SUGGESTIONS:
INSTITUTE OF BANKERS BANGLADESH, (IBB)
Banking Diploma Examination-November-2012
Organization and Management (OM)
JAIBB
Time -3 Hours
Full Marks-100
Pass Marks-50
(N.B.-All questions are of equal value. Answer any five questions)
Q1. (a) “An organization is a social system.” –Explain.
A social system is a complex set of human relationships interacting in many ways. Possible interactions are as limitless
as the stars in the universe. Each small group is a subsystem within larger groups that are subsystems of even larger
groups, and so on, until the entire world’s population is included. Within a single organization, the social system includes
all the people in it and their relationships to one another and to the outside world. Two points stand out in the complex
interactions among people in a social system. First, the behavior of any one member can have an impact, directly or
indirectly, on the behavior of any other. Although these impacts may be large or small, all parts of the system are mutually
interdependent. Simply stated, a change in one part of a system affects all other parts, even though its impact may be
slight. A second important point revolves around a system’s boundaries. Any social system engages in exchanges with its
environment, receiving input from it and providing output to it (which then becomes inputs for its adjacent systems). Social
systems are, therefore, open systems that interact with their surroundings.
(b) Distinguish between formal and informal organization.
(c) Informal organizations grow within formal organization.” –Elaborate the statement.
(d) How can managers use the informal organization?
Answer: Formal organization
Formal organization is a fixed set of rules of intra-organization procedures and structures. As such, it is usually set out
in writing, with a language of rules that ostensibly leave little discretion for interpretation. In some societies and in some
organization, such rules may be strictly followed; in others, they may be little more than an empty formalism.
• To facilitate the accomplishment of the goals of the organization: In a formal organization the work is delegated
to each individual of the organization. He/She works towards the attainment of definite goals, which are in
compliance with the goals of the organization.
• To facilitate the co-ordination of various activities: The authority, responsibility and accountability of individuals
in the organization is very well defined. Hence, facilitating the co-ordination of various activities of the
organization very effectively.
• To aid the establishment of logical authority relationship: The responsibilities of the individuals in the
organization are well defined. They have a definite place in the organization due to a well defined hierarchical
structure which is inherent in any formal organization.
• Permit the application of the concept of specialization and division of Labor, division of work amongst
individuals according to their capabilities helps in greater specializations and division of work.
• Create more group cohesiveness
• Well defined rules and regulation
• Determined objectives and policies
• Limitation on the activities of the individual
• Strict observance of the principle of co-ordination
• Messages are communicated through scalar chain
Formal rules are often adapted to subjective interests — social structures within an enterprise and the personal goals,
desires, sympathies and behaviors of the individual workers — so that the practical everyday life of an organization
becomes informal. Practical experience shows no organization is ever completely rule-bound: instead, all real
organizations represent some mix of formal and informal. Consequently, when attempting to legislate for an organization
and to create a formal structure, it is necessary to recognize informal organization in order to create workable structures.
However, informal organization can fail, or, if already set in order, can work against mismanagement.
Formal organizations are typically understood to be systems of coordinated and controlled activities that arise when work
is embedded in complex networks of technical relations and boundary-spanning exchanges. But in modern societies,
formal organizational structures arise in highly institutional contexts. Organizations are driven to incorporate the practices
and procedures defined by prevailing rationalized concepts of organizational work and institutionalized in society.
Organizations that do so increase their legitimacy and their survival prospects, independent of the immediate efficacy
of the acquired practices and procedures. There can develop a tension between on the one hand, the institutionalized
products, services, techniques, policies, and programs that function as myths (and may be ceremonially adopted), and
efficiency criteria on the other hand. To maintain ceremonial conformity, organizations that reflect institutional rules tend to
buffer their formal structures from the uncertainties of the technical activities by developing a loose coupling between their
formal structures and actual work activities. - (John Meyer and Brian Rowan, 1976)
There are many different reasons for informal organization:
• Informal standards: personal goals and interests of workers differ from official organizational goals.
• Informal communication: changes of communication routes within an enterprise due to personal relations
• Informal group: certain groups of coworkers have the same interests, or (for example) the same origin.
• Informal leaders: due to charisma and general popularity, certain members of the organization win more
influence than originally intended.
• Different interests and preferences of coworkers.
• Different status of coworkers.
• Unpleasant conditions of work.
Managerial organization theory often still regards informal organization as rather disturbing, but sometimes helpful. In the opinion
of systems theory and cybernetics, however, formal organization fades into the background and only serves, if necessary, to
supplement or to correct. Changes in structure always redevelop because of the conduct and differences among coworkers, and the
ability of self-organization is recognized as a natural characteristic of a social system.
Q2. (a) What is motivation? What are the primary and secondary needs?
Motivation is the psychological feature that arouses an organism to action toward a desired goal and elicits, controls,
and sustains certain goal directed behaviors. For instance: An individual has not eaten, he or she feels hungry, and as
a response he or she eats and diminishes feelings of hunger. There are many approaches to motivation: physiological,
Motivation may be rooted in a basic need to minimize physical pain and maximize pleasure, or it may include specific
needs such as eating and resting, or for a desired object. Conceptually, motivation is related to, but distinct from, emotion.
(b) State the assumptions of theory-X and theory –Y.
McGregor is the other major theorist associated with the Human Relations school of management. McGregor believes
there are two basic kinds of managers. One type of manager, Theory X, has a negative view of employees assuming
they are lazy, untrustworthy and incapable of assuming responsibility while the other type of manager, Theory Y, assumes
employees are trustworthy and capable of assuming responsibility having high levels of motivation. Table 1.1 illustrates
McGregor's main theoretical assumptions.
1. Employees normally do not like to work and will try to avoid it.
2. Since employees do not like working, they have to be coerced, controlled, directed and threatened with punishment to motivate
3. The average employee is lazy, shuns responsibility, is not ambitious, needs direction, and principally desires security.
1. Work is as natural as play and therefore people desire to work.
2. Employees are responsible for accomplishing their own work objectives.
3. Comparable personal rewards are important for employee commitment to achieving work goals.
4. Under favorable conditions, the average employee will seek and accept responsibility.
5. Employees can be innovative in solving organizational problems.
6. Most organizations utilize only a small proportion of their employees' abilities.1
Mcgregor's Theory X and Y is appealing to managers and dramatically demonstrates the divergence in management
viewpoints toward employees. As such, Theory X and Y has been extremely helpful in promoting management
understanding of supervisory styles and employee motivational assumptions.
### Abraham Maslow’s hierarchy of needs is the most well-known theory of motivation. He hypothesized that within
every human being there exists a hierarchy of five needs: (See Exhibit 6-1).
• Physiological: Includes hunger, thirst, shelter, sex, and other bodily needs
• Safety: Includes security and protection from physical and emotional harm
• Social: Includes affection, belongingness, acceptance, and friendship
• Esteem: Includes internal esteem factors such as self-respect, autonomy, and achievement; and external esteem
factors such as status, recognition, and attention
• Self-actualization: The drive to become what one is capable of becoming; includes growth, achieving one’s
potential, and self-fulfillment
2. As a need becomes substantially satisfied, the next need becomes dominant. No need is ever fully gratified; a
substantially satisfied need no longer motivates.
3. Maslow separated the five needs into higher and lower orders.
• Physiological and safety needs are described as lower-order.
• Social, esteem, and self-actualization are as higher-order needs
• Higher-order needs are satisfied internally.
• Lower-order needs are predominantly satisfied externally.
4. Maslow’s need theory has received wide recognition, particularly among practicing managers. Research does not
5. Maslow provided no empirical substantiation, and several studies that sought to validate the theory found no support
(c) “You can not motivate managers. They are self-pulled.” Comment on this statement.
(d) To what extent and how, is money an effective motivator?
1. Does motivation come from within a person, or is it a result of the situation? Explain.
Answer – Many people incorrectly view motivation as a personal trait—that is, some have it and others do not. Motivation is
the result of the interaction of the individual and the situation. The text defines motivation as the processes that account for an
individual’s intensity, direction, and persistence of effort toward attaining a goal. There are three key elements.
• Intensity is concerned with how hard a person tries. This is the element most of us focus on when we talk about
• Direction is the orientation that benefits the organization.
• Persistence is a measure of how long a person can maintain his/her effort. Motivated individuals stay with a
task long enough to achieve their goal.
2. What are the implications of Theories X and Y for motivation practices?
Answer – Douglas McGregor concluded that a manager’s view of the nature of human beings is based on a certain grouping
of assumptions. Theory X assumptions are basically negative. Theory Y assumptions are basically positive. There are several
implications. Theory X assumes that lower-order needs dominate individuals. Theory Y assumes that higher-order needs dominate
individuals. McGregor himself held to the belief that Theory Y assumptions were more valid than Theory X. Either Theory X or
Theory Y assumptions may be appropriate in a particular situation.
3. Compare and contrast Maslow’s hierarchy of needs theory with (a) Alderfer’s ERG theory and (b) Herzberg’s two-factor
Answer – Abraham Maslow’s hierarchy of needs.
• Physiological—Includes hunger, thirst, shelter, sex, and other bodily needs
• Safety—Includes security and protection from physical and emotional harm
• Social—Includes affection, belongingness, acceptance, and friendship
• Esteem—Includes internal esteem factors such as self-respect, autonomy, and achievement; and also external
esteem factors such as status, recognition, and attention
• Self-actualization—The drive to become what one is capable of becoming; includes growth, achieving one’s
potential, and self-fulfillment
No need is ever fully gratified; a substantially satisfied need no longer motivates. Maslow separated the five needs
• Physiological and safety needs were described as lower-order.
• Social, esteem, and self-actualization were described as higher-order needs.
Higher-order needs are satisfied internally.
Lower-order needs are predominantly satisfied externally.
Two-factor theory is sometimes also called motivation-hygiene theory. It was proposed by psychologist Frederick
Herzberg when he investigated the question, “What do people want from their jobs?” Herzberg concluded:
• Intrinsic factors, such as advancement, recognition, responsibility, and achievement seem to be related to job
• Dissatisfied respondents tended to cite extrinsic factors, such as supervision, pay, company policies, and
• The opposite of satisfaction is not dissatisfaction.
• Removing dissatisfying characteristics from a job does not necessarily make the job satisfying.
Job satisfaction factors are separate and distinct from job dissatisfaction factors. To motivate people, emphasize
factors that are intrinsically rewarding that are associated with the work itself or to outcomes directly derived from it.
ERG theory. Clayton Alderfer reworked Maslow’s need hierarchy to align it with the empirical research. His revised
need hierarchy is labeled ERG theory. Alderfer argues that there are three groups of core needs—existence,
Providing our basic material existence requirements. They include Maslow’s physiological and safety needs.
The desire we have for maintaining important interpersonal relationships. These social and status desires
require interaction with others. They align with Maslow’s social need and the external component.
An intrinsic desire for personal development. These include the intrinsic component from Maslow’s esteem category
and the characteristics included under self-actualization.
Alderfer’s ERG theory also differs from Maslow’s in that:
• More than one need may be operative at the same time.
• If the gratification of a higher-level need is stifled, the desire to satisfy a lower-level need increases.
• ERG theory does not assume that there exists a rigid hierarchy.
• A person can be working on growth even though existence or relatedness needs are unsatisfied, or all three
need categories could be operating at the same time.
• ERG theory also contains a frustration-regression dimension.
Maslow argued that an individual would stay at a certain need level until that need was satisfied.
ERG theory notes that when a higher-order need level is frustrated, the individual’s desire to increase a lower-
level need takes place. ERG theory is more consistent with our knowledge of individual differences among
4. Describe the three needs isolated by McClelland. How are they related to worker behavior?
Answer – Developed by David McClelland and his associates, the theory focuses on three needs: achievement, power, and affiliation.
• Need for achievement: The drive to excel, to achieve in relation to a set of standards, to strive to succeed
• Need for power: The need to make others behave in a way that they would not have behaved otherwise
• Need for affiliation: The desire for friendly and close interpersonal relationships
Some people have a compelling drive to succeed. They are striving for personal achievement rather than the
rewards of success, per se. This drive is the achievement need (nAch). McClelland found that high achievers
differentiate themselves from others by their desire to do things better.
The need for power (nPow) is the desire to have impact, to be influential, and to control others. Individuals high in
nPow enjoy being “in charge” and strive for influence over others. They prefer to be placed into competitive and
status-oriented situations, and tend to be more concerned with prestige and gaining influence over others than with
The third need isolated by McClelland is affiliation (nAfl). This need has received the least attention from
researchers. Individuals with a high affiliation motive strive for friendship. Prefer cooperative situations rather than
competitive ones, and desire relationships involving a high degree of mutual understanding.
5. Explain cognitive evaluation theory. How applicable is it to management practice?
Answer – Cognitive evaluation theory is well researched and supported. It suggests that when extrinsic rewards are
used by organizations as payoffs for superior performance, the intrinsic rewards, which are derived from individuals
doing what they like, are reduced. If the cognitive evaluation theory is valid, it should have major implications for
• If pay or other extrinsic rewards are to be effective motivators, they should be made contingent on an
• Cognitive evaluation theorists would argue that this will tend only to decrease the internal satisfaction that the
individual receives from doing the job.
• If correct, it would make sense to make an individual’s pay non-contingent on performance in order to avoid
decreasing intrinsic motivation.
6. What is the role of self-efficacy in goal setting?
Answer – If factors such as ability and acceptance of the goals are held constant, we can also state that the more
difficult the goal, the higher the level of performance. People will do better when they get feedback on how well they
are progressing toward their goals. Self-generated feedback is more powerful a motivator than externally generated
Self-efficacy refers to an individual’s belief that he or she is capable of performing a task. The higher one’s self-
efficacy, the more confidence one has in his or her ability to succeed in a task.
7. Contrast distributive and procedural justice. What implications might they have for designing pay systems in different
Answer – Historically, equity theory focused on distributive justice or “the perceived fairness of the amount and
allocation of rewards among individuals.” Equity should also consider procedural justice, “the perceived fairness of
the process used to determine the distribution of rewards.” The evidence indicates that distributive justice has a
greater influence on employee satisfaction than procedural justice. Procedural justice tends to affect an employee’s
organizational commitment, trust in his or her boss, and intention to quit. By increasing the perception of procedural
fairness, employees are likely to view their bosses and the organization as positive even if they are dissatisfied with
pay, promotions, and other personal outcomes.
8. Identify the variables in expectancy theory.
Answer – Expectancy theory is one of the most widely accepted explanations of motivation. It argues that the strength of a tendency
to act in a certain way depends on the strength of an expectation that the act will be followed by a given outcome and on the
attractiveness of that outcome to the individual. It says that an employee will be motivated to exert a high level of effort when he/she
• Effort will lead to a good performance appraisal.
• That a good appraisal will lead to organizational rewards.
• That the rewards will satisfy the employee’s personal goals.
Three key relationships (See Exhibit 6-7.)
• Effort-performance relationship: the probability perceived by the individual that exerting a given amount of effort
• Performance-reward relationship: the degree to which the individual believes that performing at a particular
level will lead to the attainment of a desired outcome
• Rewards-personal goals relationship: the degree to which organizational rewards satisfy an individual’s
personal goals or needs and the attractiveness of those potential rewards for the individual
9. Explain the formula: Performance = f(A × M × O), and give an example.
Answer – Success on a job is facilitated or hindered by the existence or absence of support resources. A popular
although arguably simplistic way of thinking about employee performance is as a function of the interaction of ability
and motivation; that is, performance = f(A × M). If either is inadequate, performance will be negatively affected. We
need to add opportunity to perform to our equation—performance = f(A × M × O). See Exhibit 6-8. When you attempt
to assess why an employee may not be performing to the level that you believe he or she is capable of, take a look
at the work environment to see if it is supportive.
10. What consistencies among motivation concepts, if any, apply cross-culturally?
Answer – Exhibit 6-9 presents a model that integrates much of what we know about motivation. There are cross-
• The desire for interesting work seems important to almost all workers.
• Growth, achievement, and responsibility were rated the top three and had identical rankings in another study of
QUESTIONS FOR CRITICAL THINKING
1. “The cognitive evaluation theory is contradictory to reinforcement and expectancy theories.” Do you agree or disagree?
Answer – As students make their arguments they should include the following facts from the text.
When extrinsic rewards are used by organizations as payoffs for superior performance, the intrinsic rewards, which
are derived from individuals doing what they like, are reduced. The elimination of extrinsic rewards can produce a
shift—from an external to an internal explanation—in an individual’s perception of causation of why he or she works
on a task. If the cognitive evaluation theory is valid, it should have major implications for managerial practices. The
theory may have limited applicability to work organizations because most low-level jobs are not inherently satisfying
enough to foster high intrinsic interest, and many managerial and professional positions offer intrinsic rewards.
Reinforcement theory is behavioristic in approach and is clearly in contradiction to cognitive evaluation theory. It
argues that reinforcement conditions behavior. Reinforcement theorists see behavior as being environmentally
caused. Reinforcement theory ignores the inner state of the individual and concentrates solely on what happens to a
person when he or she takes some action. Reinforcement is undoubtedly an important influence on behavior, but few
scholars are prepared to argue that it is the only influence.
Expectancy theory is one of the most widely accepted explanations of motivation. Expectancy theory argues that the
strength of a tendency to act in a certain way depends on the strength of an expectation that the act will be followed
by a given outcome and on the attractiveness of that outcome to the individual. It says that an employee will be
motivated to exert a high level of effort when he/she believes that:
• Effort will lead to a good performance appraisal.
• That a good appraisal will lead to organizational rewards.
• That the rewards will satisfy the employee’s personal goals.
Three key relationships (See Exhibit 6-7.)
• Effort-performance relationship: the probability perceived by the individual that exerting a given amount of
• Performance-reward relationship: the degree to which the individual believes that performing at a particular
• Rewards-personal goals relationship: the degree to which organizational rewards satisfy an individual’s
The key to expectancy theory is the understanding of an individual’s goals and the linkage between effort and
performance, between performance and rewards, and finally, between the rewards and individual goal satisfaction.
As a contingency model, expectancy theory recognizes that there is no universal principle for explaining everyone’s
effort will lead to performance
level will lead to the attainment of a desired outcome
personal goals or needs and the attractiveness of those potential rewards for the individual
2. “Managers should be able, through proper selection and job design, to have every employee experience flow in his or her
job.” Do you agree or disagree? Discuss.
Answer – That would be a lofty accomplishment, however studies done on this theory have been done on
management level employees and it remains to be seen whether or not it would apply to the rank and file worker.
However, managers can try to design jobs with the goal of increased job satisfaction using intrinsic factors as
motivators. Thomas suggests that the are four components to be considered. They are:
• Choice: the ability to select tasks activities that make sent to you and perform them as you deem appropriate.
• Competence: the accomplishment you feel in skillfully performing tasks activities you have chosen.
• Meaningfulness: the opportunity to pursue a worthy task purpose—that matters in the larger scheme of things.
• Progress: feeling you are making significant advancement in achieving the task’s purpose.
Jobs requiring high levels of education, training, and skill with a high degree of autonomy would be the most likely to
allow employees to experience the “flow.”
3. Analyze the application of Maslow’s and Herzberg’s theories to an African or Caribbean nation where more than a quarter
Answer – Students may lack sufficient knowledge of these cultures to fully answer the question. They should focus
on the issues of large scale unemployment. It should be relatively obvious to students that people in other cultures
world rank the need categories differently and that what is satisfaction or motivation will vary as well.
Abraham Maslow’s hierarchy of needs.
