BUSINESS M ANAGEMENT TRAINING COLLEGE

S OUTH A FRICA ’ S M OST P RESTIGIOUS D ISTANCE E DUCATION B USINESS C OLLEGE

147 Second Road - Chartwell - Fourways | Private Bag X100 - Bryanston - 2021
Tel: 011-708-0159 | Fax: 086-639-4687 | E-mail info@[Link]

[Link]
2014 Second Edition - First Print July 2014
© Copyright 2010 - All rights reserved.

No part of this publication may be reproduced, stored in a retrieval system,

or transmitted in any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior written
permission of the copyright owner, BMT College.

DIPLOMA IN BUSINESS MANAGEMENT 1ST YEAR OR

DIPLOMA IN HUMAN RESOURCE MANAGEMENT 1ST YEAR
STUDY GUIDE 631-2
MODULE 3
MANAGEMENT PRINCIPLES I:
LEADERSHIP
 READ THIS BEFORE YOU DO ANYTHING ELSE!

ICONS USED IN THIS MANUAL

LESSON 1 Indicates the start of a new lesson

Indicates the start of a Chapter (also top left of STUDY chapters)

Usually an explanation or definition of a specific word or concept

Examples of a specific topic or concept

Important information.

Take a break from your studies!

Making notes while you study is very important. Spaces have

been allocated throughout this manual for this purpose

Indicates self assessment and self assessment answer section

THESE SHOULD NOT BE SUBMITTED FOR ASSESSMENT

Outcomes for this Module (What you will learn)

Steps to be followed in order to complete/execute/do a specific

action or task.

Prescribed textbook

Smit, P.J., Cronje, G. J., Brevis, T. & Vrba, M.J. eds. 2011.
Management Principles: A Contemporary Edition for Africa. 5th
ed. Cape Town: Juta. ISBN 978-0-70217-281-6
Erasmus, B.J., Strydom, J.W. & Rudansky-Kloppers, S. eds.
2013. Introduction to Business Management. 9th ed.
Cape Town: Oxford University Press. ISBN 978 0 19 9059829

Only purchase a new edition if you did not already purchased the previous edition.
2 © Business Management Training College (Pty) Ltd
 READ THIS BEFORE YOU DO ANYTHING ELSE!
ASSIGNMENT STRUCTURE
For the 1st year of the Diploma Qualification
Study
Formative Summative Next Action from the college?
Process
SUBJECT: MANAGEMENT PRINCIPALS
Complete and submit
Module 1 College will mark Module 1
NO SUMMATIVE DUE
Step 1 Formative Assignment Formative Assignment and post
after Module 1
Introduction to Module 2.
Management
Complete and submit
College will mark Module 2
Module 2 NO SUMMATIVE DUE
Step 2 Formative Assignment and post
Formative Assignment after Module 2
Module 3.
Planning and Organising
Complete and submit
Complete and submit the College will mark Module 3
Module 3
Step 3 SUMMATIVE ASSIGNMENT Formative and Summative
Formative Assignment
on Module 1, 2 and 3. Assignment and post Module 4.
Leadership

SUBJECT: BUSINESS ADMINISTRATION

Complete and submit
Module 4 College will mark Module 4
NO SUMMATIVE DUE
Step 4 Formative Assignment Formative Assignment and post
after Module 4
Introduction to Business Module 5.
Administration
Complete and submit
College will mark Module 5
Module 5 NO SUMMATIVE DUE
Step 5 Formative Assignment and post
Formative Assignment after Module 5
Module 6.
Risk Management
Complete and submit
Complete and submit the College will mark Module 6
Module 6
Step 6 SUMMATIVE ASSIGNMENT Formative and Summative
Formative Assignment
on Module 4, 5 and 6. Assignment and post Module 7.
Financial Management

SUBJECT: ENTREPRENEURSHIP
Complete and submit
Module 7
College will mark Module 7
Formative Assignment NO SUMMATIVE DUE
Step 7 Formative Assignment and post
Introduction to after Module 7
Module 8.
Entrepreneurship

Complete and submit

Module 8 Complete and submit the College will assess Module 8
Step 8 Formative Assignment SUMMATIVE ASSIGNMENT Formative and Summative
The Entrepreneur as a on Module 7 and 8 Assignment and post the FISA.
Manager

COMPLETE THE FINAL INTEGRATED SUMMATIVE ASSESSMENT (FISA)

© Business Management Training College (Pty) Ltd

3
 STUDY PLANNER
INTRODUCTION TO MANAGEMENT
15 CREDITS*
NQF LEVEL 5

Planned Start and

Completion.
Type REF Heading/Description
(To be completed by
the student)

CHAPTER 1 - LEADING
Example 01/01/2015 | 05/01/2015

Lesson 1.1 The nature and importance of leadership |

Lesson 1.2 Management versus Leadership |

Theoretical foundations and different approaches to

Lesson 1.3 |
leadership

Lesson 1.4 Contemporary perspectives on leadership |

Individuals in the organisation

Lesson 1.5 Human behaviour in an organisation |

Lesson 1.6 Mentoring and coaching |

Lesson 1.7 Emotional Intelligence (EI) |

Groups and teams in the organisation

Lesson 1.8 Groups, teams, their role and the various types |
Lesson 1.9 Stages in group and team development |
Lesson 1.10 The Group Behavioural Model |
Lesson 1.11 Work teams in organisations |
Lesson 1.12 Types of teams |
Motivation
Lesson 1.13 Motivation - the process |
Lesson 1.14 Motivation theories |
Lesson 1.15 Money as a motivator |

Communication

The importance of communication and the

Lesson 1.16 |
communication process

Lesson 1.17 Organisational communication |

Lesson 1.18 Communication barriers |

 STUDY PLANNER
INTRODUCTION TO MANAGEMENT
15 CREDITS*
NQF LEVEL 5

Planned Start and

Completion.
Type REF Heading/Description
(To be completed by
the student)

Lesson 1.19 Improving communication |

Lesson 1.20 Organisational conflict |

Chapter 2 - Controlling
Lesson 2.1 The nature of control and the control process |

Lesson 2.2 Areas that control should focus on |

Control for top management and control at operational

Lesson 2.3 |
level

Chapter 3 - Contemporary management issues

Ethics, corporate social responsibility and corporate governance
Lesson 3.1 Ethical behaviour and decision making |

Steps in the ethical decision making and ethics in an

Lesson 3.2 |
organisation.

Lesson 3.3 Corporate social responsibility |

Lesson 3.4 Corporate governance |

Complete online formative assignment through the

Formative |
virtual Campus

Complete Summative Assignment 1 (Content of

Summative |
modules 1, 2 and 3) and place in yellow cover.

*SAQA equates one credit with ten notional hours of study. Credits include all studies related to
this module, including prescribed and recommended research, assignments and work related
projects if required. Credits will only be granted upon completion of the full programme.
 CHAPTER 1
LEADING

LEADERSHIP
IN THIS CHAPTER:
 LESSON 1.1 : THE NATURE AND IMPORTANCE OF LEADERSHIP
 LESSON 1.2 : MANAGEMENT VERSUS LEADERSHIP
 LESSON 1.3 : THEORETICAL FOUNDATIONS AND DIFFERENT
APPROACHES TO LEADERSHIP
 LESSON 1.4 : CONTEMPORARY PERSPECTIVES ON LEADERSHIP

AT THE END OF THIS CHAPTER YOU WILL BE ABLE TO:

1. Explain the concept of leadership as a management function.
2. Expound on the nature and importance of leadership in an organisation.
3. Differentiate between leadership and management.
4. Critically evaluate the trait, behavioural situational approaches to leadership.
5. Discuss various situational approaches to leadership.
6. Identify and comment on some contemporary perspectives on leadership.
7. Discuss the fundamental practices and behaviour of exceptional leaders.
 LESSON 1.1
LESSON 1.1
THE NATURE AND IMPORTANCE OF LEADERSHIP

In this Lesson:
Leadership deals with issues that relate to the influencing of
subordinates to focus their efforts on the attainment of the
organisation’s goals.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Leadership: the process of directing the behaviour of others towards the
accomplishment of the organisation’s goals.
 Charismatic leadership: A leader who inspires his or her followers through
personal magnetism and highly developed communication skills. Charismatic
leaders tend to be confident, visionary, and change-oriented and may display
eccentric or unusual behaviour.

Key points:
 The challenge for managers has shifted from managing technology and capital to
managing people.
 Managers require a unique skill, which is to inspire people to do their jobs.
 People are the most complex resource of an organisation, and each person is
motivated by different things.
 Leadership involve the leader, the follower and the organisation.
 They must understand the behaviour of their followers.
 It is the management function that activates people to do things willingly.
 Leaders have to communicate their vision, strategy and expectations to followers.
 Whenever an organisation experiences difficulties, it can relate to leadership as a
possible cause.
 Leadership is one of the most controversial and researched subjects in
management. Irresponsible and inferior leadership exist and many people
question leadership.
 Leadership involves:
 Influencing people
 Giving orders
 Communicating with subordinates
 Deliberating with subordinates and supervising their work

© Business Management Training College (Pty) Ltd

7
 LEADERSHIP
 Taking steps to improve subordinate’s performance
 Disciplining
 Dealing with conflict.
 The leader constantly implements change to improve performance.

THE CONCEPT OF LEADERSHIP

Man is a social being and will, under most circumstances, form groups. Wherever
and whenever two or more people get together there will be a leader. During the
formation of a group, certain members will begin exerting influence and a more
active role in group activities than other members. As a group grows and
develops, differentiations between leaders and followers take place. Normally, the
roles within the group will be determined by the degree of authority or power the
various members in the hierarchy possess or are given.

The effect of group influence on our lives is consequently, closely related to the
effect or influence of group leaders on our lives. We are continually being
influenced by the family and hence the leaders in the family, by our company and
hence its chief executive officers, by our work group and hence our immediate
superiors and so on.

Many of the difficulties surrounding the definition of leadership relate to the

problem of degree. Napoleon was a leader, but then so are you. All men have
some capacity for leadership and do, at times, exert this leadership potential. In its
broadest sense, therefore, leadership may be seen as an attempt by any group
member to change the behaviour of other members of the group.

In terms of this definition we are all to some degree, and at various times, leaders.

Leadership therefore is not an absolute or finite characteristic. It is a dynamic

concept difficult to measure. In other words, leadership is a relative term. While
this statement is a truism, it is equally true to say that certain members of the
group will tend to exercise more influence than others and that in most groups
there is normally- one man who is recognised as being the over-all leader.

Not only is leadership relative, but it is also interpersonal. Leadership cannot be

exercised without some form of interaction taking place between the leader
(influencer) and the follower (influence). Leadership, therefore, involves a
continual attempt on the part of the leader to influence the values, attitudes,
beliefs, perceptions, goals, etc., of the followers. To exert this influence, the leader
must continually be interacting with the other members of his group.
Communication is thus an important aspect of the leadership process.

8 © Business Management Training College (Pty) Ltd

 LESSON 1.1
Leadership must at all times be goal-directed. The leader must have some
objective in mind when attempting to influence the behaviour of his followers.
These goals and objectives must be communicated and must be accepted by the
followers as being desirable if leadership is to be effective. Repeated attempts by
a member of the group to influence the goals and directions of other group
members may be construed as an attempt at leadership, but not necessarily
effective leadership.

One of the perennial problems facing the student of leadership is the distinction
between the leader who gravitates to his position of power through personal
attributes or skills and the leader who attains his power through formal
appointment. The differences between positional status and personal status is
identical to the distinction between the leader who arrives through his personal
skills and his followers' faith and the leader who is formally placed in his position
without necessarily having had to justify his position to the group he commands.

As one would anticipate, it is not uncommon to find incongruence between a

leader's formal influence and his personal influence.

Any definition of leadership must of necessity be general, but at the same time
establish some reasonable parameters for understanding. The key elements in
such a definition must include the concepts of interpersonal influence, objectives,
formal authority and the communication process.
If you wish to Google “definitions of leadership”, the internet provides you with
24,000,000 possible definitions.

Below are just a few leadership definitions according to various sources:

Leadership is the exercise of interpersonal influence or formal authority through

the communication process in order to achieve specified goals or objectives.

This definition appears rather drab and hardly appears to cater for the Napoleons,
the Churchills or the Fords of history. Surely such men cannot be classified as
leaders in terms of the above definition? Surely their leadership was the result of
an intangible quality that cannot be defined or understood? This belief has certain
emotional appeal, but does not hold water. Regardless of the specific qualities
these men possessed, the manner in which they exercised their leadership follows
the pattern described in the definition.

© Business Management Training College (Pty) Ltd

9
 LEADERSHIP
Leadership defined according to the experts:

Peter Drucker:“The only definition of a leader is someone who has followers.”

John C Maxwell: "Leadership is influence - nothing more, nothing less.”

Warren Bennis:“Leadership is a function of knowing yourself, having a vision that

is well communicated, building trust among colleagues, and taking effective action
to realise your own leadership potential.”

John W Gardner: "Leadership is the process of persuasion and example by which

an individual (or leadership team) induces a group to take action that is in accord
with the leader’s purpose, or the shared purposes of all.”

LEADERSHIP DEFINED ACCORDING TO THE MANAGEMENT PRINCIPLES TEXTBOOK:

“Leadership is a process by which a person influences others to accomplish an

objective and directs the organisation in a way that makes it more cohesive and
coherent. Leaders carry out this process by applying their leadership attributes,
such as beliefs, values, ethics, character, knowledge, and skills.”

Contemporary definitions most often reject the idea that leadership revolves
around the leader’s ability, behaviours, styles or charisma. Today, learners
discuss the basic nature of leadership in terms of the “interaction” among the
people involved in the process: both leaders and followers. Thus, leadership is not
the work of a single person, rather it can be explained and defined as a
collaborative endeavour among group members. Therefore, the essence of
leadership is not the leader, but the relationship (Rost, 1993).

10 © Business Management Training College (Pty) Ltd

 LESSON 1.1
THE ROLES AND QUALITIES OF A LEADER
The qualities of a leader
While it is not realistic to establish a comprehensive list of attributes, traits or
characteristics for leadership it is possible to distinguish a number of traits that
seem to characterise most leaders. SP Robbins in “Organisational behaviour “
identified the following characteristics for leaders:

Key characteristics of charismatic leaders

 Vision and articulation
The leader has a vision expressed as an idealised goal that proposes a future
better that the status quo. The leader is able to clarify the importance of the vision
in terms that are understandable to others.
 Personal risk
The leader is willing to take high personal risks, incur high costs, and engage in
self-sacrifice to achieve the vision.
 Environmental sensitivity
The leader is able to make realistic assessments of the environmental constraints
and resources needed to bring about change.
 Sensitivity to followers needs
Perceptive to others’ abilities and responsive to their needs and feelings.
 Unconventional behaviour
The leader engages in behaviours that are perceived as novel and counter to
norms.

Key characteristics of transactional leaders:

 Contingent reward: Contracts exchange of rewards for effort, promises rewards
and recognises good performance. Recognises accomplishments.
 Management by exception (active): Watches and searches for deviations from
rules and standards, takes corrective action.
 Management by exception (passive): Intervenes only if standards are not met.
 Laissez-faire: Hand over responsibilities, avoids making decisions.

Key characteristics of transformational leaders:

 Charisma: Provides vision and sense of mission, instils pride, gains respect and
trust.
 Inspiration: Communicates high expectations, uses symbols to focus efforts,
expresses important purposes in simple ways.
 Intellectual stimulation: Promotes intelligence, rationality and careful problem
solving.
 Individualised consideration: Gives personal attention, treats each employee
individually, coaches and advises.

© Business Management Training College (Pty) Ltd

11
 LEADERSHIP
SEVEN MAJOR TRAITS THAT CHARACTERISE THE EFFECTIVE MANAGER
ARE:
1. Intelligence. Generally conceptual and of an abstract and symbolic nature.
2. Initiative. Being prepared or willing to break new ground and strike out in new
directions.
3. Supervising ability. The skill and ability to motivate, lead and control others.
Self-Assurance. The belief in one's own ability, which includes high self-esteem
and self-evaluation.
5. Occupational level. The degree to which one perceives oneself as belonging to,
and being more at home with, individuals of a high rather than a low socio-
economic status group.
6. Salience. This quality of salience may be the result of the actions, appearance,
behaviour and personality of the leader, or it may be achieved through the formal
position occupied by the leader. The President of the United States has salience
by virtue of the position of the office of the Presidency as well as by virtue of the
man himself. Naturally, some positions or offices have more salience attached to
them than others. The office of the Pope, for example, has salience even though
the occupant of the office may himself have little salience.
7. The degree to which he is able to maintain social distance from the group he
leads. Many effective leaders are able to maintain group cohesiveness and
solidarity without compromising their position and without becoming ‘one of the
boys'. Leaders invariably stand out from the rest of the group.

THE ROLES OF A LEADER

The functions of the leader are complex and varied. The importance of any
function depends on the kind of group being led and on the situation at the time.
Krech, Crutchfield and Ballachy categorise leadership functions into two classes,
namely:
 Primary functions: include those functions essential to the exercise of
leadership.
 Accessory functions: those functions that the group may assign to the leader
or those the leader may select to assume.

A. Primary functions

1. The executive function.

Quite obviously the leader is responsible for ensuring that things get done. This is
his executive role and requires the delegation and co-ordination of the many
activities of the group. The executive role has a substantial implementation and
administrative element.

12 © Business Management Training College (Pty) Ltd

 LESSON 1.1
2. The planning function.
The leader should have a better grasp of the over-all nature of the organisation
than any of the followers. As such, the leader will be heavily involved in the
establishment of the group's philosophy and in the setting of the group's
objectives. Based on the philosophy and objectives, the leader will be involved in
setting both the short- and long-term plans of the group. He will decide on how the
group is to go about achieving its objectives.
3. The policymaking function.
Related to the planning function is the policy-making function of the leader. In
establishing group objectives, goals and policies, the leader must be aware of his
personal goals, the goals of his subordinates and the requirements and policies of
his superiors. The establishment of policy is possibly the most critical of the
leader's functions.
4. The expertise function.
The leader is often expected to be a source of expert advice and information. He
frequently possesses certain skills that are essential to the group's activities. The
complexity of modern organizations and ever increasing technological advances
have forced the modern leader to rely on the advice of specialists in a wide range
of areas. As such the general leader is becoming more of an evaluator, critic and
commentator on the actions of specialists.
5. External group representative.
In most groups, particularly large organisations, it is essential for one man to act
as spokesman for the group and to represent the group to the world at large. This
function is normally undertaken by the leader. This ensures that a uniform and
consistent image of the group is portrayed and it also gives official weight to the
group's pronouncements.
6. Controller of internal relations.
The leader is responsible for the basic design of the group's structure. He
influences the nature of the responsibility, authority and communication hierarchy.
As such he is largely responsible for the control of inter-group relations.
7. Initiator of punishment and rewards.
One of the most sensitive and also abused leadership functions is the meting out
of punishment and the granting of rewards. Almost every leadership activity has
certain rewards and punishment characteristics. This function is, from the
follower's point of view, one of the most important of the leader's tasks. The leader
is frequently judged by the group on his fair and consistent handling of rewards
and punishment. The range of rewards and punishments varies substantially,
depending on the type of organisation and the constraints placed on the leader.
In some groups, the leader has the power of life and death over group members
while in other groups rewards and punishment opportunities may be limited.

© Business Management Training College (Pty) Ltd

13
 LEADERSHIP
B. Accessory Functions

1. Arbitrator and mediator.

Leaders are frequently called upon to settle inter- and intra-group conflict.
Numerous interpersonal conflicts may also be brought to his attention for
arbitration. As arbitrator and mediator, the leader can actively encourage or
discourage inter-group conflict or cooperation.

2. The leader as an exemplar.

The leader more strongly represents group norms than do any other members of
the group. As such, the leader may serve as a model for group behaviour,
attitudes and values.

3. The symbolic function.

Not only does the leader represent his group, he frequently serves as its symbol.
The monarchy or presidency of a nation is normally a symbolic position created to
enforce the unity, status and continuity of the group. The symbolic function is
frequently associated with ritual, pomp and ceremony.

4. The ideological function.

The leader frequently assumes the role of ideologist for the group. As such, he is
concerned with ideas, beliefs and values. He attempts to set the ideological
direction for the group and thus may be more concerned with the grand design of
events than with their administration.

5. The parent figure.

Many leaders, either out of choice or as a result of group pressure, serve as a
father figure to members. Most of us need the emotional gratification provided by a
father or mother figure. We need to be reassured, and sheltered (mother) and con­
trolled, dominated and disciplined (father).

6. The scapegoat function.

Once again, either out of choice or arising from group pressure, most leaders are
forced to act as targets for hostility. Just as the group sees the leader as an object
of positive emotional feelings, so they will, at times, perceive him as an object of
negative feelings.

14 © Business Management Training College (Pty) Ltd

 LESSON 1.1

 Authority
 Power
 Influence
 Delegation Leadership
 Responsibility
 Accountability

The balance of the components of leadership source: Management Principles p.273

Managers who are Leaders who are

Managers Leaders
not leaders not managers

The need to turn

good managers
into leaders
(and vice versa)

The integration of leadership and management. Source: Management principles p.276.

© Business Management Training College (Pty) Ltd

15
 LEADERSHIP

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Read Chapter 11 “Leadership”, pages 269-292.
Study 11.1 “Introduction”, pages 270-271.
Study 11.2 “The nature of leadership”, pages 271-276.
MANAGEMENT PRINCIPLES 5TH EDITION
Read Chapter 11 “Leadership”, pages 307-330.
Study 11.1 “Introduction”, pages 308-309.
Study 11.2 “The nature of leadership”, pages 309-15.

INTRODUCTION TO BUSINESS MANAGEMENT 8TH EDITION

Read Chapter 8 “Leading”, pages 209-224.
INTRODUCTION TO BUSINESS MANAGEMENT 9TH EDITION
Read Chapter 9 “Leading”, pages 224-239.

16 © Business Management Training College (Pty) Ltd

 LESSON 1.2
LESSON 1.2
MANAGEMENT VERSUS LEADERSHIP

In this Lesson:
The power impulse has two forms: explicit, in leaders, implicit in their
followers. When men willingly follow a leader they do so with a view to
the acquisition of power by the group which he commands and they feel that
his triumphs are theirs.

Most men do not feel in themselves the competence required for leading their
group to victory and therefore seek out a captain who appears to possess the
courage and sagacity necessary for the achievement of supremacy."

Few aspects of man's existence have generated as much interest or

discussion as the role of leadership in society. We are all fascinated by the
drama that inevitably surrounds leadership and the leader. We consider a
leader to be at the centre of events and assume that his will can influence our
lives. Any assessment of history will invariably focus on the men and women
who `changed the tide of events'.

So pronounced is this tendency that we even label periods of history by the

leaders that influenced them. When we refer to the Victorian age or the
Napoleonic era we conjure up a vision of the leader as an embodiment of his
or her times. This vision is, of course, influenced by time and by subsequent
events. Historians, too, often distort the image of the leader and his role in
society.

Our understanding of leadership is normally clouded by visions of the truly

great leaders and by an emotional assessment of their deeds. Thus it
becomes difficult to define leadership or to evaluate the nature of the concept.

For many years, writers and researchers concentrated their studies on the
leader himself. It was assumed that by understanding the leader-his physical
and psychological characteristics-one could understand the concept of
leadership. For a variety of reasons, this theory or approach is no longer
considered viable. Alternative approaches will be discussed in the next lesson.

© Business Management Training College (Pty) Ltd

17
 LEADERSHIP
Key points:
 Management and leadership are two distinct and complementary sets of
management activities.
 A person can either be a manager only without being a strong leader, or a
leader, or both.
 For success it is necessary to be both.
 Management involves coping with practices and procedures to make organisations
work.
 Leadership is about setting the direction.
 Management focuses on non-behavioural aspects while leadership focuses
on behavioural aspects.

Management versus leadership:

Source Daring 1992 and Nanus 1992. Adapted from Human Resource
Management Theory and Practice - B Swanepoel. p.357.

A manager: A leader:
 Administers  Innovates
 Is a copy  Is an original
 Focuses on systems  Focuses on people
 Relies on control  Inspires trust
 Has a short range view  Has a long range perspective
 Asks how? and when?  Asks what? and why?
 Has his/her eye on the bottom line  Has his/her eye on the horizon
 Imitates  Originates
 Accepts the status quo  Challenges the status quo
 Is the classic good soldier  Is his/her own person
 Does things right  Does the right thing.

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study 11.3 “Leadership and management”, pages 277-278.
MANAGEMENT PRINCIPLES 5TH EDITION
Study 11.3 “Leadership and management”, pages 315-316.

18 © Business Management Training College (Pty) Ltd

 LESSON 1.3
LESSON 1.3
THEORETICAL FOUNDATIONS AND DIFFERENT
APPROACHES TO LEADERSHIP

In this Lesson:

Over the years research have been done to determine what it is that
makes a person a good leader. Is a good leader born, or can someone be
made into a good leader?
In searching for traits or behaviours that make good leaders, various
leadership models have been researched. This has produced many
approaches, perspectives, theories, and models of leadership.
In this lesson we will look at the following:
 The leadership characteristics or traits approach
 The behavioural approach
 The contingency approach
 Fiedler’s contingency theory of leadership
 Hersey and Blanchard’s leadership cycle model
 The Vroom-Yetto-Jago model
 The Path-goal theory.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Trait theories of leadership: attempt to isolate characteristics that

differentiate leaders from non-leaders.
 Task-orientated leader: is concerned primarily with supervision and control.
 Employee-orientated leader: applies less control and more motivation.

© Business Management Training College (Pty) Ltd

19
 LEADERSHIP
Key points:
 Leadership characteristics: Personal qualities of leaders are looked at. The idea
here is that strong leaders had certain basic traits that distinguished them from non
-leaders. Research can be regarded as unsuccessful. There were so many
exceptions in the results each time and at the end, after 3000 studies have been
conducted, no one has compiled a universal list of traits that all successful leaders
possess.

 The behavioural approach: researches decided now to look at the behaviour of

leaders for an answer, in other words look at what a leader did instead of what a
leader was. They believed that behaviour, unlike traits, could be acquired, therefore
a manager could be trained in the right behaviour variables.
 Studies at the University of Michigan identified two forms of leadership behaviour :
Task orientated leaders (autocratic) and Employee-orientated leaders (democratic).
 Their research also found that production was higher among democratic leadership
than autocratic leadership and that that both dimensions of leadership (task- and
employee orientated) may be necessary for success.
 A leadership grid was developed so that managers could be trained towards the
ideal leadership style.

 The contingency or situational approach: researchers start identifying factors in

each situation that influence the effectiveness of leadership. Leader’s success is
often determined by their ability to sum up a situation and adapt their style of
leadership accordingly.

 Fiedler’s contingency theory: assumes that successful leadership depends on

the match between the leader, the subordinate and the situation.

 Hersey and Blanchard’s leadership cycle model: the most effective

management style for a situation is determined by the maturity of the subordinates.

 The Vroom-Yetton-Jago model: the leader’s behaviour must adjust to reflect the
task structure. This model is complex to use and not widely used by managers.

 Path-goal theory: it is the leader’s job to assist his or her followers in attaining
their goals and to provide the necessary direction and support.
Four styles were identified:
 The directive leader
 The supportive leader
 The participative leader
 The achievement oriented leader.

20 © Business Management Training College (Pty) Ltd

 LESSON 1.3
EARLY APPROACHES TO LEADERSHIP

An interesting exercise involves asking a group of people the question: ‘What

makes a great leader?' Normally, they will respond with words or phrases such as
integrity, personality, confidence, ruthlessness, courage, ambition, intelligence,
ability, common sense, vision, knowledge, etc. If all these words or phrases are
then written on a blackboard, a composite picture begins to emerge of what
qualities, traits or attributes the group believes a great leader should possess.
After a few minutes, however, it will become apparent that the group disagrees on
what leadership means and what traits a leader should possess. At this stage,
several members of the group will start to question the possibility or validity of
listing any series of traits that are meaningful.

They will begin to say that it depends on the situation or circumstances. This is the
point when the questioner could ask: `Is there such a thing as a man for all
seasons?' In other words, can a great leader be effective in a variety of fields at
different periods in history? Once again heated discussion will ensue, with some
people stating that a great leader is great regardless of the circumstances, time or
field. Others will strongly disagree and names such as Churchill, Napoleon, Ford,
etc. will be boasted about.

It is at this point that the questioner should call a halt to the discussion and present
to the group two well-known approaches to leadership, namely the trait approach
and the situational approach.

THE TRAIT THEORY

For many years the study of leadership involved the study of the leader himself. In
particular, scholars attempted to determine the unique characteristics of the
leader. Emphasis was placed on what characteristics made a leader. A logical
extension of this approach was to assume that if one could determine the key
characteristics of a leader then one could compare these characteristics with those
of other leaders. Ultimately hundreds of leaders could be studied and their traits
determined. From these traits or attributes, profiles could be developed showing
those traits that appear common to all leaders.

Another logical extension of this hypothesis was to assume that once the critical
leadership traits were known, one could assume that they were universal. In other
words, a possessor of the essential leadership traits was considered to have the
potential for leadership in any field or era. A man for all seasons.

© Business Management Training College (Pty) Ltd

21
 LEADERSHIP
This means that a great military general could be a great church leader,
industrialist, statesman or politician in his own time, in the past or in the future.
While accepting the theory that some men are better endowed with leadership
traits than others, it would appear naive to assume that these endowments are
either universal or God-given.

The trait approach seems to overlook the fact that leadership is dynamic and that
people function as leaders in a particular time and place.

Leadership does not operate in a vacuum. It is exercised in a social context, which

is itself dynamic and changing. Leadership, therefore, is not a state of being. It has
broad social and cultural overtones that are vitally connected to time and place.
Change the time and place and you change the situation in which leadership is to
be exercised. This change frequently requires a change of leadership. This in no
way denigrates the characteristics of the deposed leader it merely highlights the
fact that there probably is no `man for all seasons'.

Recent history is replete with examples of great men being made and destroyed
by circumstances and events. The cliché of `the man of the hour' probably has
validity in an understanding of the theory of leadership.

BEHAVIOURAL THEORY:
Several alterative approaches to leadership emerged in line with the behavioural
movement in the late 1950s. The first of these approaches was the move to outline
the characteristic patterns or styles of leadership behaviour such as Lewin’s
(1939) “Three classic styles of leader behaviour”, the “Michigan and Ohio states
studies”, and the managerial grid of Blake and Mouton (1964).

The managerial/leadership grid was developed by Blake and Mouton and

evaluates leader behaviour along two dimensions. Concern for productivity and
concern for human resources (people). The grid has nine possible positions along
axis, creating eighty one different positions in which the leader may fall. Based on
the findings of Blake and Mouton, managers were found to perform best under a 9
-9 style as contracted with an 9-1 Authority type leader or 1-9 Country club style
leader.

Study the explanation of the managerial grid carefully on the following pages.

22 © Business Management Training College (Pty) Ltd

 LESSON 1.3
Country club management: 9-1(Sociable style)
The leader has a high concern for people and low concern for productivity. The
leader is convinced that people offer resistance if too much emphasis is placed on
production. According to this leader people are by nature loyal and dutiful and will,
of their own accord, rectify their faults. If they like you they will do their best. He/
she avoids conflict by getting his employees to agree with one another.
Comfortable, friendly work environment and work temp.

Example of a 9-1 leader: The secretary asks her manager for time off from work
to go to the dentist. The manager replies: “Sure, you may go now and take the rest
of the afternoon off.

9
High

8
7
Concern for people

6
5
4
3
2
1
1 2 3 4 5 6 7 8 9
Low Concern for productivity High
Low

Authority compliance/Obedience: 1-9 (Slave driver)

Performance is demanded with minimum consideration for people. The leader is

strongly motivated to achieve the best results. He/she thrives on competition which
he can win thus proving him/herself. The leader believes that as a manager, he/
she carries the authority and responsibility which cannot be shared with
colleagues, and certainly not with subordinates. Efficiency in operations results
from arranging conditions of work in such a way that people elements are
disregarded and influence productivity to a minimum level.
Example of a 1-9 leader: The secretary asks her manager for time of from work to
go to the dentist. The manager replies: “No, you may not go this month and I
expect you to work overtime each weekend as we are currently behind on our
production schedule.

© Business Management Training College (Pty) Ltd

23
 LEADERSHIP
9

High
8
7

Concern for people

6
5
4
3
2
1
1 2 3 4 5 6 7 8 9
Low Concern for productivity High
Low

Middle-of-the-road management: 5-5 (Neutral style)

Adequate performance is possible by means of a combination of pressure for work
performance and adequate job satisfaction and regard for people. The 5-5 leader
maintains a balance between work achievement and employees by “giving and
taking”. He/she gets results by motivation and guidance and by being neutral. He/
she would set goals in order to motivate employees. He believes in equality. He
might use the technique of “holding a carrot in front of the employees noses”. The
leader believes in doing it the old way - “He will split the difference”
Example of a 5-5 leader: The secretary asks her manager for time of from work to
go to the dentist. The manager replies: “Yes, you may go later in the week when
most of your work is completed.
9
High

8
7
Concern for people

6
5
4
3
2
1
1 2 3 4 5 6 7 8 9
Low Concern for productivity High
Low

24 © Business Management Training College (Pty) Ltd

 LESSON 1.3
Team Management: 9-9 (Ideal style)
Achievement is attained by workers who are motivated and pursue the goals of the
organisation with good will. Work accomplishment is from committed people.
Interdependence through a common stake in organisation purpose leads to
relationships of trust and respect. The 9-9 manager sees to it that no inherent
conflict exists between the production aims of the organisation and the needs of
the employees. That is why he will actively involve everyone who has a direct
interest in the decision making process in order to get full involvement.

Example of a 9-9 leader: The secretary asks her manager for time of from work to
go to the dentist. She states: “I have completed all my duties for the day and
urgently need to go to the dentist. I will be away for only an half and hour and will
return as soon as am finished. I’ve arranged with Margaret to stand in for me. I
have also taken care of the arrangements for our after work meeting. The
manager replies: “Thank you for your loyalty and commitment”.

9
High

8
7
Concern for people

6
5
4
3
2
1
1 2 3 4 5 6 7 8 9
Low Concern for productivity High
Low

Impoverished management 1-1:(Zero effectivity)

Minimum effort is made to get work done. Exertion of minimum effort to get
required work done is appropriate to sustain organisational membership. The 1-1
manager does not try to exercise any influence but follows the crowd in a passive
manner. He/she is only interested in himself and in safeguarding his own position.
The leader acts within the rules in order to be as inconspicuous as possible. He/
she ignores conflict or withdraws if confronted. When pressed for an opinion he/
she tries to evade the issue by means of a joke or excuse. As long as everything
remains as it is, an no one is troublesome, he/she is happy.

© Business Management Training College (Pty) Ltd

25
 LEADERSHIP
Example of a 1-1 leader: The secretary asks her manager for time of from work to
go to the dentist. Manager replies: “Go if you want to, just don’t tell any one I said
you may go.”

9
High

8
7
Concern for people

6
5
4
3
2
1
1 2 3 4 5 6 7 8 9
Low Concern for productivity High
Low

CONTINGENCY THEORY
A third theory focuses on situational factors that determine the patterns of
leadership. This approach assumes that effective leadership depends on the
particular situation and involves a fit between personality, task, power, attitude and
perceptions. Effective managers diagnose the situation, identify the leadership
style that will be most affective and then determine whether they can implement
the required style.
Different theories emerged:
 Fiedler’s contingency model (p.282 in the text book).
 Hersey and Blanchard’s leadership cycle model (p.282 in the text book).
Hersey and Blanchard (1982) support the contention that there is no best
leadership style, and pointed out that successful and effective leaders are able to
adapt their style to fit the requirements of the situations.
 The vroom-Yetton-Jago Model (p.284 in the text book).

26 © Business Management Training College (Pty) Ltd

 LESSON 1.3
THE SITUATIONAL APPROACH

Different situations call for different behaviour patterns in all men. This is
particularly so for the leader. One set of circumstances may require a variety of
behaviour patterns and leadership roles that may be filled by more than one
member of the group. When the setting changes, roles may be reversed, even
though group members remain relatively constant.

The situational approach is thus based less on the persisting traits of the leader
and more on the leader's ability to fulfil the functions expected in the situation. In
other words, each group and each situation requires the performance of a number
of key leader­ship functions or tasks. As the situation changes, so the required or
expected functions may change and a new leader emerge better able to cope with
the new requirements.

EXAMPLE:
A simple story illustrates the theory well:

A middle-aged schoolmaster decides to take a group of eight 16-year-old boys on

a two-week hiking and mountaineering expedition to Namibia. The purpose of the
trip is to study the flora and fauna of the region. The schoolmaster is naturally the
leader of the expedition. He makes all the travel arrangements, plots the route the
group is to take and sets the study objectives for the trip.

The group arrives in Windhoek where a small bus is waiting for them at the airport.
They then begin their journey into the bush. The schoolmaster is respected and
deferred to in all arrangements. He is the leader. The trip progresses smoothly and
the boys are enjoying the drives and the hikes. One of the boys, Hans, rapidly
becomes influential with the group. He speaks English, Afrikaans and German. He
is better able to communicate with the people the group meets. The teacher and
the boys frequently ask him to assist them in making arrangements.

After a few days, Hans begins to take the initiative and makes many of the
camping, travel and shop­ping arrangements without being asked. On the sixth
day the group park the bus and begin a four-day hike into the interior. They carry
their provisions. Peter, the tallest and strongest of the group, is frequently asked to
scout ahead and to assist in carrying more than his fair share. He does this with
ease.

By the end of the second day of the hike Peter has emerged as the guide. He
gives instructions on where to walk, where to camp, what mountains to climb and

© Business Management Training College (Pty) Ltd

27
 LEADERSHIP
so on. On the third day, Peter leads the group into an extremely barren and
desolate area. Temperatures are high and there is no shade. The group begins to
get nervous and provisions are running out. Peter's influence begins to wane. He
is no longer sure of himself. The schoolmaster is concerned. He feels he should
not have let Peter have his head. The boys agree.

