UNIT 1

Syllabus
Fundamentals of Management: Management practices from past to present, Different levels of
management, Managerial skills and Managerial Functions , Case Studies
Planning- Objective of planning, Planning process, Types of planning, Types of plans, Management
by Objective, Decision-making- types, process & techniques,. Case Studies

Definition
“Management is knowing exactly what you want men to do and then seeing that they do it the best
and cheapest ways”.
F.W.Taylor
“Management is defined as the creation and maintenance of an internal environment in an enterprise
where individuals working together in groups, can perform efficiently and effectively towards the
attainment of group goals”.
Koontz and O’Donell

Characteristics of Management
1. Management aims at reaping rich results in economic terms: Manager's primary task is to
secure the productive performance through planning, direction and control. It is expected of the
management to bring into being the desired results. Rational utilisation of available resources to
maximise the profit is the economic function of a manager. Professional manager can prove his
administrative talent only by economising the resources and enhancing profit.
2. Management also implies skill and experience in getting things done through people:
Management involves doing the job through people. The economic function of earning profitable
return cannot be performed without enlisting co-operation and securing positive response from
"people". Getting the suitable type of people to execute the operations is the significant aspect of
management.
3. Management is a process: Management is a process, function or activity. This process continues
till the objectives set by administration are actually achieved. "Management is a social process
involving co-ordination of human and material resources through the functions of planning,
organising, staffing, leading and controlling in order to accomplish stated objectives".
4. Management is a universal activity: Management is not applicable to business undertakings
only. It is applicable to political, social, religious and educational institutions also. Management is
necessary when group effort is required.
5. Management is a Science as well as an Art: Management is an art because there are definite
principles of management. It is also a science because by the application of these principles
predetermined objectives can be achieved.
6. Management is a Profession: Management is gradually becoming a profession because there are
established principles of management which are being applied in practice, and it involves specialised
training and is governed by ethical code arising out of its social obligations.
7. Management is an endeavour to achieve pre-determined objectives: Management is concerned
with directing and controlling of the various activities of the organisation to attain the pre-determined
objectives. Every managerial activity has certain objectives. In fact, management deals particularly
with the actual directing of human efforts.
8. Management is a group activity: Management comes into existence only when there is an group
activity towards a common objective. Management is always concerned with group efforts and not
individual efforts. To achieve the goals of an organisation management plans, organises, co-
ordinates, directs and controls the group effort.
9. Management is a system of authority: Authority means power to make others act in a
predetermined manner. Management formalises a standard set of rules and procedure to be followed
by the subordinates and ensures their compliance with the rules and regulations. Since management is
a process of directing men to perform a task, authority to extract the work from others is implied in
the very concept of management.
 10. Management involves decision-making: Management implies making decisions regarding the
organisation and operation of business in its different dimensions. The success or failure of an
organisation can be judged by the quality of decisions taken by the managers. Therefore, decisions
are the key to the performance of a manager.
11. Management implies good leadership: A manager must have the ability to lead and get the
desired course of action from the subordinates.
12. Management is dynamic and not static: The principles of management are dynamic and not
static. It has to adopt itself according to social changes.
13. Management draws ideas and concepts from various disciplines: Management is an
interdisciplinary study. It draws ideas and concepts from various disciplines like economics,
statistics, mathematics, psychology, sociology, anthropology etc.
14. Management is Goal Oriented: Management is a purposeful activity. It is concerned with the
achievement of pre-determined objectives of an organisation.
15. Different Levels of Management: Management is needed at different levels of an organisation
namely top level, middle level and lower level.
16. Need of organisation: There is the need of an organisation for the success of management.
Management uses the organisation for achieving pre-determined objectives.
17. Management need not be owners: It is not necessary that managers are owners of the enterprise.
In joint stock companies, management and owners (capital) are different entities.
18. Management is intangible: It cannot be seen with the eyes. It is evidenced only by the quality of
the organisation and the results i.e., profits, increased productivity etc

Management as a Noun
In popular usage, management refers to a group of people who direct the activities of other people and
material resources towards the attainment of predetermined goals.
Management as a Process
Management as a process refers to a series of inter-related functions, such as planning, organizing,
staffing, leading and controlling.

Management as a Science
Management is a science because it contains all the characteristics of science.
systematized body of knowledge- Firstly, there is a systematized body of knowledge in management.
Principles are now available in every function of management and these principles help to improve
managerial effectiveness.
fundamental truths derived through empirical results -Secondly, principles of management have been
developed through continuous observations and empirical veri¬fication.
Cause and Effect Relationship- Like other scientific principles ,management principles are based on
the relationship between cause and effect.For ex-acccording to the principle of personnel management
,if you pay more to workers ,they will produce more.Payment made to them serves as an incentive or
stimulus which ultimately activates them to produce more.
Codified and systematised principles- Management knowledge and its principles are codified and
systematised and therefore can be transferred from one person to another person and can be taught
and learned.
Universal Applicability- Management principles are universally applicable to all types of
organizations in every economy. They are generalised in nature and provide general guidelines for
managers to use them in practice.
Management is a social science- Because it deals with human behaviour about which little is known
at present..As we all know it is not possible to study human behaviour under controlled laboratory
conditions.Human behaviour is unpredictable and therefore defies experimentation.So Management
,at best,can be called as soft science.
Management is an inexact science- Management is not an exact science like physics,chemistry or
biology.It does not offer absolute principles It can offer only flexible guidelines that would be of use
in solving problems .Management can never be an exact science because business is highly dynamic
and business conditions change continually.
Management as an Art
Art is a personalized pro¬cess as every artist has his own style. Art is essentially creative and the
success of an artist is measured by the results he achieves. A carpenter making furniture out of wood
and a goldsmith shaping gold into orna¬ments are examples of art.
Management is essentially an art because of the following reasons:
(a) Use of Knowledge-The process of management involves the use of knowledge and skills.
Every manager has to apply certain knowhow and skills while dealing with people.
(b) Practical Orientation-Management seeks to achieve concrete practical results, e.g., profits,
service, etc. According to Prof. John F. Mee, "management is the art of securing maximum
results with a minimum of effort so as to secure maximum prosperity and happiness for both
employer and employee and give the public best possible service."
(c) Creative-Like any other art, management is creative. It brings out new situations and makes
resources productive. In fact, management is one" of the most creative arts because it
requires molding and welding the attitudes and behavior of people at work for the
accomplishment of specific goals in a changing environment.
It is the art of securing desired response from people. Management makes things happen.
(d) Personalized-Like any other art, management is a personalized process. Every manager has
his own approach and technique depending upon his perception and the environmental
conditions.
(e) Constant Practice-As an art, management requires judgment and skills. The art of
management can be refined with continuous practice of management theories and
principles.
Management Science as well as an art
Management is thus an art as well as a science. The art of management is as old as civilisation. The
science of management is young and developing. Both are complimentary and mutually supportive
.Managers need to acquire the knowledge of management principles and practice in order to
successful .They need to sharpen this knowledge through constant practice. The theoretical
knowledge in management must be put to good use in a skilful way, while achieving results.
Managers therefore have to fruitfully combine their scientific knowledge with artistic skills in order to
emerge as the the winners in a competitive environment.
Objectives of Management
The main objectives of management are:
• Getting Maximum Results with Minimum Efforts - The main objective of management is
to secure maximum outputs with minimum efforts & resources.
• Increasing the Efficiency of factors of Production - Through proper utilization of various
factors of production, their efficiency can be increased to a great extent which can be obtained
by reducing spoilage, wastages and breakage of all kinds, this in turn leads to saving of time,
effort and money which is essential for the growth & prosperity of the enterprise.
• Maximum Prosperity for Employer & Employees - Management ensures smooth and
coordinated functioning of the enterprise. This in turn helps in providing maximum benefits
to the employee in the shape of good working condition, suitable wage system, incentive
plans on the one hand and higher profits to the employer on the other hand.
• Human betterment & Social Justice - Management serves as a tool for the upliftment as
well as betterment of the society..

Importance of Management
• Helps in Achieving Group Goals - It arranges the factors of production, assembles and
organizes the resources, integrates the resources in effective manner to achieve goals. It
directs group efforts towards achievement of pre-determined goals.
• Optimum Utilization of Resources - Management utilizes all the physical & human
resources productively. This leads to efficacy in management. Management provides
maximum utilization of scarce resources by selecting its best possible alternate use in industry
from out of various uses.
 • Reduces Costs - It gets maximum results through minimum input by proper planning and by
using minimum input & getting maximum output. Management uses physical, human and
financial resources in such a manner which results in best combination. This helps in cost
reduction.
• Establishes Sound Organization - No overlapping of efforts (smooth and coordinated
functions). To establish sound organizational structure is one of the objective of management
which is in tune with objective of organization and for fulfillment of this, it establishes
effective authority & responsibility relationship i.e. who is accountable to whom, who can
give instructions to whom, who are superiors & who are subordinates.
• Establishes Equilibrium - It enables the organization to survive in changing environment. It
keeps in touch with the changing environment. With the change is external environment, the
initial co-ordination of organization must be changed. So it adapts organization to changing
demand of market / changing needs of societies. It is responsible for growth and survival of
organization.
• Essentials for Prosperity of Society - Efficient management leads to better economical
production which helps in turn to increase the welfare of people. Good management makes a
difficult task easier by avoiding wastage of scarce resource. It improves standard of living. It
increases the profit which is beneficial to business and society will get maximum output at
minimum cost by creating employment opportunities which generate income in hands.
Organization comes with new products and researches beneficial for society.

Difference between Administration & Management

Point of Administration Management
distinction

Meaning It is concerned with formulation of broad It is an Art of getting things done

objectives, plans & Policies through others by directing their efforts
towards achievement of predetermined
goals
Nature Thinking function (what is to be done and Doing function (who should do it and
when). how).
Scope Determines broad objectives and policies. Implements plans and achieves goals
through people.
Level Top level function. Middle and lower level function.

Skills Conceptual and human skills. Technical and human skills.

needed

Represents Owners who invest capital and receive Paid individuals who work for
profits. remuneration.
Usage Mostly in government, military, Mostly in business organisations.
educational, social and cultural
organisations.
Who are Managers?

Managers are the indispensable resources, the priceless assets of an organisation.

 They assemble resources, set goals, decide priorities, organise and coordinate effort and get
things done through and with people.
 They are the ‘coordinators’ and ‘directors’ in the organisation.
 They are the individuals charged with examining the workflow, coordinating efforts, meeting
goals and providing leadership.
  In terms of authority, managers possess the right to command others in their areas of
responsibility.

What do Managers do? (Role of Managers)

Managers’ work with and through other people: Managers work with internal (subordinates,
supervisors, peers) as well as external groups (customers, clients, suppliers, union representatives etc.)
in order to achieve corporate goals.
Managers are mediators: Managers often step in to put things in order, clear the paths to goals,
clarify things to people, put out fires and meet goals.
Managers are politicians: Managers must develop healthy relationships with various groups in order
to achieve the goals smoothly. They may have to nurture groups and join certain coalitions within a
company. They often draw upon such relationships to win support for their proposals and decisions.
Managers are diplomats: Managers serve as official representatives of their work units at
organisational meetings. They may represent the entire organisation as well as a particular unit in
dealing with external groups (clients, customers, government officials, etc.).
Managers are symbols: Managers are symbols of corporate success or failure. They get applause
when they succeed and get depreciated and attacked when they fail. In short, they represent corporate
as well as employee aspirations. Thy are shown the door when these aspirations do not materialize.
Managers act as change agents and add value to organisational effort: In an environment marked
by complexity, uncertainty and rapid change, managers are virtually compelled to be on their toes and
grapple with changes of various kinds on a daily basis. The ability to cope with change is the crux of
the problem.

Role of a Manager (Mintzberg's Set of Ten Roles)

Professor Henry Mintzberg, a great management researcher propounded that the role is an organized
set of behaviors. He identified the following ten roles common to the work of all managers. These
roles have been split into three groups as illustrated in the following figure.
1. Interpersonal Role
1. Figurehead − Has social, ceremonial and legal responsibilities.
2. Leader − Provides leadership and direction.
3. Liaison − Networks and communicates with internal and external contacts.
2. Informational Role
4. Monitor − Seeks out information related to your organization and industry, and monitors
internal teams in terms of both their productivity and well-being.
5. Disseminator − Communicates potentially useful information internally.
6. Spokesperson − Represents and speaks for the organization and transmits information about
the organization and its goals to the people outside it.
3. Decisional Role
7. Entrepreneur − Creates and controls change within the organization - solving problems,
generating new ideas, and implementing them.
8. Disturbance Handler − Resolves and manages unexpected roadblocks.

9. Resource Allocator − Allocates funds, assigning staff and other organizational resources.
10. Negotiator − Involved in direct important negotiations within the team, department, or
organization.

Managerial Skills
Henri Fayol, a famous management theorist also called as the Father of Modern Management,
identified three basic managerial skills - technical skill, human skill and conceptual skill.
Technical Skill
Knowledge and skills used to perform specific tasks. Managers, especially at the lower and middle
levels, need technical skills for effective task performance.
Technical skills are important especially for first line managers, who spend much of their time
training subordinates and supervising their work-related problems.
Human Skill
Ability to work with, understand, and motivate other people as individuals or in groups.
Ability to work with others and get co-operation from people in the work group. For example,
knowing what to do and being able to communicate ideas and beliefs to others and understanding
what thoughts others are trying to convey to the manager.
Conceptual Skill
Ability to visualize the enterprise as a whole, to envision all the functions involved in a given
situation or circumstance, to understand how its parts depend on one another, and anticipate how a
change in any of its parts will affect the whole.
Creativity, broad knowledge and ability to conceive abstract ideas. For example, the managing
director of a telecom company visualizes the importance of better service for its clients which
ultimately helps attract a vast number of clients and an unexpected increase in its subscriber base and
profits.

Other Managerial Skills

Besides the skills discussed above, there are two other skills that a manager should possess, namely
diagnostic skill and analytical skill.
Diagnostic Skill − Diagnose a problem in the organization by studying its symptoms. For example, a
particular division may be suffering from high turnover. With the help of diagnostic skill, the manager
may find out that the division’s supervisor has poor human skill in dealing with employees. This
problem might then be solved by transferring or training the supervisor.
Analytical Skill − Ability to identify the vital or basic elements in a given situation, evaluate their
interdependence, and decide which ones should receive the most attention. This skill enables the
manager to determine possible strategies and to select the most appropriate one for the situation.
For example, when adding a new product to the existing product line, a manager may analyze the
advantages and risks in doing so and make a recommendation to the board of directors, who make the
final decision.
Diagnostic skill enables managers to understand a situation, whereas analytical skill helps determine
what to do in a given situation.

Functions of Management ( Functions of Managers)

Managers are known by the work they do, the functions they perform. According to the functional
approach, originated by Henry Fayol, in every organisation managers perform certain basic functions
in order to achieve results. These functions may be broadly classified into five categories:
1.Planning 2. Organising, 3.Staffing, 4.Leading and 5.Controlling.
1. Planning
Planning is the process of making decisions about future. It is the process of determining enterprise
objectives and selecting future courses of actions necessary for their accomplishment. It is the process
of deciding in advance what is to be done, when and where it is to be done, how it is to be done and
by whom. Planning provides direction to enterprise activities. Planning is a fundamental function of
management and all other functions of management are influenced by the planning process.
2. Organising
Organising is concerned with the arrangement of an organisation’s resources – people, materials,
technology and finance in order to achieve enterprise objectives. It involves decisions about the
division of work, allocation of authority and responsibility and the coordination of tasks. The function
increases in importance as a firm grows. A structure is created to cope with problems created by
growth. Through this formal structure, the various work activities are defined, classified, arranged and
coordinated.
3. Staffing
A manager’s greatest responsibility is to select, direct, develop and evaluate the people of the
organisation. People are the source of all productive effort in organisations and hence, need to be
nurtured carefully. Staffing is the function of employing suitable persons for the enterprise. Staffing
involves selection of the right man for the right job.
It has four important elements:
a. Recruitment may be defined as the process of attracting the maximum number of applications for a
particular job.
b. Selection is the process of screening the candidates and choosing the best ones out of them.
c. Training involves imparting the necessary knowledge and skills required for the performance of a
particular job.
d. Compensation is the price paid to the workers for the services rendered to the organisation.

4. Leading and Influencing (Directing)

Leading is stimulating people to be high performers. It includes motivating and communicating with
employees, individually and in groups. Influencing may be defined as guiding the activities of
organisation members in appropriate directions.
Leading/Directing includes the following sub functions-
a.Direction and Supervision: The function of guiding and supervising the activities of the
subordinates is known as directing. According to Dale, direction is telling people what to do and
seeing that they do it to the best of their ability. Supervision is seeing the subordinates do their work
and do it as directed. It involves overseeing employees at work.
b.Leadership: Leadership is the process of influencing the actions of a person or a group to attain
desired objectives. The success of an organisation depends upon the quality of leadership shown by its
managers.
c.Motivation: Motivation is the work a manager performs to inspire, encourage and impel people to
take required action. It is the process of stimulating people to take desired courses of action.
d.Communication: Communication is the transfer of information and understanding from one person
to another. It is a way of reaching others with ideas, facts, and thoughts.
5. Controlling
The objective of controlling is to ensure that actions contribute to goal accomplishment. It helps in
keeping the organisational activities on the right path and aligned with plans and goals.
In controlling, performances are observed, measured and compared with what had been planned. If
the measured performance is found wanting, the manager must find reasons and take corrective
actions. If the performance is not found wanting, some planning decisions must be made, altering the
original plans.
If the controlling function is to be effective, it must be preceded by proper planning.
Thus, controlling includes four things:
(i) setting standards of performance,
(ii) measuring actual performance
(iii) comparing actual performance against the standard and
(iv) taking corrective actions to ensure goal accomplishment.

Managerial Functions Interrelationship

Successful management involves active participation by managers in the above basic managerial
functions. These functions are interrelated and most managers use a combination of the four
simultaneously to solve the problems facing their companies. All management functions are related
and interrelated to each other. For theoretical purposes, it may be convenient to separate the
management functions and study them independently but practically speaking, they defy such
categorizations. They are highly inseparable. Each function blends into the other and each can be
performed in any order or sequence, not necessarily in the order shown above, but tend to be
performed (normally) in the planning, organising, leading and controlling sequence.
Levels of Management

Managers are usually classified as top, middle, or first-line.

Top managers are those at or near the top of an organization. Top managers typically have titles such
as vice president, president, chancellor, managing director, chief operating officer, chief executive
officer, or chairperson of the board.
 Responsible for providing the overall direction of an organization
 Develop goals and strategies for entire organization
 Spend most of their time planning and leading
 Communicate with key stakeholders—stockholders, unions, governmental agencies, etc.,
company policies
 Use of multicultural and strategic action competencies to lead firm is crucial
 Lays down standards for performance
 Maintains good public relations

Middle managers are those managers found between the lowest and top levels of the organization.
These individuals often manage other managers and maybe some non managerial employees and are
typically responsible for translating the goals set by top managers into specific details that lower-level
managers will see get done. Middle managers may have such titles as department or agency head,
project leader, unit chief, district manager, division manager, or store manager.
 Interprets and explains the policies framed by the top.
 Responsible for coordinating activities of lower level managers
 Establish target dates for products/services to be delivered
 Need to coordinate with others for resources
 Trains other managers.
 Participates in operating decisions.
 Rely on communication, teamwork, and planning and administration competencies to achieve
goals

First-line managers are those individuals responsible for directing the day-to-day activities of non
managerial employees. First-line managers are often called supervisors, team leaders, coaches, shift
managers, or unit coordinators.
 Directly responsible for production of goods or services
 Plans day-to-day operations.
 Assign jobs to workers
 Employees who report to lower level managers do the organization’s work
 Spend little time with top managers in large organizations
 Technical expertise is important
 Provides supervision and control over work
 Arrange material tools and equipment
 Maintains Discipline
 Rely on planning and administration, self-management, teamwork, and communication
competencies to get work done

Introduction
Different writers have provided different categorisation schemes for studying management. In order to
facilitate easy understanding, we can identify three broad approaches namely,
1. The classical theory/classical management approach
2. Neo-classical theory /Behavioural Approach and
3. Modern theory./Modern Approach

Classical Theory/ Classical Management Approach

The classical approach to management is one of the oldest and most popular approaches and is also
known as the universal or traditional approach. This approach has its roots in the basic concept of
divison of labour and specialisation. It consists mainly of-

 Bureaucratic Organisation by Max Weber

 Scientific Management developed by F.W.Taylor
 Administrative theory of management developed by Henri Fayol

1. Bureaucracy (Max Weber)

Elements of Bureaucracy
One of the important components of the classical approach is the bureaucratic model of organisation.
This model was developed by Max Weber, a German Social Scientist. This particular form of
organization is well known and very popular in government and military organisations till today.

Features of bureaucratic structure are:

Hierarchy- Hierarchy is a way of ranking various positions in descending order from top to bottom
of an organisation.
Division of Labour: In a bureaucratic organization jobs are broken into smaller units where each
person carries out a specialization task. Work is divided on the basis of specialization. Each unit is
aware of its area of competence, the areas in which it operates and the area in which it should not step.
Rules, regulations and procedures: The behaviour of employees is regulated through a set of rules.
The emphasis is on consistency. Employees are expected to follow these rules strictly.
Officials Records: All decisions and activities of the organization are formally maintained in
official’s records and preserved for future references.
Impersonal relationships-There are impersonal relationships among the organization al members.
The decisions are entirely guided by rules and regulations and are totally impersonal.
Administrative class- Bureaucracies generally have administrative class responsible for coordinating
the work Known as bureaucrats ,these officials are selected on the basis of their competence and
skills. They are selected according to merit, receive special training for their posts and enjoy corporate
tenure.

Important advantages of a bureaucratic structure may be listed thus:

Specialisation-There is a systemic division of duties, rights and power. Every member is specialized
in a particular function and knows the limits of his job.
Rationality-Bureaucracy brings rationality to an organization. The administrative behavior is
governed by rule of law rather than rule of man. This implies that the rules are framed on the basis of
technical competence and national considerations.
Predictability-There is a high degree of predictability of administrative behavior in the bureaucratic
structure. Every official is responsible for carrying out the duties assigned to him. This helps in
predicting the production capacity of each office or unit.
Democracy- People are selected on the basis of merit. Because the opportunity to train ,apply and be
selected for a job is open to every citizen, a significant degree of democracy is achieved.

Limitations /On the negative side, bureaucracy is criticised on the following grounds:
Lack of Human touch: A bureaucracy organization stresses Mechanical way of doing things.
organizational rules and regulations are given priority over individual’s needs and emotions.
Contractual obligations are given primacy over human relations.
Excessive Paper work: bureaucracy involves exercise paperwork as every decision must be put in
courting. All documents have to be mentioned in their draft and original forms. This leads to a great
wastage of time, stationary and space.
Compartmentalization of Activities: Jobs are divided into strict categories which restricts people
from performing tasks that they are capable of performing. It also encourages presentation of jobs
even when they become redundant.
Rigidity: Bureaucracy encourages status quo and breed resistance to change. Rigid compliance with
rules and regulations discourages initiative & creativity.
Goal Displacement When individuals holding office at lower levels pressurizes personal objectives
or objectives of sub-units, the overall objectives of the organization may be neglected. Once, the
organizational objectives get so displaced, there might be a question mark, on the existence of the
organization.
Delay and Red Tapism: Bureaucracy procedures involve inordinate delays and frustration in the
performance of tasks.

2. Scientific Management Contribution of F.W.Taylor

Why F.W.Taylor is accepted as the Father of Scientific Management???
It was F.W. Taylor, who recognized for the first time the need of a scientific approach to the task of
managing on enterprise.
Taylor was an industrial engineer. He studied the Cause of low efficiency of workers and concluded
that the main Cause was the lack of the knowledge on the part of the management as to how much
work should be done by a worker in a day.
It was on the basis of his objections and experiments; Taylor suggested that the Management should
follow a scientific approach in their work and apply scientific method, in tackling all problems
relating to efficiency.
Based on the first hand studies of manufacturing practices at the shop level, he formulated a series of
principles which he incorporated in his book ‘Principles of scientific management’ published in 1911.

Principles of Scientific Management

1. Science ,not Rule of Thumb- Acc. To this principle ,for solving problems and taking decisions,
the manager should adopt a scientific attitude and use scientific thinking and methods.The approach
of rule of thumb or a hit or miss approach should be replaced and instead ,the problem should be
studied in all respects, the required data should be collected and analyzed for solving it. So intuitive
decisions should be substituted by decisions based on facts.
2. Harmony, not Discard- This indicates that all departments and workers are a part and parcel of an
organization working together to achieve common goals . Therefore ,there should be complete
harmony or coordination in their functioning and any kind of disagreement, clash or conflict should
not be allowed to crop in, and if at all it arises, it should be reduced to a minimum.
3. Cooperation and not Individualism- According to this principle ,instead of encouraging
individualism, the importance of cooperative group efforts should be recognised.
4. Maximum Output and not Restricted Output- This states that production of goods should be
done at the maximum capacity available in a production unit. This is because as production increases
,the over all cost of production is bound to decrease. So a policy of restricted output should be
considered as an outdated one.
5. The Development of each man to his greatest Efficiency and Prosperity- According to this
principle, the efficiency level of the workers should be increased for the prosperity of individual
workers and the organization. This should be done by providing scientific training to them and
developing their potential abilities to the maximum, It will benefit both employees and the
organization.

Techniques of Scientific Management

1. Time Study
 It is a technique which enables the manager to ascertain standard time taken for performing a
specified job.
 Every job or every part of it is studied in detail.
 This technique is based on the study of an average worker having reasonable skill and ability.
 Average worker is selected and assigned the job and then with the help of a stop watch, time
is ascertained for performing that particular job.
 Taylor maintained that Fair day’s work should be determined through observations,
experiment and analysis by keeping in view an average worker.
Standard Time × Working Hours = Fair Day’s Work
2. Motion Study
 In this study, movement of body and limbs required to perform a job are closely observed.
  In other words, it refers to the study of movement of an operator on machine involved in a
particular task.
 The purpose of motion study is to eliminate useless motions and determine the best way of
doing the job.
 By undertaking motion study an attempt is made to know whether some elements of a job can
be eliminated combined or their sequence can be changed to achieve necessary rhythm.
 Motion study increases the efficiency and productivity of workers by cutting down all
wasteful motions.
3. Standardization
Under Scientific Management , standards have to be set in advance for the task, materials, work
methods, quality, time and cost, working conditions etc. This helps in simplifying the process of
production, reducing wasteful use of resources ,improving quality of work etc.

4. Functional Foremanship
 Taylor advocated functional foremanship for achieving ultimate specification.
 This technique was developed to improve the quality of work as single supervisor may not be
an expert in all the aspects of the work.
 Therefore workers are to be supervised by specialist foreman.
 The scheme of functional foremanship is an extension of principle of specialization at the
supervisory level.
 Taylor advocated appointment of 8 foremen, 4 at the planning level & other 4 at
implementation level.
5. Scientific Task Planning
Scientific task is the amount of work which an average worker can perform during a day under normal
working conditions(Called as fair day’s work). Management should decide in advance as to what
work is done, how, when, where and by whom. The ultimate goal is to see that work is to be done in a
logical sequence promoting maximum efficiency.
6. Differential Piece Wage Plan
 This technique of wage payment is based on efficiency of worker.
 The efficient workers are paid more wages than inefficient one.
 On the other hand, those workers who produce less than standard no. of pieces are paid wages
at lower rate than prevailing rate i.e. worker is penalized for his inefficiency.
 This system is a source of incentive to workers who improves their efficiency in order to get
more wages.
 It also encourages inefficient workers to improve their performance and achieve their
standards.
 It leads to mass production which minimizes cost and maximizes profits.
7. Mental Revolution
In order to get the desired results of scientific management, there should be a complete mental
revolution on the part of the workers as well as the ,managers . Mental revolution is a process of
bringing about drastic changes in the attitude ,outlook and behavioural pattern of workers in respect of
their duties towards work, towards their fellow workers and employers. A similar kind of change in
the outlook of managers towards workers and their problems should be made. To bring out change in
the mental attitude of both, Taylor suggested a scheme of worker participation in management and
sharing the surplus profit as bonus among workers

Criticism of Scientific Management(Limitations)

Although it is accepted that the scientific management enables the management to put resources to its
best possible use and manner, yet it has not been spared of severe criticism.
Workers Viewpoint
Unemployment - Workers feel that management reduces employment opportunities from them
through replacement of men by machines and by increasing human productivity less workers are
needed to do work leading to chucking out from their jobs.
Exploitation - Workers feel they are exploited as they are not given due share in increasing profits
which is due to their increased productivity. Wages do not rise in proportion as rise in production.
Monotony - Due to excessive specialization the workers are not able to take initiative on their own.
Their status is reduced to being mere cogs in wheel. Jobs become dull. Workers loose interest in jobs
and derive little pleasure from work.
Weakening of Trade Union - To everything is fixed & predetermined by management. So it leaves
no room for trade unions to bargain as everything is standardized, standard output, standard working
conditions, standard time etc. This further weakens trade unions, creates a rift between efficient & in
efficient workers according to their wages.
Over speeding - the scientific management lays standard output, time so they have to rush up and
finish the work in time. These have adverse effect on health of workers. The workers speed up to that
standard output, so scientific management drives the workers to rush towards output and finish work
in standard time.
Employer’s Viewpoint
Expensive - Scientific management is a costly system and a huge investment is required in
establishment of planning dept., standardization, work study, training of workers. It may be beyond
reach of small firms. Heavy food investment leads to increase in overhead costs.
Time Consuming - Scientific management requires mental revision and complete reorganizing of
organization. A lot of time is required for work, study, standardization & specialization. During this
overhauling of organization, the work suffers.
Deterioration of Quality

Administrative Theory
Henri Fayol (1841-1925) was a French industrialist who put forward and popularized the concept of
the universality of management principles, the idea that all organizations could be structured and
managed according to certain rational principles.
Fayol divided a commercial organization’s activities into the six basic elements of technical,
commercial, accounting, financial, security, and management. Fayol described the practice of
management as distinct from the other business activities. He argued that management was an activity
common to all human undertakings that is in business, in government, and even in the home.

Fayol’s 14 Principles of Management: It includes:

1. Division of Labor: The most people specialties, the more efficiently they can perform their
work. This principle is epitomized by the modern assembly line.
2. Authority: Managers must give orders so that they can get things done. While their formal
authority gives them the right to command, managers will not always compel obedience
unless they have personal authority (such as relevant expertise) as well.
3. Discipline: Members in an organization need to respect the rules and agreements that govern
the organization. To Fayol, discipline results from good leadership at all levels of the
organization, fair agreements (such as provisions for rewarding superior performance), and
judiciously enforced penalties for infractions.
4. Unity of Command: Each employee must receive instructions from only one person. Fayol
believed that when an employee reported to more than one manager, conflicts instructions and
confusion of authority would result.
5. Unity of Direction: Those operations within the organization that have the same objective
should be directed by only one manager using one plan. For example, the personnel
department in a company should not have two directors, each with a different hiring policy.
6. Subordination of Individual: Interest to the Common Good. In any undertaking, the
interests of employees should not take precedence over the interests of the organization as a
whole.
7. Remuneration: Compensation for work done should be fair to both employees and
employers.
 8. Centralization: Decreasing the role of subordinates in decision-making is centralization;
increasing their role is decentralization. Fayol believed that managers should retain final
responsibility, but should at the same time give their subordinates enough authority to do their
jobs properly. The problem is to find the proper degree of centralization each case.
9. The Hierarchy: The line of authority in an organization often represented to day by the neat
boxes and lines of the organization chart – runs in order of rank from top management to the
lowest level of the enterprise.
10. Order: Materials and people should be in the right place at the right time. People, in
particular, should be in the jobs positions they are most suited to.
11. Equity: Managers should be both friendly and fair to their subordinates.

12. Stability of Staff: A high employee turnover rate undermines the efficient functioning of an
organization.
13. Initiative. Subordinates should be given the freedom to conceive and carry out their plans,
even though some mistakes may result.
14. Esprit de Corps. Promoting team spirit will give the organization a sense of unity. To Fayol,
even small factors should help to develop the spirit. He suggested, for example, the use of
verbal communication instead of formal, written communication whenever possible.

Alternatively
1.Division of Labor
 Henry Fayol has stressed on the specialization of jobs.
 He recommended that work of all kinds must be divided & subdivided and allotted to
various persons according to their expertise in a particular area.
 Subdivision of work makes it simpler and results in efficiency.
 It also helps the individual in acquiring speed, accuracy in his performance.
 Specialization leads to efficiency & economy in spheres of business.
2.Party of Authority & Responsibility
 Authority & responsibility are co-existing.
 If authority is given to a person, he should also be made responsible.
 In a same way, if anyone is made responsible for any job, he should also have
concerned authority.
 Authority refers to the right of superiors to get exactness from their sub-ordinates
whereas responsibility means obligation for the performance of the job assigned.
 There should be a balance between the two i.e. they must go hand in hand.
 Authority without responsibility leads to irresponsible behavior whereas
responsibility without authority makes the person ineffective.
3.Principle of One Boss(Unity of Command)
 A sub-ordinate should receive orders and be accountable to one and only one boss at a time.
In other words, a sub-ordinate should not receive instructions from more than one person
 Therefore, dual sub-ordination should be avoided unless and until it is absolutely essential.
 Unity of command provides the enterprise a disciplined, stable & orderly existence.
 It creates harmonious relationship between superiors and sub-ordinates.
4.Unity of Direction
 Fayol advocates one head one plan which means that there should be one plan for a group of
activities having similar objectives.
 Related activities should be grouped together. There should be one plan of action for them
and they should be under the charge of a particular manager.
 According to this principle, efforts of all the members of the organization should be directed
towards common goal.
 Without unity of direction, unity of action cannot be achieved.
  In fact, unity of command is not possible without unity of direction.
5.Equity
 Equity means combination of fairness, kindness & justice.
 The employees should be treated with kindness & equity if devotion is expected of them.
 It implies that managers should be fair and impartial while dealing with the subordinates.
 They should give similar treatment to people of similar position.
 They should not discriminate with respect to age, caste, sex, religion, relation etc.
 Equity is essential to create and maintain cordial relations between the managers and sub-
ordinate.
 But equity does not mean total absence of harshness.
 Fayol was of opinion that, “at times force and harshness might become necessary for the sake
of equity”.
6.Order
 This principle is concerned with proper & systematic arrangement of things and people.
 Arrangement of things is called material order and placement of people is called social order.
 Material order- There should be safe, appropriate and specific place for every article and
every place to be effectively used for specific activity and commodity.
 Social order- Selection and appointment of most suitable person on the suitable job. There
should be a specific place for every one and everyone should have a specific place so that
they can easily be contacted whenever need arises.
7.Discipline
 According to Fayol, “Discipline means sincerity, obedience, respect of authority &
observance of rules and regulations of the enterprise”.
 This principle applies that subordinate should respect their superiors and obey their order.
 It is an important requisite for smooth running of the enterprise.
 Discipline is not only required on path of subordinates but also on the part of management.
 Discipline can be enforced if -
 - There are good superiors at all levels.- There are clear & fair agreements with workers.
- Sanctions (punishments) are judiciously applied.
8.Initiative
 Workers should be encouraged to take initiative in the work assigned to them.
 It means eagerness to initiate actions without being asked to do so.
 Fayol advised that management should provide opportunity to its employees to suggest ideas,
experiences& new method of work.
 It helps in developing an atmosphere of trust and understanding.
 They can be encouraged with the help of monetary & non-monetary incentives.
9.Fair Remuneration
 The quantum and method of remuneration to be paid to the workers should be fair,
reasonable, satisfactory & rewarding of the efforts.
 As far as possible it should accord satisfaction to both employer and the employees.
 Wages should be determined on the basis of cost of living, work assigned, financial position
of the business, wage rate prevailing etc.
 Logical & appropriate wage rates and methods of their payment reduce tension & differences
between workers & management creates harmonious relationship and pleasing atmosphere of
work.
 Fayol also recommended provision of other benefits such as free education, medical &
residential facilities to workers.
10.Stability of Tenure
 Fayol emphasized that employees should not be moved frequently from one job position to
another i.e. the period of service in a job should be fixed.
 Therefore employees should be appointed after keeping in view principles of recruitment &
selection but once they are appointed their services should be served.
 According to Fayol. “Time is required for an employee to get used to a new work & succeed
to doing it well but if he is removed before that he will not be able to render worthwhile
services”.
  As a result, the time, effort and money spent on training the worker will go waste.
 Stability of job creates team spirit and a sense of belongingness among workers which
ultimately increase the quality as well as quantity of work.
11.Centralization & De-Centralization
 Centralization means concentration of authority at the top level. In other words, centralization
is a situation in which top management retains most of the decision making authority.
 Decentralization means disposal of decision making authority to all the levels of the
organization. In other words, sharing authority downwards is decentralization.
According to Fayol, “Degree of centralization or decentralization depends on no. of factors like size
of business, experience of superiors, dependability & ability of subordinates etc. Anything which
increases the role of subordinate is decentralization & anything which decreases it is centralization.
Fayol suggested that absolute centralization or decentralization is not feasible.
12.Scalar Chain
Fayol defines scalar chain as ’The chain of superiors ranging from the ultimate authority to the
lowest”.
Every orders, instructions, messages, requests, explanation etc. has to pass through Scalar chain.
But, for the sake of convenience & urgency, this path can be cut short and this short cut is known as
Gang Plank.
A Gang Plank is a temporary arrangement between two different points to facilitate quick & easy
communication as explained below:

In the figure given, if D has to communicate with G he will first send the communication upwards
with the help of C, B to A and then downwards with the help of E and F to G which will take quite
some time and by that time, it may not be worth therefore a gang plank has been developed between
the two.
Gang Plank clarifies that management principles are not rigid rather they are very flexible. They can
be moulded and modified as per the requirements of situations

13.Sub-Ordination of Individual Interest to General Interest

 An organization is much bigger than the individual it constitutes therefore interest of the
undertaking should prevail in all circumstances.
 As far as possible, reconciliation should be achieved between individual and group interests.
 But in case of conflict, individual must sacrifice for bigger interests.

14.Espirit De’ Corps (can be achieved through unity of command)

 It refers to team spirit i.e. harmony in the work groups and mutual understanding among the
members.
 Spirit De’ Corps inspires workers to work harder.
 Fayol cautioned the managers against dividing the employees into competing groups because
it might damage the moral of the workers and interest of the undertaking in the long run.
 To inculcate Espirit De’ Corps following steps should be undertaken –
 There should be proper co-ordination of work at all levels
 Subordinates should be encouraged to develop informal relations among themselves.
 Efforts should be made to create enthusiasm and keenness among subordinates so that
they can work to the maximum ability.
 Efficient employees should be rewarded and those who are not up to the mark should
be given a chance to improve their performance.
  Subordinates should be made conscious of that whatever they are doing is of great
importance to the business & society.
 He also cautioned against the more use of Britain communication to the subordinates i.e. face
to face communication should be developed. The managers should infuse team spirit &
belongingness. There should be no place for misunderstanding. People then enjoy working in
the organization & offer their best towards the organization.

Why Management Principles?

By means of principles of management, a manager can avoid fundamental mistakes in his job and
foretell the results of his actions with confidence. Principles help in the following ways:
1. To increase efficiency. Principles aid thinking and action. The need for guesswork,
haphazard activities is reduced. The problems brought out by rapid changes in the environment
can be solved easily.
2. To crystallize the nature of management. Principles crystallize the ever-increasing
knowledge and thinking in the field of management.
3. To improve research in management. Management deals with human beings whose
behaviour is highly unpredictable. Principles provide a canopy of broad generalisations which
help in testing behaviour, understanding it and predicting the outcomes for future.
4. To attain social goals. Management principle plays an important role in improving the quality
of life of people and the standard of living.

Criticism Of Administrative Theory ( Limitations of Henri Fayol ‘s Theory)

 Lack of empirical evidence-
 The theory is not supported by empirical evidence
 Neglect of Human Factor-
 The theory views human being as passive and capable of reacting only to organizational rules
and economic incentives . Human attributes such as emotion, attitude,creativity have been
totally ignored.
 False Assumptions-
 The theory assumes that all organisations can be managed by the same set of rules and
principles. It does not recognises the differences in tasks and problems that confront
organizations.
 Historical Significance-
 It has only historical significance. It is more appropriate for the past.(Where the environment
was stable and predictable) than for the present (where the environment is
turbulent,competitive and continually changing).
Distinction between

Neo–Classical Theory(Behavioural Approach)

The human relations theory (also called neo-classical theory) tried to compensate for the
deficiencies in classical theory (scientific management and administrative management) modifying it
with insights from behavioural sciences like psychology, sociology and anthropology.
Neo Classical Theory or Behavioural Approach Mainly consists of-
1. Human Relations Movement based on Hawthorne Studies
2. Behavioural Science Approach

Hawthorne Experiment
In 1927, a group of researchers led by Elton Mayo and Fritz Roethlisberger of the Harvard Business
School were invited to join in the studies at the Hawthorne Works of Western Electric Company,
Chicago. The experiment lasted up to 1932. The Hawthorne Experiments brought out that the
productivity of the employees is not the function of only physical conditions of work and money
wages paid to them. Productivity of employees depends heavily upon the satisfaction of the
employees in their work situation.
The Hawthorne experiment consists of four parts. These parts are briefly described below:-
1. Illumination Experiment.
2. Relay Assembly Test Room Experiment.
3. Interviewing Programme.
4. Bank Wiring Test Room Experiment
1. Illumination Experiment: This experiment was conducted to establish relationship between
output and illumination. When the intensity of light was increased, the output also increased. The
output showed an upward trend even when the illumination was gradually brought down to the normal
level. Therefore, it was concluded that there is no consistent relationship between output of workers
and illumination in the factory. There must be some other factor which affected productivity.
2. Relay Assembly Test Room Experiment: This phase aimed at knowing not only the impact of
illumination on production but also other factors like length of the working day, rest hours, and other
physical conditions. In this experiment, a small homogeneous work-group of six girls was constituted.
These girls were friendly to each other and were asked to work in a very informal atmosphere under
the supervision of a researcher. Productivity and morale increased considerably during the period of
the experiment. Productivity went on increasing and stabilized at a high level even when all the
improvements were taken away and the pre-test conditions were reintroduced. The researchers
concluded that socio-psychological factors such as feeling of being important, recognition, attention,
participation, cohesive work-group, and non-directive supervision held the key for higher
productivity.
3. Mass Interview Programme: The objective of this programme was to make a systematic study of
the employees' attitudes which would reveal the meaning which their "working situation" has for
them. The researchers interviewed a large number of workers with regard to their opinions on work,
working conditions and supervision.
Initially, a direct approach was used whereby interviews asked questions considered important by
managers and researchers. The researchers observed that the replies of the workmen were guarded.
Therefore, this approach was replaced by an indirect technique, where the interviewer simply listened
to what the workmen had to say.
The findings confirmed the importance of social factors at work in the total work environment.
4. Bank Wiring Test Room Experiment: This experiment was conducted by Roethlisberger and
Dickson with a view to develop a new method of observation and obtaining more exact information
about social groups within a company and also finding out the causes which restrict output. The
experiment was conducted to study a group of workers under conditions which were as close as
possible to normal. This group comprised of 14 workers. After the experiment, the production records
of this group were compared with their earlier production records. It was observed that the group
evolved its own production norms for each individual worker, which was made lower than those set
by the management. Because of this, workers would produce only that much, thereby defeating the
incentive system. Those workers who tried to produce more than the group norms were isolated,
harassed or punished by the group.
The findings of the study are:-
(i) Each individual was restricting output.
(ii) The group had its own "unofficial" standards of performance.
(iii) Individual output remained fairly constant over a period of time.
(iv) Informal groups play an important role in the working of an organization.

Contributions of the Hawthorne Experiment

Elton Mayo and his associates conducted their studies in the Hawthorne plant of the western electrical
company, U.S.A., between 1927 and 1930. According to them, behavioural science methods have
many areas of application in management. The important features of the Hawthorne Experiment are:-
1. A business organization is basically a social system. It is not just a techno-economic system.
2. The employer can be motivated by psychological and social wants because his behaviour is also
influenced by feelings, emotions and attitudes. Thus economic incentives are not the only method to
motivate people.
3. Management must learn to develop co-operative attitudes and not rely merely on command.
4. Participation becomes an important instrument in human relations movement. In order to achieve
participation, effective two-way communication network is essential.
5. Productivity is linked with employee satisfaction in any business organization. Therefore,
management must take greater interest in employee satisfaction.
6. Group psychology plays an important role in any business organization. We must therefore rely
more on informal group effort.
7. The neo-classical theory emphasizes that man is a living machine and he is far more important than
the inanimate machine. Hence, the key to higher productivity lies in employee morale. High morale
results in higher output.

