MANAGEMENT PROCESS & ORGANISATION

Handout I 1. Functions of management Various authors have defined functions of management in separate manners. Henri Fayol has classified functions into: 1. 2. 3. 4. Planning, Organizing, Commanding, Coordinating and Controlling.

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Luther Gullick has used his POSDCORB (Planning, Organizing, Staffing, Directing, Controlling, Reporting and Budgeting) approach to explain the same in a more comprehensive manner. In any organization, the managers have to perform certain functions in order to achieve the organizations goals and objectives. The managerial functions can be grouped as below: Functions Planning Organizing Staffing IncludeOperative functions

Forecasting, decision making, programming, Production policy formulation, budgeting etc. Functionalization, delegation, decentralization Marketing and departmentalization etc. Recruitment, selection, training, man power Purchasing forecasting, compensation planning, promotion etc. Supervision, communication, motivation etc. Making standards, reporting, measurement and corrective action leadership, Financing recording Personnel

Directing Controlling

PLANNING This is the most basic function of management. A manager plans prior to action and thus planning precedes other functions. Planning involves: (a) Determining the objectives (b) Selection of action plan (what, when, where, how and by whom) (c) Looking ahead into the future Since planning requires use of foresight, top management is involved in this to a great extent. Planning is of the following types: Short term

Long term Characteristics of Planning: 1. Goal oriented 2. Planning is a Primary function 3. Planning is all-pervasive 4. Rational process 5. Continuous process 6. Forward-looking Advantages of planning

The Planning Process

(a) It lays attention on objectives and results (b) It enables to do things in an orderly and effective manner (c) It helps in achievement of goals (d) It helps in facing uncertainty and change (e) Reduces risk (f) Provides sense of direction (g) Helps in coordination (h) Facilitates control

ORGANISING Determine

Develop Planning Premises

Identify Alternatives Alternatives

Evaluate After formulating plans, the next step is organizing. Organizing is identifying and grouping the
activities, dividing them amongst individuals and making harmonious authority-responsibility relationships among members of the enterprise.

Objectives

Formulate Derivative Plans

Select a course of action

Nature of Organizing The main characteristics of organization as a structure are: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Common purpose Division of labor Authority structure People Communication Coordination Environment Man-made Environment Rules and regulations

Process of Organizing The process of designing organization structure involves the following steps: a. Identification of Activities b. Grouping of Activities c. Assignment of Duties d. Delegation of Authority Advantages of Organization (a) (b) (c) (d) (e) Makes Administration easy. Encourages growth and diversification. Helps in technological improvements. Facilitates good human relations. Fosters coordination.

FACTORS IN ORGANISATION DESIGN

PEOPLE

TECHNLOGY

ENVIRONMENT

STRATEGY
STAFFING Staffing is the process of filling all positions in the organization with adequate and qualified personnel. It is a managerial function of attracting, acquiring, retaining and developing the human resources required by an organization.

Staffing consists of: (a) Manpower planning (b) Recruitment (c) Selection (d) Training (e) Compensation (f) Employees maintenance (g) Appraising and counseling Advantages: (a) Required Personnel of required skills are available at the right time. (b) Persons with potential are discovered. (c) Introduction with different jobs at the same level of responsibility. (d) Transmission of required knowledge and skills. DIRECTING Directing is a managerial function, which aims at attainment of planned targets by: (a) Guiding (b) Supervising (c) Motivating (d) Leading people Directing is the executive function of management since it involves execution of plans and policies. A manager in order to direct his subordinates has to take necessary steps in order to ensure that the employees are working according to the established plans. Directing function of management includes(a) Issuing orders and instructions (b) Supervising people (c) Motivation i.e. encouraging to work for certain objectives. (d) Communicating with employees regarding plans and their execution. (e) Influencing the behavior of employees. Characteristics of Directing function

1. Pervasive Function-Performed by all the managers at all levels of the organization. 2. Continuing Function-On-going process as it continues throughout the life of an
organization.

3. Linking Function-Connecting link between preparatory functions (planning, organizing and

staffing) and controlling.

4. Creative Function-Directing converts plans into performance.

5. Human Factor-Directing is the interpersonal aspect of managing by which subordinates are

lead to understand and contribute effectively and efficiently to the attainment of enterprise objectives.

6. Chain of Command-Directing initiates at the top level in the organization and follows to
bottom through the hierarchy. Advantages: (a) (b) (c) (d) Initiates action Ensures coordination Improves efficiency Facilitates change

(e) Helps in maintaining stability and growth. CONTROLLING Controlling is the process of ensuring that the organization is moving in the right direction and that progress is being made towards achievement of the organizational goals and objectives. According to Koontz and ODonnell: Managerial control implies the measurement of accomplishment against the standard and the correction of deviations to assure attainment of objectives according to plans. The process of controlling involves the following steps: (a) (b) (c) (d) Establishing standards in order to evaluate performance Comparison of Actual performance with Standards. Finding reasons for variance between the two Taking remedial action for correcting deviations

Nature of Control The main characteristics of managerial control are as follows: 1. 2. 3. 4. 5. 6. 7. 8. Control process is universal. Control is a continuous process. Control is forward looking. Control involves measurement. Control is an influence process. Management control is a system. Control is goal oriented. Control is best aimed at results not at people as such.

Elements of Control Planning Information Feedback Delegation of authority Remedial Action

MEET STANDARDS STANDARDS PLANNING OPERATIONS (ORGANIZING & DIRECTING)

PERFORMANCE

DOES NOT MEET STANDARDS

CORRECTIVE ACTION
Fig. The Control Process Advantages: (a) Guide to operations (b) Quality of various plans can be verified (c) Managerial Accountability (d) Employee Morale (e) Ensures actions proceeds according to plans. The contribution of each of the above functions does not remain the same across all levels of management. The following diagram shows how the functions vary across organizational levels:

Top Management Middle Management Supervisory Management

Plannin g

Organisin g Staffing Directing Controllin g 7

2. Management a science or an art Management is a Science as well as an Art. The theory (science) and practice (art) of management go side by side for the efficient functioning of an organization. MANAGEMENT AS A SCIENCE Management is a science because it contains all the essentials of science. The important elements of science are as follows:

(a) Science is a systematized body of knowledge. .It establishes cause and effect relationship
between different variables.

(b) It includes principles and theories, which have been developed through continuous
observation, experimentation and research. They have evolved through practical experience and theoretical research over several decades. These principles and theories are now available in every area of management. For instance: There are several principles to serve as guidelines for effective delegation of authority.

(c) The principles have Universal applicability i.e. they can be applied under different situations.
The principles can be verified and they lead to predictable results. They have a wide and repetitive range of application. For Example: Application of management theory can be demonstrated through the quasilaboratory method of case studies.

(d) The organized body of knowledge can be taught as well as learnt in the classroom and outside
like in industry. Examples: Physics, Chemistry are some examples of science. Nature of Science of Management: Social Science Management is a social science like economics as it involves the study of human behavior. Living and complex human beings in different situations and circumstances cannot be tested through experiments. Therefore, the principles of management are not hard and fast laws. On the contrary they are flexible i.e. they can be modified in different situations. Inexact or soft science Management scientists cannot explain clearly why and how a human being behaves in a particular way and will he behave in the same way in future. The Human and Environmental element in management makes it an imperfect science. Applied Science A manager has to apply the principles just like a medical or legal practitioner. Inter-disciplinary science

Management uses knowledge from several other sciences like Economics, Mathematics, and Sociology. MANAGEMENT AS AN ART Art involves the practical application of personal skills and knowledge to achieve desired results .The function of art is to effect change and to achieve desired results. Art is essentially creative and is practice-based. The main elements of an Art are: (a) Personal skills, (b) (c) (d) Practical know-how, Result-orientation, Creativity,

(e) Constant practice aimed at perfection Management is an art because of the following reasons: a) Like an artist, a manager applies his knowledge and skills to coordinate the efforts of his people. b) Management aims at achieving practical results. e.g., profits, growth etc.

c) Just like any other art, management is creative. New situations are introduced and resources are converted into output. d) Management is a personalized process. Depending upon his understanding and environmental conditions, a manager adopts his own approach while handling various problems. e) An efficient management results in realization of organizational and other goals. CONCLUSION: Management is therefore neither exclusively an art nor exclusively a science but a combination of both. The science and art facets of management are not conflicting but are complementary to each other.

3. Effective managerial leadership Various authors have defined leadership in different manners. Some of such definitions are: Leadership is the art of influencing people to strive willingly for group objectives George R. Terry

influencing people to follow the achievement of a common goal. It is the ability to exert interpersonal influence by means of communication towards achievement of goal Koontz & ODonnell Effective managerial leadership involves the following:

(i) (ii)

Setting of goals The leader makes the goals that he and his team are to attain. This is also explained to the members of his team. Motivation of employees Effective leadership triggers an urge for accomplishment and transforms potential into performance. The effective leader creates and maintains an environment conducive to high performance. This in turn helps employees to get motivated to work hard. Building morale An effective leader shapes the thinking an attitude of the group and maintains the group discipline. He develops good human relations and facilitates interaction between the group members. Creating confidence Effective leadership creates and sustains enthusiasm amongst the followers. It also provides advice and guidance by which the subordinates can recognize and develop their capabilities. He serves as a friend philosopher and guide. Maintaining discipline In any group, it is important to follow rules, regulations and procedures that are necessary for the attainment of objectives. Developing teamwork Effective leadership helps to unify individual efforts. It acts as a cohesive force that binds the group together. It fosters mutual understanding and team efforts. Facilitating change It acts as a corner stone of organizational change and development. In a world of change and uncertainty, effective leadership becomes a vital element in the very process of change itself.

(iii)

(iv)

(v) (vi)

(vii)

(viii)

Representing the group A leadership represents the group to the outside world, thus serving as their spokesman and protecting their interests. Effective leadership is a product of many forces that act and interact simultaneously. It achieves a certain degree of integration of these varying and complex forces. This can be depicted in the following diagram:

LEADER Leaders values Confidence in followers General preferences ENVIRONMENT FOLLOWERS Social & cultural Knowledge & Economic & experience political Interest & Community involvement influence ORGANISATION Structure & pattern of work activities Technology Specialization

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Thus, an effective leader: Inspires an employee Accomplishes work and develops the employee Uses positive approach Coaches and mentors the employee Associates himself with the team Assumes obligation Shares responsibilities for rights and wrongs done by his team

It is important for any organization to make its managers effective leaders. For this, one or more of the following measures can be adopted:

i.)

Training: Leadership training programs offer specialized training to the managers and help them to become effective leaders. It gives insights and experiences on behavioral, counseling and interpersonal skills. Internal organization exposure: This involves exposing mangers to critical situations within the company itself. Autonomy and accountability: Managers maybe able to sharpen their skills when given relative freedom for decision making. Opportunities for interaction: Improving communication with subordinates help the managers understand them better and thus help address their issues in a more effective manner. Setting goals: It is important that the goals set are challenging as well as realistic. This motivates the employees to strive harder to accomplish them. Job rotation: Systematic and planned rotation in the job helps in better grooming of the managers.

ii.) iii.) iv.)

v.) vi.)

To summarize, effective leaders are both people as well as task oriented. They seek to direct the group towards high efficiency and productivity. 4. Effective communication in an organization

Communication means the process of passing information from one person to another. It is an exchange of facts, ideas, opinions, and emotions by two or more persons. In order to make the communication effective in an organization, following points must be kept in mind:

Channel Source Sender Sent Noise

Message

Receiver

Result

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Clarity: Clarity of thought is the first essential of good communication. The message must be perfectly clear and free from all ambiguity.

1. Language: It should be simple and precise which the receiver can understand easily.
Technical jargon and high sounding words should be avoided.

2. Completeness: The message must be comprehensive and adequate. Incomplete message

creates misunderstanding and delays actions.

3. Brevity: All communication should be brief. Meaningless words and information overload
spoil a message. Unnecessary repetition and over-elaboration should be avoided.

4. Timeliness: The message should reach the receiver at the right time. A message, which fails
to reach the receiver in proper time, is useless. The media used should be proper.

5. Compassion: In order to communicate effectively, the communicator must understand the

intelligence level and background of the receiver. He must know what information the receiver exactly needs and in what form.

6. Integrity: The message sent must be consistent with the objectives, policies and programs of
the organization.

7. Feedback: Communication is a two-way process. There should be follow up action to ensure

that the message is rightly understood.

8. Attention: Careful listening is essential for effective communication. The communicator

should try to secure the individual attention of the communicatee. He should convey the message in such a way that the emotions and sentiments of the receiver are not hurt.

9. Strategic use of Grapevine: A manager should make use of his grapevine to supplement the
formal channels of communication. He must understand the informal communication networks and should make their intelligent use to fill up gaps in formal communication system. In addition to the above points, there are special aids for promoting free and frank communications. Open-door policy and participation in social functions are unstructured informal aids. Suggestion scheme and personnel counseling are structured or formal aids for communication.

5. Principles of effective communication In order to make communication system effective, the following factors or principles must be followed: Principle of clarity-The idea to be transmitted should always be in easily understandable language.

Principle of attention-Communication requires that the receiver of message should understand the message. It is possible only when the recipient pays attention to the message being communicated.

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Principle of consistency-Communication should always be consistent with the plan, objective, policies and programs of the enterprise.

Principle of adequacy-The information being sent should be adequate and complete in all respects. Incomplete or inadequate information delays actions and destroys understanding and relations.

Principle of integration-The main objective of effective communication is to integrate the effort to strengthen the organization by achieving the common objectives of the organization.

Principle of timeliness- the information or ideas must be conveyed at the proper time. Any delay in this will result in the documents loosing its importance.

Principles of informality- Formal communication channels are very important and useful to the organization but informal communication also plays an important role in spreading information. In certain situations, managers should try to be informal in their behavior with subordinates.

Principle of feedback-The communication must have feedback confirmation from the recipient whether the messages have been understood by the recipient in the same sense in which the sender takes it for, and also whether the recipient is agreed or disagreed to this proposal of the sender.

Communication networks-It refers to the routes through which the communication flows to the destination, person for whom it is intended. Management should consider the effectiveness of the communication and morale of the communicatee before it should figure out such network.

Principle of economy-The communication system must be as economical as possible but not at the cost of the efficiency of the system.

6. Overcoming listening barriers The following steps may be taken to overcome listening barriers:

Clarity-The message must be perfectly clear and free from all ambiguity. The language used should be simple and precise which the receiver can understand easily. Technical jargon and high sounding words should be avoided.

Completeness-The message must be comprehensive and adequate. Incomplete message creates misunderstanding and delays actions. Brevity-All communication should be brief. Meaningless words and information overload spoil a message. Unnecessary repetition and over-elaboration should be avoided.

Timeliness-The message should reach the receiver at the right time. A message that fails to reach the receiver in proper time may turn out to be useless. The media used should be proper.

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Compassion-The communicator must understand the intelligence level and background of the receiver. He must know what information the receiver exactly needs and in what form.

Integrity-The messages sent must be consistent with the objectives, policies and programs of the organization. Feedback-Communication is a two-way process. There should be follow up action to ensure that the message is rightly understood. Attention-Careful listening is essential for effective communication. The communicator should try to secure the individual attention of the communicatee. Strategic use of Grapevine-A manager should make use of his grapevine to supplement the formal channels of communication.

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7. Grapevine

Informal Communication (Grapevine) Communication in any organization may be formal or informal in nature. While formal channels are those established by the structure of the organization, the informal channels takes place outside this. Informal communication is technically known as the grapevine. It takes place in informal and inter-personal contacts among employees. Members of informal groups pass on information and opinions to each other as well as to other informal groups. Informal communication transcends the barriers and boundaries of the formal channels. It is multiple in nature, the same person having social relationships with several other persons in the organization. It exists outside the official network but continually interacts with the formal communication. A grapevine is structure-less and information passes through it in directions. Grapevine has the following characteristics: (i) It arises from social interactions among people.

(ii) It is a natural and normal activity due to desire of the people to talk to one another. (iii) It generally operates like a cluster chain as every person tells in turn many other persons. (iv) Only a few persons are active communicators in it. These can be called liaison individuals. People are active on the grapevine when their own interests and interests of their friends are involved. (v) It operates at a fast speed because it functions through word of mouth or observation. (vi) Grapevine functions partly in a predictable manner that offers managers a chance to influence it. Advantages of grapevine are: (i) Helps in developing better relations amongst employees.

(ii) Has a flexible and personal nature, and hence fills in gaps arisen in formal channels of communication. (iii) (iv) Has a fast speed. Links persons not in official chain of command.

(v) Serves as an important feedback channel, if utilized effectively. Apart from the above advantages, the limitations of informal communication are the following: (i) It is not authentic.

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(ii) (iii) (iv)

Is prone to distortion. May give rise to rumors in the organization. It is difficult to pinpoint responsibility.

(v) May result in leakage of confidential information. It is apparent that management cannot eliminate grapevine in an organization. But by keeping the informal groups informed about concerned organizational matters in a systematic way, it can use the power of the grapevine to disseminate information.

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The following types of grapevines commonly exist in any organization:

Single Strand
Communication is through intervening persons in a string. Thus information is passed through persons who are in form of a strand.

Gossip
Non selectively, one representative communicates with the other.

Probability
Communication is done randomly with others according to laws of probability.

Cluster
Communication is selective with those the employee can trust. Thus different such clusters are formed in the organization.

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7. Motivation Motivation is one of the most important factors in determining organizational efficiency. Motivation is the process of steering a persons inner drives and actions towards certain goals and

PERFORMANCE = ABILITY X MOTIVATION

committing his energies to achieve these goals. It is characterized by a personal and internal feeling that produces goal-directed behavior. Motivation is thus a continuous process. It is complex and is system-oriented. It is very important for the shop floor workers to be motivated during their work. This results in: Higher efficiency Low absenteeism Low turnover Facilitates change Cordial human relations A better corporate image The following techniques can be employed to motivate shop floor workers:

(a) The first and foremost thing that comes to mind is looking at monetary
incentives. Though money tends to be a potent motivator, it is only a short term incentive. Ideally, monetary benefits should be linked to productivity and should prove as an incentive for working harder and maintaining set quality standards. Apart from individual productivity, parts of profits of the company should also be shared in form of profit sharing incentives.

(b) Job is also a big motivating factor. Challenging work provides job satisfaction
and inspires the worker to work harder. Methods like job rotation, job enrichment etc. help better the job content. In assembly line setups, job at shop floor level gets very monotonous. Hence such measures carry a great significance.

(c) Recognition and status implies giving acknowledgement and appreciation of

good work. Schemes like kaizens, suggestion scheme, and quality circle are tools used in Japanese companies to inspire creativity amongst employees and inspire them by giving rewards for good work and cost saving to the company.

(d) Economic security is a prime concern to the workers. By ensuring that they are
secure in the job gives a feeling of belonging to the workers. The concept of lifetime employment followed by the Japanese companies has proved itself.

(e) Responsibility brings about independence in working and hence more ownership
to the job. One way of achieving this on the shop floor is by having a cellular production concept wherein a group leader is chosen from amongst the workers by rotation. He is responsible for the performance of his cell.

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(f) Healthy competition brought about by competing for quality, maintenance and
cleanliness also ensures greater participation by the workers as well as a higher productivity.

(g) Promoting deserving workers to supervisors can provide opportunity for growth. (h) Training of workers can make them multi-skilled. If conducted successfully, it
will also make them understand their contribution to the company in a broader manner.

Monetary benefits Job enrichment

Multi-skilling Job security Responsibility Healthy competition Opportunity for growth Participation Training

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8. Role of synergy towards team and group building

SYNERGY is the concept that the combined effect of certain parts is greater than the sum of their individual effects.

For Example: Product 1 contributes X and product 2 contributes Y. If they are produced together, they may contribute X+Y+Z. Z is the synergistic effect of X and Y being brought together. Z represents positive synergy. There can be negative synergy as well. The study of synergy helps in analyzing new growth opportunities. The concept of synergy can be used to motivate members of an organization to work efficiently and effectively towards the attainment of organizational objectives. If synergy is the mission of the organization, team building is a means to achieve the end.