On the fourth day the group is still in the desert. Water is running out and two of
the boys are not well. They are finding it difficult to walk. A meeting is held. The
schoolmaster wants to stop walking. He hopes to be rescued. The two sick boys
agree, while the other six wish to press on to the distant moun­tain range. The
schoolmaster tries to assert himself, but the six boys, led by Fred, refuse to halt.
Fred is the most retiring of the boys but he is the school's long-distance running
champion. Fred has his way and leads the group on. Peter helps the two sick boys
to walk.

After a few hours in the blazing heat the schoolmaster calls a halt and suggests
they make two stretchers for the sick boys. He also suggests that Fred walk on
ahead to the mountains to look for help while the others follow on behind. The
group agrees. By nightfall the group is still some distance from the mountains and
Fred has not returned. On the fourth day the water has run out and panic begins to
grip the group. One of the sick boys is becoming steadily worse.

The group makes slow progress toward the mountains. Peter is a tower of
strength. He seems to be carrying most of the equipment as well as one of the
stretchers. He keeps the group together with encouraging advice. By nightfall they
are near the foot of the moun­tains. The schoolmaster now sends some of the
boys into the hills to collect wood for a fire. The fire is lit and two hours later they
are found by Fred and a farmer, who speaks only German. Hans explains their
plight and the farmer goes off to organise a rescue party. Fred is a hero.
Twenty-four hours later they are back in Windhoek, where the schoolmaster
immediately begins arranging for their return to Cape Town.

This simple story clearly illustrates the dynamic nature of influence and leadership
in changing circumstances.

The schoolmaster is the formal leader and is able to impose his authority on the
group under normal conditions. As circumstances change, so we see the
emergence of informal leaders who are better able to fulfil the functions required of
a leader.

28 © Business Management Training College (Pty) Ltd

 LESSON 1.3
An effective leader is someone that leads according to principles. This is called
principle-centred leadership. A leader exercises a profound influence on the lives
of his/ her subordinates, and should therefore have a set of values or principles to
ensure that his/her leadership will be effective and successful.

FOUR LEVELS, FOUR PRINCIPLES:

Principle-centred leadership is practiced from the inside out on four levels:
1. personal (my relationship with myself);
2. interpersonal (my relationships and interactions with others);
3. managerial (my respon­sibility to get a job done with others); and
4. organisational (my need to organise people to recruit them, train them,
compensate them, build teams, solve problems, and create aligned structure,
strategy, and systems).

Each level is "necessary but insufficient," meaning we have to work at all levels on
the basis of certain master principles. In this section, I will focus on the first two
principles:

• Trustworthiness at the personal level.

Trustworthiness is based on character, what you are as a person, and

competence, what you can do. If you have faith in my character but not in my
competence, you still wouldn't trust me. Many good, honest people gradually lose
their professional trustworthiness because they allow themselves to become
"obsolete" inside their organisations. Without character and competence, we won't
be considered trustworthy, nor will we show much wisdom in our choices and
decisions. Without meaningful on-going professional development, there is little
trustworthiness or trust.

• Trust at the interpersonal level.

Trustworthiness is the foundation of trust. Trust is the emotional bank account

between two people that enables them to have a win-win performance agreement.
If two people trust each other, based on the trustworthiness of each other, they
can then enjoy clear communication, empathy, synergy, and productive
interdependency. If one is incompetent, training and development can help. But if
one has a character flaw, he or she must make and keep promises to increase
internal security, improve skills, and rebuild relationships of trust.

Trust, or the lack of it, is at the root of success or failure in relationships and in the
bottom-line results of business, industry, education, and government.

© Business Management Training College (Pty) Ltd

29
 LEADERSHIP
CHARACTERISTICS OF PEOPLE WHO ARE PRINCIPLE-CENTRED LEADERS
1) They are continually learning
Principle-centred people are constantly educated by their experiences.
 They read,
 they seek training,
 they take classes,
 they listen to others,
 they learn through both their ears and their eyes.
 They are curious, always asking questions.
 They continually expand their competence, their ability to do things.
 They develop new skills, new interests.
 They discover that the more they know, the more they realise they don't know; that
as their circle of knowledge grows, so does its outside edge of ignorance.

Most of this learning and growth energy is self-initiated and feeds upon itself.

You will develop your abilities faster by learning to make and keep promises or
commitments. Start by making a small promise to yourself; continue fulfilling that
promise until you have a sense that you have a little more control over yourself.
Now take the next level of challenge. Make yourself a promise and keep it until you
have established control at that level. Now move to the next level; make the
promise, keep it. As you do this, your sense of personal worth will increase; your
sense of self-mastery will grow, as will your confidence that you can master the
next level.

Be serious and intent in the whole process, however, if you make this commitment
to yourself and then break it, your self-esteem will be weakened and your capacity
to make and keep another promise will be decreased.

2) They are service-oriented

Those striving to be principle-centred see life as a mission, not as a career. Their
nurturing sources have armed and prepared them for service. In effect, every
morning they "yoke up" and put on the harness of service, thinking of others.

See yourself each morning yoking up, putting on the harness of service in your
various stewardships. See yourself taking the straps and connecting them around
your shoulders as you prepare to do the work assigned to you that day. See
yourself allowing someone else to adjust the yoke or harness. See yourself yoked
up to another person at your side, a co-worker or spouse, and learn to pull
together with that person.

30 © Business Management Training College (Pty) Ltd

 LESSON 1.3
I emphasise this principle of service or yoking up because I have come to believe
that effort to become principle-centred without a load to carry simply will not
succeed. We may attempt to do it as a kind of intellectual or moral exercise, but if
we don't have a sense of responsibility, of service, of contribution, something we
need to pull or push, it becomes a futile endeavour.

3) They radiate positive energy

 The countenances of principle-centred people are cheerful, pleasant, and happy.

 Their attitude is optimistic, positive, and upbeat.
 Their spirit is enthusiastic, hopeful, believing.

This positive energy is like an energy field or an aura that surrounds them and that
similarly charges or changes weaker, negative energy fields around them.

They also attract and magnify smaller positive energy fields. When they come into
contact with strong, negative energy sources, they tend either to neutralise or to
sidestep this negative energy. Sometimes they will simply leave it, walking away
from its poisonous orbit. Wisdom gives them a sense of how strong it is and a
sense of humour and of timing in dealing with it.

Be aware of the effect of your own energy and understand how you radiate and
direct it. And in the middle of confusion or contention or negative energy, strive to
be a peacemaker, a harmoniser, to undo or reverse destructive energy.

You will discover what a self-fulfilling prophecy positive energy is when combined
with the next characteristic.

4) They believe in other people

Principle-centred people don't overreact to negative behaviours, criticism, or

human weaknesses.
 They don't feel built up when they discover the weaknesses of others.
 They are not naive; they are aware of weakness. But they realise that behaviour
and potential are two different things.
 They believe in the unseen potential of all people.
 They feel grateful for their blessings and feel naturally to compassionately forgive
and forget the offences of others.
 They don't carry grudges.
 They refuse to label other people, to stereotype, categorise, and prejudge. Rather,
they see the oak tree in the acorn and understand the process of helping the acorn
become a great oak.

© Business Management Training College (Pty) Ltd

31
 LEADERSHIP
Truly, believing is seeing. We must, therefore, seek to believe in the unseen
potential. This creates a climate for growth and opportunity.

Self-centred people believe that the key lies in them, in their techniques, in doing
"their thing" to others. This works only temporarily. If you believe it's "in" them, not
"in" you, you relax, accept, affirm, and let it happen. Either way it is a self-fulfilling
prophecy.

5) They lead balanced lives

 They read the best literature and magazines and keep up with current affairs and
events.
 They are active socially, having many friends and a few confidants.
 They are active intellectually, having many interests.
 They read, watch, observe, and learn.
 Within the limits of age and health, they are active physically.
 They have a lot of fun.
 They enjoy themselves.
 They have a healthy sense of humour, particularly laughing at themselves and not
at others' expense.
 You can sense they have a healthy regard for and honesty about themselves.
 They can feel their own worth, which is manifest by their courage and integrity and
by the absence of a need to brag, to drop names, to borrow strength from
possessions or credentials or titles or past achievements.
 They are open in their communication, simple, direct, non-manipulative.
 They also have a sense of what is appropriate, and they would sooner react on the
side of understatement than on the side of exaggeration.
 They are not extremists they do not make everything all or nothing. They do not
divide everything into two parts, seeing everything as good or bad, as either/or.
 They think in terms of continuums, priorities, and hierarchies.
 They have the power to discriminate, to sense the similarities and differences in
each situation. This does not mean they see everything in terms of situational
ethics. They fully recognise absolutes and courageously condemn the bad and
champion the good.
 Their actions and attitudes are proportionate to the situation balanced, temperate,
moderate, and wise. For instance, they're not workaholics, religious zealots,
political fanatics, diet crashers, food bingers, pleasure addicts, or fasting martyrs.
They're not slavishly chained to their plans and schedules. They don't condemn
themselves for every foolish mistake or social blunder. They don't brood about
yesterday or daydream about tomorrow. They live sensibly in the present, carefully
plan the future, and flexibly adapt to changing circumstances.
 Their self-honesty is revealed by their sense of humour, their willingness to admit
and then forget mistakes, and to cheerfully do the things ahead that lie within their
32 © Business Management Training College (Pty) Ltd
 LESSON 1.3
power.
 They have no need to manipulate through either intimidating anger or self-pitying
martyrdom. They are genuinely happy for others' successes and do not feel in any
sense that these take anything from them.
 They take both praise and blame proportionately without head trips or
overreactions.
 They see success on the far side of failure. The only real failure for them is the
experience not learned from.

6) They see life as an adventure

Principle-centred people savour life.

Because their security comes from within instead of from without, they have no
need to categorise and stereotype everything and everybody in life to give them a
sense of certainty and predictability. They see old faces freshly, old scenes as if
for the first time.
 They are like courageous explorers going on an expedition into uncharted
territories; they are really not sure what is going to happen, but they are confident
it will be exciting and growth producing and that they will discover new territory and
make new contributions.
 Their security lies in their initiative, resourcefulness, creativity, willpower, courage,
stamina, and native intelligence rather than in the safety, protection, and
abundance of their home camps, of their comfort zones.
 They rediscover people each time they meet them. They are interested in them.
They ask questions and get involved. They are completely present when they
listen. They learn from them. They don't label them from past successes or
failures.
 They see no one bigger than life. They are not overawed by top government
figures or celebrities.
 They resist becoming any person's disciple. They are basically unflappable and
capable of adapting virtually to anything that comes along.
 One of their fixed principles is flexibility.
 They truly lead the abundant life.

7) They are synergistic

Synergy is the state in which the whole is more than the sum of the parts.
Principle-centred people are synergistic.
 They are change catalysts.
 They improve almost any situation they get into.
 They work as smart as they work hard.
 They are amazingly productive, but in new and creative ways.
 In team endeavours they build on their strengths and strive to complement their

© Business Management Training College (Pty) Ltd

33
 LEADERSHIP
weaknesses with the strengths of others.
 Delegation for results is easy and natural to them, since they believe in others'
strengths and capacities. And since they are not threatened by the fact that others
are better in some ways, they feel no need to supervise them closely.
 When principle-centred people negotiate and communicate with others in
seemingly adversarial situations, they learn to separate the people from the
problem. They focus on the other person's interests and concerns rather than fight
over positions. Gradually others discover their sincerity and become part of a
creative problem-solving process. Together they arrive at synergistic solutions,
which are usually much better than any of the original proposals, as opposed to
compromise solutions wherein both parties give and take a little.

8) They exercise for self-renewal

Finally, they regularly exercise the four dimensions of the human personality:
 physical,
 mental,
 emotional, and
 spiritual.

They participate in some kind of balanced, moderate, regular program of aerobic

exercise, meaning cardiovascular exercise using the large leg muscles and
working the heart and lungs. This provides endurance, improving the capacity of
the body and brain to use oxygen along with many other physical and mental
benefits. Also valuable are stretching exercises for flexibility and resistance exer­
cises for strength and muscle tone.

They exercise their minds through reading, creative problem solving, writing, and
visualising.

Emotionally they make an effort to be patient, to listen to others with genuine

empathy, to show unconditional love, and to accept responsibility for their own lives
and decisions and reactions.

Spiritually they focus on prayer, scripture study, meditation, and fasting.

If a person will spend one hour a day on these basic exercises, he or she will
improve the quality, productivity, and satisfaction of every other hour of the day,
including the depth and restfulness of sleep. No other single hour of your day will
return as much as the hour you invest in sharpening the saw in other words in
exercising these four dimensions of the human personality. If you will do this daily,
you will soon experience the impact for good on your life.

34 © Business Management Training College (Pty) Ltd

 LESSON 1.3
Some of these activities may be done in the normal course of the day; others will
need to be scheduled into the day. They take some time, but in the long run they
save us a great deal of time. We must never get too busy sawing to take time to
sharpen the saw, never too busy driving to take time to get gas.

If I do this hour of exercise early in the morning, it is like a private victory and just
about guarantees public victories throughout the day. But if you take the course of
least resistance and neglect all or part of this program, you forfeit that private
victory and find yourself uprooted by public pressures and stresses through the
day.

These principles of self-renewal will gradually produce a strong and healthy

character with a powerfully disciplined, service-focused will.

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study 11.4 “The theoretical foundations of leadership”, pages 278-285.
MANAGEMENT PRINCIPLES 5TH EDITION
Study 11.4 “The theoretical foundations of leadership”, pages 316-327.

© Business Management Training College (Pty) Ltd

35
 LEADERSHIP

LESSON 1.4
CONTEMPORARY PERSPECTIVES ON
LEADERSHIP

In this Lesson:

Previous approaches and theories have contributed a great deal to knowledge

about leadership, but each one still has its shortcomings.
Research still continues, and is moving in many directions.

Key points:
 Transactional leadership: also known as traditional leaders, they clarify roles,
initiate structure and provide rewards. They direct and control in a stable structure
and they conform to organisational norms and values.
Shortcoming: they may be counterproductive
 Charismatic leader: an individual that has an exceptional impact on their
organisations and have the capacity to motivate people to do more than what is
expected of them. They create an atmosphere of change.
Shortcoming: they may be unpredictable.
 Transformational leadership: they are capable of taking an organisation through
major change. They have the ability to make successful changes in the vision,
mission, goals, strategies, structure, culture, etc. This leadership style is most
appropriate in dynamic situations.
 Female leadership: women tend to engage in leadership behaviour that is
interactive. They are concerned with consensus building, is open and inclusive and
is generally more caring than other leadership styles.
 Dynamic engagement: researches tried to single out the behaviours that leaders
use to get extra-ordinary things done.
 Attribution theory: leaders ask themselves: ‘why did a subordinate act in this
specific way?’ Then they modify their behaviour to guide their followers.
 Substitutes for leadership: this assumed that a subordinate’s job satisfaction
and performance do not necessarily depend on the behaviour of the leader.
Certain factors like ability, skill, experience and need for independence also
influence the performance and job satisfaction of subordinates and are known as
substitutes for leadership.

36 © Business Management Training College (Pty) Ltd

 LESSON 1.4
 Practices and behaviours of exceptional leaders:
Most exceptional leaders and displayed the following behaviours:
 They challenged the process.
 They inspired people to share their vision
 They enabled others to react.
 They modelled the way and set an example every day.
 They encourage and give credit where it is due.

A POST INDUSTRIAL APPROACH TO LEADERSHIP

Charismatic leadership
The charismatic leadership theory emerged in the late 1980’ and is an extension of
the attribution theory; like the trait theories, it assumes that charisma is an
individual characteristic of the leader. Although traits may play a role in charismatic
leadership, there is a growing belief that it makes more sense to view such
leadership as involving a special type of relationship with followers. Charismatic
leadership may not always be needed to achieve high levels of employee
performance. That is why charismatic leaders are most likely to emerge when an
organisation is introducing a radically new product or facing a life threatening
crisis, normally in times of dramatic change.

Transformational leadership
Transformational leadership emerged in the 1990s and is closely related to
charismatic leadership. Transformational leadership is the set of abilities that
allows the leader to recognise the need for change, to create a vision to guide that
change, and to execute the change effectively. This type of leader can influence in
every direction - downwards with subordinates, laterally with colleagues and
upwards with superiors as well as outwards with clients and customers.
Transformational leaders can change the culture of the organisation.

Transactional leadership

The charismatic leader may want followers to adopt the charismatic’s world view
and go no further.
The transformational leader will attempt to instil in followers the ability to
question not only established views but eventually those established by the
leader.

© Business Management Training College (Pty) Ltd

37
 LEADERSHIP
The three C’s of leadership excellence:

Care

Character

Competence

Fundamental practices and behaviours of exceptional leaders.

Adapted from Management principles Smit. Cronje, Brevis and Vrba. Source Kouzos, JM & Posner, BZ, in
Stoner, JAF, Freeman, RE & Gilbert, DR. 1992. Management. Englewood Cliffs, NJ: Pretice-Hall, p.488; and
Mandela, N.1994. Long walk to freedom. Randburg: Macdonald Purnell.

Practices and behaviour of exceptional Practices and behaviour of former

leaders President Mandela

He challenged the apartheid system and

Challenging the process
used every opportunity to change it. His risks
 Search for opportunities
included prosecution and a 27 year prison
 Experiment and takes risks
term.

After his release and his inauguration as

South Africa’s first black president, he
Inspiring a shared vision
inspired every South African with his vision
 Envisioned the future
of a democratic South Africa. He enlisted
 Enlist others
even former opponents as supporters and
members of his “rainbow nation”.

President Mandela was instrumental in

Enabling others to act
moving South Africa towards black majority
 Foster collaboration
rule, thereby creating an environment of
 Strengthen others
enablement.

Since his release he has emerged as the

Modelling the way
world’s most significant moral leader since
 Set the example
Mahatma Gandhi. Each day he sets the
 Plan small wins
example for reconciliation.

Nelson Mandela constantly encourages all

Encouraging the heart
South Africans to become part of his vision
 Recognise the individual contribution
of one nation, and he gives credit where it is
 Celebrate accomplishment
due - even to former opponents.

38 © Business Management Training College (Pty) Ltd

 LESSON 1.4
EMERGENT AND FORMAL LEADERSHIP

The previous example of the situational approach not only demonstrates the
importance of time and place in leadership, but also highlights the distinction
between formal leadership and emergent leadership.

Formal Leadership

Formal leadership is frequently referred to as imposed leadership. It is normally

imposed on the group by someone in superior authority. For example, the
marketing director appoints the sales manager as the formal leader of the sales
force. The sales force may have little or no choice in the selection of the sales
manager.

Formal leadership is thus established by the organisation. It is leadership that the

organisation delegates to specific individuals in the hierarchy.

As such, formal leadership is closely associated with position and authority. Each
leader or manager is formally appointed to a specific position. This position has
clearly established authority. The formal leader is thus empowered to use these
authorities to motivate and control the members (followers) in his department or
group.

Authority is here defined, as the formally delegated power the leader is entitled to
exercise over the people that report to him or for whom he is responsible. The
essential element of formal leadership is that it is given or delegated to the
individual by the organisation.

Formal leadership is closely associated with position status. Position status can be
defined as the status associated with the individual's formal position in the
organisation and not with the individual personally.

Emergent Leadership

Emergent leadership is essentially based upon group consent. It denotes the

individual the group has consciously selected to be their leader. As such, the
leader is dependent upon the group for his position status, influence and authority.
The group can, at any time, curb or even withdraw its support for the emergent
leader.

© Business Management Training College (Pty) Ltd

39
 LEADERSHIP
Emergent leadership is thus more closely associated with influence than with
authority. It is also more closely associated with the individual than with the
position. The emergent leader is the individual who, for a variety of reasons, is the
most highly respected by the other members of the group.

He is the person the other members look to for advice, expertise, assistance,
support and representation. He may be the most intelli­gent, the strongest, the
wisest or the most aggressive member of the group and for these and other
reasons the group defers to him.

The emergent leader may or may not be given formal authority by the group. His
role or effectiveness is dependent upon his influence and not on delegated
authority. As such, he is followed not because he has the power or authority to
punish, but rather because group members recognise that he can do more for
them than any other member of the group.

Informal or emergent leadership is associated with interpersonal relations rather

than with bureaucratic procedures or regulations. Emergent leadership is closely
associated with personal status. Personal status can be defined as the status
associated with the individual and not with the position he formally occupied.

THE RELATIONSHIP BETWEEN EMERGENT AND FORMAL LEADERSHIP

As mentioned previously, emergent leadership is associated with group consent

and influence, while formal leadership is a function of organisational design and
authority. As in most aspects of organisational behaviour, it is desirable to ensure a
high degree of congruence between the formal and informal leader. Ideally, the
formal leader should be one and the same as the informal or emergent leader. In
other words, the group should concur with superior authority that the man
appointed as its leader is the man it would have chosen.

Thus it is desirable that, before appointing a formal leader, the organisation should,
where possible, ensure that the man is perceived by the group as the one it would
have chosen without any external pressure.

As in the case of position and personal status, it is not uncommon to observe

incongruence between the formal leader's authority and his influence. All too often
an individual is formally appointed to a position in which he does not have the
respect or confidence of those he is expected to lead. The group may feel he is
inadequate for the task and may believe that one of its members could do the job
better.

40 © Business Management Training College (Pty) Ltd

 LESSON 1.4
The formal leader is at an immediate and constant disadvantage in such a
situation. His behaviour may take one of three forms or a combination of these
forms. He may become aggressive, retiring or reconciled.

A: The aggressive formal leader will:

 Compensate for his inability by becoming unduly belligerent and by resorting to the
continual use of authority.
 He may see any disagreement as a breach of loyalty and as a personal attack on
himself.
 He may continually try to cover his own inadequacies by placing the blame on
members of his group, or on other people or groups in the organisation.
 He will tend to rationalise his failures to himself and to his superiors.

B) The retiring leader will demonstrate his insecurity by

 Isolating himself from the group.
 He will attempt to manage from a distance.
 He will avoid conflict by avoiding contact.
 He will try to avoid failure by abdicating his decision making responsibility.

C) The reconciled leader will:

 Recognise that he is out of his depth and that there are others in the group better
able to do the job.
 He will try to secure a transfer and, if this is not possible, he will abdicate much of
his authority to the group and its informal leader.
 He may even be able to operate relatively harmoniously with the group and its
emergent leader provided he recognises his own weaknesses.
 Incongruence between formal and emergent leadership also has a profound affect
on the group and its emergent leader. The group may respond to this
incongruence in a variety of ways. These responses will be affected by the
behaviour of the formal leader.

Possible group reactions are:

a) Apathy.
 Recognising that the formal leader has little real power or influence, the group may
become apathetic.
 Motivation, job interest and job satisfaction drop to a low level.
 Interpersonal contact between group members may also decrease.
 Substandard performance is common and members may feel that their future is
bleak.
 They may reconcile themselves to the situation and simply give up.

© Business Management Training College (Pty) Ltd

41
 LEADERSHIP
B) Aggression.
 In certain circumstances, the group may actively support the poor manager. It may
feel sympathetic towards him and thus cover his errors and weaknesses.
 In effect, the group may informally take over the running of the unit.
 The manager thus abdicates his authority to the group.
 Normally the group will keep him informed about its activities and decisions.

C) Upward influence.
 Regardless of how the group reacts, members will be disturbed by the perceived
lack of upward influence that their boss can exercise.
 They will realise that his superiors probably recognise his failure and thus take little
notice of his advice.
 In particular, the group may feel that its interests cannot be properly presented to
higher authority.
 This may cause the unit to be treated as a stepchild in the organisation. Members
may find that they are always the last to receive company information and are
always the last to receive the numerous favours that an organisation can bestow
on its members.
 They may feel particularly resentful at seeing other similar groups getting a better
deal because their boss has upward influence.

FIVE LEADERSHIP STYLES

Leaders use many different styles of leadership and the styles may be described in
various ways. Certain leadership styles may be better suited to certain situations
and most leaders choose from a variety of approaches as they deal with different
issues.

Daniel Goleman has described the following six distinct leadership styles:
 Coercive leaders demand immediate compliance
 Authoritative leaders mobilise people towards a vision
 Affiliate leaders create emotional bonds
 Democratic leaders build consensus
 Pacesetting leaders set high standards and expect excellence
 Coaching leaders develop people.

A leader may use different styles at different times as he/she attempts to get the
best out of the organisation or the employees. Even coercive leaders might be
necessary and expected, for example, in a genuine emergency, although it would
not be appropriate in most settings. For the large majority of organisations
leadership that recognises and values individuals is strongly recommended.

42 © Business Management Training College (Pty) Ltd

 LESSON 1.4
Progressive manager frequently seek some degree of employee participation in
decisions that affect personnel and work processes. In many cases, managers
carry this leadership approach to a level called empowerment. The manager who
uses empowerment goes beyond solicitation of employees’ opinions and ideas by
increasing their authority to act on their own and to make decisions about the
processes they are involved with.

FIVE MANAGEMENT STYLES

The literature abounds with terms and concepts signifying management styles.
The terms used are generally descriptive of a particular style.

So, for example, we read about dictatorial, autocratic, authoritarian or directive

managers. Other common terms include participative, democratic, permissive,
people-centred, group centred, accommodative, laissez-faire, abdicative, task
centred, country club, weak, strong, manipulative and social.

We will deal with five management styles which cover most of the important types
mentioned above.

The five styles are:

1. Autocratic or directive,
2. Task centred,
3. Democratic or participative,
4. Group centred, and
5. Abdicative.

For descriptive purposes, these five styles are viewed at their extreme. No
manager ever completely reflects just one style or reflects it only to the extreme.

© Business Management Training College (Pty) Ltd

43
 LEADERSHIP
THE AUTOCRATIC OR DIRECTIVE MANAGER

As can be seen, this manager:

 allows no participation in decision making;
 has little interest in his subordinates' opinions;
 assumes that, under all circumstances, he knows more than they do;
 has a tendency to use fear as a form of motivation;
 sees people as units of production rather than as human beings;
 frequently has a good track record and becomes defensive when his decisions go
wrong;
 normally delegates to subordinates the steps or procedures for the implementation
of his/her decisions;
 expects results and has little time for failure or excuses.

THE TASK-CENTRED MANAGER

The task-centred manager is similar to the directive manager.

 He/she also takes all decisions and allows no participation. However, unlike the
directive manager, the task-centred manager not only takes the decisions,
 He/she also specifies the method of implementing these decisions.
 He/she decides what has to be done, when, where and how it has to be done and
who will do it.
 He/she checks constantly on the how’s, where’s and what’s.
 The task-centred manager closely supervises each action of his/her subordinates,
while the directive manager tells them what to do and then expects them to do it.
 Task-centred management is frequently found on shop floors and assembly lines.
 Generally, this type of manager operates in areas where little or no creativity is
required of the workers.
 The rationale behind task-centred management is that there is a best way and only
one best way to do the job.

THE DEMOCRATIC OR PARTICIPATIVE MANAGER

The participative manager:

 allows and encourages group participation in decision making;
 operates with an open mind and, even when he/she has his/her own view, he/she
is prepared to change his/her stance according to the feedback and advice of his/
her subordinates;
 uses participation as a form of motivation;
 involves subordinates in all decisions which affect them. Once the feedback
session is over, the manager makes the final decision. Ultimately, this decision

44 © Business Management Training College (Pty) Ltd

 LESSON 1.4
may be his original one and he may take none of the advice given him.
 Once he/she takes the final decision, the participative manager expects and
requires total commitment from the group to the decision.
 After the decision has been taken, the participative manager delegates the method
for the implementation of the decision to his/her stag.
 He/she may give advice or, if asked, suggest ways of accomplishing the objective.
 assumes that his/her sub­ordinates have the ability to do the job once the goal is
established or the decision taken.

THE GROUP-CENTRED MANAGER

The group-centred manager is similar to the participative manager.

 He/she also encourages participation in decision making.
 The main difference is that, after the decision has been made or the goal
established, the group centred manager works with the group during the
implementation of the decision.
 He/she sees himself as being both a leader and a working member of the team. In
his/her role as a member of the group, the manager tries not to exercise his/her
authority or influence the methods used by the group to implement the decision.
 This form of management is frequently encountered in the professions. A senior
architect, lawyer or accountant will supervise a team of colleagues who are all well
qualified and who may have as much if not more to offer in the implementation of
the organisation's decisions.
 Ultimately, however, the final responsibility for the decision rests with the senior
partner or colleague.
 Group-centred management is also found in other creative occupations, such as
advertising, research and development and medicine.

THE ABDICATIVE MANAGER

This type of management style can be deliberate and conscious.

 A manager may recognise that in certain situations he/she knows less than the
group and therefore deliberately abdicates to subordinates with superior
knowledge.
 If this style of behaviour becomes too frequent, the manager is no longer a
manager.
 He/she merely becomes the formal figurehead for the group.
 Frequent or total abdication generally results in severe problems for both the
manager and the subordinates.
 The subordinates lose all respect for him. They realise that he/she has nothing to
offer and they resent his holding a position that other members of the group are

© Business Management Training College (Pty) Ltd

45
 LEADERSHIP
better qualified to fill. They recognize, too, that a totally abdicative manager has
little upward influence and is unable to represent the group to higher authority.
 The abdicative manager frequently becomes defensive.
 He/she sees the group as a threat to his/her position.
 He/she begins isolating himself from their criticism by locking him-/herself in his/
her office and com­municating through written memoranda.

TASK, SITUATION AND PEOPLE

Much of the literature on management style suggests that certain styles are
superior. These suggestions, while frequently backed by research, can be
dangerous. One gains the impression that partici­pative and group-centred
managers are ‘good guys' and that directive, task-centred and abdicative
managers are ‘bad guys'.

Such an assumption involves value judgements on what constitutes good or bad

management style. Rather than assume that certain styles are good and others
bad, the manager should determine the appropriateness of a particular style
depending upon the task and people being supervised and the situation existing at
the time.

It is wrong to assume that all situations require participative or group-centred

management. Different cultures may respond better to directive than to
participative management. In such groups, motivation may be at its peak under
conditions of highly directive or task-centred management.

In our own society, circumstances require different styles. Consider the following
working environments

Examples

Environment 1. The manager is responsible for supervising a large group of semi-

skilled blue-collar workers on a close-tolerance assembly line. The workers are
relatively uneducated and there is no shortage of labour in the area. The industry
is competitive and top management is under pressure to keep costs down and
production high.

Environment 2. The manager is a senior member of an advertising agency. He is

responsible for the supervision of six highly creative and well-educated
copywriters. The manager and his staff are in continual contact with clients.

46 © Business Management Training College (Pty) Ltd

 LESSON 1.4
The agency has a reputation for innovation.

Environment 3. The manager is a scientist working for a large chemical firm. He

is in charge of a group of seven PhDs. The manager and the group are working on
a new chemical formula that could revolutionise the industry. All members of the
group have high professional status. They recognise that, if the formula is
successful, their professional status and their prestige within the company will be
substantially enhanced.

Environment 4. The manager is a young, highly intelligent civil engineer with little
practical experience. He is new in his job. He has been assigned to supervise the
construction of a small bridge in the middle of Johannesburg. He has under his
charge a number of older, highly experienced foremen who have spent many
years working in the bush. His relationship with the men is good. Shortly after he
arrives on the site, a series of events occur that are not within his experience.
There is a threatened strike by the labourers, most of whom don't speak English,
and construction is hampered by high winds blowing dust and loose sand all over
the site.

Environment 5. The ‘manager' is the captain of a new, highly sophisticated, but

relatively untested, submarine. The submarine is on its three-month maiden
voyage. One element of the captain's orders includes conducting tests on the
submarine's effectiveness. These tests must be conducted frequently and results
must be transcribed on to special navy forms. Failure to conduct even a small
number of these tests accurately could jeopardise the entire voyage.

Assume that you are the manager in each of the above situations. Consider what
style of management you believe to be most appropriate for each situation. Would
one management style be equally suitable for all five?

The above examples demonstrate that no management style is good or bad. What
is bad is an inappropriate style for a given situation. In other words, directive
management is not bad as such, but it is probably inappropriate for the supervision
of a group of research scientists.

Management styles, therefore, should not have value judgements attached to

them. Styles should be seen as being appropriate or inappropriate to a given set of
circumstances.

© Business Management Training College (Pty) Ltd

47
 LEADERSHIP
DEVELOPMENT OF FLEXIBILITY AND CONSISTENCY IN SITUATIONAL
LEADERSHIP

Previously it was suggested that managers tend to have one basic management
style. In other words, a manager who has an authoritarian or dictatorial personality
will tend to be directive or task centred. Regardless, however, of the manager's
basic personality and main management style it is both desirable and possible to
adjust one's style to suit a particular set of circumstances.

Most managers, when questioned on their management style, tend to see

themselves with a range encompassing all five styles. The typical middle or senior
executive tends to say he is basically participative and group centred, but when
necessary he is directive or task centred.

In many cases, managers distinguish their management style by the people they
work with. The typical manager tends to believe that with his colleagues, peers,
supervisors and senior subordinates he is participative, while with lower-level
subordinates he is directive or task centred. Many managers assume they possess
an infinite ability to adapt and adjust their style to the task and people being
supervised.

It is important that the organisation must adopt a situational leadership style to be

most effective. Depending on the time, situation and the type of employees, the
leadership style must be adapted to provide the best solutions at all times,

Employees should be made aware of the principles and advantages of the

situational leadership style, and their “buy-in”, commitment and competence must
be obtained.

During the past five years, group discussions with over 1 500 lower, middle and
senior executives has concluded that many managers recognise their basic style,
but assume a high degree of flexibility in their behaviour. Discussions with them
indicate that in our culture most-over 80 per cent-managers perceive themselves
as participative or group centred. Not surprisingly, participative styles are
perceived as being inherently good and valuable, while directive styles are
perceived as being old-fashioned and inappropriate to the modern industrial state.
Fortunately, a majority of these managers did recognise that, while they perceive
themselves as being participative, their subordinates probably perceive them as
being directive or task centred.

48 © Business Management Training College (Pty) Ltd

 LESSON 1.4
It should be recognised that we all have the ability to adapt and adjust our
behaviour to suit changing conditions. Naturally, some of us have a greater degree
of flexibility than others.

One of the more dangerous aspects of a flexible management style is the

tendency toward inconsistency. The manager must exercise caution when
changing his style lest he be thought by his subordinates to be inconsistent and
unfair. Frequently, shifts in management style may be perceived as being
superficial, insincere or manipulative. As subordinates, we have probably all had
experience with the directive manager who indulges in periodic attempts at being
participative. Often these attempts are obviously insincere and generate a degree
of incongruence in the relationship. Subordinates can usually see this coming and
will enter the 'participative' discussion with trepidation, amusement or annoyance.

The manager must apply an appropriate management style in such a way as to

motivate the team members, and to obtain their commitment in order to achieve
common goals and objectives.

THE COMPETENCE MOTIVE

Robert W. White is most closely associated with the competence motive. He

questioned the approaches to motivation that are based solely on the primary
drives. For example, the primary drives cannot explain exploration, manipulation,
and activity. White proposed a new conceptualisation based upon the assumption
that all organisms, animal or human, have a capacity to interact effectively with
their environment. He called this common capacity competence. "It receives
substantial contributions from activities which, though playful and exploratory in
character, at the same time show direction, selectivity, and persistence in
interacting with the environment." Thus defined, the competence motive is the
most inclusive general drive. The other general drives of curiosity, manipulation,
and activity can be considered as more specific competence drives.

White built an entire theory of motivation around competence. He was convinced

that people strive to have control or competence over their environment. People
need to know what they are doing and to be able to make things happen. White
determined that the critical age for competence development is between six and
nine years old. During this age period, the children cut the apron strings and
venture out into the world on their own. They develop needs to cross the street by
themselves, to ride a bike, play baseball, roller-skate, and read. These needs are
manifested by the drive for competence or mastery over the environment.

© Business Management Training College (Pty) Ltd

49
 LEADERSHIP
The successes and failures that youngsters experience in this critical age period
will have a lasting impact on the intensity of their competence motive.

This motive has interesting implications for job design in an organisation. It says
that people may be motivated by the challenge of trying to master the job or to
become competent in the job. But once the job is mastered, which most highly
specialised jobs in modern organisations are in a very short period of time,
competence motivation will disappear.

50 © Business Management Training College (Pty) Ltd

 LESSON 1.4
STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study 11.4.9 “Some contemporary perspectives on leadership”, pages
285-290.
MANAGEMENT PRINCIPLES 5TH EDITION
Study 11.4.9 “Some contemporary perspectives on leadership”, pages
323-327.

© Business Management Training College (Pty) Ltd

51
 CHAPTER 1
LEADING

INDIVIDUALS IN THE ORGANISATION

IN THIS CHAPTER:
 LESSON 1.5 : HUMAN BEHAVIOUR IN AN ORGANISATION
 LESSON 1.6 : MENTORING AND COACHING
 LESSON 1.7 : EMOTIONAL INTELLIGENCE (EI)

AT THE END OF THIS CHAPTER YOU WILL BE ABLE TO:

1. Explain why knowledge of the way the individuals function in an organisation is
essential to the manager.
2. Explain the key variables that determine human behaviour in an organisation.
3. Suggest ways of improving individual performance in the workplace.
4. Use mentoring and coaching as processes that can be used to help individuals
realise their potential in the organisation.
5. Use emotional intelligence (EI) as a way of managing superior and average
performers.
 LESSON 1.5
LESSON 1.5
HUMAN BEHAVIOUR IN AN ORGANISATION

In this Lesson:

As the purpose and job of a manager is to get things done through

other people, it is essential that managers understand the way people behave,
and the reasons they behave in certain ways.
People-issues take up the most of a manger’s time. People must be seen as
people, resources, knowledge-centres and social systems.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Cognitive strategies: short cuts that the brain uses to reduce the mass of
information it receives.
 Heuristic: decision-making principles used to draw quick conclusions.
 Halo-effect: an individual forms an impression of another one based on
certain characteristics such as intelligence, appearance, or degree.
 Values: Basic beliefs that a certain way of doing things is the right way and is
preferable to another.
 Attitude: a collection of feelings and beliefs.
 Job satisfaction: an individual’s general attitude towards his job.
 Job involvement: the degree to which an individual identifies
psychologically with the job.
 Organisational commitment: the degree to which an individual identifies
with his or her employer organisation.
 Myers-Briggs Type Indicator (MBTI): a model used by organisations to
determine personality type.
 Locus of control: refers to the extent to which a person believes his or her
behaviour directly influences the consequences of his or her actions.
 Authoritarianism: refers to the extent to which an employee believes that
there should be power and status differences in an organisation.
 Self-monitoring: refers to the extent to which employees are able to mould
their behaviour according to that of their co-workers.
 Ability: capacity to do the different tasks in a job.
 Perception: the process in which individuals arrange and interpret sensory
impressions in order to make sense of their environment.