Modern Theory (System Approach)

The systems approach to management indicates the fourth major theory of management thought called
modern theory. Modern theory considers an organization as an adaptive system which has to adjust to
changes in its environment. An organization is now defined as a structured process in which
individuals interact for attaining objectives.
Meaning of "System": The word system is derived from the Greek word meaning to bring together or
to combine. A system is a set of interconnected and inter-related elements or component parts to
achieve certain goals. A system has three significant parts:
i. Every system is goal-oriented and it must have a purpose or objective to be attained.
 ii. In designing the system we must establish the necessary arrangement of components.
iii. Inputs of information, material and energy are allocated for processing as per plan so that the
outputs can achieve the objective of the system.

Systems Approach Applied to an Organization: When systems approach is applied to organization, we

have the following features of an organization as an open adaptive system:-
1. It is a sub-system of its broader environment.
2. It is a goal-oriented – people with a purpose.
3. It is a technical subsystem – using knowledge, techniques, equipment and facilities.
4. It is a structural subsystem – people working together on interrelated activities.
5. It is a psychosocial system – people in social relationships.
6. It is co-ordinate by a managerial sub system, creating, planning, organizing, motivating,
communicating and controlling the overall efforts directed towards set goals. Characteristics of
Modern Management Thought:
1. The Systems Approach: An organization as a system has five basic parts -
(1) Input
(2) Process
(3) Output
(4) Feedback and
(5) Environment.
It draws upon the environment for inputs to produce certain desirable outputs. The success of these
outputs can be judged by means of feedback.
2. Dynamic: We have a dynamic process of interaction occurring within the structure of an
organization. The equilibrium of an organization and its structure is itself dynamic or changing.
3. Multilevel and Multidimensional: Systems approach points out complex multilevel and
multidimensional character. We have both a micro and macro approach. A company is micro within a
business system. It is macro with respect to its own internal units. Within a company as a system we
have:-
(1) Production subsystem
(2) Finance subsystem
(3) Marketing subsystem
(4) Personnel subsystem.
All parts or components are interrelated. Both parts as well as the whole are equally important. At all
levels, organizations interact in many ways.
4. Multimotivated: Classical theory assumed a single objective, for instance, profit. Systems
approach recognizes that there may be several motivations behind our actions and behaviour.
Management has to compromise these multiple objectives eg: - economic objectives and social
objectives.
5. Multidisciplinary: Systems approach integrates and uses with profit ideas emerging from different
schools of thought. Management freely draws concepts and techniques from many fields of study such
as psychology, social psychology, sociology, ecology, economics, mathematics, etc.
6. Multivariable: It is assumed that there is no simple cause-effect phenomenon. An event may be the
result of so many factors which themselves are interrelated and interdependent. Some factors are
controllable, some uncontrollable. Intelligent planning and control are necessary to face these variable
factors.
7. Adaptive: The survival and growth of an organization in a dynamic environment demands an
adaptive system which can continuously adjust to changing conditions. An organization is an open
system adapting itself through the process of feedback.
8. Probabilistic: Management principles point out only probability and never the certainty of
performance and the consequent results. We have to face so many variables simultaneously. Our
forecasts are mere tendencies. Therefore, intelligent forecasting and planning can reduce the degree of
uncertainty to a considerable
extent.
Contingency Theory
Contingency approach analysis and understands these interrelationships so that managerial actions
can be adjusted to demands of specific situations or circumstances.
Thus the contingency approach enables us to evolve practical answers to problems demanding
solutions. Organization design and managerial actions most appropriate to specific situations will
have to be adopted to achieve the best possible result under the given situation. There is no one best
way (as advocated by Taylor) to organize and manage. Thus, Contingency Approach to management
emphasizes the fact that management is a highly practice-oriented discipline. It is the basic function of
managers to analyse and understand the environments in which they function before adopting their
techniques, processes and practices. The application of management principles and practices should
therefore be continent upon the existing circumstances.
Contingency approach guides the manager to be adaptive to environment. It tells the manager to be
pragmatic and open minded. The contingency approach is an improvement over the systems approach.
It not only examines the relationships between sub-systems of the organization, but also the
relationship between the organization and its environment.

Contingency theory has the following features:

1.Managerial actions are contingent on certain actions outside the system or sub-system as the
case may be.
2.Organisational efforts should be based on the behaviour of actions outside the system so that the
organisation gets smoothly integrated with the environment.
3.Managerial actions and organisational design must be appropriate to the given situation. A particular
action is valid only under certain conditions. There is no one best approach to management. It
varies from situation to situation.

However, the contingency approach suffers from two limitations:-

1. It does not recognize the influence of management concepts and techniques on environment.
2. Literature on contingency management is yet not adequate

Quantitative Approach
Quantitative, scientific and systematic explanations gained popularity during World War II. The
quantitative viewpoint focuses on the use of mathematics, statistics, and information aids to support
managerial decision-making and organisational effectiveness. Three main branches have evolved over
the years: management science, operations management and management information systems.
Features of Quantitative Approach
i. Offers quantitative aids to decision-making; develops quantitative tools to assist in providing
products and services.
ii. The primary focus is on decision-making. Managerial choices in any situation depend on
criteria such as costs, revenues, return on investment, impact on other areas etc.
iii. Heavy emphasis is put on computers and their processing capabilities. Final solutions to
problems are reduced to mathematical formulae and these are subjected to further analysis
and processing to find viable alternatives

The Importance of Management Theories

Management theories help organizations to focus, communicate, and evolve. Using management
theory in the workplace allows leadership to focus on their main goals. When a management style or
theory is implemented, it automatically streamlines the top priorities for the organization.
Management theory also allows us to better communicate with people we work with which in turn
allows us to work more efficiently. By understanding management theory, basic assumptions about
management styles and goals can be assumed and can save time during daily interactions and
meetings within an organization.
Theories can only reach so far, and management theories are no exception. There is no such thing as a
one-size-fits-all management theory. What may work for one organization may not be relevant for
another. Therefore, when one theory does not fit a particular situation, it is important to explore the
option of developing a new theory that would lead in a new, more applicable direction. While some
theories can stand the test of time, other theories may grow to be irrelevant and new theories will
develop in their place.

Planning
Planning is necessarily forward looking. It is looking into the future. It bridges the gap between where
we are and where we want to go. It involves visualizing a future course of action and putting it in a
logical way.
Planning is deciding in advance what is to be done. It involves the selection of objectives, Functions
of Management policies, procedures and programs from among alternatives. A plan is a
predetermined course of action to achieve a specified goal. It is a statement of objectives to be
achieved by certain means in the future. In short, it is a blueprint for action

Definitions
"Planning is deciding in advance what is to be done. When a manager plans, he projects a course of
action, for the future, attempting to achieve a consistent, co-ordinated structure of operations aimed at
the desired results".
Theo Haimann

"Planning is an intellectual process, the conscious determination of courses of action, the basing of
decisions on purpose, acts and considered estimates".
Koontz O'Donnel

Characteristics of a Sound Plan

A sound plan should have the following characteristics:
(a) Primacy: Planning is an important managerial function that usually precedes other functions.
Obviously, without setting the goals to be reached and the lines of actions to be followed, there is
nothing to organize, to direct, or to control in the enterprise.
(b) Continuity: Planning is a continuous and never ending activity of a manager to keep the
enterprise as a going concern. One plan begets another plan to be followed by a series of other plans
in quick succession. Actually, a hierarchy of plans operates in the enterprise at any time.
(c) Flexibility: Planning leads to the adoption of a specific course of action and the rejection of other
possibilities. But if future and assumptions upon which planning is based prove wrong, the course of
action is to be modified for avoiding any deadlock. Accordingly, when the future cannot be moulded
to conform to the course of action, the flexibility is to be ingrained in planning by way of adapting the
course of action to the demands of current situations.
(d) Consistency: Planning is made by different managers at different times. Maintenance of
consistency or the unity of planning is one of its essential requirements. Objectives provide the
common focus for unifying managerial action in planning. Moreover, policies and procedures
introduce a consistency of executive behaviour and action in matters of planning.
(e) Precision: Planning must be precise with respect to its meaning, scope and nature. As guides to
action, planning is to be framed in intelligible and meaningful terms by way of pinpointing the
expected results. Planning must be realistic in scope rather than being dreams indicating pious desires.
(f) Pervasiveness: Planning is a pervasive activity covering the entire enterprise and every level of
management. Planning is not the exclusive responsibility of top management only. But it extends to
middle and lower managements as well. Although top managers are mostly preoccupied with
planning because of the wider scope of operational and decision making authority, planning is of
equal importance to every manager.

Principles of Planning
1. Principle of contribution to objectives- Every plan should help in the achievement
of the organizational goals.
 2. Principle of primacy of planning- Planning precedes all other management
functions. It is the first and foremost function to be followed in the process of
management.
3. Principle of pervasiveness of planning- Planning is an all pervasive function. It is
important to all managers regardless of their level in the organization.
4. Principle of flexibility- By flexibility of a plan is meant its ability to switch gears
,change direction to adapt to changing situations without unnecessary costs.
5. Principle of navigational change- Plans should be integrated and interconnected in
such a way so as to achieve the stated objectives economically and efficiently. A
manager should review events and expectations regularly, refine and redraw the plan
and keep it on track.
6. Principle of planning premises- Every plan is based on carefully considered
assumptions , known as planning premises. ”The more the individuals charged with
planning .understand and agree to utilise consistent planning premises, the more
coordinated enterprise planning will be.”
7. Principle of limiting factor- While choosing an appropriate course of action among
different alternatives ,the limiting or critical factor(such as money, manpower,
machinery, materials, management) should be recognized and given due weightage.

Planning Process
The planning process involves the following steps:
1. Analysis of External Environment: The external environment covers uncontrollable and
unpredictable factors such as technology, market, socio-economic climate, political conditions etc.,
within which our plans will have to operate.
2. Analysis of Internal Environment: The internal environment covers relatively controllable factors
such as personnel resources, finance, facilities etc., at the disposal of the firm. Such an analysis will
give an exact idea about the strengths and weakness of the enterprise.
3. Determination of Mission: The "mission" should describe the fundamental reason for the
existence of an organisation. It will give firm direction and make out activities meaningful and
interesting.
4. Determination of Objectives: The organisational objectives must be spelled out in key areas of
operations and should be divided according to various departments and sections. The objectives must
be clearly specified and measurable as far as possible. Every member of the organisation should be
familiar with its objectives.
5. Forecasting: Forecasting is a systematic attempt to probe into the future by inference from known
facts relating to the past and the present. Intelligent Functions of Management forecasting is essential
for planning. The management should have no stone unturned in reducing the element of guesswork
in preparing forecasts by collecting relevant data using the scientific techniques of analysis and
inference.
6. Determining Alternative course of Action: It is a common experience of all thinkers that an
action can be performed in several ways, but there is a particular way which is the most suitable for
the organisation. The management should try to find out these alternatives and examine them
carefully in the light of planning premises.
7. Evaluating Alternative Courses: Having sought out alternative courses and examined their strong
and weak points, the next step is to evaluate them by weighing the various factors.
8. Selecting the Best: The next step - selecting the course of action is the point at which the plan is
adopted. It is the real point of decision-making.
9. Establishing the sequence of activities: After the best programme is decided upon, the next task is
to work out its details and formulate the steps in full sequences.
10. Formulation of Action Programmes: There are three important constituents of an action plan:
 i. The time-limit of performance.
ii. The allocation of tasks to individual employees.
iii. The time-table or schedule of work so that the functional objectives are achieved within the
predetermined period.
11. Reviewing the planning process: Through feedback mechanism, an attempt is made to secure
that which was originally planned. To do this we have to compare the actual performance with the
plan and then we have to take necessary corrective action to ensure that actual performance is as per
the plan.

Types of Plans
Different types of plans are developed by an organisation, namely mission, strategies and policies,
procedures, rules, programmes and budgets.
Mission or Purpose
An organisation’s mission statement includes its philosophy and basic purpose for which it exists. It
establishes the values, beliefs, and guidelines that the organisation holds in high esteem. Mission
statement suggests how an organisation is going to conduct its business. It defines the basic intentions
of the firm. A Clear definition of ‘mission’ or ‘purpose’ is necessary to formulate meaningful
objectives.
Policies
Koontz and O’Donnel define policy as “a general statement of understanding which guides the
thinking and action in decision-making.” Policies provide the framework within which managers
operate. Policies exist at all levels in the organisation. Some may be major policies affecting the
whole organisation, while others may be minor or derivative policies affecting the functioning of
departments or sections within the departments. Policies are laid down by the management for all the
important functional areas.
Procedures
Policies are subdivided and stated in terms of procedures – A series of related steps or tasks to be
performed in a sequential way. Procedures, if simple and clear would ensure order in the performance
of operations. Though procedures exist at all levels in an organisation, they are more detailed at the
lower levels. In common parlance, they are called ‘Standard Operating Procedures’ (SOPs). Policies
and procedures are closely interrelated.
Rules
A rule is also a plan. A rule is a prescribed course of action that explicitly states what is to be done
under a given set of circumstances.
Rules are plans in that they suggest the required actions. A rule requires that a definite action has to be
taken in a particular way with respect to a situation. Some definiteness is associated with rules. The
essence of the rule is that it reflects a managerial decision that certain actions be taken – or not be
taken.

Programs
A programme is a broad term which includes goals, policies, procedures, rules and steps to be taken in
putting a plan into action.
Terry and Franklin define program as “a comprehensive plan that includes future use of different
resources in an integrated pattern and establishes a sequence of required time schedules for each in
order to achieve stated objectives”. Thus, a programme includes objective, policies, procedures,
methods, standards and budgets.
For instance, a company may embark upon modernization program of the plant and machinery and
other manufacturing systems in a big way. By all means such an effort is a major program.

BASIS FOR
POLICIES PROCEDURES
COMPARISON

Meaning A precise statement which contains the The Procedure is a systematic

set of principles acting as guidelines for sequence for an activity or task
achieving the goals of an organization is which is predefined by an
known as Policy. organization.

Nature Policies are flexible in nature, i.e. they Procedures are rigid in nature.
allow exceptional situations.

Reflects The mission of the organization. Practical applicability of the

policies.

Best Implemented Fully acceptable by the people. Follow a logical process.

when

In support of Strategies Programs

Involves Decision Making Actions

Budgets
A budget is a plan statement for a given period of time in future expressed in financial or physical
units. Budget contains expected results in numerical terms. A budget is a quantitative expression of a
plan.
Master budget which contains the consolidated plan of action of the whole enterprise is in a way the
translated version of the overall business plan of the enterprise.
Schedules
A schedule is an operational plan, timetable of work that specified time-periods (with beginning and
completion time points) within which activity or activities are to be accomplished. In order to keep the
schedule realistic and flexible, minimum and maximum time-periods may be specified.

Planning Based on Time period

Long Range Planning and Short Range Planning
Planning involves deciding a future course of action. Plans always has some time frame-the period in
future that a plan covers. Based on the length of time involved, plans are usually classified as
 1. strategic or long range plans
2. operational or short range plans
It must be remembered that both strategic and operational plans are not mutually exclusive, but are
complimentary.
Long Range Planning / Strategic Planning
The terms long range planning, Strategic planning, and Corporate planning are used synonymously by
many authors. Strategic plans are designed to meet the broad objectives of the organisation to
implement the mission that provides justification for the organisation’s existence. Strategic planning
is the prerogative of the top management which is the highest policy making body in any organisation,
strategic planning in a business organisation envisages a comprehensive study of the various external
and internal parameters that affect a company in charting a course of action to achieve the goals.
Strategic Planning helps the Management in:
i. coping effectively with future contingencies.
ii. providing an early opportunity to correct mistakes.
iii. making decisions about the right things at the right time
iv. understanding what actions to take in order to shape the future
Short Range Planning / Operational Planning Operational plans provide details as to how strategic
plans will be accomplished. Operational
planning is done at the lower levels. Operational plans stem or originate from strategic plans.
In other words, strategic planning provides guidance and boundaries for operational planning.
Effective management, therefore, must have a strategy and must operate on the day- to- day level to
achieve it. The possible tasks at the operational level include:
i. strengthening the research and development department;
ii. motivating the people to work on new products; and
iii. creating a climate in the organisation where people are willing to take risks.

Tactical or Coordinative (Intermediate) Planning

Tactical plans are less detailed than the short-range plans. Based on the results obtained by
implementing short-range plans, a mid-term review is undertaken. Coordinative planning, thus, helps
in shifting the gears, whenever pitfalls occur while implementing the short-range or long-range plans.
Formal and Informal Planning
A formal plan is a well-documented plan. It is a written record of what the organisation intends to do
within a time frame. The record is made after a careful evaluation of all relevant factors that have a
bearing on organisational functioning. It is systematic and rational.
Informal planning does not offer a written record. It is carried out without any direction. Unhealthy
tendencies like carelessness in planning and implementation, haphazard actions, loss of memory and
direction might creep in.
Functional planning & Corporate planning
Functional planning is 'unit planning'. It deals with parts such as production, marketing, finance,
manufacturing in an isolated manner. There is no unified focus. They, often, fail to see the total big
picture. The impact of internal as well as external factors may not be fully taken care of, in respect of
functional planning.
Corporate planning outlines the broad objectives of the company as a whole and develops plans
designed to meet those objectives. It has both the micro-as well as-macro focus. The various
functional plans are integrated so as to meet the broad objectives of the organisation. It is integrative
in nature. It takes a long-term view. It tries to strike a balance between organisational resources and
environmental challenges.
Proactive and Reactive Planning
In proactive planning, managers challenge the future, anticipating future contingencies and get ready
with alternative routes for unforeseen circumstances.
In Reactive planning, the organisation merely reacts to events as and when they arise.

Importance/Objectives of Planning
Planning fulfills the following objectives:
Gives an organization a sense of direction. Without plans and goals, organizations merely react to
daily occurrences without considering what will happen in the long run. For example, the solution that
makes sense in the short term doesn't always make sense in the long term. Plans avoid this drift
situation and ensure that short-range efforts will support and harmonize with future goals.
Focuses attention on objectives and results. Plans keep the people who carry them out focused on
the anticipated results. In addition, keeping sight of the goal also motivates employees.
Establishes a basis for teamwork. Diverse groups cannot effectively cooperate in joint projects
without an integrated plan.

Helps anticipate problems and cope with change. When management plans, it can help forecast
future problems and make any necessary changes up front to avoid them. Planning for potential
problems helps to minimize mistakes and reduce the “surprises” that inevitably occur.
Provides guidelines for decision making. Decisions are future-oriented. If management doesn't have
any plans for the future, they will have few guidelines for making current decisions. If a company
knows that it wants to introduce a new product three years in the future, its management must be
mindful of the decisions they make now. Plans help both managers and employees keep their eyes on
the big picture.
Serves as a prerequisite to employing all other management functions. Planning is primary,
because without knowing what an organization wants to accomplish, management can't intelligently
undertake any of the other basic managerial activities: organizing, staffing, leading, and/or
controlling.

Barriers to Effective Planning (limitations)

Sometimes, planning fails to achieve the expected results. There are many causes failure of planning
in practice. There barriers are discussed as under:
Lack of reliable data: Lack of reliable facts & figures over which plans maybe based acts as an
important barrier to effective planning. Planning loses its value if reliable information is not available
or if the planner fails to utilize the reliable information. In order to make planning successful, the
planner must determine the reliability of facts & figures.
Psychological Barriers to planning: Psychological factors limit the scope of planning. Some people
consider present more important than future because present is certain. Such person are
physiologically opposed to planning. But it should not be forgotten that dynamic mangers always look
ahead. Long- range well being of the enterprise cannot be achieved unless proper planning is done
for future.
Lack of initiatives: Planning is a forward looking process. If a manager has a tendency to follow
rather than lead, he will not be able to make good plans, therefore, the planner must take the required
initiative. There should be an active planner and manager should take adequate follow up measures to
see that plans are understand and implemented properly
Inability to plan or inadequate planning. Managers are not born with the ability to plan. Some
managers are not successful planners because they lack the background, education, and/or ability.
Others may have never been taught how to plan. When these two types of managers take the time to
plan, they may not know how to conduct planning as a process.
Lack of commitment to the planning process. The development of of a plan is hard work; it is much
easier for a manager to claim that he or she doesn't have the time to work through the required
planning process than to actually devote the time to developing a plan. Another possible reason for
lack of commitment can be fear of failure. As a result, managers may choose to do little or nothing to
help in the planning process.
Inferior information. Facts that are out-of-date, of poor quality, or of insufficient quantity can be
major barriers to planning. No matter how well managers plan, if they are basing their planning on
inferior information, their plans will probably fail.
Focusing on the present at the expense of the future. Failure to consider the long-term effects of a
plan because of emphasis on short-term problems may lead to trouble in preparing for the future.
Managers should try to keep the big picture — their long-term goals — in mind when developing
their plans.
Too much reliance on the organization's planning department. Many companies have a planning
department or a planning and development team. These departments conduct studies, do research,
build models, and project probable results, but they do not implement plans. Planning department
results are aids in planning and should be used only as such. Formulating the plan is still the
manager's responsibility.
Concentrating on controllable variables. Managers can find themselves concentrating on the things
and events that they can control, such as new product development, but then fail to consider outside
factors, such as a poor economy. One reason may be that managers demonstrate a decided preference
for the known and an aversion to the unknown.
Non- Acceptability of change: Resistance to change is another barrier to effective planning. It is a
commonly experienced phenomenon in the business world. Sometimes, planners themselves do not
like change and on other occasions they do not think it desirable to using change so non acceptability
to change affects the planning process adversely.
External limitations / Barriers: The effectiveness of planning is sometimes limited because of
external factors which are beyond the control of the planners. External stringencies are very difficult
to predict. Sudden declaration of war, Government control, natural calamities and many after factors
are beyond the control of management. They make the execution of plans very difficult.
Costly Process : Planning is time consuming and expensive process. But it is also true that if
sufficient time is not given to the planning process, the plans so produced may prove to be unrealistic.
similarly, planning involves costs of gathering and analyzing information and evaluation of various
alternatives. If the management is not willing to spend on planning, the result may not be good.

How to overcome the barriers to Effective Planning

Top management support -Effective planning should start at the top of an organisation. It must
receive the attention of the top management continually.
Climate- Planning must not be left to the chance, additionally conducive climate must be provided so
that activities proceed smoothly and systematically. Management should realise the limitations of
planning
Participation-Plans are implemented by people. So, it is necessary to secure acceptance and
commitment from them. One way to increase commitment is to solicit subordinates’ participation in
the planning process.
Integration- Different plans must be properly balanced and integrated. They must support each other
and should not work at cross purposes. Every attempt should be made to ensure that the payoffs of
planning are more than the costs involved.
Communication-Communication plays a vital role in planning. Goals, premises and policies must be
properly communicated to people. People must know what they are supposed to do ,when, how and
where. The time limits must also be communicated in advance.
Continuous Monitoring-Plans must be subjected to regular appraisal and review, so as to take note
of internal as well as external changes.
Revised and Updated Plans-Plans should constantly be revised and updated.
Contingency Planning-Contingency planning may be very useful in a turbulent environment.
Contingency planning is the development of alternative courses of action to be taken if an intended
plan is unexpectedly disrupted or rendered inappropriate.

Decision Making
Decision-making in simple may be defined as “the selection of a future course of action from among
various alternatives’.
Characteristics
 1. Decision making is a continuous process
2. It involves a choice and therefore presupposes the existence of alternatives
3. Decision making is always purposive in that decisions should aim at achieving some purposes
4. It is an intellectual process supported by sound-reasoning and judgment
5. Decision-making is all pervasive in the sense that all levels of managers take decisions,
though at the impact and scope of decisions vary.

Types of Decision Making

1. Operational & Strategic Decisions

2. Individual and Group Decisions
3. Personal vs. Organisational Decisions
4. Programmed and Unprogrammed Decisions
Operational or tactical decisions relate to the present, day to day operations of the company. The
primary purpose is to achieve high degree of efficiency in the company’s ongoing operations. Better
working conditions, effective supervision, prudent use of existing resources, better maintenance of the
equipment, etc., fall in this category
Strategic Decisions are those decisions that have far reaching impact on the organisation. The focus
in the strategic decisions is on the long-run
Eg expanding the scale of operations, entering new markets, changing the product mix, shifting the
manufacturing facility from one place to the other, striking alliances with other companies, etc., are
strategic in nature
Individual and Group Decisions
It is quite common that some decisions are taken by a manager individually while some decisions are
taken collectively by a group of managers. Individual decisions are taken where the problem is of
routine nature, whereas important and strategic decisions which have a bearing on many aspects of the
organisation are generally taken by a group. Group decision making is preferred these days because it
contributes for better coordination among the people concerned with the implementation of the
decision.
Personal Decisions managers do take some decisions which are purely personal in nature. However,
their impact may not exactly confine to their selves and they may affect the organization also. For
example: the manager’s decision to quit the organization, though personal in nature, may impact for
the organization.
Organisational Decisions Decisions taken by managers in the ordinary course of business in their
capacity as managers relating to the organizational issues are organizational decisions. For example:
decisions regarding introducing a new incentive system, transferring an employee, reallocation or
redeployment of employees etc. are taken by managers to achieve certain objectives.
Programmed decisions: Programmed decisions are routine and repetitive and are made within the
framework of organizational policies and rules. These policies and rules are established well in
advance to solve recurring problems in the organization. Programmed decisions have short-run
impact. They are, generally, taken at the lower level of management.
Non-Programmed Decisions: Non-programmed decisions are decisions taken to meet non-repetitive
problems. Non-programmed decisions are relevant for solving unique/ unusual problems in which
various alternatives cannot be decided in advance. A common feature of non-programmed decisions is
that they are novel and non-recurring and therefore, readymade solutions are not available. Since
these decisions are of high importance and have long-term consequences, they are made by top level
management

Decision Making Process

1.Specific Objective: The need for decision making arises in order to achieve certain specific
objectives. The starting point in any analysis of decision making involves the determination of
whether a decision needs to be made.
2. Problem Identification: The objective of problem identification is that if the problem is precisely
and specifically identifies, it will provide a clue in finding a possible solution. A problem can be
identified clearly, if managers go through diagnosis and analysis of the problem.
1. Diagnosis: Diagnosis is the process of identifying a problem from its signs and symptoms. A
symptom is a condition or set of conditions that indicates the existence of a problem. Diagnosing the
real problem implies knowing the gap between what is and what ought to be, identifying the reasons
for the gap and understanding the problem in relation to higher objectives of the organization.
2. Analysis: Diagnosis gives rise to analysis. Analysis of a problem requires:
 Who would make decision?
 What information would be needed?
 From where the information is available?
Analysis helps managers to gain an insight into the problem.
3. Search for Alternatives: A problem can be solved in several ways; however, all the ways cannot
be equally satisfying. Therefore, the decision maker must try to find out the various alternatives
available in order to get the most satisfactory result of a decision. A decision maker can use several
sources for identifying alternatives:
i. His own past experiences
ii. Practices followed by others and
iii. Using creative techniques.

4. Evaluation of Alternatives: After the various alternatives are identified, the next step is to evaluate
them and select the one that will meet the choice criteria. /the decision maker must check proposed
alternatives against limits, and if an alternative does not meet them, he can discard it. Having
narrowed down the alternatives which require serious consideration, the decision maker will go for
evaluating how each alternative may contribute towards the objective supposed to be achieved by
implementing the decision.
5. Choice of Alternative: The evaluation of various alternatives presents a clear picture as to how
each one of them contribute to the objectives under question. A comparison is made among the likely
outcomes of various alternatives and the best one is chosen.
6. Action: Once the alternative is selected, it is put into action. The actual process of decision making
ends with the choice of an alternative through which the objectives can be achieved.
7. Results: When the decision is put into action, it brings certain results. These results must
correspond with objectives, the starting point of decision process, if good decision has been made and
implemented properly. Thus, results provide indication whether decision making and its
implementation is proper.

Characteristics of Effective Decisions

An effective decision is one which should contain three aspects. These aspects are given below:
1. Action Orientation: Decisions are action-oriented and are directed towards relevant and
controllable aspects of the environment. Decisions should ultimately find their utility in
implementation.
2. Goal Direction: Decision making should be goal-directed to enable the organization to meet its
objectives.
3 Effective in Implementation: Decision making should take into account all the possible factors not
only in terms of external context but also in internal context so that a decision can be implemented
properly.

What is Rationality in Decision Making?

A rational decision is the one which, effectively and efficiently, ensures the achievement of the goal
for which the decision is made. If you are in business and want to make profit, then you must produce
goods and sell them at a price higher than the cost of production.
In reality, there is no right or wrong decision but a rational or an irrational decision.
So, Rational decision making attempts to reach some goal that cannot be attained without an action.
For rational decision making, we must have clear understanding of alternative courses by which a
goal can be reached under existing circumstances and limitation. This needs information and the
ability to analyze and evaluate alternatives in the light of the goal sought. Finally, it requires having a
desire to come to the best solution by selecting alternative that most effectively satisfies goal
achievement.
It is seldom to achieve complete rationality, particularly in managing. As first, decisions must operate
for the future, and the future almost invariably involves uncertainties. Second, it is difficult to
recognize all the alternatives that might be followed to reach a goal.

Limited or “Bounded” Rationality

Limitation of information and time makes a manager to settle for limited rationality, or bounded
rationality. Bounded Rationality, i.e. satisficing, is picking a course of action that is satisfactory or
good enough under the circumstances.

Group Decision Making Techniques

1. Brainstorming is a group or individual creativity technique by which efforts are made to find a
conclusion for a specific problem by gathering a list of ideas spontaneously contributed by its
member(s).
2. Devil’s Advocacy
In common parlance, a devil's advocate is someone who takes a position, sometimes one he or she
disagrees with, for the sake of argument. This process can be used to test the quality of the original
argument and identify weaknesses in its structure.
3. Delphi Technique
The word `Delphi' is a Greek word.
1.To start with, it requires selection of a coordinator and a panel of experts both within and
outside the organizations.
2.The coordinator then circulates questions in writing to each such expert.
3.The experts then write their observations.
4.The coordinator then edits those observations and summarizes, without, however disclosing
the majority opinion in his summary.
5.On the basis of his summary, the coordinator then develops a new set of questionnaire and
circulates those among experts.
Nominal Group Method
Like Delphi method, nominal group method also involves a panel of experts. However, the major
difference between the two is that while under Delphi technique, experts are not allowed to discuss
among themselves, for assessing the questions, under nominal group method experts are given the
opportunity to discuss among themselves.
There are seven steps associated with implementing the nominal group technique-
1.Define and refine the issue or question and the relevant time horizon.
2.Select the experts.
3.Issue the HR demand statement to the experts.
4.Apply expert knowledge ,state assumptions and prepare an estimate.
5.Meet face to face.
6.Discuss the demand estimates and assumptions
7.Vote secretly to determine the expert demand assessment.

MBO-Management by Objective
“MBO is a process whereby the superior and subordinate managers of an organisation jointly identify
the common goals, define each individual’s major areas of responsibility in terms of the results
expected of him, and use these resources as guides for operating the unit and assessing the
contribution of each of its members”.

GOAL Setting Process

1. Review the organization’s mission and employees’ key job tasks. An organization’s
mission statement will provide an overall guide to what organizational members think is important.
Managers should review the mission before writing goals because goals should reflect that mission. In
addition, it’s important to define what manger wants employees to accomplish as they do their tasks.
2. Evaluate available resources. One should not set goals that are impossible to achieve under
available resources. Even though goals should be challenging, they should be realistic. After all, if the
resources one has to work with won’t allow one to achieve a goal no matter how hard employee tries
or how much effort is exerted, goal shouldn’t be set. That would be like the person with a $50,000
annual income and no other financial resources setting a goal of building an investment portfolio
worth $1 million in three years. No matter how hard he or she works at it, it’s not going to happen.
3. Determine the goals individually or with input from others. The goals reflect desired outcomes
and should be congruent with the organizational mission and goals in other organizational areas.
These goals should be SMART (Specific, Measurable, Attainable, Realistic and include a Time
frame) for accomplishment.
4. Make sure goals are well-written and then communicate them to all who need to know. Writing
down and communicating goals forces people to think them through. The written goals also become
visible evidence of the importance of working toward something.
5. Build in feedback mechanisms to assess goal progress. If goals aren’t being met, change them as
needed.
6. Link rewards to goal attainment. Linking rewards to goal achievement will help in motivating
employees for goal achievement

MBO, as a management tool, thus, is so versatile that it is used;

1. to integrate the organizational goals with the individual goals;
2. as a motivational technique wherein individuals are driven towards the achievement of goals;
3. to appraise the performance of managers; and
4. to control the activities as they are performed.

Prerequisites of MBO
1. MBO is not merely a goal-setting tool. It is a philosophy and has to be understood thoroughly
by the managers concerned with achievement of objectives.
2. Top management must be willing to implement the system wholeheartedly. Its support and
encouragement are crucial for the success of MBO. The necessary democratic climate has to
be created in the organisation for setting the goals in a realistic way.
3. Goals have to be spelt out in specific and clear terms. To the extent possible, they must be
made realistic because goals motivate employees towards better performance.
 4. The key result areas (KRAs) of the business have to be identified and appropriate goals have
to be specified for these areas. All the important areas of the business must be covered with
meaningful goals.
5. It has to be realized that goal-setting in the MBO process is not an end by itself. It is only a
means to achieve organizational effectiveness. Otherwise, goal-setting becomes the primary
task rather than their achievement.
6. Appropriate organisation structure has to be designed with well understood relationships
among people such that every goal becomes some individual’s responsibility.
7. Besides clarifying the organizational roles by adopting a suitable organisation structure,
attention has to be paid on the resources required by the people to achieve the goals.
Otherwise, goals by themselves, however effective they are, do no assure performance.
8. Performance depends on the timely availability of resources. Non availability or inadequate
access to the resources frustrates the individuals concerned with the achievement of goals.
Nature of Objectives
1. Objectives may be in quantitative or qualitative terms. For example, in the areas of market
standing, productivity and physical and financial resources quantification is possible. On the other
hand, worker’s morale, social responsibility, etc. cannot exactly quantified.
However, objectives in the latter category may be expressed in qualitative terms. Thus, quantitative
objectives are gauged by ‘how much’ while qualitative objectives by ‘how well’.
2. Objectives have hierarchy in that objectives which have wider scope and are relevant for the
whole organisation are known as enterprise objectives. These objectives are split into unit level or
departmental objectives. Thus, objectives at all levels in the organisation are interrelated and form a
network.
3. Short-term and Long-term Objectives: Short-term objectives are those which are sought to be
achieved by the organisation in the immediate future, while long-term objectives are those which are
aimed to be achieved over a longer period, say five to ten years or even more. However, both are not
mutually exclusive and are interrelated.
4. Objectives sometimes may be in conflict with each other as the goals of the various departments
at times may clash. Each department considers that its goals are more important. For example, the
production goal of low unit cost achievable through mass production may be in conflict with the sales
goal of offering high quality goods.
Such conflicts have to be resolved amicably.

The process of MBO includes the following steps:

1. establishment of goals for the whole organisation,
2. preparation by subordinates, of specific goals within the framework provided by the superior,
3. joint discussion of an agreement upon the goals by the superior and subordinate,
4. joint review of progress at regular intervals in the light of the predetermined goals, and
5. corrective measures, if necessary, as revealed by the review.

Advantages of MBO
An organization can benefit in the following ways by implementing MBO.
1. Accomplishes consistency in objectives as each department’s objectives are consistent with
the organizational objectives, the possibility for the various departments working at cross
purposes is very less.
2. Contributes for effective management by providing lot of clarity in the objectives and the
organisation that is necessary to achieve them;
 3. Forces the management to plan the activities in a systematic way.
4. Facilitates objective performance appraisal. As the goals themselves become the standards
against which the actual performance is measured, MBO system itself acts as an effective
performance appraisal tool.
5. Contributes for the installation of a democratic and participative setup essential for the
success of an organisation in a complex business environment of today. The interaction that
takes place between the superiors and subordinates is a good sign of human resource
development in the organisation.

UNIT-II
Syllabus: Organising & Staffing- Types of organization, Organization structure and decentralization
of authority, Meaning of staffing, Recruitment, selection & placement, Training & development..
Directing & Controlling- Principle of directing, Essence of coordination, Different control
techniques, Management by exception. Case Studies

Organisation
An organization is a pattern of relationships many interwoven, simultaneous relationships through
which people, under the direction of managers, pursue their common goals.

Structure
Structure defines the formal relationships of the people in organisations. Different people in the
organisation are performing different type of jobs and they need to be elated in some structural way so
that their work can be effectively co-ordinated. These people have to be related in some structural way
so that their work can be effective. The main structure relates to power and to duties.

Elements of Organisation Structure

Organisation structure has the following elements:
1. Objectives and plans
Organisation structure is designed to meet plans and objectives of the organisation. It gives formal
shape to organisational activities that help to achieve its objectives.
2. Specialisation of activities:
All organisational activities are divided into sub-units and grouped on the basis of similarity of
characteristics. This forms departments which is the foundation of the organisation structure.
3. Standardisation:
Standardisation means uniformity and consistency. To enable the members of different departments
work in a co-ordinated manner, management lays down the policies, procedures and programmes
which help in carrying out the decision-making processes. Standardisation provides stability to the
organisation structure.
4. Co-ordination:
With specialisation of activities, workers may deviate from organisational goals and promote their
individual goals. There is, thus, need to integrate the tasks of different units to make them contribute
towards the common goal. Coordination ensures that organisation structure is respected by everyone
and individual goals are also seen as contributors to organisational goals.
5. Centralisation and decentralisation:
Organisation structure where decision-making power vests with top managers is a centralised
structure and a structure where decisions are made by middle and lower-level managers is a
decentralised structure.
6. Environment:
No organisation structure can be the best structure. It is subject to change depending upon changes in
the environmental factors—economic, social, technological, political etc. Organisation structure is,
thus, situational in nature.
7. Staffing:
Organisation structure is designed to achieve goals which are accomplished by human beings. The
jobs and departments are, therefore, staffed with people and authority- responsibility relationships are
established.

Factors Affecting Organization Structure

Organization structure is designed keeping in view the following factors:
1. Strategy: Strategy determines a course of action to direct various organizational activities. It
makes plans to co-ordinate human and physical resources to work towards a common objective.
Strategy is pre-requisite to organization structure and also follows it. The relationship between
strategy and organization structure is depicted as follows:

Strategies to diversify product lines or markets require decentralized transition as decision-making is

done at wider level and strategies for organizations working in stable environment. Where managers
do not diversify their operations, require a centralized organization.
2. Technology: The technology for manufacturing goods and services also affects the organization
stricture.
In case of mass production technology, mechanistic organization structure is more appropriate, while
in case of continuous production or small scale production technology, the appropriate from is organic
structure. This is because mass production technologies involve standardization and specialization of
work activities and continuous or unit production technologies require low levels of standardization
and specialization.
3. People: Organization structure defines work, groups it into departments and appoints people to run
those departments. People at different jobs must possess the skill, knowledge and efficiency to
accomplish the related tasks.
4. Tasks Activities performed by people who transform organizational plans into reality are known as
tasks. Various task characteristics are:
(a) Skill variety:
It is the extent to which creativity and variety of skills and talents are required to do a task.
People with high degree of task varieties perform tasks that increase their intellectual ability and give
them high job satisfaction.
(b) Task identity:
Whether to produce a product in whole or in parts determines its task identity. When a product is
produced as a whole, it has greater task identity.
People performing tasks with high task identity y (for example, a computer programmer) perform
various job functions related to that task from beginning to the end, derive job satisfaction out of their
work and feel motivated to repeat those tasks.
(c) Task significance:
The importance of task affecting the well-being or lives of people working inside and outside the
organization determines significance of the task.
People performing tasks with high task significance, i.e., tasks which positively affect the well-being
and safety of others (for example, a traffic police inspector), feel satisfied with their job performance
and perform work of high quality and esteem.
(d) Autonomy:
Whether or not an individual plans the task on his own determines autonomy of the task.
It determines the extent to which a person enjoys t freedom of performing various
Job activities and determines the steps or procedures to carry them out. People who are responsible
for all the functions and schedules related to a job (for example, a project manager) hold
accountability for that job and enjoy greater autonomy with respect to that task and derive greater job
satisfaction.
(e) Feedback:
It is the information that people receive about successful completion of their task.
5. Decisions
Centralized decision-making powers give rise to mechanistic structures and decentralized decision-
making processed give rise to organic or behavioral structures.
6. Informal organization
Informal organizations are and outgrowth of formal organizations. Social and cultural values,
religious beliefs and personal likes and dislikes of members which form informal groups cannot be
overlooked by management.
7. Size:
A group known as Aston Group conducted research on firms of different sizes and concluded that as
firms increase in size, the need for job specialization, standardization and decentralization also
increases and organizations are structured accordingly.
8. Environment:
Organization structure cannot ignore the effects of environment. Organizations must adapt to the
environment, respond to incremental opportunities and satisfy various external parties such as
customers, suppliers, layout unions etc.
In case of stable environment where people perform routine and specialized jobs, which do not
change frequently, a closed or mechanistic organization structure is appropriate.
9. Managerial perceptions:
Organizations where top managers perceive their subordinated as active, dynamic and talented
entrepreneurs, prefer organic form of structure, If they hold negative opinion about their subordinates,
they prefer mechanistic organization structure.

Organisation Design
Organizational design is about creating the best fit between the strategic choices of the organization
and the organizational setting.
Organizational design involves implementing organizational structures and systems that align to an
organization's core strategies.
Types of Organization Design
Organization Design is often divided into two distinct styles:
Hierarchical.
Organic.

Characteristic Hierarchical Structure Organic Structure

High – with an emphasis on

Usually lower – less
horizontal separation into
Complexity differentiation and functional
functions, departments and
separation.
divisions.

High – lots of well-defined Lower – no real hierarchy, and

Formality lines of control and less formal division of
responsibility. responsibilities.

Low – employees lower down

Higher – ower-level employees
the organization have little
Participation have more influence on decision
involvement in decision
makers.
making.

Downward – information Lateral, upward and downward –

Communication starts at the top and trickles information flows through the
down to employees. organization with fewer barriers.

There are several factors that greatly impact organizational design. These factors are:

Strategy. Strategy dictates the strategic priorities of an organization. This is the most important
influencing factor of organizational structure and design.
Environment. The environment a company operates in influences its strategy but also dictates how it
positions itself. In a rapidly-changing environment, the organization has to design for more flexibility,
or adaptability, while in a stable environment, the organization can optimize for efficiency.
Technology. Information technology is a key enabler for decision-making. The state of IT impacts
organizational design as well. When systems are in place, and decision-making is based on data, the
organizational structure and design – including the potential for hierarchical control – will be different
from an organization where most of the data is stored in unorganized Excel sheets.
Size & life cycle. The organizational size and life cycle also impact the organizational structure and
design.
Culture. Organizational culture is another key element that impacts organizational structure and
design – and, vice versa, design also impacts culture.
Leadership Style: The leadership style of top management can influence organizational design.
Leaders who prefer centralized control may opt for a different structure than those who promote
decentralization and employee empowerment.
Customer Needs and Expectations: The focus on meeting customer needs and expectations can
drive the design of processes and structures. Customer-centric organizations may have structures that
prioritize responsiveness and service.
Legal and Regulatory Requirements: Compliance with legal and regulatory requirements can
impact organizational design, especially in industries with strict regulations.
Competitive Pressures: Intense competition may necessitate organizational designs that enhance
agility, innovation, and efficiency to stay competitive in the market.

