable behaviour and. replacing it with
 Positive Reinforcement: Positive reinforcement explains that, behaviour. It can be used for motivating the employees as well as for
when an employee gives a positive and a required behavior, enhancing organizational effectiveness.
the response towards them should be positive. This stimulates
the occurrence of a behavior. Reward to an employee who According to Stephen P. Robbins
performs well reinforces his/her desire to perform better
because of positive results of doing so. “OB Mod is a programme where managers identify performance
 Negative Reinforcement: Negative reinforcement takes place related employee behaviours and then implement an intervention
when certain deterrent(s) or obstruction(s) is removed and the strategy to strengthen desirable behaviour and weaken undesirable
employee(s) responds to a desired behavior after such removal. behaviours.”
For instance, an employee who commutes from a long
distances wraps up a few projects faster than desired; but, According to Schermerhorn, Hunt and Osborn:
when he is told by the manager to take the projects home for a
couple of days and complete them, it stimulates him/her to “OB Mod is the systematic reinforcement of desirable work behaviour
work as expected. By removing the negative stimuli, the and the non reinforcement or punishment of unwanted work
desired behavior is reinforced. behaviour. It includes four basic reinforcement strategies. Positive
 Punishment: Punishment refers to imposing negative reinforcement, negative reinforcement, punishment and extinction”
consequences or removing positive consequences with a view
to preventing employee(s) from repeating undesirable and Steps in OB Modification
uncalled for behaviors. It can, therefore, be both positive and
negative. Fred Luthans and R. Kreitner developed and used OB Mod to
 Extinction: Extinction refers to extinguishing a learned represent a behavioural approach to the management of human
behavior by withholding a positive reinforcement or reward resources for performance improvement.
that has encouraged the behavior.
The steps given by them in applying the OB Mod are summarized in
To conclude, the reinforcement theory revolves round a basic idea that the following figure:
consequences influence behavior. Consequence that brings rewards
propels a particular behavior and consequences that give punishment
diminish the occurrences of a behavior. Last but not the least, the 1. Identification
consequences that give neither reward nor punishment put an end to a
behavior. The theory helps the mangers to choose the right method of The first step in the OB Mod is identification of performance related
motivation to motivate their employees basing upon the prevailing behaviours. First of all the behaviour should be identified as desirable
situation. or undesirable from the point of view of the organisation. Then in the
next stage, critical behaviours, that have significant impact on the
Organisational Behaviour employees’ performance, should be given due attention. The critical
behaviours can be identified through discussions with the particular
Modification (OB MOD) employee and his immediate superior as both are closely intimated
with the job behaviours.
94
Some of the critical behaviours which affect job performance are are several strategies that can be used at this stage. These include
absenteeism or attendance, tardiness or promptness, complaints or positive or negative reinforcement, extinction or punishment.
constructive criticism, listening to or not listening to the instructions,
etc. If such behaviours are modified, good results could be expected. The use of a particular strategy will depend upon the type of situation
Due attention should be given to the critical behaviour because they faced. After developing and implementing a particular strategy, the
get repeated again and again. frequency of resulting behaviour is measured. If a behaviour change
has occurred in the right direction, the manager will select a

2. Measurement
reinforcement schedule that will maintain the desired behaviour.

After the critical behaviours of the employees have been identified, 5. Evaluation
the next step for the manager is to measure the frequency of the
critical behaviour over time. The measurement can be done by The last stage in OB Mod is the evaluation whether the intervention
observation and by extraction of information from records. If the strategies are working properly or not. The basic purpose of OB Mod
frequency is within the acceptable limit, it will require no action, but is to bring change in undesirable behaviours so as to improve
if it exceeds the acceptable limit, performance. Evaluation will reveal whether the undesirable
behaviours have been substituted by desirable behaviour or not. If
it will need immediate attention. The measurement of behaviour will there has been a change in behaviour, whether it is permanent or just
also help the managers in determining the success in changing the temporary.
employees’ behaviour.
Further, the evaluation will also show whether there is improvement

3. Analysis
in the performance or not. If there is a positive change, it suggests that
the interventions are successful. However, if the change is not
significant, it may call for adoption of alternate and more appropriate
At the next step, the managers will have to do a functional analysis of strategies.
the behaviour that requires modification. This analysis will determine
what circumstances lead to a particular type of behaviour, what are the Utilities of OB Modification
consequences of such behaviour etc. Contingent consequences of
behaviour should be identified because these consequences have OB Mod has been applied successfully in many organizations, service
impact on subsequent behaviour. Moreover, some contingent as well as manufacturing, to improve organizational effectiveness and
consequences appear to be affecting the critical behaviour on the understand human behaviour in organizations. It is an important
surface only, the functional analysis should try to find out the technique of human resource management.
competing contingencies for every behaviour also.
The major strengths and utilities of OB Mod are as follows:
4. Intervention
1. Can be Put to Testing
Once the critical behaviours have been identified and the
circumstances which cause such behaviours have been determined, the OB Mod concentrates on a person’s external behaviour and this
next step will be to develop an effective intervention strategy. There allows a manager to realistically observe and deal with outward
95
manifestations of behaviour. Since it deals with observed behaviour it
can be put to testing. Organisational Behaviour
Modification (OB MOD)
2. Development of Employees
OB Mod in simple words can be defined as a technique for modifying
OB Mod presents a set of tools by which people can learn new the modifying or behaviour of the organizational members so that they
behaviours and skills and thereby replacing undesirable behaviours. are engaged in desirable undesirable behaviour and. replacing it with
Positive reinforcement could be used to encourage desirable behaviour. It can be used for motivating the employees as well as for
behaviour by the employees. Social learning theory can be of great enhancing organizational effectiveness.
use in the effective implementation of any training programme for the
employees. Thus, OB Mod is a great technique of developing the According to Stephen P. Robbins
employees.
“OB Mod is a programme where managers identify performance

3. Control and Regulation of the Employees’ Behaviour

related employee behaviours and then implement an intervention
strategy to strengthen desirable behaviour and weaken undesirable
behaviours.”
OB Mod provides various tools to the managers for effectively
controlling and influencing the behaviour of employees in the According to Schermerhorn, Hunt and Osborn:
organisation. Most behaviour in the organisation are learned,
controlled and changed by the consequences. The managers can use “OB Mod is the systematic reinforcement of desirable work behaviour
operant conditioning to control and regulate the behaviour of and the non reinforcement or punishment of unwanted work
subordinates by manipulating the reward system. behaviour. It includes four basic reinforcement strategies. Positive
reinforcement, negative reinforcement, punishment and extinction”
The behavioural consequences that are rewarding increase the
probability of desired behaviour whereas aversive consequences Steps in OB Modification
decrease the probability of desired response.
Fred Luthans and R. Kreitner developed and used OB Mod to
4. Easy to Understand and Use
represent a behavioural approach to the management of human
resources for performance improvement.

The understanding of OB Mod techniques is comparatively easy. The steps given by them in applying the OB Mod are summarized in
Managers can use these without many problems. OB Mod has the following figure:
received great attention from several Organizations in the recent
years. It is widely applied in large Organizations in the areas of human
resource management, executive development, motivation,
introduction of change and organisational development.

96
 observation and by extraction of information from records. If the
frequency is within the acceptable limit, it will require no action, but
if it exceeds the acceptable limit,

it will need immediate attention. The measurement of behaviour will

also help the managers in determining the success in changing the
employees’ behaviour.

3. Analysis

At the next step, the managers will have to do a functional analysis of

the behaviour that requires modification. This analysis will determine
what circumstances lead to a particular type of behaviour, what are the
consequences of such behaviour etc. Contingent consequences of
1. Identification
behaviour should be identified because these consequences have
impact on subsequent behaviour. Moreover, some contingent
consequences appear to be affecting the critical behaviour on the
The first step in the OB Mod is identification of performance related surface only, the functional analysis should try to find out the
behaviours. First of all the behaviour should be identified as desirable competing contingencies for every behaviour also.
or undesirable from the point of view of the organisation. Then in the
next stage, critical behaviours, that have significant impact on the
employees’ performance, should be given due attention. The critical 4. Intervention
behaviours can be identified through discussions with the particular
employee and his immediate superior as both are closely intimated Once the critical behaviours have been identified and the
with the job behaviours. circumstances which cause such behaviours have been determined, the
next step will be to develop an effective intervention strategy. There
Some of the critical behaviours which affect job performance are are several strategies that can be used at this stage. These include
absenteeism or attendance, tardiness or promptness, complaints or positive or negative reinforcement, extinction or punishment.
constructive criticism, listening to or not listening to the instructions,
etc. If such behaviours are modified, good results could be expected. The use of a particular strategy will depend upon the type of situation
Due attention should be given to the critical behaviour because they faced. After developing and implementing a particular strategy, the
get repeated again and again. frequency of resulting behaviour is measured. If a behaviour change
has occurred in the right direction, the manager will select a
2. Measurement
reinforcement schedule that will maintain the desired behaviour.

