UNIT ONE

OVERVIEW AND NATURE OF MANAGEMENT

Introduction
Management is a generic term and subject to many interpretations. A
number of contrasting ideas are attributed to the meaning of management.
There are also different ways of viewing the study and knowledge of
management. Management is a universal phenomenon. It is a very popular
and widely used term. All organizations - business, political, cultural or
social are involved in management. There are many definitions of
management as there are authors and practitioners. Management has been
interpreted to mean many things like other disciplines.
Hence, there is no one generally accepted definition of management.
According to Mescon, and Khedouri (1985), management is the process of
planning, organizing, leading and controlling the efforts of organization
members and using all organizational resources to achieve stated
organizationalgoals.
F.W. Taylor (1886) (Father of Scientific Management), has postulated that
management is “The determination of the overall policy of a business
organization”
Herold Koontz and Heinz Weilhrick (1990) view management as “the
process of designing and maintaining an environment in which individuals,
working together in groups, efficiently accomplish selected goals”
Henri Fayol (1916) argues that to manage is to forecast and plan, to
organize, to command, to co-ordinate and to control.
Mary Parker Follet (1941) defined management as “Getting things done
through other people”
Pearce and Robertson (1989) postulates that management is the process of
optimizing human, material, and financial contributions for the achievement
of organizational goals

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Features of Management
Management is an activity concerned with guiding human and physical
resources such that organizational goals can be achieved. Nature of
management can be highlighted as:
i) Management is Goal-Oriented
The success of any management activity is accessed by its achievement of
the predetermined goals or objective. Management is a purposeful activity.
It is a tool which helps use of human & physical resources to fulfil the pre-
determined goals. For example, the goal of an enterprise is maximum
consumer satisfaction by producing quality goods and at reasonable prices.
This can be achieved by employing efficient persons and making better use
of scarce resources.
ii) Management integrates Human, Physical and Financial Resources
In an organization, human beings work with non-human resources like
machines. Materials, financial assets, buildings etc. Management integrates
human efforts to those resources. It brings harmony among the human,
physical and financial resources.
iii) Management is Continuous
Management is an on-going process. It involves continuous handling of
problems and issues. It is concerned with identifying the problem and
taking appropriate steps to solve it, e.g., the target of a company is
maximum production. For achieving this target various policies have to be
framed but this is not the end. Marketing and Advertising is also to be
done. For these policies have to be again framed. Hence this is an on-going
process.
iv) Management is all Pervasive

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Management is required in all types of organizations whether it is political,
social, cultural or business because it helps and directs various efforts
towards a definite purpose. Thus clubs, hospitals, political parties, colleges,
hospitals, business firms all require management. Whenever more than one
person is engaged in working for a common goal, management is necessary.
Whether it is a small business firm which may be engaged in trading or a
large firm like Tata Iron & Steel, management is required everywhere
irrespective of size or type of activity.
v) Management is a Group Activity
Management is very much less concerned with individual efforts. It is more
concerned with groups. It involves the use of group effort to achieve
predetermined goal of management of an organization.
Management Roles
Mintzberg proposed ten managerial roles a typical manager has to perform
in discharging his day-to-day activities. Mintzberg’s ten managerial roles
can be grouped as those concerned with interpersonal relationships, those
concerned with transfer of information, and those concerned with decision-
making.
Interpersonal Roles
This refers to those types of managerial roles that involve people and other
duties that are ceremonial and symbolic in nature. There are three types of
interpersonal roles:
a. Figure head Role
Manager performs a role as symbolic head and accordingly he is obliged to
perform a number of routine duties of a legal or social nature. The typical
activities include greeting visitors, signing legal documents etc.
b. Leader Role
As a leader of the department, manager gives direction to his employees
and other subordinates to fulfill the assigned goals and objectives. He is
responsible for the motivation and activation of subordinates. Also, he is
response for staffing, training and associated activities. Some of the typical

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activities include goals setting, providing guidance, review the progress of
work etc.
c. Liaison Role
The manager is required to maintain contact with external sources that
provide valuable information. These sources are individual or groups
outside the manager’s unit and may be inside or outside the organization.
For this he as to maintain self-developed network of outside contacts and
informers who provide favors and information, for example, acknowledging
mail, doing external board work etc.
Informational Roles
This refers to those types of managerial roles that involve receiving,
collecting and disseminating information. There are three types of
informational roles:
a. Monitor
Typically, manager is spanning the boundaries of the organization and
trying to get information from outside though various sources such as
reading magazines, taking with other to learn current developments,
movements of competitors planning, program etc. Manager seeks and
receives variety of special information (much of it current) to develop
thorough understanding of organization and environment. He emerges as
nerve centre of internal and external information about the organization.
b. Disseminator
Manager acts as conduits of information to organizational members. He is
expected to transmit information received from outside or from
subordinates to member of the organization. Some information is factual
and some may involve interpretation and integrating of diverse value
positions of organizational influencers. Some of the typical activities of this
role include holding informational meetings, making phone calls to relay
information etc.
c. Spokesman

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Manager represents the organization to outsiders by performing the role as
spokesman. In this context, the manager transmits information to outsiders
on organization’s plans, policies, results, achievements, serves as expert on
the chosen field by giving value suggestion to the community etc. As
mentioned earlier, he holds board meeting periodically and gives
information to the media.
Decisional Roles
This refers to those types of managerial roles that revolve around making
decision. There are four types of decisional roles.
a. Entrepreneur
As entrepreneur, manager initiates and oversees new projects that will
improve their organization’s performance. He thoroughly analyses the
strengths of the organization and the opportunities available in the
environment and takes initiative to implement improvement projects to
bring about worthwhile changes within the organization and continuously
supervise designing new developmental projects. Some of the typical
activities include organizing strategy and review sessions to develop new
programs, instrumental in venturing novel projects etc.
b. Disturbance Handler
As disturbance handler, managers take corrective action in response to
unforeseen problems within as well as outside the organization. Whenever
any conflicts occur among the subordinates regarding the sharing of
resources, allocation of funds etc., and the manager intervene appropriately
and resolve those issues. He is responsible for corrective action when
organization faces important, unexpected disturbances.
c. Resources Allocator
Manager is responsible for the allocation of organizational resources –
physical, human, monetary resources of all kind and in effect, the making or
approval of all significant organizational decision. In order to perform this
activity, he will be schedule meetings, requesting authorization, and

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performing any activity that involves budgeting and the programming of
subordinate’s work.
d. Negotiator
Manager also performs as negotiators when they discuss and bargain with
other groups to gain advantage for their own units. Manager will negotiate
with business partners in case the organization is seeking alliances to
venture projects or extend their operation in new marketing.

Management Skills
Managers need certain skills in order to perform the duties and activities
associated with various functions. Katz found that managers need three
essential skills or competencies. They are technical sills, interpersonal skills
and conceptual skills.
i) Technical skills
This refers to acquisition of knowledge and proficiency in a certain
specialized field. For example, mechanics work with tools, and their
supervisors should have the ability to teach them how to use these tools.
Similarly, accountants apply specific techniques in doing their job. First
line manager, as well as middle level managers, is required to acquire
mastery over the technical aspects of the organizational work operations.
Technical skills include knowledge of and proficiency in certain specialized
fields, such as engineering, computers, finance, manufacturing etc. Kanz
proposed that technical skills become less important as manager moves into
higher level of management, but even top managers need some proficiency
in the organization’s specialty
ii) Interpersonal Skills
It is ability to work with people; it is cooperative effort; it is team work; it is
the creation of an environment in which people feel secure and free to
express their opinions Human or interpersonal skills represent the ability to
work well with and understand others to build cooperative effort within a
team to motivate and to manage conflict. These skills are important for

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manages at all levels. Managers need to be aware of their own attitudes,
assumption and beliefs as well as being sensitive to their subordinate’s
perceptions needs, and motivations. It is important to note that these skills
are called as soft skills and it is proved that the organizations nurturing
those soft skills within the organization are so successful in their business
operations. Some of the important soft skills include communicating,
motivating, and leading, delegating and negotiating skills. Manager with
good interpersonal skills is to get the best out of their people. They know
how to communicate, motivate, lead and inspire enthusiasms and trust.
iii) Conceptual Skills
It is the ability to see the ‘big picture’ to recognize significant elements in a
situation to understand the relationships among the elements. Managers
must also have the ability to conceptualize and to think about abstract
situations. They must be able to see the organization as whole with holistic
approach and able to see the big picture of the organization. The manager
must understand the relationships among various subunits and to visualize
how organizations fit into is broader environment. These abilities are
essential to effective decision making, and all managers must involve in
making decisions. Conceptual skills are needed by all managers at all levels.
Katz proposed that these skills become more important in top management
positions.

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 UNIT TWO
FUNCTIONS OF MANAGEMENT
Introduction
Management has been described as a social process involving responsibility
for economical and effective planning & regulation of operation of an
enterprise in the fulfillment of given purposes. It is a dynamic process
consisting of various elements and activities. These activities are different
from operative functions like marketing, finance, purchase etc. Rather these
activities are common to each and every manger irrespective of his level or
status.
Different experts have classified functions of management. According to
George & Jerry, “There are four fundamental functions of management i.e.,
planning, organizing, actuating and controlling”.
According to Henry Fayol, “To manage is to forecast and plan, to organize,
to command, & to control”. Whereas Luther Gullick has given a keyword
’POSDCORB’ were
 P stands for Planning,
 for Organizing,
 S for Staffing,
 D for Directing,
 Co for Co-ordination,
 R for reporting and
 B for Budgeting.
But the most widely accepted are functions of management given by
KOONTZ and O’DONNEL i.e.

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  Planning,
 Organizing,
 Staffing,
 Directing and
 Controlling.

Planning
It is the basic function of management. It deals with chalking out a future
course of action & deciding in advance the most appropriate course of
actions for achievement of pre-determined goals.
According to Koontz O’Donnell - "Planning is an intellectual process, the
conscious determination of courses of action, the basing of decisions on
purpose, acts and considered estimates".
According to KOONTZ, “Planning is deciding in advance - what to do, when
to do & how to do. It bridges the gap from where we are & where we want
to be”. A plan is a future course of actions.
According to Urwick, “Planning is a mental predisposition to do things in
orderly way, to think before acting and to act in the light of facts rather
than guesses”.
Thus, planning is a systematic thinking about ways & means for
accomplishment of pre-determined goals. Planning is necessary to ensure
proper utilization of human and non-human resources.
Steps in Planning Function
Planning function of management involves following steps: -
i) Establishment of objectives
 Setting of goals and objectives to be achieved
 Stated in a clear, precise and unambiguous language.
 Stated in quantitative terms.

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  Should be practical, acceptable, workable and achievable.
ii) Establishment of Planning Premises
 Planning premises may be internal or external. Internal includes
capital investment policy, management labour relations, philosophy of
management, etc. Whereas external includes socio-economic, political
and economic changes.
 Internal premises are controllable whereas external are non-
controllable.
iii) Choice of alternative course of action
 A number of alternative course of actions have to be considered.
 Evaluated each alternative in the light of resources available
 Choose the best alternative.

iv) Securing Co-operation

After the plans have been determined, it is necessary rather advisable to
take subordinates or those who have to implement these plans into
confidence. This motivates them, valuable suggestions can come and
employees will be more interested in the execution of these plans.
v) Follow up/Appraisal of plans
After the selected plan is implemented, it is important to appraise its
effectiveness and correct deviations or modify the plan as required.
Planning is basically a decision-making function which involves creative
thinking and imagination that ultimately leads to innovation of methods and
operations for growth and prosperity of the enterprise
Characteristics of Planning
1. Planning is looking ahead.

2. Planning is goal-oriented.

3. Planning is an intellectual process.

4. Planning involves choice & decision making.

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 5. Planning is the primary function of management / Primacy of
Planning.
6. Planning is a Continuous Process.
7. Planning is all Pervasive.
8. Planning is designed for efficiency.
9. Planning is Flexible

Types of Planning
Based on the length of the planning horizon, planning may be classified
as Strategic Planning, Tactical Planning and Operational Planning.
i) Strategic Planning:
These plans are organization-wide, establish overall objectives, and
position an organization in long term of its environment such as (i) Long
range issues with broader technological and competitive aspects of the
organization as well as allocations of resources (ii) long term actions to
be taken to achieve the goals between five and fifteen years. (iii)
Developed by top management in consultation with the board of
directors and middle level managers.

ii) Tactical Planning

It typically addresses intermediate issues involving periods between two
and five years which are relatively specific, concrete and more detailed
such as (i) outline the steps for particular departments to achieve the
goals (ii) generally developed by middle managers who weigh the pros
and cons of several possibilities before settling on one issue. (iii)
Important to strategic plan success.
iii) Operational Planning
These plans specify details on how overall objectives are to be achieved.
The key aspects of operational planning are (i) Focuses mainly for short-
range issues usually developed by lower-level managers in conjunction with

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middle management. (ii) Identify what must be accomplished over a short
period, mostly day-to-day operational activates such as work methods,
inventory planning etc.
Advantages of Planning
1. Planning facilitates management by objectives
2. Planning minimizes uncertainties.
3. Planning facilitates co-ordination.

4. Planning improves employee’s moral.

5. Planning helps in achieving economies.
6. Planning facilitates controlling.
7. Planning provides competitive edge.
8. Planning encourages innovations.
Disadvantages of Planning
Internal Limitations
There are several limitations of planning. Some of them are inherit in the
process of planning like rigidity and other arise due to shortcoming of the
techniques of planning and in the planners themselves.

1. Rigidity
2. Misdirected Planning
3. Time consuming
4. Probability in planning
5. False sense of security
6. Expensive
External Limitations
1. Political Climate- Change of government from Congress to some other
political party, etc.
2. Labour Union- Strikes, lockouts, agitations.
3. Technological changes- Modern techniques and equipment’s,
computerization.

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4. Policies of competitors- E.g., Policies of Coca Cola and Pepsi.
5. Natural Calamities- Earthquakes and floods.
6. Changes in demand and prices- Change in fashion, change in tastes,
change in income level, demand falls, price falls, etc.

Organizing
Organizing in a general sense means systematic arrangement of activities.
In this sense, organizing is done by each individual. However, organizing as
a process of management essentially relates to sub-dividing and grouping of
activities.
Meaning and Process of Organizing
Organizing refers to the way in which the work of a group of people is
arranged and distributed among group members. The function of organizing
includes the determination of the activities to be performed; creation of
departments, sections and positions to perform those activities; and
establishing relationships among the various parts of an organization. The
purpose is to create a framework for the performance of the activities of an
organization in a systematic manner. It is important to note that the term
organization should not be used in the same sense as organizing.
Organizing is a function of management, while organization refers to a
group of persons who have come together to achieve some common
objectives.
The process of organizing refers to identifying and grouping of activities to
be performed, defining and delegating authority, casting responsibility and
establishing relationships to enable people to work together effectively in
accomplishing objectives.
Organizing is the function of management which follows planning. It is a
function in which the synchronization and combination of human, physical
and financial resources take place. All the three resources are important to
get results. Therefore, organizational function helps in achievement of
results which in fact is important for the functioning of a concern.

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According to Chester Barnard, “Organizing is a function by which the
concern is able to define the role positions, the jobs related and the co-
ordination between authority and responsibility. Hence, a manager always
has to organize in order to get results.
Principles of Organizing
The organizing function is carried out on the basis of guidelines given by
experts. These are known as principles of organization. These principles
have been developed by management experts from time to time. The
principles of organization developed by Lyndall Urwick are briefly stated
below.
i) Principle of objectivity
All organizations and each part of any undertaking should be the expression
of a purpose, either explicit or implied
ii) Principle of correspondence.
Formal authority and responsibility must be co-terminus and equal
iii) Principle of Responsibility
The responsibility of higher authority for the acts of its subordinates is
absolute
iv) Principle of Scalar Chain
Scalar chain is a chain of command or authority which flows from top to
bottom. With a chain of authority available, wastages of resources are
minimized, communication is affected, overlapping of work is avoided and
easy organization takes place. A scalar chain of command facilitates work
flow in an organization which helps in achievement of effective results. As
the authority flows from top to bottom, it clarifies the authority positions to
managers at all level and that facilitates effective organization.
v) Principles of Span of Control
No supervisor can supervise directly the work of more than five, or at the
most, six subordinates whose work interlocks.

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Wide span of control- It is one in which a manager can supervise and
control effectively a large group of persons at one time. The features of this
span are: -
 Less overhead cost of supervision
 Prompt response from the employees
 Better communication
 Better supervision
 Better co-ordination
 Suitable for repetitive jobs
Narrow span of control- According to this span, the work and authority is
divided amongst many subordinates and a manager doesn't supervise and
control a very big group of people under him. The manager according to a
narrow span supervises a selected number of employees at one time. The
features are: -
 Work which requires tight control and supervision, for example,
handicrafts, ivory work, etc. which requires craftsmanship, there
narrow span is more helpful.
 Co-ordination is difficult to be achieved.
 Communication gaps can come.
 Messages can be distorted.
 Specialization work can be achieved.
Factors Influencing Span of Control
 Managerial Abilities.
 Competence of Subordinates
 Nature of Work
 Delegation of Authority
 Degree of Decentralization
vi) Principle of Specialization
According to the principle, the whole work of a concern should be divided
amongst the subordinates on the basis of qualifications, abilities and skills.

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It is through division of work specialization can be achieved which results in
effective organization.
vii) Principle of Coordination
The final object of all organizations is smooth, effective coordination of
efforts
vii) Principle of Functional Definition
According to this principle, all the functions in a concern should be
completely and clearly defined to the managers and subordinates. This can
be done by clearly defining the duties, responsibilities, authority and
relationships of people towards each other

viii) Principle of unity of command

It implies one subordinate –one superior relationship. Every subordinate is
answerable and accountable to one boss at a time. This helps in avoiding
communication gaps and feedback and response is prompt.

Line, Staff and Functional Authority Relationships

We have discussed how departments, sections and levels of management
are created. We now turn our attention to authority relationships. These are
of three types:
i) Line Authority
ii) Staff Authority
iii) Functional Authority
Line Authority
Line authority is the authority of a manager over his immediate
subordinates. Line authority is not the right of managers of line
departments only. Managers of staff departments also enjoy line authority
over their subordinates. Line authority is the right of a manager to issue
orders and to see that these orders are carried out. If the orders are not
obeyed, managers have a right to take action.

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A manager gets this authority from his superior and shares it with his
subordinates. Similarly, authority flows from top to bottom in other line as
well as staff departments. This chain of authority from top to bottom is
known as Scalar Chain. Every order must pass through this scalar chain.
This scalar chain also acts as the line of accountability. Subordinates report
to their superiors about their performance through this scalar chain. The
scalar chain gives rise to a series of superior-subordinate relationships in an
organization
Staff Authority
Managers of line as well as staff departments have line authority over their
subordinates. When the work of line manager’s increases, staff officers are
appointed to help them. The job of staff is to give advice, information,
suggestion and guidance. For example, personnel manager is appointed to
help the managers in hiring and training people. He does not have the final
authority to appoint people. Final authority is that of line managers. Staff
people can only advise. Their advice can be accepted or rejected by line
managers.
Functional Authority
Functional authority is similar to line authority, but it is exercised over a
person who is not the immediate subordinate of a manager. The purchasing
manager, for example, has functional authority relating to procedures to be
used in purchasing goods for various production departments. The
purchasing manager may be given this authority to ensure that goods
purchased are of right quality and are suitable for the purpose for which
they have been purchased. Consider another example. Production is a line
activity. Security is a staff function.
Normally, production manager takes decisions relating to production. But in
the event of fire, manager of security would be given functional authority to
handle the emergency situation. He will exercise this authority till the crisis
is over. The main reason for using functional authority is to take advantage
of the special knowledge and skill of functional specialists such as

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purchasing or personnel manager. In practice, however, functional
authority is restricted to specialized persons. If too much functional
authority is used, the position of line managers becomes weak and they are
not able to perform their managerial duties properly.
Formal and Informal Organizations
Formal organization lays down authority, responsibility and work
relationships. These are not the only relationships in the organization. When
people work together, they develop certain social and informal
relationships. These social and informal relationships constitute the
informal organization.
Informal organization comes into being out of the desire of people to
associate with one another. People associate in groups to gossip, to
exchange information and views, to share difficulties and happiness.
Informal organization consists of groups of people who may work in the
same department or in different departments of the organization. These
informal groups are formed on the basis of emotional attachment and the
purpose is to satisfy those needs which cannot be satisfied by formal
organization. The informal organization keeps its members informed of all
matters affecting their job and positions in the organization.
The members of informal organization informally elect someone as their
leader and provide him the needed support. The informal leader does not
have any formal authority. His authority depends upon the combined
support of group members. Organizing becomes easy if managers are able
to identify the leaders of informal groups and gain their cooperation for the
betterment of the formal organization.

Difference between Formal and Informal Organizations

Formal Organization Informal Organization
1. It is created by the top management 1. It is not created by top
management.

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 ( It arises out of the
natural desire of the
people to associate).
2. It is created to get the job of an 2. It is formed to satisfy
those need of
organization performed in a planned members which
cannot be satisfied
and systematic manner through formal
organization

3. It is managed by officially appointed mangers 3. Members of the

informal group
select
someone as their leader to
take care of the
interest of the group
members
4. Managers of formal organization have 4. The authority of the
leader of the
formal authority informal group
depends on the combined
support of group
members
5. Formal organization is permanent and 5. Informal organization is
of temporary
stable nature. It changes
its size and membership
from time to time.

Staffing

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It is the function of manning the organization structure and keeping it
manned. Staffing has assumed greater importance in the recent years due
to advancement of technology, increase in size of business, complexity of
human behaviour etc. The main purpose of staffing is to put right man on
right job i.e., square pegs in square holes and round pegs in round holes.
According to Kootz & O’Donell, “Managerial function of staffing involves
manning the organization structure through proper and effective selection;
appraisal & development of personnel to fill the roles designed under the
structure”.
Staffing Process - Steps Involved in Staffing
1. Manpower requirements
The very first step in staffing is to plan the manpower inventory required by
a concern in order to match them with the job requirements and demands.
Therefore, it involves forecasting and determining the future manpower
needs of the concern.
2. Recruitment
Once the requirements are notified, the concern invites and solicits
applications according to the invitations made to the desirable candidates.
3. Selection
This is the screening step of staffing in which the solicited applications are
screened out and suitable candidates are appointed as per the
requirements.
4. Orientation and Placement
Once screening takes place, the appointed candidates are made familiar to
the work units and work environment through the orientation programmes.
placement takes place by putting right man on the right job.
5. Training and Development
Training is a part of incentives given to the workers in order to develop and
grow them within the concern. Training is generally given according to the
nature of activities and scope of expansion in it. Along with it, the workers
are developed by providing them extra benefits of in-depth knowledge of

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their functional areas. Development also includes giving them key and
important jobs as a test or examination in order to analyze their
performances.
6. Remuneration
It is a kind of compensation provided monetarily to the employees for their
work performances. This is given according to the nature of job- skilled or
unskilled, physical or mental, etc. Remuneration forms an important
monetary incentive for the employees.
7. Performance Evaluation
In order to keep a track or record of the behaviour, attitudes as well as
opinions of the workers towards their jobs. For this regular assessment is
done to evaluate and supervise different work units in a concern. It is
basically concerning to know the development cycle and growth patterns of
the employees in a concern.

8. Promotion and transfer

Promotion is said to be a non- monetary incentive in which the worker is
shifted from a higher job demanding bigger responsibilities as well as
shifting the workers and transferring them to different work units and
branches of the same organization.

Directing
Directing is said to be a process in which the managers instruct, guide and
oversee the performance of the workers to achieve predetermined goals.
Directing is said to be the heart of management process.
According to Human, “Directing consists of process or technique by which
instruction can be issued and operations can be carried out as originally
planned” Therefore, Directing is the function of guiding, inspiring,
overseeing and instructing people towards accomplishment of
organizational goals

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Direction is that inert-personnel aspect of management which deals directly
with influencing, guiding, supervising, motivating sub-ordinate for the
achievement of organizational goals. Direction has following elements:
 Supervision
 Motivation
 Leadership
 Communication
Characteristics of Directing
1. Pervasive Function
Directing is required at all levels of organization. Every manager provides
guidance and inspiration to his subordinates.
2. Continuous Activity
Direction is a continuous activity as it continuous throughout the life of
organization.
3. Human Factor
Directing function is related to subordinates and therefore it is related to
human factor. Since human factor is complex and behaviour is
unpredictable, direction function becomes important.

4. Creative Activity
Direction function helps in converting plans into performance. Without this
function, people become inactive and physical resources are meaningless.
5. Executive Function
Direction function is carried out by all managers and an executive at all
levels throughout the working of an enterprise, a subordinate receives
instructions from his superior only.
6. Delegate Function
Direction is supposed to be a function dealing with human beings. Human
behaviour is unpredictable by nature and conditioning the people’s
behaviour towards the goals of the enterprise is what the executive does in

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this function. Therefore, it is termed as having delicacy in it to tackle human
behaviour.
Importance of Directing
1. It Initiates Actions
Direction is the function which is the starting point of the work performance
of subordinates. It is from this function the action takes place; subordinates
understand their jobs and do according to the instructions laid. Whatever
are plans laid, can be implemented only once the actual work starts. It is
there that direction becomes beneficial.
2. It Ingrates Efforts
Through direction, the superiors are able to guide, inspire and instruct the
subordinates to work. For this, efforts of every individual towards
accomplishment of goals are required. It is through direction the efforts of
every department can be related and integrated with others. This can be
done through persuasive leadership and effective communication.
Integration of efforts brings effectiveness and stability in a concern.
3. Means of Motivation
Direction function helps in achievement of goals. A manager makes use of
the element of motivation here to improve the performances of
subordinates. This can be done by providing incentives or compensation,
whether monetary or non - monetary, which serves as a “Morale booster” to
the subordinates Motivation is also helpful for the subordinates to give the
best of their abilities which ultimately helps in growth.

4. It Provides Stability
Stability and balance in concern becomes very important for long term sun
survival in the market. This can be brought upon by the managers with the
help of four tools or elements of direction function - judicious blend of
persuasive leadership, effective communication, strict supervision and
efficient motivation. Stability is very important since that is an index of

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growth of an enterprise. Therefore, a manager can use of all the four traits
in him so that performance standards can be maintained.
5. Coping up with the Changes
It is a human behaviour that human beings show resistance to change.
Adaptability with changing environment helps in sustaining planned growth
and becoming a market leader. It is directing function which is of use to
meet with changes in environment, both internal as external. Effective
communication helps in coping up with the changes. It is the role of
manager here to communicate the nature and contents of changes very
clearly to the subordinates. This helps in clarifications, easy adaptations and
smooth running of an enterprise. For example, if a concern shifts from
handlooms to power looms, an important change in technique of production
takes place.
6. Efficient Utilization of Resources
Direction finance helps in clarifying the role of every subordinate towards
his work. The resources can be utilized properly only when less of wastages,
duplication of efforts, overlapping of performances, etc. doesn’t take place.
Through direction, the role of subordinates become clear as manager makes
use of his supervisory, the guidance, the instructions and motivation skill to
inspire the subordinates. This helps in maximum possible utilization of
resources of men, machine, materials and money which helps in reducing
costs and increasing profits.

Controlling
Controlling consists of verifying whether everything occurs in conformities
with the plans adopted, instructions issued and principles established.
Controlling ensures that there is effective and efficient utilization of
organizational resources so as to achieve the planned goals. Controlling
measures, the deviation of actual performance from the standard
performance, discovers the causes of such deviations and helps in taking
corrective actions

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According to Brech, “Controlling is a systematic exercise which is called as
a process of checking actual performance against the standards or plans
with a view to ensure adequate progress and also recording such
experience as is gained as a contribution to possible future needs.”

Steps in Controlling
1. Establishment of standards
Standards are the plans or the targets which have to be achieved in the
course of business function. They can also be called as the criterions for
judging the performance. Standards generally are classified into two-
a. Measurable or Tangible - Those standards which can be measured and
expressed are called as measurable standards. They can be in form of
cost, output, expenditure, time, profit, etc.
b. Non-measurable or intangible- There are standards which cannot be
measured monetarily
2. Measurement of Performance
The second major step in controlling is to measure the performance.
Finding out deviations becomes easy through measuring the actual
performance. Performance levels are sometimes easy to measure and
sometimes difficult. Measurement of tangible standards is easy as it can be
expressed in units, cost, money terms, etc. Quantitative measurement
becomes difficult when performance of manager has to be measured.
Performance of a manager cannot be measured in quantities. It can be
measured only by-
 Attitude of the workers,
 Their morale to work,
 The development in the attitudes regarding the physical environment,
and
 Their communication with the superiors.
3. Comparison of Actual and Standard Performance

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Comparison of actual performance with the planned targets is very
important. Deviation can be defined as the gap between actual performance
and the planned targets. The manager has to find out two things here-
extent of deviation and cause of deviation. Extent of deviation means that
the manager has to find out whether the deviation is positive or negative or
whether the actual performance is in conformity with the planned
performance.
Once the deviation is identified, a manager has to think about various cause
which has led to deviation. The causes can be-
 Erroneous planning,
 Co-ordination loosens,
 Implementation of plans is defective, and
 Supervision and communication are ineffective, etc.
4. Taking Remedial Actions
Once the causes and extent of deviations are known, the manager has to
detect those errors and take remedial measures for it. There are two
alternatives here-
 Taking corrective measures for deviations which have occurred; and
 After taking the corrective measures, if the actual performance is not
in conformity with plans, the manager can revise the targets.

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 UNIT THREE
THEORIES/APPROACHES TO MANAGEMENT
A lot of theories have been developed to underpin the concept of
management in organization. Among some of these schools of management
thought are:
 Classical or traditional approach,
 Behavioural approach,
 System approach and
 Contingency approach.
Classical /Traditional Approach
The key assumption under this approach is that people are rational and
economically oriented in their approach towards work. The approach
focuses extensively on formal organizations. It also deals with management
and organizations by emphasizing more on the organization’s purpose and
formal structure Proponents of this approach also placed greater emphasis
on planning of work, the technical requirements of the organization,
principles of management, and rational and logical behaviour.
The classical approach is made up of:
 Scientific Management.
 Administrative Management
 Bureaucratic Management
Scientific Management
It aims at improving the general manufacturing process with a view to
improving productivity. It is also concerned with formulating proper work
procedures so that materials will flow uninterrupted. It lays emphasis on

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scientific methods of doing things rather than the use of personal intuition,
experience, practice and guess work. Scientific management was based on
the work of Frederick Winslow Taylor [1856-1915]. He was described as the
Father of Scientific Management. Taylor contributed to the study of
management in the following areas:
 The need to develop scientific methods of doing things rather than
opinion and rule-of-thumb.
 Scientific selection of workers with properly defined roles and
responsibilities.
 Scientific education, training and development of the worker
 Scientific development of intimate, friendly and co-operative spirit
between management and labour.
According to Taylor, the success of the above principles required a
complete mental revolution on the part of management and labour. This
required substituting facts or scientific method for intuition, opinion and
guesswork.
Elements of Scientific Management
The techniques which Taylor regarded as its essential elements or features
may be classified as under:
 Scientific task and rate-setting, work improvement, etc.
 Planning the task.
 Vocational selection and training
 Standardization (of working conditions, material equipment etc.)
 Specialization
 Mental revolution.
Contributions/Benefits from Scientific Management
 Scientific approach to doing things leads to general improvement in
working conditions.
 Scientific improvement in working methods leads to increase in
productivity all other things being equal.

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  It enables workers to be paid by results and to take advantage of
packages.
 The scientific approach to management enables managers to adopt a
more positive role in leadership styles at the shop floor level in
particular.
 It was the basis and the foundation for advanced studies [motion
study]
 It created orderliness through a well-designed organizational
structure.
 It reduced putting square pegs in round holes since workers were
carefully selected based on their abilities to do a particular work.
 It emphasized the importance of training and development of
employees to enhance their productive efficiency.
 It provided supervisors with the necessary support to make them
more effective

Limitations/Drawbacks of the Scientific Management

 Workers resented Taylor’s position expressing anxiety that working
faster or harder will exhaust work and may lead to redundancy and
consequently lay-offs.
 The faster work rate which implied speed up was criticized since it
exerted pressure on the work force to achieve a set standard to
qualify for an incentive package.
 Scientific management had little regard for human feelings and
sentiments. The emphasis was too much on hard work and increased
productivity.
 Greater emphasis on productivity and profitability made the manager
to exploit the worker and the buyer of his products.
 The worker was made a rigid adherent to methods and procedures to
the detriment of discretion and initiative.

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  It narrowed motivation to bonus system of incentive to the neglect of
other methods of motivation such as respect for human rights.
 The approach gave managers at the workplace the exclusive right to
plan and control activities.
 The system of bargaining for conditions of work was absent since
every job was scientifically measured, timed and rated.

Administrative Management Principles/Theory

The administrative principles/theory is also regarded as classical
organization theory. Its two major purposes are;
 To develop basic principles that could guide the design creation, and
maintenance of large organizations;
 To identify the basic functions of managing organizations.
Henri Fayol [1841-1925] a French industrialist and had extensive business
experience founded the classical approach. Fayol’s concern was on the
totality of an organization. To him, management was the most neglected
aspect of business operation. Before Fayol, the general believe was that
managers are born and not made. That is to say, no one could become a
manager through formal training. However, Fayol was of the view that
management was a skill like any other, and that, it could be taught once its
underlying principles were understood.

Contributions/Benefits from the Administrative Theory

 The numerous principles that have evolved have provided blue- prints
in management.
 The works of Fayol, Follett and others have set the foundations for
present emphasis on the key components of the function/process of
management-planning, organizing, directing/leading and controlling.
 It has enhanced and promoted the skills of managers.

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  The use of principles makes room for little deviations since the
principles provide blue-print and direction. In this way, trial and error
are minimized.
Criticisms /Drawbacks to the Administrative Principles
 Dogmatic adherence to principles stifles initiative and discretionary
use of authority Principles are not applicable in all situations since we
are in a dynamic environment. They cannot be used as rule-of-thumb
 Since organizations cannot function without people, the disregard for
human factors that will apply the principles is a serious drawback to
the administrative principle.

Bureaucratic Management
This is the third arm of the classical approach. The most important
personality associated with bureaucracy is Max Weber [1864-1920]. The
concept of bureaucracy often referred to as “red tapeism” i.e., too many
rules, regulations and paperwork which often lead to inefficiency. It is
referred to as officialdom i.e., all the apparatus of central and local
government. The concern of Weber was on bureaucracy as a form of
organization with hierarchy of authority regulated by rules and regulations.
According to Weber, the above characteristics/features make bureaucratic
organizations capable of attaining the highest degree of efficiency since to
him, it is the most rational means of controlling workers or members in an
organization. He believed that bureaucracy is indispensable for the needs of
large-scale organizations.
The size [large] and complex nature of organizations make bureaucracy
inevitable in such organizations. Max Weber identified three types of
legitimate authority:

 Traditional authority- This is where acceptance of authority is based

on tradition and custom.
 Charismatic authority- The acceptance of authority is based on loyalty
to, and confidence in the personal qualities of a person in authority.

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  Rational-Legal authority –This is also based on the office or the
position a person legitimately occupies; regulated by rules and
procedures of the organization.
Contributions/benefits from Weber’s bureaucracy
 The need for fairness and uniformity of treatment of workers’
demands bureaucracy.
 Adherence to rules and procedures does not make room for
arbitrariness.
 The element of hierarchy of authority creates orderliness and respect
for higher authority.
 The elements of division of labour and specialization put the worker
on the right job/task.
Limitations/Drawbacks of Weber’s bureaucracy
 Too much emphasis on rules, procedures, record-keeping and
paperwork may lead to delay and inefficiency.
 There is the tendency of workers to place too much reliance on rules
and procedures to the detriment of initiative and discretion.
 Bureaucracy does not make room for flexibility and adaptation
 It disregards informal organization and the development of groups
with their own goals.

The Behavioural Approach

The behavioural management theory is often called the human relations
movement because it addresses the human dimension of work. Behavioural
theorists believed that a better understanding of human behaviour at work,
such as motivation, conflict, expectations, and group dynamics, improved
productivity. The theorists who contributed to this school viewed
employees as individuals, resources, and assets to be developed and worked
with — not as machines, as in the past. Several individuals and experiments
contributed to this theory.

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It was developed to take care of the human element in organizations which
was a major limitation of the classical approach. The major assumption that
underlines the behavioural approach is that people are social and self-
actualizing.

Systems Theory
This viewpoint uses systems concepts and quantitative approaches from
mathematics, statistics, engineering, and other related fields to solve
problems. Managers find optimal solutions to management problems by
using scientific analysis which is closely associated with the systems
approach to management. A system is an interrelated and interdependent
set of elements functioning as a whole. It is an open system that interacts
with its environment. It is composed of inputs from the environment
(material or human resources), transformation processes of inputs to
finished goods (technological and managerial processes), outputs of those
finished goods into the environment (products or services), and feedback
(reactions from the environment). Subsystems are systems within a broader
system. Interdependent subsystems (such as production, finance, and
human resources) work toward synergy in an attempt to accomplish an
organizational goal that could not otherwise be accomplished by a single
subsystem. Systems develop synergy.
Contribution of the System Approach
 It ended the dominance of the classical and the behavioural
approaches.
 It blended the opposing views of both the classical approach and the
behavioural approach.
 It brought to fore the important role the environments and its
elements play on business activities.
 It cautions managers to be circumspect in the decision-making
process since a decision made in one department can affect almost all
the other departments

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  It creates the awareness of sub-systems each with potentially
conflicting roles and goals which must be integrated.
 It focuses attention on inter-relationships between it and its
environment i.e., the need of the system as a whole.

Limitations/Drawbacks/Criticisms of the Systems Approach

 It is perceived that some organizations operate successfully and
achieve their corporate objectives under the closed system i.e.,
without recourse to the external environment.
 The environment and its elements sometimes have negative impact on
organization. The external environment has negative socio-cultural
practices that may adversely affect other organizations that may
relate to it.
 Breakdown of a sub-system of a system may affect all the other
systems and a general breakdown of the entire systems.
 The impact of a decision in one department on the entire organization
may cause managers to be over-circumspect. This may lead to delays
in decisions or no decisions at all.

Contingency View Approach

This view emphasizes the fit between organization processes and the
characteristics of the situation. It calls for fitting the structure of the
organization to various possible or chance events. It questions the use of
universal management practices and advocates using traditional,
behavioural, and systems viewpoints independently or in combination to
deal with various circumstances. The contingency approach assumes that
managerial behaviour is dependent on a wide variety of elements. Thus, it
provides a framework for integrating the knowledge of management
thought.

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Contributions to the Contingency Approach
 It gives rise to the notion that different problems require different
methods of approaches of solution.
 It calls for the application of different management styles in dealing
with different situations.
 It has eliminated some of the loopholes associated with the classical
approach. For example, the classical approach wanted to find only one
best way of doing things. The contingency approach does not
subscribe to this.
 It creates a synthesis and a collaborated relationship among other
approaches.

Limitations/Drawbacks/Criticisms of the Contingency Approach

 The ideal of psychic unity of mankind implies that certain principles
and perceptions are capable of universal application.
 Different management styles based on situational analysis may not
always yield the same expected results.

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 UNIT FOUR
ORGANIZATIONAL STRUCTURE
Introduction
In an organization, a number of activities are performed. These activities
are required to be coordinated. Organizational structure is designed for
division of tasks, grouping of activities and coordinating and controlling the
tasks of the organization. The detailed study of all components and
dimensions of organizational structure is required for creation of efficient
and stable structure. Well-designed organizational structure facilitates the
smooth functioning of the organization
Concept of Organization Structure
Organizational structure may be defined as the established pattern of
relationships among the components of the organization. Organizational
structure in this sense refers to the network of relationships among
individuals and positions in an organization.
Jennifer and Gareth have defined organizational structure as the formal
system of task and reporting relationships that controls, coordinates and

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motivates employees so that they cooperate and work together to achieve
an organization’s goals. In fact, organizational structure describes the
organization framework. Just as human beings have skeletons that define
their parameters, organizations have structures that define-theirs. It is like
the architectural plan of a building. Just as the architect considers various
factors like cost, space, special features needed etc. While designing a
good structure, the managers too must look into factors like benefits of
specialization, communication problems, and problems in creating authority
levels etc., before designing the organization structure.

Significance of Organizational Structure

The organizational structure contributes to the efficient functioning of
organization in the following ways.
I. Clear-cut Authority Relationships
Organizational structure allocates authority and responsibility. It specifies
who is to direct whom and who is accountable for what results. The
structure helps an organization member to know what is his role and how
does it relate to other roles.

II. Pattern of Communication

Organizational structure provides the patterns of communication and
coordination. By grouping activities and people, structure facilitates
communication between people centred on their job activities. People who
have joint problems to solve often need to share information.
III. Location of Decision Centres
Organizational structure determines the location of centres of decision
making in the organization. A departmental store, for instance may follow a
structure that leaves pricing, sales promotion and other matters largely up
to individual departments to ensure that various departmental conditions
are considered.
IV. Proper Balancing

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Organizational structure creates the proper balance and emphasizes on
coordination of group activities. Those more critical aspects for the success
of the enterprise may be given higher priority in the organization. Research
in a pharmaceutical company, for instance, might be singled out for
reporting to the general manager or the managing director of the company.
Activities of comparable importance might be given, roughly equal levels in
the structure to give them equal emphasis
V. Stimulating Creativity
Sound organizational structure stimulates creative thinking and initiative
among organizational members by providing well defined patterns of
authority. Everybody knows the area where he specializes and where his
efforts will be appreciated.
VI. Encouraging Growth
An organizational structure provides the framework within which an
enterprise function. If it is flexible, it will help in meeting challenges and
creating opportunities for growth. A sound organizational structure
facilitates growth of the enterprise by increasing its capacity to handle
increased level of activity.
VII. Making use of Technological Improvements
A sound organizational structure which is adaptable to change can make
the best possible use of latest technology. It will modify the existing pattern
of authority- responsibility relationships in the wake of technological
improvements.

Delegation of Authority
Delegation is the process that a manager follows in dividing the work
assigned to him so that he performs that part, which because of his position
he can perform effectively. Delegation is legitimate authorization to a
manager or employee to act in specified ways. It enables him to function

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independently without reference to the supervisor but within the limits set
by the supervisor and the normal framework of organizational objectives,
policies, rules and procedures. Thus, delegation involves:
a) Entrustment of work to another for performance,
b) Grant of power, right or authority to be exercised to perform the work,
c) Creation of an obligation on the part of the person accepting delegation.
Delegation of authority is one of the most important elements in the process
of organizations. Organizations are characterized by a network of activities
and roles. Delegation is the process through which the interrelationships
are created among individuals in their different roles in the organization.
Delegation is necessary because it is physically impossible for a single man
to look after the affairs of a large organization. The success of a manager
lies in his ability to multiply himself through other people. The
organizations of today are not only large but also complex in character. No
manager can claim to have all the skills and expertise to perform all the
diverse kinds of jobs. Again, large scale business activities are not confined
to one place. It may have several branches and units at several places.
Delegation becomes a necessity for running these branches.
The major benefits of delegation are:
 Delegation leads to professionalism.
 Managerial decisions may involve creativeness and innovativeness.
 The competitive environment may be created in the organization.
 The mangers may take quick decisions.
The limitations of delegation of authority are:
 The managers may resist delegating authority.
 The managers may require training for taking decisions and the costs
of training may be higher.
 Every person may not be able to take high level of decision in the
effective way.
 The administrative costs may also increase.

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Despite these limitations, delegation of authority enhances efficiency in the
organization.

Authority & Power

Power is much broader concept than authority power is the ability of
individuals or groups to informal the actions of other persons or groups.
Authority
Authority is the legal right to command actions by others and to enforce
compliance. Authority may also be defined as the degree of discretion in
organizational position conferring on persons occupying these positions the
right to use their judgment in decision making.

Power
Power is border concept then authority. Power may be defined as the ability
of individuals or groups to influence the action of other persons.
Sources of Power
Power is defined as the capacity to influence, the possession of delegated
authority or an ability to act. According to French and Raven, individuals
have five different social bases of power depending upon how they position
their relationship with others. They are reward power, coercive power,
legitimate power, referent power and expert power. The first three types of
power can be exercised because of the position in which one finds oneself in
the organization and can be referred to as position power and the last two
can be attributed more to the characteristics of the individual and referred
to as personal power.
I. Legitimate Power
It is held because the organization has given power and authority to the
position held by the leader. This stems from the belief that the superior has
the right to command the subordinate and expect that his or her orders will
be obeyed. The employees accept the rights of persons holding higher
offices to command because of the legitimate authority bestowed on the
individual by the organization.

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 II. Reward Power
It is held because the leader has the opportunity through the control of
resources, either to give or withhold things wanted by others. A leader can
use reward power well to reinforce effective behavior or badly to
manipulate the behavior of others. The greater the rewards that the leader
is perceived as having within his or her control to dispense to others, the
greater will be the individual’s ability to influence others through reward
power.
III. Coercive Power
It can be described as power which is exercised to manipulate the behavior
of another by threatening to withhold desired rewards or punish the
individual if the latter fails to comply with the wishes of the leader. In order
to avoid the negative consequences, the individual will unwillingly obey the
orders of the superior and perhaps develop a hostile attitude towards their
leader. The strong presence of unions in organizations will restrict or
weaken this power base.
IV. Referent Power
Its base is identification with a person who has desirable resources or
personal traits. If a person has admirable, charismatic, attractive, and
extraordinary characteristics, he can exercise power over others to get
things done. The followers identify with the leader and more attracted
towards his or personal charisma and they are pleased to act in ways
desired by their leader
V. Expert Power
It is held because of the leader’s knowledge, aptitude and ability. It comes
from an individual’s ability to direct another’s behavior because of special
knowledge or expertise that one person may be perceived to possess which
others need and look for. An experienced software engineer will be able to
influence his colleagues to things in a particular way because the staff

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members will look up to this software engineer as someone possess the
knowledge, experience and judgment that the staff member lacks.

UNIT FIVE
MOTIVATION
Motivation is defined as individual’s intention or willingness to put
maximum effort in his/her work to reach organizational goals and enhance
one’s ability to satisfy some individual needs. The cyclic process of
motivation starts from

Unsatisfied needs TensionDrivesSearch BehaviorSatisfied Needto

end with Reduced Tension.
There are three major elements related to motivation:
 Effort,
 Goals and
 Needs.
i. Effort
It refers to an individual’s intensity in reaching the stated goal. The
intensity varies from importance to various goals. If these efforts are
channeled in proper direction consistent with organizational goals, the
organization will maximize its profit and reach a state of excellence in their
field.
ii. Need
It refers to some internal state that makes certain outcomes appear
attractive. It is also a state of deficiency and the organism tries to restore
this deficiency to make it as equilibrium. An unsatisfied need creates
tension that stimulates drives within an individual. These drives direct the

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individual in different directions or searching in different places to find a
particular goal, If the goal is attained the organism will satisfy the need and
reduce the tension.
iii. Goals
Human behavior is always goal directed. Once the desired goal is satisfied,
individuals will always restate the goals or look for other goals to get
satisfied. Goals will always be changing from one level to another. In order
to motivate an individual, managers must ensure to set a goal in such a way
which stimulates him or her to put more effort in their work. An effective
way to set goals is to follow the SMART approach, which states that goals
should meet five characteristics:
 Specific
 Measurable
 Achievable
 Relevant
 Timely or Time Limited
Theories of Motivation
1. Maslow’s Hierarchy of Needs
Abraham Maslow formulated one of the most popular theories of human
motivation. Maslow’s theory is based on the following propositions.
i. The needs are arranged in a hierarchy of importance, ranging from
the lowest nee to highest need level
ii. All needs are never fully satisfied
iii. Once a need is fairly well satisfied, it no longer motivates behavior
iv. The needs are interdependent and overlapping
Maslow’s theory of motivation explains five levels of needs:
I. Physiological Needs
The need for sunlight, sex, food, water and others, which are basic to
human survival, are called physiological needs. At work level, this need can
be met through by providing good working conditions, attractive wage or
salary, subsidized housing, free catering etc.

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 II. Safety Needs
The safety needs include the need for freedom from threat caused by the
environment, animals and people. It also includes the need for shelter,
security and peace. At work level, this need can be met by providing private
health insurance cover, attractive pension provisions, safe working
conditions etc.
III. Love and Belonging Needs
These needs cover the need of relationships, affection, giving and receiving
love and sense of belonging. The manager can provide the following
facilities to take care of these needs: company sports and social clubs, office
parties, barbeques, outings, permission for informal activities, and
encouraging open communication
IV. Self Esteem Needs
It is also known as ego needs, which fulfill the need for strength,
achievement, recognition, appreciation, respect and prestige. The managers
can provide regular positive feedback, prestigious job titles, photographs in
company newsletter, promotions etc.
V. Self-actualization Needs
These are the need for full development of one’s potential. Challenging job
assignments, discretion over work activities, promotion opportunities and
encouraging creativity can fulfill these needs.
In terms of motivation, Maslow argued that each level in the hierarchy must
be substantially satisfied before the next level is activated, and that once a
need is fully satisfied, it may not motivate people. The next level in the
hierarchy will be dominant only after the fulfillment satisfaction level. This
theory has a lot of implication for managers. As a manager if you want to
motivate an employee, first try to understand what level that person is on in
the hierarchy and focus on satisfying those needs at or just above the level.

2. Herzberg Two-Factor Theory of Motivation

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Herzberg’s two-factor theory of motivation suggests that there are two sets
of factors which either led to job satisfaction or dissatisfaction. They are
Motivating factors and Hygiene factors.
Herzberg resulted in two specific conclusions:
1. There is a set of extrinsic job conditions that, when not present, result in
dissatisfaction among employees. If these conditions are present, this does
not necessarily motivate employees. These conditions are the dissatisfiers
or hygiene factors because they are needed to maintain at least a level of no
dissatisfaction.
These factors are related to the context of the job and are called
dissatisfiers.
These include:
 Job security
 Salary
 Working condition
 Status
 Company policies
 Supervision
 Interpersonal supervision
 Fringe benefits

2. A set of intrinsic job conditions exist that help to build levels of

motivation, which can result in good job performance. If these conditions
are not present, they do not result in dissatisfaction. These set of aspects
are related to the content of the job and are called satisfiers. These include:
a. Achievement
b. Recognition
c. Work itself
d. Responsibility
e. Advancement
f. Personal growth and development

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Motivating Factors
The presence of motivating factors always ensures job satisfaction and
happiness among the employees. They are: achievement, recognition,
responsibility, advancement, growth and the work itself. These motivating
factors are relating to the work content factors.
Hygiene Factors
The other set, which leads to dissatisfaction, is the hygiene factors such as
salary, company policy, supervision, status, security and working
conditions. These hygiene factors are relating to the work contextual
factors. Herzberg argued that improvement in the hygiene factors would
only minimize dissatisfaction but not increase satisfaction and motivation.
Implications for Managers
In order to motivate employees, the managers must ensure to provide the
hygiene factors and then follow the motivating factors. Hertzberg’s
motivation-hygiene theory proposes that intrinsic factors are related to job
satisfaction and motivation, whereas extrinsic factors are associated with
job dissatisfaction.
According to Herzberg, the factors that led to job satisfaction were separate
and distinct from those that led to job dissatisfaction. Therefore, manages
who sought to eliminate factors that created job dissatisfaction could bring
about workplace harmony but not necessarily motivation. Because they do
not motivate employees, the extrinsic factors that create job dissatisfaction
were called hygiene factors. When these factors are adequate, people will
not be dissatisfied; but at the same time, they may not be fully satisfied.
They will be in neutral state. If we want to motivate people on their jobs, it
is suggested to give much importance on those job content factors such as
opportunities for personal growth, recognition, responsibility, and
achievement. These are the characteristics that people find intrinsically
rewarding.
3. McGregor’s Theory X and Theory Y

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McGregor’s theory is based on how a manager feels about human nature. In
general, people tend to have either positive or negative assumptions about
human nature. Based on these assumptions, McGregor proposed two sets of
theories as Theory X (negative assumptions) and Theory Y (positive
assumptions).
Theory X
Theory X represents the traditional approach to managing and is
characterized by the following basic assumption about human beings.
i. The average human being has an inherent dislike of work and will
avoid it if he can.
ii. Because of human characteristic of dislike of work, most people must
be coerced, controlled, directed, and threatened with punishment to
get them to put forth adequate effort towards the achievement of
organizational objectives.
iii. The average human being prefers to be directed, wishes to avoid
responsibility, has relatively little ambition, and wants security above
all.
iv. Once the team leaders tend to have the above-mentioned negative
assumptions about
v. their members, consequently, they will adopt the following strategies
to influence them.
vi. Control measures or strict supervision are properly exercised to get
results from them
vii. Such control can be achieved by the appropriate use of rewards and
punishment.
Implications of X Theory
The implication for a manger working in an organization with these
premises is that the group will be strictly controlled and supervised.
Decisions will be made largely by the manager and communicated in writing
or verbally in a formal situation. Members of the group will rarely be

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involved in determining their own tasks. Theory X usually operates in
traditional, highly centralized organizations.

Theory Y
Theory Y is more people oriented. It refers to Maslow’s hierarchy of needs,
particularly the higher-order needs and the motivation to fill these needs at
work. It is based on the following assumptions.
i. The expenditure of physical and mental effort is as natural as play or
rest.
ii. External control and threat of punishment are not the only means for
bringing about effort toward organizational objectives. People will
exercise self-direction and self-control in the services of objectives to
which they are committed.
iii. Commitment to objectives is a function of rewards associated with
their achievement.
iv. The average human beings learn, under proper condition, not only to
accept but to seek responsibility.
v. The capacity to exercise a relatively high degree of imagination,
ingenuity, and creativity in the solution of organizational problems is
widely, not narrowly, distributed in the population.
vi. Under the conditions of modern industrial life, the intellectual
potentialities of the average human being are only partially utilized.
Implications of Y Theory
Leaders operating under these assumptions will be more likely to consult
the group encourage members to contribute to decision making and work
without strict supervision. Communication between the group and the
leader will be two of the members of the group. The acceptance of the
Theory Y approach, with its tenets of participation and concern for worker
morale, encouraged managers to begin practicing such activities as
 Delegating authority for many decisions,

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  Enlarging and enriching jobs of workers by making them less
repetitive,
 Increasing the variety of activities and responsibilities and
 Improving the free flow of communication within the organization.

UNIT SIX
LEADERSHIP
Leadership has different meanings by different authors. Leadership is
influence. Leadership is the art or process of influencing people so that they
will contribute willingly. Leadership is a great quality and it can create and
convert anything. There are many definitions of leadership. Some of the
definitions of leadership are reproduced below: -
According to Alford and Beatty Leadership "is the ability to secure
desirable actions from a group of followers voluntarily, without the use of
coercion".
In the words of R.T. Livingston - Leadership is "the ability to awaken in
others the desire to follow a common objective".
According to Peter Ducker, Leadership "is not making friends and
influencing people i.e., salesmanship. Leadership is the lifting of man's
vision to higher sights, the raising of man's performance to higher
standards, the building of man's personality beyond its normal limitations".
"Leadership is the process by which an executive imaginatively directs
guides and influences the work of others in choosing and attaining specified
goals by mediating between the individuals and the organization in such a
manner that both will obtain maximum satisfaction". (Theo Haimann)
There are three processes by which people can be influenced-
 Compliance,

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  Identification and
 Internalization
I. Compliance
It occurs when people are influenced to do something against their will
because they have been coerced into doing it otherwise, they may likely to
face severe consequences which cost them heavily. In most authoritarian
organizations, managers will influence subordinates through the process of
coercion which, often elicits reluctant and half-hearted compliance.
II. Identification
It occurs when people do things that the leader wants them to do because
they like him or her and what to put forth the effort to accomplish the
things that the leader would like them to do. Subordinates simply follow
their managers just because he is so attractive or likable or who acts as a
role model. Such leaders tend to have more charisma and possess some
qualities that are more valued and admired by others in the organization.
III. Internalization
It occurs when followers are convinced that acting in a particular way as
directed by the leader is in their own interests. This is the highest level,
wherein the amount of influence exerted by the managers is very limited.
The employees will realize the type of action what they have been asked to
do will be providing more benefits in future. Having internalized the values
or opinions of the leader because of their high trust in the individual’s
judgment and expertise, the employees willingly do whatever needs to be
done.
Theories of Leadership
There are three major approaches to leadership:
a) Trait theories,
b) Behavioral theories,
c) Situational theories.
Trait Theories

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Trait theories highlight that there exists a finite set of individual traits or
characteristics that distinguish successful from unsuccessful leaders. There
are six traits associated with effective leadership which includes
 Drive,
 The desire to lead,
 Honesty and integrity,
 Self-confidence,
 Intelligence and
 Job-relevant knowledge.
I. Drive:
Leaders exhibit a high effort level. They have a relatively high desire for
achievement, they are ambitious, they have a lot of energy, they are
tirelessly persistent in their activities and they show initiative.
II. Desire to lead:
Leaders have a strong desire to influence and lead others. They
demonstrate the willingness to take responsibility

III. Honesty and Integrity

Leaders build trusting relationship between themselves and followers by
being truthful and non-deceitful and by showing high consistency between
word and deed.
IV. Self-confidence
Followers look to leaders for an absence of self-doubt. Leaders therefore
need to show self confidence in order to convince followers of the rightness
of goals and decisions.
V. Intelligence
Leaders need to be intelligent enough to gather synthesize and interpret
large amounts of information; and to be able to create vision, solve
problems and make correct decision.
VI. Job-relevant knowledge

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Effective leaders have a high degree of knowledge about the company, the
industry and technical matters. In-depth knowledge allows leaders to make
well-informed decision and to understand the implications of those
decisions.

Behavioral Theories
Behavioral theories highlight that the most important aspect of leadership is
not the traits of the leader, but what the leader does in various situations.
Successful leaders are distinguished form unsuccessful leaders by their
particular style of leadership. The foundation for the style of leadership
approach was the belief that effective leaders utilized a particular style to
lead individuals and groups to achieving certain goals, resulting in high
productivity and morale. Unlike trait theories, the behavioral approach
focused on leader effectiveness, not the emergence of an individual as a
leader. There are two prominent styles of leadership such as task
orientation, and employee orientation.
I. Task orientation
This is the emphasis the leader place on getting the job done by such
actions as assigning and organizing the work, making decision, and
evaluating performance.
II. Employee orientation
This is the openness and friendless exhibited by the leader and his concern
for the needs of subordinates.

Situational Theories
Situational theories outline that the effectiveness of the leader is not only
determined by his or her style of behavior, but also by the situation
surrounding the leadership environment. Situational approaches to
leadership take the position that there is no “one best way to lead in all the

52 | P a g e
situations. Effective leadership style will vary from situations to situation
depending on several factors such as:
 The personality predisposition of the leaders,
 The characteristics of the followers,
 The nature of task being done and
 Other situational factors.
Transformation Leadership
It is exercised when the leader intellectually stimulates the subordinates,
excites, arouses and inspires them to perform far beyond what they would
have thought themselves capable of. By providing a new vision, the
transformational leader transforms the followers into people who self-
actualize.
Charismatic leadership is central to transformational leaderships. These
kinds of leaders guide or motivate their followers in the direction of
established goals by clarifying role and task requirements. There exists a
kind of understanding between the leader and the follower that if the goals
are achieved, the follower’s own interests and desires will be rewarded.
This type of leader also pays attention to the concerns and developmental
needs of individual followers: they change follower’s awareness of issues by
helping them to look at old problems in new ways; and they are able to
excite, arouse and inspire followers to put extra effort in order to achieve
group goals. In essence, most transformational leaders are also charismatic
leaders because they are seen as heroic and as having a profound and
extraordinary effect on their followers.
Typical characteristics of Transformational Leader
I. Charisma
Provides vision, and sense of mission, instills pride, gains respect and trust
II. Inspiration
Communicates high expectations, use symbols to focus efforts, expresses
important purposes in simple way

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III. Intellectual stimulation
Promotes intelligence, rationality and careful problem solving
IV. Individual Consideration
Gives personal attention, treats each employee individually, coaches,
advises.

Typical Characteristics of Transactional leaders

I. Contingent Reward
Contracts exchange of rewards for effort, promises rewards for good
performance, recognizes accomplishments
II. Management by Exception
Watches and searches for deviations, form rules and standards, take
corrective action
III. Laisses-Faire
Abdicates responsibilities, avoided making directions.

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