There Are Two Broad Categories of Organization

i) Mechanistic form of organization
ii) Organic form of Organization
Mechanistic form of Organisation
It is characterized by high levels of complexity, formalization and centralization. A highly
mechanistic system is characterized by centralized decision making at the top, a rigid hierarchy of
authority, well but narrowly defined job responsibilities especially at lower levels, and extensive rules
and regulations which are explicitly make known to employees through written documents. In
mechanistic organization, labor is divided and subdivided into many highly specialized tasks (high
complexity), workers are granted limited discretion in performing theirs tasks and rules and
procedures are carefully defined (high formalization); and there is limited participation in decision
making which tends to be conducted at the highest levels of management high centralization.
Organic form of Organisation
A highly organic system is characterized by decentralized decision-making which allows people
directly involved with the job to make their own decisions, very few levels in the hierarchy with
flexible authority and reporting patters, loosely defined job responsibilities for members, and very few
written rules and regulations. It is relatively simple, informal and decentralized. Compared with
mechanistic organizations, employees in organic organizations, such as design firms or research labs,
tend to be more generalist in their orientation.
Parameters Mechanistic Organisational Organic Organisational structure.
Structure

Span of control. Narrow Wide

Structure Organisation structure is Structure is flat shaped with authority

pyramid shaped with authority decentralised to lower levels of
centralised at the top. management

Hierarchy of It follows hierarchy of Does not follow hierarchy of command.

Command command.

Assignment of Tasks are performed according Tasks are assigned to people according to
Tasks to discretions and desires of their capabilities and skills and not
managers at the top. hierarchical positions.

Control Control is exercised from the There is self-control.

top.

In General, Organisation has two Type of structure Layout

1. Formal Structure
 2. Informal Structure
Formal Organisation Structure
A formal organizational structure refers to a type of structured and planned organizational structure
that may be adopted by an organization. One of the attributes of a formal organizational structure is
the fact that it divides the roles of the individuals in the organization in a hierarchical manner, from
the top to the bottom

Types of Formal Organisational Structure

The types are:
1. Line Organization
2. Line and Staff Organization
3. Functional Organization
4. Project Organization
5. Matrix Organization
6. Committee Organisation
7.Networking Organisation
Line Organisation
Line organisation is the simplest and oldest form of organisation structure. It is called as military or
departmental or scalar type of organization. Under this system, authority flows directly and vertically
from the top of the managerial hierarchy ‘down to different levels of managers and subordinates and
down to the operative level of workers.
Line organisation clearly identifies authority, responsibility and accountability at each level. The
personnel in Line organization are directly involved in achieving the objectives of the organization.
The line organisation structure is given below:

Activities covered under line management vary with the nature of organisation. For a manufacturing
company, the production, finance and sales departments form line departments, and purchase,
personnel, R&D and legal functions constitute the staff departments.
In a legal consultancy firm or a Research and Development organisation, the legal functions and R &
D departments from the line departments. Also, while production department is a line department for
manufacturing organisation, purchase and accounts department form line departments for production
department.
The line organisation chart for a manufacturing company appears as follows:
Features of Line Organisation:
Line organisation has the following features:
1. Line Authority: Authority flows in line from top to bottom. Every superior has direct authority
over subordinates who, in turn, have authority over their immediate subordinates.
2. Scalar chain:
Every superior delegates work to his subordinate and gives him authority to exercise that work. The
subordinate accepts the delegated task and delegates it further to his subordinates. This forms the
scalar chain.
3. Communication:
The orders and commands flow from top to bottom and responsibilities, suggestions and complaints
flow from bottom to top. Every superior and subordinate are connected through formal chain of
communication.
4. Responsibility and accountability:
Every individual in the hierarchy has clearly defined responsibility and accountability for the work
delegated to him. The accountability and responsibility is unitary since two or more persons cannot be
jointly held accountable for the same task. This structure limits the area of action for each position
and position holder.
5. Independent relationships:
People of different functional areas at the same level are independent of each other. They report to
immediate superiors of their department in a hierarchy. All departmental heads are ultimately
responsible for departmental results and finally report to the chief executive of the organisation.
6. Suitability:
This form of organisation is suitable for small-sized undertakings. As the organisation grows in size,
its operations become complex and it becomes necessary to appoint specialists to assist the line
managers.

Advantages of Line Organization:

a. The line organization structure is very simple to understand and simple to operate.
b. Communication is fast and easy and feedback can be acted upon faster.
c. Responsibility is fixed and unified at each level and authority and accountability are clear-cut,
hence each individual knows to whom he is responsible and who is or in truth responsible to him.
d. Since it is especially useful when the company is small in size, it provides for greater control and
discipline in the organization.
e. It makes rapid decisions and effective coordination possible. So it is economic and effective.
f. The people in line type of organization get to know each other better and tend to feel close to each
other.
g. The system is capable of adjusting itself to changing conditions for the simple reason that each
executive has sole responsibility in his own sphere.
Disadvantages of Line Organization:
a. It is a rigid and inflexible form of organization.
b. There is a tendency for line authority to become dictatorial.
c. It overloads the executive with pressing activities so that long-range planning and policy
formulation are often neglected.,
d. There is no provision for specialists and specialization, which is essential for growth and
optimisation.
e. Different departments may be much interested in their self-interests, rather than overall
organizational interests and welfare.
f. It is likely to encourage nepotism.
g. It does not provide any means by which a good worker may be rewarded and a bad one punished.

2. Line and Staff Organization

This type of organization structure is in large enterprises. The functional specialists are added to the
line in line and staff organization. Mere, staff is basically advisory in nature and usually does not
possess any command authority over line managers.
Allen has defined line and staff organization as follows.
“Line functions are those which have direct responsibility for accomplishing the objectives of the
enterprises and staff refers to those elements of the organization that help the line to work most
effectively in accomplishing the primary objectives of the enterprises.”
In the line and staff organisation, staffs assist the line managers in their duties in order to achieve the
high performance.
Example
In an organization which has the production of textiles, the production manger, marketing manager
and the finance manager may be treated as line executives, and the department headed by them may
be called line departments
On the other hand, the personnel manager who deal with the recruitment, training and placement of
workers, the quality control manager who ensure the quality of products and the public relations
manager are the executives who perform staff functions.
Here, it is better to see the type of staff, which may be in an organization.
Line and Staff Positions
Line position is enjoyed by virtue of position in the organisational hierarchy and staff position is
enjoyed by virtue of specialised knowledge and skills to deal with specific problem areas. Line
manager is responsible for attainment of organisational goals through co-ordination of individual and
organisational activities.
Line managers exercise direct authority over subordinates and staff authority is auxiliary, advisory or
supportive in nature which helps line managers concentrate on important and strategic organisational
matters, besides smoothly carrying out the line activities.
However, staff specialists have line authority over people of their departments. Staff can recommend
the line managers but they cannot enforce their recommendations over line managers.

Type of Staff:
The staff organizations mentioned above all has in common the fact that they are auxiliary to the main
functions of the business. There are, however, different types of staff.
The three main divisions may be listed as:
1. Personal Staff.
2. Specialized Staff.
3. General Staff.
1. Personal Staff:
Personal staff consists of a personal assistant or adviser attached to the line executive at any level. His
main function is to aid and advise the line executive as also to perform any other work assigned to
him.
In business, the personal staff is typified by the private secretary, who may keep the executive’s
personal check book, and arrange his appointments. General or business executives are given personal
staff assistants on the same theory.
2. Specialised Staff:
The specialised staff have expert knowledge in the specific fields. The specialised staff are those that
handle the specialised functions. For example, accounting, personnel, engineering and research. It is
impossible for one man to familiarise himself with all the various specialities needed in the modern
large business.
Hence the general or the company president, and perhaps the department head, is provided with
experts in each Field to counsel him on the various specialise staff could serve in any of the following
capacities:
a. Advisory Capacity.
b. Service Capacity.
c. Control Capacity.
a. Advisory Capacity:
Its purpose is to render specialised advice and assistance to management while needed. Some typical
areas covered by advisory staff is legal, public relations and economic development areas.
b. Service Capacity:
This group provides a service, which is useful to the organisation as a whole and not to any specific
division or function.
An example would be the personnel department serving the enterprises by procuring and training the
needed personnel for all departments. Other areas of service include research and development,
purchasing, statistical analysis, insurance problems etc.
c. Control Capacity:
This includes quality control staff that may have the authority to control the quality and enforce
standards.
3. General Staff:
Any decision that cuts across departmental lines must be made by the Chief Executive. It cannot be
delegated to the head of a specialised staff group or to a line department head, since other department
heads will naturally resent interference in their department heads will naturally resent interference in
their department by someone who is in no way their superior.
A typical case would be a change in the organisation structure of the company as a whole: the
combination of two departments under a single head, for example or the organisation of a new top-
level department.
It is with these functional that cannot be delegated that the general staff personnel can provide
assistance and save the time of the top man. True, the chief cannot delegate any one of these functions
to a general staff person, but he can often delegate parts of each of them.
The title of the general staff person is most often “assistance to” the company president, or other
executive.
A staff member may serve as a coach, diagnostician, policy planner, coordinator, trainer, strategist
etc.
A line and staff organisation chart is given below:
Features of Line and Staff Organisation:
Line and staff organisation has the following features:
1. Line authority achieves the major organisational goals and staff authority assists the line authority
in achieving these goals. Staff specialists perform specialised task of decision-making and provide
expert advice on various managerial problems.
2. Staff has specialised knowledge in their fields and make recommendations to line managers when
they feel necessary to do so.
3. Line managers may or may not accept the staff advise unless otherwise directed to do so by the top
managers. Staff advice is only recommendatory in nature.
4. Line and staff are not formally related to each other through authority-responsibility relationships.
Line managers seek staff advice which they may or may not follow. Staff cannot insist on the same.
Advantages of Line and Staff Organisation:
a. Line members can concentrate mainly on the doing function as the work of planning and
investigation is performed by the staff. Specialisation provides for experts advice and efficiency in
management.
b. Since the organisation comprises line and staff functions, decisions can be taken easily.
c. The staff members supply complete factual data to the line officers covering activity within and
without their own units. This will help to greater co-ordination.
d. It provides an adequate opportunity for the advancement of workers.
e. The staff services provides a training ground for the different positions.
f. Adequate organisation a balance among the various activities can be attained easily.
g. The system is flexible for new activities may be undertaken by the staff without forcing early
adjustments of line arrangements.
h. Staff specialists are conceptually oriented towards looking ahead and have the time to do
programme and strategic planning and analyse the possible effects of expected future events.
Disadvantages of Line and Staff Organisation:
a. Confusion and conflict may arise between line and staff because the allocation of authority and
responsibility is not clear and members of the lower levels may be confused by various line orders and
staff advices.
b. Staff generally advise to the lines, but line decides and acts. Therefore, the staffs often feels
powerless.
c. Too much reliance on staff members may not be beneficial to the business because line officials
may lose much of their judgment and imitative.
d. Normally, staff employees have specialised knowledge and expert. Line makes the final decisions,
even though staff give their suggestions. Staff officers, therefore, may be resented.
e. Staff officers are much educated so their ideas may be more theoretical and academic rather than
practical.
f. Although expert advice is available it reaches the workers through the managers. Here it is liable to
create a greater deal of misunderstanding and misinterpretation.
g. Since staff specialists demand higher payments, it is expensive.
h. The staff are unable to carry out its plan or recommendations because of lack of authority. So they
become ineffective sometimes, it will make them careless and indifferent towards their jobs.
i. Since the line are performed, with the advise provided by the staff, if things go right then the staff
takes the credit and if things go wrong then the line get the blame for it.
3. Functional Organisation
The functional organisation was evolved by F.W. Taylor. This form of organisation structure emerges
as the organisation grows in size. New departments are added and departmental activities become
specialised. Specialisation creates sub- departments and it no longer remains feasible for top managers
to control the activities of all the departments. Managers become specialised in their tasks and focus
on activities related to their departmental tasks for the entire organisation
Functional authority is “the right that is delegated to an individual or a department to control specified
processes, practices, policies, or other matters relating to activities undertaken by persons in other
departments”. Authority over people of other departments is exercised not only by the line managers
but also by managers of other departments

According to Terry, “Functional organisation refers to the organisation which is divided into a number
of functions such as finance, production, sales, personnel, office and research and development and
each of functions are performed by an expert”. Line authority, staff authority and functional authority
as a third type of authority are in this type of organisation.
Features of Functional Organisation:
a. Each worker receives instructions not only from one superior, but also from a group of specialists,
thus violates unity of command
b. Three types of authority relationships are in the functional organisation such as line authority, staff
authority and functional authority.
c. Staff specialists are given the authority to decide and do things in a limited way.
d. The scope of the work is kept limited but the area of authority is left unlimited.
e. There is a grouping of activities of the enterprise into certain major functional departments.
Advantages of Functional Organisation:
a. Each manager is an expert in his field. He has to perform a limited number of functions. So
complete specialisation will be in functional organisation.
b. The greater degree of specialisation leads the improvement in the quality of product.
c. Since the job requirements are definite and tangible, organisation can achieve the intensive
utilisation of the principle of specialisation of labour at the managerial level.
d. Specialisation will lead for mass production and standardisation.
e. Since experts get sufficient time for creative thinking, planning and supervision are made efficient.
f. It increases the work satisfaction for specialists who presumably do what they like to do.
Disadvantages of Functional Organisation:
a. Since there is no direct boss or controller of the workers, co-ordination is hard to achieve.
b. Since workers are under different bosses, discipline is hard to achieve. As results there will be low
morale on the part of the workers.
c. The non-supervisory employees are uncertain as to whom they should turn for advice and aid when
problem call for analysis.
d. Due to that control is divided, action cannot be taken immediately.
e. Since there will be many foreman of equal rank in the same department, the conflicts of leadership
may arise.
f. It reduces the opportunities for the training of all-round executives to assume further leadership in
the firm.

Project Organisation
This organisational structure are temporarily formed for specific projects for a specific period of time,
for the project of achieving the goal of developing new product, the specialists from different
functional departments such as production, engineering, quality control, marketing research etc., will
be drawn to work together. These specialists go back to their respective duties as soon as the project is
completed.
Really, the project organisation is set-up with the object of overcoming the major weakness of the
functional organisation, such as absence of unity of command, delay in decision-making, and lack of
coordination.
The project organization chart may be shown as follows:

Advantages of Project Organisation:

a. It is a remarkable illustration of relationship between environment, strategy and structure.
b. The grouping of activities on the basis of each project results in introduction of new authority
patterns.
c. Since the specialists from different departments is drawn to work together under the project
organisation it helps to coordination.
d. It makes for meaningful control and fixation of individual responsibility.
Disadvantages of Project Organisation:
a. The uncertainty may be attributed to the diverse backgrounds of the professional who are deputed
to the project.
b. The project manager finds it difficult to motivate and control the staff in a traditional way in the
absence of well-defined areas of responsibility lines of communication and criteria to judge
performance.
c. Delay in completion of the project may occur.
d. Effective project management may also be hindered by the top management who may not be
wholly are of the problems at the project centre.
5. Matrix Organisation
According to Stanley Davis and Paul Lawrence matrix organisation is “any organisation that employs
a multiple command system that includes not only the multiple command structure, but also related
support mechanism and an associated organisational culture and behaviour pattern.”
A matrix organisation, also referred to as the “multiple command system” has two chains of
command. One chain of command is functional in which the flow of authority is vertical.
The second chain is horizontal depicted by a project team, which is led by the project, or group
manager who is an expert in his team’s assigned area of specialisation.
Since the matrix structure integrates the efforts of functional and project authority, the vertical and
horizontal lines of authority are combination of the authority flows both down and across. The matrix
form of organisation is given below.

Advantages of Matrix Organisation:

1. Since there is both vertical and horizontal communication it increases the coordination and this
coordination leads to greater and more effective control over operations.
2. Since the matrix organisation is handling a number of projects, available resources will be used
fully.
3. It focuses the organisational resources on the specified projects, thus enabling better planning and
control.
4. It is highly flexible as regards adherence to rules, procedures etc. Here experience is the best guide
to establishing rules and procedures.
5. As any department or division has to harness its effort towards accomplishment of a single project,
employees are effectively motivated.
Disadvantages of Matrix Organisation:
1. Since, there is more than one supervisor for each worker, it causes confusion and conflicts and
reduce effective control.
2. There is continuous communication both vertically as well horizontally, which increases paper
work and costs.
3. It is difficult to achieve a balance below on the projects technical and administrative aspects

Committee Organisation
Committee is “a group of persons to whom, as a group, some matter is committed.” Committees are
made in all types of organisations, whether business or non-business, like Government, schools,
colleges, banks, financial institutions etc. Committees can be made at any level of the organisation
and its members can come from any functional area. A person can also be a member of more than one
committee at the same point of time.
Committees frame rules to deal with specific situations after consulting members of the group who
express their opinion verbally, in writing or by show of hands; for example, leave committee frames
leave rules of the company. Committees are chaired by the heads of committees known as conveners
or chairpersons. Each committee member has one vote to decide on the matters delegated to it.
The committee:
1. Can make final decision on the matter delegated to it, or
2. Cannot make or recommend a decision but only deliberate on the matter and submit the information
for decision-making to the managers.

Networking Organisation/ Virtual/ Boundary less

Network organisation is a structural arrangement that combines elements of function, product and
geographic designs, while relying on a network arrangement to link subsidiaries across the nation or
the world. This organisational format helps the companies take advantage of economies of scale at the
global level along with catering to local customer demands.
This structure links subsidiaries of a company that are spread worldwide. Some subsidiaries specialise
in manufacturing while others in sales. All of them are, however, linked with headquarters. Some are
closely controlled by headquarters while others are more autonomous. The structure is, thus, a
combination of geographic, functional and product elements.

The term ‘virtual organisation’ is increasingly used to describe a network of companies. In virtual
organisations, interpersonal and group relations are increasingly mediated electronically, through the
use of e-mail and other services of the new information and communication technologies. It is a
temporary network amongst firms that work for a specific objective.
It is also known as boundary-less organisation, that is, an organisation whose design is not defined by
vertical, horizontal or external boundaries designed by a pre-defined structure. This structure
eliminates vertical and horizontal boundaries and breaks the external barriers between the company
and its customers and suppliers.
Informal Organization
Informal organisation evolves over time and is a network of relationships that exist within an
organisation. The relationships arise due to common interests or friendships. These relationships can
be across divisions and it is that daily interactions between members of staff take place. This informal
structure may be different from that which is set out on paper.
Informal structures develop because:
(a) People find new ways of doing things which they find easier and save them time
(b) Patterns of interaction are shaped by friendship groups and other relationships
(c) People forget what the formal structures are
(d) It is easier to work with informal structures.
(e) Individuals’ goals may differ from the organisations – workers with the same goals gravitate
together.
(f) Certain members of the organisation may be natural leaders and so lead a group, even though they
have no formal managerial place.
Merits:
a. If managers can work with the informal groups within their department, there should be higher
levels of motivation and productivity.
b. Communication between the various departments is better through the informal network. This
could lead to increased innovation and motivation of the employees which should help the company
succeed.
c. Makes the whole system more efficient
d. Gives satisfaction and stability to employees
Demerits:
a. Communications which take place within the grapevine structure are often misinterpreted.
b. Resistance to change
c. If the formal structure is in conflict with the informal structure, the organisation may end up being
inefficient at meeting its objectives cause employees become reluctant to accept formal structure.
d. The informal groups exert strong pressures for conformity
Authority is the right to command. It is the discretion power vested with a manager to use the
organizational resources. Managers acquire authority by virtue of the rank or title associated with their
position.
Authority is granted to the individuals in a formal way in the organization. It flows from the top to
down in the organization structure.

Responsibility, on the other hand is the obligation to perform the tasks and accounts for their
satisfactory completion. It is implied that an individual is expected to fulfill certain job requirements
when he or she accepts a position in the organization.
In other words, the individual is answerable for the results of the task to be performed. In contrast to
authority, responsibility of an individual in the organization is always upwards, that is, the subordinate
is responsible to his or her superior.

Delegation of Authority
Delegation of authority is the process of entrusting a portion of one's responsibility and decision-
making powers to subordinates or lower-level employees within an organization. In this process, a
manager or leader assigns specific tasks, duties, or responsibilities to others while retaining overall
accountability for the outcomes.
Principles of delegation:
1. Principle of unity of command – This principle states that a subordinate should get instructions
from only one superior and he is accountable only to the concerned superior. Dual accountability
creates confusion in the mind of the subordinate.
2. Principle of parity of authority and responsibility – Authority should be commensurate with
respon-sibility. Authority without responsibility will make the subordinate a careless person. On the
other hand, responsibility without authority will make the subordinate an inefficient person. So, there
should be a proper balance between authority and responsibility.
3. Principle of absoluteness of responsibility – A superior can delegate authority but not
responsibility. Responsibility is an obligation which can neither be delegated nor be temporarily
shifted. A superior is accountable for all acts of his subordinates, whether good or bad.
4. Principle of delegation by results – It is essential that the assignment of tasks and the entrustment of
authority should be done keeping in view the results expected. The organizational objectives are to be
clearly defined, as duties to be performed are related to the objectives to be attained.
5. Principle of limitations of authority – The limits of authority of each subordinate should be well-
defined so that one cannot misuse such authority. There should be a written manual which helps a
subordinate to understand the authority in the right direction.
6. Principle of effective communication – There should be an effective communication system
between the delegator and the delegatee. Two-way communication is essential to make the delegation
effective. As a result, a superior can give clear instructions and the subordinate can seek the necessary
clarifications.
7. Principle of proper motivation – A subordinate should be motivated through positive incentives so
that he accepts the responsibility and can show excellent performance. A rational system of reward,
financial or non-financial, would act as an incentive to subordinates to take on the responsibility
willingly.
8. Principle of clear chain of command – Delegation of authority can be effective only when everyone
in the organization knows precisely where-he stands in relation to another. The line of authority from
top to bottom should be clear so that a subordinate knows his immediate superior.
9. Principle of competence – The subordinate selected as a delegatee should be competent. He should
be properly trained in accomplishing delegated jobs. An executive should encourage his subordinate
to take the initiative and accept new responsibilities.
10. Principle of effective control – There should be a suitable control system to measure the
performance of subordinates. A superior should ensure that the authority delegated to subordinates is
properly used.

Decentralization of Authority
Definition
“Decentralisation is the pushing down of authority and power of decision making to lower levels of
organisation.” Satya Saran Chatterjee

According to Louis A. Allen – “Decentralisation refers to the systematic effort to delegate to the
lowest level all the authority except that which can be exercised only at central points.
Decentralisation is concerned with a placement of authority with reference to responsibilities.”

Difference Between Power & Authority

BASIS FOR
POWER AUTHORITY
COMPARISON
Meaning Power means the ability or potential The legal and formal right to give orders
of an individual to influence others and commands, and take decisions is
and control their actions. known as an Authority.
Focus It is a personal trait. It is a formal right, given to the high
officials.
Source Knowledge and expertise. Position & office
Hierarchy Power does not follow any hierarchy. Authority follows the hierarchy.
Resides with Person Designation
Legitimate No Yes

Essential Characteristics of Decentralization

(i) Decentralization Not the Same Thing as Delegation:

Delegation means demi-transfer of responsibility and authority from one individual to another. But
decentralization means scattering of authority throughout the organization. It is the diffusion of
authority within the entire enterprise. Delegation can take place from one person to another and be a
complete process. But decentralization is completed only when the fullest possible delegation is made
to all or most of the people.
(ii) Decentralization is Distinct from Dispersion:
Dispersion occurs when plants and offices are located at different places with physical distance
between them. Performance of work in dispersed plants and offices does not necessarily lead to
decentralization.
Decentralization can proceed without separation of facilities and facilities can be separated without
decentralization. A company may be highly decentralized even though all physical facilities and
employees are located in a single building. Thus, decentralization can take place even without
dispersion.
(iii) Decentralization is not a Type of Organization:
Decentralization may be achieved even without changing the organizational structure as it refers
primarily to the systematic delegation authority throughout the organization industries in which
markets are less uncertain, production processes technologically less dynamic and competitive
relationships more stable, tend to become more centralized.

Principles of Decentralisation of Authority ( Ralph. J. Cardinar)

(1) The power to take the decisions regarding the decentralisation must be vested with the top
management.
(2) Subordinates must be competent and capable enough to take the decisions.
(3) Responsibilities should also be assigned along with authorities to the subordinates.
(4) Mutual understanding is essential for decentralisation. The main function of staff must be
to advise and counsel with the line staff so that the line staff may take independent decisions
and may improve themselves if required.
(5) Authorities must be delegated in order to execute the arrangement of decentralisation.
(6) Top officers must delegate their authority to their subordinates in the real and true sense.
(7) Decentralisation depends on the assumptions that the collective decisions are better than
the decisions taken by one person.
(8) Personnel policies be decided on standard basis and must be changed from time to time
according to the need. There must be a provision of reward to the efficient workers and
inefficient workers be punished.
(9) Efforts be made that the decisions should be taken at the right time with the right intention
and after careful thought, otherwise the arrangement of decentralisation will not be
successful.
(10) The arrangement of decentralisation depends on the need of organisation objectives,
organisational structure and the policies of enterprise.

Factors Influencing Decentralization

1. Nature of Growth of Organization: If the organization has grown in size through expansion of
activities through diversification, etc. it may continue to retain its original structure until it faces
difficulty in their effective management. On the other hand, if it has grown in size due to acquisition
or absorption of different businesses, it will prefer creating independent departments and divisions to
benefit from the expertise of people work-ing in those units while still retaining control over them.
 2. Philosophy of Promoters or Top Management: If the top management believes in uniformity, or
if it seeks unified management and control, it may opt for a centralized set-up. On the other hand, if it
believes in granting freedom in decision-making to departments and divisions, it will settle for
decentralization.
3. Effect of Size of Business Organization: Decentralization in case of a small organization may not
be advisable. A better course for it would be to adopt a functional structure by grouping its activities
under production, marketing, finance, etc. and assign their management to centrally controlled
departments. But in a large organization having work-units operating at a number of places, creation
Basis Decentralization Centralization

Definition Decision-making capabilities delegated across Decision-making capability rests

multiple levels with the top management

Flow of Information Open and free Vertical

Ideal for Decentralization is ideal for large-sized Centralization is ideal for small-
organizations sized organizations

Decision-making Significantly faster Comparatively slow

speed

People Involved In decentralization, a higher number of people In centralization, only a few

from each level are involved in the decision- handpicked people are involved
making process in the decision-making process

Employee Highly motivated employee Demotivated employee

Motivation

Conflict in Decision Most likely to occur Least likely to occur

Burden The burden gets shared among many levels Only one group is carrying the
burden

Stability Prone to instability due to multiple conflicting Relatively stable as decisions

decisions are made by a central authority
sharing a common ideology

of separate divisions and departments will add to their efficiency and profitability.
4. Extent of Diversification: If an organization is producing a number of diverse products—from
salt to software, as in case of Tatas—creation of functional departments may not serve its purpose
because they would not be able to do justice to production and distribution of all products and
services. The alternative in such a case would be to have a separate department or division for each
product and service.
5. Nature of Functions: There should be greater decentralization of the basic functions, e.g.,
production, marketing and finance. That way, employees engaged in these activities would be
encouraged to perform more efficiently. On the other hand, in the case of staff functions like
personnel recruitment, research and development, central-ization may produce better results.
6. Availability of Competent Managers: Decentralization will be possible only when middle level
managers of the organization are capable and experienced enough to make important decisions.
Where such managers are not to be found, central-ization—and not decentralization—would be more
beneficial.

Staffing
Staffing is concerned with manning various positions in the organisation. Staffing involves the
determination of manpower requirements of the enterprise and providing it with adequate competent
people at all its levels. Thus, manpower planning, procurement (i.e., selection and placement),
training and development, appraisal and remuneration of workers are included in staffing.

“Staffing can be defined as filling and keeping filled positions in the organisation structure.”
—Koontz and Weihrich
“Staffing is a process through which an organisation ensures that it has, on a continuous basis, the
proper number of employees with the appropriate skills in the right jobs at the right times to achieve
the organisation’s objectives.” —Caruth, Caruth and Pane

Features of Staffing
(i) Staffing is an important function of management.
(ii) The basic concern of staffing is management of manpower or human resources.
(iii) Staffing helps in getting right types of persons on right jobs.
(iv) Staffing is a pervasive function. It is performed by the managers at all levels of
management

Objectives of staffing
(i) To procure right type of personnel for right jobs.
(ii) To train and develop human resources.
(iii) To develop personnel policies as regards transfer, promotion, etc.
(iv) To mould effectively the human resources and motivate them for higher performance.
(v) To establish desirable working relationship between employers and employees and between
groups of employees.
(vi) To ensure satisfaction of the needs of the workers so that they become loyal and committed
to the organisation.
(vii) To build high morale among employees by maintaining good human relations.

Factors that are followed in every organisation to design a staffing pattern

(i) Size of the Organisation
The quantum of human resources of organisation are determined by the size of the organisation. The
size may be small, medium and large. The organisation structure determines the size and in term the
staffing pattern of the organisation. If the size is small the number of employees will be less. The
optimum size will determine the comfortable staffing pattern.
(ii) Type of Skills Needed
The type of skills needed by the organisation also influences the staffing pattern. Normally three type
of skills are identified in workers –
(a) Skilled workers
(b) Semi skilled workers and
(c) Unskilled workers.
Generally skilled and semiskilled workers will be less number as compared to unskilled workers. The
staffing pattern is determined by these types of skills needed in the organisation.
(iii) Employee’s Number
The total number of employees required in an organisation also determines the staffing pattern. In
labour Intensive Unit, the number will be more and staffing pattern provides for more levels. In
capital intensive unit the labour will be less and accordingly the staffing pattern will be designed.
(iv) Clients and Customers
Consumer behaviour towards the organisation also determines the staffing. If the clientele is more, the
activity of the organisation will be high and requires more personnel. The expansion and
diversification may also encourage the restructuring of staffing pattern.
(v) Financial Position
The financial position of an organisation also influences the staffing pattern. The financial constraints
may come in the way of recruiting the required staff, On the other hand, sound financial position may
have way of availing required staff.
(vi) Geographic Location
The location of business unit also determines the staffing pattern of one organisation. Business units
close to business centers may operate with less staff and distant units may have to work with more
staff.

Importance of Staffing
1. Identifies Competent Personnel:
Staffing identifies the requirement of workforce to fill in the positions in the organisational structure
and selects right people for the right job. It ensures that people with adequate competencies are
employed.
2. Improved Performance:
By deploying right people on the right job helps business enterprises to use physical resources in the
most optimum manner leading to higher productivity, better efficiency and improved performance.

3. Continuous Survival and Growth:

Proper training and employee development programmes updates managers with the changes in
business environment. The succession planning for managers ensures the continuous survival and
growth of the enterprise.
4. Optimum Utilisation of the Human Resources:
Staffing identifies the workforce requirements and plans appointment of people accordingly. This
ensures that there are adequate personnel available to avoid under-utilisation or disruption of work
due to under-staffing.
5. Provides Job Satisfaction and Builds Morale:
Staffing provides opportunities for growth through internal promotions, appreciates and rewards the
contribution through continuous appraisals. This keeps the workforce satisfied and in high morale.

Staffing has Three Aspects

1. Recruitment – Recruitment is a positives process which aims to attract larger number of people
with desirable profile to apply for positions vacant in the organisation. Higher the number of
applicants, greater is the possibility of finding a suitable employee.

2. Selection – Selection is a negative process which scrutinizes the applications received and selects
only those who are most suitable for the vacant position. Recruitment invites applications but
selection rejects applications.

3. Training – Training is another positive process which upgrades the knowledge and skills of
employees and enhances the ability to perform better.

Recruitment
Recruiting refers to the process of attracting potential job applicants from the available labor force.
Every organization must be able to attract a sufficient number of the job candidates who have the
abilities and aptitudes needed to help the organization to achieve its objectives.

According to Edwin B. Flippo, “Recruitment is the process of searching for prospective employees
and stimulating them to apply for jobs in the organisation.”

According to Scott, Clothier and Spriegel the need for recruitment arises out of the following
situations:
1. Vacancies created due to expansion, diversification, and growth of business.
2. An increase in the competitive advantage of certain concerns, enabling them to get more of
the available business than formerly.
3. An increase in business arising from an upswing during the recovery period of a business
cycle.
4. Vacancies created due to transfer, promotion, retirement, termination, permanent disability or
death.
5. The normal population growth, which requires increased goods and services to meet the needs
of the people.
6. A rising standard of living, which requires more of the same goods and services as well as the
creation of new wants to be satisfied.
The objectives of recruitment
(i) To attract people with multi-dimensional skills and experiences those suit the present and
future organisational strategies,
(ii) To induct outsiders with a new perspective to lead the company,
(iii) To infuse fresh blood at all levels of the organisation,
(iv) To develop an organisational culture that attracts competent people to the company,
(v) To search or head hunt/head pouch people whose skills fit the company’s values,
(vi) To devise methodologies for assessing psychological traits,
(vii) To seek out non-conventional development grounds of talent,
(viii) To search for talent globally and not just within the company,
(ix) To design entry pay that competes on quality but not on quantum,
(x) To anticipate and find people for positions that does not exist yet
Importance / Purpose of Recruitment

1. To determine the present and future requirements of the organization in conjunction with the
personnel planning and job analysis activities.
2. To enhance the pool of potential job aspirants with minimal cost.
3. To enhance the success rate of the selection process by reducing the number of, under-
qualified or overqualified job applicants.
4. To effectively reduce the probability of job applicants, once recruited and selected, will leave
the organization only after a short period of time.
5. To meet the organization’s legal and social obligations regarding the composition of its
workforce.
6. To start identifying and preparing potential job applicants who will be appropriate
candidates.
7. To increase organizational and individual effectiveness in the short and long-term.

8. To evaluate the effectiveness of various recruiting techniques and sources for all types of
job applicants.
9. To support and form the basis of the manpower retention plan of the organization.
10. To form the basis of the manpower development process by hiring the future talents.
Sources of Recruitment
A. Internal
1. Transfer
2. Promotion
3. Recommendations & Referals
4. Notice Board
5. Deptt exams
B. External
1. Advertisement
2. Recommendations
3. Gate Applicants
4. Employment Exchange
5. Personal Consultants
6. Educational Institutions/ Campus Hiring
7. Job Portals
8. Social Networking sites

Selection
Employee Selection is the process of choosing individuals who have relevant qualifications to fill jobs
in an organization. Without qualified employees, an organization is in a poorer position to succeed
According to Keith Davis, “Selection is the process by which an organisation chooses from a list of
screened applicants, the person or persons who best meet the selection criteria for the position
available.”

Examples
Siemens India: It uses extensive psychometric instruments to evaluate short-listed candidates. The
company uses occupational personality questionnaire to understand the candidate’s personal attributes
and occupational testing to measure competencies.
LG Electronics India: LG Electronics uses 3 psychometric tests to measure a person’s ability as a
team player, to check personality types and to find a person’s responsiveness and assertiveness.
Arthur Anderson: while evaluating candidates, the company conducts critical behaviour interviewing
which evaluates the suitability of the candidate for the position, largely based on his past experience
and credentials
PepsiCo India: The Company uses India as a global recruitment resource. To select professionals for
global careers with it, the company uses a competency- based interviewing technique that looks at the
candidate’s abilities in terms of strategizing, lateral thinking, problem solving, managing the
environment. This apart, Pepsi insists that to succeed in a global posting, these individuals possess
strong functional knowledge and come from a cosmopolitan background.

Process of Selection
1. Preliminary interview.
2. Application blank.
3. Employment tests.
4. Employment interview.
5. Reference check.
6. Medical examination.
7. Final selection
8. Job offer
Importance of Selection
1. Procurement of Suitable Candidate is Possible:
Only suitable candidates who are fit for the job are selected from among the prospective candidates
for employment. So, selection is a process by which only desirable candidates are hired and others are
denied the opportunity.
2. Good Selection Reduces the Cost of Training and Development:
Proper selection of candidates reduces the cost of training because qualified personnel have better
grasping power. They can understand the technique of the work better. Therefore, the organization
can develop different training programmes for different persons on the basis of their individual
differences, thus reducing the time and cost of training considerably.
3. Proper Selection Resolves Personnel Problems:
Proper selection of personnel reduces personnel problems in the organization. Many problems like
labour turnover, absenteeism and monotony shall not be experienced in their severity in the
organization. Labour relations will be better because workers will be fully satisfied by their work.

Barriers to Effective Selection

The main objective of selection is to hire people having competence and commitment. This objective
is often defeated because of certain barriers.
The impediments which check effectiveness of selection are perception, fairness, validity, reliability
and pressure.
Perception: Selectors inability to understand others accurately is probably the most fundamental
barrier to selecting the right candidate. Selection demands an individual or a group of people to assess
and compare the respective competencies of others, with the aim of choosing the right persons for the
jobs. Selector’s limited perceptual ability is obviously a stumbling block to the objective and rational
selection of people.
Fairness Fairness in selection requires that no individual should be discriminated against on the basis
of religion, region, race or gender. But the low numbers of women and other less-privileged sections
of the society in middle and senior management positions and open discrimination on the basis of age
in job advertisements and in the selection process would suggest that all the efforts to minimise
inequity have not been very effective.
Validity Validity, is a test that helps predict job performance of an incumbent. A test that has been
validated can differentiate between the employees who can perform well and those who will not.
However, a validated test does not predict job success accurately. It can only increase possibility of
success.
Reliability A reliable method is one which will produce consistent results when repeated in similar
situations. Like a validated test, a reliable test may fail to predict job performance with precision.
Pressure Pressure is brought on the selectors by politicians, bureaucrats, relatives, friends and peers
to select particular candidates. Candidates selected because of compulsions are obviously not the right
ones. Appointments to public sector undertakings generally take place under such
pressures.
BASIS FOR
RECRUITMENT SELECTION
COMPARISON
Meaning Recruitment is an activity of searching Selection refers to the process of selecting
candidates and encouraging them apply for the best candidates and offering them job.
it.
Approach Positive Negative
Objective Inviting more and more candidates to apply Picking up the most suitable candidate and
for the vacant post. rejecting the rest.
Key Factor Advertising the job Appointment of the candidate
Sequence First Second
Process Vacancies are notified by the firm through The firm makes applicant pass through
various sources and application form is various levels like submitting form,
 made available to the candidate. written test, interview, medical test and so
on.
Contractual Relation As recruitment only implies the Selection involves the creation of
communication of vacancies, no contractual contractual relation between the employer
relation is established. and employee.
Method Economical Expensive

Training
Training refers to the process of imparting specific skills and is an attempt to improve current or
future employee performance by increasing an employee’s ability to perform through learning,
usually by changing the employee’s attitude or increasing his or her skills and knowledge.
Definition
According to Edwin B. Flippo, “Training is the act of increasing the knowledge and skills of an
employee for doing a particular job.”
The objectives of training are as follows:
(i) To provide job related knowledge to the workers.
(ii) To impart skills among the workers systematically so that they may learn quickly.
(iii) To bring about change in the attitudes of the workers towards fellow workers, supervisor and the
organisation.
(iv) To improve the productivity of the workers and the organisation.
(v) To reduce the number of accidents by providing safety training to the workers.
(vi) To make the workers handle materials, machines and equipment efficiently and thus to check
wastage of time and resources.
(vi) To prepare workers for promotion to higher jobs by imparting them advanced skills.

Need for Employee Training

Training is given on four basic grounds:
1. New candidates who join an organization are given training. This training familiarizes them with
the organizational mission, vision, rules and regulations and the working conditions.
2. The existing employees are trained to refresh and enhance their knowledge.
3. If any updations and amendments take place in technology, training is given to cope up with those
changes.
4. When promotion and career growth becomes important. Training is given so that employees are
prepared to share the responsibilities of the higher level job.

Importance of training in an Organisation

(i) Advantages of standardization The methods of production are standardised through training. All
trained employees follow same methods and techniques of production and hence there can be little
variation in output and standards produced by different employees. By using standardised methods,
the quality of output would be increased.
ii) Reduced supervision and direction A trained employee knows what job he has to do and how to
do that job and requires no guidance and supervision. Supervisors can devote their time to solve more
important problems rather than concentrating on constant and regular supervision.
iii)Economical use of resources A well-trained employee makes better and economical use of
available resources (materials, machines, and equipment). Optimum utilisation of resources results in
reduced cost on production and higher profits.
iv)Increase in productivity Training brings about increase in quantity and quality of goods produced
resulting in high productivity.
v)Future manpower needs Through proper training employees become eligible for promotion
handling more responsibility. An expanding and growing organisation wishes to train the existing
employees so as to place them in higher positions in future.
vi)Reduced accidents at workplace Untrained people are bound to commit errors while handling
machinery and equipment resulting in incidents at workplace. Training eliminates (reduces) the
possibility of incident due to mishandling of equipment, machinery, and other resources of the
organisation.

Type of Training
I. On-the-Job
As the name suggests, the training is on the job itself. A new employee is put on a machine or a
specific job under the guidance of a supervisor or instructor. This method of training is common for
all new employees. An experienced worker works along with the new entrant and he explains to him
the nature of work, the use and handling of machines and tools and how they are to be operated. The
worker is expected to learn the whole process himself. This training method is not expensive and does
not involve any separate or elaborate arrangement for the training of new employees.
Some of the On-the-Job training methods are:
1. Apprenticeship training
2.Vestibule training
3. Job rotation
4. Planned progression
5. Under study
6. Coaching and counselling

II. Off –the-Job

Off-the-job-training system, a trainee is removed from his normal working place and spends his full
time for training purpose in any other place.
During the training period, there is no contribution of trainee to the organisation. Normally, this type
of training is provided outside the organisation and rarely within the organisation but not in the
working place.
The various off the job training methods are:-
1. Lecture (Classroom Instruction)
2. Audio-Visual Techniques
3. Conference (Discussion)
4. Role Playing
5. Case Study
6. Simulation
7. Programmed Instruction
8. Computer Assisted Instruction

Controlling
Control is the process through which managers assure that actual activities conform to planned
activities.
According to Breach - "Control is checking current performance against predetermined standards
contained in the plans, with a view to ensuring adequate progress and satisfactory performance."
According to George R Terry - "Controlling is determining what is being accomplished i.e.,
evaluating the performance and if necessary, applying corrective measures so that the performance
takes place according to plans."