© Business Management Training College (Pty) Ltd

53
 INDIVIDUALS IN THE ORGANISATION
Key points:
 Managers can not do their jobs if they do not understand the nature of people.
 Individual behaviour are determined by ability, attitude, motivation, personality,
perception, learning.

Attitudes
 A person’s attitude is determined by his/her values, or those things that are
important to him/her.
 Values and attitudes are difficult to change.
 An attitude can influence productivity and attitudes warn of potential problems.
 Managers can try to change an attitude by changing:
 Organisational factors
 Group factors
 Personal factors
 If a negative attitude is changed to a positive one, job satisfaction can improve.

Personality
 Managers should understand different personalities, as certain personality traits
are better suited to certain jobs that others.
 The Myers-Briggs Type Indicator classify individuals as
 Extrovert or introvert
 Sensing or intuitive
 Thinking or feeling
 Perceiving or judging.

 Managers use the MBTI to match personalities with jobs.

 Traits that influence a person’s behaviour in an organisation are
 Personality type
 Locus of control
 Authoritarianism
 Self-monitoring
 Achievement orientation
 Risk profile

54 © Business Management Training College (Pty) Ltd

 LESSON 1.5
Ability
 Each individual has a different set of abilities.
 Ability comprises both intellectual capacity and physical ability.
 It is important for the manager to make sure that an employee’s ability matches the
task that has been assigned.
 Lately managers refer to competency rather than ability. Competency refers to four
aspects:
 Knowledge
 Skills
 Value orientation
 Applied in context

 A person is only competent if all these aspects are applied in the workplace.

Motivation
 This is the factor that contributes the most to human behaviour. What motivates
people? (Motivation will be discussed in detail in lesson later on)

Perception
 People do not react to reality, but to what they perceive as reality.
 Goals are perceived differently by different people.
 People use cognitive strategies such as heuristics and prejudices as short cuts to
perceive others.
 These short cuts can lead to stereotyping and distortion.

Learning
 Employees continually learn new things in the workplace.
 Learning concepts include conditioning and shaping.
 People have different learning styles and these styles should be accommodated in
all learning and training material.
 People learn through:
 Reading
 Listening
 Observing
 Doing

© Business Management Training College (Pty) Ltd

55
 INDIVIDUALS IN THE ORGANISATION
People learn best when they actively participate in the learning. People learn the
skills they need to perform only when they actually use these skills.

Training courses must always actively involve the participants and must give them
the chance to practice the skills they are supposed to be learning. People learn
when they put the skills they learn to work immediately on the job.

It is claimed that you cannot teach a person anything; you can only make him/her
want to learn. If this is accepted it gives credence to the expectation theory of
motivation, which states that people are motivated to perform if they believe
their efforts will be rewarded and that the rewards will be important to them.

Thus: Motivation is the first step. The next step will be to ensure that the
systems of learning provided are the most suitable for the needs of the trainees.

ACCORDING TO ARMSTRONG (1977) THE LEARNING THEORY SUGGESTS THAT THERE

ARE TEN MAIN CONDITIONS REQUIRED FOR LEARNING TO BE EFFECTIVE:

1. The individual must be motivated to learn. He/she should be aware that his/her
present level of knowledge or skill needs to be improved if he/she is to perform his
work to his own and to other’s satisfaction.
2. Standards of performance should be set for the learner. The learner needs a sense
of direction and “feedback” on how he/she is doing. The learner must gain
satisfaction from learning.
3. Learning is an active not a passive process. The learner needs to be actively
involved with his trainer, his/her fellow trainees and the subject matter of the
training programme.
4. Appropriate techniques should be used. The trainer must use training tools and
material in accordance with the needs of the job, the individual and the group.
5. Learning methods should be varied. The use of a variety of techniques helps to
maintain the interest of the trainee.
7. Time must be allowed to absorb the learning. Learning requires time to assimilate,
test and accept.
8. The learner must receive reinforcement of correct behaviour.
9. The need to recognise that there are different levels of learning and that these
need different methods and take different times.
10. The learner should receive guidance.

56 © Business Management Training College (Pty) Ltd

 LESSON 1.5
STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study Chapter 12 “Individuals in the organisation”, pages 293-308.
MANAGEMENT PRINCIPLES 5TH EDITION
Study Chapter 12 “Individuals in the organisation”, pages 334-350.

© Business Management Training College (Pty) Ltd

57
NOTES:
 LESSON 1.6
LESSON 1.6
MENTORING AND COACHING

In this Lesson:

Why are coaching and mentoring currently the two fastest growing ways to
develop employees?
The great advantage of coaching as a developmental process is that it
provides the opportunity for one-on-one training, guiding, instructing,
observing, modelling, evaluating performance, and providing corrective action.
All of this can be done on the job or even by phone. It occurs through regular
sessions as the person is performing and applying the principles and ideas
discussed in the coaching sessions, with immediate feedback from the coach.
At work, coaching can be provided by a consultant, a training professional
specialising in coaching, or the person’s own supervisor if versed in coaching
techniques and equipped with its tools.
In mentoring, the emphasis is not on providing specific performance skills, but
on guiding the employee to move continuously in the right direction toward the
goal of reaching higher challenges and accomplishments.
Coaching and mentoring help the persons involved sharpen their focus and
move more effectively toward their goals.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Mentoring: refers to a personal developmental relationship in which a more

experienced or more knowledgeable person helps a less experienced or less
knowledgeable person.
 Coaching: is a method of directing, instructing and training a person or
group of people, with the aim to achieve some goal or develop specific skills.
There are many ways to coach, types of coaching and methods to coaching.

© Business Management Training College (Pty) Ltd

59
 INDIVIDUALS IN THE ORGANISATION
Key points:
 All managers need to be competent in the mentoring and coaching processes.
 Mentoring boosts capabilities and standing.
 The goal of coaching is focused on the improvement of single aspects of job
performance.
 Coaching offers one-on-one customised approaches to altering some behaviour.

MENTORING AND COACHING

Mentoring and coaching are practices intended mainly to enhance the
effectiveness of high-potential and high-performing employees, managers and
executives.

MENTORING
Mentoring involves a part-time and fill-time relationship of support and guidance
between an experienced work colleague and a less experienced but high-potential
colleague. The mentor provides support, advice, contacts and feedback to the
protégé or mentee regarding the latter’s work role tasks, duties, responsibilities,
and competency requirements, their personal and performance development, and
their career planning. Mentoring relationships may last for a few months, but it is
more usual for them to run for between six months to two years. Within the
relationship, the mentor generally fills one or more of four main roles:
 role model
 adviser
 broker
 advocate.

COACHING
Whereas mentoring is a decade-old practice, coaching is of more recent origin,
having risen to prominence only since the mid– to late 1990s. In general terms
coaching may be defined as a solution– and results-based individual or small group
learning facilitation process derived from behavioural theories of learning and
change that is intended to help high-performing employees further enhance their
performance focus, effectiveness and achievements. According to Skiffington and
Zeus (2003:129): ’Coaching, as opposed to managing, involves focusing on an
individual’s development and enabling him/her to become more self-reliant and to
solve problems and make decisions independently. Coach managers promote
reflection and insight and help individuals to become more self-managing and self-
generating.

60 © Business Management Training College (Pty) Ltd

 LESSON 1.6
STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Read 12.5 “Coaching and mentoring”, pages 308-309.
MANAGEMENT PRINCIPLES 5TH EDITION
Read 12.5 “Coaching and mentoring”, pages 348-349.

© Business Management Training College (Pty) Ltd

61
 INDIVIDUALS IN THE ORGANISATION

LESSON 1.7
EMOTIONAL INTELLIGENCE (EI)

In this Lesson:
Emotional Intelligence Quotient, or EQ, is a term being heard more and
more often in human resources departments and even in executive
board rooms.
Emotional intelligence is considered to involve emotional empathy; attention
to, and discrimination of one's emotions; accurate recognition of one's own
and others' moods; mood management or control over emotions; response
with appropriate (adaptive) emotions and behaviours in various life situations
(especially to stress and difficult situations); and balancing of honest
expression of emotions against courtesy, consideration, and respect (i.e.,
possession of good social skills and communication skills).
Additional, though less often mentioned qualities include selection of work that
is emotionally rewarding to avoid procrastination, self-doubt, and low
achievement (i.e., good self-motivation and goal management) and a balance
between work, home, and recreational life.
In essence, EQ is the pattern of how people's biases in their thinking leads
them to think one thing or choice is better than another, as well as their clarity
in differentiating within those biases to exercise clear and sound judgment.
"People see what they want to see." — Red Barber

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study 12.4. “Emotional Intelligence (EI)”, pages 307-308.
MANAGEMENT PRINCIPLES 5TH EDITION
Study 12.4. “Emotional Intelligence (EI)”, pages 347-348.

62 © Business Management Training College (Pty) Ltd

 LESSON
CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Emotional Intelligence: the ability to access, manage and make use of

one’s own feelings in the workplace, as well as those of other people.

Key points:
 It is more important to work success than IQ or technical skill.
 The emotional competencies are self-awareness, self management, social
awareness and relationship management.
 Self-awareness: knowing what one feels. People with an accurate self-awareness
competence will be aware of their abilities and limitations and will learn from their
mistakes to make improvement.
 Emotional self-management: the ability to regulate distressing affects like anxiety
and anger. It produces self-worthiness: letting others know one’s values and
principles, intentions and feelings and acting in ways that are consistent with them.
 Social awareness: is manifested in empathy, service orientation and organisational
awareness. The empathy competence gives people an awareness of other’s
emotions and needs. This sensitivity is critical for superior performance and is
critical for South African managers who have to deal with a diverse workforce.
 Organisational awareness: refers to the ability to read the currents of emotions
and political dynamics in groups.
 Relationship management: entails the ability to attune ourselves to the emotions of
another person.

In the practice of organisational development (OD) experienced professionals

have always been fascinated by leaders and employees with superior technical
knowledge and skills but with the inability to manage themselves and others
effectively. The popularisation of emotional intelligence has made it easier for
professionals concerned with the optimisation of individual, team and
organisational performance, to address the business costs of emotional ineptitude,
and to question the narrow, “expertise-is-all” view of capabilities (Goleman,
1998a). The relevance and subsequent interest in emotional intelligence by
different stakeholders in South Africa organisations, can be ascribed to the
following factors:
 the need to find new ways to address the adaptability of employees in South
African organisations undergoing vast and significant changes;
 meeting the demands for increased productivity, competitiveness, quality and
service created by international market forces; and
 the renewed emphasis for individuals and teams to accept co-responsibility and
accountability for the development of competencies and skills to increase
personal, team and organisational performance.

© Business Management Training College (Pty) Ltd

63
 CHAPTER 1
LEADING

GROUPS AND TEAMS IN THE

ORGANISATION
IN THIS CHAPTER:
 LESSON 1.8 : GROUPS, TEAMS, THEIR ROLE AND THE VARIOUS
TYPES
 LESSON 1.9 : STAGES IN GROUP AND TEAM DEVELOPMENT
 LESSON 1.10 : THE GROUP BEHAVIOURAL MODEL
 LESSON 1.11 : WORK TEAMS IN ORGANISATIONS
 LESSON 1.12 : TYPES OF TEAMS

AT THE END OF THIS CHAPTER YOU WILL BE ABLE TO:

1. Distinguish between groups and teams in an organisation.
2. Explain the important role that groups and teams play in a contemporary
organisation.
3. Differentiate between various types of informal and formal groups that we find in
an organisation.
4. Explain why people join groups.
5. Depict and explain the stages in group and team development.
6. Identify a group’s stage of development according to the stage characteristics.
7. Explain the variables that influence group and team behaviour in terms of Group
8. Behaviour Model.
9. Describe a work team in terms of its characteristics.
10. Defend the use of work teams in an organisation.
11. Differentiate between problem-solving, self managed, cross-functional, and
virtual teams.
12. Recommend ways of introducing teams in the workplace.
 LESSON 1.8
LESSON 1.8
HUMAN BEHAVIOUR IN AN ORGANISATION

In this Lesson:

Organisational goals are mostly attained by groups of people, not

individuals. Mangers must develop, support, facilitate and lead groups to
achieve goals. It is therefore imperative that managers understand groups and
their performance.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Groups: a groups refers to two or more individuals, interacting and

interdependent, who come together to achieve particular goals.
 Work group: a unit of two or more people who interact primarily to share
information and to make decisions that will help each group member perform
within his or her own area of responsibility.

Key points:
 All teams are also groups, but not all groups are teams. A team is a special kind of
group.
 People join groups to satisfy certain needs.
 Groups offer security to people.
 An individual can achieve a certain status by joining a group.
 Feelings of self esteem can be raised by being accepted into a valued group.
 Joining groups can satisfy the social needs of people.
 We distinguish between two categories of groups – informal and formal.

Informal groups
 This group develops out of the day-to-day activities and interaction of employees.
 The goals are not necessarily the same as those of the organisation.
 The informal group can have a considerable influence on the organisation.
 Interest groups are formed as a result of the shared interests of its members.
 Friendship groups are formed because of social needs and things that people
have in common that they want to share.

© Business Management Training College (Pty) Ltd

65
 GROUPS AND TEAMS IN THE ORGANISATION

Formal groups
 These groups are formed to accomplish specific tasks and to achieve goals.
 Characteristics of formal groups:
 The skills of members are random and varied;
 There is a leader;
 Members are accountable and rewarded for their own performance;
 Group’s performance is the sum of all the individual members’ performance.
 Command groups consist of a manager and subordinates who report to him/her.
 A task group consists of people working together to complete a specific task, and
can cross hierarchical boundaries.

WHAT IS A GROUP?

A group consists of a number of individuals who:

 have a common goal or objective;
 interact with one another to achieve this common goal;
 are aware of one another;
 agree that they belong to a group.

Individuals seldom work in isolation from others. Groups are a characteristic of all
social institutions and almost everyone in an organisation will be a member of one
or more groups.

Groups are normally formed among people who share a physical environment.
Common goals arise when individuals all have something in common and are
related to the individual needs of the group members. A group is characterised by
its members communicating with one another, over time on a face-to-face basis.
As a result of this communication, each group member influences and is
influenced by all other group members.

Types Of Groups
Groups that exist in organisations are typically divided into two basic types:
1. Formal
2. Informal.

A formal group is one that exists within an organisation, which is established by

management to perform tasks that enhance the attainment of organisational
objectives.

66 © Business Management Training College (Pty) Ltd

 LESSON 1.8
Formal groups are commonly divided into two basic types:
 Command Groups are formal groups that are outlined on the chain of command
on an organisation chart. Command groups normally handle the more routine
activities of the organisation
 Task Groups are formal groups of organisation members who interact with one
another to accomplish most non-routine organisational activities.

EXAMPLES of formal groups:

A committee is a group of individuals that has been charged with performing

some type of activity and is usually classified as a task group.

(i) Committees: Committees represent a traditionally used formal group.

The major reasons for establishing committees are:
 To allow organisation members to exchange ideas.
 To generate suggestions and recommendations that can be offered to other
organisational units.
 To develop new ideas for solving existing organisational problems.
 To assist in the development or organisational policies

What makes committees successful?

 The committee’s goals should be clearly defined, preferably in writing.
 The committee’s authority should be specified.
 The optimum size of the committee should be determined. The ideal number of
committee members for many tasks seems to range from five to ten.
 A chairperson should be selected on the basis of ability to run an efficient meeting.
 Appointing a permanent secretary to handle communications.
 The agenda and all supporting material for the meeting should be distributed
before the meeting. This will ensure that members would be ready with informed
contribution.
 Meetings should be started on time, and the time at which they will end should be
announced at the outset.

(ii) Work teams

Work teams are formal groups that are beginning to gain popular acceptance and
support in organisations. Work teams are another example of task groups used in
organisations. A work team is a recently developed management tool, which is
generally established to achieve greater organisational flexibility or to cope with
rapid growth.

© Business Management Training College (Pty) Ltd

67
 GROUPS AND TEAMS IN THE ORGANISATION

 The goals or objectives of the group should be clearly defined, and must be
achievable, realistic and measurable. These goals will result directly from the
organisation’s goals/objectives
 The buy-in of all group members should be obtained by the leader.
 Specific standards must be set according to which the goals must be achieved.
 The group and all the members assume responsibility for the attainment of the
goals.
 The team leader is ultimately accountable for the success of the team’s
achievements and successes and failures.

Work teams are discussed in depth later in this chapter.

Teams versus groups: what is the difference?

Groups and teams are not the same thing! In the previous section we defined a
group as two or more individuals, interacting and interdependent, who have come
together to achieve a particular objective. A work group is a group that interacts
primarily to share information and to make decisions to help each member perform
within his or her area of responsibility. Work groups have no need or opportunity to
engage in collective work that requires joint effort. Their performance is merely the
summation of each group member’s individual contribution.
A work team generates positive synergy through coordinated effort. Their
individual efforts result in a level of performance that is greater than the sum of
those individual inputs.
Comparing work groups to work teams
Work group Work teams

Share information Goal Collective performance

Neutral (sometimes negative) Positive

Synergy

Individual Individual and mutual

Accountable

Random and varied Complementary

Skills

68 © Business Management Training College (Pty) Ltd

 LESSON 1.8
STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study 13.2 “Groups and teams”, pages 312-313.
Study 13.3 “Categories and types of organisational group”, pages 313-
315.
MANAGEMENT PRINCIPLES 5TH EDITION
Study 13.2 “Groups and teams”, pages 356-357.
Study 13.3 “Categories and types of organisational group”, pages 357-
359.

© Business Management Training College (Pty) Ltd

69
 GROUPS AND TEAMS IN THE ORGANISATION

LESSON 1.9
STAGES IN GROUP AND TEAM
DEVELOPMENT

In this Lesson:

Groups go through stages of development. A newly formed group

performs at a different level than an established group.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Group cohesion: Extent to which the members of a group find staying

together to be in mutual interest.

Key points:
Forming stage
 There is uncertainty about the purpose of the group, and the group rules.
 Group leaders must get the members to think of themselves as a group.
Storming stage
 Characterised by conflicts and disagreements.
 Members become more assertive and willing to state opinions.
 Cohesion is weak.
 Group leaders must focus on groups goals and performance.
Norming stage
 The group begins to function as a unit.
 Balancing of forces takes place and members try to protect the group from
disintegration.
 Group leaders must watch out for premature sense of satisfaction.
Performing stage
 Group is mature, organised and well-functioning.
 They should be able to deal with complex tasks.
 The group structure is stable and they support goals.
Adjourning stage
 Activities are completed and the group is able to disband.
 This stage is important for temporary groups that must be able to convene quickly,
do the job and then adjourn, often to reconvene at a later stage.

70 © Business Management Training College (Pty) Ltd

 LESSON 1.9
STAGES IN THE DEVELOPMENT OF GROUPS.
Source: Management Principles, A Contemporary Edition for Africa, PJ Smit & GJ de J Cronje,
Juta.

Forming stage
Interaction begins.

Storming stage
Conflict emerges.

Norming stage
Team norms or rules of
behaviour are established.

Performing stage
Tasks are accomplished.

Adjourning stage
The team breaks up.

© Business Management Training College (Pty) Ltd

71
 GROUPS AND TEAMS IN THE ORGANISATION

CASE STUDY: EFFECTIVE TEAMS ARE DESCRIBED WITHIN THE STAGES

OF TEAM DEVELOPMENT.

The BT Global Challenge Round the World Yacht Race

This yacht race has provided the material for a case study comparing a yacht race
with today’s business environment. The race was highly competitive, the
environment hostile, at times dangerous, and conditions were uncertain. Faced
with these pressures, and racing identical yachts, the winners were skippers who
led their teams most effectively to achieve or sustain high performance. The
compilers of the case study interviewed the crew members of the various teams,
recording their emotions experienced during the various stages of team
development. These were some of the responses:

Forming: (Identifying emotions)

Crew members were motivated and daunted by the enormity of the challenge
ahead. They were unsure of themselves and their own technical ability, and there
was fear about the structure of the boats and their ability to withstand the
pressures of the Southern Ocean. There was anxiety about coping in the dangerous
conditions. A lot of self-interest marked this stage of team development on the
boats.

Storming: (Understanding emotions)

At this stage the crew members were becoming more competent and were starting
to challenge the skipper on his appointment and role as leader. Dissatisfaction
with the initially established rules and procedures was surfacing. Crew members
juggled for position and tolerance was limited. Most of the decisions were still
made by the skipper. As this stage progressed, the crew members were slowly
beginning to better understand differences in styles, motivation, need for change,
and diversity. Feelings were discussed and personal conflict was dealt with.
Traumatic encounters between crew members occurred regularly.

Norming (Using emotions)

At this stage the teams were consolidating and confidence was building. Crew
members shagged ideas and were willing to change if there was a better way. A
more systematic approach was followed and procedures were agreed upon by
team members.

72 © Business Management Training College (Pty) Ltd

 LESSON 1.9
Responsibility was shared among crew members and a collaborative approach to
decision making developed. Team members were developing trust and started
solving problems together. The skipper of one of the best performing boats started
“giving power away” - the team was running itself and he didn’t even need to be
there.

Performing (Managing emotions)

At this stage the crew were highly committed to the task and to each other. There
was a feeling of well being, and self-interest was put aside. Openness, honesty,
and effective conflict handling characterized this stage. Crew members were
managing their emotions and were focused on performance, making the best of
decisions, and continually striving to improve.

Adjourning (Team dissolve)

As the race neared completion, the crew members of the various teams needed to
pass through a “mourning” phase. On some yachts the skippers were pro-active in
dealing with the end of the race and started discussing the future as early as
Sydney. Many spent the long leg from Cape Town to La Rochelle helping crew
members to come to terms with their feelings. On a few yachts the subject was
never openly discussed.

Note: Some crews never reached the performing stage; some never left the
storming stage.

Source: Cranwell-Ward, J. Bacon, A & Mackei, R. 2002. Inspiring leadership: Staying

afloat in turbulent times. Cornwall: Thomson, pp. 61-63, and [Link]

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study 13.4 “Stages in group and team development”, pages 315-317.
MANAGEMENT PRINCIPLES 5TH EDITION
Study 13.4 “Stages in group and team development”, pages 359-362.

© Business Management Training College (Pty) Ltd

73
 GROUPS AND TEAMS IN THE ORGANISATION

NOTES:

74 © Business Management Training College (Pty) Ltd

 LESSON 1.10

LESSON 1.10
THE GROUP BEHAVIOURAL MODEL

In this Lesson:

The functioning of a group is determined by various factors. In this

lesson we examine these factors.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Group Behavioural Model: it predicts how factors such as organisational

context, group member resources, group structure and group processes
influence the development and effectiveness of groups and teams in
organisations.
 Norm: a generally agreed-upon standard of behaviour which groups expect
their members to follow.
 Compliance: an individual changes behaviour, but does not personally
agree with the group’s norm.
 Internalisation: an individual changes behaviour and personally accepts the
norm.
 Status: the perceived ranking of one member relative to other members of
the group.

Key points:

Organisational context
Following are the factors that influence the functioning of a group.
 Goals and strategies: This determines a group’s goals and how to achieve them.
 Authority structures: determine a work group’s placement in the organisation.
 Policies, procedures, rules, regulations: Can speed up group development and
prevent conflict, but can also limit creativity.
 Organisational resources: groups must have access to the necessary resources to
complete tasks successfully.
 Personnel selection: Criteria used by organisation determine the functioning of the
group.
 Performance management system: members should be collectively appraised and
awarded. Evaluation can either encourage or discourage group performance.

© Business Management Training College (Pty) Ltd

75
 GROUPS AND TEAMS IN THE ORGANISATION

 Organisational culture: defines acceptable values for groups and therefore

directs the performance of groups.
 Physical work setting: the greater the proximity of the group members, the more
they will interact.
 Group member resources: members should possess technical knowledge and
skills, as well as interpersonal skills.

Group Structure
The structure of a group determines how the group will function as a whole.
There are seven factors that form the structure of the group:
 Leadership: the leader gives direction and motivates the group.
 Roles: each member has his or her role to fulfil and each has his or her own
expectation. Intra-role conflict occurs when two people have different expectations
of the same role.
 Norms: can be formal or informal. When a group’s norms are not accepted by a
member, the member may experience pressure to conform. The individual can
either conform through compliance or conform by way of internalisation.
 Status: factors such as knowledge, experience, aggression, power and seniority
determine the status of each individual. The group as a whole has its status in the
organisation.
 Cohesiveness: it develops because of the attraction of the group for the
individual, and can be positive or negative.
 Size: smaller groups are more productive while larger groups are better at problem
solving. The larger the group, the weaker the individual effort.
 Diversity: diverse groups with a variety of skills and knowledge are more effective
than homogeneous groups.

Group processes
The processes that enable groups to improve on their performance are the
following:
 Group decision making: groupthink occurs when individual group members do not
express their own assessment of a decision. Groups shift occurs when group
members take group decisions that are more adventurous or more conservative
than the decision of the individual.
 Communication: reduces ambiguities and clarifies a group’s tasks.
 Power and politics: plays an important role because the members with more power
can influence those with less power.
 Conflict: need not always be negative but can affect goal attainment negatively.

76 © Business Management Training College (Pty) Ltd

 LESSON 1.10
Group tasks
 Tasks range from simple to complex.
 Task interdependence between group members is the most powerful basis of
interaction between groups in an organisation.

FACTORS INFLUENCING WORKGROUP EFFECTIVENESS

Managers should always strive to maximise work group effectiveness.

 Personality characteristics of members: Certain personality traits such as
sociability; self-reliance and independence tend to be positively related to group
productivity, morale and cohesiveness. On the other hand, negatively evaluated
characteristics such as dominance and unconventionality tend to be negatively
related to the dependent variables.

 Heterogeneity of members: Most group activities require a variety of skills and

knowledge. Therefore, when a group is heterogeneous in terms of personality,
opinions; abilities, skills and perspectives, there is an increased probability that the
group will possess the needed characteristics to complete its tasks effectively.

 Group leadership: One of the most important keys to success is the type of
leadership of a group. The decisive factor is the choice of a leader, which is
spelled out by asking what person will best lead the group towards achieving its
common goal.

 Size of work group: As the number of members of a work group increases, forces
are created within that group that can either increase or decrease its effectiveness.
The ideal number depends primarily on the group’s purpose.
Work group size is an important determinant of group effectiveness, because it
has a considerable impact on:
 Leadership
 Group members
 Group processes.

 Cohesiveness of work groups: Group cohesiveness is the attraction group

members feel for one another in terms of desires to remain a member of the group
and resist leaving it. The greater these desires, the more the cohesiveness within
the group.

 Group norms: The interaction within the group leads to the development of group
norms. A norm can be defined as a generally accepted standard of behaviour that
each member of the group is supposed to maintain.

© Business Management Training College (Pty) Ltd

77
 GROUPS AND TEAMS IN THE ORGANISATION

Most group norms relate to one or more of the following categories: organisational
pride; performance; profitability; teamwork; training; planning; customer relations
and honesty or security.

 Status of work group members: Status is the position of a group member in relation
to other group members. Work-related determinants of status include titles; work
schedules and amount of pay group members receive. Non-work related
determinants of status include education level, race, age and sex. To maximise the
effectiveness of a work group, managers should also consider the status of
members of the informal group or groups that exist within that formal group.

CHARACTERISTICS OF EFFECTIVE GROUPS

 The group knows the reason for its existence and there is a sense of commitment
to the group.
 The group has well established and relaxed working relationships among all its
members.
 There are guidelines or procedures for decision making
 The members of the group believe in shared objectives.
 There is communication between the group members.
 The members receive and render mutual assistance and there is a feeling of
mutual trust and dependency present.
 The group is eager to help each member develop his full potential.
 There exist a free flow of information and communication.
 The members handle conflict within the group in a constructive manner.
 The supportive atmosphere stimulates creativity.
 Members are flexible and adaptable in regard to their goals and attitude.
 Individual members feel secure to make decisions that seem appropriate to them
because each member understands the goals and philosophy of the operation.

THE SOCIAL STRUCTURE IN GROUPS

The social structure of every group is composed of a group leader; group members
or followers and group norms:
 Group leader: The leader of a group may vary as the circumstances of the group
change. A group member can emerge as leader if he, in the opinion of the group,
is best able to satisfy a particular group need at a particular time.
 Group members or followers: The success of a group depends on whether the
members are prepared to accept the leader’s leadership.
 Group norms: A group’s norms are an important aspect of its social structure. For
example: If a sheet-metal worker is part of a production team and such a worker

78 © Business Management Training College (Pty) Ltd

 LESSON 1.10
exceeds the group’s production norms, he will soon be admonished by the group.
The reason is simple: If he continues to exceed the production norms, the other
members of the group will be expected to work to the same production standard.

PARTICIPATION
Participation in decision-making should not degenerate into unstructured general
discussions that result in common denominator “decisions”, but rather should
consist of the process of capitalising on the experiences and ideas of others
and on the increased motivation that this might bring about.

Possible advantages of Participation

The primary theme running through discussions of the value of participation in
decision-making is that of motivation. In normal circumstances people become ego
-involved in the decisions they have made as individuals, or in the making of which
they have participated in groups.
Such increased motivation, it is argued, might in turn lead to other outcomes,
such as the following:
(1) a higher rate of output and increased quality;
(2) a reduction in turnover, absenteeism, and tardiness
(3) a reduction in the number of grievances and more peaceful manager-subordinate
and manager-union relations;
(4) a greater readiness to accept change;
(5) a greater ease in the management of subordinates; and
(6) the improved quality of managerial decisions.

Whether, or to what extent, these possible benefits might accrue presumably

depends upon the interaction of a variety of conditions and situational variables.

CONDITIONS FOR EFFECTIVE PARTICIPATION

There is no "formula" for ensuring effective participation and its possible benefits;
there are, however, certain conditions that are prerequisites for the process, even
though they do not ensure its success. The first such prerequisites include certain
psychological conditions associated with the individuals, some of which are
set out as follows:
(1) the subordinate must be capable of becoming psychologically involved in the
activities that require participation:
(2) he must favour the activity, and buy-in must occur
(3) he must see the relevance to his personal life pattern of the thing being
considered; and
(4) he must be able to express himself to his own satisfaction.

© Business Management Training College (Pty) Ltd

79
 GROUPS AND TEAMS IN THE ORGANISATION

The other non-personal conditions include the following:

(1) time availability ( if a decision is urgent, time may not permit group decision
making;
(2) rational economics (the decision must be one that is economically sound)
(3) subordinate security (his participation must not adversely affect his status or role
(4) manager-subordinate stability - the process must not threaten to undermine the
formal authority of the manager, or lead to doubt about the competence of the
manager); provision for communication channels through which employees may
take.

CONTRACT GROUP MEMBERS TO OBTAIN BUY-IN

Each member of the group must be contracted to commit to achieving the group’s
objectives. This means that the member must commit perform in such a way that
the objectives will be attained.
Clear guidelines should exist describing:
 The goals and objectives;
 The time frames within it must be achieved;
 The required tasks and competencies to accomplish these goals;
 Clear standards must be set as benchmark;
 A clear indication of how the success will be measured and by whom.

The team leader will identify the strengths and weaknesses of each team
member, and task will be allocated according to the particular strengths of each
team member. Each member will therefore do what he/she is best at, in such a
way that the team gets the benefit of all the members’ strengths.
The overall success of the team is therefore much more assured.

A process of consultation is followed in determining benchmarks and

timelines.

a) Benchmarks/standards
All members must understand and agree to the standards set as benchmark, and
agree to adhere to it. If the quality of one member’s input is not up to standard, it
may jeopardise the entire group’s effort. It must be clear exactly what standard is
required from each team member.

b) Timelines
The time required for the completion of the task must be realistic and fair, and all
group members must agree to it. Where a team works together on a task or
project, each member’s contribution may be dependent on the input that he/she

80 © Business Management Training College (Pty) Ltd

 LESSON 1.10
receives from other members. The result would be that in the event of one
member being late, all the others might be late as well. It is therefore crucial that
everybody understands and agrees to the timelines set for the group.

OBTAINING GROUP PARTICIPATION

1. Brief the group

 Specify the essential parameters: Every member needs to know the boundaries
within which he is expected to operate.
 Explain the desired outcome: Spell out the group’s objectives and explain to
them exactly- why- these are the objectives.
 Get the group to explain its plan of action and check this plan objectively for any
possible flaws.
 Check that the group understands exactly what is required.
 The leader should sell, but not oversell, his own approach. He should make sure
that the members of the group are aware of his approach and preferences as far
as the implementation of the plan is concerned.
 Indicate the need for progress reports. The leader has to be kept up to daze with
regard to the progress of the project.
 Discuss the areas of the task that are sensitive to error or risk. If group
members have been alerted to be on their guard in certain areas, they will be able
to take the necessary precautions.

2. Monitor the progress of the group

 Encourage the group to follow their plan of action.
 Be alert for signs that indicate that things are starting to go wrong.
 Intervene only when the team does not spot errors.
 The leader must be ready to help with advice and guidance when needed but must
avoid doing the task himself.
 The leader should encourage frequent informal discussion rather than formal
feedback.

3. Appraising employees’ performance

Managers of businesses need an effective system of personnel appraisal (also

called staff evaluation or merit rating) to enable them to answer the question:
How well are my people performing? Under such a system each employee's
performance and progress is evaluated, and rewards are given for above-average
performance.

© Business Management Training College (Pty) Ltd

81
 GROUPS AND TEAMS IN THE ORGANISATION

Often, this method is used in determining merit salary increases.

If an MBO program, or its equivalent, is not being used, employee appraisals are
usually based on such factors as:
 Quantity and quality of work performed.
 Cooperativeness.
 Initiative.
 Dependability, including attendance.
 Job knowledge.
 Ability to work with others.
 Safety.
 Personal habits.

Each of these factors can be evaluated as, for example, superior, above average,
average, below average, or poor. The person’s wage or salary is then determined
from the evaluation. Employee evaluations should be related to promotions and
salary increases in addition to identifying marginal workers and designing training
activities for them. They can also be used to motivate employees, if the evaluations
are really translated into rewards. As small businesses have felt increasing
pressure to improve productivity, evaluating employee performance has become a
vital concern for those who want to get the best output from their people. While
most companies do it, few of them do it well.

4. Evaluation and feedback

 Feedback is important and should acknowledge skills and performance

 Feedback should be constructive, which could be positive or negative
 Praise the team and give recognition to the people involved if the task was
successful.
 If the result was problematic, evaluate the reason why, and work together with the
group to rectify the problem.
 Feedback is always a two-way process. The leader must give feedback to the
group, but the group must also provide feedback to the leader.

Feedback could be positive or negative.

1. Positive feedback:
Includes verbal and non-verbal encouragement, giving the group ‘a pat on the
back’. Positive constructive feedback entails that the group must know which
aspects of their performance were effective – where they did well, where not so
well, and how they can improve and develop further.

82 © Business Management Training College (Pty) Ltd

 LESSON 1.10
2. Negative feedback:
Negative feedback undermines the group’s abilities, and may leave them
feeling hopeless, angry and upset. It is not helpful because it doesn’t suggest how
improvements can be made or even recognise that improvements are possible.
Constructive negative feedback may be critical of the performance, but is
considerate of the groups’ feelings and offers supportive strategies to improve
performance. It accentuates the positive and respects people’s dignity, while
communicating the bad news and explaining the reasons. At the same time it
offers some opportunities for improvement.

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study 13.5 “Variables that influence group and team behaviour”, pages
319-327.
MANAGEMENT PRINCIPLES 5TH EDITION
Study 13.5 “Variables that influence group and team behaviour”, pages
363-370.

© Business Management Training College (Pty) Ltd

83
 GROUPS AND TEAMS IN THE ORGANISATION

LESSON 1.11
WORK TEAMS IN ORGANISATIONS

In this Lesson:

Organisations use teams to address the demands imposed on them, for

instance globalisation. Groups can be developed into teams, and their
characteristics will change.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Work team: consists of a small number of employees with complementary

competencies who work together on a project, are committed to a common
purpose, and are accountable for performing tasks that contribute to
achieving an organisation’s goals.
 Parallel development: several tasks are competed simultaneously.
 Serial development: one task completed at a time, followed by the next.

84 © Business Management Training College (Pty) Ltd

 LESSON 1.11
Key points:
Characteristics
 Complementary competencies: each individual team member should have
varied skills which are not duplicated in the team.
 Commitment to common purpose: team members are involved in setting the
team’s goals. They should be committed to a common purpose and expectations.
 Shared mission and collective responsibility: all members know the mission of
the company and all accept collective responsibility.
 Individual and mutual accountability and rewards: members are rewarded
mutually and individually.
 Synergy: the individual efforts are greater than the sum of individual inputs.
 Shared leadership: teams share leadership. Members share responsibility with
the leader.
 Equality: everyone suppresses their individual ego for the good of the team.

Why do organisations use teams? Some of the reasons are:

 Innovation: teams enhance creativity.
 Speed: by replacing serial development with parallel development.
 Cost: faster responses and decision making.
 Quality: through shared accountability and commitment.

WORK TEAMS:

Why is it important to use work team?

Work teams result in significantly more efficient operations such as:
 A reduction in work cycle times;
 Heightened responsiveness and flexibility
 On-going learning
Significantly improved business and people outcomes for instance:
 Increased customer satisfaction;
 Greater commitment to organisational goals;
 Higher productivity;
 Enhanced quality of work life.