After the critical behaviours of the employees have been identified, 5. Evaluation
the next step for the manager is to measure the frequency of the
critical behaviour over time. The measurement can be done by

97
The last stage in OB Mod is the evaluation whether the intervention employees. Thus, OB Mod is a great technique of developing the
strategies are working properly or not. The basic purpose of OB Mod employees.
is to bring change in undesirable behaviours so as to improve
performance. Evaluation will reveal whether the undesirable
behaviours have been substituted by desirable behaviour or not. If 3. Control and Regulation of the Employees’ Behaviour
there has been a change in behaviour, whether it is permanent or just
temporary. OB Mod provides various tools to the managers for effectively
controlling and influencing the behaviour of employees in the
Further, the evaluation will also show whether there is improvement organisation. Most behaviour in the organisation are learned,
in the performance or not. If there is a positive change, it suggests that controlled and changed by the consequences. The managers can use
the interventions are successful. However, if the change is not operant conditioning to control and regulate the behaviour of
significant, it may call for adoption of alternate and more appropriate subordinates by manipulating the reward system.
strategies.
The behavioural consequences that are rewarding increase the
Utilities of OB Modification probability of desired behaviour whereas aversive consequences
decrease the probability of desired response.
OB Mod has been applied successfully in many organizations, service
as well as manufacturing, to improve organizational effectiveness and
understand human behaviour in organizations. It is an important 4. Easy to Understand and Use
technique of human resource management.
The understanding of OB Mod techniques is comparatively easy.
The major strengths and utilities of OB Mod are as follows: Managers can use these without many problems. OB Mod has
received great attention from several Organizations in the recent
years. It is widely applied in large Organizations in the areas of human
1. Can be Put to Testing resource management, executive development, motivation,
introduction of change and organisational development.
OB Mod concentrates on a person’s external behaviour and this
allows a manager to realistically observe and deal with outward
manifestations of behaviour. Since it deals with observed behaviour it Perception Meaning and Process
can be put to testing.
4-5 minutes

2. Development of Employees Perception is an intellectual process of transforming sensory stimuli

to meaningful information. It is the process of interpreting something
OB Mod presents a set of tools by which people can learn new that we see or hear in our mind and use it later to judge and give a
behaviours and skills and thereby replacing undesirable behaviours. verdict on a situation, person, group etc.
Positive reinforcement could be used to encourage desirable
behaviour by the employees. Social learning theory can be of great It can be divided into six types:
use in the effective implementation of any training programme for the
 Of sound: The ability to receive sound by identifying vibrations.
98
  Of speech: The competence of interpreting and understanding the  Internal factors: The factors that influence the perception of an
sounds of language heard. individual internally are psychological requirements, learning,
 Touch: Identifying objects through patterns of its surface by background, experience, self-acceptance, and interest.
touching it.
 Taste: The ability to receive flavor of substances by tasting it 3. Organizing
through sensory organs known as taste buds.
 Other senses: They approve perception through body, like balance, Keeping things in order or say in a synchronized way is organizing. In
acceleration, pain, time, sensation felt in throat and lungs etc. order to make sense of the data received, it is important to organize
 Of the social world: It permits people to understand other them.
individuals and groups of their social world. Example − Priya goes to
a restaurant and likes their customer service, so she will perceive We can organize the data by:
that it is a good place to hang out and will recommend it to her
friends, who may or may not like it. Priya’s perception about the  Grouping them on the basis of their similarity, proximity, closure,
restaurant is good. continuity.
 Establishing a figure ground is the basic process in perception. Here
Perception  Process by figure we mean what is kept as main focus and by ground we
mean background stimuli, which are not given attention.
Perception process are the different stages of perception we go  Perceptual constancy that is the tendency to stabilize perception so
through. The different stages are: that contextual changes don’t affect them.

 Receiving 4. Interpreting
 Selecting
 Organizing Finally, we have the process of interpreting which means forming an
 Interpreting idea about a particular object depending upon the need or interest.
Interpretation means that the information we have sensed and
1. Receiving organized, is finally given a meaning by turning it into something that
can be categorized. It includes stereotyping, halo effect etc.
Receiving is the first and most important stage in the process of
perception. It is the initial stage in which a person collects all Importance of Perception in OB
information and receives the information through the sense organs.
We need to understand what the role of perception in an organization
2. Selecting is. It is very important in establishing different role of perceptions
like:
Selecting is the second stage in the process. Here a person doesn’t
receive the data randomly but selectively. A person selects some  Understanding the tasks to be performed.
information out of all in accordance with his interest or needs. The  Understanding associated importance of tasks allotted.
selection of data is dominated by various external and internal factors.  Understanding preferred behavior to complete respective tasks.
 Clarifying role perceptions.
 External factors: The factors that influence the perception of an
individual externally are intensity, size, contrast, movement,
repetition, familiarity, and novelty.
99
For example, every member in a group has to be clear regarding the
role allotted to them. Programmer writes the code, tester checks it, etc.

Principles and Errors of

Perception
Principles of Perception

William James American psychologist has said if we understand the

world as it appears to us, it will be a big booming- buzzing confusion. In the Figure, two faces can be seen in the background of a white
Hence, we do not see the things as they appear, but we see them as we colour. So also the white background can be perceived as a vessel in
want, i.e. more meaningfully. the background of two faces.

GROUPING OF STIMULI IN PERCEPTUAL ORGANIZATION

In perceptual process we select a particular stimulus with our attention
and interpret it. In the same way whenever it is necessary many
discrete stimuli in our visual field are organised into a form and As said above, according to gestalt principle, the objects can be
perceived more meaningfully than they appear. perceived meaningfully when they are grouped together. There are
some principles which are followed by us in order to make our
This phenomenon was well explained by Gestalt psychologists. They perception more meaningful.
believed that the brain creates a coherent perceptual experience by
perceiving a stimulus as a whole than perceiving discrete entities. This They are as follows:
is more meaningfully stated in the gestalt principle as ‘the whole is
better than sum total of its parts’. This is explained under many sub- (i) Proximity
principles of perception.
Proximity means nearness. The objects which are nearer to each other
Figure-ground Relationship can be perceived meaningfully by grouping them. For example, the
word ‘Man’, here though the letters are discrete, when grouped
According to this principle any figure can be perceived more together gives some meaning. The stars in the Figure which are nearer
meaningfully in a background and that figure cannot be separated to each other are perceived together as groups/single figure.
from that background. For example, letters written with a white chalk
piece are perceived clearly in the background of a blackboard.

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(ii) Similarity (iv) Closure

Stimuli need not be nearer to each other for perception. If there is When a stimulus is presented with gaps, the human tendency is to
similarity in these objects, they are grouped together and perceived, perceive that figure as complete one by filling the gaps
even if they are away. For example, in this Figure grouping will be psychologically. For example, in the Figure, the gaps are filled
done according to similarity, i.e. all circles, squares and triangles are psychologically and perceived as letters M and A, circle and a
grouped separately. rectangle.

(iii
) Continuity

Any stimulus which extends in the same direction or shape will be

perceived as a whole Figure A and B. For example, (A) in this figure
though the curved line is broken, it is perceived as a continuous line,
so also straight line is not seen with semicircles but as a continuous
line (B) the dots are perceived as existing in the same line of direction (v) Symmetry
continuously.
Objects which are having symmetrical shape are perceived as groups.
For example, the brackets of different shapes shown in the Figure
perceived meaningfully, because they are grouped together and
perceived as brackets.

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ERRORS OF PERCEPTION The tendency for individuals to attribute their own successes to
internal factors while putting the blame for failures on external
factors.
1. Stereo Typing

“Making positive or negative generalizations about a group or 7. Self-fulfilling prophecy

category of people, usually based on inaccurate assumptions and
beliefs and applying these generalizations to an individual member of People’s preconceived expectations and beliefs determine their
the group.” For e.g. Girls are very talkative, Rich are cruel to poor. behavior, thus, serving to make their expectations come true Example
when a teacher, labeled a kid as stupid (because he has illegible
handwriting). Soon the kid believed on teacher and behave like one.
2. Halo Effect

Drawing general impression of individual on the basis of a single 8. Perceptual defense

characteristic. I.e. if someone is good at one dimension, he/she is
perceived to be good at other dimensions as well. People tend to defend the way they perceive things. Once established,
a person’s way of viewing the world may become highly resistant to
change. Sometimes, perceptual defense may have negative
3. Recency Effect consequences. This perceptual error can result in manager’s inability
to perceive the need to be creative in solving problems. As a result,
When the most RECENT information influences our judgment, even the individual simply proceeds as in the past even in the face of
though we have a whole of other information on the Person. evidence that business as usual is not accomplishing anything
worthwhile