• Physiological—Includes hunger, thirst, shelter, sex, and other bodily needs
• Safety—Includes security and protection from physical and emotional harm
• Social—Includes affection, belongingness, acceptance, and friendship
• Esteem—Includes internal esteem factors such as self-respect, autonomy, and achievement; and external
esteem factors such as status, recognition, and attention
• Self-actualization—The drive to become what one is capable of becoming; includes growth, achieving one’s
potential, and self-fulfillment
Intrinsic factors, such as advancement, recognition, responsibility, and achievement seem to be related to job
satisfaction. Dissatisfied respondents tended to cite extrinsic factors, such as supervision, pay, company policies,
and working conditions. Job satisfaction factors are separate and distinct from job dissatisfaction factors.
4. Can an individual be too motivated, so that his or her performance declines as a result of excessive effort? Discuss.
Answer – Students’ responses may vary but should consider the following elements from the text. McClelland found
that high achievers differentiate themselves from others by their desire to do things better. If a high achiever sets too
high goals for him/herself, he/she could end up demotivating him/herself because of the failure to achieve the goals.
According to cognitive evaluation theory, when extrinsic rewards are used by organizations as payoffs for superior
performance, the intrinsic rewards, which are derived from individuals doing what they like, are reduced. The popular
explanation is that the individual experiences a loss of control over his/her own behavior so that the previous intrinsic
motivation diminishes. Furthermore, the elimination of extrinsic rewards can produce a shift—from an external to an
internal explanation—in an individual’s perception of causation of why he/she works on a task.
5. Identify three activities you really enjoy (for example, playing tennis, reading a novel, going shopping). Next, identify three
activities you really dislike (for example, going to the dentist, cleaning the house, staying on a restricted-calorie diet). Using
the expectancy model, analyze each of your answers to assess why some activities stimulate your effort while others do not.
Answer – Students’ responses will vary but should take into consideration the following elements of expectancy
theory. The strength of a tendency to act in a certain way depends on the strength of an expectation that the act will
be followed by a given outcome and on the attractiveness of that outcome to the individual. It says that an employee
will be motivated to exert a high level of effort when he/she believes that:
• Effort will lead to a good performance appraisal.
• That a good appraisal will lead to organizational rewards.
• That the rewards will satisfy the employee’s personal goals.
• Effort-performance relationship: the probability perceived by the individual that exerting a given amount of effort
• Performance-reward relationship: the degree to which the individual believes that performing at a particular
level will lead to the attainment of a desired outcome
• Rewards-personal goals relationship: the degree to which organizational rewards satisfy an individual’s
personal goals or needs and the attractiveness of those potential rewards for the individual
Q3. (a) Identify some factors that cause conflicts in domestic and multinational firms.
1. a struggle or clash between opposing forces; battle
2. a state of opposition between ideas, interests, etc; disagreement or controversy
3. a clash, as between two appointments made for the same time
4. (psychology) opposition between two simultaneous but incompatible wishes or drives, sometimes leading to a
state of emotional tension and thought to be responsible for neuroses
(b) Discuss the different ways of managing conflicts.
A. Causes of Conflict
C. Stages of Conflict
D. Reaction to Conflict
A. Approaches to Conflict Resolution
B. Conflict Management
C. Strategies for Conflict Resolution
OBJECTIVE: At the end of the lesson, students will be able to identify, classify, relate, apply and resolve concepts on:
• Types, Causes, Stages and Reactions to Conflict
• Approaches to Conflict Resolution
• Strategies for Conflict Resolution
• A state of disharmony between incompatible or antithetical persons, ideas, or interests; a clash.
• Opposition between characters or forces in a work of drama or fiction, especially opposition that motivates or
shapes the action of the plot.
• A psychic struggle between opposing or incompatible impulses, desires, or tendencies.
1. Intrasender – conflict originates in the sender who gives conflicting instructions
2. Intersender – arises when a person receives conflicting messages from one or more sources.
3. Interrole – occurs when a person belongs to more than one group.
4. Person-role – result of a discrepancies between internal and external role.
5. Interperson – between people whose positions require interaction with other persons who fill various roles in the same
6. Intragroup – occurs when a group faces new problem, when new values are imposed on the group from outside, or
when one’s extragroup role conflicts with one’s intragroup role.
7. Intergroup – common when two groups have different goals and can only achieve their goals at the other’s expense.
8. Role Ambiguity – condition where an individual do not know what is expected of them.
9. Role Overload – individuals cannot meet the expectations placed on them.
1. Latent conflict – phase of anticipation
It exists whenever individual, groups, organization or nations have differences that bother one or the other but those
differences are not great enough to cause one side to act to alter the situation. There is not yet an outright conflict present
but a number of factors exist that create the conditions that could result in a conflict.
2. Perceived conflict – indicates cognitive awareness of stressful situation
It exists when there is a cognitive awareness on the part of at least one party that
events have occurred or that conditions exist favorable to creating overt conflict.
Groups recognizes that a conflict is emerging and starts to look for possible
3. Felt conflict – presence of affective states such as stress, tensions, anxiety, anger, hostility.
Organization, groups or individual become more internally cohesive. Other group in the organization are
viewed with suspicion as outsider. Us versus them mentality begins to really take hold.
4. Manifest conflict – overt behavior resulting from the above three stages.
At this stage the conflicting parties are actively engaging in conflict behavior which is usually very apparent to non-
involved parties. Feelings of conflict are now translated into actions and words which could either be constructive
obstructive to problem solving process.
1. Sublimation- a defense mechanism by which the individual satisfies a socially prohibited instinctive drive through
the substitution of socially acceptable behavior.
4. Identification- a persons association with or assumption of the qualities, characteristics or views of another person
– attribution to yourself ( consciously or unconsciously) of the characteristic of another person.
6. Substitute goals – setting another goal
7. Rationalization- a defense mechanism by which your true motivation is concealed by explaining your actions and
feelings in a way that is not threatening.
9. Reaction formation- a defense mechanism by which an objectionable impulse is expressed in an opposite or
11. Projection- the attribution of one’s own attitudes, feelings or desires to someone or something as a naïve or
unconscious defense against anxiety or guilt.
12. Displacement- unconscious defense mechanism whereby the mind redirects emotion from a dangerous object to a
13. Fixation- a strong attachment to a person or thing especially such an attachment formed in childhood or infancy and
manifested in the immature or neurotic behavior that persists throughout life.
14. Withdrawal- detachment as from social or emotional involvement.
15. Repression- the classical defense mechanism that protects you from impulses or ideas that would causes anxiety
by preventing them from becoming conscious.
16. Conversion- repressed ideas conflicts or impulses are manifested by various bodily symptoms, such as paralysis or
sensory deficits that have no physical cause.
- a change in which one adopts a new religion, faith or beliefs.
Approaches to Conflict Resolution
1. ACCOMMODATING - the person neglects personal concerns to satisfy the concerns of others. It is cooperative
2. COMPROMISING – the individual attempts to find mutually acceptable solutions that partially satisfy both
parties in reflects assertiveness and cooperation
3. COLLABORATING – the individual attempts to work with others toward solutions that satisfy the work of both
parties it is both assertive and cooperative
4. COMPETING – the person pursues personal concerns at another’s expense. It is a power oriented mode that is
assertive but uncooperative. the competition is aggressive and pursues one’s own goals at another’s expense.
Negotiation – is a strategic process used to move conflicting parties toward an outcome.
PROCESS/PHASES OF NEGOTIATION:
PHASE 1 Establishing the issue and agenda
PHASE 2 Advancing demands and uncovering interests
PHASE 3 Bargaining and discovering new options – inflict resolution to both parties; options to resolve
PHASE 4 Working out an agreement
PHASE 5 Aftermath – is the period following an agreement in where parties are expending the consequences of their
Collaboration – is achieved through a developmental process. It is sequential yet reciprocal and characterized by
1. Awareness – makes a conscious entry into a group process, focus on goals of convening together, generate
definition of collaborative process and what it means to team members
2. Tentative exploration and mutual acknowledgement
a. Exploration – disclose professional skills for the desire process; disclose areas where contribution
cannot be mace, disclose values reflecting priorities; identify roles and disclose personal values,
including time, energy, interest and resources.
b. Mutual acknowledgements – clarify each members potential contributions; clarify member’s work style,
organizational supports and barriers to collaborative efforts.
3. Trust building – determines the degree to which reliance on others can achieved; examines congruence
between words and behaviors; set interdependent goals; develop tolerance for ambiguity.
4. Collegiality – defines the relations of the members with each other; define the responsibilities and tasks of each;
defines entrance and exit conditions.
5. Consensus – determine the issues for which consensus; determine the process for reevaluating consensus
6. Commitment – realize the physical; emotional and material actions directed toward the goal; clarify the
procedures for reevaluating commitment in light of goal depends and group for deviance.
7. Collaboration – initiate process of joint decision making reflecting the synergy that results from combining
b. Mental or Physical Power
1. Research – more powerful tool in generating knowledge.
2. Participation – democracy (people power)
- involves social trained researcher to guide to people
- involve stakeholders
3. Action – Stakeholders will initiate the action done by the people.
COPAR – community organizing participatory action researc
(c) Show a model of the organization development.
Answer: Beckhard lays out a sequential, five stage model for organization development (OD). OD involves (1) planned,
(2) organization-wide action (3) managed through its internal hierarchy which (4) increases organizational efficiency and
sustainability through (5) use of planned interventions into organizational processes that are informed by behavioral-science
knowledge. Beckhard asserts that successful OD has to address the entire “organization” of an organization, even if
it is looking to affect only tactical changes to parts of it. Seeing organizational health and possibilities for change and
development as connected and intricately interrelated, Beckhard—invoking both his own definition and those of Gardner
(1965), Schein (1965), Miles (1966), and Morse (1968)—writes that an organization is OD-primed when it is, above all,
goal-oriented, self-renewing, adaptable, well-regulated, and communicating effectively within its ranks. Once such a
dynamic is in place, Beckhard writes, OD’s processes can facilitate increased effectiveness, improved working conditions,
Austin and Bartunek analyze and discuss the perceived disconnect between OD idea-development (“scholarship”) and
its practical, real-world implementation. Additionally, practical OD approaches like action research are focusing less
and less on making scholarly contributions to the field. But academic-practitioner knowledge should be strongly linked,
contend Austin and Bartunek, for academic, economic, and pragmatic reasons. The two authors divide their chapter
into four parts. First, they explore the history of OD’s evolving humanistic emphases, including the field’s early focus on
individual and group development, as well as later models which attend more to the macro the business environment
and work to promote synergies between an organization and its relevant contexts. Next, Austin and Bartunek explore a
distinction between different academic and practitioner views of OD, first introduced by Bennis (1966) and later modified
by Porras and Robertson (1992). The distinction Bennis draws is between theories of change (or change process theory as
Porras and Robertson call it), which look to answer the question of how and why change occurs, and theories of changing
(“implementation theory”) which focus on how to create and guide change to reach a desired objective. Third, Austin and
Bartunek use Bennis’ distinction to locate OD within the larger contextual framework of organizational change, noting
OD’s evolution from the method of planned change to one potential “motor” for refashioning a social system. They
reference Van de Ven and Poole’s (1995) “four ideal types of change theories”:
• The “teleological” or goal-driven motor (ex: Strategic Change theory, theories of Cognitive Framing, Change
Momentum theory, and Theories of Innovation)
• The “life cycle” or sequential stage motor (ex: Punctuated Equilibrium theory)
• The “dialectic” or two-poles conflict motor (ex: Schematic Change models and Theories of Communicative Change)
• The “evolutionary” motor (ex: Internal Change Routines and Institutional Change theory)
Q4.(a) Define decision support system (DSS).
DSS as a bundle of hardware, data and knowledge, user interface and software application -change and evolve over
time. As a result, the purpose of this paper is to investigate the notion of DSS evolution and DSS characteristics and
component evolution. Previous literature has primarily been concerned about the notions that DSS evolve and that
methodologies of DSS development consider that evolution. In addition, there has been some concern as to why
DSS evolve. However, there has been limited research according to how DSS actually change and evolve over time.
Accordingly, we review the previous literature on DSS evolution, according to its individual components and provide
specificity for DSS evolution through those components changing over time.
(b) State the problems of not using the Management Information Systems in Banking.
(c) Analyze the costs and benefits of using MIS in your branch.
Q5. (a) What are the three levels of analysis in an OB model? Are they related? If so, how?
(c) What is an organization? Is the family unit an organization? –Explain.
• organizations are social systems, not just technical economic systems
• we are motivated by many needs
• we are interdependent; our behavior is often shaped by the social context
• informal work group is a major factor in determining attitudes and performance of individual workers
• management is only one factor affecting behavior; the informal group often has a stronger impact
• job roles are more complex than job descriptions would suggest; people act in many ways not covered by job
• there is no automatic correlation between individual and organizational needs
• communication channels cover both logical/economic aspects of an organization and feelings of people
• teamwork is essential for cooperation and sound technical decisions leadership should be modified to include
• people try to satisfy one class of need at work: economic need
• no conflict exists betwene individual and organizational objectives
• people act rationally to maximize rewards
• we act individually to satisfy individual needs
(d) What is contingency approach to OB?
Contingency approach, also known as situational approach, is a concept in management stating that there is no one universally
applicable set of management principles (rules) by which to manage organizations. Organizations are individually different, face
different situations (contingency variables), and require different ways of managing. Contingency approaches remain less common
Contingency approach evolved during the 1960s. Management theory and research began to adopt a new orientation,
one that embodied a simple concept and enabled significant advancements in the study of management and
organizations, now referred to as the contingency approach. It emphasised the importance of situational influences on
the management of organisations and questioned the existence of a single, best way to manage or organise. Today, the
contingency approach dominates theory and research in the management literature. Contingency approach challenged
the classic process and models designed by management theorists such as Taylor and Fayol. Various researchers
concentrated on different contextual factors. Joan Woodward (1958)[1]
into the economic environment, in particular market competition and technological change. A broader approach was
developed by a British team of researchers at the University of Aston, widely known as Aston Group by developing a
the size of the organizations, Burns and Stalker (1961)[3]
studied the production technology, Blau and
as well as Lawrence and Lorsch (1967)
conceptual scheme for the comparative analysis of organizational structure which took account of several contextual
factors at the same time (Pugh & Hickson et al., 1963).[5]
A conceptual model of the contingency approach was developed by Kieser and Kubicek.[6]
formal structure of an organization defines the roles of its members in a specific way and thereby directs their behaviour
to a certain degree. The performance of the organization depends on the degree to which these role definitions enable
members to cope with the requirements resulting from the context of the organization.
Bank Wiring Observation Room (1931-1932)
• choose 9 workers, three soldermen, two inspectors to assemble terminal banks
• group piecework used-guaranteed base rate; pay reflects both group and individual effort
• group placed in separate room to observe impact of group dynamics on prod.
• what happened-employees had notion of proper day's work; most work done in morning; when they felt they
had done what they considered enough, they slacked off so output constant
• wage incentive really didn't work; informal social organization evolved; controlled rate busters
• workers often traded jobs and helped each other; formal supervisor often looked other way
• why did workers restrict output-didn't want management to know they could do more
• complex social system evolved-common sentiments, relationships
• -what is critical is not what is but what is perceived
• -since worker couldn't affect management, group gave meaning and significance to work
• -workers resist formal changes in management to break up loyalties, routines industrial engineer
Q6.(a) State the merits and demerits of selection of personnel from within and also those of selection from outside the firm.
(b) What is your opinion about the policy of open competition?
(c) What are the skills and personal characteristics that a manager has to possess?
(d) What measures would you suggest to enhance the efficiency of bank managers?
Q7.(a) “Planning and control are Siamese twins.”-Explain and elaborate the statement.
(b) Make a comparison of feed forward feed back system of control.
(c ) What are the requirements for effective control?
(d) Explain the importance of flexibility of controlling.
Q8. (a) What is job satisfaction? State why it is considered as an important dependent variable in OB model?
Job satisfaction is how content an individual is with his or her job. Scholars and human resource professionals generally
make a distinction between affective job satisfaction
the extent of pleasurable emotional feelings individuals have about their jobs overall, and is different to cognitive job
satisfaction which is the extent of individuals’ satisfaction with particular facets of their jobs, such as pay, pension
arrangements, working hours, and numerous other aspects of their jobs.
[1]
and cognitive job satisfaction.
At its most general level of conceptualization, job satisfaction is simply how content an individual is with his or her job.
At the more specific levels of conceptualization used by academic researchers and human resources professionals,
job satisfaction has varying definitions. Affective job satisfaction is usually defined as an unidimensional subjective
construct representing an overall emotional feeling individuals have about their job as a whole.[1][2][3][4]
job satisfaction for individuals reflects the degree of pleasure or happiness their job in general induces. Cognitive job
satisfaction is usually defined as being a more objective and logical evaluation of various facets of a job. As such,
cognitive job satisfaction can be unidimensional if it comprises evaluation of just one aspect of a job, such as pay or
maternity leave, or multidimensional if two or more facets of a job are simultaneously evaluated. Cognitive job satisfaction
does not assess the degree of pleasure or happiness that arises from specific job facets, but rather gauges the extent to
which those job facets are judged by the job holder to be satisfactory in comparison with objectives they themselves set or
with other jobs. While cognitive job satisfaction might help to bring about affective job satisfaction, the two constructs are
distinct, not necessarily directly related, and have different antecedents and consequences.[2]
One of the biggest preludes to the study of job satisfaction was the Hawthorne studies. These studies (1924–1933),
primarily credited to Elton Mayo of the Harvard Business School, sought to find the effects of various conditions (most
notably illumination) on workers’ productivity. These studies ultimately showed that novel changes in work conditions
temporarily increase productivity (called the Hawthorne Effect). It was later found that this increase resulted, not from the
new conditions, but from the knowledge of being observed. This finding provided strong evidence that people work for
purposes other than pay, which paved the way for researchers to investigate other factors in job satisfaction.
Scientific management (aka Taylorism) also had a significant impact on the study of job satisfaction. Frederick Winslow
Taylor’s 1911 book, Principles of Scientific Management, argued that there was a single best way to perform any given
work task. This book contributed to a change in industrial production philosophies, causing a shift from skilled labor and
piecework towards the more modern of assembly lines and hourly wages. The initial use of scientific management by
industries greatly increased productivity because workers were forced to work at a faster pace. However, workers became
exhausted and dissatisfied, thus leaving researchers with new questions to answer regarding job satisfaction. It should
also be noted that the work of W.L. Bryan, Walter Dill Scott, and Hugo Munsterberg set the tone for Taylor’s work.
Some argue that Maslow’s hierarchy of needs theory, a motivation theory, laid the foundation for job satisfaction theory.
This theory explains that people seek to satisfy five specific needs in life – physiological needs, safety needs, social
needs, self-esteem needs, and self-actualization. This model served as a good basis from which early researchers could
Job satisfaction can also be seen within the broader context of the range of issues which affect an individual's experience
of work, or their quality of working life. Job satisfaction can be understood in terms of its relationships with other key
factors, such as general well-being, stress at work, control at work, home-work interface, and working conditions.
Edwin A. Locke’s Range of Affect Theory (1976) is arguably the most famous job satisfaction model. The main premise
of this theory is that satisfaction is determined by a discrepancy between what one wants in a job and what one has in a
job. Further, the theory states that how much one values a given facet of work (e.g. the degree of autonomy in a position)
moderates how satisfied/dissatisfied one becomes when expectations are/aren’t met. When a person values a particular
facet of a job, his satisfaction is more greatly impacted both positively (when expectations are met) and negatively (when
expectations are not met), compared to one who doesn’t value that facet. To illustrate, if Employee A values autonomy in
the workplace and Employee B is indifferent about autonomy, then Employee A would be more satisfied in a position that
offers a high degree of autonomy and less satisfied in a position with little or no autonomy compared to Employee B. This
theory also states that too much of a particular facet will produce stronger feelings of dissatisfaction the more a worker
Another well-known job satisfaction theory is the Dispositional Theory. It is a very general theory that suggests that people
have innate dispositions that cause them to have tendencies toward a certain level of satisfaction, regardless of one’s job.