Effective teams and teaming in organisations is dependant on three

prerequisites namely:
1. Designing the organisation around teams which can take clear ownership of
whole and meaningful pieces of work;
2. Ensuring healthy and productive team functioning through proper team
establishment;
3. Instilling a culture of continuous learning and innovation.

© Business Management Training College (Pty) Ltd

85
 GROUPS AND TEAMS IN THE ORGANISATION

Teams outperform individuals when the tasks being done require multiple skills,
judgement and experience. Teams are more flexible and responsive to changing
events than traditional departments or other forms of permanent groupings. Teams
have the capability to quickly assemble, deploy, refocus and disband.

A sample of team building facilitators completed a short questionnaire on the

strengths and weaknesses of South African teams and challenges for teams and
teams work in South Africa.
The following is a summery of the most significant problems that South African
teams experience according to the facilitators:
 Uncertainty in terms of the role of the leader and team members;
 Lack of support systems;
 Poor interpersonal relationships;
 Lack of understanding behaviour of team members or poor listening skills;
 Team members do not always understand the process or dynamics of team work;
 Inability to manage diversity;
 Lack of business understanding;
 Lack of flexibility.

The following strengths were identified:

 Loyalty;
 Hardworking;
 Focusing energy on one or two tasks at hand;
 Commitment;
 Technical skills;
 Winning spirit.

Greatest challenges identified by the facilitators:

 Managing diversity; (mainly race and gender diversity)
 Bridging cultural gaps;
 Obtaining a higher level of knowledge about team behaviour and the process and
dynamics of team work;
 Achieving and understanding of and implementing empowerment;
 Developing business understanding.

SP Robbins, A Odendaal & G Roodt states that employees seek the following
qualities and traits from team leaders and managers:
 Reliability;
 Dependability;
 Honesty;
 Direction and support;
 Attentive listening and understanding of team members;
86 © Business Management Training College (Pty) Ltd
 LESSON 1.11
 Fair treatment of all individuals;
 Timorous decisions and answers;
 A caring attitude;
 Trust and appreciation;
 Cheerfulness and positive reinforcement
 Sense of humour.

Arnold and associates identified five categories of behaviour that are important
for the effective leadership of empowered teams:
 Leading by example: This refers to behaviour that shows the leader’s
commitment to his or her own work as well as that of the team.
 Coaching: refers to a set of behaviours that educate team members and help
them to become self reliant.
 Participative decision making refers to a leader’s use of team members’
information and input in decision making (it includes behaviours such as
encouraging team members to express their ideas and opinions).
 Informing refers to the behaviour of sharing organisation wide information such as
mission and philosophy.
 Showing concern/Interacting with the team refers to behaviour that
demonstrates a general regard for team members’ well being (it is keeping track of
what is going on in the team and working closely with the team as a whole).

The following is a summery of the positive characteristics of South African team

leaders as identified by team building facilitators:
 Assertive;
 Quick decision making
 Task focussed;
 Achievement orientated;
 Hard working or enthusiastic;
 Strong on mechanical issues (vision, mission an goal, technical skills,
communication skills);
 Supportive;
 Charismatic.

The following weaknesses were identified by the facilitators:

 Delegation;
 Feedback;
 Empathy;
 Coaching;
 Lack of listening skills.

© Business Management Training College (Pty) Ltd

87
 GROUPS AND TEAMS IN THE ORGANISATION

TEAM-BASED STRUCTURES

In a team-based structure, the entire organisation is made up of work groups or

teams that perform the organisation's work. In a team-based structure, employee
empowerment is crucial, because there is no line of managerial authority from
the top to the bottom. Rather, employee teams are free to design work in a way
they think is best. However, the teams are also held responsible for all work
activity and performance results in their respective areas.

In large organisations, the team structure complements what is typically a

functional or divisional structure. This allows the organisation to have the
efficiency of a bureaucracy while providing the flexibility that teams provide.

The following figure illustrates a team structure. In this figure, a team structure
involves teams of various types working together as needed to solve problems and
explore opportunities, either on a full-time or on a part-time basis. These are often
cross-functional teams composed of members from different areas of work
responsibility. The intention is to break down the functional barriers inside the
organisation and create more effective lateral relations for on-going problem-
solving and work performance.

Plant
Manager

Manufacturing Sales Engineering Human Resource

Manager Manager Manager Manger

New
Valuing
product Team Assignments Diversity
development
team workforce

Figure: Example of a team structure.

Source: Schermerhorn (2002:265)

88 © Business Management Training College (Pty) Ltd

 LESSON 1.11
Teams are useful in the workplace as they give people an opportunity to work
together, and to focus on the team’s purpose and the tasks that achieve this
purpose. Each individual can make a contribution. The level of contribution
depends on a complex interaction between several factors - supportive team
communication, member’s personal skills, recognition of individual and team
efforts, the recognition of diversity and a sense of belonging. The leadership and
membership skills of those in a team also significantly affect members’
opportunities to make a contribution.

A work team’s results are evaluated by considering two aspects. One involves
what it does, in terms of production, service or costs. The other involves how it
achieves those results, in terms of teamwork, cooperation and initiative. This
chapter explains how a team operates to complete its tasks. Communication,
involvement and commitment to the team’s goals are important parts of that
process.

The ten steps Goetsch presents in effective teamwork are:

1) establish direction and goals for the team;

2) establish clear roles and ground rules for the team;
3) establish accountability for the performance of the team;
4) develop team leadership skills;
5) develop communication skills for team leaders and members;
6) develop conflict-resolution skills for team leaders and members;
7) establish a well-defined decision-making process for the team and empower
members to participate;
8) establish behaviours, ethics, and trust among team members;
9) recognise and reward effective team performance;
10) continually evaluate, improve, and build the team.

WORK TEAM ENABLERS

The organisation, the team and each team member must all communicate with one
another to learn what tasks are to be completed at each organisation level by each
different team. Cooperative relationships help work teams to develop efficient
workplace practices.

© Business Management Training College (Pty) Ltd

89
 GROUPS AND TEAMS IN THE ORGANISATION

The five work-team enablers are:

1. Power
2. Accountability
3. Capability
4. Direction
5. Transparency

Each work team must:

 Establish the enablers
 Agree on ways to develop
 Create positive relationships
 Maintain relationships with other teams.

1. Power
For a team to develop and work well it must have power. That power is given by its
mandate (reason for being). The team leader and each member must all be clear
about the team’s role and their own role. They must also understand the authority
held by their team.

The three sources of team power are:

 Personal Power held by each team member.
 Positional power delegated by the organisation to the team leader or any other
team member.
 Situational power determined by environmental factors and by team interactions.
Any one of these three sources of power can influence the way the work team
develops.

2. Accountability
Each work team has a mandate - that is, an authorisation, order or contract to
perform its particular duties. A mandate, or clear definition of the work team’s role
and each team member’s role, is vital for everyone involved to perform their work
tasks, individually and cooperatively. A team’s effectiveness in meeting its
accountabilities depends on the quality of the team leader. The more the team
respects the leader, and the less a leader has to rely on the formal status in the
organisation, the better it is for the team. The more organized and well informed
the team leader, the better the team will work together. Finally, if the leader has
good human relations and communication skills, there is less chance of conflict.
Not only is the team, as a whole unit, accountable: each member is individually
accountable. The qualifications, skills and attitudes of each member are central to
how well the team performs. If members are under qualified, uninterested or over
concerned with their own objectives, then team discussion and actions will be less
productive.
90 © Business Management Training College (Pty) Ltd
 LESSON 1.11
3. Capability
A team’s potential depends greatly on the capability of its members—that is, their
qualifications, knowledge, skills and attitudes. It also depends on the team’s
operating structure. This is the framework in which individual team members’
capabilities are used. The operating structure enables the organisation, its teams
and individuals to meet legislative, industry, market, customer, operational and
personal requirements. A team needs an operating structure for its collective
achievement.

The team’s operating structure also affects its functioning and how people feel
about belonging to it. Team members who know what is happening and feel
confident can contribute to, and influence, the team’s outcomes. They are able to
work productively through the combination of individual and team capabilities.

4. Direction
Direction is the line the team works along to reach its goals. Sometimes these
goals are simply to complete the team’s day-to-day activities. Other goals may be
longer-term: for example, changing to new team systems and ways of doing
things. If the direction and goals are clear it is easier for the team to complete its
activities.

A team with clear direction is more likely to achieve its intended outcomes. A
common purpose and direction, and commitment to the team from its members
lead to team cohesion. In a cohesive team, members obtain a high level of job
satisfaction. They feel needed, and will not let other team members down.
Communication flows freely between members of such a team and decisions are
rapidly acted on.

5. Transparency
Transparency means that it is easy for all members of a team to understand fully
what is happening in the team. Each member can participate and trust the
capacity of others to get the job done. With transparency, team members
collaborate to achieve the team’s goals. Every member has needs—for example,
status, friendship or achievement - which they expect the team to meet.
Transparency helps individuals to contribute information and ideas clearly, to work
towards establishing harmony, and to minimise power struggles and conflict in the
team. A team that understands its mandate and has a joint commitment to the
tasks usually has a positive attitude and communication climate. If, on the other
hand, there is dissatisfaction, lack of unity and low morale, the climate is negative
and the team will inevitably be less efficient.

© Business Management Training College (Pty) Ltd

91
 GROUPS AND TEAMS IN THE ORGANISATION

While the organisation provides the setting, the work team provides the forum
where people interact, develop relationships, and take a common approach to
tasks and goals. Each team in an organisation is constantly changing, and has a
clearly defined life cycle.

WORKING TOGETHER

Team skills are quite different from those of competing individuals. They involve
cooperation, mutual support and accountability to the team. These skills are
needed in families for members to support and encourage each other. They are
also needed at school for students to learn together. And they are needed on the
job in managing projects, making informed decisions and solving intricate
problems.

These skills can expand limited resources, develop new ideas and to build viable
relationships. An individual alone has but a limited perception of the range of
possibilities in a situation. A team taps into a variety of perceptions and so widens
the scope of available information, options and ideas. When various heads come
together in teamwork-which means listening, developing ideas and building
on each other’s insights- not only are more ideas generated but also a
mutual acceptance and trust builds among the participants through the
interaction.

The quality and effectiveness of individual strategies is also greatly enhanced

when team members constructively question each other's thought process.
A team can help clarify hidden factors, such as the nature of the resistance or the
level of trust in a particular situation. The interaction that comes from working and
thinking together in a team also helps an individual avoid making assumptions that
are not reality based. Team members do this by asking questions such as: "Is the
data sufficient?" "Is it accurate?" or "What is the source?"

For example, a customer education department I worked with in a Midwestern

corporation assumed quite naturally that their teaching aids (directions for how to
use) was up to date. That was until one member of their education team happened
to overhear some customers questioning whether they were getting the right
information on how to run the expensive, new equipment they had just bought. At
this point questions, like those indicated above, were raised. When they checked it
out, they were shocked to find that their instructions were out of date.
Consequently, with the help of upper management, they set up an
interdepartmental team to keep them current in their presentations about company
products consisting of representatives from engineering, marketing and

92 © Business Management Training College (Pty) Ltd

 LESSON 1.11
production. If any of their educational materials were inaccurate or out of date, it
would show up at these meetings, not in presentations to customers.

TEAM LEARNING

Of course not all teams are well organised. Nor do all team members understand
the real meaning of teamwork. A poorly organised team probably functions worse
than a collection of competing individuals.

Teams need to learn certain skills as a team to function effectively. Peter

Senge coined the phrase "team learning" to show how teams go through the steps
in the learning process together, not just as individuals. That means they are
willing to experiment and learn from their results by sharing insights, reflecting
on outcomes and really listening to each other.

According to A. J. Chopra, an expert in innovative team process, "If you use

people's heads in a good way, they'll let you borrow their hearts." You do this,
Chopra says, by really listening for what is of value in what they say. "New
ideas rarely come to mind fully formed, so they are vulnerable to attack. To
voice such ideas is to risk being ridiculed or thought impractical or even
irresponsible. If people feel that they can take such risks with you in a way
that is not only safe but productive, then working with you becomes a positive
experience." (Chopra)

The teams learn to function effectively when they provide much needed guidance
and support to individual members. Teams can fill the gap left by the downsizing
of middle managers. As teams fill this gap, they give individuals a place to belong
in the organisational system.

How teams fill the gap

According to the book, Wisdom of Teams "a real team autonomously develops it
own common purpose, performance goals, working approach and methods for
mutual accountability" In other words, they organize themselves. This stands in
contrast to "pseudo teams" which call themselves teams but are really just
competing individuals." (Katzenbach and Smith 61-64)

Team members can help each other by developing a system for supporting
their individual goals. After setting their team performance goals a self-
organising team can set then cooperate in achieving their individual goals.

© Business Management Training College (Pty) Ltd

93
 GROUPS AND TEAMS IN THE ORGANISATION

If team members really do learn how to develop and train each other, their
competence will improve and so will their morale and their performance as
well.

Real teams provide the support individuals need to manage their way through the
complex problems and issues that confront them. It is a lot easier to get
recognition and help from the members of your team than it is to try to get the
attention of a boss that is too busy to give you the time.

Becoming a "member" of a team is important to new people, in an organisation

too. New recruits are keenly sensitive to signals that indicate how they will be
treated by others. They carefully watch how others respond to what they say and
do because they know that the way they get treated will largely determine their
success in the organisation.

A well functioning team interacts directly with its members in an intermeshed set of
relationships based on trust that constantly gives support and guidance to the
individuals involved. When this happens, individual performance in the team
exceeds what any one of them could do alone.

PROFESSIONALS

The role of people at work today has shifted from a passive one in which they
followed orders, to an active one in which they take informed risks. Those once
known as "Workers" in the old bureaucratic system, have become "Professionals"
in today's complex workplace. That calls for the use of initiative by well informed
people who can make intelligent decisions. (Hammer 1-15)

These professionals need teams to manage complex processes, to network with a

variety of resources and to do creative problem solving. Teams provide the
means, as well as the practice and coaching required to achieve competence in
doing these things, as noted before.

Teams do not replace the traditional organisational structure. Rather they

work within it to offer individuals a more dynamic process and a creative
energy flow throughout the organisation.

For example, the administrative personnel of a mid-sized company I worked with

on the East Coast created an innovative new process in their organisation system:
a problem solving support group. These administrators were people who work as
94 © Business Management Training College (Pty) Ltd
 LESSON 1.11
secretaries and receptionists. They had never before met as team. But, in the
midst of a training program, they used a little creative imagination to create a new
entity. Now they meet once a week with their supervisor to help each other solve
the problems they have with indifferent bosses, irate clients and unreliable
suppliers. They fine tune their problem solving skills as they work together on their
own real issues.

SYNERGY

As noted above, synergy can multiply a team's resources far beyond the
limitations of the individual contributors. It happens when team members work
cooperatively to share ideas, recognise the value of each member's contribution
and jointly craft those ideas into viable options.

In a recent book on biology and social systems, Kevin Kelly points out how a
single honey bee can do nothing by itself. But in the hive it becomes part of
a highly productive operation to make honey. There occurs in this process,
Kelly says, "a hive mind" consisting of many individual bees working together
collectively. (Kelly 11).

Synergy multiplies the resources of team members through the interaction

of a variety of contributors who see a problem from diverse perspectives.

When this happens the collective brain, or what Kelly would call the "hive mind", of
the team takes on an enriched and enlarged life of its own which is exciting to all
involved and can produce highly innovative results. "Our team is like a blueberry
pancake" a member of a creative team on the West Coast once told me during a
training session. He was speaking of how leadership operates in his team. "Its
flat", he said. "We’re all equal. But there are the blueberries. They are the ones
who get the action going." Taking initiative in setting a goal and making a
commitment to bring about constructive results puts a person in a
leadership role, like those "blueberries".

Peter Block, a prominent organisational consultant, describes this kind of

leadership in terms of commitment to a personal vision: "The essence of political skill
is building support", he says. "This takes place through dialogue and the most
compelling dialogue we can have is about our vision. Leadership is keeping
others focused on our vision and this means we have to get comfortable
talking about it." (Block 121 )

© Business Management Training College (Pty) Ltd

95
 GROUPS AND TEAMS IN THE ORGANISATION

A NEW MODEL FOR LEADERSHIP

A model invented and promoted by Synectics, Inc., a Cambridge consulting firm,

works effectively for the kind of leadership Block describes.
The Synectics model actually requires dual leadership to make the process
work: one person facilitates the process, the other is committed to the
pursuit of a vision or a goal. The team members work together to generate
ideas to help the one with the goal create a viable achievement strategy to
implement his or her vision.
In this model individuals readily set goals that are aligned with team and
organisational objectives. Even though most new ideas are incomplete and easily
destroyed, as noted previously, skilful facilitation can manage the process to
create an environment that allows creativity to flourish.

This process works best if the facilitator rotates from one meeting to the next. That
way fresh energy comes with each new process leader. Of course it can be quite a
challenge for some team members to facilitate the process for the first time, but
with help from the team they can readily acquire the needed skills, as in the
previous example of the administrative personnel team.
A group of engineers in the Department of Public Works I worked with in a small
town in Eastern Massachusetts, exemplified how well this process can work by the
way they embraced it. They were all union, with the traditional attitudes of that
group. None of them had ever conducted a meeting before. But when they learned
how to work this process, their productivity soared because they realised they
could solve their own problems better than management could do it for them.

Conclusion
With the support of management, and by working cooperatively, effective teams
can readily help individuals adapt to new situations, solve intricate problems,
multiply their resources and create constructive change in the workplace.
Individuals are most effective when they do not work alone but with others on a
team.

J. Allyn Bradford is a consultant, specializing in Team Effectiveness, who has worked with over 25 major
corporations in the US and abroad. © Allyn Bradford

96 © Business Management Training College (Pty) Ltd

 LESSON 1.11
TEAM MEMBERS’ ROLE

A role is the behaviour that is expected of someone who holds a particular

position. Work teams operate with set expectations about how each team member
should behave. For example, a leader’s role differ from the roles played by other
members. A leader is expected to behave differently form other members.
There are three general roles that help a team achieve its goals.

1. Task-related roles
2. Maintenance-related roles
3. Liaison-related roles

An understanding of these different roles helps to explain some of a team’s

interactions. Some of the roles are constructive, others are destructive.

1. Task-related roles
involve team members in briefing others, reporting, evaluating their own
performance and assessing the performance of others. One of the task-related
roles—that of the initiator, for example—starts procedures or finds new ways of
talking a problem. Table 11.1 on the next page gives seven examples of task-
related roles. Team members may assume any of these roles, but an efficient
leader will keep control of proceedings and ensure that roles are properly
performed.

2. Maintenance-related roles
are concerned with people and their relationships. These roles help to keep the
team together so that its tasks can be completed efficiently. Maintenance-related
roles include advising and counselling others. Another, the harmonizer role, helps
to maintain team relationships by working to avoid conflict and reduce tension.
Examples of team-maintenance roles are given in Table 11.2. A team member
may assume any of these.

A work team’s emotional climate is continually changing, and so the maintenance

roles change too. The tasks a team is asked to complete also change. External
environmental changes also affect the team.
A decision by management—for example, to diversify the company’s activities—
means that the team will have to complete new tasks.

3. Liaison-related roles
Involve team-to-team relationships and collaboration. They are responsible for
identifying needs and setting ground rules to meet those needs.

© Business Management Training College (Pty) Ltd

97
 GROUPS AND TEAMS IN THE ORGANISATION

Then teams can work together for mutual benefit. Without successful team-to-team
relationships, work is much more difficult.

Table 11.1 Team behaviour: task-related roles:

Role Example
1. The initiator starts a procedure, defines “Why don’t we define the problem and then
problems and organises solutions. move on from there.
2. The information seeker draws out facts by “As the Safety Officer, Jill, could you tell us
asking questions. about the problem?”
3. The information giver (preferably an “The annual report shows that output has
expert) provides facts. decreased by 2%”
4. The opinion seeker asks questions to
“I’m not sure about that proposal. What do you
discover the team’s views on a particular
think about it?”
topic.
5. The opinion giver offers useful opinions
“One way to overcome the problem might be…”
based on personal experience.
6. The clarifier paraphrases, asks for feedback “Are you proposing we complete the
on a member’s comment, and integrates manuals ourselves rather than ask
ideas. consultants?”
“So far we have heard from Data Processing,
7. The summariser restates the main points
Accounts and Sales. The proposals seem to
and the team’s ideas and plans for action.
be…”

Table 11.2 Team behaviour: maintenance roles

Role Example

1. The harmonizer seeks to avoid conflict, reduce “Both suggestions are useful, Sue and Carlos. I think
tensions and mediate between members. we can combine both in our plan.”

2. The encourager ensures that each team member

“That’s a terrific suggestion. You obviously put a lot
participates and gives appropriate recognition to all
of work into it.”
contributions.

3. The communication facilitator ensures that

team members communicate well with each oth­
“That’s interesting. What do other people think?”
er, and that no single member dominates the dis­
cussions or activities.

4. The interpersonal problem solver ensures that

“There appears to be a problem about this. Let’s talk
any conflicts that emerge in the team are quickly
about it.”
identified and resolved.

“I’ve noticed the team prefers to keep management

5. The standard setter suggests norms and
structure issues out of these meetings. Is this a sub­
standards of behaviour.
ject to be avoided?”

98 © Business Management Training College (Pty) Ltd

 LESSON 1.11
CONFLICT
The workplace constitutes a dynamic environment consisting of people who have
different personalities, values, cultures and ethical values. It is vital that personnel
should share common values and goals that bind them together in an attempt to
achieve the organisation’s goals and objectives. The corporate culture should
provide guidance to personnel to work together in order to achieve these goals
and objectives in an organised way. The organisation faces great risks if sound
relationships amongst personnel are hampered with inter-group conflict and stress.
In the end, it is not only the people, but the organisation too, that will suffer from
risks associated with interpersonal relationships.

INTER-GROUP CONFLICT
Causes of inter-group conflict and collaboration are varied. Some of the more
significant factors generating inter-group conflict are:
 Personality conflict
Different backgrounds, different management styles, religions and values can cause
conflict.
 Conflicting ideas
Two different, but interrelated departments could have totally different values,
attitudes and approaches to problem solution.

Conflict may be the result of workers believing that the company is pushing
productivity for as little remuneration as possible, while management may believe
that the workers are lazy, doing less than a fair day’s work for a fair day’s pay.

CONCLUSION

Each work team is assigned a given task or operation; its members manage the
task or operation without direct supervision and assume responsibility for the
results. When work teams function properly, the number of supervisors needed
decreases sharply. Management practices that include a high level of involvement
by employees contribute to productivity and profits, according to research studies.
“People work harder because of increased involvement and commitment that
comes from having more control and say in their work; people work smarter
because they are encouraged to build skills and competence. People work more
responsibly because more responsibility is placed in the hand of the employees
further down in the organisation. These practices work not because of some
mystical process, but because they are grounded in sound social science,
principles that have been shown to be effective by a great deal of evidence.”

© Business Management Training College (Pty) Ltd

99
 GROUPS AND TEAMS IN THE ORGANISATION

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study 13.6 “Organisational teams”, pages 327-331.
Study 13.7 “Types of team”, pages 331-335.
MANAGEMENT PRINCIPLES 5TH EDITION
Study 13.6 “Organisational teams”, pages 370-374.
Study 13.7 “Types of team”, pages 374-375.

100 © Business Management Training College (Pty) Ltd

 LESSON 1.12

LESSON 1.12
TYPES OF TEAMS

In this Lesson:
In this lesson we differentiate between the three most common forms of
team in organisations, and how to introduce teams into the workplace.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Social rapport: involves the intangible elements of the social work
relationship: active listening, mutual dialogue, trust, caring, sharing thoughts
and ideas.

Key points:
 Problem solving teams: composed of employees from the same department who
meet a few hours per week to discuss problems. They have no authority to
implement solutions unilaterally.
 Self managed work teams: they may make an implement decisions and take
responsibility for the outcomes.
 Cross-functional: comprise employees on the same level, who must solve
problems that require expertise of specialists.
 Virtual teams: co-workers who use telecommunications and information
technology to accomplish an organisational task.

Developing individuals into team members:

 Selection process: a strict selection process should be followed. Candidates
must have technical skills as well as the right personality traits.
 Training: the purpose is to train members to perform a variety of managerial
leadership activities.
 Reward systems: the way the organisation rewards performance will influence
the behaviour of the group member.

© Business Management Training College (Pty) Ltd

101
 CHAPTER 1
LEADING

MOTIVATION
IN THIS CHAPTER:
 LESSON 1.13 : MOTIVATION - THE PROCESS.
 LESSON 1.14 : MOTIVATION THEORIES
 LESSON 1.15 : MONEY AS A MOTIVATOR

AT THE END OF THIS CHAPTER YOU WILL BE ABLE TO:

1. Explain what motivation encompasses.
2. Illustrate and explain the motivation process.
3. Differentiate between content theories, process theories, and reinforcement
theories of motivation.
4. Present arguments for and against the use of money as a motivator.
5. Make recommendations regarding the design of jobs, which are likely to motivate
the worker.
 LESSON 1.13

LESSON 1.13
MOTIVATION - THE PROCESS.

In this Lesson:

In this lesson we explain what motivation encompasses and illustrate

the motivation process.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Motivation: in an organisational context it can be defined as the willingness

of an employee to achieve organisational goals.

Key Points:
 Motivation is one of the factors that directly affect employee performance.
 Motivation comes from within.
 Motivation is what drives people to behave in certain ways.
 People are motivated to do what is in their best interest.
 Managers can not motivate people, but they can do much to create a work
environment in which the best interests of employees and of the organisation
coincide.

The Motivation Process

 The process consists of the following interdependent elements:
 Need: an individual will become motivated to fulfil a need.
 Motive: a person is motivated to work towards a motive.
 Behaviour: the need will motivate the employee to behave in a certain way.
 Consequence: the consequence of behaviour may be positive or negative.
 Satisfaction: the consequence of behaviour could lead to satisfaction or
dissatisfaction.
 Feedback: if dissatisfaction is the outcome, the need remains unsatisfied. If
satisfaction is the outcome, the motivation process will start all over again as
people have many needs.

© Business Management Training College (Pty) Ltd

103
 MOTIVATION
THE CONCEPTS OF NEED-DRIVE-GOAL

We all have certain needs and follow a process to satisfy those needs. Several
psychologists have produced models to explain this process. Essentially, all our
behaviour is driven to satisfy a need of some type.

The process of satisfying the need is shown below and is known as the
'need-drive-goal' cycle:
 I identify a need of some type. Let us assume that I am thirsty and set a goal to
satisfy that need. The goal is not to be thirsty anymore.
 My need results in motivated behaviour or action. I will search for methods of
satisfying the need. What choices of liquid do I have? I could have tea, coffee, soft
drink or water. (A drink containing alcohol would probably not quench my thirst)
 I act to satisfy the need. I will choose a liquid that I prefer to reduce and eliminate
the thirst. I have achieved my goal.
 I evaluate that the need has been satisfied because I am no longer thirsty. (I stop
drinking.) The consequence of my
behaviour is positive.

ORGANISATIONAL BEHAVIOUR AND MOTIVATION

Robbins (1986) defines organisational behaviour as “a field of study that

investigates the impact that individuals, groups and structures have on
behaviour within organisations for the purpose of applying such knowledge
toward improving an organisation’s effectiveness.”

To explain: Organisational behaviour is a field of study, which studies three

determinants of behaviour in organisations, namely individuals, groups and
structure. Organisational behaviour applies the knowledge gained about
individuals, groups and the effect of structure on behaviour to make the
organisations work more effectively.

To sum up: Organisational behaviour is concerned with the study of what people
do in an organisation and how that behaviour affects the performance of the
organisation.
The following topics comprise the subject area of organisational behaviour:
 Productivity and motivation;
 Leader behaviour and power group structure and process;
 Interpersonal communication;
 Attitude development and change processes.

104 © Business Management Training College (Pty) Ltd

 LESSON 1.13
MOTIVATION

Motivation can be defined as an individual’s willingness to exert high levels

of effort toward organisational goals, conditioned that the individual will satisfy
some individual need. Motivation is primarily concerned with the reasons why
people behave in a certain way.

What is motivation?

 Motivation is the process used by managers to bring out the best in employees by
giving them reasons to perform better.
 Managers are always motivating employees, either positively, to perform, or
negatively, to withhold performance.
 Two ways to succeed in business are to increase productivity and efficiency and to
improve employee satisfaction.
 Because there are many factors that affect productivity and satisfaction, motivation
alone is not enough.
 Employee performance is a product of the employee’s ability to do the job, the
application of positive motivation and the extent to which the job meets the
employee's expectations: that is:

Performance = Ability x Motivation x Expectations

Most employees work for a company expecting to do a good job, receive a

satisfactory income and gain satisfaction from doing a good job. However,
performance and satisfaction are dependent on being able to do the job
satisfactorily.

If employees are not performing as expected, they may be unsuitable for the job,
inadequately trained, or unmotivated. If they are unsuitable for the job, move them
to a more suitable job, and if untrained, train them. If they are both suited and
trained, try harder to motivate them. But you must be careful to keep employee
expectations realistic so as not to lead them to make unwarranted requests.

Why motivate employees?

One reason managerial motivation is so difficult to use is that there are different
purposes for motivating people, and each of these requires different incentives.

© Business Management Training College (Pty) Ltd

105
 MOTIVATION
Usually managers use motivational techniques for the following purposes:

1. To attract potential employees

Managers wanting to encourage potential employees to come to work for them
must find and use incentives that would appeal to a person needing a job. These
incentives usually include a good income, pleasant working conditions, and
promotional possibilities.

2. To improve performance
Managerial motivation is also used to improve performance and efficiency on the
part of present employees. Employers can motivate workers by praising good work,
giving more responsibility to employees, publicly recognizing a job well done, and
awarding merit salary increases.

3. To retain good employees

Motivation can also be used to encourage present employees to stay with the
company rather than leave for another job. This is accomplished primarily through
the use of employee benefits, most of which are designed to reward employees
who stay with the company.

There may be occasions when, because of poor performance or for other reasons,
a business may want to use incentives to get undesirable employees to leave.

During economic downturns or other financial reverses, a company might find it

less expensive to "pay off" workers with a cash settlement or early retirement than
to continue to pay their salary and benefits.

HOW TO MOTIVATE EMPLOYEES

The theory of motivation is relatively simple as shown in the figure on the next
page.

An employee has a need or needs, and management applies some kind of

incentive or stimulus, which promises to satisfy that need. The employee responds
with favourable behaviour, which results in job satisfaction, so that his or her needs
are satisfied and the company achieves productivity and efficiency. Management's
problem in motivating employees, then, is to know them well enough to know what
they need and what incentives will stimulate them to perform.

106 © Business Management Training College (Pty) Ltd

 LESSON 1.13
THE MOTIVATIONAL PROCESS

Employees needs Job satisfaction

Response Behaviour

Stimulus Efficiency and

(Incentives) productivity

MOTIVATIONAL TECHNIQUES

Some “tried and true” techniques of improving motivation are:

A) Quality circles;
B) Zero defects programs;
C) Job enrichments;
D) Management by Objectives;
E) Variable work schedules.

A) Quality circles (QCs) are small, organized work groups meeting periodically to
find ways to improve quality and output. They motivate by getting employees
involved and taking advantage of their creativity and innovativeness.

B) Zero defects approach is based on getting workers to do their work "right the first
time.'' thus generating pride of workmanship. It assumes that employees want to
do a good job-if permitted to.

C) Job enrichment emphasizes giving employees greater responsibility and authority

over their jobs, as the best way to motivate them. Employees are encouraged to
learn new and related skills or even to trade jobs with each other as ways of making
the job more interesting and therefore more productive.

D) The purpose of management by objectives (MBO), also called goal-centred

performance appraisals, is for managers and employees to work together to set

© Business Management Training College (Pty) Ltd

107
 MOTIVATION
goals for the organisation, their division and themselves, and then to use those
goals as guides to perfor­mance and as a means of evaluating it.

E) Variable work schedules permit employees to work at times other than the
standard workweek of five eight-hour days. Such schedules are being extensively
used, especially by small firms to motivate employees. Flexi time allows
employees to schedule their own hours as long as they are present during certain
required hours, called core time. This gives employees greater control over their
time and activities. Job splitting is dividing a single full-time job into distinct parts
and letting two (or more) employees do the different parts. In job sharing, a single
full-time job is shared by two or more; employees with one doing all aspects of the
job at one time and the other at another time.

MOTIVATION AUDIT

A motivation audit can be completed to assess employee’s motivation.

The following factors induce poor motivation:

 Low productivity; absenteeism; poor timekeeping.
 High staff turnover; poor quality work; customer/client complaints.
 Low team morale; interpersonal conflict among employees.
 Conflicts with management; inflexible attitudes to change.
 Bad relations with other parts of the organisation.

108 © Business Management Training College (Pty) Ltd

 LESSON 1.13
STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Read 14.1 “Introduction to motivation”, pages 337-338.
Study 14.2 “The motivation process”, pages 338-340.
MANAGEMENT PRINCIPLES 5TH EDITION
Read 14.1 “Introduction to motivation”, page 384.
Study 14.2 “The motivation process”, pages 384-386.

INTRODUCTION TO BUSINESS MANAGEMENT 8TH EDITION

Study Chapter 11.7 “Motivating employees”, pages 313-326.
INTRODUCTION TO BUSINESS MANAGEMENT 9TH EDITION
Study Chapter 12.7 “Motivating employees”, pages 326-338.

© Business Management Training College (Pty) Ltd

109
 MOTIVATION

LESSON 1.14
MOTIVATION THEORIES

In this Lesson:

Theories on human behaviour are based on observation. Theories can

never predict behaviour with absolute certainty; they provide managers with a
good indication of possible behaviour in various circumstances. In this lesson
we differentiate between the various motivation theories.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Higher-order needs: Affiliation, esteem and self-actualisation. Needs are
satisfied by intrinsic reward. (rewards experienced directly by the individual.)
 Lower-order needs: Physiological and security needs, satisfied by extrinsic
rewards. (rewards provided by the organisation)

Key points:
We classify motivation theories in terms of content, process and reinforcement
theories.

CONTENT THEORIES (ATTEMPTS TO FIND OUT WHAT PEOPLE’S NEEDS ARE)

 These theories are associated with the work of researchers such as Maslow,
Herzberg and McClelland.
 Content theories try to determine the needs that people want to satisfy and the
factors that influence individual behaviour.
 Maslow’s hierarchy of needs: this theory is based on the two assumptions that i)
people always want more and ii) people’s needs arise in order of importance.
 The five levels in Maslow’s hierarchy of needs model are:
 Physiological needs
 Security needs
 Social needs
 Esteem needs
 Self-actualisation needs.
 Contemporary managers realise that people can not be confined to these five
steps, and there are some criticisms of the theory.

110 © Business Management Training College (Pty) Ltd

 LESSON 1.14
 The value of the theory to managers:
 It highlights important categories of needs
 It makes a distinction between higher-order and lower order needs
 It stresses the importance of personal growth in the workplace.
 Mangers can create working environments where the higher-order needs of the
workers are satisfied.
 Herzberg’s two-factor theory: he found that factors leading to job satisfaction
were separate and different from those leading to job satisfaction.
 He termed the sources of work satisfaction motivator factors and the sources of
work dissatisfaction hygiene factors.
 Motivator factors are work itself, achievement, recognition, responsibility,
opportunities.
 Hygiene factors are salary, interpersonal relations, company policy and
administration, status and job security.
 Managers can apply this theory by eliminating dissatisfaction, providing
opportunities for growth and job restructuring.
 Acquired needs model: Also known as McClelland’s theory. His research indicated
that different needs predominate in different people. He distinguishes between
three needs:
 The need for achievement
 The need for affiliation
 The need for power
 Management should use this model to improve worker performance by placing
employees in jobs according to their predominant needs.

PROCESS THEORIES (ATTEMPT TO FIND OUT HOW MOTIVATION OCCURS.)

 According to the equity theory of motivation, an individual must be able to
perceive a relationship based on comparing his own input-output ratio to that of an
equal person.
 Inputs are efforts, experience, qualifications, seniority, and status.
 Outputs are praise, recognition, salary, promotion.
 The worker’s comparison then leads to a conclusion of being under-, over- or
equitably rewarded.
 If the individual’s perception is that he/she is under- or over rewarded, he or she
will try to restore the equity.
 Mangers use this theory to understand motivation and work performance. Their
approach should be open and honest about employee inputs and outcomes.
 When feelings of inequity arise, managers should be patient and correct the
problem or explain why perceptions are unfounded.
 The expectancy theory was developed by Victor Vroom.

© Business Management Training College (Pty) Ltd

111
 MOTIVATION
 It suggests that an individual’s work motivation is determined by:
 Expectancy
 Instrumentality
 Valence
 Managers apply this theory by linking performance to rewards, finding out what
outcomes employees perceive as desirable and provide them and clearly
communicating desired behaviours to employees.

REINFORCEMENT THEORY (BEHAVIOUR IS A FUNCTIONS OF ITS CONSEQUENCES)

 According to this theory, behaviour followed by positive consequences will occur
more frequently and behaviour by negative consequences will not occur as
frequently.
 Behaviour can be reinforced by reward or through avoidance.
 Negative reinforcement is punishment and extinction.
 Managers can use the reinforcement theory to enhance motivation in the
workplace by flowing these steps:
 Identify behaviours that are important to job performance
 Measure how often workers engage in these behaviours
 Analyse the causes and consequences of these behaviours
 Use positive and negative reinforcement
 Evaluate the results of reinforcement.

112 © Business Management Training College (Pty) Ltd

 LESSON 1.14
CONTENT THEORIES OF MOTIVATION

Motivation theories explain what factors motivate a person.

A. MASLOW'S HIERARCHY OF NEEDS

Maslow assumes that people will always want more, based on what they have
now. A need that has been satisfied no longer motivates a person. Each of us has
our own order of importance for these needs.
 The primary needs are physiological and are for food, drink, shelter etc. Little
energy will be aimed at satisfying the other needs unless the primary needs are
satisfied.