Characteristics/Features of Controlling
Managerial control has certain characteristic feature. They are:
1. Control is the function of every manager. Managers at all levels have to perform this function to
contribute to the achievement of organisational objectives.
2. Control leads to appraisal of past activities. The deviations in the past are revealed by the control
process. Corrective actions can be initiated accordingly.
3. Control is linked with future, as past cannot be controlled. It should anticipate possible deviations
and to think of corrective action for the control of such deviations in the future. It is usually
preventive as presence of control system tends to minimise wastages, losses and deviations from
standards.
4. Control is concerned with setting standards, measurement of actual performance, comparison of
actual performance with predetermined standards and bringing to light the variations between the
actual performance and the standard performance.
5. Control implies taking corrective measures. The object in checking the variations or deviations
is to rectify them and prevent their recurrence. It is only action which adjusts performance to
predetermined standards whenever deviations occur.
6. Control can be exercised only with reference to and or the basis of plans. To quote Mary
Cushing Niles - "Whereas planning sets the course, control observes deviations from the course or to
an appropriately changed one".
7. Control is based on facts and figures. Its purpose is to achieve and maintain acceptable
productivity from all resources of an enterprise. Therefore, control aims at results and not at persons.
It is for correcting a situation, and not for reprimanding persons.
8. Information or feedback is the guide to control. The feedback is helpful to the manager to
determine how far the operations are proceeding in conformity with plans and standards, and where
remedial action is called for.
9. Control involves continuous review of standards of performance and results in corrective action
which may lead to change in the performance of other functions of management. This makes control a
dynamic and flexible process.
10. Control is a continuous activity. It involves constant analysis of validity of standards, policies,
procedures etc

STEPS IN CONTROL PROCESS

There are three basic steps in a control process:
l Establishing Standards
The first step in the control process is to establish standards against which results can be measured.
The standards the managers desire to obtain in each key area should be defined as far as possible in
quantitative terms. Standards need to be flexible in order to adapt to changing conditions. The
standard should emphasis the achievement of results more than the conformity to rules and methods.
While setting the standards, the following points have to be borne in mind:
(a) The standards must be clear and intelligible. If the standards are clear and are understood by the
persons concerned, they themselves will be able to check their performance.
(b) Standards should be accurate, precise, acceptable and workable.
(c) Standards are used as the criteria or benchmarks by which performance is measured in the control
process. It should not be either too high or too low. They should be realistic and attainable.
(d) Standards should be flexible i.e., capable of being changed when the circumstances require so.
Measuring and Comparing actual Results against Standards
The second step in the control process is to measure the performance and compare it with the
predetermined standards. Measurement of performance can be done by personal observation, by
reports, charts and statements. If the control system is well organised, quick comparison of these with
the standard figure is quite possible. This will reveal variations.
While comparing the actual performance with the standards fixed, the manager has to find out not
only the extent of variations but also the causes of variations. This is necessary, because some of the
variations may be unimportant, while others may be important and need immediate corrective action
by the manager.
Taking Corrective Action
After comparing the actual performance with the prescribed standards and finding the deviations, the
next step that should be taken by the manager is to correct these deviations. Corrective action should
be taken without wasting of time so that the normal position can be restored quickly. The manager
should also determine the correct cause for deviation. Taking corrective action can be achieved in the
following way:
(a) The manager should try to influence environmental conditions and external situations in such a
way as to facilitate the achievement of goals.
(b) He should review with his subordinates the instructions given earlier so that he may be able to
give clear, complete and reasonable instructions in future.
(c) There are many external forces which cannot be adjusted by the manager. They have to be
accepted as the facts of the situation, and the executives should revise their plans in the light of these
changing forces.
Types of Control
Most control methods can be grouped into one of the two basic types:
1 Past-oriented Controls These are also known as post-action controls and measure results after the
process. They examine what has happened in a particular period in the past. These controls can be
used to plan future behaviour in the light of past errors or successes.
2 Future-oriented Controls These are also known as steering controls or feed-forward controls and
are designed to measure results during the process so that action can be taken before the job is done or
the period is over. They serve as warning-posts principally to direct attention rather than to evaluate
e.g.: Cash flow analysis, funds flow analysis, network planning etc.
Controlling Techniques
1 Budgeting
A budget is a statement of anticipated results during a designated time period expressed in financial
and non-financial terms. Budgets cover a designated time period - usually a year. At stated intervals
during that time period, actual performance is compared directly with the budget targets and
deviations are quickly detected and acted upon. E.g. of Budgets: Sales budget, production budget,
capital expenditure budget, cash budget, master budget etc.
2 Standard Costing
The cost of production determines the profit earned by an enterprise. The system involves a
comparison of the actuals with the standards and the discrepancy is called variance.
The various steps involved in standard costing are:
i. Setting of cost standards for various components of cost e.g.: raw materials, labour etc.
ii. Measurement of actual performance.
iii. Comparison of actual cost with the standard cost.
iv. Finding the variance of actual from the standard cost.
v. Findings the causes of variance.
Taking necessary action to prevent the occurrence of variance in future.
3 Responsibility Accounting
Responsibility accounting can be defined as a system of accounting under which each departmental
head is made responsible for the performance of his department.
4 Reports
A major part of control consists of preparing reports to provide information to the management for
purpose of control and planning.
5 Standing Orders, Rules and Limitations
Standing orders, rules and limitations are also control techniques used by the management. They are
issued by the management and they are to be observed by the subordinates.
6 Personal Observation
A manager can also exercise fruitful control over his subordinates by observing them while they are
engaged in work.
7. Self-control: Each employee must exercise self-control and do what is expected at work most of
the time on most work related matters, as no enterprise can exist self control. Self-control stems from
the employee’s ego, orientation, training and work attitudes.
8. Policies and procedures: They are guides to action for managers to use in controlling behaviour
and output of employees. They can, for example, protect the firms’s resources and equipment and
require employee’s presence for appropriate work times.
9. Critical Path Method (CPM)
A critical path consists of that set of dependent tasks (each dependent on the preceding one), which
together take the longest time to complete. A CPM chart can define multiple, equally critical paths.
The tasks, which fall on the critical path, should be noted in some way, so that they may be given
special attention by both the project manager and the personnel assigned to them. The critical path for
any given method may shift as the project progresses; this can happen when tasks are completed
either behind or ahead of schedule, causing other tasks which may still be on schedule to fall on the
new critical path.
10. Gantt Chart
Henry Laurence Gantt developed Gantt charts. Gantt charts were used as a visual tool to show
scheduled and actual progress of projects. Gantt charts were used on large construction projects. A
Gantt chart is a matrix, which lists on the vertical axis all the tasks to be performed. Each row
contains a single task identification, which usually consists of a number and name. The horizontal axis
is headed by columns indicating estimated task duration, skill level needed to perform the task and the
name of the person assigned to the task, followed by one column for each period in the project's
duration. Comparison between estimated start and end and actual start and end should indicate project
status on a task-by-task basis.
11.Programme Evaluation And Review Technique
In the 1950s, the Project Evaluation Review Technique was developed by the US Navy to manage the
Polaris submarine missile program of their Special Projects Office. Project Evaluation Review
Technique, or PERT, is used to identify the time it takes to finish a particular task or activity. It is a
system that helps in proper scheduling and coordination of all tasks throughout a project. It also helps
in keeping track of the progress, or lack thereof, of the overall project. Knowing the time it should
take to execute a project is crucial, as it helps project managers decide on other factors such as the
budget and task delegation. No matter how big or small a project is, estimates can be too optimistic or
pessimistic, but using a PERT chart will help determine realistic estimates.

Directing
According to G. R. Terry - "Directing means moving to action and supplying simulative power to a
group of persons". Thus, the plan is put into operation through the organisation by the process of
direction. Another term used to describe this function is "Activating".

In the words of G. R. Terry - "Activating means moving into action - supplying simulative power to
the group".
According to Dale, "Direction is telling people what to do and seeing that they do it to the best of their
ability. It is through directing that managers get the work done through people.
Directing consists of:
1. Issuing orders and instructions by a superior to his subordinates.
2. Guiding, advising and helping subordinates in the proper methods of work.
3. Motivating them to achieve goals by providing incentives, good working environment etc.
4. Supervising subordinates to ensure compliance with plans.

The process of directing involves:

1. Providing effective leadership
2. Integrating people and tasks and convincing them to assist in the achievement of the overall
objectives
3. Effective communication
4. Providing climate for 'subordinate' development

Directing has the following characteristics features:

1. It is the function of the superior manager and runs from top to down in the organisation
structure. A subordinate has to receive instructions for doing his job from his superior.
2. Direction implies issuing orders and instruction. Besides issuing orders and instruction a
superior also guides and counsels his subordinates to do his job properly.
3. The top management gives broad direction to the middle level managers who in turn give
specific direction to the lower level management.
4. The four important aspects of directing are supervision, motivation, leadership and
 communication. All these functions are interconnected and mutually dependent.

Importance of Directing
1. Direction integrates employees' efforts: The individual efforts need to be integrated so that
the organisation achieves its objectives. No organisational objective can be achieved
without the function of direction.
2. Direction initiates action: It is through direction that the management makes individuals
function in a particular way to get organisational objectives.
3. Direction gets output from individuals: Every individual in the organisation has some
potentials and capabilities which can be properly utilised through the function of direction.
4. Direction facilitates changes: To manage change management must motivate individuals
to accept these changes which can be accomplished through motivation.

PRINCIPLES OF DIRECTION
For effective direction, following principles may be used:
(i) Principle of leadership: Ability to lead effectively is essential to effective direction.
(ii) Principle of informed communication: The management should recognise and utilise
informal organisation constructively.
(iii) Principle of direct supervision: The manager should supplement objective methods of
supervision and control with direct personal supervision to ensure personal contact.
(iv) Principle of direct objectives: The manager should communicate effectively and motivate
the subordinates for most effective performance.
(v) Principle of harmony of objectives: The manager should guide the subordinates so that
their individual interest harmonizes with group interests.
(vi) Principle of unity of command: For most effective direction, subordinates should be
responsible to one superior.
(vii) Principle of managerial communication: The manager being the principle medium of
communication, should keep lines of communication open.
(viii) Principle of comprehension: The communication should ensure that the recipients of
the information actually comprehend it.
(ix) Principle of direct communication: The direct flow of information is most effective for
communications

Principles of Issuing Orders

Following points should be observed while issuing orders to the subordinates:
(i) Few orders: Issue as few orders as possible. More orders than those that are absolutely necessary,
if issued, will result in loss of independence and thus initiatives of subordinates will be suppressed.
(ii) Clear orders: The orders should be absolutely clear. They create confidence in the mind of the
subordinates about the clear understanding by the order given.
(iii) Brief but complete orders: The orders should be as brief as possible but complete orders to
convey fully what is intended to be done.
(iv) Promptness: Professional form and proper tone in orders. Prompt issuing of order and proper use
of technical words and phrases is essential for effective directing. Proper tone in issuing the orders
should be observed.
(v) Legitimate scope of orders: The manager issuing the order should keep within his own domain.
He must not encroach upon the sphere of the receiving executive.
(vi) Follow up orders: Another important principle of direction is that once orders or instructions are
issued, they should be followed up to see that they are executed, or the instructions should be
countermanded or withdrawn.

Management by Exception
It is a system of identification and communication that signals the manager as to when and where his
attention is needed. The main object of this system is to enable the manager to identify and isolate the
problems that call for decision and action, and avoid or ignore or pay less attention to less critical
problems which better be handled by his subordinates.
Under this system the manager should receive only condensed, summarised and invariable
comparative reports covering all the elements, and he should have all the exceptions to the past
averages or standards pointed out, both the specially good and the specially bad exceptions.

Advantages of Management by Exception

1. It saves time. Manager attends to real problems at a particular point of time.
2. Concentrated efforts are possible, as this system enables the manager to decide when and
where he should pay his attention. It identifies crisis and critical problems.
3. Lesser number of decisions is required to be taken, which enables the manager to go into
detail.
4. This enables to increase span of control and increase the activities for a manager.
5. Use of past trends, history and available data can be made fully.
6. It alarms the management about the good opportunities as well as difficulties.
7. Qualitative and quantitative yardsticks are provided for judging the current position.
8. It prevents management from over managing

Limitations of Management by Exception:

Management by exception is not a solution to all management problems; it has its limitations as well.
Some of them are:
1. It requires a comprehensive observing and reporting system.
2. It increases paper work.
3. The system is silent till the problem becomes critical.
4. Some important factors, like human behaviour, are difficult to measure.

System of Management by Exception:

The system of Management by Exception can be evolved in following phases:
I Phase: Measurement Phase: In this phase, facts of operational situation are collected and assessed,
i.e., use of performance of its whole range inputs such as efforts contributing to the goals of the
organisation; its productivity, money flow, effectiveness of financial resources being used to produce
goods, services and profits
The information about all these factors are utilised by way of quantitative measurements like using
time standards, balance sheet data, inventory data, inspection results of finished products, inventory
accumulation for sales, current assets, equipment utilisation data.
II Phase: Projection Phase:
In this phase, analysis of those measurements which are meaningful to the objectives of the
organisation for future outlook or expectations is carried out. Past and present data are projected by
using the statistical concept like probability, standard deviation, confidence, correlation, sample size,
significance etc.
Examine the potential effect of changes expected as per forecast. Then the projections are modified by
the forecasts to decide the ‘goals’. At this stage complete planning is thoroughly looked at from the
angle of existing policies and procedures, organisation structure, adequacy and capability of the
existing staff and equipment. If need arises necessary changes are made.
III Phase: Selection Phase:
In this phase, those vital and economical available measures are selected, which will best indicate the
progress towards its objectives. Thus the criteria are selected, which the management would like to
use to follow the progress or performance towards predicted objectives.
IV Phase: Observation Phase:
In this phase, current status of performance is periodically observed and measured. The system should
be reliable, automatic and adequate. Adequate means of observations should neither be too less nor
too more, and only necessary information at desired frequency is obtained.
V Phase: Comparison Phase:

In this phase, comparison is made between the actual and expected performance and progress in order
to identify the exception, analyse causes and report the need for action to the appropriate authority
about the exceptions that required priority of attention.
VI Phase: Action Phase:
This is the phase, where decisions are taken and implemented with a view to bring the performance to
the desired level or adjust in anticipations to reflect changing conditions or take full advantage of
better performance or opportunity.
Thus the Management by Exception compromise as systematic approach of handling the management
problems and free the manager from the demands of routine work, which enables manager to devote
more time for creative efforts directed towards “improving the overall efficiency of the organisation”.
This also provides necessary information readily available, for taking timely and qualitative decisions,
which would require lot of time.

(PROCESS) Key features of the System of Management by Exception include:

Established Standards: Clear and well-defined standards, benchmarks, or plans are set for various
aspects of organizational performance. These standards serve as a reference point for normal
operations.
Thresholds or Tolerance Levels: Managers define specific thresholds or tolerance levels that
indicate when a situation deviates from the standard to a degree that requires managerial intervention.
Regular Monitoring: Routine monitoring and reporting systems are put in place to keep track of
ongoing activities and performance metrics. This monitoring is often automated and designed to
provide timely information.
Selective Attention: Managers focus their attention on cases that fall outside the established norms or
tolerances. Routine, day-to-day operations that are within acceptable limits do not require managerial
involvement.
Intervention Criteria: Clear criteria are established to determine when and how managers should
intervene. This could include the severity of the deviation, potential impact on organizational goals, or
other relevant factors.
Efficiency and Productivity: The system aims to enhance efficiency and productivity by minimizing
unnecessary managerial involvement in routine matters. Managers can allocate their time and
resources more effectively to address critical issues.
Decentralized Decision-Making: The System of Management by Exception often involves
decentralized decision-making, empowering lower-level managers or employees to handle routine
matters within established parameters.

Difference Between MBO & MBE

Parameters Management by Objectives (MBO) Management by Exception (MBE)

Definition A management approach in which A management approach in which managers
managers and employees work together monitor performance and take action only when
to set and achieve specific goals. deviations from established standards occur.
Goals Specific and measurable goals are set in Standards are set in advance and managers
advance and agreed upon by all parties. monitor performance to ensure they are met.
Emphasis Emphasis is placed on setting and Emphasis is placed on monitoring and controlling
achieving goals. performance.
Role of Managers Managers actively participate in setting Managers primarily monitor performance and
and achieving goals. take action when necessary.
Role of Employees Employees are involved in setting goals Employees are responsible for meeting
and take responsibility for achieving established standards.
them.
Decision Making Decisions are made based on goal Decisions are made based on deviation from
attainment. established standards.
Feedback and Regular feedback and communication is Feedback and communication primarily occur
Communication necessary to ensure progress towards when deviations from standards are identified.
goals.
Implementation and Implementation and evaluation of Implementation and evaluation primarily occur
Evaluation progress towards goals is ongoing. when deviations from standards are identified.

Unit 3
Syllabus: Fundamentals of individual behavior, Personality, types of personality, Personal
effectiveness, meaning of Attitudes, Types, Components, attitude formation and attitude change.
Meaning & Type of Group Behaviour, Interpersonal skills, Transactional Analysis, Johari Window,

Syllabus: Introduction to OB: The meaning of OB, Why study organizational behaviour,
Fundamentals of individual behaviour. Determinants of Personality, types of personality. Personal
effectiveness. Attitudes: Meaning, Types, Components, Theory of attitude formation and attitude
change.

Defining Organisation
Organisations are sets of people who work together to achieve shared goals.
Different authors have defined organisation in different ways. The main definitions of organisation
are as follows:
 1. According to Keith Davis, "Organisation may be defined as a group of individuals, large of
small, that is cooperating under the direction of executive leadership in accomplishment of
certain common object.“
2. According to Chester I. Barnard, "Organisation is a system of co-operative activities of two or
more persons."
3. According to Louis A. Allen, "Organisation is the process of identifying and grouping the work
to be performed, defining and delegating responsibility and authority, and establishing relationship for
the purpose of enabling people to work most effectively together in accomplishing objectives.“
4. According to Mooney and Railey, "Organisation is the form of every human association for the
attainment of a common purpose."
ORGANISATION May be AS:
Organisation as a Process: In this first sense, organisation is treated as a dynamic process and a
managerial activity which is essential for planning the utilization of company's resources, plant an
equipment materials, money and people to accomplish the various objectives.
Organisation as a Framework of Relationship: In the second sense organisation refers to the
structure of relationships and among position jobs which is created to release certain objectives. For
example: According to Mooney and Reily, "Organisation is the form of every human association for
the attainment of a common purpose."
Organisation as a Group of persons: In the third sense, organisation is very often viewed as a group
of persons contributing their efforts towards certain goals. Organisation begins when people combine
their efforts for some common purpose. It is a universal truth that an individual is unable ability and
resources. Barnard has defined 'Organisation' as an identifiable group of people contributing their
efforts towards the attainment of goals.
Organisation as a System: In the fourth sense, the organisation is viewed as system. System
concepts recognize that organizations are made up of components each of which has unique
properties, capabilities and mutual relationship. The constituent element of a system are linked
together in such complex ways that actions taken by one producer have far reaching effect on others.

Concept of O.B
O.B is defined as the systematic study and application of knowledge about how individuals and
groups act within the organizations where they work. OB draws from other disciplines to create a
unique field
John W. Newstrom and Keith Davis define the term organisational behaviour as, “the study and
application of knowledge about how people as individuals and as groups — act within organisations.
It strives to identify ways in which people can act more effectively.”
OB spans topics related from the individual to the organization.

Organizational behaviour (OB) is the study of human behaviour in organizational settings, how
human behaviour interacts with the organization, and the organization itself.
Organizational Behaviour (OB)is an interdisciplinary behavioural science that studies phenomena and
dynamics (processes) of organisations , relates these processes to their various human units discusses
human units: individuals, roles, dyads, teams, inter- teams, organizations and organization-
environment interface .
Organisational behaviour is concerned broadly with the study of the behaviour of people within an
organisational setting. It is important to emphasise that the behaviour of people cannot be studied in
isolation and that it is necessary to understand interrelationships with other variables
which together comprise the total organisation.

ELEMENTS OF ORGANISATIONAL BEHAVIOUR

The key elements in the organisational behaviour are people, structure, technology and the
environment in which the organisation operates.
1. People: People make up the internal and social system of the organisation. They consist of
individuals and groups. The groups may be big or small; formal or informal; official or unofficial.
Groups are dynamic and they work in the organisation to achieve their objectives.
People make up the internal social system of the organization. They consist of individuals and groups,
and large groups as well as small ones. People are the living, thinking, feelings beings who created the
organizations. It exists to achieve their objectives. Organizations exist to serve people. People do not
exist to serve organizations. The work force is one of the critical resources t hat need to be managed.
In managing human resources, managers have to deal with:
i) Individual employee who are expected to perform the tasks allotted to them
ii) Dyadic relationships such as superior-subordinate interactions
iii) Groups who work as teams and have the responsibility for getting the job done,
iv) People out side the organization system such as customers and government officials
2.Structure: Structure defines the formal relationships of the people in organisations. Different people
in the organisation are performing different type of jobs and they need to be (elated in some structural
way so that their work can be effectively co-ordinated. These people have to be related in some
structural way so that their work can be effective. The main structure relates to power and to duties.
For example, one person has authority to make decisions that affect the work of other people.
Some of the key concepts of organization structure are listed as below:
a) Hierarchy of Authority: This refers to the distribution of authority among organizational positions
and authority grants the position holder certain rights including right to give direction to others and
the right to punish and reward.
b) Division of Labor: This refers to the distribution of responsibilities and the way in which activities
are divided up and assigned to different members of the organization is considered to be an element of
the social structure.
c) Span of Control: This refers to the total number of subordinates over whom a manager has
authority
d) Specialization: This refers to the number of specialities performed within the organization.
e) Standardization: It refers to the existence of procedures for regularly recurring events or activities
f) Formalization: This refers to the extent to which rules, procedures, and communications are
written down
g) Centralization: This refers to the concentration of authority to make decision.
h) Complexity: This refers to both vertical differentiation and horizontal differentiation.
Vertical differentiation: outlines number of hierarchical levels;
horizontal differentiation highlights the number of units within the organization (e.g departments,
divisions) Organizations can be structured as relatively rigid, formalized systems or as relatively
loose, flexible systems.
Thus the structure of the organizations can range on a continuum of high rigidity to high flexibility.
There are two broad categories of organization:
i) Mechanistic form of organization
ii) Organic form of Organization
Mechanistic form of Organisation
It is characterized by high levels of complexity, formalization and centralization. A highly
mechanistic system is characterized by centralized decision making at the top, a rigid hierarchy of
authority, well but narrowly defined job responsibilities especially at lower levels, and extensive rules
and regulations which are explicitly make known to employees through written documents. In
mechanistic organization, labor is divided and subdivided into many highly specialized tasks (high
complexity), workers are granted limited discretion in performing theirs tasks and rules and
procedures are carefully defined (high formalization); and there is limited participation in decision
making which tends to be conducted at the highest levels of management high centralization.
Organic form of Organisation
A highly organic system is characterized by decentralized decision-making which allows people
directly involved with the job to make their own decisions, very few levels in the hierarchy with
flexible authority and reporting patters, loosely defined job responsibilities for members, and very few
written rules and regulations. It is relatively simple, informal and decentralized. Compared with
mechanistic organizations, employees in organic organizations, such as design firms or research labs,
tend to be more generalist in their orientation.
3.Technology: Organizations have technologies for transforming inputs and outputs. These
technologies consist of physical objects, activities and process, knowledge, all of which are brought to
bear on raw materials labor and capital inputs during a transformation process. The core technology is
that set of productive components most directly associated with the transformation process, for
example, production or assembly line in manufacturing firm. Technology such as machines and work
processes provide the resources with which people work and affects the tasks that they perform. The
technology used has a significant influence on working relationships. It allows people to do more and
work better but it also restricts’ people in various ways.
4. Environment: All organisations operate within an external environment. It is the part of a larger
system that contains many other elements such as government, family and other organisations. All of
these mutually influence each other in a complex system that creates a context for a group of people.
Every organization interacts with other members of its environment. The interactions allow the
organization t o acquire raw material, hire employees, secure capital, obtain knowledge, and build,
lease or buy facilities and equipment. Since the organization process a product or service for
consumption by the environment, it will also interact with its customers. Other environmental actions,
who regulate or over see these exchanges, interact with the organization as well (distributors,
advertising agencies, trade associations, government of the countries in which business is
conducted)Organizations are embedded in an environment within which they operate. Some of the
external factors may be completely beyond the control of the organization to change, such as the
cultural, social or economic, or governmental aspects. However, many of the other factors such as
sizing up the market, being in tune with the technological changes takes place, being a step ahead of
competition, or stocking up and buffering supplies when certain materials are likely to be in short
supply, are all within the control of the organization. Effectively managing these situations, however,
requires constant and close vigilance, adaptability to changes, and being able to manage problematical
situations through good decisions making.
Fit between Environment and Structure:
Firms facing a fast changing or turbulent external environment were very effective when they had
more organic structures which provided flexibility for quick changes to be make within the internal
environment of the system. Similarly, firms which operated in a relatively stable external environment
were very effective when they had more mechanistic structures. This mechanistic structure allowed
the system to operate in a predictable manner since authority, responsibility,procedures, and rules
were clearly specified.
Characteristics of organizational behaviour :
1. It is a way of thinking about individuals, groups and organizations.
2. It is multidisciplinary.
3. There is a distinctly humanistic orientation.
4. It is performance-oriented.
5. The use of scientific method is important in studying variables and relationships.
6. It is applications-oriented in the sense of being concerned with providing useful answers to
questions that arise when managing organizations.
Assumptions of O.B
O.B is Based on a few fundamental concepts which revolve around the nature of people and
organisations
The basic assumptions are:
There are differences between individuals: people have much in common, but each person in the
world is also individually different. Individual differences mean that management can cause the
greatest motivation among employees by treating them differently.
A whole person: When we talk about an individual we don’t talk about his skills only but it is about
whole person his background, his family, his likes and dislikes . Because all this lays a strong impact
on his behaviour in the workplace.
Caused behaviour: The behaviour of the employee is caused and not random. This behaviour is
directed towards some one that the employees belieives rightly or wrongly, is in his interest.
Human Dignity: This assumption says that people want to be treated with respect and dignity and
should be treated as such.Every job, however simple, entitles the people who do it to proper respect
and recognition of their unique aspirations and abilities.
Mutuality of interest: it is represented by the statement that the organisations need people and
people also need organisations. Organisation need people to help attain organisational objectives and
people see organisations as a means to help them to reach their goals.
Holistic concept: This concept interprets people – organisation relationships in terms of the whole
person, whole group, whole organisation and the whole social system.
Need for management: OB is useful in improving an organisations effectiveness through proper
management

MODELS OF OB
Organizations differ in the quality of organizational behaviour that they develop. These differences
are substantially caused by different models of organizational behaviour that dominant management’s
thought in each organization. The model that a manager holds usually begins with certain assumptions
about people and thereby leads to certain interpretations of organizational events.
The following four models of organizational behaviour are as follows:
A. Autocratic model
B. Custodial model
C. Supportive model
D. Collegial model
E. System Model
Autocratic Model
The autocratic model depends on power. Those who are in command must have the power to
demand “you do this-or else,” meaning that an employee who does not follow orders will be
penalized.
In an autocratic environment the managerial orientation is formal, official authority. This
authority is delegated by right of command over the people to it applies.
Under autocratic environment the employee is obedience to a boss, not respect for a manager.
The psychological result for employees is dependence on their boss, whose power to hire, fire, and
“perspire” them is almost absolute.
The psychological result of this model on employees is their increasing dependence on their boss. Its
main weakness is its high human cost.

The Custodial Model

A successful custodial approach depends on economic resources.
The resulting managerial orientation is toward money to pay wages and benefits.
Since employees’ physical needs are already reasonably met, the employer looks to security needs as
a motivating force. If an organization does not have the wealth to provide pensions and pay other
benefits, it cannot follow a custodial approach.
The custodial approach leads to employee dependence on the organization. Rather than being
dependence on their boss for their weekly bread, employees now depend on organizations for their
security and welfare.
Employees working in a custodial environment become psychologically preoccupied with their
economic rewards and benefits.
As a result of their treatment, they are well maintained and contended. However, contentment does
not necessarily produce strong motivation; it may produce only passive cooperation. The result tends
to be those employees do not perform much more effectively than under the old autocratic approach.

The Supportive Model

The supportive model depends on leadership instead of power or money. Through leadership,
management provides a climate to help employees grow and accomplish in the interests of the
organization the things of which they are capable.
The leader assumes that workers are not by nature passive and resistant to organizational needs, but
that they are made so by an inadequately supportive climate at work. They will take responsibility,
develop a drive to contribute, and improve themselves if management will give them a chance.
Management orientation, therefore, is to support the employee’s job performance rather than to
simply support employee benefit payments as in the custodial approach.
Since management supports employees in their work, the psychological result is a feeling of
participation and task involvement in the organization. Employee may say “we” instead of “they”
when referring to their organization.
Employees are more strongly motivated than by earlier models because of their status and recognition
needs are better met. Thus they have awakened drives for work.
This model assumes that employees will take responsibility, develop a drive to contribute and improve
them if management will give them a chance. Therefore, management’s direction is to ‘Support’ the
employee’s job performance rather than to ‘support’ employee benefit payments, as in the custodial
approach. Since management supports employees in their work, the psychological result is a feeling
of participation and task involvement in an, organization.

The Collegial Model

A useful extension of the supportive model is the collegial model. The term “collegial” relates to a
body of people working together cooperatively.
The collegial model depends on management’s building a feeling of partnership with employees. The
result is that employees feel needed and useful. They feel that managers are contributing also, so it is
easy to accept and respect their roles in their organization. Managers are seen as joint contributors
rather than as bosses.
The managerial orientation is toward teamwork. Management is the coach that builds a better team
The employee’s response to this situation is responsibility. For example employees produce quality
work not because management tells them to do so or because the inspector will catch them if they do
not, but because they feel inside themselves an obligation to provide others with high quality. They
also feel an obligation to uphold quality standards that will bring credit to their jobs and company.
The psychological result of the collegial approach for the employee is self-discipline. Feeling
responsible, employees discipline themselves for performance on the team in the same way that the
members of a football team discipline themselves to training standards and the rules of the game.In
this kind of environment employees normally feel some degree of fulfillment, worthwhile contribution,
and self-actualization, even though the amount may be modest in some situation. This self-
actualization will lead to moderate enthusiasm in performance.

The System Model

managers must increasingly demonstrate a sense of caring and compassion, being sensitive to the
needs of a diverse workforce with rapidly changing needs and complex personal and family needs.
In response, many employees embrace the goal of organizational effectiveness, and reorganize the
mutuality of company-employee obligations in a system viewpoint. They experience a sense of
psychological ownership for the organization and its product and services.
FOUR MODELS OF ORGANIZATIONAL BEHAVIOUR
Autocratic Custodial Supportive Collegial
Basis of Model Power Economic Leadership Partnership
resources
Managerial- orientationAuthority Money Support Teamwork
Employee Dependence on Dependence on Participation Self-discipline
psychological result boss organization
Employee needs met Subsistence Security Status and Self-actualization
recognition
Performance result Minimum Passive Awakened drives Moderate enthusiasm
cooperation
Foundation of Individual Behaviour
Individual behaviour is influenced by various factors. We will study those personal factors, which has
influence on productivity, job satisfaction, absenteeism and turnover.
Biological and Individual Factors
There are certain factors which are inherited by an individual. A person inherits physical appearance,
way of talking, analyzing, and taking initiative in a group. Physical attributes of a person are
important in work enviornment. If a manager is able to identify these factors he will be able to deal
with each of individual employees effectively. These factors are as under:
(a) Age: Age is one of the important factors to generate productivity. The relationship between job
and performance is an issue of increasing concern. Younger employees are expected to be more
energetic, adventurous, ambitions and risk takers. On the other hand old people are considered to be
more conservative, having slow speed of work and are less adaptable. Job performance and turnover
declines with increasing age and therefore less job opportunities, hence there are less of resignation.
Older people generally get higher wages, longer paid vacation and they stick on to the job because of
pension benefits. However, productivity is related to attitude and behaviour of employees irrespective
of age factor. Speed, agility, strength and coordination reduces by age. Experience, the older
employees enjoy is of a great significance, disadvantages caused due to declining age is offset by
experience.
(b) Gender: Traditionally some jobs were reserved for females like nursing jobs. Over a passage of
time, there is no gender differentiation between male and female. We observe successful female
entrepreneurs working around the world. In the Indian defence services, the women fighter pilots had
done a wonderful job during Kargil operations. They can undergo physical and mental stress and
display exemplary capabilities. There is no gender difference for skills that are required for problem
solving, analytical skills, competitive drive, motivation, sociability and learning ability. It has been
established that women are more willing to conform to authority.
Men are more aggressive and have greater expectations from the organization. There is no difference
in productivity and job satisfaction. Women absents more as compared to the men, this is because of
the social responsibility and domestic problems. Women have to stay longer at home for child care,
illness of dependants and the like. As far as turnover is concerned, there is no difference between men
and women.
(c) Religion: Religion and culture play an important role in determining various aspects of individual
behaviour. There is a great impact on individual who have been brought up in ideal religious culture
concerning moral, ethics and a code of conduct. Religion and culture determine individual attitude
towards work and compensation.
Employees having high religious value are generally found to be hard working, honest, dependable,
sociable, who can fit in the organization well. They are productive, innovative and think well of the
organization.
(d) Marital Status: Marriage imposes increased responsibilities on an individual, therefore an
individual desires to have a steady job. Married employees have fewer absences, lesser turnover and
higher job satisfaction. Number of dependants is also a factor to be considered. There is no clear cut
information about the impact of marital status on productivity absenteeism, turnover and job
satisfaction. Since marriage increases the family commitment, an individual do not change
organizations.
Tenure
Tenure is referred to as experience. The impact of experience on performance is an issue which is
subject to a lot of misconception and speculation. Work experience is considered to be a good
indicator

of employee productivity. There is a positive relationship between seniority and job performance and
negative relationship between seniority and absenteeism.
Employee turnover is negatively related to seniority. Research indicates that experience and
satisfaction are positively related. Seniority and experience is a better indicator of job satisfaction than
the age of a person.
Ability
Ability is individuals’ capacity to perform various tasks in a job. Ability is made up of two sets of
skills:
(A) Intellectual skills or ability and
(B) Physical skills or ability. We are not created equals. It does not mean we are inherently inferiors
to others. Everyone has strengths and weaknesses in ability. What is important is to identify level of
ability or skills and put it to optimum utilization to improve performance.
(A) Intellectual ability: It is an ability of a person that is required to do mental activities. Higher IQ
is not necessary to perform the job successfully. For any high job a general level of intelligence is
adequate. Intellectual ability can be further divided into the following skills:
(a) Number Aptitude: A person having number aptitude displays speed, accuracy and arithmetic
inclination in the work. Such individuals can be best employed in accounts and sales tax departments.
(b) Verbal Comprehension: It refers to ability to understand what is heard or read. It is relationship
of words to each other. People having verbal comprehension can be best employed as plant managers.
They would be ideal to draft corporate polices.
(c) Perceptual Speed: It is an ability to identify visual similarities and differences. Such individuals
can be gainfully employed for investigative jobs.
(d) Inductive Reasoning: The ability is related to individual’s skill to identify logical sequence in a
problem and later solve the same. Such individuals can be assigned the job in research and
development departments / organizations.
(e) Deductive Reasoning: The ability refers to use of logic and assess the implications of an
arguments. People with this skill can ideally foot the bill as supervisors.
(f) Spatial Visualisation: It is an ability to imagine how an object would look if its position in the
space were changed. Interior decorators have this skill.
(g) Memory: It is an ability to recall past experience. Sales persons depend upon this ability in
performance of their job.
(B) Physical Ability: Physical ability refers to strength factors which includes dynamic strength
(muscles force), trunk strength (abdominal muscles), static strength (exertion of force against external
object) and explosive strength. Other factors relate to body coordination, balance and stamina. It is the
responsibility of the manager to identify physical skills in the individual and assign them suitable jobs
commensurate with their ability. High importance of physical skills are given in police, railways,
defence, revenue and agriculture fields where various skills are important. In industrial setting, it must
be ensured that ability is co-related to the job requirements so that an optimum output is achieved.
Emotions
For many years wisdom of a person and his ability to perform was measured by Intelligence Quotient
(IQ). IQ was a measure for admission to schools, measurement of performance in studies, for seeking
jobs and performance evaluation while on the job. However studies indicate that Emotional
Intelligence (EI) is now considered as greater predictor of success than IQ. In 1990, Salovey and
Mayer coined the term ‘Emotional intelligence’. They described emotional intelligence as “a form of
social intelligence that involves the ability to moniter one’s own and others’ feelings and emotions, to
discriminate among them, and to use this information to guide one’s thinking and action”. Cognitive
abilities are related to IQ of an individual and non-cognitive with emotions. It has been found that
emotional and social skills actually help to improve cognitive functioning also.
Learned Characteristics
1. Personality: Personality is sum total of ways in which an individual reacts and interacts with
others. It is a dynamic organization within an individual of those psychological systems that
determine his unique adjustments with his environment. It is the charm, positive attitude, smiling face,
growth and the development of a person that adds to personality. Personality is greatly influence by
the environment that a person has been brought up and the factors of heredity.
(a) Environment: It refers to culture in which a person is raised. Culture establishes norms, values
and attitude that are passed on to generations. Early conditions, norms in the family, friend and social
groups and other influences that are formative of personality.
(b) Heredity: Heredity is transmitted through genes that determine hormone balance and leads to
physique formation which shapes personality. Heredity refers to those factors like physical stature,
facial attractiveness, temperament, muscle composition, reflects and energy level. Heredity is made
up of biological factors. Traits like shyness, fear and distress are passed on to generations. Traits are
characteristics of an individual when exhibited in large number of situations. More consistence and
more frequent occurrences in diverse situations, the more predominant the trait in an individual are.
Common traits found in a person are shyness, aggressive, submissive, laziness, ambitious, loyal and
timid. Perception is the process by which information is interpreted in order to give meaning to the
world around us. Different people perceive the same thing differently. It should be noted that we
should evaluate each situation / individual carefully before forming an opinion.
(c) Attitude: Attitude is a tendency to act/think in certain ways either favourably or unfavourably
concerning objects, people or situation. For example, If I say I am satisfied with my job, what actually
I am doing is expressing my attitude towards the job. An attitude is the way a person feels about a
person, a place, a thing, a situation or an idea. Attitude could be positive or negative. Attitude can be
measured either by observing the action of the individual or simply asking him the questions about
how he would behave in a particular situation.
(d) Values: Values are beliefs that guide actions and judgments across a variety of situations. Values
represent basic convictions that a specific mode of conduct is personally or socially preferable to an
opposite mode of conduct. They contain a judgmental element in that they carry an individual's ideas
as to what is right, good or desirable. Values have both content and intensity attributes.
Values are of two types:
Terminal value refers to desirable end-states. These are the goals a person would like to achieve
during his or her lifetime.
Instrumental values relate to means for achieving Terminal values. It is a tool for acquiring terminal
values. For example obedient, capable etc.
Individual values are formed in the initial stages. They are influenced by the parents, teachers, friends
and other social groups. Values vary from person to person. Values help in understanding the
attitudes, and motivational level of the individuals. It helps to change the individual behaviour. Values
are of a great help to determine as to what is good and what is desirable. Values are so strong an
instrument that it at times ulter rational decisions.An organization having right value system have
greater chances of growth.

Personality Traits Influencing Organizational Behavior

Personality traits are enduring characteristics that describe an individual's behaviour. The more
consistent the characteristic over time, and the more frequently it occurs in diverse situations, the
more important that trait is in describing the individual.

There are twelve major personality traits influencing organizational behaviour, i.e,
(1) Authoritarianism,
(2) Bureaucratic Personality,
(3) Machiavellianism,
(4) Introversion and Extroversion,
(5) Problem Solving Style,
(6) Achievement Orientation,
(7) Locus of Control,
(8) Self Esteem,
(9) Self Monitoring,
(10) Risk Taking,
(11) ‘Type A’ and ‘Type B’ Personality, and
(12) Myers-Briggs Type Indicator (MBTI).
1. Authoritarianism: According to Adorno, “This concept refers to a belief that there should be
status and power differences among people in organisations.” Authoritarians tend to place high moral
value on their beliefs and are strongly oriented towards conformity of rules and regulations. They
naturally prefer stable and structured work environments which are governed by clean rules and
procedures.
2. Bureaucratic Personality: The personality of a bureaucratic person is based upon respect for
organisational rules and regulations. He is different from an authoritarian person in respect that his
acceptance of authority is not total and blind. A person who is bureaucratic in nature values
subordination, conformity to rules, impersonal and values formal relationships also. These people
become better supervisors when the type of work is routine, repetitive and proceduralised because
these people are not innovative, they do not like taking risks and feel more at ease in following
established directions.
3. Machiavellianism: This personality trait of Machiavellianism also known as Mach is named after
Niccolo Machiavelli. It is the degree to which an individual is pragmatic, maintains emotional
distance and believes that the end can justify the means.
The characteristics of high MACH employers are as follows:
(i) A Mach man is pragmatic, maintains emotional distance and believes that ends can justify means.
(ii) A high Mach man manipulates more, wins more, are persuaded less and persuade others more
than the low machs.
(iii) High Mach people flourish when they interact face to face with others rather than indirectly.
(iv) These people are successful when the situation has a minimum number of rules and regulations.
(v) High Mach man has high self confidence and high self esteem. They are cool and calculating and
have no hesitation using others or taking advantage of others in order to serve their own goals.
(vi) They are not easily swayed by a sense of friendship, trust or loyalty. They are specially successful
in exploiting structured situations and vulnerable people.
4. Extroverts are gregarious and sociable individuals while introverts are shy, quiet and retiring. It has
been observed that introverts and extroverts people have different career orientations and require
different organisational environment to maximize performance. Extroverts are more suitable for
positions that require considerable interaction with others that is why managerial positions are
dominated by extroverts.
Thus, we can say that to be an extrovert is a managerial trait to be a successful manager. On the other
hand, introvert people are more inclined to excel at tastes that require thought and analytical skill. An
extreme introvert works best alone in a quiet office without external interruption or influence.

5. Problem Solving Style: Individuals have their own style of solving their problems and making
their decisions and this style of their affects their personality in certain ways. There are four problem
solving styles based upon Don Hellriegll, John W. Slocum and Richard W. Woodman “organisational
behaviour”.
These styles are:
(i) Sensation Feeling Style: The people who have the sensation feeling style are dependable, friendly,
social and they approach facts with human concerns. These people are pragmatic, methodical and like
jobs which involve human contract and public relations. Some suitable areas of jobs for these people
are teaching, customer relations, social workers and marketing.
(ii) Sensation Thinking Style: People with sensation thinking style are practical, logical, decisive and
sensitive to details. These people prefer bureaucratic type organisations. They are not highly suitable
for jobs requiring interpersonal relations. But these people are more skilled in technical jobs e.g.
production, accounting, engineering and computers.
(iii) Intuition Feeling style: The persons with intuition feeling style are enthusiastic, people oriented,
charismatic and helpful. The professions which are suited to this style are public relations, advertising,
politics and personnel.
(iv) Intuition Thinking Style: These people are very creative, energetic, ingenious and like jobs which
are challenging in terms of design and analysis such as system design, law, research and development,
top management and so on.
6. Achievement Orientation: Achievement orientation or a high need to achieve is a personality trait
which varies among different types of people and can be used to predict certain behaviour. The people
with very high achievement orientation strive to do things in a better way. They want to feel that their
success or failure is due to their own actions. These people do not like to perform easy tasks where
there is no challenge or tasks with very high amount of risk as the failure rate is more.
These people like to do the acts with moderate difficulties, so that they can have a sense of
achievement also and on the other hand the failure rate is also not very high. Or in other words,
achievers will like to do the jobs where the outcome is directly attributed to their efforts and chances
of success are so-so. The high achievers will do better in sports, management and sales where there is
moderate difficulty, rapid performance feedback and direct relationship between effort and reward.
7. Locus of Control: Locus of control refers to an individual’s belief that events are either within
one’s control (Internal Locus of Control) or are determined by forces beyond one’s control. Some
people believe that they are the masters of their own fate. Other people see themselves as pawns of
fate, believing that whatever happens to them in their lives is due to their luck or fate. The first type is
labeled as internals and the latter has been called externals. A Person’s Perception of The Source Of
His Or Her Fate Is Termed Locus Of Control.
Internal Locus of Control:
(i) A person with a strong internal locus of control has more control over his own behavior. He
believes that he controls events concerning his own life and his internal traits determine what happens
in a given situation. He believes that he is the master of his own density.
(ii) These people are more active in seeking more information to make decisions. They are better at
retaining the information and are less satisfied with the amount of information they possess.
(iii) Internals are more active socially.
(iv) Internals prefer skill achievement outcomes.
(v) Internals are more likely to use personally persuasive rewards and power bases and less likely to
use coercion.
(vi) These people are more independent and less susceptible to influence of others.
(vii) The internals prefer participative management.
(viii) Research has shown that internally oriented people hold jobs of higher Status, advance more
rapidly in their careers.
(ix) Internals take more responsibility for their health and have better health habits. As a result their
incidents of sickness and of absenteeism are lower.
External Locus of Control:
(i) People who rate high in externality are less satisfied with their jobs, have higher absenteeism rates,
are more alienated from the work setting and are less involved on jobs than are internals. They
generally prefer directive management.
(ii) Unlike the internals, these people prefer chance oriented awards.
(iii) A person with a strong ‘external locus of control’ feels that outside forces are affecting the events
in his life and he is at the mercy of destiny, chance or other people. He believes that everything will
happen by the will of God and nothing or nobody can stop it. External locus of control refer
(iv) Unlike, the internals, the externals are more interested in job security and not in advancement of
careers.
(v) Whereas the internals prefer intrinsic rewards e.g. feeling of and he is at the mercy of
achievement, externals are more interested in extrinsic awards, destiny, chance or other people. From
the above mentioned traits of internals and controls it can be concluded that internals would be better
on sophisticated tasks, which include most managerial and professional jobs or any other jobs which
require complex information processing and learning. In addition, they are suited to jobs requiring
initiative and independence of action. As against this, externals would do well on jobs that are well
structured and routine and in which success depends heavily on coupling with the directions given by
others.
8. Self Esteem: Self Esteem refers to the feeling of like or dislike for oneself.” “Self Esteem is the
degree of respect a person has for himself.” This trait varies from person to person as people differ in
the degree to which they like or dislike each other. The research on self esteem offers some interesting
insights into organisation behaviour.
A few of the research findings about self esteem are:

(i) Self esteem is directly related to the expectations for success. High self esteem people believe that
they possess the ability they need to succeed at work.
(ii) Individuals with high self esteem will take more risks in job selection. They are more likely to
choose unconventional jobs than people with low self esteem.
(iii) People with low self esteem are more susceptible to external influence than are those with high
self esteems. Low esteems are dependent on the receipt of positive evaluations from others. As a
result they are more likely to seek approval from others and more prone to conform to the beliefs and
behaviours of those they respect than are the high esteem.
(iv) In managerial positions, the low esteems tend to be concerned with pleasing others and, therefore,
less likely to take unpopular stands than are high esteems.
(v) High esteems are more satisfied with their job than the low esteems.
(vi) High self esteem people are very friendly, affectionate, find it easy to form interpersonal
attachments and find good in other people. Low self esteem people are usually critical of others, are
generally depressed and blame others for their own failures.
(vii) High esteem people are high performers while low esteem people contribute to poor performance
which in turn reinforces low self esteem.
9. Self Monitoring: “Self monitoring is a personality trait that measures an individual’s ability to
adjust his or her behaviour to external situational factors”. Self monitoring is a personality trait which
has recently received attention. The research on self monitoring is in infancy, so predictions must be
guarded.
However, prime evidence suggests the following points:
(i) As self monitoring refers to the individual’s ability to adjust his or her behaviour to external
factors, individuals with high self monitoring can show considerable adaptability in adjusting their
behaviour to external, situational factors.
(ii) High self monitors can behave differently in different situations. They are capable of presenting
striking contradictions between their public, personal and private selves. Low self monitors cannot
deviate their behaviour. They tend to display their true dispositions and attitudes in every situation;
hence, there is high behavioural consistency between who they are and what they do.
(iii) The high self monitors tend to pay closer attention to the behaviour of others and are more
capable of conforming than are low self monitors.
(iv) We can also hypothesize that high self monitors will be more successful in managerial positions
where individuals are required to play multiple and even contradictory roles. The high self monitor is
capable of putting different faces for different audiences.
10. Risk Taking: The propensity of people to assume risks or avoid risks varies from person to
person depending upon the willingness of the people to take chances. This human trait will affect the
decision making capability of a manager. This individual personality trait will determine how long
will it take a person to take a decision or how much information will be needed before he takes a
decision.
Some people are very conscious in nature, while the others are impulsive. An impulsive person is a
high risk taking manager; he will make rapid decisions and use less information in making their
choices than a very conscious and low risk taking manager. But the research shows that the decision
accuracy is generally the same in both the groups.
Research has concluded that managers in organisations are risk aversive, but still there are individual
differences on this point. Some jobs specifically demand high risk taking persons e.g. the job of a
broker in a brokerage firm. Because in this job for effective performance rapid decisions are required.
On the other hand, some jobs are such where risk taking may prove a major obstacle e.g. the job of an
accountant who performs auditing activities. This job should be filled by, someone, with low risk
taking trait.
11. ‘Type A’ and ‘Type B’ Personality: People who are impatient, aggressive and highly
competitive are termed as ‘Type A’ personality. But those who are easy going, laid back and non-
competitive are termed as ‘Type B’ personality. Type ‘A’ people tend to be very productive as they
work very hard. Their negative side is that they are very impatient, good team players, more irritable
and have poor judgment. Type ‘B’ people do better on complex tasks involving judgment and
accuracy rather than speed and hard work.
Despite Type ‘A’s hard work, the Type ‘B’ people are the ones who appear to make it to the top.
Great sales persons are usually Type A’s while senior executives are generally Type B’s. The reason
is that promotions in corporate and professional organisations usually go to those “who are wise rather
than to those who are merely hasty, to those who are tactful, rather than to those who are hostile and
to those who are creative rather than to those who are merely agile in competitive stride.”
12. Myers-Briggs Type Indicator (MBTI): The personality theory proposed by Carl Jung identified
the way people preferred to perceive their environment. Almost Twenty years later, Briggs and Myers
developed the Myers – Briggs type indicator (MBTI) a personality test that measured each of the traits
in Carl Jung’s model. MBTI is in-fact, one of the most widely used personality tests. It is used by
many organisations to select people for a particular position.