This approach became a notable explanation of job satisfaction in light of evidence that job satisfaction tends to be stable
over time and across careers and jobs. Research also indicates that identical twins have similar levels of job satisfaction.
A significant model that narrowed the scope of the Dispositional Theory was the Core Self-evaluations Model, proposed
by Timothy A. Judge, Edwin A. Locke, and Cathy C. Durham in 1997.[5]
Self-evaluations that determine one’s disposition towards job satisfaction: self-esteem, general self-efficacy, locus of
control, and neuroticism. This model states that higher levels of self-esteem (the value one places on his/her self) and
general self-efficacy (the belief in one’s own competence) lead to higher work satisfaction. Having an internal locus of
control (believing one has control over her\his own life, as opposed to outside forces having control) leads to higher job
satisfaction. Finally, lower levels of neuroticism lead to higher job satisfaction.[5]
Judge et al. argued that there are four Core
According to opponent process theory,[6]
Primary processes give way to emotions that are steady with the event in question. Events that seem negative in manner
will give rise to the feelings of stress or anxiety. Events that are positive give rise to the feeling of content or relaxation.
The other process is the opponent process, which induces feelings that contradict the feelings in the primary processes.
Events that are negative give rise to feelings of relaxation while events that are positive give rise to feelings of anxiety. A
variety of explanations have been suggested to explain the uniformity of mood or satisfaction. This theory shows that if
you try to enhance the mood of individual it will more likely fail in doing so. The opponent process theory was formulated
to explain these patterns of observations.[7][8]
emotional events, such as criticisms or rewards, elicits two sets of processes.
Equity Theory shows how a person views fairness in regard to social relationships. During a social exchange, a person
identifies the amount of input gained from a relationship compared to the output, as well as how much effort another
individuals, the person is likely to be distressed because the ratio between the input and the output are not equal.[10]
For example, consider two employees who work the same job and receive the same benefits. If one individual gets a
pay raise for doing the same or less work than the other, then the less benefited individual will become distressed in his
workplace. If, on the other hand, one individual gets a pay raise and new responsibilities, then the feeling of inequality is
Equity Theory suggests that if an individual thinks there is an inequality between two social groups or
The concept of discrepancy theory explains the ultimate source of anxiety and dejection.[11]
fulfilled his responsibility feels the sense of anxiety and regret for not performing well, they will also feel dejection due
to not being able to achieve their hopes and aspirations. According to this theory, all individuals will learn what their
obligations and responsibilities for a particular function, over a time period, and if they fail to fulfill those obligations then
they are punished. Over time, these duties and obligations consolidate to form an abstracted set of principles, designated
approval, or love. These achievements and aspirations also form an abstracted set of principles, referred to as the ideal
When the individual fails to obtain these rewards, they begin to have feelings of dejection, disappointment,
Two-factor theory (motivator-hygiene theory)
Frederick Herzberg’s Two-factor theory (also known as Motivator Hygiene Theory) attempts to explain satisfaction and
motivation and hygiene factors, respectively. An employee’s motivation to work is continually related to job satisfaction of
a subordinate. Motivation can be seen as an inner force that drives individuals to attain personal and organizational goals
(Hoskinson, Porter, & Wrench, p. 133). Motivating factors are those aspects of the job that make people want to perform,
and provide people with satisfaction, for example achievement in work, recognition, promotion opportunities. These
motivating factors are considered to be intrinsic to the job, or the work carried out.[14]
the working environment such as pay, company policies, supervisory practices, and other working conditions.[14]
While Hertzberg's model has stimulated much research, researchers have been unable to reliably empirically prove
the model, with Hackman & Oldham suggesting that Hertzberg's original formulation of the model may have been a
employees will react in an identical manner to changes in motivating/hygiene factors.[14]
Agitation and anxiety are the main responses when an individual fails to achieve the obligation or
This theory also explains that if achievement of the obligations is obtained then the reward can be praise,
This theory states that satisfaction and dissatisfaction are driven by different factors –
Furthermore, the theory does not consider individual differences, conversely predicting all
criticised in that it does not specify how motivating/hygiene factors are to be measured.[14]
Hackman & Oldham proposed the Job Characteristics Model, which is widely used as a framework to study how
particular job characteristics impact on job outcomes, including job satisfaction. The model states that there are five
core job characteristics (skill variety, task identity, task significance, autonomy, and feedback) which impact three critical
psychological states (experienced meaningfulness, experienced responsibility for outcomes, and knowledge of the actual
results), in turn influencing work outcomes (job satisfaction, absenteeism, work motivation, etc.).[15]
characteristics can be combined to form a motivating potential score (MPS) for a job, which can be used as an index of
how likely a job is to affect an employee's attitudes and behaviors. A meta-analysis of studies that assess the framework
of the model provides some support for the validity of the JCM.[16]
The motivating potential score (MPS) can be calculated, using the core dimensions discussed above, as follows;
Jobs that are high in motivating potential must be also high on at least one of the three factors that lead to experienced
meaningfulness, and also must be high on both Autonomy and Feedback.[17]
characteristics model predicts that motivation, performance and job satisfaction will be positively affected and the
likelihood of negative outcomes, such as absenteeism and turnover, will be reduced.[17]
If a job has a high MPS, the job
Communication overload and communication underload
One of the most important aspects of an individual’s work in a modern organization concerns the management of
communication demands that he or she encounters on the job.[18]
load, which refers to “the rate and complexity of communication inputs an individual must process in a particular time
Individuals in an organization can experience communication over-load and communication under- load which
can affect their level of job satisfaction. Communication overload can occur when “an individual receives too many
messages in a short period of time which can result in unprocessed information or when an individual faces more complex
messages that are more difficult to process.[19]
complete a task, when more inputs exist than outputs, the individual perceives a condition of overload[18]
positively or negatively related to job satisfaction. In comparison, communication under load can occur when messages or
inputs are sent below the individual’s ability to process them.”[19]
under-load, if an individual does not receive enough input on the job or is unsuccessful in processing these inputs, the
individual is more likely to become dissatisfied, aggravated, and unhappy with their work which leads to a low level of job
Demands can be characterized as a communication
” Due to this process, “given an individual’s style of work and motivation to
According to the ideas of communication over-load and
Superior-subordinate communication is an important influence on job satisfaction in the workplace. The way in which
subordinates perceive a supervisor's behavior can positively or negatively influence job satisfaction. Communication
behavior such as facial expression, eye contact, vocal expression, and body movement is crucial to the superior-
subordinate relationship (Teven, p. 156). Nonverbal messages play a central role in interpersonal interactions with
respect to impression formation, deception, attraction, social influence, and emotional.[20]
supervisor helps to increase interpersonal involvement with their subordinates impacting job satisfaction. The manner
in which supervisors communicate with their subordinates non-verbally may be more important than the verbal content
(Teven, p. 156). Individuals who dislike and think negatively about their supervisor are less willing to communicate or have
motivation to work whereas individuals who like and think positively of their supervisor are more likely to communicate and
are satisfied with their job and work environment. A supervisor who uses nonverbal immediacy, friendliness, and open
communication lines is more likely to receive positive feedback and high job satisfaction from a subordinate. Conversely,
a supervisor who is antisocial, unfriendly, and unwilling to communicate will naturally receive negative feedback and
create low job satisfaction in their subordinates in the workplace.
Effective human resources practices lead to positive financial outcomes
A Watson Wyatt Worldwide study identified a positive outcome between a collegical and flexible work environment
and an increase in shareholder value. Suggesting that employee satisfaction is directly related to financial gain. Over
40 percent of the companies listed in the top 100 of Fortune magazine’s, “America’s Best Companies to Work For” also
appear on the Fortune 500. It is possible that successful workers enjoy working at successful companies, however, the
Watson Wyatt Worldwide Human Capital Index study claims that effective human resources practices lead to positive
financial outcomes more often than positive financial outcomes lead to good practices.
Mood and emotions form the affective element of job satisfaction. Moods tend to be longer lasting but often weaker states
of uncertain origin, while emotions are often more intense, short-lived and have a clear object or cause.[22]
Some research suggests moods are related to overall job satisfaction.[23][24]
found to be significantly related to overall job satisfaction.[25]
Frequency of experiencing net positive emotion will be a better predictor of overall job satisfaction than will intensity of
positive emotion when it is experienced.[25]
Emotion work (or emotion management) refers to various types of efforts to manage emotional states and displays.
Emotion management includes all of the conscious and unconscious efforts to increase, maintain, or decrease one or
more components of an emotion. Although early studies of the consequences of emotional work emphasized its harmful
effects on workers, studies of workers in a variety of occupations suggest that the consequences of emotional work are
It was found that suppression of unpleasant emotions decreases job satisfaction and the amplification of pleasant
emotions increases job satisfaction.[27]
The understanding of how emotion regulation relates to job satisfaction concerns two models:
Positive and negative emotions were also
1. Emotional dissonance. Emotional dissonance is a state of discrepancy between public displays of emotions
and internal experiences of emotions,[28][29]
dissonance is associated with high emotional exhaustion, low organizational commitment, and low job
2. Social interaction model. Taking the social interaction perspective, workers’ emotion regulation might beget
responses from others during interpersonal encounters that subsequently impact their own job satisfaction. For
example: The accumulation of favorable responses to displays of pleasant emotions might positively affect job
that often follows the process of emotion regulation. Emotional
It has been well documented that genetics influence a variety of individual differences.[32]
genetics also play a role in the intrinsic, direct experiences of job satisfaction like challenge or achievement (as opposed
to extrinsic, environmental factors like working conditions). One experiment used sets of monozygotic twins, reared apart,
to test for the existence of genetic influence on job satisfaction. While the results indicate the majority of the variance in
job satisfaction was due to environmental factors (70%), genetic influence is still a minor factor. Genetic heritability was
also suggested for several of the job characteristics measured in the experiment, such as complexity level, motor skill
requirements, and physical demands.[33]
Some research suggests an association between personality and job satisfaction. Specifically, this research describes
the role of negative affectivity and positive affectivity. Negative affectivity is related strongly to the personality trait of
neuroticism. Individuals high in negative affectivity are more prone to experience less job satisfaction. Positive affectivity
is related strongly to the personality trait of extraversion. Those high in positive affectivity are more prone to be satisfied
in most dimensions of their life, including their job. Differences in affectivity likely impact how individuals will perceive
objective job circumstances like pay and working conditions, thus affecting their satisfaction in that job.[34]
How job satisfaction is measured depends on whether affective or cognitive job satisfaction is of interest. The majority of
job satisfaction measures are self-reports and based on multi-item scales. Several measures have been developed over
the years, although they vary in terms of how carefully and distinctively they are conceptualized with respect to affective or
cognitive job satisfaction. They also vary in terms of the extent and rigour of their psychometric validation.
The Brief Index of Affective Job Satisfaction (BIAJS) is a 4-item, overtly affective as opposed to cognitive, measure
of overall affective job satisfaction. The BIAJS differs from other job satisfaction measures in being comprehensively
validated not just for internal consistency reliability, temporal stability, convergent and criterion-related validities, but also
for cross-population invariance by nationality, job level, and job type. Reported internal consistency reliabilities range
is a specifically cognitive job satisfaction measure. It measures one’s satisfaction in
five facets: pay, promotions and promotion opportunities, coworkers, supervision, and the work itself. The scale is simple,
participants answer either yes, no, or can’t decide (indicated by ‘?’) in response to whether given statements accurately
Other job satisfaction questionnaires include: the Minnesota Satisfaction Questionnaire (MSQ), the Job Satisfaction
Survey (JSS), and the Faces Scale. The MSQ measures job satisfaction in 20 facets and has a long form with 100
questions (five items from each facet) and a short form with 20 questions (one item from each facet). The JSS is a 36 item
questionnaire that measures nine facets of job satisfaction. Finally, the Faces Scale of job satisfaction, one of the first
scales used widely, measured overall job satisfaction with just one item which participants respond to by choosing a face..
Job Satisfaction can be indicative of work behaviors such as organizational citizenship,[36]
Further, job satisfaction can partially mediate the relationship of personality variables
One common research finding is that job satisfaction is correlated with life satisfaction.[40]
meaning people who are satisfied with life tend to be satisfied with their job and people who are satisfied with their job
tend to be satisfied with life. However, some research has found that job satisfaction is not significantly related to life
satisfaction when other variables such as nonwork satisfaction and core self-evaluations are taken into account.[41]
An important finding for organizations to note is that job satisfaction has a rather tenuous correlation to productivity on the
job. This is a vital piece of information to researchers and businesses, as the idea that satisfaction and job performance
are directly related to one another is often cited in the media and in some non-academic management literature. A recent
meta-analysis found surprisingly low correlations between job satisfaction and performance.[42]
found that the relationship between satisfaction and performance can be moderated by job complexity, such that for
high-complexity jobs the correlation between satisfaction and performance is higher than for jobs of low to moderate
complexity. Additionally, one longitudinal study indicated that among work attitudes, job satisfaction is a strong predictor
of absenteeism, suggesting that increasing job satisfaction and organizational commitment are potentially good strategies
for reducing absenteeism and turnover intentions.[43]
have negative effects on performance, organizational deviance, and organizational citizenship behaviours.[44]
the relationship of satisfaction to productivity is not as straightforward as often assumed and can be influenced by a
number of different work-related constructs, and the notion that "a happy worker is a productive worker" should not be the
foundation of organizational decision-making. For example, employee personality may even be more important than job
satisfaction in regards to performance.[45]
Recent research has also shown that intention to quit alone can
(b) “Organizational Behavior is generally predictable. So, there is no need to formally study OB.” Why is this comment
(c ) What are effectiveness and efficiency and how they are related to organizational behavior?
Efficiency in general describes the extent to which time, effort or cost is well used for the intended task or purpose. It
is often used with the specific purpose of relaying the capability of a specific application of effort to produce a specific
outcome effectively with a minimum amount or quantity of waste, expense, or unnecessary effort. "Efficiency" has widely
varying meanings in different disciplines.
The term "efficient" is very much confused and misused with the term "effective". In general, efficiency is a measurable
concept, quantitatively determined by the ratio of output to input. "Effectiveness", is a relatively vague, non-quantitative
concept, mainly concerned with achieving objectives. In several of these cases, efficiency can be expressed as a result as
percentage of what ideally could be expected, hence with 100% as ideal case. This does not always apply, not even in all
cases where efficiency can be assigned a numerical value, e.g. not for specific impulse.
A simple way of distinguishing between Efficiency and Effectiveness is the saying, "Efficiency is doing things right, while
Effectiveness is doing the right things." This is based on the premise that selection of objectives of a process are just as
important as the quality of that process.
A slightly broader mode of efficiency that nevertheless remains consistent with the "percentage" definition in many cases is to say that
efficiency corresponds to the ratio r=P/C of the amount P of some valuable resource produced, per amount C of valuable resources
consumed. This may correspond to a percentage if products and consumables are quantified in compatible units, and if consumables
are transformed into products via a conservative process. For example, in the analysis of the energy conversion efficiency of heat
engines in thermodynamics, the product P may be the amount of useful work output, while the consumable C is the amount of high-
temperature heat input. Due to the conservation of energy, P can never be greater than C, and so the efficiency r is never greater
than 100% (and in fact must be even less at finite temperatures).
(d) What are the individual level variables that influence organizational effectiveness?
Q9.(a) How do the required managerial skills differ in the organizational hierarchy?
(b) Distinguish between administration and a management.
(c ) Why has Fredrick Winslow Taylor been called the father of scientific management and Henri Fayol the father of
(d) What is meant by the term “Management by exception”?
Management by objectives (MBO) is a process of defining objectives within an organization so that management and
employees agree to the objectives and understand what they need to do in the organization in order to achieve them. The
term "management by objectives" was first popularized by Peter Drucker in his 1954 book The Practice of Management.
The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of
the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally,
when employees themselves have been involved with the goal setting and choosing the course of action to be followed by
them, they are more likely to fulfill their responsibilities.
According to George S. Odiorne, the system of management by objectives can be described as a process whereby the superior and
subordinate jointly identify its common goals, define each individual's major areas of responsibility in terms of the results expected of
him, and use these measures as guides for operating the unit and assessing the contribution of each of its members.[2]
Unique features and advantages of the MBO process
The principle behind Management by Objectives (MBO) is for employees to have a clear understanding of the roles
and responsibilities expected of them. They can then understand how their activities relate to the achievement of the
organization's goal. MBO also places importance on fulfilling the personal goals of each employee.
Some of the important features and advantages of MBO are:
1. Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment.
This increases employee job satisfaction and commitment.
2. Better communication and coordination – Frequent reviews and interactions between superiors and
subordinates helps to maintain harmonious relationships within the organization and also to solve many
4. Subordinates tend to have a higher commitment to objectives they set for themselves than those imposed on
5. Managers can ensure that objectives of the subordinates are linked to the organization's objectives.
Objectives can be set in all domains of activities (production, marketing, services, sales, R&D, human resources, finance,
Some objectives are collective, for a whole department or the whole company, others can be individualized.
Objectives need quantifying and monitoring. Reliable management information systems are needed to establish relevant
objectives and monitor their "reach ratio" in an objective way. Pay incentives (bonuses) are often linked to results in
There are several limitations to the assumptive base underlying the impact of managing by objectives,[citation needed]
1. It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes.
2. It underemphasizes the importance of the environment or context in which the goals are set. That context
includes everything from the availability and quality of resources, to relative buy-in by leadership and
stake-holders. As an example of the influence of management buy-in as a contextual influencer, in a 1991
comprehensive review of thirty years of research on the impact of Management by Objectives, Robert Rodgers
and John Hunter concluded that companies whose CEOs demonstrated high commitment to MBO showed, on
average, a 56% gain in productivity. Companies with CEOs who showed low commitment only saw a 6% gain in
3. Companies evaluated their employees by comparing them with the "ideal" employee. Trait appraisal only looks
at what employees should be, not at what they should do.
When this approach is not properly set, agreed and managed by organizations, self-centered employees might be prone
to distort results, falsely representing achievement of targets that were set in a short-term, narrow fashion. In this case,
managing by objectives would be counterproductive.
The use of MBO must be carefully aligned with the culture of the organization. While MBO is not as fashionable as
it was before, it still has its place in management today. The key difference is that rather than 'set' objectives from a
cascade process, objectives are discussed and agreed upon. Employees are often involved in this process, which can be
A saying around MBO – "What gets measured gets done", ‘Why measure performance? Different purposes require
different measures’ – is perhaps the most famous aphorism of performance measurement; therefore, to avoid potential
problems SMART and SMARTER objectives need to be agreed upon in the true sense rather than set.
Q10. Write short notes on any four of the following:-
Job analysis is the formal process of identifying the content of a job in terms activities involved and attributes needed
to perform the work and identifies major job requirements. Job analysis was conceptualized by two of the founders of
industrial/organizational psychology, Frederick Taylor and Lillian Moller Gilbreth in the early 20th century.[1]
provide information to organizations which helps to determine which employees are best fit for specific jobs.