 The safety needs are next on the list. These are for physical safety at work and at
home, economic security, and job security. Fair payment and fringe benefits,
including pension and life and accident insurance are important. One of the
reasons individuals resist change is because their safety needs are threatened.

 Social needs are those for acceptance, to belong to a group and for love and
affection. In the work environment this is achieved through induction programs,
socialising and team activities.

 The next category of needs are those for recognition, status and esteem. Each
of us needs to be recognized for our capabilities and achievements by our
superiors, peers, and subordinates. We also need to have self-respect. This
means we must respect ourselves. This is achieved in the work environment by
tangible things such as rewards, titles, cars, and other status symbols.

• The highest need is for self-actualisation and achievement. The need is to fulfil
oneself and to make something of one's life and to use one's capabilities to the
maximum.

Maslow assumed that a person would attempt to satisfy the more basic needs
before satisfying the higher level needs. In one sense this is true because a
person who is hungry, thirsty and without shelter will not be interested in
achievement.

A satisfied need is no longer a motivator. Similarly, an unsatisfied need will

cause internal conflict and stress. There is some dispute about the validity of his
theory, in that no valid research shows that a hierarchy of needs exists. Maslow's
work does show us that individual needs exist and that individuals work to satisfy

© Business Management Training College (Pty) Ltd

113
 MOTIVATION
them. As a manager, you must be aware of this and try to structure your
subordinates' jobs to satisfy their needs.

It is also true that several needs may exist at the same time, as you have
experienced. Some needs are short term in nature, others long term. Both types of
needs must be satisfied. Our needs also change as our age and family life cycle
change in life.

You must realise that it is not always possible to satisfy all of a person's needs
at work. There are only a few opportunities for promotion, which satisfies the
recognition and status needs. This is why many people do outside activities that
satisfy these needs.

MASLOW’S HIERARCHY OF NEEDS

Self-actualisation
needs
achievement,
self-fulfilment

Status needs
recognition, rewards, titles
and status symbols

Social needs
acceptance, belonging, love, affection

Safety needs
physical safety, job security, fair payment, fringe benefits

Physiological needs
food, drink, shelter

114 © Business Management Training College (Pty) Ltd

 LESSON 1.14
B. HERZBERG'S TWO- FACTOR THEORY OF MOTIVATION

The second content theory of motivation is that of Frederick Herzberg. It is

commonly referred to as the two factor theory. He built on the work of Maslow
and analysed many people's jobs to establish the ‘critical incidents' that made
the individuals satisfied or dissatisfied with the job.

Herzberg analysed these incidents and separated them into two categories. He
found that job satisfiers related to the content of the job or what the person was
doing. Herzberg calls them the motivators. These are intrinsic in that they are
internal feelings that people experience.

These motivators are:

 Achievement in the job. This is the good feeling you get when you
successfully perform a difficult task.
 Receiving recognition for good work that you have accomplished.
 Being given challenging work to do which stretches you mentally and
intellectually.
 Being assigned responsibility for a whole job and being allowed to make all
the relevant decisions about it.
 Having advancement opportunities in terms of promotion or transfers to other
interesting, new tasks.
• Having opportunities to develop your skills.

The job-dissatisfactory elements related to the job context, or the environment

in which the person is working. Herzberg calls them the hygiene factors. People
will complain about these issues in an organisation.

Examples:
 Company policies and quality of administration.
 Working conditions.
 Relationships with subordinates, superiors and peers. On-going conflict and
unhappy situations create dissatisfaction.
 Salary and job security.

Employee satisfaction will be higher when both sets of factors are provided.

As a manager, you must ensure that the hygiene factors are satisfied, in
order to ensure high morale. The motivation factors must be designed
around each individual to ensure satisfaction and commitment.

© Business Management Training College (Pty) Ltd

115
 MOTIVATION
Herzberg's work and research methods have been criticised. They are, however,
work oriented and give us valuable insights into what motivates a person in the
work environment.

HYGIENE FACTORS
Lead to feelings of satisfaction
or dissatisfaction with the organisation.

MOTIVATION FACTORS
Lead to feelings of satisfaction
or dissatisfaction with the job.

C. MCGREGOR’S THEORY X AND Y

McGregor poses two distinct views of people. After studying the ways managers
dealt with their subordinates, he concluded that their approach was based on certain
assumptions about people.

The first set of assumptions, called Theory X, was that:

 Employees inherently dislike work and will attempt to avoid it where possible.
 Individuals must be coerced and threatened to achieve their objectives.
 Employees want formal direction wherever possible because they are reluctant to
accept responsibility.
 Most individuals place security above everything else and display little ambition.
 This is a negative view of people. If, however, you believe it to be true, based on
your observations, you will treat people accordingly.

Theory Y takes a more optimistic view of people and is more positive:

 Employees view work as a natural activity, similar to recreation.

 Individuals will exercise self-direction towards objectives to which they are committed.
 The average person can accept responsibility and looks for it.
 Individuals at all levels in an organisation are capable of innovative thinking and
decision-making.

116 © Business Management Training College (Pty) Ltd

 LESSON 1.14
The first set of assumptions says that lower-order needs are important in a person’s
life. The second set of assumptions say that the higher-order needs are important to
a person. As with the other theories, the evidence to validate them is not conclusive.
They do tell us, however, why some supervisors and managers behave the way
they do.

PROCESS THEORIES OF MOTIVATION

A. VROOM’S EXPECTANCY THEORY

In essence, expectancy theory argues that the strength of an individual’s tendency

to act in a certain way depends on:
 The strength of his expectancy that the act will be followed by a given outcome.
 The attractiveness of that outcome to the individual.

This theory includes three variables:

 Attractiveness – the importance that the individual places on the possible
outcome or reward that can be achieved through actual job performance.
 Performance – reward linkage – the degree to which the individual believes that
performing at a particular level will lead to the attainment of the outcome he desires.
 Effort-performance linkage – the probability perceived by the individual that if he
accepts a given amount of effort he will achieve the desired performance.

Four steps in Vroom’s Expectancy theory:

1. What perceived outcomes does the job offer the employee?
 Outcomes may be positive: pay; security, companionship
:trust; fringe benefits;
:a chance to use talents or skills;
:congenial and pleasant relationships.
 Some employees may view the outcomes in a more negative light:
:fatigue; boredom; frustration;
:harsh supervision;
:threat of dismissal.

2. How favourable do employees consider these outcomes?

Do employees value these outcomes positively, negatively or neutrally? This is an
internal and personal issue and the individual has to take into account his personal
attitudes, personality and needs.
3. What kind of behaviour must the employee exhibit in order to achieve these
outcomes?
The outcomes are not likely to have any real effect on the individual employee’s

© Business Management Training College (Pty) Ltd

117
 MOTIVATION
performance unless the employee knows, clearly and unambiguously, what he or
she must do in order to achieve them.

4. How does the employee view his chances of doing what is asked of him?
The employee must consider his known strengths and competencies as well as his
ability to control those variables that will determine eventual success.

Issues raised by the expectancy theory:

1. It emphasises payoffs or rewards. The organisation must be concerned with
giving individuals those rewards that they value positively.
2. The expectancy theory emphasises expected behaviours. Does the person know
what is expected of him/her?
3. The theory is concerned with the individual’s expectations.

Simple model of expectancy theory:

A job well Organisational

I believe Will very likely
My effort And I will get rewards and inner
result in done
satisfaction.

The key difference between content theories of motivation and process

theories of motivation is:
 Content theories imply that satisfaction of needs leads to performance.
 Process theories argue that performance leads to satisfaction.

WAYS TO ENSURE THAT A JOB OFFERS MOTIVATION TO EMPLOYEES

 Direct feedback: Feedback should not be given on a directly personal level.

Rather say “You did a stupid thing” instead of “You are a stupid person.”
 Every job should be done for one “customer”: Nobody can work directly for a
system, a committee or a certain set of rules.
 Every job should have some new learning content: Even if an employee is
happy with his routine job, he should at least be given the opportunity from time to
time to learn something new.
 Have people schedule their own work: Employees should be in a position to
work out for themselves when it best suits them to perform their various duties and
will appreciate being allowed the freedom of choice.
 Give people their own budget: Making employees responsible for their own
spending, will give them a sense of responsibility and will make them cost-
consciousness.
 Allow psychological privacy: Allow employees to use their own style or methods in

118 © Business Management Training College (Pty) Ltd

 LESSON 1.14
performing a function.
 Allow direct communication: Employees should have the opportunity to by-pass
supervisors in order to communicate directly with the person who can best help
them.
 Require personal accountability: If an employee knows he is responsible for the
entire performance of his job, he will take much pride in doing it well.
 Use goals: Employees should have hard and specific goals which must be attainable.
 Individualise rewards: Managers should use their knowledge of individual
differences and needs to select the rewards over which they have control.
 Link rewards to performance: To encourage an employee’s work achievement
the manager should make sure his subordinate realises that a particular reward is
given for a specific job performance.
 Check the system for fairness: An employee should be able to see his reward
or “bonus” as a fair return for the effort he has made.
 Managers should always remember that people are motivated by the work itself
because it satisfies their needs for responsibility and achievement. Managers can
ensure this by using different job enrichment techniques.
 Group pressures can affect motivation in negative as well as positive ways.
Managers can win certain groups over and get them on their side by including
them in key decisions that affect their work.
 Watch out for changes: A wise manager will not believe that once things are
going well they will continue to remain in that healthy state.

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Read 14.3 “The classification of motivation theories”, page 340.
Study 14.4 “Content theories”, pages 340-347.
Study 14.5 “Process theories”, pages 347-353.
MANAGEMENT PRINCIPLES 5TH EDITION
Read 14.3 “The classification of motivation theories”, pages 386-387.
Study 14.4 “Content theories”, pages 387-393.
Study 14.5 “Process theories”, pages 393-399.

© Business Management Training College (Pty) Ltd

119
 MOTIVATION

LESSON 1.15
MONEY AS A MOTIVATOR

In this Lesson:

All the theories of motivation deal with money as a motivator.

Organisations should base a balanced reward system on the assumption that
different people have different needs, which they satisfy in different ways.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Job Diagnostic Survey (JDS) – a questionnaire that measures the degree

to which various job characteristics are present in a particular job.
 Motivating Potential Score (MPS) – presents an index of a job’s potential to
motivate workers.

Key points:
 From research and theories of motivation, there is evidence that money influences
people’s work performance.
 According to the Maslow and Herzberg theories, money satisfies lower-order
needs.
 In terms of Herzberg’s theory, monetary reward linked to recognition of good
performance is a motivator.
 The equity theory suggests that we use pay as a measurement of fair treatment.
 According to the expectancy theory money is a motivator under certain conditions.
 The reinforcement theory suggests that money is a reward given for desired
performances in order to change workers’ behaviour.

Designing jobs that motivate

Organisations should design work in such a way that greater scope for personal
achievement and recognition is built into the job.
 Job enlargement: involves adding a greater variety of tasks to an existing job.
Also known as horizontal work loading.
 Job enrichment: the person responsible for the actual job now performs the
planning and control of work. Also known as vertical work loading.
 Job characteristics model: recognises the fact that not all workers can or want to

120 © Business Management Training College (Pty) Ltd

 LESSON 1.15
apply job enrichment to their work, and not all kinds of work or jobs are suitable for
job enrichment.
 The five core dimensions of the model are:
 Skill variety
 Task identity
 Task significance
 Autonomy
 Feedback
 These core dimensions create three critical psychological states:
 Meaningfulness of the work.
 Responsibility for outcomes of the work.
 Knowledge of the actual results of the work activities.
 The model postulates that job motivation would be highest when the job that a
worker performs scores high on the various dimensions.
 By knowing a job’s MPS, a managers can identify jobs that could benefit from
being redesigned.
 The job characteristics model can guide managers to redesign jobs with a view to
enhancing their motivating potential.

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Read 14.6 “Money as a motivator”, pages 353-359.
MANAGEMENT PRINCIPLES 5TH EDITION
Read 14.6 “Money as a motivator”, page 399.

© Business Management Training College (Pty) Ltd

121
 CHAPTER 1
LEADING

COMMUNICATION
IN THIS CHAPTER:
 LESSON 1.16 : THE IMPORTANCE OF COMMUNICATION AND THE
COMMUNICATION PROCESS
 LESSON 1.17 : ORGANISATIONAL COMMUNICATION
 LESSON 1.18 : COMMUNICATION BARRIERS
 LESSON 1.19 : IMPROVING COMMUNICATION
 LESSON 1.20 : ORGANISATIONAL CONFLICT

AT THE END OF THIS CHAPTER YOU WILL BE ABLE TO:

1. Explain why effective communication is crucial to organisational success.
2. Illustrate diagrammatically and discuss the communication process.
3. Compare intra-personal, interpersonal, and organisational communication.
4. Identify and describe barriers to effective communication in the organisation.
5. Recommend of overcoming the communication barriers.
6. Suggest ways for managers to become better communicators.
7. Assess the impact of information technology on the communication process.
8. Identify possible causes of conflict in the organisation.
9. Recommend ways of managing organisational conflict.
10. Discuss negotiation as a conflict management technique.
 LESSON 1.16
LESSON 1.16
THE IMPORTANCE OF COMMUNICATION
AND THE COMMUNICATION PROCESS

In this Lesson:
If a manager is able to communicate their ideas clearly, so that employees
definitely know what is asked of them, the subordinates will, consequently,
perform their jobs correspondingly. On contrast, an aggressive way of
managing reports results in employees’ getting more and more frustrated,
often guessing what their real faults were.

A positive approach to communication, ensures that an employee and a

supervisor understand each other, and are more effective at the workplace.

Effective communication in the workplace provides employees with a clear

understanding of what is demanded from them, with knowledge of what to do
and what to expect. For organisations, such a communication style creates
effective performance of the staff, and, consequently, increases customer
loyalty and profit.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Communication: the process of transmitting information and meaning.

 Encoding: takes place when a person translates information into a series of
symbols for communication.
 Decoding: the process in which the receiver interprets the message and
translates it into meaningful information.
 Communication channel: a channel for transmitting a message.

© Business Management Training College (Pty) Ltd

123
 THE COMMUNICATION PROCESS
Key points:
 Managers need communication for all management functions.
 Managers spend about 60 to 80 % of their time communicating with subordinates,
peers, superiors and outside constituents.
 Communication is a manager’s most important skill.
 Communication takes place between a sender and a receiver.
 The steps in a communication process are interactive, they do not occur in a
specific order.
 The sender initiates the communication – the sender is the person with the
information.
 Encoding happens when the information is translated into an understandable
message. This happens through words, symbols, writing, and videos.
 In cases where the receivers are illiterate or do not understand the language of the
sender well, methods such as symbols, videos and illustrations are effective.
 The sender selects a channel to transmitting the message: the channel could be
non-verbal, oral or written. It can be one-on-one or in groups.
 The receiver receives the message.
 Decoding takes place. The receiver must first perceive the message, then interpret
it.
 The interpretation of information depends on the receiver’s past experience,
personal assessment of the symbols, expectations etc.
 The receiver decides whether feedback to the sender is necessary.

124 © Business Management Training College (Pty) Ltd

 LESSON 1.16
GENERAL COMMUNICATION THEORY

INTRODUCTION AND DEFINITIONS

The term communication can be defined as the process of passing information and
understanding from one person to another. The term communications is normally more narrowly
used to describe the mechanical and electronic means of transmitting and receiving information,
such as newspapers, bulletin-board announcements, computer inputs, radios, telephones, and
video screens.

Communication is something we all do everyday. We all have desires, needs or

ideas that we wish to share with others. The purpose of our communications
usually determines to whom we communicate. To communicate effectively we
need to develop certain skills. Before we can acquire these skills we need to
define and/or understand communication.

Communication is a functional, dynamic and transactional process whereby individuals share

meaning and promote understanding by interpreting verbal / non-verbal messages.

Communication has certain functions such as a psychological function (getting to

know ourselves and others), social function (interaction with others), informational
function (acquiring information), and an influence function (influencing ideas /
behaviours). Furthermore, communication is dynamic, meaning it changes all the
time. Communication is a transactional process whereby two or more people
share information, thus playing the roles of sender and receiver.

HOW DO WE COMMUNICATE?
 Verbally: talking and listening.
 Writing: letters and memos.
 Gestures: pointing a finger.
 Facial expressions: frowning.
 Posture: sitting, lying down.
 Locomotion: moving about.

There are certain communication principles that we need to understand:

1. Communicating with other people
 This is part of social interaction. Success of communication lies in the involvement
of al the parties. Thus to have effective communication everyone has to participate
in the discussion.
2. Communication can be intentional or unintentional

© Business Management Training College (Pty) Ltd

125
 THE COMMUNICATION PROCESS
 Most of the time we mean what we say or do. We communicate unintentionally
through our body language and gestures.
3. Communication is irreversible
 You can’t take back what you have said or did. Therefore it is important that you
need to think before doing/saying anything. Without knowing you may hurt
someone’s feelings unintentionally and create unnecessary tensions and conflict.
4. Unrepeatable
 The same message does not always have the same effect if it has to be repeated.
Every situation is unique and you can’t create the same atmosphere as you had in
the same event previously. Therefore, think before you say or do something, to
ensure that there is no repeating of the event. You may recall that if a friend tells a
joke and you don’t listen carefully the effect of the joke is lost and you don’t find it
funny. If the joker then tells it again it is not funny anymore.
5. Ethical implications
 Be truthful, using integrity, being fair, respecting others, showing responsibility

There are some misconceptions involving communication such as:

a) When you say something it is the same as communicating it.
Someone may not interpret your message the way it was intended. This is
because you didn’t communicate it well enough.
b) More communication is better
Excessive communication can be damaging. Sometimes you need to
communicate less because you may tire others if you can’t stop talking and then
you loose your audience completely. Basically the audience becomes bored with
your conversation.
c) Communication solves all problems
Sometimes it is best to just keep silent. If you are too opinionated your audience
will loose interest in your conversation. Be careful not to be too silent because this
can have the wrong effect as well.
d) Good communication is a natural ability
Not everyone can communicate effectively. This is a skill that needs to be
developed. Therefore if you are not a good communicator you need to learn skills,
especially in die business environment to ensure effective communication. By
effective we mean that your audience captures every word that you are saying and
understands the messages conveyed by you.

COMPONENTS OF COMMUNICATION
How is a message transmitted and received? What other elements are involved in
communication? Study diagram 1, describing the different components of
communication.

126 © Business Management Training College (Pty) Ltd

 LESSON 1.16

NOISE Context NOISE

Channel/Medium
SENDER/ Message SENDER/
RECEIVER Verbal/Non-Verbal RECEIVER

Feedback

NOISE Context NOISE

CONTENTS OF COMMUNICATION:
Body language = 55%.
Tone of voice = 38%.
Words = 7%.
TOTAL = 100%

If you are not aware of what your voice sounds like or what your body is doing, you
cannot communicate effectively!

THE COMMUNICATION PROCESS

Feedback Feedback

Decoding Encoding

MESSAGE
SENDER/
COMMUNICATOR   RECEIVER

Decoding
Encoding

Transmit Transmit

© Business Management Training College (Pty) Ltd

127
 THE COMMUNICATION PROCESS
Sender:
The sender is the initiator of the communication process. The sender is the one
that starts the communication process. You need to understand that the sender is
also the person that starts a new topic while communication is already underway.
Message:
Meaning is transferred through the use of verbal or non-verbal communication.
Messages are encoded and decoded. Encoding a message means that the
sender transforms the ideas or feelings into symbols and organise it into a
message. Decoding a message is when the receiver transforms the received
message into ideas or feelings to interpret and understand the message.
There are four types of messages:
 Intentional verbal messages (Intending to use language to convey a message)
 Unintentional verbal messages (Didn’t really mean what was said)
 Intentional non-verbal messages (Having full control over gestures and body
language)
 Unintentional non-verbal messages (Having no control over body language)
Channel:
This is the way the message travels to the receiver. Via light waves, sound waves,
electronic impulses.
Medium:
The physical means by which the message travels to the receiver. This may be via
newspapers, telephone or television.
Noise:
This refers to anything that distracts or interferes with the message. These
distractions may be external (environment), internal (emotions), or semantic
(language).
Receiver:
This is the person who interprets or decodes the message that was sent by the
sender, by forming an understanding of the message.
Feedback:
This refers to the response that the receiver gives after forming an understanding
of the message that was received. The response may be a positive-, negative-,
verbal-, non-verbal-, internal- (self assessment) or external- (peer assessment)
responses.
Context:
The physical context refers to the environment where the communication is taking
place; social context (relationships); historical context (the background provided
from a previous conversation with person); psychological context (moods or
feelings that is brought into the conversation); cultural context (set of beliefs/
values/norms that a large group shares can influence communication).

128 © Business Management Training College (Pty) Ltd

 LESSON 1.16
SUMMARY OF THE COMMUNICATION PROCESS

SENDER MESSAGE CHANNEL MEDIUM

 Initiator of the  Verbal - Intentional/  Sensory  Verbal/Non-Verbal
message Unintentional  Light Waves  Radio
 Encodes Messages  Non-Verbal -  Sound Waves  Newspapers
Intentional/  Electronic  Television
Unintentional  Computers

NOISE RECEIVER FEEDBACK CONTEXT

 Internal  Interprets the  Positive/Negative  Physical
 External message  Internal/External  Social
 Semantic  Forms an  Verbal/Non-Verbal  Historical
understanding  Psychological
 Decodes message  Cultural
 Gives feedback

VERBAL AND NON-VERBAL COMMUNICATION

Language and communication are often used as synonyms, simply because
language is the basic set of symbols that man has used for many years.

Oral Communication
Oral communication is widely used within organisations ( both in formal and
informal situations). Oral communication is quicker than written communication
and has a definite place within the workplace.

Formal communication
Formal communication does not necessarily have to be written communication:
meetings, training programmes, telephone discussions, oral reporting and
interviews are all examples of formal oral communication, even if conducted in
informal style or tone.

Informal communication
The communication channels in an organisation is normally designed for work-
related messages. The hierarchy structure is rigid and if employees were to keep
strictly to those channels, the atmosphere would become very stiff indeed. An
informal flow of communication messages has a very definite place within the
organisation. The best-known form of informal communication is the GRAPEVINE,
with which we are all familiar. It is an essential source of information to
management and employees alike. Clever managers know how to use this
channel to their advantage.

© Business Management Training College (Pty) Ltd

129
 THE COMMUNICATION PROCESS
Other examples of informal communication is informal written notes, letters or
house organs. These contain personal information and humour, that creates a
spirit of goodwill and a pleasant atmosphere amongst the employees.

Like the misconception that formal communication = written communication, we

should not be misled into believing that informal communication = oral
communication.

Verbal communication refers to the use of words to convey messages.

Transmission of verbal messages may take place orally (spoken) or in writing.

Non-verbal communication refers to signs, gestures, body language and facial

expressions used to communicate. Transmission is done without using
language.

NON-VERBAL COMMUNICATION

Some communication experts maintain that 65% of all communication is non-

verbal. Non-verbal communication refers to all communication by means other
than language. Sometimes we attach more value to the non-verbal behaviour of a
person during the communication process than his actual words. An example is
when a person tells a lie but because he avoids eye contact, you know that his
words are not the truth. In this case you believe his non-verbal communication but
discard his verbal communication.

Non-verbal communication can serve at least three major functions:

 It can complement the verbal /oral message
 It can also be contradictory to the verbal/oral message
 It can serve as a substitute for verbal/oral communication
Non-verbal communication can be divided into three parts: sign language , action
language and object language.

Sign language
We use sign language when we use a gesture or vocal tone which stands for a
word, number or punctuation mark. The gesture might be as simple as the peace
sign or the hitch-hiker’s signal or as complex as the system of signals baseball
players use during a game. The clenched, raised fist, for example is a gesture
used by groups making strong demands.

130 © Business Management Training College (Pty) Ltd

 LESSON 1.16
Action language
We use action language all the time. It includes all bodily movements that do not
have the primary function of communication. Walking, running and sitting are all
examples. If your head droops and your shoulders sag while you walk, your
posture expresses your mood.
Object language
This refers to the intentional or unintentional display of material objects on the
human body. These objects include art objects, jewellery, clothing etc. Some
people wear an engagement ring or a wedding band for a reason (intentional
object language). Our choice of clothing, on the other hand, may be without
conscious intent (unintentional object language).

Body Language and cues

Being aware of your body language can help you be more effective in meetings
and communicating in general. To effectively utilise body language you have to:
 Learn to observe other people’s body language.
 Learn to be aware of your own body language.
 Learn to read the effect you have on others by reading their body language they
give you in response.
 Learn to send the messages you intend.
 Learn what to do with body language information.

When our bodies are used to communicate non-verbally, we use body language.
Another word used for body language is kinesics. Through their non-verbal
messages people give us many cues or hints about their emotions, their intentions,
their personalities and even their social status.
The use of distance is another component of non verbal communication. The word
proxemics is used for the study of space.
Human relationships are described in terms of four kinds of distance: intimate,
personal, social and public distance.

 The intimate zone is that distance between people up to 45 cm, reserved for
lovers, family or close friends.
 The personal zone is from 45 cm to 1.25 meters and reserved for close
relationships or discussions of a personal nature usually on a one-to-one basis.
 The social zone ranges from 1.25 meters to 2.15 meters. This is the area where
we do most of our business, e.g. interaction between a lecturer and his/her
learner.
 The public zone denotes 2 meters or more of space. An example is the lecturer
addressing an auditorium of learners.

© Business Management Training College (Pty) Ltd

131
 THE COMMUNICATION PROCESS
Our control of time is another form of non-verbal communication. At one time or
another we all use time for psychological effect. If you have a date with someone
you don't know very well, you probably will not arrive too early because you might
appear to be too eager.

If you dent your husband’s car, you wait for the right time to tell him about it. When
we study how human beings communicate through their use of time, we are
concerned with chronemics (chrono=time).
We do not always appreciate the part time plays in our lives until control of it is
taken from us. We do not like to wait for someone or stand in a queue in the bank
and wait for the next available teller.

Facial expression
The face is one of the most expressive parts of the body. The way you move your
forehead, eyebrows, eyes, mouth and lips communicates something about you.
Half raised eyebrows usually indicate worry, half-closed eyes, boredom. Closed
eyes indicates sleep and a wide smile indicates happiness. Facial cues are very
important in communication.

Eye contact
Being able to look another person in the eye traditionally implies that you are being
truthful and it is said that the person who averts eye contact in hiding something.

Cues given in eye contact seem to reveal a good deal about personality. When
delivering a speech it is important to keep eye contact with the audience. This will
be dealt with in more detail later.

Body movements and gestures

Whether it is sign, action or object language, we use the body for two non-verbal
functions: to reinforce our verbal message and to reveal our attitudes and
emotions. Some people “talk“ with their hands. Hand gestures are sometimes
substitutes for verbal communication. For example, solely by means of hands, one
person can give another instructions on how to park a car. People who are hearing
impaired use a system of hand signals so comprehensively that it literally replaces
spoken language. Gestures are also important in public speaking. Gestures should
never distract the listener’s attention from the verbal message.
Physical Appearance and the use of objects
Dress, grooming and general physical appearance are often the basis of the first
and long lasting impressions. Uniforms play an important part of non verbal
communication. Police uniforms, badges and weapons may be seen as non-verbal
communication indicating power and authority, while blue jeans and T-shirts with
132 © Business Management Training College (Pty) Ltd
 LESSON 1.16
tennis shoes communicate something quite different. We also make use of
physical objects in our non-verbal communication. We use the term artefacts for
those objects that a person uses to communicate. Cars, clothing and other such
objects are used to non-verbally communicate status and power or even
competence. Even the way in which someone holds and lights a cigarette
transmits cues about him/her.

Posture
Posture is the arrangement and position of the body and the limbs as a whole.
Posture can reflect your inner motivation and your intentions, as well as your
attitude.

Thus the way you carry yourself will probably be responsible for the image you
create when you are standing, sitting or walking. The military posture “stomach in,
chest out, shoulders back!”, communicates soldiers that look alert. The military is
convinced that posture reflects attitude. It must be admitted that there is a certain
amount of truth in the military’s reasoning that the soldier who looks alert is alert.

Vocal cues
Paralanguage is the term used for vocal non-verbal communication. This
includes such characteristics such as pace, inflection, loudness or tone.

In all forms of speech, vocal non-verbal communication has a tremendous

potential for influencing the meaning of the speaker’s verbal message as
interpreted by the listener. Not only are the words that are spoken important but
more important may be the way in which they are said. Try to say the word yes in
a friendly, angry and sarcastic way.

The old saying “what you are, speaks so loud that I cannot hear what you say”,
indicates the importance of non-verbal communication.

Always observe non-verbal communication and use the non-verbal messages in

conjunction with verbal communication.

LISTENING SKILLS

Is hearing and listening the same thing? NO! Take for example when your wife or
husband carries on and on about something that is not important to you, you
pretend to listen, but do not hear a word he/she is saying. Once they are finished
with their “moaning session” they insist on a response and you don’t have a clue
what they were talking about. Now that’s what we call hearing!

© Business Management Training College (Pty) Ltd

133
 THE COMMUNICATION PROCESS
Hearing is the physiological process of decoding sounds. You only hear and do not
make distinctions or form understanding about the message.

When you listen you receive, attend to and assign meaning to aural and visual
stimuli. Therefore you form an understanding of the message and make a
distinctions of what you heard. Listening is therefore a more complex process than
hearing. It requires discipline and energy. It is an acquired skill.
Listening is very important as it:
 Improves interpersonal relationships
 Allows us to learn something new
 Provides us with information, examples and directions
 Impresses the communicator
 Boosts the communicator’s ego and encourages him/her to talk more.

THE PROCESS OF LISTENING

When we listen we have to take into account that each individual has different
perceptions, attitudes and beliefs. Some may actively make a decision not to
listen, others perhaps cannot hear clearly, and yet another may sit ready with an
argument before you have even finished your sentence, causing them not to listen
properly. Everybody goes through the same process of listening.

The first step of listening will be the receipt of the message. Once we have
received and listened to the message, we have to decide what it means. Because
we are all different and have different backgrounds, we will assign different
meanings to the message. Each individual will understand it and interpret it in his/
her own way.

Once you have decided what is important about the message and what is
unimportant, you will retain what you find most valuable. Therefore, we selectively
attend to messages.

There are some advantages to listening. You prevent misunderstanding of the

message. It increases your knowledge, while providing valuable information. It
increases your confidence and the speaker’s confidence. When one listens
effectively you built trust with the speaker which improves teamwork and co-
operation.

134 © Business Management Training College (Pty) Ltd

 LESSON 1.16
How do we listen effectively?
Study diagram 2, which explains the listening process

LISTEN =

Select
Hear Attend Information

Understand Remember EVALUATE

THERE ARE DIFFERENT TYPES OF LISTENING PROCESSES:

Appreciative listening
This method is usually referred to as individual type of listening. The individual
selects the enjoyment of listening to music, a television programme or even a
speech being delivered by someone.

Discriminative listening
This method of listening takes place when a person deliberately distinguishes a
specific sound from others. For example, you may be waiting for someone to get
home. You will therefore be listening for the front door to open and the sound of
the door to open and close.

Comprehensive listening
When people are trying to remember what is being said and to interpret the
meaning of the message as comprehensively as possible, they are applying
comprehensive listening.

Critical listening
This happens when the listener receives a variety of information. He/she sifts
through what he/she heard in order to make a decision.

If you’re not a good listener it is best to develop skills for effective listening.
 Make time to listen and take your time to listen

© Business Management Training College (Pty) Ltd

135
 THE COMMUNICATION PROCESS
 Talk less, listen more
 Focus on the speaker and listen to the message.
 Ignore distractions that may keep you from hearing accurately
 Do not fidget while listening, it is creating the impression that you are not
comfortable or not listening at all.
 Do not rush the speaker, be patient
 Don’t interrupt the speaker while he/she is talking
 Summarise the information that you have heard / learned
 Listen in between the lines. Find the meaning of the message.
 Give verbal- as well non-verbal feedback.
 Try to learn something new and not be critical all the time
 Be empathetic rather than judgmental towards the speaker

We know now that listening involves active participation in what we hear.

According to Ellis & McClintock (1993:51): “...hearing is a passive activity, listening
is an active one.”

We also realise that listening is more than simply paying attention to what
someone else is saying. It requires the active involvement (active participation) of
the listener.

Active participation involves the following aspects:

 Verbal and non-verbal agreement (also called feedback )
 The attitude of the listener towards the speaker
 The environment
 The needs of the listener

We will now investigate feedback in more detail.

FEEDBACK
Feedback is the response of the listener to what the speaker says. The listener
can provide feedback through verbal means (voice) or through non-verbal means
(gestures and facial expressions)

Verbal feedback
This can take the form of encouraging noises (such as uh-huh), words that are
short enough not to interrupt the speaker (yes or no), or even an answer to a
question asked by the speaker. Words and sentences are normally used in a one-
to-one situation between two people, where this type of verbal feedback will not be
disruptive compared to a situation where a larger audience is involved.

136 © Business Management Training College (Pty) Ltd

 LESSON 1.16
Non-verbal feedback
This can take many forms. One example of non-verbal feedback is applause.
The members of an audience clap their hands to show their appreciation for a
good speech. An example of non-verbal feedback in a one-to-one situation might
entail the listener leaning forward in his/her seat, thereby indicating that he/she is
interested in what the speaker has to say, and is paying careful attention.

Something important to note about feedback is that it can be encouraging or

discouraging. It can encourage a speaker to continue speaking, or can indicate
that the message is not being conveyed successfully. An example of discouraging
non-verbal feedback is a frown, while a listener can give encouraging non-verbal
feedback by nodding, smiling when something amusing is said, or maintaining
good eye contact throughout. If an effective speaker receives discouraging
feedback, he/she will use it to his/her advantage and simplify the message or
provide a further explanation to support his/her point of view. Hopefully this will
persuade the audience to share the same point of view. A poor speaker, however,
may become unnerved and lose contact with the audience or listener.

Perception — how we experience other people and their behaviour.

Selective — to choose carefully.

THE ATTITUDE OF THE LISTENER

Listening also involves perceptions. If the listener dislikes the speaker for some
or other reason, his/her listening will be affected adversely or negatively. If this is
the case, the listener will tend to listen selectively and focus only on aspects of
the information with which he/she disagrees.

Because they apply a selective listening process many listeners hear only what
they ‘want’ to hear, and this often results in poor understanding and conflict.

A successful listener is a critical listener. Someone who can:

 accept what another person says;
 carefully consider the validity of the speaker’s message and finally;
 agree in his/her mind with what was said, or silently formulate a counter argument.

In other words critical listening implies that the listener does not immediately or
unthinkingly accept what the speaker says. However, critical listening should never
become a fault-finding exercise in which the listener only concentrates on the
negative points made by the speaker.

© Business Management Training College (Pty) Ltd

137
 THE COMMUNICATION PROCESS
By adopting this kind of attitude the listener ‘ignores’ the real purpose behind the
speech and very little real communication takes place. Critical listening should only
be a process of evaluation in which the listener assesses the content of the
speech or compares values expressed by the speaker with his/her own frame of
reference.

The environment

The listening environment may also have an impact on the effectiveness of the
listening process. Distractions, such as noise, cause interference as they interfere
with the message of the speaker and draw the attention of the audience away from
what is being said. The listener has to compensate by straining mentally to ‘hear’
better. As a result, the listener tires sooner and his/her attention span becomes
shorter. Other factors, such as a room that is too cold or too warm or a venue that
carries too much human traffic, all result in ineffective listening. Fortunately these
factors can usually be overcome by planning, and by booking a suitable venue.

The needs of the listener

Conscious listening is practiced to obtain information. The need to obtain the right
information has an influence on how effectively people listen, and serves as a
motivation for active listening. Without this motivation, the listener may
unconsciously be ignoring the speaker. This will result in tasks not being
completed as requested or not being completed at all. To keep the listener
motivated, it is important to give him/her the information that he/she finds useful. A
good speaker should therefore always provide useful information.

How to respond sensitively as a listener

Through talking, everybody wants to defend their views and persuade others to
accept their view. One is inclined to talk more and listen less. In doing this, we do
not realise how much we lose by not listening.

The first step is the choice or desire to listen actively. Give your full attention to
the person speaking to you. Do not let your attention wonder.

The second step is to recognise the other person’s emotions and feelings. One
should not interpret shyness as being “high and mighty”. People do not like it when
a wrong emotion is attributed to them.

The third step is that you need to let the other person know that you accept their
feelings. They need to know that you accept and respect their right to an opinion.
138 © Business Management Training College (Pty) Ltd
 LESSON 1.16
The last step is to gauge the level of the person’s feelings. Pay attention to his/her
non-verbal communication which could reveal the intensity of his/her emotions.

The question may arise how these steps can be applied. Each situation is unique,
but a few guidelines are supplied:
 Do not discuss the person’s feelings with other people. You will loose your
credibility once you are known as a person who cannot be trusted with confidential
matters.
 Be prepared to be a soundboard.
 Don’t over analyse the other person’s feelings. Although you need to show
understanding and be sensitively, nobody wants to be “read like a book”.
 Indicate through non-verbal communication that you are listening actively.
 Guard against any interruptions in the process of active listening. Close your office
door and have telephone messages taken etc.
 It could be worthwhile to mention to the person that other people might have
similar feelings were they to experience a similar situation.
 It is very effective to reflect the other person’s statement or emotion by repeating
what he/she said or by interpreting his/her words. This will also ensure that you
understand the contents of his/her message correctly.
 Make extensive use of the question technique.
 Be careful not to convey any new information
 Keep an open mind.
 Remember, if you have strong emotions yourself, it is very difficult to listen actively
or sensitively.

The following clauses can be useful when applying the question technique:
 Do you mean that…….?
 Many people share the view that…..?
 Do I understand you correctly when you say…..?
 Are you quite sure that……?
 Are you feeling as if he……?
 I don’t blame you if you think that……?

As a sensitive yet critical listener you should let people know that they can confide
in you, but that you expect them to do something about their problem. Through
active listening you can link up with the other person’s emotional level. Provide
them an opportunity to explain their feelings and viewpoints by selecting well
formulated questions. Steer away from the pitfalls by not arguing or providing him/
her with a solution. Assist the person to solve his/her problems on their own. This
will contribute towards a positive self-image of the person.

© Business Management Training College (Pty) Ltd

139
 THE COMMUNICATION PROCESS
Such a person will feel good and appreciate you. When the situation has been
defused, he/she would in turn listen more readily to you. If you can master this you
have become one of those rare persons: A GOOD LISTENER!

It is important that when you have listened to information that you supply an
appropriate response about the information. This is called feedback on the
message.

Having effective listening skills however is not enough, you need to learn how to
give an effective response to what was said. You can therefore only respond
correctly if you understand the message correctly.

To understand a message correctly you first need to listen!

We can make distinctions between appropriate and inappropriate responses:

Appropriate Responses Inappropriate Responses

 Questioning – asking relevant questions  Irrelevant – changing the subject that is
to better understanding of the message not relevant to the message
 Interpreting – forming understanding of  Tangential – briefly acknowledges what
the message was said but digress from the topic and
 Advise & evaluation – giving advice side-tracks the subject. (Important that this
about the message and evaluating the is not changing the subject)
message thereafter  Incongruous – When the verbal and the
 Paraphrase – verbalising the non-verbal message don’t agree we tend
understanding of the message to have a sarcastic response
 Empathizing – Showing empathy for the  Interrupting – when violating the turn-
speaker taking rule by interrupting the speaker who
 Supporting – Approve of the speaker / is still talking.
reduce tension/ being silent

Distinction between positive and negative responses:

Positive Responses Negative Responses

 Reinforces the original behaviours  Discourage original behaviours
 Complementing on effectiveness of  Judge the effectiveness of the message
message  Being too critical
 Positive empowering critique  Negative discouraging critique

Distinctions between verbal and non-verbal response :

Verbal Responses Non-Verbal Responses
 Giving oral feedback  Gestures
 Writing a response  Body language
 Eye contact
 Paralanguage/ tone and register

140 © Business Management Training College (Pty) Ltd

 LESSON 1.16
Distinctions between passive and aggressive responses :
Passive Responses Aggressive Responses
 not being strict / structured  Just about achieving the goals therefore
 no having strict standards for giving being very strict / structured about giving
feedback feedback
 very casual, but sometimes critical  Highly disciplinary in his/her feedback
feedback  Formal feedback being critical and
sometimes judgmental

Summary of feedback/response :

Appropriate Response Inappropriate Response

 Questioning  Irrelevant
 Interpretations  Tangential
 Advising  Incongruous
 Evaluating  Interrupting
 Paraphrasing
 Empathise
 Support
 Silence
Positive Responses Negative Responses
 Reinforcing  Discouraging
Internal Responses External Responses
 Self assessment  From other people
Verbal Responses Non-verbal Responses
 Orally  Body language
 written  Gestures
COMMUNICATION CAN ALSO BE DESCRIBED AS THE FLOW OF INFORMATION BETWEEN
INDIVIDUALS AND GROUPS IN AN ATTEMPT TO:
 Create understanding
 Influence behaviour
 Achieve certain objectives

Within businesses and other organisations, communication is an important support

activity to ensure that they achieve their objectives for different activities. The
different activities also have to communicate with one another to ensure that the
organisation reaches its overall objectives.

The organisation has to communicate with parties in the external business

environment (macro-environment and competitive environment), since important
interest groups such as consumers, suppliers, financial institutions, trade unions
and the government are situated in this environment. The more effective the flow
of information, the greater the potential for success is in the organisation’s
business activities.

© Business Management Training College (Pty) Ltd

141
 THE COMMUNICATION PROCESS
Generally communication is seen as a process involving two distinct phases:
 A transmission phase, when the person who wants to send a message (the
sender) formulates the message and sends it to the receiver through a certain
medium (face-to-face, a phone call, a letter or an email message). The receiver
then receives the message and interprets it.
 A feedback phase, when the receiver (who now becomes the sender) responds to
the message by sending a new message to the initial sender (who now becomes
the receiver).

ORAL COMMUNICATION TECHNIQUES

In spoken communication the person addressed immediately becomes aware of

the conditions under which the message is shared. Therefore, speed, tone, mood,
gestures, and facial expressions seriously affect the way in which the individual
reacts.

Informal talk or discussion

This is the most fundamental form of communication. Informal discussions are
suitable for day-to-day liaisons, directions, exchanges of information, progress
reviews, and disciplinary counselling sessions, to maintain effective personal
relations.

Planned appointments
These are appropriate for regular appraisal interviews, recurring joint work
sessions, and so forth. The parties should be adequately prepared to make such
meetings complete and effective by being up to date, providing adequate data and
information, and by limiting interruptions as much as possible. Planned
appointments are suitable for extended projects or discussions with employees
(especially new ones, those with problems, or those who travel extensively). Many
supervisors have regular appointments on a daily (brief), weekly (longer), or
monthly (extensive) basis.

Telephone calls
These are useful for quick follow-ups or for imparting or receiving information,
instructions, or data. However, your telephone personality sometimes contradicts
your real (face-to-face) self, so you should examine how you sound when talking
on the telephone. Also, since the impersonality of routine calls is sometimes
resented, you should occasionally follow up with personal notes to confirm the
message or information.

142 © Business Management Training College (Pty) Ltd

 LESSON 1.16
Informal staff meetings
These provide an opportunity for sharing useful information of common interest
and for developing strong group cohesiveness. Properly supplemented with
individual face-to-face contacts, they are an outstanding means of coordinating
activities and building mutual understanding. Hold brief, informal staff meetings
regularly or as the need arises-at the beginning or ending of the day or even
during lunch or coffee breaks.

Planned conferences
These are relatively formal affairs. A common error is to create an agenda without
consulting those who will attend. Most participants appreciate being asked for their
input and having sufficient time to prepare any needed data, information, reports,
and recommendations. Properly conducted, a planned conference can be
extremely useful. If improperly managed, it can waste time, antagonise people,
and discourage future participation.

Mass meetings
Meetings of large numbers of employees or managers can be valuable for
celebrating occasions like the introduction of a new product, for making emergency
plans when a crisis occurs, or for introducing new policies or key personnel. But
because of the opportunity for emotions to flare and hostile questions to be asked,
such meetings require that the presiding individual has great patience, skill, and a
forceful personality.

WRITTEN COMMUNICATION TECHNIQUES

All messages that are intended to be formal, official, or long-term or that affect
several people in relation should be written. Be sure to use written communication
to amend any previous written communication. Oral changes can easily be
forgotten, or may be recalled inaccurately.

Interoffice memos
Memos are used for recording informal inquiries or replies. Interoffice memos can
also be of value if several people are to receive a message that is extensive or if
data is numerous or complex. A memo can be a simple way of keeping your
superior informed, and it can be read at his/her convenience. Memos should not
be overused, or it will lose the impact and can be ignored in future.

© Business Management Training College (Pty) Ltd

143
 THE COMMUNICATION PROCESS
Letters
Letter are usually addressed to individuals. Letters are more formal in tone than
memos. They are useful for official notices, formally recorded statements, and
lengthy communications, even when the addressee is physically accessible.
Letters are often valuable as a means of communicating as it involves thoughts
and ideas for future discussion or it can be part of finding solutions to problems.

Reports
These are more impersonal than letters and often more formal. Reports are used
to convey information, analyses, and recommendations to superiors and
colleagues. Reports are most effective when they are based on the results of
conferences, inspections and research. Reports should carefully distinguish
objectively determined facts from more subjective guesses, opinions, impressions,
and generalisations.

Bulletin-board notices
For lengthy or formal announcements of new policies or promotions, bulletin-board
notices are appropriate. They are most effective when they are accompanied by
illustrations. Most bulletin-board announcements should be supplemented with
other forms of written communications, because there is no certainty that they will
be seen or read by all employees.

Posters, exhibits, and displays

These can serve a useful purpose by visually attracting the attention of employees.
They may be expensive, require considerable space, and must be properly
prepared. The most common subjects are introducing new company products,
promoting quality production or service, increasing safety, cutting waste, and
stimulating suggestions.

BARRIERS TO COMMUNICATION

There are various factors that can impede the success and effectiveness of
corporate and individual communication. These factors are called communication
barriers:

Differences in perception and distortions

Because communication takes place between individuals who are all different and
unique, it is only natural that their interpretations of messages may differ.
Individual personalities, preferences, attitudes, cultures, values, norms, ideas and
background affect people's perceptions.

144 © Business Management Training College (Pty) Ltd

 LESSON 1.16
Personality differences
Some people are by nature more critical, narrow-minded or short-tempered than
others. These personality traits influence the way that messages are interpreted
and the way in which messages are communicated.

Lack of communication skills

Some people lack the basic skills to communicate effectively. They may have
problems with expressing themselves, sometimes as a result of poor language
skills, or they may be poor listeners.

Information overload
When a person receives too much information at once, making sense of it all can
be very difficult. This is especially true if a person receives conflicting messages
from different sources during the same time period. Not having the time to analyse
each message thoroughly could result in misinterpretations and, ultimately, in bad
decisions.

Choosing the wrong communication medium

The best medium for a specific message is the one that reaches the target
audience in the most effective and affordable way. Choosing the wrong medium
could result in ineffective communication.

Rumours
The grapevine could become a major barrier to effective corporate communication
if false rumours are spread. Rumours are often the result of a lack of information or
a feelings of insecurity.

Language and emotional barriers

Not all people are equally proficient in the use of different languages. Employees
are often required to communicate in their second or even third language. Apart
from this, different people sometimes attach different meanings to the same word,
especially in a diverse society such as South Africa. Emotions also play an
important role in the interpretation of messages that are received. Depending on
how happy or sad a person is, he/she might interpret the same message differently
on two separate occasions.

© Business Management Training College (Pty) Ltd

145
 THE COMMUNICATION PROCESS
Contradiction between verbal and non-verbal messages
Body language and other non-verbal clues, like tone and pitch of voice, play a very
important role in the communication process. If verbal and non-verbal messages
contradict each other, the receiver of the information will be confused, and the
message will often be distorted.
Diversity
Different cultures have different styles of communication. In countries with diverse
populations, it is very important to consider the communication style of the person
that you communicate with. Knowledge and sensitivity to these differences will
have a big influence on the success of communication with stakeholders from
other backgrounds and countries.

GENERAL GUIDELINES WHEN COMMUNICATING TO SUBORDINATES WITH THE

INTENTION TO INSTRUCT, DIRECT, ORDER OR ASSIGN.

Don't make it a struggle for power.

If you typically project an “I’ll-show-you-who's-boss” image, you'll soon be in
conflict with the whole department. Try to focus your attention and the worker's
attention on the goal that needs to be met. The idea to project is that it is the
situation that demands the order, not a “personal” order from the supervisor.

Avoid a too informal or humorous manner.

If you want employees to take instructions seriously, then deliver the message that
way. It's all right to have fun occasionally, but be clear and firm about those
matters that are important.

Consider your choice of words.

Most employees accept the fact that the supervisor's job is to hand out orders and
instructions. Their animosity is more likely to be with the way in which the
instructions are given. Therefore, select words that will clearly convey your
thoughts, and consider your tone of voice.

Don't assume that the worker understands.

Encourage the employee to ask questions and to identify problems. Have the
employee confirm understanding by repeating or demonstrating what you've said.

Seek feedback right away.

Give the employee who wishes to complain about the assignment a chance to do
so at the time. It's better to discover resistance and misunderstandings while there
is still time to have them ironed out.

146 © Business Management Training College (Pty) Ltd

 LESSON 1.16
Don't give too many orders.
Communication overload will be self-defeating, so be selective in issuing
instructions. Keep them brief and to the point. If you can, wait until an employee
has finished one job before assigning another one.
Provide just enough detail.
Jobs differ on the complexity of information required to do them well, and workers
differ on their needs for detail too. “Old hands” get bored listening to unnecessary
information; new employees may require supporting details. So think about, and
adapt to, the information needs of the person you're addressing.
Watch out for conflicting instructions.
Check to make sure you're not telling your employees one thing while supervisors
in adjoining departments are telling their staff the opposite. Also, be consistent
from day to day and employee to employee in the directions you provide.
Don't choose only the willing worker.
Some people are naturally co-operative. Others make it difficult every time you ask
them to do anything. Be careful not to overwork the willing person and ignore the
“hard-to-handle” person just to avoid confrontations.
Try not to pick on anyone.
It is tempting to “punish” problematic employees by handing them the unpleasant
assignments. Resist this if you can. Employees have the right to expect the work
to be distributed fairly.

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Read 15.1 “Introduction to communication and interpersonal
relationships”, pages 362-363.
Study 15.2 “The communication process”, pages 363-365.
MANAGEMENT PRINCIPLES 5TH EDITION
Read 15.1 “Introduction to communication and interpersonal
relationships”, pages 410-411.
Study 15.2 “The communication process”, pages 411-413.

© Business Management Training College (Pty) Ltd

147
 ORGANISATIONAL COMMUNICATION

LESSON 1.17
ORGANISATIONAL COMMUNICATION

In this Lesson:

In this lesson we compare intra-personal-, interpersonal- and organisational

communication.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Intra-personal communication: managers receive, process and transmit

information to themselves.
 Interpersonal communication: messages are transmitted directly between
two or more people on a person-to-person basis.
 Organisational communication: information is transferred between
organisations or between different units or departments in the same
organisation.

Key points:
 Effective communication can give an organisation a competitive edge.\
 Organisational communication flows in four directions: upwards, downwards,
horizontally and laterally.
 Two primary organisational communication networks are the formal network and
the informal network.
 Formal communication follows the structure of the organisation or the chain of
commands.
 The informal network involves communication that does not follow the chain of
command, but tells you who is really talking to whom and about what.
 The informal network is strong and works faster than the formal network.
 Downward communication starts with tip management and flows down through the
management level to workers.
Delegating is a downward communication process.
 Upward communication is when employees send a message to their superiors.
 Horizontal communication occurs between people on the same level and improves
coordination of the work effort. It is formal communication, but does not follow the
chain of command.

148 © Business Management Training College (Pty) Ltd

 LESSON 1.17
 Lateral communication takes place between people at different levels and is
usually designed to provide information or assistance to either or both parties.
 Informal communication is also seen as ‘the grapevine”
 Managers must understand the grapevine and use it as a means of transmitting
information.

IDENTIFYING A COMMUNICATION STRATEGY

Within an organisation individuals have to communicate with each other in order to

achieve their objectives and to co-ordinate work. Without effective internal
communication, it would be impossible to execute the activities of the organisation.
Just as important is external communication with the organisation’s stakeholders
such as the community at large, government, suppliers, labour unions and others
that have an influence on the success of the organisation. The better the external
communication, the greater the potential of the organisation to achieve its
objectives.

We have established in the previous lessons that communication is the flow of

information between individuals and groups in an attempt to:
 create understanding
 influence behaviour
 achieve certain objective.

TYPES OF COMMUNICATION THAT ORGANISATIONS ENGAGE IN:

 Communication within the different activities: The sales representative visits
different stores to get orders for products and then informs the sales manager of
the quantities ordered and delivery dates.
 Communication between the different activities: The sales manager has to
communicate the ordered quantities to the operations manager to ensure delivery
on time. The operations manager then communicates with the purchasing
manager to ensure that the products are delivered on time from the suppliers. The
purchasing manager then has to communicate with the financial manager to
ensure that funds are available to pay the suppliers on time.
 Communication with parties in the business environment: Sales
representatives communicate with retailers (supermarkets and shops) to sell the
products of the business. Purchasing staff communicates with suppliers. Marketing
staff places advertisements in newspapers to inform customers about the products
of the business.

© Business Management Training College (Pty) Ltd

149
 ORGANISATIONAL COMMUNICATION
Figure 2.1 below demonstrates the types of communication that organisations
engage in as discussed above.

COMMUNICATION

INTERNAL EXTERNAL
COMMUNICATION COMMUNICATION

 Communication within the  Communication with exter­

different activities nal stakeholders
 Communication between the
different activities

INTERNAL COMMUNICATION
Let’s revise what we have discussed in the previous lessons.
Two types of communications can be identified, namely:
 FORMAL (OFFICIAL) COMMUNICATION
 INFORMAL (UNOFFICIAL) COMMUNICATION.

Formal communication
Formal communication is official communication between managers, subordinates
and other stakeholders. Formal communication does not necessarily have to be
written communication: meetings, training programmes, telephone discussions,
oral reporting and interviews are all examples of formal oral communication, even
if conducted in informal style or tone.
Some forms of formal communications are:
 instructions (from managers to subordinates)
 meetings
 written letters
 reports
 e-mail messages.

Formal communication flows in four directions:

1. Downwards: from managers to subordinates
2. Upwards: from subordinates to managers
3. Horizontal: between colleagues in teams and departments
4. Diagonal: between employees from different departments and at different levels in
the organisation.
150 © Business Management Training College (Pty) Ltd
 LESSON 1.17
Informal communication
The communication channels in an organisation are normally designed for work-
related messages. The hierarchy structure is rigid and if employees were to keep
strictly to those channels, the atmosphere would become very stiff indeed. An
informal flow of communication messages have a very definite place within the
organisation.

The best-known form of informal communication is the GRAPEVINE, with which

we are all familiar. It is an essential source of information to management and
employees alike. Clever managers know how to use this channel to their
advantage.

Another form of informal communication is “management by wandering

around” (MBWA). Managers use this form of communication to communicate with
subordinates in an informal manner. Managers usually walk around the various
departments in the organisation and informally discuss work-related issues with
subordinates. This technique provides managers with valuable inside information
and fosters good relationships between managers and subordinates.

Other examples of informal communication is informal written notes, letters or

house organs. These contain personal information and humour, that creates a
spirit of goodwill and a pleasant atmosphere amongst the employees.
Like the misconception that formal communication = written communication, we
should not be misled into believing that informal communication = oral
communication.

Figure 2.2 demonstrates the different types of internal communication techniques.

FORMAL INFORMAL

COMMUNICATION COMMUNICATION

DOWNWARD UPWARD HORIZONTAL DIAGONAL GRAPEVINE MBWA

© Business Management Training College (Pty) Ltd

151
 ORGANISATIONAL COMMUNICATION
CHOOSING THE APPROPRIATE MEDIA FOR INTERNAL COMMUNICATION

There are various channels of communication that managers or subordinates can

use to communicate with each other. When choosing a communication medium or
channel for a message, we should consider the following factors:

 Information richness. This refers to how much information the selected

information medium can carry and the extend to which the medium enables the
sender and receiver to reach a common understanding. Lets consider an SMS
message. There is just so much information that can be conveyed and chances
are good that the receiver may not have the same understanding from the
message as it was intended.

 The time needed for communication. If we need to communicate a message

urgently we may not want to consider calling a meeting in a weeks time.

 The need for a paper- or electronic trail. This refers to information that needs to
be used as evidence at a later stage. Think of the importance of issuing written
warnings. We have discussed in module one the importance of always keeping a
paper trail.

The most popular forms of internal communication used in today’s businesses are:
 face-to-face communication which includes informal conversations, formal
discussions, meetings, MBWA and video conferencing
 communication via phones and/or cell phones
 personal communication which includes e-mails to employee’s personal email
address
 impersonal communication such as newsletters to which the sender usually does
not expect any feedback on
 intranet: a communication tool that organisations use to communicate with their
employees regarding newsworthy information, announcements, vacancies etc.

EXTERNAL COMMUNICATION

The purpose of communicating with external stakeholders has a dual purpose:

 to develop and maintain relationship
 to build the image of the organisation.

We will now be discussing the most important stakeholders that have an influence
on the success of an organisation.

152 © Business Management Training College (Pty) Ltd

 LESSON 1.17
 SOCIETY AND GOVERNMENT
The reconstruction and development programme (RDP) that the government
introduced in 1996 views the business community as an important partner in
achieving the socio-economic objectives of our country, namely:
 meeting the basic needs of all citizens
 developing the country’s human resources
 building the economy
 democratising the state (government) and society).
Within this context organisations have a social responsibility towards the
community and country to assist in achieving socio-economic objectives.

 CONSUMERS
Consumers are the main source of income for many organisations. The emphasis
should not only be to attract new consumers, but especially to retain existing
customers through customer satisfaction and service excellence.

 SUPPLIERS
Maintaining good relationships with suppliers is crucial to the success of an
organisation, as better terms an discounts can be negotiated. The better the
relationship the better the service will be that the organisation receives.

 FINANCIAL INSTITUTIONS
Financial institutions not only provide finance when additional capital is needed,
but provide financial services that influences the efficiency of the business. They
offer additional financial services such as financial advice, insurance etc. These
institutions is vital to the long-term success and survival of the organisation.

 LABOUR UNIONS
Building good long-term relationships with the labour union(s) that represent the
workforce is also very important to the organisation. The better the relationship the
better the likelihood of resolving differences that affect the entire workforce.

 THE MEDIA
Representatives of the media such as journalists, writers and TV/Radio presenters
can either harm or promote the image of an organisation through the messages
that they promote to the general public. Good relationships with the media could
result in favourable exposure for the organisation.

© Business Management Training College (Pty) Ltd

153
 ORGANISATIONAL COMMUNICATION
CHOOSING THE APPROPRIATE MEDIA FOR EXTERNAL COMMUNICATION

Organisations have a variety of media that they can use to communicate with the
external environment. These media include the media used in internal
communications (previously discussed) as well as the following media:
 Exhibitions
 Sponsorships
 Print media such as newspapers, magazines
 Broadcast media such as radio and television

We have discussed in the previous lessons the barriers to effective

communication. Let’s revise some of these barriers now.

BARRIERS TO EFFECTIVE COMMUNICATION

 Differences in perception and distortions
 Personality differences
 Lack of communication skills
 Information overload
 Choosing the wrong communication medium
 Rumours
 Language and emotional barriers
 Contradiction between verbal and non-verbal messages
 Diversity.

Checklist for overcoming communication barriers

YES
Choose an appropriate medium. 
Select a cost effective medium. 
Communicate the message as accurate as possible, in a language that the 
receiver will understand.
Ensure the control of effectiveness. Include feedback mechanisms to 
measure effectiveness.
Ensure that a non-verbal message does not contradict a verbal message. 
Separate emotions from the interpretation of the message. 
Be a good listener. 
Only respond to a message once you completely understand the message. 

154 © Business Management Training College (Pty) Ltd

 LESSON 1.17
A COMMUNICATION MODEL

Communication is a process by which we exchange or share opinions by using a

common set of symbols. To compile an effective marketing communication mix, it
is of the utmost importance that the marketer should have knowledge or
background of the communication channel through which a source sends a certain
message to its audience.

Communication in the business world can be divided into two main categories:
interpersonal communication and mass communication.

Interpersonal communication is direct, face-to-face communication between two

or more persons. When people communicate face-to-face it means that they can
observe each other's non-verbal-, verbal messages and reactions which allow
them to react almost immediately upon them.

Mass communication refers to communication with a much larger, and therefore

more impersonal audience. A large part of marketing communication is directed at
specific target populations through mass media like magazines, radio, television or
newspapers.

The meaning of communication to the consumers

The communication activities of enterprises are mainly directed at the client and
have objectives such as persuading them to use the business’s products or
services, reminding them about these products or services and informing them
about changes, new products or services.

Consumer behaviour
Consumer behaviour includes the behaviour patterns of potential, current and loyal
consumers. The factors that influence consumer behaviour tell us why consumers
buy certain products. Three groups are distinguished, namely individual, group and
economic determinants:

Individual determinants
The individual factors are an inherent part of the individual and it is essential for
the entrepreneur to be aware of these factors and how they influence the
consumer.
 Motives -Internal urges in the individual based on unfulfilled needs.
 Perception - The way a person perceives something. Perceptions influence
attitudes.

© Business Management Training College (Pty) Ltd

155
 ORGANISATIONAL COMMUNICATION
 Learning ability - People's behaviour is determined by what they learn and
remember.
 Attitudes - Attitude can be defined as a disposition towards a person, product or
business.
 Personality - Certain psychological characteristics can influence a consumer’s
behaviour.
 Lifestyle - An individual consumer’s way of life will also influence his/her buying
behaviour.

Group determinants
All people would like to belong to a specific group to satisfy their social needs.
Consequently groups will influence behavioural patterns. Consumer’s behaviour is
influenced by the norms of the cultural group they belong to, as well as the norms
of other groups with which they identify, namely:

 Cultural groups: consumers function within the framework of the cultural group to
which they belong. Culture refers to the values and norms of a specific group.

 Social classes: homogeneous groups which have more or less the same values
and lifestyles.

 The family: this is a unit consisting of a father, mother and children.

 Reference groups and opinion leaders: a reference group is any group against
which a person can evaluate his/her behaviour.

Economic determinants
Consumer behaviour is not only determined by individual and group factors. The
utility or value that a product has for consumers is related to the alternatives on
which they can spend their money. The economic determinants all exert an
influence on the decisions consumers have to make.
Consumers are generally influenced by the following economic determinants when
deciding to buy or not:
 Their income
 Their willingness to spend the income
 The benefits that they can derive from a product in relation to price

Consumer decision-making
It is important to have a sound knowledge of how a consumer interprets and
processes information when communicating with different target markets.
Six phases in the decision-making process can be identified:
 Awareness of a need.
156 © Business Management Training College (Pty) Ltd
 LESSON 1.17
 Seeking information.
 Evaluation.
 Decision-making.
 Action.
 After-sales evaluation.

The decision-making process may be slow and gradual as is often the case when
durable articles or novelties are bought. If there is risk that the product is a social
or financial risk, or appears to be a failure, consumers tend to think about it at
length before taking action or purchasing it.

Sometimes decisions are made on the spur of the moment and the consumer
moves quickly from recognition of a need to purchasing the article (impulsive
decision making). Habitual decision-making occurs when the consumer always
buys the same product without thinking about it. Generally, the decision-making
process will be shorter for products of low value, and longer for more expensive
products.

THE COMMUNICATION CHANNEL OR FLOW IN RELATION TO MARKETING

Businesses and especially marketers are both the senders and receivers of
messages. As a sender they attempt to inform, persuade and remind the
consumer about their products or services in such a way that the consumer does a
purchase according to a newly-created or reinforced need. As receivers of
messages, marketers attempt to be sensitive to messages from their target
markets that will help them to develop better and more applicable marketing
messages and to identify new business opportunities. From this can be seen that
marketing communication should be recognised as a two-way communication
rather than a one-way communication.

In a previous lesson we have discussed the general communication channel. Now

let’s discuss how the communication channel relates to the marketing process.
A general communication channel consists mainly of the following elements:
 The source (sender)
 Coding (formulation)
 The message (coded)
 The medium (the conveyer)
 The audience (receiver)
 Decoding (interpretation),
 Feedback

© Business Management Training College (Pty) Ltd

157
 ORGANISATIONAL COMMUNICATION
 Channel noise (competitive stimuli).

Source or sender
The source / sender is the initiator of the message which is sent to the receiver or
audience. During an interpersonal conversation this person can be a parent,
friend, a consumer or a sales person. In the case of a mass advertisement the
source will be the enterprise itself.

Formulation and encoding

Formulation or encoding is the process by which the source's ideas and thoughts
are put into a specific message, symbols or images. Whether a business wants to
convey its message in the form of an advertisement, or the sales person wants to
convey it in the form of a presentation, they have to ensure that they convey it in
language, symbols and images that will catch the interest of their target audience.

Message
The message is the important information which the source wants to send or
convey to the receiver. The success of any business depends on it being able to
provide something better, faster, cheaper or more conveniently than the
competition. This is what attracts your customers in the first place, and is what
keeps them coming back. Being able to describe this strength in a single
statement (known as a unique selling proposition (USP) or “elevator pitch”) is
essential to your marketing.

The unique selling proposition is a short and snappy, memorable message that
identifies the unique benefits of the organisation’s product or service. It gives
prospective customers immediate, compelling reasons to place their trust (and
money!) with your company.

Why develop an USP?

Every day, everywhere they go, people are bombarded with thousands of
advertising messages. As a result, they tend to shut out most of what they see,
remembering only the shortest, and most consistent catchphrases.

Any business’s aim should therefore be to convey its strongest competitive

advantage in a way that is quick, simple, and which clearly differentiates you from
other similar suppliers.

An USP can make it easier to stand out in an already crowded market. Defining an
USP will not only give customers more reason to choose you over a competitor,
but it will also give you a hook on which to hang all your marketing efforts.

158 © Business Management Training College (Pty) Ltd

 LESSON 1.17
Formulating an USP
The key to a great USP is to remember that it is about the customer. It gives them
a reason to like, trust and do business with you. Put yourself in his or her shoes
and see if you are convinced. You should be able to describe your USP in less
than 30 seconds.

Ask the following questions to start formulating your USP:

 What aspects of your business are unique?
 Of these, which are most important to your customers and potential customers?
 What gaps are there in the market that your business is uniquely qualified to fill?
 Of all of these, which will be the easiest to communicate?

Reduce these answers down to a paragraph or two, and then down to a single
sentence.
It will not be easy, but keep editing until you have reduced the information to its
core.

Focus on the value that these characteristics offer, bearing in mind that you need a
statement that customers can immediately grasp, understand, and appreciate.

Make your USP visible on all your material, from your stationery through to your
website. Wherever you provide product or service information, make the benefits
immediately obvious.

Medium or conveyer
The transmission of the message needs a channel/medium to convey it with. The
medium or conveyer is the method (personal or impersonal) which is used to
convey the message from sender to receiver.

Impersonal mediums (mass media) which can be used are the radio, newspapers,
TV, magazines, etc. Personal mediums that can be used are the opinions and
perceptions of consumers and even facial expressions and attitudes of sales
representatives.

Decoding
Decoding is the process of explanation and interpretation of the language and
symbols which have been sent through a channel by the source. The meaning of
the message therefore becomes clear and understandable to the receiver. For the
message to be successfully transmitted, it is very important that the sender uses
the same frame of reference as the receivers.

© Business Management Training College (Pty) Ltd

159
 ORGANISATIONAL COMMUNICATION
Reaction
The reaction gained from the receiver determines whether the message has been
sent through successfully or not. If the advertisement was successful, the
customer will show interest in or become ready to buy the product

Feedback
Feedback is the reaction to the message from the audience in a verbal or non-
verbal way. Verbal feedback can be conveyed as single words like "yes” or “I
understand". Non-verbal feedback refers to behaviour or action like the shake of a
head, a smile or even a frown. When marketing communication is employed the
expected feedback will be in the form of an action or behaviour – more enquiries
about the product or service or an increase in sales of the product or service.

Channel noise
Competitive advertising is probably one of strongest external factors that could
influence the success of the sending, receiving, reaction upon and feedback of the
message. Channel noise in the business world is represented by various types of
advertisements from competitors, publicity or news articles and promotional
displays of other products or services.

INFORMATION TRANSMISSION PROCESS

Marketers use various techniques to improve the message transmission and

conveyance process.
They use the following factors to achieve their objectives:
 perception
 learning
 convincing.

PERCEPTION

Perception can be described as a selective process through which the individual

stimuli (e.g. colour of an advertisement, familiarity of a brand name, contrast in
picture, intensity and message itself) are selected from the environment. This is
then organised and interpreted in its broad perspective.
Senses as well as subjective factors (experience, values, and prejudices) of the
consumer play an important role in determining the perception of the consumer.

When a consumer for example looks at a motor vehicle he/she does not only see a
metal box on wheels, not even only a means of transport that can take him/her
from one destination to another, but a product that can make his/her life more
160 © Business Management Training College (Pty) Ltd
 LESSON 1.17
comfortable and even be an indicator of his success or an extension of him-/
herself. If the consumer associates it with some of his/her inner needs he/she will
develop a certain perception and attitude regarding the car.
LEARNING
A consumer who is purposefully intent upon learning will be more receptive for the
content of a message than a person who only pages through the newspaper and
incidentally notices the advertisement while busy with other activities (e.g. a
person looking for a TV will be on the lookout for an advertisement in the media
because of his/her interest to buy a new product). The marketer normally will direct
his/her advertising on the incidental learning of the consumer and in so doing, will
also satisfy the purposeful learner.

After incidental or purposeful learning, the natural process of forgetting follows and
it therefore is necessary to engrave the message by repetition. The repetition must
however not be repeated too often otherwise the perception and attitude of the
consumer may be negatively influenced.

PERSUASION OR CONVINCING

Before the consumer can be persuaded by any marketing message, he/she must
first receive the message, understand it and make it his/her own. The marketer
must influence the consumer in such a way that the consumer will change his/her
perception, attitude and ultimately his/her actions to follow the message.

PROMOTIONAL OBJECTIVES
People communicate with each other for various reasons. They ask for help, give
advice and instructions, supply information and present options.

Promotion is mainly used to sell the product or service available to the enterprise.
Promotional methods are used to motivate attitudes and behaviour. Steers will try
to convince people to rather buy their hamburgers than those of Spur. Steers can
also convince their present customers that their hamburgers are the best in order
to ensure that the consumers would not want to change suppliers.

The source (Steers) attempts to develop a favourable image with their present and
potential customers in order to sell their products. It is therefore of cardinal
importance to set certain objectives so that the promotional methods can be
chosen and developed in such a way that use of it will ensure optimal success.

© Business Management Training College (Pty) Ltd

161
 ORGANISATIONAL COMMUNICATION
Advertising can carry out three tasks or objectives:
 To inform the target market
 To convince the target market
 To remind the target market of the product or service

INFORMATIVE ADVERTISING

Informative advertising can be used to stimulate dormant needs and to develop the
demand for a new product. This type of advertising is mainly used in the early
stages of the product life cycle. Informative advertising usually takes place before
the execution of aggressive marketing. The purpose is to inform the general public
of the characteristics and advantages of the product or service. This helps the
consumer to make more selective intelligent purchasing decisions.

Informative advertising is successfully applied with complex products such as

vehicles, computers and financial services. With these products there are usually
lots of information to convey and informative advertising can successfully be used.
Sometimes informative advertising is also used to introduce new brand names.

Persuade

In order to convince the consumer or potential buyer to purchase the enterprise's

product, it is necessary that the advertising or promotional method be of such a
nature as to encourage this. Usually the consumer applies a negative connotation
to persuasive advertising. This form of advertising is mostly used to stimulate
sales. Persuasive advertising can be seen in highly competitive, mature product
categories such as cool drinks, beer and banking services.

Normally the enterprise does not attempt to achieve an immediate reaction upon
the advertisement, but to create a positive image of the product among the public.

Remind

Another objective of promotion is to constantly remind the consumer of the

existence of the product or service. This type of advertising is mainly applied
during the mature phase of the product life cycle. The main objective is to activate
positive memories. It is also used to constantly engrave the brand in the mind of
consumers.

162 © Business Management Training College (Pty) Ltd

 LESSON 1.17
THE MARKETING COMMUNICATION MIX/PROMOTIONAL MIX

All objectives that are determined in the broad functional context of the enterprise
are usually derived from enterprise goals. It is therefore essential that in its
communication programme, the enterprise must choose the correct promotion
methods to supplement the promotion objectives which have been determined.

How will you reach your target market? Promotion is the way in which an
establishment introduces its market offerings to its target market. The purpose of
promotion is to communicate directly with potential or existing customers to
encourage them to purchase the product or service and recommend it to others.
Promotion is the major part of the marketing function. Very often the advertising
will not be handled '‘in-house”; that is by the company, but by a promotional or
advertising agency.

Promotion has been defined as the co-ordination of all seller initiated efforts to set
up channels of information and persuasion to sell goods and services. While
implicit communication occurs through the various elements of the marketing mix,
most of the organisation’s communications with the market place takes place in a
carefully planned and controlled promotional programme.

To develop promotional activities, a promotional plan needs to be drawn up. The

following should be included:
 A framework for developing, implementing and controlling the organisation’s
integrated marketing communication programmes and activities.
 The roles and functions of specific elements of the promotional mix (advertising,
direct marketing, sales promotion and publicity/public relations).
 Develop strategies for each element.
 Implement the plan with relevant action steps and time lines.

As with any other business function, planning plays a fundamental role in the
development and implementation of an effective promotional programme. A
promotional plan provides the framework for developing, implementing and
controlling the organisation’s integrated marketing plan and programme.

All staff should to be involved in, or at least be informed of, every step the planning
team has reached in the process. Such a staff briefing is necessary to maximise
awareness of targets and participation by all staff concerned. This can be done via
memos or in weekly staff meetings.

© Business Management Training College (Pty) Ltd

163
 ORGANISATIONAL COMMUNICATION
The impact of advertisements, brochures, exhibitions, sales demonstrations and media
publicity must regularly be assessed, e.g., an analysis must be made of the
number of enquiries and sales resulting from each form of promotion.
To develop an effective promotional strategy, a company combines promotional
mix elements to produce an effective promotional campaign. It involves co-
ordinating the promotional mix elements to develop a controlled, integrated
programme of effective marketing communication.

The company must consider which promotional tools to use and how to best
combine them to achieve its marketing and promotional objectives. Companies
also face the task of distributing the total promotional budget across all the
elements of the promotional mix.

A good promotional mix normally includes the following:

ADVERTISING

Advertising can be defined as any paid form of non-personal communication about

an organisation, product or service by an identified sponsor. This is the best-
known and most commonly used form of promotion. It is very expensive and
wrong decisions in this regard could cost the company thousands of Rand.

Advertising is important because it can be a very cost-effective method for

communicating with large audiences. Advertising can also be used to create
images and symbolic appeals for a company or brand, a capacity that is very
important for companies who sell products or services that are difficult to
differentiate functionally (e.g. cigarettes).

Another advantage of advertising is its ability to strike a responsive chord with

consumers when other elements of the marketing programme have not been
successful.

An advertising campaign can be described as the purposeful, objective,

appropriate and impersonal distribution of messages which are connected to a
need-satisfying product, service, personality, place, institution or idea.

It indicates the place where it is available and/or the price, by an identifiable

sponsor to a specific target audience, with the objective of informing, reminding
and/or persuading the target audience to a certain action.