It measures how people focus their attention (extrovert or introvert), collect information (sensing or
intuition), process the same (thinking or feeling) and finally direct themselves to the other world
(judging or perceiving) MBTI then combines the four classifications into 16 personality types.

CHALLENGES & OPPORTUNITIES IN O.B

The following are some of the significant Challenges:
i) Improving People Skills
ii) Improving Quality and Productivity
iii) Managing Workforce Diversity
iv) Responding to Globalization
v) Empowering People
vi) Coping with Temporariness
vii) Stimulating Innovation and Change
viii) Emergence of the e-organization
ix) Improving Ethical Behaviour
1 Improving People Skills:
Technological changes, structural changes, environmental changes are accelerated at a faster rate in
business field. Unless employees and executives are equipped to possess the required skills to adapt
those changes, the achievement of the targeted goals cannot be achieved in time. There two different
categories of skills – managerial skills and technical skills. Some of the managerial skills include
listening skills, motivating skills, planning and organizing skills, leading skills, problem solving skill,
decision making skills etc. These skills can be enhanced by organizing a series of training and
development programmes, career development programmes, induction and socialization etc.
Implications for Managers: Designing an effective performance appraisal system with built-in
training facilities will help upgrade the skills of the employees to cope up the demands of the external
environment. The lower level cadre in management is required to possess more of technical skills. As
they move towards upward direction, their roles will be remarkably changed and expected to have
more of human relations and conceptual
skills.
2 Improving Quality and Productivity:
Quality is the extent to which the customers or users believe the product or service surpasses their
needs and expectations. For example, a customer who purchases an automobile has certain
expectation, one of which is that the automobile engine will start when it is turned on. If the engine
fails to start, the customer’s expectations will not have been met and the customer will perceive the
quality of the car as poor. Deming defined quality as a predictable degree of uniformity and
dependability, at low cost and suited to the market. More and more managers are confronting to meet
the challenges to fulfill the specific requirements of customers. In order to improve quality and
productivity, they are implementing programs like total quality management and reengineering
programs that
require extensive employee involvement.
Implications for Managers: Today’s managers understand that any efforts to improve quality and
productivity must influence their employees. These employees will not only be a major force in
carrying out changes, but increasingly will participate actively in planning those changes. Managers
will put maximum effort in meeting the customer’s requirements by involving everyone from all the
levels and across all functions. Regular communications (both formally and informally) with all the
staff at all levels is must. Two way communications at all levels must be promoted. Identifying
training needs and relating them with individual capabilities and requirements is must. Top
management’s participation and commitment and a culture of continuous improvement must be
established.
3 Managing Workforce Diversity:
This refers to employing different categories of employees who are heterogeneous in terms of gender,
race, ethnicity, relation, community, physically disadvantaged, homosexuals, elderly people etc. The
primary reason to employ heterogeneous category of employees is to tap the talents and potentialities,
harnessing the innovativeness,
obtaining synergetic effect among the divorce workforce. In general, employees wanted to retain their
individual and cultural identity, values and life styles even though they are working in the same
organization with common rules and regulations. The major challenge for organizations is to become
more accommodating to diverse groups of people by addressing their different life styles, family
needs and work styles.
Implications for Managers: Managers have to shift their philosophy from treating everyone alike to
recognizing individual differences and responding to those differences in ways that will ensure
employee retention and greater productivity while, at the same time not discriminating. If work force
diversity is managed more effectively, the
management is likely to acquire more benefits such as creativity and innovation as well as improving
decision making skills by providing different perspectives on problems. If diversity is not managed
properly and showed biases to favour only a few categories of employees, there is potential for higher
turnover, more difficulty in communicating and more interpersonal conflicts.
4 Responding to Globalization:
Today’s business is mostly market driven; wherever the demands exist irrespective of distance,
locations, climatic conditions, the business operations are expanded to gain their market share and to
remain in the top rank etc. Business operations are no longer restricted to a particular locality or
region. Company’s products or services are spreading across the nations using mass communication,
internet, faster transportation etc. An Australian wine producer now sells more wine through the
Internet than through outlets across the country. More than 95% of Nokia hand phones are being sold
outside of their home country Finland. Japanese cars are being sold in different parts of globe. Sri
Lankan tea is exported to many cities across the globe. Executives of Multinational Corporation are
very mobile and move from one subsidiary to another more frequently.
Implications for Managers: Globalization affects a managerial skills in at least two ways: i) an
Expatriate manager have to manage a workforce that is likely to have very different needs, aspirations
and attitudes from the ones that they are used to manage in their home countries. ii) Understanding the
culture of local people and how it has shaped them and accordingly learn to adapt ones management
style to these differences is very critical for the success of business operations. One of the main
personality traits required for expatriate managers is to have sensitivity to understand the individual
differences among people and exhibit tolerance to it.
5 Empowering People
The main issue is delegating more power and responsibility to the lower level cadre of employees and
assigning more freedom to make choices about their schedules, operations, procedures and the method
of solving their work-related problems. Encouraging the employees to participate in work related
decision will sizably enhance their commitment at work. Empowerment is defined as putting
employees in charge of what they do by eliciting some sort of ownership in them. Managers are doing
considerably further by allowing employees full control of their work. An increasing number of
organizations are using self-managed teams, where workers operate largely without boss. Due to the
implementation of empowerment concepts across all the levels, the relationship between
managers and the employees is reshaped. Managers will act as coaches, advisors, sponsors, facilitators
and help their subordinates to do their task with minimal guidance.
Implications for Manager: The executive must learn to delegate their tasks to the subordinates and
make them more responsible in their work. And in so doing, managers have to learn how to give up
control and employees have to learn how to take responsibility for their work and make appropriate
decision. If all the employees are
empowered, it drastically changes the type of leadership styles, power relationships, the way work is
designed and the way organizations are structured.
6 Coping with ‘Temporariness”
In recent times, the Product life cycles are slimming, the methods of operations are improving, and
fashions are changing very fast. In those days, the managers needed to introduce major change
programs once or twice a decade. Today, change is an ongoing activity for most managers. The
concept of continuous improvement implies constant change. In yester years, there used to be a long
period of stability and occasionally interrupted by short period of change, but at present the change
process is an ongoing activity due to competitiveness in developing new products and services with
better features. Everyone in the organization faces today is one of permanent temporariness. The
actual jobs that workers perform are in a permanent state of flux. So, workers need to
continually update their knowledge and skills to perform new job requirements.
Implications for Manager: Managers and employees must learn to cope with temporariness. They
have to learn to live with flexibility, spontaneity, and unpredictability. The knowledge of
Organizational Behaviour will help understand better the current state of a work world of continual
change, the methods of overcoming resistance to change process, the ways of creating a better
organizational culture that facilitates change process etc.
7 Stimulating Innovation and Change
Today’s successful organizations must foster innovation and be proficient in the art of change;
otherwise they will become candidates for extinction in due course of time and vanished from their
field of business. Victory will go to those organizations that maintain flexibility, continually improve
their quality, and beat the competition to the
market place with a constant stream of innovative products and services. For example, Compaq
succeeded by creating more powerful personal computers for the same or less money than IBNM or
Apple, and by putting their products to market quicker than the bigger competitors. Amazon.com is
putting a lot of independent bookstores out of business as it proves you can successfully sell books
from an Internet website.
Implications for Managers: Some of the basic functions of business are being displaced due to the
advent of a new systems and procedures. The challenge for managers is to stimulate employee
creativity and tolerance for change.
8 Emergence of E-Organization
This embraces e-commerce and e-business. State and central governments, municipal corporations are
using the Internet for extending all the public utility services more efficiently through internet.
Implications for Managers: The employees must acquire skills, knowledge, attitudes in learning new
technology, overcoming any resistance
9 Improving Ethical behaviour:
The complexity in business operations is forcing the workforce to face ethical dilemmas, where they
are required to define right and wrong conduct in order to complete their assigned activities. The
ground rules governing the constituents of good ethical behaviour has not been clearly defined.
Differentiating right things from wrong behaviour has become more blurred. Following unethical
practices have become a common practice such as successful executives who use insider information
for personal financial gain, employees in competitor business participating in massive cover-ups of
defective products etc.
Implications for Managers: Managers must evolve code of ethics to guide employees through
ethical dilemmas. Organizing seminars, workshops, training programs will help improve ethical
behaviour of employees. Retaining consultants, lawyers, voluntary service organizations to assist the
company in dealing with ethical issues will ensure positive ethical behaviour. Managers need to create
an ethically healthy climate for his employees
where they can do their work productively and confront a minimal degree of ambiguity
regarding what constitutes right and wrong behaviour.

Personality
Personality is a dynamic organization within an individual of those psychological systems that
determines his unique adjustment with the environment. It is a sum total of ways in which an
individual reacts and interacts with others.”
Personality can be defined as the consistent psychological patterns within an individual that affect the
way they interact with others and the situations they encounter. Personality is defined as relatively
stable and enduring characteristics that determine our thoughts, feelings and behaviour. Personality is
a complex phenomenon and there are various perspectives of personality construct. One common and
simple definition of Personality is: It is the consistent psychological patterns within an individual that
affect the way they interact with others and the situations they encounter.
Determinants of Personality
Personality is determined by heredity, environment (culture) and situation under which an individual
works.
Heredity: The genetic components inherited from our parents at the time of conception determine
strongly the personality characteristics of an individual. Heredity is transmitted through genes, which
determine hormone balance, which later determine physique and subsequently the personality. The
colour, height, physical statutory, facial attractiveness, gender, temperament, muscle composition,
inheritable diseases etc are considered to be inherited from our parents
Environment
Every individual is born and brought up in a particular environment. Environment leaves an imprint
on the personality of an individual. The culture in which people are brought up in their lives and they
type of socialization process such as family’s child rearing practices, socio economic status of the
family, number of children in a family, birth order, education of the parents, friends and peer group
pressures, religious practices, the type of schooling and recreational activities, pastime behaviour etc
play a critical role in shaping our personalities.
Situation
The type of specific situation which a person encounters also equally shapes the type of personality
characteristics. Individual has to interact with number of problems in a given situation, which does not
remain constant. It is subject to change and hence fluid in nature. There is therefore a need to
recognise the person-situation interaction. It can be social learning activity of personality. Thus
personality is situational; the uniqueness of each situation and any measure of personality must be
examined.

Key Personality Traits Relevant to Work Behaviour

i) Self Esteem: It refers to the individuals’ self worthiness and the extent to which they regard
themselves as capable, successful, important and worthwhile. People who feel good about themselves
will always produce good results. Studies of self-esteem show that it is closely related to mental
health. People with low self-esteem are more likely to suffer depression and greater stress. People
with positive self-esteem adjust to life better and deal every day problems more effectively.
Individuals’ with high self esteem will try to take up more challenging assignments and be successful,
which in turn, enhance their overall self-concept. People with high self esteem would tend to classify
themselves as highly valuable in the organization.
ii) Locus of Control: It refers to the extent to which people tend to have control over their own fate
and life.
There are two type of locus of control. The Internal Locus of Control refers to those who believe that
they control what happens to them and shape the course of their evens in their lives, whereas the
External Locus of Control believe that what happens to them is controlled by outside forces such as
luck or chance.
iii) Self Efficacy: It refers to the belief that a person has in their own capability to perform a specific
task.
People with high self-efficacy will prefer to have moderate level of task difficulty, strong self
confidence and conviction in the chosen tasks and possess high expectation in completing the
assignment across the entire situation. Employees with high self-efficacy respond to specific negative
feedback about their performance with increased motivation and effort, while those with low self-
efficacy are more likely to give up and reduce their motivation.
iv) Self-Monitoring: It refers to the extent to which a person has the ability to adjust his or her
behaviour to external or situational factors. Those with high self-monitoring will be more sensitive
and notice the significant changes occurring in the environment and able to adapt them by adjusting
their behaviour. High self-monitors are capable of exhibiting a striking contrast between their public
persona and their private self. Low self-monitors cannot disguise their behaviour and tend to exhibit
the same behaviour all the time.
v) Emotional Intelligence: It is also called as EQ which refers to individual’s ability to be aware of
feelings and emotions and the extent to which they can manage them more effectively in dealing with
others and challenging events.
vi) Big Personality Traits (OCEAN/ CANOE)
There are five Big Personality Traits which have a significant impact in individual’s life. They are as
follows:
a) Openness to experience: This refers to the extent to which people are more imaginative, artistic
sensitivity and intellectualism. Individuals tend to vary widely ranging from conservative to creative
or artistic. Extremely open people are creative, and artistically sensitive. Whereas not so open
category personnel are
very conservative and find comfort in the familiar or routine activities
b) Conscientiousness: This refers to the extent to which people are responsible and dependable in
their work and life. A highly conscientiousness person is responsible, organized, dependable and
persistent. They are likely to move upward direction very quickly and attain remarkable achievement
in their life. Those who score low on this dimension are easily distracted, disorganized and unreliable
c) Extroversion: Extroverts are sociable, lively, and gregarious and seek outward interaction. Such
individuals are likely to be most successful working in marketing division, public relations etc. where
they can interact face to face with others. Introverts are quite, reflective, introspective and intellectual
people, preferring to interact with a small intimate circle of friends. Introverts are more likely to be
successful when they can work on highly abstract ideas (accountant, R&D work etc) in a relatively
quite atmosphere.
d) Agreeableness: This refers to the extent to which individuals agreeing and cooperating with others.
Highly agreeable people are cooperative, warm and trusting. People who score low on agreeableness
are cold, disagreeable and antagonistic. This characteristic is very important and critical in attaining a
successful achievement in their life.
e) Emotional Stability/ Neuroticism: This refers to the extent to which people have the ability to
withstand stress. People with positive emotional stability tend to be calm, self confident and secure.
Those with highly low level of emotional stability tend to be nervous, anxious, depressed and
insecure.
.

Personality Types (MBTI)

MBTI describes four dimensions of Personality Types:
(a) Extroversion versus Introversion: (The ways in which people relate to the world)
(b) Sensing versus Intuition: (Becoming aware of and perceiving information)
(c) Thinking versus feeling: (Ways of deciding and prefer to make judgments)
(d) Judging and Perception: (The amount of control exercising and organizing people)
a) Extroversion and Introversion:
This deals with whether the focus of attention is directed towards outwardly or inwardly. Where do
you prefer to focus your attention?
Extroversion: Extroverted attention flows outward to the world of objects and people or external
ideas. They are interacting more with people.
Characteristics associated with people who prefer Extraversion are:
 Attuned to external environment
 Prefer to communicate by talking
 Work out ideas by talking them through
 Have broad interests
 Sociable and expressive
 Readily take initiative in work and relationships
Extroverts are usually active, sociable, like variety and stimulation, and are often good speakers, sales
people or public relations professionals.
Introversion: Introverted attention focused on the subjective, inner world of thoughts, feelings and
ideas. Introverts like quit reflection, can concentrate on one idea or thought for longer than an
extrovert, and are less active and prone to change.
Characteristics associated with people who prefer Introversion are:
 Drawn to their inner world
 Prefer to communicate in writing
 Work out ideas by reflecting on them
 Learn best by reflection, mental “practice”
 Focus in depth on their interest
 Private and contained
Research scientists, academicians and librarians are often introverts

b) Sensing Versus Intuition:

This aspect deals with the ways of collecting information and ideas.
A person with a sensing preferences focuses on the specific, practical and tangible. The sensing
person relies more on the physical or material reality of the world of the five senses: touch, sight,
sound, taste or smell. Sensing managers take in information through their senses and attend to the
details of the problem. They like to solve problems in standard ways. They are patient with routine
details and are precise in their work. They distrust creative inspirations and usually work all the way
through to reach conclusions. They emphasize action, urgency and bottom-line results.
Characteristics associated with people who prefer Sensing:
 Oriented to present realities
 Factual and concrete, precise and practical
 Focus on what is real and actual
 Observe and remember specifics
 Build carefully and thoroughly toward conclusions
 Understand ideas and theories through practical applications
 Trust experience
Sensation Feelers (SF) deal with concrete problems in a methodical way. They have astute powers of
observation regarding the details of how an organization is run. SFs do not fight the system, but use
what is available for problem solving. SFs are non judgmental of their co-workers and do not look for
underlying motives and meanings in people’s behaviour. If organizations do not have adequate SF’s,
small problem will go unattended till they become big.
Intuition
This person relies more on their insights and based on that they guess, assume and draw the
inferences. Ideas, associations or creative process often accompany the presence of intuition. They
focus on the relationships and connections between facts. Intuition manager like solving new
problems and are impatient with routine details. They perceive the problem in its totality and consider
several alternatives simultaneously. They are imaginative and futuristic, enjoying mind testing
games..
Characteristics associated with people who prefer Intuition:
 Oriented to future possibilities
 Imaginative and verbally creative
  Focus on the patterns and meanings in data, sees beyond the surface
Remember specifics when they relate to pattern
 Move quickly to conclusions, follow hunches
 Want to clarify ideas and theories before putting them into practice
 Trust inspiration
Intuitive Thinkers (NT) are the architects of progress and ideas. They are interested in the principle on
which the organization is built and seek answers to the significant events. They have enormous drive
and are creative. If organizations do not have adequate number of NT’s, change will be minimal.
c) Thinking versus Feeling:
These deals with the way people make decisions.
Thinking The person with a preference for thinking tends to be objective, analytical and impersonal
in decision and judgments. Thinking managers are logical and analytical in their problem solving and
search for additional information in a logical manner.
Characteristics associated with people who prefer Thinking:
 Solve problem with logic,
 Use cause and effect reasoning
 Strive for an objective standard of truth
 Can be “tough-minded”
 Fair – want everyone treated equally
As this person is logical in analysis, he is good at organizing, scheduling, comparing, analyzing and
quantitatively evaluating objections and activities. Sensation Thinkers (ST) are decisive and excellent
at decisions involving precise interpretations of facts and figures. They are persevering and precise.
They want the organization run on an impersonal basis. They are hard working and super dependable.
Organizations run efficiently because of such managers.
Feeling
People who use feelings to make decision are more likely to be empathetic, loyal, and appreciative
and tactful. Feeling types consider the person and are likely to bend the rules if the situation warrants.
Feeling managers heavily emphasize the human aspects in dealing with organizational problems and
is more process oriented. They enjoy pleasing people and avoid conflicts. Intuitive Feelers (NF) have
personal charisma and commitments to the people they lead. They communicate their caring and
enthusiasm. They are comfortable in an unstructured,group-centred management system that lets
employees participate in the decision making process. If adequate NF’s are not available in
organization, an organization will become cold, sterile and dull.
Characteristics associated with people who prefer Feeling:
 Empathetic
 Guided by personal values
 Assess impacts of decisions on people
 Strived for harmony and positive interactions
 Compassionate
 May appear “tenderhearted”
d) Judgment versus Perception
This aspect deals with the amount of control a person has over events and organizing things.
Judgment The strong Judgment oriented people tend to live in a planned, decided and orderly way,
wanting to regulate their life and control events. They are given more responsibility and authority
because their operating mode is stable and predictable.
Characteristics associated with people who prefer Judging:
 Scheduled
 Organize their lives
 Systematic
 Methodical
 Make short and long term plans
 Like to have things decided
 Try to avoid last-minute stresses
The person with a strong orientation for judgment will therefore be good at making decision and
planning. They usually make good managers, engineers and lawyers.
Perception Perceptive people tend to live in a flexible, spontaneous way, wanting to understand life
and adapt to it. They often appear to be more relaxed and less organized than judging types and are
less attracted to schedules and routines.
Characteristics associated with people who prefer Perceiving:
 Spontaneous
 Flexible
 Casual
 Open-ended
 Adapt, change course
 Like things loose and open to change
 Feel energized by last minute pressures.
The perceptive type, on the other hand, may wait until all the information and aspects of a situation
are seen before they make a decision.

Types of Personality
Type A: People having Type A personality are always moving, walking and eating rapidly. They feel
impatient with the speed the events take place. They always strive to do two or three thing at any one
time and cannot cope with leisure. They are generally obsessed with work involved with numbers.
The following are their typical characteristics of Type A
Type A Personality
 Competitive
 High Need for Achievement
 Aggressive
 Works Fast
 Impatient
 Restless
 Extremely Alert
 Tense Facial Muscles
 Constant Time Pressure

Type B: People possessing Type B personality never suffer from sense of urgency and take thing as it
comes coolly. They do not discuss achievement and leave it to the superiors to identify it. Those
people having B type of personality play for fun and relaxation rather than to show off. These people
have the tendency to relax without guilt.
The following are their typical characteristics of Type B people.
Type B Personality
 Able to Take Time to Enjoy Leisure
 Not Preoccupied with Achievement
  Easy Going Works at Steady Pace
 Seldom Impatient
 Relaxed
 Not Easily Frustrated
 Moves Slowly
 Seldom Lacks Enough Time

Theories of Personality shaping

There are various theories which have been given but the most logical personality theories seem to be
Psychoanalytic Theory, socio-psychological , trait and self theories.
1. Sigmund Freud’s Theory/ Psychoanalytic Theory: Freud proposed that personalities have
three components: the id, the ego, and the superego.
 Id: a reservoir of instinctual energy that contains biological urges such as impulses toward
survival and aggression. The id is unconscious and operates according to the pleasure
principle, the drive to achieve pleasure and avoid pain. The id is characterized by primary
process thinking, which is illogical, irrational, and motivated by a desire for the immediate
gratification of impulses.
 Ego: the component that manages the conflict between the id and the constraints of the real
world. Some parts of the ego are unconscious, while others are preconscious or conscious.
The ego operates according to the reality principle, the awareness that gratification of
impulses has to be delayed in order to accommodate the demands of the real world. The ego
is characterized by secondary process thinking, which is logical and rational. The ego’s role is
to prevent the id from gratifying its impulses in socially inappropriate ways.
 Superego: the moral component of personality. It contains all the moral standards learned
from parents and society. The superego forces the ego to conform not only to reality but also
to its ideals of morality. Hence, the superego causes people to feel guilty when they go
against society’s rules. Like the ego, the superego operates at all three levels of awareness.
Freud believed that the id, the ego, and the superego are in constant conflict. He focused mainly on
conflicts concerning sexual and aggressive urges because these urges are most likely to violate
societal rules.

2. Socio-psychological theory
According to this theory, individual and society are interlinked. This theory disagrees with Freud’s
contention. It is also called as Neo-Freudian theory. Researchers believe that social relationships are
fundamental to the formation and development of personality.
Karen Horney was a social theorist. She believed that personality is developed as an individual learns
to cope with basic anxieties that stems up from parent – child relationships. She proposed that
individuals could be classified into three personality groups:
Complaint – Those individuals who moved toward others. They desire to be loved, wanted and
appreciated.
Aggressive – Those individuals who move against others. They desire to excel and win admiration.
Detached – Those individuals who move away from others. They desire independence, self-
sufficiency and freedom from obligations.
3. Trait Theory: Unlike many other theories of personality, such as psychoanalytic or
humanistic theories, the trait approach to personality is focused on differences between
individuals. The combination and interaction of various traits forms a personality that is
unique to each individual. Trait theory is focused on identifying and measuring these
individual personality characteristics.
In 1936, psychologist Gordon Allport categorized traits into three levels:
Cardinal Traits: These are traits that dominate an individual’s whole life, often to the point that the
person becomes known specifically for these traits. People with such personalities often become so
known for these traits that their names are often synonymous with these qualities.
Central Traits: These are the general characteristics that form the basic foundations of personality.
These central traits, while not as dominating as cardinal traits, are the major characteristics you might
use to describe another person. Terms such as intelligent, honest, shy and anxious are considered
central traits.
Secondary Traits: These are the traits that are sometimes related to attitudes or preferences and often
appear only in certain situations or under specific circumstances. Some examples would be getting
anxious when speaking to a group or impatient while waiting in line.
Trait theory gives recognition to the continuity of personality. This theory is bassed on personality
research. It attempts to find a relationship between aet of personality variables and assorted behaviour.
4. Self Theory : This theory was given by Carl Rogers (1959) who believed that humans have
one basic motive, that is the tendency to self-actualize - i.e. to fulfill one's potential and
achieve the highest level of 'human-beingness' we can. The humanistic approach states that
the self is composed of concepts unique to ourselves. The self-concept includes three
components:
Self worth (or self-esteem) – what we think about ourselves. Rogers believed feelings of self-
worth developed in early childhood and were formed from the interaction of the child with the
mother and father.
Self-image – How we see ourselves, which is important to good psychological health. Self-
image includes the influence of our body image on inner personality. At a simple level, we
might perceive ourselves as a good or bad person, beautiful or ugly. Self-image has an effect
on how a person thinks feels and behaves in the world.
Ideal self – This is the person who we would like to be. It consists of our goals and ambitions
in life, and is dynamic – i.e. forever changing. The ideal self in childhood is not the ideal self
in our teens or late twenties etc.
5. Social learning theory Social learning theory, proposed by Albert Bandura, emphasizes the
importance of observing, modelling, and imitating the behaviors, attitudes, and emotional
reactions of others. Social learning theory considers how both environmental and cognitive
factors interact to influence human learning and behavior

Models of Personal Effectiveness

Traits View of Stephen R. Covey
1. Being proactive and taking responsibility
2.Begin with the end in mind: to begin with the end in mind means to start with a clear understanding
of your desired destination.
3.Win-Win: This means developing an attitude of seeking mutual benefit.
4.Seek first to understand then to be understood: Empathetic listening gets inside another person’s
frame of reference.
5.Synergize: which refers to developing the habit of creative cooperation or teamwork.
6.Sharpen the Saw: The habit is aimed at self renewal in four areas-Physical, mental, emotional, social
and spiritual. It involves setting aside time for self renewing activities regularly.

Daniel Goleman
Daniel Goleman developed the concept of emotional intelligence, which is at the heart of Personal
effectiveness .
 1. Self–awareness- Self awareness means having a deep understanding of one’s emotions,
strengths, weaknesses, needs and motives.
2. Self-Regulation- The signs of emotional self regulation are a propensity for reflection and
thoughtfulness ;comfort with ambiguity and change ,and integrity-an ability to say no to
impulsive urges.
3. Motivation-This is the trait that all effective leaders have. They are driven to achieve beyond
expectations. They are achievers.
4. Empathy- Empathy is important today for at least three reasons: the increasing use of team
work; the rapid pace of globalization ;the growing need to retain talent.
5. Social Skill- The leader’s task is to get work done through other people and social skill makes
that possible.

Attitude
Attitudes can be defined as an individual’s feelings about or inclinations towards other persons,
objects, events, or activities. Attitudes encompass such affective feelings as likes and dislikes, and
satisfactions and dissatisfactions.
According to G.W. Allport, “Attitude is a mental and neutral state of readiness organized
through experience, exerting a directive or dynamic influence upon individual’s response to all
objects and situations with which it is related.”

Components of Attitudes
There are three components of attitudes such as
Cognitive (Thinking),
Affective (Feeling)
and Cognitive (Behavioural).
Cognitive component deals with thinking, evaluation, comparison, rational, logical issues with
respect to the targeted object. This will facilitate to form a strong belief or further strengthen the belief
system towards various objects. By observing and analyzing the various features of Sony lap top
computer, you may form a very good opinion stating that Sony laptop is best among others. Such an
evaluation is based on the cognitive component of attitudes.
Affective component: Affective component of attitude is related to person’s feelings about another
person, which may be positive, negative or neutral. I do not like Maya because she is not hard
working, or I like Mina because she is hard working. It is an expression of feelings about a person,
object or a situation.
Behavioural component: Behavioural component of attitude is related to impact of various situations
or objects that lead to individual’s behaviour based on cognitive and affective components. I do not
like Maya because she is not hard working is an affective component, I therefore would like to
disassociate myself with her, is a behavioural component and therefore I would avoid Maya.

Nature of Attitude
1. Attitude are a complex combination of things we tend to call personality, beliefs, values,
behaviors, and motivations.
2. An attitude exists in every person’s mind. It helps to define our identity, guide our actions,
and influence how we judge people.
3. Although the feeling and belief components of attitude are internal to a person, we can view a
person’s attitude from his or her resulting behavior.
4. Attitude helps us define how we see situations, as well as define how we behave toward the
situation or object.
 5. Attitude provides us with internal cognitions or beliefs and thoughts about people and objects.
6. Attitude cause us to behave in a particular way toward an object or person.

Characteristics of attitudes
Attitude can be characterized by:
Affective Cognitive consistency: The degree of consistency between the affective and cognitive
components influences the attitude—behavior relationship. That is, the greater the consistency
between cognition and evaluation, the greater the strength of the attitude-behavior relation.
Strength: Attitudes based on direct experience with the object may be held with greater certainty.
Certainty is also influenced by whether affect or cognition was involved in the creation of the attitude.
Attitudes formed based on affect are more certain than attitudes based on cognition
Valence: It refers to the degree or grade of likeliness or unlikeliness toward the entity/incident. If a
person is fairly unconcerned toward an object then his attitude has low valence.
Direct Experience:An attitude is a summary of a person’s past experience; thus, an attitude is
grounded in direct experience predicts future behavior more accurately. Moreover, direct experience
makes more information available about the object itself.
Multiplicity: It refers to the amount of features creating the attitude. For example, one may show
interest in becoming a doctor, but another not only shows interest, but also works hard, is sincere, and
serious.
Relation to Needs: Attitudes vary in relative to requirements they serve. Attitudes of an individual
toward the pictures serve only entertainment needs, but attitudes of an employee toward task may
serve strong needs for security, achievement, recognition, and satisfaction.
Types of Attitude
Job satisfaction: Job satisfaction is related to general attitude towards the job. A person having a high
level of satisfaction will generally hold a positive attitude while dissatisfied people will generally
display negative attitude towards life. When we talk about attitude, we generally speak about job
satisfaction because they are inter-related in organizational behaviour.
Job involvement: Job involvement refers to the degree to which a person identifies himself
(psychologically) with his job, actively participates and considers his perceived performance level
important to self-worth. High level of involvement indicates that the individual cares for his job, that
has an impact on high productivity. Higher the job satisfaction, lower will be absenteeism and
employee turnover.
Organizational commitment: Organizational commitment refers to degree to which an employee
identifies himself with the organizational goals and wishes to maintain membership in the
organization. He wants to “belong” to the organization and take an active part in the its functioning.
Absenting or resigning from the job versus job satisfaction is a predictor of organizational
commitment. The concept has been very popular in the recent times. Organizational commitment
depends upon job enrichment factor and degree to which the workers enjoy autonomy and freedom of
action while performing.

Sources of Attitudes
Attitudes are formed through various sources. We acquire or learn from parents, teachers, peer group
members.
i) Family Members:
Parents or siblings influence strongly to form favourable or unfavourable attitudes towards various
objects. The child rearing practices, the types of reinforcement received from parents or siblings will
help mould certain attitudes such as strong preference towards colour, religious faith, choices of food
habits etc which would be stable and long lasting over a period of time.
ii) Reference Group:
People tend to form a strong attitude based on the influence of powerful personalities whom they
admire a lot. For example, celebrities, charismatic political or religious leaders significantly influence
either to strengthen the existing attitudes or form new attitudes. Marketing managers rely on celebrity
figures to endorse the products to subtly influence their admirers to buy the products.
iii) Peer Group influence:
Friends or colleagues at work place will have a strong influence on the formation of certain attitudes
or belief system due to pressure to conforming to their norms, standards, values etc. People need
people. The acceptance or reassurance of group members will strongly reinforce the chosen attitudes
and behaviour.
iv) Socialization and Learning process:
The way in which people are brought up in family, the do’s and don’ts laid down by the parents,
educational and educational institutions, the rules and regulations of work place, the types of rituals,
cultures, norms of society etc will strongly influence the formation of attitudes.

Functions of Attitude
Attitudes serve four major functions for the individual:
1. The Adjustment Function:
Attitudes often help people adjust to their work environment. When employees are well treated they
are likely to develop a positive attitude towards the management and the organisation, otherwise they
are likely to develop a negative attitude towards management and the organisation. These attitudes
help employees adjust to their environment and are a basis for future behaviour.
For example, if employees who are well treated are asked about management or the organisation they
are likely to say good things. These employees are very loyal to the management also. On the other
hand, if the employees are berated or they are given minimum salary increases or they have less job
satisfaction, the reverse may be true.
2. The Ego Defensive Function:
Along with the adjustment function, attitudes also help them defend their self images. People often
form and maintain certain attitudes to protect their own self images. For example, workers may feel
threatened by the employment or advancement of minority or female workers in their organisation.
These threatened workers may develop prejudices against the new workers.
They may develop an attitude that such newcomers are less qualified and they might mistreat these
workers. This attitude helps the workers protect the ego and is known as an ego defensive attitude.
This ego defensive attitude is used by the employees in coping with a feeling of guilt or threat. Unless
this feeling is removed, this kind of attitude will Remain unchanged.
3. The Value Expressive Function:
Attitudes provide people with a basis for expressing their values. Our value expressive attitudes are
closely related to our self concept. A person, whose value system is centralized on freedom, will have
a positive attitude towards decentralization of authority in the organisation, flexible work schedules
etc. Another person who is very ambitious will have a positive attitude towards a job which will offer
bright future prospects and chances of promotion.
A manager who believes strongly in work ethics will tend to voice attitudes toward specific
individuals or work practices as a means of reflecting this value. For example, a supervisor who wants
a subordinate to work harder might put it this way “You’ve got to work harder. That has been the
tradition of the family since it was founded. It helped get us where we are today and everyone is
expected to subscribe to this ethic”. Thus, the attitudes serve as a basis for expressing one’s central
value.
4. The Knowledge Function:
Attitudes are often substituted for knowledge. Attitudes help supply standards and frames of reference
that allow people to organize and explain the world around them. Regardless of how accurate a
person’s view of reality is attitudes towards people, events and objects help the individual make sense
out of what is going on. Stereotyping is an example. In the absence of knowledge about a person, we
may use a stereotyped attitude for judging the person.
Why should managers know about these attitude functions? Such a knowledge can help the managers
in two ways firstly, he will understand and predict how a certain person is likely to behave. Secondly,
it can help the management in changing the attitudes of another person. They can do this by changing
the conditions that sustain the attitude.

Theories of Attitude Formation and Change

There are various theories which explain formation of attitude
1. Cognitive Consistency Theories: Research has generally concluded that people seek consistency
among their attitudes and between their attitudes and their behaviour. This means that people seek to
reconcile divergent attitudes and align their attitudes and behaviour so that they appear rational and
consistent. When there is an inconsistency, forces are initiated to return the individual to an
equilibrium state where attitudes and behaviour are again consistent. This can be done by either
altering the attitude or the behaviour or by developing a rationalization for the discrepancy.
The cognitive consistency theories are concerned with inconsistencies that arise between related
beliefs, bits of knowledge and evaluation about an object or an issue. Though various consistency
theories differ in several respects, all of them have a common object that is reducing the inconsistency
and returning the individual to the equilibrium state.
2. Congruity theory: C.E. Os good and P.H. Tannenbaum have proposed the congruity theory of
attitudes which is similar to the balance theory. This theory focuses on the changes in the evaluation
of a source and a concept that are linked by an associative or dissociative assertion. Congruity exists
when a source and concept that are positively associated have exactly the same evaluations and when
a source and concept that are negatively associated have exactly the opposite evaluations attached to
them.
Congruity is a stable state and incongruity is an unstable one. As a result, incongruity leads to a
change of attitude. This theory states that how much change should be there in the attitudes towards
the source and the concept so that incongruity is resolved.
3. Affective Cognitive consistency theory: M.I. Rosenberg has suggested the affective-cognitive
consistency theory which is concerned with the consistency between a person’s overall attitude or
effect towards an object or issue and his beliefs about its relationship to his more general values. This
theory is concerned mainly with what happens within the individual when an attitude changes. It
assumes that the relationship between the affective and cognitive components of the attitude change
when an attitude is altered.
The theory postulates the following points:
(i) A person’s effect towards or evaluation of the attitude object tends to be consistent- with this
cognitive structural component.
(ii) When there is inconsistency beyond a certain level of tolerance, the individual is motivated to
reduce the inconsistency and thereby to change one or both components to make them more
consistent.
(iii) The theory, thus, suggests that changes in the affective component produce changes in the
cognitive component in order to bring about consistency between the two.
(iv) The theory also suggests that persuasive communication can also be used to change the attitudes,
by revaluating the goals themselves.
4. Functional theories: The functional theory considers how attitudes and efforts are related to the
motivational structure of the individual.
This theory focuses on two things:
(i) The meaning of the influence situation in terms of both the kinds of motives that it arouses and
(ii) The individual’s method of coping and achieving his goals.
An understanding of the functions served by attitudes is important for attitude change procedures
since a particular method may produce change in individuals whose attitudes serve one particular
function, but may produce no change in individuals for whom the attitudes serve a different function.
5. Kelman’s functional theory: He has distinguished three processes of attitude formation and
change:
(i) Compliance
(ii) Identification and
(iii) Internalisation.
This theory is directed towards the types of social relationships that occur in social influence
situations.
Compliance occurs when an attitude is formed or changed in order to gain a favourable impression
from other person or group.
Identification occurs when a person forms or changes his attitude because this adoption helps him
establish or maintain a positive self defining relationship with the influencing agent.
Internalization involves adopting an attitude because it is congruent with one’s overall value systems.
This approach makes an important contribution towards an understanding of the conditions that
influence the maintenance and stability of attitude change.
6. Reinforcement theory

Why are attitudes important?

1. Attitudes serve as one way to organize our relationship with our world. They make our
interactions more predictable affording us a degree of control.For example, the attitude “I like
working for this company” is very useful in guiding our behaviour towards the company’s
work.
2. Attitudes also enable us to reduce the vast amount of information that we possess into
manageable units. All the beliefs we have about our company could be summarized as “I like
my company”, and thus our attitude represents the combination of many bits of information
for us.
3. We can use others attitudes to make judgments about them.
4. It has been found consistently that the more similar our attitudes are to those of others, the
more we like them.
5. Finally, people’s attitudes can sometimes be useful in predicting behaviour, such as how they
will vote in an election or which brand of car they will buy.

What is Personal Effectiveness

Effectiveness is a measure of the ability of a task to produce a specific desired effect or result that can
be qualitatively measured.
Effectiveness means that you determine exactly what you want to do . In effectiveness the end point is
fixed , and it is a matter of steadily improving the process of getting there.
Our industries are going through a turbulent change in the present globalization scenario. To succeed
in this environment and for organizations to survive, personal and work effectiveness for every
individual is an absolute necessity.
Need for Personal Effectiveness
Basis of Organizational Success
2. Promotes Individual in value addition
3. Mastering Self Management and interpersonal relationship in the organizations.
4. Develop human competencies.- Personal effectiveness helps individuals in developing their skills
and characteristics identified are known as competencies.

Certain Competencies need to be developed for Personal Effectiveness:

The Goal and The human

The Leadership action resource The directing
Cluster management management subordinates cluster
cluster cluster

The focus on
others cluster

The Five Clusters of Management Competencies(Boyatzis,1982)

Stephen R Covey’s Model of Personal Effectiveness (7 Habits)

Traits View of Stephen R. Covey

1. Being proactive and taking responsibility: Proactivity is about taking responsibility for one's
reaction to one's own experiences, taking the initiative to respond positively and improve the
situation. He postulates that "between stimulus and response lies your ability to choose" how to react.
One needs to discuss and recognize one's circle of influence and circle of concern.
2.Begin with the end in mind: to begin with the end in mind means to start with a clear
understanding of your desired destination. One should be clear that what one wants in the future (a
personal mission statement) so that one can work and plan towards it, and understanding how people
make important life decisions. To be effective one needs to act based on principles and constantly
review one's mission statements.
Covey says that all things are created twice: Before one acts, one should act in one's mind first. Before
creating something, measure twice. Do not just act; think first: Is this how I want it to go, and are
these the correct consequences?

3.Win-Win: This means developing an attitude of seeking mutual benefit. One should seek mutually
beneficial win–win solutions or agreements in one’s relationship. Valuing and respecting people by
seeking a "win" for all is ultimately a better long-term resolution than if only one person in the
situation had gotten their way. Thinking win–win isn't about being nice, nor is it a quick-fix
technique; it is a character-based code for human interaction and collaboration
4.Seek first to understand then to be understood: Use empathetic listening to genuinely understand
a person, which compels them to reciprocate the listening and take an open mind to be influenced.
This creates an atmosphere of caring, and positive problem-solving.
5.Synergize: which refers to developing the habit of creative cooperation or teamwork. Combine the
strengths of people through positive teamwork, so as to achieve goals that no one could have done
alone
6.Sharpen the Saw: The habit is aimed at self renewal in four areas-Physical, mental, emotional,
social and spiritual. It involves setting aside time for self renewing activities regularly.
7. Put first things first : Covey talks about what is important versus what is urgent. Priority should
be given in the following order
Quadrant I. Urgent and important (Do) – important deadlines and crises
Quadrant II. Not urgent but important (Plan) – long-term development
Quadrant III. Urgent but not important (Delegate) – distractions with deadlines
Quadrant IV. Not urgent and not important (Eliminate) – frivolous distractions

Rosabeth Moss Kanter distinguishes seven particular qualities that personal and mangerial
effectiveness requires:
1. The ability to operate without relying on a hierarchy
2.The ability to compete in a way that enhances rather than undercuts cooperation
3. A high standard of ethics
4.Humility: there will always be new things to learn
5.Having a process focus: How things are done is just as important as what is done, making things
happen is as important as deciding what should happen.
6.Multifaceted and ambidextrous abilities: To work across functions and business units to find
synergies that multiply value, to form alliances when opportune but cut ties when necessary and to
swim effectively in the mainstream and the new streams.
7.The ability to gain satisfaction from results, valuing the contribution rather than demanding status
rewards.