/organizational psychologists are often the professionals who on the attributes need in a prospective employee to perform
the job successfully. The Occupational Information Network (O*NET) is an online website which provides analyses of a
One of the main purposes of conducting job analysis is to prepare job descriptions and job specifications which in turn
helps hire the right quality of workforce into an organization. The general purpose of job analysis is to document the
requirements of a job and the work performed. Job and task analysis is performed as a basis for later improvements,
including: definition of a job domain; description of a job; development of performance appraisals, personnel
selection, selection systems, promotion criteria, training needs assessment, legal defense of selection processes, and
In the fields of human resources (HR) and industrial psychology, job analysis is often used to gather information for use in
personnel selection, training, classification, and/or compensation.[3]
The field of vocational rehabilitation uses job analysis to determine the physical requirements of a job to determine
whether an individual who has suffered some diminished capacity is capable of performing the job with, or without, some
Professionals developing certification exams use job analysis (often called something slightly different, such as "task
analysis" or "work analysis") to determine the elements of the domain which must be sampled in order to create a
content valid exam. When a job analysis is conducted for the purpose of valuing the job (i.e., determining the appropriate
compensation for incumbents) this is called "job evaluation."
Job analysis aims to answer questions such as:
• What physical and mental activities does the worker undertake?
• When is the job to be performed?
• Where is the job to be performed?
• How does the worker do the job?
• What qualifications are needed to perform the job?
• What are the working conditions (such as levels of temperature, noise, offensive fumes, light)
• What machinery or equipment is used in the job?
• What constitutes successful performance?
Job analysts are typically industrial/organizational psychologists or human resource officers who have been trained by,
and are acting under the supervision of an industrial/organizational psychologist. There are several ways to conduct
a job analysis, including: interviews with incumbents and supervisors, work sampling,
questionnaires (structured, open-ended, or both), observation, critical incident investigations,
and gathering background information such as duty statements or classification specifications. In job analyses
conducted by HR professionals, it is common to use more than one of these methods.[3]
Generally, there are two perspectives in which job analyses are conducted: task-oriented or worker-oriented.
Task-oriented procedures focus on the actual activities involved in performing work.[2]
consideration work duties, responsibilities, and functions. The job analyst then develops task statements which clearly
state the tasks that are performed with great detail. After creating task statements, job analysts rate the tasks on
scales indicating importance, difficulty, frequency, and consequences of error. Based on these ratings, a greater sense
of understanding of a job can be attained.[1]
techniques used to describe job expertise.
For example, the job analysts may tour the job site and observe workers performing their jobs. During the tour the analyst
may collect materials that directly or indirectly indicate required skills (duty statements, instructions, safety manuals,
Task analysis, such as cognitively oriented task analysis (COTA), are
is a classic example of a task-oriented technique. Developed by Fine and Cronshaw in
1944, work elements are scored in terms of relatedness to data (0–6), people (0–8), and things (0–6), with lower scores
representing greater complexity. Incumbents, considered subject matter experts (SMEs), are relied upon, usually in a
panel, to report elements of their work to the job analyst. Using incumbent reports, the analyst uses Fine's terminology
to compile statements reflecting the work being performed in terms of data, people, and things. The Dictionary of
Occupational Titles uses elements of the FJA in defining jobs.[1]
Worker-oriented procedures aim to examine the human attributes needed to perform the job successfully.[2]
attributes have been commonly classified into four categories: knowledge, skills, abilities, and other characteristics (KSAO).
Knowledge is the information people need in order to perform the job. Skills are the proficiencies needed to perform each
task. Abilities are the attributes that are relatively stable over time. Other characteristics are all other attributes, usually
worker-oriented job analysis, the skills are inferred from tasks and the skills are rated directly in terms of importance of
frequency. This often results in data that immediately imply the important KSAOs. However, it can be hard for SMEs to
The Fleishman Job Analysis System (F-JAS) developed by Edwin A. Fleishman represents a worker-oriented approach.
Fleishman factor-analyzed large data sets to discover a common, minimum set of KSAOs across different jobs. His
system of 73 specific scales measure three broad areas: Cognitive (Verbal Abilities; Idea Generation & Reasoning
Abilities; Quantitative Abilities; Memory; Perceptual Abilities; Spatial Abilities; and Attentiveness), Psychomotor (Fine
Manipulative Abilities; Control Movement Abilities; and Reaction Time and Speed Abilities), and Physical (Physical
Strength Abilities; Endurance; Flexibility, Balance, and Coordination; Visual Abilities; and Auditory and Speech Abilities).
The KSAOs required for a job are inferred from the most frequently-occurring, important tasks. In a
JobScan is a measurement instrument which defines the personality dynamics within a specific type of job.[9]
collecting PDP ProScan Survey results of actual performers and results of job dynamics analysis surveys completed by
knowledgeable people related to a specific job, JobScan provides a suggested ideal job model for that position. Although
it does not evaluate the intellect or experience necessary to accomplish a task, it does deal with the personality of the type
One key difference between task-oriented and worker-oriented procedures lies in the extent that task oriented procedures
are directly observable. Ratings of ability statements could be more susceptible to inflation by job analysis respondents
because it is harder to verify that an ability is there than seeing a task being done. Ability ratings may also reflect a self-
rating compared to job-rating, suggesting that self-presentation will be more likely with ability statements.[10]
(an online resource which has replaced the Dictionary of Occupational Titles (DOT)) lists job requirements
for a variety of jobs and is often considered basic, generic, or initial job analysis data. Everyone can use this database
at no cost and is continually updated by observing workers from each occupation. O*net also has a Career Exploration
Tool which is an assessment to help workers and students who are searching for new careers. Data available from O*Net
includes physical requirements, educational level, and some mental requirements. Task-based statements describing the
work performed are derived from the functional job analysis technique. O*Net also provides links to salary data at the US
national, state and city level for each job.
The Position Analysis Questionnaire (PAQ) is a well-known job analysis instrument. Although it is labeled a questionnaire, the PAQ
is actually designed to be completed by a trained job analyst who interviews the SMEs (e.g., job incumbents and their supervisors).[2]
The PAQ was designed to measure job component validity of attributes presented in aptitude tests. Job component validity is the
relationship between test scores and skills required for good job performance. There are 195 behavior-related statements in the PAQ
divided into six major sections: information input, mental process, work output, relationships with others, job context, and other job
A job evaluation is a systematic way of determining the value/worth of a job in relation to other jobs in an organisation.
It tries to make a systematic comparison between jobs to assess their relative worth for the purpose of establishing a
Job evaluation needs to be differentiated from job analysis. Job analysis is a systematic way of gathering information
about a job. Every job evaluation method requires at least some basic job analysis in order to provide factual information
about the jobs concerned. Thus, job evaluation begins with job analysis and ends at that point where the worth of a job is
ascertained for achieving pay equity between jobs.
The purpose of job evaluation is to produce a defensive[clarification needed]
pay structure can be built. The important features of job evaluation may be summarised thus:
ranking of jobs on which a rational and acceptable
• It tries to assess jobs, not people.
• The standards of job evaluation are relative, not absolute.
• The basic information on which job evaluations are made is obtained from job analysis.
• Job evaluations are carried out by groups, not by individuals.
• Some degree of subjectivity is always present in job evaluation.
• Job evaluation does not fix pay scales, but merely provides a basis for evaluating a rational wage structure.
The process of job evaluation involves the following steps:
• Gaining acceptance: Before undertaking job evaluation, top management must explain the aims) and uses of
the programme to the employees and unions. To elaborate the programme further, oral presentations could be
made. Letters, booklets could be used to classify all relevant aspects of the job evaluation programme.
• Creating job evaluation committee: It is not possible for a single person to evaluate all the key jobs in an
organisation. Usually a job evaluation committee consisting of experienced employees, union representatives
and HR experts is created to set the ball rolling.
• Finding the jobs to be evaluated: Every job need not be evaluated. This may be too taxing and costly. Certain
key jobs in each department may be identified. While picking up the jobs, care must be taken to ensure that
they represent the type of work performed in that department.
• Analysing and preparing job description: This requires the preparation of a job description and also an analysis
of job needs for successful performance .
• Selecting the method of evaluation: The most important method of evaluating the jobs must be identified now,
keeping the job factors as well as organisational demands in mind.
• Classifying jobs: The relative worth of various jobs in an organisation may be found out after arranging jobs in
order of importance using criteria such as skill requirements, experience needed, under which conditions job
is performed, type of responsibilities to be shouldered, degree of supervision needed, the amount of stress
caused by the job, etc. Weights can be assigned to each such factor. When we finally add all the weights, the
worth of a job is determined. The points may then be converted into monetary values.
Once the evaluation process is over and a plan of action is ready, management must explain it to employees and put it
In the light of changes in environmental conditions (technology, products, services, etc.) jobs need to be examined
closely. For example, the traditional clerical functions have undergone a rapid change in sectors like banking, insurance
and railways, after computerisation. New job descriptions need to be written and the skill needs of new jobs need to be
duly incorporated in the evaluation process. Otherwise, employees may feel that all the relevant job factors - based on
which their pay has been determined - have not been evaluated properly.
For job evaluation to be practicable it is necessary:
• that jobs can be easily identified
• that there are sufficient differences between different jobs; and
• that agreements no the relative importance or worth of different jobs can be negotiated between the enterprise
and its employees and/or their representatives..
The pay offs from job evaluation may be stated thus:
• It tries to link pay with the requirements of the job.
• It offers a systematic procedure for determining the relative worth of jobs. Jobs are ranked on the basis of
rational criteria such as skill, education, experience, responsibilities, hazards, etc., and are priced accordingly.
• An equitable wage structure is a natural outcome of job evaluation. An unbiased job evaluation tends to
eliminate salary inequities by placing jobs having similar requirements in the same salary range.
• Employees as well as unions participate as members of job evaluation committee while determining rate grades
for different jobs. This helps in solving wage related grievances quickly.
• Job evaluation, when conducted properly and with care, helps in the evaluation of new jobs.
• It points out possibilities of more appropriate use of the plant's labour force by indicating jobs that need more or
less skilled workers than those who are manning these jobs currently.
There are three basic methods of job evaluation: (1) ranking, (2) classification, (3) factor comparison. While many
variations of these methods exist in practice, the three basic approaches are described here.
Perhaps the simplest method of job evaluation is the ranking method. According to this method, jobs are arranged from
highest to lowest, in order of their value or merit to the organization. Jobs can also be arranged according to the relative
difficulty in performing them. The jobs are examined as a whole rather than on the basis of important factors in the job;
the job at the top of the list has the highest value and obviously the job at the bottom of the list will have the lowest value.
Jobs are usually ranked in each department and then the department rankings are combined to develop an organizational
ranking. The following table is a hypothetical illustration of ranking of jobs. The variation in payment of salaries depends
on the variation of the nature of the job performed by the employees. The ranking method is simple to understand and
practice and it is best suited for a small organisation. Its simplicity however works to its disadvantage in big organisations
because rankings are difficult to develop in a large, complex organisation. Moreover, this kind of ranking is highly
subjective in nature and may offend many employees. Therefore, a more scientific and fruitful way of job evaluation is
According to this method, a predetermined number of job groups or job classes are established and jobs are assigned
to these classifications. This method places groups of jobs into job classes or job grades. Separate classes may include
office, clerical, managerial, personnel, etc. Following is a brief description of such a classification in an office.
• Class I - Executives: Further classification under this category may be Office Manager, Deputy office manager,
Office superintendent, Departmental supervisor, etc.
• Class II - Skilled workers: Under this category may come the Purchasing assistant, Cashier, Receipts clerk, etc.
• Class III - Semiskilled workers: Under this category may come Stenotypists, Machine-operators, Switchboard
• Class IV - Semiskilled workers: This category comprises Daftaris[clarification needed]
The job classification method is less subjective when compared to the earlier ranking method. The system is very easy
to understand and acceptable to almost all employees without hesitation. One strong point in favour of the method is that
it takes into account all the factors that a job comprises. This system can be effectively used for a variety of jobs. The
weaknesses of the job classification method are:
• Even when the requirements of different jobs differ, they may be combined into a single category, depending on
• It is difficult to write all-inclusive descriptions of a grade.
• The method oversimplifies sharp differences between different jobs and different grades.
• When individual job descriptions and grade descriptions do not match well, the evaluators have the tendency to
classify the job using their subjective judgements.
A more systematic and scientific method of job evaluation is the factor comparison method. Though it is the most
complex method of all, it is consistent and appreciable. Under this method, instead of ranking complete jobs, each job is
ranked according to a series of factors. These factors include mental effort, physical effort, skill needed, responsibility,
supervisory responsibility, working conditions and other such factors (for instance, know-how, problem solving abilities,
accountability, etc.). Pay will be assigned in this method by comparing the weights of the factors required for each job, i.e.,
the present wages paid for key jobs may be divided among the factors weighted by importance (the most important factor,
for instance, mental effort, receives the highest weight). In other words, wages are assigned to the job in comparison to its
The steps involved in factor comparison method may be briefly stated thus:
• Select key jobs (say 15 to 20), representing wage/salary levels across the organisation. The selected jobs must
represent as many departments as possible.
• Find the factors in terms of which the jobs are evaluated (such as skill, mental effort, responsibility, physical
effort, working conditions, etc.).
• Rank the selected jobs under each factor (by each and every member of the job evaluation committee)
• Assign money value to each level of each factor (example: consider problem solving is one of the factor, what
level of problem solving is required {basic, intermediate or advance}) and determine the wage rates for each
• The wage rate for a job is apportioned along the identified factors.
• All other jobs are compared with the list of key jobs and wage rates are determined. An example of how the
factor comparison method works is given below:
After the wage rate for a job is distributed along the identified and ranked factors, all other jobs in the department are
compared in terms of each factor. Suppose the job of a 'painter' is found to be similar electrician in skill (15), fitter in
mental effort (10), welder in physical effort (12) cleaner in responsibility! (6) and labourer in working conditions (4). The
wage rate for this job would be (15+10+12+6+4) is47.j
This method is widely used currently. Here, jobs are expressed in terms of key factors. Points are assigned to each factor
after prioritising each factor in order of importance. The points are summed up to determine the wage rate for the job.
Jobs with similar point totals are placed in similar pay grades. The procedure involved may be explained thus:
1. Select key jobs. Identify the factors common to all the identified jobs such as skill, effort, responsibility, etc.
2. Divide each major factor into a number of sub factors. Each sub factor is defined and expressed clearly in the order of
The most frequent factors employed in point systems are (i) Skill (key factor); Education and training required, Breadth/
depth of experience required, Social skills required, Problem-solving skills, Degree of discretion/use of judgement,
Creative thinking (ii) Responsibility/Accountability: Breadth of responsibility, Specialised responsibility, Complexity of the
work, Degree of freedom to act, Number and nature of subordinate staff, Extent of accountability for equipment/plant,
Extent of accountability for product/materials; (iii) Effort: Mental demands of a job, Physical demands of a job, Degree of
The educational requirements (sub factor) under the skill (key factor) may be expressed thus in the order of importance.
3. Find the maximum number of points assigned to each job (after adding up the point values of all sub-factors of such a
This would help in finding the relative worth of a job. For instance, the maximum points assigned to an officer's job in a
bank come to 540. The manager's job, after adding up key factors + sub factors points, may be getting a point value of
say 650 from the job evaluation committee. This job is now priced at a higher level.
4, Once the worth of a job in terms of total points is expressed, the points are converted into money values keeping in
view the hourly/daily wage rates. A wage survey is usually undertaken to collect wage rates of certain key jobs in the
The point method is a superior and widely used method of evaluating jobs. It forces raters to look into all key factors
and sub-factors of a job. Point values are assigned to all factors in a systematic way, eliminating bias at every stage. It
is reliable because raters using similar criteria would get more or less similar answers. The methodology underlying the
approach contributes to a minimum of rating error (Robbins p. 361). It accounts for differences in wage rates for various
jobs on the strength of job factors. Jobs may change over time, but the rating scales established under the point method
remain unaffected. On the negative side, the point method is complex. Preparing a manual for various jobs, fixing values
for key and sub-factors, establishing wage rates for different grades, etc., is a time consuming process, According to
Decenzo and Robbins, "the key criteria must be carefully and clearly identified, degrees of factors have to be agreed
upon in terms that mean the same to all rates, the weight of each criterion has to be established and point values must
be assigned to degrees". This may be too taxing, especially while evaluating managerial jobs where the nature of work
(varied, complex, novel) is such that it cannot be expressed in quantifiable numbers.
1. Job evaluation is not exactly scientific.
2. The modus operandi of most of the techniques is difficult to understand, even for the supervisors.
3. The factors taken by the programme are not exhaustive.
4. There may be wide fluctuations in compensable factors in view of changes in technology, values and
aspirations of employers, etc.
5. Employees, trade union leaders, management and the programme operators may assign different weight to
different factors, thus creating grounds for dispute.
A job description is a list that a person might use for general tasks, or functions, and responsibilities of a position. It
may often include to whom the position reports, specifications such as the qualifications or skills needed by the person
in the job, or a salary range. Job descriptions are usually narrative,[1]
competencies; for instance, strategic human resource planning methodologies may be used to develop a competency
architecture for an organization, from which job descriptions are built as a shortlist of competencies.
but some may instead comprise a simple list of
A job description is usually developed by conducting a job analysis, which includes examining the tasks and sequences
of tasks necessary to perform the job. The analysis considers the areas of knowledge and skills needed for the job. A job
usually includes several roles. The job description might be broadened to form a person specification or may be known as
A job description may include relationships with other people in the organization: Supervisory level, managerial
requirements, and relationships with other colleagues.
A job description need not be limited to explaining the current situation, or work that is currently expected; it may also set
out goals for what might be achieved in future.
Prescriptive job descriptions may be seen as a hindrance in certain circumstances:[2]
• Job descriptions may not be suitable for some senior managers as they should have the freedom to take the
initiative and find fruitful new directions;
• Job descriptions may be too inflexible in a rapidly-changing organization, for instance in an area subject to rapid
• Other changes in job content may lead to the job description being out of date;
• The process that an organization uses to create job descriptions may not be optimal.
(g) Consultative management.
Q11. (a) What is scientific management? What are the four principles of scientific management?
Another branch of the classical school of management is the scientific management approach. The scientific
management approach emphasized empirical research for developing a comprehensive management solution. Scientific
management principles are meant to be applied by managers in a very specific fashion. A fundamental implication of
scientific management is the manager is primarily responsible for increasing an organization's productivity. This has major
implications for the American economy in the face of a consistent lack of competitive productivity and GNP growth. The
major representatives of this school of thought are Frederick Winslow Taylor and Frank and Lillian Gilbreth.
Frederick Taylor is known as the "father of scientific management." Taylor began work at the age of 18 as an apprentice
to a pattern maker, and as a machinist. He later joined the Midvale Steel Company as a laborer rising in eight years to
chief engineer. During this period at the steel mill, he performed exhaustive experiments on worker productivity, and
tested what he called the "task system," later developing into the Taylor System, and eventually progressing into scientific
management. His experiments involved determining the best way of performing each work operation, the time it required,
materials needed, and the work sequence. He sought to establish a clear division of labor between management and
Taylor's task management methodology rests on a fundamental belief that management, the entrepreneurs in Taylor's
day, were not only superior intellectually to the average employee, but had a positive duty to supervise them and organize
their work activities to eliminate what Taylor called "the natural tendency of workers to soldier" on the job.
In 1911, a paper Taylor originally prepared for presentation to the American Society of Mechanical Engineers was
published as The Principles of Scientific Management. Taylor positioned scientific management as the best management
approach for achieving productivity increases. It rested on the manager's superior ability and responsibility to apply
systematic knowledge to the organizational work setting.