4. The Similar-to-Me Effect

Managerial & Behavioural
We tend to favor/like or give favorable judgment to those who are
similar to us. Example two candidates came along for interview, one Applications of Perception
from Delhi and the other from Bihar. As interviewer is from Delhi, he
tends select to the candidate from Delhi, better evaluation. Managerial applications of perception

5. Fundamental Attribution Error 1. Employment Interview

The tendency to underestimate the influence of external factors and A major input into who is hired and who is rejected in any
overestimate the influence of internal factors when making judgments organization is the employment interview. Evidence indicated that
about the behavior of others. interviewers often make inaccurate perceptual judgements. Interviews
generally draw early impressions that become very quickly
entrenched. If negative information is exposed early in the interview,
6. Self-Serving Bias it tends to be more heavily weighted than if that same information
102
comes out later. As a result, information elicited early in the interview behaviour. Managers can harness the power of the Pygmalion effect to
carries greater weight than does information elicited later. A “good improve productivity in the organization. It appears that high
applicant” is probably characterized more by the absence of expectations of individuals come true. Managers can extend these
unfavourable characteristics than by the presence of favourable high expectations of individuals to an entire group. When a manager
characteristics. expects positive things from a group, the group delivers. Similarly, if
a manager expects people to perform minimally, they will tend to
The employment interview is an important input into the hiring behave so as to meet these low expectations. Thus, the expectations
decision and a manager must recognize that perceptual factors become reality.
influence who is hired. Therefore, eventually the quality of an
organization’s labour force depends on the perception of the
interviewers. 4. Employee Loyalty

2. Performance Evaluation
Another important judgement that managers make about employees is
whether they are loyal to the organization. Few organizations
appreciate employees, especially those in the managerial ranks openly
An employee’s performance appraisal very much depends on the disparaging the firm.
perceptual process. The performance appraisal represents an
assessment of an employee’s work. While this can be objective, many BEHAVIOURAL APPLICATIONS OF PERCEPTION
jobs are evaluated in subjective terms. Subjective measures are, by
definition, judgemental. Individual does not always perceive the events freely from the
environment. She/He selects the stimuli from the environment which
The evaluator forms a general impression of an employee’s work. can satisfy her/his needs, desires and expectations because of the
What the evaluator perceives to be “good” or “bad” employee dominance of needs in individual. Individual selects the stimuli on the
characteristics will, significantly influences the appraisal outcome. An basis of certain guidelines which are termed as principles of
employee’s future is closely tied to his or her appraisal -promotions, perceptual selection. Here, each principle is not significant alone in
pay raises and continuation of employment are among the most making perception. Basic principles of perceptual selection are
obvious outcomes. discussed below:

3. Performance Expectations 1. Principle of Intensity

A manager’s expectations of an individual affect both the manager’s According to intensity principle of perceptual selection, the more
behaviour towards the individual and the individual’s response. An intense the external stimulus, the more likely it is to be perceived.
impressive amount of evidence demonstrates that people will attempt Loud sound, dark color, strong smell, bold and italic letters etc. are
to validate their perceptions of reality, even when these perceptions perceived more easily and quickly in comparison to the soft sound,
are faulty. This is particularly relevant when we consider performance light color, soft smell. This principle is used frequently in
expectations on the job. advertisement like bright color in packaging, loud sound in television
commercials. Supervisors sought loudly to get attention.
The term self-fulfilling prophecy or Pygmalion effect have evolved to
characterize the fact that people’s expectations determine their
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 2. Principle of size 5. Principle of repetition

The size principle of perceptual selection states that the larger size of Repetition or frequency plays vital role to select the perception.
stimulus, the more likely it is to be perceived. This means that the Highly repeated stimulus gets more attention than none repeating or
stimulus with larger size is easily perceived than the stimulus having single one. For example, producers or suppliers repeat advertising
small size. Normally, supervisors and managers with large body size materials to their prospect customers to get attention. Supervisors and
can command more strictly to their subordinates because of positive managers give directions again and again to their subordinates so that
perception of subordinates towards them. Large billboards are used in they can remember. Refreshment training are given to employee to
advertisement to draw the attention of perceivers. Full page refresh the knowledge or skill of employees.
advertisement gets more attention of readers. In the given figure,
bigger circle is likely to be perceived quickly which draws the
attention of viewer. 6. Principle of Motion

3. Principle of contrast
This principle states that the moving objects draw more attention than
the stationary objects. For instance, advertisement of a car or
motorcycle uses the running (moving) state to attract perceivers.
Contrast stands for dissimilarity or uniqueness against all other Likewise, trainers, teachers and supervisors keep on moving while
stimulus or objects standing out. This principle states that the stimulus instructing or observing their trainees, students and subordinates so
which is different or unique in comparison to the nearby and common that perceiver gets more attention in moving.
objects, that will be perceived easily and quickly. For example, person
wearing different color dress in a group can perceive the attention.
Employees with different sound or vision are perceived quickly. 7. Principle of learning motivation and personality
Likewise the word DANGER written with red letter on while
background draws quick attention. Cricketers wear different color sun This principle states that individual perceive the stimulus which
glasses to get attention. In the adjacent figure, though all the circles compatible to their learning, motivation and personality. Learning
have equal size, but central circle is easily perceived than other creates certain expectancy so that individual perceive in certain
because of its contrast color. manner. Motivation itself helps to draw attention towards stimulus
and the personality affects the way of perceiving the stimulus.

4. Principle of Novelty and Familiarity

UNIT – 5
Novelty is newness and familiarity is commonness or known to the
perceiver. This principle states that perceiver perceive easily and Leadership Meaning and Types of Leaders
quickly to novel (new) or familiar stimulus depending upon
circumstances. For instance, new person in locality draws more Leadership
attention while familiar face can easily be recognized. New design of
vehicle or machine or dress can be perceived fast. “Leadership is the quality of behavior of individuals whereby they
guide people or their activities in organizing efforts” — Chester I.
Barnard
104
“Leadership is the ability of a superior to induce subordinates to work (iii) Leadership and motivation are closely interconnected. By
with confidence and I zeal” — Koontz and ‘Donnell understanding motivation, one can appreciate better what people want
and why they act as they do. A leader can encourage or dampen
“Leadership is the process by which an executive imaginatively workers motivation by creating a favorable or unfavorable working
directs, guides and influences the work of others in attaining specified environment in the organization.
goals.” — Theo Haimann
(iv) The essence of leadership is followership. In other words, it is the
Leadership may be defined as a position of power held by an willingness of people to follow a person that makes that person a
individual in a group, which provides him with an opportunity to leader. Moreover, people tend to follow those whom they see as
exercise interpersonal influence on the group members for mobilizing providing a means of achieving their desires, needs and wants.
and directing their efforts towards certain goals. The leader is at the
Centre of group’s power structure, keeps the group together, infuses (v) Leadership involves an unequal distribution of power between
life into it, moves it towards its goals and maintains its momentum. leaders and group members. Group members are not powerless; they
can shape group activities in some ways. Still, the leader will usually
For example, a leader of national or international standing commands have more power than the group members.
widespread influence over a large number of people while the
influence of the leader of a small work group in an organization is (vi) Leaders can influence the followers’ behavior in some ways. In
very limited. Both are leaders in their own right and fulfill our fact, leaders can influence workers either to do ill or well for the
definition of leadership. company. The leader must be able to empower and motivate the
followers to the cause.
Leadership is an influential process. The leader is in a position to
shape, regulate, control and change the attitudes, behaviour and (vii) The leader must co-exist with the subordinates or followers and
performance of his group members. The latter are supposed to comply must have the clear idea about their demands and ambitions. This
with the former’s desires and directives and partially suspend their creates loyalty and trust in subordinates for their leader.
own judgment and discretion. There exists a particular relationship
between the leader and his group members which is characterized by (viii) Leadership is to be concerned about values. Followers learn
interpersonal and social interaction. ethics and values from their leaders. Leaders are the real teachers of
ethics, and they can reinforce ideas. It is very important for leaders to
Nature of Leadership make positive statements of ethics if they are not hypocritical.

(i) Leadership derives from power and is similar to, yet distinct from, (ix) Leading is a very demanding job for both physically and
management. In fact, “leadership” and “management” are different. psychologically. The leader must have the strength, power, and ability
There can be leaders of completely unorganized groups, but there can to meet the bodily requirements; zeal, energy, and patience to meet the
be managers only of organized groups. Thus it can be said that a mental requirements for leading.
manager is necessarily a leader but a leader may not be a manager.