Daniel Goleman’s view of Emotional Intelligence

Daniel Goleman developed the concept of emotional intelligence, which is at the heart of Personal
effectiveness .
• Self –awareness- Self awareness means having a deep understanding of one’s emotions,
strengths, weaknesses, needs and motives.
• Self-Regulation- The signs of emotional self regulation are a propensity for reflection and
thoughtfulness ;comfort with ambiguity and change ,and integrity-an ability to say no to
impulsive urges.
• Motivation-This is the trait that all effective leaders have. They are driven to achieve beyond
expectations. They are achievers.
• Empathy- Empathy is important today for at least three reasons: the increasing use of team
work; the rapid pace of globalization ;the growing need to retain talent.
• Social Skill- The leader’s task is to get work done through other people and social skill makes
that possible.

Self –awareness

Self-Regulation

Motivation

Empathy

Social Skill

Definition of Group
A work group is collection of two or more individuals, working for a common goal and are
interdependent. They interact significantly to achieve a group objective. Group is defined as collection
of two or more individuals who are interdependent and interact with one another for the purpose of
performing to attain a common goals or objective. The principal characteristics presented in this
definition – goals, interaction and performance are crucial to the study of behaviour in organizations.
A group is a collection of individuals in which the existence of all (in their given relationships) is
necessary to the satisfaction of certain individual needs to each.

Types of Groups

1. Formal groups:
Formal groups are collections of employees who are made to work together by the organization to get
the job done smoothly and efficiently. The formal groups are those whose primary purpose is
facilitating, through member interactions, the attainment of the goals of the organization. For
example, if five members are put together in a department to attend to customer complaints they
would be a formal group.
i) Command Group
It is formed to carry out a specific task. There is a leader in a group who is also designated by the
organization. He receives orders from his superior and reports to him about group activities and
performance.
ii) Task Group A task group is made up of individuals from across the functional areas. They work
together to complete a job/task. Task group boundaries are not limited to its hierarchical superior.
Once the task is complete the group members fall back to their respective parent groups/units. For
example, the plant manager of a chemical processing plant may be interested in identifying potential
safety problems in the plant. To provide a coordinated effort, the manager creates a four-person task
force consisting of the production superintendent, maintenance superintendent, director of engineering
and the safety engineer. The group members will deliberate these issues, bring out suitable remediable
measure for those safety problems within a deadline period. If any problems are found, the plant
manager may create other task forces to work toward the elimination of the potential problems. These
activities create a situation that encourages the members of the task force to communicate, interact
and to coordinate activities, if the purpose of the group is to be accomplished.
iii) Committee
The other form of formal group is committee. It can be of permanent or temporary nature. Planning
committee, finance committees are of permanent nature, they keep working all along and have a
designated authority to control the work. There are temporary committees, which are formed to
accomplish a one-time works like committees formed at district levels to issue identity cards to
citizens. They are formed for specific work and disbanded once they have completed their work.
2. Informal Groups
Informal groups are groups that are not formally organized in the work system to get the job done but
develop on their own randomly at workplaces because of common interest and mutual liking of the
group members. For example members of production department, body manufacturing department,
HR department members and few individual from finance dept may form a friendship group. This
development takes place because of the interaction
they have with each other during the official work. Members from within one group or members from
different departments or even an organization can form an informal group.
i) Interest and Friendship Groups: The group members form relationships based on some common
characteristics such as age, political belief, or interests. Generally, it can be considered as formal or
informal group. Groups often develop because the individual members have one or more common
characteristics. This is called friendship groups. For example, recreation clubs, social groups etc.
ii) A clique is simply a group of people with shared goals or interests, who are few enough in number
for each to know and communicate with all others personally. A workforce of any size includes
groups of people who "hang together" for a variety of reasons. Perhaps they do similar work or have
another factor in common A clique may be further defined by rules or behaviors that are expected of
and accepted by its members, and by the tendency of its members to gravitate toward an informal
leader. Unconsciously, members recognize a form of authority that isn't imposed by any structure
iii ) Psychological Groups
When informal group involve themselves in various activities, interactions and sentiments based on
common interests, value system and social bondage they tend to develop highest level of sentiments
or affinity among themselves and become aware of each-others needs and potential contribution to
further group objectives. These groups are called psychological groups. The distinct feature of such
informal group is that the members become close knit, develops strong feeling of togetherness and get
identified by the group. A feeling that ‘we’ belong to a particular group sets in deep into the behaviour
pattern of all group members.

Type of Teams
1. Problem-Solving Teams
In problem-solving teams, members share ideas or offer suggestions on how work processes and
methods can be improved. Rarely, however, are these teams given the authority to unilaterally
implement any of their suggested actions. One of the most widely practiced applications of problem-
solving teams during ` the1980s was quality circles these are work teams of eight to ten employees
and supervisors who have a shared area of responsibility and meet regularly to discuss their quality
problems, investigate causes of the problems, recommend solutions, and take corrective actions.
Self-Managed Work Teams Problem-solving teams were on the right track but they didn't go far
enough in getting employees involved in work-related decisions and processes. This led to
experimentation with truly autonomous teams that could not only solve problems but implement
solutions and take full responsibility for outcomes.
2. Cross-Functional Teams
These are teams made up of employees from about the same hierarchical level, but from different
work areas, who come together to accomplish a task. The goal was to improve communication and
tracking of work, which would lead to increased productivity and more satisfied clients.
3. Self-managed teams
Self-managed teams operate in many organizations to manage complex projects involving research,
design, process improvement, and even systemic issue resolution, particularly for cross-department
projects involving people of similar seniority levels. While the internal leadership style in a self-
managed team is distinct from traditional leadership and operates to neutralize the issues often
associated with traditional leadership models, a self-managed team still needs support from senior
management to operate well.Self-managed teams may be interdependent or independent. Of course,
merely ailing a group of people a self-managed team does not make them either a team or self-
managed.
4. Project teams
A team used only for a defined period of time and for a separate, concretely definable purpose, often
becomes known as a project team. Managers commonly label groups of people as a "team" based on
having a common function. Members of these teams might belong to different groups, but receive
assignment to activities for the same project, thereby allowing outsiders to view them as a single unit.
In this way, setting up a team allegedly facilitates the creation, tracking and assignment of a group of
people based on the project in hand.

REASONS FOR JOINING GROUPS:

The most popular reasons for joining a group are related to our needs for security, identity, affiliation,
power and engaging in common tasks.
SECURITY: By joining a group, members can reduce the insecurity of being alone. The membership
will make them feel stronger, gaining resistant to threats, having fewer self-doubts etc. New
employees are particularly vulnerable to a sense of isolation and turn to the group for guidance and
support.
STATUS: Inclusion in a group that is viewed as important by others provides recognition and status
for its members. Being a member of Rotary Club, the members feel pride and gain status and
recognition.
SELF-ESTEEM: Groups can provide people with feelings of self-worth. That is, in addition to
conveying status to those outside the group, membership can also give increased feelings of worth to
the group members themselves. The self-esteem is bolstered when members are accepted by a highly
valued group. Being assigned to a task force whose purpose is to review and make recommendations
for the location of the company’s new corporate head quarters can fulfil one’s intrinsic needs for
competence and growth.
AFFILIATION: Groups can fulfil social needs. People enjoy the regular interaction that comes with
group membership. For many people, these on-the-job interactions at work are the primary source for
fulfilling their needs for affiliation.
POWER: For individuals who desire to influence others, groups can offer power without a formal
position of authority in the organization. As a group leader he or she may be able to make requests of
group members and obtain compliance without any of the responsibilities that traditionally go either
formal managerial position.
GOAL ACHIEVEMENT: There are times when it takes more than one person to accomplish a
particular task- there is a need to pool talents, knowledge in order to complete a job. In such instances,
management will rely on the use of a formal group.
Norms
“Group Norms are set of beliefs, feelings, and attitude commonly shared by group members. These
are also referred to as rules of standards of behaviour that apply to group members” All groups have
established norms, that is - norms tell members what they ‘ought’ and ‘ought not’ to do a thing under
certain circumstances. From an individual stand point, they tell what is expected of them in certain
situations. When agreed to and accepted by the group, norms act as a means of influencing the
behaviour of group members with a minimum of external control. Norms differ among groups,
communities and societies, but they all have them.
Types of Norms
Norms may differ from organization to organization, nature of work and the location. Following
norms are generally found and practiced by all the organizations.
(a) Performance Norms: Performance standard is set by the individual worker and approved by the
superiors. These are general norms, industry standards prevailing in a particular type of industry and
restricted to geographical limits. All the individuals are expected to fulfil their task within the
stipulated time. If some
worker is slow and cannot cope up with the work load, is assisted by other group members. On the
contrary if some worker produces more than what is required to do is reprimanded by the group
members and discouraged to produce more than upper limits set by the organization so that
management does not raise their expectations.
(b) Appearance Norms: Appearance norms are related to dress code and code of conduct in the
organization. In good organization dress while on work, dress for sports function or for dinner are laid
down. In defence services such norms are inbuilt in the organizational culture. As regards to code of
conduct, an individual is expected
to be loyal and display total dedication to the organization he serves. Workers are not expected to
report about fellow workers to the superiors. In the same way members are not expected to divulge
company secrets to any other organization, no matter how much tension prevails between workers and
management. Group norms is a very powerful tool for high productivity and maintenance of peaceful
relationship among the fellow workers.
(c) Behaviour Norms: Guidelines for general behaviour are issued by the management so that all the
employees display behaviour in an identical manner. These guidelines may cover various aspects
relating to the work. This may include time management, punctuality, salutation, showing respect to
the views of other members behaviour
while on shop floor and level of professionalism that an individual should possess. These norms
eventually take the form of organization culture and are very useful for bringing down the conflict or
stress level among the group members.
Group Conformity
Conformity: Members in the organization want to belong to a group for various reasons. First they
want to belong to a group to fulfil the need of social security. The second reason is the conformity to
group decisions in conflicting and confusing situation as a best bet. When individual belong to a
group he abides by group norms and the group decision against one’s own judgment. Individuals need
for affiliation is satisfied when an individual is fully accepted in the group by group members.

Groupthink
Groupthink is a phenomenon in which the norms for consensus override the realistic appraisal of
alternative course of action. Groupthink is a situation when all the members of a group are aligned to
each other in the group and blindly abide by the group decisions. No external pressure is applied. In
the process it has been seen that poor decision are made by the group as no one resist the decision,
groupthink phenomenon is bad for group decision making because group members don’t take decision
based on rationality, non use of available data, and over estimation about ability. Too much of group
cohesion is dangerous for equality decisions. The following are the antecedents of Groupthink:
i) Excessive group cohesiveness
ii) Insulation of group from external information and influence
iii) Lack of impartial leadership and of norms encouraging proper procedures
iv) Ideological homogeneity of members
v) High stress from external threat and task complexity
These antecedents are relating to basic structural faults in the group and to the immediate decision
making contexts. The following are some of the symptoms of groupthink:
i) Feelings of invulnerability and unanimity
ii) Unquestioning belief that the group must be right
iii) Tendency to ignore or discredit information contrary to group’s position
iv) Direct pressure exerted on dissidents to bring them into line Ignore external information
vii) Overestimate its own abilities and capabilities to make good decision
viii) Rationalize or reject data that tend to disconfirm its original views and judgments
ix) Apply direct pressures on those who momentarily express doubts about any of the group’s shared
views
x) Those who have doubts or different view point keep silent about misgivings and even minimizing
to themselves the importance of their doubts.
In a group where the groupthink phenomenon operates, members constantly monitor and censor
themselves to ensure that they are going along with the group’s opinion and not deviating by
expressing a different viewpoint. Too much cohesion has the built-in danger of group member falling
into the trap of groupthink, which in turn, compromises good decision-making, especially in complex
situations.

Group Shift
Group shift is basically a change in riskiness of a decision. This means that based on your individual
decision - your risk decision was A. But after reviewing the group’s decision which could be more
toward conservatism or greater risk, you will ultimately change your decision based on the majority.
Therefore moving from your originally decision to that of the majority even though your final answer
might be infact different from your own beliefs.
This means group shift is a phenomenon in which the initial positions of individual members of a
group are exaggerated toward a more extreme position. When people are in groups, they make
decisions about risk differently from when they are alone. In the group, they are likely to make riskier
decisions, as the shared risk makes the individual risk less. It is seen that group is willing to take
greater risks than when the same members make decision individually. In case more financial
commitment is involved, individuals tend to be very cautious and make conservative decisions.
However, when the same kinds of decisions are made by groups, the decisions made are less
conservative. Groups feel more at ease and comfort in making riskier decisions. Higher risk taking
behaviours in a group are probably a function of the responsibilities for the consequences of the
decision making shared by all the group members rather than one individual assuming more burdens
by himself. This phenomenon for groups to take greater risks while making critical decisions when
compared to individual decision making is known as the Groupshift. The most plausible explanation
of the shift towards risk seems to be that the group diffuses responsibility. Group decisions free any
singly member from accountability for the group’s final choice. Greater risk can be taken because,
even if the decision fails, no one member can be held wholly responsible

Group Processes
Group process refers to how an organization's members work together to get things done. Group
process can occur from within the group, outside of the group and any time of year. Effective
organizations take a close look at how members work together, which roles they fill and whether
members are contributing equally. Through group process, observation and analysis can help identify
problems early, thus alleviating the need for a major overhaul as the year progresses. . To facilitate
such understanding one has to explore concepts as:
 Group functions & activities
 Group decision and making
 Group norms & standard of behavior
 Group leadership
 Group member’s roles
Synergy
Synergy refers to the cumulative effect of two or more substances which is different from the
individual summation of those substances. It connotes the creation of a whole which is greater than
the sum of the individual parts. For example, synergy is obtained when 2 +2 is not merely 4, but can
be made to add up to more than 4. For example, three engineers are given the tasks of solving a
problem. The ideas generated jointly by these three engineers will be richer and more creative than if
the three engineers individually generated their own ideas without any interaction among them. The
ideas generated jointly will be better than the individually generated ideas because the three now
jointly and creatively explore several different alternatives, discuss the pros and cons and develop
integrated thoughts which are more innovative, thus arriving at a much more powerful solutions than
what they would have been able to achieve individually. The group has developed synergy by merely
interacting with each other using their combined wisdom to generate integrated solutions. This is
positive synergy.
Social loafing represents a negative synergy where the whole is less than the sum of the parts where
individuals are likely to reduce their effort due to diffusion of responsibility.
Social Facilitation Effect: The mere presence of others also affects the performance of individual. It
reported that the presence of others tend to improve performance when the tasks are relatively simple
and well rehearsed. This Positive effect is termed as Social Facilitation Effect.

Group Cohesion
Cohesiveness defines the degree of closeness that the members feel with the group. It identifies the
strength of the members desires to remain in the group and degree of commitment to the group.
Cohesiveness of the group is reflected to the extent of unity displayed by the group members and
adherence to the group norms. It is “WE” feeling displayed by the members of the group. Cohesion
can be achieved when there is a feeling of attraction and adherence to group norms.
Following factors contribute to group Cohesiveness:
Togetherness It is a natural tendency that people want to remain together When they interact they
know each other better and are attracted by their nature and behaviour pattern. People share their
happiness and hardships and a bond of togetherness is formed.
Group Size Cohesiveness of a group depends upon the close interaction of the group members with
each other. In a large group it not possible for the individual to communicate with each other hence
there is likelihood of large group being less cohesive than the small group. In work environment small
group is more effective. If a group is large, there is also a possibility of formation of small sub groups
within a large group. This will lead to delusions of group norms and power politics within the sub
group, which is not desirable.
Entry Norms There are organizations whose membership is difficult to obtain. There are also clubs
which are reserved for exclusive members of a particular background like Defence Services Officers
club. Joining of such group elevates the status, position and members feel a sense of pride and
accomplishment. Because the membership of such clubs is exclusive. At times, there is also a long
waiting list to join such groups. More exclusive the group more cohesive it will be. More difficult to
get entry, more cohesive the group would be.
Threat and Challenges Every group has its objectives. It has been experimented that whenever there
is a threat to disturb the group norm or group objective, group members get more united to protect the
group objective from the party threatening the same. It will be noticed that external threat brings
higher degree of cohesion to the group. In the fast moving world today, the importance of group has
increased many fold. Employees have sacrificed their perks and privileges to ensure higher
productivity by adhering to group norms. For example employees in a well organized industry work
beyond specified time to achieve group goals. Meeting higher challenges brings personal satisfaction
to group members and higher level cohesiveness to the group they are part of.
Degree of participation in group Activities Participation in group activities is important as it leads
to more frequent interaction between group members. Success in group activities also bring
cohesiveness as each of the participants feels that he has been the contributor for achievement of
group goals. For example participation in sports team and achieving the victory.
Attitude and Value Group members having identically attitude and high level of value system will
behave themselves identically and promote group norms and achieve Cohesiveness. In such situation
decision making and implementation of group task is comparatively easy . Conflict situations are
avoided and a smooth sailing is achieved. Interest of the group is well protected due to cohesiveness
of the group.
1. Factors that increase cohesiveness:
Members of a cohesive group share common goals, remain attached to one another, conform to the
group standards and untidily work to achieve the goals.
The following factors increase group cohesiveness:
(a) Similarity in attitudes, values, beliefs and interests of members increases group cohesiveness,
facilitates communication and develops understanding amongst group members.
(b) Inter-group competition, where two groups compete to reach a common goal increases
cohesiveness of each group. A basketball championship, for example, will increase cohesiveness of
each team to win the match.
(c) Personal liking and attraction for each other increases group cohesiveness.
(d) Success in achieving group goals leads to group cohesiveness.
(e) Size of the group also determines cohesiveness of a group. Smaller groups are generally more
cohesive than bigger groups.
(f) Increase in interpersonal interaction increases attraction of group members to one another and
increases cohesiveness of the group.
(g) Consensus amongst group members on group goals increases group cohesiveness.
(h) Dependence of members on each other to achieve the group goals increases group cohesiveness.
Factors that decrease cohesiveness:
When members are not strongly attached to each other and do not work with a spirit of cooperation, it
leads to decline in group cohesiveness.
The following factors are detrimental to group cohesiveness:
(a) Large size of the group decreases group cohesiveness.
(b) When members have conflicting opinion about group goals, group cohesiveness will decline. If
some members want group goals to be complementary to organisational goals while others want them
to be contradictory to organisational goals, group cohesiveness decreases.
(c) While inter-group competition increases cohesiveness, intra-group competition decreases
cohesiveness. Intra-group competition (competition amongst members of the same group) promotes
individual goals at the cost of group goals.
(d) If less dominant members of the group surrender to the viewpoints of the dominant members, this
causes group cohesiveness to decline.
(e) Unpleasant group interactions, dissimilarity amongst attitudes, beliefs and values and lack of
enjoyable group activities decreases group cohesiveness.
(f) Involvement of group members in activities outside the group and threatening internal environment
where members compete for resources within the group reduces group cohesiveness.
(g) Heterogeneous groups with members from different age groups, job responsibilities, education and
status decease the group cohesiveness.
Consequences of Group Cohesiveness:
Highly cohesive groups lead to following consequences:
1. Group goals and group norms can be achieved effectively.
2. If there is high compatibility between group goals and organisational goals, people perceive
management as supportive of group goals and, therefore, perform better than less cohesive groups.
3. Members communicate with each other frequently and understand the feelings of others.
4. Members achieve higher job satisfaction than members of less cohesive groups.
5. It leads to friendly competition amongst work groups that perform similar activities and do not
depend upon each other to get the work done.
6. It affects willingness to innovate and change. Changes can be introduced if they are accepted by
members of the group.
Group cohesiveness leads to positive consequences when group members unitedly agree to
organisational goals and make desirable changes in the organisational policies. This increases
organisational productivity and efficiency. Group norms are high, resistance to change is low and
members even subordinate group goals in favour of organisational goals.

ANALYSIS OF INTERPERSONAL RELATIONSHIP

Johari Window
Joseph Luft and Harrington Ingham have developed a model to look at one’s personality that can be
known and unknown to self and known and unknown to others. The concept known as Johari
Window. It is a technique to analyze and improve interpersonal - Transaction.

The above figure indicates that there are four parts (self) in all of us that has been indicated by four
quadrants. These are explained below:
(a) Open Self: Open Self is known as Public area. This quadrant indicates information about self is
known to oneself and also to others. The information relates to feelings, motivation and behaviour of
an individual, which he is willing to share with those whom he comes in contact. The individual
behaves in a straight forward manner and is sharing. In an organizational setting, because of the
openness of the individual the chances of conflict are reduced to minimum.
(b) Blind Self: This quadrant is related to information is not known to self but known to others, who
interact with you, know more about you. This is known as blind area. It is important that an individual
should reduce blind area to the minimum by interacting with people more intimately and by asking
questions about self. For example, an individual may not be aware of the fact that he is extremely task
oriented and employees do not like it. In other words, others know and perceive the individual as a
hard taskmaster and dislike him because of this. This is blind area that a person is blind to the fact that
he interacts with others in the professional manner. This situation is likely to create an unpleasant
atmosphere in the organization. Individual therefore should reduce blind area and increase public area.
This will reduce conflict situations to a great extent in interpersonal behaviour.
(c) Hidden Self: Certain aspect of personality has formed this quadrant. Self knows information but
others do not know it. There are certain aspects, which are private. Individual therefore does not want
to share it with subordinates and wants to keep hidden. The area is also called Private Area.
(d) Unknown Self: This area is characterized by facts unknown to the self and to others. This is dark
area, which is not pregnable. There is nothing much that can be done about it. It should be an
endeavour to improve upon oneself by obtaining feedback from others about self. Individual should
carry out improvement and perceive oneself correctly so that one perceives each person in the right
manner. There are certain factors to improve Interpersonal relations. (Public Area).

Development of Inter-personal Relationship

(a) Develop positive attitude: We have already studied attitude, perception and values and its
relationship towards accomplishment of given task. It should be an endeavour of every manager to
look at the individuals, situations from positive point of view and remove distortion if any in a
particular situation. Personal bias is dangerous and acts as bloc in improving relationship. If a
manager is unbiased, have positive feeling towards his subordinates, advices them when in trouble
and supports them in day-to-day functioning will develop a positive feeling about the workers, which
will reduce blind area and convert it in to public area. This will bring an excellent work environment
in the organization.
(b) Be Empathetic: Manager must look at from the employees’ point of view. He should be able to
identify subordinates need pattern and try and fulfil them. He should display high degree of sensitivity
towards the subordinates and rise above the personal interest for the well being of employees.
(c) Improve Self Concept: Every individual must improve his self-image. This is possible when work
is assigned to an individual based on his skills, aptitude, experience, knowledge and qualification. In
case there is distortion between the individual’s expectations and job requirement, a person is bound
to develop frustration that would lead to the feeling of inadequacy (for a highly skilled person). In this
situation a job rotation or even change of organization is recommenced. This will bring to him new
challenges, and have a greater degree of freedom of action and job satisfaction that will lead to
increased degree of self-concept. In
nutshell, self-concept is achieved by achieving an ideal fit between individual competency and job
requirement.
(d) Communication: Communication is an important factor in developing an ideal interpersonal
relationship. All barriers of communication should be removed. Managers should conduct themselves
in such a manner that the subordinates feel that the former is approachable. One must also be a good
listener. Mis-perception should not be allowed to set in for want of communication. Subordinates
should be kept posted about the latest happing in an organization so that they are prevented
from imagining the situation that may distort perception. In the organization vertical, horizontal,
diagonal communication be permitted. Formation of social clubs should be encouraged.

Transactional Analysis
Transaction is the unit of social interaction. Transactional Analysis is the method for studying
interactions between individuals.
It is a model for explaining why and how people think, act and interact like they do. It is very useful
in studying various behaviour patterns and it is a social psychology and a method to improve
communication. Through this, people better understands their own and other’s behaviour, especially
in interpersonal relationship.”

EGO STATE
Transactional Analysis also involves the identification of the ego states behind each and every
transaction. Berne defined an ego state as “a consistent pattern of feeling and experience directly
related to a corresponding consistent pattern of behavior.
An ego state is a set of related thoughts, feelings, and behaviors in which part of an individual’s
personality is revealed at a given time (Stewart & Joines, 1987)
Each of our personalities is made up of various parts: the Parent, the Adult, and the Child egostates.
Study of ego state is an important part of transactional analysis, it explains psychological behaviour
pattern of an individual. Study of ego state is related to the way an individual thinks, his feelings and
subsequent behaviour. People interact with each other in terms of psychological positions of
behaviour known as ego state.
Sigmund Freud was the first to advocate that in every individual there are three ego states residing
within him i.e. parent ego, adult ego and child ego. They stimulate, monitor and control individual
behaviour.
Parent Ego
Parent Ego refers to the personality attributes like value, attitude and behaviour of parent like people,
inherited by a person when he was child. This behavioural pattern becomes basics for behaviour as
individual copy parent figures like teacher, father, mother, brother or any other person who is elderly
and displays an advisory behaviour, which is copied by a child and subsequently displayed in his
lifetime when such situations arise. Parent ego can be of two types.
(a) Nurturing parents
Nurturing parent ego is characterized by over protectiveness, helpful, distant, dogmatic, indispensable
and upright parent behaviour. When such behaviour is displayed to a child, he inherits the same
pattern of behaviour.
(b) Critical parents
Critical parents ego state is characterized with the behaviour, which is hurtful, waging finger at the
other and conveys displeasures. The behaviour is strict which usually quotes rules, laws and has great
reliance on successful people.
Adult Ego
Adult Ego is based on reasoning, seeking from subordinates and providing information. A person
having adult ego views people equal, worthy of undertaking any job and responsible. They behave
rationally and think logically. Physical signs can identify their behaviour, which displays controlling
type. People with adult ego, verify their behaviour and update their parent and child ego continuously.
They block parent and child ego state based on experience. The person updates data to determine what
is valid thus he controls emotional expression. Adult ego is considered to be valid ego state
comparatively.
Child Ego
Child ego state is inner feelings, experience and adaptation. Person having child ego generally
displays creativity in his action. He conforms to the situation and people who interact with him and
displays anxiety, depression, dependence, fear and hate. Child ego can be perceived by observing an
individual who displays physical signs like silent compliance, attention seeker in certain situations he
displays temper, tantrums, giggling and coyness. The individual thinks non-logical and wants
immediate action on various issues. Such behaviour is formed unto 5 years of age by accepting inputs
of behaviour of various individuals around in childhood days. Child gets a social birth and inherits
various patterns within the child ego state. These are:-
(a) Natural Child
Natural child generally displays following behavioural pattern
• Affectionate
• Does what come in the way
• Fearful
• Self-indulgent
• Aggressive
(b) Adaptive child
Adaptive child is psychologically trained in obeying instructions from parents though not to his liking
and does whatever because parents insist to do so. It has the tendency to get involved in NOT OK
transaction. Rebellion, frustration becomes part of his personality.
(c) The little professor
The little professor is intuitive, creative and manipulative. He believes in magic and uses this ego state
with adult ego state and achieves good interpersonal relationship. He responds to non-verbal
communication and play hunches. He is imaginative.
Analysis of Transactions
One of the barriers of communication is crossed transaction. TA is a technique for examining the
nature of interpersonal communication between the two individuals and to analyse its effectiveness.
Every piece of conversation is treated as a transaction. For example when A talks to X it is one
transaction and when X replies to A it is another. Each transaction of an individual emanates from
parents ego, adult ego or child ego state. As stated earlier, parent ego state (P) is authoritarian, the
adult ego state (A) is rational and logical in approach and lastly the child ego state (C) is impulsive.
Every person transacts from all the three ego states but each one of us has one ego state as dominant.
Transaction is effective when stimulus and response is from the same ego state and the
complementary in nature. Crossed transactions create conflict and problems for interpersonal
behaviour.
Let us study patterns of complementary transaction.
(a) Complementary Transaction
Complementary transactions are those communications where stimulus and response (S—R) is from
identical ego state. Message from one person gets almost predicted response and the transaction is
parallel. There are nine such complementary transactions:-
(i) Adult – Adult Transaction
Both individuals are transacting from adult ego state. The stimulus and response are based on logical
thinking and rationale. This type of communication is considered most ideal in any organization.
There is least chance of conflict among the workers.
(ii) Adult – Parent Transaction
In adult – parent ego state, manager speaks from adult ego state which is rational and backed by rules
and regulations while the employees speak from the parent ego state which is authorization, is not
likely to smooth in the long run. Parent ego state (workers) will try to control and dominate the
manager. The employees may develop hostile attitude towards the boss.

This type of transaction is effective if child ego is of little professor category where employees can
work with certain amount of creativity. Manager in this type of situation has to keep guiding and
tolerating childlike behaviour of employees which is characterized by loose control, and lot of fun and
enjoyment, which is not productive for the organization.
(iv) Parent – Parents transactions
Parent ego state is characterized by admonitions, rewards, and work by rule, praise and punishment. If
both i.e., the manager and employees have the above characteristics of ego state, the stimuli and
response will be dominating from either side. While manager would put forward his ideas, the
employees would reject it and put up a fresh idea and would want to be accepted by the manager.
Manager will have to take up a nurturing parent attitude for transaction to be fruitful and thus have a
productive communication.
(vi) Parent – Child ego state
This transaction is workable in the organization where the manager will get the work done from
subordinates by advising, guiding, and by assigning rewards for good work and punishment for non-
performance. The subordinates (Child ego) will listen to manager and look forward for advice,
guidance, and assistance at each stage of production cycle. Manager may get frustration because he
may develop the feeling that he is controlling an inefficient work force.

(vii) Child – Parent ego state

This is not a very effective style of communication whose manager has a child ego state and
employee’s parent ego state. In such situation employees would control the manager. The latter would
always perceive employees as threat and look forward for their advice from time to time. It will be
lassie-faire type of command. Instances of manager being ridiculed and talked about loosely by
subordinates will be a common phenomenon.

(viii) Child – Adult ego state Transactions

When manager acts from child ego, there will be poor decisions based on whims and fancies and
emotions. This will pose a problem for employees who want to work rationally. Unless the ego state
of the manager is changed, this is going to be problem in the organization. No growth can be expected
with child ego manager at the helms of affairs.
(ix) Child – Child ego state
Such transaction is not good for the organization. This organization even can be called as leaderless.
Manager with child ego dominant is more of a liability to the organization. Performance of the
organization will be poor, no growth, no new ideas, and lethargy will prevail in the system. In such
situation, the manager should be replaced.

Non-Complimentary Transactions
Non-Complimentary transactions are those transactions which a sender sends the message on the basis
of his ego state, but the response is from an incompatible ego state on the part of receiver. Such
behaviour occur when stimulus and response is not parallel. Following figure depicts non-
complimentary transaction.

Life Positions
Child develops life philosophy by experience. As child grows he tries to develop philosophy for itself
based on self-identity, sense of worth and an ability to perceive people in the right sense. Harris
identified life positions where individual knows about himself and the perception of people about him.
Transactional analysis constructs the following four life positions.
(a) I am Okay you are Okay.
(b) I am Okay you are not Okay.
(c) I am not Okay you are Okay.
(d) I am not Okay you are not Okay
1. I am Okay your Okay (C)
This is an ideal life position because this position is rationally chosen one. In this position individual
behaves rationally and accept significance of others. People feel happy and life is worth living.
Individual with this life position expresses confidence in his subordinates, work with high level of
delegation of authority, and believes in give and take. Manages enjoys good communication network,
work with confidence and there is work sharing and positive attitude towards work. People remain
happy and have high level of job satisfaction. People work with adult ego state. There is no conflict
situation and there is total understanding among subordinates and peer group. This is an Ideal life
position.
2. I am Okay, you are not okay (B)
This is distrustful psychological life position taken by individual who feel that others are wrong. They
blame others for their failure. People who have been neglected by parents in their childhood take this
position. They generally operate from rebellion child ego state that feel victimized and blame others
for their miseries. Mangers lack trust, confidence in the intellectual level, skills and talent in their
subordinates and do not believe in delegation of authority. They perceive delegation as threat to their
personal existence. Managers are critical, oppressive and point out flaws in the working of
subordinates. They operate from critical parent ego state and rarely give positive remarks. They feel
their workers lazy, irresponsible and find them as stated in theory X of Mc Gregor. Expresses bossing
attitude.
3. I am not okay, you are okay (D)
This life position is common to persons who feel powerless in comparison to others. Persons in this
life position always grumble and feel at the mercy of others. They have tendency to withdraw and at
times experience depression that may lead to suicide in extreme cases. People with this life position
operate from child ego state. Managers tend to give and receive bad feelings. They are unpredictable
and display erratic behaviours. It is not a good life position. People are diffident in this life position.
4. I am not okay, you are not okay (A)
This is the worst life position in which individual feel defeated and sees whole world as miserable. It
is a desperate life position where people lose interest in living. In extreme cases people commit
suicide or homicide.

How various life positions help in transactional analysis?

Following are various life positions:
(a) I am Okay you are Okay.
(b) I am Okay you are not Okay.
(c) I am not Okay you are Okay.
(d) I am not Okay you are not Okay
As person, one doesn't stay in one position all the time, but keeps on shifting between positions.
Although, we may have a default position due to childhood circumstances, we also have a choice of
using our Adult ego state to stay in "I am ok, you are ok" . By staying in "I am ok you are ok" we
invite the best possible outcome, because we are expecting good things to happen and for other people
to be reliable and trustworthy.
The "I am ok you are ok" position is the one which correlates with a secure attachment pattern, the
others all expect abandonment, attack or rejection. If you do relate to your employee or group member
either generally or when things get tough, e.g. during arguments or absences, from a position that isn't
"I am ok, you are ok" you are expecting to get hurt.
It is important that you find a way to relate from an "I am ok you are ok" position as much as possible
to your subordinate and that he or she relates in the same way to you.Only then are you in a place
where you can trust and respect yourself and the other person and you can be secure in knowing that
you both are committed to working things out together when things get tough.
During our childhood , one of the positions is opted. For most people, first position persists but some
unfortunately lands up in second or third. A basic difference exists between first three and last
position. While the first three positions are a matter of circumstances (majorly the parents), the
position is a matter of choice. The first three are the unconsciously adopted based on feelings but the
last one is based on the conscious and verbal decision based on thought, faith and the wager of action.
Since first

three positions are based on experience of infancy, it is important to understand the birth and strokes
which lead to these positions.
Stroking
Stroking is an important aspect of transactional analysis. Stroking is an act of implying recognition to
other person. Stroking is recognition that a person gives to his subordinates for good work done or
even bad work done. Lack of stroking has an adverse psychological and physiological effect on
individual. Stroking is a basic unit of motivation that can be seen from the following
(a) The quantity and the quality of strokes serve as either positive or negative motivation for
employees.
(b) Good share of psychological satisfaction we get from work is from strokes available from other
persons.
(c) We get strokes from the work itself.
There are positive and negative strokes. Positive strokes are recognition, pat on the back and affection
shown by superiors, who make subordinate feel okay. It is the recognition of the work that employees
get boost to do even better. Negative strokes on the other hand are the feeling “you are not okay”
conveyed by superiors by way of criticism, hating and by scolding for the job not done well.

UNIT IV

Syllabus: Motivation:, Theory of Motivation: Maslow’s, Herzberg’s, McClelland, Contemporary

theories of Motivation: Self Determination Theory, Self Efficacy Theory, Vroom’s Expectancy Theory,
Equity Theory, Reinforcement Theory, Meaning of Perception, process, Behavioral applications of
perception. Case Studies

Motivation
Motivation is defined as “inner burning passion caused by need, wants and desire which propels
an individual to exert his physical and mental energy to achieve desired objectives”.
Importance of Motivation
(a) High level of performance: It is the duty of every manager to ensure that the employees have a
high degree of motivation. He should offer monetary and non-monetary incentives. Highly motivated
workers would be regular for work, and have a sense of belonging for the organization. Quality of
product will be improved, wastage will be minimum and there will be increase in productivity, and
performance level will be high.
(b) Low employee turnover and absenteeism. Employee turnover and absenteeism is caused due to
low level of motivation on the part of managers. When dissatisfaction is increased employees do not
enjoy the work assigned to them. Therefore there is a tendency of absenteeism. The workers hunt for
an alternative job and leave the organization whenever they get an opportunity. High level of
absenteeism causes low level of production, wastages, poor quality and disruption in production
schedules. Increased turnover is disastrous for any organization as it puts strain on financial position
of the organization due to additional recruitment, selection, training and development. Motivation is
therefore a very important management tool to achieve organizational excellence.
(c) Acceptance of organization change. Management must continuously scan the external and the
internal environment. There has been a great impact of. Social change and technology evolution on
the motivation level of employees. Social change increases aspirations of workers and put an
additional demand on the organization, which must be considered positively so that conducing
working environment is created. Technical innovation, better working conditions, better R & D
facilities, encouragement to employees and existence of better personal policies should be part of any
organization. This will facilitate retention of employees. Management must ensure that the changes
are introduced in the organization and its benefits explained to the employees so that there is no
resistance to change and organizational growth is achieved. Re-engineering processes will go a long
way to boost employee morale and achieve high degree of motivation.
(d) Organizational image: Employees are the mirrors of any organization. Managers must lay down
high performance standards coupled with high monetary and nonmonetary rewards. Training &
development programmes should be regularly organized and employee skill improved. It will have a
positive impact on the employees and the image of the organization will be improved. It will also
reduce employee turnover and better employee will look forward to join the organization. High
organizational image will contribute towards brand image of the product and services the organization
is marketing.

TRADITIONAL/ EARLY THEOREIS OF MOTIVATION

1. Maslow’s Hierarchy of Needs Abraham Maslow formulated one of the most popular theories of
human motivation. Maslow’s theory is based on the following propositions.
1. The needs are arranged in a hierarchy of importance, ranging from the lowest need
to highest need level
2. All needs are never fully satisfied
3. Once a need is fairly well satisfied, it no longer motivates behaviour
4. The needs are interdependent and overlapping
Maslow’s theory of motivation explains five levels of needs.
Physiological Needs
The need for food, water and others, which are basic to human survival, are called physiological
needs. At work level, this need can be met through by providing good working conditions, attractive
wage or salary, subsidized housing, free catering etc.
Safety Needs
The safety needs include the need for freedom from threat caused by the environment,animals and
people. It also includes the need for shelter, security and peace. At work level, this need can be met by
providing private health insurance cover, attractive pension provisions, safe working conditions etc.
Love and Belonging Needs
These needs cover the need of relationships, affection, giving and receiving love and sense of
belonging. The manager can provide the following facilities to take care of these needs: company
sports and social clubs, office parties, barbeques, outings, permission for informal activities, and
encouraging open communication
Self Esteem Needs
It is also known as ego needs, which fulfil the need for strength, achievement, recognition,
appreciation, respect and prestige. The managers can provide regular positive feedback, prestigious
job titles, photographs in company newsletter, promotions etc.
Self-actualization Needs
These are the need for full development of one’s potential. Challenging job assignments, discretion
over work activities, promotion opportunities and encouraging creativity can fulfil these needs.
In terms of motivation, Maslow argued that each level in the hierarchy must be substantially satisfied
before the next level is activated, and that once a need is fully satisfied, it may not motivate people.
The next level in the hierarchy will be dominant only after the fulfilment satisfaction level. This
theory has a lot of implication for managers. As a manager if you want to motivate an employee, first
try to understand what level that person is on in the hierarchy and focus on satisfying those needs at or
just above the level.
Maslow’s framework:
It is based on three fundamental assumptions
1. Individuals are goals oriented whose needs can influence their behaviour. Only unsatisfied needs
can influence behaviour; satisfied needs do not act as motivator
2. A person’s needs are arranged in an order of importance, or hierarchy, from the basic (eg. Food and
shelter) the complex (eg. Ego and achievement)
3. The person advances to the next level of the hierarchy, or from basic to complex needs, only when
the lower need is at least minimally satisfied. That is, the individual worker will first focus on
satisfying a need for safe working conditions before motivated behaviour is directed toward satisfying
a need for achieving the
successful accomplishment of a task.
Implications of Maslow’s Hierarchy of Needs Theory
This model helps the managers to understand and deal with issues of employee motivation at the
workplace. This model can be applied to motivate people at all levels in the organization. Managers
who understand the need patterns of their staff can help the employees to engage in the kinds of work
activities and provide the types of work environment that will satisfy their needs at work. For
instance, the employees love and belonging needs can be fully satisfied by organizing yearly dinner
and dance program, office week end parties, creating recreation clubs or social clubs etc. Fortunately,
the workplace has the potential to offer need gratification for several different types of needs, and
mangers can motivate employees by giving appropriate organizational support which will gratify
individual’s needs. Thus, despite its drawbacks, Maslow’s theory offers managers a good technique
on understanding the motives or needs of individuals and how to motivate organizational members.

2.Herzberg Two-Factor Theory of Motivation

Herzberg’s two-factor theory of motivation suggests that there are two sets of factors which either led
to job satisfaction or dissatisfaction. They are Motivating factors and Hygiene factors.
Herzberg classified these job factors into two categories-
(a) Motivational Factors: There is a set of job conditions, which operates primarily to build strong
motivation and job satisfaction. These factors are called motivational factors. They are intrinsic in
nature and help increase one’s output. These factors have positive effect on morale, productivity, and
job satisfaction and over all efficiency of the organization.
These factors are as under:
Achievement
Advancement
Possibility of Growth
Recognition.
Work Itself
Responsibility
(b) Maintenance Factors: There are some job conditions which operate primarily to dissatisfy
employees when these conditions are absent. These factors are also called hygiene factors. When
these factors are present they do not motivate in a strong way, when absent they dis-satisfy, That is
why these factors are called dissatisfiers. These factors are.
• Company Policy and administration.
• Technical supervision.
• Interpersonal relationship with superiors.
• Interpersonal relationship with peers.
• Interpersonal relationship with subordinates.
• Salary.
• Job security.
• Personal Life.
• Working condition.
• Status.
Above factors are not an intrinsic part of a job. They prevent losses due to work restrictions. These
factors are necessary to maintain a reasonable degree of satisfaction of employees. As stated earlier
they are demotivators if they are not present. For example minimum level of working conditions must
be maintained by the organization to ensure that minimum level of satisfaction exists. If working
conditions are poor, the employees will be dissatisfied and it would have adverse effect on goal
achievement. Potency of various factors does not increase the motivational level. It is influenced by
personality and characteristics of individual employee. Herzberg has identified that employees are
either maintenance seekers or motivation seekers.
Implications for Managers:
In order to motivate employees, the managers must ensure to provide the hygiene factors and then
follow the motivating factors. Hertzberg’s motivation-hygiene theory proposes that intrinsic factors
are related to job satisfaction and motivation, whereas extrinsic factors are associated with job
dissatisfaction. According to Herzberg, the factors that led to job satisfaction were separate and
distinct from those that led to job dissatisfaction. Therefore, manages who sought to eliminate factors
that created job dissatisfaction could bring about workplace harmony but not necessarily motivation.
Because they do not motivate employees, the extrinsic factors that create job dissatisfaction were
called hygiene factors. When these factors are adequate, people will not be dissatisfied; but at the
same time they may not be fully satisfied. They will be in neutral state. If we want to motivate people
on their jobs, it is suggested to give much importance on those job content factors such as
opportunities for personal growth, recognition, responsibility, and achievement. These are the
characteristics that people find intrinsically rewarding.

Difference between Maslow’s & Herzberg’s theory

Issue Maslow’s Model Herzberg’s Model
Order of needs Hierarchical arrangement of No such hierarchical
needs. arrangement.
Emphasis Descriptive. Prescriptive
Essence of theory Unsatisfied needs energize Gratified needs cause
behavior; this behavior causes performance.
performance.
Motivator Any need can be a motivator if Only higher order needs serve
it is relatively unsatisfied. as motivators.
Applicability Takes a general view of the Takes a micro-view and deals
 motivational problems of all with work oriented
workers. motivational problems of
professional workers
Factors The existence of some factors The positive and negative
creates positive attitude and factors are completely
their non-existence creates
negative attitude.