164 © Business Management Training College (Pty) Ltd

 LESSON 1.17
An advertising campaign must be carefully planned with a clear view as to whether
the retailer or the consumer is to be targeted and whether it is the product or the
organisation that is to be promoted. Advertising agencies provide expert advice
and carry out or manage a number of tasks, including copy writing, design and
layout advertising or use of type, style and visual matter.

Advertising budgets

Any advertising campaign usually has to adhere to a strict budget, the size of
which is determined by:
 The objectives of the campaign (what the organisation intends to achieve by it).
 The amounts of money competitors are spending in promoting their products.
 The stage the product has reached in its life cycle.

The amount an organisation needs to spend on promotion should be determined

by what must be done to accomplish its communication objectives. It is vital to set
clear, measurable goals in order to determine the advertising budget. Advertising
expenditure does not guarantee a boost in sales unless it is used wisely and cost
effectively.

Advertising objectives

Objectives vary from one organisation to another, and will vary depending on the
environment at the time of advertising. Competition, consumer behaviour, revenue
and profits will also influence objectives.

Objectives can include to:

 Persuade repetitive business.
 Create a desire for the product or service.
 Emphasise the benefits and advantages of products or services.
 Create an awareness of the product or service.
 Increase the market share.
 Improve revenue.
 Influence public attitude towards the product or service.
 Improve brand loyalty.
 Confirm, in the minds of customers, that they have made the right choice.
 Enhance the desired image of the establishment.

© Business Management Training College (Pty) Ltd

165
 ORGANISATIONAL COMMUNICATION
Advertising media

A company wishing to do a sales promotion should ensure that market research

was extensively done and relevant data analysed. Once the marketing mix and
target markets have been established, the planning of the promotion activity
should be directed to the target market via the optimum media:
 Newspapers
 The Internet
 Billboards and outdoor media (taxi’s, busses, posters etc.)
 Books and brochures
 Magazines
 Television
 Radio
 To promote a service or goods available in a specific area - use a regional radio
station, not a national one.
 To promote mining equipment - use trade magazines relevant to the mining
industry, not television.

PLANNING FOR ADVERTISING

(1) (2) (3)
Identify and research the Determine advertising Determine the budget
target market objectives

(4) (5) (6)

Develop the media plan Create the advertising Evaluate advertising
message effectiveness

(1) Identify and research the target audience

 Choose an appropriate and attractive segment of the market.
 Assess the potential of this segment.
 Analyse needs and behaviour of the segment / target audience – know their likes/
dislikes, preferred medium (TV, radio, newspaper, internet, etc.)

The following must be determined:

 An exact description of the target audience;
 The location of the target audience;
 The size of the market segment;
 The lifestyles and purchasing habits of the target audience;
 Number of and image perceptions of competitive products.

166 © Business Management Training College (Pty) Ltd

 LESSON 1.17

Marketers do not act in isolation and therefore attention is also paid to enterprises that
market similar products or services and hold similar market shares.

(2) Determine advertising objectives

The main objective of advertising is to change the behaviour, actions, attitude or
thoughts of the receivers of the advertising message about a certain aspect.
Advertising objectives must be SMART:
 Specific
 Measurable
 Achievable
 Realistic
 Be achieved in a specific Time Period

Clear objectives provide effective communication and co-ordination between the

departments / agencies. They also provide criteria for decision-making and provide
the norms for finally evaluating the campaign.

(3) Determine the budget

 Percentage of sales method: Advertising expenditure can be set as a percentage
(%) of sales.
 Competitive parity: Company decides to spend the same percentage as its
competitors in the industry on advertisements
 Affordable method: Advertising expenditure is based on what the company
estimates it can afford.

(4) Developing the media plan

The following factors must be considered in choosing the advertising media:

Internal Factors:
 Financial position of the enterprise
 The nature of the product
 The nature of the distribution channels and market coverage
 Nature of the marketing communication decisions of the enterprise
 Nature of the advertising message

External Factors:
The way, in which the target market is segmented, as well as the reading,
listening, viewing and buying habits of the target market.

© Business Management Training College (Pty) Ltd

167
 ORGANISATIONAL COMMUNICATION
Media factors:
Accessibility and availability of the medium for the marketer
The versatility of the medium

Media types:
TV, Press, Radio, On-line, etc.

DIFFERENCES BETWEEN PRINTED MEDIA, RADIO AND TV ADVERTISEMENTS:

Printed media – non-verbal, descriptive, colour orientated.

Radio – hearing orientated, short, clear, imagination.
TV – Combination of radio and print characteristics.

(5) Create advertising message

Copy research
To get the motivating factor, which is to be used in the advertisement, copy
research must be done. (The unique selling proposition - USP)
The message has to be presented in a way that attracts attention.
Must produce the desired type of perceptual or behavioural response and not be
misinterpreted or rejected.

The following aspects have to be taken into consideration when preparing the
message:

MESSAGE CONTENT

Choose if you want to make a rational or emotional appeal on your target market:
 Rational appeal – give facts, research and logical arguments.
 Emotional appeal – concentrate on feelings, perceptions and creative ideas.

MESSAGE STRUCTURE

 Open conclusion - where customers are likely to be qualified and interested in

making their own conclusions, the advertisement must allow them to come to their
“own” conclusion about the benefits of the product.
 Definite conclusion - where the targeted segment is less likely to be motivated or
is incapable of drawing the relevant conclusion, the advertisement must show
them the way.

MESSAGE SOURCE

 Credibility - Refers to the degree to which the source is perceived as being an

168 © Business Management Training College (Pty) Ltd
 LESSON 1.17
expert in respect of the product and being unbiased in the claims being made for it.
 Attractiveness - Refers to the receiver's perception of the prestige of the source or
the degree to which the source agrees with the receiver’s perception of physical
attractiveness.

(6) Evaluate advertising effectiveness

Control must be exercised to prevent possible variation in plans, because the
advertisement campaign is expensive. The advertising message and other
strategic aspects of the campaign must be tested beforehand to reduce the risk of
wasting money. Methods which might be used for the pre-testing of an
advertisement are copy testing, control lists, test marketing, inquiry tests,
consumer panels, spilt exposure tests.

The characteristics of a successful advertisement:

 The message should be conveyed correctly in order to reach the target market.
 It must be visible and make and impact – should attract interest and attention.
 It must pay for its cost and make a profit for you.
 It must be repeated regularly.
 It must appear in the correct media.
 It must reach the specific target market.
 It must clearly define the benefits of your product.
 It must be affordable.

Ultimately, advertising should follow the AIDA principle, that is:

Attract Attention.
Create Interest.
Foster Desire.
Inspire Action.

DIRECT MARKETING

Organisations communicate directly with target customers to generate a response

and/or a transaction. It involves a variety of activities, including direct selling,
telemarketing and direct response advertisements through direct mail.

Direct response marketing

Usually targets individual customers rather than operating indirectly through mass
media like magazines, newspapers or TV.
It normally aims at an immediate response rather than an increase in awareness
or positive feeling about the brand. Purchases are made directly from the
manufacturer rather than through an intermediary.

© Business Management Training College (Pty) Ltd

169
 ORGANISATIONAL COMMUNICATION
Advantages:
 Convenient and time savings from the customers point of view to purchase from a
catalogue.
 Finer targeting of market
 Forges continuing relationships with high value customers

Interactive marketing
Interactive marketing can be defined as providing and responding to information by
the computer or television.
Advantages:
 It requires the audience to be proactive by asking for a response to the message
 More flexible
 Can build relationships
 Could be low cost.

Mediums
 Internet
 CD-ROM
 Interactive television

Sales promotion
Defined as those marketing activities that provide extra value or incentives to the
sales force, it can stimulate immediate sales. A promotion can be seen as an
economic incentive in the form of price reductions, free goods or the chance to win
a prize.

Trade promotions
Used to:
 Persuade outlets to stock the brand.
 Persuade outlets to push the product.
 Compensate for price increases.

Sales promotions are used to:

 Introduce a new product.
 Encourage consumers to buy more of the existing lines.
 Encourage consumers to buy at off peak times.
 Secure repetitive business.
 Challenge competitors.
 Increase sales.
 Regain former customers.

170 © Business Management Training College (Pty) Ltd

 LESSON 1.17
Consumer promotions are used to:
 Attract new customers to try the brand
 Increasing the loyalty of existing customers
 Introducing customers to use more of the product

Consumer promotions could include:

 Free trial samples of a product.
 Sponsorship.
 Discount vouchers.
 Free gifts.
 Rewards for loyalty e.g. frequent flyer miles.
 Competitions.

DESIGNING A PROMOTIONAL ACTIVITY

In order to undertake a promotional activity, the marketing department has to:

 Identify and target the required market segment.
 Establish the purpose of the promotion
 Take decisions on a suitable promotional message for the target audience.
 Select a suitable form of media for the target audience.
 Evaluate the promotional activity by measuring feedback in terms of who becomes
aware of the product, uses it and expressed satisfaction with it.
 The choice of promotional activity ultimately is determined by what the
organisation can afford to spend, the type of product or market and the stage
reached in the product’s life cycle.

It is important that sales promotions stay within budget and clearly targets the
potential groups of consumers. Organisations need to determine the effectiveness
of various promotional and advertising activities in persuading consumers to buy a
particular product.

The success of a promotional activity can be determined by looking at a number of

factors that may include:
 Increase in sales.
 More consumers become aware of the product or service.
 New enquiries about the products or services.
 Increases in the number of enquires regarding the product or service.

© Business Management Training College (Pty) Ltd

171
 ORGANISATIONAL COMMUNICATION
PUBLICITY

Like advertising, publicity involves non-personal communication to a mass

audience. Unlike advertising, publicity is not directly paid for by the company. The
company or organisation attempts to get the media to cover a fun or favourable
event on a product, service, cause or event to affect awareness, knowledge,
opinions and/or behaviour. Techniques include news releases, press conferences,
feature articles, photographs, films and videotapes.

Publicity is not always under the control of an organisation and could sometimes
be unfavourable. Negative stories about a company and/or its products can be
very damaging.

PUBLIC RELATIONS (PR)

When an organisation systematically plans and distributes information in an

attempt to control and manage the nature of the publicity it receives, and its image,
it is engaging in the function know as public relations.

Activities of PR
 Achieving positive coverage in the media.
 Creating and reinforcing the corporate image.
 Sponsoring special events.
 Lobbying politicians and officials.
 Advising management about key public issues.

PR's contribution to marketing

 Creating product awareness and interest.
 Launching new products.
 Influencing specific target market segments.
 Coping with crisis situations.
 Enhancing corporate image.

The public relations function is the “face and mouth” of the business. Public
relation activities are usually free, but less controllable by the organisation,
example fraud charges against some directors (negative PR influence).

PERSONAL SELLING

The final element of the promotional mix is personal selling. It is a form of person-
to-person communication in which a seller attempts to assist and/or persuade
172 © Business Management Training College (Pty) Ltd
 LESSON 1.17
perspective buyers to purchase the company’s products and services. Personal
selling involves direct contact between the buyer and seller. It also provides more
immediate and precise feedback because the impact of the sales presentation can
generally be assessed from the customer’s reactions.

Personal sales comprise the oral and personal offerings of any product or service
to a potential client, with the aim of achieving a sale. A car salesman will for
example attempt to convince the client, by way of a personal conversation, a
presentation and even non-verbal techniques to buy the product. A further test
drive in the car may then finally convince the potential client to buy the product.
Personal sales can be expensive per contact as it concentrates on building a
relationship through the interaction between the salesman and the buyer. Personal
sales are normally more effectively applied in the case of industrial goods and
some speciality products while advertising is usually used for selling consumer
goods with a broader appeal.

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study15.3 “Organisational communication”, pages 365-368.
MANAGEMENT PRINCIPLES 5TH EDITION
Study15.3 “Organisational communication”, pages 413-416.

INTRODUCTION TO BUSINESS MANAGEMENT 8TH EDITION

Read Chapter 12.14 “Marketing communication decisions”, pages 406-
414.
INTRODUCTION TO BUSINESS MANAGEMENT 9TH EDITION
Study Chapter 12.14 “Marketing communication decisions”, Pages 417-
427

© Business Management Training College (Pty) Ltd

173
 COMMUNICATION BARRIERS

LESSON 1.18
COMMUNICATION BARRIERS

In this Lesson:

Communication barriers can prevent understanding. We have discussed some

communication barriers in the previous lessons, but we will now elaborate on
some of the barriers in this lesson.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Credibility: the perceived characteristics of an information source
 Perception: the process in which individuals arrange and interpret sensory
impressions in order to make sense of their environment.

Key points:
Possible barriers to effective communication can be placed in four categories.

Intra personal factors:

 Differing perceptions is one of the most common communication barriers.
 People tend to see and hear only what they are emotionally prepared to see and
hear.
 People seek out and select favourable messages and ignore pleasant ones.
 People’s ability to develop and apply communications skills differ.

Interpersonal factors:
 Interaction between superior and subordinate will either limit or encourage the
content of their communication, and how often they communicate.
 Trust between the sender and receiver impacts on the effectiveness of
communication.
 The accuracy or communication is related to how similar two communicators
perceive themselves to be. Differences in religion, ethnic group, gender, etc. play a
role.

174 © Business Management Training College (Pty) Ltd

 LESSON 1.18
Structural factors
 A person’s status in an organisation depends on the position he or she occupies.
 The greater the number of management layers a message must pass through, the
longer it will take to reach its destination and the less likely it is to be accurate.
 Interpersonal communication becomes increasingly difficult as the size of a work
group increases.
 The shorter the physical distance between people, the more frequently they will
interact.

Technological factors
 The way we communicate has changed as a result of technological factors.
 Exchanging messages has changed from messengers to telegraph, telephone,
voice mail, e-mail, sms.
 Technological change has an impact on the effectiveness of communications as
well as the amount of information available.
 The use of incorrect communication medium may be a barrier to effective
communication.

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study15.4 “Barriers to effective communication”, pages 368-373.
MANAGEMENT PRINCIPLES 5TH EDITION
Study15.4 “Barriers to effective communication”, pages 416-421.

© Business Management Training College (Pty) Ltd

175
 IMPROVING COMMUNICATION

LESSON 1.19
IMPROVING COMMUNICATION

In this Lesson:

In this lesson we look at how managers can communicate better and the
impact of Information Technology on communication.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Business portal: a specific company’s gateway to internet-based

information.

Key points:
 To overcome perception barriers: when messages are transmitted, senders must
use their own perception to translate an compile the message so that it makes
sense to the receiver.
 Overload barriers can be overcome when the sender keeps the message simple
and specific.
 When transmitting the message, barriers are noise and timing. Noise levels must
be kept to a minimum, and must be done at the correct time.
 Trust and credibility barriers are overcome when affection and respect are offered
and earned.

 Overcoming individual differences in communication skills requires effective

feedback.
 To overcome emotional barriers, communicators should remain calm and avoid
making others emotional by their behaviour.

176 © Business Management Training College (Pty) Ltd

 LESSON 1.19
Communications and Information Technology (IT)
 IT changes the way in which communication takes place.
 Communication methods that developed include internet, e-mail, business portals,
databases, wireless communication and teleconferencing, voicemail, etc.
 Internet offers unlimited communication opportunities as information is available to
anyone in the world.
 With e-mail, users and send, receive and forward messages from people all over
the world.
 E-mail has become very popular with managers.
 Business portals are widely used to enable specific categories of employees to
access useful information pertaining to the organisation.
 Handheld devices allow people to get information when and where they need it.
 Telecommuting allows organisations to recruit and hire people all over the

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study15.5 “How managers can become better communicators”, pages
373-375.
Study15.6 “The impact of information technology on the communication
process”, pages 375-376.
MANAGEMENT PRINCIPLES 5TH EDITION
Study15.5 “How managers can become better communicators”, pages
421-422.
Study15.6 “The impact of information technology on the communication
process”, pages 422-423.

© Business Management Training College (Pty) Ltd

177
 ORGANISATIONAL CONFLICT

LESSON 1.20
ORGANISATIONAL CONFLICT

In this Lesson:

Many organisational conflicts stem from contradictory ideas about the

distribution of organisational resources. When the behaviours of the
organisational members are interdependent, conflict arises. Conflict involves
the expression of incompatibility, not its mere existence. Conflict can be both
destructive and productive.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Conflict: three characteristics are: incompatible goals, interdependence and

interaction.
 Negotiation: a process of interaction between parties, directed at reaching
some form of agreement that will hold and that is based upon common
interests, with the purpose of resolving conflict despite differences. This is
achieved by the establishment of common ground and the creation of
alternatives.

Key points:

Conflict can be managed by:

 Avoidance, which is rarely effective as no face-to face meeting takes place.
 Formulating a shared goal.
 Playing down differences between conflicting parties. (smoothing)
 Authoritative command.
 The formal organisational structure – job redesign and creation of positions.
 Negotiation.

178 © Business Management Training College (Pty) Ltd

 LESSON 1.20
The negotiation process
Identifying the potential for negotiation starts the process.
The steps in the process are:
1. Setting goals: goals to achieve in the negotiation process must be formulated.
2. Analyse one’s own and the opponent’s position.
3. Identify issues that will be discussed with the opponent.
4. Analyse information on opponents.
5. Consider legal and financial implications – be aware of stipulations of a contract.
6. Decide on tactics.
7. Schedule feedback – regular feedback sessions to review performance.

Three phases that the process goes through are:

 Emotional phase: during this phase, the climate for negotiation is established.
 Political phase: a task leader emerges.
 Problem definition phase: the group attempts to define the problem.
 Constructive phase: the group deals with the problem constructively.
 Final socio-economic phase: closure of the meeting takes place.

INTRODUCTION TO NEGOTIATION

The business environment is based entirely on negotiation. Even in early

times man had already learnt to negotiate a deal by exchanging articles, animal
labour or coins. In those days exchanges took place in specifically measured units,
for example, a shekel of silver for a sheaf of wheat. Those who had more ingenuity
in the business circle in time learnt that should he be able to negotiate a barter in
such a way that he could acquire more than the fixed value, he in fact made a
bigger profit out of such a deal. In later years we find that the businessman would
argue about the size of a slaughter animal. The one party would like to offer a
lamb while the other party would rather like to receive a fully-grown sheep. The
principle of fixed values had faded.

As wealth grew through the years, it later became apparent that the art of
negotiation earned substantial dividends. In modern times the businessman finds
himself in a negotiating situation every minute of the day. Whether it is an article to
be bought or stock to be sold, negotiations take place between the supplier and
buyer. But negotiations also take place on many other levels. In these days
negotiations take place in respect of labour, rent, interest rates, in fact there is
hardly any action that a businessman can put into effect without having to
negotiate.

© Business Management Training College (Pty) Ltd

179
 ORGANISATIONAL CONFLICT
Negotiation: the process of two or more parties working together to arrive at a
mutual acceptable resolution of one or more issues, such as a commercial
transaction, a contract, or a deal of any sort. Negotiation is a give and take
bargaining process that, when conducted, leaves all parties feeling good about the
result and committed to achieving it.

WHAT NEGOTIATION IS NOT?

When your manager gives you a task to complete and your only choice is to
complete the task, that is not negotiation. If a third party is brought in to make a
decision between parties using arbitration, the parties are legally bound to follow
the arbitrator’s decision - That is NOT negotiation. When parties are not working
together to reach an agreement, negotiation does not take place. 1 1

Negotiating skills for managers -S Cohen

Steps in the negotiation process include:

 Preparation,
 Presentation,
 Probing,
 Bargaining
 Closing.

Different types of closure include, but are not limited to:,

 Concession close,
 Summary close,
 Adjournment close,
 Or-else close
 Either-or close.

Essential characteristic of successful negotiators:

 They have to be well trained and knowledgeable in the intricacies of negotiations;
 They have to possess good social interpersonal skills;
 Negotiations have to like dealing with people and thus need good information
processing skills;
 Their should have a positive outgoing personality and aim towards mutual gains
and not filled with greed;
 They should execute good communication skills such as presenting and receiving
information;
 Negotiators must be able to listen sincerely and express themselves clearly in
every situation;
 They need a lost of persuasive abilities;
 They need to be creative thinkers to come up with counterproposals and
180 © Business Management Training College (Pty) Ltd
 LESSON 1.20
alternative arguments
 Although they have to be goal orientated and persistent, they also need to be
flexible and open-minded to consider other peoples ideas and way of thinking.

My father said: "You must never try to make all the money that's in a deal. Let the
other fellow make some money too, because if you have a reputation for always
making all the money, you won't have many deals.” J. Paul Getty

Because of the complexity of political, social and labour negotiations, the art of
bargaining has become a very intricate issue, to the extent that the big
multinational companies as well as governments (without exception) make use of
negotiators who have been intensively trained and prepared for the sole purpose
of negotiation.

Inevitably we all have a natural atonement to negotiation because we inadvertently

give expression to our ability to negotiate since childhood. It will be virtually
inconceivable that our civilisation could survive should the element of negotiation
be omitted.

Because of the phenomenal role that negotiating abilities play in the success of a
business concern, we will endeavour to develop the skills of the business
entrepreneur to the extent that he will enter a negotiation situation with prepared
objectives. There are of course many personal qualities that have an important
role in negotiation, but in this lecture we will suffice by an intensive study of
negotiation techniques. Because many actions to be discussed are applied in a
specific sequence, we wish to recommend that the lectures be studied as such.

WHAT IS NEGOTIATION?

Negotiation is a process whereby two or more parties come to an agreement

that is satisfactory to all parties concerned.

When looking at the Latin Language, we find that the word negotiation means
"business". The first very important phenomenon that comes to the fore when
analysing the negotiating action is that in virtually all cases there is a winner and a
loser. The question that now arises is how could there be a winner or a loser
with both parties having been satisfied?

During negotiations each party will endeavour to find out what the other party
really wants, and how determined he is to obtain his objectives. The scrutiny of the
other party's requirements and limits form the crux of this chess game. In this
instance everything counts: every question, every answer, every intonation, the
manner of speaking, the manner of answering and the pressure being applied.

© Business Management Training College (Pty) Ltd

181
 ORGANISATIONAL CONFLICT
The winner will be the negotiator who succeeds the best in establishing what his
opponent's aspirations are, and how much he can afford to pay for them. The
negotiator who wins has acquired the art of concluding the transaction at the peak
(or centre) of the negotiations.
The negotiator, who carries a transaction through relentlessly and regardless of
any adverse effects it may have on his opponent, is in fact the loser. The reason
being that the opponent is perhaps forced to skimp on the quality of finish of the
article.

It could well be that the few Rand you save is not worth the expense of having an
important business relationship jeopardised. The really sound transaction is the
one with the best possible advantage to you without the opponent being compelled
to supply inferior quality or not being able to make sufficient profit to justify his
existence.

STEPS IN THE NEGOTIATION PROCESS

We have now established the importance of negotiation. Let us now concentrate

on its application. There are four strategic steps that have to be considered to
conclude a transaction successfully:

1. The planning and preparatory phase which is executed long before the negotiating
session is reached.

2. The initial preparatory meeting at which the two opponents disclose their individual
offers while clarifying and justifying the figures.

3. The true negotiating session is realised. This could be labelled "the war of
changed expectations". In this instance, questions are asked and answered. The
parties raise different opinions, attack and defend until consensus is reached
and a mutual decision is taken.

4. The transaction is finalised or stalemate is reached.

Let us summarise the process of negotiation as being the quest for consensus
between two (or more) parties at a junction somewhere in the future. It is
principally these differences of opinion that distinguish negotiation from mere
conversation.

182 © Business Management Training College (Pty) Ltd

 LESSON 1.20
The crux being that both parties should feel mutually satisfied at having reached a
gratifying agreement. Is it not strange, therefore, that in so many negotiating
situations both parties are completely satisfied with the transaction concluded, and
to the extent that only an impartial outsider will probably be able to say which party
got the better deal. At the conclusion of the transaction both parties consider
themselves as having obtained the maximum possible advantage, and that no
greater benefit could have been obtained.

Negotiation is therefore the achievement of a sense of satisfaction and not so

much the result of the negotiations. Negotiation could in certain instances be seen
as a game of poker where the credibility of the player is the overriding factor. The
opponent must feel that he can believe you when you state or strongly imply that
you have reached your optimum. Likewise, the negotiator will not conclude before
being convinced that he has driven his opponent to the limit. Credibility is therefore
the crux of the negotiating action. It is of paramount importance when deciding
upon the initial offer, as well as the granting or rejection of concessions that follows
sooner or later.

The loss of credibility could have a negative effect, particularly in the event of
misunderstanding during initial negotiations for instance when making an
unreasonable opening offer which forces the negotiator to change his direction
abruptly, thereby displaying his false bargaining.

Good Practice Avoid

Actively listen Interrupting

Question for clarification Attacking

Summarising Blaming

Test commitment Talking too much

Seeking & giving information Sarcasm

Encourage two way conversation Threats

State and plan your proposal – then

Taking it personally
summarise

Use the ‘if you ….then we’ll’ principle Closed body language

© Business Management Training College (Pty) Ltd

183
 ORGANISATIONAL CONFLICT

Decision making tools for negotiation:

Usually the first method we choose when we want something. Useful when
PERSUASION:
interests or opinions are the same.

This is not the easy way out, and sometimes it’s just not worth continuing if the
GIVING IN:
cost (in any terms) is too high.

This could simply be stating your options, ‘I could take my business

elsewhere’. It could also be gentle reminders or unspecified consequences
BULLYING:
right up to threats. Threats are not useful in a negotiation situation as they
erupt in full blown battles.

PROBLEM Works well when both parties have a strong relationship, where you trust each
SOLVING: other, and share the problem.

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study15.7 “Interpersonal relationships”, pages 376-380.
Read 15.8 “Summary”, page 381.
MANAGEMENT PRINCIPLES 5TH EDITION
Study15.7 “Interpersonal relationships”, pages 424-428.
Read 15.8 “Summary”, pages 428-429.

184 © Business Management Training College (Pty) Ltd

 LESSON 1.20

NOTES:

© Business Management Training College (Pty) Ltd

185
 CHAPTER 2
CONTROLLING

IN THIS CHAPTER:
 LESSON 2.1 : THE NATURE OF CONTROL AND THE CONTROL
PROCESS
 LESSON 2.2 : AREAS THAT CONTROL SHOULD FOCUS ON
 LESSON 2.3 : CONTROL FOR TOP MANAGEMENT AND CONTROL
AT OPERATIONAL LEVEL

AT THE END OF THIS CHAPTER YOU WILL BE ABLE TO:

1. Depict and explain the “position” of control in the management process.
2. Define control.
3. Explain the nature of control.
4. Explain the control process.
5. Describe the areas that control should focus on in an organisation.
6. Differentiate between control at top management level and operational level.
7. Present recommendations on the design of a control system.
 LESSON 2.1
LESSON 2.1
THE NATURE OF CONTROL AND THE
CONTROL PROCESS

In this Lesson:

Control is the final step of the management process and it provides feedback
to the first step, namely planning.

Basically, organisational coordination and control is taking a systematic

approach to figuring out if you're doing what you wanted to be doing or not. It's
the part of planning after you've decided what you wanted to be doing.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Control process: three characteristics are: incompatible goals,

interdependence and interaction.

Key points:
 Control procedures are used to check if things are under control and proceeding
as they should.
 It keeps deviations from the planned activities to a minimum.
 It is a continuous process.
The importance of control
 It ensures that activities are on track.
 It ensures that resources are deployed effectively.
 It results in better quality.
 Control enables management to cope with change.
 It controls achieving of goals.
 It helps to minimise costs and limit errors.
 It facilitates delegation and teamwork.

© Business Management Training College (Pty) Ltd

187
 CONTROLLING
The control process
 Establishing standards of performance: performance standard is a projection of
expected or planned performance. Performance standards must be realistic,
attainable and measurable.
The Balanced Score Card is a popular tool that ensures clear standards.
 Measuring actual performance: variable should be quantifiable. Reporting should
be reliable and data must be accurate.
 Evaluating deviations: differences between actual performance and
predetermined standards are evaluated.
It is important to know why a standard is merely equalled, and not exceeded, or
why the organisation has done better than the standard.
 Taking corrective action: corrective action is taken to achieve performance
standards, or to better them.
If actual performance does not match the performance standard, three option are
available:
 Actual performance can be improved
 The strategy can be revised
 The standards can be altered to make them more realistic.

Corrective action becomes the starting point of the next cycle.

Controlling
It is a process by which managers assure that resources are obtained and used
effectively and efficiently in the accomplishment of the organisation’s objectives.

188 © Business Management Training College (Pty) Ltd

 LESSON 2.1
STEPS IN THE CONTROL PROCESS

Establish the performance

standards and methods
of measuring them

Measure performance
against standards

Continuous managing of the process

Evaluate any deviations

from the standards

Take corrective action

and change performance
or standard, if needed

Step 1: Establish the performance standard.

This is done at the planning stage. Organisational level and functional

departments must set these objectives and performance standards, for each
area of the organisation. They must ensure that the overall strategy is
implemented in each area of the business. Standards can be set based on a
person's experience and judgement. They can also be based on the performance
of similar people in other organisations. Standards can also be based on the
previous performance of an individual and department. MBO is a technique for
individual control. At the end of the planning process, a budget is prepared with
standards of performance in each area and level in an organisation.

The idea of using benchmarks is becoming more frequent. These focus on cross-
company comparisons of how well basic functions and processes in the value
chain are performed.

© Business Management Training College (Pty) Ltd

189
 CONTROLLING
Step 2: Measure performance against the standard.

A manager needs information to measure performance. Useful information must

be accurate, relevant, timely, concise and complete. Performance may be
assessed visually or in writing. Performance should be measured as close to the
point of action as possible. Each functional area and level in the organisation will
have its appropriate reports.

Step 3: Evaluation of performance must occur after measurement.

If there is no deviation from the standard, then the management process continues
normally. If there are deviations from the standard, you must assess the reasons
for their occurrence. A small deviation may be significant under some
circumstances, but not under others.

To be successful, performance evaluation must:

 Concentrate on exceptions to the standards. We must concentrate on what is

not going to plan.

 Have allowable upper and lower limits of deviation for the process being
measured.

Step 4: Correction of performance.

If performance is out of line, then three possible choices are available:

 The first is to maintain the deviation, provided it is within the set limits.

 The second choice is to correct the deviation and return to the standard. This
could be achieved through training, changing the reward system. re-designing
jobs and processes, or changing the people doing the job.

 The final choice is to change the standard. It could have been originally,
incorrectly set (too high or too low-) or market conditions might have changed
since the standard was set. If a person does not reach a standard, especially one
that has been set for him, then he will often blame the standard. He may be
completely correct in that assertion.

190 © Business Management Training College (Pty) Ltd

 LESSON 2.1
STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Read 16.1 “Introduction to controlling”, pages 386-388.
Study 16.2 “The control process”, pages 388-391.
MANAGEMENT PRINCIPLES 5TH EDITION
Read 16.1 “Introduction to controlling”, pages 438-440.
Study 16.2 “The control process”, pages 440-443.

INTRODUCTION TO BUSINESS MANAGEMENT 8TH EDITION

Read Chapter 9 “Controlling the management process”, pages 227-241.
INTRODUCTION TO BUSINESS MANAGEMENT 9TH EDITION
Read Chapter 10 “Controlling the management process”, pages 242-255.

© Business Management Training College (Pty) Ltd

191
 CONTROLLING

NOTES:

192 © Business Management Training College (Pty) Ltd

 LESSON 2.2
LESSON 2.2
AREAS THAT CONTROL SHOULD FOCUS ON

In this Lesson:

An organisation’s activities should be controlled at strategic points.

Management must identify the areas to control – these are the areas
responsible for the effectiveness of the entire organisation.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Quality control: refers to the activities that management performs to ensure
a level of quality that will satisfy the consumer, on the one hand, and has
certain benefits for the organisation on the other.
 Just in time system (JIP) – based on the premise that actual orders for
finished products are converted into orders for raw materials and
components which arrive just in time for the manufacturing process.
 Economic ordering quantity (EOQ)– based on replenishing inventory levels
by ordering the most economical quantity.
 Physical resources: tangible assets, such as buildings, office equipment
and furniture, vehicles, manufacturing machinery and equipment, trading
stock, raw materials, work in progress and finished products.
 Inventory: refers to the reserves of resources held in readiness to produce
products and services as well as the end-products that are kept in stock to
satisfy customers.

© Business Management Training College (Pty) Ltd

193
 CONTROLLING
Key points:

The four key areas of control are physical resources, financial resources,
information sources and human resources.

Physical resources
 Control systems include usage procedures, periodic inspections and stocktaking.
Control systems for inventories, raw materials and finished products are inventory
control and quality control.
 Inventory control: it costs an organisation 20 to 25 cents per rand of inventory per
annum keep inventories.
Inventory control seeks to keep inventory and the costs involved, as low as
possible. Three control systems are relevant:
 Economic ordering quantity (EOQ)
 Materials requirements planning (MRP) and
 JIT – Just in time system
 Quality control: Total quality management (TQM) is the responsibility of everyone
in the organisation. The ultimate test of product quality is in the marketplace.
Quality control comprises the following steps:
1. The definition of goals or standards
2. Measuring quality
3. Rectifying deviations and solving problems

Financial resources
 The control of financial resources is central to the control of other resources of the
organisation.
 Financial control is about controlling resources as they flow in, as they are held and
as they flow out.
 Financial control measures are cash flows, cash management, investment returns,
etc.
Two instruments of financial control are budgetary control and financial analysis.
 The budget: management allocates financial resources to different departments
by means of the budget. Budgets:
 Supports in coordinating resources
 Provides guidelines in application of resources
 Sets standards
 Makes the evaluation of resource allocation possible
 Types of budgets are financial, operational and non-financial budgets.
 Financial analysis: certain financial ration analyses enable management to
control financial resources, and also provide an indication of the organisation’s
financial performance and attainment of goals. Examples are:
 Velocity of turnover of assets and creditors
194 © Business Management Training College (Pty) Ltd
 LESSON 2.2
 Analysis of marketing performance
 Analysis of rental paid and marketing costs
 Liquidity analysis
 General performance analysis

Information resources
 Relevant information is vital in monitoring the progress of goal attainment.
 Effective control is dependent on supporting information.
 The faster that managers receive feedback on what is running well and what not,
the more effectively the control systems will function.

Human resources
 The main instrument used to control human resources is performance
management.
 Other human resource control instruments include ratio analyses that can be
applied in respect of labour turnover, absenteeism and the composition of labour
force.
 People play a decisive role in informal control systems.
 A group of people working together develop norms, which may include the quality
of a product, speed of production etc., have an influence on the group when it
comes to control.

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Read 16.3 “The focus of control”, page 392.
Study 16.4 “The areas of control ”, pages 392-400.
MANAGEMENT PRINCIPLES 5TH EDITION
Read 16.3 “The focus of control”, page 443.
Study 16.4 “The areas of control ”, pages 444-453.

© Business Management Training College (Pty) Ltd

195
 CONTROLLING

NOTES:

196 © Business Management Training College (Pty) Ltd

 LESSON 2.3
LESSON 2.3
CONTROL FOR TOP MANAGEMENT AND CONTROL AT
OPERATIONAL LEVEL

In this Lesson:

Management is responsible for the performance of the organisation as a

whole. Control is broken down into strategic control and operations control, to
enable management to control the performance of the organisation.
In this lesson we differentiate between the two levels of control and we look at
the design of control systems.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Strategic control: is exercised at tip management level and entails a close
study of the organisation’s total effectiveness, productivity and management
effectiveness.
 Operations control: is concerned with the organisation’s processes that
entail transforming resources into products and services..

Key points:
Strategic control
 An organisation’s total effectiveness depends on whether its mission and goals are
attained or not.
 To evaluate the organisation’s performance, its productivity must be studied.
 Productivity can be increased by:
 Improving operations or
 Increasing employee involvement
 Low productivity in South Africa is because of insufficient education and training,
lack of awareness and knowledge of productivity, obsolete technology and
systems, etc.
 Measuring management effectiveness is a strategic control tool which is a
manager’s audit of an organisation’s main success factors.

© Business Management Training College (Pty) Ltd

197
 CONTROLLING
Operations control
Three forms of operations control are:
 Preliminary control: the purpose is to prevent possible problems regarding any of
the resources.
 Screening control: is action taken as resources are transformed into products and
services in order to ensure that standards are met.
 Post-action control: focuses on the outputs of the transformation process and
involves actions taken to fix a faulty output.

Characteristics of an effective control system

 Integration: a control system must be integrated with planning. It must be flexible,
accurate, goal-oriented, timely and not too complex.
 Flexibility: it must be able to accommodate change.
 Accuracy: it should provide an accurate and goal-oriented picture of the situation.
 Timeliness: control data should be supplied regularly as needed.
 Unnecessary complexity: Complex systems may cause managers to lose their
personal involvement and motivation in seeing that things go according to plan.
Personnel could also become de-motivated and this could lead to resistance.

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study 16.5 “Levels of control”, pages 401-405.
MANAGEMENT PRINCIPLES 5TH EDITION
Study 16.5 “Levels of control”, pages 453-456.