(ii) Leadership is essential for managing. The ability to lead

effectively is one of the keys to being an effective manager because
she/he has to combine resources and lead a group to achieve
objectives.
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TYPES OF LEADER 3. Motivational Leader

1. Managerial Leader A motivational leader seeks mutual benefit for themselves, others, and
the organization. People want to follow them because of who they are
A managerial leader is the least effective of the five types of leaders. and what they know. They influence others from the outside. They are
They have the least influence. People only follow them because they process focused. They are trusted and deliver results for themselves,
have to. They are not in the position to serve others. Their desire is to their families, their team, their organization, their customers, their
be served by others because they are in the position. They see others suppliers, and their community. Their weakness is not making the
as tools to use to complete the objective for the day. They prefer to necessary sacrifices to reproduce other motivational leaders.
make decisions. Their weakness is character development.
Here’s a brief review of characteristics:
Here’s a brief review of characteristics:
 Character is strong.
 Character is weak.  Desire is to serve.
 Desire is “to be served” rather than “to serve.”  They have an abundance mindset.
 They have a scarcity mindset.  Competency is developed and specialized.
 Competency can range from undeveloped to highly developed.  Focus is on leading (influencing/releasing) people, managing the
 Focus is on managing (directing/controlling) people and processes. processes, and getting results.
 Values the position more than the people.  Values people more than the position.
 Strength comes from power, control, formal authority, and  Strength comes from relationships, moral authority, and team
personal results. results.

2. Relational Leader 4. Inspirational Leader

A relational leader builds relationships in order to influence others. An inspirational leader inspires managerial and relational leaders to
People want to follow them because of who they are, not what they become motivational leaders. Their focus is on growing themselves in
know. They develop mutual respect with others and work well with order to inspire others to grow. They influence others on the inside.
them. Although people want to follow them, they have not developed They are people-focused not process-focused. They focus heavily on
specialized knowledge. Their weakness is not making the necessary character development. True inspirational leaders are followed
sacrifices to develop their competency. because of how much they care and who they are on the inside. They
are inspired by the growth of those following them.
Here’s a brief review of characteristics:
Here’s a brief review of characteristics:
 Character is strong.
 Desire is to serve.  Character is stronger.
 They have an abundance mindset.  Desire is to serve and develop others.
 Competency is undeveloped and generalized.  They have an abundance mindset.
 Focus is on leading (influencing/releasing) people.  Competency is highly developed and specialized.
 Values people more than the position.  Focus is on leading (influencing/releasing) people and developing
 Strength comes from relationships and moral authority. motivational leaders.
 Values people more than the position.
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  Strength comes from relationships, moral authority, and the growth
of others.

5. Transformational Leader

A transformational leader’s passion and purpose is to transform

others. They are the most influential of the five types of leaders and
are highly respected. Their reputation precedes them. They are well
known for developing leaders. Their influence touches people in all
industries and across multiple generations. They have influenced
many leaders for many years. Their influence is continuously being
transferred through many other leaders at many different times in
multiple locations.

Here’s a brief review of characteristics:

 Character is strongest.
 Desire is to serve and to develop others.
 They have an abundance mindset. Based on Behavioral Approach
 Competency is highly developed and specialized.
 Focus is on leading (influencing/releasing) people and developing


motivational and inspirational leaders.
Values people more than the position.
1. Power Orientation

 Strength comes from relationships, moral authority, growth of

The power orientation refers to the “degree of authority” that a leader
others, and the respect they have earned.
adopts to influence the behavior of his subordinates. Based on this, the
leadership styles can be further classified as:
Leadership Style  Autocratic Leadership
 Participative Leadership
The Leadership Styles are the behavioral patterns that a leader adopt  Laissez-Faire
to influence the behavior of his followers, i.e. the way he gives
directions to his subordinates and motivates them to accomplish the
given objectives. 2. Leadership as a continuum

The leadership styles can either be classified on the basis of This model is given by Tannenbaum and Schmidt, who believed that
behavioral approach or situational approach. These approaches are there are several leadership styles that range between two extremes of
comprised of several theories and models which are explained below: autocratic and free-rein, which are shown below:

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 5. Managerial Grid

The managerial grid is the tool designed by Blake and Mouton to

determine the leadership style. According to them, the leadership style
gets influenced by both the task-oriented and relation-oriented
behavior in varying degrees.

6. Three Dimensional Grid

The three-dimensional grid is also called as a 3-D leadership model

given by W.J. Reddin. Reddin included the effectiveness dimension
along with the task-oriented and relationship-oriented dimensions to
study how a leader behaves in a given situation and a specific
environment.
3. Employee-Production Orientation
Based on Situational Approach
Several types of research were conducted to study the leadership
behavior that gets affected by the several characteristics that are
related to each other. It was found that employee orientation and
1. Fiedler’s Contingency Model
production orientation play an important role in determining the
leadership style.The employee orientation is based on the premise that This theory is given by Fred Fiedler, who, along with his associates
an employee is an important part of the group and is in parallel to the identified the situational variables and their relationship to determine
democratic leadership style. Whereas the production Orientation the leadership styles. Thus, this model is comprised of three elements,
focuses on the production and technical aspects of the job and the leadership styles, situational variables and the interrelationship
employees are considered as the tools for accomplishing the jobs. between these two.
Thus, the production orientation is parallel to the autocratic leadership
style.
2. Hursey and Blanchard’s Situational Model

4. Likert’s Management System According to this model, the leader has to adopt the leadership style
that matches up with the subordinate’s maturity i.e. his willingness to
Rensis Likert along with his associates studied the patterns and direct his behavior towards the goal.
behavior of managers to identify the leadership styles and defined four
systems of management. These four systems are: Exploitative
Authoritative, Benevolent Authoritative, consultative system and
3. Path-Goal Model
participative system.
The Path-Goal Model is given by Robert House, who, along with his
associates tried to predict the effectiveness of leadership styles in
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varied situations. He believed that the foremost function of any leader than simply stating, “Great work!” The latter only provides praise,
is to define the goals to the subordinates clearly and assist them in which is an opinion without any specifics or true factual information.
finding the best path to accomplish that goal.

2. They listen
Traits and Qualities of Effective
Leader How well are you with this leadership trait? Effective leaders listen to
hear you, not to react to you. Listening is a skill that can take some
time to master, but it is one of the traits that sets leaders apart from the
Traits of Effective Leader rest.

We know a highly effective leader when we see one. They give off an
energy that often makes us like them instantly—we feel comfortable 3. They show vs. tell
in their presence. Highly effective leaders have employees singing
their praises and can captivate an audience for hours. They can lead a Effective leaders lead by example. They understand that when you tell
revolution when required and can have a great impact on those they someone something, it might not be as well-received as when you
lead and the lives they touch. show something. This also speaks to the fact that we respond to
pictures and images in a different way than we do to words.
As an HR Manager and Public Relations Specialist, I’ve had the
opportunity to work closely with Executive and Senior Leadership
teams of organizations. With time, it became clear to me that highly 4. They are open to suggestions and realize it takes a village
effective leaders have some similarities when it comes to how they
interact with others and approach day-to-day and long term work When you take note of highly successful leaders, also take note of the
goals. Through my research and observation, I’ve found the following team they surround themselves with. Highly successful leaders know
to be a few of the leadership traits best used to learn how to be a better how to hire or create a team of individuals to support them. They also
leader. understand it takes a village to create success, so they’re open to the
ideas of others and delegate to get work done. To learn how to be a
better leader, start building a team that inspires others and creates
1. They give feedback and encourage success.

Highly successful leaders understand that employees like to receive

feedback and encouragement. Even if it’s not always positive, 5. They don’t compare themselves to others
communication and feedback help an employee know their work
matters, and they’re being noticed. In addition, the type of feedback We are each on our own path and have our own mark to leave on the
shared by successful leaders is more than praise—it’s feedback that world, and highly effective leaders understand this. It’s essential not
reinforces facts about an individual’s work vs. simple praise that’s to compare oneself to others and where they’re at in their careers. On
one’s opinion of someone else’s work. For example, stating “You that token, it’s also important to do things the way you feel they
completed the project on time without any flaws. Great work!” should be done for optimal results, which might be different than how
provides facts and praise, which has been shown to be more effective someone else will do things. Finally, not that it’s always easy, but it’s

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important to keep jealousy and envy in check to be a highly successful Though we often think of leaders as those who hold management
leader. positions, speakers, or leaders of organizations, it is possible for others
to hold leadership traits within an organization. You can be a leader

6. They follow through, keep their word, and uphold

with or without the title to go along with it if you so choose to be. If
you think you have leadership qualities, speak to your supervisor to
integrity find out what opportunities there might be for you. To learn how to be
a better leader, you can also look for leadership training on your own,
Many leadership programs repeatedly state that we are only as good as and you might also consider finding some volunteer opportunities that
our word. If we say we’re going to do something, then we need to do allow you to put your leadership qualities to the test. After all, we
it. If we can’t follow-through, then we need to communicate so to cannot have too many highly effective leaders in this world.
remain in integrity. Honesty and dependability are two key leadership
traits. Qualities of Effective Leader

7. They take responsibility and ownership 1. Honesty and Integrity

Mistakes are going to happen and the quicker we own up to our The 34th President of United States, Dwight. D.Eisenhower once said,
mistakes and take responsibility for them, the quicker we can come up “The supreme quality of leadership is unquestionably integrity.
with a solution and move on to the next task. Without it, no real success is possible, no matter whether it is on a
section gang, a football field, in an army, or in an office.” Honesty and
Early in my career, I had made a mistake at work. Though I held a lot integrity are two important ingredients which make a good leader.
of fear around the situation, I immediately told my manager. “Did you How can you expect your followers to be honest when you lack these
fix it?” he asked. “Yes,” I replied. “Great,” he said, as he walked qualities yourself? Leaders succeed when they stick to their values
away. It was as simple as that. At that moment, I knew I would make and core beliefs and without ethics, this will not be possible.
mistakes, and I knew the sooner I owned up to them, the better. This
moment also allowed me to give myself a break and realize that I was
likely going to make mistakes again, which was OK, but it was how I 2. Confidence
handled and reacted to them that mattered.
To be an effective leader, you should be confident enough to ensure
8. They have perseverance and tenacity
that other follow your commands. If you are unsure about your own
decisions and qualities, then your subordinates will never follow you.
As a leader, you have to be oozing with confidence, show some
Having had health issues for the majority of my adult life, I clearly swagger and assertiveness to gain the respect of your subordinates.
recall in my early 20s when one physician told me that I needed This does not mean that you should be overconfident, but you should
perseverance and tenacity to get better. These words have stuck with at least reflect the degree of confidence required to ensure that your
me. To heal, I needed to keep researching, moving forward and followers trust you as a leader.
couldn’t give up. This is what I see in the majority of highly effective
leaders I meet—they have a lot of perseverance and tenacity, which is
required for them to achieve and maintain success. 3. Inspire Others

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Probably the most difficult job for a leader is to persuade others to have a profound impact on masses. A leader should think long and
follow. It can only be possible if you inspire your followers by setting hard before taking a decision but once the decision is taken, stand by
a good example. When the going gets tough, they look up to you and it. Although, most leaders take decisions on their own, but it is highly
see how you react to the situation. If you handle it well, they will recommended that you consult key stakeholders before taking a
follow you. As a leader, should think positive and this positive decision. After all, they are the ones who will benefit or suffer from
approach should be visible through your actions. Stay calm under your decisions.
pressure and keep the motivation level up. As John Quincy Adams
puts it, “If your actions inspire others to dream more, learn more, do
more and become more, you are a leader.” If you are successful in 7. Accountability
inspiring your subordinates, you can easily overcome any current and
future challenge easily. When it comes to accountability, you need to follow the approach
highlighted by Arnold H Glasow when he said, “A good leader takes

4. Commitment and Passion

little more than his share of the blame and little less than his share of
the credit.” Make sure that every one of your subordinates is
accountable for what they are doing. If they do well, give them a pat
Your teams look up to you and if you want them to give them their all, on the back but if they struggle, make them realize their mistakes and
you will have to be passionate about it too. When your teammates see work together to improve. Holding them accountable for their actions
you getting your hands dirty, they will also give their best shot. It will will create a sense of responsibility among your subordinates and they
also help you to gain the respect of your subordinates and infuse new will go about the business more seriously.
energy in your team members, which helps them to perform better. If
they feel that you are not fully committed or lacks passion, then it
would be an uphill task for the leader to motivate your followers to 8. Delegation and Empowerment
achieve the goal.
You cannot do everything, right. It is important for a leader to focus

5. Good Communicator
on key responsibilities while leaving the rest to others. By that, I mean
empowering your followers and delegating tasks to them. If you
continue to micromanage your subordinates, it will develop a lack of
Until you clearly communicate your vision to your team and tell them trust and more importantly, you will not be able to focus on important
the strategy to achieve the goal, it will be very difficult for you to get matters, as you should be. Delegate tasks to your subordinates and see
the results you want. Simply put, if you are unable to communicate how they perform. Provide them with all the resources and support
your message effectively to your team, you can never be a good they need to achieve the objective and give them a chance to bear the
leader. A good communicator can be a good leader. Words have the responsibility.
power to motivate people and make them do the unthinkable. If you
use them effectively, you can also achieve better results.
9. Creativity and Innovation

6. Decision-Making Capabilities What separates a leader from a follower? Steve Jobs, the greatest
visionary of our time answers this question this way, “Innovation
Apart from having a futuristic vision, a leader should have the ability distinguishes between a leader and a follower.” In order to get ahead
to take the right decision at the right time. Decisions taken by leaders in today’s fast-paced world, a leader must be creative and innovative
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at the same time. Creative thinking and constant innovation is what This theory is given by Gordon Allport. According to him, the
makes you and your team stand out from the crowd. Think out of the personality of an individual can be studied through a distinction
box to come up with unique ideas and turn those ideas and goals into between the common traits and the personal dispositions.
reality.
The common traits are used to compare the people on the grounds of

10. Empathy
six values, such as religious, social, economic, political, aesthetic and
theoretical. Besides the common traits, there are personal dispositions
which are unique and are classified as follows:
Last but certainly not the least, is empathy. Leaders should develop
empathy with their followers. Unfortunately, most leaders follow a  Cardinal Traits: The cardinal traits are powerful, and few people
dictatorial style and neglect empathy altogether. Due to this, they fail possess personality dominated by a single trait. Such as Mother
to make a closer connection with their followers. Understanding the Teressa’s altruism.
problems of your followers and feeling their pain is the first step to  Central Traits: These traits are the general characteristics
become an effective leader. Even that is not enough until you work possessed by many individuals in the varying degrees. Such as
hard and provide your followers with the suitable solution to their loyalty, friendliness, agreeableness, kindness, etc.
problems.  Secondary Trait: The secondary traits show why at times, a person
behaves differently than his usual behavior. Such as a jolly person
To become a good leader, one must have all these qualities but if you may get miserable when people try to tease him.
lack some of these qualities, then you might struggle to make the mark
in the world of leadership. You will have to set a good example for
others to follow. That is where your commitment, passion, empathy, 2. Cattell’s Trait Theory
honesty and integrity come into play. Good communication skills and
decision-making capabilities also play a vital role in success and This trait theory is given by Raymond Cattell. According to him, the
failure of a leader. Lastly, innovation and creative thinking, as well as sample of a large number of variables should be studied to have a
the futuristic vision, are a couple of key traits which make a leader proper understanding of the individual personality.
stand out.
He collected the life data (everyday life behaviors of individuals),
experimental data (standardizing experiments by measuring actions),
Trait Theory questionnaire data (responses gathered from the introspection of an
individual’s behavior) and done the factor analysis to identify the
The Trait Theory asserts that an individual is composed of a set of traits that are related to one another.
definite predisposition attributes called as traits. These traits are
distinguishable and often long lasting quality or a characteristic of a By using the factor analysis method, he identified 16 key personality
person that makes him different from the others. factors:

The two most common trait theories are:  Abstractedness: Imaginative Vs Practical
 Warmth: Outgoing Vs Reserved
 Vigilance: Suspicious Vs Trusting
1. Allport’s Trait Theory 

Tension: Impatient Vs Relaxed
Apprehension: Worried Vs Confident
 Emotional Stability: Calm Vs anxious
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  Liveliness: Spontaneous Vs Restrained The fundamental principle of the situational leadership model is that
 Dominance: Forceful Vs Submissive there is no single “best” style of leadership. Effective leadership is
 Social Boldness: Uninhibited Vs Shy task-relevant, and the most successful leaders are those who adapt
 Perfectionism: Controlled Vs Undisciplined their leadership style to the performance readiness (ability and
 Privateness: Discreet Vs Open willingness) of the individual or group they are attempting to lead or
 Sensitivity: Tender Vs Tough influence. Effective leadership varies, not only with the person or
 Self Reliance: Self sufficient Vs Dependent group that is being influenced, but it also depends on the task, job, or
 Rule-Consciousness: Conforming Vs Non-Conforming function that needs to be accomplished.
 Reasoning: Abstract Vs Concrete
 Openness to Change: Flexible Vs Stubborn The Situational Leadership Model has two fundamental concepts:
leadership style and the individual or group’s performance readiness
The trait theory is based on the assumption that the traits are common level, also referred to as maturity level or development level.
to many individuals and they vary in absolute amounts. Also, the traits
remain consistent over a period of time, and thus can be measured
through the behavioral indicators.

LSM: Leadership Situational

Model
Situational Leadership Theory, or the Situational Leadership Model,
is a model created by Paul Hersey and Ken Blanchard, developed
while working on Management of Organizational Behavior. The In the 1970s Hershey and Blanchard specified and further developed
theory was first introduced in 1969 as “life cycle theory of the concept of situational leadership. In their situational leadership
leadership”. During the mid-1970s, life cycle theory of leadership was theory they indicated that the effectiveness of the leadership style is
renamed “Situational Leadership Theory.” dependent on the situation. But what is determinative for the
situation? Both the maturity of the employees and their attitudes are
Situational Leadership emerged as one of a related group of two- determinative. Therefore Paul Hersey and Ken Blanchard distinguish
factor theories of leadership, many of which originated in research four levels of maturity that can be placed in their situational leadership
done at Ohio State University in the 1960s. These two-factor theories model:
hold that possibilities in leadership style are composed of
combinations of two main variables: task behavior and relationship S1. Directing: A lot of direction by the leader and little support; low
behavior. Various terms are used to describe these two concepts, such competence and low motivation.
as initiating structure or direction for task behavior and consideration
or socioemotional support for relationship behavior. Related S2. Coaching: A lot of direction by the leader and a lot of support;
leadership models include Blake and Mouton’s Managerial Grid and low competence and high motivation.
Reddin’s 3D Theory.
S3. Supporting: Little direction by the leader and a lot of support;
high competence and low motivation.

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S4. Delegating: Little direction by the leader and little support; high example a change or a reform of the organization. This employee
competence and high motivation. wants to set to work enthusiastically but he cannot work
independently because of his lack of skills and knowledge. A situation
Leadership styles like this might make an employee insecure. By explaining his
decision-making and by listening to the employee and giving him
According to Paul Hersey and Ken Blanchard a leader will have to undivided attention, the leader is guiding him. This style can be
adapt his style to level of maturity of the employee. As the maturity compared to the consultative leadership style.
increases, the independence of the employee also increases
accordingly. Consequently, four leadership styles are created within This leadership style is also called selling for a reason; the leader has
situational leadership. to ‘sell’ the tasks to the employee and convince him that he is able to
do them. Specific instructions are important here, as are
S1: Telling (Directing) communication at a level of equals. The leader makes the decisions,
but it is good if the employee asks questions and wants to know the
At this level, the leader has to deal with employees that are not purpose of the task. When the employee shows progress, he should be
competent and (still) unmotivated. This may have different causes. complimented to make him feel confident about his skills.
New and/or inexperienced employees are not capable enough to carry
out tasks independently. It may be experienced as threatening when an S3: Participating (Supporting)
employee is not competent enough to perform a task. This might
cause him to postpone the task or do this unwillingly. Good At this level, the employees are capable but (temporarily) unwilling.
instruction and monitoring of the entire work process would be the They are qualified workers but because of the number of tasks, they
best style of leadership in this situation. This is also sometimes might get the idea that they are being inundated with work. This can
referred to as task-oriented leadership with little or no concern for make them insecure and reluctant. To take away this insecurity, it is
human relationships and support. important that the leader confers with the employees and supports
them in their work. By having employees participate in the decision-
The employee will receive a lot of direction from the leader when it making process, acceptance will increase and the employees will be
comes to the tasks they have to fulfil. Not just the final objective is able to work independently again. It is also possible that a mistake has
made clear, but also the steps that have to be taken along the way. been made for which the employee blames himself. This can make
That is why he needs specific instructions in the form of composed him stagnate and lose confidence. That is why support from the leader
tasks. The leader makes the final decisions. It helps to compliment the is important.
employee about progress he is making and not overburdening him
with too much information at once. It is a good idea for a leader to The employee needs to be stimulated and has to get back the
have the employee repeat in his own words what he is supposed to do. confidence to make decisions independently again. It is a good idea
That way, it becomes clear if the instructions have been correctly for the leader to give that confidence to the employee and remind him
understood. of other tasks and projects that he did do well in the past. This type of
employee can benefit from some calm, face-to-face brainstorming or
S2: Selling (Coaching) sparring about a question or an issue. That increases his confidence
and makes his superior someone he can talk to. The employee is
At this level the employees have a desire to work independently but allowed to take some risks and trust in his own abilities.
they are not capable of doing this yet. They are employees who have
not reached full maturity and are hindered by circumstances for S4: Delegating
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At this level the employees can and want to carry out their tasks Team Building Exercises
independently, they have a high level of task maturity as a result of
which they need less support. Employees inform the leader about their Let us throw some light on some team building execises.
progress of their own accord and at the same time they indicate when
problems present themselves or when the work is stagnating. They  Encourage many trust building exercises in your team. Team
become motivated because of their independence and as a result a members must trust each other for the maximum output.
leader does not have to consult with them continuously. Blindfold half of your team members and ask them to jump over
bricks with the help of members who can see. Repeat this exercise
Delegating may seem easy, but it rarely is in practice. It is a good idea and now blindfold those who could see earlier. This exercise goes a
for a leader to discuss the final goal with the employee, when the task long way in building the trust among the team members. An
has to be (deadline) and how he plans to carry it out. It is possible to individual might be a little hesitant initially, but the moment he
plan evaluation moments in order to monitor progress and check if jumps over the brick with his fellow team member without getting
everything is going according to plan. The leader has to realise that hurt, he starts trusting him. The trust factor increases with time and
delegating involves keeping distance; the employee is responsible for relations among the team members improve.
the decisions. If things go well, compliments are in order. Boosting  One must know his fellow team member well. You can’t work with
confidence and letting go are the foundational techniques of someone you don’t know. Include a lot of exercises which help the
delegating. team members know each other well. Make pairs and ask them to
write whatever they know about their partner and vice a versa. You
can ask anyone to write his partner’s favourite colour, favourite
Team Building outfit, preferred hangout zone and so on. Ask his partner to correct
him if he is wrong in his answers. People know a lot about each
4-5 minutes other this way and also find out some unknown facts about their
partner. Ask the team members to give their introduction one by
one once the team is formed.
 The team members must be compatible with each other. Include
icebreaking activities in the team. Take them out for picnics; get
Team building refers to the various activities undertaken to motivate
togethers where they can interact with each other freely on any
the team members and increase the overall performance of the team.
topic. Allow the individuals to bring their families as well. People
You just can’t expect your team to perform on their own. A come a lot closer this way. Relationships improve. Remember your
motivating factor is a must. Team Building activities consist of team member’s birthday, anniversary or any other important date
various tasks undertaken to groom a team member, motivate him and and do not forget to wish him that day. Ask for a treat! This way,
make him perform his best. individuals are no longer strangers to each other and the bonding
increases.
We all are human beings and love appreciation. Any individual  Encourage activities where individuals come together as a single
performing exceptionally well must be appreciated well in public. He unit and work for a common task. Collect some even sized sticks,
feels happy and motivated to perform even better the next time. If any rope, nails, hammer, and glue stick. Ask your team members to
team member has come out with a unique idea; treat him with any construct a bridge out of the sticks using the rope, hammer,
thing that makes him happy. Never criticize any team member or gluestick and nails. You will be surprised to see that everyone will
demotivate him if he has failed to perform. Ask him to “Buck up”. be involved in the activity and help each other in making the bridge.
The concentration and will power to do something increases and
individuals learn to work as a single unit. They all work together,

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 each one contributing something or the other to construct the
bridge i.e. accomplish the task assigned to their team.

Need for Team Building – Why Team Building ?

Team Building activities are of utmost importance as they help in the

overall development of the team members and in turn improving the
team’s performance. It also strengthens the bond among the
employees and they feel motivated to work and achieve the targets.
Some kind of team building activities must be undertaken from time
to time to encourage the team members to work hard and realize their
dreams.
Stage 1: Forming
Tuckman Model of Team Development
High dependence on leader for guidance and direction. Little
5-6 minutes agreement on team aims other than received from leader. Individual
Dr Bruce Tuckman published his Forming Storming Norming roles and responsibilities are unclear. Leader must be prepared to
Performing model in 1965. He added a fifth stage, Adjourning, in the answer lots of questions about the team’s purpose, objectives and
1970s. The Forming Storming Norming Performing theory is an external relationships. Processes are often ignored. Members test
elegant and helpful explanation of team development and behavior. tolerance of system and leader.
Similarities can be seen with other models, such as Tannenbaum and
Schmidt Continuum and especially with Hersey and Blanchard’s Stage 2: Storming
Situational Leadership model, developed about the same time.
Decisions don’t come easily within group. Team members vie for
Tuckman’s model explains that as the team develops maturity and position as they attempt to establish themselves in relation to other
ability, relationships establish, and the leader changes leadership style. team members and the leader, who might receive challenges from
Beginning with a directing style, moving through coaching, then team members. Clarity of purpose increases but plenty of uncertainties
participating, finishing delegating and almost detached. At this point persist. Cliques and factions form and there may be power struggles.
the team may produce a successor leader and the previous leader can The team needs to be focused on its goals to avoid becoming
move on to develop a new team. This progression of team behaviour distracted by relationships and emotional issues. Compromises may be
and leadership style can be seen clearly in the Tannenbaum and required to enable progress.
Schmidt Continuum – the authority and freedom extended by the
leader to the team increases while the control of the leader reduces. In Stage 3: Norming
Tuckman’s Forming Storming Norming Performing model, Hersey’s
and Blanchard’s Situational Leadership model and in Tannenbaum Agreement and consensus largely forms among the team, who
and Schmidt’s Continuum, we see the same effect, represented in respond well to facilitation by leader. Roles and responsibilities are
three ways. clear and accepted. Big decisions are made by group agreement.
Smaller decisions may be delegated to individuals or small teams
within group. Commitment and unity is strong. The team may engage
in fun and social activities. The team discusses and develops its
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processes and working style. There is general respect for the leader Feelings of insecurity would be natural for people with high
and some of leadership is more shared by the team. Leader facilitates ‘steadiness’ attributes (as regards the ‘four temperaments’ or DISC
and enables. model) and with strong routine and empathy style (as regards the
Benziger thinking styles model, right and left basal brain dominance).
Stage 4: Performing