Alderfer’s ERG Theory

ERG theory groups human needs into three broad categories: existence, relatedness, and growth.
Existence needs correspond to Maslow’s physiological and safety needs.
Relatedness needs refer mainly to Maslow’s belongingness needs.
Growth needs correspond to Maslow’s esteem and self-actualization needs

Similarities to Maslow's Hierarchy

Studies had shown that the middle levels of Maslow's hierarchy have some overlap; Alderfer
addressed this issue by reducing the number of levels to three. The ERG needs can be mapped to
those of Maslow's theory as follows:
Existence: Physiological and safety needs
Relatedness: Social and external esteem needs
Growth: Self-actualization and internal esteem needs
Like Maslow's model, the ERG theory is hierarchical - existence needs have priority over relatedness
needs, which have priority over growth.

Differences from Maslow's Hierarchy

In addition to the reduction in the number of levels, the ERG theory differs from Maslow's in the
following three ways:
Unlike Maslow's hierarchy, the ERG theory allows for different levels of needs to be pursued
simultaneously.
The ERG theory allows the order of the needs be different for different people.
The ERG theory acknowledges that if a higher level need remains unfulfilled, the person may regress
to lower level needs that appear easier to satisfy. This is known as the frustration-regression principle.
Thus, while the ERG theory presents a model of progressive needs, the hierarchical aspect is not rigid.
This flexibility allows the ERG theory to account for a wider range of observed behaviors.
.
3. McGregor’s Theory X and Theory Y
McGregor’s theory is based on how a manager feels about human nature. In general, people tend to
have either positive or negative assumptions about human nature. Based on these assumptions,
McGregor proposed two sets of theories as Theory X (negative assumptions) and Theory Y (positive
assumptions).
Theory X
Theory X represents the traditional approach to managing and is characterized by the following basic
assumption about human beings.
1. The average human being has an inherent dislike of work and will avoid it if he can. Because
of human characteristic of dislike of work, most people must be coerced, controlled, directed,
and threatened with punishment to get them to put forth adequate effort towards the
achievement of organizational objectives.
2. The average human being prefers to be directed, wishes to avoid responsibility, has relatively
little ambition, and wants security above all.
3. Once the team leaders tend to have the above-mentioned negative assumptions about their
members, consequently, they will adopt the following strategies to influence them.
4. Control measures or strict supervision are properly exercised to get results from them
5. Such control can be achieved by the appropriate use of rewards and punishment.
Implications of X Theory:
The implication for a manger working in an organization with these premises is that the group will be
strictly controlled and supervised. Decisions will be made largely by the manager and communicated
in writing or verbally in a formal situation. Members of the group will rarely be involved in
determining their own tasks. Theory X usually operates in traditional, highly centralized
organizations.
Theory Y
Theory Y is more people oriented. It refers to Maslow’s hierarchy of needs, particularly the higher-
order needs and the motivation to fill these needs at work. It is based on the following assumptions.
The following are some of the assumptions of Theory Y.
1. The expenditure of physical and mental effort is as natural as play or rest.
2. External control and threat of punishment are not the only means for bringing about effort
toward organizational objectives. People will exercise self-direction and self-control in the
services of objectives to which they are committed.
3. Commitment to objectives is a function of rewards associated with their achievement.
4. The average human beings learn, under proper condition, not only to accept but to seek
responsibility.
5. The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in
the solution of organizational problems is widely, not narrowly, distributed in the population.
6. Under the conditions of modern industrial life, the intellectual potentialities of the average
human being are only partially utilized.
Implications of Y Theory:
Leaders operating under these assumptions will be more likely to consult the group, encourage
members to contribute to decision making and work without strict supervision. Communication
between the group and the leader will be two of the members of the group. The acceptance of the
Theory Y approach, with its tenets of participation and concern for worker morale, encouraged
managers to begin practicing such activities as
i)delegating authority for many decision, ii) enlarging and enriching jobs of workers by making them
less repetitive, iii) increasing the variety of activities and responsibilities and iv) improving the free
flow of communication within the organization.
CONTEMPORARY THEORIES OF MOTIVATION
1. EQUITY Theory: Equity theory, most popularly known as equity theory of motivation, was first
developed by John Stacey Adams, a workplace and behavioural psychologist, in 1963. Adams
proposes equity theory of motivation based on the proposition that every one tend to compare the ratio
of his/her input and out come with input-outcome ratio of other person. The comparison process is
highly inevitable. The reference person or comparison person will always be in the same group, class,
age, category etc. For example, a manager will always compare himself/herself with other fellow
manages. In the comparison process, if a person feels that his ratio of input-outcome is more or less
equal to that of his comparison person’s ratio of input-outcome, a state of equity exists. Then he
perceives the situation as just and fair. If a person perceives the ratio as unequal, he will experience
inequity that will lead to tension and stress. Inequity exists under two conditions: 1. the person feels a
negative inequity, when he has been rewarded less for his efforts than another and 2. The person
experiences a positive inequity, when he finds himself rewarded more than another for a similar
degree of effort. Both kinds’ of inequities produce cognitive dissonance or internal tensions and
propel people to action in order to reduce the dissonance.
Implications of Equity Theory:
Equity theory sensitizes managers to the fact that individuals often make equity comparisons and that
sometimes the rewards given by managers may have consequences which might be reflected in
subordinates’ behaviours. This is especially true when visible rewards such as promotions, pay
increases and bonuses are given to employees.
Managers must anticipate when the employees experience inequities and try to adjust the behaviour in
such a way by communicating the performance appraisal process to their employees. The proper
explanation of how the performance appraisal process is being carried out must be explained to all the
employees. Further, the types of rewards dispensed and creating a well established system which
takes care of the anomalies in the reward systems are essential in maintaining inequity in the
organization. . Felt inequities Managers should consider openly sharing information on how allocation
decisions are made, following consistent and unbiased procedures and engaging in similar practices to
increase the perception of procedural justice. By increasing the perception of procedural
fairness, employees are likely to view their bosses and the organization as positive even if they have
dissatisfied with pay, promotions and other outcomes.

2.EXPECTANCY/VROOM’s THEORY- Vroom has propagated Expectancy Theory based on

employee expectancy. He believes that employee is motivated to exert high level of efforts when he
believes that efforts will lead to good performance and therefore organizational rewards that will
satisfy achievement of personal goals. The focus of the theory has three elements.
(a) Efforts - Performance relationship. It is related to the probability perceived by individual that
exerting a given amount of efforts will lead to performance (Expectancy).
(b) Performance - Reward Relationship. The degree to which the individual believes that
performing a particular level will lead to attainment of desired outcome (Instrumentality).
(c) Reward-personal goal relationship. The degree to which an organizational reward will satisfy
individual needs and its attractiveness for the individual (Valence).
Expectancy II (Instrumentality) Performance Reward Relationship
Implications of Vroom Expectancy Model
If the employees feel that the rewards are not so attractive to fulfil his goals, he or she may not put
much effort in his or her work. For example, the employee works hard in the hope of getting a
promotion but gets a pay rise instead which he is not interested in will make him demotivated. Or the
employee wants a more interesting and challenging job but receives only a few words of praise. It is
desirable to assess what attracts employees in their work. But some managers incorrectly assume that
all employees want the same thing, thus overlooking the motivational effects of differentiating
rewards

3.GOAL SETTING THEORY Locke proposed that intentions to work towards a goal are major
source of work motivation. The goals facilitate employees what needs to be done and how much effort
will need to be put forth in their tasks. The evidence shows the work values and goals will determine
strongly the performance of an individual. Actual work behaviour then becomes a function of values
and goals set by the individual. The manager can motivate employees between goals which jointly
decided by both.
Key components of the Goal-Setting Theory include:
Goal specificity: Goals should be clear, specific, and well-defined. Vague or general goals are less
motivating because they lack clarity.
Goal difficulty: Goals should be challenging but achievable. Setting overly difficult goals may lead to
frustration and a sense of failure, while setting goals that are too easy may not provide sufficient
motivation.
Goal acceptance: For goals to be effective, individuals must accept and be committed to achieving
them. This commitment increases the likelihood of sustained effort and perseverance.
Feedback: Regular feedback on progress toward goal achievement is crucial. Feedback helps
individuals adjust their effort, strategies, and behaviors to stay on track toward reaching the goal.
Task complexity: The complexity of the task can influence the effectiveness of goal setting. For
simpler tasks, setting specific goals may be more beneficial, while complex tasks may require a
combination of specific and general goals.

The key mechanisms through which goal setting influences performance include:
Direction: Goals provide a clear direction for action, guiding individuals on what needs to be
accomplished.
Intensity: Goals energize individuals and increase their effort to meet the specified objectives.
Persistence: Goals encourage persistence and sustained effort over time, especially when individuals
face challenges or setbacks.
Implications of Goal Setting Theory:
The success of goal setting as a motivational technique is largely a function of designing the goals
with all four characteristics. Goal setting is a powerful motivator and can be used even in service
organizations where the output is not easily quantifiable. Goals can be set in such organizations in
terms of servicing time, customer complaints, customer satisfaction levels, and other factors as would
be appropriate to the managerial responsibilities at hand

4. McClelands THREE – NEEDS THEORY

McClelland proposed three types of needs common in work life. They are Need for Achievement,
Need for Power and Need for Affiliation.
Need for Achievement:
This refers to the drive to excel, to achieve in relation to a set of standards and to strive to succeed.
People with a high need for achievement are striving for personal achievement rather than for
trappings and rewards of success. They have a desire to do something better or more efficiently than it
has been done before. They prefer jobs that offer personal responsibility for finding solutions to
problems, in which they can, received rapid and unambiguous feedback on their performance in order
to tell whether they are improving or not and in which they can set moderately challenging goals.
Implications for Need for Achievement Theory:
Too little challenge will bore them since there is no opportunity to satisfy their urge to achieve, and
too much challenge would mean that the job is difficult and hence will induce the fear of failure in
them. Since their need for achievement and accomplishment are high, high Need for Achievement
individuals will not try to work on jobs that are so challenging that successful task accomplishment
become doubtful. Also, high achievers avoid very easy or very difficult tasks instead they show
willingness to take a moderate level of difficulty which will have much challenge in accomplishing
them. They like to set goals that require stretching themselves a bit.
Need for Power:
This refers to the need to make others behave in a way that they would not have behaved otherwise.
Individuals high in Need for Power enjoy being ‘in-charge’, strive for influence over others, and
prefer to be in competitive and status oriented situations. McClelland distinguished two types of
power – Personal Power and Institutional Power. Individuals high in personal power like to inspire
subordinates and expect that latter to respect and obey them. Such behaviours gratify their own need
for power in a personal sense. Managers, who are high in institutional power, tend to exert authority
and influence so as to achieve the goals of the organization rather than to gain any personal ego
satisfaction. McClelland describes the institutional power managers as “organization minded” and
getting things done in the interest of the organization. That is, the institutional power manager
exercises power in the interests and welfare of the organization. Institutional power managers are said
to be very effective since they are willing to somewhat sacrifice their own interests for the
organization’s overall wellbeing. McClelland feels that institutional or social power is good for the
organization and personal power is detrimental to the overall interests of the organization.
Implications for Need for Power:
Persons with high need for power would naturally be turned on by holding positions of authority and
influence in the organization. They like to take charge and be in control of situations. Placing such
individuals in high level positions will help them to gratify their own needs as well as get many of the
organization’s policies and orders followed and carried out by employees.
Need for Affiliation:
This refers to the desire for friendly and close interpersonal relationships. Individuals high in Need for
Affiliation like to interact with colleagues in the organization. They have a strong desire for approval
and reassurance from others and they are willing to conform to the norms of groups to which they
belong. In effect, they have needs to develop affinity and warm relationships with people in the work
system. They are usually gregarious by nature and like to work with others in a friendly atmosphere.
Team work, co-operative efforts, and joint problem-solving sessions, and committee assignments are
all suited for those high in Need for Affiliation.
Implications for Need for Affiliation:
People high in need for affiliation are said to perform better in their jobs when they are given
supportive feedback. Thus, friendly managers and supervisors can influence individuals high in Need
for Affiliation and motivate them to work harder.
Self Determination Theory
Self-Determination Theory (SDT) was developed by researchers Edward L. Deci and Richard M.
Ryan. This theory concerns with human motivation, personality and optimal functioning. Rather than
just the amount of motivation, self-determination theory focuses on different types of motivation
The assumption is that people have three basic psychological needs: competence, relatedness, and
autonomy.
First, the need for competence means the desire to control and master the environment and outcome.
We want to know how things will turn out and what the results are of our actions.Controlled
motivation involves doing a task with a sense of pressure, demand, or coercion. It comprises two
subtypes of extrinsic motivation that have not been well internalized:
(1) external motivation, which means doing the activity in order to receive a reward or avoid a
punishment
(2) introjected motivation, which results from partial internalization of the extrinsic contingencies and
involves doing an activity because the person would feel approved of for doing it, or guilty and
unworthy for not.
Example A boy is externally motivated when he does his homework because his parents pay him for
doing it; a girl's motivation is introjected when she takes calculus because she thinks she should and
would be ashamed of herself if she did not.

Second, the need for relatedness deals with the desire to “interact with, be connected to, and
experience caring for other people”. Our actions and daily activities involve other people and through
this we seek the feeling of belongingness.

Thirdly, the need for autonomy concerns with the urge to be causal agents and to act in harmony with
our integrated self. Deci and Ryan stated that to be autonomous does not mean to be independent. It
means having a sense of free will when doing something or acting out of our own interests and
values.self-determination theory three needs
Autonomous motivation involves engaging in an activity with eagerness and volition, with a sense of
choice and willingness. It is made up of two subtypes:
(1) intrinsic motivation, which means doing a task because it is interesting and spontaneously
satisfying
(2) identified motivation, which is a well internalized form of extrinsic motivation and involves doing
the task because it feels personally important.
A girl is intrinsically motivated when she takes a music class just because it is fun and challenging; a
boy's motivation is identified when he studies biology because he is deeply committed to becoming a
doctor.
Implications of SDT
Leaders who put SDT into practice create conditions in the work environment that aim to optimize
employee motivation through 2 ways: autonomous, motivation that is doing a job because it’s
intrinsically consistent with the employee’s values, and controlled motivation, that is doing a job
because the employee feels pressured by other forces to do it.
Studies have also shown that the type of motivation that employees have matters more than how much
motivation they have when leaders are trying to predict how an employee will be performing.
Rewards are extrinsic motivators, but it does not mean that it is harmful. It can be used appropriately
without undermining intrinsic motivation. Rewards shouldn’t be used to control others or make
employees dependent on external rewards.
Autonomous motivation should be the key factor to find in promoting SDT, as it more likely increases
flexible thinking, high-quality learning, and problem solving Employees also have great work
satisfaction when fostering their intrinsic motivation.
Self-Efficacy Theory
Psychologist Albert Bandura defined self-efficacy as an individual's belief that he or she will be able
to accomplish a specific task. He believed that an essential component to accomplishing something is
our confidence that we can. Bandura referred to self-efficacy as the mind's self-regulatory function; it
tells us when to try and when to stop. If you do not believe something is possible, you are less likely
to attempt the task and more likely to give up early if you do.
Self-efficacy drives your motivation; just as you have different degrees of motivation depending on
the task, so also do you have different levels of self-efficacy.
There are four sources for self-efficacy:
1. Mastery: Bandura believed that the best way to develop self-efficacy toward a particular task
was through mastery of the subject. Success leads toward additional successes, and failure can
cast doubt on the outcome of future attempts. When you succeed at something, you are more
likely to attempt it again.
2. Modeling: Knowing that a task is doable is key to successfully completing it. Most people are
unlikely to undertake activities they believe are impossible. Seeing others similar to yourself
succeed reinforces the belief that you can also accomplish the same task.
3. Persuasion: Receiving positive feedback about something is a great source of persuasion and
therefore builds self efficacy. When someone tells you that you have done a good job, you are
likely to remember the praise and repeat the activity in the future.
4. Physiological Factors: Receiving negative feedback has great affect on lowering self efficacy.

Implications of Self-Efficacy in the Workplace

Selection/Promotion Decisions
Organizations should select individuals who have high levels of self-efficacy. These people will be
motivated to engage in the behaviors that will help them perform well in the workplace. A measure of
self-efficacy can be administered during the hiring/promotion process.
Training and Development
Organizations should consider employee levels of self-efficacy when choosing among candidates for
training and development programs. If the training budget is limited, then greater return (i.e., job
performance) on training investment can be realized by sending only those employees high in self-
efficacy. These people will tend to learn more from the training and, ultimately, will be more likely to
use that learning to enhance their job performance.
Goal Setting and Performance
Organizations can encourage higher performance goals from employees who have high levels of self-
efficacy. This will lead to higher levels of job performance from employees, which is critical for
many organizations in an era of high competition

Reinforcement Theory
Reinforcement theory of motivation was proposed by BF Skinner and his associates. It states that
individual’s behaviour is a function of its consequences. It is based on “law of effect”, i.e, individual’s
behaviour with positive consequences tends to be repeated, but individual’s behaviour with negative
consequences tends not to be repeated. Reinforcement theory of motivation overlooks the internal
state of individual, i.e., the inner feelings and drives of individuals are ignored by Skinner. This theory
focuses totally on what happens to an individual when he takes some action. Thus, according to
Skinner, the external environment of the organization must be designed effectively and positively so
as to motivate the employee.
The managers use the following methods for controlling the behaviour of the employees:

1. Positive Reinforcement- This implies giving a positive response when an individual shows
positive and required behaviour. For example - Immediately praising an employee for coming early
for job. This will increase probability of outstanding behaviour occurring again. Reward is a positive
reinforce, but not necessarily. If and only if the employees’ behaviour improves, reward can said to be
a positive reinforcer. Positive reinforcement stimulates occurrence of a behaviour. It must be noted
that more spontaneous is the giving of reward, the greater reinforcement value it has.
2. Negative Reinforcement- This implies rewarding an employee by removing negative / undesirable
consequences. Both positive and negative reinforcement can be used for increasing desirable /
required behaviour.
3. Punishment- It implies removing positive consequences so as to lower the probability of repeating
undesirable behaviour in future. In other words, punishment means applying undesirable consequence
for showing undesirable behaviour. For instance - Suspending an employee for breaking the
organizational rules. Punishment can be equalized by positive reinforcement from alternative source.
4. Extinction- It implies absence of reinforcements. In other words, extinction implies lowering the
probability of undesired behaviour by removing reward for that kind of behaviour. For instance - if an
employee no longer receives praise and admiration for his good work, he may feel that his behaviour
is generating no fruitful consequence. Extinction may unintentionally lower desirable behaviour.

Implications of Reinforcement Theory

Reinforcement theory explains in detail how an individual learns behaviour. Managers who are
making attempt to motivate the employees must ensure that they do not reward all employees
simultaneously. They must tell the employees what they are not doing correct. They must tell the
employees how they can achieve positive reinforcement.

Motivating a diverse workforce

Understanding motivation requires understanding how to manage diversity. Every employee has his
own background, beliefs, attitudes, values and way of thinking. One might be motivated by financial
rewards, another by perks, still another by job quality. To further complicate matters, motivations
change as employee’s age or change roles. Rather than treat everyone the same or apply broad
assumptions, managers must understand what makes each employee unique and build on those
strengths. Managers should never assume they know what works for everyone. They must pay
attention to what employees say and do, which often reveals an employee's work ethic, drive and
sensibilities.
1. Recognize, Reinforce and Reward: Money and benefits are important factors in attracting and
retaining people, but reward and recognition help meet that basic human need to feel
appreciated and rewarded for what one does. A successful reward and recognition program
does not have to be complicated or involve money to be effective.
2. Involve and Engage the Workforce: People may show up for work, but are they engaged and
productive? People are more committed when there is a process for them to contribute their
ideas and suggestions.
 3. Develop the Potential of Individuals: Many people rate educational and training opportunities
as ‘just as important’ as the money they make. Therefore, it is the responsibility of top
management to see who needs what and accordingly devise the appraisals.

PERCEPTION
Perception can be defined as a process by which individuals select, organize and interpret their
sensory impressions, so as to give meaning to their environment. Perception is a complex cognitive
process and differs from person to person. People's behaviour is influenced by their perception of
reality, rather than the actual reality. In comparison to sensation, perception is a much broader
concept. Sensation involves simply receiving stimuli through sensory organs, whereas the process of
perception involves receiving raw data from the senses and then filtering, modifying or transforming
the data completely through the process of cognition. The processes of perception consist of various
sub processes such as confrontation, registration, interpretation and feedback.
The study of perception is very important in the organization because it is necessary for the manager
to perceive individuals correctly irrespective of their status and perceive each of the situation as close
to the real fact or as it exists by interpreting the sensory reflects in correct way. Sensation and
perception are complex phenomenon. Perception is outcome of sensation and is much broader in its
nature. Perception involves observing data, selecting, and organizing the data based on sensory
reflects and interpreting the same as per personality attributes of the perceiver. That is why no two
individuals can perceive an employee in the same manner, for one he may be efficient while for the
other he may be perceived as useless The various principles of perceptual organization consist of
figure-ground, perceptual grouping, perceptual constancy, perceptual context and perceptual defence.
Features of Perception
1. Perception is the intellectual process: through which a person selects the data from the
environment, organisess it and obtains meaning from it. The physical process of obtaining
data from environment known as sensation ,is distinct from it.
2. Perception is the basic cognitive or psychological process: The manner in which a person
perceives the environment affects his behaviour. Thus, people’s actions, emotions, thoughts,
or feelings are triggered by the perception of their surroundings.
3. Perception , being an intellectual and psychological process, becomes a subjective process
and different people may perceive the same environmental event differently based on what
particular aspects of the situation they choose to absorb, how they organise this information,
and the manner in which they interpret it to obtain the grasp of the situation.
Perceptual Selectivity
Though people are exposed to several stimuli , they tend to select only a few at a given point of time,
this is perceptual selectivity.
Subliminal Perception : when the stimuli is so subtle that an individual may not even be conscious
that he is exposed to some stimulus
INPUT OUTPUT APPROACH OF PERCEPTUAL PROCESS
Perception is a process consisting of several sub-processes. We can take an input-throughput-output
approach to understand the dynamics of the perceptual process. This approach emphasizes that there
is input, which is processed and gives output. The stimuli in the environment - subjects, events, or
people - can be considered as the perceptual inputs. The actual transformation of these inputs through
the perceptual mechanisms of selection, organization, and interpretation can be treated as the
throughputs , and the resultant opinions, feelings, attitudes, etc, which ultimately influence our
behavior, can be viewed as the perceptual outputs. The whole perceptual process can be presented as
follows:
1) Perceptual input/stimuli: the first process in the perceptual processes is the presence of stimuli like
people, objects, events, information etc. though the presence of stimulus is necessary for perception; it
is not the actual process of perception. Nevertheless the perception process can not start in the absence
of stimuli.
2) Perceptual mechanism: the actual perception starts with the receipt of information, or data (of
stimuli) from various sources. The receipt of stimuli is a psychological aspect of the perception
process. And most perceptual inputs are received from various sensory inputs. One sees things, hears
them, smells, tastes, or touches them and learns other aspects of the things thus; reception of stimuli is
a physiological aspect of perception process.
3) Selection of stimuli: after receiving the stimuli or data, some are selected for further processing
while others are screened out because it is not possible for a person to select all stimuli for processing
to attach meaning, which he receives from the environment. Two types of factors affect the selection
of stimuli for processing: external factors or factors related to stimuli and internal factors or factors
related to the perceiver. Important eternal factors are intensity of stimulus, its size contrast,
movement, repetition, familiarity, strange characteristics, etc. such features of the stimulus attract the
attention of perceiver more as compared to other stimuli. Internet factors important to selection of
stimuli are the perceiver's self-acceptance, etc. such factors of the perceiver influence his interest or
indifference in the objects being received for prevention. Normally, he will select the objects, which
interest him and will avoid that for which he is indifferent.
4) Organization of stimuli: after the data have been selected, these are organized in some form in
order to make sense out of them. Such organization of stimuli may take the form of figure-ground,
grouping, simplifications, and closure.
I. Figure and ground: people tend to organize information on what is known as the figure ground
principle. This involves that in perceiving stimuli or phenomena, the tendency is to keep certain
phenomena in focus and other phenomena in the background. Figure is perceived to be dominant and
more attention is paid to it. While ground is given less prominence and attention and is kept in the
background.
II. Grouping: in grouping the perceiver groups the various stimuli on the basis of their similarity or
proximity. Thus, all such stimuli, which have been grouped together, are likely to be perceived as
having same characteristics. For example, all the workers may be perceived to have some opinions
about the management because of grouping on the basis of similarity, or all the persons coming from
the same place may be perceived as having same characteristics because of grouping on the basis of
proximity.
III. Simplification: whenever people are overloaded with information, they try to simplify it to make
it more meaningful and understandable. In the process of simplification, the perceiver subtracts less
salient information and concentrates on important one. Simplification makes the things more
understandable because the perceiver has been able to reduce the complexity by eliminating some of
the things, which are less important.
IV. Closer: when faced with incomplete information, people fill up the gaps themselves to make the
information meaningful. This may be some on the basis of past experience, past data, or hunches. For
example, in many advertisements, alphabets are written by putting electric bulls indicating the shape
of the concerned alphabets but broken lines. In such cases, people tend to fill up the gap among
different bulbs to get meaning out of these.
5) Action: the last phase of the perceptual process is that of acting in relation to what has been
perceived. This is the output aspect of perceptual process. The action may be overt. The covert action
may be in the form of change in attitudes, opinions, feelings, values, and impression formation
resulting from the perceptual inputs and throughputs. The overt action may be in the form of behavior
easily visible.
Therefore, to sum up we can say that there are five stages in Perceptual Process:
Five Stages in Perceptual Process:
Stage I: Observation Phase – It depicts the environmental stimuli being observed by the five senses
of the perceived
Stage II: Selection of the Stimuli: This is governed both by factors external to the perceived, such as
the characteristics of the stimulus, and internal to the individual, such as the personality disposition
and motivations of the perceiver.
Stage III: Organizing Stage – In this stage, the perceiver is influenced by figure and ground,
grouping, and several perceptual errors such as stereotyping halo effects, projection and perceptual
defence.
Stage IV: Interpretation Stage: This stage is governed by the perceiver’s assumptions of people and
events and attributions about causes of behaviour and feelings.
Stage V: Behaviour Response: In this stage the response of the perceiver takes on both covert and
overt characteristics. Covert response will be reflected in the attitudes, motives, and feelings of the
perceiver and overt responses will be reflected in the actions of the individual.

Factors Influencing Perception: Following three factors influence the perception

Several factors influence how we process the perceptual inputs and transform them into
outputs. There are three broad categories: Characteristics of Perceiver, Characteristics of
Target, and Characteristics of Situation.
Characteristics of Perceiver:
A person’s needs and motives, self-concept, past experience, emotional state, and personality aspects
strongly influence the perceptual process.
Needs and Motives: Unsatisfied needs or motives stimulate individuals and may exert a strong
influence on their perception. For examples, two groups of subjects – One group who is deprived of
food for about 24 hours and the other group which had food enough were shown the blurred pictures
and asked to explain the contents. The first group perceived the blurred image as food far more
frequently than the other group. People needs and motives thus play a big part in the perceptual
process.
Self Concept: It refers how a person perceives himself/herself which in turn influence his or her
perception of the world around them. If a person perceives himself as incompetent, then he perceives
the world as threatening. On the other hand, if he feels himself as confident and capable, he will
perceive everything around as friendly.
Attitudes: The preferences and likingness affects ones perception. A lecturer, who likes bigger class,
feels comfortable in a lecture session which has more than hundred students. Another lecturer, who
likes small class with a lot of questions, may not be so comfortable in such big classes.
Interests: Individual’s focus of attention is also influenced by the interests of people. A plastic
surgeon will more likely to notice an imperfect nose than a plumber. Because of our individual
interests differ considerably, what one person notices in a situation, can differ from what other person
perceives.
Past experiences: Individuals past experiences also influence in moulding ones perception. For
example if one has had problem responding to examination questions in the past, he or she will tend to
perceive even simple, straightforward examination question as tricky. Likewise, if a person was
betrayed by a couple of friends, he or she would never venture to cultivate new friendship in future.
Psychological or Emotional State: If an individual is depressed, he or she is likely to perceive the
same situation differently from the other person who is at the extreme level of excitement or
happiness. If a person has been scared of seeing a snake in the garden, she is likely to perceive a rope
under the bed as a snake. Thus, the emotional and psychological states of an individual also influence
the perceptual process and the different types of interpretation of the situation.
Expectation: Expectations can also distort the perceptual process. If a person expects police officers
to be more authoritative and dictatorial, he or she may perceive them as if they are rough and tough
regardless of the Police Officers actual traits.
New Experience: If a person experiences something new, that is more likely to grab attention than the
objects or events that has been experienced before. For example, a person is more likely to notice the
operations along an assembly line if this is first time that person has seen an assembly line. In 1970’s
women police officers are highly visible because traditionally Police Officers positions were
predominantly held by males.
Personality Characteristics: There is a strong relationship between personality factors and
perception. For example, secure people tend to perceive others as warm supportive than those, who
are more cold and indifferent. Similarly, self-accepting persons perceive others as lining and
accepting them. Those who are not self-accepting tend to distrust others. Insecure, thoughtless or
non self-accepting persons are less likely to perceive themselves and those around them accurately. In
all probabilities, they are likely to distort, misinterpret or in other ways defensively perceive the
situation
Characteristics of Target:
The ways things are organized around us are greatly influencing the perceptual process. Some of the
typical characteristics include bright color, noise; novel objects, bigger unusual size, moving objects,
status, appearance, contrast, intensity, repetition etc. catch people attention. For example, an unusual
noise raised by a person, a strong beam of light suddenly flashed, a very handsome, attractive person
among a group of clumsy people, a red light against the black background, an unusually obese person
amidst a group of slim people etc.
Organization of Target: People tend to organize the various parts of elements in the environment as
a meaningful whole. Such organizing activity is a cognitive process and those are based on Gestalt
Principles. The following are the four Gestalt Principles – Figure and Ground, Proximity Similarity,
Closure, Continuation.
Figure and Ground: What a person observes is dependent on how a central figure is being separated
from its background. This implies that the perceived object or person or event stands out distinct
from its background and occupies the cognitive space of the individual. In a dance programme, the
spectators’ tend to perceive the dance performance against the back ground music, backdrop setup etc.
The perceiver thus tends to organize only the information which stands out in the environment which
seems to be significant to the individual.
Proximity: People tend to perceive things, which are nearer to each other, as together as group rather
than separately. If four or five members are standing together, we tend to assume that they are
belonging to same group rather than as separately. As a result of physical proximity, we often put
together objects or events or people as one group even though they are unrelated. Employees in a
particular section are seen as group.
Similarity: Persons, objects or events that are similar to each other also tend to be grouped together.
This organizing mechanism helps us to deal with information in an efficiently way rather than getting
bogged down and confused with too many details. For examples, if we happen to see a group of
foreign nationals at an International seminar, Indians are grouped as one group, British as another,
Americans as yet another based on the similarity of nationalities.
Closure: In many situation, the information what we intend to get may be in bits and pieces and
not fully complete in all respects. However, we tend to fill up the gaps in the missing parts and
making it as meaningful whole. Such mental process of filling up the missing element is called as
closure. For example, while giving promotions to the staff members, the managers will try to get full
information to make an effective decision, in absence of getting complete information, managers try
to make meaningful assumptions and based on that suitable decision will be made.
Characteristics of the Situation:
Change in situation leads to incorrect perception about a person. Time is one factor, which influences
the perception. Time is related to work setting and social setting. A person decked up for party may
not be noticeable but the same dress in office would be noticed distinctly, though the person has not
changed. You would have very frequently heard people say that their manager is different during
working hours and 1800 opposite while in social setting. In fact person is the same but the perceiver
perceives the manager as per business like setup while on work, while the person is observed on a
private or a personal platform when meeting him in the club or at home. What is important to
remember is the perception should be done in a correct manner not to be led due to work setting or
social setting and that the situation is not allowed to perceive wrongly. An object can be identified by
its size, shade, shape, sound it makes and background. It can be distinguished based on its movement.
In darkness it may be identified by its silhouette, for example caravan moving on skyline at the dawn

PERCEPTION THEORIES
Many theories have been developed connecting causes and behaviour. Three are particularly relevant
to organisational behaviour:
1. The Correspondent Inference Theory; The correspondent inference theory describes how an alert
perceiver infers another's intentions and personal dispositions from his or her behaviour. It is a theory
of how we use other people's behaviour as a basic assumption for assessing the stability of their
personalities.
The Correspondent Inference Theory, developed by Edward E. Jones and Keith E. Davis in the 1960s,
is a psychological theory that focuses on how people make attributions about the intentions or
dispositions of others based on their observed behaviors. The theory is particularly concerned with
how individuals infer a person's motives by analyzing the choices they make in a given situation.
This theory is an extension of attribution theory and seeks to explain how observers attribute certain
behaviors to the underlying personality or disposition of the actor.
It has following principles:
Choice of Behavior: According to the theory, people tend to make correspondent inferences when
they observe someone's intentional behavior. Intentional behaviors are those that are freely chosen
and not compelled by external factors.
Social Desirability: The theory suggests that observers are more likely to make correspondent
inferences when the behavior is perceived as socially undesirable or when it goes against the norm.
This is because behaviors that are freely chosen and socially undesirable are seen as more indicative
of the individual's underlying disposition.
Non-common Effects: If a person's behavior leads to specific outcomes that are not commonly
associated with other potential behaviors in the given situation, observers are more likely to make
correspondent inferences. Non-common effects increase the perceived informativeness of the
behavior.
Role of Choice: The theory emphasizes the importance of perceived choice in making correspondent
inferences. If a person freely chooses a behavior that leads to non-common effects, observers are more
likely to attribute that behavior to the individual's dispositional factors.
Situational Constraints: The theory acknowledges that situational constraints can affect the ability to
make correspondent inferences. If a person's behavior is perceived as constrained by external factors,
the observer may be less likely to attribute the behavior to the individual's disposition.
2.The co-variation theory; It states that for a factor to be the cause of behaviour it must be present
when the behaviour occurs and absent when it does not. This principle explains whether behaviour
stems from internal or external causes. In this context people make internal or external inferences
after

gathering three types of information: the perceived stimulus object, other people who could be in a
similar situation and the entire context surrounding the event
3. Attribution Theory
Attribution is the process by which people interpret the perceived causes of behaviour. The initiator of
attribution theory is generally recognised as Heider, who suggests that behavior is determined by a
combination of perceived internal forces and external forces
It has following assumptions:
1. Internal Attribution (Situational Attribution) : Attributing the cause of a behavior to internal factors
such as personality, traits, or motives. For example, if someone succeeds at a task, it may be attributed
to their skills or effort.
External Attribution (Dispositional Attribution): Attributing the cause of a behavior to external factors
such as situational or environmental factors. For example, if someone fails at a task, it may be
attributed to the difficulty of the task or external obstacles.
2. Stability:
Stable Attribution: The cause of behavior is perceived as relatively constant over time.
Unstable Attribution: The cause of behavior is seen as temporary or likely to change.
3. Controllability:
Controllable Attribution: The cause of behavior is perceived as under the individual's control.
Uncontrollable Attribution: The cause of behavior is perceived as outside the individual's control.
4. Consensus:
High Consensus: If many people would behave similarly in a given situation, the cause is attributed to
external factors.
Low Consensus: If few people would behave similarly, the cause is attributed to internal factors.
5.Distinctiveness:
High Distinctiveness: If the behavior is unique to a specific situation, the cause is attributed to
external factors.
Low Distinctiveness: If the behavior is common across different situations, the cause is attributed to
internal factors.

Errors in Perception

There are five types of errors or short-cut methods which are frequently used by the individuals. They
are:
i) Selective Perception
ii) Projection
iii) Stereotyping
iv) Halo Effect
v) Contrast Effect
Selective Perception It is a tendency to observe people selectively and accordingly interpret based on
their interest, background, experience and attitudes. For instance, we are more likely to notice the type
of cars which are similar to ours. In an organization so many things keep happening but different
people will perceive one fact differently based on individuals selectivity in perceiving which is
generally based on his past experience and attitude towards work. It is important that when we read
others, we make a mistake reading with speed and putting seal of what has been selectively seen by a
perceiver. For correct perception an individual must be observed, studied, tried and later perceived
without an individual bias.
Projection: You assume a person based on your own traits and not what he actually possesses. If you
were hard working and dependable you would expect others to be so. When managers engage in
projection, they compromise their ability to respond to individual differences. They tend to see people
as more homogeneous than they really are. Thus, managers should guard themselves against
perceptual biases through projection.
Stereotyping: It is a tendency to judge people based on the perception of the group to which he
belongs. We tend to attribute favorable or unfavorable characteristics to the individual based on upon
widely held generalization about the group. For instance, we perceive that Japanese in general are
hard working, quality conscious and industrious, and based on that we generalize that all Japanese are
like that, but in reality it may not be so.
Halo Effect: Halo effect refers to judging an individual based on single characteristics, such as
intellectual ability, sociability and appearance. Halo effect, whether it is positive or negative, will
distort our perception and block us from actually perceiving the trait that is being judged
Contrast Effect:It is tendency to evaluate a person’s characteristics by just comparing with other
people who happened to acquire higher or lower position on the same characteristics.eg During
selection process, interviewer selects a particular person for a particular job not because he fulfils all
requirements but he is generally selected in relation to the other candidates. Individual selected may
be academically, skill wise, experience wise better than those not selected. So it is a comparative or
contrast phenomenon of perception.

Managerial and behavioural applications of Perception

In general, people tend to judge one another for many purposes, such as appraising performance,
motivational level, attitudes, skills, knowledge etc. These types of judgments will have some
important consequences for the organization.
Stress:
Judging people based on the comparison process will make people tensed. It will have either positive
consequences or negative consequences. If a person is matured enough, he or she will take up this
issue positively and will try to put more effort to meet the expectation or perception of their manager.
Sometimes, the consequences will be very negative leading to absenteeism, illness, low job
satisfaction, poor morale etc. A great deal of stress can be due to the perception, judgments and
expectations that workers and managers have about the workplace. Managers must ensure that the
judgment must lead to positive consequences.
Employment Interview:
Due to perceptual errors in the interview process, the screening of job applicants from not so potential
to potential will not be very effective. There is poor inter-rater agreement on the performance of job
applicants which will perhaps due to interviewer’s subjective feelings, bias, prejudice and cause all
the perceptual errors. In some cases, discrimination in recruitment interviews occur due to the forming
of opinions of interviews based on racial, gender or age stereotypes. Taking due consideration on the
elimination of these errors will significantly help in making effective decision.
Performance Expectation:
Manager’s expectation will have a significant impact on the performance of an employee. If a
manager expects a very good performance from his subordinate and conveys such expectations in all
possible ways to him, that employee will adjust behaviour in such a way by putting more effort in his
work and fulfil the expectation of his manager. Similarly, if a manager expects a very poor or
substandard performance, that concerned employee will
tend to behave in such a way to as to meet those low expectations. Thus, the expectations become
reality. The terms self-fulfilling prophecy has evolved to characterize the fact that people’s
expectations determine their behaviour. Managers must ensure that only positive expectations must be
conveyed to their employees to make them put on more effort to become outstanding employees.
Performance Evaluation:
During the performance appraisal, the managers are subjected to have influenced by various
perceptual errors particularly, halo effect, stereotyping, contrast effect etc. In general, managers use
subjective measures in evaluating employees performance as good or bad based on their overall
perception Due to this, their assessment is found to be faulty leading to severe implications in job
outcomes. In order to avoid such errors, managers need to be trained in evaluation techniques.
Employee Effort:
Assessment of an individual’s effort is purely subjective judgment susceptible to perceptual
distortions and bias. If manager is free from such perceptual errors and his judgment is just and fair,
the employees will put more effort and help the organization to meet its objectives.
Employee Loyalty:
Managers tend to perceive employees differently. If employees are looking for employment outside
the organization, the employees may be labelled as disloyal. If an employee questions top
management decision, he is branded as disloyal, If an employee reports unethical practices of
management to authorities outside the organization, he is branded as disloyal. The assessment of an
employee’s loyalty or commitment is highly subjective judgmental. Due care must be taken to ensure
proper judgment free from such perceptual errors.
 UNIT V
Syllabus: Leadership: What is leadership, types of leaders and leadership styles, traits and qualities
of effective leader, trait theory, LSM – Leadership Situational Model, Team Building, Tuckman Model
of Team Development. Organizational Change: Meaning of organizational change approaches to

managing organizational change, creating a culture for change, implementing the change, Kurt
Lewin Model of change.

LEADERSHIP
Leadership can be defined as influence, that is, the area or process of influencing people so that they
will strive willingly and enthusiastically towards achievement of group goals. Leaders play a critical
role in influencing the work behaviour of others in the system.

Characteristics of Leadership
Every group in the organization has a leader. A successful leader has following characteristics.
1. The ability to use power effectively: A leader inherits power by virtue of his appointment. Known
as the legitimate power apart from the above he achieves willing obedience by using one or more of
power bases like expert power, referent power, reward and coercive power. Line authority also
facilitates to influence subordinate.
2. An ability to comprehend: Human beings have different motivational needs at different times and
situations. The ability to comprehend relates to understanding people, their needs, expectations and
what a leader has been doing to satisfy them. This is a continuous process that gives a leader the
understanding of his subordinates and an ability to explore the situation to his advantage to get the
organizational goal achieved.
3. Ability to inspire: Inspiration is best judged when subordinates work with zeal in hopeless
situation. Leader must identify each individual’s capabilities, skill and inspire them. Inspiration
emanates from a leader who may have charm, an appeal, devotion to duty, which subordinates further
want to enhance them by loyally obeying the leader wilfully. Inspirations also come from charismatic
personality of the leader. Subordinates promote what leader desires.
4. Leadership style: Leadership style is firstly the ability of a leader to act in a manner that will
develop a climate conducive to the response from the led and secondly arouse motivation among the
employees, leader must design and maintain an environment for efficient performance. He should
identify motivational needs, desires of the subordinates and work out a plan that fulfills motivational
needs and aspirations of the employees. Organizations practices must include appropriate reward
system, freedom of action in work environment, recognition, open communication system and very
informal and cordial behaviour pattern among various layers of organizational structure. Leaders must
be participative, face the same problems as his subordinates, work in the identical environment and
not show the signs of tiredness. He must be loyal to his subordinates and follow an appropriate
leadership style taking into consideration the organizational climate and the environment he has to
work. His approach must be reconciliatory.
Leaders lead by virtue of:
1. Power (Autocratic)
2. Knowledge (Intellect)
3. Position
4. Experience
5. Charisma

Some of the Leadership Styles

Psychologist Kurt Lewin, Blake Mouton developed their framework, and it provided the foundation
of many of the approaches that followed afterwards. They gave major styles of leadership:
1. Autocratic leaders: make decisions without consulting their team members, even if their input
would be useful. This can be appropriate when you need to make decisions quickly, when there's no
need for team input, and when team agreement isn't necessary for a successful outcome. However,
this style can be demoralizing, and it can lead to high levels of absenteeism and staff turnover.
2. Democratic leaders make the final decisions, but they include team members in the decision-
making process. They encourage creativity, and people are often highly engaged in projects and
decisions. As a result, team members tend to have high job satisfaction and high productivity. This is
not always an effective style to use, though, when you need to make a quick decision.
3. Laissez-faire Add to My Personal Learning Plan leaders give their team members a lot of freedom
in how they do their work, and how they set their deadlines. They provide support Add to My
Personal Learning Plan with resources and advice if needed, but otherwise they don't get involved.
This autonomy can lead to high job satisfaction, but it can be damaging if team members don't
manage their time well, or if they don't have the knowledge, skills, or self motivation to do their work
effectively. (Laissez-faire leadership can also occur when managers don't have control over their work
and their people.)
4. People-oriented style : focus on organizing, supporting, and developing your team members. This
participatory style encourages good teamwork and creative collaboration.
5. Task-oriented leadership style: focus on getting the job done. You define the work and the roles
required, put structures in place, and plan, organize, and monitor work.