198 © Business Management Training College (Pty) Ltd

 LESSON 2.3
NOTES:

© Business Management Training College (Pty) Ltd

199
 CHAPTER 3
CONTEMPORARY MANAGEMENT
ISSUES

ETHICS, CORPORATE SOCIAL

RESPONSIBILITY AND CORPORATE
GOVERNANCE
IN THIS CHAPTER:
 LESSON 3.1 : ETHICAL BEHAVIOUR AND DECISION MAKING
 LESSON 3.2 : STEPS IN THE ETHICAL DECISION MAKING AND
ETHICS IN AN ORGANISATION.
 LESSON 3.3 : CORPORATE SOCIAL RESPONSIBILITY
 LESSON 3.4 : CORPORATE GOVERNANCE

AT THE END OF THIS CHAPTER YOU WILL BE ABLE TO:

1. Explain what “ethics” means in the business environment.
2. Present arguments why organisations should behave ethically.
3. Explain what ethical decision-making entails.
4. Explain the concept “corporate social responsibility”.
5. Defend the viewpoint that organisations should be socially responsible.
6. Explain what sustainability reporting entails.
7. Explain what “corporate governance” means and entails.
 LESSON 3.1
LESSON 3.1
ETHICAL BEHAVIOUR AND DECISION MAKING

In this Lesson:

Failure in corporate governance is a real threat to the future of every

organisation. Corporate governance as a business ethics issue is a hundred
times more powerful than the internet or globalisation and can destroy an
organisation in a week. To make matters worse, standards of corporate
governance are changing rapidly in response to random events which capture
public imagination.
In business ethics, what was good is becoming bad and what was considered
bad is now good. Standards for corporate governance that have worked for
decades are looking old fashioned or immoral while other practices that raised
questions are becoming totally acceptable.
As recently as a decade ago, many companies viewed business ethics only in
terms of administrative compliance with legal standards and adherence to
internal rules and regulations. Today the situation is different. Attention to
business ethics is on the rise across the world and many companies realize
that in order to succeed, they must earn the respect and confidence of their
customers. Like never before, corporations are being asked, encouraged and
prodded to improve their business practices to emphasize legal and ethical
behaviour. Companies, professional firms and individuals alike are being held
increasingly accountable for their actions, as demand grows for higher
standards of corporate social responsibility.

What is ethical? Decision making can be hard enough but when we have to
consider ethics and decision making we can tie ourselves up so tight we stop
making decisions entirely. In this lesson, we explain what ethical decision
making entails and differentiate between ethical and unethical behaviour.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Ethics: it entails the code of moral principles and values that directs the
behaviour of and individual or a group in terms of what is right or wrong.

© Business Management Training College (Pty) Ltd

201
 ETHICS, CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE GOVERNANCE
Key points:

 A code of ethics sets standards about what is good or bad behaviour and decision
making.
 A code of ethics can be better understood if we compare it with the behaviour of an
individual or a group controlled by prescribed laws on the one hand, and by free
choice on the other.
 Ethical questions often appear as grey areas.
 Managers find it easier to decide what course of action to take if they can identify
the level at which an ethical dilemma appears.
The five levels of ethical decision making are:
 Individual level
 Organisational level
 Association level
 Societal level
 International level

Approaches to ethical decision making

 Utilitarian approach: a manger studies the effects of a particular action on the
people directly influenced by it and takes a decision that will benefit the most
people to the greatest extent.
 Human rights approach: the individual is entitled to fundamental freedom and
rights that another individual cannot take away.
 Justice approach: this approach states that ethical decisions should entail the
equitable, fair and impartial distribution of benefits and costs among individuals and
groups.
 Informal approach: this approach involves using guidelines such as the platinum
rule: ‘Treat others as they want to be treated.’

202 © Business Management Training College (Pty) Ltd

 LESSON 3.1
INTRODUCTION
If people are generally asked to define or explain ethics, most people would say
something like ”doing something that is right and avoid doing something that is
wrong”
Therefore, we can define ethics as such:

Ethics is the study of the general nature of morals and of the specific choices
based on these morals made by individuals concerned, with what constitutes
good and bad human behaviour, including actions and values.

EXAMPLE: If you find somebody’s wallet, returning it to the rightful owner is the
right thing to do, instead of keeping it for oneself, no matter how tempting it may
be.

In other words: Ethics is concerned with human values and what constitutes right
and wrong conduct. Ethics is concerned with the relationship between people.

Religious beliefs and training, educational background, political and economic

philosophy, socialisation through families, peer groups influences and work
experience all come together to produce a personal moral code of ethical values.

Now, let’s look at unethical conduct:

Unethical conduct indicates that action and behaviour which is in conflict with
accepted norms and values of society.

Examples of unethical behaviour in business:

 Agents who do not tell their customers how much commission or additional
administration costs they have to pay on a business deal.
 Managers of companies award themselves large bonuses and packages, which
they do not deserve.
 Companies who design products that break relatively quickly and consumers have
to replace these products.
 Large companies that delays payment to their suppliers for goods and services
rendered.
 Companies "steal" trained staff from other companies to save themselves the
expense of doing the training themselves.

© Business Management Training College (Pty) Ltd

203
 ETHICS, CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE GOVERNANCE
In the present business environment the spotlight has been on the ethics of people
in business. This is not just happening in South Africa but worldwide. In a recent
study of leadership, there were 10 characteristics common to great leaders. The
first was found to be "a high standard of personal ethics". This tells us that ethics is
very important in business, and will continue to be a critical issue. Continued
ethical abuse is likely to lead to increased government intervention and regulations
and a decrease in freedom in business. (Bell, 1992)

BUSINESS ETHICS
Business ethics means that there is right (√) and wrong (X) behaviour in business.

Business behaviour is individual behaviour in the business environment that

is regarded as the correct and right business conduct.

Unethical business practices refers to conduct that is in conflict with what

is seen as correct behaviour and is therefore unacceptable.

It is clear from the above that what is regarded as ethical or unethical

conduct is dependent on:
 The norms or values of a particular society.
 The view of the individuals in the community regarding what is right or wrong in
certain circumstances.
Good business begins with ethics. Most successful people and companies are
those that take ethics seriously. Ethical managers and ethical businesses tend to
be more trusted, suffer less resentment from its employees and receive less
government intervention. It is also difficult to have a universal set of rules for ethical
and unethical behaviour. The reason being that different communities and cultures
have different social norms and values.

Especially in a country like South Africa, with diverse cultural and ethnic groupings,
to speak of general social norms and values is a difficult task to tackle. Many
businesses in South Africa employ people who have different views of what is right
and what is wrong. It is therefore important for business to draw up a code of
conduct.

The purpose of a code of conduct is to ensure ethical behaviour by both the

business and its employees. A code of conduct either forms part of, or is an
attachment to, an employee’s contract of employment. It reflects the fundamental
standards of conduct expected by all employees of the organisation.
There are many different codes of conduct.

204 © Business Management Training College (Pty) Ltd

 LESSON 3.1
Codes of conduct are written in the same way as company policies. The code of
conduct is usually brief and provides general guidelines. Individuals may also
interpret the code of conduct differently from one another.

WHAT IS A CODE OF CONDUCT?

A code of conduct is a set of ethical rules, which employees must abide by so

that they know what is acceptable and non-acceptable behaviour in the
workplace, where they are currently employed. It is a set of principles based on an
organisation's core values and their business philosophy.

LOOK AT THE FOLLOWING EXAMPLES:

 Some people will never steal stationery from a store, but will not think it is
stealing when they take stationery from the office for themselves.
 Some people will take time off work and say that they are ill, but they are
actually in good health.

In compiling a code of conduct for employees, the following aspects must be

included and thoroughly thought of by the organisation before putting such a code
of conduct in place:

1. Define the moral and professional behaviour of employees.

2. Define the standards of employee’s performance to be met in delivering a
product or a service.
3. Define the manner in which perks, gifts and favours are accepted.
4. Define the limits of the employee’s private interests.
5. Define the manner in which employees treat the public and the organisation's
clients.
6. The accepted norms and values of the community in which the business
operates must be honoured.
7. The code of conduct must be specific and not vague.
8. Management must ensure that employees adhere to the code of conduct and
explain the consequences if the code is breached.
9. Employees must have a clear understanding of what will happen if they disobey
the code.
10. Employees must ensure that they understand the code of conduct.
11. Employers should ensure that when employees are not sure of what ethical
behaviour are expected from them in certain situations that they (the employees)
are briefed.

© Business Management Training College (Pty) Ltd

205
 ETHICS, CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE GOVERNANCE
We can therefore say that a code of conduct, if correctly drawn up and managed,
can be a dynamical cultural guide and disciplining tool, which will provide a sound
moral foundation for the organisation as a whole.

IDENTIFYING AND EXPLAINING THE PRINCIPLES OF A CODE OF CONDUCT

As we have discussed previously, the values of a business are stated in the code
of conduct. These statement reflects and states the principles which guide the
business and the environment in which it operates.

THERE ARE TWO TYPES OF PRINCIPLES:

General principles:
These principles reflect the values of other businesses and institutions in the
country or internationally. Rushworth Kidder in his book, Shared Values for a
troubled world (1994), asked the question, “If you could formulate a global code of
ethics for the 21st century, what would be on it?” The following were found to be
common values: Love, truth, fairness, freedom, unity, tolerance, responsibility and
respect. Kidder did further research on people’s values from different countries
and cultures and found the following to be common values internationally: truth or
honesty, respect, responsibility, fairness, love, care or compassion. (Cited and
adapted in Cynthia Schoeman, Ethics, Wits Business School)

Examples of general principles:

 Employees must recognise, respect and conform to the values of the business.
These values must be promoted in the employee’s daily tasks.
 All employees must respect their colleagues, manager, shareholder(s) and
owner(s).
 All relationships must be in line with the Employment Equity (EE) Act, which
protects employees against discrimination and sexual harassment.
 Ethical and professional behaviour is in the spirit of the business practice.
 Employees must be treated with respect and consideration.
 Employees may not use abusive, offensive or hurtful language to another
employee, a group of employees or people associated with the business.
 Employees must represent themselves in a responsible and respectful manner
and refrain from any conduct that may threaten the well being of a colleague or the
business.

206 © Business Management Training College (Pty) Ltd

 LESSON 3.1
Specific principles:
These principles relate directly to the type of business dealings and manner in
which the business dealings are handled.
 Employees must fulfil their contractual obligations to the business to the best of
their ability.
 No employee is compelled to perform any duty for which he or she has not been
trained or qualified.
 All employees must act responsibly in their tasks and duties in accordance with the
legal agreement entered into by the business on their behalf.
 The personal and private use of company property is prohibited, unless permission
is granted by an authorised person.
 All employees must adhere to the minimum working requirements of the company
and as stipulated by the BCEA.
 Employees must adhere to the safety and security rules and regulations of the
company. Breach of these rules may result in disciplinary action.

ETHICAL DILEMMAS IN BUSINESS

It is important to remember that ethics is not prescriptive. This means that there
is no set of rules that tells us how to behave ethically and morally in all
situations. Dilemmas involve uncertainty and risk over the rightness and the
wrongness of actions.

BASIC MOTIVES FOR STEPPING OVER THE LINE BETWEEN ETHICAL AND UNETHICAL
CONDUCT INCLUDES:
 Fear of losing one's job;
 Pressure by a supervisor to produce unrealistic results or results in an unrealistic
period of time;
 Ambition to excel and advance your career;
 Revenge for a perceived wrong;
 If one has a personal tendency to ignore the consequences of one's actions;
 If a company offers high rewards or bonuses, employees can conduct unethical
behaviour in order to get this reward (in other words take short cuts in their work
to obtain the promised reward);
 If employees are threatened, they will do anything to avoid punishment, and this
is when "dirty" business is done.
Other unethical business practices are:
 Bribery,
 Corruption,
 Fraud,
 Intimidation.

© Business Management Training College (Pty) Ltd

207
 ETHICS, CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE GOVERNANCE
These are ethical problems many organisations face in the business environment
today.

BUILDING AN ETHICAL BUSINESS

Business practices, that an organisation's leaders view as right or wrong, reflect

their underlying values. An underlying value means ethical beliefs that provide a
foundation for ethical behaviour in that organisation. Businessmen who are deeply
committed to these underlying ethical values will operate their business strictly
according to their personal interpretation of these values. It is apparent that deep
commitment to basic values affects business and gives rise to strong integrity and
leadership that is not compromised. Ethical values are established by the strong
commitment and leadership of that organisation. The management team is under
pressure to deliver to its stakeholders. The personal integrity of the organisation's
leader is the most powerful voice in the ethical performance of the organisation.
A supportive culture: organisational culture is one in which the company makes
a good and fair effort to meet obligations to all its stakeholders, not only to its
employees. A code of ethics should establish a foundation for ethical conduct.
With training and consistent management, an organisation can develop a level of
understanding and create a spirit of ethical behaviour.

THE THREE C’S IN BUSINESS ETHICS

Remember we said that most people want to do the right thing for themselves,
their families and for others. Most people are honest and will remain honest.
Business ethics is none other than a person's full awareness of what they are
doing, and what the consequences and complications of their actions are.
We can then say that business ethics is concerned with the behaviour of a business
towards all its stakeholders, which can be consumers, suppliers, employees,
shareholders and any other persons or organisations who have an interest in the
organisation.

Every human being at one stage or another struggles with making a decision. A
person can be torn between a course of action, and this can involve ethics.
Companies as well as individuals will have to strive to make sure that ethics
remain a priority before acting and making a decision.

The golden rule to always start with, is to treat people the way you want them
to treat you. This ideology will always work well if all people involved are
operating in the same manner.

208 © Business Management Training College (Pty) Ltd

 LESSON 3.1
Compliance means a person lives and behaves according to the law, they abide
by company ethics and rules, and community expectations. Companies must also
then treat their employees with respect and fairness to produce a workforce that is
productive, stable and ethical. This implies that employees will behave honestly in
their personal and business environment as well.

Contributions are what business gives back to society. Communities and

consumers throughout the world today believe that corporations should be held
responsible for their actions. Conservation and environmentally friendly
organisations giving back to their communities and to society are more successful.
Ethics looks at the moral principles, duties, values, conduct and obligations of
these organisations.

Consequences of individual or organisational behaviour can be positive or

negative, and this will depend on what the community and the associated
businesses find acceptable or not acceptable.

ETHICAL BEHAVIOUR

Authors, Solomon and Hanson (1985), gave the following rules on how to act
ethical when involved in reasoning and decision making:
1. Consider other people's well being, including the well being of those people who
are not directly involved.
2. Think of yourself as a member of the business community or community itself, and
not as an isolated individual.
3. Obey the laws of your organisation, community and country.
4. Think of yourself, and your organisation as a part of a greater society.
5. Obey moral rules and values (also your cultural values).
6. Think objectively.
7. Always ask yourself the question, "what sort of person would do such a thing?"
8. Respect the customs of others, but remember not at the expense of your own
ethics.

The above rules remind us that we are part of a greater society and that our
actions affect others, who must also be considered. When people make decisions
without a moral or ethical foundation, they are adrift and selfish, interested only in
themselves. These kinds of people put other people at risk as well as themselves.

© Business Management Training College (Pty) Ltd

209
 ETHICS, CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE GOVERNANCE
Other questions you can ask yourself are:
 Is this legal?
 Am I violating the law or company policy?
 Am I violating the rights of others?
 Is this a balanced decision? (is it fair to all concerned in the short and long term?)
 Does it promote a win-win situation?
 How will it make me feel about myself?
 Will it make me feel proud or ashamed of myself?
 Would I feel good if the consequences of my decision were to be published in a
newspaper?
 Would I feel good if my family / friends found out?
 The above questions can only be answered privately with complete objectivity,
where one can reflect on facts and listen to one's "inner voice”.

ETHICAL ISSUES AND APPROACHES

Philosophers and others disagree about the purpose of a business in society. For
example, some suggest that the principal purpose of a business is to maximize
returns to its owners, or in the case of a publicly-traded concern, its shareholders.
Thus, under this view, only those activities that increase profitability and
shareholder value should be encouraged. Some believe that the only companies
that are likely to survive in a competitive marketplace are those that place profit
maximisation above everything else. However, some point out that self interest
would still require a business to obey the law and adhere to basic moral rules,
because the consequences of failing to do so could be very costly in fines, loss of
licensure, or company reputation. The economist Milton Friedman is a leading
proponent of this view.

Other theorists contend that a business has moral duties that extend well beyond
serving the interests of its owners or stockholders, and that these duties consist of
more than simply obeying the law.

They believe a business has moral responsibilities to so-called stakeholders,

people who have an interest in the conduct of the business, which might include
employees, customers, vendors, the local community, or even society as a whole.
They would say that stakeholders have certain rights with regard to how the
business operates, and some would even suggest that this even includes rights of
governance.

Some theorists have adapted social contract theory to business, whereby

companies become quasi-democratic associations, and employees and other
stakeholders are given a voice over a company's operations.

210 © Business Management Training College (Pty) Ltd

 LESSON 3.1
This approach has become especially popular subsequent to the revival of
contract theory in political philosophy, which is largely due to John Rawls “A
Theory of Justice”, and the advent of the consensus-oriented approach to solving
business problems, an aspect of the "quality movement" that emerged in the
1980s.

Philosophers Thomas Donaldson and Thomas Dunfee proposed a version of

contract theory for business, which they called “Integrative Social Contracts
Theory”. They speculate that conflicting interests are best resolved by formulating
a "fair agreement" between the parties, using a combination of i) macro-principles
that all rational people would agree upon as universal principles, and, ii) micro-
principles formulated by actual agreements among the interested parties. Critics
say the proponents of contract theories miss a central point, namely, that a
business is someone's property and not a mini-state or a means of distributing
social justice.

Ethical issues can arise when companies must comply with multiple and
sometimes conflicting legal or cultural standards, as in the case of multinational
companies that operate in countries with varying practices. The question arises,
for example, ought a company to obey the laws of its home country, or should it
follow the less stringent laws of the developing country in which it does business?
To illustrate, United States law forbids companies from paying bribes either
domestically or overseas; however, in other parts of the world, bribery is a
customary, accepted way of doing business. Similar problems can occur with
regard to child labour, employee safety, work hours, wages, discrimination, and
environmental protection laws.

It is sometimes claimed that a Gresham's law of ethics applies in which bad ethical
practices drive out good ethical practices. It is claimed that in a competitive
business environment, those companies that survive are the ones that recognize
that their only role is to maximize profits. On this view, the competitive system
fosters a downward ethical spiral.

Rushworth Kidder developed a fascinating way to address ethical conflicts. He

calls it a "trilemma". Instead of feeling stuck in a choice between violating your
ethics and doing something painful but ethical, he suggests exploring if there is a
third, unexplored option.

© Business Management Training College (Pty) Ltd

211
 ETHICS, CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE GOVERNANCE
CORPORATE ETHICAL POLICIES:

Many companies have formulated internal policies pertaining to the ethical conduct
of employees. These policies can be simple exhortations in broad, highly-
generalised language (typically called a corporate ethics statement), or they can
be more detailed policies, containing specific behavioural requirements (typically
called corporate ethic codes). They are generally meant to identify the company's
expectations of workers and to offer guidance on handling some of the more
common ethical problems that might arise in the course of doing business. It is
hoped that having such a policy will lead to greater ethical awareness, consistency
in application, and the avoidance of ethical disasters.

An increasing number of companies also require employees to attend seminars

regarding business conduct, which often include discussion of the company's
policies, specific case studies, and legal requirements. Some companies even
require their employees to sign agreements stating that they will abide by the
company's rules of conduct.

Not everyone supports corporate policies that govern ethical conduct. Some claim
that ethical problems are better dealt with by depending upon employees to use
their own judgment. Others believe that corporate ethics policies are primarily
rooted in utilitarian concerns, and that they are mainly to limit the company's legal
liability, or to curry public favour by giving the appearance of being a good
corporate citizen. Ideally, the company will avoid a lawsuit because its employees
will follow the rules. Should a lawsuit occur, the company can claim that the
problem would not have arisen if the employee had only followed the code
properly.

Sometimes there is disconnection between the company's code of ethics and the
company's actual practices. Thus, whether or not such conduct is explicitly
sanctioned by management, at worst, this makes the policy duplicitous, and, at
best, it is merely a marketing tool.

To be successful, most ethicists would suggest that an ethics policy should

be:
 Given the unequivocal support of top management, by both word and by example.
 Explained in writing and orally, with periodic reinforcement.
 Do-able. Something employees can both understand and perform.
 Monitored by top management, with routine inspections for compliance and
improvement.
 Backed up by clearly stated consequences in the case of disobedience.

212 © Business Management Training College (Pty) Ltd

 LESSON 3.1
ETHICS OFFICERS

Ethics officers (sometimes called "compliance" or "business conduct officers")

have been appointed formally by organisations since the mid-1980s. One of the
catalysts for the creation of this new role was a series of fraud, corruption and
abuse scandals that afflicted the U.S. defence industry at that time. This led to the
creation of the Defence Industry Initiative (DII), a pan-industry initiative to promote
and ensure ethical business practices. The DII set an early benchmark for ethics
management in corporations. In 1991, the Ethics Officer Association (EOA) was
founded at the Centre for Business Ethics (at Bentley College, Waltham, MA) as a
professional association for those responsible for managing organisations efforts
to achieve ethical best practices. The membership grew rapidly (the EOA now has
over 1,100 members) and was soon established as an independent organisation.

Another critical factor in the decisions of companies to appoint ethics/compliance

officers was the passing of the Federal Sentencing Guidelines for Organisations in
1991, which set standards that organisations (large or small, commercial and non-
commercial) had to follow to obtain a reduction in sentence if they should be
convicted of a federal offence.

Although intended to assist judges with sentencing, the influence in helping to

establish best practices has been far-reaching. In the wake of numerous corporate
scandals between 2001-2004 (affecting large corporations like Enron, WorldCom
and Tyco), even small and medium-sized companies have begun to appoint ethics
officers. They often report to the CEO and are responsible for assessing the
ethical implications of the company's activities, making recommendations
regarding the company's ethical policies, and disseminating information to
employees. They are particularly interested in uncovering or preventing unethical
and illegal actions. This trend is partly due to the Sarbanes-Oxley Act in the United
States, which was enacted in reaction to the above scandals. A related trend is the
introduction of risk assessment officers that monitor how shareholders investments
might be affected by the company's decisions.

The effectiveness of ethics officers in the marketplace is not clear. If the

appointment is made primarily as a reaction to legislative requirements, one might
expect the efficacy to be minimal, at least, over the short term. In part, this is
because ethical business practices result from a corporate culture that consistently
places value on ethical behaviour, a culture and climate that usually emanates
from the top of the organisation. The mere establishment of a position to oversee
ethics will most likely be insufficient to inculcate ethical behaviour: a more systemic
programme with consistent support from general management will be necessary.

© Business Management Training College (Pty) Ltd

213
 ETHICS, CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE GOVERNANCE
The foundation for ethical behaviour goes well beyond corporate culture and the
policies of any given company, for it also depends greatly upon an individual's
early moral training, the other institutions that affect an individual, the competitive
business environment and, indeed, society as a whole.
Religious views on business ethics

Many religions have extensive literature and legal codes on the accumulation and
use of wealth; and many businesses rely on these ethical guidelines, both as a
result of the religious beliefs of owners and managers, and as a way of ensuring
that their actions meet the otherwise unwritten ethical standards of local
communities. For example Jewish business ethics.

The basis of all Jewish law is the Torah; here there are more commandments
concerning the kashrut (fitness) of one's money than the kashrut of food (see 613
Mitzvot). These laws are developed and expanded upon in the Mishnah and the
Talmud (particularly in Order Nezikin), and are then delineated in the major codes
of Jewish law (e.g. Mishneh Torah, 12th c.; Shulkhan Arukh, particularly chosen
Mishpat, 16th c.). A wide array of topics on business ethics are discussed in the
response literature. The literature also addresses the ethical dimension. Rabbi
Yisrael Lipkin Salanter (19th century), founder of the Mussar movement in Eastern
European, taught that just as one checks carefully to make sure their food is
kosher, so too should one check to see if their money is earned in a kosher
fashion (Chofetz Chaim, Sfat Tamim, chapter 5). The teachings go much further,
there is a widely quoted tradition (see for e.g. Kitzur Shulkhan Arukh 62:1;
originating in Talmud Shabbat 31a) that in one's judgement in the next world, the
first question asked is: "were you honest in business?"

In Christianity, the basis of this theology is the Old Testament and the New
Testament. For example, Jesus asked his disciples, "If you lend to those from
whom you hope to receive, what credit is that to you?" Luke 6:34. Although this
may be a general injunction to disinterested benevolence, it has also been read as
a condemnation of interest or usury. Jesus referenced this especially when one
lends to another believer. As a Christian, with an eternal mind-set, ultimately God
is our rewarder and lending to a fellow believer should be left to God to reward
over collecting nominal interest.

For Islam, the basis of these laws is the Qur'an, and they are amplified in the
Hadith. Muslim wealth ethics include avoidance of the exploitation of people in
need through lending them money at interest (riba) and prohibitions against false
advertising; under Islamic law, if a vendor sells an item by making false claims
about it, the customer has the right to have the transaction cancelled.

214 © Business Management Training College (Pty) Ltd

 LESSON 3.1
IMPLEMENTATION

A code of ethics (otherwise an ethical policy, code of conduct, statement of

business practice or a set of business principles) can be a management tool for
establishing and articulating the corporate values, responsibilities, obligations, and
ethical ambitions of an organisation and the way it functions. It provides guidance
to employees on how to handle situations which pose a dilemma between
alternative right courses of action, or when faced with pressure to consider right
and wrong.

No two codes will be the same. They must reflect the concerns of the employees
of the particular organisation and the context of the relationships and business
environment in which it operates. Having a code of conduct is not enough,
however. It can only be effective and practically useful with committed
dissemination, implementation, monitoring and embedding at all levels so that
behaviour is influenced.

Business ethics for the small and medium size enterprises (SME’s) tend to be in
the form of informal codes of practice and verbal understanding of acceptable and
unacceptable behaviour rather than standardised procedures, which are a feature
of larger organisations.

As we have discussed previously, all codes of conduct must be in line with the
South African constitution and any other law passed to eliminate unfair
discrimination and promote employment equity. No business may discriminate
indirectly or directly, against an employee on the basis of gender, sex, marital
status, pregnancy, race or ethnicity, customs or religious affiliations.

A code of conduct must be seen within the context of the company's vision and
mission statement as well as the principles on which the company is operating.
Why is the code of conduct such an important document for the successful running
of a business? The code of conduct deals with employer and employee relations
and provides a guideline on procedures to follow should any party deviate from the
code.

© Business Management Training College (Pty) Ltd

215
 ETHICS, CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE GOVERNANCE
CONCLUSION:
 Because the consequences of management decisions are greater than ever
before, it is very important that managers act transparent and ethically.
 Decreasing time and time pressures in business today, means that guidelines to
make ethical decisions are very important to any organisation.
 Ethics - means that a person is behaving honestly and shows honourable
conduct that affects countless business decisions made today.
 Ethical dilemmas arise when individuals and organisations are not sure what
course of action to follow.
 Fears, pressures, selfish and devious behaviour, as well as ambition are among
the motives that lead to unethical conduct.
 Three elements that are important to ethical conduct are: compliance, contribution
and consequences of one's actions.
 All businesses face legal constraints, but ethics is more than a legal issue and
a legal constraint.
 Business leaders have a moral and ethical obligation to society and especially
the community they serve and must therefore act in such a manner.
 Organisations today must integrate into their structures and business cultures an
ethical code of conduct.
 Once a code of conduct has been initiated and implemented in an organisation,
this program must be monitored and audited, and a meaningful effort must be
made to eliminate and prevent any unethical behaviour.
 Ethics is a commitment that should be made by and carried out by all employees,
and supported by top management.

216 © Business Management Training College (Pty) Ltd

 LESSON 3.1
MAKING CODES OF CONDUCT EFFECTIVE:

TEN Practical rules in good business conduct for small and medium size
enterprises (SME’s):

1. Establish your core business values and stick to them or else your reputation will
suffer
2. Welfare and motivation of your staff is crucial to your success
3. Remember that the owner-manager's business behaviour will be taken as a role
model by staff
4. If you need a partner in the business make sure that they share both your vision
and values
5. Work at your relations with customers; they neither start nor stop when the sale is
made
6. Don't knock your competitors
7. Stick to your agreed terms of payment
8. Record all financial transactions in your books
9. Find at least one way of supporting the communities in which you operate
10. If you are doubtful about an ethical issue in your business, ask for advice.

© Business Management Training College (Pty) Ltd

217
 ETHICS, CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE GOVERNANCE
Good Practice Poor Practice

Root the code in core ethical values Pinning the code to the notice board
Failing to obtain board commitment to the
Give a copy to all staff
code
Provide a way to report breaches in a Leaving responsibility for its effectiveness to
confidential manner HR or any other department
Include ethical issues in corporate training Failing to find out what concerns the staff at
programmes different levels
Set up a board committee to monitor the Not to feature the code in induction training
effectiveness of the code and management development activities
Report on the code's use in the annual Not to have a procedure for revising the
report code regularly
Make conformity to the code part of a
Make exceptions to the code's application
contract of employment
Make the code available in the language of Fail to follow up breaches of the code's
staff standards
Make copies of the code available to Fail to set a good example by corporate
business partners, including suppliers leaders
Review code in light of changing business Treat the code as confidential or a purely
challenges internal document

Make it difficult for staff to have direct access

Make sure senior staff "Walk the Talk"
to the code

Simple ethical tests for a business decision:

TRANSPARENCY Do I mind others knowing what I have decided?

EFFECT Who does my decision affect or hurt?

FAIRNESS Would my decision be considered fair by those affected?

218 © Business Management Training College (Pty) Ltd

 LESSON 3.1
STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Read 17.1 “Introduction to ethics, social responsibility, and governance”,
page 412.
Study 17.2 “Ethics”, pages 412-417.
MANAGEMENT PRINCIPLES 5TH EDITION
Read 17.1 “Introduction to ethics, social responsibility, and governance”,
page 466.
Study 17.2 “Ethics”, pages 466-476.

© Business Management Training College (Pty) Ltd

219
 ORGANISING AND DELEGATING

LESSON 3.2
STEPS IN THE ETHICAL DECISION MAKING AND
ETHICS IN AN ORGANISATION.

In this Lesson:
We’ve all heard these rules to live by: Don’t hurt, don’t steal, don’t lie,
and the more famous “Do unto others as you would have done to you.”
In our personal lives most people try to follow these rules. Ethics are often
thought of by many as something that is related to the personal side of life and
not to the business side. In some businesses, having ethics may actually be
frowned upon. This is usually due to the fact that business is about doing
what’s best for the bottom line and not always about doing the right thing.
It is commonly understood that there are ethics and then there are workplace
ethics. Often we don’t stop to realise that there is no difference between
personal ethics and ethics in the workplace; ethics are the same whether at
work or in personal life. After all, ethics are about making choices that may not
always feel good or seem like they benefit you. Ethical choices are the “right”
choices to make and are examples of rules to live by. In this lesson we explain
the steps in ethical decision making and investigate the management of ethics
in an organisation.

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study 17.2.3 “Steps in the ethical decision-making process”, pages 418-
420.
Study 17.2.4 “Managing ethics in the organisation”, pages 420-422.
MANAGEMENT PRINCIPLES 5TH EDITION
Study 17.2.3 “Steps in the ethical decision-making process”, pages 472-
474.
Study 17.2.4 “Managing ethics in the organisation”, pages 474-475.

220 © Business Management Training College (Pty) Ltd

 LESSON 3.2
Key points:
The steps to be taken when an ethical decision is made:
 Identify the problem: define the problem.
 Determine whose interests are involved: which of the various stakeholders are
involved and how will they react to it.
 Determine the relevant facts: a decision can not be made if all the facts are not
known.
 Determine the expectations of those involved: expectation will be different for
various stakeholders.
 Weigh up the various interests: judge whose interests are more important.
 Determine the range of choices: first decide what is possible, before deciding on
what to do.
 Determine the consequences of choices for all involved: consider the effects of the
various alternatives.
 Make your choice: a reasoned judgement can now be made.

Managing ethics in the workplace

The following can be done by managers to ensure ethical standards are being
followed:
 Lead by example: top and senior managers must be openly and strongly
committed to ethical conduct.
 Develop a corporate code of ethics: this helps to set an internal standard of
behaviour in ethical matters.
 Create ethical structures: ethical training programmes at all levels can help to
entrench ethical behaviour in organisations.
 Manage whistle blowing: an organisation must protect whistle-blowers as they
make confidential disclosures.

Each ethical issue is different and there is no general rule applicable to all ethical
problems. The decision maker is personally responsible for his or her decisions.

© Business Management Training College (Pty) Ltd

221
 ORGANISING AND DELEGATING

LESSON 3.3
CORPORATE SOCIAL RESPONSIBILITY

In this Lesson:

In this lesson we investigate the reason why it is important for organisations to

be socially responsible. Corporate social responsibility implies that a business
owner/manager, in the process of serving his/her own business interests, is
obliged to take actions that also protects and enhance society’s interest.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Corporate social responsibility: this implies that a manager, in the process
of serving his/her own business interests, is obliged to take actions that also
protect and enhance society’s interests.
 Primary stakeholders: those identified in the micro-environment and market
environment.
 Secondary stakeholders: those present in the macro-environment of the
organisation.

Key points:
 To make socially responsible decisions, managers should consider all possible
stakeholders.
 Economist Milton Friedman said that when an organisation makes a profit, it is
being socially responsible.
 Other groups argue that social responsibility policies should be part of an
organisation’s mission statement.
 Social obligation: because society allows organisations to exist, organisations
owe it to society to make profits.
 Social reaction: here the view is that organisations owe society more than the
provision of goods and services, and that they should be accountable for the
ecological, environmental and social costs resulting from their actions.
 Social responsiveness: this refers to the socially responsible actions of
organisations that exceed social obligation and social reaction.
 Primary stakeholders: Shareholders, employees, suppliers, customers.

222 © Business Management Training College (Pty) Ltd

 LESSON 3.3
 Secondary stakeholders: the local community, the country as a whole, the
international environment.

Sustainability reporting
 A problem in accounting on sustainability is that it is difficult to measure the
financial implications of environmental aspects and social activities.
 In South Africa, sustainability reporting is becoming routine practice.
 International and local indexes measure the performance of companies in terms of
recognised corporate responsibility standards.

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study 17.3 “Corporate social responsibility”, pages 422-428.
MANAGEMENT PRINCIPLES 5TH EDITION
Study 17.3 “Corporate social responsibility”, pages 476-480.

© Business Management Training College (Pty) Ltd

223
 ORGANISING AND DELEGATING

LESSON 3.4
CORPORATE GOVERNANCE

In this Lesson:

Responsible companies regard the ability to demonstrate good corporate

governance as a basic requirement of doing business.

The King 2002 Report on Corporate Governance (King II) leads the world on
its inclusion of sustainability matters as a basic requirement of good
governance.

In this lesson we discuss the meaning and importance of corporate

governance.

CONCEPTS AND VOCABULARY TERMS YOU NEED TO UNDERSTAND:

 Corporate governance: the system by reference to which organisations are

managed and controlled and from which the organisation’s values and ethics
emerge.

Key points:

King II identified seven characteristics of good corporate governance:

 Discipline: a commitment by senior management to adhere behaviour that is

universally recognised an accepted to be correct and proper.

 Transparency: the ease with which an outsider I able to make meaningful analysis
of the company’s activities.

 Independence: the extent to which mechanisms have been put in place to

minimise or avoid potential conflicts that may exist.

 Accountability: individuals or groups who make decision and take actions, must
be accountable for their decision and actions.

224 © Business Management Training College (Pty) Ltd

 LESSON 3.4
 Responsibility: pertains to behaviour that allows for corrective action and for
penalising mismanagement.

 Fairness: the systems that exist within the company must be balanced in taking
into account all those that have an interest in the company and it future.

 Social responsibility: a well-managed company will be aware of, and respond to,
social issues, placing a high priority on ethical standards.

There is no standard recipe for moral corporate governance but there are broad
guidelines to follow.

STUDY AND RESEARCH

MANAGEMENT PRINCIPLES 4TH EDITION

Study 17.4 “Corporate governance”, pages 428-430.
Read 17.5 “Summary”, page 430.
MANAGEMENT PRINCIPLES 5TH EDITION
Study 17.4 “Corporate governance”, pages 480-482.
Read 17.5 “Summary”, page 483.

© Business Management Training College (Pty) Ltd

225
 BIBLIOGRAPHY

 Armistead, C and Rowland, P. eds. 1996. Managing Business Processes: BPR and
beyond. Chichester UK: John Wiley and Sons.
 Beach, D.S. - Personnel. 1990. The Management of People at Work. 4th ed. New York:
Mac Millan.
 Biesheuvel, S. 1994.‘Work Motivation and Compensation’, Motivational Aspects, Volume
1: page unknown
 Du Toit, G.S., Erasmus, B.J. & Strydom, J.W. eds..2012. Introduction to Business
Management. 8th ed. Cape Town: Oxford University Press.
 Erasmus, B.J., Strydom, J.W. & Rudansky-Kloppers, S. eds. 2013. Introduction to
Business Management. 9th ed. Cape Town: Oxford University Press.
 Gerber, P.D., Nel, P.S. & Van Dyk, P.S. 1998. Human Resources Management. 4th ed.
Johannesburg: International Thompson Publishing.
 Freeman, R.E,. Gilbert, D.R. & Stoner, J.A.F. 1995. Management. 6th ed. New Jersey:
Prentice Hall.
 Katz, D. and Kahn, R.L. 1966. The Social Psychology of Organisations. 2nd ed. New
York: John Wiley & Sons.
 Klatt, L.A., Murdick, R.G. & Schuster, F.E. 1985. Human Resource Management. London:
Charles Merrill.
 Luthans, F. 1993. Organisational Behaviour. 3rd ed. New York. McGraw-Hill Book
Company.
 Megginson, L.C., Scott, R.S. & Megginson, W.L. 1991. Successful Small Business
Management. 6th ed. Boston: McGraw-Hill Irwin.
 Myers, M.T. and Myers, G.E. 1982. Managing by Communication: An Organisational
Approach. New York: McGraw-Hill.
 Pickle, H.B. and Abrahamson, R.L. 1986. Small Business Management. 4th ed. New
York: John Wiley & Sons.
 Robbins, S.P. 1986. Organisational Behavior: Concepts, Controversies and Applications.
Englewood Cliffs NJ: Prentice Hall.
 Smit, P.J. and Cronje, G.J. 2002. Management Principles. 3rd ed. Cape Town: Juta.
STUDY GUIDE REVIEW AND COMMENTS
We are committed to provide the best quality study material to our
students. Your contribution and constructive feedback to this
regard will be highly appreciated.

Student Name:

Student Number:

Name of Study guide:

Comments and Feedback: (Refer to page numbers where applicable)

Please Fax to: Academic Support Desk 0865329562