Individual Differences

UNIT 1: INDIVIDUAL DIFFERENCES

Learning Outcomes
After reading this chapter, you should be able to do the following.
 Define and explain causes of personality differences.
 Explain personality characteristics within organisations.
 Identify and explain how to measure personality.
 Explain attitudes, its characteristics, functions and its formation within organisation.
 Explain values. its functions and types within organizations.
 Explain intelligence and it types within organizations.

Introduction
Organizations are made up of their individual members. The individual is a central feature
of organisational behaviour whether acting in isolation or as part of a group in response to
expectations of the organisation. A discussion of individual behaviour in organizations is
therefore riddled with complexity and contradictions. Managers are required to be
competent at selecting the individuals who will be valuable to the organisation. They need
to be observant about the individuals who are performing well and have the potential to
develop within the organisation. They also need to be able to value difference and be
sensitive to contrasting needs. Finally, managers need to know themselves and understand
their own uniqueness and the impact their personality has on others. It is the task of
management to integrate the individual and the organisation and to provide a working
environment that permits the satisfaction of individual needs as well as the attainment of
organisational goals.

How Do Individuals Differ?

Our sense of self is shaped by our inherited characteristics and by influences in our social
environment. The process of growing up such as the impact of our early family life and the
country in which we live has a significant part to play in our identity. Most social scientists
would agree that both inherited and environmental factors are important in our
development, and it is the "ay m which these factors interact which is the key to our adult
personality.

However, scientists differ with regard to the weight they place on these factors - some
believing that our personality is heavily influenced by our inherited characteristics and will
never change, others believing the reverse. But first, what are the differences among
individuals? These include:
 ethnic origin
 physique
 gender
 early family experiences
 social and cultural factors
 national culture
 motivation
 attitudes
 personality traits and types
 intelligence and abilities
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 perception

Personality
Though psychologists and social scientists unanimously agree to the importance of
personality, they are unable to come out with a unanimous definition. Many authorities on
the subject have defined personality in different ways. Some of the definitions are
reproduced below:

Probably the most meaningful approach would be to include both the person and the role as
Floyd L. Ruch does in his definition. He states that: the human personality includes:
 External appearance and behaviour or social stimulus value
 Inner awareness of self as a permanent organizing force
 The particular pattern or organization of measurable traits. both "inner and "outer"

Gordon Allport - gave the most frequently used definition of personality nearly 70 years
ago. He said personality is "the dynamic organization within the individual of those
psychophysical systems that determine his unique adjustments to his environment". From
this definition, it can be understood one's physical appearance and behaviour affects others.
Understanding oneself means one is unique with a set of attitudes and values and a self-
concept. Finally, the pattern of measurable traits refers to a set of characteristics that the
person exhibits.

J.B Kolasa defines personality as - "Personality is a broad, amorphous designation relating

to fundamental approaches of persons to others and themselves. To most psychologists and
students of behaviour, this term refers to the study of the characteristic traits of an
individual, relationship between these traits and the way 'in which a person adjusts to other
people and situations".

According to Gluck - "Personality is a pattern of stable states and characteristics of a

person that influences his or her behaviour toward goal achievement. Each person has
unique ways of protecting these states".

James D Thompson and Donald Van Houten define personality as - "a very diverse and
complex psychological concept. The word "personality" may mean something like
outgoing, invigorating interpersonal abilities ... but we must also recognize and explain the
fact that development results in man acquiring a distinctiveness or uniqueness which gives
him identity which enables him and us to recognize him as apart from others. These
distinguishing characteristics are summarized by the term personality".

From the above definitions we can say that personality is a very diverse and complex
psychological concept. It is concerned with external appearance and behaviour, self,
measurable traits, and situational interactions. The words of Clyde Kleeckholn and H. A.
Murray can be used to sum up the meaning of this complex term personality whey they
said, "that to some extent, a person's personality is like all other people's, like some other
people's, like no other people's".

Major Determinants of Personality

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What determines personality? Of nil the complexities and unanswered questions in the
study of human behaviour. this question may be the most difficult. People are enormously
complex; their abilities and interests and attitudes are diverse. An early argument in
personality research was whether an individual's personality was the result of heredity or
environment. Was the personality Predetermined at birth, or was it the result of the
individual's interaction with his or her environment? Personality appears to be a result of
both influences. Additionally, today we recognize another factor - the situation. The
problem lies in the fact the cognitive and psychological processes, plus many other
variables. all contribute to personality. The determinants of personality can perhaps best be
grouped in five broad categories: biological, cultural, family, social and situational.

Biological Factors
The study of the biological contributions to personality may be studied under three heads:
 Heredity: Heredity refers to those factors that were determined at conception. Physical
stature, facial attractiveness, sex, temperament, muscle composition and reflexes,
energy level, and biological rhythms are characteristics that arc considered to be
inherent from one's parents. The heredity approach argues that the ultimate explanation
of an individual's personality is the molecular structure of the genes, located in the
chromosomes. Research on animals has showed that both physical and psychological
characteristics can be transmitted through heredity. But research on human beings is
inadequate to support this viewpoint. However, psychologists and geneticists have
accepted the fact that heredity plays an important role in one's personality.

 Brain: The second biological approach is to concentrate on the role that the brain plays
in personality. Though researchers make some promising inroads, the psychologists are
unable to prove empirically the contribution of human brain in influencing personality.
The most recent and exciting possibilities come from the work done with electrical
stimulation of the brain (ESB) and split-brain psychology. Preliminary results from the
electrical stimulation of the brain (ESB) research give indication that better
understanding of human personality and behaviour might come from the study of the
brain. Work with ESB on human subjects is just beginning. There seem to be definite
pleasurable and painful areas in the human brain. This being true, it may be possible
physically to manipulate personality through ESB.

 Biofeedback: Until recently, physiologists and psychologists felt that certain biological
functions such as brainwave patterns, gastric secretions, and fluctuations in blood
pressure and skin temperature were beyond conscious control. Now some scientists
believe that these involuntary functions can be consciously controlled through
biofeedback. In BFT the individual learns the internal rhythm of a particular body
process through electronic signals feedback from equipment that is wired to the body
area. From this biofeedback the person can learn to control the body process in
question. More research is needed on biofeedback before any definitive conclusions can
be drawn. But its potential impact could be extremely interesting for the future.

 Physical features: A vital ingredient of the personality, an individual's external

appearance, is biologically determined. The fact that a person is tall or short, fat or
skinny, black or white will influence the person's effect on others and this in turn, will
affect the self-concept. Practically all would agree that physical characteristics have at
least some influences on the personality. According to Paul H Mussen "a child's
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physical characteristics may be related to his approach to the social environment, to the
expectancies of others, and to their reactions to him. These, in turn. may have impacts
on personality development". If personality characteristics were completely dictated by
heredity, they would be fixed at birth and no amount of experience could alter them.
But personality characteristics are not completely dictated by heredity. There are other
factors, which also influence personality.

Cultural Factors
Among the factors that exert pressures on our personality formation are the culture in
which we arc raised, our early conditioning, the norms among our family, friends and
social groups and other influences we experience. Traditionally, cultural factors are usually
considered to make a more significant contribution to personality than biological factors.
The culture largely determines attributes toward independence, aggression, competition,
and cooperation. According to Paul H Mussen "each culture expects, and trains, its
members to behave in the ways that are acceptable to the group. To a marked degree, the
child's cultural group defines the range of experiences and situations he is likely to
encounter and the values and personality characteristics that will be reinforced and hence
learned". Culture requires both conformity and acceptance from its members. There are
several ways of ensuring that members comply with the dictates of the culture. The
personality of an individual to a marked extent is determined by the culture in which he or
she is brought up. It follows that a person reared in a western culture has a different
personality from a person reared in our Indian culture.

Family Factors
Whereas the culture generally prescribes and limits what a person can be taught, it is the
family, and later the social group, which selects, interprets and dispenses the culture, Thus,
the family probably has the most significant impact on early personality development. A
substantial amount of empirical evidence indicates that the overall home environment
created by the parents, in addition to their direct influence, is critical to personality
development. For example, children reared in a cold, unstimulating home are much more
likely to be socially and emotionally maladjusted than children raise by parents in a warm,
loving and stimulating environment.

The parents play an especially important part in the identification process, which is
important to the person's early development. According to Mischel, the process can be
examined from three different perspectives.
 Identification can be viewed as the similarity of behaviour including feelings and
attitudes between child and model.
 Identification can be looked at as the child's motives or desires to be like the model.
 It can be viewed as the process through which the child actually takes on the
attributes of the model.
From all three perspectives, the identification process is fundamental to the understanding
of personality development. The home environment also influences the personality of an
individual. Siblings (brothers and sisters) also contribute to personality.

Social Factors
There is increasing recognition given to the role of other relevant persons, groups and
especially organisations, which greatly influence an individual’s personality. This is
commonly called the socialisation process. Socialisation involves the process by which a
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person acquires from the enormously wide range of behavioural potentialities that are open
to him or her. Socialisation starts with the initial contact between a mother and her new
infant. After infancy, other members of the immediate family – father, brothers, sisters and
close relatives or friends, then the social group – peers, school friends and members of the
work group, play influential roles. Socialisation process is especially relevant to
organisational behaviour because the process is not confined to early childhood, taking
place rather throughout one’s life. In particular evidence is accumulating that socialisation
may be one of the best explanations for why employees behave the way they do in today’s
organisations.

Situational Factors
Human personality is also influenced by situational factors. The effect of environment is
quite strong. Knowledge, skill and language are obviously acquired and represent important
modifications of behaviour. An individual's personality, while generally stable and
consistent, does change in different situations. The different demands of different situations
call forth different aspects of one's personality. According to Milgram "Situation exerts an
important press on the individual. It exercises constraints and may provide push. In certain
circumstances it is not so much the kind of person a man is, as the kind of situation in
which he is placed that determines his actions". We should therefore not look at personality
patterns in isolation.

Personality Characteristics in Organizations

Managers should learn as much as possible about personality in order to understand their
employees. Hundreds of personality characteristics have been identified. We have selected
eight characteristics because of their particular influences on individual behaviour in
organizations. They are:
 Locus of Control
 Machiavellianism
 Self-esteem
 Self-efficacy
 Self-monitoring
 Positive/Negative affect
 Risk Taking
 Type A Personality

Locus of Control
Some people believe they are masters of their own fate. Other people see themselves as
pawns of fate, believing that what happens to them in their lives is due to luck or chance.
An individual's generalized belief about internal (self) versus external (situation or others)
control is called locus of control.
 Internals: Those who believe they control their destinies have been labelled
internals. Internals (those with an internal locus of control) have been found to have
higher job satisfaction, to be more likely to assume managerial positions, and to
prefer participative management styles. In addition, internals' have been shown to
display higher work motivation, hold stronger beliefs that effort leads to
performance, receive higher salaries and display less anxiety than externals (those
with an external locus of control).

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 Externals: Externals are those individuals who believe that what happens to them is
controlled by outside forces such as luck or chance. Extremals prefer a more
structured work setting and they may be more reluctant to participate in decision-
making. They are more compliant and willing to follow directions.

Research on locus of control has strong implications for organisations. A large amount of
research comparing internals with externals has consistently shown that individuals who
rate high in externalities are less satisfied with their jobs, have higher absenteeism rates, are
more alienated from the work setting, and are less involved on their jobs than internals.

Why are externals more dissatisfied? The answer is probably because they perceive
themselves as having little control over those organisational outcomes that are important to
them. Knowing about locus of control can prove valuable to managers. Because internals
believe they control what happens to them, they will want to exercise control in their work
environment. Allowing internals considerable voice is how work is performed is important.
Internals will not react well to being closely supervised. Externals, in contrast may prefer a
more structured work setting, and they may be more reluctant to participate in decision-
making.

Therefore, internals do well on sophisticated tasks - which includes most managerial and
professional jobs -that require complex information processing and learning. Additionally,
internals are more suited to jobs that require initiative and independence of action. In
contrast, externals should do well on jobs that are well structured and routine and where
success depends heavily on complying with the directions of others.

Machiavellianism
Niccolo Machiavelli was a sixteenth century Italian statesman. He wrote "The Prince", a
guide for acquiring and using power. The primary method for achieving power! that he
suggested was manipulation of others. Machiavellianism then is a personality characteristic
indicating one's willingness to do whatever it takes to get one's way. An individual high in
Machiavellianism is pragmatic, maintains emotional distance and believes that ends can
justify means. "If it works use it", is consistent with a High-Mach perspective.

High-Machs believe that any means justify the desired ends. They believe that
manipulations of others are fine if it helps to achieve a goal. Thus, high-Machs are likely to
justify their manipulative behaviour as ethical. They are emotionally detached from other
people and arc oriented toward objective aspects of situations.

R Christie and F.L Geis, have found that high-Mach's flourish-

 When they interact face to face with others rather than indirectly;
 When the situation has a minimum number of rules and regulations thus allowing
latitude for improvisation: and
 When emotional involvement with details irrelevant to winning distracts low-
Mach's.

A high-Mach individual behaves in accordance with Machiavelli's ideas, which include the
notion that it is better to be feared than lived. High-Mach’s tend to use deceit in
relationships have a cynical view of human nature and have little concern for conventional
notions of right and wrong. They are skilled manipulators of other people, relying on their
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persuasive abilities. High-Machs are suitable in jobs that require bargaining skills or where
there are substantial rewards for winning (example commissioned sales).

Self-Esteem
Self-esteem is an individual's general feeling of self-worth. Individuals with high self-
esteem have positive feelings about themselves, perceive themselves to have strength as
well as weaknesses, and believe their strengths are more important than their weaknesses.
Individuals with low self-esteem view themselves negatively. They are more strongly
affected by what other people think of them, and they complement individuals who give
them positive feedback while give cutting down people who them negative feedback.

Research on self-esteem (SE) offers some interesting insights into organisational

behaviour.
High-SEs: People with High SEs
 believe they possess more of the ability they need in order to succeed at work,
 will take more risks in job selection and are more likely to choose unconventional
jobs,
 are more satisfied with their jobs.