Taylor developed four principles of scientific management:
1. A scientific management methodology be developed.
2. Managers should assume the responsibility for selecting, training and developing the employee.
3. Managers should fully cooperate with employees to insure the proper application of the scientific management method.
4. Management should become involved with the work of their employees as much as possible.2
Scientific management consisted of a system for supervising employees, improving work methods, and providing
incentives to employees through the piece rate system. While Taylor assumed there was an unquestioned necessity
to supervise employees, he also sought the best way of performing a job as well as to provide financial incentives for
increased productivity by paying employees by the piece through the piece rate system.
Taylor's Principles became enormously popular in America, as well as in Europe, providing organizational theory an aura
of science. Scientific management led to time and motion studies, efficiency experts and others spreading the gospel.
Taylor's optimistic belief that study of the organization through his scientific method would provide the answers necessary
to resolve the most difficult productivity problems is extremely important to contemporary management. He is the first to
point out that it is management's primary responsibility to make an organization productive.
(b) Discuss the 14 principles of management by Henri Fayol.
As a result of his long management career, Fayol developed fourteen management principles:
1. Division of Work. Division of work, specialization, produces more and better work with the same effort. It focuses
effort while maximizing employee productivity. It is applicable to all work including technical applications. There are
limitations to specialization, which are determined by its application.
2. Authority and responsibility. Authority is the right to give orders and the power to exact obedience. Distinction must
be made between a manager's official authority deriving from office, and personal authority created through individual
personality, intelligence, and experience. Authority creates responsibility.
3. Discipline. Obedience and respect between a firm and its employees based on clear and fair agreements are
absolutely essential to the functioning of any organization. Good discipline requires managers to apply sanctions
whenever violations become apparent.
4. Unity of command. An employee should receive orders from only one superior. Employees cannot adapt to dual
5. Unity of direction. Organizational activities must have one central authority and one plan of action.
6. Subordination of Individual Interest to General Interest. The interests of one employee or group of employees are
subordinate to the interests and goals of the organization and cannot prevail over it.
7. Remuneration of Personnel. Salaries are the price of services rendered by employees. It should be fair and provide
satisfaction both to the employee and employer. The rate of remuneration is dependent on the value of the services
rendered as determined by the employment market.
8. Centralization. The optimum degree of centralization varies according to the dynamics of each organization. The
objective of centralization is the best utilization of personnel.
9. Scalar chain. A chain of authority exists from the highest organizational authority to the lowest ranks. While needless
departure from the chain of command should be discouraged, using the "gang plank" principle of direct communication
between employees can be extremely expeditious and increase the effectiveness of organizational communication.
10. Order. Organizational order for materials and personnel is essential. The right materials and the right employees are
necessary for each organizational function and activity.
11. Equity. In organizations, equity is a combination of kindliness and justice. The desire for equity and equality of
treatment are aspirations to be taken into account in dealing with employees.
12. Stability of Tenure of Personnel. In order to attain the maximum productivity of personnel, it is essential to maintain a
stable work force. Management insecurity produces undesirable consequences. Generally the managerial personnel of
prosperous concerns is stable, that of unsuccessful ones is unstable.
13. Initiative. Thinking out a plan and ensuring its success is an extremely strong motivator. At all levels of the
organizational ladder, zeal and energy on the part of employees are augmented by initiative.
14. Esprit de Corps. Teamwork is fundamentally important to an organization. Creating work teams and using extensive
face-to-face verbal communication encourages this.3
While subsequent organizational research has created controversy over many of Fayol's principles, they are still widely
(c ) What is the Hawthorne Experiments?
The Hawthorne Experiments consist of two studies conducted at the Hawthorne Works of the Western Electric Company
in Chicago from 1924 to 1932. The study's particular focus is on lighting and attempts to operationalize many of the
principles of scientific management. The initial study in 1924 was conducted by a group of engineers seeking to
determine the relationship of lighting levels to worker productivity. The study was done in connection with the National
Research Council of the National Academy of Sciences. The results of the study findings are extremely interesting since
worker productivity increases as the lighting levels decrease until the employees are unable to see what they are doing,
after which performance naturally declines.
Beginning in 1927, a second group of experiments commenced with a group of five women in the bank wiring room.
During the course of the experiment, the experimenters, conducting the study, supervise the women. Additionally, the
workers in the experimental group are given special privileges including: the right to leave their workstation without
permission, rest periods, free lunches, and variations in pay levels and workdays. As with the first set of experiments, the
second group of experiments resulted in significantly increased rates of productivity.
In the second experimental study in 1928 the Harvard researchers, F. J. Roethlisberger, Professor of Human Relations,
and Elton Mayo, a Professor of the Industrial Research Department, became associated with it. After extensive research,
the results were not published until 1939. They conclude the primary determinant of the increase in productivity is the
change in the supervisory arrangement, rather than the changes in lighting or other associated worker benefits. Since the
experimenters became the primary supervisors of the employees, the intense interest they displayed for the workers was
the basis for the increased motivation and resulting productivity.
Essentially the experimenters became a part of the study and influenced its outcome. This is the origin of the term
Hawthorne Effect describing the special attention researchers give to a study's subjects and the impact it has on its
findings. While the result of the Hawthorne studies failed to answer the specific question of the relation between
illumination and worker productivity, the study did create a strong theoretical foundation for the human relations view of
Q12. (a) Discuss Abraham H. Maslow’s Needs Hierarchy Theory.
Receiving his doctorate in psychology, Abraham Maslow was the first psychologist to develop a theory of motivation
based upon a consideration of human needs. Maslow's theory of human needs has three assumptions. First, human
needs are never completely satisfied. Second, human behavior is purposeful and is motivated by need satisfaction.
Third, needs can be classified according to a hierarchical structure of importance from the lowest to highest.
Maslow believes the needs hierarchy can be classified into five specific groups. To reach successive levels of the
hierarchy required the satisfaction of the lower level needs:
1. Physiological needs. Maslow groups all physical needs necessary for maintaining basic human wellbeing into this
category. These needs become acute and predominant if any or all of these needs are unsatisfied. However, consistent
with Maslow's theory of motivation, once a need is satisfied, such as thirst, it no longer is a motivator.
2. Safety needs. These needs include the need for basic security, stability, protection, and freedom from fear. A normal
state exists for an individual to have all of these needs generally satisfied. Otherwise, they become primary motivators.
3. The belongingness and love needs. Once the physical and safety are satisfied and no longer are motivators, then
the belongingness and love needs emerge as primary motivators. The individual will strive to establish meaningful
relationships with significant others. Deprivation of the belongingness and love need will result in significant personality
4. The esteem needs. An individual must develop self-confidence. In order to do this, it is essential to the individual to
have adequacy from achieving mastery and competence leading to the achievement of status, reputation, fame and glory.
This achieves satisfaction of the self-esteem needs.
5. The need for self-actualization. Assuming all of the previous needs in the hierarchy are satisfied, a "new discontent
and restlessness will soon develop... A musician must make music, an artist must paint, a poet must write ... What a man
Maslow's hierarchy of needs theory helps the manager to visualize employee motivation. It helps in understanding
the motivations and needs employees have and the requirement to satisfy basic needs in order to achieve higher-level
(b) Briefly discuss theory X and theory Y.
McGregor is the other major theorist associated with the Human Relations school of management. McGregor believes
there are two basic kinds of managers. One type of manager, Theory X, has a negative view of employees assuming
they are lazy, untrustworthy and incapable of assuming responsibility while the other type of manager, Theory Y, assumes
employees are trustworthy and capable of assuming responsibility having high levels of motivation. Table 1.1 illustrates
McGregor's main theoretical assumptions.
1. Employees normally do not like to work and will try to avoid it.
2. Since employees do not like working, they have to be coerced, controlled, directed and threatened with punishment to motivate
3. The average employee is lazy, shuns responsibility, is not ambitious, needs direction, and principally desires security.
1. Work is as natural as play and therefore people desire to work.
2. Employees are responsible for accomplishing their own work objectives.
3. Comparable personal rewards are important for employee commitment to achieving work goals.
4. Under favorable conditions, the average employee will seek and accept responsibility.
5. Employees can be innovative in solving organizational problems.
6. Most organizations utilize only a small proportion of their employees' abilities.5
Mcgregor's Theory X and Y is appealing to managers and dramatically demonstrates the divergence in management
viewpoints toward employees. As such, Theory X and Y has been extremely helpful in promoting management
understanding of supervisory styles and employee motivational assumptions.
(c ) What is MBO? Who has introduced it in Management?
Management by objectives (MBO) is a process of defining objectives within an organization so that management and
employees agree to the objectives and understand what they need to do in the organization in order to achieve them. The
term "management by objectives" was first popularized by Peter Drucker in his 1954 book The Practice of Management.
The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of
the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally,
when employees themselves have been involved with the goal setting and choosing the course of action to be followed by
them, they are more likely to fulfill their responsibilities.
According to George S. Odiorne, the system of management by objectives can be described as a process whereby the
superior and subordinate jointly identify its common goals, define each individual's major areas of responsibility in terms
of the results expected of him, and use these measures as guides for operating the unit and assessing the contribution of
Unique features and advantages of the MBO process
The principle behind Management by Objectives (MBO) is for employees to have a clear understanding of the roles
and responsibilities expected of them. They can then understand how their activities relate to the achievement of the
organization's goal. MBO also places importance on fulfilling the personal goals of each employee.
Some of the important features and advantages of MBO are:
6. Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment.
This increases employee job satisfaction and commitment.
7. Better communication and coordination – Frequent reviews and interactions between superiors and
subordinates helps to maintain harmonious relationships within the organization and also to solve many
9. Subordinates tend to have a higher commitment to objectives they set for themselves than those imposed on
10. Managers can ensure that objectives of the subordinates are linked to the organization's objectives.
Q13.(a) What is performance management?
1. Performance Management – The Myths…
• Performance Management is only about addressing poor performance
Sometimes the words ‘Performance Management’ (PM) creates a negative image in people’s minds. It is often thought of in
relation to ‘dealing with’ people who are not doing the job, not delivering on agreed objectives or behaving unprofessionally
and ‘performance managing’ them is to give them a ‘telling off’ or ‘disciplining them. This is particularly the case at the University
as our procedure for addressing serious and / or continuous underperformance is called the Performance Management Procedure. In
reality Performance Management is the overarching process that encompasses day to day management of people’s work and the way
in which they do it. It is about engaging everyone in understanding what their role and responsibilities are in supporting the University
• Performance Management is about “getting people out of the University”.
In reality, in any organisation there are probably no more than 1% of people who will be formally engaged in a process to terminate
their contract as a result of a Performance Management process and this is likely to be because they are in breach of their role
expectations and contract, or have behaved in a manner that threatens the University, themselves or others.
• People are threatened by managers being involved in what they do on a day to day basis.
On the contrary, they usually like it. It demonstrates that their manager is interested in them and allows them to show what they are
capable of. People like to be noticed and praised for what they do well. They are also motivated by learning new things and having
fresh challenges as this can make a working environment simulating and interesting.
This PM guide is for managers and leaders to help with understanding the purpose of PM here at the University and what are their
1.1 What is a Performance Management Process...
• Improves organisational, team and performance
• is based on the agreement of work objectives and development plans agreed in PDR.
• Involves the joint and continuing review of performance against these objectives;
• It can acknowledge successful contribution, identify improvements, development needs and potential.
• An integral part of the PM process is the need to monitor performance, reward staff that perform well, and challenge
those who do not on a day to day basis.
(b) What are the factors to be considered in performance management?
(c ) Discuss the role of performance management?
Day to Day Performance Management Activities that form part of the PM process:
• planning and agreeing work activity;
• monitoring activity regularly to ensure plans and agreements are reached;
• ensure work activity and behaviour is in line with agreed job expectations for the role;
• providing positive and constructive feedback on activity and behaviour;
• acknowledging successes and providing support and development to build knowledge and skills;
• communicating and keeping people informed;
• Support applications, where appropriate for promotion and recognition.
2. Concerned about Performance Issues?...
As a manager, it is your responsibility to deal with day to day performance and be concerned when someone is not managing to do
what you have agreed. Your own line manager and your Human Resource Manager are useful sources of support to discuss these
things with you. This aspect to managerial responsibilities is never a pleasant task, but the best approach is to try doing it “in
partnership” with the person. Sometimes there are hidden things that a manager sometimes doesn’t realise or personal issues that are
affecting people in work so it is important to talk about things as honestly, supportively, and as early as possible.
The concern usually starts at the point where a manager has a “hunch” there is something amiss or evidence that the member of staff is
not doing what was agreed. It is important to differentiate between what is a “hunch” and fact. What do you hear and see? These are
some of the likely behaviours you may see...
Missed
deadlines in
tasks usually
done well
Work
requires
greater
effort than
usual
Be Careful - if you look hard enough for evidence of poor performance you will probably find it, but there may be factors that
explain the situation. Keep an open mind and try to seek out the underlying reasons that exist. You will need to drill down into the
problem to find out the real cause, expect to find complexity and try not to rush to a hasty conclusion.
It’s helpful to be clear about your evidence of an individual’s performance, consider the questions in the pie chart below, be clear
about what the behaviour is, the number of times it’s happened, the effect on the individual, department or project. If you plot the
evidence using the pie chart you can identify if there are one or several issues, whether barriers and limitations have been placed on
them. Overall you can determine the important issues and be ready to deal with any questions or challenges you may receive.
Be honest with yourself too. Has your leadership and management style been part of the problem? Often an individual will use this to
defend any perceived criticism, however unfair or inaccurate!
3. Preparing to Discuss Someone’s Performance…
In most cases informal meetings take place before any formal process would start. It will depend on the situation, for example gross
misconduct would move into a formal process immediately and the advice of your HRM will help you to determine your strategy for
It is important to treat people with sensitivity and with dignity at all times and bear in mind that you may be dealing with someone
• Has no idea of the impact of their behaviour or the standard of work required;
• Is undertaking work they have not been adequately prepared for;
• Is experiencing stress or distress outside or inside work.
The main purpose of discussing someone’s performance is to:
• Investigate fully the reasons for performance issues;
• Discuss with people the gap between the expected performance and their actual performance;
• Agree how improvement can be made and provide coaching and development, if appropriate, providing a reasonable time
• Explain to them the consequences of not improving;
• Monitoring their performance during and at the end of the “trial" period and provide feedback during the process;
• Where the required standard is still not reached consider other options with your HR Manager.
4. The University of Liverpool’s Performance Management Procedure...
This quick guide should be seen in the context of the Performance Management Procedure http://www.liv.ac.uk/hr/policies/index.htm.
This is intended to provide a quick reference point for managers needing to start a process or involved in a process. It is important
however, that managers familiarise themselves with the principles articulated in the Procedure and good practice outlined in this how
1. Seek guidance from Area HRM to determine the correct
procedure to address the issue they face
Disciplinary Performance Management Other
• Call in writing
• Provide appropriate notice
• Clearly state matters to be discussed
• Have available facts relating to the issues eg dates, places etc
See Section 3 of Guide
• Have a thorough two way discussion
See Section 3 of Guide
Performance meets the required standards Performance has not met the required standards
• Agree a note of the meeting both parties keep.
• Expunge the note and any related correspondence after
• Agree & record actions to achieve an appropriate level of
performance and timescales.
• Agree a date for review – normally within 3 months of initial meeting.
• Agree a note of the meeting and retain.
• Monitor situation during the review period and maintain
communication with the member of staff offering assistance
& support as appropriate.
• Prepare for the meeting
• Call the meeting in writing and identify matters to be discussed
• Thorough two way discussion
Improvement has been made but
remains below the standard required
• Agree & record note of the meeting
and further remedial action
required to achieve appropriate
level of performance.
• Agree a date for review normally
within 3 months.
• Confirm the outcome and required
actions.
Performance had not met the required
standard
• Inform the member of staff that a
• Prepare for the meeting
• Call the meeting in writing and identify matters to be discussed
• Thorough two way discussion
Performance has met the required standard Performance had not met the required standard
• Agree a note of the meeting both parties keep.
• Continue to monitor the situation to ensure level of
required performance is being sustained.
• Expunge the note and related correspondence after 12
• At all stages of the procedure advice and guidance is available from HR.
• At all stages of the procedure a member of staff has the right to be represented by a member of staff who is a
colleague or a trade union representative.
• If there is any disagreement at the meeting about the factual basis of any alleged poor
performance, assistance from an appropriate agreed expert may be sought.
Q14. (a) What is strategic planning? What are the basic steps in strategic planning?
(b) Discuss the good features of strategic planning.
(c ) What is SWOT analysis? Conduct SWOT analysis of your chosen enterprise.
• Inform the member of staff that a formal disciplinary
meeting will be called in accordance with the University’s
Disciplinary Procedure.
David C. McClelland of Harvard University performed research on motivation patterns. Most notably this was done with
the Thematic Apperception Test (TAT) where an individual writes a descriptive analysis of their individual reactions from
unstructured pictures. McClelland determines the motivational state of the subjects from these descriptions.
Based upon this research, McClelland developed an achievement motivation theory consisting of four sets of needs:
achievement, affiliation, competence and power.6
Achievement motivation is a need people have to succeed through overcoming challenges. The affiliation motivation is
similar to Maslow's belongingness and love need where people relate to others on a social basis. The competence need
is the desire to accomplish a job well done, and the power motivation is the need to control others and make a difference
McClelland believes people have strong needs. His achievement motivation theory is important for managers seeking
understanding of employee motivational patterns.
Q15. (a) What is controlling? What are the steps in controlling?
What Is Controlling and Why Is It Important?
What is controlling? It’s the process of monitoring, comparing, and correcting work performance. All managers should
control even if their units are performing as planned because they can’t really know that unless they’ve evaluated what
activities have been done and compared actual performance against the desired standard.3 Effective controls ensure that
activities are completed in ways that lead to the attainment of goals. Whether controls are effective, then, is determined
by how well they help employees and managers achieve their goals. Why is control so important? Planning can be done,
an organizational structure created to facilitate efficient achievement of goals, and employees motivated through effective
leadership. But there’s no assurance that activities are going as planned and that the goals employees and managers are
working toward are, in fact, being attained. Control is important, therefore, because it’s the only way that managers know
whether organizational goals are being met and if not, the reasons why. The value of the control function can be seen in
three specific areas: planning, empowering employees, and protecting the workplace.
The second reason controlling is important is because of employee empowerment. Many managers are reluctant to
empower their employees because they fear something will go wrong for which they would be held responsible. But an
effective control system can provide information and feedback on employee performance and minimize the chance of
The final reason that managers control is to protect the organization and its assets.6 Today’s environment brings
heightened threats from natural disasters, financial scandals, workplace violence, supply chain disruptions, security
breaches, and even possible terrorist attacks. Managers must protect organizational assets in the event that any of these
things should happen. Comprehensive controls and backup plans will help assure minimal work disruptions.
The control process is a three-step process of measuring actual performance, comparing actual performance against a
standard, and taking managerial action to correct deviations or to address inadequate standards. The control process
assumes that performance standards already exist, and they do. They’re the specific goals created during the planning
Step -1. Measuring Actual Performance:
To determine what actual performance is, a manager must first get information about it. Thus, the first step in control is
HOW WE MEASURE. Four approaches used by managers to measure and report actual performance are personal
observations, statistical reports, oral reports, and written reports. Most managers use a combination of these approaches.
WHAT WE MEASURE. What is measured is probably more critical to the control process than how it’s measured. Why?
Because selecting the wrong criteria can create serious problems. Besides, what is measured often determines what
employees will do. What control criteria might managers use?
Some control criteria can be used for any management situation. For instance, all managers deal with people, so criteria
such as employee satisfaction or turnover and absenteeism rates can be measured. Keeping costs within budget is also
a fairly common control measure. Other control criteria should recognize the different activities that managers supervise.