The team is more strategically aware; the team knows clearly why it is
Organizational Change
doing what it is doing. The team has a shared vision and is able to
stand on its own feet with no interference or participation from the Organizational change can be defined as the alteration in structure,
leader. There is a focus on over-achieving goals, and the team makes technology or people in an organization or behavior by an organization.
most of the decisions against criteria agreed with the leader. The team Here we need to note that change in organizational culture is different from
has a high degree of autonomy. Disagreements occur but now they are change in an organization. A new method or style or new rule is
resolved within the team positively, and necessary changes to implemented here.
processes and structure are made by the team. The team is able to
work towards achieving the goal, and also to attend to relationship, An organizational change occurs due to two major factors namely:
style and process issues along the way. Team members look after each
other. The team requires delegated tasks and projects from the leader.  External factor: External factors are those factors that are present
The team does not need to be instructed or assisted. Team members outside the firm but force the firm to change or implement a new
might ask for assistance from the leader with personal and law, rule etc. For example, all banks are bound to follow the rules
interpersonal development. laid down by the RBI.
 Internal factor: Internal factors are those factors that are caused or
Fifth stage: Adjourning introduced inside an organization that forces a change. For
example, no smoking in the workplace.
Bruce Tuckman refined his theory around 1975 and added a fifth stage
to the Forming Storming Norming Performing model – he called it Kurt Lewin’s Force Field Analysis
Adjourning, which is also referred to as Deforming and Mourning.
Adjourning is arguably more of an adjunct to the original four stage Kurt Lewin, is a noted organizational theorist, who proposed the force
model rather than an extension – it views the group from a perspective field analysis for organizational change. In this theory, he has
beyond the purpose of the first four stages. The Adjourning phase is prioritized two factors for change in an organization, namely:
certainly very relevant to the people in the group and their well-being,
but not to the main task of managing and developing a team, which is  Driving force: Driving force can be defined as an organizational
clearly central to the original four stages. force that makes a change with respect to structure, people and
technology. In short, it drives the organization from one culture to
Tuckman’s fifth stage, Adjourning, is the break-up of the group, another.
hopefully when the task is completed successfully, its purpose  Restoring force: Restoring force is the force which changes the
fulfilled; everyone can move on to new things, feeling good about culture from the existing state to the old state. It indicates a
what’s been achieved. From an organizational perspective, recognition backward motion while the driving force indicates a forward
of and sensitivity to people’s vulnerabilities in Tuckman’s fifth stage motion.
is helpful, particularly if members of the group have been closely
bonded and feel a sense of insecurity or threat from this change.
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Importance of Organizational Change According to Kurt Lewin, the planned organizational change is
implemented in three different stages. They are:
There is a need of change in an organization because there is always a
hope for further development, and in order to survive in a competitive  Unfreezing: In this stage, the organization studies if the change is
market, the organization needs to be updated with changes. However, required or not, what and why is the change necessary. Considering
we have listed some reasons to explain why changes are deliberately the entire situation, the organization decides for appropriate
made and carefully planned by the organization before change. Thus a plan and strategy is formulated as required.
implementation.  Changing: In this stage, the organization executes the plan and
program for change. For this purpose, proper precautions are taken
 It improves the means to satisfy the economic requirements of in order to maintain cooperation and coordination between the
people. employees and management, avoiding miscommunication or
 It enhances the profitability of organization. disputes. Adequate supervision and control is arranged as needed.
 It promotes employee satisfaction and well-being.Planned Change  Refreezing: This is the final stage, in order to bring organizational
change. By way of supervision, the organization tries to evaluate
We can define planned change as any kind of alteration or the effectiveness of change. Collecting all this information, the
modification which is done in advance and differently for management interprets whether to continue or replace change by
improvement. some other alternatives or to make further minor changes.

The Need for Planned Change Types of Planned Change

Planned change takes places in an organization when there is a On the basis of a company’s requirement planned change is classified
demand for change due to two types of forces. These forces are into three types. They are:
grouped into internal sources and external sources.
 Change in structure
 Change in technology
Internal forces that lead to a planned change in an organization
 Change in people
include obsolescence of production and service, new market
opportunities, new strategic direction, increasing workforce diversity,
Change in Structure
and shift in socio-cultural values.

External forces that lead to a planned change in an organization We say that the planned change required is change in structure when
include regulators, competitors, market force, customers, and development is required in these following areas:
technology. Each of these forces can create pressing demand for
change in small or big, public or private, business or non-business  Change in management
organizations.  New management
 Change in position or location
 Change in objective, rules, regulations etc.
Process of Planned Change
 Launching new branches
Once the management decides to implement some changes in the
organization, it needs to be done carefully as it is a very sensitive
issue. It is very important for all the employees to adapt to change.
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Change in Technology —or quite major—as in the case of refocusing an overall marketing
strategy, fighting off a hostile takeover, or transforming a company in
We say that the planned change required is change in technology the face of persistent foreign competition.
when development is required in these following areas:
Organizational change initiatives often arise out of problems faced by
 Need of office automation a company. In some cases, however, companies change under the
 Installing new hardware and software impetus of enlightened leaders who first recognize and then exploit
 Executing new working procedures new potentials dormant in the organization or its circumstances. Some
 New methods in production function observers, more soberly, label this a “performance gap” which able
 Producing new products and devices management is inspired to close.
 New training, research and development program
But organizational change is also resisted and—in the opinion of its
Change in People promoters—fails. The failure may be due to the manner in which
change has been visualized, announced, and implemented or because
We say that the planned change required is change in people when internal resistance to it builds. Employees, in other words, sabotage
development is required in these following areas: those changes they view as antithetical to their own interests.

 New candidate requirement AREAS OF ORGANIZATIONAL CHANGE

 Promotion or demotion
 Transfer to other location Students of organizational change identify areas of change in order to
 Suspension or dismissal analyze them. Daniel Wischnevsky and Fariborz Daman, for example,
 Deputation writing in Journal of Managerial Issues, single out strategy, structure,
 Training and development and organizational power. Others add technology or the corporate
population (“people”). All of these areas, of course, are related;
Approaches to Managing companies often must institute changes in all areas when they attempt
to make changes in one. The first area, strategic change, can take
Organizational Change place on a large scale—for example, when a company shifts its
resources to enter a new line of business—or on a small scale—for
Organizational change occurs when a company makes a transition from its example, when a company makes productivity improvements in order
current state to some desired future state. Managing organizational change to reduce costs. There are three basic stages for a company making a
is the process of planning and implementing change in organizations in such
strategic change: 1) realizing that the current strategy is no longer
suitable for the company’s situation; 2) establishing a vision for the
a way as to minimize employee resistance and cost to the organization
company’s future direction; and 3) implementing the change and
while simultaneously maximizing the effectiveness of the change effort. setting up new systems to support it.