Low-SEs: - People with low SEs

 are more susceptible to external influence,
 depend on the receipt of positive evaluations from others,
 tend to be concerned with pleasing others and therefore, are less likely to take
unpopular stands, and
 are less satisfied with their jobs.

Self-esteem may be strongly affected by situations. Success tends to raise self-esteem,

whereas failure tends to lower it. Given that high self-esteem is generally a positive
characteristic, managers should encourage employees to raise their self-esteem by giving
them appropriate challenges and opportunities for success.

Self-Efficacy
Self-efficacy refers to an individual's belief that he or she is capable of performing a task.
The higher your self-efficacy, the more confidence you have in your ability to succeed in a
task. So, in difficult situations, we find that people with low self-efficacy are more likely to
lessen their effort or give up altogether whereas those with high self-efficacy will try harder
to master the challenge. In addition, individuals high in self- efficacy seem to respond to
negative feedback with increased effort and motivation; those low in self-efficacy are likely
to lessen their effort when given negative feedback. Individuals with high self-efficacy
believes that they have the ability to get things done, that they are capable of putting forth
the effort to accomplish the task, and that they can overcome any obstacles to their success.
There are four sources of self-efficacy:
 Prior experiences;
 Behaviour models witnessing the success of others;
 Persuasion from other people; and
 Assessment of current physical and emotional capabilities.

Believing in one's own capability to get something done is an important facilitator of

success. There is strong evidence that self-efficacy leads to high performance on a wide
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variety of physical and mental tasks. Managers can help employees develop their self-
efficacy. This can be done by providing performance and rewarding employee's
achievements.

Self-Monitoring
A characteristic with great potential for affecting behaviour in organisations is self-
monitoring. Self-monitoring refers to an individual's ability to adjust his or her behaviour to
external situational factors.

High self-monitors pay attention to what is appropriate in particular situations and to the
behaviour of other people, and they behave accordingly. Low-monitors, in contrast, are not
as vigilant to situational cues and act from internal states rather than paying attention to the
situation. As a result, the behaviour of low-monitors, because their behaviour varies with
the situation appear to be more unpredictable and less consistent. High monitors are
capable of presenting striking contradictions between their public persona and their private
self. Low self-monitors can't disguise themselves this way.

Positive/Negative Effect
Individuals who focus on the positive aspects of themselves, other people, and the world in
general are said to have positive effect. In contrast. those who accentuate the negative in
themselves, others, and the world are said to possess negative affect. Employees with
positive effect are absent from work less often. Individuals with negative effect report more
work stress. Negative individual effect produces negative group effect, and this leads to less
cooperative behaviour in the work group. Managers can do several things to promote
positive effect, including allowing participative decision making and providing pleasant
working conditions.

Risk-Taking
People differ in their willingness to take chances. High-risk-taking managers made more
rapid decisions and used less information in making their choices than the low-risk-taking
managers. While it is generally correct to conclude that managers in organizations are risk
aversive, there are still individual differences on this dimension. As a result, it makes sense
to recognize these differences and even to consider aligning risk-taking propensity with
specific job demands. For example, a high-risk-taking propensity may lead to more
effective performance for a stockbroker, but these personality characteristics might prove a
major obstacle for an auditor.

Type A and Type B Personality

Type A behaviour pattern is a complex of personality and behavioural characteristics,
including competitiveness, time urgency, social status, insecurity, aggression, hostility and
a quest for achievements. Type A personality individual is "aggressively involved in a
chronic, struggle to achieve more and more in less and less time, and if required to do so,
against the opposing efforts of other things or other persons".

Type A personality:
 Are always moving, walking, and eating rapidly.
 Feel impatient with the rate at which most events take place.
 Strive to think or do two or more things simultaneously.
 Cannot cope with leisure time; and
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 Are obsessed with numbers, measuring their success in terms of how much of
everything they acquire.

The alternative to the Type A behaviour pattern is the Type B behaviour pattern. People
with Type B personalities are relatively free of the Type A behaviours and characteristics.
Type B personalities are "rarely harried by the desire to obtain a wildly increasing number
of things or participate in an endless growing series of events in an ever-decreasing amount
of time".

Type B personality:
 Never stiffer from a sense of time urgency with its accompanying impatience.
 Feel no need to display or discuss either their achievements or accomplishments
unless such exposure is demanded by the situation.
 Play for fun and relaxation, rather than to exhibit their superiority at any cost; and
 Can relax without guilt.

Organizations can also be characterized as Type A or Type B organizations. Type A

individuals in Type B organizations and Type B individuals in Type A organizations
experience stress related to a misfit between their personality type and the predominant
type of the organization.

Attitudes
Attitude is defined as a more or less stable set of predispositions of opinion, interest or
purpose involving expectancy of a certain kind of experience and readiness with an
appropriate response. Attitudes are also known as "frames of reference". They provide the
background against which facts and events are viewed. It becomes necessary to know the
attitudes of members of an organisation because they have to perceive specific aspects like
pay, hours of work, promotion etc., of their job life in the wider context of their generalized
attitudes.

An attitude is also a cognitive element; it always remains inside a person. Everyone's

psychological world is limited and thus everyone has a limited number of attitudes. Jn
business organisation, employees have attitudes relating to world environment, job security
etc. The individual's attitudes towards these factors are indicative of his apathy or
enthusiasm towards the activities and objectives of the organisation.

Characteristics of Attitude
Rao and Narayana identified the following characteristics of attitudes.
 Valence. It refers to the magnitude of degree of favourableness or unfavourableness
toward the event. While measuring attitudes we are basically concerned with the
valence. If a person is extremely favourable or unfavourable toward an attitude object,
then his attitude will have a high valence.
 Multiplexity. It refers to the number or elements constituting attitude. For example, an
employee may be loyal to the organization, but another may be loyal, hardworking,
respectful, and dependent also.
 Relation to Needs. Attitudes can also vary in relation to the needs they serve. Attitude
of an individual toward the pictures may serve only entertainment needs. On the other
hand, attitudes of an individual toward task may serve strong needs for security,

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achievement, recognition and satisfaction.

 Centrality. This refers to the importance of the attitude object to the individual.
Centrality indicates the importance of the object. The attitude which has high centrality
for an individual will be less accessible to change.

Functions of Attitude
Attitudes are known to serve at least four important functions in an organisation setting:
 Attitudes determine meaning: Much of what is seem in the environment and in
other people's behaviour is determined by attitudes. If one has an overall favourable
attitude towards a person, one tends to judge his activities as "good" or "superior".
On the other hand, negative attitudes or prejudices generally prompt disagreement
with the individual concerned or failure to appreciate the good work done by him.
 Attitudes reconcile contradictions: It is not uncommon to come across people
who hold contradictory opinions. With the proper attitude as a background,
intelligent people can reconcile or rationalize the same actions, which to others are
obvious contradictions. For example, when a worker takes a little rest, a superior
considers it "idling".
 Attitudes organize facts: As already seen, objective events can be differently
perceived by different people because of different attitudes. Meanings can be
concocted and falsely communicated to others by changing the attitudes of the
recipients towards wider social issues.
 Attitudes select facts: From the plethora of environmental facts and stimuli, one
tends to select those, which are in consonance with one's cherished beliefs and
attitudes. Attitudes, thus, act as a screen or filter.

Components of Attitudes
 Cognitive Component: This component includes the beliefs an individual has about a
certain person, object, or situation. The belief that "discrimination is wrong" is a value
statement. Such an opinion is the cognitive component of an attitude. Learned beliefs,
such as "you need to work long hours to get ahead in this job", lead to attitudes that
have an impact on behaviour in the workplace. The cognition component of an attitude
reflects a person's perceptions or beliefs. Cognitive elements are evaluative beliefs and
are measured by attitude scales or by asking about thoughts. The statement "I believe
Japanese workers are industrious," reflect the cognitive component of an attitude. The
cognitive component sets the stage for the more critical part of attitude - its affective
component.

 Affective Component: This component refers to the person's feelings that result from
his or her beliefs about a person, object or situation. A person who believes hard work
earns promotions may feel anger or frustration when he or she works hard but is not
promoted. The affective component becomes stronger as an individual has more
frequent and direct experience with a focal object, person or situation. Affect is the
emotional component of an attitude. It refers to an individual's feeling about something
or someone. Statements such as "I like this," or "I prefer that" reflect the affective
component of an attitude. Affect is measured by physiological indicators such as
galvanic skin response (changes in electrical resistance of skin which indicate
emotional arousal) and blood pressure. These indicators show changes in emotions by
measuring physiological arousal. If an individual is trying to hide his or her feelings,
this might be shown by a change in arousal.
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 Behavioural Component: This component refers to the individual's behaviour that

occurs as a result of his or her feeling about the focal person, object or situation. An
individual may complain, request a transfer, or be less productive because he or she
feels dissatisfied with work. The behavioural component of an attitude refers to an
intention to behave in a certain way toward someone or something. For example, our
attitudes towards women in management may be inferred from an observation of the
way we behave toward a female supervisor. We may be supportive, passive or hostile
depending on our attitude. The behavioural component of an attitude is measured by
observing behaviour or by asking a person about behaviour or intentions.

Attitude Formation
Attitudes are learned. Individuals acquire attitudes from several sources but the point to be
stressed is that the attitudes are acquired but not inherited. Our responses to people and
issues evolve over time. Two major influences on attitudes are direct experience and social
learning.

 Direct Experience: Attitudes can develop from a personally rewarding or punishing

experience with an object. Direct experience with an object or person is a powerful
influence on attitudes. Research has shown that attitudes that are derived from direct
experience are stronger, are held more confidently and are more resistant to change
than are attitudes formed through indirect experience. One reason that attitudes derived
from direct experience are so powerful is because their availability. This means that
the attitudes are easily accessed and are active in our cognitive processes. When
attitudes are available, we can call them quickly into consciousness. Attitudes that are
not learned from direct experience are not as available, and therefore we do not recall
them easily.

 Classical Conditioning: One of the basic processes underlying attitude formation can
be explained on the basis of learning principles. People develop associations between
various objects and the emotional reactions that accompany them.

 Operant Conditioning: Attitudes that are reinforced, either verbally or nonverbally,

tends to be maintained. Conversely, a person who states an attitude that elicits ridicule
from others may modify or abandon the attitude.

 Vicarious Learning: In which a person learns something through the observance of

others can also account for attitude development particularly when the individual has
no object direct experience with the about which the attitude is held. It is through
vicarious learning processes that children pick up the prejudices of their parents.

 Social Learning: In social learning, the family, peer groups and culture shape an
individual's attitudes in an indirect manner. Substantial social learning occurs through
modelling, in which individuals acquire attitudes by merely observing others. For an
individual to learn from observing a model, four processes must take place:
a) The learner must focus attention on the model. Attitudes, Values and Work Ethics
b) The learner must retain what was observed from the model. Behavioural
reproduction must occur; that is, the learner must practice the behaviour.
c) The learner must be motivated to learn from the model.
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Social learning can take place through the following ways:

 The Family: A person may leam attitudes through imitation of parents. If parents have
a positive attitude towards an object and the child admires his parents, he is likely to
adopt a similar attitude, even without being told about the object, and even without
having direct experience. Children also learn to adopt certain attitudes by the
reinforcement they are given by their parents when they display behaviours that reflect
an appropriate attitude.

 Peer Groups: Peer pressure molds attitudes through group acceptance of individuals
who express popular attitudes and through sanctions, such as exclusion from the
group, placed on individuals who espouse (promote) unpopular attitudes.

 Modelling: Substantial social learning occurs through modelling, which individuals

acquire attitudes by merely observing others. The observer overhears other individuals
expressing an opinion or watches them engaging in a behaviour that reflects an
attitude, and the observer adopts this attitude.

Values
Another source of individual differences is value. Values exist at a deeper level than
attitudes and are more general and basic in nature. We use them to evaluate our own
behaviour and that of others. Value is an enduring belief that a specific mode of conducts
or end state of existence is personally and socially preferable to the alternative modes of
conduct or end states of existence. Once it is internalized it becomes consciously or
unconsciously, a standard or criterion for guiding action, for developing and maintaining
attitudes toward relevant objects and situation, for justifying one's own and others' actions
and attitudes for morally judging oneself and others and for comparing oneself with
others. Value, therefore, is a standard or yardstick to guide actions, attitudes, evaluations
and justifications of the self and others.

Ronald D White and David A Bednar have defined value as a "concept of the desirable, an
internalized criterion or standard of evaluation a person possesses. Such concepts and
standards are relatively few and determine or guide an individual's evaluations of the
many objects encountered in everyday life".

Values are tinged with moral flavour, involving an individual's judgement of what is right,
good or desirable. Thus values:
 Provide standards of competence and morality.
 Are fewer in number than attitudes.
 Transcend specific objects, situations or persons.
 Are relatively permanent and resistant to change.
 Are more central to the core of a person.

Individuals learn values as they grow and mature. They may change over the life span of
an individual develops a sense of self. Cultures, societies, and organizations shape values.

Importance of Values
Values are important to the study of organizational behaviour because they lay the

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foundation for the understanding of attitudes and motivation and because they influence
our perceptions. Individuals enter an organization with preconceived notions of what
"ought" and what "ought not to be. For example, If Jeevan enters IG Ferns and Curtains
with a view that salary on piece-rate system is right and on time-rate basis is wrong. He is
likely to be disappointed if the company allocates salary on time-rate basis. His
disappointment is likely to breed his job dissatisfaction. This will, in turn, adversely affect
his performance, his attitude and in turn, behaviour would be different if his values are
aligned with the company’s reward/pay policy.

Formation of Values
Values are learned and acquired primarily through experiences with people and
institutions. Parents, for example, will have substantial influence on their children's values.
A parent's reaction to everyday events demonstrates what is good and bad, acceptable and
unacceptable and important and unimportant. Values are also taught and reinforced in
schools, religious organizations, and social groups. As we grow and develop, each source
of influence contributes to our definition what is important in life. Cultural have influence
of the formation of values. Basic convictions of what is good or bad are derived from one's
own culture.

Types of Values
Allport and his associates categorized values into six types:
 Theoretical: Interested in the discovery of truth through reasoning and systematic
thinking.
 Economic: Interest in usefulness and practicality, including the accumulation of
wealth.
 Aesthetic: Interest in beauty, form and artistic harmony.
 Social: Interest in people and love as a human relationship.
 Political: Interest in gaining power and influencing people.
 Religious: Interest in unity and understanding the cosmos as a whole.

Rokeach distinguishes between two types of values: Instrumental and Terminal.

 Instrumental Value: Instrumental values reflect the means to achieve goals; that is,
they represent the acceptable behaviour to be used in achieving some end state.
Instrumental values identified by Rokeach include ambition, honesty, self-sufficiency
and courageousness. Instrumental value refers to a single belief that always takes the
form: I believe that such and such a mode of conduct (example Honesty, courage, etc.)
is personally and socially preferable in all situations with respect to all objects. An
instrumental value is a tool or means for acquiring a terminal value.

 Terminal Value: Terminal values, in contrast, represent the goals to be achieved, or

the end states of existence. Rokeach identified happiness, love, pleasure, self-respect,
and freedom among the terminal values. Terminal value takes a comparable form: I
believe that such and such an end state of existence (example salvation, or world at
peace etc.) is personally and socially worth striving for. A terminal value is an ultimate
goal in a desired status or outcome.

Work Values
Work values are important because they affect how individuals behave on their jobs in
terms of what is right and wrong. The work values most relevant to individuals are: -
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 Achievement: Achievement is a concern for the advancement of one's career. This

is shown in such behaviours as working hard and seeking opportunities to develop
new skills.
 Concern for Others: Concern for others reflects caring, compassionate behaviour
such as encouraging other employees or helping others work on difficult tasks.
These behaviours constitute organizational citizenship.
 Honesty: Honesty is accurately providing information and refusing to mislead
others for personal gain.
 Fairness: Fairness emphasizes impartiality and recognizes different points of
view. Although individuals vary in their value systems, when they share similar
values at work, the results are positive. This means that organizations recruiting
job candidates should pay careful attention to individual's values.

Intelligence
When most people speak about intelligence or intellectual abilities, they generally are
referring to one's capacity to understand complex ideas. Of course, this is certainly very
important. To succeed on a job, one must have the mental capacity to undertake the
intellectual challenges associated with it. However, this kind of mental prowess is not the
only kind of intelligence there is. In fact, on the job, several distinct types of intelligence
have proven to be very important. We now consider these.

Cognitive Intelligence: "Oh yes, Jessica is very smart," someone might tell you in
reference to the new person hired in your department. But what exactly is meant by
"smart"? Traditionally, the term is used to refer to a specific kind of intellectual ability that
psychologists' term cognitive intelligence. This involves the ability to understand complex
ideas, to adapt effectively to the environment, to learn from experience, to engage in
various forms of reasoning, and to overcome obstacles by careful thought.

As you know people possesses varying degrees' intelligence (or IQ). You also probably
realize that different jobs require contrasting levels of cognitive intelligence for success.
As you might suspect, the concept of cognitive intelligence is rather broad; it consists of a
wide variety of different cognitive skills and abilities. Among these are abilities involving
words, numbers, and visual images, including the following.

 Verbal comprehension: The ability to understand written material quickly and

accurately.
 Verbal reasoning: The ability to analyze verbal information so as to make valid
judgments on the basis of logical implications of material.
 Word fluency: The ability to express oneself rapidly, easily, and with flexibility
 Numerical ability: The ability to perform basic mathematical operations quickly and
accurately.
 Numerical reasoning: The ability to analyze logical relationships and to recognize the
underlying principles underlying them.
 Space visualization: The ability to visualize three-dimensional forms in space and to
be able to manipulate them mentally.
 Symbolic reasoning: The ability to think and reason abstractly using symbols rather
than words or numbers, to manipulate abstract symbols mentally, and to make
logically valid judgments based on them.

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Individual Differences

It probably comes as no surprise that different jobs require different blends of these
abilities. As some obvious examples, writers have to be adept at word fluency, statisticians
have to be good at numerical ability and numerical reasoning, and architects have to be
skilled at visualization. Interestingly, spatial it is assumed widely that people who have
high amounts of cognitive intelligence have an edge over those who don't when it comes
to job performance.

Practical Intelligence
The ability to devise effective ways of getting things done. Growing evidence suggests
that practical intelligence is indeed different from the kind of intelligence measured by IQ
tests, and that it is especially important in business settings. In particular, people with high
amounts of practical intelligence are very proficient at solving a wide range of business
problems. The secret to their success resides in what is known as tacit knowledge –
knowledge about how to get things done. In contrast to formal academic knowledge,
which, as you know, often involves memorizing definitions, formulas, and other
information, tacit knowledge is far more practical in nature. Specifically, tacit knowledge
includes the following major characteristics.
 Action-oriented. It involves "knowing how" to do something as opposed to "knowing
that" something is the case. For example, skilled athletes can perform amazing feats on
the playing field but may not be able to put into words just how they perform these
actions.
 Allows individuals to achieve goals they personally value. As such, it is practically
useful, focusing on knowledge that is relevant to them.
 Acquired without direct help from others. Such knowledge often is acquired on
one's own, largely because it goes unspoken. As such, people must recognize it, and its
value, for themselves. For instance, although no one may ever tell an employee that
getting help from a more senior person will aid his or her career, this person may
recognize this fact and act on it.

People with high amounts of practical intelligence are adept at solving the problems of
everyday life, including how they relate to their jobs. Of importance, there is more to
intelligence than the verbal, mathematical, and reasoning abilities that often are associated
with academic success. Practical intelligence, too, is important and contributes to success
in many areas of life -including something that may be of interest to you, success as a
manager. Don't be misled by the term 'practical" into thinking that this form of intelligence
applies only to people who work with their hands, such as mechanics and plumbers.
Clearly, such individuals do have to know how to perform certain physical actions, but
they also have to have cognitive skills as well so they can assess problems they confront
on the job.

Emotional Intelligence: A third important kind of intelligence that can often play an
important role in behaviour in organizations is known as emotional intelligence (EI).
Originally, emotional intelligence was defined as a cluster of abilities relating to the
emotional or "feeling" side of life, and was viewed as involving four basic components:
 the ability to recognize and regulate our own emotions (e.g., to hold our temper in
check),
 the ability to recognize and influence others' emotions (e.g, the ability to make
them enthusiastic about our ideas),
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Individual Differences

 self-motivation (the ability to motivate oneself to work long hours and resist the
temptation to give up), and
 the ability to form effective long-term relationships with others.

However, extensive research on EI suggests that a more appropriate model of this kind of
intelligence includes the following factors instead:
 Appraisal and expression of emotions in oneself: An individual's ability to
understand his or her own emotions and to express these naturally.
 Appraisal and recognition of emotions others: The ability to perceive and
understand others' emotions.
 Regulation of emotions in oneself: The ability to regulate one's own emotions.
 Use of emotions to facilitate performance: The ability to use emotions by
directing them toward constructive activities and improved performance (e.g., by
encouraging oneself to do better).

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Group Dynamics

UNIT 2: GROUPS DYNAMICS

Learning Outcomes
After reading this chapter, you should be able to do the following.
 Explain what is group, group types and why people join groups.
 Explain group formation and development process.
 know about group decision making techniques and group roles.
 Explain group cohesiveness and performance.
 know about communication and interactions in groups.
 Identify and explain teams and characteristics of teams.

What is a group?
Groups can be defined in terms of perception, motivation, organisation,
interdependencies, and interactions. According to John Naylor (2004) a group
comprises at least two people, who continually interact with each other, have
something in common and recognize that they are members of the group.

A simple and comprehensive definition has been offered by Marvin Shaw: ‘A group is two
or more persons who interact with one another such that each person influences and is
influenced by each other person.’ This implies two people who are physically near each
other are not a group unless they interact and have some influence on each other.

Stephen Robbins also defines a group as ‘two or more individuals, interacting and
interdependent, who have come together to achieve particular objectives.

Forsyth (1995) defined the term group as “three or more interdependent individuals
who can mutually influence one another”. However, Forsyth goes even further to state
that a group encompasses “two or more individuals who are connected to one another by
social relationships” (Forsyth, 2006).

The term “group dynamics” refers to the structures and processes by which groups
form and function thus the processes by which people interact and behave in a group
environment. It therefore involves the influence of personality, power, and behaviour on
the group process. Group dynamics are relevant in all types of group’s i.e. formal and
informal groups etc.

No matter the type of group, all groups possess the following elements/Characteristics:
 Interaction: thus groups are systems that foster interaction among its members in
various ways especially when it relates to decisions to be made and things to be
done.
 Interdependence: groups members are mutually dependent on each other
especially as it relates to outcomes, actions, Thoughts, feelings, and experiences.
 Structure: Structure here refers to “a stable pattern of relationships among the
members of a group”. Members are not connected to one another at random and
their relationships are fostered by roles of each member.

Why do People join Groups?

 Security: By joining a group, individuals can reduce the insecurity of “standing
alone. “People feel stronger, have fewer self-doubts, and are more resistant to threats

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when they are part of a group.

 Status: Inclusion in a group that is viewed as important by others provides recognition
and status for its members.
 Self-Esteem: Groups can provide people with feelings of self-worth. That is, in
addition to conveying status to those outside the group, membership can also give
increased feelings of worth to the group members themselves.
 Power: What cannot be achieved individually often becomes possible through group
action. There is power in numbers.
 Goal Achievement: there are times when it takes more than one person to
accomplish particular task; there is a need to pool talents, knowledge, or power in
order to complete a job.
 Affiliation: groups can fulfil social need. People enjoy the regular interaction that
comes with group membership. For many people, it is the on-the job interactions
which are their primary source for fulfilling their needs for affiliation.

Types of Groups
Formal Groups
These are those groups that are defined by the organizational structure, with
designated work assignments and established tasks. In formal groups, the behaviour one
exhibits, are stipulated by and directed towards organizational goals. Thus, formal groups
are established by the organisation to do work. Formal groups include.
 Command/functional group: A command group is determined by organizational
chart. It is composed of the individual who report directly to a given manager. It is
characterized by functional reporting relationship such as a group manager and
those who report to the manager. They are also relatively permanent.
 Task group: It represents those working together to complete a job task. They are
also organizationally determined. They are created to perform a specific task, such as
solving a particular problem and it is relatively temporary. A task group’s
boundaries, however, are not limited to its immediate hierarchical superior. It can
cross command relationships.

Informal Groups
They are alliances that are not formally structured nor organizationally determined. These
groups are natural formations in the work environment that appears in response to the
need for social contact. They provide very important service by satisfying their
member’s social needs. Informal groups include.
 Friendship groups: Those brought together because they share one or common
characteristics. Social alliances, which frequently extend outside the work situation,
can be based on similar age, or ethnic heritage, support for football club or political
party.
 Interest groups: Interest groups are those working together to attain a specific
objective with which each is concerned. They are organized around a common
activity or interest although friendships may develop among members. Employees
who band together to have their vacation schedules altered, to support a peer who
has been sacked, represents the formation of a united body to further their common
interest. It is relatively temporary. They may exist for a long time and may become
relatively permanent. E.g. Women’s network groups.

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Other types of groups include but are not limited to: social groups, contrived
groups, emergent groups, heterogeneous vs. homogeneous groups, primary groups,
secondary groups etc.

Group Formation and Development

Groups generally pass through a standardized sequence in their evolution. This sequence
is called the five-stage model of group development. This model developed by Tuckman
characterized groups as proceeding through five distinct stages. Forming, Storming,
Norming, Performing and adjourning.

 Forming Stage: the first stage is characterized by a great deal of uncertainty about
the group’s purpose, structure, leadership, their roles and group goals. Members are
‘testing the waters’ to determine what types of behaviour are acceptable. there is a
good deal of holding back to see who takes charge and how. If the formal leader
(e.g., a supervisor) does not assert his or her authority, an emergent leader will
eventually step in to fulfil the group’s need for leadership and direction. This stage is
complete when members have begun to think of themselves as part of a group.
 Storming Stage: this stage is one of intra-group conflict. Members accept the
existence of the group, but there is resistance to the constraints that the group imposes
on individuality. Furthermore, there is conflict over who will control the group. When
this stage is complete, there will be a relatively clear hierarchy of leadership within the
group.
 Norming Stage: the third stage is one in which group relationship develop and the
group demonstrate cohesiveness. There is now a strong sense of group identity and
camaraderie. This norming stage is complete when the group structure solidifies
and the group has assimilated a common set of expectation of what defines correct
member behaviour
 Performing Stage: the structure at this point is fully functional and acceptable.
Group energy has moved from getting to know and understand each other to
performing the task at hand. For permanent work group, performing is the last stage
in their development. However, for temporary committees, teams, task force, and
similar groups that have a limited task to perform, there is a fifth stage called the
adjourning stage.
 Adjourning Stage: The final in stage group development for temporary groups
and is characterized by concern with wrapping up activities rather than task
performance. Responses of group members vary in this stage. Some are upbeat,
basking in the group’s accomplishment. Others may be depressed over the loss of
camaraderie and friendship gained during the work group’s life.

Group Cohesiveness and Performance

Cohesiveness may by define as “sticking together” or “bonding” of group members and
their desire to remain part of the group or phenomenon which determines how well a
group holds together. Group cohesiveness is the measure of how much members are
attracted to and wish to remain with a group. Cohesiveness in work groups has many
positive effects, including worker satisfaction, low turnover and absenteeism, and higher
productivity. However, highly cohesive groups may be detrimental to organizational
performance if their goals are misaligned with organizational goals and more vulnerable to
groupthink. Cohesiveness has two dimensions: emotional (or personal) and task- related.

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Group Dynamics

 Emotional Cohesiveness: is derived from the connection that members feel to other
group members and to their group as a whole.
 Task-related Cohesiveness refers to the degree to which group members share group
goals and work together to meet these goals.

There are many factors which affect group cohesiveness and performance that can be
summarized under four broad headings.

 Size of the group: As a group increases in size, problems arise with communications
and co-ordination. Large groups are more difficult to handle and require a higher level
of supervision. Absenteeism also tends to be higher in larger groups. When a group
becomes too large it may split into smaller units and friction may develop between the
sub-groups. Beyond this size the group tends to split into sub-groups.
 Compatibility of members: The more homogeneous the group in terms of such
features as shared backgrounds, interests, attitudes, and values of its members, the
easier it is usually to promote cohesiveness. Variations in other individual differences,
such as the personality or skills of members, may serve to complement each other and
help make for a cohesive group. However, such differences may be the cause of
disruption and conflict. Conflict can also arise in a homogeneous group where
members are in competition with each other. Individual incentive payment schemes,
for example, may be a source of conflict.
 Permanence of group members: Group spirit and relationships take time to develop.
Cohesiveness is more likely when members of a group are together for a reasonable
length of time and changes occur only slowly. A frequent turnover of members is
likely to have an adverse effect on morale and on the cohesiveness of the group.
 Nature of the task: Where workers are involved in similar work, share a common task
or face the same problems, this may assist cohesiveness. The nature of the task may
serve to bring people together when it is necessary for them to communicate and
interact regularly with each other in the performance of their duties – for example,
members of a research and development team. Even if members of a group normally
work at different locations, they may still experience a feeling of cohesiveness if the
nature of the task requires frequent communication and interaction – for example,
security guards patrolling separate areas who need to check with each other on a
regular basis. However, where the task demands a series of relatively separate
operations or discrete activities – for example, on a machine- paced assembly line – it
is more difficult to develop cohesiveness. Individuals may have interactions with
colleagues on either side of them but little opportunity to develop a common group
feeling.
 Physical setting: Where members of a group work in the same location or in close
physical proximity to each other this will generally help cohesiveness. However, this
is not always the case. For example, in large open-plan offices staff often tend to
segregate themselves from colleagues and create barriers through the strategic siting
of such items as filing cabinets, bookcases or indoor plants. The size of the office and
the number of staff in it are, of course, important considerations in this case. Isolation
from other groups of workers will also tend to build cohesiveness. This often applies
to a smaller number of workers on a night shift.
 Communications: The more easily members can communicate freely with each
other, the greater the likelihood of group cohesiveness. Communications are affected
by the work environment, by the nature of the task and by technology. For
example, difficulties in communication can arise with production systems where

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workers are stationed continuously at a particular point with limited freedom of

movement. Even when opportunities exist for interaction with colleagues, physical
conditions may limit effective communication. For example, the technological layout
and high level of noise with some assembly line work can limit contact between
workers. Restrictions on opportunities for social interaction can hamper internal group
unity. This can be a major reason why getting a team to work well is such a challenge
in large organizations.
 Technology: We can see that the nature of technology and the way work is carried
out have an important effect on cohesiveness and relate closely to the nature of the
task, physical setting and communications. Where the nature of the work process
involves a craft or skill-based ‘technology’ there is a higher likelihood of group
cohesiveness. However, with machine-paced assembly line work, it is more difficult
to develop cohesiveness.
 Management and leadership: Teams tend to be a mirror image of their leaders. The
form of management and style of leadership adopted will influence the relationship
between the group and the organisation and are major determinants of group
cohesiveness. In general terms, cohesiveness will be affected by such things as the
manner in which the manager gives guidance and encouragement to the group, offers
help and support, provides opportunities for participation, attempts to resolve conflicts
and gives attention to both employee relations and task problems. McKenna and
Maister draw attention to the importance of the group leader establishing a level of
trust among the group by helping them understand the behaviours that build trust.
‘The job of the group leader is to encourage people to earn the trust of others in their
group and then show them how it can translate into greater commitment, greater
creativity, greater professional satisfaction, and better performance. Farrell makes the
point that managers are ultimately responsible for creating a balance in the workplace
and should take the lead in setting standards of behaviour in teams.
 HR policies and procedures: Harmony and cohesiveness within the group are more
likely to be achieved if HR policies and procedures are well developed and
perceived to be equitable, with fair treatment for all members. Attention should be
given to the effects that appraisal systems, discipline, promotion and rewards, and
opportunities for personal development have on members of the group.
 Success: The more successful the group, the more cohesive it is likely to be, and
cohesive groups are more likely to be successful. Success is usually a strong
motivational influence on the level of work performance. Success or reward as a
positive motivator can be perceived by group members in a number of ways, for
example the satisfactory completion of a task through co-operative action, praise
from management, a feeling of high status, achievement in competition with other
groups, or benefits gained, such as high wage payments from a group bonus incentive
scheme.
 External threat: Cohesiveness may be enhanced by members co-operating with
one another when faced with a common external threat, such as changes in their
method of work or the appointment of a new manager. Even if the threat is
subsequently removed, the group may continue to have a greater degree of
cohesiveness than before the threat arose. Conflict between groups will also tend
to increase the cohesiveness of each group and the boundaries of the group become
drawn more clearly.

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Interaction Patterns
ln addition to becoming aware of communication processes, the worker must also consider
patterns of interaction that develop io a group.

Patterns of Group Interaction

 Maypole - when the leader is the central figure and communication occurs from
the leader to the member and from the member to the leader.
 Round robin - when members take turns talking.
 Hot seat - when there is an extended back-and-forth between the leader and one
member as the other member 's watch.
 Free Doating - when all members take responsibility for communicating, taking
into consideration their ability to contribute meaningfully to the particular topic.

The first three patterns are leader centered because the leader structures them. The fourth
pattern is group centered because it emerges from the initiative of group members. In most
situations, workers should strive to facilitate the development of group-centered rather
than leader-centered interaction patterns. ln group-centered patterns, members freely
interact with each other. Communication channels between members of the group are
open. In leader-centered patterns, communications are directed from members to the
worker or from the worker to group members, thereby reducing members' opportunities to
communicate freely with each other.

Group-centered communication patterns tend to increase social interaction, group morale,

members commitment to group goals, and innovative decision making (Carletta, Garrod,
& Fraser-Krauss. 1998). However, such patterns can be less efficient than leader centered
patterns because communication may be superfluous or extraneous to group tasks (Shaw,
1964). Sorting out useful communications can take a tremendous amount of group time.
Therefore, in task groups that are making routine decisions, when time constraints are
important and when there is little need for creative problem solving, the worker may
deliberately choose to encourage leader-centered rather than group-centered interaction
patterns.

To establish and maintain appropriate interaction patterns, the worker should be familiar
with the factors that can change communication patterns, such as:
 Cues and the reinforcement that members receive for specific interactional
exchanges
 The emotional bonds that develop between group members
 The subgroups that develop in the group
 The size and physical arrangements of the group
 The power and status relationships in the group

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Group Dynamics

Team
A team is “a small number of people with complementary skills who are committed to a
common purpose, performance goals, and approach for which they hold themselves
mutually accountable”. A small number of people means between 2 and 25 team members.
Effective teams typically have fewer than 10 members.

Types of Teams
Teams can do a variety of things. They can make products, provide services, negotiate
deals, coordinate projects, offer advice, and make decisions. Teams are classified
according to their objectives. The four most common team found within organizations are
explained below.
 Problem-Solving Teams: These were typically composed of 5 to 12 hourly
employees from the same department who met for a few hours each week to discuss
ways of improving quality, efficiency, and the work environment. In problem-solving
teams, members share ideas or offer suggestions on bow work processes and methods
can be improved. Rarely, however, are these teams given the authority to unilaterally
implement any of their suggested actions.
 Self-managed teams: Self-managed teams are defined as groups of workers who are
given administrative responsibility for their task domains. Administrative
responsibility involves delegated activities such as planning, scheduling, monitoring,
and staffing. These are activities normally performed by managers. In short,
employees in these unique work groups act as their own supervisor. Self-managed
teams are variously referred to as semi-autonomous work groups, autonomous work
groups, and super teams.
Something much more complex is involved than this apparently simple label suggests.
The term self-managed does not mean simply turning workers loose to do their own
thing. Indeed, an organization embracing self-managed teams should be prepared to
undergo revolutionary changes in management philosophy, structure, staffing and
training practices, and reward systems. Moreover, the traditional notions of managerial
authority and control are turned on their heads. Not surprisingly, many managers
strongly resist giving up the reins of power to people they view as subordinates. They
see self-managed teams as a threat to their job security.
 Cross-Functional Teams: A common feature of' self-managed teams, particularly
among those above the shopfloor or clerical level, is that they are cross-functional
teams. These are teams made up of employees from about the same hierarchical level,
but from different work areas, who come together to accomplish a task. Many
organizations have used horizontal, boundary-spanning groups for decades. For
example, IBM created a large task force in the 1960s-made up of employees from
across departments in the company-to develop its highly successful.
 Virtual Teams: Virtual teams are not product of modem times. Thanks to evolving
information technologies such as the Internet, E-mail, videoconferencing, groupware,
and fax machines, you can be a member of a work team without really being there.
Traditional team meetings are location specific. Team members are either physically
present or absent. Virtual teams, in contrast, convene electronically with members

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reporting in from different locations, different organizations, and even different time
zones. Because virtual teams are so new, there is no consensual definition. Our
working definition of a virtual team is a physically dispersed task group that conducts
its business through modem information technology. Advocates say virtual teams are
very flexible and efficient because they are driven by information and skills, not by
time and location. People with needed information and/or skills can be team members,
regardless of where or when they actually do their work. On the negative side, lack of
face-to-face interaction can weaken trust, communication, and accountability.

Why Do Work Teams Fail?

Advocates of the team approach to management paint a very optimistic and bright picture.
Yet there is a dark side to teams. They can and often do fail. Anyone contemplating the
use of teams in the workplace needs a balanced perspective of their advantages and
limitations. There are a number of reasons why work teams can be ineffective. More than
half a century ago, the tendency for reduced effort as group size increases was identified,
and this continues to be a problem today. ln the 1970s, the devastating effect of groupthink
was documented. More recently, specific problems related to self-managed teams have
been identified.

Social Loafing
Is group performance less than, equal to, or greater than the sum of its parts? Can three
people, for example, working together accomplish less than, the same as, or more than
they would working separately? An interesting study conducted more than a half century
ago found the answer to be “less than”. In a rope-pulling exercise, the study found that
three people pulling together could achieve only two and a half times the average
individual rate. Eight pullers achieved less than four times the individual rate. This
tendency for individual effort to decline as group size increases has come to be called
social loafing. Let us briefly analyse this threat to group effectiveness and synergy with an
eye toward avoiding it.

Social Loafing Theory and Research

Among the theoretical explanations for the social loafing effects are (1) equity of
effort-“Everyone else is goofing off, so why shouldn't I?”; (2) loss of personal
accountability –“I'm lost in the crowd, so who cares?”; (3) motivational loss due to the
sharing of rewards-“Why should I work harder than the others when everyone gets the
same reward?”; and (4) coordination loss as more people perform the task-“We're getting
in each other's way”.

Research studies refined these theories by showing that social loafing occurred when.
 The task was perceived to be unimportant, simple, or not interesting.
 Group members thought their individual output was not identifiable.
 Group members expected their co-workers to loaf.

But social loafing did not occur when group members expected to be evaluated. Also,
recent research suggests that self-reliant “individualists” are more prone to social loafing
than are group-oriented “collectivists”. But individualists can be made more cooperative
by keeping the group small and holding each member personally accountable for results.

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UNIT 3: LEADERSHIP

Learning Outcomes
After reading this chapter, you should be able to do the following.
▪ Explain leadership and differentiate between a leader(ship) and
manager(ment).
▪ Explain leadership and management power and influence with organisations.
▪ Explain the theories of leadership.

Defining Leadership
Defining leadership has a lot of problems because there is a complex interaction among
the leader, the followers and the situation. Leading is establishing direction and
influencing others to follow that direction. But this definition is not as simple as it sounds
because leadership has many variations and different areas of emphasis. Stogdill (1974)
after extensive literature review concluded that there are almost as many definitions of
leadership as there are person who have attempted to define the concept.

Leadership has been defined in terms of trait, behaviours, influences, interaction patterns,
role relationships and occupation of position. Common to all definitions of leadership is
the notion that leaders are individuals who, by their actions, facilitate the movement of a
group of people towards a common or shared goal. This definition implies that leadership
is an influence process. The distinction between leader and leadership is important, but
potentially confusing. The leader is an individual; leadership is the function or activity this
individual performs.

What is leadership from well notable writers?

 Hollander, 1995- Leadership is a process where an individual influences a group
towards the attainment of desired goal or organizational goals.
 Mullins, 2005- Leadership refers to a relationship through which one person
influences the behaviour or actions of other people.
 Naylor, 2004- Leadership is the process of influencing people towards
achievement of organizational goals.
 DuBrin, 1995-Leadership is the act that causes others to act or respond in a shared
direction.
 Stogdill, 1974-Leadership is the initiation and maintenance of structure in
expectation and interaction.
 Terry, 1997- leadership is the relationship in which one person, the leader,
influences others to work together willingly on related tasks to attain that which the
leader desires.
 Katz and Kahn, 1978 – Leadership is the influential increment over and above
mechanical compliance with the routine directives of the organization.
 Rauch and Behling, 1984 - Leadership is the process of influencing the activities
of an organized group toward goal achievement.

From the above definitions, leadership is about

 influencing people not forcing them
 getting people to work willingly
 achieving organizational goals; not just wielding power

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 building teams, creating cohesion and resolving conflict

Formal versus Informal Leadership

 Formal leaders are those who exert influence by virtue of their positions in
organizations.
 Informal leaders are those who are not designated as organizational leaders yet
exercise influence over others, primarily as a result of their own a personal
attribute.

Leader versus Manager

Leadership does not require any managerial position to act as a leader. On the other hand,
a manager can be a true manager only if he has got the traits of leader in him. By virtue of
his position, manager has to provide leadership to his group. The table below set out the
differences between a leader and manager.

Basis Manager Leader

Origin A person becomes a manager A person becomes a leader on
by virtue of his position. basis of his personal qualities.
Formal Rights Manager has got formal rights in Rights are not available to a
an organization because of his leader.
Followers status. subordinates
The are the The group of employees whom
followers of managers. the leaders lead is his followers.
Functions A manager performs Leader influences people to work
all five functions of willingly for group objectives.
Necessity management.
A manager is very essential to A leader is required to create
a concern. cordial relation between person
working in and for organization.
Stability It is more stable. Leadership is temporary.
Mutual All managers are leaders. All leaders are not managers.
Relationship
Accountability Manager is accountable for self Leaders have no
and subordinates behaviour and well-defined
performance. accountability.
Concern A manager’s concern A leader’s concern is group
is goals and member’s satisfaction.
Followers organizational
People follow goals.
manager by virtue People follow them on voluntary
of job description. basis.
Role A manager can continue in office A leader can maintain his position
continuation till he performs his duties only through day to day wishes of
satisfactorily in congruence with followers.
organizational goals.
Sanctions Manager has command over A leader has command over
allocation and distribution of different sanctions and related
sanctions. task records. These sanctions are
essentially of informal nature.

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Leadership and Management Relationship and Differences

Leadership and management are distinct concepts, but the words are often used as though
they have the same meaning. This confusion may arise from the fact that sometimes the
same person is employed to do the job of leader and manager.

Managers are appointed and have legitimate power to exact compliance and to reward and
punish. The position authority inherent in their appointment enables them to influence
others. Leaders are either appointed or emerged from within the group. Their influence
goes beyond the action dictated by formal authority.

Harvard's John Kotter says that management is about coping with complexity, and
leadership, in contrast, is about coping with change. He also states that leadership is an
important part of management, but only a part; management also requires planning,
organizing, staffing, and controlling.

Management produces a degree of predictability and order. Leadership produces change.

Kotter believes that most organizations are under-led and over managed. He sees both
strong leadership and strong management as necessary for optimal organizational
effectiveness.

A leader’s job is to decide where the team they are leading is heading. A leader will set the
ultimate aim, objective and goals for the team. They will then inspire and motivate the
team to achieve the objectives set. This will involve reviewing progress and ensure that the
team is on course to achieve the objectives set. A manager’s job is to set how the team will
achieve the objectives set by the leader. They will overcome any problems the team
encounter and decide how to deal with complexity.

Theories of Leadership
Trait Approach
This approach assumes that leaders are born and not made. It assumes that leadership
consists of certain inherent characteristics or personality traits which distinguish them
from their followers. The approach focuses on the person in the job and not on the job
itself. The theory suggests that attention should be given to the selection of leaders rather
than training for leadership. McCall and Lombardo (1983) researched both success and
failure identified four primary traits by which leaders could succeed or 'derail':
 Emotional stability and composure: Calm, confident and predictable,
particularly when under stress.
 Admitting error: Owning up to mistakes, rather than putting energy into covering
up.
 Good interpersonal skills: able to communicate and persuade others without
resort to negative or coercive tactics.
 Intellectual breadth: Able to understand a wide range of areas, rather than having
a narrow (and narrow-minded) area of expertise.

In addition, other core traits identified in the literature are:

 Achievement drive: High level of effort, high levels of ambition, energy and
initiative
 Leadership motivation: an intense desire to lead others to reach shared goals
 Honesty and integrity: trustworthy, reliable, and open

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 Self-confidence: Belief in one’s self, ideas, and ability

 Cognitive ability: Capable of exercising good judgment, strong analytical
abilities, and conceptually skilled
 Knowledge of business: Knowledge of industry and other technical matters
 Emotional Maturity: well adjusted, does not suffer from severe psychological
disorders.
 Others: charisma, creativity and flexibility

The limitation of this approach includes.

 There is bound to be some subjective judgment in determining who is regarded as a
good or successful leader.
 The list of possible traits tends to be very long and there is not always agreement on
the most important.
 It ignores the situational factor.
 There is also a disagreement over which traits are the most important for an
effective leader.

Functional or Group Approach

This approach to leadership focuses attention not on the personality of the leader but on the
functions of leadership. The functional approach views leadership in terms of how the
leader’s behaviour affects and is affected by the group of followers. The function
approach believes that the skills of leadership can be learnt, developed and perfected.
Kotter make the point that successful Companies do not wait for leaders to come along;
they actively seek out people with leadership potential and expose them to career
experiences designed to develop their potentials. Hence greater attention should be paid
to successfully training leaders to improve their performance. Indeed, with careful
selection, nurturing and encouragement, dozens of people can play important roles in
business organizations.

Behavioural Approach or Theories

This approach draws attention to the kinds of behaviour of people in the leadership
situation. The aim is to isolate behaviours that differentiate between effective and
ineffective leaders. There are several studies done to determine the right behaviour needed
for good leadership. Among them is

University of Michigan Studies

The focus of these studies was to locate the behavioural characteristics of leaders that were
related to performance effectiveness. The study group came out with two dimensions of
leadership behaviour labelled employee oriented and production oriented.
 Employee oriented: leaders here emphases interpersonal skills, are interested in the
needs of the employees and accept individual differences. These leaders are associated
with higher group productivity and job satisfaction.
 Production oriented: they emphases task aspect of the job. Their main occupation is
the completion of their group’s task. Production oriented leaders are associated
with lower group productivity and lower worker satisfaction.

University of Iowa Studies

The focus of this study conducted by Kurt Lewis explores three leadership styles or
behaviours namely autocratic, democratic and laissez-faire. This study was based on
the assumption that subordinates are more likely to work effectively for managers who

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adopt a certain style of leadership. They concluded from their studies that l asseiz-faire
style was ineffective on every performance criterion. Quantity of work done is equal for
both democratic and autocratic styles. However, work quality was and group satisfactions
were high in democratic groups.

Ohio State Studies

The focus of this study was on the effects of leadership styles on group performance.
The results after the study concluded that there were only two independent dimensions of
leader behaviour. That is consideration structure and initiating structure.
 Consideration: entails leadership behaviour associated with creating mutual respect
and trust for employees’ ideas and feelings and focuses on concern for group
member’s needs and desires. The study concludes that leaders who are high in
consideration assist employees with personal problems treat employees equally, are
friendly and approachable.
 Initiating structure: leader behaviour that organizes and defines what group
members should be doing to maximize output. Leaders who are high in initiating
structure assigns particular task to followers and expect workers to maintain definite
standard of performance and strict on meeting deadlines.

The leadership behaviour was plotted on separate axes to yield four behavioural styles
identified below

Initiation Structure
Low High
Low Structure – High consideration High Structure – High consideration
High
n
Consideratio

Less emphasis placed on structuring The leader provides a lot of guidance

employee tasks while the leader about how task can be completed while
concentrates on satisfying employee needs being highly considerate of employee
and wants need and wants

Low Structure-Low Consideration High Structure – Low consideration

Low

Leader fails to provide necessary structure Primary emphasis is placed on

and demonstrates little consideration for structuring employee tasks while the
employee needs and wants leader demonstrates little
consideration for employee needs and
wants.

High consideration-High structure style appears to be generally more effective in terms of

subordinate satisfaction and group performance but evidence from the studies is not
conclusive. It was instead concluded that the effectiveness of a given leadership style
depends on situational factors.

Robert Blake and Jane Mouton Managerial Grid

Dimensions identified at the University of Michigan provided the basis for the
development of the managerial grid model developed by Robert Blake and Jane Mouton
(1960s). The grid depicted two dimensions of leader behaviour, concern for people on y-
axis and concern for production on x- axis with each dimension ranging from low (1)
to high (9), thus creating 81 different positions in which the leader’s style may fall.

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Robert Blake and Jane Mouton Managerial identify five various leadership styles that
represent different combinations of concern for people and concern for production.
Managers who scored high on both these dimensions simultaneously (labelled team
management) performed best. The managerial grid model is shown in the Figure below.

 Impoverished Management or Style (1, 1): located at the lower left-hand corner of
the grid. This point is characterized by low concern for both people and production; its
primary objective is for managers to stay out of trouble. The leader has low concern
for employee satisfaction and work deadlines and as a result disharmony and
disorganization prevail within the organization. The leaders are termed ineffective
wherein their action is merely aimed at preserving job and seniority.
 Country club Management or Style (1, 9): located at the upper left-hand corner of
the grid. This point is distinguished by high concern for people and a low concern for
production; its primary objective is to create a secure and comfortable atmosphere
where managers trust that subordinates will respond positively. The leader feels
that such a treatment with employees will lead to self-motivation and will find people
working hard on their own. However, a low focus on tasks can hamper production
and lead to questionable results.
 Authoritarian Management or Style (9, 1): Also called dictatorial or perish
style, is located at the lower right-hand corner of the grid. This point is identified by
high concern for production and low concern for people; its primary objective is to
achieve the organization's goals, and employee needs are not relevant in this process.
The leader believes that efficiency can result only through proper organization of
work systems and through elimination of people wherever possible. Such a style can
definitely increase the output of organization in short run but due to the strict policies
and procedures, high labour turnover is inevitable.
 Middle-of-the-road Management or Style (5, 5):, located at the middle of the grid.

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This is basically a compromising style where leaders maintain a balance between

workers' needs and the organization's productivity goals; its primary objective is to
maintain employee morale at a level sufficient to get the organization's work done.
 Team Management or Style (9, 9): located at the upper right-hand of the grid. This
point is characterized by high concern for people and production; its primary
objective is to establish cohesion and foster a feeling of commitment among workers.
The leader feels that empowerment, commitment, trust, and respect are the key
elements in creating a team atmosphere which will automatically result in high
employee satisfaction and production.

The Managerial Grid model suggests that competent leaders should use a style that
reflects the highest concern for both people and production point (9, 9), team-oriented
style.

Douglas McGregor (1960) Theory X and Theory Y

In his 1960 management book, The Human Side of Enterprise, Douglas McGregor made
his mark on the history of organizational management and motivational psychology
when he proposed the two theories by which managers perceive employee motivation.
He referred to these opposing motivational methods as Theory X and Theory Y
management.
According to McGregor, Theory X leadership assumes the following:
 Work is inherently distasteful to most people, and they will attempt to avoid work
whenever possible.
 Most people are not ambitious, have little desire for responsibility, and prefer to be
directed.
 Most people have little aptitude for creativity in solving organizational problems.
 Motivation occurs only at the physiological and security levels of Maslow’s Needs
Hierarchy.
 Most people are self-centred. As a result, they must be closely controlled and often
coerced to achieve organizational objectives.
 Most people resist change.
 Most people are gullible and unintelligent.

Essentially, theory x assumes that the primary source of most employee motivation is
monetary, with security as a strong second.

Managerial styles: Management assumes complete responsibility for organizing,

planning, important decision making, directing and motivating people. Employees are not
trusted with important decisions.

In strong contrast to Theory X, Theory Y leadership makes the following general

assumptions:
 Work can be as natural as play if the conditions are favourable.
 People will be self-directed and creative to meet their work and organizational
objectives if they are committed to them.
 People will be committed to their quality and productivity objectives if rewards are in
place that addresses higher needs such as self-fulfilment.
 The capacity for creativity spreads throughout organizations.

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 Most people can handle responsibility because creativity and ingenuity are common in
the population.
 Under these conditions, people will seek responsibility.

Managerial styles: Management trusts employees, and delegate’s important decisions

to lower levels. It fosters an environment conducive to the growth of both organization
and subordinate. This makes work inherently satisfying and invokes participation.

Contingency Theories of Leadership

The contingency theories are based on the belief that there is no single style of leadership
appropriate to all situations. Major contingency models of leadership include.

Robert House Goal Path Theory

This theory developed by Robert House is one of the most respectable theories of
leadership and it applies the expectancy theory of motivation. The theory is based on the
premise that an employee’s perception of expectancies between his effort and
performance is greatly affected by a leader’s behaviour. The theory suggests that it is
the responsibility of the leader to assist his followers in attaining their goals and to
provide the necessary direction and support to ensure that their goals are compatible with
the overall objectives of the group or organisation. The theory suggests that a leader’s
behaviour is acceptable by his followers if they view it as an immediate source of
satisfaction or as a means of future satisfaction.

House’s theory advocates servant leadership. As per servant leadership theory,

leadership is not viewed as a position of power. Rather, leaders act as coaches and
facilitators to their subordinates. House identifies four leadership behaviours or styles.
 Direct Leader: Here the leader provides guidelines, informs employees of what is
expected of them, schedule work to be done and gives specific guidance on how to
accomplish it. He makes judicious use of rewards and disciplinary action. The style
is the same as task- oriented one.
 Supportive Leader: Here the leader is friendly and shows concern for the needs
of employees. This style is the same as people-oriented leadership.
 Participative Leader: The leader believes in group decision-making and shares
information with subordinates. The leader consults with employees and uses their
suggestions before making a decision relating to work, task goals, and paths to resolve
goals.
 Achievement –Oriented Leader: Leader sets challenging goals and expects
employees to perform at their highest level. The leader believes that employees are
responsible enough to accomplish challenging goals. This is the same as goal-setting
theory.

The theory assumes that leaders are flexible, and they can apply or display any type of this
leadership depending on the situation.
Contingencies

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The theory states that each of these styles will be effective in some situations but not in
others. It further states that the relationship between a leader’s style and effectiveness is
dependent on the following variables:
 Employee characteristics: These include factors such as employees’ needs, locus
of control, experience, perceived ability, satisfaction, willingness to leave the
organization, and anxiety. For example, if followers are high in ability, a directive
style of leadership may be unnecessary; instead a supportive approach may be
preferable.
 Characteristics of work environment: These include factors such as task structure
and team dynamics that are outside the control of the employee. For example, for
employees performing simple and routine tasks, a supportive style is much effective
than a directive one. Similarly, the participative style works much better for non-
routine tasks than routine ones. When team cohesiveness is low, a supportive
leadership style must be used whereas in a situation where performance-oriented team
norms exist, a directive style or possibly an achievement-oriented style works better.
Leaders should apply directive style to counteract team norms that oppose the team’s
formal objectives.

Hersey and Blanchard Situational Leadership Model (1988)

The Hersey-Blanchard Situational Leadership theory is based on the ’readiness’ level of
the people the leader is attempting to influence. Readiness is the extent to which followers
have the ability and willingness to accomplish a specific task.
 Ability: which is defined as the knowledge, experience and skill that an individual or
group brings to a particular task or activity.
 Willingness: is defined as the extent to which an individual or group has the
confidence, commitment and motivation to accomplish a specific task.

The readiness(R) is divided into a continuum of four levels which are:

 R1 - low follower readiness; refers to low ability and low willingness of followers i.e.
those who are unable and insecure
 R2 - low to moderate follower readiness: refers to low ability and high willingness
of followers i.e. those who are unable but confident
 R3 - moderate to high follower readiness: refers to high ability and low
willingness of followers i.e. those who are able but insecure
 R4 - high follower readiness: refers to high ability and high willingness of followers
i.e. those who are both able and confident

Direction is provided by the leader and according to Hersey-Blanchard Situational

Leadership theory the amount of direction (task behaviour) and amount of socio-
emotional support (relationship behaviour) a leader must provide depends on the
situation and the "level of maturity" of the followers. Therefore, the decisions in this
case are follower directed. When the followers move from low levels to high levels of
readiness, the combinations of task and relationship behaviours appropriate to the situation
begin to change.

For each of the four levels of readiness, they argue for the leadership style used may be a
combination of task behaviour and relationship behaviour.
 Task behaviour is defined as the extent to which the leader engages in spelling out
the duties and responsibilities of an individual or group. These behaviours include

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telling people what to do, how to do it, when to do it, where to do it, and who is to do
it.
 Relationship behaviour is defined as the extent to which the leader engages in two
way or multi way communications. These behaviours include listening, facilitating,
and support of behaviours.

By combining the task and the relationship behaviour, we arrive at the following four
different styles of leadership which correspond with the different levels of readiness.
 S1 - Telling: This style is most appropriate for low follower readiness (R1). It
emphasizes high task behaviour and limited relationship behaviour. Leadership style
because the leader tells followers what to do and how to do it.
 S2 - Selling: This style is most appropriate for low to moderate follower readiness
(R2). It emphasizes high amounts of both task and relationship behaviour. The leader
is not only providing guidance but is also providing the opportunity for dialogue and
clarification in order to help the person “by in” psychologically to what the leader
wants.
 S3 - Participating: This style is most appropriate for moderate to high follower
readiness (R3). It emphasizes high amount of relationship behaviour but low amount
of task behaviours. It is effective for motivating those who are able but unwilling or
insecure.
 S4 - Delegating: This style is most appropriate for high follower readiness (R4). It
emphasizes low levels of both task and relationship behaviour. It is effective in
situations where followers are at the highest level of readiness meaning that they are
capable, willing, and confident. It involves autonomous decision-making on the part of
the followers.

Contemporary Theories of Leadership

Great Man Theory of Leadership
Much of the work on this theory was done in the 19th century and is often linked to the
work of the historian Thomas Carlyle who commented on the great men or heroes of the
history saying that “the history of the world is but the biography of great men”. According
to him, a leader is the one gifted with unique qualities that capture the imagination of the
masses. They do not need to be intellectually genius or omniscient prophets to succeed,
but they definitely should have the right stuff which is not equally present in all people.

The great man theory of leadership states that some people are born with the necessary
attributes that set them apart from others and that these traits are responsible for their
assuming positions of power and authority. A leader is a hero who accomplishes goals
against all odds for his followers. The theory implies that those in power deserve to be
there because of their special endowment. Furthermore, the theory contends that these
traits remain stable over time and across different groups. Thus, it suggests that all
great leaders share these characteristic regardless of when and where they lived or the
precise role in the history they fulfilled.

Take a look at the following leaders Alexander the Great, Julius Caesar, Napoleon, Queen
Elizabeth I, Abraham Lincoln and Kwame Nkrumah. They definitely possess high levels
of ambition coupled with clear visions of precisely where they want to go. These
leaders are cited as naturally great leaders, born with a set of personal qualities that made
them effective leaders.

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Criticism
Many of the traits cited as being important to be an effective leader are typical masculine
traits. In contemporary research, there is a significant shift in such a mentality because
emergence of many great women leaders as well. Due this reason the theory is now
recognized as the “great person theory”.

Leader-Member Exchange Theory

Another new dimension to leadership theories was added with the proposition of the
Leader-Member Exchange (LMX) Theory. The assumption behind this theory is that a
leader cannot use a fairly homogenous style with all of the people in their work unit and a
leader act differently with different people and tend to have her/his “in-group‟. Thus, as
per this theory, a leader maintains a special relationship with a small group of their
followers, due to time pressures. The people in the “in-group‟ tend to get more attention,
have the trust of the leader and also enjoy special privileges and even have an informal
interaction with the leader. On the contrary, followers in the “out-group‟ spend less time
with the leaders, have limited access to rewards and privileges and the leader-follower
relation is based on a formal authority interaction.

The people in the “in-group‟ are chosen based on the personal compatibility with the
leader, competence, attitude, and personality exhibited by the followers. Though the
“ingroup‟ is chosen by the leaders, it is the follower’s characteristics that drive the
leader’s categorising decision.

However, dangers are inherent in being a part of the inner circle. That is, sometimes, the
fortune of the inner circle, tend to rise or fall along with the leader. In general, followers in
the in-group status will have higher performance ratings, lower turnover intentions, greater
satisfaction with their superior, and higher overall satisfaction than the out-group.

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Personal compatibility, Leader

Surbodinate competence,
and/or extraverted personality

Trust High Interaction

Subordinate Subordinate Subordinate

A B C

In-Group

Subordinate Subordinate Subordinate

A B C

Out-Group

Transactional Theory of Leadership

The transactional theory of leadership was first discussed by Max Weber in 1947 and was
later developed by Bernard M Bass in 1981. There are several assumptions that underlie
the transactional theory, which are as follows:
 People perform their best when the chain of command is definite and clear.
 Workers are motivated by rewards and punishments.
 Obeying the instructions and commands of the leader is the primary goal of the
followers.
 Subordinates need to be carefully monitored to ensure that expectations are met.

Under the transactional theory of leadership, the leaders guide or motivate their followers
in the direction of established goals by clarifying role and task requirements. The
characteristic features exhibited by transactional leaders are as follows:
 Contingent Reward: The leader links the goals of the organization to rewards and
clearly specifies and expectations, provides the needed resources and set SMART
(specific, measurable, attainable, realistic, and timely) goals for the subordinates.
 Management by Exception (Active): The leader actively monitors the performance of
the subordinates, watches and searches for deviations from rules and standards, and
take corrective actions to prevent mistakes.
 Management by Exception (Passive): In terms of passive management, a leader
intervenes only if standards are not met and even use punishments for poor
performances; an
 Laissez-Faire: In this form, the leader gives an environment to subordinates, where
they can take decisions. The leader himself abdicates from responsibilities and avoids
making decisions, due to which the followers lack the direction.

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This kind of leadership may not be suitable for all occasions but where organizational
problems are quite simple and clearly defined. The transactional leaders tend to be highly
directive and action oriented and their relationship with the followers tends to be transitory
and not based on emotional bonds. In taking this style of leadership, gender differences
exist. Several studies found that, in using transactional leadership style, women were more
likely to focus on the “rewards‟ component, while the men laid their focus on
‘punishment’ component.

Transformational Theory of Leadership

Transformational leadership is also equated to an extent with the charismatic leadership. In
order to bring transformation in the “followers‟ or employees‟ interest and reshape their
capacity, one critical component that has been considered essential is the charisma of the
leader. In this form of leadership, a leader inspires her/his followers to transcend their own
self-interests for the betterment of the organization. Transformational leaders pay attention
to the developmental needs and concerns of the followers and inspire followers to give a
new outlook for the old problems and thus motivate the followers towards achievement of
the goals of the organization, by giving them new perspective. According to Bass and
Riggio, there are four dimensions to the transformational theory of leadership, viz.
Idealized Influence (II), Inspirational Motivation (IM), Intellectual Stimulation (IS) and
Individualized Consideration (IC), which are as follows:
 Idealized Influence (II): In this form of leadership, the leaders act as role models for
their subordinates, and they exhibit high morals and ethical standards. They further
provide the vision and sense of mission, instil pride amidst the followers and gains
respect and trust.
 Inspirational Motivation (IM): In this dimension of leadership, leaders inspire their
subordinates in various ways and give meaning to their work and bring new challenges
and enthusiasm. The leader expresses the organizational purposes in simple terms to
the followers and has high expectations on the followers.
 Intellectual Stimulation (IS): In this form, the leaders stimulate the intellectual ability
of their followers. That is, through new approaches, the leaders try to stimulate the
way of thinking of their subordinates and thus, raise the creativity in them and promote
intelligence, rationality and problem-solving skills; and
 Individualized Consideration (IC): The leaders, under this dimension, pay more
attention to the individual needs of development of the subordinates so as to achieve
success (Kuchynkova, 2013).

Research was also made on the gender differences in transformational leadership, and it
was found that, women were rated higher than men on most dimensions of
transformational leadership and higher outputs were achieved by women, by following
this style of leadership.

Apart from the above-mentioned modern theories of leadership, there have been wide
array of studies that have been taking place on leadership in recent times, which is based
on the concepts of spirituality, authenticity, chaos and complexity, relationality, ethical
leadership, visionary leadership, transcendence, etc. All such analysis on leadership brings
in new dimension to the study of leadership and is still in the process of evolving a solid
theoretical construct. The emerging theories thus, attempt to accommodate new
organizational structures characterized by more fluid, temporal arrangements, rapidly

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Leadersh
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changing technologies, increased globalization, and changing workplace demography

(Klenke, 2011). Some of the substitute theories of leadership are of the view that in such
new forms of organization, the need for a single leadership is diminished. However, some
of the studies also suggest that in new forms of organizational structure, the need for a
leader is felt more, because of the newness of the organizational structure and the
followers tend to look at their leaders to make sense of the unfamiliar organizational forms
(Klenke, 2011).

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UNIT 4: ORGANIZATIONAL STRUCTURE AND DESIGN

Learning Outcomes
After reading this chapter, you should be able to do the following
 Explain and identify the importance of Organizations
 identify and explain the dimensions of organizational design.
 identify and explain organizational configurations.
 Differentiate between organic and mechanic design.
 Identify and explain types of organizational structures.

What is an Organization?
Organizations are hard to see. Most of us spend many of our waking hours working in an
organization of one type or another. Organizations as diverse as a bank, a corporate farm, a
government agency have characteristics in common. We may define organizations is as
follows: organizations are (1) social entities that (2) are goal-directed, (3) are designed as
deliberately structured and coordinated activity systems, and (4) are linked to the external
environment. An organization is not a building or a set of policies and procedures;
organizations are made up of people and their relationships with one another. An organization
exists when people interact with one another to perform essential functions that help attain
goals. An organization is a means to an end. We might think of an organization as a tool or
instrument used by owners and managers to accomplish a specific purpose. The purpose will
vary, but the central aspect of an organization is the coordination of people and resources to
collectively accomplish desired ends. According to Katz and Kahn (1978) an organization is
a group of people working together to achieve common goals. Organization is also defined as
a system incorporating a set of sub-systems. In an organization of any size or complexity,
employees' responsibilities typically are defined by what they do, who they report to, and for
managers, who reports to them.

Importance of Organizations
Organizations are all around us and shape our lives in many ways. But what contributions do
organizations make? Why are they important? Exhibit below indicates seven reasons
organizations are important to you and to society.
 First, recall that an organization is a means to an end. Organizations bring together
resources to accomplish specific goals.
 Organizations also produce goods and services that customers want at competitive prices.
Companies look for innovative ways to produce and distribute desirable goods and
services more efficiently. Two ways are through e-business and through the use of digital
manufacturing technologies.
 Organizations adapt to and influence a rapidly changing environment. Consider
Facebook, which continues to adapt and evolve along with the evolving Internet and
social media environment.
 Through all these activities, organizations create value for their owners, customers, and
employees. Managers analyze which parts of the operation create value and which parts
do not; a company can be profitable only when the value it creates is greater than the cost
of resources.
 Finally, organizations must cope with and accommodate today’s challenges of workforce
diversity and growing concerns over ethics and sustainability, as well as find effective
ways to motivate employees to work together to accomplish organizational goals.

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Dimensions of Organization Design

The first step for understanding organizations is to look at the features that describe specific
organizational design traits. These features describe organizations in much the same way that
personality and physical traits describe people. The exhibit below illustrates two types of
interacting features of organizations: structural dimensions and contingency factors
 Structural dimensions provide labels to describe the internal characteristics of an
organization. They create a basis for measuring and comparing organizations.
 Contingency factors encompass larger elements that influence structural dimensions
including the organization’s, technology, environment, culture, and goals. Contingency
factors describe the organizational setting that influences and shapes the structural
dimensions. Contingency factors can be confusing because they represent both the
organization and the environment.

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These factors can be envisioned as a set of overlapping elements that shape an organization's
structure and work processes, as illustrated below.

Structural Dimensions
Key structural dimensions of organizations include formalization, specialization, hierarchy of
authority and centralization.

Formalisation
Formalization pertains to the amount of written documentation in the organization.
Documentation includes procedures, job descriptions, regulations, and policy manuals. These
written documents describe behaviour and activities. It is about the degree to which jobs
within the organization are standardized. The degree of formalization can vary widely
between organizations and within organizations.
 A highly formalized job gives the job incumbent a minimum amount of discretion over
what is to be done, when it is to be done, and how he or she should do it. Employees can
be expected always to handle the same input in the same way. The greater the
standardization, the less input the employee has into how the job is done.
 For Low formalization, job behaviours are relatively non-programmed, and employees
have a great deal of freedom to exercise discretion in their work.

Large universities, for example, tend to be high on formalization because they have several
volumes of written rules for such things as registration, dropping and adding classes, student
associations, dormitory governance, and financial assistance. A small, family-owned
business, in contrast, may have almost no written rules and would be considered informal.

Specialization
Specialization is the degree to which organizational tasks are subdivided into separate jobs. If
specialization is extensive, each employee performs only a narrow range of tasks. If
specialization is low, employees perform a wide range of tasks in their jobs. Specialization is
sometimes referred to as the division of labour. Henry Ford became rich and famous by
building automobiles on an assembly line, demonstrating that work can be performed more
efficiently by using a work specialization strategy. By breaking jobs up into small,
standardized tasks, Ford was able to produce cars at the rate of one every ten seconds, while
using employees who had relatively limited skills.

By the late 1940s, most manufacturing jobs in industrialized countries were being done this
way. Management saw this as a means to make the most efficient use of its employees' skills.
Other efficiencies that could be achieved through work specialization includes
 Embployee skills at performing a task successfully increase through repetition.
 Training for specialization is more efficient from the organization's perspective.
 It increases efficiency and productivity, encouraging the creation of special inventions
and machinery.

Hierarchy of Authority
Hierarchy of authority describes who reports to whom and the span of control for each
manager. The hierarchy is depicted by the vertical lines on an organization chart. The
hierarchy is related to (i) span of control - to describe the number of employees that each
manager/supervisor is responsible for or the number of positions that can be satisfactorily
coordinated by one person or the number of subordinates who reports directly to a given
manager or supervisor. When spans of control are narrow, the hierarchy tends to be tall. This

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may present a problem of co-ordination and consistency in decision making and also hinder
effective communication across the organisation structure. When spans of control are wide,
the hierarchy of authority will be shorter. It becomes difficult to supervise subordinates
effectively and this place more stress on the manager.

Centralization
Centralization refers to the hierarchical level that has authority to make decisions. When
decision making is kept at the top level, the organization is centralized. When decisions are
delegated to lower organizational levels, it is decentralized. Examples of organizational
decisions that might be centralized or decentralized include purchasing equipment,
establishing goals, choosing suppliers, setting price, hiring employees, and deciding
marketing territories.

Organizational Size
The size of an organisation has obvious implications for the design of its structure. The larger
an organization becomes, the more complicated its structure. When an organization is small
its structure can be simple, or it may not even have a formal structure. As an organization
grows, however, it becomes increasingly difficult to manage without more formal work
assignments and some delegation of authority. Therefore, large organizations develop formal
structures. Tasks are highly specialized and detailed rules and guidelines dictate work
procedures. Inter organizational communication flows primarily from superior to subordinate,
and hierarchical relationships serve as the foundation for authority, responsibility, and
control. The type of structure that develops will be one that provides the organization with the
ability to operate effectively.

Organizational Technology
Organizational technology refers to the tools, techniques, and actions used to transform inputs
into outputs. It concerns bow the organization produces the products and services it provides
for customers and includes such things as flexible manufacturing, advanced information
systems, and the Internet. An automobile assembly line, a college classroom, and an
overnight package delivery system are technologies, although they differ from one another.

Environment
The environment includes all elements outside the boundary of the organization. Key
elements include the industry, government, customers, suppliers, and the financial
community. The environmental elements that affect an organization the most are often other
organizations.

Organization's Goals and Strategy

The organization’s goals and strategy define the purpose and competitive techniques that set
it apart from other organizations. Goals are often written down as an enduring statement of
company intent. A strategy is the plan of action that describes resource allocation and
activities for dealing with the environment and for reaching the organization's goals. Goals
and strategies define the scope of operations and the relationship with employees, customers,
and competitors.

Organization's Culture
An organization's culture is the underlying set of key values, beliefs, understandings, and
norms shared by employees. These underlying values and norms may pertain to ethical
behaviour, commitment to employees, efficiency, or customer service, and they provide the

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glue to hold organization members together. An organization's culture is unwritten but can be
observed in its stories, slogans, ceremonies, dress, and office layout.

Performance and Effectiveness Outcomes

The whole point of understanding structural dimensions and contingency factors is to design
the organization in such a way as to achieve high performance and effectiveness. Managers
adjust various aspects of the organization to transform inputs most efficiently and effectively
into outputs and provide value. Efficiency refers to the number of resources used to achieve
the organization 's goals. It is based on the quantity of raw materials, money, and employees
necessary to produce a given level of output. Effectiveness is a broader term, meaning the
degree to which an organization achieves its goals. To be effective, organizations need clear,
focused goals and appropriate strategies for achieving them. Many organizations apply new
technology to improve efficiency and effectiveness. For example, to increase efficiency
during the recent recession, Deloitte LLP cut travel budgets for consultants and began using
Web and video conferencing for meetings that don't involve clients.

Achieving effectiveness is not always a simple matter because different people want different
things from the organization. For customers, the primary concern is high-quality products and
services at a reasonable price, whereas employees are mostly concerned with adequate pay,
good working conditions, and job satisfaction. Managers carefully balance the needs and
interests of various stakeholders in setting goals and striving for effectiveness. This is
referred to as the stakeholder approach, which integrates diverse organizational activities by
looking at various organizational stakeholders and what they want from the organization. A
stakeholder is any group within or outside of the organization that has a stake in the
organization's performance. The satisfaction level of each group can be assessed as an
indication of the organization's performance and effectiveness.

Exhibit below illustrates various stakeholders and what each group wants from the
organization. Stakeholder interests sometimes conflict, and organizations often find it
difficult to simultaneously satisfy the demands of all groups. A business might have high
customer satisfaction, but the organization might have difficulties with creditors or supplier
relationships might be poor.

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Organizational Configuration
An important insight from organization design researchers is how organizations are
configured that is, what parts make up an organization and how do the various parts fit
together? An organization's design or configuration will reflect contingency factors along
recognizable patterns. One framework proposed by Henry Mintzberg suggests that every
organization has five parts. These parts, illustrated in the exhibit below, include the technical
core, top management, middle management, technical support, and administrative support.

Technical Core. The technical core includes people who do the basic work of the
organization. This part produces the product and service outputs of the organization. This is
where the primary transformation from inputs to outputs takes place. The technical core is the
production department in a manufacturing firm, the teachers and classes in a university, and
the medical activities in a hospital.

Technical Support. The technical support function helps the organization adapt to the
environment. Technical support employees such as engineers, researchers, and information
technology professionals scan the environment for problems, opportunities, and technological
developments. Technical support is responsible for creating innovations in the technical core,
helping the organization change and adapt.

Administrative Support. The administrative support function is responsible for the smooth
operation and upkeep of the organization, including its physical and human elements. This
includes human resource activities such as recruiting and hiring, establishing compensation
and benefits, and employee training and development, as well as maintenance activities such
as cleaning of buildings and service and repair of machines.

Management. Management is a distinct function, responsible for directing and coordinating

other parts of the organization. Top management provides direction, planning, strategy, goals,
and policies for the entire organization or major divisions. Middle management is responsible
for implementation and coordination at the departmental level. In traditional organizations,
middle managers are responsible for mediating between top management and the technical
core, such as implementing rules and passing information up and down the hierarchy.

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Organic and Mechanistic Designs

Organizations can also be categorized along a continuum ranging from a mechanistic design
to an organic design. Tom Bums and G.M. Stalker first used the terms organic and
mechanistic to describe two extremes of organization design after observing industrial firms
in England.

In general, a mechanistic design means that the organization is characterized by machine-

like standard rules, procedures, and a clear hierarchy of authority. Organizations are highly
formalized and are also centralized, with most decisions made at the top.

An organic design means that the organization is much looser, free-flowing, and adaptive.
Rules and regulations often are not written down or, if written down, are flexibly applied.
People may have to find their own way through the system to figure out what to do. The
hierarchy of authority is looser and not clear-cut. Decision-making authority is decentralized.
Various contingency factors will influence whether an organization is more effective with a
primarily mechanistic or a primarily organic design. Exhibit below summarizes the
differences in organic and mechanistic designs based on five elements: structure, task,
formalization, communication, and hierarchy. The exhibit also lists the typical contingency
factors associated with each type of design.
 Centralized Versus Decentralized Structure. Centralization and decentralization pertain
to the hierarchical level at which decisions are made. In a mechanistic design, the
structure is centralized, whereas an organic design uses decentralized decision making.
Centralization means that decision authority is located near the top of the organizational
hierarchy. Knowledge and control of activities are centralized at the top of the
organization, and employees are expected to do as they are told. With decentralization,
decision making authority is pushed down to lower organizational levels. In a highly
organic organization, knowledge and control of activities are located with employees
rather than with supervisors or top executives. People are encouraged to take care of
problems by working with one another and with customers, using their discretion to make
decisions.
 Specialized Tasks Versus Empowered Roles. A task is a narrowly defined as a piece of
work assigned to a person. With a mechanistic design, tasks are broken down into
specialized, separate parts, as in a machine, with each employee performing activities
according to a specific job description. A role, in contrast, is a part in a dynamic social
system. A role has discretion and responsibility, allowing the person to use his or her
discretion and ability to achieve an outcome or meet a goal. In an organization with an
organic design, employees play a role in the team or department and roles may be
continually redefined or adjusted.
 Formal Versus Informal Systems. With a mechanistic design, there are numerous rules,
regulations, and standard procedures. Formal systems are in place to manage information,
guide communication, and detect deviations from established standards and goals. With
an organic design, on the other hand, there are few rules or formal control systems.
Communication and information sharing is informal.
 Vertical Versus Horizontal Communication. Mechanistic organizations emphasize
vertical communication up and down the hierarchy. Top managers pass information
downward to employees about goals and strategies, job instructions, procedures, and so
forth, and in turn ask that employees provide information up the hierarchy concerning
problems, performance reports, financial information, suggestions and ideas, and so forth.

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In an organic organization, there is greater emphasis on horizontal communication, with

information flowing in all directions within and across departments and hierarchical
levels. The widespread sharing of information enables all employees to have complete
information about the company so they can act quickly. In addition, organic organizations
maintain open lines of communication with customers, suppliers, and even competitors to
enhance learning capability.
 Hierarchy of Authority Versus Collaborative Teamwork. In organizations with a
mechanistic design, there is a close adherence to vertical hierarchy and the formal chain
of command. Work activities are typically organized by common function from the
bottom to the top of the organization and there is little collaboration across functional
departments. The entire organization is controlled through the vertical hierarchy. An
organic design, on the other hand, emphasizes collaborative teamwork rather than
hierarchy. Structure is created around horizontal workflows or processes rather than
departmental functions, with people working across department and organizational
boundaries to solve problems. The vertical hierarchy is dramatically flattened, with
perhaps only a few senior executives in traditional support functions such as finance or
human resources. Self-directed teams are the fundamental work unit in highly organic
organizations.

Types of Organizational Structure

Line Organisation
Also known as vertical or scalar organisation represents a direct vertical relationship through
which activities follow. The line of authority flows from top to bottom throughout the
organisation and the quantum of authority is highest at the top and reduce at each successive
level down the hierarchy. The line of authority provides the channels of communication,
coordination and accountability in the organisation.

Characteristics of line organisation

• All orders and instructions now from top to bottom
• Ull request and suggestions now from bottom to top .
• All employees get orders and instruction from their immediate superior.
• Numbers of employees working under superior is limited.
• All employees are responsible to their immediate superior . .
• Specialized and supportive services do not take place in these organizations
• Unified control by the line officers can be maintained since they can independently
take decisions in their areas and spheres.

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Advantages of Line Organization

• Simplest: It is the most simple and oldest method of administration.
• Unity of Command: In these organizations, superior-subordinate relationship is
maintained, and scalar chain of command flows from top to bottom.
• Better discipline: The control is unified and concentrates on one person and
therefore, he can independently make decisions of his own. Unified control ensures
better discipline.
• Fixed responsibility: In this type of organization, every line executive has got fixed
authority, power and fixed responsibility attached to every authority.
• Flexibility: There is a co-ordination between the top most authority and bottom line
authority. Since the authority relationships are clear, line officials are independent
and can flexibly take the decision. This flexibility gives satisfaction of line
executives.
• Prompt decision: Due to the factors of fixed responsibility and unity of command,
the officials can take prompt decision.

Disadvantages of Line Organization

Over reliance- The line executive's decisions are inmplemented to the bottom. This results in
over-relying on the line oflicials.
Lack of specialization- A line organization flows in a scalar chain from top to bottom and
there is no scope for specialized functions. For example, cxpert advices whatever decisions
are taken by line managers are implemented in the samne way.
Inadequate communication- The policies and strategies which are framed by the top
authority are carried out in the same way. This leaves no scope for communication from the
other end. The complaints and suggestions of lower authority are not communicated back to
the top authority. So there is one-way communication.
Lack of Co-ordination- Whatever decisions are taken by the line officials, in certain
situations wrong decisions, are carried down and implemented in the same way. Therefore,
the degree of effective co- ordination is less.
Authority leadership- The line officials have tendency to misuse their authority positions.
This leads to autocratic leadership and monopoly in the concern.

Line and Staff Organizations

Line and staff organization is a modification of line organization and it is more complex than
line organization. According to this administrative organization, specialized and supportive
activities are attached to the line of command by appointing staff supervisors and staff
specialists who are attached to the line authority. The power of command always remains
with the line executives and staff supervisors guide, advice and counsel the line executives
and have no authority over line managers and their subordinates.

Features of Line and Staff Organization

i. There are three types of staff:
 Personal Staff: consist of personal assistant or advisor attached to a line
executive at any level. Its main function is to aid and advice the line
executive,as also to perform any other work assigned to it.
 Specialized Staff: staff's which has expert knowledge in specific fields such
as accounting Personal Management Accounting etc
 GeneraI Staff: consist of experts in different fields. This category of staffs
operates at the highest level and is meant to aid and advice the top

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management.
ii. There are two lines of authority which flow at one time in a concern:
 Line Authority
 Staff Authority
iii. Power of command remains with the line executive and staff serves only as
counselors.
iv. Division of work and specialization takes place in line and staff organization .
v. The whole organization is divided into different functional areas to which staff
specialists are attached.
vi. Efficiency can be achieved through the features of specialization.