For instance, a manager at a pizza delivery location might use measures such as number of pizzas delivered per day,
average delivery time, or number of coupons redeemed. A manager in a governmental agency might use applications
typed per day, client requests completed per hour, or average time to process paperwork.
Most work activities can be expressed in quantifiable terms. However, managers should use subjective measures when
they can’t. Although such measures may have limitations, they’re better than having no standards at all and doing no
Step- 2. Comparing Actual Performance against the Standard:
The comparing step determines the variation between actual performance and the standard. Although some variation in
performance can be expected in all activities, it’s critical to determine an acceptable range of variation (see Exhibit 18-4).
Deviations outside this range need attention. Let’s work through an example. Chris Tanner is a sales manager for Green
Earth Gardening Supply, a distributor of specialty plants and seeds in the Pacific Northwest. Chris prepares a report
during the first week of each month that describes sales for the previous month, classified by product line.
Products Actual Standard Over/under
Vegetable plants 1,075 913 (162)
Perennial flowers 630 634 4
Annual flowers 800 912 112
Herbs 160 140 (20)
Flowering bulbs 170 286 116
Flowering bushes 225 220 (5)
Heirloom seeds 540 672 132
Total 3,600 3,777 177
Product Standard Actual Over (Under)
Exhibit—F.1 displays both the sales goals (standard) and actual sales figures for the month of June. After looking at the
numbers, should Chris be concerned? Sales were a bit higher than originally targeted, but does that mean there were no
significant deviations? That depends on what Chris thinks is significant; that is, outside the acceptable range of variation.
Even though overall performance was generally quite favorable, some product lines need closer scrutiny. For instance,
if sales of heirloom seeds, flowering bulbs, and annual flowers continue to be over what was expected, Chris might need
to order more product from nurseries to meet customer demand. Because sales of vegetable plants were 15 percent
below goal, Chris may need to run a special on them. As this example shows, both over variance and under variance may
require managerial attention, which is the third step in the control process.
Managers can choose among three possible courses of action: do nothing, correct the actual performance, or revise the
standards. Because “do nothing” is self-explanatory, let’s look at the other two.
CORRECT ACTUAL PERFORMANCE. Sports coaches understand the importance of correcting actual performance.
During a game, they’ll often correct a player’s actions. But if the problem is recurring or encompasses more than one
player, they’ll devote time during practice before the next game to correcting the actions.9 That’s what managers need
to do as well. Depending on what the problem is, a manager could take different corrective actions. For instance, if
unsatisfactory work is the reason for performance variations, the manager could correct it by things such as training
programs, disciplinary action, changes in compensation practices, and so forth. One decision that a manager must make
is whether to take immediate corrective action, which corrects problems at once to get performance back on track, or to
use basic corrective action, which looks at how and why performance deviated before correcting the source of deviation.
It’s not unusual for managers to rationalize that they don’t have time to find the source of a problem (basic corrective
action) and continue to perpetually “put out fires” with immediate corrective action. Effective managers analyze deviations
and if the benefits justify it, take the time to pinpoint and correct the causes of variance.
REVISE THE STANDARD. It’s possible that the variance was a result of an unrealistic standard—too low or too high
a goal. In that situation, the standard needs the corrective action, not the performance. If performance consistently
exceeds the goal, then a manager should look at whether the goal is too easy and needs to be raised. On the other hand,
managers must be cautious about revising a standard downward. It’s natural to blame the goal when an employee or a
team falls short. For instance, students who get a low score on a test often attack the grade cutoff standards as too high.
Rather than accept the fact that their performance was inadequate, they will argue that the standards are unreasonable.
Likewise, salespeople who don’t meet their monthly quota often want to blame what they think is an unrealistic quota. The
point is that when performance isn’t up to par, don’t immediately blame the goal or standard. If you believe the standard
is realistic, fair, and achievable, tell employees that you expect future work to improve, and then take the necessary
corrective action to help make that happen.
Feed forward/Concurrent/Feedback Controls:
Managers can implement controls before an activity begins, during the time the activity is going on, and after the activity
has been completed. The first type is called feed-forward control; the second, concurrent control; and the last, feedback
FEED FORWARD CONTROL. The most desirable type of control—feed forward control—prevents problems because
it takes place before the actual activity.12 For instance, when McDonald’s opened its first restaurant in Moscow, it sent
company quality control experts to help Russian farmers learn techniques for growing high-quality potatoes and to help
bakers learn processes for baking high-quality breads. Why? McDonald’s demands consistent product quality no matter
the geographical location. They want a cheeseburger in Moscow to taste like one in Omaha. Still another example of feed
forward control is the scheduled preventive maintenance programs on aircraft done by the major airlines. These programs
are designed to detect and hopefully to prevent structural damage that might lead to an accident.
The key to feed forward controls is taking managerial action before a problem occurs. That way, problems can be
prevented rather than having to correct them after any damage (poor-quality products, lost customers, lost revenue, etc.)
has already been done. However, these controls require timely and accurate information that isn’t always easy to get.
Thus, managers frequently end up using the other two types of control.
CONCURRENT CONTROL: Concurrent control, as its name implies, takes place while a work activity is in progress.
For instance, Nicholas Fox is director of business product management at Google. He and his team keep a watchful eye
on one of Google’s most profitable businesses—online ads. They watch “the number of searches and clicks, the rate at
which users click on ads, the revenue this generates—everything is tracked hour by hour, compared with the data from a
week earlier and charted.”13 If they see something that’s not working particularly well, they fine-tune it. The best-known
form of concurrent control is direct supervision. Another term for it is management by walking around, which is when a
manager is in the work area interacting directly with employees. For example, Nvidia’s CEO Jen-Hsun Huang tore down
his cubicle and replaced it with a conference table so he’s available to employees at all times to discuss what’s going
on.14 Even GE’s CEO Jeff Immelt spends 60 percent of his workweek on the road talking to employees and visiting the
company’s numerous locations.15 All managers can benefit from using concurrent control because they can correct
problems before they become too costly.
FEEDBACK CONTROL: The most popular type of control relies on feedback. In feedback control, the control takes place
after the activity is done. For instance, the
Denver Mint discovered the flawed Wisconsin quarters using feedback control. The damage had already occurred even
though the organization corrected the problem once it was discovered. And that’s the major problem with this type of
control. By the time a manager has the information, the problems have already occurred, leading to waste or damage.
However, in many work areas, financial being one example, feedback is the only viable type of control. Feedback controls
do have two advantages.16 First, feedback gives managers meaningful information on how effective their planning efforts
were. Feedback that shows little variance between standard and actual performance indicates that the planning was
generally on target. If the deviation is significant, a manager can use that information to formulate new plans. Second,
feedback can enhance motivation. People want to know how well they’re doing and feedback provides that information.
Now, let’s look at some specific control tools that managers can use.
The balanced scorecard approach is a way to evaluate organizational performance from more than just the financial
perspective.17 A balanced scorecard typically looks at four areas that contribute to a company’s performance: financial,
customer, internal processes, and people/innovation/growth assets. According to this approach, managers should develop
goals in each of the four areas and then measure whether the goals are being met. Although a balanced scorecard makes
sense, managers will tend to focus on areas that drive their organization’s success and use scorecards that reflect those
strategies.18 For example, if strategies are customer-centered, then the customer area is likely to get more attention
than the other three areas. Yet, you can’t focus on measuring only one performance area because others are affected as
well. For instance, at IBM Global Services in Houston, managers developed a scorecard around an overriding strategy
of customer satisfaction. However, the other areas (financial, internal processes, and people/innovation/growth) support
that central strategy. The division manager described it as follows, “The internal processes part of our business is directly
related to responding to our customers in a timely manner, and the learning and innovation aspect is critical for us since
what we’re selling our customers above all is our expertise. Of course, how successful we are with those things will affect
Cyber-attackers from China targeted Google and 34 other companies in an attempt to steal information. The largest-
ever criminal stealing of credit-card data—account information belonging to millions of people—happened to Heartland
Payment Systems, a payments processor. An ex-worker at Goldman Sachs stole “black box” computer programs that
Goldman uses to make lucrative, rapid-fire trades in the financial markets.20 Talk about the need for information controls!
Managers deal with information controls in two ways: (1) as a tool to help them control other organizational activities, and
(2) as an organizational area they need to control.
Being able to effectively motivate employees is a challenge that managers face in all types and sizes of organizations.
“Everything that we give to our workers gets returned to us in terms of efficiency, quality, loyalty, and innovation.”
Motivation is the willingness to exert high levels of effort to reach organizational goals, conditioned by the effort’s ability to
A. Effort is a measure of intensity or drive. High levels of effort are unlikely to lead to favorable job performance unless the
effort is channeled in a direction that benefits the organization.
B. A need is an internal state that makes certain outcomes appear attractive. An unsatisfied need creates tension that
stimulates drives within an individual. These drives generate a search behavior to find particular goals that, if attained, will
satisfy the need and reduce the tension.
Hence motivation is the force that energizes behavior, gives direction to behavior, and underlies the tendency to persist.
1. A person’s motivation is not directly measurable, but must be inferred from behavior.
2. Performance is a function of ability, motivation and working conditions.
3. Besides hiring individual with ability to do the work, managers have the challenge to provide working conditions that
nurture and support individual motivation to work toward organization goals. The main elements of motivation have been
identified based on numerous studies. A simplified model of motivation has been developed.
MASLOW’S NEEDS THEORY AND ITS ANALYSIS
According to Abraham Maslow’s hierarchy of needs theory, one of the most widely known theories of motivation, individual
1. Maslow’s hierarchy of needs from the most basic to the highest.
a. Physiological needs are basic and include needs for food, water, and shelter.
b. Safety needs pertain to the desire to be safe, secure and free from threats to our existence.
c. Belongingness needs involve the desire to affiliate with and be accepted by others.
d. Esteem needs are related to the two-pronged desire to have a positive self-image and to have our contributions valued
e. Self-actualization needs pertain to the requirement of developing our capabilities and reaching our full potential.
2. Needs at one level do not have to be completely fulfilled before the next level becomes relevant.
3. As needs on one level are fulfilled, they cease to act as motivators and tension develops to fulfill needs at the next
4. Recent studies have raised questions as to whether the hierarchical aspect of Maslow’s theory is applicable to
everyone and whether there might be fewer than five levels of needs.
1. Five levels of need are not always present.
2. Order of needs and hierarchy may not be the same for all employees.
3. There are certainly cultural differences which the theory did not take care.
4. Analyzing the theory in country and cultural context, for example in China, the hierarchy of needs found was different
OTHER NEED AND COGNITIVE THEORIES OF MOTIVATION
McGregor’s Theory X and Theory Y were developed by Douglas McGregor and describe two distinct views of human
1. Theory X was the assumption that employees dislike work, are lazy, seek to avoid responsibility, and must be coerced
2. Theory Y was the assumption that employees are creative, seek responsibility, and can exercise self-direction.
3. Theory X assumed that lower-order needs (Maslow’s) dominated individuals, and Theory Y assumed that higher-order
Motivation-hygiene theory is the theory developed by Frederick Herzberg that suggests that intrinsic factors are related
to job satisfaction and motivation, and extrinsic factors are associated with job dissatisfaction. The basis of Herzberg’s
theory is that he believed that the opposite of satisfaction was not dissatisfaction. Removing dissatisfying characteristics
from a job would not necessarily make the job satisfying. Frederick Herzberg’s two-factor theory states that there are only
Hygiene factors are factors that eliminate dissatisfaction. They include things such as supervision, company policy, salary,
working conditions, security and so forth—extrinsic factors associated with job context, or those things surrounding a job.
Hygiene factors are necessary to keep workers away from feeling dissatisfied. There are several hygiene factors.
Motivators are factors that increase job satisfaction and hence motivation. They include things such as achievement,
recognition, responsibility, advancement and so forth—intrinsic factors associated with job content, or those things within
Motivator factor can only lead workers to feel satisfied and motivated.
Clayton Alderfer’s ERG theory combines Maslow’s five needs into three need levels: existence, relatedness and growth.
1. Existence needs include the various forms of material and physiological desires, such as food and water, as well as such
work-related forms as pay, fringe benefits and physical working conditions.
2. Relatedness needs address our relationships with significant others, such as families, friendship groups, work groups and
3. Growth needs impel creativity and innovation, along with the desire to have a productive impact on our surroundings.
4. ERG needs differ in concreteness, i.e. the degree to which their presence or absence can be verified.
5. The satisfaction-progression principle is a principle that states that satisfaction of one level of need encourages concern
6. Besides disagreeing as to the number of need levels that might exist, the ERG theory differs from Maslow’s hierarchy of
needs theory in three other significant ways:
a. Although the general notion of a hierarchy is retained, Alderfer’s theory argues that we can be concerned with more
than one need category at the same time.
b. ERG theory is more flexible in acknowledging that some individuals’ needs may occur in a somewhat different order
than the posited by the ERG framework.
c. ERG theory incorporates a frustration regression principle which states that if we are continually frustrated in our
attempts to satisfy a higherlevel need, we may cease to be concerned about that need. McClelland’s acquired-needs
theory argues that our needs are acquired or learned on the basis of our life experience.
1. The Thematic Apperception Test (TAT) measures the needs for achievement, affiliation, and power.
2. The need of achievement (nAch) is the desire to accomplish challenging tasks and achieve a standard of excellence in
3. The need for affiliation (nAff) is the desire to maintain warm, friendly relationships with others.
4. The need for power (nPow) is the desire to influence others and control one’s environment.
a. Personal power is the need for power in which individuals want to dominate others for the sake of demonstrating their
b. Institutional power is the need for power in which individuals focus on what they can do to solve problems and further
5. The need profile of successful managers in competitive environments appears to include:
a. A moderate-to-high need for institutional power.
b. A moderate need for achievement to facilitate individual contributions early in one’s career and a desire for the
organization to maintain a competitive edge as one moves to higher levels
c. At least a minimum need for affiliation to provide sufficient sensitivity for influencing others.
d. Need for achievement may actually be more important than need for power in running small or large, decentralized
6. It may be possible to foster the needs for achievement and for institutional power through training.
Many aspects of need theories are of value to managers.
1. Need theories are compatible in pointing out the importance of higher-level needs as a source of motivation.
2. Research indicates that it is more likely that individuals differ in the makeup of their need structures than that the need
structures of individuals are basically the same.
3. The frustration-regression aspect of ERG theory may have serious implications for organizations.
Equity Theory, developed by J. Stacey Adams, says that an employee perceives what he or she got from a job situation
(outcomes) in relation to what he or she put into it (inputs) and then compares the inputs outcomes ratio with the inputs-
outcomes ratios of relevant others and finally corrects any inequity.
1. The referents are the persons, systems, or selves against which individuals compare themselves to assess equity.
2. Equity theory recognizes that individuals are concerned with their absolute rewards as well as the relationship of those
3. What will employees do when they perceive an inequity?
a. Distort either their own or others’ inputs or outcomes.
b. Behave in some way to induce others to change their inputs or outcomes.
c. Behave in some way to change their inputs or outcomes.
d. Choose a different comparison person.
EXPECTANCY, GOAL SETTING AND RE-ENFORCEMENT THEORIES
Expectancy Theory is the theory that an individual tends to act in a certain way based on the expectation that the act will
be followed by a given outcome and on the attractiveness of that outcome to the individual.
Three relationships are important to this theory.
1. Effort-performance linkage (expectancy) is the probability perceived by the individual that exerting
a given amount of effort will lead to a certain level of performance.
2. Performance-reward linkage (instrumentality) is the degree to which an individual believes that performing at a
particular level is instrumental in, or will lead to, the attainment of a desired outcome.
3. Attractiveness of the reward (valence) is the importance that the individual places on the potential outcome or reward
4. There are four features inherent in the theory.
a. What perceived outcomes does the job offer the employee?
b. How attractive do employees consider these outcomes to be?
c. What kind of behavior must the employee exhibit to achieve these outcomes?
d. How does the employee view his or her chance of doing what is asked?
5. The key to understanding expectancy theory is understanding an individual’s goal and the linkage between effort and
performance, between performance and rewards, and between rewards and individual goal satisfaction.
Goal-Setting Theory says that specific goals increase performance, and difficult goals, when accepted, result in higher
performance than easy goals. What do we know about goals as motivators?
1. Intention to work toward a goal is a major source of job motivation. Specific and challenging goals are superior
motivating forces. Specific hard goals produce a higher level of output than do generalized goals.
2. Is there a contradiction between achievement motivation and goal setting? No, and here’s why.
a. Goal-setting theory deals with people in general; achievement theory is based only on people who have a high need for
achievement. Difficult goals are still recommended for the majority of employees.
b. The conclusions of goal-setting theory apply to those who accept and are committed to the goals.
Difficult goals will lead to higher performance only if they are accepted.
3. Will employees try harder if they participate in the setting of goals?
a. We can’t say that participation is always desirable.
b. However, participation is probably preferable to assigning goals when the manager expects resistance.
4. Will people do better when they get feedback on how well they’re progressing toward their goals?
b. Self-generated feedback has been shown to be a more powerful motivator than externally generated feedback.
5. What contingencies exist in goal-setting theory? There are four contingencies we need to know about.
a. Feedback influences the goal-performance relationship.
b. Goal commitment is another contingency. Commitment is most likely to occur when goals are made public, when the
individual has an internal locus of control, and when the goals are self-set rather than assigned.
c. Self-efficacy is another contingency and 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.
d. The last contingency that affects goal setting is national culture.
6. Our conclusion about motivation from goal-setting theory is that intentions, as defined by hard and specific goals, are a
a. In the proper conditions, they can lead to higher performance.
b. However, there’s no evidence that such goals are associated with increased job satisfaction.
Reinforcement Theory is counter to goal-setting theory. It proposes that behavior is a function of its consequences.
1. Reinforcement theory argues that behavior is externally caused.
2. What controls behavior are reinforcers, which are consequences immediately following a response that increase the
probability that the behavior will be repeated.
3. Reinforcement theory ignores factors such as goals, expectations, and needs.
4. It focuses solely on what happens when a person takes some action.
5. How can the concept of reinforcement be used to explain motivation?
a. People will most likely engage in a desired behavior if they are rewarded for doing so.
b. These rewards are most effective if they immediately follow a desired response.
c. Behavior that isn’t rewarded or is punished is less likely to be repeated.
6. Managers can influence employees’ behavior by reinforcing the work behaviors they desire.
Open-book management is a motivational approach in which an organization’s financial statements (the “books”) are
opened to and shared with all employees.
1. The goal of open-book management is to get employees to think like an owner by seeing the impact their decisions and
2. To be effective, employees have to be taught the fundamentals of financial statement analysis and what the numbers
3. The style of management demands for involvement of employees in all decision making for organization involving the
4. Employees may be treated as business partners so productivity and profitability is enhanced.
Pay-for-performance programs are compensation plans that pay employees on the basis of some performance measure.
1. Performance-based compensation is probably most compatible with expectancy theory.
2. The increasing popularity of pay-for-performance programs can be explained in terms of both motivation and cost
3. Do pay-for-performance programs work? Studies seem to indicate that they do.
Integrating Contemporary Theories of Motivation
1. The basic foundation is the simplified expectancy model.
2. The model also considers the achievement-need, reinforcement and equity theories.
3. Rewards also play an important role in the model.
The theories we look at in this section represent current explanations of employee motivation.
Although these theories may not be as well known as those we just discussed, they are supported by research.19 These
contemporary motivation approaches include goal-setting theory, reinforcement theory, job design theory, equity theory,
expectancy theory, and high-involvement work practices.
At Wyeth’s research division, executive vice president Robert Ruffolo established challenging new product quotas for the
company’s scientists in an attempt to bring more efficiency to the innovation process. And he made bonuses contingent
on meeting those goals. Before a big assignment or major class project presentation, has a teacher ever encouraged
you to “Just do your best”? What does that vague statement, “do your best,” mean? Would your performance on a
class project have been higher had that teacher said you needed to score a 93 percent to keep your A in the class?
Research on goal setting theory addresses these issues, and the findings, as you’ll see, are impressive in terms of the
effect that goal specificity, challenge, and feedback have on performance.22 Research provides substantial support for
goal-setting theory, which says that specific goals increase performance and that difficult goals, when accepted, result
in higher performance than do easy goals. What does goal-setting theory tell us? First, working toward a goal is a major
source of job motivation. Studies on goal setting have demonstrated that specific and challenging goals are superior
motivating forces. Such goals produce a higher output than does the generalized goal of “do your best.” The specificity
of the goal itself acts as an internal stimulus. For instance, when a sales rep commits to making eight sales calls daily,
this intention gives him a specific goal to try to attain. It’s not a contradiction that goal-setting theory says that motivation
is maximized by difficult goals, whereas achievement motivation (from three-needs theory) is stimulated by moderately
challenging goals.24 First, goal-setting theory deals with people in general, whereas the conclusions on achievement
motivation are based on people who have a high nAch. Given that no more than 10 to 20 percent of North Americans are
high achievers (a proportion that’s likely lower in underdeveloped countries), difficult goals are still recommended for the
majority of employees. Second, the conclusions of goal-setting theory apply to those who accept and are committed to the
goals. Difficult goals will lead to higher performance only if they are accepted. Next, will employees try harder if they have
the opportunity to participate in the setting of goals? Not always. In some cases, participatively set goals elicit superior
performance; in other cases, individuals performed best when their manager assigned goals. However, participation is
probably preferable to assigning goals when employees
might resist accepting difficult challenges.
Finally, we know that people will do better if they get feedback on how well they’re progressing toward their goals because
feedback helps identify discrepancies between what they have done and what they want to do. But all feedback isn’t
equally effective. Selfgenerated feedback—where an employee monitors his or her own progress—has been shown to
be a more powerful motivator than feedback coming from someone else.26 Three other contingencies besides feedback
influence the goal-performance relationship: goal commitment, adequate self-efficacy, and national culture.
First, goal-setting theory assumes that an individual is committed to the goal. Commitment is most likely when goals are
made public, when the individual has an internal locus of control, and when the goals are self-set rather than assigned.27
Next, self-efficacy refers to an individual’s belief that he or she is capable of performing a task.28 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 likely to reduce their effort or give up altogether, whereas those with high self-efficacy will try
harder to master the challenge.29 In addition, individuals with high self-efficacy seem to respond to negative feedback
with increased effort and motivation, whereas those with low self-efficacy are likely to reduce their effort when given
Finally, the value of goal-setting theory depends on the national culture. It’s well adapted to North American countries
because its main ideas align reasonably well with those cultures. It assumes that subordinates will be reasonably
independent (not a high score on power distance), that people will seek challenging goals (low in uncertainty avoidance),
and that performance is considered important by both managers and subordinates (high in assertiveness). Don’t expect
goal setting to lead to higher employee performance in countries where the cultural characteristics aren’t like this.
The relationships among goals, motivation, and performance. Our overall conclusion is that the intention to work toward
hard and specific goals is a powerful motivating force. Under the proper conditions, it can lead to higher performance.
However, no evidence indicates that such goals are associated with increased job satisfaction.31
Reinforcement theory says that behavior is a function of its consequences. Those consequences that immediately follow
a behavior and increase the probability that the behavior will be repeated are called reinforcers. Reinforcement theory
ignores factors such as goals, expectations, and needs. Instead, it focuses solely on what happens to a person when he
or she does something. For instance, Walmart improved its bonus program for hourly employees. Employees who provide
outstanding customer service get a cash bonus. And all Walmart hourly full- and part-time store employees are eligible
for annual “My$hare” bonuses, which are allocated on store performance and distributed quarterly so that workers are
rewarded more frequently.32 The company’s intent: keep the workforce motivated to meet goals by rewarding them when
they did, thus reinforcing the behaviors. We showed how managers use reinforcers to shape behavior, but the concept is
also widely believed to explain motivation. According to B. F. Skinner, people will most likely engage in desired behaviors
if they are rewarded for doing so. These rewards are most effective if they immediately follow a desired behavior; and
behavior that isn’t rewarded, or is punished, is less likely to be repeated.33 Using reinforcement theory, managers can
influence employees’ behavior by using positive reinforcers for actions that help the organization achieve its goals. And
managers should ignore, not punish, undesirable behavior. Although punishment eliminates undesired behavior faster
than non reinforcement does, its effect is often temporary and may have unpleasant side effects including dysfunctional
behavior such as workplace conflicts, absenteeism, and turnover. Although reinforcement is an important influence on
work behavior, it isn’t the only explanation for differences in employee motivation.
It’s not unusual to find shop-floor workers at Cordis LLC’s San German, Puerto Rico, facility interacting directly with
customers, especially if that employee has special skills or knowledge that could help come up with a solution to a
customer’s problem.35 One company executive said, “Our sales guys often encourage this in specific situations because
they don’t always have all the answers. If by doing this, we can better serve the customers, then we do it.” As this
example shows, the tasks an employee performs in his or her job are often determined by different factors, such as
providing customers what they need when they need it. Because managers want to motivate individuals on the job, we
need to look at ways to design motivating jobs. If you look closely at what an organization is and how it works, you’ll find
that it’s composed of thousands of tasks. These tasks are, in turn, aggregated into jobs. We use the term job design to
refer to the way tasks are combined to form complete jobs. The jobs that people perform in an organization should not
evolve by chance. Managers should design jobs deliberately and thoughtfully to reflect the demands of the changing
environment, the organization’s technology, and employees’ skills, abilities, and preferences.36 When jobs are designed
like that, employees are motivated to work hard. Let’s look at some ways that managers can design motivating jobs.
As we saw in the Management History Module job design historically has been to make jobs smaller and more
specialized. It’s difficult to motivate employees when jobs are like this. An early effort at overcoming the drawbacks of job
specialization involved horizontally expanding a job through increasing job scope— the number of different tasks required
in a job and the frequency with which these tasks are repeated. For instance, a dental hygienist’s job could be enlarged
so that in addition to cleaning teeth, he or she is pulling patients’ files, refiling them when finished, and sanitizing and
storing instruments. This type of job design option is called job enlargement. Most job enlargement efforts that focused
solely on increasing the number of tasks don’t seem to work. As one employee who experienced such a job redesign said,
“Before, I had one lousy job. Now, thanks to job enlargement, I have three lousy jobs!” However, research has shown
that knowledge enlargement activities (expanding the scope of knowledge used in a job) lead to more job satisfaction,
enhanced customer service, and fewer errors.
JOB ENRICHMENT. Another approach to job design is the vertical expansion of a job by adding planning and evaluating
responsibilities—job enrichment. Job enrichment increases job depth, which is the degree of control employees have over
their work. In other words, employees are empowered to assume some of the tasks typically done by their managers.
Thus, an enriched job allows workers to do an entire activity with increased freedom, independence, and responsibility. In
addition, workers get feedback so they can assess and correct their own performance. For instance, if our dental hygienist
had an enriched job, he or she could, in addition to cleaning teeth, schedule appointments (planning) and follow up with
clients (evaluating). Although job enrichment may improve the quality of work, employee motivation, and satisfaction,
research evidence has been inconclusive as to its usefulness.
JOB CHARACTERISTICS MODEL. Even though many organizations implemented job enlargement and job
enrichment programs and experienced mixed results, neither approach provided an effective framework for managers
to design motivating jobs. But the job characteristics model (JCM) does.40 It identifies five core job dimensions, their
interrelationships, and their impact on employee productivity, motivation, and satisfaction.
1. Skill variety, the degree to which a job requires a variety of activities so that an employee can use a number of different
2. Task identity, the degree to which a job requires completion of a whole and identifiable piece of work.
3. Task significance, the degree to which a job has a substantial impact on the lives or work of other people.
4. Autonomy, the degree to which a job provides substantial freedom, independence, and discretion to the individual in
scheduling the work and determining the procedures to be used in carrying it out.
5. Feedback, the degree to which doing work activities required by a job results in an individual obtaining direct and clear
information about the effectiveness of his or her performance.
Notice how the first three dimensions—skill variety, task identity, and task significance—combine to create meaningful
work. In other words, if these three characteristics exist in a job, we can predict that the person will view his or her job as
being important, valuable, and worthwhile. Notice, too, that jobs that possess autonomy give the jobholder a feeling of
personal responsibility for the results and that if a job provides feedback, the employee will know how effectively he or she
The JCM suggests that employees are likely to be motivated when they learn (knowledge of results through feedback)
that they personally (experienced responsibility through autonomy of work) performed well on tasks that they care about
(experienced meaningfulness through skill variety, task identity, or task significance).41 The more a job is designed
around these three elements, the greater the employee’s motivation, performance, and satisfaction and the lower his or
her absenteeism and likelihood of resigning. As the model shows, the links between the job dimensions and the outcomes
are moderated by the strength of the individual’s growth need (the person’s desire for self-esteem and self-actualization).
Individuals with a high growth need are more likely to experience the critical psychological states.
1. Combine tasks. Put fragmented tasks back together to form a new, larger work module (job enlargement) to increase skill
2. Create natural work units. Design tasks that form an identifiable and meaningful whole to increase employee “ownership”
of the work. Encourage employees to view their work as meaningful and important rather than as irrelevant and boring.
3. Establish client (external or internal) relationships. Whenever possible, establish direct relationships between workers and
their clients to increase skill variety, autonomy, and feedback.
4. Expand jobs vertically. Vertical expansion gives employees responsibilities and controls that were formerly reserved for
managers, which can increase employee autonomy.
5. Open feedback channels. Direct feedback lets employees know how well they’re performing their jobs and whether their
performance is improving or not. Research into the JCM continues. For instance, one recent study looked at using job
redesign efforts to change job characteristics and improve employee well-being.42 Another study examined psychological
ownership—that is, a personal feeling of “mine-ness” or “our-ness”
Do you ever wonder what kind of grade the person sitting next to you in class makes on a test or on a major class
assignment? Most of us do! Being human, we tend to compare ourselves with others. If someone offered you $50,000 a
year on your first job after graduating from college, you’d probably jump at the offer and report to work enthusiastic, ready
to tackle whatever needed to be done, and certainly satisfied with your pay. How would you react, though, if you found
out a month into the job that a coworker—another recent graduate, your age, with comparable grades from a comparable
school, and with comparable work experience—was getting $55,000 a year? You’d probably be upset! Even though in
absolute terms, $50,000 is a lot of money for a new graduate to make (and you know it!), that suddenly isn’t the issue.
Now you see the issue as what you believe is fair—what is equitable. The term equity is related to the concept of fairness
and equitable treatment compared with others who behave in similar ways. Evidence indicates that employees compare
themselves to others and that inequities influence how much effort employees exert.
Equity theory, developed by J. Stacey Adams, proposes that employees compare what they get from a job (outcomes)
in relation to what they put into it (inputs), and then they compare their inputs–outcomes ratio with the inputs–outcomes
ratios of relevant others (Exhibit 16-8). If an employee perceives her ratio to be equitable in comparison to those of
relevant others, there’s no problem. However, if the ratio is inequitable, she views herself as under rewarded or over
rewarded. When inequities occur, employees attempt to do something about it. The result might be lower or higher
productivity, improved or reduced quality of output, increased absenteeism, or voluntary resignation.
Employee’s Assessment
Inequity (Under rewarded)
Outcome-A/Inputs A> Outcomes A/Inputs A
Outcome-A/Inputs A = Outcomes A/Inputs A Equity
Outcome-A/Inputs A < Outcomes A/Inputs A
Inequity (Over rewarded)
The referent—the other persons, systems, or selves individuals compare themselves against in order to assess equity—
is an important variable in equity theory.48 Each of the three referent categories is important. The “persons” category
includes other individuals with similar jobs in the same organization but also includes friends, neighbors, or professional
associates. Based on what they hear at work or read about in newspapers or trade journals, employees compare their
pay with that of others. The “system” category includes organizational pay policies, procedures, and allocation. The “self”
category refers to inputs–outcomes ratios that are unique to the individual. It reflects past personal experiences and
contacts and is influenced by criteria such as past jobs or family commitments.
Originally, equity theory focused on distributive justice, which is the perceived fairness of the amount and allocation of
rewards among individuals. More recent research has focused on looking at issues of procedural justice, which is the
perceived fairness of the process used to determine the distribution of rewards. This research shows that distributive
justice has a greater influence on employee satisfaction than procedural justice, while procedural justice tends to affect
an employee’s organizational commitment, trust in his or her boss, and intention to quit. What are the implications for
managers? They should consider openly sharing information on how allocation decisions are made, follow consistent and
unbiased procedures, and engage in similar practices to increase the perception of procedural justice. By increasing the
perception of procedural justice, employees are likely to view their bosses and the organization as positive even if they’re
dissatisfied with pay, promotions, and other personal outcomes.
The most comprehensive explanation of how employees are motivated is Victor Vroom’s expectancy theory.50 Although
the theory has its critics, most research evidence supports it. Expectancy theory states that an individual tends to act in
a certain way based on the expectation that the act will be followed by a given outcome and on the attractiveness of that
outcome to the individual. It includes three variables or relationships.
1. Expectancy or effort–performance linkage is the probability perceived by the individual that exerting a given amount of
effort will lead to a certain level of performance
2. Instrumentality or performance–reward linkage is the degree to which the individual believes that performing at a particular
level is instrumental in attaining the desired outcome.
3. Valence or attractiveness of reward is the importance that the individual places on the potential outcome or reward that
can be achieved on the job. Valence considers both the goals and needs of the individual. This explanation of motivation
might sound complicated, but it really isn’t. It can be summed up in the questions: How hard do I have to work to
achieve a certain level of performance, and can I actually achieve that level? What reward will performing at that level of
performance get me? How attractive is the reward to me, and does it help me achieve my own personal goals? Whether
you are motivated to put forth effort (that is, to work hard) at any given time depends on your goals and your perception of
whether a certain level of performance is necessary to attain those goals. Let’s look at an example. Your second author
had a student many years ago who went to work for IBM as a sales rep. Her favorite work “reward” was having an IBM
corporate jet fly into Springfield, Missouri, to pick up her best customers and her and take them for a weekend of golfing at
some fun location. But to get that particular “reward,” she had to achieve at a certain level of performance, which involved
exceeding her sales goals by a specified percentage. How hard she was willing to work (that is, how motivated she was
to put forth effort) was dependent on the level of performance that had to be met and the likelihood that if she achieved
at that level of performance she would receive that reward. Because she “valued” that reward, she always worked hard
to exceed her sales goals. And the performance–reward linkage was clear because her hard work and performance
achievements were always rewarded by the company with the reward she valued (access to the corporate jet).
The key to expectancy theory is understanding an individual’s goal and the linkage between effort and performance,
between performance and rewards, and finally, between rewards and individual goal satisfaction. It emphasizes payoffs,
or rewards. As a result, we have to believe that the rewards an organization is offering align with what the individual
wants. Expectancy theory recognizes that no universal principle explains what motivates individuals and thus stresses
that managers understand why employees view certain outcomes as attractive or unattractive. After all, we want to
reward individuals with those things they value positively. Also, expectancy theory emphasizes expected behaviors.
Do employees know what is expected of them and how they’ll be evaluated? Finally, the theory is concerned with
perceptions. Reality is irrelevant. An individual’s own perceptions of performance, reward, and goal outcomes, not the
outcomes themselves, will determine his or her motivation (level of effort).
Integrating Contemporary Theories of Motivation
Many of the ideas underlying the contemporary motivation theories are complementary, and you’ll understand better
how to motivate people if you see how the theories fit together. It presents a model that integrates much of what we
know about motivation. Its basic foundation is the expectancy model. Let’s work through the model, starting on the left.
The individual effort box has an arrow leading into it. This arrow flows from the individual’s goals. Consistent with goal-
setting theory, this goals–effort link is meant to illustrate that goals direct behavior. Expectancy theory predicts that an
employee will exert a high level of effort if he or she perceives a strong relationship between effort and performance,
performance and rewards, and rewards and satisfaction of personal goals. Each of these relationships is, in turn,
influenced by certain factors. You can see from the model that the level of individual performance is determined not only
by the level of individual effort but also by the individual’s ability to perform and by whether the organization has a fair and
objective performance evaluation system. The performance–reward relationship will be strong if the individual perceives
that performance (rather than seniority, personal favorites, or some other criterion) is what is rewarded. The final link in
expectancy theory is the rewards–goal relationship.
The traditional need theories come into play at this point. Motivation would be high to the degree that the rewards an
individual received for his or her high performance satisfied the dominant needs consistent with his or her individual goals.
A closer look at the model also shows that it considers the achievement–need, reinforcement, equity, and JCM theories.
The high achiever isn’t motivated by the organization’s assessment of his or her performance or organizational rewards;
hence the jump from effort to individual goals for those with a high nAch. Remember that high achievers are internally
driven as long as the jobs they’re doing provide them with personal responsibility, feedback, and moderate risks. They’re
not concerned with the effort–performance, performance–reward, or rewards–goals linkages. Reinforcement theory is
seen in the model by recognizing that the organization’s rewards reinforce the individual’s performance. If managers have
designed a reward system that is seen by employees as “paying off ” for good performance, the rewards will reinforce
and encourage continued good performance. Rewards also play a key part in equity theory. Individuals will compare the
rewards (outcomes) they have received from the inputs or efforts they made with the inputs–outcomes ratio of relevant
others. If inequities exist, the effort expended may be influenced.
Finally, the JCM is seen in this integrative model. Task characteristics (job design) influence job motivation at two places.
First, jobs that are designed around the five job dimensions are likely to lead to higher actual job performance because
the individual’s motivation will be stimulated by the job itself—that is, they will increase the linkage between effort and
performance. Second, jobs that are designed around the five job dimensions also increase an employee’s control over
key elements in his or her work. Therefore, jobs that offer autonomy, feedback, and similar task characteristics help to
satisfy the individual goals of employees who desire greater control over their work.
After Vincent Stevens’s church ran an experiment in which 10 members were each given $100 to help their communities,
some used it as seed capital to raise thousands more. As a partner in a Bellevue, Washington, accounting firm, he
wondered what would happen if he tried the same thing with his employees. To find out, his company launched Caring,
Serving, and Giving, a program that lets employees apply for grants of up to $500 to fund community service projects. By
empowering employees to use the seed money as they saw fit, they were motivated to make the best use of it. Another
benefit that was realized was a boost in employee morale. Understanding and predicting employee motivation is one of
the most popular areas in management research. We’ve introduced you to several motivation theories. However, even
the contemporary theories of employee motivation are influenced by some significant workplace issues—motivating in
tough economic circumstances, managing cross-cultural challenges, motivating unique groups of workers, and designing
At Deloitte, employees are allowed to “dial up” or “dial down” their job responsibilities to fit their personal and professional
goals.67 The company’s program called Mass Career Customization has been a huge hit with its employees! In the first
12 months after it was rolled out, employee satisfaction with “overall career/life fit” rose by 25 percent. Also, the number
of high-performing employees staying with Deloitte increased. Motivating employees has never been easy! Employees
come into organizations with different needs, personalities, skills, abilities, interests, and aptitudes. They have different
expectations of their employers and different views of what they think their employer has a right to expect of them. And
they vary widely in what they want from their jobs. For instance, some employees get more satisfaction out of their
personal interests and pursuits and only want a weekly paycheck—nothing more. They’re not interested in making their
work more challenging or interesting or in “winning” performance contests. Others derive a great deal of satisfaction in
their jobs and are motivated to exert high levels of effort. Given these differences, how can managers do an effective job
of motivating the unique groups of employees found in today’s workforce? One thing is to understand the motivational
requirements of these groups including diverse employees, professionals, contingent workers, and low-skilled minimum-
Organizations have historically assumed that “one size fits all” when it comes to allocating rewards. Managers typically
assumed that everyone wants more money and more vacation time. But as organizations become less bureaucratic and
more capable of differentiating rewards, managers will be encouraged to differentiate rewards among employees as well
as for individual employees over time. Organizations control a vast number of potential rewards that employees might
find appealing. A partial list would include increased base pay, bonuses, shortened workweeks, extended vacations,
paid sabbaticals, flexible work hours, part-time employment, guaranteed job security, increased pension contributions,
college tuition reimbursement, personal days off, help in purchasing a home, recognition awards, paid club memberships,
and workfrom- home options. In the future, most organizations will structure individual reward packages in ways that will
MOTIVATING A DIVERSE WORKFORCE.