9. Teams or groups or both or none towards organizational effectiveness Man is a social animal and prefers to live and work in groups. A group is an aggregate of persons with close inters relationships. A group is a cluster of two or more individuals who interact with each other on a relatively enduring basis, identify themselves as belonging to a distinct unit and who share certain common activities, interest, values and goals. Members of a group relate to one another in some common ways and united by some common ties on a sustained basis. A group is different from a crowd which has no structure and performs no specific function. The members of a group interact with one another to jointly pursue common goals. An organization consists of several types of groups. Every member of the organization belongs to one or more groups.

TYPES OF GROUPS: Primary and Secondary Groups Small and Large Groups

Formal and Informal Groups If a product or technological break through generates a family of products which move through successive stages of new and improved products, the temporary task force concept is ineffective. Next step is to create permanent teams which consists of representatives from each functional department the teams meet regularly to resolve inter departmental issues and to achieve coordination. When not involved with issues associated with new product development, the team members work on their regular assignments.

Teams are an important means to organize work activities. When management uses teams as its central co-ordination device, we have a team structure. Conclusion: Groups are powerful in changing the behavior, attitudes, values and in disciplining members. Groups can also be used for decision making, negotiating and bargaining. Groups also

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influence communication patterns. One can hardly consider a number of people as a team when each member communicates only with the boss. Effective group interactions also effect motivation. A group concept helps in understanding the interactions between leaders and followers as well as among all group members. Team work towards a goal under a leader. Therefore for organizational effectiveness both groups and teams are required.

10. Decision-making Decision-making is influenced by two parameters, namely its acceptability and its quality. Based on these, decisions can be of four types. These are shown in the following diagram: (a) Flip of a coin decision: Flip of coin is a decision associated with low quality and low acceptability. It refers to

High Acceptabilit y of Decision Low

Group Decision

Ideal Decision

Flip of Coin Decision Low

Experts Decision Quality of Decision High

unprogrammed, unstructured decisions taken on the spur of the moment without any conscious thought or analysis. (b) Group decision: It is a decision associated with low quality and high acceptability. A group decision is jointly arrived at by the members of the group where each person is allowed to express his views and opinions on the subject and a consensus is arrived at. (c) Experts decision: It s a decision associated with high quality but low acceptability. An Expert decision is the one taken by an individual on the basis of the superiority of his knowledge, education, skills, experience etc. He possesses an expertise which enables him to take on the responsibility of decision making. (d) Ideal decision: An ideal decision is a high quality decision which even has a high acceptability. It is taken carefully and objectively taking all the points into consideration.

10. Role of spiritual needs towards motivation

Human needs can be classified in two categories: (1) Primary needs

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(2) Secondary needs Spiritual needs come under Secondary or Acquired needs. Such needs are related to mind and spirit. Mainly these needs develop as one matures or gets education. Social environment and time gets them realized. Human beings tend to create happiness in their surroundings. Secondary needs may be: Social Needs

Egoistic Needs Secondary needs make the efforts of the manager complicated because they vary among people much more than primary needs. Secondary needs develop a variety of motives in each person and are often hidden so that he himself cannot recognize them. Both primary and secondary needs exist in a person at the same time and it is very difficult to differentiate among the various needs. Motivation of workers is concerned with the satisfaction of the various needs. The manager should try to analyze the various needs and take the appropriate steps to satisfy them in order to motivate the workers to achieve the organization objectives.

11. Mintzbergs design configurations with respect to structure of an organization

The difficult task of linking business strategy to organization design is simplified by the application of Mintzbergs typology for the integration of structure and contingency factors. He believed that every organization has a configuration of five parts. Top management is created at the top of each organization. Middle management is found at the intermediate level. At the bottom is the technical core consisting of lower level managers and workers who carry out the organizations main mission. The function is the chain of command that runs from top management to the technical core. There is also a group of technical and professional staff personnel staff personnel who are engineers, researchers and system analysts who assist in the creation of many plans and controls that are applied to the technical core. Finally the administration staff performs such indirect services such as maintenance, accounting and clerical. Their relative size of each of these parts is determined by the organization environment, technology, goals and structures. Mintzbergs design further proposed that each of these five organization components fit together in five basic forms:

(a) Simple Structure: The organization is simple with the top managers and only a few workers.
There may be a very small administrative staff but probably no technically professional staff. Decision making is highly centralized, co-ordination is informal, division of labour is minimal and workers perform overlapping activities. This type of structure adapts well to changes in the environment and its goals are stress survival and innovation.

(b) Machine Bureaucracy: It is usually a large company organized along functional lanes with little
lateral co-ordination. It features bureaucratic principle with heavy specialization, many rules and regulations, centralized activity, large technical/professional staff and formalized process. The technology is usually routine service and main production. The machine bureaucracys environment is generally stable and its goal is to improve external efficiency.

(c) Professional Bureaucracy: This is usually a big functionally designed business that employs
professional people for the delivery of a non routine service technology i.e. hospitals and universities. Although highly formalized they also decentralize much of the decision making authority to those professionals that actually perform the non routine service. They operate in complex but relatively stable environment and focus on such goals as innovation and quality.

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(d) Divisionalized form: The type of organization is similar to the divisional approach to structure.
Typically this is a large organization that is broken down into product or market sub-units with few lateral coordinating devices although corporate level personnel provide some liaison service. Decision making is decentralized and each division remains fairly autonomous. The environment tends to be stable although the market mix may be complex. The technical support staff concentrate at corporate headquarters and provides service for all divisions.

(e) Autocracy: It is much like the matrix form and evolves in complex and changing environments
in which the technology is not sophisticated and coordinated by both vertical and horizontal ends. Structure tends to be informal and authority is centralized. The major coordination comes from dual chain of command. Administration staff is large but technical staff tends to be small.

12. Organizations structure and design affects attitude, behaviour and work performance of
its employees. Organization design is the process by which managers create a structure of tasks and authority. The form and characteristics of an organization structure vary depending upon the attributes such as division of labor, departmentalization, span of control and authority.

Division of labor is the extent to which the organization work separated into different jobs to be done by different people. Departmentalization is the process of the related function or major work activities in to manageable units to achieve more effective and efficient overall coordination of organization. It can be departmentalized on the basis of function, product, customer, territory and project.

Span of Control indicates the number of people directed or managed effectively by a supervisor. However organizations must give due consideration to similarity of functions, geographical closeness of subordinates, complexity of functions, direction and control required by subordinates, etc in establishing the span of control. The authority is the legal power to command or extract action from others. Since managers get work done through others, authority constitutes the key to the managers job authority in the sense is thus shared by the manager with the right to command.

Delegation of authority takes place when organizational power is given to subordinates by a superior. It plays an important role in the organization as it relieves the manager from performing rest time duties, provides motivation to the subordinates and thus develops the subordinates. However, certain amount of centralized control is essential as it provides a feeling of prestige to the manager, power cost, tightens control and results in greater uniformity of policy and practices. The new organization design developed in the recent years to enable the organizations to compete effectively are the:

a) Team structure in which the team is used as the central advice to coordinate work activities. b) Virtual Organization: It is small core organization that out sources major business functions. c) Boundary less organizations: An organization that seeks to eliminate the chain of command have
limitless spans of control and replace departments with empowered teams.

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d) Feminine organizations: An organizations characterized by humanistic treatment of individuals

non opportunism careers defined through service to others, commitment to employee growth, creation of a caring community and power sharing. Thus an organization structure is a set of formal planned relationship between grouping of similar functions and between the physical factors and human beings required for the performance of these functions.

13. Team versus Groups

Groups and Teams are not the same thing. Group is two or more individuals interacting and interdependent who have come together to achieve particular objectives. A group work is a group that interacts primarily to share information and to make decisions to help each member perform with in his or her area of responsibility. Work groups have no need or opportunity to engage in collective work that requires joint effort. So their performance is merely the summarization of each group member's individual contribution. There is no positive synergy that would create an overall level of performance greater than the sum of the inputs. A team generates positive synergy through coordinated effort. Their individual effort result in a level of performance that is greater than the sum of those individual inputs. The extensive use of teams creates the potential for an organization to generate greater outputs with no increase in inputs. Nothing inherently magical in the creation of team assures the achievement of positive synergy. Merely calling a group teams does not automatically increase its performance. If management hopes to gain increase in organization performance through use of teams it well need to ensure that their team possess these characteristics. Team building is an attempt to assist the work group in becoming adapted by learning how to identify, diagnose and solve its own problems. Team building is one of the powerful and well accepted techniques of organizational development. A team can be considered as a number of people organized around a set of objectives. Many organizations are involved with the introduction of team work. In a typical team building program employees belonging to same work group discuss the problems relating to their task performance. Members provide information about their individual perceptions of the problem. Having diagnosed the problem, action plans are formulated and implemented to overcome the difficulties. In the final or concluding sessions impact of the plans is assessed. Team building helps to improve the organizations problem solving and decision making skills. It also improves interpersonal relationships and communication systems. However team building fails to consider input organizational variables such as technology and structure. It becomes a complicated exercise especially when new groups are formed. The following are some of the benefits through team work: a) Increased employee motivation b) Higher levels of productivity c) Increase employee satisfaction d) Common commitment to goals e) Improved communication f) Expanded job skills

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g) Organizational flexibility 15. Management

Management can be read as MAN /AGE/ MEN/ T Managing the human resources with experience and tact is Management. Peter Drucker defines management as A function, a discipline, a task to be done, and managers practice this discipline, carry out functions and discharge these tasks. Thus, management refers to an intricate set of functions and processes designed to initiate and unify group effort in a meaningful manner directed towards pursuing certain goals. This involves 5 Ms of management which are:

Materials

Man

Management Money

Methods

Machinery

The various components of management are:

a) Organizational activity: To co-ordinate group behaviour amongst organizational

teams.

b) Goal Formation: Defining goals and objective for the team of people. c) Goal accomplishment & evaluation: Once the goal is decided, to see that it is
accomplished with the given resources being utilized in an effective manner.

d) Organizational survival: To make the organization competitive, and to be able to

forecast and adapt to the change in environment.

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e) Implementation: Policies and programs to achieve the above.

The various characteristics of management are:

i) ii) iii) iv) v) vi) vii) viii)

It is a universal process: Fundamentals of management are equally applicable in all organizations. It is purposeful: Exists for the achievements of a specific purpose that is attainment of pre-determined objectives or goals. It is creative: For optimal utilization of resources, , managers may have to break out of the conventional thinking process and adopt innovative approaches. It is a unifying force: Management reconciles individual objectives with organizational goals. It is a social process: Being concerned with people and their inter-relations, it concentrates on group activity. It is multidisciplinary: Management thrives upon knowledge gained from other disciplines like engineering, sociology, psychology and economics. It is an art as well as a science: It is a systematic body of theoretical knowledge as well as its practical application. It is intangible: Management cannot be seen or felt. However its effect can be felt across the organization.

16. Manager A manager is a person who manages men, plant, material, methods, money, machinery and other miscellaneous resources available at his discretion/disposal efficiently and effectively towards achievement of organizations goals. A manager is a person in an organization that leads a team of subordinates to accomplish a task/ goal/ objective by using certain resources. In discharging the above, a manager has to assume different roles. These are:

Figurehead Discharge of duties given to a manager by virtue of his office e.g. making speeches. Leader Relationship of the manager with his subordinates. Liaison Relations with outsiders. Monitor Seeking and receiving information for his organization Disseminator Transfer of information

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17. Leader A leader is a person who by virtue of his personality traits or charismatic personality or on beckon call influences a group of people to have their willing participation towards achievement of organizations goals. A person can be called a leader only when people accept him and agree to be influenced. The leader must be an active participant in the activities of the group. There must be community of interest between the leader and his followers. A leader seeks to make the followers strive willingly to accomplish group objectives. A leader influences his followers willingly not by force or coercion. A leader shows the way by his own example. He is not a pusher but sets an ideal before his followers by his personal conduct. According to Urwick , it is not what a leader says, still less what he writes that influences his subordinates. It is what he is. And they judge what he is by what he does and how he behaves. A leader is one who holds a sway over the attitudes, actions and behavior of a group of persons. Followers may also influence the attitudes and behavior of the leader to some extent by interacting with him. A leader is at the center of the groups power structure. He derives his power from superior knowledge or experience, formal authority, charisma, distinct personal traits, resources for rewards and punishment. In order to become a leader, a person must possess certain qualities or traits. Some of these traits are as follows: (i) (ii) (iii) (iv) Physical qualities-Sound health, vitality, endurance, physical and nervous energy, enthusiasm. Intellectual qualities-high intelligence, sound judgement, ability to teach, scientific approach, decisiveness Moral qualities- integrity, fair play, moral courage, will power, sense of purpose.

Social qualities-ability to inspire, tact, persuasiveness, self-confidence, empathy, initiative, knowledge of human nature. Conclusion: A leader Inspires the employee Accomplishes work and develops the employee Uses positive approach, We will work it out together. What do you suggest? Coaches the employee, shows him how to do his job Says we Assumes obligation

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 Fixes the blame for loss in production or sales on himself. 18. Manager-Leader concept Quite often leading and managing are considered as synonymous terms. Both require several qualities or traits and both are processes involving interpersonal relations. Both involve setting goals and mobilizing resources. But in reality there are several differences between leadership and management:

1. Relationship-Management implies superior-subordinate relationship. This relationship arises

within organizational context. On the other hand, leadership can occur anywhere within or without organization context. For example: A mob can have a leader but not a manager. Informal groups have leaders but not managers. Leadership is possible in both formally organized as well as unorganized groups. But management is possible only in formal and organized groups.

2. Source of Influence-A manager is appointed and he obtains authority from his position. He
makes use of his formal authority to influence the behaviour of his subordinates. On the contrary, a leader is not always appointed and he derives his power from his followers who accept him their leader. A leader makes use of this power to influence the attitudes and behaviour of his followers.

3. Sanctions-A manager has command over the allocation and distribution of rewards (positive
sanctions), e.g., promotion and punishments (negative sanctions), e.g., demotion. On the other hand, a leader has command over social satisfaction and related task rewards.

4. Basis of Following- Both managers and leaders have followers. But the people follow them for
different reasons. People follow a manager because they are required to follow by their job description supported by a system of rewards and penalties. On the contrary, people follow the leader on voluntary basis. If there are no followers there can be no leader. But a manager may be there even if there are no followers but only subordinates. A manager may continue in office so long as his performance is considered satisfactory. Whereas a leader can survive as long as followers accept him.

5. Accountability-A manager is accountable for his own behavior as well as for the job behavior of
his subordinates. His accountability for performance is clearly defined. But there is no clear-cut accountability relationship in leadership as a leader is not accountable for behavior in the same way. A manager seeks to achieve organizational goals but a leader is more concerned with group goals and members satisfaction.

6. Functions-A manager performs all the functions of planning, organizing, staffing, directing, and
controlling. On the other hand, the main job of a leader is to guide and inspire the efforts of his followers. Conclusion: A leader need not be a manager but a manager must have many of the qualities of a good leader.

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19.

Role of a manager Managerial Roles The job of a modern manager is very complex and multi-dimensional. Therefore, a manager has to play several roles to perform his job effectively and efficiently. Mintzberg has identified ten roles of a manager, which are grouped into three categories. For example, status, as manifested in the interpersonal roles, brings information to the manager, and it is this information (together with the status) that enables him to perform the decision making role effectively. Interpersonal roles involve interactions with people. Informational roles are concerned with collection, dissemination and use of information for the purpose of communication. Decisional roles involve taking decisions about various issues in the organization. A brief description of the ten roles is given below :

1. Figurehead-In this role a manager performs symbolic duties required by the status of his office.
Making speeches, bestowing honours, welcoming official visitors, distributing gifts to retiring employees are examples of such ceremonial and social duties.

2. Leader-This role defines the managers relationship with his own subordinates. The manager
sets an example, legitimizes the power of subordinates and brings their needs in accord with those of his organization.

3. Liaison-It describes a managers relationships with the outsiders. A manager maintains mutually
beneficial relations with other organizations, governments, industry groups, etc.

4. Monitor-It implies seeking and receiving information about his organization and external events.
An example is picking up a rumour about his organization.

5. Disseminator-It involves transmitting information and judgements to the members of the

organization. The information relates to internal operations and the external environment. A manager calling a staff meeting after a business trip is an example of such a role.

6. Spokesman-In this role, a manager speaks for his organization. He lobbies and defends his
enterprise. A manager addressing the trade union is an example.

7. Entrepreneur-It involves initiating change or acting as a change agent. For example, a manager
decides to launch a feasibility study for setting up a new plant.

8. Disturbance handler-This refers to taking charge when the organization faces a problem or
crisis, e.g., a strike, feud between subordinates, loss of an important customer. A manager handles conflicts, complaints and competitive actions.

9. Resource allocator-In this role a manager approves budgets and schedules, sets priorities and
distributes resources.

10. Negotiator-As a negotiator, a manager bargains with suppliers, dealers, trade union, agents, etc.

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Figurehead INTERPERSONAL ROLES Leader Liaison Monitor INFORMATIONAL ROLES Disseminator Spokesman Entrepreneur Disturbance handler DECISIONAL ROLES Resource allocator Negotiator Generally, interpersonal roles are more prominent at the top level of management. At middle management levels, informational roles are more common. Decisional roles are significant normally at top and lower levels of management. 20. Responsibilities of a manager A manager has to do several things if he is to fulfil his responsibility for the efforts of his subordinates.

a) Basically, he has to create a conductive atmosphere within his unit to enable his subordinates to
develop, sharpen and utilize their abilities and skills in a most effective manner.

b) As a responsible and mature manager, he has to positively and purposefully understand the
essential nature and dynamics of tasks and the various forces which exert their influence on them.

c) He has to be aware of the needs, goals, values and attitudes of his subordinates as they interact
with each other within and outside the work unit.

d) He has to devise the ways and means of relating the needs of his subordinates with the goals of
his work unit.

e) He has to provide effective and supportive leadership, foster team spirit, activate bilateral and
multilateral communication channels with them, enlist their participation in decision making and implementation, extend reasonable freedom to them for operational purposes, remove obstacles

30

and distortions, provide feedback to them on how they perform and help them to overcome their deficiencies.

f) He has to pave the way for generation of interpersonal trust and goodwill. g) A responsible manager focuses and builds on the strengths of his subordinates and makes them
as productive as possible. 21. Functions of a manager All the managers have to perform certain functions in an organization to get the things moving. Various authors have defined these functions in separate manners. Henry Fayol has classified functions into: 1. Planning, 2. Organizing, 3. Commanding, 4. Coordinating and

5. Controlling.
Luther Gullick has used his POSDCORB (Planning, Organizing, Staffing, Directing, Controlling, Reporting and Budgeting) approach to explain the same in a more comprehensive manner. In any organization, the managers have to perform certain functions in order to achieve the organizations goals and objectives. The managerial functions can be grouped as below: Functions Planning Organizing Staffing IncludeOperative functions

Forecasting, decision making, programming, Production policy formulation, budgeting etc. Functionalisation, delegation, decentralization Marketing and departmentalization etc. Recruitment, selection, training, man power Purchasing forecasting, compensation planning, promotion etc. Supervision, communication, motivation etc. Making standards, reporting, measurement and corrective action leadership, Financing recording Personnel

Directing Controlling

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The contribution of each of the above functions does not remain the same across all levels of management. The following diagram shows how the functions vary across organizational levels: 22. Effective communication

Top Management Middle Management Supervisory Management

Plannin g

Organizin g Staffing Directing Controllin g

Effective communication refers to communication which achieves the goals set for it in an efficient manner. An effective communication system is one that ensures that a common understanding is produced and promoted between the sender and receiver of a message as to its meaning and implications. Bringing about effective communication is a complex process and it involves the use of several factors. These include the following: Attitudes of managers not only towards lower staff but also towards each other, Level of understanding among people, Nature of authority structure, Extent and efficiency of physical facilities for communication, Nature of information which is the subject matter of communication,

The wording and language employed to communicate. Principles of an effective communication system are: a. The sender should be clear in his mind as to the intent, content and context of communication on each occasion. He should also clarify the purpose of communication to the receiver, apart from giving due attention to the aspects of timing of communication. b. Adequate safeguards are to be built into the communication system to prevent transmission of conflicting and confusing messages to receivers. Information should be reliable. c. The communication channels should be straight forward and short, to minimize delays and distortion of information. d. Arrangements are to be made for prompt transmission of information to the needed areas. Fast and automatic systems of information flow should be built into the organizational structure. e. Communication effectiveness can be maintained and improved by matching the media with the nature of messages to be transmitted. Medium may be formal or informal, oral or written, face to face or indirect, or an appropriate combination of them.

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f.

There should be a proper internal organizational atmosphere of trust, goodwill, understanding in the organization.

g. Language employed in communication should be simple and easy to understand h. Feedback is the most important characteristic of effective communication. i. j. The system should allow free flow of information from the points of origin to destination. Formal communication channels should be supplemented with informal channels.

k. Upward communication should be encouraged in an atmosphere of openness and freedom from fear. l. 23. Communication system should be flexible enough to absorb additional loads of information. Types of communication

Upward Communication Formal Communication

Types of Communication
-- According to the organizational structure

Downward Communication Informal Communication

Vertical Communication
-- According to Direction of Communication

Diagonal Communication
Horizontal Communication

--According to way of Expression Formal Communication: The salient features of Formal communication are-

Oral Communication

Gestural Communication
Written Communication

(a) Formal channels are the channels designed by management to link various parts of the organization. (b) In a formal communication system, matters such as who should communicate with whom, what, when and how to communicate are more explicitly defined. (c) Formal channels are designed as part of organizational structure of authority and activity relationships. (d) Formal communication follows the routes formally laid down in the organization structure of the enterprise.

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(e) Formal communication is generally in writing. Formal channels basically consists of Downward, Upward, Horizontal and Diagonal information flows The following are the advantages of Formal communication Useful for decision-making Planning Co-ordination Control over subordinates Fixation of responsibility

Enable managers to perform their functions The following are the disadvantages of Formal communication Increases the workload Reduces accuracy of messages Not good for upward communication Adversely effects the relationship of topmost superiors and distant subordinates They tend to be slow and rigid.

Organizational distance, screening at various points and narrow route . Informal Communication (Grapevine) Salient Features: (i) These channels naturally and normally emerge in organizations over a period of time. (ii) They arise out of activities, interactions and sentiments of people in organizations. (iii) Members in an organization establish social relations with each other which go beyond official, formal relations. (iv) Such channels are established by people for purposes of exchange of ideas, feelings and information within and outside the organization. (v) Members of an informal group pass on information and opinions to each other as well as to other informal groups. (vi) A grapevine is structure less and information passes through it in all directions. (vii) It is a natural and normal activity due to desire of people to talk to one another. (viii) Only a few persons are active communicators in it. These can be called liaison individuals. People are active on the grapevine when their own interests and interests of their friends/colleagues are involved.

34

(ix) Grapevine functions partly in a predictable manner which offers managers a chance to influence it. Advantages (i) Members of the organization to transmit information both on task use informal channels and non-task related matters. (ii) Communication is transmitted at greater speed because it functions through word of mouth or observation. (iii) (iv) (v) It has greater flexibility. It is more dynamic and free from status differentials. It helps in developing better human relations in the organization.

(vi) It serves to fill possible gaps in the formal communication due to its flexible and personal nature. (vii) It helps to link persons who are not in the official chain of command. (viii) Grapevine helps to satisfy social needs of employees and provides an outlet for releasing anxiety, frustration, etc. Disadvantages (i) (ii) (iii) (iv) (v) Encourage rumors that may distort information. It becomes difficult to assign responsibility for such erratic information. Is less orderly and less static. As grapevine has no definite origin, nobody can be held responsible for it. It may result in leakage of confidential information.

(vi) It is not dependable as informal channels may not always be active. Downward Communication Salient Features (i) Employed by managers of various levels to transmit information, ideas and queries. (ii) (iii) (iv) level) Advantages (i) (ii) (iii) (iv) Used for passing on managerial decisions, plans, policies to subordinates. Aids in defining and clarifying goals. Used for guiding, instructing and inspiring subordinates. Information about the objectives, policies and programmes of the enterprise. Follows the line of authority or the chain of command. Can be both directive and non-directive in nature. Flow of information from a superior (high level) to a subordinate (lower

35

(v) Provision of such information to employees helps to create a sense of belonging, feeling of loyalty to the organization and an active interest in the work. Disadvantages (i) (ii) Communication is taken as a directive as it is coming from the top. It may hamper feedback to the management .

Upward communication Salient Features (i) (ii) (iii) (iv) Employed by subordinates to transmit information. These channels follow the line of authority. Communication is partly task oriented and partly interpersonal. It is non directive.

(v) Flow of communication from lower levels (subordinates) to higher levels (superiors) of authority. (vi) A Manager cannot exercise effective control without such information . Upward communication performs the following important functionsa. b. c. d. Advantages Serves as a measurement of effectiveness of downward communication. Provides management with necessary information for decision making. Relieves employees from pressures and frustrations of work situations. Gives the employees a sense of participation in management. (i) Ideas and requests relating to job roles can be transmitted from subordinates to superiors. (ii) (iii) Consist of performance reports, replies to queries etc. Used to transmit views, suggestions and grievances.

(iv) Enables the management to know what is happening throughout the organization. (v) An executive can know the outcome of his decisions and instructions from reliable information from the employees. Disadvantages (i) Subordinates may filter information to protect their own interests.

(ii) May not be taken seriously by top management. Horizontal Communication (or lateral communication) Salient Features(i) Exchange of ideas and information among people working at the same level of authority.

36

(ii) Co-ordination of the activities of different departments or divisions of the enterprise. (iii) Communication among people of the same status or rank. (iv) Takes place mostly through meetings, conferences, telephones, letters, memos, manuals, etc. Advantages(i) Communication among people of same status or rank tends to be faster and flexible. (ii) There are no status barriers. (iii) Helpful in coordinating the activities of different departments or division of the enterprise. (iv) Enables executives to exchange information and understanding. Crosswise or Diagonal Communication Salient Features(i) Communication between persons who are neither in the same department nor on the same level of organizational structure. (ii) (iii) It cuts across departmental lines. Diagonal communication is the least used channels of communication.

(iv) Generally takes place when members cannot communicate effectively through other channels. Example: The Cost and Works accountant who is interested in conducting a distribution cost analysis may ask a report directly from the sales representatives. A diagonal communication takes place when sale representatives submit their report directly to the Cost and Works Accountant. Advantages(i) (ii) Helps to save time Assists in speeding up action.

(iii) Helps communication between persons who are neither in the same department nor on the same level of organizational structure. (iv) Disadvantages(i) Least used channel of communication. It cuts across departmental lines.

(ii) Generally takes place when members cannot communicate effectively through other channels. Oral Communication Salient Features: (i) (ii) (iii) Involves exchange of messages through spoken words. May take place a. by face to face contacts b through mechanical devices like telephone

37

(iv) (v) Merits (i) (ii) (iii) (iv) (v)

It is very speedy, helps to interchange feelings and attitudes. Greater understanding and cooperation can be obtained. Economical Personal touch Speed Flexibility Quick response

38

Demerits (i) (ii) (iii) (iv) (v) Lack of record Time consuming Lengthy message Physical distance Misunderstanding

Written Communication Salient Features (i) Transmission through written words- letters, circulars, memos (ii) Used to issue specific orders and instructions to subordinates (iii) Managers frequently use written communication in the course of performing their functions. (iv) It is frequently used to issue specific orders and instructions to subordinates. Merits: (i) (ii) (iii) (iv) (v) (vi) Demerits: (i) (ii) (iii) (iv) (v) (vi) Time consuming Expensive Inflexibility Little secrecy Lack of personal touch Misunderstanding Effectiveness Lengthy messages Economical Repetition Permanent record Better response

39

Gestural Communication or Body Language Salient Features (i) Communication is through gestures or postures. (ii) A person can convey much through wave of hands, parting of lips, movement of eyes, etc. (iii) Gestures by the audience indicate reaction or response to the oral message. Advantages(i) Gestural communication is very useful in conveying feelings, emotions and attitudes.

(ii)

It is often used to supplement oral communication.

Orders
Instructions Policies Memos Circulars Procedures Rules Budgets Handbooks Newsletters

Requests

Suggestions
Grievances Complaints Proposals Reports

Downward communication

Upward communication

Inter departmental memos

Inter personal dialogues Line and staff parleys Telephonic conversations Union Management meetings

Horizontal communication

Fig. Communication Flows

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24.

Role of listening in effective communication Careful listening is essential for effective communication. The communicator should try to secure the individual attention of the communicatee. He should convey the message in such a way that the emotions and sentiments of the receiver are not hurt. Empathetic listening and open mind are necessary for this purpose. One of the steps which can be taken to overcome the barriers to communication is Attention. To listen carefully is considered as a commandment of good communication. Communication is a two-way process. There should be follow-up action to ensure that the message is rightly understood. For example, nodding of head may indicate that the message has been understood. Listening means giving attention, not merely being an audience. Another synonym of listening is lending ones ear. Thus conscious participation is a prerequisite. Listening is not merely an activation of the sensory organ but also the involvement of the mind. It involves active participation of the listener. He has to pay attention and interpret what is being said. The failure to listen is another communication barrier. Often, when the other person is expressing his or her point of view, the receiver stops listening in order to concentrate on preparing his or her rebuttal argument. Other times, the receiver falls to listen due to distractions, such as the heat or the discomfort of the setting. Sometimes, the receiver fails to listen simply due to a lack of concentration, which may be exacerbated by boredom or fatigue. Most people have a limited span of attention when it comes to listening. After listening to someone speak for a time, the receiver often tunes him or her out - although still listening, they simply do not consciously register the full content of the sender's message. Conclusion: Listen carefully-find areas of common interest and listen for main ideas.

25.

Barriers to effective communication Inspite of the development of high speed electronic devices, communications are not successful in many cases. Some of the barriers or obstacles to effective communication are discussed below:

1. Organizational BarrierThe organization structure with a scalar chain of command restricts free and frequent communications. Due to the intervention of many levels delay and distortion in the message occurs. Successive transmission of the same message are decreasingly accurate. Formal and structured organization pattern discourages informal communications. It reduces chances of cross checking. A manager receives information from one source and transmits messages to another single level. The more complex the organization, the more difficult it becomes to ensure that correct information is passed on to the right person at the right time through the right medium.

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2. Status BarrierPersons of higher status do not talk freely with those of lower status. Subordinates at lower levels do not feel comfortable in talking to superiors. They hold back unpleasant facts. Lack of trust in his superior makes communication less effective.

3. Perceptual BarrierPeople greatly differ in the way they perceive things and events. People are likely to analyze and interpret information in terms of stereo-types they have built up in the past.

4. Narrow/Closed mindsIf people limit their opinion to their own narrow goals and views, no effective communication is possible because closed minds consider all information as unnecessary overload.

5. Differential assumptionsThe information contained in communication is generally backed up by certain assumptions. The sender may have been quite clear about the assumptions but unless they are shared with the receiver, there is likely to be incomplete communication, leading to different interpretations.

6. Semantic BarrierWords and symbols used to communicate facts may mean different things to different people. For Example: Profits may mean one thing to a manager and quite another to a worker.

7. Personal weaknessesFear and distrust may prevent effective communication. The sender may fear that the consequences of transmitting a particular message may destabilize his own position or the position of the receiver even though it is in the larger interests of the system to communicate. People who receive from and transmit information to them seldom attach much importance to the content. Anger, Jealousy, hatred interferes with the communication process.

8. Resistance to communicateResistance to communicate is a pervasive barrier to communication. Some people think wrongly that information need not be or should not be communicated and that people already know about it.

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9. Inattention BarrierWhen the receiver does not pay complete attention to the message, communication becomes ineffective. A person may be inattentive when he considers the message as superficial or uninteresting. He may be pre-occupied with other more important matters or the message may be contrary to his expectations. Extreme emotions, e.g., depression may also cause lack of attention.

10. Information OverloadManagers are flooded with information from various sources. They may not always be able to regulate the flow of information. They may ignore or misinterpret some of the messages. Time pressures may also create communication problems.

11. Premature EvaluationCommunication is hampered when the receiver evaluates the message before getting the complete information.

12. Channel DistortionsPhysical or mechanical barriers may also cause distortion of communication. Many people talking simultaneously, electronic disturbances, inaudible telephone lines, noise, etc. are examples of channel distortion. SummaryBARRIERS TO COMMUNICATION 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Absence of a common frame of reference. Badly encoded messages. Disturbance in the transmission channel. Poor retention (especially in face to face communication) Inattention by the receiver Unclarified assumptions Mistrust between the sender and the receiver Premature evaluation of the message Different perception of reality Semantic difficulties Vagueness about the objectives to be achieved Misinterpretation of the message

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13. 14. 15. 26.

Clash of attitudinal nuances of the sender and the receiver Psycho-physical factors Selection of a wrong variety of language

Barriers to effective listening Barriers to effective listening are: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) Your actual physical ability to hear? Attention to the speakers voice, appearance, pronunciation, accent. Use grammar, or mannerisms-to the exclusion of what the speaker is trying to say to you? Discounting and disregarding what the speaker is saying because you do not like his or her physical appearance, voice, pronunciation, accent, use of grammar, or mannerisms? Listening to words only, not to the underlying feeling behind the words, much of which is communicated by nonverbal methods. Listening for details to the exclusion of the overall meaning, or to the exclusion of the ideas and principles on which the details are based? Allowing preconceived beliefs about the particular subject being discussed to prevent you from receiving the speakers ideas? Allowing emotional feelings about the subject to turn you off, especially if the speaker uses emotional words? Concentrating on note taking to the extent that you lost the train of thought? Interrupting? Being sure that you already know all there is to know about the subject? Inattention because you do not like to consider unpleasant complicated, or difficult subjects? Inattention because you are tired, sleepy, hungry, and want to go home? Inattention because you know that whatever is said, you could say it better? Inattention because you have more important things to think about? Boredom because you have already heard too many speeches, lectures, discussions, conversations, and people talking at you? Inability to keep your mind on the subject(s)?

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(xvii)

Inattention to the speakers words because you are trying to think of a reply, or of a question to ask during the discussion period?

(xviii) Confusion because you dont have the faintest idea of what the speaker is talking about and have never heard the words before? (xix) (xx) Lack of understanding because you do not look at the speaker to grasp the full effect of what is being said, as well as to notice gestures, facial expressions, and other nonverbal signals? Lack of concentration because your mind moves faster than the speakers voice and wanders into side paths so that you lose the train of thought? Motivation Motivation is the process of activating a dynamic but dormant force within a person which keeps on crumbling under him to perform better and better. The term motivation has been derived from the word motive. Motive is a psychological force within an individual that sets him in motion. According to E.F.L.Brech, Motivation is a general inspirational process which gets the members of the team to pull their weight effectively, to give their loyalty to the group, to carry out properly the tasks that they accepted and generally to play an effective part in the job that the group has undertaken. Motivation is the process of steering a persons inner drives and actions towards certain goals and committing his energies to achieve these goals. It involves a chain reaction starting with felt needs, resulting in motives which give rise to tension(unfulfilled desires) which causes action towards goals. It is the process of stimulating people to strive willingly towards the achievement of organizational goals. Motivation may be defined as the work a manager performs in order to induce subordinates to act in the desired manner by satisfying their needs and desires. Thus, motivation is concerned with how behaviour gets started, is energized, sustained and directed. The above definitions reveal the following characteristics of motivation: (i) (ii) (iii) (iv) (v) Motivation is a personal and internal feeling Motivation produces goal-directed behavior Motivation is a continuous process Motivation is complex Motivation is system-oriented

27.

(vi) A person cannot be partly motivated, as he is a self-contained and inseparable unit. Motivation creates goal directed behavior. (vii) Motivation can be either positive or negative.

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(viii)

Motivation is different from job satisfaction

Needs

Tension

Incentives (Actions)

Change Repeat

Fail

Succeed Motivation

Fig. Motivation Process

Thus, needs and incentives are the key elements in the process of motivation. Significance of Motivation (i) (ii) (iii) (iv) Higher efficiency Low absenteeism and turnover Facilitates change Human relations

(v) Corporate image Motivation helps to utilize and develop creative talent of employees. In the words of Rensis Likert, Motivation is the core of management Poorly motivated employees can nullify the soundest organization. Thus, motivation is the key to management in action. 28. Maslows Need Hierarchy Theory MASLOWS NEED HIERARCHY THEORY Abraham H. Maslow, an eminent American psychologist, developed a general theory of motivation, known as the Need hierarchy theory. The salient features of this theory are as follows: (i) (ii) The urge to fulfil needs is a prime factor in motivation of people at work. Human beings strive to fulfil a wide range of needs. Human needs are multiple, complex and interrelated. Human needs form a particular structure or hierarchy. Physiological needs are at the base of the hierarchy while self-actualization needs are at the apex. Safety (security) needs, social needs and esteem (ego) needs are positioned in between. As one proceeds from base towards apex, needs become less essential.

46

(iii)

Lower-level needs must at least partially be satisfied before higher level needs emerge. Human beings strive to gratify their needs in a sequential manner starting from the base of the hierarchy. All needs are not felt at the same time. As soon as one need is satisfied, another need emerges. A satisfied need is not a motivator, i.e., it ceases to influence human behaviour.

(iv) (v) (vi)

Various need levels are interdependent and overlapping. Each higher level need emerges before the lower need is completely satisfied. As shown in the following figure there are five categories of human needs:

Self actualization needs Esteem needs Social needs Safety needs Physiological needs

Fig. Maslows Need Hierarchy (i)

Physiological needs - These are biological needs required to preserve human life. Therefore, these needs are also known as survival needs. They include needs for food, drink, clothing, sleep, etc. These needs must be satisfied first of all and therefore they are a powerful motivating force when thwarted. Physiological needs must be satisfied repeatedly but they are essentially finite. For example, an individual requires a limited amount of food but he requires it every day.

(ii)

Safety Needs - Once physiological needs are reasonably satisfied, a person wants protection from physical dangers and economic security. Safety needs are thus concerned with protection from danger, deprivation and threat. These needs are finite but they may serve as motivators in case of arbitrary and unpredictable management action.

(iii)

Social Needs - Man is a social animal as he seeks affiliation with others. Social needs refer to need for belonging, need for acceptance, need for love and affection, etc. Such needs are infinite as they are considered as secondary needs because they are not essential to preserve human life. Organizations can influence these needs through supervision, communication system, work groups, etc.

47

(iv)

Esteem Needs - Esteem needs are of two types: self-esteem and esteem of others. Self-esteem needs include self-respect, self-confidence, competence, achievement, knowledge and independence. Esteem of others includes reputation, status, and recognition. These needs are infinite and thwarting them results in feeling of inferiority, weakness and helplessness. Self-actualization Needs: These are the needs for realizing ones full potential, for continued self-development, for being creative. It is the desire of becoming what one is capable of becoming. It is an infinite and growth need. Need hierarchy represents a typical pattern that operates most of the time. Critical Appraisal The theory is widely criticized for the following reasons: a) b) c) d) e) 29. Needs are not the only determinant of behaviour. The theory gives an oversimplification of human needs and motivation. The hierarchy of needs is not always fixed. Maslows theory is based on a relatively small sample. There is no definite evidence that once a need is satisfied it loses its motivating force.

(v)

Herzbergs Hygiene Factors Herzbergs Two-Factor Theory Herzberg theory of motivation is an extension of theory suggested by Maslow and classifies motivation factors into two categories: a) Hygiene or maintenance factors b) Motivating factors Hygiene or maintenance factors They are necessary to maintain a reasonable level of satisfaction among employees. These factors do not provide satisfaction to the employees but their absence will dissatisfy them. Therefore, these factors are called dissatisfiers. These are not intrinsic parts of a job but they are related to conditions under which a job is performed. They are environmental factors and extrinsic to the job. They include: Company Policy and Administration Technical Supervision Inter-personal relationship with peers, supervisors and subordinates Working conditions Salary Status

48

 Job Security On the other hand, motivational factors are intrinsic parts of the job. Any increase in these factors will satisfy the employees and help to improve performance. But a decrease in these factors will not cause dissatisfaction. These include Achievement, Recognition, Advancement, Responsibility, and Opportunity for growth Critical Appraisal Herzbergs theory has been criticized on the following grounds: a) The theory is based on a small sample of 200 accountants and engineers which is not representative of the work force in general. b) level. c) 30. The theory focuses too much attention on satisfaction rather than on performance The distinction between maintenance factors and motivating factors is not fixed.

Managerial Grid The managerial grid is a two-dimensional portrayal of leadership based on concerns for people and for production. It was developed by Blake and Mouton and has nine possible positions on the grid. The five key positions identified by Blake and Mouton were as follows: a. 1,1 Impoverished b. 9,1 Task c. 1,9 Country-club d. 5,5 Middle-of-the-road e. 9,9 Team Blake and Mouton concluded that managers perform best using a 9,9 style.

49

The Grid provides a visual framework for understanding various approaches to leadership, with axes of Concern for Production and Concern for People, measured on a scale from 1 (low) to 9 (high). The grid presents a conceptual frame of reference for guiding the organization development process through various states -- teams building, interface conflict solving, ideal strategic corporate modeling, tactical implementation of the model, and stabilization. The process focuses on individual development, team building, conflict solving and strategic modeling. This widely-known Grid concept focuses on five fundamental styles:

50

9,9: Contribute and Commit. Work accomplishment is from committed people, interdependence through a common stake in organization purpose leads to relationships of trust and respect (style is Sound). 9,1: Control and Dominate. Operational efficiency results from arranging working conditions so that human elements interface only minimally (style is Dictatorial). 1,9: Yield and Comply. Thoughtful attention to people's need for satisfying relationships leads to a comfortable, friendly organization atmosphere and work tempo (style is Accommodating). 5,5: Balance and Compromise. Adequate organization performance is possible by balancing the necessity to get out work with maintaining a satisfactory level of morale (style is Status Quo). 1,1: Evade and Elude. Exertion of minimal effort to get required work done is appropriate to sustaining organizational membership (style is Indifferent 31. Authority Authority may be defined as the right to guide and direct the actions of others and to secure from them responses which are appropriate to the attainment of the goals of the organization. According to Barnard, Authority is the character of communication(order) in a formal organization by virtue of which it is accepted by a contributor to, or member of the organization as generating the action he contributes, that is, as governing or determining what he does or is not to do so far as the organization is concerned. The main characteristics of authority are as follows: (i) (ii) The authority given to a position is legal and legitimate. The extent and limits of authority of a position are defined in advance.

(iii) Authority is a relationship between two individuals-one superior and the other subordinate. (iv) (v) (vi) (vii) Authority is used to achieve organizational goals. Authority is the key to the managerial job. Authority can be delegated. Authority in itself is an objective thing but its existence is always subjective.

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32.

Power Power refers to the ability or capacity to influence the behaviour or attitudes of other individuals. A managers power may be considered as his ability to cause subordinates to do what the manager wishes them to do. A managers power may be measured in terms of his ability to a) give rewards, b) punish individuals, c) withdraw rewards, etc. Thus, reward, coercion, dominating personality, expertise, etc. are the main sources of power. Power is an important means to enforce obedience to the rules, regulations and decisions of the organization. Power may be derived on personal or institutional bases. The use of power may affect the behavior of people in the desired manner. But it does not necessarily imply that the people are in agreement with the exercise of power.

33.

Difference between Authority and Power Though the concepts of Authority and Power are related to each other, there are some differences between them which are outlined as follows: Ability vs Right : Power is a generalized ability endowed in an individual to influence the actions of others. Authority is vested in formal managerial or administrative positions. It gives the position holder the right to influence behavior and to demand compliance. Legitimate formal position is only one of the bases of power. Thus authority is a form of power. Power is a broader concept than authority.

Formal-non-formal: Authority is generally associated with formal organizations. But the other bases of power operate and become effective in non-formal situations also. Authority has rational legal implications while power may or may not have such implications.

Personal-impersonal: Authority is impersonally vested in job positions. But the other bases of power, as for example, charisma, knowledge, and reference have personalized bases and need not flow from the position held by the individual power holder concerned. This means that authority can be delegated. But power based on other sources-for example, experience cannot be delegated.

Degree of structure: Authority is more structured in organizations and governed by several due forces, procedures and constraints. It flows downwards and can be exercised in a well defined, functional manner only. On the other hand, some forms of power are less structured. They are more flexible and open. They flow

52

not only downwards, but also upwards and sideways as for example, the power of subordinates to withhold co-operation to their superior. In power relationships based on sources other than authority, there are no fixed superiors and subordinates. Association with responsibility: Authority and responsibility go together while in the case of other forms of power, a sense of responsibility may or may not co-exist with them. For example, an individual may make use of his expertise in making bombs and explosives, to terrorize people. It amounts to exercise of expert power without responsibility.

Nature of compliance: Compliance to authority attempts or to the exercise of authority by a manager in organizational situations and on task related matters, is mandatory on the part of subordinates and is not left to their free will. Defiance of authority by subordinates is normally regarded as insubordination and is liable to be viewed seriously. But in the case of some other bases of power, compliance is not mandatory. For example, one may disregard the expert opinions of a group or individual and get away with it.

34.

Leadership styles Leadership Styles The behaviour pattern exhibited by a leader while influencing the followers is known as leadership style. On the basis of how leaders use their power, leadership styles can be classified into three broad categories-autocratic, consultative and free-rein. Autocratic or Authoritarian Leadership Salient Features: (a) An autocratic leader exercises complete control over the subordinates. (b) He centralizes power in himself and takes all decisions without consulting the subordinates. (c) He dominates and drives his group through coercion and command. (d) He loves power and never delegates authority. (e) The leader gives orders and expects the subordinates to follow them ungrudgingly and unquestioningly. (f) He uses rewards and holds threat of penalties to direct the subordinates. Advantages: a. Autocratic leadership style permits quick decision-making. b. It provides strong motivation and satisfaction to the leader c. Less competent subordinates are needed at lower levels d. The style may give positive results when higher speed is required Disadvantages

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a. Autocratic style leads to frustration, low morale and conflict amongst subordinates b. Subordinates tend to avoid responsibility and initiative c. Full potential and creative ideas of subordinates are not utilized d. Organizational continuity is threatened in absence of the leader Democratic or Participative Leadership Salient features a. Consultative or democratic leader takes decisions in consultation with the subordinates b. Decentralizes authority and allows subordinates to share his power c. Does what the group wants and follows the majority opinion d. Provides freedom of thinking and expression e. Listens to suggestions, grievances and opinions of the subordinates Advantages a. Improves job satisfaction and morale of subordinates b. Cultivates decision making ability of subordinates c. Leader multiplies his abilities through the contribution of his followers d. Quality of decisions is improved e. Develops positive attitudes f. Labor absenteeism and turnover are reduced. Disadvantages: a. Time consuming b. May result in delays in decision making c. May not yield positive results when subordinates prefer minimum interaction with the leader. d. Over a period of time subordinates may develop the habit of expecting to be consulted. e. Consultation may be interpreted as a sign of incompetence on the part of the leader to deal with problems. f. It requires considerable communicating and peruasive skills on the part of the leader.

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Autocratic

Democratic

Laissez Faire

Leadership Styles
Free-rein or Laissez-faire leadership Salient Features: 1. Involves complete delegation of authority so that subordinates themselves take decisions. 2. The free-rein leader avoids power and relinquishes the leadership position. 3. The free-rein leader serves only as a contact to bring the information and resources needed by the subordinates. Advantages: 1. Positive effect on job satisfaction and morale of subordinates. 2. Maximum possible scope for development of subordinates. 3. Full utilization of the potential of subordinates. Disadvantages: 1. Subordinates do not get the guidance and support of the leader. 2. It ignores the leaders contribution just as autocratic style ignores the contribution of the subordinates. 3. Subordinates may move in different directions and may work at cross purposes which may degenerate into chaos. On the basis of how leaders use their motivation, leadership styles can be classified into two broad categories-Positive and Negative Leadership

Positive approach of leadership:

Salient Features-

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(i) (ii) (iii)

Leader motivates people by offering them rewards, monetary or otherwise, for better performance. It assumes that rewards induce people to work hard. The more the reward, the higher is the efficiency.

(iv) Positive leadership promotes peace. For Example: Introduction of a scheme of leave encashment will certainly reduce the rate of absenteeism in the organization. Negative approach of leadership: Salient Features(i) (ii) (iii) (iv) Leader (manager) induces people to work hard by threatening them to penalize if work is not up to the mark The main emphasis is mainly on penalties for the shortcomings. Expects acceptable performance in many situations but it costs high to the organization. Subordinates work not only to contribute something to the organization but only to protect their jobs.

(v) There is no incentive for the subordinates, if they work beyond a certain level. For Example: If the manager imposes a salary cut for absence from duty, it is the negative approach to improve absenteeism. Orientation Styles Under this category, there are two types of styles (i) Employee-oriented leadership: Salient Features1. More concern about their subordinates 2. Provision for better working conditions 3. Needs of subordinates are satisfied 4. Highest attention is paid to the interests, attitudes and needs of subordinates (ii) Production or task-oriented leadership: Salient Features1. Main concern is only to get the work done 2. Subordinates are kept busy all the time 3. Human aspect of the subordinates are ignored 4. Leaders are of the opinion that they can attain results by better planning, engaging better methods and machines and keeping the employees busy all the time. 35. Synergy

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SYNERGY, simply stated, is the concept that the combined effect of certain parts is greater than the sum of their individual effects. For Example: Product 1 contributes X and product 2 contributes Y. If they are produced together, they may contribute X+Y+Z. Z is the synergistic effect of X and Y being brought together and that Z represent positive synergy. There can be negative synergy as well. The study of synergy helps in analyzing new growth opportunities. The concept of synergy can be used to motivate members of an organization to work efficiently and effectively towards the attainment of organizational objectives. If synergy is the mission of the organization, team building is a means to achieve the end. 36. Group Man is a social animal and prefers to live and work in groups. A GROUP is an aggregate of persons with close inter relationships. A group is a cluster of two or more individuals who interact with each other on a relatively enduring basis, identify themselves as belonging to a distinct unit and who share certain common activities, interest, values and goals. Members of a group relate to one another in some common ways and united by some common ties on a sustained basis. A group is different from a crowd which has no structure and performs no specific function. The members of a group interact with one another to jointly pursue common goals. An organization consists of several types of groups. Every member of the organization belongs to one or more groups. TYPES OF GROUPS: 37. Team Work teams are formal groups made up of interdependent individuals, responsible for attaining goals. Organizations are increasingly designing work around teams rather than individuals. A work team is a formal group made up of interdependent individuals, responsible for attaining a goal . All work teams are groups, but only formal groups can be work teams. There are different types of teams. Four characteristics can be used to distinguish different types of teams: 1. Teams can vary in their purpose or goal. 2. The duration of a team tends to be either permanent or temporary. 3. Team membership can be either functional or cross-functional. 4. Finally, teams can either be supervised or self-managed. Given these four characteristics, some of the most popular types of teams used today include: functional teams, self-directed or self-managed teams, and cross-functional teams. Primary and Secondary Groups Small and Large Groups Formal and Informal Groups

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There are a number of reasons why a team will be used. Creates esprit de corps. Allows management to think strategically. Speeds decisions. Facilitates workforce diversity.

Increases performance. DEVELOPING AND MANAGING EFFECTIVE TEAMS. Teams aren't automatically going to magically increase productivity. We need to look more closely at how managers can develop and manage effective teams. Characteristics of effective teams. There are eight characteristics associated with effective teams. a) b) c) d) e) f) g) Clear goals. Relevant skills. Mutual trust. Unified commitment. Good communication. Negotiating skills. Appropriate leadership.

h) Internal and external support. Managing teams: In planning, it's important that teams have clear goals and that these goals be clear to every member of the team. Organizing tasks involved with managing a team include clarification of authority and structural issues. Leading issues include such things as determining what role the leader will play, how conflict will be handled, and what the best communication process is. Two important controlling issues include how to evaluate the team's performance and how to reward team members. One popular approach to group incentive plans is gain sharing which is a program that shares the gains of the efforts of group members with those group members. Group and Team There is a difference between a Group and Team: 1. A Group may be formal or informal where as a team is necessarily formal.

38.

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2. A group may or may not have a common goal to work towards but a team efforts are clustered towards the attainment of organizational objectives. 3. A group can be organizational or social. A team is mostly organizational. A Group is an aggregate of persons with close inter relationships. A group is a cluster of two or more individuals who interact with each other on a relatively enduring basis, identify themselves as belonging to a distinct unit and who share certain common activities, interest, values and goals. Members of a group relate to one another in some common ways and united by some common ties on a sustained basis. A group is different from a crowd which has no structure and performs no specific function. The members of a group interact with one another to jointly pursue common goals. An organization consists of several types of groups. Every member of the organization belongs to one or more groups. If a product or technological break through generates a family of products which move through successive stages of new and improved products, the temporary task force concept is ineffective. Next step is to create permanent teams which consists of representatives from each functional department the teams meet regularly to resolve inter departmental issues and to achieve coordination. When not involved with issues associated with new product development, the team members work on their regular assignments. Teams are an important means to organize work activities. When management uses teams as its central co-ordination device, we have a team structure. Conclusion: Groups are powerful in changing the behaviour, attitudes, values and in disciplining members. Groups can also be used for decision making, negotiating and bargaining. Groups also influence communication patterns. One can hardly consider a number of people as a team when each member communicates only with the boss. Effective group interactions also effect motivation. A group concept helps in understanding the interactions between leaders and followers as well as among all group members. Team work towards a goal under a leader. Therefore for organizational effectiveness both groups and teams are required. 39. Difference between Administration and Management Many experts make no distinction between administration and management and use them as synonyms. Several American writers consider them as two distinct functions. A few experts treat administration as a part of management. These three points are explained below: 1. Administration is above management According to this viewpoint, administration is a top level function while management is a lower level function. Administration is a determinative (thinking) function concerned with laying down basic objectives and broad policies of an organization. On the other hand, management is an executive (doing) function involving the direction of human effort towards the realization of such objectives. Therefore managers are often called executives. This view is held by eminent American experts on management. For Instance-Oliver Sheldon, Florence According to them administration involves policy formulation whereas management is concerned with the execution of policies and supervision of day to day operations. 2. Administration is a part of management

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European School of thought holds that management is a comprehensive term and administration is a part of it. For Instance-Kimball and Kimball In their opinion, management comprises both policy-making and execution. Administration is that part of management which involves doing routine things in a known setting. The other and more important part of management is risk-taking, dynamic and innovative function. Thus, the European viewpoint is exactly opposite to the American viewpoint. 3. Administration and management are one Henry Fayol, Chester Barnard, George Terry and many other writers make no distinction between administration and management. In practice, the two terms are used interchangeably because both involve the same principles and functions. In order to resolve the conflict, management may be classified into: (i)Administrative management (ii)Operative management Every manager spends a part of his time in performing administrative management functions and the remaining time on operative management functions. Distinction between Administration and Management

(a) NatureAdministration is a determinative or thinking function whereas Management is an

executive or doing function.

(b) ScopeAdministration is concerned with the determination of major objectives and

policies. Management is concerned with the implementation of policies.

(c) LevelAdministration is mainly a top level function whereas Management is largely a

middle and lower level function.

(d) InfluenceAdministrative decisions are influenced mainly by public opinion and other
outside forces. Managerial decisions are influenced mainly by objectives and policies of the organization.

(e) Direction of human effortsAdministration is not directly concerned with direction of

human efforts. Management is actively concerned with direction of human efforts in the execution of plans.

(f) Main functionPlanning and control are the main functions involved in Administration.
Directing and organizing are the main functions involved in Management.

(g) Skills requiredIn Administration conceptual and human skills are required whereas in
Management technical and human skills are required.

(h) UsageAdministration is used largely in government and public sector. Management is

used mainly in business organizations.

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(i) IllustrationsAdministration:

Minister, Commander, Commissioner, Management : Managing Director, General Manager, Sales Manager

Registrar

40.

Organization The term organization, may be defined as a collective entity of people who consciously engage in some activity on a sustained basis for achieving an objective or a set of objectives. According to Chester Barnard: Organization is a system of consciously coordinated activities of two or more persons. The main features of an Organization are: a) It is man-made and is composed of people-who have their own needs, goals, sentiments and values. b) It has an identity of its own, apart from the people associated with it. It is a distinct entity and has its own form and function. c) It is characterized by a co-operative human endeavor, activities and processes involving use of skills, resources and technology. d) The interactions, relationships and activities need to be determined, coordinated and managed by a specified group of people within the entity. e) It is goal-oriented and purposeful-one or more of such goals like survival, entertainment, profit etc.

41.

Organizational Culture Culture is the set of important understandings that members of a community share in common. It consists of patterned way of thinking, feeling and reacting that are acquired by language and symbols that create distinctiveness among human groups. A system of shared values is the building block of culture. Organization culture refers to a system of shared meanings held by members that distinguishes the organization from other organizations. Thus: Culture is a perception that exists in the organization, not in the individual.

Organizational culture is a descriptive term. It describes rather than evaluates. Ten characteristics of an organization's culture have been proposed through research: a) b) c) d) Member identity. Group emphasis. People focus. Unit integration.

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e) f) g) h) i)

Control. Risk tolerance. Reward criteria. Conflict tolerance. Means-ends orientation.

j) Open-systems focus. The source of culture is usually a reflection of the vision or mission of the organization's founders. It results from the interaction between the founders' biases and assumptions and what the first employees subsequently learned from their own experiences. The study of organization culture is important because of the following reasons: 1. No organization can operate in isolation to its cultural environment. In other words, organizations are social system that must inevitably operate to survive within the framework of a larger cultural system. 2. People in organization come from different cultural backgrounds. They have different beliefs, customs, understanding, preferences, etc. An organization should develop its specific culture over a period of time. We can observe organizational culture by studying its values and norms. The system of shared meanings represents a set of characteristics that are of utmost importance for the organization. The success of Japanese management is attributed to their unique cultural values such as life term employment, respect for seniority, collective decision making, concern for employees etc. Culture is to human collectivity what personality is to an individual. 42. Organizational climate Organizations involve cooperative action in which individuals exchange something of value (labor) for something else of value (the intrinsic and extrinsic rewards of work). Typically, this exchange is explained in terms of market or bureaucratic phenomena. However, the idea that organizations are themselves "cultures" is now firmly accepted. William Ouchi, in Theory Z detailed the "culture of Japanese organizations". He argued these organizational culture factors were important elements in Japanese success. These cultural factors ranged from a commitment to quality, to the company song and morning group exercise. These cultural factors are the "soft" elements of the organization, the beliefs, values, heroes, organizational stories, and assumptions about the role of workers, which produce very hard results, e.g. quality. Organizational climate is related to but distinct from organizational culture. Climate measures whether people's expectations about what it should be like to work in an agency are met. For example, Theory X and Theory Y organizations reflect different cultural values about the motivations of people for work and the degree of control necessary for management to assume. Organizational climate refers to employee acceptance of, for example, a Theory X culture. If many new employees with Theory Y values join a Theory X organization a climate problem will develop because many employees do not share the dominate organizational culture value. 43. Is organization a sentient system A school of thought associates organizations with living beings and draws up an analogy of an organization as a sentient system. Thus, like any living system, an organization has a life cycle consisting of four phases:

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Birth an organization is born (incorporation) when a group of people form a network of horizontal and vertical relationships to achieve a common objective. Thus is formed an organization structure that consists of a social group of people, and a structural framework in which people interact.

Growth with time, and business, the organization needs to grow. As a systematic combination of people, functions and facilities, the organization structure grows to provide a mechanism within which people work together for accomplishment of desired objectives. These people coordinate and accomplish their tasks through lines of authority, like in a living system.

Aging as the organization gets old, it has rigidity setting in and time to respond to environmental change increases. The business as well as profitability goes down, and the environmental pressure begins to show. Death this stage is the final for the organization, wherein the organization no longer continues. The fortune 500 list has changed quite significantly over the past 10 years. Many companies in the list have been removed and do not find a place. They are now in the aging or decline phase. Similarly new companies in the growth phase have entered (e.g. InfoTech companies). In India, a similar trend is apparent. Traditional business houses that have led the arena like Ruias, Goenkas, Tatas, Birlas are being replaced by Infosys, Satyam, Reliance and the like. 44. Principle of unity of command The principle of unity of command states that no member of an organization should report to more than one superior on any single function. The application of this principle is easy in pure line organization, in which each superior has general authority; however it becomes a complex problem in actual cases in which some form of staff and/or functional organization is used. In practice, instructions may be received from several sources without loss of productivity. The problem is to avoid conflicts in orders from different people relating to the same subject. The principle of unity of command may be useful in the planning of an organization if it helps to keep relations between superior and subordinate simple and direct, it is not realistic if it is interpreted as an immutable law that would eliminate useful relationships among a number of managers. 45. Span of control Span of Control A manager at any level in an organization is required to direct, supervise and co-ordinate the tasks of a few individuals who are placed as his subordinates and who form his work unit. He has direct authority-responsibility relationships with them. The concept span of control (also known as span of management or span of supervision) refers to the number of subordinates a manager can directly manage in a work setting. It denotes the degree of direct authority and responsibility of a manager for supervision and direction of efforts and activities of his immediate subordinates. If he has only a small number of subordinates, say 3 or 4,it means that his span of management is narrow. His span gets widened with an increase in the number of subordinates directly reporting to him.

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Span of management is a classical concept in the literature on organizational structure. An understanding of the concept helps in finding out the reason for creation of a number of managerial levels, division of managerial labor and formation of compact work groups in charge of each manager in an organization. It is generally agreed that there is an upper limit to the number of immediate subordinates which a manager can effectively supervise. There are certain human and operational constraints on a manager which prevent him from effectively supervising and coordinating the activities of more than a limited number of people directly under him. These constraints create the need for determining the size of the work group to be placed under the immediate charge of a manager as also the number of managerial levels in an organization. Example: Suppose in a business enterprise four major divisional managers report to the chief executive. Each divisional manager supervises the activities of six departmental unit managers, and in turn each one of the latter has under him eight section chiefs. Each section chiefs work unit consists of ten supervisors. In this example, the enterprise has five managerial levels. Given the limitations of span of management and the consequent creation of a few levels of management, the chief executive is in a position to indirectly co-ordinate the activities of 24 departmental managers, 48 section chiefs and 80 supervisors, apart from directly supervising four divisional managers. The span of management of the chief executive is four, while the span of management of each divisional manager, departmental manager, and section chief is six, eight and ten respectively. Factors determining span of control Several organizational, managerial and task-related factors have to be considered in the determination of appropriate span of control.

a. Quality of delegation of authority: A well defined and clear-minded delegation of authority by

a manager to his subordinates helps him to manage his work unit efficiently and thereby enhances his ability to manage a larger number of subordinates. If subordinates know what is expected of them, what are their tasks, and how much authority and discretion they have, the incidence of their confusion and anxiety as also their dependence on the manager tend to be lower; this means that the manager does not feel over-burdened with handling a relatively large number of subordinates.

b. Organizational planning: A well-designed system of organizational policies, procedures, plans,

rules, measurable standards and methods lubricates organizational functioning thereby smoothening superior subordinate relationships and increasing the possible width of span of control.

c. Communication system: The extent of direct, regular and noise-free communication between a
manager and his subordinates, as also appropriate interactions between them, determine the span of control. A stream-lined communication and reporting system tends to facilitate creation of wide span of control.

d. Staff assistance: The managerial work load of managers can be substantially lightened by
entrusting some tasks to specialist staff groups.

e. Motivation, ability and skills of manager and subordinates: A mature and skillful manager
with requisite leadership and administrative abilities, styles, perspectives and skills has a better supervisory span.

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f. Nature of tasks: In a work unit characterized by simple, standardized, stable and routine tasks,
the extent of supervision required tends to be low. This facilitates enlargement of the work unit under a manager and hence a larger span. If the tasks are complex, variable and highly interrelated, they call for close and careful co-ordination by the manager and hence his effective span gets narrow. The behaviour of above factors differs from organization to organization and from level to level. Hence the appropriate span of control is also variable. 46. Centralization Centralization implies the concentration of authority at the top level of the organization. According to Allen: Centralization is systematic and consistent reservation of authority at central points within an organization In practice there cannot be complete centralization because Absolute centralization means each and every decision is to be taken by top management which is not practicable. Factors Responsible for Centralization1. To facilitate personal leadership In the early stages of an enterprise and in small firms, the success depends largely on the personal leadership of a dynamic and talented leader. Authority may be centralized to give full scope to facilitate personal leadership which may result in quick decisions and imaginative action. 2. To provide integration Coordination of individual efforts is essential to the success of every organization. Centralized direction is an effective means of unification and integration of individual efforts. It acts as a binding force on the various parts of the organization. 3. To achieve uniformity of action Where uniformity of policy and action is required, authority may be centralized at the top. Such uniformity is often desirable in personnel, purchasing and advertising. Therefore, authority in these areas tends to be centralized. 4. To handle emergencies Centralization helps to avoid overlapping efforts and duplication of work. It enables the management to exercise effective control in order to minimize waste and to achieve economy in operations. ADVANTAGES OF CENTRALISATION: a. Effective utilization of talents of the top leader. b. All parts move together. A unifying force that integrates all operations. c. A strong coordinated top management team is developed. d. Uniformity of policy and plans.

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e. Best arrangement to tackle emergencies. Resources and information can be mobilized quickly and effectively. f. Duplication of functions and facilities is minimized. DISADVANTAGES OF CENTRALISATION: a. b. c. d. e. 47. Delays in decision-making and communication. Centralized power and authority may be abused. Inhibit development of lower level people. Low motivation and morale of lower level people. Fortunes of the enterprise depend on the health and vitality of top executives.

Decentralization Decentralization means dispersal of authority throughout the organization. According to Allen: Decentralization applies to the systematic delegation of authority in an organization wide context Decentralization refers to the systematic effort to delegate to the lowest levels all authority except that which can only be exercised at central points. It is the distribution of authority throughout organization. In practice there cannot be complete decentralization because absolute decentralization implies no control over the activities of subordinates which cannot be possible. Therefore, effective decentralization requires a proper balance between dispersal of authority among lower levels and adequate control over them. According to Ernest Dale-The degree of decentralization in an organization can be measured by applying the following tests: a. Number of decisions- Greater the number of decisions made at lower levels, greater is the degree of decentralization. b. Importance of decisions- The more important are the decisions made at lower levels, higher is the degree of decentralization. c. Effects of decisions-A company which permits both financial and personnel decisions at lower levels is more decentralized than a company which permits only operational decisions. d. Checking of decisions-Decentralization is greater when there is no checking of decisions made. FACTORS DETERMINING THE DEGREE OF DECENTRALISATION 1. 2. 3. 4. Size and complexity of the organization Dispersal of operations Degree of diversification History of the enterprise

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5. Outlook of top management 6. Availability of competent personnel 7. Nature of functions 8. Communication system 9. Planning and control procedures 10. Complexities of the situation Advantages of Decentralization a. Relief to top executives b. Motivation of subordinates c. Quick decisions d. Growth and diversification e. Executive development f. Effective communication g. Efficient supervision and control Disadvantages of Decentralization a. Expensive b. Difficulty in coordination c. Lack of uniformity d. Narrow product lines e. External constraints Effective decentralization requires: (a) (b) (c) (d) (e) 48. Appropriate centralization Development of managers Open communication Coordination Adequate controls

Formalization Formalization is the degree to which an organization relies on rules and procedures to direct the behavior of employees. Mechanistic organizations are high in complexity, formalization, and centralization. Organic organizations are low in complexity, formalization, and centralization. Obviously, team-based structures and boundary-less organizations are going to have minimal formalization and centralization. This could create some coordination and control problems for managers. However, these disadvantages could be minimized by having mechanisms in place to manage conflicts over coordination and control.

49.

Standardization

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Standards represent the criteria against which actual performance is measured. Standards serve as the benchmarks because they reflect the desired results or acceptable level of performance. Standards may be of different kinds:

a) Quantitative Standards: These standards are set in physical or monetary terms. Such standards
are set in production, sales, finance and other areas where results can be measured. They are further classified as:

(i) Cost standard- It specifies the cost limits within which results should be achieved. (ii) Revenue standards- It represents the desired level of profits. (iii)Time standards- It specifies the time limits. (iv) Physical standards- e.g., quantity of output b) Qualitative Standards: There are certain areas in which it is not possible to set standards in
quantitative terms. Goodwill, employee moral, motivation, industrial relation etc. 50. Pyramidal and hierarchical organization A pyramidal or hierarchical organization is based on the principle of span of control. A manager can supervise a limited number of people. The span of control refers to the number of subordinates a supervisor can supervise effectively. A wide span yields a flat structure, while a narrow span results in tall structure.

Graicunas has developed a mathematical formula to show the numerical limitations of the subordinates a manager can control. If an organization is designed on the above principle, it will look like a pyramid where the chain of command and communication would flow from top to the bottom.

As an organization grows and as the number of employees rises, the organizational structure tends to become more formalized. It becomes more bureaucratic. There are two options most likely to be used. A functional structure expands the concept of functional departmentalization and creates an organizational design that groups similar or related occupational specialties together.

The divisional structure is an organizational structure made up of autonomous, self-contained units. However, many contemporary organizations are finding that the traditional hierarchical organizational designs like the functional and divisional structures aren't appropriate for the increasingly dynamic and complex environments they face.

One of the new concepts in organization design is the team-based structure which is an organization structure made up of work groups or teams that perform that organization's work.

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51.

Individual excellences An organization is made of people who have an identity of their own. Thus, the sum total contributions of the individuals synergise to form organizational effort. Individuals are thus basic building blocks of the organization. They form groups which in turn form organizational units. If the individual is deployed in a proper way in the organization, the individual excellences build up, and it leads to effectiveness. This is in turn also determined by: Organizational climate

Organizational excellences

Group excellences

T E A M

Individual excellences
Organizational culture Motivation

Synergy Individual excellences serve as the source of group effectiveness.

Individual goals Lower degree effectiveness Organization goals of

Individual goals Higher degree effectiveness Organization goals of

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52.

Managerial excellences Managerial excellences are associated with team efforts in an organization. These are achieved when the manager is able to attain his social, physical and monetary targets. This involves excelling in all the functions of management starting from planning and ending at controlling. There are five factors that can impact managerial excellences:

(i) (ii) (iii) (iv) (v)

External conditions imposed on the manager by the larger organization of which he is a part. Resources, which include member abilities and personality characteristics. Structure that shapes managers' behavior and includes roles, norms, status, group size, and formal leadership. Communication patterns used to exchange information, group decision processes, leader behavior, power dynamics, conflict interactions, and other actions. Tasks, which involves the complexity and interdependence of these tasks the manager is responsible for.

External conditions

Complexity & interdependence

Abilities, personality

Manageria l Excellence s

Power dynamics, group processes

Roles, norms, formal leadership

53.

Organizational structure The right organizational structure can play an important role in an organization's evolution. Organizing is the process of creating an organization's structure. Organization structure is an organization's framework as expressed by its degree of complexity, formalization, and centralization . Complexity is defined as the amount of differentiation in an organization.

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Formalization is the degree to which an organization relies on rules and procedures to direct the behavior of employees. Centralization is defined as the concentration of decision-making authority in upper management. Decentralization is the handing down of decision-making authority to lower levels in an organization. Organization design is the development or changing of an organization's structure. Factors affecting structure: Three major contingency factors that affect organization design include strategy, size, and technology.

Strategy affects organization design in that structure should change as an organization's strategy changes. Size affects organization design because as organizations grow, they tend to become more formalized and bureaucratic.

Finally, technology affects organization design because the production process should fit with the type of organization structure in order to be effective. Managerial implications: A functional structure expands the concept of functional departmentalization and creates an organizational design that groups similar or related occupational specialties together. The divisional structure is an organizational structure made up of autonomous, self-contained units. However, many contemporary organizations are finding that the traditional hierarchical organizational designs like the functional and divisional structures aren't appropriate for the increasingly dynamic and complex environments they face. One of the new concepts in organization design is the team-based structure which is an organization structure made up of work groups or teams that perform that organization's work. 54. MBO MBO is both a philosophy and a technique of management. It represents a rational and systematic approach to management wherein measurable goals are set up in consultation with subordinate managers and the contribution of each individual is judged in terms of such goals. According to George Odiorne: MBO is a process whereby the superior and the subordinate managers of an enterprise jointly identify its common goals, define each individuals major areas of responsibility in terms of the result expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members. According to John W. Humble: MBO is a dynamic system which seeks to integrate the companys need to clarify and achieve its profit and growth goals with the managers need to contribute and develop himself. It is a demanding and rewarding style of managing a business. Characteristics of MBO

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1. Mutual Goal Setting: Fundamental to the MBO process is the mutual setting of objectives
between each position holder and his or her superior and the use of these objectives as standards for evaluating the employees performance.

2. Compatibility: MBO is a process of setting compatible objectives at all levels of the organization.
The process begins with the setting of overall organizational objectives at the top. Using these objectives as guides, positions at middle and lower levels of the hierarchy determine their objectives making them compatible with organizational objectives and with each other.

3. Measurable Objectives: MBO involves the setting of specific measurable objectives for a future
time period. The idea is to assign each employee a specific target which is time bound. One approach is to set qualitative objectives that indirectly measure the real goal being sought. For example: design and run ten community service advertisements may be an objective in public relations.

4. Systematic: MBO is a formal process that begins with goal setting and continues through
performance review.

5. Continuity: Under MBO, performance appraisals are conducted jointly on a continuing basis with
provision for regular periodic reviews. MBO is a dynamic approach that attempts to integrate the individual with the organization.

6. Key Result Areas: The emphasis in MBO is on performance improvement in the areas which are
of critical importance to the organization as a whole. Key and sub-key areas are identified for each function as shown in the following example: Finance (Key Area) Sub-Key Areas: (i) (ii) (iii) (iv) Objectives of MBO Cash flow Dividend Policy Debt-equity Ratio Sources of Funds

Management by Objectives is intended primarily: 1. To measure and judge performance; 2. To relate individual performance to organizational goals; 3. To clarify both the job to be done and the expectations of accomplishment; 4. To foster the increasing competence and growth of the subordinates; 5. To enhance communications between superior and subordinates; 6. To serve as a basis for judgements about salary and promotion; 7. To stimulate the subordinates motivation and

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8. To serve as a device for organizational control and integration. 55. What are advantages and disadvantages of MBO?

DIAGNOSIS Understanding the organization Obtaining commitment Defining jobs Training people

GOAL SETTING Organizational goals and strategies Unit and individual goals Review by superior Joint agreement

FINAL REVIEW Discussion Analysis Motivation Rewards Control

Recycle ACTION PLANNING INTERIM REVIEWS Environmental changes Revise goals & action plans activities required sequence of activities roles and relations time and resources

ADVANTAGES OF MBO

MBO offers the following advantages:

1. Improved Planning: MBO produces clear and measurable performance goals. A network of
goals is created and appropriate action plans are formulated for goal achievement. There is effective matching of goals and resources. Clear goals and action plans generate concrete thinking and lead to result-oriented and forward planning. MBO forces managers to plan for results rather than plan for work. It ensures that goals of each department are consistent with the overall objectives of the organization.

2. Team Work: MBO results in better communication between superior and subordinates which
reduces conflict. The whole management team is actively involved in goal setting. There is integration of lower level goals with organizational goals. Different individuals are fused into a co-operative team. MBO clarifies the job assignment and responsibility of each individual.

3. Effective self-control: A clear set of verifiable goals provides effective standards for selfcontrol. MBO provides a mechanism by which managers can ensure that enterprise is moving in right direction.

4. Objective Appraisal: MBO permits impartial appraisal because employee performance is

evaluated against verifiable and mutually agreed criteria. The performance of every individual is evaluated in terms of the mutually agreed targets. Under MBO the superior does not evaluate the

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subordinate but his performance. MBO also allows employees to monitor and control their own performance. Such self-appraisal facilitates personal development. MBO helps to develop managers who have potential for growth.

5. Motivation and Morale: MBO leads to better interpersonal relations through involvement and
recognition of people at all levels. It provides greater opportunities to make personal contribution and to accept more responsibility. Participative goal setting and two-way communication improve the commitment and morale of employees. Superior managers assume a supportive role and subordinates are allowed to exercise self-direction and self-control. This results in innovation and creativity on the part of subordinate managers. Thus, MBO is a result-oriented and rational philosophy. It permits management by results in place of management by crisis. Many organizations both in the public and private sector have benefited a lot through the application of MBO. LIMITATIONS OF MBO MBO has several weaknesses, some of which are inherent in the system while others arise while introducing it. The main hurdles in successful application of MBO are as follows:

1. Goal-setting Problems: Very often it is very difficult to set truly verifiable and measurable
goals. Over-emphasis on quantifiable and easily measurable goals may result in neglect of crucial qualitative goals like job satisfaction. Similarly, over-emphasis on short-term goals may be at the cost of long-term goals. Goals once set may be followed rigidly leading to inflexibility in the organization.

2. Time Consuming: MBO requires a great deal of time in setting measurable goals through
consensus. In the initial stage several meetings may have to be held to bring confidence in subordinates. The formal periodic reviews and final appraisal sessions also consume a lot of time.

3. Increased Paperwork: MBO results in a plethora of newsletters, instruction booklets, training

manuals etc. Subordinates have to fill in forms and submit detailed reports on their performance.

4. Pressure-oriented: Under MBO managers are forced to assume a supportive role. In many cases
MBO programmes indiscriminately force improvement on all employees. An MBO programme based on reward-punishment psychology may prove self-defeating in the long run.

5. Undermining Leadership: In a scheme of MBO, leadership does not find a central place. MBO
is based on a particular type of democratic leadership which may not be successful in all situations.

6. Participation Problem: MBO requires mutual goal-setting by the superior and the subordinate.
In many cases, the goals are set by the superior because he has no time to discuss it with the subordinate or he is not willing to share power with the subordinate. In other cases, the subordinate may not be willing to set goals for himself because he is incompetent or he fears criticism from the superior.

7. Inflexibility: MBO may introduce inflexibility in the organization. Once goals are set down, the
superior may not like to modify them due to fear of resistance from the subordinates. 56. Cohesive group

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The term group cohesiveness refers to the extent to which members of a group are united and work together in order to achieve a common objective. It is the spirit of closeness and solidarity of members of a group. The main characteristics of a cohesive group are: 1. The strength of interpersonal attachment 2. Attractiveness among members 3. The level of motivation among members not only to remain in the group, but 4. To identify themselves with the goals and culture of the group 5. Commitment by employees to the success of goals 6. Association with the groups fortunes. Advantages: In a highly cohesive group Members develop common attitudes, values and behaviour patterns.

They actively follow the norms of the group and follow the requirements of group discipline. 57. They are loyal to the groups goals and leadership influences. Problems are solved collectively and decision making ability is developed. Members develop positive feelings towards their work and they tend to perform well. Mutual regard, trust and warmth in interpersonal relations is developed. Association with the group leads to considerable satisfaction. Stable membership over fairly long periods of time. Collectively and courageously handling of problems.

Group decisions Group decisions are those which are made by more than one manager joining together for the purpose. In an organization, two or more managers at the same or different levels put their heads together, jointly deliberate on the problem, information and alternatives and hammer out a decision for which they assume collective responsibility. For Example: Decisions which have inter-departmental effects like, a product related decision affecting manufacturing, purchasing and marketing departments, are sometimes made by forming a committee composed of responsible executives of the three departments. Group decision-making is not new in organization. The Board of Directors is a decision-making unit. As a group, the board members make several vital corporate decisions. In organizations, individual managers as a group make decisions.

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The decision-making function and process get enriched by the pooling of diverse expertise, knowledge, authority and perspectives represented by the group. Elaborate group deliberation and consideration of alternative courses from several angles tend to ensure that decisions of high quality are made. To the extent that authority for making decisions is entrusted to the group, it gets diffused among the members. In cases where a manager involves his group of subordinates in decision making, the decisions so reached tend to enjoy a high degree of acceptance. The disadvantages of group decision-making are delays in decision-making, lack of rationality and responsibility among group members, dilution of the quality of decisions by compromise and conformity among members of the group and so on.

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MANAGEMENT PROCESS & ORGANISATION IMT GURGAON STUDENTS

Handout III

Solution to Case Studies

CASE # 1

a) A chain of command, which also happens to be a chain of communication and

control, is a vertical line of authority from the top management to every subordinate managerial position. After reading this case study, I feel that a chain of command never prevailed between Mr. Rao and Ms. Jain. A hierarchy or a formal channel defining the authority, responsibility, and communication relationship between Mr. Rao and Ms. Jain never existed.

General Manager

Personal Secretary

Computer Operator

As highlighted in this case study, Mr. Rao was working as Personal Secretary whereas Ms. Jain was working as a Computer Operator in a large government organization. Both were reporting to the General Manager. Mr. Rao was polite and helpful to the General Manager and other seniors whereas he was autocratic in dealing with juniors in the organization. It seems that Mr. Rao even considered Ms. Jain as his subordinate and his attitude towards Ms. Jain was a bit harsh. Hence, I don't feel that a chain of command existed between Mr. Rao and Ms. Jain.

b) In my opinion, the reasons which made the General Manager ignore the noise
outside his room could be: 1. General Manager knew the reasons behind the noise and the parties involved in the heated exchanges. 2. The heated exchanges between Mr. Rao and Ms. Jain were a normal or a routine affair. 3. General Manager, it seems was mentally prepared that it was not necessary to involve himself in such arguments that usually prevailed between his personal secretary and computer operator.

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4. I feel that The General Manager was only concerned about the work being done rather than emphasizing on a conducive work environment wherein every employee feels at ease to work in and thereby considering such an organization as his/her second home. 5. Since a chain of command was not defined in the organization between Mr. Rao and Ms. Jain, I feel that the General Manager never wanted to get involved in such arguments between Mr. Rao and Ms. Jain and thereby taking a particular person's side or favoring either Mr. Rao or Ms. Jain. 6. Another reason for ignoring the noise could be that the General Manager never wanted to spoil his relationship either with Mr. Rao or with Ms. Jain. 7. General Manager, it seems had left it for time to sort out the relationship between Mr. Rao and Ms. Jain.

c) Any General Manager of an organization holds a very responsible and authoritative

position. After going over this case study, I feel that the General Manager should immediately do the following: o Define a hierarchy or a formal channel, which clearly highlights the authority, responsibility, and communication relationship between Mr. Rao and Ms. Jain. o He should try to sort out the differences between Mr. Rao and Ms. Jain as soon as possible cause it might lead to a bad example in the entire organization and might effect the overall image of the organization. o He should take both Mr. Rao and Ms. Jain into confidence and try to figure out the root cause of such heated arguments or exchanges. o The manager should change their seating arrangements, thereby ensuring that Mr. Rao and Ms. Jain do not share the same cabin. o The manager should talk to both Mr. Rao and Ms. Jain individually and tell them that in case they want to become role models and want to gather respect from their subordinates, they need to behave in a professional manner. o The manager should discuss the significance of an organization, group cohesiveness and team effort. The emphasis should be laid on educating the entire organization so that such incident is not repeated in near future. o Mr. Rao should be instructed to change his autocratic style of dealing with subordinates in an organization. He should be complemented on his attitude towards his seniors and he should be asked to maintain the same attitude while dealing with his subordinates. o A verbal warning should be given to both Mr. Rao and Ms. Jain. o As a last resort, if the manager feels that both Mr. Rao and Ms. Jain are at fault, he can ask both of them to leave the organization.

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CASE # 2
a) The Executive Director who was holding a very senior managerial position in Gulshan Fabrics was in favor of a traditional management philosophy. His ego was hurt during a meeting with zonal managers, when he received a suggestion favoring humane aspect in the organization from his subordinate who happened to be head of Mumbai zone. The Executive Director didn't take the suggestion on a positive note as he felt that it was an open criticism against him and that too by his subordinate in front of all other zonal managers. He also wanted to express his feelings in front of other zonal mangers, thus portraying that he won't accept or agree upon any suggestion, which he is not comfortable with, or a suggestion, which comes, in the way of his management philosophy. Being a practitioner of traditional organizational characteristics - efficiency, rationality, order, conformity and formality, the Executive Director had a mindset and accepting change in the organization functioning and that too after incorporating a suggestion from a subordinate was an uphill task. A careful study of the facts and their analysis strongly establish that the Executive Director is a Theory X manager because: o o o o o o o He doesn't lay emphasis on employees. The Executive Director doesn't believe in cooperation between management and workers. No emphasis is laid on participative management and decentralization. The Executive Director believes in imposition of control measures in order to increase the efficiency of the workers. Emphasis is laid on over-centralization of managerial authority. The Executive Director is in favor of Autocratic orientation of managers. He doesn't believe in providing a free flow of communication in the organization.

b) Yes, I feel that G.P.Basotia was right in suggesting that organization should become more humane. The only mistake that he made was of giving the suggestion in front of other zonal mangers. G.P. Basotia should have given this suggestion to the Executive Director in private. He should have also explained the logic behind such thinking, that: o The management is responsible for designing conducive organizational structures and processes so as to enable people to realize their potential, release their energies and contribute their best to the goals of the organization and to fulfillment of their own personal needs. o It would encourage open communication, participative management, flexibility, self-direction, self control among the employees along with creativity and innovation. Had the performance report of Mumbai presented by G.P. Basotia before making the suggestion, the Executive Director wouldn't have got irritated. The Executive Director would have given a serious thought on the suggestion so made. In fact the performance report would have made the Executive Director very

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happy and in addition he would have also congratulated G.P.Basotia for this achievement in front of other zonal managers. CASE # 3 i. Authority is the formal right vested in the managerial position to perform his managerial functions and it includes right to issue instructions to subordinates and right to influence events for achieving certain goals. This authority is capable of delegation, dissemination to lower levels of the organization. In the given case of fashion fabric Hiren Dasgupta is having formal right to get work done through Harish mastana, one of his sales representatives. Thus, Dasgupta is having authority over Harish. Similarly, Mr. K.T. Parekh has authority over the Sales Manager by virtue of his position as General Sales Manager. The terms responsibility and accountability are often used interchangeably by some management theorists. However, it has also been distinguished by some other theorists on the following lines: Responsibility is an obligation of the person to whom authority is entrusted to perform the assigned task. In another sense, it is a set of task and duties assigned to a person. On the other hand accountability connotes personal answerability for decisions, actions and results on the part of a person for his actions and his subordinates actions to his superior. In the context of given case, Harish, is both responsible and accountable to Dasgupta for the achievement of sales targets. On the similar lines, relationship of Dasgupta with that of General Sales Manager can also be defined. However, at the same time, Dasgupta is also accountable to the General Sales Manager for the work done by Harish. Power refers to ability of an individual to gain influence and dominance over events, things and beliefs in ways desired. Authority can also be associated with power, in the sense that authority is form of power generally associated with formal organizations. Thus, power may be based on the formal position or inherent in personality of an individual. It can be found that Union President is not having any formal authority to reinstate or give instructions to General Sales Manager for reinstatement of his nephew Harish Mastana. However, he has the power by virtue of his position as Mill Union Mazdoor President, since he can influence work behavior and actions of workers of the company. ii. Authority, power, responsibility, accountability, relationships have both positive and negative impacts. It is only through such relationships an organization plans, works and tries to achieve its objectives. It is only through flow of authority and responsibility an organization exists and work is performed. The peculiarity in the case lies in the power held by Mill Mazdoor Union President. Positive impact of such power held by Union President is that it keeps a check on Managers and make them cautious and alert. It will also force Managers to think of other alternatives before resorting to any harsh treatment, such as retrenchment in the above case. Moreover, agreeing to the suggestion of Mill Mazdoor Union President will ensure smooth functioning of the company through union cooperation.

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However, in the given case, it is highly likely that the impact would be towards the negative side. There are chances that Dasgupta will feel demotivated to perform his duties. He will feel dejected and sad about the incident. He would be concerned about encroachment of his authority by the power of union leader. On the other hand, Harish will unnecessarily feel more powerful as compared to his superior. He may continue with his casual approach towards his work by not meeting the standards and expectations of the organization. This will also give wrong signals to his colleagues, that work can be avoided in this organization through union leaders or through the use of power tactics over the management. Thus such relationships can lead to anti-work environment in the company. CASE # 4

(a)

Social responsibility can be defined as the responsibility of a business towards the society. A business responsibility can be towards: 1. Performing economic functions - Production & Supply of goods 2. Consideration of interests of the society 3. Undertaking economic activities 4. Promotion of education, removal of poverty, etc 5. Encouraging social welfare and preserving social values Any successful organization or enterprise has social responsibility built into its objectives, policies, strategies and plans and also their day to day functioning.

(b)

The thermometer manufacturing plant in Ahmedabad was closed because traces of mercury were found and that too in large quantities in the village where its factory was located. Hence an issue was raised by the social activists on the following grounds: o Any business enterprise gets resources from the society and it manufactures goods and services for the society. Hence, Healthy & Hearty (India) Ltd, a business organization being a sub-system of the larger society has no right to survive if it damages the society. A relationship between a business house and the society can be maintained only through a socially responsible behavior. o Social obligations form part of the ethics of business organizations. o A business house involves a large number of groups who are interested in the functioning of the organization. The expectations of the stakeholders should be taken into consideration by Healthy & Hearty (India) Ltd. o The objective of social responsibility promotes objectives of business houses. o Every business house during its functioning has to take decisions. Acceptance of social responsibility as one of the main objectives ensures that the business house makes decisions in interests of the society. This objective however was missing in Healthy & Hearty (India) Ltd. o Since Healthy & Hearty (India) Ltd was not working in the direction of social responsibility, the issue of goodwill was questioned.

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o Healthy & Hearty (India) Ltd was trying to become a professional organization without catering towards the needs of the society.

(c)

In case the state pollution board serves a notice, the Executive Director should reiterate the fact that the company is extra conscious in its social responsibility. At the same time, the Executive Director should emphasize on: 1) Installation of the state-of-art effluent treatment plant with zero discharge facility 2) Green belt being around the factory The Executive Director should argue in favor of Social Responsibilities of Business by discussing the following points: o A company gets resources from the society and it manufactures goods and services for the society. A relationship between a business house and the society can be maintained only through a socially responsible behavior. o Business organizations are not only concerned about making money. Social obligations also form part of their ethics. o A business house involves a large number of groups who are interested in the functioning of the organization. The expectations of the stakeholders should be taken into consideration by all the business houses. o The objective of social responsibility promotes objectives of business houses. o Every business house during its functioning has to take decisions. Acceptance of social responsibility as one of the main objectives ensures that the business house makes decisions in interests of the society. o Any business house working in the direction of social responsibility can avoid imposition from the government. o Working in the direction of social responsibility enables a business house to improve its goodwill. o All business houses are becoming professionals and professionalism involves catering to the needs of the society. o A business organization acquires social power through economic and commercial activities and services. This social power needs to match with social responsibility and then only it can avoid being misused. o Companies and their management show initiative in economic matters. They prove their worth and leadership in achievement of economic goals. Society also has a right to expect from companies and their management a degree of involvement, initiative, support and contribution in solving social problems.

(d) Devising of an action plan Healthy and Hearty (India) Ltd. should: (a) Stop making decisions and undertaking activities which seriously interfere with the genuine interests of other sections of the society. (b) Aim at serving their customers with whole-some products at fair prices, treating their employees with decency and dignity, honoring the commitments to

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their suppliers and creditors, honestly observing the laws of the land, and adopting efficient production techniques. (c) Consider the network of interest groups who have a stake in the effective and efficient functioning of enterprises. (d) Show social awareness, concern and commitment and uphold the values, beliefs and interests of society and of the various groups therein.

CASE # 5 (a) The possible factors which made Beta Ltd. sell its brand (Yummy and Tasty) are:

Need for restructuring of its unmanageable product collection Beta Ltd. realized that it was not able to manage the household brands namely, Yummy and Tasty. Low business potential for the company Yummy and Tasty turned out to be minor or secondary businesses for Beta. Unable to meet its objectives Some of the most important objectives of a business enterprise are: Survival Profit maximization Growth Stability Efficiency Beta Ltd. realized that manufacturing of its brand (Yummy and Tasty) are not in line with its objectives.

(b) Business Strategy for Alpha Acquisition strategy

Alpha International adopted Acquisition Strategy in order to achieve its growth objectives. Features of Acquisition strategy: 1. It reduces the time, risks and skills involved in assessing internal growth opportunities and utilizing them in order to develop the necessary resource base. 2. Achieves a measure of synergy between the parent and the acquired enterprises. From the point of view of Alpha International, manufacturing of Tasty and Yummy household brands would result in profits. The reason being that: The company makes the same type of products and hence growth in its brands without additional input or distribution costs. Alpha International can use the same set of distributors to place these brands (Yummy and Tasty) in shops. It would result in an increase of 5-7% in companys turnover in the first year.

(c) Business Strategy for Beta Retreat Strategy

Beta Ltd. adopted Retreat Strategy in order to save its vital interests. Features of Retreat Business Strategy Beta Ltd:

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1. Beta Ltd. required assistance in order to cope up with adverse situations in the environment Two of its brands Yummy and Tasty were not doing well. 2. Minimization of any negative impacts Retreat Strategy was adopted with an overall view to help Beta Ltd. to regroup its resources and strive towards growth. Generally, Retreat Strategy involves temporary and partial set backs, withdrawal of an organizations products from the markets, sale of manufacturing facilities, etc. Beta Ltd: Planned for restructuring of its products Decided in favor of selling off its low business potential products(Yummy and Tasty)

MANAGEMENT PROCESS & ORGANISATION IMT GURGAON STUDENTS

Handout II Case Studies CASE # 1 Mr. P.R.S Rao and Ms. Shilpa Jain were respectively working as Personal Secretary and Computer Operator to the General Manager in a large government organization. The Personal Secretary was very nice and courteous to the General Manager and other seniors in the organization. He would also go out of the way to help them in personal non-office jobs. At the same time, he was autocratic in dealing with juniors in the organization. Many a times, he was a bit harsh with Ms. Shilpa who was directly reporting to the General Manager. This has led to void in the relationship between the two, who were also sharing the cabin attached to the office of General Manager. The cabin was clumsy and dirty with papers scattered all around the room. There were cluttered wires and stains on the floor. One hot summer day Ms. Shilpa came to office and switched on the ceiling fan. There were loose papers lying on the table of Mr. Rao. With the velocity of air from the fan papers on the table of Mr. Rao went helter-shelter in the room. Ms. Jain saw the flying papers but kept on doing the urgent work given by the General Manager. Mr. Rao, who was half an hour late for the office, was irritated to see his table. He shouted at Ms. Shilpa and ordered her to sort all the papers on the floor and arrange them properly on his table. Ms. Shilpa refused and there were heated exchanges between the two. The General Manager heard the noise but ignored it.

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That afternoon Mr. Rao submitted a note to the General Manager for his intervention. He also accused Ms. Shilpa of dereliction of duties and insubordination on several instances.

Discuss the chain of command prevailing between Mr. Rao and Ms. Jain. What could be the reasons which made the General Manager to ignore the noise outside his room? What should the General Manager do now?

CASE # 2

Gulshan Fabrics, the national readymade garments departmental chain is managed by Executive Director. The company has its Head Office in Bangalore. It outsources its manufacturing of garments. The company was divided into different zones with zonal offices in all metropolitan cities. In a meeting with Zonal Managers, the Executive Director received a suggestion from the head of Mumbai zone, G.P. Basotia, that organization should become more humane to employees. This irritated the Executive Director. He immediately remarked addressing to the Zonal Manager of Mumbai. "I have been closely watching the operations of Mumbai branch. There has been a lot of laxity in the managing affairs of employees. The human relations they teach in a management course do not work in real life. You must exercise better control over employees." The Zonal Manager apologized to the Executive Director for making an inappropriate suggestion. At the same time he presented a report wherein Mumbai zone has broken all earlier records of growth. Why did Executive Director got angry? Is he a theory X manager or a theory Y manager? Do you think G.P. Basotia was right in suggesting that organization should become more humane? What would have happened if the performance report of Mumbai was presented before making the suggestion? CASE # 3 Hiren Dasgupta, Sales Manager of Fashion Fabrics, Eastern Region did not find the performance of Harish Mastana, one of his sales representatives, upto the mark. On six separate occasions, Hiren personally discussed with Harish about his various problems, suggesting ways and means so that he might improve his sales performance. During the last conference, Hiren said, "Harish, I'm going to have to let you go if your sales are not upto quota this month."

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Harish failed to meet his quota. Hiren could not bear with the situation and decided to go for further action. He wrote him a letter informing him of his dismissal. Three days later, Hiren received a call from Mr. K.T. Parekh, General Sales Manager, "Hiren, I want you to put Harish Mastana back on the payroll immediately. You know he is the nephew of Mill Mazdoor Union President." "O.K." signed Hiren, "I'll see that it's done." a) What are the authority-power-responsibility-accountability relationships in this case? b) What can be the possible impact of these relationships on the functioning of the company? CASE # 4 In a news article Gujarat based Healthy and Hearty (India) Ltd. has been accused of dumping hazardous chemicals around its plant located in the suburbs of Vadodra. The Executive Director was very disturbed. Two years back the company was forced to shut sown its thermometer manufacturing plant in the outskirts of Ahmedabad, when traces of mercury were found in large quantities in the village where its factory was located. State and the social activists ensured the closure of plant. Since then, company was extra conscious in its social responsibility. A state-of-art effluent treatment plant with zero discharge facility was installed at the factory in Vadodra. There was a green belt around the factory and the water from the effluent treatment plant was reused in the factory and was also used in the irrigating the green belt. To analyse the problem, samples were collected in the vicinity of plant and it was found that the chemicals present were those which were not even used in any of the manufacturing processes or operations at the factory. The source of contamination must be other factories. (a) What do you mean by social responsibility. (b) Why was the thermometer manufacturing plant in Ahmedabad closed. (c) If the state pollution board serves them with a notice, what should Executive Director do? (d) Devise and action plan for the Executive Director to reduce the impact of article in the Newspapers. CASE # 5 Delhi-based Alpha International is close to acquiring popular household brands Yummy and Tasty form Beta Ltd. The deal, at rupees thirty-five crores was announced at a joint press conference. It was sometimes back that Beta felt the need to restructure its unwieldy product portfolio and exist brands which had low business potential for the company. Beta had put these brands on sale late last year. Alpha has emerged as the highest bidder for them. The company, stated in the press release that Alpha is buying the brands but not their manufacturing facility in Noida (near Delhi), because the plant also makes other food products which are Betas core food brands. While Yummy and Tasty are marginal businesses for Beta, (around Rs.20 crore per annum) management consultants felt that they are a good fit in Alphas product portfolio. The company makes the same genre of products and can grow the brands without additional input or distribution costs. Tasty and Tummy are food brands that Alpha can

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manufacture in its existing plants spread across seven locations in Punjab and Maharashtra. The company can also use the same set of distributors to place these brands in shops. Financial Analysts expect them to add 5-7% to Alphas Rs.250 crore turnover in the first year. (a) What are the possible factors which made Beta sell its brand? (b) Discuss the business strategy for Alpha. (c) Discuss the business strategy for Beta.

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MANAGEMENT PROCESS & ORGANISATION IMT GURGAON STUDENTS

Handout III

Solution to Case Studies

CASE # 1

d) A chain of command, which also happens to be a chain of communication and

control, is a vertical line of authority from the top management to every subordinate managerial position. After reading this case study, I feel that a chain of command never prevailed between Mr. Rao and Ms. Jain. A hierarchy or a formal channel defining the authority, responsibility, and communication relationship between Mr. Rao and Ms. Jain never existed.

General Manager

Personal Secretary

Computer Operator

As highlighted in this case study, Mr. Rao was working as Personal Secretary whereas Ms. Jain was working as a Computer Operator in a large government organization. Both were reporting to the General Manager. Mr. Rao was polite and helpful to the General Manager and other seniors whereas he was autocratic in dealing with juniors in the organization. It seems that Mr. Rao even considered Ms. Jain as his subordinate and his attitude towards Ms. Jain was a bit harsh. Hence, I don't feel that a chain of command existed between Mr. Rao and Ms. Jain.

e) In my opinion, the reasons which made the General Manager ignore the noise
outside his room could be: 1. General Manager knew the reasons behind the noise and the parties involved in the heated exchanges. 2. The heated exchanges between Mr. Rao and Ms. Jain were a normal or a routine affair.

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3. General Manager, it seems was mentally prepared that it was not necessary to involve himself in such arguments that usually prevailed between his personal secretary and computer operator. 4. I feel that The General Manager was only concerned about the work being done rather than emphasizing on a conducive work environment wherein every employee feels at ease to work in and thereby considering such an organization as his/her second home. 5. Since a chain of command was not defined in the organization between Mr. Rao and Ms. Jain, I feel that the General Manager never wanted to get involved in such arguments between Mr. Rao and Ms. Jain and thereby taking a particular person's side or favoring either Mr. Rao or Ms. Jain. 6. Another reason for ignoring the noise could be that the General Manager never wanted to spoil his relationship either with Mr. Rao or with Ms. Jain. 7. General Manager, it seems had left it for time to sort out the relationship between Mr. Rao and Ms. Jain.

f) Any General Manager of an organization holds a very responsible and authoritative

position. After going over this case study, I feel that the General Manager should immediately do the following: o Define a hierarchy or a formal channel, which clearly highlights the authority, responsibility, and communication relationship between Mr. Rao and Ms. Jain. o He should try to sort out the differences between Mr. Rao and Ms. Jain as soon as possible cause it might lead to a bad example in the entire organization and might effect the overall image of the organization. o He should take both Mr. Rao and Ms. Jain into confidence and try to figure out the root cause of such heated arguments or exchanges. o The manager should change their seating arrangements, thereby ensuring that Mr. Rao and Ms. Jain do not share the same cabin. o The manager should talk to both Mr. Rao and Ms. Jain individually and tell them that in case they want to become role models and want to gather respect from their subordinates, they need to behave in a professional manner. o The manager should discuss the significance of an organization, group cohesiveness and team effort. The emphasis should be laid on educating the entire organization so that such incident is not repeated in near future. o Mr. Rao should be instructed to change his autocratic style of dealing with subordinates in an organization. He should be complemented on his attitude towards his seniors and he should be asked to maintain the same attitude while dealing with his subordinates. o A verbal warning should be given to both Mr. Rao and Ms. Jain. o As a last resort, if the manager feels that both Mr. Rao and Ms. Jain are at fault, he can ask both of them to leave the organization. CASE # 2 c) The Executive Director who was holding a very senior managerial position in Gulshan Fabrics was in favor of a traditional management philosophy. His ego was hurt during a meeting with zonal managers, when he received a suggestion favoring

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humane aspect in the organization from his subordinate who happened to be head of Mumbai zone. The Executive Director didn't take the suggestion on a positive note as he felt that it was an open criticism against him and that too by his subordinate in front of all other zonal managers. He also wanted to express his feelings in front of other zonal mangers, thus portraying that he won't accept or agree upon any suggestion, which he is not comfortable with, or a suggestion, which comes, in the way of his management philosophy. Being a practitioner of traditional organizational characteristics - efficiency, rationality, order, conformity and formality, the Executive Director had a mindset and accepting change in the organization functioning and that too after incorporating a suggestion from a subordinate was an uphill task. A careful study of the facts and their analysis strongly establish that the Executive Director is a Theory X manager because: o o o o o o o He doesn't lay emphasis on employees. The Executive Director doesn't believe in cooperation between management and workers. No emphasis is laid on participative management and decentralization. The Executive Director believes in imposition of control measures in order to increase the efficiency of the workers. Emphasis is laid on over-centralization of managerial authority. The Executive Director is in favor of Autocratic orientation of managers. He doesn't believe in providing a free flow of communication in the organization.

d) Yes, I feel that G.P.Basotia was right in suggesting that organization should become more humane. The only mistake that he made was of giving the suggestion in front of other zonal mangers. G.P. Basotia should have given this suggestion to the Executive Director in private. He should have also explained the logic behind such thinking, that: o The management is responsible for designing conducive organizational structures and processes so as to enable people to realize their potential, release their energies and contribute their best to the goals of the organization and to fulfillment of their own personal needs. o It would encourage open communication, participative management, flexibility, self-direction, self control among the employees along with creativity and innovation. Had the performance report of Mumbai presented by G.P. Basotia before making the suggestion, the Executive Director wouldn't have got irritated. The Executive Director would have given a serious thought on the suggestion so made. In fact the performance report would have made the Executive Director very happy and in addition he would have also congratulated G.P.Basotia for this achievement in front of other zonal managers.

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CASE # 3 i. Authority is the formal right vested in the managerial position to perform his managerial functions and it includes right to issue instructions to subordinates and right to influence events for achieving certain goals. This authority is capable of delegation, dissemination to lower levels of the organization. In the given case of fashion fabric Hiren Dasgupta is having formal right to get work done through Harish mastana, one of his sales representatives. Thus, Dasgupta is having authority over Harish. Similarly, Mr. K.T. Parekh has authority over the Sales Manager by virtue of his position as General Sales Manager. The terms responsibility and accountability are often used interchangeably by some management theorists. However, it has also been distinguished by some other theorists on the following lines: Responsibility is an obligation of the person to whom authority is entrusted to perform the assigned task. In another sense, it is a set of task and duties assigned to a person. On the other hand accountability connotes personal answerability for decisions, actions and results on the part of a person for his actions and his subordinates actions to his superior. In the context of given case, Harish, is both responsible and accountable to Dasgupta for the achievement of sales targets. On the similar lines, relationship of Dasgupta with that of General Sales Manager can also be defined. However, at the same time, Dasgupta is also accountable to the General Sales Manager for the work done by Harish. Power refers to ability of an individual to gain influence and dominance over events, things and beliefs in ways desired. Authority can also be associated with power, in the sense that authority is form of power generally associated with formal organizations. Thus, power may be based on the formal position or inherent in personality of an individual. It can be found that Union President is not having any formal authority to reinstate or give instructions to General Sales Manager for reinstatement of his nephew Harish Mastana. However, he has the power by virtue of his position as Mill Union Mazdoor President, since he can influence work behavior and actions of workers of the company. ii. Authority, power, responsibility, accountability, relationships have both positive and negative impacts. It is only through such relationships an organization plans, works and tries to achieve its objectives. It is only through flow of authority and responsibility an organization exists and work is performed. The peculiarity in the case lies in the power held by Mill Mazdoor Union President. Positive impact of such power held by Union President is that it keeps a check on Managers and make them cautious and alert. It will also force Managers to think of other alternatives before resorting to any harsh treatment, such as retrenchment in the above case. Moreover, agreeing to the suggestion of Mill Mazdoor Union President will ensure smooth functioning of the company through union cooperation. However, in the given case, it is highly likely that the impact would be towards the negative side. There are chances that Dasgupta will feel demotivated to perform his

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duties. He will feel dejected and sad about the incident. He would be concerned about encroachment of his authority by the power of union leader. On the other hand, Harish will unnecessarily feel more powerful as compared to his superior. He may continue with his casual approach towards his work by not meeting the standards and expectations of the organization. This will also give wrong signals to his colleagues, that work can be avoided in this organization through union leaders or through the use of power tactics over the management. Thus such relationships can lead to anti-work environment in the company. CASE # 4

(e)

Social responsibility can be defined as the responsibility of a business towards the society. A business responsibility can be towards: 1. Performing economic functions - Production & Supply of goods 2. Consideration of interests of the society 3. Undertaking economic activities 4. Promotion of education, removal of poverty, etc 5. Encouraging social welfare and preserving social values Any successful organization or enterprise has social responsibility built into its objectives, policies, strategies and plans and also their day to day functioning.

(f)

The thermometer manufacturing plant in Ahmedabad was closed because traces of mercury were found and that too in large quantities in the village where its factory was located. Hence an issue was raised by the social activists on the following grounds: o Any business enterprise gets resources from the society and it manufactures goods and services for the society. Hence, Healthy & Hearty (India) Ltd, a business organization being a sub-system of the larger society has no right to survive if it damages the society. A relationship between a business house and the society can be maintained only through a socially responsible behavior. o Social obligations form part of the ethics of business organizations. o A business house involves a large number of groups who are interested in the functioning of the organization. The expectations of the stakeholders should be taken into consideration by Healthy & Hearty (India) Ltd. o The objective of social responsibility promotes objectives of business houses. o Every business house during its functioning has to take decisions. Acceptance of social responsibility as one of the main objectives ensures that the business house makes decisions in interests of the society. This objective however was missing in Healthy & Hearty (India) Ltd. o Since Healthy & Hearty (India) Ltd was not working in the direction of social responsibility, the issue of goodwill was questioned. o Healthy & Hearty (India) Ltd was trying to become a professional organization without catering towards the needs of the society.

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(g)

In case the state pollution board serves a notice, the Executive Director should reiterate the fact that the company is extra conscious in its social responsibility. At the same time, the Executive Director should emphasize on: 3) Installation of the state-of-art effluent treatment plant with zero discharge facility 4) Green belt being around the factory The Executive Director should argue in favor of Social Responsibilities of Business by discussing the following points: o A company gets resources from the society and it manufactures goods and services for the society. A relationship between a business house and the society can be maintained only through a socially responsible behavior. o Business organizations are not only concerned about making money. Social obligations also form part of their ethics. o A business house involves a large number of groups who are interested in the functioning of the organization. The expectations of the stakeholders should be taken into consideration by all the business houses. o The objective of social responsibility promotes objectives of business houses. o Every business house during its functioning has to take decisions. Acceptance of social responsibility as one of the main objectives ensures that the business house makes decisions in interests of the society. o Any business house working in the direction of social responsibility can avoid imposition from the government. o Working in the direction of social responsibility enables a business house to improve its goodwill. o All business houses are becoming professionals and professionalism involves catering to the needs of the society. o A business organization acquires social power through economic and commercial activities and services. This social power needs to match with social responsibility and then only it can avoid being misused. o Companies and their management show initiative in economic matters. They prove their worth and leadership in achievement of economic goals. Society also has a right to expect from companies and their management a degree of involvement, initiative, support and contribution in solving social problems.

(h) Devising of an action plan Healthy and Hearty (India) Ltd. should: (e) Stop making decisions and undertaking activities which seriously interfere with the genuine interests of other sections of the society. (f) Aim at serving their customers with whole-some products at fair prices, treating their employees with decency and dignity, honoring the commitments to their suppliers and creditors, honestly observing the laws of the land, and adopting efficient production techniques.

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(g) Consider the network of interest groups who have a stake in the effective and efficient functioning of enterprises. (h) Show social awareness, concern and commitment and uphold the values, beliefs and interests of society and of the various groups therein.

CASE # 5 (d) The possible factors which made Beta Ltd. sell its brand (Yummy and Tasty) are:

Need for restructuring of its unmanageable product collection Beta Ltd. realized that it was not able to manage the household brands namely, Yummy and Tasty. Low business potential for the company Yummy and Tasty turned out to be minor or secondary businesses for Beta. Unable to meet its objectives Some of the most important objectives of a business enterprise are: Survival Profit maximization Growth Stability Efficiency Beta Ltd. realized that manufacturing of its brand (Yummy and Tasty) are not in line with its objectives.

(e) Business Strategy for Alpha Acquisition strategy

Alpha International adopted Acquisition Strategy in order to achieve its growth objectives. Features of Acquisition strategy: 3. It reduces the time, risks and skills involved in assessing internal growth opportunities and utilizing them in order to develop the necessary resource base. 4. Achieves a measure of synergy between the parent and the acquired enterprises. From the point of view of Alpha International, manufacturing of Tasty and Yummy household brands would result in profits. The reason being that: The company makes the same type of products and hence growth in its brands without additional input or distribution costs. Alpha International can use the same set of distributors to place these brands (Yummy and Tasty) in shops. It would result in an increase of 5-7% in companys turnover in the first year.

(f)

Business Strategy for Beta Retreat Strategy Beta Ltd. adopted Retreat Strategy in order to save its vital interests. Features of Retreat Business Strategy Beta Ltd: 3. Beta Ltd. required assistance in order to cope up with adverse situations in the environment Two of its brands Yummy and Tasty were not doing well. 4. Minimization of any negative impacts Retreat Strategy was adopted with an overall view to help Beta Ltd. to regroup its resources and strive towards growth.

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Generally, Retreat Strategy involves temporary and partial set backs, withdrawal of an organizations products from the markets, sale of manufacturing facilities, etc. Beta Ltd: Planned for restructuring of its products Decided in favor of selling off its low business potential products(Yummy and Tasty)

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MANAGEMENT PROCESS & ORGANISATION IMT GURGAON STUDENTS

Handout IV

Theoretical Perspectives:
+ Classical Organisation Theory

Scientific Management Theory a) Proposed by Frederick Winslow Taylor, who is popularly recognized as the father of 'Scientific Management' b) Brief history about Frederick Winslow Taylor: Taylor was an engineer, scientist and practitioner in USA. This approach was mainly to solve the work-related problems in order to improve the effectiveness and efficiency. When he started his career as a machinist and a foreman, he was disappointed to see the way in which the things were being done by the workers in his organization. He was brought up in a culture of honesty, dedication, rationality, discipline and hard work, and he wanted to do things in a rational and analytical manner. Taylor concentrated on the shop floor level workers. c) Initiatives taken by Frederick Taylor:

i. Taylor believed that by improving tools and equipments, efficiency

of the workers would increase apart from reducing their physical strain. ii. Time study designed to establish the standard time required to carry out a job under specified conditions. It involves analysis of job into its constituent elements and recording the time taken in performing each element. iii. Motion study, that is, a systematic and critical study of the movement of both the worker and the machine so as to identify and eliminate unnecessary and wasteful movements. iv. Differential piece rate system-Taylor suggested that a direct link should be created between remuneration and productivity for motivating workers.

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For Example, under this system two piece rates are laid down: one, low rate for those failing to achieve the standard output and the second higher rate for those achieving or exceeding the standard output. Suppose the two piece rates are Re. 1 and Rs 1.50 respectively, Standard daily output laid down through time and motion studies is 10 units. The daily wages of two workers A and B who produce 8 and 12 units will be calculated as under: A's wages = 8 units @ Rs 1= Rs 8 B's wages = 12 units @ Rs 1.50 = Rs 18 Due to significant difference in wages, A and other inefficient workers will be under pressure to reach the standard output. B and other efficient workers will be encouraged to keep their output above standard. v. Functional Foremanship: According to Taylor, one supervisor cannot be an expert in all aspects of work supervision. He suggested the system of functional foremanship in which eight supervisors supervise a worker's job. Four of them are concerned with the planning of work and the other four are involved in the execution of work at the shop floor. vi. He was in favor of scientific selection and systematic training of workers. He emphasized right man for the right job. vii. He stressed the need for creation of a good working environment. For example, cleanliness within the organization. viii. Taylor distinguished the roles and responsibilities of management from those of workers. He said that management should take responsibility for planning. He assigned the role of 'doing' to workers to accomplish the work as per the instructions given by the management. d) Advantages of this theory: It was directed towards increasing worker's productivity Taylor's theory linked remuneration with output Emphasis was laid on time and motion studies, work measurement, simplification and standardization. Improvement in tools and equipment was directly linked with reduction of physical stress of the workers. This theory distinguished the roles and responsibilities of management from those of the workers.

e) Disadvantages of Scientific Management: Mechanistic Approach: Taylor's theory ignores the human element in production and is devoid of a human touch. It treats workers as factors of production and not as human beings. Unrealistic assumptions: Financial gain is not everything. Workers also want job satisfaction, participation, recognition and appreciation.

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Narrow view: Taylor focused attention completely on efficiency at the shop floor. It does not deal with management of the total organization. Impracticable: Many ideas of Taylor are said to be infeasible in practice. For example, functional foremanship is likely to create problems because it violates the principle of unity of command. Exploitation of Labor: In the name of increasing efficiency, workers were forced to speed up affecting their physical and mental health. Taylor's theory was oriented towards organization goals.

f) Taylor's practical philosophy: Science, not rule of thumb; harmony, not discord (dispute); co-operation, not individualism; maximum output, not restricted output. g) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS: Frederick -Remember how fed up you were when you first read this theory, fed becomes fred, and Fred. FredFred. Frederick Winslow - Best way to win is to win slowly. Hence the name Winslow Taylor - Remember Mark Taylor, the famous Australian Captain or what comes after s, it is t and scientific mgt theory gets recognized with Taylor (s-t) Conclusion- Frederick Winslow Taylor

Frederick Winslow Taylor - Scientist - Engineer - Machinist - Foreman Tools and Equipment - Time and Motion Study - Functional Foremanship Differential piece rate system Shop Floor Level Rational and critical way of doing things Advantages Disadvantages
Administrative Management Theory A -Henri Fayol While Taylor concentrated on shop floor level, theorists and thinkers such as Henri Fayol, Max Weber focused on organization structure and management functioning. a) Proposed by Henri Fayol b) Brief history about Henri Fayol:

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Fayol started his career as a mining engineer and later became a chief executive. According to Fayol, the role of a manger is to forecast, plan, organize, command, co-ordinate and control. c) Classification of Activities: Fayol classified all business activities into six categories: Remember: TCS AFM d) Henri Fayol's 14 management principles: Technical (manufacturing or production of products), Commercial (buying, selling and exchange), Security (protection of persons and property), Accounting (recording) Financial (optimum use of capital), Managerial

1. Scalar Chain: It refers to the chain of superiors ranging from the ultimate authority to
the lowest level in the organization.

E D C B A
Scalar Chain and Gang-Plank As shown in the above figure, if A wants to communicate with I, usually message will move from A to E via B, C, D and from E it will come down to I via F, G and H. But if it is essential to communicate immediately, a gang-plank (dotted line) may be created between A and I without weakening the chain of command. This gang-plank allows the two employees to deal directly with each other. But each must inform his supervisor of any action taken by him.

F G H I

2. Division of work: It refers to specialization of work and helps in producing more

products of better quality with same efforts.

3. Authority versus Responsibility: As per Henri Fayol, authority and responsibility are
related. Wherever authority is exercised, responsibility arises.

4. Unity of Command: An employee should receive orders from one supervisor only. 5. Unity of direction: There should be one head and one plan for a group of activities
having the same objective.

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6. Discipline: It implies respect for the organization and its employees. That is, there
should be respect for the rules and agreements designed to secure obedience.

7. Order: This principle is concerned with the arrangement of things and the placement
of people. It implies that there is a place for everything and everything is in its place.

8. Stability of tenure of personnel: Employees cannot work efficiently unless job

security is assured to them. Management must strive to reduce employee turnover. For example, a mediocre manager who stays should be preferred to an outstanding manager who leaves the organization after a short duration.

9. Remuneration of personnel: The amount of remuneration and the method of

payment should be just and fair and should provide maximum satisfaction to both the employees and employers.

10. Centralization: According to Fayol, the degree of concentration of authority should

be based upon optimum utilization of all faculties of the personnel. In other words, it should be determined on the basis of individual circumstances in each case.

11. Equity: Equity implies employees should be treated with justice and kindness.
Managers should not be biased or partial in their dealings with subordinates.

12. Initiative: Employees at all levels should be given the opportunity to take initiatives
and exercise judgment in the formulation and execution of plans. Initiative refers to the freedom to think for one self and use discretion in doing work. It develops the interest of employees in their jobs and provides job satisfaction to them.

13. Esprit de corps: It implies unity of effort through harmony of interests. In other words,
it emphasizes on the importance of groups and teamwork.

14. Individual interests versus organizational interests: The interest of one employee or
group of employees should not prevail over that of the company. Efforts should be made to reconcile individual interests with those of the organization. When there is a conflict between the two, the interests of the organization should prevail over individual interests. e) Advantages of this theory:

Universality: All organizations face the problem of making optimum utilization of scarce resources. The functions and principles are applicable in all sorts of organizations. Fayol recognized the need for managers to acquire and learn certain abilities and skills. All the principles are flexible. The approach is regarded as dynamic enough to absorb new thinking and new functions of management like, innovation, etc.

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Compliance with unity of command principle ensures that the deviations from the set targets are very less.

f) Disadvantages of Administrative Management Theory:

Too formal: Fayol theory is said to be very formal. Vague: Some of the concepts have not been properly defined. For example, the principle of division of work does not tell how the task should be divided. Inconsistency: Principles of administrative theory were based on personal experience and limited observations. They are generalizations and lack empirical evidence. Contradictory principles: For example, unity of command principle is incompatible with division of work. No attention paid to workers Historical value: This theory is less appropriate in the existing environment. For example, present day managers cannot depend entirely on formal authority and must use persuasion to get the work done.

g) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS:

Henri Fayol - Mining Engineer - Chief Executive Classification of activities - TCS AFM 14 Principles Organization as a whole Advantages Disadvantages
Comparison between Taylor and Fayol :

Basis of comparison Emphasized on: Focus:

Taylor Shop floor level Improving productivity through work simplification and standardization Scientist

Fayol Analysis of manager's activities Improving overall administration through general principles Practitioner of jobs Mgt of total

Identity: What they did?

Management organization

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Administrative Management Theory B - Max Weber's Ideal-type Organization - Bureaucracy a) Proposed by Max Weber. b) Brief history about Max Weber: Max Weber, a scientist, analyzed the formation and administration of public bureaucracies, which happen to be the oldest form of organization. Weber evolved an ideal type of bureaucracy as a conceptual model. c) Features of Bureaucracy: Max Weber's model is characterized by the following features:

1. Division of work: There is a high degree of specialization or division of labor 2. 3.

in a bureaucratic organization. Tasks are divided into very specialized jobs and each member performs his specialized function in a predictable manner. Rules and regulations: Detailed and rigorous rules are laid down to specify and govern the work behavior of the employees. Hierarchy of authority: A clearly defined hierarchy is created by downward delegation of authority. Authority enables a person to give commands needed for discharging duties at various levels. Each supervisor exercises supervision and control on his subordinates with provision for appeal to higher authorities in the prescribed manner. Record keeping: Every decision and action is recorded in the form of written documents and kept in its original as well as draft form. Technical competence: Selection and promotion of employees are based on their technical competence. Qualifications are prescribed for each job/position. Impersonal relations: Relations among the members of a bureaucratic organization are impersonal and formal.

4. 5. 6.

d) Advantages of Bureaucracy:

Specialization:

Every member is assigned a specialized a specialized task to perform. Structure: A structure or form is created by specifying the duties and responsibilities and reporting relationships in a command hierarchy. Rationality: A measure of objectivity is ensured by prescribing in advance the criteria for decision-making. Predictability: The rules, regulations, specialization impart predictability and thereby ensure stability in the organization.

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 Democracy: Emphasis on qualification and technical

competence makes the organization more democratic. e) Disadvantages of Bureaucracy:

Rigidity: Rules and regulations in a bureaucracy are often rigid and inflexible. Goal displacement: Because of the rules so framed, the objectives of the organization may be neglected. Impersonality: A bureaucratic organization stresses mechanical way of doing things. Organizational rules and regulations are given preference over an individual's needs and emotions. Paperwork: Bureaucracy involves excessive paperwork, as every decision must be put in writing. Restricts people: Jobs are divided into categories, which restrict people from performing tasks that they are capable of performing. Misuse of positions: People in a bureaucracy tend to use their positions and resources for their own self-interest.

f) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS: Think of a bureaucrat and try to link the above features/advantages/disadvantages with him/her. + Neo-Classical Organisation Theory Human Relations Movement a) Proposed/Pioneered by: Elton Mayo b) Brief history about Elton Mayo: Elton Mayo is considered to be the father of neo-classical approach. He was the leader of the team, which conducted the famous Hawthorne experiments. c) What exactly is Human Relations Movement? Human Relations is a socio psychological approach to management. That is, it suggests that a business enterprise is a social system in which the group norms exercise significant influence on the behavior and performance of the individuals. Human Relations movement gave the main importance to human factors. It believed that workers couldn't be motivated by economic rewards alone. They want social satisfaction at the workplace. Managers should create such a climate in the organization that workers can feel happy. For example, cordial supervision, job enrichment, participative decision-making,

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etc. The main aim being to motivate the workers in such a way that they work together productively, cooperatively, and with satisfaction and achieve organizational goals. d) Basic Philosophy:

1. A human organization is a psycho-social system. 2. An organization operates through employees, and workers and hence their
needs should be assessed. 3. Employees along with money want recognition, appreciation, participation, responsibility, etc. 4. An organization should recognize and respect its employees. 5. The management should cooperate with employees, by establishing sympathetic, caring, and friendly relations with them. 6. The management should aim towards reducing the distance or the gap between the management and the workers and they should aim towards creating "one big happy family" of all members of the organization. 7. There should be no conflicts within an organization. 8. Efforts should be made to ensure a high degree of satisfaction, motivation, morale and sense of security of workers. e) Advantages of this theory: Human Relations Approach helps to satisfy the social and psychological needs of employees. Satisfaction of employees is likely to increase productivity and reduce costs. Sound human relations can result in the optimum utilization of resources. Human Relations movement focuses on inter-personal relations. It highlights the "people side" of organizations. It therefore avoids the imbalances caused by over-emphasis on technical and administrative aspects under scientific management and administrative theory. The theory emphasizes on the fact that employees are human beings and they are entitled to be treated with respect and dignity. A true concern for workers would yield rich dividends.

f) Disadvantages of Human Relations Movement: 1. Unscientific - Critics have questioned the scientific validity of the human relations approach. 2. Shortsighted - Inter-personal relations are considered as an end in itself and very little attempt is made to really understand the human behavior. 3. Unrealistic assumptions - Human Relations approach is based on over-liberal assumptions about people, their needs, attitudes.

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4. Negative view of conflict - Human Relationists believed that conflict is always bad and must be avoided. They failed to recognize conflict as a creative force. 5. Happy workers are considered to be productive workers. But research has revealed that no direct correlation exists between morale and productivity. 6. Anti-individualistic: Human Relations approach is directed towards people. It replaces the control of the boss by the control of the group forcing the individual to sacrifice his personal values to group norms. 7. Several shortcuts were created in order to keep the workers happy, example, false feeling of importance and belongingness were given to workers, managers resorted to socializing with employees in a superficial manner and manipulating them to believe that management really cared for them. g) Hawthorne Studies/Experiments: Elton Mayo involved himself in these studies and in all four experiments/studies were conducted.

(i)

Illumination Experiments: In this experiment it was observed that improved productivity could be brought about by not only improved working conditions but also by promoting informal social relationships among the workers. Relay assembly test room experiment: In this experiment, improved working conditions were introduced. For example, friendly and informal supervision, shorter working hours and working days, free interaction among group members, better wages, etc. The productivity and morale of the group increased consistently during the period of the experiment. Even when the improvements in working conditions were withdrawn, productivity and morale of the group were not affected. It was concluded that socio-psychological factors such as feelings of importance, recognition, attention, participation, and lenient supervision resulted in higher worker productivity. Massive Interviewing Programme: A large number of workers were interviewed to judge their attitudes and opinions on the factors influencing productivity. It was found that the opportunity to talk freely about things that are important to workers, informal relations, has a positive effect on the morale and productivity of workers. Bank wiring observation room experiment : In this experiment, a group of 14 workers was put under close observation. The pay of every member was made dependent on the performance of the group as a whole. It was found that the group had its own norms of performance and various forms of social pressure were exercised to enforce these norms. As a result output could not increase despite group incentive schemes.

(ii)

(iii)

(iv)

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h) Conclusions of Hawthorne experiments: Influence of psychological, and social factors on the workers productivity and satisfaction were highlighted. The experiments also proved that informal groups and interpersonal relations exerted more influence over workers behavior. Friendly and cordial supervision, free communication, etc resulted in improving worker's productivity and satisfaction level. The importance of humanizing the relations between management and workers were realized. Many organizations started taking interest in the welfare and happiness of workers. They initiated measures to socialize workers, to relax supervisory styles, to improve working conditions, to encourage informal and interpersonal relations, to show respect and warmth to workers, etc. i) Drawback of Hawthorne studies:

(i) (ii) (iii) (iv) (v) (vi)

(vii)

Illogical: Mayo has been criticized for implying that management is always logical whereas workers are largely driven by emotions. Unscientific: There was no systematic basis in the choice of work, worker and the environment. The investigations were not carried out on a systematic basis. True but Irrelevant: The conclusions of Hawthorne experiments are true but irrelevant. Some industrialists argue that the main object of a business is to make profits rather than to keep workers happy. Unrealistic assumptions: They focused on the human aspects of work place and ignored other aspects in the organization. Too Obvious: Social psychologists argue that the findings of Hawthorne studies are not new but were all known long ago. Simple: The generalizations were also simplistic and nave. The behavior of the workers were not natural but was affected by their feeling of importance, attention and publicity they got.

j) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS: Conclusion- Elton Mayo

Proposed by Brief history Philosophy Advantages Dis-advantages Hawthorne studies - 4 experiments

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Comparison between Human Relations and Scientific Management:

Human Relations 1. 2. 3. 4. No universal principles Focus on people Man is a social animal Motivation, job satisfaction

Scientific Management 1. Principles for universal application 2. Focus on machines 3. Man is a economic animal 4. Time-Motion study, functional Foremanship, wage incentives 5. Improvement in productivity, and efficiency

5. Improvement in inter-personal relations

Behavioural Science Thinking (BST) a) Practitioners of BST: McGregor (Theory X and Theory Y), Abraham Maslow (Need hierarchy theory of human motivation) b) Brief history about BST: Behavioural Science deals with scientific analysis, investigation and understanding of human behavior. There are three main branches of behavioural sciences: 1. Psychology - It is the study of individual human behavior 2. Sociology - It is the study of human behavior in groups 3. Anthropology - It is the study of physical, biological and cultural influences on human behavior c) Basic Assumptions and Propositions of BST: Organizations are socio-technical systems

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Conflict in organizations is desirable in some cases. Conflicts and co-operation co-exist in organizations Individuals differ in terms of their attitudes, perceptions and value systems. Therefore, they react differently to the same situation. People working in an organization have their needs and goals, which may differ, from the organizational goals. Management should try and achieve a consensus between the organizational and individual goals. People's behavior as individuals may be different from their behavior as members of a group. A wide range of factors influence relations among people (interpersonal relations). People working together in an organization form their own informal groups. Such groups have their own norms, culture and communication systems. Informal groups exercise a significant influence on the attitudes, behavior and performance of employees. d) Advantages of this theory: It analyses and understands human behavior The behavioural science approach highlights the need to achieve both human, social and economic goals It regards individuals as dynamic and different from one another in regards to their needs and attitudes This theory also highlights the significance of conflicts in organizations BST is a discipline concerned with scientific investigation

e) Disadvantages of Behavioural Approach: Individualistic perspective: The Behavioural science approach centers its attention on understanding of individuals Simplistic: The behavioural science approach revolves around a very simple aspect that individuals are different from one another. Time consuming: This approach deals with scientific investigation, analysis and understanding of human behavior. Behavioural approach lacks scientific validity This approach errs by identifying management with psychology Biased towards groups and group behavior

f) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS:

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Pioneered by Brief history - Psychology, Sociology, Anthropology Assumptions Advantages Dis-advantages

Comparison between Human relations and Behavioural Approach:

Human Relations Behavioural Approach Focus on individual, his needs and Focus in groups and group behavior behavior Highlights interpersonal relationships Highlights group relationships Based on Hawthorne Experiments Based on human relations movement Narrow scope Wide scope Emphasis on motivation, morale, Emphasis on group dynamics, informal And job satisfaction organization, motivation via job enrichment Conflict in organization is always Conflict may even be beneficial, cannot destructive Approach (QA) always be resolved Quantitativeand should always be minimized Pioneered by Elton Mayo Pioneered by McGregor, Maslow a) Proposed/Pioneered by: W.C.Churchman Organizations are socio-technical Organizations are purely social systems systems Revolves is also known as needs Regards individuals as different from one b) This approacharound psychologicalmanagement science approach, mathematical of individuals theory approach, operations and dynamic in regards to their needs another research approach. approach, decision and attitudes

c) What exactly is Quantitative Approach? The Quantitative Approach follows scientific method. The scientific method believes in the fact that every work follows rationality and is observable and verifiable.

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Scientific method consists of the following steps: 1. 2. 3. 4. 5. 6. Objectives are stated or specified Problem is defined Assumptions are made Data is collected Assumptions are tested Results are explained

Remember: OPA DAR The scientific method is highly formal and aims at precision and perfection. In order to arrive at perfection, it is essential to express relations and facts in numerical, quantitative and mathematical terms. Mathematics defines and expresses relations among variables in such a way that one best solution is arrived at. d) Features of QA: 9. Management is a series of decision-making. The job of a manager is to secure the best solution out of a series of inter-related variables. 10.These variables can be presented in the form of a mathematical model, which consists of a set of functional equations, which highlights interrelationship of the variables. 11.If the model is properly formulated and the equations are correctly solved, one can secure the best possible solution to the model. 12.Organizations exist for the achievement of specific and measurable economic goals. 13.In order to achieve the goals the optimal decisions must be made through scientific reasoning. 14.The quality of management is judged by the quality of decisions made in diverse situations. 15.Efforts should be made to ensure a high degree of satisfaction, motivation, morale and sense of security of workers. e) Advantages of this theory:

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 The quantitative approach underlines the great importance of the study of diverse decision situations and the means of perfecting them. It emphasizes on factual data and logical analysis in the decision making process. Disciplined thinking is encouraged. Complex relations among variables can be expressed more efficiently. Quantitative approach has led to electronic data processing, management information systems, linear programming and other techniques. This approach has facilitated planning and decisionmaking. f) Disadvantages of Quantitative Approach: 8. It argues that management has no other functions except decisionmaking. 9. This approach underrates the importance of the human element in management. 10.Quantitative approach is a mechanistic approach (devoid of reality). In real life, managers have to take decisions speedily with inadequate data. 11.Time consuming: Full data gathering takes time. 12.Unrealistic assumptions: This approach involves unrealistic assumptions. For example, all related variables are measurable and have a functional relationship. 13.Unpractical: It suffers from the practical difficulty that the required data cannot be kept fully up-to date and accurate. g) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS: Conclusion - W.C.Churchman
Proposed by Also known as Intro about QA Features Advantages Dis-advantages

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Comparison between Quantitative Approach and Scientific Management:

Scientific Mgt Suggests use of scientific methods research Focuses on improving efficiency of workers and machines by finding one best way of doing things 3. Time and Motion studies 4. F.W.Taylor 5. Analysis of operating problems at the shop floor level

Quantitative Approach Suggests application of operation Focuses on finding right answers to managerial problems Mathematical and statistical techniques W.C.Churchman Analysis of mgt problems at all levels of organization

Systems Philosophy (SP)

a) Practitioners of SP: Kenneth Boudling, Kahn b) Brief history about SP: System contains number of elements which are interdependent and interacting. The main elements of systems approach are as follows:

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1. An organization is a unified and purposeful system consisting of several interconnected, interacting and interdependent parts. 2. The parts of a system are called sub-systems. Each sub-system influences the other sub-systems and the system as a whole. 3. The position and function of each sub-system can be analyzed and understood only in relation to other sub-systems and to organization as a whole. 4. The organization as a system can be analyzed and understood only by reference to its sub-systems. 5. Each sub-system derives its strength by its association and interaction with the other sub-systems. As a result the collective contribution of the organization is greater than the aggregate of individual contributions of its sub-systems. This is known as synergy. 6. Each system has a boundary that separates it from its environment. The boundary determines which parts are internal to the organization and which are external. For example, employees are within the boundary and creditors; customers are external to a firm. 7. The reaction or response of the environment to the output is known as feedback. Feedback is useful in evaluating and improving the functioning of the system. 8. Organizations operate on the principle that they have several alternative ways of doing the same thing or achieving the same goal. c) Classification of systems: Physical systems - Example, solar system, Ganga river Mechanical systems - Implies systems which are engineering in nature. Example, Sewing machine, motorcar Biological systems - Those systems which observe a cycle of birth, growth, decay and death. Example, human beings, plants Social systems - These systems are devised by man to overcome problem of isolation. Example: Family Open systems - An open system actively interacts with its environment. By interacting with other systems, it tries to establish exchange relationships.

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Closed systems - A closed system is self contained and isolated from the environment. It is a non-adaptive system. It does not receive inputs often from other systems and does not trade with the outside world. Example: An automatic wrist watch
ENVIRONMENT

INPUTS TRANSFORMATION PROCESS

OUTPUTS

FEEDBACK

Fig: An open system view of organization d) Organization as an input-output system Inputs imply human, physical resources taken from the environment. An organization converts inputs using various processes into outputs (products and/or services). For example, an educational institution produces literate people. An organization is hence an input-output system. e) Advantages of this theory: It aims at meaningful analysis of organizations and their management. It facilitates the interaction between organization and its environment. It guides managers to avoid analyzing problems in isolation and to develop an integrated approach.

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 Systems approach provides clues to the complex behavior of people in an organization. f) Disadvantages of Systems Philosophy: Too vague Over-conceptual The approach does not recognize the differences in systems Systems philosophy does not specify the nature of interactions and inter-dependencies. Unpractical: It cannot be easily and directly applied to practical problems. It does not offer specific tools and techniques for the practicing executive. It fails to offer a unified body of knowledge.
g) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS: Pioneered by Brief history Classification Advantages Dis-advantages

III.

CONTINGENCY VIEWPOINTS (CV)

a) Practitioners of CV: Tom Burns, Joan Woodward, Paul Lawrence, James Thompson b) Also known as: Situational Approach c) Brief history about CV: Contingency approach was developed by managers, consultants and researchers who tried to apply the concepts of earlier approaches to real life situations. They found that the concepts and techniques highly effective in one situation failed to work in other situations. As per the contingency approach, the best solution is the one, which meets the requirements

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of the given situation. In other words, there is no single best way of managing applicable in all situations. Contingency viewpoint is more than a mere matter of common sense. Management should deal with different situations in different ways. In other words, the effectiveness of any technique is contingent on the given situation. It is the responsibility of management to analyze the situation and then choose the right approach to deal with it. Contingency approach rejects universality of management concept. d) Features of Contingency Approach: o Management is entirely situational. In other words, the conditions and complexity of the situation determine which measure or technique is applicable and effective. o Management should therefore match or fit its approach to the requirements of the particular situation. o Management policies and practices must respond to environmental changes. o Knowledge and understanding of different principles, techniques and styles of management is a must. o Managers should understand that there is no one best way to manage. Example: An effective and efficient leader should change his/her style to match the given situation. Thus, the contingency approach has applicability and usefulness for all the functions of management. In order to implement the contingency viewpoints, the managers have to take four sequential steps: 1. Analyze and understand the situation 2. Study and examine the validity of various concepts, principles and techniques 3. Make the right choice by matching the technique to the situation, and 4. Implement the choice e) Advantages of this theory:

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 Contingency approach provides a clear view of the realities of the managerial job. The contingency approach provides situation specific solutions. The approach is open-minded. Contingency approach has commonsense value and wide-ranging practical utility. It promotes analytical, critical and multi-dimensional thinking with the help of which managers can innovate new and better approaches and widen their choice. The contingency approach tries to integrate the findings of the earlier approaches and it makes an effort to make them contingent on the demands of the situation. The contingency approach accepts that organizations and their environment are too dynamic to be always effectively managed in the same manner. Managers must be capable of changing their approach and style to match the changes in the environment. f) Disadvantages of CV: It adds confusion to the practice of management by stressing that everything depends on situation. The manager has no tested and proven prescriptions to depend upon. Unrealistic: Without a theoretical foundation, it is impossible to research, or develop a knowledge base. Unpractical: The approach does not incorporate all aspects of the system theory. Very complex theory Simplistic: It is also said that there is nothing new in contingency theory because classical theorists also advised managers to use principles in the light of changing conditions.
g) HOW TO REMEMBER THIS THEORY FOR YOUR EXAMS:

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Pioneered by/Practitioners Also known as Brief history Features Advantages Dis-advantages

Comparison between Approach:

Systems

approach

and

Contingency

2. 3. 4. 5. 6. 7.

Systems Approach Contingency Approach 1. An organization is goal oriented Organization are complex and its effectiveness Consisting of interdependent and is dependent on specific situations. Interacting sub-systems. Treats all organizations alike irres Treats each organization and each situation pective of its size, culture as a unique entity Input-output process, synergy, open No specific concepts system, are the main concepts Recognizes mainly the interactions Attempts to identify the nature of interactions among system and sub-systems Neutral on the universality of Rejects the universality of principles principles Main focus on internal environment Main focus on external environment Pioneered by Pioneered by Tom Burns, Joan Woodward, Paul Kenneth Boudling, Kahn Lawrence, James Thompson

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