THEORIES OF LEADERSHIP
Following are the theories of Leadership:
1. Trait Theory
2. Behavioural Theories
3. Situational Or Contingency theories
1.Trait Theory of Leadership
Trait theories assume that people inherit certain qualities and traits that make them better suited to
leadership. Trait theories often identify particular personality or behavioural characteristics shared by
leaders. For example, traits like extraversion, self-confidence, and courage are all traits that could
potentially be linked to great leaders.
Some of the significant characteristics of leaders are categorized as follows:
- Physical Characteristics – age, appearance, height, weight
- Social Background – Education, social status, mobility
- Intelligence – Intelligence, ability, judgment, knowledge, decisiveness, fluency of speech
- Personality – Aggressiveness, alertness, dominance, enthusiasm, extroversion, independence,
creativity, personal integrity, self-confidence
- Task-related Characteristics – Achievement drive, drive for responsibility, initiative, persistence,
enterprise, task orientation
- Social Characteristics – Administrative ability, attractiveness, cooperativeness, popularity, prestige,
sociability, interpersonal skill, tack and diplomacy
Not all leaders possess all the traits. Trait theory of leadership gives no guidance as to how much of
any trait a leader should have. The theory is not conclusive. Most of the traits identified in successful
leaders are actually the pattern of behaviour.
2.BEHAVIOURAL THEORIES
The foundation for the style of leadership approach was the belief that effective leaders utilized a
particular style to lead individuals and groups to achieving certain goals, resulting in high productivity
and morale.
There are two prominent styles of leadership such as
i)Task orientation: Task orientation is the emphasis the leader place on getting the job done by such
actions as assigning and organizing the work, making decision, and evaluating performance. The task
concerned leaders are focusing their behaviours on the organizational structure, the operating
procedures (S.O.P.) and they like to keep control. Task-oriented leaders are still concern with their
staff motivation; however it's not their main concern. They will favour behaviours that are in line with
Initiating, Organizing, Clarifying, Information Gathering etc.
ii)Employee orientation. Employee orientation is the openness and friendless exhibited by the leader
and his concern for the needs of subordinates. The people oriented leaders are focusing their
behaviours on ensuring that the inner needs of the people are satisfied. Thus they will seek to motivate
their staff through emphasizing the human relation. People oriented leaders still focus on the task and
the results; they just achieve them through different means. Leaders with a people focus will have
behaviours that are in line with Encouraging, Observing,
Listening, Coaching and Mentoring etc.

Following are major theories under behavioural approach to leaderships

i) Ohio State University Studies
ii) University of Michigan Studies.
iii)The Management Grid
iv) Likert’s System

i)Ohio State Studies

A famous series of studies on leadership were done in Ohio State University, starting in the 1950s.
They found two critical characteristics both of which could be high or low and were independent of
one another. These are Initiating Structures and Consideration
Initiating Structure: This concerned the degree to which the leader organized and defined the task,
assigned the work to be done, established communication networks and evaluated work-group
performance. Some behaviours of leaders who are strong in Initiating Structure Style include:
1. Letting group members know what is expected of them
2. Encouraging the use of uniform procedures
3. Trying out ideas in the group
4. Making his/her attitudes clear to the group
5. Deciding what shall be done and how it shall be done
6. Assigning group members to particular tasks
7. Making sure that his/her part in the group is understood by group members
8. Scheduling the work to be done
9. Maintaining definite standards of performance
10. Asking that group members follow standard rules and regulations
Consideration, which was defined as behaviour that involves trust, mutual respect, friendship;
support and concern for the welfare of the employee. Consideration refers to an emphasis on an
employee orientation leadership style. Their findings indicated that a mixture of initiating-structure
and consideration leader behaviour, which are achieved the highest effectiveness, depends largely on
situational factors. Some of the behaviours of leaders who are strong in consideration style include:
1. Being friendly and approachable
2. Doing little things to make it pleasant to be a member of the group
3. Putting suggestions made by the group into operation
4. Treating all group members as his/her equal
 5. Giving advanced notice of changes
6. Making him/herself accessible to group members
7. Looking out for the personal welfare of group members
8. Willingness to make changes
9. Explaining actions
10. Consulting the group when making changes

ii)Michigan Studies
A famous series of studies on leadership were done in Michigan University, starting in the 1950s.
Two distinct styles of leadership were developed from their studies:
- Job-centred leaderships style, which focused on the use of close supervision, legitimate and
coercive power, meeting schedules and evaluating work performance.
- Employee-centred style, which is people oriented and emphasis delegation of responsibility and a
concern for employee welfare, needs, advancement and personal growth. Their findings reported that
employee centred and job centred styles result in productivity increase.
However, job centred behaviour created tension and pressure and resulted in lower satisfaction and
increased turnover and absenteeism. Employee centred style is the best leadership style.
Leadership’s style is too complex to be viewed as one dimensional, but more than two dimensions
may complicate the interpretation of leadership behaviour. The measurement of leadership style for
each of the approaches was accomplished through the use of questionnaire. This method of
measurement is both limited and controversial. Further, in search of the most effective leadership’s
style, the research findings suggested that a universally accepted best style was inappropriate to the
complexities of modern organizations.
iii)Managerial Grid
A popular framework for thinking about a leader’s ‘task versus person’ orientation was developed by
Robert Blake and Jane Mouton in the early 1960s. Called the Managerial Grid, or Leadership Grid, it
plots the degree of task-centeredness versus person-centeredness and identifies five combinations as
distinct leadership styles. The Managerial Grid is based on two behavioural dimensions:
Concern for People – This is the degree to which a leader considers the needs of team members, their
interests, and areas of personal development when deciding how best to accomplish a task.
Concern for Production – This is the degree to which a leader emphasizes concrete objectives,
organizational efficiency and high productivity when deciding how best to accomplish a task.
Using the axis to plot leadership ‘concerns for production’ versus ‘concerns for people’, with each
dimension ranging from low (1) to high (9), thus creating 81 different positions in which the leader’s
style may fall.
The five resulting leadership styles are as follows:
Impoverished Management (1, 1): Managers with this approach are low on both the dimensions
and exercise minimum effort to get the work done from subordinates. The leader has low concern for
employee satisfaction and work deadlines and as a result disharmony and disorganization prevail
within the organization. The leaders are termed ineffective wherein their action is merely aimed at
preserving job and seniority.
Task management (9, 1): Also called dictatorial or perish style. Here leaders are more concerned
about production and have less concern for people. The style is based on theory X of McGregor. The
employees’ needs are not taken care of and they are simply a means to an end. The leader believes
that efficiency can result only through proper organization of work systems and through elimination
of people wherever possible. Such a style can definitely increase the output of organization in short
run but due to the strict policies and procedures, high labour turnover is inevitable.
Middle-of-the-Road (5, 5): This is basically a compromising style wherein the leader tries to
maintain a balance between goals of company and the needs of people. The leader does not push the
boundaries of achievement resulting in average performance for organization. Here neither employee
nor production needs are fully met.
Country Club (1, 9): This is a collegial style characterized by low task and high people orientation
where the leader gives thoughtful attention to the needs of people thus providing them with a friendly
and comfortable environment. The leader feels that such a treatment with employees will lead to self-
motivation and will find people working hard on their own. However, a low focus on tasks can
hamper production and lead to questionable results.
Team Management (9, 9): Characterized by high people and task focus, the style is based on the
theory Y of McGregor and has been termed as most effective style according to Blake and Mouton.
The leader feels that empowerment, commitment, trust, and respect are the key elements in creating a
team atmosphere which will automatically result in high employee satisfaction and production.

iv)Likert’s System Four Model:

Rensis Likert suggests that managers operate under four different systems.
System I – Exploitative Authoritative: The manager believes in very authoritarian manner and
actually exploits the subordinates
System II – Benevolent Authoritative: The manager takes a paternalistic approach while still being
autocratic. Behaving as benevolent autocratic, the leader maintains strict control over the subordinates
albeit in a paternalistic manner.
System III – Consultative: The manager consults the subordinates and sill maintains the right to
make the final decision.
System IV – Participative Groups: The manager uses a democratic style and makes decision by
consensus and majority vote.
Likert feels that the best way for all organizations to manage employees is to move towards System
IV

3.Situational/ Contingency Theories

Situational approaches to leadership take the position that there is no “one best way to lead in all the
situations. Effective leadership style will vary from situations to situation, depending on several
factors such as the personality predisposition of the leaders, the characteristics of the followers, the
nature of task being done and other situational factors.
Under Situational/ Contingency Theories we have three theories:
i)Fiedler’s Contingency Theory
ii) Path Goal Theory
iii)Situational Leadership Theory
Fiedler's contingency theory: It is one of the contingency theories that states that effective
leadership depends not only on the style of leading but on the control over a situation. There needs to
be good leader-member relations, task with clear goals and procedures, and the ability for the leader
to meet out rewards and punishments. Lacking these three in the right combination and context will
result in leadership failure.
Fidler measured leadership style on the scale that indicated the degree to which a person described
favourably or unfavourably. He coined the concept of Least preferred co-worker (LPC) –The
employee with whom the person could work least well. As per Fidler’s findings one, a person who
describes his least preferred co-worker in a relatively favourable manner (high LPC rating) tend to be
permissive, human relations oriented and considerate of the feelings of his men. But a person who
describes his least preferred co-worker ( LPC) in an unfavourable manner- (low LPC rating) tends to
be managing, task oriented and less concerned with the human relations aspect of the job. High LPC
managers are employee oriented and want to maintain a good interpersonal relationship with their co-
workers. They regard their close ties with employees important for their efficiency. While managers
having low LPC are task oriented. They display lower priority for employees than the level of
productivity.
Fiedler identified three variables to determine the ideal leadership style as :
(a) Leader-Member Relationship: If a manager is able to establish good relations with his workers
based on personality, skill and knowledge he may be successful leader and does not have to depend
on power and authority. Leader-member relations were measured on LPC scale, either they were good
or bad depending upon the degree of cohesion, co-operation and the level of conflict prevailing
between the leader and led.
(b) Task Structure: High task structure is related to a task where all actions required to be taken are
explained in sequential manner and employees understand and anticipate what is coming next. On the
contrary when a task is unstructured, the employees do not know as to how to handle the work and
group-member’s role become ambiguous.
(c) Position Power: In this situation power derived by the leader from his formal position and other
power bases are not considered. Fiedler feels that a leader having a strong power position can obtain
(wield ) followership more easily than a leader not having a formal power base. The position of power
is determined by the amount of control which the leader has over allocation of resources,
determination of salaries, rewards, punishments and hiring of people.
ii)Path-Goal Theory of Leadership: Path-Goal theory of leadership was proposed by Martin Evans
and Robert House in 1970- 71. The theory is an amalgamation of Contingency approach of leadership
and Expectancy theory of motivation. The principle function of the leader is facilitating to increase
valence perception of their subordinates and clarify and increase expectancy probabilities of them.
This will in turn make them to put greater amount of effort and derive higher level of satisfaction and
performance in their work. The theory is composed of two basic propositions such as i) role of the
leader and ii) dynamics of the situation. The two main aspects of this model are as follows:
Leadership Role: Leader behaviour is acceptable and satisfying to the extent that subordinates
perceive such behaviour as a source of satisfaction or instrumental to future satisfaction. There are
four styles of leadership:
- Directive Leadership Behaviour: This deals with planning, organizing, controlling and
coordinating of subordinates activities by the leader. It is similar to the traditional dimension of
initiating structure in that the leader’s emphasis is on letting the subordinates know what is expected
of them.
- Supportive Leadership Behaviour: This concerns giving support consideration to the needs of the
subordinates, displaying concern for their well-being and welfare and creating a friendly and pleasant
environment.
- Participative Leadership Behaviour: This deals with sharing of information and an emphasis on
consultation with subordinates and use of their ideas and suggestions in reaching group-related
decision.
-Achievement-oriented Leadership:Setting challenging goals, seeking improved performance,
seeking trust of continued efficiency of the subordinates are the main factors of this style of
leadership. The style is highly effective for those who have clear cut and non repetitive assignments
and have an urge to satisfy higher level of motivational needs.
Dynamics of Situation/Contingencies
The theory states that each of these styles will be effective in some situations but not in others. It
further states that the relationship between a leader’s style and effectiveness is dependent on the
following variables:
Employee characteristics: These include factors such as employees’ needs, locus of control,
experience, perceived ability, satisfaction, willingness to leave the organization, and anxiety. For
example, if followers are high inability, a directive style of leadership may be unnecessary; instead a
supportive approach may be preferable.
Characteristics of work environment: These include factors such as task structure and team
dynamics that are outside the control of the employee. For example, for employees performing simple
and routine tasks, a supportive style is much effective than a directive one. Similarly, the participative
style works much better for non-routine tasks than routine ones.
When team cohesiveness is low, a supportive leadership style must be used whereas in a situation
where performance-oriented team norms exist, a directive style or possibly an achievement-oriented
style works better. Leaders should apply directive style to counteract team norms that oppose the
team’s formal objectives.

The Hersey-Blanchard Situational Leadership Theory

iii) Situational leadership theory: The Hersey-Blanchard Situational Leadership Theory was created
by Dr Paul Hersey and Ken Blanchard. The theory states that instead of using just one style,
successful leaders should change their leadership styles based on the maturity of the people they're
leading and the details of the task. Using this theory, leaders should be able to place more or less
emphasis on the task, and more or less emphasis on the relationships with the people they're leading,
depending on what's needed to get the job done successfully. According to Hersey and Blanchard,
there are four main leadership styles:
 Telling (S1) – Leaders tell their people what to do and how to do it.
 Selling (S2) – Leaders provide information and direction, but there's more communication
with followers. Leaders "sell" their message to get people on board.
 Participating (S3) – Leaders focus more on the relationship and less on direction. The leader
works with the team, and shares decision-making responsibilities.
 Delegating (S4) – Leaders pass most of the responsibility onto the follower or group. The
leaders still monitor progress, but they're less involved in decisions.
As you can see, styles S1 and S2 are focused on getting the task done. Styles S3 and S4 are more
concerned with developing team members' abilities to work independently.
Maturity Levels According to Hersey and Blanchard, knowing when to use each style is largely
dependent on the maturity of the person or group you're leading. They break maturity down into four
different levels:
 M1 – People at this level of maturity are at the bottom level of the scale. They lack the
knowledge, skills, or confidence to work on their own, and they often need to be pushed to
take the task on.
 M2 – at this level, followers might be willing to work on the task, but they still don't have the
skills to complete it successfully.
 M3 – Here, followers are ready and willing to help with the task. They have more skills than
the M2 group, but they're still not confident in their abilities.
 M4 – These followers are able to work on their own. They have high confidence and strong
skills, and they're committed to the task.
The Hersey-Blanchard model maps each leadership style to each maturity level, as shown below.
Maturity Level Most Appropriate Leadership Style
M1: Low maturity S1: Telling/directing
M2: Medium maturity, limited skills S2: Selling/coaching
M3: Medium maturity, higher skills but lacking
S3: Participating/supporting
confidence
M4: High maturity S4: Delegating
To use this model, reflect on the maturity of individuals within your team. The table above shows
which leadership style Hersey and Blanchard recommend for people with that level of maturity.
Team
A team is a group of individuals, all working together for a common purpose. The individuals
comprising a team ideally should have common goals, common objectives and more or less think on
the same lines.

Difference between Team and Group

Characteristics of a team
1. Clear Goals :
This is necessary so that all team members understand the purpose and vision of the team. It is
important to understand where the team is headed. People tend to support what they help to create.
Team members who were involved in establishing the goals will work to achieve them.
2. Defined Roles: It’s important for group members to understand their job function and for leaders
to tap into the skills and talents of group members. There are two kinds of roles necessary in team
meetings. Task roles- people in these roles supply the energy and information to get the job done.
Maintenance roles – people in these roles help to establish and maintain interpersonal relationships
among group members.
3. Open and Clear Communication: This is one of the most important characteristics for high
functioning teams. Problems that emerge in groups can often be traced back to communication
problems. Effective communication will keep a team informed and focused. Communication
“breakdowns” can often be attributed to poor listening skills. It’s important to focus on hearing the
message before forming our own conclusions about the message. Distractions can prevent us from
giving out full attention to the speaker.
4. Effective Decision Making Awareness of various decision making methods can help a team make
efficient decisions. Consensus is considered one of the best methods to use; however, team members
should select a method that works best for them by weighing the advantages and disadvantages of
each method.
5. Balanced Participation: This can be defined as full involvement. Team members contribute when
appropriate, and member’s opinions are valued and sought. It is important when leaders define what
type of participation they expect from members. Leaders help to create a climate of participation.
Learning member’s names and getting to know member’s between meetings helps to create an
inviting and comfortable atmosphere.
6. Valued Diversity Team members are valued for their unique skills and talents. A diversity of
thinking, idea generating, problem solving and experiences help to create an effective team.
7. Managed Conflict This is essential to a team’s growth. It’s important that issues aren’t ignored and
avoided in a group. When managed effectively the benefits include: -the team will have to find ways
to communicate differences and seek common goals. -the team will be forced to look at all points of
view. -improves creativity because the team will need to look beyond current assumptions. -the
quality of decisions will improve because through disagreement the team will look for solutions that
meet everyone’s objectives.
Team members are allowed to express emotions. -increased participation from team members because
if they feel comfortable disagreeing, they are more likely to participate.
8. Positive Atmosphere An effective team has an open climate where member’s are comfortable with
each other and aren’t afraid to take risks. Creativity is expressed and laughter is shared. Trust is a key
element is creating this atmosphere. What builds trust? Honesty, accessibility, acceptance, and
dependability. A credible leader walks the walk.
9. Cooperative Relationships Team members want to work together for the good of the team and
understand that combining the skills of numerous people will produce something that could not be
created alone. The strength of each team member is being utilized. Feedback is given and received
constructively. Evaluations are utilized. Success is celebrated.
10. Participative Leadership Leadership is shared among team members at various times.
Type of Teams
Organization/Work Force - Such groups are formed in organizations where team members work
together under the expert guidance of leader. A leader or a supervisor is generally appointed among
the members itself and he along with his team works hard to achieve a common goal. The leader all
through must stand by his team and extract the best out of each team member. He must not
underestimate any of his team members and take his team along to avoid conflicts.
Teams can be classified on their objective. Following are three of the common types of teams:
CROSS Functional Team: Cross-functional teams consist of individuals from various departments
of an organization. They are employees from about the same hierarchical level, but from different
work areas who come together to accomplish a task. Cross-functional teams are an effective way to
allow people from diverse areas within an organization (or even between organizations) to exchange
information, develop new ideas and solve problems, and coordinate complex projects. Of course,
cross-functional teams are no picnic to manage. Their early stages of development are often very time
consuming as members learn to work with diversity and complexity. It takes time to build trust and
team-work, especially among people from different background, with different experiences and
perspectives.
Virtual Teams: Virtual teams are teams that may never actually meet together in the same room--
their activities take place on the computer via teleconferencing and other electronic information
systems. Engineers in the United States can connect audibly and visually directly with counterparts all
around the globe, sharing files via internet, electronic mail, and other communication utilities; all
participants can look at the same drawing, print, or specification so decision are make much faster.
With electronic communication systems team members can more in or out or a team or a team
discussion as the issues warrant.
Self-Managed Teams These teams consist of employees who are responsible for
managing/performing tasks that reach and satisfy internal and external customers. These are generally
composed of ten to fifteen people who take on the responsibilities of their former supervisors.
Typically, this includes collective control over the pace of work, determination of work assignments,
organization of breaks, and collective choice of inspective procedures. Fully self-managed teams even
select their own members; have the members evaluate each other's performance. AS a result,
supervisory positions take on a decreased importance and may even be eliminated. Self managed
teams (SMT) lead to greater job satisfaction, higher productivity, positive attitude, etc.
Project Teams: These teams are formed to accomplish a specific project with a defined start and end
date. It completes a particular task, create a product, or achieve a project objective.

Social Loafing
Social loafing is the tendency for individual to expend less effort when working collectively
than when working individually. It directly challenges the logic that the productivity of the group as
a whole should at least equal the sum of the productivity of each individual in that group.A
common stereotype about groups is that the sense of team spirit spurs individual effort and enhances
the group's overall productivity.
In the late 1920s, a erman psychologist named Ringelmann compared the
results of individual and group performance on a rope-pulling task. He expected that the group's effort
would be equal to the sum of the efforts of individuals within the group; that is, three people pulling
together should exert three times as much pull on the rope as one person, and eight people should
exert
eight times as much pull. Ringelmann's results, however, did not confirm these expectations. Groups o
f three people exerted a force only two-and-a-half times the average individual performance. Group of
eight
collectively achieved less that four times the solo rate. Therefore, increases in group size are inversely
related
to individual performance

Tuckman And Jensons – Five Stage Life Cycle Model Of Group Development
Five Stage Life Cycle Model: Tuckman outline five stages of group development. They are:
i) Forming: At this stage, group members try to comprehend where they stand in the group and how
they are being perceived by others in the group. The members are very cautious in their interactions
with each other and the relationships among the group members are very superficial. Members’
seldom express their feelings in the group and the individual members who are trying to understand
who they are in the group have concerns about how they will fit in the group as permanent group
members. This is characterized by much uncertainty about group’s purpose, structure and leadership.
Members are ‘testing the waters’ to determine what types of behaviour are acceptable. This stage is
complete when members have begun to think of themselves as part of a group.
ii) Storming: At this stage, disagreement tends to get expressed among the group members, and
feelings of anxiety and resentment are also expressed. Some power struggle may ensure at this stage
to determine who should assume the informal leadership role in the group. This storming stage is also
known as the sub-grouping and confrontation. This group is characterized by intra-group conflict.
Members accept the existence of the group, but there is resistance to the control the group imposes on
individuality. There is sometimes conflict over who will control the group. When this stage is
complete, there will be a relatively clear hierarchy of leadership within the group.
iii) Norming: This stage is characterized by close relationships and cohesiveness. The group sets
norms, tries to attain some degree of cohesiveness, understands the goals of the group, starts making
good decision, expresses feelings openly and makes attempts to resolve problems and attain group
effectiveness. At this stage, members’ roles get defined, and task and maintenance roles are assumed
by group members. Group members’ also begin to express satisfaction and confidence about being
members of the group.
iv) Performing: This stage is characterized by collaboration and integration. The group members
evaluate their performance so that the members develop and grow. The group relationships and
structures are set and accepted. Group energy has moved from getting to know and understand each
other, to performing the task at hand. Feelings are expressed at this stage without fear, leadership roles
shared among the members, and the group members’ activities are highly co-coordinated. The task
and maintenance roles are played very effectively. The task performance levels are high and member
satisfaction, pride and commitment to the group also high. Both performance and members’
satisfaction are sustained indefinitely;
v) Adjourning: This stage is characterized by concern with wrapping up activities rather than task
performance. The group prepares for its disbandment. High task performance is no longer the group’s
top priority. Instead, attention is directed towards finalizing activities. As the group approaches the
terminal phase, members break off their bonds of affection and stop interaction with each other.
Responses of group members vary in this state. Some feel pride in what the group has accomplished.
Others may be negative and critical of the way the organization has treated the group and others may
be sad over the loss of friendship gained during the life of the work groups.

MEANING OF ORGANISATIONAL CHANGE

Change is the coping process of moving from the present state to a desired state that individuals,
groups and organizations undertake in response to dynamic internal and external factors that alter
current realities.
TYPES OF CHANGE
(i) Happened Change: This type of change is rather unpredictable and takes place naturally due to
external factors. It is profound and traumatic for it is out of direct control and produces a future state
that is largely unknown. This type of change occurs when an organization reaches a plateau in its
lifecycle and falls prey unwisely to demand from the environment.
(ii) Reactive Change: Changes that are clearly in response to an event or a series of events are termed
reactive changes. Generally, most companies are engaged in reactive, often incremental change.
These changes are attempted when the demand for a company’s products/services registers an
increase or decrease, or a problem/crisis occurs or develops. Eg Microsoft , Hewlett & Packard
(iii) Anticipatory Change: Change carries out in expectation of an event or a series of events is
called anticipatory change
(iv) Planned Change: Planned change or developmental change is undertaken to improve upon the
current way(s) of operating. It is a calculated change, initiated to achieve a certain desirable
output/performance and to make the organization more responsive to internal and external demands.
(v) Incremental Change: Change directed at the micro level and focused on units/subunits/components
within an organization are termed as incremental changes. Changes are brought in gradually and are
usually adaptive in nature. It is assumed that those small changes will set in process the large change
and lead the system slowly in a healthier direction. It also provides the organization an opportunity to
learn from its own experience. A failed incremental change will cause less damage to the total system
than an unsuccessful large-scale change.
(vi) Operational Change: This is necessitated when an organization needs to improve the quality of its
products or services due to external competition, customers’ changing requirements and demands, or
internal organizational dynamics. Eg Dominos
(vii) Strategic Change: Change that is addressed to the organization as a whole or to most of the
organisation’s components including strategy may be called strategic change. Nissan
(viii) Directional Change: A change in direction may become imperative for an organization due to
severe competition or regularly shifts in government policy and control (for example, on pricing,
import/export restriction, etc.). Directional change is also critical when the organization is developing
a new strategy or is incapable of executing effectively its current strategy.
(ix) Fundamental Change: This entails a redefinition of the current purpose or mission of the
organization. It may be necessitated by drastic changes in the business environment, the failure of the
current corporate leadership, problems with employee morale, or a sharp fall in
turnover.
(x) Total Change: For total change, the organization is constrained to develop a new vision, and a
strong link between its strategy, employees and business performance. The organization has to
achieve a turnaround or perish. Total change is necessary to extricate the organization from the rot
that has set in due long-term failure of business, employee-organisation value incongruence,
estrangement of operators from the reality of the business environment, and concentration of power in
the hands of a few people who could be furthering their personal interests at the cost of the
organization.

Forces of Change (Stemming From External Environment)

1. Political Forces
2. Economic Forces
3. Technological Forces
4. Government Forces
5. Increased Global Competition
6. Changing Customer Needs and Preferences

Internal Forces for Change

A variety of forces inside an organization also cause changes that relate to system dynamics,
inadequacy of existing administrative process, individual/group expectations, technology, structures,
profitability issues and resources constraints.
1. System Dynamics
2. Inadequacy of Administrative Processes
3. Individual/Group Speculations
4. Structure Focused Change
5. Technological Changes
6. Persons Focused Change
7. Profitability Issues
8. Resource Constraints

CHARACTERISTICS OF EFFECTIVE CHANGE

Effective planned change efforts are often characterised by some common characteristics.
1. Motivating change by creating a readiness for the change among employees and attempting
to overcome resistance to change
2. Creating a shared vision of the desired future state of the organisation
3. Developing political support for the needed changes
4. Managing the transition from the current state to the desired future state and
5. Sustaining momentum for change so that it will be carried to its completion

The conditions necessary for successfully carrying out effective change programmes include the
following:
1. The organisation’s members themselves must be ready to act as the key sources of energy for
change.
2. Key members of the organisation must recognise the need for change and be attracted by the
potentially positive outcomes of the change programme.
3. A willingness to change norms and procedures must exist.

LEWIN’S FORCE FIELD ANALYSIS MODEL

Kurt Lewin suggests that efforts to bring about planned change in an organisation should approach
change as a multistage process. His model of planned change is made up of three steps— unfreezing,
change, and refreezing

1. Unfreezing is the process by which people become aware of the need for change. This stage is
about getting ready to change. It involves getting to a point of understanding that change is necessary,
and getting ready to move away from our current comfort zone.
This first stage is about preparing ourselves, or others, before the change (and ideally creating a
situation in which we want the change). If people are satisfied with current practices and procedures,
they may have little or no interest in making employees understand the importance of a change and
how their jobs will be affected by it. The employees who will be most affected by the change must be
made aware of why it is needed, which in effect makes them dissatisfied enough with current
operations to be motivated to change.
2. Change itself is the movement from the old way of doing things to a new way. This second stage
occurs as we make the changes that are needed. People are 'unfrozen' and moving towards a new way
of being. Change may entail installing new equipment, restructuring the organisation, implementing a
new performance appraisal system anything that alters existing relationships or activities.
This is not an easy time as people are learning about the changes and need to be given time to
understand and work with them. Support is really important here and can be in the form of training,
coaching, and expecting mistakes as part of the process.
3. Refreezing As the name suggests this stage is about establishing stability once the changes have
been made. The changes are accepted and become the new norm. People form new relationships and
become comfortable with their routines. This can take time. makes new behaviour relatively
permanent and resistant to further change. Examples of refreezing techniques include repeating newly
learned skills in a training session and role-playing to teach how the new skills can be used in a real-
life wok situation.
Refreezing is necessary because without it, the old ways of doing things might soon reassert
themselves, while the new ways are forgotten.

Kotter’s Model of Change

1. Creating a Sense of Urgency
The process should start with establishing a sense of urgency among both managers and employees.
Everyone involved should feel the need for change or that change is critical for organizational growth.
The objective of this step should be to prepare the employees for the upcoming change and motivate
them to offer their contribution. In order to create an environment where everyone is aware of the
existing problem Identify existing threats and opportunities affecting the organization. One can use a
SWOT analysis with the team. Based on it one can then develop future scenarios portraying what
could happen.
2. Putting Together a Guiding Coalition
This step is dedicated to bringing together a competent team with the right skills, qualifications,
reputation, connections and sufficient power to provide leadership to the change efforts and influence
stakeholders. The size of the team will vary depending on the nature of the proposed change. Once a
team is assembled, focus on setting clear goals and developing an environment of trust and
commitment.
3. Developing Vision and Strategies
The objective of this step is to create a sensible vision to direct the initiative and to develop effective
strategies to help the team achieve it. It helps create a picture of what the future of the organization
looks like once the change is implemented.
The right vision help achieve change successfully by inspiring and guiding team actions and
decisions. It should also define clear and realistic targets to help easily measure success and appeal to
the interest of the company stakeholders.
4. Communicating the Change Vision
In this step, the focus is on effectively communicating the vision and the strategies in ways that help
encourage the rest of the organization to accept and support the change initiative. The goal here is to
capture the hearts and minds of the employees; to get them to make sacrifices to support the change,
to get them to believe that change is possible and the resulting benefits are for the best of the
organization as well as themselves.
5. Remove Barriers to Action
When implementing organizational-wide change, obstacles may occur frequently. Barriers may come
in the form of insufficient processes, resistance to change by employees themselves, disempowering
managers, organizational policies and its structure, etc. And in this step, the guiding coalition and the
senior management should focus on removing such obstacles that block the organization’s path to
achieving the change vision.
6. Accomplish Short-Term Wins
Achieving complete real transformation may take time. Going so long without any victories to
celebrate may discourage employees. A short-term win is an organizational improvement that can be
implemented within a short period of time. Such a quick win should be visible throughout the
organization, unambiguous, and related to the change initiative.
7. Build on the Change
This step is all about sustaining the implementation of change by ensuring that the teams are working
persistently towards achieving the change vision while measuring progress. It’s important to make
sure that the team doesn’t declare victory prematurely after a few quick wins.
8. Make Change Stick
In this step, the change leaders work on nurturing a new culture where change can stick. This includes
changing organizational norms and values, processes, reward systems, and other infrastructure
elements to make sure that everything aligns with the new direction.

KEY FACTORS IN EFFECTIVE CHANGE MANAGEMENT

1. Change is all-pervasive: Any process of change is likely to have an impact greater than the
sum of its parts. A holistic view must be taken to ensure that the full environmental impact is
understood.
2. Effective change needs active senior management support: Without the support of senior
management, change will lack vision. Senior management backing for the change process is crucial to
recruiting the desired level of support to instigate change at all levels.
3. Change is a multi-disciplinary activity: Recognition of the multidisciplinary nature of change goes
a long way in beginning the sequence of realising of transformation. Problem owners are identified
because of their association with the change. Change agents are recruited because of their expertise in
facilitating change through its various stages. Their
expertise may be based on people’s skills, technological know-how, or their experience of system
analysis.
4. Change is All About People, Pure and Simple: People are the most important asset: people want
and need to grow, and personal growth is the engine that drives organisation performance. Therefore,
when contemplating change, involve the people in the process from the outset. Through active
participation you accomplish two things you gain commitment and ownership of the change process
by all; and those experiencing the change will not need to be pushed but will begin to drive change
themselves.
5. Change is About Success: Creating an organisational culture which is receptive to change should
provide a competitive edge that will last the test of time.
6. Change is a Perceptual Process: Change is about identifying triggers, seeking vision, recruiting
converts to the visions, and maintaining and renewing the need for change on an ongoing basis. The
effective management of change demands management action on all these fronts.
7. Effective changes require competent change agents One of those needs of successful change
management relates to the required skills, knowledge and position of change agents. Analysis of the
change situation will determine the appropriate management team in terms of their attributes. It will
not, however, ensure that the change agents have the necessary competencies to effectively contribute
to the process of change. To be fully effective, the change agents must have certain capabilities, over
and above their functional skills and knowledge.

Resistance to change
Resistance to change is the action taken by individuals and groups when they perceive that a change
that is occurring as a threat to them.

The common causes for resistance are individuals:

1. Believing that they will lose something for example, status, power, security, career
opportunities, relationships as a consequence of the change. Or else that the change will cost
them more than they stand to gain for example, that they will have to do more work, but will
have fewer opportunities for reward
2. not understanding the positive intent and impacts of the change
3. believing that the changes are fundamentally unfair, prioritising the personal interests of a few
over the benefits of many
 4. having assessed the need and impacts of the change and have come to radically different
conclusions about the situation than the organisation’s leaders, often because they have
different sources of information
5. not understanding what is expected of them
6. feeling that there is nothing stopping them resisting
7. being unable to change because, for example, the change requires altering a long-standing
habit.

Types-of-Resistance-to-Change
There are three (3) types of resistance to change in organizations.
These types are:
1. Logical and rational,
2. Psychological and emotional, and
3. Sociological resistance.
Logical and Rational Resistance: These resistances are the outcomes of disagreement with rational
facts, rational reasoning, logic and science. These arise from the actual time and effort required to
adjust to change including new job duties that must be learned.
These are too costly which might be borne by the common employees and managers. Even though
change may be beneficial for the employees in the long run. But the short run costs for change must
be paid first. Logical resistance to change include the following:
i. Time required to adjust
ii. Extra efforts to relearn
iii. Possibility of less desirable condition
iv. Economic costs of change
v. Questionable technical feasibility of change

Psychological Resistance: These types of resistances are typically based on emotion and attitude. It is
internally logical from the perspective of the employee attitude and feelings about change. Employees
may fear the unknown, mistrust management, or feel that their security and ego needs are threatened.
Even though management may believe that there is no justification for these feelings they are very
rational to employees, and as such mangers must deal with them. Psychological or emotional
resistance may take place in the following manner:
i. Fear of unknown
ii. Low tolerance of change
iii. Dislike of management/change agent
iv. Lack of trust in other
v. Need for security
vi. Desire for status quo

Sociological Resistance: Sociological resistance may sometimes be logical. This happens when it is
seen as a product of challenge to group interests, norms, and values. Since social values are powerful
force in the environment, they must be carefully considered.
On a small group level, there is work friendship and relationships that may disrupt buy change. Then
resistance occurs. However, sociological resistance includes the following:
i. Political coalitions
ii. Opposing group values
iii. Narrow outlook
iv. Vested interest
v. Desire to retain existing friendships

Managing resistance to change

Six classic strategies for dealing with change resistance in your organization:
Education & Communication: One of the best ways to overcome resistance to change is to educate
people about the change effort beforehand. Up-front communication and education helps employees
see the logic in the change effort. This reduces unfounded and incorrect rumors concerning the effects
of change in the organization.
Participation & Involvement: When employees are involved in the change effort they are more
likely to buy into change rather than resist it. This approach is likely to lower resistance more so than
merely hoping people will acquiesce to change.
Facilitation & Support: Managers can head-off potential resistance by being supportive of
employees during difficult times. Managerial support helps employees deal with fear and anxiety
during a transition period. This approach is concerned with provision of special training, counseling,
time off work.
Negotiation and Agreement: Managers can combat resistance by offering incentives to employees
not to resist change. This can be done by allowing change resistors to veto elements of change that are
threatening, or change resistors can be offered incentives to go elsewhere in the company in order to
avoid having to experience the change effort. This approach will be appropriate where those resisting
change are in a position of power.
Manipulation and Cooptation: “Cooptation” (no it’s not misspelled) involves the patronizing
gesture of bringing a person into a change management planning group for the sake of appearances
rather than their substantive contribution. This often involves selecting leaders of the resisters to
participate in the change effort. These leaders can be given a symbolic role in decision making
without threatening the change effort.
Explicit and Implicit Coercion: Managers can explicitly or implicitly force employees into
accepting change by making clear that resisting change can lead to losing jobs, firing, or not
promoting employees.

CULTURE & CHANGE

Culture is the sum of the beliefs and values that shape norms of behaviour and dictate the ways things
get done.
Change e ort needs to lead with culture as part of a more holistic approach if a transformation
program is to have the best possible chance of success. In particular, the change needs to draw on
whatever positive cultural attributes are embedded in the organization. It also needs to minimize any
negative cultural attributes that might get in the way.
There are several levers that companies should employ as they use culture to lead transformation.
Among the most important are the following:
Culture diagnostic: Before you can use culture in a transformation or change your culture, you need
to know your culture’s strengths and weaknesses. Effectively tapping into the strengths can give your
change initiative the momentum it needs t o overcome obstacles.
The “critical few” behaviours: Setting a small number of clear behavioral change goals, which we
call the critical few, is a crucial way of showing workers what you want them to do differently. By
focusing on only a few behaviours , you avoid a situation in which workers become overwhelmed and
as a result do nothing, hoping the new requirements will just go away
Employee pride and commitment: The odds of a successful transformation plummet when morale is
bad. Companies must find ways to connect workers to something larger that they can believe in
including customer benefits or the satisfaction of beating a benchmark.
Informal peer networks and motivators: Culture might start at the top, but it is reinforced at every
level. Having a peer point out the benefits of change, instead of an executive or manager, is very
powerful and leads to improved behaviors that continue even when nobody is looking
Storytelling: At companies with strong cultures, there are usually widely known stories that answer
this question, often about the boldness of a leader or some decisive moment in the company’s history.
These stories can be a source of pride and a natural way of reinforcing desired behaviors.

How culture can be created and sustained?

To create a great culture in an organization following are the steps as well as the components:
1.Vision: A great culture starts with a vision or mission statement. These simple turns of phrase guide
a company’s values and provide it with purpose. That purpose, in turn, orients every decision
employees make. When they are deeply authentic and prominently displayed, good vision statements
can even help orient customers, suppliers, and other stakeholders. A vision statement is a simple but
foundational element of culture.
2. Values: The second step in culture formation is establishing values. A company’s values are the
core of its culture. While a vision articulates a company’s purpose, values offer a set of guidelines on
the behaviors and mindsets needed to achieve that vision
3. Practices: Of course, values are of little importance unless they are enshrined in a company’s
practices. If an organization professes, “people are our greatest asset,” it should also be ready to invest
in people in visible ways. Similarly, if an organization values “flat” hierarchy, it must encourage more
junior team members to dissent in discussions without fear or negative repercussions. And whatever
an organization’s values, they must be reinforced in review criteria and promotion policies, and baked
into the operating principles of daily life in the firm.
4. People: No company can build a coherent culture without people who either share its core values or
possess the willingness and ability to embrace those values. That’s why the greatest firms in the world
also have some of the most stringent recruiting policies.
Culture can be sustained through:
a) Artefacts. They refer to the total physical and socially constructed environment of an organisation.
Examples of artefacts include office space, equipments, rules, systems and procedures.
b) Language. It refers to the fundamental way in which the organisation comprehends its world.
Examples of language include jokes, metaphors, stories, myths and legends.
c) Behaviour patterns. They refer to recurrent patterns of behaviour which are a feature of
organisational life. These patterns include rites, rituals, ceremonies and celebrations.
d) Norms of Behaviour: They refer to rules for behaviour which dictate what are considered to be
appropriate and inappropriate responses from employees in certain circumstances. Such norms
develop over time as individuals negotiate with each other in their attempts to reach a consensus on
how to deal with organisational issues.
e) Heroes. They make success possible, provide role models and portray the organisation to external
constituencies. Heroes are the people who motivate other employees.
f) Symbols and symbolic action. These include words, objects, conditions, acts or characteristics of
the organisation, which mean something to organisational members. Typical symbols found in
organisations include corporate logos, policies and products.

Meaning of Change Agent

Though change is a continuous process involving managers at all levels, who should initiate change
and how has to be deliberately decided in planned change. Planned change can be introduced through
change agents. Change agent is the person who initiates change in the organisation to increase
organisational effectiveness.
Planned change may be change in people, structure or technology. Any resistance in introducing
change is overcome by the change agent who motivates the employees to accept the change. Internal
management takes help of external consultants in introducing planned change.
Change agents can, thus, be:
1. External Change Agents
2. Internal Change Agents.
1. External change agents: They are generally the behavioural scientists who specialise in human
behaviour. They work as consultants for the company and devise its change strategy.
2. Internal change agents: They are continuously involved in the change process. They belong to the
organisation only and depending on the need where the change is required, they are selected from
different levels and departments. Internal change agents are usually the managers who are trained by
the consultants (external change agents) to implement change as on ongoing process.
They introduce change within the broad framework of change strategy devised by the external change
agents.
They also lead the members to implement the change process. Internal change agents may also be
change advisors appointed from specific departments for specific periods. After the change
programme is completed, they go to their original departments.

They convince organisational members to accept and implement the change. What they learn from the
consultants, they communicate to the managers and promote behavioural skills to smoothen the
change process.

Change advisors should have the following qualities for making change programme successful:

1. Diagnostic skills.
2. Behavioural skill.
3. Attitudes of acceptance.
4. Personal qualities to provide emotional support and reassurance
External Change Agents:
1. They take total view of the organization as a system.
2. They are not much affected by norms of the organization.
3. They do not view change as an on-going process as they are appointed by the organization for
specific tasks.
4. They use diagnostic skills to diagnose the problem and plan the overall strategy for change.
5. Their role is comprehensive in nature.
6. Their role is primarily that of process consultation, that is, deciding the process of introducing
change.
7. They help the organisation move towards self-renewal and growth

Internal Change Agents:

1. They accept the system as given
2. They apply change practices suitable to the needs of the organization within the organisational
norms.
3. They view change as an on-going process with minor or major changes in the components of the
organization
4. They use problem-solving skills to deal with problems related to change.
5. Their role is secondary to that of external agents.
6. Their role is primarily of implementing the change process. They work as trained by the
consultants. Their role is primarily educational as they educate people about the need for accepting
and implementing the change.
7. They sustain the organisation to maintain their competitive position.
Though, external and internal change agents have different roles, the difference is only in the
perspective. Their focus is the same; to move the organisation to a new state of equilibrium with
better competitive advantage.
While external change agents are specialised in their work, internal change agents work under their
guidance to deal with people internal to the organisation and implement the change process smoothly
with no or minimum resistance.
At the initial stages of change, both internal and external change agents work together to understand
the need for change, areas where change can be most beneficial for the organisation and behavioural
problems of people who will be affected by change. Working of internal and external change agents
together develops mutual trust, smoothens the process of change and makes it move as an ongoing
process.
Change process is effective when external change agent acts as a process consultant and actual
implementation is done by the internal change agents. Internal change agent is more conversant with
the problems in the organisation and can, therefore, manage the change process better. Various
diagnostic and problem-solving skills can, however, be taught by the external change agent.

Role of a Change Agent

Though role of a change agent varies with the nature of organisation, problem and management,
change agent usually performs the following tasks:
1. He announces the need for change in the organisation. Members usually want to maintain status
quo which is resistant to change. Change agents help to overcome this resistance.
2. He diagnoses the present situation in the organisation, foresees changes in the environment and
helps the client company in adapting to the changing environment.
3. He helps in smoothly carrying out the change process. People accept change naturally without
feeling that they are forced to accept it.
4. He formulates strategies for change. These are known as change interventions or OD (organisation
Development) interventions.
5. He trains the internal change agents to implement the change process and introduce it further in the
organisation. Change, thus, becomes an on-going process in the light of ever-changing dynamic
external environment.
6. He uses behavioural skills to deal with emotional and social problems of employees in accepting
and implementing change.
A change agent, thus, acts as a:
1. Facilitator:
He facilitates change by developing awareness about the importance of change.
2. Consultant:
He draws major plan for change based on his diagnostic skills.
3. Counselor:
He studies the attitudes, personality, perception, beliefs and expectations of organisational members to
the change process and motivates them to accept change and continue in the changed environment till
a change is introduced again.

Approaches to Organisational Change: