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BIT 2309 PPM - Notes

Principles and Practices of Management (Jomo Kenyatta University of Agriculture and

Technology)

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JOMO KENYATTA UNIVERSITY

OF
AGRICULTURE & TECHNOLOGY

SCHOOL OF OPEN, DISTANCE &

eLEARNING
IN COLLABORATION WITH
SCHOOL OF HUMAN RESOURCE
MANAGEMENT

DEPARTMENT OF COMMERCE

HBC 2105 PRINCIPlES OF MANAGEMENT

P.O. Box 62000, 00200

Nairobi, Kenya

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HBC 2105 PRINCIPLES OF MANAGEMENT

Course description
Introduction to Management: Definition of management; management levels; man-
agerial skills and roles; Evolution of management – The Practice and study of Man-
agement, The Universal Process Approach, The Operational Approach, The Be-
havioral approach, The Systems Approach, The Contingency Approach ; Business
environment: internal; task and external. Functions of Management - Planning;
Organizing; Coordinating, Directing, Controlling, Staffing and Motivating. Current
challenges and development in management: The 21st Century Manager.

Course aims
This course seeks to expose the students to basic management principles and to
appreciate the role of managers in enhancing organizational success.

Learning outcomes
By the end of this course the student should be able to:

1. To discuss management skills and roles.

2. To describe the historical development of management.

3. To explain the key functions of management.

4. To apply basic principles of Management.

Instruction methodology
It will be done through:

1. Lecturers

2. Buzz (Group discussions)

3. Case studies

4. Presentations

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Course Text Books

These two will be used

• Kootnt 2 Harold and Wehirich Hein 2, (2009) Management 12th edition, Mc-
Graw Hill

• Hill Charles W and Mashane Steven, (2006) Principles of Management, Mc-

Graw Hill.

Course Journals
• Journal of Organizational Behavior

• Journal of business management

• Journal of Social Psychology

Assessment information
The module will be assessed as follows;

• CATs/Assignment/Presentation 30 %

• Final Examination 70 %

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Contents

1 Introduction to Management vii

1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii
• How Managers learn . . . . . . . . . . . . . . . . xx

2 The Evolution of Management xxiii

2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiv
2.2 A Historical Overview . . . . . . . . . . . . . . . . . . . . . . . . xxiv
2.3 Approaches to Management . . . . . . . . . . . . . . . . . . . . . . xxv
• Fayol’s Principles of Management . . . . . . . . . xxvi
• Hawthorn Studies . . . . . . . . . . . . . . . . . xxxii

3 Managing the Business Environment xxxviii

3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxxix
3.2 The internal environment . . . . . . . . . . . . . . . . . . . . . . . xxxix
3.3 The external environment . . . . . . . . . . . . . . . . . . . . . . . xlii

4 Functions of Management li
4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . li
4.2 Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . li
4.3 Importance of Planning . . . . . . . . . . . . . . . . . . . . . . . . lii
4.4 Types of Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . liii
4.4.1 Strategic Plans . . . . . . . . . . . . . . . . . . . . . . . . liii
4.4.2 Tactical Plans . . . . . . . . . . . . . . . . . . . . . . . . . liii
4.4.3 Operational Plans . . . . . . . . . . . . . . . . . . . . . . . liii
4.5 Time frame for planning . . . . . . . . . . . . . . . . . . . . . . . liv
4.6 MAKING PLANNING EFFECTIVE . . . . . . . . . . . . . . . . . lv
4.6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . lv

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CONTENTS CONTENTS

4.6.2 Steps in the planning process . . . . . . . . . . . . . . . . . lvi

4.6.3 Barriers to Planning . . . . . . . . . . . . . . . . . . . . . . lvii
4.6.4 AVOIDING THE BARRIERS . . . . . . . . . . . . . . . . lvii
• Why people fail in planning . . . . . . . . . . . . lviii
4.6.5 PRINCIPLES OF PLANNING . . . . . . . . . . . . . . . . lix
4.7 GOALS AND OBJECTIVES . . . . . . . . . . . . . . . . . . . . . lx
4.7.1 Definition and Importance of Goals . . . . . . . . . . . . . lx
4.7.2 Steps in goal setting . . . . . . . . . . . . . . . . . . . . . . lxi
4.7.3 Barriers to effective goal setting and how to overcome them lxii

5 Organising lxv
5.1 Importance of Organizing Function . . . . . . . . . . . . . . . . . . lxviii
5.2 The Process of Organization . . . . . . . . . . . . . . . . . . . . . lxix
5.2.1 The Key Organizing Components . . . . . . . . . . . . . . lxix
• Designing jobs . . . . . . . . . . . . . . . . . . . lxx
• Grouping jobs (departmentalization) . . . . . . . . lxx
• Authority and Responsibility . . . . . . . . . . . . lxxv
• Span of Control . . . . . . . . . . . . . . . . . . lxxxii
• Line and Staff Relations . . . . . . . . . . . . . . lxxxiv
• Co-ordination . . . . . . . . . . . . . . . . . . . . lxxxv
5.3 Principles of Organizing . . . . . . . . . . . . . . . . . . . . . . . lxxxv

6 Controlling xci
6.1 Organizational Control . . . . . . . . . . . . . . . . . . . . . . . . xci
6.1.1 Characteristics of control . . . . . . . . . . . . . . . . . . . xci
6.1.2 Control Systems . . . . . . . . . . . . . . . . . . . . . . . xcii
6.2 The Steps Elaborated . . . . . . . . . . . . . . . . . . . . . . . . . xciv
6.3 Taking Corrective Action . . . . . . . . . . . . . . . . . . . . . . . xcvii

7 Co-ordinating cii
7.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . cii
7.2 Element of Managerial Functions . . . . . . . . . . . . . . . . . . . cii
7.2.1 Features of Co-Ordination . . . . . . . . . . . . . . . . . . cii
7.2.2 Benefits of Co-ordination To An Organization . . . . . . . . ciii

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CONTENTS CONTENTS

8 Directing cx
8.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . cx
8.1.1 Characteristics of Directing . . . . . . . . . . . . . . . . . cx
8.1.2 Importance of Directing . . . . . . . . . . . . . . . . . . . cxi
8.2 Elements of Direction . . . . . . . . . . . . . . . . . . . . . . . . cxi
8.2.1 Supervision . . . . . . . . . . . . . . . . . . . . . . . . . . cxi
8.2.2 Motivation . . . . . . . . . . . . . . . . . . . . . . . . . . cxii
8.2.3 Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . cxv
8.2.4 Communication . . . . . . . . . . . . . . . . . . . . . . . cxxi
8.2.5 Managing Work Groups . . . . . . . . . . . . . . . . . . . cxxvii
8.2.6 Conformity . . . . . . . . . . . . . . . . . . . . . . . . . . cxxviii
8.2.7 Conflict Management . . . . . . . . . . . . . . . . . . . . cxxxv
8.2.8 Nature of Organizational Conflict . . . . . . . . . . . . . . cxxxvi
8.2.9 Managing Conflict . . . . . . . . . . . . . . . . . . . . . . cxxxvii
8.2.10 Strategies of Maintaining Organisational Conflicts . . . . . cxxxix
8.2.11 Corporate Culture . . . . . . . . . . . . . . . . . . . . . . cxli

9 Staffing cxliv
9.0.12 Characteristics Of Staffing Process . . . . . . . . . . . . . . cxliv
9.1 Personnel Management . . . . . . . . . . . . . . . . . . . . . . . . cxlv
9.1.1 The Process of Personnel Management . . . . . . . . . . . cxlvii
• Recruitment . . . . . . . . . . . . . . . . . . . . cxlviii
• Selection . . . . . . . . . . . . . . . . . . . . . . cl
• Orientation . . . . . . . . . . . . . . . . . . . . . cli
• Training And Development . . . . . . . . . . . . clii

10 Emerging trends in management clx

10.1 Dynamics of Management . . . . . . . . . . . . . . . . . . . . . . clx
Solutions to Exercises . . . . . . . . . . . . . . . . . . . . . . . . . clxiii

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HBC 2105 PRINCIPLES OF MANAGEMENT

LESSON 1
Introduction to Management

Learning outcomes
By the end of this lesson you should be able to:

1. define tems commonly used in management

2. explain the basic concepts in management

3. identify the major components of management

4. describe the various levels of management

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1.1. Introduction
Hallo. Ever wondered what management is, and what managers really do? To
find out, we welcome you to this course where we begin to explore the world of
management and managers. We provide basic principles and concepts that will
give you a solid foundation to build a deeper understanding of these concepts. Let
us begin by defining a few terms and concepts:

1. Management – Management is the process of working with and through

others to achieve organizational objectives in a changing environment i.e.
effective and efficient use of limited resources. The resources in this case are
inclusive of all human input, financial supply, raw materials and capital items.
In other words, it is the proper and effective use of people and resources to
accomplish organizational objectives. By objectives we mean goals set by
the organization that are simple (clear), measurable , achievable/attainable ,
realisable/realistic and time-bound (SMART). There are five components in
the above definition that we need to take note of:

• Working and through others: management is a social process thus

brings individuals together. According to the research done, managers
who do not work with others hamper their careers.
• Achieving organizational objectives: an objective is a target to strive
for . Note that, this always requires collective action ;thus without it an
organization will be aimless and wasteful.
• Balancing effectiveness and efficiency: the relationship between these
two terms is important and presents a manager with a never ending chal-
lenge. Effectiveness entails promptly achieving a stated objective while
efficiency enters the picture when the resources acquired to achieve an
objective are weighed against what was actually accomplished.
• Making the most of limited resources: Managers are resourceful per-
sons who get the best out of the little that is allocated to them. The
resources available and the population in need of them are not balanced
.Therefore there is need to maximize on these limited resources. In this
sense, economics and management are closely related.

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• Coping with a changing environment:Flexibility, adaptability and volatil-

ity are defining features of a successful manager; successful managers
anticipate and adjust to changing circumstances as they possess these
characteristics.

2. Team – A team is a group of individuals with complementary skills who

work together to achieve a common goal. During and after the activities
of the group, all achievements and shortcomings are considered a collective
responsibility of the whole unit and not that of a single individual.

3. Manager – The person whose role is to co-ordinate people and ensure effi-
cient use of resources in achieving a goal; the responsibilities of a manager
can differ from organization to organization, but they are typically catego-
rized into three levels of management.

4. Senior Managers – They are responsible for the administrative and func-
tional direction of a group of employees. They generally have more discretion
and greater financial authority than other managers. Their main task is often
policy formulation for the whole organization and coming up with strategies
to implement those strategies. They are also charged to act as overseers over
the general managers to whom they may delegate duties as well..

5. General Managers – Supervises more than one function and often super-
vises all the functions of a company by supervising the managers of those
functions. The general manager has wide latitude and a lot of discretionary
authority. He or she has considerable financial responsibility and usually
has P&L responsibility for the company or a large segment of it. The gen-
eral manager generally is also the hiring authority for the company, although
he/she may also delegate that authority to subordinate managers.

Realities in Mangement:

• Change : The concept of change is a reality in management; challenging

goals motivate people to strive for improvement. Also to remain competitive
in a dynamic market setup, progress is a necessity.

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• Speed ,teamwork and flexibility: These three are necessary for efficient
service delivery in any organization. As a manager, one should embrace these
three as pillars of their day-to-day operation.

• Closeness to the customer: Customer satisfaction is key to building loyalty

which is essential for business survival. As such it is important for every
manager to enjoy rapport with their customers despite their seniority.

• Continuous improvement and lifelong learning : Knowledge of business

is ever advancing and with innovation, technology has become the new face
of [Link] continuous update on new developments, the personnel
and ultimately the business will be unable to cope with the advances in the
practice of business. For there to be any real progress or at least maintenance
of status, continuous improvement and lifelong learning is essential for all
managers.

Functions of management
As we study these functions, the big question at the back of our minds that we are
attempting to answer is: What do managers really do? There are eight functions:

1. Planning: Managers define the courses of action - they come up with strate-
gies that outline the ’WHATs’, ’WHOs’, ’HOWs’, ’WHENs’,’WHEREs’ etc
(strategic planning) of the respective goals and objectives laid out in the firm.
This entails Decision making: The process of making of choices from among
several possible alternative courses of action that should been developed by
the manger. This basically involves short-listing every available alternative
or option that the firm has, evaluating their pros and cons of each and their
impact on the firm should they be adopted and finally settling on a most ap-
propriate alternative. Planning ensures the activities/operations of the organi-
zation stay on course so that the organization does not deviate from its goals
and objectives.

2. Organizing :Defined as the process of identifying the activities (the whats),

grouping similar or related activities together, and assigning qualified indi-
viduals to carry them out, this function requires managers to make structural
considerations that define hierarchy, chain of command and flow of work in

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the firm. As such staff are classified into departments each headed by a man-
ager and the respective departmental managers report to a superior authority
such as a managing director. The role of organizing ensures specialisation in
function which increases efficiency and accountability in the organization.

3. Staffing This is the process of acquiring and managing human resource.

Managers are charged with the responsibility to recruit (hire or employ),
place, train and develop people (improve skills through workshops, seminars,
conferences and refresher courses). It involves Motivating - offering rewards
to the employees for their faithful pursuit of collective organizational objec-
tives and looking into their social welfare as a means to show them that the
organization regards them as assets. In this way, the employees are inspired
to work harder for the good of their firm.

4. Coordinating: All the aqctivities and people in the organization need to be

kept in harmony and resonance. This is usually achieved through commu-
nication. It is the duty of managers to pass on technical knowledge, rules
and instructions to their subordinates and return feedback of the information
passed therein to their superiors should there be any. Managers should also
be able to respond to complaints, criticism, allegations, complements, sug-
gestions, etc. tabled to them by superior and inferior colleagues at work.

5. Directing/Leading: This leadership function of managers are requires them

to act as role models to their employees. They should offer exemplary guid-
ance through their actions in the workplace - basic things such as following
protocol, punctuality in submission of results or even reporting to the work-
place, intolerance for misconduct or lack of ethics are traits they should por-
tray to the letter for their subordinates to emulate. They must weld enough in-
fluence on the efforts of all the employs and direct the efforts towards achiev-
ing organizational objectives as opposed to individual objectives.

6. Controlling: One other important function is keeping things on track by com-

paring desired results with the actual results and taking corrective measures.
Good objectives are measurable and time bound . In this sense, it is expected
that managers should be able to compare and contrast the actual results at
a particular time against desired or predicted results for that particular time.

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this ensures that discrepancies are noted, over-achievement appreciated and

corrective measures, if necessary , are taken in good time to realign the pro-
ductivity levels to the desired standard.

Each of these functions of Management will be discussed in details in later lessons.

Levels of Management
The term levels of management refer to a line of differentiation between various
managerial positions in an organization, the levels in management increases when
the size of the business and work force increases and vice versa, they determine the
chain of command, the amount of authority & status enjoyed by any managerial
position. It is important to note that these levels are based on what is known as the
’the Organizational structure’, a diagramatical represntation of levels of authority in
an organization, as defined by the activities induvidual and sections or departments
are involved in. Examples of organizational structures are provided in Fig. 1.1 in
the next subsections. The levels of management can be classified in three broad
categories as follows:-

Top Level Management

The members include board of directors, president, vice-president, CEOs, etc. They
are responsible for controlling and overseeing the entire organization. They develop
goals, strategic plans, company policies, and make decisions on the direction of the
business. In addition, top-level managers play a significant role in the mobilization
of outside resources and are accountable to the shareholders and general public.
According to Lawrence S. Kleiman, the skills needed include broadened under-
standing of how competition, world economies, politics, and social trends affect
organizational effectiveness. The role of the top management can be summarized
as follows:

1. Top management lays down the objectives and broad policies of the enter-
prise.

2. It issues necessary instructions for preparation of department budgets, proce-

dures, schedules etc.

3. It prepares strategic plans & policies for the enterprise.

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4. It appoints the executive for middle level i.e. departmental managers.

5. It controls & coordinates the activities of all the departments.

6. It is also responsible for maintaining a contact with the outside world.

7. It provides guidance and direction.

8. The top management is also responsible towards the shareholders for the per-
formance of the enterprise.

Middle Level Management

This is the second layer of management it consist of general managers, branch man-
agers and department managers. They are accountable to the top management for
their department’s function. They devote more time to organizational and direc-
tional functions. Their roles can be emphasized as executing organizational plans
in conformance with the company’s policies and the objectives of the top man-
agement, they define and discuss information and policies from top management
to lower management, and most importantly they inspire and provide guidance to
lower level managers towards better performance. Some of their functions are as
follows:

1. Designing and implementing effective group and intergroup work and infor-
mation systems.

2. Defining and monitoring group-level performance indicators.

3. Diagnosing and resolving problems within and among work groups.

4. Designing and implementing reward systems supporting cooperative behav-

ior.

5. They execute the plans of the organization in accordance with the policies
and directives of the top management.

6. They make plans for the sub-units of the organization.

7. They participate in employment & training of lower level management.

8. They interpret and explain policies from top level management to lower level.

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9. They are responsible for coordinating the activities within the division or de-
partment.

10. It also sends important reports and other important data to top level manage-
ment.

11. They evaluate performance of junior managers.

12. They are also responsible for inspiring lower level managers towards better
performance.

Middle managers serve as a liaison between top managers and the rest of the or-
ganization. They are typically much more visible to the greater workforce than
top management, but they spend most of their time developing and implementing
strategic actions plans needed to achieve the organizational goals set by top manage-
ment. Middle managers essentially have the important role of designing, selecting,
and carrying out the best plan possible as a means of propelling a company towards
its overall goals. Job titles of middle managers include directors, assistant directors,
regional directors, division mangers, deans, branch managers, site managers.

Low Level Management

Lower level is also known as supervisory / operative level of management. It
consists of supervisors, foreman, section officers, superintendent etc. According
to R.C. Davis, “Supervisory management refers to those executives whose work
has to be largely with personal oversight and direction of operative employees”.
They are concerned with direction and controlling function of management. Low-
level managers work most closely with the greater workforce and hold a much
more interpersonal role than any of the other levels of management. Titles of low-
level managers can also vary significantly from company to company, but typically
they resemble the department that they are situated in, such as accounting manager,
academic affairs manager, human resources manager, head of financial operations,
sales leader, and so on. Their other activities include

1. Assigning of jobs and tasks to various workers.

2. They guide and instruct workers for day to day activities.

3. They are responsible for the quality as well as quantity of production.

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4. They are also entrusted with the responsibility of maintaining good relation
in the organization.

5. They communicate workers problems, suggestions, and recommendatory ap-

peals etc to the higher level and higher level goals and objectives to the work-
ers.

6. They help to solve the grievances of the workers.

7. They supervise & guide the sub-ordinates.

8. They are responsible for providing training to the workers.

9. They arrange necessary materials, machines, tools for getting the things done.

10. They prepare periodical reports about the performance of the workers.

11. They ensure discipline in the enterprise.

12. They motivate workers. They are the image builders of the enterprise because
they are in direct contact with the workers.

Changes in Management hierachies

There are a number of changes to organizational structures that influence how many
managers are at each level of the organizational hierarchy, and what tasks they
perform each day. Organizational structures can be described by the number of
levels of hierarchy. Those with many levels are called tall organizations. They
have numerous levels of middle management, and each manager supervises a small
number of employees or other managers. That is, they have a small span of control.
Flat organizations have fewer levels of middle management, and each manager has
a much wider span of control. Examples of organization charts that show tall and
flat organizational structures are presented in the diagram below:

Many organizational structures are now more flat than they were in previous decades.
This is due to a number of factors.

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Figure 1.1: Management Hierarchies

• Flexible and Responsive; Many organizations want to be more flexible and

increasingly responsive to complex environments. By becoming flatter, many
organizations also become less centralized. Centralized organizational struc-
tures have most of the decisions and responsibility at the top of the organiza-
tion, while decentralized organizations allow decision-making and authority
at lower levels of the organization. Flat organizations that make use of decen-
tralization are often more able to efficiently respond to customer needs and
the changing competitive environment.

• Middle-level managers lessening; As organizations move to flatter struc-

tures, the ranks of middle-level managers are diminishing. This means that
there a fewer opportunities for promotion for first-level managers, but this
also means that employees at all levels are likely to have more autonomy
in their jobs, as flatter organizations promote decentralization. When orga-
nizations move from taller to flatter hierarchies, this may mean that middle
managers lose their jobs, and are either laid off from the organization, or are
demoted to lower-level management positions. This creates a surplus of labor
of middle level managers, who may find themselves with fewer job opportu-
nities at the same level.

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• Increased use of teams; Each team member in an organization has differ-

ent capabilities, yet they collaborate to perform tasks. Many organizations
are now using teams more frequently to accomplish work because they may
be capable of performing at a level higher than that of individual employees.
Additionally, teams tend to be more successful when tasks require speed,
innovation, integration of functions, and a complex and rapidly changing en-
vironment.
This creates another type of managerial position in an organization that uses
teams called the team leader, who is sometimes called a project manager,
a program manager, or task force leader. This person manages the team by
acting as a facilitator and catalyst. He or she may also engage in work to help
accomplish the team’s goals. Some teams do not have leaders, but instead
are self-managed. Members of self-managed teams hold each other account-
able for the team’s goals and manage one another without the presence of a
specific leader.

• Outsourcing; Outsourcing occurs when an organization contracts with an-

other company to perform work that it previously performed itself. Out-
sourcing is intended to reduce costs and promote efficiency. Costs can be
reduced through outsourcing, often because the work can be done in other
countries, where labor and resources are less expensive than in the United
States. Additionally, by having an out-sourcing company aid in production
or service, the contracting company can devote more attention and resources
to the company’s core competencies. Through outsourcing, many jobs that
were previously performed by American workers are now performed over-
seas. Thus, this has reduced the need for many first-level and middle-level
managers, who may not be able to find other similar jobs in another com-
pany.

Managerial skills
In order to effectively carry out all of the managerial functions and operate effi-
ciently at all levels of management, Managers therefore, need to posses certain
skills. Regardless of organizational level, all managers must have five critical skills.
The first way of looking at these skills is as outlined below:

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• technical skills

• interpersonal skills

• conceptual skills

• diagnostic skills

• political skills

Let’s take a closer look at each of these skills:

Technical skills
Technical skill involves understanding and demonstrating proficiency in a particu-
lar workplace activity. Technical skills are things such as using a computer word
processing program, creating a budget, operating a piece of machinery, or preparing
a presentation. The technical skills used will differ in each level of management.
First level managers may engage in the actual operations of the organization, they
need to have an understanding of how production and service occur in the organi-
zation in order to direct and evaluate line employees. First-line managers need skill
in scheduling workers and preparing budgets. Middle managers use more technical
skills related to planning and organizing, and top managers need to have skill to
understand the complex financial workings of the organization.

Interpersonal skills
Interpersonal skills involves human relations, or the manager’s ability to interact
effectively with organizational members. Communication is a critical part of in-
terpersonal skills, and an inability to communicate effectively can prevent career
progression for managers. Managers who have excellent technical skill, but poor
interpersonal skills are unlikely to succeed in their jobs. This skill is critical at all
levels of management.

Conceptual skills
Conceptual skill is a manager’s ability to see the organization as a whole, as a
complete entity. It involves understanding how organizational units work together
and how the organization fits into its competitive environment. Conceptual skill
is crucial for top managers, whose ability to see "the big picture" can have major

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repercussions on the success of the business. However, conceptual skill is still

necessary for middle and supervisory managers, who must use this skill to envision,
for example, how work units and teams are best organized.

Diagnostic skills
Diagnostic skills is used to investigate problems, decide on best solution and imple-
ment it. Diagnostic skill involves other skills technical, interpersonal, conceptual,
and politic. For instance, to determine the root of a problem, a manager may need to
speak with many organizational members or understand a variety of informational
documents. The difference in the use of diagnostic skill across the three levels of
management is primarily due to the types of problems that must be addressed at
each level. First level managers may deal primarily with issues of motivation and
discipline, such as determining why a particular employee’s performance is flag-
ging and how to improve it. Middle managers are likely to deal with issues related
to larger work units, such as a plant or sales office. For instance, a middle-level
manager may have to diagnose why sales in a retail location have dipped. Top
managers diagnose organization wide problems, and may address issues such as
strategic position, the possibility of outsourcing tasks, or opportunities for overseas
expansion of a business.

Political skills
Political skills involve obtaining power and preventing other employees from taking
away one’s power. Managers use power to achieve organizational objectives, and
this skill can often reach goals with less effort than others who lack political skills.
Much like the other skills described, political skills cannot stand alone as a man-
ager’s skills; in particular, though, using political skills without appropriate levels
of other skills can lead to promoting a manager’s own career rather than reaching
organizational goals. Managers at all levels require political skills; managers must
avoid others taking control that they should have in their work positions. Top man-
agers may find that they need higher levels of political skills in order to successfully
operate in their environments. Interacting with competitors, suppliers, customers,
shareholders, government, and the public may require political skills.

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Figure 1.2: Managerial skills

Alternative way of categorizing managerial skills

The managerial skills can be put into three broad categories, namely: technical
skills, teambuilding skills and drive. These are briefly described in the table below:

• How Managers learn

Before we leave this lesson it is important to note the various ways through which
managers learn. Three are listed listed below:

• Through job assignment i.e. the school of hard knocks.

• Relationships with bosses ,mentors and coworkers.

• From formal training and education.

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As assignmant, elaborate on the above three. Can you think and suggest more ways?

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Revision Questions

Example . State the main components of management

Solution: Working through others, Achieving organizational objectives, making the
most of limited resources, copying with a changing environment 

E XERCISE 1.  Explain the major components of management

E XERCISE 2.  Using illustrations distinguish between the following:
Management
Team
Managers
Senior Managers
General Managers
E XERCISE 3.  Outline atleast 8 roles of a manager in an organization?

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LESSON 2
The Evolution of Management

Learning outcomes
By the end of this lesson, you should be able to:

1. identify the major landmarks in the study of development of management

2. give a brief historical account of the evolution of management

3. explain the theories that underpin the study and practice of management

4. describe relevant application of theories of management to modern business

organizations

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2.1. Introduction
In the previous lesson we learnt about general basic concepts in management. To-
day, we take a look through the historical developments in management, together
with the theories which have been develpoed over the years, that underpin the study
of management and inform inform further research and management decisions. We
also look at the major contributors to the field of management from ancient to mo-
derm times and the key principles they developed. Welcome.

2.2. A Historical Overview

The systematic study of management is relatively new as an area of academic study.
Management is essentially a product of the 20th century. Only three universities
offered business management courses before 1900. However, the practice of man-
agement has actaully been around for thousands of years. The pyramid of Egypt
for example, stand as tangible evidence of the ancient world’s ability to manage. It
reportedly took more than 100,000 individuals 20 years to construct the great pyra-
mid honoring the Egyptian king nearly 500 years ago. This remarkable achievement
was as a result of systematically managed efforts. Chinese also used management in
their government, 1500 BC - when the great Chinese empire built the wall of China.
The Greeks also used management in government, 1000 BC. Babylonians are also
known to have used management in government, 2700 BC. The management of the
great Roman empire could not have succeeded without use of management. It is
recorded that from about 800BC, the Romans were practising . A lot of bureacracy
was in place in the ancient Roman governance system.

Information overload
Since the building of the pyramids, entire civilizations have come and gone. In
one form or another management was practiced in each, but sadly, during those
thousands of years of management experience, one modern element was missing:
a systematically recorded body of management knowledge. In early cultures, man-
agement was something one learnt by words of mouth and by trial and error –
not something one studied in school , read about in textbooks and on the inter-
net, theorized about, experimented with or wrote about. Since the modern print
was introduced, an indication of what is available, is a 1990 study which identi-
fied 54 journals dealing with just behavioral side of management. In fact so much

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information on management theory and practice exist today that is difficult, if not
impossible to keep abreast with.

2.3. Approaches to Management

In search for and during the development of a systematically recorded body of man-
agement knowledge, a number of theories of management have emerged. We can
safely state that no single theory of management is universally accepted today. For
this reason, to provide a useful perspective that will guide our study of modern
management, we shall discuss five different approaches to management:

1. Universal process approach

2. The operational approach

3. The behavioral approach

4. The systems approach

5. Contingency approach.

Universal Process Approach

The Universal process approach is the oldest and one of the most popular ap-
proaches to management thought. It is also known as the universalist or functional
approach. According to this approach, the administration of all organizations, pub-
lic or private and large or small, require the same rational process. Early universal
process writers emphasized the specialization of labor (who does what), the chain
of command (who reports to whom), and authority (who is ultimately responsible
for getting things done). We will use some of the early contributors to this theories
as examples to demonstrate what this approach is all about.

Henry Fayol’s (1841-1925) universal management process.

He believed that most managerial practice falls into certain patterns that can be
identified and analysed. He strongly believed that management was not a personal
talent but rather a skill like any other and therefore could be taught or learned .
In 1916, at the age of 75, Henry Fayol published his now classic book, Adminis-
tration Industrielle et Generale, although it was not widely known in Britain and

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United States until an English translation became available in 1949. Fayol believed
that the managers job could be divided into five functions, or areas of managerial
responsibility:

• planning;

• organizing;

• commanding;

• coordination; and

• controlling, that are essential to managerial success.

Fayol found out that the activities of industrial undertaking fall into six groups:

• Technical activities - production

• Commercial activities - buying, selling and exchange

• Financial activities - search for capital and its use

• Security - protection of employees, employers and property

• Accounting activities - record management, analysis of gains and liabilities.

• Managerial activities

This approach to management remains to be the most widely used approach to man-
agement today. Following his line of thought he then developed certain principles
which are outline below.

• Fayol’s Principles of Management

Fayol defined the following 14 principles of management:

1. Division of labour - work being divided among workers.

2. Authority and responsibility - managers had to be granted authority to carry

out their responsibility.

3. Discipline - workers are expected to respect rules and regulations of the or-
ganisation .

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4. Unity of command - This implies that an employee would only receive com-
mand from one supervisor.

5. Unity of direction - A manager should have one plan for each organisational
objective.

6. Individual surbordination - The interest of the organisation should come be-

fore individual interests.

7. Compensation - pay should be fair and good performance should be rewarded.

8. Centralisation - There would be one point the organisation that exercise over-
all control.

9. Scalar chain - authority should flow downward from top to bottom through
the chain of command.

10. Order - people and materials should be in the right place at the right time.

11. Equity - managers should be fair in dealing with employees. Treatment

should be equal.

12. Stability of tenure - Efficiency can be enforced by a stable workforce.

13. Initiative - employees should be given the freedom to act and be innovative.

14. Espirit de corp - In union there is strength; therefore, team work should be
encouraged.

Max Weber and bureaucracy (1864-1920)

Max was a German sociologist who was very sensitive to the abuse of power by peo-
ple in managerial positions. In order to reduce this abuse of power, Weber proposed
an organisation system that would be run by rules and regulations (bureaucracy).
Under bureaucracy, an effective organisation had a hierarchy structure based on
formal authority and where people were guided by rational rules and regulations,
rather than arbitrary acts by those in management.
Max Weber’s Bureaucratic Principles
There should be:

1. Division of labour by functional specialization

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2. Well-defined hierarchy of authority.

3. A cadre of professional employees.

4. A system of impersonal rules and procedures.

5. Autonomous decisions by office holders.

6. Merit-based employee selection and tenure.

Limitations of the Functional Approach

1. This approach fails to appreciate the difference between various organisations

by assuming that all organisations can be managed by the same set of rules
and regulations.

2. This approach can only be stable under stable situations but with frequent
changes, it proves ineffective as changes in conditions require qualification
in management principles and bureaucratic rules.

3. This approach sees people as passive and capable of reacting only to organi-
sational rules and regulations. this undervalues the human element in organi-
sation. It ignores qualities like attitudes, emotions, creativity and initiative.

4. People can actually go against rules.

Operational/Scientific Management Approach

This is a convenient description of the production–oriented area of management
dedicated to improving efficiency, cutting waste, and improving quality. Since the
turn of 20th century it has had a number of labels, including the scientific man-
agement, management science, operations research, production management and
operations management. The main objective here was to determine how jobs could
be designed in order to maximise output for employees - the emphasis being on
efficiency. This school of thought was championed by Fredrick W. Taylor and later
on he was followed by a number of other scholars.

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Fredrick [Link]’s Scientific Management:1856-1915:

Taylor was an industrial Engineer who worked in the US at a time when indus-
tries were facing shortage of skilled labour. For factories to expand productivity,
ways had to be looked for to increase efficiency of employees. Management faced
questions such as:

1. Whether some elements of work could be combined or eliminated.

2. Whether the sequence of jobs would improve.

3. Whether there was one best way of doing a job.

According to the early definition, scientific management is that kind of management

which conducts a business or affairs by standards established by facts or truths
gained through systematic observation, experiment or reasoning. In trying to an-
swer the above-stated questions, Taylor slowly developed a body of principles that
constitutes scientific management.

Taylor’s Principles of Scientific management

1. He advocated for development of a true science of management so that the
methods of performing each task could be determined.

2. There should be a scientific selection of workers so that each worker could be

given responsibility for the task which he or she is best suited to do.

3. There should be scientific education and development of the workers.

4. There should be intimate friendly corporation between management and labour.

Generally, this principles that Taylor developed could only succeed if there was a
complete mental revolution on the part of both management and labour so that they
would take off their eyes from profits but together concentrate on increasing pro-
duction. A number of people, who became commonly known as Taylor’s followers
advanced this theory. Frank and Lillian Gilbreth, pioneered the use of motion pic-
tures for studying and streamlining the work motions. They focused their studies
on ways of promoting welfare of the individual worker. For them, the ultimate aim
of scientific management was to help workers reach their full potential as human
beings. They studied the areas of time and motion and concluded that motion and

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fatigue were directly proportional i.e. every motion that was eliminated reduced
fatigue. They developed a free position plan of promotion that intended to serve
as an employee development programme as well as a morale booster. According
to this plan, the worker would do his/her present job, prepare for the next one at
the same time and train the successor at the very same time. Therefore, the worker
would always be a doer, a learner and a trainer simultaneously. Henry L. Gantt con-
tributed to scientific management by defining production control and cost control
techniques. W. Edwards Deming encouraged employees’ participation and striving
for continuous improvement.

Limitations of Scientific Management/ Operational Approach

1. During Taylor’s time, the mental revolution he advocated for rarely came
about, and often lead to increased productivity per person which in turn led
to lay-offs.

2. It assumed that people were rational and therefore motivated only by material
gain.

3. They assumed that one had only to tell workers what they had to do to in-
crease earnings and they would do it; but people have a need for other things
apart from money e.g. recognition.

4. They overlooked the human desire for job-satisfaction; therefore, the worker
became more willing to go on strike over working conditions rather than
salary issues.

Behavioral Approach
This approach has evolved gradually over many years. Advocates of the behavioral
approach to management point out that people deserve to be central focus of or-
ganized activity. A few people dwelt on earlier theories and came up with a more
people-oriented theory of management. This school of thought introduced a more
’human face’ to management. The following contributed towards this approach:

Mary Packer Follet, (1868-1933)

She recognised the potential of individuals but advocated that no one would become
whole except if they were in a group. She believed that the artificial distinction

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between managers as order givers and subordinates as takers, obscured the natural
relationship that should have existed between them as members of one group. She
strongly felt that for management and labour to become part of one group, the
traditional views on workers would have to be abandoned.

Chester Bernard, (1886-1961)

He argued that people came together in formal organisations to achieve things they
cannot achieve when alone. As they perceive the goals of the organisation, they
must also satisfy their needs. He strongly believed that for an organisation to func-
tion effectively, a balance must be maintained between organisational goals and the
goals of the individuals in the organisation.

Hugo Munsterberg, (1960-1963)

He is perceived as the father of industrial physiology. He suggested that productiv-
ity could be increased through:

1. Finding the best possible person i.e. a worker with mental ability is best for
the job.

2. Finding the best possible work i.e. work that provides ideal psychological
conditions in order to maximise productivity.

3. Use of psychological influence in order to produce the best possible effect to

motivate employees.

Generally, Hugo sought to find the best person for the job, study and design the job
itself to match it closely with human abilities and characteristics.

Elton Mayo ,1880-1949:

Mayo is termed the father of human relation management. He participated in the
Hawthorn studies where the emphasis was on the worker rather than the work, the
researchers at this study were concerned with studying people, especially in terms
of social relationships at work. He concerned himself with the treatment of psy-
chological satisfaction as the primary management concern. Human relations de-
scribes how managers interact with subordinates, when and how management of

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people could lead to better performance. The argument being that when morale and
efficiency deteriorate, the human relations in the organisation must be bad.
Managers need to know why people behave the way they do and the psychological
factor that motivate them, if they are to create human relations. The main catalyst
of human relations is the Hawthorn studies.

• Hawthorn Studies
The experiments were conducted by Mayo and associates from Harvard university
in the Hawthorn plant of western company. Earlier on, researchers conducted ex-
periments using two groups:

1. An experiment group - which was subjected to changes in lighting.

2. A control group - subjected to constant lighting.

When lighting conditions were improved, productivity went up, but when lighting
conditions were worsened productivity also went up. This was puzzling but what
complicated the problem further was that the control group’s productivity also im-
proved. In an attempt to solve this puzzle, Mayo triggered off the human relations
management. In a new experiment, he used two groups each comprising six women.
For the experimental group, such variables as salaries were changed and rest periods
added, work hours shortened and groups allowed to suggest changes they wanted
made. Again output went up for both the control and experimental groups. For this
reason, Mayo ruled out financial resources as the cause of increased productivity.
He concluded that a complex emotional chain reaction had triggered the increase in
productivity. He felt that because the members of the groups had been singled out
for special attention, they developed group pride that motivated them to increase
productivity. The experiment made Mayo conclude that special attention like being
selected in a study, exposing one to constant contact caused people to increase their
efforts. This phenomenon is called the Hawthorn effect. Other behavioral theorists
who have contributed to this approach to management include: McGregor, Maslow
and Herzberg. A brief description of their works follows.

McGregor theory X and Y:

McGregor came up with two theories known as Theory X and Theory Y. Theory X
states that the people are inherently lazy, requiring coercion and control, avoiding

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responsibility and only seeking security; that man dislikes work and would seek
ways to escape it. Theory Y on the other hand, states that people are ambitious,
self motivated and anxious to accept greater responsibility whenever they can; that
man likes work and would actually seek responsibility. The implication here is that
if a manager adopts theory X, then he/she would look at employees as people who
must be closely supervised and monitored, who must be forced to work in order to
achieve results. But looked at from the perspective of theory Y, the employees are
people who are self driven, who can work without force or close supervision, to
fulfil their needs for greater responsibility.

Maslow’s hierarchy of needs theory:

Maslow based his suggestion on a hierarchical model with basic needs at the bottom
and higher needs at the top. He grouped human needs into five categories, namely:
basic needs, security needs, social needs, esteem needs and self-actualization needs.
He contended that what really motivate individuals to work is the search for ways of
satisfying their needs; that most poeple work to satisfy the basic needs like the need
for food, clothing, shelter, etc., before they strive to fulfil other needs. However,
it has been noted that the fulfilment of these needs does not always follow this
hierarchical order in real life practise - different indivuals want to fulfil two or more
of these needs at the same time. You will possibly learn more about the Maslow’s
theory of needs a future course, (Human Resource Management). To managers this
theory implies that to have workers’ productivity increase, different need-levels of
differents individuals must be identified and a work environment that makes the
workers feel that their needs are being met must be provided.

Herzberg’s motivation theory (1959):

On other notable propnent of this theory is Herzberg. He stated that certain factors
tended to lead to job satisfaction whereas others frequently lead to dissatisfaction.
He put th ese factors into two groups: motivators and hygiene factors. Motivators
are the factors that if present would to job satisfaction, while hygiene factors were
factors that, though important, their presence would not necessarily lead to job sat-
isfaction. He concluded that a more satisfied worker would produce more than a
dissatisfied worker. Thus, Managers must find out what made thier workers feel
satisfied with the job they are doing.

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Figure 2.1: Maslow’s hierachy of needs

Limitations of Human relations approach

1. In viewing the human factors as the most important organisational variable, it
committed the same mistake of earlier theories - searching for one best way
of management i.e. scientific management - designing jobs in the best way
possible; administrative management - one best way of designing activities.

2. It views the worker as being motivated by social rewards; this is a very sim-
plistic view of human beings who are complex and motivated by a variety of
factors.

3. It assumes that satisfied workers would be productive thus making firms in-
troduce fringe benefits which did not always result in increased productivity.

The Systems Approach

Chester I . Barnard, (1886-1961)
A system is a collection of parts operating interdependently to achieve a common
purpose. Thus the system approach represents a marked departure from the past. In
fact it requires completely different style of thinking. It looks at the organization as
a composite of many parts operating interdependently. Consequently, the different
perspective according to this theory reveals the underlying emphasis - that willing-
ness to serve, common purpose and communication are the principal elements in an

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organization; and that the organization did not exist if these three elements were not
present and working interdependently . As such, Chester argued that people came
together in formal organisations to achieve things they cannot achieve when alone.
As they perceive the goals of the organisation, they must also satisfy their needs.
He strongly believed that for an organisation to function effectively, a balance must
be maintained between organisational goals and the goals of the individuals in the
organisation. His view was backed by that of Ludwig von Bertalanffy’s General
systems theory - based on the assumption that everything is part of a large, interde-
pendent arrangement. According to this theory, in order to understand an organized
whole we must know the parts and the relations between them.

Fact. It is important to note that upto this end there was no universally accepted
theory of management. Thus the search for a balance continued.

The Contingency Approach

This is an effort to determine through research which managerial practices and tech-
niques are appropriate in specific situations. The consideration here is based on the
Contingency characteristics. Some management scholars are attracted to contin-
gency thinking because it is workable compromise between the systems approach
and what can be called a purely situational perspective. This theory argues that
appropriate management action depends on the situation prevailing at the time. Ac-
cording to it, there are no ready made answers to managerial questions, but rather
the decisions that a manager will make depend on the situation; as such every sit-
uation requires different reactions. Three characteristics of contingency approach
are:

• An open system perspective: The theorists see the need to understand how
organizational sub-systems combine to interact with outside social, cultural,
political, and economic systems.

• A practical research orientation: That a practical research which ultimately

leads to more effective on the job management must be carried out.

• Multivariate perspective: This is seen as an ideal research technique used to

determine how a number of variables interact to cause a particular outcome.

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A number of theorists contributed to this school of thought and to the evolution of

management, forming what may be termed as contemporary thoeries of managem-
net. They include:

1. Expectancy theory, V.H. Vroom (1960s). Vroom stated that an individual’s

behavior is formed not on objective reality but on his subjective perception of
that reality.

2. Theory z - the Japanese approach, W. Ouchi (1981). According to this the-

ory, workers are more participative and are capable of performing many and
varied tasks depending on the times. Ouchi studied the successful American
company to see why they continued to succeed while others were failing. He
found out that most American companies followed a set of business practices
that he called type A and that typical Japanese companies followed an influ-
ence set called type J. However, highly successful American firms followed
neither of these, but used a modified approach that borrowed on the strengths
of J, but also used A methods when cultural factors dictated. This modified
and flexible system is what he called theory Z.

3. Reinforcement theory, [Link] (1974), states that a given behavior is a

function of the consequences of earlier behavior.

4. Attribution theory, Kelley (1972), suggested that we judge other people’s

behavior by attributing meaning to their behavior in the light of perceived
internal and external forces.

5. Goal theory, Locke (1968), argues that motivation is driven primarily by the
goals or objectives that individuals set for themselves.

6. Equity theory, Robbins (1993), states that people make comparison between
themselves and others in terms of what they invest in their work (inputs) and
what outcome (benefits) they receive from it.

Example . In your own words, explain the universal approach to management.

Solution: All organizations are typically the same and require the same rational
process to manage them.

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E XERCISE 4.  In just a sentense for each, explain the other four approaches to
management?
E XERCISE 5.  In about one page describe Fayol’s contribution to the develop-
ment of principles of management and the relevance of his principles to modern
management.
E XERCISE 6.  Research on the additional contemporary theories mentioned above
(1960 to date), and explain their principles outlining their merits and limitations.

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LESSON 3
Managing the Business Environment

Learning outcomes
By the end of this lesson you should be able to:

1. define the business environment

2. identify the forces in the business environment

3. describe the interation between business and the identified forces in the envi-
ronment

4. explain how these forces affect the operations of the business and how these
effects could be dealt with.

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3.1. Introduction
Today’s lesson focuses on the business and its environment. A business firm is an
open system. It gets resources from the environment and supplies its goods and ser-
vices to the environment. There are different levels of environmental forces. Some
are close and internal, whereas others are external. External forces may be related
to national, regional or international levels. These environmental forces provide
opportunities or threats to the business organization. Every business organization
tries to grasp the available opportunities and face the threats that emerge from the
business environment. So what is this business environment?

Definition. A business describes all those factors/forces that influence the oper-
ations of the business. In other words, these forces from where a business gets
resources and supplies resources, and factors that present opportunities and threats
are taken as the business environment. They are both internal and external, and the
business must be able to deal with them effectively in order to succeed. Let’s take
a closer look at these factors.

Components of Business Environment

The business environment of an organization can be classified into two broad cate-
gories:

1. The Internal environment

2. The external environment

3.2. The internal environment

The internal environment of a business consists of all those factors within the busi-
ness, that affect the operations of the business and the business can direct total
control them, ie. the business can manipulate them to its advantage. They include
such factors like:

• management policies

• goals and objectives of the business

• finances

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• human resources

• capital assets, etc.

• practices and patterns of behaviour in the organization.

In modern stragic management terms, these factors form what is known as the com-
petitive environment, and are summed up in three broad categories:

• Structure

• Resources

• Culture

Structure
Structure describes the formal organization of the business including:

• Objectives of the business

• Management policies and style

• Systems, procedures

• Chain of command

Resources
Resources refer to any utilities that can be put to use to create value. These could
be tangible or intangible in nature. The resources of a business can take the form
of:

1. Finances (money)

2. Machinery, plant or equipment

3. Information available and accessible to the organization

4. Human resources(employees/workers) in terms of ASK - (Ability, Skills,

Knowledge)

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Culture
Culture refers to the values, beliefs, norms, practices and aspiration that shape the
behaviour of people (workers) in an organization. This defines how the activists
of a business are conducted. In today’s organization these are usually expressed in
terms of core values of the organizations e.g. integrity, honesty, transparency and
teamwork. The desired behaviours of the members of the organization are generally
enforced through a set of principles or rules known as codes of conduct or codes of
ethics for the members of that particular organization or profession. Knowledge of
these factors will help manager make decisions which will support the successful
operations for the business.

Internal Constraints (within the firm)

The following are constraints that originate from within the organization but which
management must take care of.

• Constraints imposed by organizational charters and guidelines Many or-

ganizations such as government agencies, religious bodies and corporations
have written documents which constitute corporate charters, by-laws, poli-
cies, rules, constitutions etc. These documents spell out what the organiza-
tion can or cannot do and managers in these organizations are limited by what
these documents say.

• Constraint imposed by organizational policies, procedures, rules and

strategies These predetermined plans place limits on what an organization
can or cannot do e.g. policy specifying that all sales be to wholesalers tells
managers that sales will not be made to ultimate consumers at all, or rules
against members of the same family working in the same organization.

• Constraints imposed by limited money and personnel No organization has

unlimited capital. Because of insufficient funds, managers may be unable to
hire the best qualified people, purchase the best equipment and land and so
forth. Therefore the organization will be restricted in what actions it can
take. Managers may also be limited by the personnel (employees) within the
organization who may not have the necessary skills or knowledge to carry out
planned activities. Employees may also resist changes that affect them in the
organization.

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• Constraints imposed by higher level management Policies, procedures and

rules such as noted above are developed by higher level management. In
addition higher level managers develop the strategies that direct the actions
of other members of the organizations. The actions of higher management
can therefore limit the actions of the lower level management.

• Constraints imposed by custom and culture. Custom is defined as long

established, continuous, reasonable and constant practices considered as un-
written law and resting for authority on long consent. Custom defines the
unique ways of how things have always been done in the organization.

• Constraints imposed by stockholders and Boards of Directors Sharehold-

ers have the opportunity to influence a company by exercising voting rights.

3.3. The external environment

The external environment refers to all those factors that influnce the operation of
the business, but the business may only have very little control, or no control at all
over them. This environment is subdivided into two categories:

1. Task Environment

2. Macro Environment

The task envrionment

The factors in the task environment (also known as the operating environment or
immediate environment) are those that the business/organization can only partially
control, but have significant influence or effect on the operations and success of the
business. They usually describe the key players in the industry in which a business
is operating. The business has the potential to create favourable relationships and
working conditons with these players to its advantage. They consist of:

1. Customers

2. Suppliers

3. Competitors

4. Employee unions/labour unions

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5. Creditors vi. Financial institutions

6. Hobby groups/special interest groups etc.

7. Communities living around the business

8. Trade Associations

9. Government

10. Share holdersTask envrionment

Macro Environment Elements

The macro/remote environment principally consists of those factors over which the
business has no control at all. These include the following, usually condensed in
the acronym PESTEL:

• Political environment

• Economic environment

• Socio-cultural environment

• Technological Environment

• Environment (Natural/Physical environment)

• Legal environment

PESTEL Analysis of the macro environmental factors

Political Legal environment
For our purpose, we will enjoin political and legal environment as they are closely
related. Political environment refer to issues of governance in a given country and
this has direct influence on the kind of laws and regulations that govern the conduct
of any buiness. Such political systems as democracy, communism ot otherwise will
determine the type og government in place. This environment is also very closely
lonked to the economic systems and policies in place in one given country. For
example, communism encourages centralization of the economy and planning. In
a democratic system decentralization may be practised to a certain level. It is also

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worth mentioning that the government is usually the nation’s largest consumer, em-
ployer and investor and any changes in the spending priorities will have a significant
impact on a business. Political influence will include legislation on trading pricing,
dividends tax, employment, privatisation, development of free market influences
and unemployment. Economic forecasts are normally prepared on the basis that
the existing government policies continue. Other factors are political stability in a
country, which will influence the rate of investment in the country. The business
must thus react to the attitude of the exisitng government.

Elements of Political and legal Environment

In summary, there are three important elements are associated with the political and
legal environment as outlined below:

1. Government: Government policies, rules and regulation that are controlling

and monitoring the business enterprises and its activities. The type of gov-
ernment administration of the country and the business policy of the country.
These things should be evaluated by the business manager from point of view
of business. Managers should be aware and constantly study the changes in
the regulatory framework of the government and their impact on the business.
For example, government tax policies are critical and affect the business or-
ganization almost instantly.

2. Legal: It is concerned with regulating how an organisation does business

and covers: Law of contract i.e. validity of contract, Sale of goods Act –
selling practices, Health and safety, Employment Act: How an organisation
treats its employees, Legislation on competitive behaviour, Law of Tort: Neg-
ligence, Auditor’s and management liability, Environmental legislation: Pol-
lution control such as waste management, Company’s Act in Kenya Cap 486
- laws which are protecting consumers, competitors, and organisation. Busi-
ness organization should be aware of the laws which relevant to companies,
competitors, intellectual property, foreign exchange, labor and so on.

3. Political: Political system is influences the business and its activities. These
include political instability, frequent change of government, political/economic
blocks eg the East African Community and AOU, political pressure groups -
civil society etc., influence government and in this way to some extent control

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and regulate business activities within the country. Recently, special interest
groups and political action committee put pressure to business organizations
to pay more attention towards consumer’s rights, minority rights and women
rights, apart from the sporadic movements against certain products and ser-
vices of some business organizations like the production and sale of tobacco
by BAT.

Economic environment
The economic environment constitutes economic conditions, economic policies,
and the economic system that is important to business. The economic conditions of
the country may include:-

• Nature of the economy of the country

• The general economic situation in the region

• The available resource markets like money, material, market raw material
components, services, supply markets which influence the supply of inputs to
the organization, their costs, quality, availability and reliability of supply of
products and services.

• The level of the economic income of the country

• The distribution of income and assets of the country.

• Public finance of the country.

• Development process of the country

• Taxation levels

• Inflation rate

• Balance of trade and exchange rates

• Level of unemployment interest rates and availability of credit

• Government subsidies

Together with the above, one should also look at international economic issues:

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• The extent of protectionist measures.

• Comparative rates of growth, inflation, wages and taxation

• Freedom of capital movement

• Economic agreement in various trading blocs such as the EU, COMESA.

• Relative exchange rates.

• A downturn in the economy can lead to corporate failures across a number

of sectors. The worst hit are suppliers of goods with high income elasticity
demand eg. house builders like Housing Finance.

These factors determines the economic strength and weakness in the market. Pur-
chasing power of the individual depends upon the economic factors like current
income, price, savings, and circulation of money, debt and credit availability. Peo-
ple’s income distribution pattern analyzes the market possibilities and impacts on
enterprise. These are the very important determinants of business strategy in the
organization for formulating, implement and controlling of economic policies. For
instance in developing country, the low income may be reason for the very high
demand for the product and services of the business. In countries where the invest-
ments and income are steadily and rapidly rising, business prospects are generally
bright and further investments are encouraged. In developed economics, replace-
ment demand accounts for a considerable part of the total demand for many con-
sumer durables where as the replacement demand is negligible in the developing
countries. Deflationary government fiscal policy (low government spending, high
taxation and a planned budget surplus) and central bank monetary policy, high in-
terest rates, restrictions on money supply expansion and revaluation of currency can
adversely affect a business. This is because they influence demand for goods both
domestically and internationally, cost of capital and the level of profitability which
in turn affects dividends and retained earnings level.

Social Cultural environment

Businesses operate within societies with established cultures as defined by their cus-
toms, traditions, tastes and preferences. This Socio-cultural context within which
businesses operate is an important factor that should be analyzed setting up any

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business. It consists of factors which are related to human relationships and the
impact of social attitudes and cultural [Link] include:

• Power - defines patterns of influence; who has power, how effectively is it

being used?

• Leadership - who are the leaders and what are their weaknesses and strength?

• Culture - the values and traditions within which the business must operate.
For example, one problem facing multinationals has often been failure to cope
with the different cultural values of the countries within which they operate.

• Risk - attitudes towards risks and risk taking, a society can be risk averse or
seekers.

• Changing values and lifestyles eg. flexible working hours, internet access and
other IT devices that allow people to shop on line

• Changing beliefs

• Changing patterns of work and leisure

• Demographic changes.

• Changing mix in the ethnic and religious background of the population.

Social issues like the role of the business in the society, environment pollution,
corruption, use of mass media and consumption of products and services which
are offered by the company. Social attitudes and values issues like social customs,
beliefs, rituals and practices, changing life style patterns and materialism are expec-
tations of society from the business. Family structure, values and attitudes towards
the family and these changes also influence to business and its operation. Role of
the women, position, nature of responsibilities in society is also influenced to busi-
ness and its operation in market. Educational levels, awareness and consciousness
of rights and work ethics of the society can be influenced to business and its opera-
tion. Social practice, beliefs and associated factors are helpful for promotion of the
certain products, services or ideas; the success of marketing depends to a very large
extent, on the success in terms of changing social attitudes or value systems.

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Technological environment
This is a rapidly changing area and organisations should be very careful with it. It
can influence the following:

• Changes in production techniques e.g. the use of robots, Computer Aided

Manufacture

• Products that are made or sold e.g. software

• How services are provided. ATMS for banks

• How to identify markets creation of customer databases.

Much has been made of the application of new technologies to communications and
business especially the Internet. The impact of information as the raw material in
a knowledge-based economy is huge. Within an industry failure to exploit infor-
mation and new production technology can lea to an organisation failing behind its
rivals and losing its competitive edge. The distribution of services has change and
there has been removal of entry barriers in certain industries such as banking and
insurance. Much lower start up costs has created threats to the established players,
which if they do not respond to, could lead to decline. New technology leads to
innovation of substitutes for example in the pharmaceutical industry, biotechnology
and data storage devices. Examples of changes in production processes includes use
of robotics and computers. This has led to lower cost of production, better quality
goods or both. Technological factors sometimes pose serious problems. A firm that
is unable to cope with technological changes may not be able to survive. Further, the
differing technological environment of different markets or countries may be called
for product modifications. Technology is the most important elements of the macro
environment. Technology is the human being innovation and it literally wonder.
Technology helps to human being go to moon, travelling the spaceships, other side
of the globe with few hours. Advances in the technologies have facilitated product
improvements and introduction of new products and have considerably improved
the marketability of the products. Internet and telecom system is the part of tech-
nological development in the world. These things today changed whole world. It
changes people and business operation. It leads to many new business opportunities
apart from the many existing systems.

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Characteristics of technological environment

• The find of technological change

• Opportunities are arising out of technological developments.

• Risk and uncertain is the major feature of the technological developments

• Research and development role to country Technology and business activities

are to be highly considerable, interrelated and interdependent.

Technological output/fruits available to society through business activities in this

way have improved the quality of life in the society

Fact. The five elements of the external environment affect the organization indi-
rectly. Managers should monitor the indirect action factors for early warning signs
of change that might later affect the organization. Managers can only adjust to
the external environment through the planning process, or by changes in the formal
organization structure i.e through flexibility which involves a conscious structuring
of the organization so that it will best meet the demands of the environment at any
given time. The direct action factors of the environment consists of the organiza-
tions stakeholders i.e. the groups which have direct impact on the organization.
These are either internal like employees, shareholders and the Board of Directors
or external like customers, suppliers, competitors, labour unions, financial insti-
tutions, the media and competitors. Managers need to balance the interest of all
those stakeholders for the good of the organization. This can be done through such
actions as (advertising, lobbying and collective bargaining).

Example . In details, explain the impact of demograghic changes on business

organizations.
Solution: Demography refers to study of the population. Demographic elements
are: population size, growth rate, Age composition, Family size, Economic stratifi-
cation of the population, Education levels, Language, and Religion. These factors
can have serious effects on businesses if not carefully considered, as outlined: Size:
Expected growth or decline on the national and international population affects the
markets size; Type: Changes in the age distribution affects the product or services
to be offered; Location: The expected drift of population into different parts of

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the country affects the channels of distribution. Demographic changes can have
negative impact on demand. Falling birth rates could indicate problems ahead for
producers and sellers of baby products later. Emigrating population can reduce
demand on a local basis. Cultural changes in tastes and fashion can have a dam-
aging effect on organisations that fail to anticipate and adapt to these changes eg.
clothing. Demographic factors like size of the population, population growth, rate,
age, composition, life expectancy, family size, spatial dispersal, occupational sta-
tus, employment pattern etc affect the demand for goods and service. The growth of
population and income result increases demand for goods and services. A rapidly
increasing population indicates that a growing demand for many products. For in-
stance, developing countries like India and Pakistan with high population growth
rate indicates an enormous increase in labor supply. The occupational and spatial
nobilities of population have implications for business. Labor is easily mobile be-
tween different occupations and regions. Its supply will be relatively smooth and
this will relatively affect the wage rate. If a labor market is highly heterogeneous in
respect of language, caste, religion and ethnicity personnel management is likely to
become a more complex task. 

Revision Questions

E XERCISE 7.  What do you understand by the terms business environment?

E XERCISE 8.  How does the culture of an organisation affect the implementation
of its policies?
E XERCISE 9.  Suggest how a manager can use the competitive environment to
the advantage of the business.

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LESSON 4
Functions of Management

4.1. Introduction
Henri Fayol, the father of the school of Systematic Management, was motivated
to create a theoretical foundation for a managerial educational program based on
his experience as a successful managing director of a mining company. In his day,
managers had no formal training and he observed that the increasing complexity of
organizations would require more professional management. Fayol’s legacy is his
generic Principles of Management. Of Fayol’s six generic activities for industrial
undertakings (technical, commercial, financial, security, accounting, managerial),
the most important were The Five Functions of Management that focused on the
key relationships between personnel and its management. theoretical purposes, it
may be convenient to separate the function of management but practically these
functions are overlapping in nature i.e. they are highly inseparable. Each function
blends into the other & each affects the performance of others.

4.2. 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 achieve-
ment of pre-determined goals. 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. It is an exer-
cise in problem solving & decision making. Planning is determination of courses

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of action to achieve desired goals. Thus, planning is a systematic thinking about

ways & means for accomplishment of pre-determined goals. Planning is necessary
to ensure proper utilization of human & non-human resources. It is all pervasive,
it is an intellectual activity and it also helps in avoiding confusion, uncertainties,
risks, wastages [Link] are many different types of plans and planning.

4.3. Importance of Planning

1. The purpose of every plan and of all derivative plans is to facilitate the ac-
complishment of enterprise purpose and objectives.

2. Planning therefore gives direction to the activities of the organization. With-

out plans people would not know what is to be expected of them.

3. Planning also facilitates control. The plans act as standards against which
performance can be measured and evaluated. Deviations from plans help to
point out weaknesses in the organizational process.

4. Since managerial operations in organizing, leading and controlling are de-

signed to support the accomplishment of enterprise objectives, planning log-
ically precedes the execution of all other management functions. Without
planning other management functions would be impossible. Given the im-
portance of planning then it is essential to identify planning responsibilities.
That is who in the organization does planning? By its very nature it is obvious
that the responsibility for planning rests with the management. All managers
are involved in the planning process. Planning starts with top management.
These top managers working in consultation with the Board of Directors es-
tablish the broad goals and strategies of the firm. Middle managers work
together to assist with strategic planning and they work individually to de-
velop and implement planning activities within their respective divisions/or
units. First line managers also plan for their units and develop operational
plans to actualise the planning done at middle level.

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4.4. Types of Plans

4.4.1. Strategic Plans
Which are the broad plans developed by top managers to guide the general direction
of the firm. They follow from the major goals of the firm and indicate what business
the firm is in or what business it intends to be. Strategic plans therefore indicate how
or where the firm will position itself within its environment (They are of large scope
and extended time frame).
Strategic planning involves analyzing competitive opportunities and threats, as well
as the strengths and weaknesses of the organization, and then determining how
to position the organization to compete effectively in their environment. Strate-
gic planning has a long time frame, often three years or more. Strategic planning
generally includes the entire organization and includes formulation of objectives.
Strategic planning is often based on the organization’s mission, which is its funda-
mental reason for existence. An organization’s top management most often con-
ducts strategic planning

4.4.2. Tactical Plans

These have a moderate scope and intermediate time frame. They are concerned
with how to implement the strategic plans that are already developed. They deal
with specific resources and time constraints. They mainly focus on people and
action. Tactical planning is mainly associated with middle management.
Tactical planning is intermediate-range planning that is designed to develop rela-
tively concrete and specific means to implement the strategic plan. Middle-level
managers often engage in tactical planning. Tactical planning often has a one- to
three-year time horizon.

4.4.3. Operational Plans

They have the narrowest focus and shortest time frame. They fall into many types
that include:

• Standing Plans: Plans developed to handle recurring and relatively routine

situations. They include policies which are general guidelines governing rel-
atively important actions within the organization. Standard operating proce-
dures which are more specific guidelines for handling a series of recurring

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activities. Finally rules and regulations which are statements of how specific
activities are to performed.

• Single Use Plans This is the second category of operational plans. These
are plans set up to handle events that happen only once. The two types are
programs and projects.A program is a single use plan for a large set of activi-
ties while a project usually has a narrower scope than a programme otherwise
they are similar.
Operational planning generally assumes the existence of objectives and specifies
ways to achieve them. Operational planning is short-range planning that is de-
signed to develop specific action steps that support the strategic and tactical plans.
Operational planning usually has a very short time horizon, from one week to one
year.
Exercise. Research on the contents of a business plan and develop a plan for your
own small business you intend to start.

4.5. Time frame for planning

Regardless of the kind of plan a manager is developing recognition of the impor-
tance of time is essential. Plans either fall under long range, intermediate or short
range plans.
• Long range planning: Covers several time periods, from five years to as
long as several decades. Long range plans are mainly associated with activ-
ities such as major expansion of products or facilities, development of top
managers, large issues of stocks or change of manufacturing systems. Top
managers are responsible for long range planning in most organizations.

• Intermediate planning: range in time from one year to five years. Because
of the uncertainties associated with long range plans, intermediate plans are
the primary concern of most organizations. They are usually developed by
both top and middle management. They are the building blocks in the pursuit
of long range plans.

• Short range planning: covers time periods of one year or less. They focus
on day to day activities and provide a concrete base for evaluating progress
towards the achievement of intermediate and long range plans.

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4.6. MAKING PLANNING EFFECTIVE

4.6.1. Introduction
The plans used/made in an organization are not random but rather they are arranged
in a hierarchy that corresponds to the organizations structure. At each level plans
have two purposes:

1. They provide the means for achieving the objectives set in the plans of the
next higher level.

2. They provide the objectives to be met by the plans in the next lower level.

As already discussed plans are of two major types:

1. Strategic plans which are designed to meet the broad objectives of the orga-
nization

2. Operational plans which provide the details of how the strategic plans will be
accomplished.

The operational plans are divided into two main types i.e. standing plans which
are standardized approaches for dealing with recurrent and unpredictable situations
and single use plans which are developed to achieve specific purposes and dissolved
when these purposes have been achieved.
Standing plans include policies, standard procedures, rules and regulations. Once
established standing plans allow managers to conserve time used for planning and
decision making as similar situations are handled in a predetermined and consistent
manner.
Single use plans include programs, projects and budgets. These are detailed courses
of action that are unlikely to be repeated
Planning being a rational approach to accomplishing objectives should be a flexible
process which takes into account the various changes taking place in and outside
the organization.
Objectives must be set in the light of the economic, social, cultural, political, tech-
nological, legal and ethical elements of the organizations environment. The inter-
actions of plans with every element of the environment are many and complex and
they affect the efficiency and effectiveness of plans. But since planning is a vital
part of all managerial jobs managers should strive to make it more effective by:

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• Understanding and following the steps in planning

• Understanding the barriers to effective planning

4.6.2. Steps in the planning process

Planning is not a random process but one that generally follows certain steps. How-
ever the steps vary depending on the nature of the plan i.e. whether major or minor.
In an exam situation always use an example to illustrate the planning process such
as plan to buy company car, plans to introduce computers etc.
Step 1: Identification of opportunities
This step includes a preliminary look at possible future opportunities and deciding
what the strengths and weaknesses of the organization are. The manager must have
a careful scan of competition, customers, and the external environment.
Step 2: Establishing objectives
Here the manager must answer the question of "where the organization wants to
tego, how and when to get there". Objectives must be established for the entire
organization and then for each unit.
Step 3: Consider planning premises
Need to establish in what environment internal or external the firm’s plans will op-
erate. Questions like what kind of markets will there be? what quantity of sales?
what prices? costs? wage rates? tax rates and policies. In premising the man-
ager establishes and obtains agreement to utilize and disseminate critical planning
premises, which are forecast data of factual nature applicable to the organizations
plans, laws and policies.
Step 4: Determine alternative courses The alternative courses of action should be
determined. For each plan there can be several and different ways of approaching
the objectives.
Step 5: Evaluate the alternatives
The alternative courses should be examined and the strengths and weaknesses de-
termined in the light of the objectives. The risks and returns involved in each alter-
native should be examined.
Step 6: Select one course of action This is the point of decision making, deciding
which out of the alternative course of action should be selected for adoption.
Step 7: Formulate derivative plans

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To support the basic plan, some derivative plans are required - for example most
plans may go with the hiring of staff and this needs other smaller plans.
Step 8: Numberise the plans by budgeting
The plans must be given meaning by converting them into budgets, for example
by showing the incomes, costs and expenses to be expected. Budgets when well
formulated become important standards against which planning progress can be
measured.

4.6.3. Barriers to Planning

1. Environmental Barriers: Most organizations operate in environments that
are complex and dynamic where the environmental factors keep changing
rapidly e.g. technology, politics and economic conditions. These changes
make it harder to develop effective plans. Plans may become obsolete even
before they are executed.

2. Poor Goal Setting ;The beginning step in planning is goal setting. If the
goals set are unrealistic either they are unattainable or too low. This will
hinder effective planning.

3. Resistance to Change; By its very nature, planning involves change. Fear of

the unknown, preferences for status quo and economic insecurity causes or-
ganizational members including managers to resist change and as such resist
planning that might cause such change.

4. Time and Expense ;Lack of time or financial resources can limit planning.
Planning takes time and the managers face many pressures and these pres-
sures may cause them to resist planning.

5. Other Constraints; Various situational constraints such as labour contracts,

government regulations, scarce resources, natural factors and disasters may
all affect planning.

4.6.4. AVOIDING THE BARRIERS

Certain guidelines if followed by managers can help them deal with the roadblocks
to planning. These include:

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1. Planning should start at the top; Top managers should set the goals and
strategies that lower level managers will follow. Top management committed
is crucial for any plan to actualise.

2. Planners should recognize the limits; Managers must recognize that no

planning system is perfect. Planning has limits and cannot be done with ab-
solute precision.

3. Communication ;Vertical communication within the organization hierarchy

can facilitate planning. People should be let to know what is expected of them
at all times.

4. Participation ;Managers who are involved in planning are more likely to

know what is going on and therefore be motivated to contribute.

5. Integration ;As much as possible the long term, intermediate and short range
plans must be properly integrated and the better they are integrated, the more
effective the organizations overall planning system.

6. Contingency planning ;Managers should develop alternative actions that a

company might follow if conditions change.

• Why people fail in planning

Besides the barriers outlined above there are several other reasons why people fail
in planning. Summarized these reasons are as follows:

• Lack of commitment to planning

• Confusion of planning studies with plans

• Failure to develop and implement sound strategies

• Lack of meaningful objectives and goals

• Underestimation of the importance of planning premises

• Failure to see the scope of plans

• Failure to see planning as a rational process

• Excessive reliance on experience

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• Lack of top management support

• Lack of adequate control measures

NB: Managers should remove obstacles to planning and try and establish a climate
in which subordinates must plan. The following guidelines could help managers to
establish a climate conducive to planning

• Planning must not be left to chance

• Planning should start at the top

• Planning must be organized

• Planning must be clear and definite

• Goals, strategies, policies and premises must be communicated clearly

• Managers must participate in planning

• Planning must include awareness and acceptance of change

4.6.5. PRINCIPLES OF PLANNING

1. Principle of Contribution to Objectives ;The purpose of all plans is to fa-
cilitate the achievement of the goals of the organization.

2. Principle of Primacy of Planning ;Says that planning should precede all

other managerial functions. All other management functions cannot be per-
formed without plans.

3. Principle of Efficiency of Plans ;Says that the efficiency of a plan should be

measured by its contributions to objectives as offset by its costs.

4. Principle of Planning Premises ;The better the understanding of planning

premises, the more co-ordinated the plans.

5. Principle of Strategy and Policy Framework; The more strategies and poli-
cies are carefully developed and understood the more consistent and effective
plans are likely to be.

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6. Commitment Principle ;Logical planning should allow a period in the future

necessary to foresee the accomplishment of plans.

7. Principle of Flexibility ;The more flexible the plans the less the loss incurred
through unforeseen events.

8. Principle of the Limiting Factor; In choosing from alternatives, only those

factors that are limiting or critical to the attainment of the goals should be
considered.

9. Principle of Navigational Change ;The more planning decisions commit for

the future, the more important it is that managers periodically check on events
and expectations and redraw plans as necessary to maintain a course towards
desired goals.

4.7. GOALS AND OBJECTIVES

4.7.1. Definition and Importance of Goals
We have already said earlier in our discussion of management that every organiza-
tion has objectives or targets that it wants to achieve. A goal is a statement of where
the organization wants to be at a specific time in the future. It is therefore a target
that the organization wants to hit.
A goal like any other target provides a clear purpose and direction for the organi-
zation’s activities. Without goals organization’s activities would be haphazard. The
organization would be without direction and hence it would be subject to the whims
of the environment. Without goals planning is also not possible. The statement of
an organization’s goal is somewhat like a constitution, it guides the behaviour of
the people in the organization.
Organizational goals can therefore be looked at as the results that an organization
strives to achieve. Organizational goals therefore play many roles in the organiza-
tion:
• They provide employees with a sense of direction concerning where the or-
ganization wants to go or is headed. So the members are able to pool their
resources and efforts together towards the stated goals.

• Goals encourage managers to use their resources more effectively and effi-
ciently.

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• Goals provide the basis for achieving organizational co-ordination

• Goals provide the basis for evaluating organizational performance as they can
be used as standards against which performance is measured.

4.7.2. Steps in goal setting

Goal setting just like planning is not a random activity but rather it is a process that
follows certain distinct steps.

• Environmental scanning and monitoring to identify opportunities and threats.

• Assessment of organizational strengths and weaknesses.

• Establishment of overall organizational goals.

• Establishment of unit goals.

• Establishment of sub-unit goals.

• Monitoring of progress toward goals attainment at all levels of the organiza-

tion.

This process of goal setting is affected by the various environmental factors. Im-
portant aspects of the environment that may affect goal setting include:

1. Political-legal forces ;These are those forces associated with governmental

and legal systems.

2. Economic forces ;These are such aspects of the economy as inflation, eco-
nomic growth, interest rates and unemployment. For example during infla-
tionary periods firms must pay more for materials and other utilities.

3. International forces; Here factors like multinational businesses, foreign in-

vestments, foreign pricing must be considered.

4. Sociocultural factors; These include customs and value that characterize

the society within which the firm operates. These influence consumer tastes,
employee attitudes and society preferences.

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5. Technological forces; Which affect modes of production and communication

methods also affect goal setting. There is also the company’s task environ-
ment which consists of dimensions that affect the organization specifically i.e.
they are unique to it and affect it in specific ways e.g. the firms customers,
suppliers, competitors and trade unions.

Notes

• All organizations have multiple goals. Goals may be by level so that at the
top goals are mainly the purpose and mission of the organization. Middle
management set goals which must follow logically from the strategic goals
of top management. Line managers also have goals which relate to specific
projects or activities pertinent to the manager’s job.

• Goals can also be by areas of function so that we have goals for marketing,
financial, production and personnel departments.

• Goals may also be classified according to their time frame so that there are
short range, medium range and long range goals.

In dealing with all these different goals, the manager must try to use his or her skills
to balance the disparate goals into a congruent set of organizational aims. This bal-
ancing is known as goal optimization and involves a trade off between different
goals for the sake of organizational effectiveness. Optimization allows the organi-
zation to pursue a unified vision and therefore helps managers maintain consistency
in their actions.

4.7.3. Barriers to effective goal setting and how to overcome them

1. Setting inappropriate goals ;These are goals that do not fit the organizations
purpose, mission or strategy - for example a church organization which is
non-profit making aiming to earn a specified profit.

2. Setting unattainable goals ; Setting goals that are impossible to achieve.

Goals should be challenging but if they are unattainable they will finally stop
being an effective incentive.

3. Overemphasizing quantitative goals; Quantitative goals are good because

they can help the manager assess the extent of goal attainment. But if they are

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overemphasized they can discourage managers. Besides a lot of the managers

work cannot be quantified e.g. improvements in morale.

4. Overemphasizing qualitative goals ; Here the manager pays too much at-
tention to subjective goals at the expense of the quantitative goals. A manager
may for example improve morale at the expense of costs.

5. Rewarding ineffective goal setting ;If managers who have had poor goal
setting are rewarded, then others in the organization may not see the need to
work diligently at goal setting.

6. Not rewarding effective goal setting ;If managers who set good goals are
not rewarded for their efforts, this serves as a discouragement to goal setting.

These barriers to goal setting can be overcome by managers using certain guidelines
to effective goal setting.

1. Understanding the purpose of goals ;Managers must understand and appre-

ciate that goals are only targets that are aimed at but not necessarily hit all the
time. A manager who sets goals and comes close to achieving them is doing
a good job.

2. Stating goals properly; Goals must be stated clearly and as far as possible
they must be concise, specific and they should indicate a time frame for their
accomplishment.

3. Ensuring goals consistency; Goals should be consistent both horizontally

and vertically i.e. between functional areas and between levels of manage-
ment. For example middle management goals should not contradict top man-
agement goals or goals of the marketing department should not contradict
those of production.

4. Communication; Once established goals must be communicated to the mem-

bers of the organization so that the employees know what they are expected
to do and hence work in a unified manner.

5. Rewarding effective goal setting; Rewarding effective goal setting can im-
prove the process of goal setting as it serves as a morale booster.

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Example . Discuss the importance of planning?

E XERCISE 10.  Discuss the barriers to effective goal setting and how you can
overcome them?

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LESSON 5
Organising

The word organization has two common meanings. The first meaning signifies an
institution, for example we refer to a school as an organization. The second deals
with organization as a process i.e. the process of organizing which is the second
basic managerial function and which mainly refers to the way work is divided and
allocated among members of the organization with the aim of goal attainment.
The process of organizing involves balancing a company’s needs for both stability
and change. It is the structure of an organization that gives stability to the actions
of its members. Change is adapted by altering an organizations structure. This
lesson is going to focus on the process of organizing with particular attention to
the basic elements of the process of organizing which include: Division of work,
departmentation, co-ordination, span of management, authority and power, line and
staff relations and organizational design.
It is the process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational
goals. According to Henry Fayol, “To organize a business is to provide it with ev-
erything useful or its functioning i.e. raw material, tools, capital and personnel’s”.
To organize a business involves determining & providing human and non-human
resources to the organizational structure. Organizing as a process involves:

• Identification of activities.

• Classification of grouping of activities.

• Assignment of duties.

• Delegation of authority and creation of responsibility.

• Coordinating authority and responsibility relationships.

Organizing is the function of management that involves developing an organiza-

tional structure and allocating human resources to ensure the accomplishment of
objectives. The structure of the organization is the framework within which effort
is coordinated. The structure is usually represented by an organization chart, which
provides a graphic representation of the chain of command within an organization.

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Decisions made about the structure of an organization are generally referred to as

’organizational design’ decisions.
Organizing also involves the design of individual jobs within the organization. De-
cisions must be made about the duties and responsibilities of individual jobs as well
as the manner in which the duties should be carried out. Decisions made about the
nature of jobs within the organization are generally called ’job design’ decisions.
Organizing at the level of the organization involves deciding how best to depart-
mentalize, or cluster jobs into departments to effectively coordinate effort. There
are many different ways to departmentalize, including organizing by function, prod-
uct, geography, or customer. Many larger organizations utilize multiple methods of
departmentalization. Organizing at the level of job involves how best to design
individual jobs to most effectively use human resources.
Traditionally, job design was based on principles of division of labor and specializa-
tion, which assumed that the more narrow the job content, the more proficient the
individual performing the job could become. However, experience has shown that
it is possible for jobs to become too narrow and specialized. When this happens,
negative outcomes result, including decreased job satisfaction and organizational
commitment and increased absenteeism and turnover.
Recently many organizations have attempted to strike a balance between the need
for worker specialization and the need for workers to have jobs that entail vari-
ety and autonomy. Many jobs are now designed based on such principles as job
enrichment and teamwork.
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 takes 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. 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.
A manager performs organizing function with the help of following steps:-

1. Identification of activities - All the activities which have to be performed in

a concern have to be identified first. For example, preparation of accounts,
making sales, record keeping, quality control, inventory control, etc. All these

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activities have to be grouped and classified into units.

2. Departmentally organizing the activities - In this step, the manager tries

to combine and group similar and related activities into units or departments.
This organization of dividing the whole concern into independent units and
departments is called departmentation.

3. Classifying the authority - Once the departments are made, the manager
likes to classify the powers and its extent to the managers. This activity of
giving a rank in order to the managerial positions is called hierarchy. The top
management is into formulation of policies, the middle level management
into departmental supervision and lower level management into supervision
of foremen. The clarification of authority help in bringing efficiency in the
running of a concern. This helps in achieving efficiency in the running of a
concern. This helps in avoiding wastage of time, money, effort, in avoidance
of duplication or overlapping of efforts and this helps in bringing smoothness
in a concern’s working.

4. Co-ordination between authority and responsibility - Relationships are

established among various groups to enable smooth interaction toward the
achievment of the organizational goal. Each individual is made aware of his
authority and he/she knows whom they have to take orders from and to whom
they are accountable and to whom they have to report. A clear organizational
structure is drawn and all the employees are made aware of it.

Koontz defines organizing as "the grouping of activities necessary to attain objec-

tives, the assignment of each grouping of activities to a manager with authority
necessary to supervise it, the provision for coordination vertically and horizontally
in the enterprise structure.” Another definition refers to organizing as the process
of identifying and grouping the work to be performed, defining and delegating re-
sponsibility and authority and establishing relationships for the purpose of ensuring
people to work together effectively.
Specifically organizing is the process of grouping activities and resources in a logi-
cal and appropriate fashion.
Most organizations start in one form and then evolve into other forms as they grow,
shrink or otherwise change. Organization process involves shaping the organization

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as it grows, shrinks or changes.

5.1. Importance of Organizing Function

1. Specialization
Organizational structure is a network of relationships in which the work is divided
into units and departments. This division of work is helping in bringing specializa-
tion in various activities of concern.

2. Well defined jobs

Organizational structure helps in putting right men on right job which can be done
by selecting people for various departments according to their qualifications, skill
and experience. This is helping in defining the jobs properly which clarifies the role
of every person.

3. Clarifies authority
Organizational structure helps in clarifying the role positions to every manager (sta-
tus quo). This can be done by clarifying the powers to every manager and the way
he has to exercise those powers should be clarified so that misuse of powers do
not take place. Well defined jobs and responsibilities attached helps in bringing
efficiency into managers working. This helps in increasing productivity.

4. Co-ordination
Organization is a means of creating co- ordination among different departments of
the enterprise. It creates clear cut relationships among positions and ensure mu-
tual co- operation among individuals. Harmony of work is brought by higher level
managers exercising their authority over interconnected activities of lower level
manager.

5. Effective administration
The organization structure is helpful in defining the jobs positions. The roles to be
performed by different managers are clarified. Specialization is achieved through
division of work. This all leads to efficient and effective administration.

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6. Growth and diversification

A company’s growth is totally dependant on how efficiently and smoothly a con-
cern works. Efficiency can be brought about by clarifying the role positions to the
managers, co-ordination between authority and responsibility and concentrating on
specialization. In addition to this, a company can diversify if its potential grow. This
is possible only when the organization structure is well- defined. This is possible
through a set of formal structure.

7. Sense of security
Organizational structure clarifies the job positions. The roles assigned to every
manager is clear. Co- ordination is possible. Therefore, clarity of powers helps
automatically in increasing mental satisfaction and thereby a sense of security in a
concern. This is very important for job- satisfaction.

8. Scope for new changes

Where the roles and activities to be performed are clear and every person gets in-
dependence in his working, this provides enough space to a manager to develop his
talents and flourish his knowledge. A manager gets ready for taking independent
decisions which can be a road or path to adoption of new techniques of production.
This scope for bringing new changes into the running of an enterprise is possible
only through a set of organizational structure

5.2. The Process of Organization

5.2.1. The Key Organizing Components
The process of organizing involves certain key components and concepts which
actually constitute various aspects of an organizational structure. These include:

1. Job design

2. Grouping of jobs

3. Authority and responsibility

4. Coordination

5. Span of management

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6. Line and staff relations

• Designing jobs
Job design is the process of determining what procedures and operations are to be
performed by the employees in each position. The basis for all design job activities
is job specialization which involves a definition of the tasks that distinguish one job
from others. Jobs are broken into small simple and separate operations in which
each work can specialize.
Because no one person is physically able to perform all the operations in most com-
plex tasks, and no one person is able to acquire all the needed skills for a job, there
is need to specialize and divide work according to the areas of specialization. Job
specialization therefore has certain advantages: People are able to become experts
in their areas of function, simplified tasks can be learned in a relatively short time
and can be completed quickly, the availability of a variety of jobs makes it possi-
ble to choose. Managers are able to exercise greater control over workers, as they
can easily observe and monitor employees doing simple jobs. However it is pos-
sible to overspecialise and this has various disadvantages: It can lead to boredom
and dissatisfaction, and staff may look for more exciting work elsewhere, too much
time may be spent passing the work from one person to another so that efficiency is
actually reduced.
The limitations of job specialization can however be overcome by using other alter-
natives to specialization. These include:

• Job rotation: where employees are rotated across several narrowly defined
and standardized jobs.

• Job enrichment: where there is more discretion or freedom how jobs may be
completed.

• Job enlargement: where the job is changed to include more activities.

• Grouping jobs (departmentalization)

After jobs have been designed the next step in organizing process is to group them
into logical sets. The step is important because properly grouped jobs make coor-
dination and integration of activities much easier. This process of grouping jobs is

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Figure 5.1: Departmentation by Function

known as departmentalization. Departmentation usually groups jobs according to

one of these three bases: function, product and location.
Departmentation by function
In this form of departmentation employees who are involved in the same or very
similar functions are grouped together. Most organizations using this form of de-
partmentalization end up with the four basic functional departments: marketing,
production, finance and human resource. Departmentalisation by function has cer-
tain advantages:

• It is logical because it groups like or similar activities together. This facilitates

specialization which could lead to increased productivity.

• Coordination is improved since work is not duplicated.

• It also contributes to organizational simplicity.

• Each department is staffed by experts in that particular function and therefore

managers in charge of each function can keep close control of the activities.

Departmentalisation of functional areas also has certain limitations. It is ideal for

small organizations but as the organization grows some weaknesses become appar-
ent and complex.

• The chain of command becomes excessively long as new levels are added.
This may slow down communication.

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Figure 5.2: Departmentation by peoduct

• It does not allow departmental managers to develop much understanding of

the activities in other departments—so it becomes difficult to develop well
rounded executives.

• It tends to slow decision making. Employees might concentrate so much on

their functional specialities that they lose sight of the total organization.

Departmentalisation by product
Here the activities associated with individual products or closely related product
lines are grouped together. It is extensively used in many retailing and manufactur-
ing organizations. This form of departmentalization has certain advantages:

• All activities associated with unique products are kept together;

• It facilitates use of specialised capital, facilitates a certain type of coordina-

tion and permits maximum use of personal skills and specialized knowledge.

• Internal competition is promoted—one product line competes with another.

The performance of the manager of a product is measured in part by com-
paring his results against those of the manager of another product. A good
example in Kenya would be EAI and its brand managers.

• Profitability of various products is more easily evaluated. It is possible to

determine which products or product lines are making losses.

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Figure 5.3: Departmetalization by Location

This form of departmentalization also has certain disadvantages:

• additional management personnel may be required to handle different product

lines.

• some duplication of efforts may result. Each product line may require its own
accountant, engineer, marketing and production staff. Personnel costs may as
a result outweigh the benefits of product departmentation.

• Coordination may be difficult. This is especially true for firms with many
product lines i.e. complex organizations.

Departmentalization By Location
Here jobs that are in one location or nearby locations are grouped together into one
department and allocated a manager.
As an organization grows bigger geographical departmentation becomes necessary
with geographical departments. Ultimate authority for performing the basic orga-
nizational functions is still retained by headquarters, but some authority for their
performance is delegated to the departments on a geographical basis.

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In departmentalizing by location considerations for the following must be made,

economic factors, climatic factors, legal and political factors and convenience to
customers.
Advantages:
• Decentralization allows the branches to react to local conditions more appro-
priately.

• Faster decisions because consultation with headquarters is minimised.

• Provides a good training ground for general managers.

Problems:
• Control remote branches feel too independent and thus hinder control.

• Branches are expensive to run.

• There is duplication of resources especially human resources.

Other forms of departmentalization
There are several other ways in which an organization could be departmentalized.
These include among others:
• departmentation by customers here activities are grouped so that they can
serve the needs of specific customers. Used in businesses where customers
have heterogeneous characteristics e.g. foreign and local buyers, domestic
and industrial consumers or even in hospitals according to patient needs.

• manufacturing firms also often group activities around a process or type of

equipment—here people and materials are brought together in order to carry
out a particular operation.

• departmentation of sequence occurs when a sequence of numbers or other

identifying characteristics defines the separation of activities.
Note
The discussion above has considered bases of departmentation in their pure form,
but in reality most organizations use multiple or combined bases. A firm could,
for instance use product departmentation at the top but departmentalize each prod-
uct group by function. Each marketing department could then be broken down by
location. Bases of departmentalization could also be mixed at the same level.

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• Authority and Responsibility

This involves the determination of how authority and responsibility are managed
in the organization. At the level of individual manager and his subordinates it in-
volves the delegation process. At the level of the total organization it relates to
decentralization.
Delegation
Delegation can be defined as the act of assigning formal authority and responsibility
for completion of specific activities to subordinates. Delegation is necessary since
no superior can personally accomplish and supervise all the tasks in the organiza-
tion.
Delegation to subordinates does not make managers any less responsible to their
superiors. Delegation of responsibility does not mean abdication of responsibility
by the delegating managers. After delegation the delegating manager still retains the
responsibility for the accomplishment of the tasks. In short the delegating manager
must answer why a delegated activity was not done, remains responsible for any
necessary mistakes caused by subordinates to whom he delegated. In other words
one does not delegate responsibility because responsibility always remains with the
delegating manager.
The extent to which managers delegate authority and accountability is influenced
by such factors as the culture of the organization, the specific situation involved
and the relationships, personalities and capabilities of the people in that situation.
In delegating the manager must first assign responsibility, then he must grant the
authority necessary to carry out the task and finally he must create accountability.
Barriers to delegation
Managers may be reluctant to delegate because of several reasons:

• Negative personal attitudes some managers may lack confidence and trust in
their subordinates and therefore find it difficult to delegate to them.

• Unreceptiveness of other peoples views some managers are unable to wel-

come other peoples views.

• Unwillingness to let go delegation entails willingness to give others the right

to use their discretion. Managers who are unwilling to part with some of their
authority find it difficult to delegate.

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• Unwillingness to let others make mistakes mistakes are part of learning and
subordinates must be allowed to make mistakes, but managers who fear to be
let down by subordinates mistakes will not delegate easily.

• Perceived threat superiors are usually afraid of being replaced or outshone by

brighter and better educated subordinates, and hence may limit the authority
they pass to them.

• A feeling of inadequacy a manager who is not competent fears that they will
expose their lack of skill through delegation.

Guidelines For Effective Delegation:

The guideline presented in the following sections can help ensure that authority is
delegated properly:

1. Grant proper amount of authority ;This is the principle of parity of au-

thority and responsibility. It means that responsibility for results cannot be
greater than the authority delegated. Conversely responsibility should not be
less than the authority delegated. Enough authority should always be dele-
gated to achieve the desired results. Failure to delegate the necessary author-
ity to discharge the responsibility implies that subordinates should not be held
responsible for it would be both unsatisfactory and inequitable. At the other
extreme too much authority can result in a manager’s "running away" from
the situation to the detriment of the organization e.g. too much authority over
money may lead to misappropriation and improper investments by managers.

2. Define the results; expected Another helpful approach is for the delegator to
make sure he or she has clearly defined the results expected. If a manager
defined precisely what is to be done, he or she is in a much better position to
decide how much authority to delegate.

3. Consider the capabilities of the subordinate; In delegating it is important

that the manager considers the experience background and intelligence of the
person to whom authority is to be assigned. Generally the more able the
individual, the more authority the person will be able to handle. However,
allowances for mistakes should be made.

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4. Make sure the authority is clearly stated; If authority is not clearly ex-
plained problems can develop. Authority relationships should be clear not
only to the subordinates but to all others concerned as well. The person in
charge should be known to everyone involved in an activity i.e. all those
concerned should know where authority resides.

5. Modify the authority whenever necessary; Managers should maintain a

flexible attitude about what kind of and how much authority to delegate. Be-
cause of changes in the external environment (new laws, economic conditions
etc.). Authority is always revocable or subject to modification. It can always
be taken back, increased, decreased, or otherwise changed by the person who
granted it in the first place.

6. Follow unity of command and chain of command; Ideally, authority should

be delegated so that each individual reports to only one superior. Doing so is
often not possible because of the need for staff specialists, who frequently are
given functional authority. It is also important for each person to know the
source of authority delegated to him or her. Each manager at all levels should
know what decisions should be made by him or her and what decisions must
be passed upward to a superior. When this chain of command is violated, the
working authority of a manager is endangered.

7. Develop a willingness to delegate; Without delegation no organization can

function well, and some of the largest obstacles to effective delegation are
psychological. Lack of courage to delegate properly and of the knowledge
of how to do it is one of the most general causes of failure in an organiza-
tion. Many managers are afraid to delegate authority because they fear the
subordinate will not perform satisfactorily and thus will make them look bad.
Two observations are in order in dealing with fear of subordinates. First, an
effective organization is never built by holding good people back. Second, an
old maxim in management states, "managers are judged not by what they do
but by what they cause others to do".

8. A supportive climate; A supportive managerial climate free of fear and frus-

tration should prevail. Mistakes should be treated as teaching points and not
causes for reprimand. A supportive and positive attitude towards subordinates

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should be maintained. Participative management styles are more suitable than

authoritative ones for effective delegation.

9. Free communication; Delegation works best where superiors and subordi-

nates communicate freely.

10. Control techniques; Control ensures that the delegated authority is not being
abused. Control tools should not however interfere with the day to day work
of subordinates.

Advantages of delegation

• Delegation enhances prompt action as no consultation is needed before deci-

sions are made.

• It enables the superiors to perform higher levels of work. This is because

decisions are made at the lowest competent levels.

• It helps subordinates develop themselves professionally by doing challenging

work. Subordinates become competent.

• Decisions are likely to be better as they are made at the lower levels of the
organization close to where the problems are.

• Delegation also improves morale. Delegation means job enrichment and

management by objectives which enhance morale and commitment.

Disadvantages of delegation

• The subordinate may make a serious mistake regarding the delegated work,
but the superior will take the blame.

• The subordinate may have the knowledge and skills to do the delegated work,
but he or she may not put in maximum effort as the superior would do.

• If you assign responsibility without authority, the delegated work will not be
properly done.

• If you delegate work to someone who avoids decisions he will not make mis-
takes but the work will suffer.

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Decentralization
The results of maximum delegation throughout the organization is decentralization.
Under decentralization power and control are systematically delegated to lower lev-
els in the organization.
In general decentralization is pursued when the environment is complex and uncer-
tain, when lower level managers are talented and want more say in decision making
and when the decisions being made are relatively minor.
The opposite of decentralization is centralization, by which power and control are
systematically kept at the top of the organization. Decentralization as a philosophy
of management involves:

• Selectively determining what authority to push down to subordinates.

• Developing policies and procedures to guide subordinates on how to use this

authority.

• Controlling the use of this authority.

• Geographical relocation of activities.

Factors determining the degree of centralization or decentralization:

• Number of decisions made at lower levels. The greater the number the greater
the degree of decentralization.

• The importance of the decision if decisions at lower levels affect important

aspects of the organization, then the degree of decentralization will be re-
stricted.

• Costliness of decisions this is probably the most important factor as managers

are reluctant to delegate authority for crucial decisions. Generally the more
costly the action to be decided, the more likely that it will be made at higher
levels.

• Need for uniformity in policy usually where uniformity of policy is required

centralization is favoured.

• Size of the organization usually the larger the organization the more the need
to decentralize. Larger organizations with larger numbers of people must be
divided to fairly autonomous divisions to facilitate efficient management.

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• Management philosophy i.e. the orientation of top management.

Advantages of decentralization

• People working in the line units can make quick decisions without reference
to their superiors all the time.

• High morale and staff motivation exists because the middle and junior man-
agers are encouraged to use their initiatives to be responsible for their work.

• Decisions concerning conditions and situations are flexible and adaptable.

This is useful for rapid changes in the organisation and beneficial in the com-
petitive market.

• Top managers are relieved of work overload which is diffused. They can get
more time to put their efforts on policies, objectives and strategies. This is
useful for growth, expansion and better profitability in their organisations.

Disadvantages of decentralization

• It is difficult to get capable managers who are well motivated to be responsible

for handling additional responsibility.

• Decentralization may lead to inconsistent treatment of customers or members

of the public. This may lead to loss of business if the market has major
competitors.

• Decentralization leads to ineffective communication unless adequate control

systems are established in the organisation.

• Parochial attitudes may be developed by some subsidiary units in the decen-

tralized organisations. They may consider their own needs instead of the
corporation needs.

• It is difficult to exercise effective control and co-ordination of activities in

decentralized organisations. The individual units can sometimes work against
the corporate goals and objectives.

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Conclusion An organisation is better off if it uses a decentralised structure but

maintain adequate control and co- ordination of all functional activities.
Centralization
An organisation is centralized if its main areas of authority are handled by a few
senior managers in the head office. The managerial functions of planning, research
and development, personnel and finance functions are not delegated with enough
authority. There is little diffusion of appropriate authority because the senior man-
agers at the centre do not want to delegate more work to their subordinates.
Advantages of centralization

• Decisions are made quickly and co-ordinated easily at one point.

• Top managers take a wider view of problems and consequences. A proper

balance is maintained between different departments and functions especially
regarding resource allocation.

• Quality of decisions are theoretically supposed to be higher because of senior

manager’s better skills and experience.

• Crisis decisions are taken at the centre more quickly without any need to refer
back to get authority.

• Policies, regulations and procedures can be standardized organisation-wide.

• Finally it is possibly cheaper to reduce the number of managers as this will

lower the overhead costs.

Disadvantages of centralization

• Rules and regulations are functional hence the employees feel that their su-
periors issue orders to hold powers over the subordinates. This reduces the
effectiveness of interpersonal communication and increases tensions between
the superiors and their subordinates.

• Rules are dysfunctional because employees use them to learn the meaning of
minimum behaviour and productivity which is expected from them.

• Complexy of decisions and bureaucracy leads to slow decision making pro-

cess. Innovation and creativity are discouraged. The subordinates do not have
chance to think and make their decisions which they have initiated.

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• Customer responsiveness is slow as the top managers are not near their cus-
tomers.

• Centralized organisations tend to be bureaucratic and slow to adapt to new

changed conditions.

• Control system is outdated because feedback on errors is used to initiate cor-

rection after the problems have happened but not preventing such problems.
If the key groups of managers at the centre want to delegate more work to
their subordinates then they must give appropriate authority to the employ-
ees.

• Span of Control
The fourth element of the process of organizing is the concept of span of control also
known as span of management. Span of control refers to the number of subordinates
that one manager can supervise directly.
The manager faces certain limitations, he has limited time, limited personal capa-
bility and he can only give attention to and concentrate only on a limited number of
subjects at a time. These limitations support the concept of span of control and also
indicate that the optimum span varies among individuals and among organizations.
The principle of span of control states that, the number of subordinate positions
directly reporting to a superior position should be that number which is considered
as optimum and which balances:

1. the essential subordinate activities

2. the spans of personality knowledge, energy and attention of the superior

3. the communication and

4. the expenses associated with additional levels of management.

The actual span of control cannot be rigid and universal. It should be determined
on the basis of:

1. Personal quality of both the superior and subordinate and

2. The number of important activities at the next lower level of the organization
structure.

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The span of control will therefore vary according to the following factors:

• Ability of both subordinate and boss where they are both capable and com-
petent then a large span is possible.

• Level of the superior in the hierarchy the higher the superior is in the organi-
zational hierarchy, the narrower the span of control.

• Faith in the subordinates (if the superior has faith in subordinates then there
will be a higher span due to more delegation.

• Nature and type of work (if work is highly dynamic and volatile then a nar-
rower span is favourable.

• Physical dispersion of subordinates if subordinates are scattered in several

locations then the manager can only supervise a few.

• Number of other non supervisory duties of the manager if the manager has
many other non supervisory tasks, then he can only supervise less subordi-
nates.

• Need for communication (if need for communication is frequent then a lim-
ited span is preferable.

• The type of organization and management clear and comprehensive plans

and policies at all levels reduce the volume of personal decision making of
the manager therefore its span of control can easily increase.

Tall and Flat Organizations

The number of the span of control affects both group effectiveness and overall orga-
nizational effectiveness. A manager who has a large number of subordinates is said
to have a wide span of control. One who has few subordinates has a narrow span of
control. A wide span of management results in an organization that has relatively
few levels of management a flat organization.
A narrow span adds more layers of management and therefore leads to a tall or-
ganization. In general flat organizations tend to be characterized by greater com-
munication between lower and higher management, greater ability to respond to
environmental changes and lower total managerial costs. Spans tend to be larger
when:

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• people are competent

• people prefer low supervision

• tasks are similar

• work is standardized

Spans tend to be smaller when:

• people are widely dispersed

• manager has a lot of other work

• required interaction is high

• new problems frequently arise

The span of control has direct effect on communication and therefore on effec-
tiveness. Where the span is narrow and therefore the structure is tall, there may
be ineffective, inaccurate and incomplete communication due to the many levels
and this could lead to decreased morale and increased executive payroll besides the
possible redtape that may accompany the many levels.
With short structures where the span is wide, supervision and control may be unsat-
isfactory and this may lead to decreased productivity or increased costs of training
high calibre managers.

• Line and Staff Relations

Line and staff relationships are important in organizations but this is one area of
management that causes much confusion and conflict. Line authority follows from
the scalar principle as being that relationship in which a superior exercises direct
supervision over a subordinate. They are therefore the positions in the direct chain
of command with specific responsibility for accomplishing the goals of the organi-
zation.
Staff positions are advisory. Their function is to investigate, research and give ad-
vice to the line managers who they support. Staff positions are therefore outside the
direct chain of command and are primarily supportive in nature. These distinctions
between line and staff are becoming less clear as managers realize that everyone in
the organization is part of the same team and that all are important for effectiveness.

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The distinction is however important as a way of organizational life. Superior and

subordinates must know whether they are acting in a staff or line capacity. If staff,
they must realize their job is to advise and not command. The commands and the
decisions must be made by the line superiors through the chain of command.

• Co-ordination
If work activities are divided and departmentalized, it is necessary for managers to
coordinate these activities to achieve organizational goals.
The ability of managers to achieve effective coordination depends in part on the
number of subordinates reporting to them. The number of subordinates reporting
to one manager constitutes his or her management or span of control. The larger
the span the more difficult it may be to coordinate and supervise the activities of
subordinates. This is further discussed in lesson 7 of these series.

5.3. Principles of Organizing

The organizing process can be done efficiently if the managers have certain guide-
lines so that they can take decisions and can act. To organize in an effective manner,
the following principles of organization can be used by a manager.

1. Principle of Specialization
States that work should be divided and grouped in a logical manner in order to
eliminate duplication of effort and other forms of waste.
According to the principle, the whole work of a concern should be divided amongst
the subordinates on the basis of qualifications, abilities and skills. It is through divi-
sion of work specialization can be achieved which results in effective organization.

2. 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 defin-
ing the duties, responsibilities, authority and relationships of people towards each
other. Clarifications in authority- responsibility relationships helps in achieving co-
ordination and thereby organization can take place effectively. For example, the
primary functions of production, marketing and finance and the authority respon-
sibility relationships in these departments shouldbe clearly defined to every person

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attached to that department. Clarification in the authority-responsibility relationship

helps in efficient organization.

3. Principles of Span of Control/Supervision

According to this principle, span of control is a span of supervision which depicts
the number of employees that can be handled and controlled effectively by a single
manager. According to this principle, a manager should be able to handle what
number of employees under him should be decided. This decision can be taken by
choosing either froma wide or narrow span. There are two types of span of control:-

a) 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:-
i. Less overhead cost of supervision
ii. Prompt response from the employees
iii. Better communication
iv. Better supervision
v. Better co-ordination
vi. Suitable for repetitive jobs
According to this span, one manager can effectively and efficiently handle a large
number of subordinates at one time.

b. Narrow span of control

According to this span, the work and authority is divided amongst many subor-
dinates and a manager doesn’t supervises 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:-
i. Work which requires tight control and supervision, for example, handicrafts,
ivory work, etc. which requires craftsmanship, there narrow span is more helpful.
ii. Co-ordination is difficult to be achieved.
iii. Communication gaps can come.
iv. Messages can be distorted.
v. Specialization work can be achieved.

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Factors influencing Span of Control

1. Managerial abilities- In the concerns where managers are capable, qualified
and experienced, wide span of control is always helpful.

2. Competence of subordinates- Where the subordinates are capable and com-

petent and their understanding levels are proper, the subordinates tend to very
frequently visit the superiors for solving their problems. In such cases, the
manager can handle large number of employees. Hence wide span is suitable.

3. Nature of work- If the work is of repetitive nature, wide span of supervision

is more helpful. On the other hand, if work requires mental skill or crafts-
manship, tight control and supervision is required in which narrow span is
more helpful.

4. Delegation of authority- When the work is delegated to lower levels in an

efficient and proper way, confusions are less and congeniality of the environ-
ment can be maintained. In such cases, wide span of control is suitable and
the supervisors can manage and control large number of sub- ordinates at one
time.

5. Degree of decentralization- Decentralization is done in order to achieve spe-

cialization in which authority is shared by many people and managers at dif-
ferent levels. In such cases, a tall structure is helpful. There are certain
concerns where decentralization is done in very effective way which results
in direct and personal communication between superiors and sub- ordinates
and there the superiors can manage large number of subordinates very easily.
In such cases, wide span again helps.

3. 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, commu-
nication 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 bot-
tom, it clarifies the authority positions to managers at all level and that facilitates
effective organization.

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4. Principle of Unity of Command

It implies one subordinate-one superior relationship. Every subordinate is answer-
able and accountable to one boss at one time. This helps in avoiding communication
gaps and feedback and response is prompt. Unity of command also helps in effec-
tive combination of resources, that is, physical, financial resources which helps in
easy co-ordination and, therefore, effective organization.
However this principle is often violated. In organizations there are many people
who are responsible to two or more persons. Failure to adhere to the principle of
unity of command may result into confusion because the individual is not sure of
the superior to whom he/she reports; or she/he fears that if allegiance is shown, to
manager A, probably manager B will be offended and he can take punitive mea-
sures. Inefficiency can arise if the subordinate serves both A and B then some of
his/her work falls below perceived standards.

5. Adequacy of Authority
This means that each manager in the organization should be given sufficient author-
ity to achieve the desired results.

[Link] of Objective
It states that all individuals in the organization and the departments to which they
belong should contribute to the principal objectives of the organization. So an or-
ganization structure is effective if it facilitates the contribution of individuals in the
attainment of organizational objectives.

[Link] of Efficiency
An organization structure is efficient if it facilitates accomplishment of objectives
by people with the minimum possible costs and other unsought consequences.

8. Responsibility for Results

States that even if a superior delegates adequate authority to a subordinate, the
superior is still responsible for the results if the goal is not attained.

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[Link]
The responsibility for results principle does not however relieve subordinate man-
agers of their responsibility to perform. It holds that when managers accept a plan
from their superiors, they are duty bound to carry it out i.e. they are accountable to
their superiors for the results.
The principles should not be viewed by managers as absolute measures but rather
as guidelines that must be applied in the light of the circumstances prevailing in
the organizations. It is possible to find that some of the principles are completely
inapplicable to some of the local firms in Kenya especially due to the nature of own-
ership and size. For example in a small family concern where different members of
the family run the firm together, the unity of command principle may prove difficult
to apply.

Classification of Organizations
Organizations are basically classified on the basis of relationships. There are two
types of organizations formed on the basis of relationships in an organization:

1. Formal Organization
This is one which refers to a structure of well defined jobs each bearing a measure
of authority and responsibility. It is a conscious determination by which people
accomplish goals by adhering to the norms laid down by the structure. This kind
of organization is an arbitrary set up in which each person is responsible for his
performance. Formal organization has a formal set up to achieve pre- determined
goals.
A formal organization comes into being when:

• persons are able to communicate with one another

• when they are willing to act and

• when they share a purpose

2. Informal Organization
It refers to a network of personal and social relationships which spontaneously orig-
inates within the formal set up. Informal organizations develop relationships which

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are built on likes, dislikes, feelings and emotions. Therefore, the network of social
groups.
E XERCISE 11.  Create an organisational structure for the business you intended
to start in the previous lesson.
E XERCISE 12.  In groups, research on approaches to organisational designs and
do a presentation on the above in a class setting.
Example . Advantages of delegation?
Solution:

Delegation enhances prompt action as no consultation is needed before decisions

are made.
It enables the superiors to perform higher levels of work. This is because decisions
are made at the lowest competent levels.
It helps subordinates develop themselves professionally by doing challenging work.
Subordinates become competent.
Decisions are likely to be better as they are made at the lower levels of the organi-
zation close to where the problems are.
Delegation also improves morale. Delegation means job enrichment and manage-
ment by objectives which enhance morale and commitment.


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LESSON 6
Controlling

It involves regulating organizational activities so that actual performance conforms

to expected standards and goals. It ensures that actual performance or events con-
form to planned performance as closely as possible. Unplanned actions cannot be
controlled.

6.1. Organizational Control

Managers must monitor & evaluate:

• Are we efficiently converting inputs into outputs?

• Must accurately measure units of inputs and outputs.

• Is product quality improving?

• Are we competitive with other firms?

• Are employees responsive to customers?

• Customer service is increasingly important

• Are our managers innovative in outlook?

• Does the control system encourage risk-taking?

6.1.1. Characteristics of control

I. It is an essential function of management.
• Control follow up action to other management functions.

• It completes the management function

II. Control is a continuous process

• It is an ongoing and dynamic process.

• Involves continuous review of performance and revision of standards of op-

eration.

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III. Control is based on planning

Measurement of performance requires certain standards which are laid down under
planning.

IV. Action is the essence of control

Essence of control lies in action taken to correct performance. Mere measurement
does not achieve control.

V. Information is the guide to control

Control action to be taken depends on timely availability of adequate information
regarding actual performance.

VI. Control aims at future

• Looking at the future through the eyes of the past.

• Past is the basis for regulating action in future.

6.1.2. Control Systems

These are systems that provide managers with information to determine if strategy
and structure are working effectively and efficiently. E.g. Formal, target-setting,
monitoring, evaluation and feedback systems.
A good control system should:

• Be flexible so that managers can respond as needed.

• Provide accurate information about the organization.

• Provide information in a timely manner.

Types of Control
There are three types of control;

Feedforward:
Used in the input stage of the process.

• Managers anticipate problems before they arise.

• Managers can give rigorous specifications to suppliers to avoid quality prob-

lems.

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Concurrent:
Gives immediate feedback on how inputs are converted into outputs.

• Allows managers to correct problems as they arise.

• Managers can see that a machine is becoming out of alignment and fix it.

Feedback:
Provides after the fact information managers can use in the future.

• Customer reactions to products are used to take corrective action in the future.

Control Process Steps

1. Establish standards, goals, or targets against which performance is to

be evaluated. Standards must be consistent with strategy, for a low cost
strategy, standards should focus closely on cost. Managers at each level need
to set their own standards.

2. Measure actual performance: managers can measure outputs resulting from

worker behavior or they can measure the behavior themselves. The more
non-routine the task is, the harder to measure. Managers then measure the
behavior (come to work on time) not the output.

3. Compare actual performance against chosen standards. Managers must

decide if performance actually deviates. Often, several problems combine
creating low performance.

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4. Evaluate result and take corrective action. Perhaps if the standards have
been set too high, workers may need additional training, or equipment. This
step is often hard since the environment is constantly changing.

6.2. The Steps Elaborated

Setting of standards
Many managers fail to set standards. More often than not, what constitutes "an
honest day’s work" or "good service" is not clear. The failure in clearly defining
performance standards make effective control impossible.
Performance standards are needed for all activities performed by a firm. Standards
are performance targets. Managers attempt to at least meet them and perhaps, ex-
ceed them. They may be either quantitative or qualitative.

• Quantitative Standards

Quantitative standards are criteria for judging performance that can be expressed in
money time exposed, proportions and percentages, weights, distance or some other
numerical style. Quantitative standards have two major advantages; they are rea-
sonably precise. That is required level of performance is stated in terms managers
understand, they are relatively easy to measure. This is simply because quantitative
standards mean about the same thing to all supervisors. Some of the most common
quantitative standards are discussed below:

1. Time Standards They indicate how much time is needed for a specific result.

2. Cost Standards Cost standards indicate how much money should be spent to
perform a particular task.

3. Revenue Standards Revenue standards show how much income should be

earned from specific activities.

4. Historical Data Organizations often use past performance as a basis for esti-
mating future satisfactory performance.

5. Market Share This standard concerns the percentage of the total market that
a firm would want to acquire and maintain.

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6. Productivity standards are needed in all activities in an organization. Pro-

ductivity is a key standard, since it indicates the efficiency with which activi-
ties are conducted.

7. Return on Investment (ROI) Is the ratio of net income to invested capital.

Firms with several divisions often use ROI as a measuring device for different
divisions as well as for the company as a whole. It helps to show managers of
divisions how well they have employed the capital assets assigned to them.

8. Profitability (Return on Sales) Can be expressed as a ratio of net profits to

sales. If a firm falls below what management considers a fair return on sales,
corrective action is indicated. Profitability standards may be based on past
experience, performance of other similar firms, and judgement.

9. Quantitative Personnel Standards Personnel standards can be set for such

items as employee turnover, accidents, absenteeism, and suggestions received
from employees.

• Qualitative Standards

A basic drawback of qualitative standards is that it is difficult to apply them to all

operations in a firm. Not all standards can be expressed in time, weights, percent-
ages, money. or other measures. For examples the goal of an organization may be
"to maintain a good relationship with the trade union". Does the absence of a strike
or showdown necessarily indicate existence of a good relationship with the union?
Because of this basic drawback, qualitative standards are also needed.
Qualitative standards are subjective standards used to evaluate situations that can-
not be expressed numerically. For example, "employees are expected to be neatly
dressed". Because they are subjective, qualitative standards are difficult to use in
performance evaluation.

Guidelines for setting standards

1. Set standards at appropriate levels Standards should be set at a reasonably
attainable level under the prevailing conditions. If work standards are set
too low, resources (human and non-human) are wasted; if they are set too
high, mistakes, frustration and a host of other problems will result. Managers

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should carry out time-and-motion studies of production activities in order to

develop realistic standards.

2. Keep standards to a reasonable number In many cases an excessive num-

ber of standards are set. This wastes managers time and creates resentment.
Some jobs are "over-engineered". So many standards are set that it becomes
too time-consuming. This interferes with managers "real" or important activ-
ities.

3. Have people expected to meet standards, help set them. Many people do
not like standards that are imposed on them without their having any say in
the matter. Participation in setting standards goes a long way in making them
acceptable.

4. Communicate standards effectively In well-managed organizations, each

employee knows what standards have been set for his/her performance and
the degree to which he/she is meeting them.

5. Explain why standards are required People accept standards much more
readily when they understand why more standards are needed.

6. Condition people to want higher standards An important art in managing

is to motivate personnel to want even higher, though attainable standards.

Measuring Performance
Step 2 in the control process is to measure performance against standards. It in-
volves comparing what was accomplished with what was intended to be accom-
plished. Measuring performance follows the setting of a standard and precedes the
taking of remedial action.
A standard would be meaningless unless the degree to which it is met is determined.
It is pointless to set a per-unit production cost of Kshs.10 and then not measure
actual costs.
Measuring performance tells managers when corrective action is required. In other
words, measurement of performance helps managers to answer such key questions
as "how well are we doing?" and "What should be done to improve performance?"

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In some cases performance can be measured objectively with considerable preci-

sion. In other cases, it must be measured subjectively. Performance can be mea-
sured by strategic devices, ratio analysis, personal observation and level of satisfac-
tion.

Guidelines for measuring performance

Measurement of performance can be made effective if the following guidelines are
followed:

1. Be economical—Although standards should be set for all activities, precise

measurement of every activity may cost more than it is worth. It is common
to find a firm that requires its personnel to complete lengthy reports that are
never used. Another firm may install sophisticated devices to detect minute
deviations. Measurement can be made economical by the use of sampling.
Also, management should concentrate on strategic control points.

2. Be prompt—Delays in measuring performance automatically create delays

in taking corrective action. The sooner a deviation from the norm is brought
to the attention of the manager concerned the more quickly the problem can
be rectified.

3. Be accurate—Accurate measurement leads to the right corrective action.

The opposite is true. It is possible to measure the performance of some activ-
ities very accurately by machines and devices. However, measuring perfor-
mance solely by observation may lead to errors.

4. Be systematic—As much as possible, the information used to measure per-

formance should be collected and disseminated systematically. Through com-
puterisation, a vast amount of needed information can be obtained if the right
management information system (MIS) is designed MIS is discussed in the
next chapter.

6.3. Taking Corrective Action

Corrective actions are called for when performance fails to meet the standards set
for it. Corrective action may involve a very simple act, such as adjusting a machine

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or giving an employee a demonstration on how to use a particular machine. It may

also be very complicated, like turning around an unprofitable organization.
Corrective actions also vary in the time required to effect them. Routine malfunc-
tion may be corrected immediately. But complex problems may require months or
even years to rectify.

Guidelines for Taking Corrective Action

The following guidelines are useful in making corrective action effective:

1. Deal with problems, not symptoms—Managers should search for the fun-
damental problem and not base remedial action on symptoms. Lack of mo-
tivation is usually not the real problem. It is only a symptom of one or more
underlying problems. It may be caused by ineffective supervision, poor work-
ing conditions, or some other problem.

2. Be prompt in taking corrective action—A common error in managing is

failure to take corrective action promptly when standards are not met. Man-
agers should be encouraged to take corrective action quickly. The old saying
"A stitch in time saves nine" holds for most situations encountered in manag-
ing.

3. Whenever possible, build corrective action into existing plans—Ideally

plans (rules, procedures, policies and strategies) should have built into them
the appropriate action to take if something goes wrong. Prescribed correction
saves time and is efficient. However, major problems in an organization usu-
ally have no prescribed solutions and require considerable use of judgement.

4. Consider Constraints—Managers should bear in mind that various environ-

mental constraints limit the problem-solving actions that managers may take.
Good managers ask questions such as "What are the legal implications of
what I want to do?" "How will the competitors react to this strategy?"

So generally the purpose and nature of control can be summarized under the fol-
lowing principles.
Principles of purpose of control—Hold that controls are not for the sake of it.
They should ensure that plans succeed by detecting deviations and furnishing the
basis for correction of such deviations.

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Principle of future directed controls—The more a control is based on the feed

forward rather than simple feedback of information, the more managers have the
opportunity to understand or perceive deviations from plans before they occur and
take action in time to prevent them. Control like planning should be forward looking
although the principle is usually ignored in practice. There are no easily available
systems for performance control in the field of managing.
Principle of control responsibility—The main responsibility for the exercise of
control rests in the manager charged with the performance of the particular plans
involved. Delegation of authority, assignment of tasks, and responsibility for objec-
tives rest in individual managers. It must follow that control over this work should
be exercised by each of these managers.
Principle of efficiency of controls—Control techniques and approaches are effi-
cient if they detect and highlight the nature and causes of deviations from plans
with a minimum of costs or other unsought consequences. The benefits of control
should outweigh the costs if controls have to be efficient.
Principle of Indirect Control—The higher the quality of every manager in the
managerial system, the less will be the need for direct controls.
Principle of reflection of plans—The more that plans are clear, complete and in-
tegrated, and the more that controls are designed to reflect such plans, the more
effectively controls will serve the needs of managers. Controls cannot be devised
without plans since their task is to ensure that plans work.
Principle of Organizational Suitability—Controls should reflect the place in the
organization structure where responsibility for action lies. Controls need a clear
organization structure. Since it is the function of an organization structure to define
a system of roles, it follows that controls must be designed to effect the role where
responsibility for performance of the plan lies.
Principle of standards—Effective controls require objective, accurate and suitable
standards controls should provide a simple specific and verifiable way to measure
whether planning programs are being accomplished.
Principle of critical point control—Effective control should pay attention mainly
to only those areas where deviations would affect the running of the organization
substantially (mainly to avoid being wasteful).
The exception principle—The more managers concentrate control efforts on ex-
ceptions, the more efficient will be the results of their control. Managers should

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concern themselves only with significant deviations i.e. exceptionally "good" or

"bad" situations.
Difference with critical point—Critical point control has to do with recognizing
the points to be watched while exception has to do with watching the size of the
deviation.
Principle of Flexibility of Controls—If they are to remain effective in the light
of dynamic environments, controls should be flexible. If a plan fails or is changed
controls should also be adjusted.
Principles of Action—Controls are justified only if they indicate corrective action
through appropriate planning, organizing, staffing and leading. If this principle is
forgotten controls could become useless and wasteful of managerial and staff time.

Benefits of Control Function of Management

Control improves Goodwill
Quality control improves the quality of the products. Cost control decreases the
cost of the products. Therefore, the organization can supply good quality products
at lower prices. This increases the goodwill of the organization.

Control minimizes Wastage

Control helps to reduce the wastage of human, material and financial resources.
This increases the profits of the organization.

Control ensures optimum utilization of resources

Control helps the organization to make optimum utilization of the available re-
sources. This also increases the profit of the organization.

Control helps to fix responsibility

Control helps to fix responsibility of a particular job on a particular person or a
particular department. So, if there are any mistakes then a particular person or a
particular department will be held responsible for it.

Control guides operations

Control fixes certain standards. All the work has to be done according to these
standards. So control, acts like a traffic signal. It guides all the operations of the
organization in the right direction.

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Control motivates employees

In control, the employees’ performances are evaluated regularly. Those who show
good performances are rewarded by giving them promotions, cash prizes, etc. This
motivates the employees to work hard, and it also improves their morale.

Control minimizes deviations

Control minimizes the deviations between a planned performance and actual per-
formance.

Control facilitates Delegation

Control helps the superiors to evaluate the work of their subordinates. So, the su-
perior can concentrate on the very important work, and they can delegate the less
important work to their subordinates. Thus, it facilitates delegation.

Control facilitates Co-ordination

Control facilitates co-ordination between the different departments of the organiza-
tion. Whenever, there are any deviations, different departments come together to
take collective and corrective steps.

Control increases efficiency

Efficiency is the relation between returns and cost. If there is a high return at low
cost then there is efficiency and vice-versa. Control leads to high returns and low
cost. Therefore, it increases efficiency
E XERCISE 13.  Giving at least five reasons, explain why it would be important
for a manager to intergrate all the three types of control as opposed to only using
one.
Example . Benefits of Control Function of Management?
Solution:

Control minimizes deviations

Control facilitates Delegation
Control facilitates Co-ordination
Control increases efficiency
Control motivates employees 

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LESSON 7
Co-ordinating

7.1. Introduction
Co-ordination means to integrate or bring together all the activities of an organiza-
tion.
Reasons why coordination is carried out:
(a) It is done for achieving the goals of the organization.
(b) There must be proper co-ordination throughout the organization.

7.2. Element of Managerial Functions

1. Co-ordination through Planning : Planning facilitates co-ordination by in-
tegrating the various plans through mutual discussion, exchange of ideas. For
instance co-ordination between finance budget and purchases budget.

2. Co-ordination through Organizing: Co-ordination as the very essence of

organizing. When a manager groups and assigns various activities to subor-
dinates, and when he creates departments, co-ordination is uppermost in his
mind.

3. Co-ordination through Staffing: A manager should bear in mind that the

right number of personnel in various positions with right type of education
and skills are taken which will ensure right men on the right job.

4. Co-ordination through Directing: The purpose of giving orders, instruc-

tions and guidance to the subordinates is served only when there is a har-
mony between superiors and subordinates, that is who does what and whom
you report.

5. Co-ordination through Controlling: Manager ensures that there should

be co-ordination between actual performance and standard performance to
achieve organizational goals.

7.2.1. Features of Co-Ordination

Coordination is not a distinct function but the very essence of management. Thus
some of the features are:

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1. Coordination is the basic responsibility of every manager and it can be achieved

through the managerial functions. No manager can evade or avoid this re-
sponsibility. Coordination is essential whenever people work together to
achieve some common objective.

2. Coordination does not arise spontaneously or by force it involves planning

through time gradually. It is the result of conscious and concerted action by
management.

3. The heart of coordination is the unity of effort and action which involves
fixing the time and manner of performing various activities so that individual
efforts are blended into a productive team.

4. Coordination is a continuous, never ending or on-going process. It is also a

dynamic process. It should evolve as per the organizations needs.

5. Coordination is required in group efforts not in individual effort. It’s team

work oriented.

6. Coordination has a common purpose of getting organizational objectives ac-

complished.

7. Balancing, timing and integrating are the three elements of coordination. Bal-
ancing is ensuring that enough of one thing is available to support or counter-
balance the other.

7.2.2. Benefits of Co-ordination To An Organization

1. Higher Efficiency and Economy
Coordination helps to improve the efficiency of operations by avoiding overlap-
ping efforts and duplication of work. Coordination is a creative force which makes
possible a total result which is greater than the sum of individual achievements.

2. Good Human Relations

Besides promoting the efficiency of operations, coordination improves the morale
and job satisfaction of employees. A well-coordinated organization can attract, re-
tain and utilize better personnel. Coordination improves human relations by recon-

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ciling individual and organizational objectives through solving of disputes among

the employees.

3. Unity of direction
Coordination helps to ensure unity of action in the face of disruptive forces. By
welding together different departments and sections into one entity, coordination
ensures the stability and growth of an organization. It enables the executives to see
the enterprise as a whole instead of narrow sectional goals. Individual interests are
sub¬ordinated to the common interest more easily and effectively.

4. Quintessence of management(Essential part of management)

Coordination is an all inclusive concepts or the end result of the management pro-
cess. Management is noth¬ing more than coordination of all activities, efforts and
forces that affect the organization.

5. Organizational Effectiveness
It enhances the effectiveness and stability of the organization. They will feel that
they have a place in the organization. They will feel that they have earned that
place. The presence of coordination becomes part of their job experience and hence
can form a very useful part of their training.
Coordination is the process of integrating the objectives and activities of the sep-
arate units (departments) of an organization in order to achieve organization goals
effectively. Without coordination, individuals and departments would lose sight of
their roles within the organization.
The need for coordination depends upon the nature and communication require-
ments of the tasks performed and the degree of interdependence of the various sub-
units performing them. When these tasks require or can benefit from information
flow between units then a high degree of coordination is best.
A high degree of coordination is also likely to be beneficial for work that is non
routine and unpredictable for work where environmental factors keep changing, for
work in which tasks are highly interdependent (i.e when one unit cannot function
without receiving inputs from another unit) and for organizations that set high per-
formance objectives.
Co-ordination of activities

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Co-ordination is the linking of activities in the organisation that serve to achieve a

common goal or objective. As task activities are divided in the organisation man-
agers must attempt to develop mechanisms that will link the task’s together so that
a desired goal is accomplished.
The result of linking activities is the creation of various forms of activity interde-
pendence. The degree to which activities are interdependent can vary from high to
low. There are four configurations of activity interdependence:-

• Pooled

• Sequential

• Reciprocal

• Team

Pooled interdependence: - It exists where there is minimal direct contact between

individuals or groups performing an activity. Work does not flow between activities
rather the results of the activities are “pooled” at a a higher level in the organisation.
Each member of a planning staff may be individually assign the task of investigation
and preparing a forecast on a specific domain of the organisation’s environment..
After each member has performed the task, forecasts are submitted to the vice-
president strategic planning who has the task of integrating them into a broader
long-range plan.
Co-ordination is most readily achieved through standardization eg. have rules and
regulations, imposing direct supervision and creating training programs. Rules and
guidelines for each task performed separately there could be deadlines for the sub-
mission of the reports to the vice-president.
Sequential interdependence: A greater degree of interdependence exists when the
output of one activity becomes the input of another activity. It is mainly found in
an assembly line where a worker may install package a product the next one puts
the label.
Co-ordination is achieved in sequential interdependence through standardization
which emphasises on the use of plans and schedules. Setting deadlines, establish-
ing performance targets, and identifying linkages between activities are all critical
managerial decisions that must be made before units engage in the work process.

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Sequential interdependence therefore requires workers to spend time planning so as

to achieve an effective level of co-ordination.
Reciprocal interdependence: When units provide each other with activity inputs
to co-ordinate, mutual adjustment is required. Mutual adjustment is the process of
direct communication and joint decision making among units involved in the task
activities.
For example a legal department in a savings and loan business may review appli-
cations borrowers that were submitted to the loan department. After an application
form is reviewed and changed it is sent back to the loan department so that the re-
quest or denial of the loan can be processed. The output of the loan department
becomes the input for the legal department and the output of the legal department
becomes an input for the loan department. Thus there is a two-way flow between
departments.
Team interdependence: The most intense form of interdependence results when
completion of activities requires teamwork. Team interdependence exists when
work is interactive or acted on jointly by members of different groups or units rather
than simply being transferred back and forth. It is mainly used when an activity
cannot be broken down easily into distinct tasks because there is uncertainty over
what tasks have to be performed in order to accomplish the goal.
Teamwork requires plans, standardisation, mutual adjustment and most important
direct contact among activity participants. Physical reparation makes co-ordination
through teamwork difficult to accomplish.
The need for coordination of organizational activities is least with pooled inter-
dependence, greater with sequential interdependence and greatest with reciprocal
interdependence. As the need for coordination increases so does the difficulty of
achieving it effectively. Similarly, increased specialization increases the need for
coordination. But the greater the specialization, the more difficult it is for managers
to coordinate the specialized activities of different units.
People in specialized units tend to develop their own sense of the organizations
goals and how to achieve them.
Problems in Achieving Effective Co-ordination

1. Differences in orientation towards particular goals: members of different

departments develop their own views about how best to advance the interests
of the organization. Accounts may see cost control as most important to

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the organization’s success, sales people may see product features as more
important than product quality etc. i.e. people are buried in departmental
attachments.

2. Differences in time orientation ;time periods mean different things for the
various specialists e.g. research people may be pre-occupied with problems
that will take years to solve while production managers may be concerned
with problems that must be solved immediately.

3. Differences in interpersonal orientation members of different departments

may have different approaches to interpersonal relationships and especially to
communication. Some may adopt a relaxed attitude to communication while
others are abrupt and quick in decision-making.

4. Differences in formality structure ;each type of unit in the organization

may have different methods and standards of evaluating progress toward ob-
jectives and for rewarding employees.

Note:
Division of work involves more than a difference in precise activities. It also influ-
ences how we perceive the organization, how we perceive our role in it and how we
relate to each other.
Such differences are essential as they enable the organization to match individ-
ual talents, skills and perspectives to the specialized needs of different tasks and
activities. Coordination must be achieved where necessary without reducing the
differences that contribute to task accomplishment.
Division of work and specialization are desirable to help the organization use its
resources most efficiently. Differentiation encourages conflict among individuals
and organizational subunits. Various members of the organization present their view
points argue them out openly and make sure they are heard and that way they force
managers to consider the special needs and knowledge of different departments
when problems arise.
Achieving Effective Co-ordination
Communication is the key to effective coordination Coordination is basically infor-
mation processing task—the greater the uncertainty of the task to be coordinated

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the greater the need for information. The three approaches to achieving effective
coordination are as follows:

• The first employs the basic management techniques: the managerial hier-
archy, plans and goals to give general direction to activities and rules and
procedures to guide these activities.

• The second approach becomes necessary when the organization’s various

subunits become more interdependent, expand in size and the basic coor-
dination mechanisms of managerial hierarchy, rules and procedures, and goal
setting become inadequate. The approach focuses on increasing the coordi-
nation potential by investing in: (communication)

• Vertical information system e.g. the modern MIS a means of which data are
transmitted across the levels of the organization.

• By creation of lateral relationships i.e. cutting across the chain of command

by permitting information to be exchanged and decisions made at hierarchi-
cal levels where the needed information actually exists e.g. direct contact
between individuals who must deal with the same situation.

• The third approach to achieving effective coordination is by reducing the need

for coordination. This may be done through:

1. Creation of slack resources additional resources give extra leeway to working

units e.g. providing more workers, materials or time can ease problems.

2. Creation of self contained jobs each unit is provided with all the resources
and information needed to function without having to share resources with
other units.

E XERCISE 14.  How can an open door policy enhance coordination activities in
an organisation?
Example . Problems in achieving effective Co-ordination?
Solution:

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Differences in orientation towards particular goals: members of different depart-

ments develop their own views about how best to advance the interests of the or-
ganization. Accounts may see cost control as most important to the organization’s
success, sales people may see product features as more important than product qual-
ity etc. i.e. people are buried in departmental attachments.
Differences in time orientation ;time periods mean different things for the various
specialists e.g. research people may be pre-occupied with problems that will take
years to solve while production managers may be concerned with problems that
must be solved immediately.
Differences in interpersonal orientation members of different departments may have
different approaches to interpersonal relationships and especially to communica-
tion. Some may adopt a relaxed attitude to communication while others are abrupt
and quick in decision-making.
Differences in formality structure ;each type of unit in the organization may have
different methods and standards of evaluating progress toward objectives and for
rewarding employees. 

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LESSON 8
Directing

8.1. Introduction
This lesson on directing sets out to convey three aspects of management which
when put together constitute directing. These include motivation, leadership and
communication, a short review of corporate culture and Japanese management is
also included. Directing is an interesting and challenging managerial function be-
cause basically, there is no one best way to lead, motivate or communicate. Direct-
ing is also of critical importance to management because unless people are moti-
vated, lead and effectively communicated to, not much in the way of results can be
achieved even with very good plans and organization structures.

8.1.1. Characteristics of Directing

Pervasive Function
Directing is required at all levels of organization. Every manager provides guidance
and inspiration to his subordinates.

Continuous Activity
Direction is a continuous activity as it continuous throughout the life of organiza-
tion.

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.

Creative Activity
Direction function helps in converting plans into performance. Without this func-
tion, people become inactive and physical resources are meaningless.

Executive Function
Direction function is carried out by all managers and executives at all levels through-
out the working of an enterprise, a subordinate receives instructions from his supe-
rior only.

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Delegate Function
Direction is supposed to be a function dealing with human beings. Human be-
haviour is unpredictable by nature and conditioning the people’s behaviour towards
the goals of the enterprise is what the executive does in this function. Therefore, it
is termed as having delicacy in it to tackle human behaviour.

8.1.2. Importance of Directing

• Direction initiates actions to get the desired results in an organisation.

• Direction attempts to get maximum out of employees by identifying their

capabilities.

• Direction is essential to keep the elements like Supervision, Motivation, Lead-

ership and Communication effective.

• It ensures that every employee work for organisational goals.

• Coping up with the changes in the Organisation is possible through effective

direction.

• Stability and balance can be achieved through directing.

8.2. Elements of Direction

8.2.1. Supervision
Supervision implies expert overseeing of subordinates at work in order to guide and
regulate their efforts. Every manager has to supervise the work of his subordinates
to see that they do their work as desired. Supervision is one important element of
the process of directing. But supervision is particularly important at the operating
level of management.
The supervisor :

• Is in direct personal contact with the workers and he acts as the link between
workers and management. He communicates the policies, plans and orders
of management to the workers.

• Brings workers’ grievances, suggestions and appeals to the notice of manage-

ment.

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Effective supervision is essential for the accomplishment of desired goals. The

purpose of supervision is to ensure that subordinates perform their tasks according
to prescribed procedures and as efficiently as possible.

8.2.2. Motivation
Understanding Motivation
Motivation is a key part of the managers job because through it the manager is able
to make people want to perform activities so that goals can be achieved. Motivation
has been defined as the set of processes that determine behavioural choices.
That is the processes which influence people to behave the way they do. Motivation
is therefore concerned with the reasons for human behaviour, it explains why people
behave in a certain manner.
Motivation is derived from motive which is an inner force that moves a person
to behave in a certain way. Motives may stem from both physiological and psy-
chological needs. Motivation is greatly affected by the environment in which the
employee is operating, and therefore management of the environmental factors that
affect workers is one way to lighten the function of motivation.
The concepts of reward and punishment are basic to motivation. For example most
modern theories of motivation stress rewards as motivational factors. While pun-
ishments can also serve to motivate, it is difficult to draw reliable evidence that
punishments help produce more effective or desirable behaviour. For example few
prisoners get rehabilitated by prison conditions. How rewards and punishment are
used in management depends on each individual manager. Management thinking
on motivation has progressed through three distinct stages:

1. Traditional view ;this view of motivation was held during the era of Freder-
ick W. Taylor and scientific management. This was a simplistic way of look-
ing at employees. The opinion was that employees worked only for economic
reasons and presumably the more they were paid, the harder they worked. It
is also known as the rational or economic concept of motivation.

2. Human related view ;this approach was advocated by the behavioural school
of management thought. It argued that social forces were the primary deter-
minants of motivation. The opinion was that the more satisfied people were

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Figure 8.1: The Motivation process

with their jobs the harder they worked. Also known as the social concept of
motivation.

3. Human resources review ;this view takes the most positive attitude towards
employees’ motivation. It argues that people are actually resources that can
benefit the organization. It also argues that people want to help and managers
should look upon them as assets.

The Motivational Process

Human motivation is a complex process that begins with human needs. (Needs are
drives or forces that initiate behaviour). When needs become very strong people
engage in efforts to fulfil these needs. As a result of such efforts people experience
various levels of need satisfaction. The extent to which people find their needs
satisfied serves to influence the future choices to satisfy the same or similar needs.
The diagram illustrates:
The motivational process is a dynamic one. An individual has at any one time
several needs to satisfy and one can be at different positions in the cycle for each
need. Satisfaction of the needs also takes different time frames but at any rate the
starting point is always needs.
Motivation is a complex problem in organizations because the needs, wants and
desires of each employee differ. Each employee is unique in his biological and
psychological make up.
Motivation is further complicated by the fact that it is not exactly clear who is

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responsible for employee motivation i.e. whether the manager or the employee
himself (is the individual expected to provide his own motivation or is motivation a
function of management?).
Motivation can either be external or internal. External motivation emanates from
management, and employees react either positively or negatively to what their man-
agers do. Managers must therefore use external motivation that generates positive
responses from employees.
Internal motivation originates from within the individual as he tries to satisfy his
various needs. It may be caused by factors within the individual e.g. personality
or factors that are under the control of management e.g. job context (salaries, poli-
cies, working conditions) and job content (recognition, advancement, status and
responsibility).
Persons find that organizations allow them to achieve goals that they cannot achieve
alone. This may imply a large degree of self-motivation or internal motivation on
the part of each individual. Many people however do not realize that by working
toward the organizational goals they are also achieving their own individual goals.
Such people are rarely self motivated enough to share in organizational goals and
usually want jobs with salaries that can pay bills. For such people management
must provide external motivation in order to encourage them to work towards orga-
nizational goals.

Motivating Factors
Despite the fact that scholars of management have not agreed fully on what moti-
vates people, there is a general consensus that the listed factors do cause motivation.

• Participation in Planning—when employees are given a choice to plan their

own work and contribute to organizational planning, the plans are more ac-
ceptable to them—after all they have taken part in making them.

• Challenging Work—when work is not challenging boredom sets in and this

is likely to cause sluggishness and dissatisfaction at the place of work

• Recognition and Status—most people want approval by peers, friends and

bosses. Benefits that show status e.g. company car, credit card, club mem-
bership may increase motivation. Recognition is shown by items distinction

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e.g. a key to the executive lift, or washroom, carpeted offices, reserved park-
ing etc.

• Authority, Responsibility and Power—some people are motivated greatly by

being responsible for the work of others. Many people stay in organizations
with a hope of rising to upper levels. Management should therefore devise
plans for advancement and growth.

• Independence of Action—being allowed to work without close supervision.

• Security—especially financial security achieved mainly through secure and

comprehensive labour contracts e.g. that involve medical covers and insur-
ance.

• Advancement—people could become demotivated if the organization has lit-

tle room for upward mobility

• Personal growth—people want to grow wholesomely both in aspects related

to the job like skills and those outside the job like potentials in such fields as
sports.

• Good working conditions The environment in which people operate is very

important to their importance. Excessively noisy, congested, dirty or poorly
arranged places may demotivate employees.

• Money A good salary is a basic motivator. In fact for some people money
could be the greatest motivational force. For example for people who are
financially hard pressed money remains the biggest motivator. However, peo-
ple also look for other things in a job other than money and they may even
accept lower paying jobs that have those other things.

8.2.3. Leadership
Leadership is the process of guiding and influencing subordinates for the accom-
plishment of desired goals. It involves the integration of organizational interests
with personal goals. A person can be an effective manager when he possesses the
qualities of a good leader. It is through leadership that a manager can build up con-
fidence and zeal among his subordinates. In order to guide his subordinates in the

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desired direction, a manager should adopt an appropriate style of leadership. The

pattern and quality of leadership determines the level of motivation. Leadership is
always related to a particular situation.

Leadership Versus Management

The question of whether leadership is synonymous with management has long been
debated. While they are similar in some ways, they are different in more ways.
People can be leaders without being managers, managers without being leaders or
both leaders and managers.

• A manager usually directs others because of formal authority and power.

• A manager is by essence required to perform the four functions of planning,

organizing, directing and controlling.

• leadership is a little of management but not all of it—it involves ability to

persuade others to seek set goals willingly.

• Leadership binds a group together and motivates it towards agreed goals.

• A leader needs only to influence his followers or their behaviour in whatever

direction he chooses.

• Unlike the manager a leader does not rely on any formal authority, because
while a manager can force people to comply by using formal authority a
leader has no such power.

However, people can be both and effective leadership does increase a person’s man-
agerial capabilities.

Need for Leadership

Effective leadership gives direction to the efforts of workers.

• leadership guides organizational efforts towards achievement of organiza-

tional goals.

• It has been said that without leadership an organization is a muddle of men

and machines.

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• Leadership is the ability to persuade others to seek defined goals enthusiasti-

cally, and it is the leader who triggers the power of motivation in people and
guides them towards goals.

• Leadership transforms potential into reality.

• Leadership is indispensable if an organization is to be successful.

• workers need to know how they can contribute to organizational goals.

Power and Leadership

The foundation of leadership is power. Leaders have power over their followers and
they wield this power to exert their influence. There are five basic types of power
that can be used by leaders.

• Legitimate Power ;This is based on the perception that the leader has the
right to exercise influence because of his position and roles. It is power cre-
ated and conveyed by the organization.

• Reward Power ;The power to grant and withhold various types of rewards.
These rewards may include pay increases, promotion, praise, recognition, etc.
The greater and the more important the reward, the more power a leader has.

• Coercive Power ;The power to force compliance through psychological, emo-

tional or physical threat. In industrial organizations coercion may be subtle
through oral reprimands, fines, layoffs, demotion. In military organizations
coercion could actually be physical.

• Expert Power Power ;based on knowledge and expertise. The more knowl-
edge one has and the fewer the people who are aware of it, the more power
he has.

• Referent Power; Power based on subordinates identification with the leader,

it usually distinguishes leaders from non leaders. The leader exerts influence
because of charisma and reputation. The follower wishes to be like the leader
or to be associated with him.

Note: Most leaders use several different types of power at the same time. However,
regardless of the manager’s skills power always has its limits. Generally people can

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only be influenced up to a point and willingness to follow usually is limited. Few

leaders can maintain a long term support for their ideas and programs.
Employees usually react to attempts to influence them either by showing commit-
ment, compliance, or resistance.

Leadership Styles
The method or style of leadership a manager chooses to use greatly influences his
effectiveness as a leader. An appropriate leadership style coupled with a proper
external motivational technique can lead to the achievement of both individual and
organizational goals. If the style is inappropriate goals could suffer and workers
may feel resentful, aggressive, insecure and dissatisfied.
There are three main styles of leadership:

• Autocratic Style

All authority and decision making is centered in the leader. He makes all decisions,
exercises total control by use of rewards and punishment. An autocratic leader re-
quires conformity from his subordinates and always considers his decision to be
superior to those of his subordinates. One advantage of autocratic leadership is that
it allows faster decision making but it can easily cause workers to experience dis-
satisfaction, dependence on the leader or passiveness towards organizational goals.

• Democratic or Participative Style

This style of leadership seeks to obtain cooperation of workers in achieving orga-

nizational goals by allowing them to participate in decision-making. It does not
relieve the leader of his decision-making responsibilities or of his power over sub-
ordinates, but it requires that he recognise subordinates as capable of contributing
positively to decision making. Participative decision-making can lead to improved
manager-worker relations, higher morale and job satisfaction, decreased depen-
dence on the leader and better acceptance of decisions. However, it also has certain
limitations, delayed decision-making, ‘group think’, time consuming and diluted
decisions due to compromising.

• Laissez Faire Style (Free Reign)

This style does not depend on the leader to provide external motivation but, the
workers motivate themselves based on their needs, wants and desires. They are

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given goals and left on their own to achieve them. The leader assumes the role of a
group member.
This approach increases worker independence and expression and forces him to
function as a member of a group. The main disadvantage is that, without a strong
leader the group could lack direction or control, which may result into frustration in
the workers. For laissez faire to work the subordinates must be competent, reliable
and well versed with the goals of the organization.

Continuum of Leadership
In reality there is not only three leadership styles but styles could be many ranging
from highly boss centered styles to highly employee centered leadership. Accord-
ing to Tannenbaum and Schmidt the leader has flexibility in choosing the most
appropriate style. The choice of the style depends on three factors:

• Forces in the leader which include his value system, confidence in own lead-
ership inclinations, feelings of insecurity and unncertainty, and confidence in
his subordinates.

• Forces in subordinates—each employee has different needs, wants, desires,

experience, training abilities, skills etc. It is therefore beneficial for the man-
ager to understand the forces at work within his employees. A manager could
for instance allow participation in decision making if the employees are com-
petent, well trained, ready to assume responsibility, have high needs for in-
dependence, understand and identify with the goals of the organization and
necessary knowledge. If these are absent then the leader may be forced to
lead autocratically.

• Forces in the situation Include environmental pressures such as type of or-

ganization, effectiveness of work group, type of problem and urgency of the
problem. For example production workers may work better under one style
while professionals may work better under a different style.

Factors Influencing Leadership effectiveness

Identification of situational factors within the work environs and the choice of ap-
propriate leadership style is the essence of effective leadership. The following fac-
tors influences leader effectiveness in different work situations: -

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1. Leader personality and past experiences:- managers value background and

experiences will affect his or her choice of leadership styles. A manager who
has had success in exercising little supervision or values the self-fulfilment
needs of subordinates may adopt an employee-oriented style of leadership. A
manger who distrusts subordinates or who simply likes to manage all work
activities may adopt a more authoritarian role.

2. Expectation of superiors:- a superior who favours task oriented leadership

may cause a manager to adopt that style of leadership. A superior who favours
an employee-oriented style on the other hand may encourage the manager to
adopt the employee-oriented leadership

3. Subordinates characteristics and expectations:- the response of subordi-

nates to managers will be subordinates characteristics in terms of skills and
training influence the mangers choice of style. Highly capable employee
would normally require less directly approach. The expectation of subor-
dinates is another factor in determining how appropriate a particular style
will be. Subordinates who have employee centred managers in the past may
expect a new manager to have similar style and may react negatively to au-
thoritarian leadership.

4. Tasks requirements: Jobs that precise instructions are to be followed de-

mand more task oriented style than jobs whose operating procedures can be
left largely to the individual employees e.g. University teaching.

5. Organisational climate and policy:- the “personality” or climate of an or-

ganisation influences the expectations and behaviours of organisation mem-
[Link] organisations where climate and policies encourage strict accountabil-
ity for expenses and results, managers usually supervise and control subordi-
nates tightly.

6. Peer expectation and behaviours: - Ones fellow managers so as not to ap-

pear odd. Also conformance to their expectations is required.

A leader performs many functions which greatly determine the success of the or-
ganization. Some of these functions include arbitrating, catalyzing, representing,

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inspiring, praising, providing security and supplying objectives. To be able to ac-

complish these functions the leader requires certain skills. Any skill that a man-
ager has acquired serves to increase his leadership abilities. Included are technical
skills, human skills, and conceptional skills. The most appropriate leadership style
depends on the situation, the leader himself, his subordinates and the organization.
Leaders in Kenya for instance must be aware of the environmental circumstances
faced by their employees. These circumstances are of economic, political, social,
cultural, educational, religious and geographical nature. These the manager must
consider when leading his people.

8.2.4. Communication
Communication involves exchange of ideas and information in order to create mu-
tual understanding. It is a systematic process of telling, listening and understanding.
A Manager has to explain the plans and orders to his subordinates and to understand
their problems. He must develop a sound two-way communication system so as to
be always in touch with his subordinates. Sound communication fosters mutual
understanding and coordination among different units of the organisation.
The process of communication is affected by many situational and organizational
factors. Factors in the external environment include educational factors, sociologi-
cal factors, legal factors, political factors, technological factors and economic fac-
tors. Time and geographical distance are also other factors that affect communi-
cation. The manager may not have the time to send out communication or the
message may become invalid with passage of time. Communication is also affected
by internal factors such as the structure of the organization, managerial styles and
changes in technology. Using the communication process model managers are able
to pinpoint problems and to take corrective action.
Communication in an organization is either external or internal. Internal communi-
cation takes place between people within the organization while external commu-
nication occurs between people in the organization and others outside the organi-
zation. Today’s organizations are complex and big and the amount of information
handled is very large. Therefore a lot of efficiency in communication is required.
All organizations generate internal communication and the communication flow is
multidirectional.
It could either be:

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• Vertically upward—from lower to higher level through the chain of com-

mand.

• Vertically downward—from higher to lower levels.

• Direct horizontal—when an individual from one department communicates

to another in another department but at the same organizational level

• Indirect horizontal—occurs between people of different organizational levels

and in different departments.

• Grapevine- Depending on the nature of the firm zigzagging or diagnosing of

messages cannot be ruled out.

The informal group through the grapevine forms an important communication chan-
nel. All organizations have a "grapevine" or informal communication channel.
News flow through the grapevine with or without the approval of the management.
The information that flows through the grapevine is rarely ever true as it is based
on gossip and half truths. Where management has not devised ways of passing
information promptly the "grapevine" thrives. So the more fully and accurately
management keeps people informed, the weaker the grapevine.
The firm also invites communication with groups outside and as the organization
grows external communication grows. These groups include customers, suppliers,
government, competitors etc.
Written communication is in form of letters, memos, manuals or minutes. It has
the advantage of providing records and references. Written messages are to a large
extent uniform.
Most communication in organizations is oral. It provides immediate feedback and
unclear issues can be classified immediately. The communicator knows the effects
of communication immediately. It can easily be altered or adjusted to suit the re-
ceiver. Face to face communication when used by managers gives the subordinates
a feeling of importance and self worth.
Non Verbal Communication includes facial expression, body gestures, eye move-
ments, distance maintained etc. These can either reinforce what we say or contradict
it. Communicators must know that its actions that count finally so a manager must
be able to supplement what he says with actions.

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Active listening is vital for communication ; this refers to a method of listening for
the total meaning of a message. A sender’s message has a verbal and a non verbal
component as well as a feeling component.
The receiver must be aware of both components in order to understand the full
meaning of the message. The feeling component expresses the feelings the com-
municator is experiencing at the time of communication. These may be of joy, hate,
resentment or anger and are contained in the way the words are expressed Very
sweet words may be expressed in a way to convey a sour message.
People can become more active listeners if they follow these guidelines.

• Suspend premature judgement—premature judgement prevents the receiver

from listening for the total meaning of a message and this makes the sender
defensive.

• Listen with understanding—the receiver should try and understand what is

being said from the senders perspective.

• Listen and respond to feelings—the content of a message often plays a small

part in interpersonal communication. The emotions and feelings during com-
munication should be recognised.

• Note all non verbal cues.

• Rephrase the sender’s message. The receiver may restate or paraphrase the
sender’s message in his own words to see if she/he understands the sender’s
message

• Stop talking and listen

• put the talker at ease

• show the talker you want to listen

• remove distractions

• empathize with the talker

• be patient

• hold your temper

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• avoid argument and criticism

• ask questions

Communication barriers can arise from either sender, channel, receiver or from the
surroundings.

1. Lack of planning to communicate—good communication is not by chance.

Clear thinking must precede talking or writing. Often people talk or write
without clear thinking and without a clear purpose for their work.

2. Unclarified assumptions—most messages have an underlying assumption.

For a message to be clearly understood both the sender and the receiver must
understand the underlying assumption.

3. Semantic distortion (language)—where words are not clearly understood be-

cause they are ambiguous. Besides some words have several meanings and
when used in a message they may mean different things to different people.

4. Poor expression (language)—caused by poorly chosen words, omissions, lack

of coherence, awkward sentence structure and unfamiliar jargon.

5. Loss of transmission—as the message is passed around people insert their

own words or they paraphrase the message and this distorts the original mes-
sage.

6. Poor retention—few people retain things for a long period. People forget too
fast.

7. Poor listening—human minds keep wandering and as a message is being

passed people keep pondering their own things. Some use the opportunity
to make impressions on others and such people give ideas and comments to-
tally unrelated to the message.

8. Hasty (premature) evaluation—people have a common tendency to judge,

approve or disapprove what is being said rather than trying to understand the
speaker.

9. Distrust, threat and fear—in an organization plagued by fear and distrust com-
munication is difficult as each message is viewed sceptically.

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10. Insufficient period for adjustment to change—the essence of communication

is to effect change. Change usually disrupts the way people have been carry-
ing on their work and usually people need enough time to adjust to change.

11. Noise—noise or interruptions from without the communication e.g. giving

instructions in a noisy environment, disease, weather etc.

Improvement in communication should be an ongoing goal for managers especially

due to the vital role it plays in organizations.
Effective communication requires that meaning must be transmitted and under-
stood. The responsibility for communication rests upon management as they are
the people in charge of the enterprise. In a business enterprise, knowledge of the
area of business e.g. of the products, skills of doing the job and time are vital for
communication. A person in charge of selling a product must for instance have a
thorough knowledge of the product, must have selling skills and presentation skills.
Both the sender and the receiver of the message can improve communication.

1. Clarify ideas before communicating

2. Examine the purpose of communication

3. Remove hierarchical barrier Status differences in organizations can limit the

effectiveness of communication between superiors and subordinates—this
creates a psychological distance which makes employees filter the informa-
tion they give to management, withholding any information they feel is dis-
tasteful. 3. Remove interpersonal barriers Communication is an interpersonal
process, interpersonal barriers such as distrust, defensiveness, and domina-
tion hinder open communication.

4. Be sensitive to the receiver’s perspective; The communicator should be em-

pathetic to the receiver i.e. be able to put himself in the shoes of the receiver.

5. Develop and maintain credibility; Credibility is usually measured by one’s

expertise on the subject matter being communicated.

6. Support words with action.

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7. Avoid information overload i.e. giving employees more information than they
can handle or process. A gate keeper could be used to screen the information,
or filtering and prioritising of information could help reduce overload.

8. Avoid information underload Giving too little information, this often leads to
employee dissatisfaction.

9. Be a good listener ;Effective communication takes place only when the sender
is satisfied with the receiver’s response.

10. The receiver can improve communication by becoming a better listener, by

learning the art of active listening, and by practising the art of providing feed-
back. Feedback is the process of responding to what another has told you i.e.
communicating how you feel. Feedback can either be responsive where the
sender’s message is restated or corrective where one communicates the effects
of the message. Certain guidelines could be observed for effective feedback
by the receiver.

• Aim to help the recipient.

• Consider the recipient’s ability.

• Focus on behaviour rather than on person.

• Be descriptive rather than evaluative.

• Respect the recipient’s privacy.

Other Qualities For Improving Organization Communication include

1. Define specific communication goals prior to actual communication.

2. . Establish communication mechanisms through which organizational mem-

bers can interact regularly.

3. Facilitate frequent face-to-face interactions between supervisors and employ-

ees.

4. Encourage employees to express their ideas and concerns in dealing with their
jobs.

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5. Solicit information from employees concerning their careers and personal

problems.

6. Involve employees in formulating their task goals and responsibilities.

7. Provide employees with timely feedback on their job performance.

8. Inform employees on any changes in the company’s goals and policies as

soon as possible.

9. Periodically evaluate the firm’s communication effectiveness.

8.2.5. Managing Work Groups

Formal And Informal Work Groups
An organization can be described as a group of people working toward common
goals. Within any organization there are two groups, formal groups and informal
groups.
Formal groups are official and created by management e.g. divisions, departments,
units, work teams and [Link] groups arise from member interactions
e.g. people having tea together meet to share ideas.

Why People Form Groups

• Natural attractions—people have inborn tendencies to form into groups, to
work and live together.

• Survival—people gather together to survive being alone for long periods of

time can affect our emotional health badly e.g. what happens to people put
under solitary confinement.

• Interdependence—people interdepend mainly because of human limitations

and weaknesses. People form into groups to overcome personal limitations.

Kinds of Groups
A group is two or more people who interact regularly to accomplish a common goal

• at least two people must be involved

• must interact regularly

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• have a common purpose

1. Functional Group is created by the organization to accomplish a range of

goals without a definite time limit.

2. A Task Group is created by the organization to accomplish a limited number

of goals within a stated or implied time.

3. Informal Group also called interest group created by organizational members

for purposes that may or may not be related to the organization and has no
time horizon. Managers should recognize the existence and importance of the
informal organization (the overall pattern of influence and interaction defined
by the total set of informal groups within the organization).

Group Dimensions – Characteristics Found In Groups.

8.2.6. Conformity
Human beings and their behaviour are amazingly diverse, but within any given
culture or group there is considerable agreement. Compliance with existing rules, or
customs is called conformity. All groups make certain demands on their members.
1. to obey the norms of the group

2. to accept sanctions or forms of punishment

3. to give up rights (individual rights in favour of group interest).

Group members may conform for the following reasons:
1. Fear—fear of sanctions e.g. to alienate ii.

2. Insecurity—some individuals are very insecure and will easily conform.

3. Good judgement, because conformity produces good results.

The extent to which conformity is necessary depends on several factors e.g. the
type of organization as people move up managerial levels, the less the conformity
required. While conformity is necessary to the organization’s everyday operation it
does not necessarily result in creativity, innovations, and new ideas needed to im-
prove and organize. Most people have been strongly used to conforming in schools,
churches, family etc. As a result relatively few individuals are able to think original
thoughts, plans or to develop new concepts.

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• Aggression

This refers to offensive behaviour e.g. fights at work, for resources, for friends,
for power etc. The fight may be either acceptable or unacceptable. Aggression is
mainly as a result of:

• Frustration (especially when somebody faces bottlenecks to goal attainment)

• Annoyance (feeling of being upset)

• Attack (physical or mental harm done to an individual or a group is an attack)

Note
To curb aggression managers should come up with rules and regulations to govern
peoples conduct at work, or seek ways to direct aggression tendencies towards the
attainment of organization goals in socially acceptable ways.

• Competition

Competition involves struggle for resources or other items. People compete when
resources are limited or as a result of societal pressure. Organizations will also
compete between themselves for resources, markets and personnel (external). In-
ternal competition arises between individuals, groups or units in the organization.
When properly managed competition can produce beneficial results e.g. increased
efficiency, less boredom help weed out unproductive people. It would also lead to
more mistakes, accidents, waste or duplication of efforts.

• Cooperation

Another aspect of group dynamics is cooperation which simply means working to-
gether willingly. Where people’s tasks are interrelated or where a group of people
have to accomplish one task then cooperation is not only essential but is critical,
without it there would be no results. Managers must concern themselves with co-
operation because the survival of their organizations is in part determined by other
organizations (external). But they also must guard against illegal cooperation e.g.
collusion in price setting.
Cooperation between individuals and groups with the organizations (internal) is
very important. For an organization to remain cohesive managers must seek willing
internal cooperation because without it group goals cannot be achieved.

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• Role Dynamics

People in groups play roles, some work to accomplish goals, others serve the lead-
ers, others keep every one happy, while some do very little but still remain part of
the group. Role dynamics explains how a person’s expected role is transformed into
his/her enacted role.

• Expected role

Is what is expected of a group member and is transmitted in the form of a sent

role and translated into a perceived role. If the sent role is not clear then the role
becomes ambiguous. Sometimes the sent roles may be clear but are inconsistent
and this leads to role conflict.

• Cohesiveness

Refers to the extent to which members of a group are motivated to remain together.
A group where members enjoy working together and eagerly pull together and are
contented with being members is highly cohesive. A group with low cohesiveness is
one where members do not like to be together and are eager to leave the group. High
cohesiveness may result from small size, clear goals and constant interaction. The
results are that group members are highly motivated and there is goal attainment.
Low cohesiveness may be due to large size, ambiguous goals and roles and little
interaction and the result may be low goal attainment, low morale and death of the
group.

• Group Norms

Norms are standards of behaviour that group members develop and which become
accepted behaviour. Group members may develop norms on ways of communicat-
ing, dressing, passing free time, sharing meals etc. and norms on the acceptable
minimum level of production or performance.

Managing Groups In The Organization

As stated earlier structured organizations consist of two kinds of groups (formal and
informal groups)
A formal group has several prescribed characteristics e.g.

• an official and designated leader

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• a specific mission

• established goals

• specified performance standards

• known rewards and punishment

• rules to be followed

The informal group on the other hand has the following characteristics:

• created by members

• no official leader

• if rulers exist they are developed by the group

• the group also establishes peer sanctions and rewards

• it may mainly thrive on mutual trust and interest, and confidence in members
ability to keep information within the group.

Informal groups mainly exist due to the following reasons:

• Transmission of information

Not all information is transmitted through the official channels. Some managers
can be very secretive and pass very little information. Informal groups manage
to gather both official and unofficial information and pass it around through their
communication channel popularly known as the "grapevine". Information through
the grapevine is undocumented and is based mainly on hearsay, rumours and it
undergoes changes as it is passed around.

• Fear

People may form an informal group because they fear what they do not know hence
they form protective grouping.

• Amusement (entertainment)

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Mainly from knowing the personal lives and affairs of the managers from the gossip
passed around.
Management of Committees
A committee is an official group mainly formed to deliberate on a specific subject
or matter. Other names include task forces, commission project teams etc. A lot of
managerial work is usually delegated to committees.
Characteristics of Committees
Committees usually range in size from two to several people.

• they are found at all levels in the enterprise

• Committees are either standing committees i.e. they are permanent, or ad

hoc i.e. formed for a specific purpose and mainly temporary. Whereas man-
agement may create certain committees for purposes of delegation of some
matter, some forms of committee are created by law e.g. Board of Directors,
PTA in schools and Board of Governors.

Committees can be made more effective if managers follow specific guidelines.

1. The goals and limits of authority of the committee need to be clearly specified
so as to keep the activities of the committee in focus.

2. The committee should have a specific agenda to work from.

3. Members of committees should not devote too much time to the committee
and forget their regular jobs.

4. The results or output of the committee should be specified and clearly com-
municated to the committee.

5. The size of the committee should be appropriate. It should only be large

enough to be most efficient. Large committees may be desired if many differ-
ent experts are needed and if the scope of the task is wide. Smaller commit-
tees may be needed if speed in action is necessary and if the matter is highly
confidential.

6. The committee should have the right members i.e the people selected to the
committee should be suited for the work. They should be people with the

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interest of the committee at heart, they should be psychologically compatible

with each other and they should be qualified i.e. they are able to provide the
needed information.

7. The person heading the committee i.e. the chairperson should be suited for
the position. He is the person to set the mode and to be held accountable
for the success of the committee. He should be a person who possesses the
following qualities:- planning ability, objectivity, diplomacy, experience and
efficiency.

8. The committee should be provided with the needed or necessary information

and resources to accomplish their task e.g. they should have the necessary
staff assistance.

9. The committee should be provided with realistic and reasonable deadlines

for the completion of its assignment. Frequent checks on the committee’s
progress are also necessary so as to review whether the committee need any
extra information.

10. The committee should be asked to provide a final report writing and the report
should be acted upon.

Why The Wide Use Of Committees

• Committees may be used because they are likely to produce more information
for decision-making, especially when they are made of experts from different
fields.

• Use of committees ensures that authority is distributed as decisions are made

by a group.

• Committees are likely to facilitate coordination—each committee member

may be reporting about or representing each of the functional areas in the
organization.

• Committees may foster support for decisions—usually through the use of

committees employees are given the opportunity to participate in the decision
making process as they are allowed to represent their viewpoints.

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• Committees can lead to employee development. Because of the expensive

contact with people from different fields, committee members get to broaden
their knowledge. Young managers can learn a lot by sitting in committees.

Limitations Of Committees

• They are expensive both in terms of time and resources.

• Committees often lead to slow decision-making especially due to the consul-

tations they need for consensus.

• Committees could lead to compromise solutions in a bid to avoid conflicts.

• Since it is a group decision making with no one person responsible for the
results, members may lack commitment on that account.

An example of a Committee (Board of Directors) A board of directors is the supreme

governing body of a corporation. It is a permanent and legally required committee.
The C.E.O. in any organization is accountable to the board and serves at the plea-
sure of the board. Sometimes majority shareholders do serve on the board with the
largest shareholder probably serving as the chairperson to the board.
The operation of the board should be such that it aims to achieve key objectives.
Outsiders to the firm are more objective board members than insiders and they can
offer significant observations and criticism.
Responsibilities

• Obey the provisions of the corporate charter—which stipulates the authorized

activities for that corporation.

• Avoid conflicts of interest e.g. collusion in price setting by sitting on boards

of competitive companies.

• Elect corporate officers e.g. the managing director or the C.E.O.

• Decide on key financial matters (investments).

• Give broad direction to the enterprise.

• Maintain the survival or community of the firm.

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Advantages of Group Decision Making

• Use of groups in decision-making tends to lead to higher quality decisions

than a single individual working alone might have obtained.

• More information is available to the group than is available to an individ-

ual—members have varying experiences, education and qualifications.

• A group is likely to generate more alternatives—so each person may have

their own differing ideas.

• Acceptance of the decision will probably be greater than it would be if an

individual made the decision alone—it involves an element of democracy.

Disadvantages

• Groups tend to take longer to reach a decision, because all members may wait
to discuss every aspect of the decision.

• The group may try too hard to compromise to the exclusion of a superior
decision that the group could have attained with more effort.

• A single individual may dominate the process—setting aside all the potential
advantages of group decision-making.

• Groups may succumb to group think i.e. become interested in maintaining

cohesiveness and good feelings towards one another and lose sight of the
groups original goals.

• Here the group makes decisions that protect its members and individuals and
the group as a whole rather than decisions that are in the best interest of the
overall organization.

8.2.7. Conflict Management

Also included in directing are the management of organizational conflict and change.

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8.2.8. Nature of Organizational Conflict

This is the disagreement within the context of an organizational setting between
individual employees, groups or departments, or between employees and the orga-
nization. Organizational conflict can either be positive or negative, some conflicts
lead into better performance while others result into reduction in performance.
Causes:

• Multiple Value Sources—people’s values differ as they come from different

backgrounds (different religions, philosophies, education etc.)

• Idealized individual values (interest) vs. practical organizational values.

The organization may demand behaviour at variance with personal wants and
interests.

• Interdependency between people or groups within the organization.

• Competition—between people or groups can also cause conflict.

• Difference in goals—can cause conflict between departments.

For management conflict may arise when:

• Their authority is challenged

• Their private rights are questioned (does a manager have a private life beyond
his work in the company?)

Note
Whatever the cause of conflict it must be noted that the consequences are the same:
either

• hostility—people refuse to cooperate and are antagonistic

• withdrawal—refusing to socialize or leaving the organization

• motivation—where conflicting parties strive to prove each other wrong.

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8.2.9. Managing Conflict

Depending on the expected outcome managers can manage conflict in either of
these ways:

• Encouraging Conflict Where conflict is likely to lead to increased perfor-

mance and motivation then management can encourage conflict through com-
petition, through contests or by publicizing results and performance.

• Preventing Conflict Some cases require that conflict be prevented in the first
instance e.g. cases where departments are arguing over use of resources.
Rules and procedures can be used to govern how issues are to be resolved.

• Resolving Conflict Conflicts will always occur in organizations and manage-

ment must devise ways of resolving them.

The following are a few ways in which management can resolve conflicts.

1. Avoidance ;Ignoring the problem and hoping that it will go away. Strategy
works if the conflict is minimal.

2. Smoothing ;Similar to avoidance, but here the manager acknowledges the

existence of the conflict while developing its importance.

3. Compromise ;Involves reaching a point of agreement between what each

of the conflicting parties wants. The conflicting parties meet half way so to
speak—each gives up a bit of its demand. It works okay so long as none of
the parties feels cheated afterwards.

4. Confrontation ;The direct way of addressing the conflict and working to-
gether to resolve it also called problem solving—as there is open exchange of
information. The best method of resolving a conflict should result in a no win
no lose situation. If one party feels cheated then the likelihood of additional
conflict is very high.

Note
Where conflict is between the organization and the individual mainly because the
goals of the organization are at variance with individual goals management can deal
with the conflict through the following ways:

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• Use of a blend amounts to administration by objectives cater for both organi-

zation and individual goals.

• A fusion a personalizing process where individuals pursue their own goals so

as to seek fulfilment and self-actualisation.

• Socializing the organization tends to get people to devote their efforts to pur-
suit of organizational goals.

• Integration management comes up with an agreeable "mix" (individuals are

given a chance to come up with their own goals and ways of achieving them.)

Consequences of Organization Conflicts

Organizational conflicts can be functional or dysfunctional to individuals and orga-
nizations.

• Functional Consequences

Among the major functional results are:

1. Dissociating elements in a situation may be removed and unity may be estab-

lished. After open expression of conflict the combatments may feel closer to
each other.

2. After conflict new leadership may be brought into the organization because
the former leaders may be found unsuitable under the pressures of conflict.

3. All goals and policies may be modified or replaced by more relevant goals as
a result of the conflict.

4. Conflict may become institutionalised. After several instances of inter-group

conflict, outlets may be established where potential conflict may be resolved.
Informal group discussions between members of management and employees
is an example of institutionalization of conflict.

5. Motivation of energy available to complete tasks may be increased under the

influence of inter-group conflicts.

6. Conflict may increase innovation because of the greater diversity of view

points and heightened sense of necessity.

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7. Each group member may develop increased understanding of his own posi-
tion because conflict forces people to bring forth all supporting arguments,
think more clearly about issues and seek support of evidence of the views.

8. Groups may achieve awareness of their own identities, each group thereby
becoming more limited. They may identify where they belong more clearly.

9. Inter-group conflicts may satisfy the aggressive urges inherent in many peo-
ple.

• Dysfunctional Consequences

1. The mental health of some combatants may be adversely affected because of

the emotional stress reactions precipitated in such people. Tolerance levels
are different i.e. low and high.

2. Inter-group conflict of a high intense nature usually results in a misallocation

of organizational resources i.e. time wanted to fight or combat one another,
material and personnel are likely to be misused. People waste the organiza-
tions time, funds, materials and personnel in carrying out the warfare.

3. Sub-optimization of part of the system occurs when disputants push their own
position to the extreme.

4. The distortion of goals may occur as people begin to concentrate their at-
tention on petty issues or embark on faultfinding, regarding their opponents
instead of pursuing their assigned missions.

8.2.10. Strategies of Maintaining Organisational Conflicts

Conflicts may be managed by the conflicting parties themselves or by third parties.
Organizational conflicts can be met with non-attention, suppression or resolution.

• Lose-Lose Strategies

In lose-lose strategy both parties in the conflict lose in the sense that neither achieves
its true desires in the conflict. Conflict is managed in such a way that its underlying
reasons remain unaffected. Consequently future conflict of a similar nature is likely
to occur.
There are three basic approaches to conflict management in the lose-lose strategy;

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1. Avoidance - Managing conflict by avoidance is an extreme form of non-

attention. In this approach there is no direct attempt to deal with a manifest
conflict. Everyone pretends that conflict does not really exist or if it does ex-
ist, it is such that it will simply disappear. Consequently, in this strategy, the
conflict is left to develop on its own into a constructive or destructive force
within the organization.

2. Smoothing - This is managing conflict by playing down differences among

the conflicting parties and high-lighting similarities and areas of agreement.
The aim is to encourage peaceful co-existence through a recognition of com-
mon interests. Smoothing may ignore the real essence of a given conflict. It
is a form of a non-attention of a minor form.

3. Compromise - In this approach accommodations are made such that each

party in the conflict gives up something of value to each other. As a result
neither party gains its full desires and the reasons for conflict remain un-
solved.

• Win-Lose Strategy

In win-lose strategy, one party in the conflict wins while the other loses. One party
wins by achieving its desires at the expense of the other party’s desires. The root
causes of conflict are not addressed. Instead, there is a tendency to suppress desires
of at least one of the parties. Therefore future conflicts of a similar nature are likely
to occur.

1. Competition - In this approach, a victory is achieved on the part of the win-

ning party.

2. Authoritative - Command Here a formal authority simply dictates a solution

and specifies what is gained and lost and by whom e.g. government intervenes
in strikes and gives workers time to conform. When the authority is a party to
the conflict, it is easy to predict who will be the winner and who is the loser.

• Win-Win Strategy

Win-win strategy provides the best solution to conflict. It is a strategy that truly
resolves conflict. It involves the recognition by all conflicting parties that something

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is wrong and needs attention. Both parties in the conflict win as both achieve their
goals.

8.2.11. Corporate Culture

Meaning of Culture
Vijay Sathe defines culture as "the set of important understandings that members
of a community share in common". These shared understandings consist of norms,
values, attitudes and beliefs. The community may be a society, industry, company,
department or work unit.
The culture of an organization can be determined from the things, doings, feelings
and sayings held in common by organizational members.

Factors that determine the culture of any organization:

1. Values held by top management—top management through their orienta-
tion and values set the tone that prevails in the organization. For example a
management that is antagonistic to competitors creates this atmosphere for
its employees.

2. History of the organization—the way things have always been done in the
organization determines to a great extent the things held in common by its
members. For example the character of the founder of a company is main-
tained in the company through out the years.

3. Top management vision for the company—what top management feel about
the future of the company permeates into the entire organization. If the CEO
for instance has no faith in the future of the company a tone of hopelessness
may prevail among employees.

4. Work Group -The nature of the immediate work group will affect one’s per-
ception of the quality of culture. Commitment refers to whether this group is
just going through the routine motions of work. Sixteen people are just going
through the motions, it is difficult for a particular individual to obtain high
levels of output and satisfaction. Hinderance is concerned with the degree
to which a great deal of busy work of doubtful value is given to the group.
Morals and friendliness within the group are factors with which most readers
are familiar.

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5. Organizational Characteristics- The leadership style of the immediate su-

pervisor will have a considerable effect on the culture of the group and vice
versa. If the manager is always pursuing for output, this alters the environ-
ment. Trust refers to supervisory behaviour characterised by personally work-
ing hard and setting an example. Consideration is a leadership characteristic.
Organizational characteristics may also affect the type of culture. Organi-
zations vary on such attributes as size and complexity. Large organizations
tend toward higher degrees of specialization and greater impersonalization.
Labour unions often find that large firms are easier to organise than smaller
ones because smaller firms tend to be closer and have more informal rela-
tionships between employee and management. Complex organizations tend
to employ a greater number of professionals and specialists which alters the
general approach to solving problems. Organizations also vary in the degree
to which they write things down and attempt to program behaviour through
rules, procedures and regulations (standardisation of processes). They can
also be distinguished on the basis of the degree of decentralization of deci-
sion making authority, which affects the degree of autonomy and freedon of
personnel within the organization.

6. Administrating Process-Corporate culture can be affected by administration

processes. Firms that can develop a direct link between performance and re-
wards tend to create cultures conducive to achievement. Communication sys-
tems that are open and free flowing tend to promote participation and creative
atmospheres. The general attitudes that exist toward the handling of risk and
the tolerance of conflict will, in turn, have considerable impact on the type of
team work affected. They also affect the amount of organizational innovation
and creativity.

A strong and widely recognised culture is one of the factors that may contribute to
the success of a company.
A company’s predominant culture can be changed by various environmental factors
e.g. competition, government action or social movement. For example the cur-
rent issues of gender balance, environmental friendliness, economy deregulation,
privatisation and even transparency and accountability may change the cultures of
many companies here in Kenya.

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Culture emerges from the actions of organization members and any attempt to
change culture must focus on what people do. If a manager can get organizational
members to behave differently then cultural change is possible. Culture gives orga-
nizational members a sense of how to behave and what they ought to be doing.
E XERCISE 15.  Outline the leadership roles of a manager.
Example . Importance of Directing?
Solution:

Direction initiates actions to get the desired results in an organisation.

Direction attempts to get maximum out of employees by identifying their capabili-
ties.
Direction is essential to keep the elements like Supervision, Motivation, Leadership
and Communication effective.
It ensures that every employee work for organisational goals.
Coping up with the changes in the Organisation is possible through effective direc-
tion.
Stability and balance can be achieved through directing. 

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LESSON 9
Staffing

According to Theo Haimann, “Staffing pertains recruitment, selection, develop-

ment and compensation of subordinates.”
According to Kootz & O’Donell, “Managerial function of staffing involves man-
ning the organization structure through proper and effective selection, appraisal &
development of personnel to fill the roles designed in the structure”.
Human resource management (HRM), or staffing, is the management function de-
voted to acquiring, training, appraising, and compensating employees . In brief, it
covers activities such as:

• human capital management

• knowledge management

• reward management

• performance management

• employee relations and wellbeing

• learning and development management

9.0.12. Characteristics Of Staffing Process

• Staffing is an important managerial function

• Staffing is a persistent activity

• Staffing is a continuous activity.

• The basis of staffing function is efficient management of personnel.

• Staffing is performed by all managers.

Staffing Plan
• Analyzing Manpower requirements.

• Recruitment. Selection.

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• Placement.

• Training and Development.

• Performance Appraisal.

Keys To A Successful Staffing System

• Build your staffing system upon objective, performance-based criteria.

• Use a structured interview process.

• Develop a staffing plan.

Importance Of Staffing
• Filling the Organizational positions

• Developing competencies to challenges

• Retaining personnel -professionalism

• Optimum utilization of the human resources

9.1. Personnel Management

Is a specialist function of management and is not directly involved with business
strategy it is a collection of people-related activities.

• Setting general and specific management policy for employment relationship.

• Administration: writing job descriptions, managing the appraisal process.

• Policing: ensuring the personnel policies are followed.

• Collective bargaining and industrial relations.

• Staffing and organisations i.e. providing and retaining personnel.

• Implementing downsizing and redundancy programmes.

• Aiding self development of employees at all levels.

• Reviewing and auditing manpower and management in the organisation.

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Human Resource Management (HRM)

Is a strategic and coherent approach to the management of an organisation’s most
valued assets. The people working there who individually and collectively con-
tribute to the achievement of its objectives for sustainable competitive advantage
(Armstrong). It aims at integrating personnel issues with the company’s strategy. It
is the process of managing people so as to contribute to organisational performance
and change.

Aims and goals of HRM

• Serve the interests of management as opposed to employees.

• Suggest a strategic approach to personnel issues.

• Link mission to HR strategies.

• Enable human resource development to add value.

• Gain employees commitment to the organisations value and goals.

HRM is managing people for results. It is the responsibility of every manager. It

involves every person who is responsible for the work of others. It is about building
a very competitive organisation around highly committed employees.

Features (Distinctive) Of HRM

• Top management: - Personnel was a staff function with limited impact. Top
managers set direction and they must be involved.

• Performance and delivery of HRM: Line managers are responsible for the
implementation of HRM. They do not carry out specialised instructions but
manage within the context of the organisation’s HRM strategy.

• Strategic fit: The right people in every respect must be chosen.

• Cultures and values: HRM tires to inaucate the organisations values into its
employees.

• Employee behaviour and commitment: HRM seeks to win heart and minds
rather than mere consent to management decisions.

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Table 9.1: Differences between HRM and personnel management

• Reward systems that recognise good performance e.g. Performance related

pay.

• Employees and assets people are a resource to be deployed. Assets need

to be maintained through training. Degradation of human assets will harm
competitiveness.

Differences Between personnel management And HRM

9.1.1. The Process of Personnel Management
The composition of an organization’s work force changes over time. People get
promoted, others get laid off and some look for better jobs elsewhere, while some
undesirable or unsuccessful employees are transferred. The personnel management
process is a continuing procedure to keep the organization supplied with the right
people in the right positions at the right time.
The steps or activities in this process include:

• Human resource (manpower) planning

• Recruitment

• Selection

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• Placement/orientation

• Training and development

• Performance appraisal

• Compensation

• Termination/ Separation.

Manpower Planning
Manpower planning is the long term planning of the manpower requirements of an
organization taking into account both internal activities and factors in the external
environment. Manpower planning aims at:

• obtaining and retaining the quantity and quality of people an organization

needs.

• making the best use of human resources

• being able to anticipate the future in terms of potential surplus or deficit of

people.

• Recruitment
This is the second step in the staffing process. This process starts when a company
finds it needs to hire more employees. Recruitment concerns the set of activities
that an organization uses to attract job candidates who have the abilities and skills
needed to assist the organization in the achievement of its goals. Recruitment can
either be general or specific. General recruitment is directed at filling positions
that frequently open up in most organizations e.g. clerical or non-skilled or semi-
skilled workers. Specific recruitment is mainly for managerial positions and for
professional positions such as engineers and other skilled workers.
Recruitment sources are either internal or external. Internal recruitment involves
recruitment from within the organization through for example job postings or pro-
motions. Internal recruitment has several advantages:

• It reduces excessive recruitment and placement costs;

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• promotes improved morale and loyalty among employees because they be-
lieve their performance will be rewarded with promotions;

• generates internal competition for higher level positions which leads to in-
creased performance;

• when managers promote from within they deal with people whose qualities
they already know;

Recruitment from within also has several disadvantages:

• internal candidates may lack sufficient experience, knowledge, management

ability, intelligence or skill in dealing with people;

• promotions from within may lead to in-breeding—an enterprise may tend to

stagnate if all managers share the same views and experience. Bringing in
new managers with different backgrounds can result in new ideas and new
approaches;

• may create internal disharmony, this happens where there are many internal
managers qualified for the job but in the end only one has to be selected.

• the Peter principle—managers are promoted until they reach their level of
incompetence. If a manager proves successful in one level he may keep being
promoted to higher levels until he cannot perform well.

External Recruitment is used extensively for highly specialised positions for which
personnel in the organization are unqualified, where an organization may be ex-
panding too rapidly to develop an adequate supply of managerial talent and when
management wants to give the enterprise a new vigorous orientation.
The sources of external recruitment may include walk-ins and unsolicited resumes
from individuals, agencies and placement firms, newspaper advertisements, schools
and colleges, unions and professional associations.
Advantages of outside recruitment include:

• the selection can be made from a much greater number of people.

• it brings individuals into the organization who have different backgrounds

and who can perhaps help the enterprise maintain vitality.

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• outside recruitment is used to give an organization a totally new direction.

Disadvantages of outside recruitment may include:

• the individual selected will lack specific experience in how the organizations
functions and how the various departments interrelate.

• it costs more in terms of both money and time, for instance fees may have to
be paid for advertisements and for professional recruitment firms and besides
it may take weeks to locate the truly qualified manager.

• some adverse qualities of a person recruited from outside may go undetected

despite a thorough investigation—for example how on earth can the recruit-
ment manager tell that the candidate has a bad temper?

• Selection
Once enough candidates have been recruited, the actual selection process begins.
This process usually begins with an initial screening interview (short listing), which
is followed by completion of application forms. This initial screening and comple-
tion of application forms allows the employer to get basic information about the
candidates, determine the level of interest of the candidate and determine whether
or not the selection process will continue after this screening interview, the success-
ful candidates then appear for the formal interview where the candidates meet face
to face with the recruitment panel who mainly give the candidate certain tests e.g.
skills and abilities test and psychological tests. The tests may be oral or written
depending on the interviewer.
Formal interviews have certain defects:

• The interviewee is likely to be inexperienced in interviews and he/she may

feel uneasy and have an uncharacteristically tense manner.

• Interviews may cause the candidate to adopt a phony behaviour. The can-
didate feels compelled to project an image that he or she thinks will be ac-
ceptable to the interviewer. Sometimes the act put on by a qualified applicant
may be obviously false or projects an image that is contrary to the organiza-
tions style. A less qualified candidate who projects a realistic position may
be given the job.

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• Tendency of interviewers to ask questions that have no useful answers e.g."tell

me about yourself" or open ended questions like "what would you say is your
greatest weakness".

• The interview process may also prove unreliable becasue of the different ob-
jectives of interviewer and interviewee. A prospective employer will want to
sell the organization as a good place to work and may exaggerate the orga-
nization’s strength. The prospective employee on the other hand wants to be
hired and may exaggerate his/her qualities.

A candidate who has successfully gone through the formal interview may be asked
for a physical examination, the prospective employer may also make reference
checks about the candidate and if these and the physical examination are accept-
able then the candidate gets the job offer.
The whole selection process has certain limitations:

• The diversity of selection approaches and tests indicates that there is no per-
fect way to select employees/managers. Even carefully chosen selection cri-
teria are still imperfect in predicting performance.

• There is distinction between what a person can do (ability) and what he/she
will do. Selection techniques and instruments are not a sure way to predict
what people will do even though they may have the ability to do it.

• Testing itself especially seeking information may be considered an invasion

of privacy. In addition it has been charged that some tests unfairly discrimi-
nate against members of minority groups.

• Time and cost involved in making personal decisions e.g. advertising expense
agency fees, costs of test materials, time spent interviewing candidates, costs
of reference checks, medical, start up required for new managers and orien-
tation of new employees.

• Orientation
Orientation or socialization is designed to provide a new employee with the infor-
mation he or she needs in order to function comfortably and effectively.
Socialization gives three types of information:

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• general information about daily work routines;

• a review of the organization’s history, purpose, operations and products and

services;

• detailed presentation of the organization’s policies, work rules and employee

benefits. When new employees enter an organization they may feel anxious
and worry about how well they will fit into the system, how well they will
relate with the more experienced employees and therefore orientation should
be aimed at reducing the anxiety of new employees.

Generally orientation is therefore concerned with placement and induction. The

levels of induction in an organization include overall level of induction, department
induction, sectional induction, job level induction and induction by other appropi-
ate groups for example, the safety committee, professional groups like economists,
social/recreational groups, trade unions and co-operative societies.

• Training And Development

Training programs are directed towards maintaining and improving current job
performance, while development programs seek to develop skills for future jobs.
Training programs are mainly concerned with the technical aspects of the job and
therefore are usually directed at employees. Development programs are mainly for
managers.

1. Training - Training varies from highly informal assessments to highly struc-

tured programs due to the different calibre of people existing in an organi-
zation the training needs will vary with each group of people. Training of
employees can be effected with different approaches which are either inter-
nal or external. Internal approaches to training These are programs carried
out within the environs of the organization and conducted for the organiza-
tion. Examples are:

• Orientation - this is the process of introducing new employees to the organi-

zation and to their specific jobs.

• Development by Level-training is provided as an individual rises from level

to level. It follows the promotional path and becomes more and more ori-

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ented towards development of managerial rather than technical skills. It is

advantageous in that :

1. the method is logical as it follows a promotional path, one only trains when
the training is needed;

2. since training deals with immediate performance needs trainees are highly
motivated and

3. training is not wasted on individuals who never rise.

• Job Rotation - this requires an employee to spend a certain amount of time

in each of the various key departments. The objective is to show what each
department does and how it relates to the organization as a whole.

Advantages:

1. Trainees can be evaluated and the manager decides whether or not he wants
him.

2. Trainees get the feel of different jobs and decide which suits them best.

Limitations:

1. The exposure provided by rotation may not be long enough to prove the em-
ployee’s effectiveness.

2. Expensive, as trainees are inexperienced and thus not working properly.

• Apprentice Training-this method involves making the learner work as an

understudy of an experienced worker for a fixed period of time after which
he is expected to work alone.

• Coaching-an informal person-to-person counselling that cannot be standard-

ized. For it to work the subordinate must have confidence and trust in the
coach. It is a method disliked by insecure superiors.

• Acting Capacity-the trainee temporarily works in a senior position mainly

when the superior is on vacation or absent due to other reasons.

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• Assistant to- Positions-the trainee works under close supervision of an expe-

rienced employee who may assign him some duties. It is an excellent method
only if the superior is a good teacher and has the skill to counsel the employee.

• Committee and Junior Boards—the trainee is appointed to some committee

set up for a given task. Members of the committee comprise experienced
employees and the less experienced one gets the opportunity to interact with
the experienced ones and to get a feel of how things are done.

External Approaches
These approaches are generally used to supplement internal programs. They are
normally conducted by consultants, universities, colleges and other professional
bodies. The programs may be conducted through traditional classroom lectures,
seminars, workshops, conferences, etc. They are useful when skill or knowledge
needed is highly specialised and organisations may have no one with in-depth
knowledge of the subjects.
Guidelines For Successful External Programs

1. Should include all personnel, senior and subordinate.

2. The program should be evaluated regularly to justify its usefulness.

3. It must be actively supported by top management.

4. Emphasis should be placed on results not on the training activities.

5. Training needs should determine the methods or programs.

6. The theory and practice must be integrated.

7. Training should be rewarded.

Performance Appraisal
This is another aspect (step) in the process of staffing. It is the process of iden-
tifying, measuring and developing human performance in the organization. Most
managers find performance appraisal quite a difficult activity. It is not always easy
to judge subordinates performance accurately and it is even more difficult to convey
the judgement to the subordinates in an amicable manner.

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The performance appraisal may be either formal or informal. Informal appraisal is

the continuous process of feeding back to subordinates information about how well
they are doing their work and it is usually on a day to day basis.
Errors that could occur during appraisal

1. Central tendency error—superiors have been found to rate most of their em-
ployees within a narrow range. The rater fails to distinguish significant dif-
ferences between group members and lumps everyone together in an average
or above average category.

2. Strictness/Leniency error—some superiors may be by nature overly strict or

overly lenient and this biases the appraisal activity.

3. Halo effect—this exists where the rater assigns the same rating to each factor
being evaluated for an individual e.g. if he rates an employee above average
on promptness he may have the tendency to rate him above average on all
other factors and thus fail to identify the weak/strong points.

4. Recency error—in an annual evaluation a supervisor may give undue empha-

sis to performance during the past 2 or 3 months and ignore performance
levels prior to this. This leads to uneven performance as well as contributing
to the "playing the game" attitude where employees relax in the initial months
and then work very hard just before the evaluation period.

5. Personal biases—personal biases can exist in the form of racialism, sex, back-
ground etc. An evaluater may have preconceived ideas about people of a cer-
tain sex, age or race and thus evaluate them in the light of his preconceived
opinions. Here also the effects of stereotypes come into play during evalua-
tion.

Techniques of performance appraisal

• Graphic rating—assessing performance by a graph or a line representing the

range of a personal trait or dimension of the job.

• Behavioural rating—assessing performance by specific description of work

behaviour.

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• Work standards approach—comparing actual performance with present stan-

dards.

• Essay—writing a commentary discussing an individuals strengths and weak-

nesses.

• Management by objectives—setting of future objectives and action plans jointly

by subordinates and superiors and then measuring outcomes against goals.

• Ranking method—involves ranking of employees in one department or work

unit ranging from the best to the worst performer based on overall contribu-
tion to the organization.

Benefits of Performance Appraisal

For staff it will enable them to:

• Have a clear understanding of the goals and standards that are expected of
them.

• Explain their needs and acknowledge any weaknesses in the positive context.

• Increase their confidence and awareness.

• Generate their solutions to problems and accept responsibility for their own
development.

For managers a well run Appraisal will enable them to:

• Gain important insights into the work being done and those doing it.

• Improve the ability to plan, control and monitor work.

• Assess training needs.

• Develop a positive working climate in which effective staff communication

and development is evident.

For the organization:

• It will have a staff whose abilities, talents and expertise are more effectively
harnessed.

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• A staff who understand and work to clearly defined policies, aims and objec-
tives.

• Justifiable bases for such actions as separations, transfers, promotions etc.

Compensation Systems
Compensation (remuneration) refers to any payment or reward that an individual
receives in return for performing organizational tasks. The basic types of compen-
sation include:

• Direct financial compensation (salaries/wages).

• Indirect financial compensation—other financial rewards other than wages

and salaries e.g. medical cover, insurance cover, paid leave, etc.

• Non-financial compensation—most are intangible and they relate to the sat-

isfaction that an individual derives in performing his duties. They can be
as a result of meaningful jobs, social [Link] remuneration system
should be able to attract and retain the right calibre of people, and gives re-
wards that will increase the workers motivation.

Factors Influencing Basic Compensation Policy And Practices

• Union Pressures Labour :union pressures exert considerable influence upon

the wage an salary issues. Generally the more powerful a union is or the
stronger its bargaining power as measured by its membership and leadership
strengths the greater will be the possibility of higher wages and salaries.

• Job requirements in terms of knowledge & skills: Various jobs in an organi-

sation are graded in accordance with relative skills efforts, responsibility, job
condition etc. The more difficult the jobs are the higher will be the wages or
salaries paid to the employees.

• The organisation size or ability to pay; The large the organisation is the higher
the chances of good profits earned by it. Large companies or organisations
thus tend to pay higher wages and salaries relative to smaller organisations
because of their ability to pay.

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• Product competitiveness and prospects for higher profits. If an organisation

product (goods or services) are highly competitive and profits are good wage
level in the organisation is likely to rise. Hence organisations which are mar-
ket leaders in terms of products or services quality tends to make high profits
and pay better than their competitors.

• Psychological and Sociological/Ethical factors: These factors exert a con-

siderable influence on the company’s wage levels because if the employees
are dissatisfied with wages and salaries paid to them a sizeable pressure for
wage/salary increases would develop frequently which may at times not be
justified on purely economic grounds. Psychologically individuals perceive
the level of wages and salary as a measure of satisfaction, security and sta-
tus in life. Wage/salary differentials serve to depict social hierarchies and
individuals perceive themselves in relation to others in relation to how much
each of them earns. Ethically individuals feel that wages and salaries should
be commensurate with their efforts.

• Government policy and action in wage determination. Like pressures from

trade unions there’s pressure from the government upon wage and salary
practices. Acting in the public interest government may pass legislation, issue
executive orders or establish commissions with a view to regulate compen-
sation policies and practices for the purpose of attaining specific social and
economic objectives such as elimination of exceptionally low wages.

• Cost of living or consumer price index. This is often regarded as an automatic

minimum pay criteria. Due to high cost of living resulting from rising prices
various organisation do increase their wages and salaries.

E XERCISE 16.  Explain how a company can attract and retain qualified staff.
Example . Characteristics Of Staffing Process
Solution:

Staffing is an important managerial function

Staffing is a persistent activity
Staffing is a continuous activity.

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The basis of staffing function is efficient management of personnel.

Staffing is performed by all managers. 

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LESSON 10
Emerging trends in management

10.1. Dynamics of Management

Successful managers are the ones who anticipate and adjust to changing circum-
stances rather than being passively swept along or caught unprepared. Employers
today are hiring managers who can take familiar situations in stride. Business week
served up this amusing but challenging profile of tomorrow’s managers: the next
generation of corporate leaders will need the charm of a debutante, the flexibility
of a gymnast , and the quickness of a panther. A few foreign languages and a keen
understanding of technology won’t hurt either. Also in the mix are a sense of humor
, passion , and the ability to make decisions rapidly. This particular collection of
the changes is the product of five overarching sources of change:

1. globalization

2. the evolution of product quality

3. environmentalism,

4. ethical reawakening

5. the internet revolution

Together, these factors are significantly reshaping the practice of management.

Globalization :
Figuratively speaking , the globe is shrinking in almost every conceivable way.
Networks of transportation , communication , computers , music and economics
have tied the people of the world together as never before. Companies are having to
become global players just to survive, let alone prosper. Import figures are stunning.
For instance, the united states currently imports about 60% of its oil, with 68% the
figure forecasted for the year 2025. A controversial aspect of globalization is the
practice of off shoring, the out- sourcing of jobs from developed countries to lower
– wage countries. This is a long- standing practice that has been going on for
decades. Tens of thousands of jobs in the textile, steel, and consumer electronics
industries is long gone from the united states. Have a look at the table below of the

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21st century manager:( ten major changes) Also balancing the global jobs equation
a bit are two factors: (1) 5.1 million employees in the United States are employed
by foreign- owned companies such as Japan’s Toyota and Germany’s Siemens and
(2) in sourcing. Today’s model manager is one who is comfortable transacting
business in multiple languages and cultures. There is a rapidly growing army of
global managers from all corners of the world, and you can become a member of it
through diligent effort and a clear sense of purpose.

The Evolution Of Product Quality

Managers have been interested in the quality of their products , at least as an af-
terthought ,since the industrial revolution. Today’s hospitals ,hotels and even uni-
versities are more interested in improving product /service quality as are factories
,mines , airlines ,and railroads. Progressive managers are moving away from the
first two approaches and toward the build- it – in and design – it – in approaches.

Environmentalism
Green issues such as deforestation ;global warming ; depletion of ozone layer ;toxic
waste ; food safety and pollution of land ,air and water have gone mainstream. Man-
agers around the world are picking up the environmental banner and putting their
creative ideas to work. Others include Ethical reawakening and even the internet
and e- business revolution.

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E XERCISE 17.  Read and make notes on the relevance of ethical reawakening
and the internet revolution to the 21st century manager.
Example . Benefits of Performance Appraisal?
Solution:

For staff it will enable them to:

Have a clear understanding of the goals and standards that are expected of them.
Explain their needs and acknowledge any weaknesses in the positive context.
Increase their confidence and awareness.
Generate their solutions to problems and accept responsibility for their own devel-
opment.


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Solutions to Exercises
Exercise 1. They include working with and through others implies that manage-
ment is a social process that brings individuals together. According to the research
done, managers who do not work with others hamper their careers. An objective is
a target to strive for . Note that, this always requires collective action ;thus with-
out it an organization will be aimless and wasteful. The relationship between the
two terms, effectiveness and efficiency, is important and presents a manager with
a never ending challenge. Effectiveness entails promptly achieving a stated objec-
tive while efficiency enters the picture when the resources acquired to achieve an
objective are weighed against what was actually accomplished. Managers are re-
sourceful persons who get the best out of the little that is allocated to them. The
resources available and the population in need of them are not balanced .Therefore
there is need to maximize on these limited resources. In this sense, economics and
management are closely related. Flexibility, adaptability and volatility are defin-
ing features of a successful manager; successful managers anticipate and adjust to
changing circumstances Exercise 1
Exercise 3. The following are the roles of a manager.
Planning- managers define the course of action they come up with strategies that
outline the ’HOWs’, ’WHENs’,’WHEREs’ etc (strategic planning) of the respective
goals and objectives laid out in the firm.
Decision making - The process of carrying out every management function is de-
fined by making of choices. This basically involves short listing every available
alternative or option that the firm has, evaluating their pros and cons of each and
their impact on the firm should they be adopted and finally settling on a most ap-
propriate alternative.
Organizing - managers make structural considerations that define hierarchy, chain
of command and flow of work in the firm. As such staff are classified into depart-
ments each headed by a manager and the respective departmental managers report
to a superior authority such as a managing director. The role of organizing en-
sures specialisation in function which increases efficiency and accountability in the
organization.
Staffing -this is the process of acquiring and managing human resource. Managers
are charged with the responsibility to recruit(hire or employ), train and develop peo-

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ple (improve skills through workshops, seminars, conferences and refresher courses
).
Communicating - it is the duty of managers to pass of technical knowledge, rules
and instructions to their subordinates and return feedback of the information passed
therein back to their superiors should there be any. Managers should also be able to
respond to complaints, criticism, allegations, complements, suggestions etc tabled
to them by superior and inferior colleagues at work.
Motivating - Involves offering rewards to the employees for their faithful pursuit
of collective organizational objectives and looking into their social welfare as a
means to show them that the organization regards them as assets. In this way, the
employees are inspired to work harder for the good of their firm.
Leading - managers are required to act as role models to their employees. They
should offer exemplary guidance through their actions in the workplace basic things
such as following protocol, punctuality in submission of resultsor even reporting to
the workplace, intolerance for misconduct or lack of ethics are traits they should
portray to the letter for their subordinates to emulate.
Controlling: this is keeping things on track by comparing desired results with the
actual results and taking corrective measures. Good objectives are measurable and
time bound . In this sense, it is expected that managers should be able to compare
and contrast the actual results at a particular time against desired or predicted results
for that particular time. this ensures that discrepancies are noted, over achievement
appreciated and corrective measures, if necessary, are taken in good time to realign
the productivity levels to the desired standards. Exercise 3
Exercise 4. The operational approach is dedicated to improving efficiency, waste
reduction and improving quality. The behavioral approach focuses on the people
as the most important asset of any organized activity. Systems approach sees the
organization as a collection of many parts operating interdependently to achieve a
common purpose, while contingency approach represents a compromise between
contingent factors and the situation at hand when making managerial decisions
Exercise 4

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