Today’s business environment requires companies to undergo changes Technological changes are often introduced as components of larger
almost constantly if they are to remain competitive. Factors such as strategic changes, although they sometimes take place on their own.
globalization of markets and rapidly evolving technology force An important aspect of changing technology is determining who in the
businesses to respond in order to survive. Such changes may be organization will be threatened by the change. To be successful, a
relatively minor—as in the case of installing a new software program technology change must be incorporated into the company’s overall
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systems, and a management structure must be created to support it. managers can make themselves available to provide explanations and
Structural changes can also occur due to strategic changes—as in the to minimize stress arising in many scores of situations.
case where a company decides to acquire another business and must
integrate it—as well as due to operational changes or changes in Some companies manage to overcome resistance to change through
managerial style. For example, a company that wished to implement negotiation and rewards. They offer employees concrete incentives to
more participative decision making might need to change its ensure their cooperation. Other companies resort to manipulation, or
hierarchical structure. using subtle tactics such as giving a resistance leader a prominent
position in the change effort. A final option is coercion, which
People changes can become necessary due to other changes, or involves punishing people who resist or using force to ensure their
sometimes companies simply seek to change workers’ attitudes and cooperation. Although this method can be useful when speed is of the
behaviors in order to increase their effectiveness or to stimulate essence, it can have lingering negative effects on the company. Of
individual or team creative-ness. Almost always people changes are course, no method is appropriate to every situation, and a number of
the most difficult and important part of the overall change process. different methods may be combined as needed.
The science of organization development was created to deal with
changing people on the job through techniques such as education and TECHNIQUES FOR MANAGING CHANGE EFFECTIVELY
training, team building, and career planning.
Managing change effectively requires moving the organization from
RESISTANCE TO CHANGE its current state to a future desired state at minimal cost to the
organization. Key steps in that process are:
A manager trying to implement a change, no matter how small, should
expect to encounter some resistance from within the organization.  Understanding the current state of the organization. This involves
Resistance to change is normal; people cling to habits and to the status identifying problems the company faces, assigning a level of
quo. To be sure, managerial actions can minimize or arouse resistance. importance to each one, and assessing the kinds of changes needed
People must be motivated to shake off old habits. This must take place to solve the problems.
in stages rather than abruptly so that “managed change” takes on the  Competently envisioning and laying out the desired future state of
character of “natural change.” In addition to normal inertia, the organization. This involves picturing the ideal situation for the
organization change introduces anxieties about the future. If the future company after the change is implemented, conveying this vision
after the change comes to be perceived positively, resistance will be clearly to everyone involved in the change effort, and designing a
less. means of transition to the new state. An important part of the
transition should be maintaining some sort of stability; some things
Education and communication are therefore key ingredients in —such as the company’s overall mission or key personnel—should
minimizing negative reactions. Employees can be informed about both remain constant in the midst of turmoil to help reduce people’s
the nature of the change and the logic behind it before it takes place anxiety.
through reports, memos, group presentations, or individual  Implementing the change in an orderly manner. This involves
discussions. Another important component of overcoming resistance managing the transition effectively. It might be helpful to draw up a
is inviting employee participation and involvement in both the design plan, allocate resources, and appoint a key person to take charge of
and implementation phases of the change effort. Organized forms of the change process. The company’s leaders should try to generate
facilitation and support can be deployed. Managers can ensure that enthusiasm for the change by sharing their goals and vision and
acting as role models. In some cases, it may be useful to try for
employees will have the resources to bring the change about;
small victories first in order to pave the way for later successes.

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Change is natural, of course. Proactive management of change to trends is working remotely or telecommuting, which some people
optimize future adaptability is invariably a more creative way of prefer rather than coming into the office every day.
dealing with the dynamisms of industrial transformation than letting
them happen willy-nilly. That process will succeed better with the Ask each employee their preferences — maybe some will opt to work
help of the the company’s human resources than without. remotely, but others would rather work from the office.

Creating a Culture for Change, Don’t just approach change from a management perspective, but from
the employee’s perspective. When it comes to employee concerns,
Implementing the Change smart leaders talk less and listen more.

As part of today’s changing technological landscape, it is vital to 2. Recognize All Reactions to Change
create a workplace culture that adapts to those changes. Doing so
starts with having a comfortable workplace culture to begin with. Not every employee responds to change in the same way. Therefore, it
Making your employees feel at ease in their current working is important to address all the ways employees react to change. The
conditions is the basis of creating a workplace that can adapt to best approach is to address all reactions with the same amount of
changes. concern. As mentioned earlier, some employees will respond well to
change, while others will require a slower transitional period.
Change is an inevitable part of the workplace no matter what industry
you’re in. To make these changes simple to implement, companies It’s never too late to embrace change, either. For example, one of the
need to address employee concerns. Many employees thrive on oldest insurers in Canada recently decided to take a more proactive
adaption and continuous learning, while others like to stick to the old approach to digital literacy and employee engagement.
tried and true policies and routines that they’ve been using for years.
Savvy managers ensure all employees are happy when keeping up Regardless of the size or age of the company, all employees should
with changes in the workplace. understand the need for change to remain competitive in the ever-
changing technological and business world.
Your workplace can follow these five ways to embrace change in the
workplace, while ensuring zero employees get left behind. 3. Lead Employees by Example

1. Seek Feedback and Employee Engagement Introducing a new technology or strategy to a workplace might be
scary to employees who have become accustomed to using the same
Seeking employee feedback is one way to show employees they are equipment and processes since they started working. Executives and
valued and their opinions and comfort are your priority. Asking for managing staff should lead by example. They must be open to change
feedback is also a way of showing transparency in the company, to show employees it can be a lot easier than they think.
which is crucial to maintaining a strong workplace culture despite
potential changes. If employees see company leadership frustrated and hesitant about
change, they will follow that example. While it is easy for executives
Another way to encourage employee engagement is to adapt to to get stuck in their ways and believe the technology and processes the
changes that result in more job satisfaction. This may include company was founded on will always be the best option, everyone
managing a mobile workforce. Today, one of the major workplace should remain open-minded.

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 4. Maintain a Sense of Community By looking at change as a process with distinct stages, you can
prepare yourself for what is coming and make a plan to manage the
As changes occur at work, managers should maintain a culture where transition – looking before you leap, so to speak. All too often, people
employees know they are welcome. When changes take over the go into change blindly, causing much unnecessary turmoil and chaos.
workplace, remind longer-tenured employees that they are part of the
team and that they are still a necessary component in making that
team work.

Part of maintaining a sense of community is ensuring employees

know the company values and believe in them. If there is a two-way
street of trust between employees and their managers, it creates a good
foundation for embracing change.

You can also maintain a sense of community by rewarding employees

for trying, even if they fail. Mistakes and failure are inevitable when
companies implement change. The only way to make employees feel
safe with trying new things is to embrace their mistakes. If employees
are afraid to fail, they will be very hesitant to try new ways of doing
things. To begin any successful change process, you must first start by
understanding why the change must take place. As Lewin put it,
5. Train Employees Appropriately “Motivation for change must be generated before change can occur.
One must be helped to re-examine many cherished assumptions about
While creating a basis for change is imperative, managers should be oneself and one’s relations to others.” This is the unfreezing stage
prepared to appropriately train employees to prepare for transition. from which change begins.
Start by addressing employees’ fears and encouraging them to
participate fully in every aspect of the process. Unfreeze

Employees must be prepared to adapt as new technologies are This first stage of change involves preparing the organization to
constantly being introduced. Training acceptance is one of the most accept that change is necessary, which involves breaking down the
vital lessons to give employees. existing status quo before you can build up a new way of operating.

Kurt Lewin Model of change Key to this is developing a compelling message showing why the
existing way of doing things cannot continue. This is easiest to frame
when you can point to declining sales figures, poor financial results,
If you have a large cube of ice but realize that what you want is a cone worrying customer satisfaction surveys, or suchlike. These show that
of ice, what do you do? First you must melt the ice to make it things have to change in a way that everyone can understand.
amenable to change (unfreeze). Then you must mold the iced water
into the shape you want (change). Finally, you must solidify the new To prepare the organization successfully, you need to start at its core –
shape (refreeze). you need to challenge the beliefs, values, attitudes, and behaviors that
currently define it. Using the analogy of a building, you must examine
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and be prepared to change the existing foundations as they might not consistent job descriptions, and so on. The refreeze stage also needs to
support add-on storeys. Unless this is done, the whole building may help people and the organization internalize or institutionalize the
risk collapse. changes. This means making sure that the changes are used all the
time, and that they are incorporated into everyday business. With a
This first part of the change process is usually the most difficult and new sense of stability, employees feel confident and comfortable with
stressful. When you start cutting down the “way things are done,” you the new ways of working.
put everyone and everything off balance. You may evoke strong
reactions in people, and that’s exactly what needs to be done. The rationale for creating a new sense of stability in our ever-
changing world is often questioned. Even though change is a constant
By forcing the organization to re-examine its core, you effectively in many organizations, this refreezing stage is still important. Without
create a (controlled) crisis, which in turn can build a strong motivation it, employees get caught in a transition trap where they aren’t sure
to seek out a new equilibrium. Without this motivation, you won’t get how things should be done, so nothing ever gets done to full capacity.
the buy-in and participation necessary to effect any meaningful In the absence of a new frozen state, it is very difficult to tackle the
change. next change initiative effectively. How do you go about convincing
people that something needs changing if you haven’t allowed the most
Change (Move) recent changes to sink in? Change will be perceived as change for
change’s sake, and the motivation required to implement new changes
After the uncertainty created in the unfreeze stage, the change stage is simply won’t be there.
where people begin to resolve their uncertainty and look for new ways
to do things. People start to believe and act in ways that support the As part of the refreezing process, make sure that you celebrate the
new direction. success of the change – this helps people to find closure, thanks them
for enduring a painful time, and helps them believe that future change
The transition from unfreeze to change does not happen overnight: will be successful.
people take time to embrace the new direction and participate
proactively in the change. A related change model, the Change
Curve , focuses on the specific issue of personal transitions in a
changing environment and is useful for understanding this aspect in
more detail.

In order to accept the change and contribute to making it successful,

people need to understand how it will benefit them. Not everyone will
fall in line just because the change is necessary and will benefit the
company. This is a common assumption and a pitfall that should be
avoided.

Refreeze

When the changes are taking shape and people have embraced the
new ways of working, the organization is ready to refreeze. The
outward signs of the refreeze are a stable organization chart,
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