Advantages of Line and Staf Organization

 Relief to line of executives: In a line and staff organization, the advice and
counselling which is provided to the line executives divides the work between the
two. The line executive can concentrate on the execution of plans and they get
relieved of dividing their attention to many areas.
 Expert advice: The line and staff organization facilitates expert advice to the line
executive at the time of need. The planning and investigation which is related to
different matters can be done by the staff specialist and line officers can concentrate
on execution of plans.
 Benefit of Specialization: Line and staff through division of whole concern into two
types of authority divides the enterprise into parts and functional areas. This way
every officer or official can concentrate in its own area.
 Better co-ordination: Line and staff organization through specialization is able to
provide better decision making and concentration remains in few hands. This feature
helps in bringing co- ordination in work as every official is concentrating in their own
area.
 Benefits of Research and Development: Through the advice of specialized staff, the

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line executives get time to execute plans by taking productive decisions which are
helpful for a concern. This gives a wide scope to the line executive to bring
innovations and go for research work in those areas. This is possible due to the
presence of staff specialists.
 Training: Due to the presence of staff specialists and their expert advice serves as
ground for training to line officials. Line executives can give due concentration to
their decision making. This in itself is a training ground for them.
 Balanced decisions: The factor of specialization which is achieved by line staff helps
in bringing co- ordination. This relationship automatically ends up the line official to
take better and balanced decision.
 Unity of action: Unity of action is a result of unified control, Control and its
effectively take place when coordination is present in the concern. In the line and staff
authority all the officials have got independence to make decisions. This serves as
effective control in the whole enterprise.

Disadvantages of Line and Staf Organization

 Lack of understanding: In a line and staff organization, there are two authorities
flowing at one time. This results in the confusion between the two. As a result, the
workers are not able to understand as to who their commanding authority is. Hence
the problem of understanding can be a hurdle in effective running.
 Lack of sound advice: The line official gets used to the expertise advice of the staff.
At times the staff specialist also provides wrong decisions which the line executives
have to consider. This can affect the efficient running of the enterprise.
 Line and staff conflicts: Line and staff are two authorities which are flowing at the
same time. The factors of designations, status influence sentiments which are related
to their relation, can pose a distress on the minds of the employees. This leads to
minimizing of coordination which hampers a concern's working.
 Costly: ln line and staff concern, the concerns have to maintain the high remuneration
of staff specialist. This proves to be costly for a concern with limited finance.
 Assumption of authority: The power of concern is with the line official, but the staff
dislikes it as they are the one more in mental work.
 Staff steals the show: In a line and staff concern, the higher returns are considered to
be a product of staff advice and counselling. The line officials feel dissatisfied and a
feeling of distress enters a concern. The satisfaction of line officials is very important
for effective results.

Departmentalisations/Divisionalisation
This is the grouping together of related jobs into administrative units typically called
departments. There are five broad types of departmentalisation used in business operations:
by functional, by process by product or service, by customer/market and by geography. The
first two, function and process are derived from the internal operations of the organization;
and the other three are based on external factors.
• Functional departmentalisation: The functional structure group's positions into
work units based on similar activities, skills, expertise, and resources. The most
commonly used basis for grouping is according to specialisation. Worked may be
departmentalize and based on business functions such as marketing, production
accounting.

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• Process departmentalisation: similar to functional departmentalisation except the

focus is on specific jobs grouped according to the activity. This grouping encourages
specialisation and expertise among employees.
• Product or Service departmentalisation: segments the organisation of the product
being produced. They are more common in the larger diversified organisations and
enhance interaction and communication among employees who produce the same
product or service.
• Customer/market departmentalisation segments the organisation on the bases of
clients to be served.
• Location/geography departmentalisation: jobs are grouped on the basis of region
served for ease of administration and also to serve a particular need or demands i.e.,
West Africa, North Africa or on a smaller scale city, region and metropolis.

Departmentalisation of work by Function

Advantages of Division of Work by Function

 Chief executive/ managing director in touch with all operations
 Reduces /simplifies control mechanism
 Clear definition of responsibilities
 Specialist at senior and middle management level

Disadvantages of Division of Work by Function

 Senior managers overburdened with matters
 Senior managers neglect strategic issues
 Difficult to cope with diversity
 Co-ordination between functions difficult

Departmentalization of Work by Product or Service

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Departmentalization of Work by Location

Advantages of Division of Work by location or Product

 Concentration on business area
 Facilitates the measurement of unit's performance
 Ease of addition and divestment of units
 Facilitates senior manager's attention to strategy

Disadvantages of Division of Work by location or Product

 Possible confusion over locus of responsibility (centralization and decentralization
confusion)
 Conflict between divisions
 Costly
 Complexity of co-ordination if there are too many divisions

Matrix Structure
The matrix structure combines functional specialization with the focus of divisional structure.
The functional departments provide a stable base for specialized activities and a permanent
location for members of staff and the divisional departments may be based on either project
team, product, geographical area systems etc. Employees in a matrix structure belong to at
least two formal groups at the same time. A functional group and a product, program, or
project team. They also report to two bosses: one within the functional group and the other
within the team. Within the functional departments authority and responsibility flows

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vertically down the line but the authority and responsibility of the project manage; flows
horizontally across the organizational structure. This' structure not only increases employee
motivation, but it also allows technical and general management training across
functional areas as well.

Advantages of Matrix Structure

 Better cooperation and problem solving.
 Increased flexibility.
 Better customer service.
 Better performance accountability.
 Improved strategic management.

Disadvantage of Matrix Structure

 The two-boss system is susceptible to power struggles, as functional supervisors and
team leaders vie with one another to exercise authority.
 Members of the matrix may suffer task confusion when taking orders from more than
one boss.
 Teams may develop strong team loyalties that cause a loss of focus on larger
organization goals.
 Adding the team leaders, a crucial component, to a matrix structure can result in
increased costs.

Network Structure
The network structure relies on other organizations to perform critical functions on a
contractual basis. In other words, managers can contract out specific work to specialists. This
approach provides flexibility and reduces overhead because the size of staff and operations
can be reduced. On the other hand, the network structure may result in unpredictability of
supply and lack of control because managers are relying on contractual workers to perform
important work.

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UNIT 5: ORGANIZATIONAL CULTURE AND THE CULTURAL

WEB

Learning Outcomes
After reading this chapter, you should be able to do the following
 Explain what organizational culture is.
 Explain various models of organizational culture.
 Explain various taxonomies of organizational culture.
 Explain the elements of cultural web.

Organizational Culture
There are many ways to think about culture. Dutch management professor Geert Hofstede
refers to culture as the “software of the mind” and argues that it provides a guide for humans
on how to think and behave. James Day Hodgson, former U.S. ambassador to Japan,
describes culture as a “thicket”. This last metaphor holds hope for struggling international
marketers. According to the ambassador, thickets are tough to get through, but effort and
patience often lead to successes. However, most books acknowledge culture as the sum of
the values, rituals, symbols, beliefs, and thought processes that are learned and shared by a
group of people, then transmitted from generation to generation. Below we set out some
definitions that will let you begin to develop a sense of what organisational culture might be.

 The glue that holds an organisation together.

 The way we do things around here (Marvin Bower, former Managing Director of
McKinsey and Company).
 The set of attitudes, values, goals and practices that characterize an institution or
organisation (Merriam-Webster's online Dictionary).
 The beliefs, values, myths, legends and stories that arc held in common.
 Collective sense-making.
 A pattern of shared basic assumptions that the group learned as it solved its problems
of external adaptation and internal integration, that has worked well enough to be
considered valid and, therefore, to be taught to new members as the correct way to
perceive, think and feel in relation 10 those problems (Schein, 1992, page 12).

Martins and Martins (2003, p 380) state the general definition of organisational culture as “a
system of shared meaning held by members, distinguishing the organisation from other
organisations”. In relation to the above definition, Arnold (2005, p 625) indicates that
“organisational culture is the distinctive norms, beliefs, principles and ways of behaving that
combine to give each organisation its distinct character", These two definitions suggest that
organisational culture distinguishes one organisation from another organisation. Therefore,
organisational culture is to an organisation what personality is to an individual (Johnson,
1990).

Linking up with the above definitions, Schein (1985, p 9) also defines organisational culture
as a “pattern of basic assumptions invented, discovered, or developed by a given group as it
learns to cope with its problems of external adaptation and internal integration that has
worked well enough to be considered valid, and therefore, to be taught to new members as
the correct way to perceive, think, and feel in relation to those problems”. This description
highlights that organisational culture is created assumptions, which are accepted as a way of
doing things and are passed on to new members of an organisation.

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For new employees thus would mean adaptive behaviour within the organisation that leads to
new belief systems. This new and adaptive behaviour instilled through organisational values
and beliefs are associated with rituals, myths and symbols to reinforce the core assumptions
of
organisational culture (Hofstede, 1991).

In relation to the above definition, Brown (1998, p 9) defines organisational culture as "the
pattern of beliefs. values and learned ways of coping with experience that have developed
during the course of an organisation's history. and which tend to be manifested in its material
arrangements and in the behaviours of its members". This suggests that organisational culture
is articulated in the organisation. in order to shape the way in which organisational members
should behave.

However, this pattern of values, norms, beliefs, attitudes, principles and assumptions may be
unwritten or non-verbalized behaviour that describe the way in which things get done; to give
the organisation its unique character (Brown, 1998).

Given the various definitions of organisational culture which were discussed in this section,
the adopted and relevant definition for this study is stated by Harrison (1993, p 11) as the
"distinctive constellation of beliefs, values, work styles, and relationships that distinguish one
organisation from another".

In other words, organisational culture includes those qualities of the organisation that give it a
particular climate or feel. As a result, the distinct qualities of an organisation may manifest
through four dimensions, namely power, role, achievement, and support (Harrison, 1993).

Schein Model of Organisational Culture

Schein (1985) developed a metaphor of organisational culture as an iceberg. The essence of
an
iceberg, in this case, is that the majority of the iceberg is below the surface of the water and
we
cannot see what it is that supports the part of the iceberg that is above the water surface and
visible. Schein suggested that there were three layers of organisational culture, two of which
were below the water line, Basic Assumptions and Values, and one of which was visible and
above the water line, Artefacts.

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Artefacts: Artefacts are the things that we can observe in an organisation. We can observe
the technology, the buildings, furniture, what is on people's desks, the decoration of rooms,
the artwork and posters on walls, people's behaviour, what they say and how they say it, how
meetings are conducted, how decisions are made and how the organisation is formally
structured. Artefacts are the objects and behaviours that an observer will see and hear, that
are elements of the culture, but which cannot be understood until the organisational culture is
understood.

Values: Schein argues that the artefacts that we can observe are manifestations of the values
that constitute part of the organisational culture. Implicit in the iceberg metaphor is that the
values are below the surface of the water, and thus not obvious to the observer who sees and
hears only the artefacts.

But what are "values"? Hyde and Williams (2000) define personal values as:
‘Underlying and relatively stable dispositions which people [in the organisation] use
to guide their actions and decisions and to help them make judgments about what is
right and wrong'.

Writing about a Government organisation, Hyde and Williams (2000) give as examples of
organisational values a belief in:
 The importance of staff diversity
 Professionalism
 Continuous improvement
 Staff well-being
 Service to clients

The implication of this is that what you see and hear in organizations, the artefacts, ranging
from the physical structure of the building and the behaviours that you observe are all to be
understood in terms of the values that the staff members hold in common. Organisational
members will usually be able to list the values of their organisation, if asked.

The managerialist approach to culture implies that management may design and impose the
organisational values. The critical perspective suggests that values cannot be imposed if they
differ from the personal values of the individuals. If the imposed values are at variance with
the personal ones, then it is likely that either the imposed ones will be ignored, or the people
who cannot accept them will leave the organisation (Hyde and Williams, 2000).

Basic assumptions: Just as the artefacts are manifestations of the values, so the values are
manifestations of the basic assumptions. Basic assumptions are sometimes referred to as
TFGs
(Taken for Granteds) - beliefs that everyone in an organisation share that do not have to be
made explicit, as they are taken for granted". Values flow from these basic assumptions.

Cultural Web
The Cultural Web is a model developed by Gerry Johnson and Kevan Scholes in the 1990s,
aiming to help organizations understand the core elements of their culture. Culture plays a

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pivotal role in shaping organizational behaviour, decision-making, and performance. By

analyzing the Cultural Web, organizations can gain insights into their existing culture and
identify areas for improvement or alignment with strategic objectives.

Stories
Stories encompass the myths, legends, and anecdotes shared within an organization. They
often reflect the organization's values, history, and significant events. Stories contribute to
shaping the collective identity and sense of belonging among employees.

Rituals and Routines

Rituals and routines represent the established patterns of behaviour and activities within an
organization. These can include daily rituals like morning meetings, annual events like
employee recognition ceremonies, or standardized processes for decision-making. Rituals and
routines reinforce cultural norms and expectations.

Symbols
Symbols are tangible representations of an organization's culture. This can include logos,
office layout, dress code, and even language or jargon specific to the organization. Symbols
serve as powerful communication tools, conveying messages about the organization's values
and identity.

Organizational Structure
Organizational structure refers to the formal hierarchy, roles, and reporting relationships
within an organization. It influences communication channels, authority distribution, and
decision-making processes. The structure can either support or hinder cultural values and
behaviours.

Control Systems
Control systems encompass the policies, procedures, and performance management
mechanisms used to govern behaviour within an organization. This includes systems for
reward and recognition, performance evaluation, and compliance monitoring. Control
systems shape employee behaviour by incentivizing alignment with cultural norms.

Power Structures

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Power structures denote the distribution of authority and influence within an organization.
This includes formal power (e.g., hierarchical positions) and informal power (e.g., expertise,
networks). Understanding power dynamics is crucial for grasping how decisions are made
and how individuals navigate the organizational landscape.
Analyzing the Cultural Web:
To analyse the Cultural Web, organizations can examine each component individually and
assess its alignment with desired cultural attributes and strategic objectives.
Questions to consider:
 How do stories and narratives within the organization reflect its values and beliefs?
 What rituals and routines reinforce or challenge cultural norms?
 How are symbols used to communicate organizational identity and aspirations?
 Does the organizational structure support collaboration, innovation, and agility?
 Are control systems promoting behaviours that align with cultural values and strategic
goals?
 What are the formal and informal power structures, and how do they influence
decision-making and behaviour?

Conclusion
The Cultural Web offers a holistic framework for understanding and analyzing organizational
culture. By exploring the interconnected elements of stories, rituals, symbols, structure,
control systems, and power dynamics, organizations can gain deeper insights into their
culture and its impact on performance. Leveraging the Cultural Web enables organizations to
navigate cultural complexities, drive meaningful change, and cultivate environments
conducive to innovation, collaboration, and success.

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