To maximize motivation among today’s workforce, managers need to think in terms of flexibility. For instance, studies
tell us that men place more importance on having autonomy in their jobs than do women. In contrast, the opportunity
to learn, convenient and flexible work hours, and good interpersonal relations are more important to women.68 Having
the opportunity to be independent and to be exposed to different experiences is important to Gen Y employees whereas
older workers may be more interested in highly structured work opportunities.69 Managers need to recognize that
what motivates a single mother with two dependent children who’s working full time to support her family may be very
different from the needs of a single part-time employee or an older employee who is working only to supplement his or
her retirement income. A diverse array of rewards is needed to motivate employees with such diverse needs. Many of the
work–life balance programs (see Chapter 12) that organizations have implemented are a response to the varied needs of
a diverse workforce. In addition, many organizations have developed flexible work arrangements—such as compressed
workweeks, flextime, and job sharing, which we discussed in Chapter 11—that recognize different needs. Another job
alternative that we also discussed earlier is telecommuting. However, keep in mind that not all employees embrace the
idea of telecommuting. Some workers relish the informal interactions at work that satisfy their social needs as well as
Do flexible work arrangements motivate employees? Although such arrangements might seem highly motivational,
both positive and negative relationships have been found. For instance, a recent study that looked at the impact of
telecommuting on job satisfaction found that job satisfaction initially increased as the extent of telecommuting increased,
but as the number of hours spent telecommuting increased, job satisfaction started to level off, decreased slightly, and
In contrast to a generation ago, the typical employee today is more likely to be a professional with a college degree
than a blue-collar factory worker. What special concerns should managers be aware of when trying to motivate a team
of engineers at Intel’s India Development Center, software designers at SAS Institute in North Carolina, or a group
of consultants at Accenture in Singapore? Professionals are different from nonprofessionals.71 They have a strong
and long-term commitment to their field of expertise. To keep current in their field, they need to regularly update their
knowledge, and because of their commitment to their profession they rarely define their workweek as 8 A.M. to 5 P.M.
five days a week. What motivates professionals? Money and promotions typically are low on their priority list. Why?
They tend to be well paid and enjoy what they do. In contrast, job challenge tends to be ranked high. They like to tackle
problems and find solutions. Their chief reward is the work itself. Professionals also value support. They want others to
think that what they are working on is important. That may be true for all employees, but professionals tend to be focused
on their work as their central life interest, whereas nonprofessionals typically have other interests outside of work that can
compensate for needs not met on the job.
MOTIVATING CONTINGENT WORKERS. We discussed the increased number of contingent workers employed by
organizations. There’s no simple solution for motivating these employees. For that small set of individuals who prefer the
freedom of their temporary status, the lack of stability may not be an issue. In addition, temporariness might be preferred
by highly compensated physicians, engineers, accountants, or financial planners who don’t want the demands of a full-
time job. But these individuals are the exceptions. For the most part, temporary employees are not temporary by choice.
What will motivate involuntarily temporary employees? An obvious answer is the opportunity to become a permanent
employee. In cases in which permanent employees are selected from a pool of temps, the temps will often work hard
in hopes of becoming permanent. A less obvious answer is the opportunity for training. The ability of a temporary
employee to find a new job is largely dependent on his or her skills. If an employee sees that the job he or she is doing
can help develop marketable skills, then motivation is increased. From an equity standpoint, when temps work alongside
permanent employees who earn more and get benefits too for doing the same job, the performance of temps is likely
to suffer. Separating such employees or perhaps minimizing interdependence between them might help managers
Management is a universal phenomenon. It is a very popular and widely used term. All organizations - business, political,
cultural or social are involved in management because it is the management which helps and directs the various efforts
towards a definite purpose. According to Harold Koontz, “Management is an art of getting things done through and
with the people in formally organized groups. It is an art of creating an environment in which people can perform and
individuals and can co-operate towards attainment of group goals”. According to F.W. Taylor, “Management is an art of
knowing what to do, when to do and see that it is done in the best and cheapest way”.
Management is a purposive activity. It is something that directs group efforts towards the attainment of certain pre -
determined goals. It is the process of working with and through others to effectively achieve the goals of the organization,
by efficiently using limited resources in the changing world. Of course, these goals may vary from one enterprise to
another. E.g.: For one enterprise it may be launching of new products by conducting market surveys and for other it may
be profit maximization by minimizing cost.
Management involves creating an internal environment: - It is the management which puts into use the various factors of
production. Therefore, it is the responsibility of management to create such conditions which are conducive to maximum
efforts so that people are able to perform their task efficiently and effectively. It includes ensuring availability of raw
materials, determination of wages and salaries, formulation of rules & regulations etc.
Therefore, we can say that good management includes both being effective and efficient. Being effective means doing the
appropriate task i.e., fitting the square pegs in square holes and round pegs in round holes. Being efficient means doing
the task correctly at least possible cost with minimum wastage of resources.
Management can be defined in detail in following categories:
As a process, management refers to a series of inter - related functions. It is the process by which management creates,
operates and directs purposive organization through systematic, coordinated and co-operated human efforts, according
to George R. Terry, “Management is a distinct process consisting of planning, organizing, actuating and controlling,
performed to determine and accomplish stated objective by the use of human beings and other resources”. As a process,
management consists of three aspects:
1. Management is a social process - Since human factor is most important among the other factors, therefore
management is concerned with developing relationship among people. It is the duty of management to make
interaction between people - productive and useful for obtaining organizational goals.
2. Management is an integrating process - Management undertakes the job of bringing together human physical
and financial resources so as to achieve organizational purpose. Therefore, is an important function to bring
harmony between various factors.
3. Management is a continuous process - It is a never ending process. It is concerned with constantly identifying the
problem and solving them by taking adequate steps. It is an on-going process.
Like various other activities performed by human beings such as writing, playing, eating, cooking etc, management is also
an activity because a manager is one who accomplishes the objectives by directing the efforts of others. According to
Koontz, “Management is what a manager does”. Management as an activity includes -
1. Informational activities - In the functioning of business enterprise, the manager constantly has to receive and
give information orally or in written. A communication link has to be maintained with subordinates as well as
superiors for effective functioning of an enterprise.
2. Decisional activities - Practically all types of managerial activities are based on one or the other types of
decisions. Therefore, managers are continuously involved in decisions of different kinds since the decision
made by one manager becomes the basis of action to be taken by other managers. (E.g. Sales Manager is
deciding the media & content of advertising).
3. Inter-personal activities - Management involves achieving goals through people. Therefore, managers have to
interact with superiors as well as the sub-ordinates. They must maintain good relations with them. The inter-
personal activities include with the sub-ordinates and taking care of the problem. (E.g. Bonuses to be given to
Management as a discipline refers to that branch of knowledge which is connected to study of principles & practices
of basic administration. It specifies certain code of conduct to be followed by the manager & also various methods for
Management as a discipline specifies certain code of conduct for managers & indicates various methods of managing
an enterprise. Management is a course of study which is now formally being taught in the institutes and universities after
completing a prescribed course or by obtaining degree or diploma in management, a person can get employment as a
Any branch of knowledge that fulfils following two requirements is known as discipline:
1. There must be scholars & thinkers who communicate relevant knowledge through research and publications.
2. The knowledge should be formally imparted by education and training programmers.
Since management satisfies both these problems, therefore it qualifies to be a discipline. Though it is comparatively a new
discipline but it is growing at a faster pace.
Management as a group refers to all those persons who perform the task of managing an enterprise. When we say that
management of ABC & Co. is good, we are referring to a group of people those who are managing. Thus as a group
technically speaking, management will include all managers from chief executive to the first - line managers (lower-level
managers). But in common practice management includes only top management i.e. Chief Executive, Chairman, General
Manager, Board of Directors etc. In other words, those who are concerned with making important decisions, these persons
enjoy the authorities to use resources to accomplish organizational objectives & also responsibility to for their efficient
Management as a group may be looked upon in 2 different ways:
1. All managers taken together.
The interpretation depends upon the context in which these terms are used. Broadly speaking, there are 3 types of
1. Patrimonial / Family Manager: Those who have become managers by virtue of their being owners or relatives of
2. Professional Managers: Those who have been appointed on account of their specialized knowledge and degree.
3. Political Managers / Civil Servants: Those who manage public sector undertakings.
Managers have become a part of elite group of society as they enjoy higher standard of living in the society.
Science is a systematic body of knowledge pertaining to a specific field of study that contains general facts which explains
a phenomenon. It establishes cause and effect relationship between two or more variables and underlines the principles
governing their relationship. These principles are developed through scientific method of observation and verification
Science is characterized by following main features:
1. Universally acceptance principles - Scientific principles represents basic truth about a particular field of enquiry.
These principles may be applied in all situations, at all time & at all places. E.g. - law of gravitation which can be
applied in all countries irrespective of the time.
Management also contains some fundamental principles which can be applied universally like the Principle of
Unity of Command i.e. one man, one boss. This principle is applicable to all type of organization - business or
2. Experimentation & Observation - Scientific principles are derived through scientific investigation & researching
i.e. they are based on logic. E.g. the principle that earth goes round the sun has been scientifically proved.
Management principles are also based on scientific enquiry & observation and not only on the opinion of Henry
Fayol. They have been developed through experiments & practical experiences of large no. of managers. E.g. it
is observed that fair remuneration to personal helps in creating a satisfied work force.
3. Cause & Effect Relationship - Principles of science lay down cause and effect relationship between various
variables. E.g. when metals are heated, they are expanded. The cause is heating & result is expansion.
The same is true for management, therefore it also establishes cause and effect relationship. E.g. lack of
parity (balance) between authority & responsibility will lead to ineffectiveness. If you know the cause i.e. lack
of balance, the effect can be ascertained easily i.e. in effectiveness. Similarly if workers are given bonuses, fair
wages they will work hard but when not treated in fair and just manner, reduces productivity of organization.
4. Test of Validity & Predictability - Validity of scientific principles can be tested at any time or any number of
times i.e. they stand the test of time. Each time these tests will give same result. Moreover future events can be
predicted with reasonable accuracy by using scientific principles. E.g. H2 & O2 will always give H2O.
Principles of management can also be tested for validity. E.g. principle of unity of command can be tested by
comparing two persons - one having single boss and one having 2 bosses. The performance of 1st person will
It cannot be denied that management has a systematic body of knowledge but it is not as exact as that of other physical
sciences like biology, physics, and chemistry etc. The main reason for the inexactness of science of management is that
it deals with human beings and it is very difficult to predict their behavior accurately. Since it is a social process, therefore
it falls in the area of social sciences. It is a flexible science & that is why its theories and principles may produce different
results at different times and therefore it is a behavior science. Ernest Dale has called it as a Soft Science.
Art implies application of knowledge & skill to trying about desired results. An art may be defined as personalized
application of general theoretical principles for achieving best possible results. Art has the following characters -
1. Practical Knowledge: Every art requires practical knowledge therefore learning of theory is not sufficient. It is
very important to know practical application of theoretical principles. E.g. to become a good painter, the person
may not only be knowing different colour and brushes but different designs, dimensions, situations etc to use
them appropriately. A manager can never be successful just by obtaining degree or diploma in management; he
must have also know how to apply various principles in real situations by functioning in capacity of manager.
2. Personal Skill: Although theoretical base may be same for every artist, but each one has his own style and
approach towards his job. That is why the level of success and quality of performance differs from one person
to another. E.g. there are several qualified painters but M.F. Hussain is recognized for his style. Similarly
management as an art is also personalized. Every manager has his own way of managing things based on his
knowledge, experience and personality, that is why some managers are known as good managers (like Aditya
Birla, Rahul Bajaj) whereas others as bad.
3. Creativity: Every artist has an element of creativity in line. That is why he aims at producing something that has
never existed before which requires combination of intelligence & imagination. Management is also creative in
nature like any other art. It combines human and non-human resources in useful way so as to achieve desired
results. It tries to produce sweet music by combining chords in an efficient manner.
4. Perfection through practice: Practice makes a man perfect. Every artist becomes more and more proficient
through constant practice. Similarly managers learn through an art of trial and error initially but application of
management principles over the years makes them perfect in the job of managing.
5. Goal-Oriented: Every art is result oriented as it seeks to achieve concrete results. In the same manner,
management is also directed towards accomplishment of pre-determined goals. Managers use various
resources like men, money, material, machinery & methods to promote growth of an organization.
Thus, we can say that management is an art therefore it requires application of certain principles rather it is an art of
highest order because it deals with moulding the attitude and behavior of people at work towards desired goals.
Management is both an art and a science. The above mentioned points clearly reveals that management combines
features of both science as well as art. It is considered as a science because it has an organized body of knowledge
which contains certain universal truth. It is called an art because managing requires certain skills which are personal
possessions of managers. Science provides the knowledge & art deals with the application of knowledge and skills.
A manager to be successful in his profession must acquire the knowledge of science & the art of applying it. Therefore
management is a judicious blend of science as well as an art because it proves the principles and the way these
principles are applied is a matter of art. Science teaches to ’know’ and art teaches to ’do’. E.g. a person cannot become a
good singer unless he has knowledge about various ragas & he also applies his personal skill in the art of singing. Same
way it is not sufficient for manager to first know the principles but he must also apply them in solving various managerial
problems that is why, science and art are not mutually exclusive but they are complementary to each other (like tea and
The old saying that “Manager are Born” has been rejected in favor of “Managers are Made”. It has been aptly remarked
that management is the oldest of art and youngest of science. To conclude, we can say that science is the root and art is
Over a large few decades, factors such as growing size of business unit, separation of ownership from management,
growing competition etc have led to an increased demand for professionally qualified managers. The task of manager has
been quite specialized. As a result of these developments the management has reached a stage where everything is to
A profession may be defined as an occupation that requires specialized knowledge and intensive academic preparations
to which entry is regulated by a representative body. The essentials of a profession are:
1. Specialized Knowledge - A profession must have a systematic body of knowledge that can be used for
development of professionals. Every professional must make deliberate efforts to acquire expertise in the
principles and techniques. Similarly a manager must have devotion and involvement to acquire expertise in the
2. Formal Education & Training - There are no. of institutes and universities to impart education & training for
a profession. No one can practice a profession without going through a prescribed course. Many institutes of
management have been set up for imparting education and training. For example, a CA cannot audit the A/C’s
unless he has acquired a degree or diploma for the same but no minimum qualifications and a course of study
has been prescribed for managers by law. For example, MBA may be preferred but not necessary.
3. Social Obligations - Profession is a source of livelihood but professionals are primarily motivated by the desire to
serve the society. Their actions are influenced by social norms and values. Similarly a manager is responsible
not only to its owners but also to the society and therefore he is expected to provide quality goods at reasonable
4. Code of Conduct - Members of a profession have to abide by a code of conduct which contains certain rules and
regulations, norms of honesty, integrity and special ethics. A code of conduct is enforced by a representative
association to ensure self discipline among its members. Any member violating the code of conduct can be
punished and his membership can be withdrawn. The AIMA has prescribed a code of conduct for managers but
it has no right to take legal action against any manager who violates it.
5. Representative Association - For the regulation of profession, existance of a representative body is a must. For
example, an institute of Charted Accountants of India establishes and administers standards of competence for
the auditors but the AIMA however does not have any statuary powers to regulate the activities of managers.
From above discussion, it is quite clear that management fulfills several essentials of a profession, even then it is not a full
a. It does not restrict the entry in managerial jobs for account of one standard or other.
b. No minimum qualifications have been prescribed for managers.
c. No management association has the authority to grant a certificate of practice to various managers.
d. All managers are supposed to abide by the code formulated by AIMA,
e. Competent education and training facilities do not exist.
f. Managers are responsible to many groups such as shareholders, employees and society. A regulatory code
g. Managers are known by their performance and not mere degrees.
h. The ultimate goal of business is to maximize profit and not social welfare. That is why Haymes has rightly
remarked, “The slogan for management is becoming - ’He who serves best, also profits most’.”
ÿ 4.2 Evolution of Management Theory and Practices
Describe the historical foundations of management practice, and understand the three major approaches to management
theory. Though management owes much to ancient cultures, management theory only came of age with the industrial
revolution. Scientific management evolved during the unprecedented economic growth of the nineteenth century. The
accepted view today recognizes three approaches to management: classical, human relations, and quantitative. Systems
theory and contingency management are also important approaches to management theory.
¸ Discuss the concepts of scientific, bureaucratic, and administrative management.
Scientific management holds that there is "one best way to accomplish any task which can be determined through
scientific research. This "optimal" method can be used to define jobs, refine processes, and organize systems of work.
Administrative management holds that there are certain principles of management that have universal application. Max
Weber used the term rational bureaucracy to describe an ideal system in which positions are well defined, the division
of labor is clear, objectives are explicit, and a clear chain of authority exists. Standardized systems provide a consistent
approach to decision making. Perhaps the most influential approach to modern management administrative management
proposed fourteen important management functions that pertain to every manager in an organization. From these original
fourteen functions, modern theory has distilled four: planning, organizing, leading, and controlling.
¸ Explain the focus of the behavioral approach and the human relations movement.
Behavioral studies have focused on leadership roles for managers who must motivate employees to accomplish
work in the most productive ways. Theorists within the human relations movement have studied situational variables the
complex interactions of individuals within work environments and the nature of work itself.
¸ Define systems theory and contingency management concepts.
Systems theory requires managers to define their role within the entire system which is made up of individual but
interrelated parts that must be coordinated. Contingency management stresses that managers should adjust their
leadership behavior to meet different situations or be assigned to positions more appropriate to their leadership styles.
¸ Describe quantitative approaches to management and the role of information systems.
Quantitative approaches are based on the concepts of management science, of theoretical field on the cutting edge
of high&-powered mathematical molding that provides managers with information for making decisions. A specific
management area called operations management is an applied discipline of system control and decision making
encompassing operational activities such as inventory control, scheduling, forecasting, budgeting, and materials
management. Most of the models used are grounded in, statistics and relay on computer technology increase in
microelectronic and microelectronic computer innovations has resulted in a comparable growth in information systems.
Information is a resource that managers require for daily decisions; with advanced systems, information is changing the
way manager interact and how their organizations function.
Define management, and discuss future perspectives for management careers.
Management is the process of getting things done through others. Managers major responsibilities are defining
what is to be done, organizing resources, guiding others toward accomplishing their tasks, and controlling performance.
Planning, organizing, leading, and controlling form the outline of this text. Future managers will find exceptional
opportunities in global affairs, and they will find equally rewarding challenges in small, high&-growth ventures.
Explain what constitutes an organization, and discuss the differences between formal and informal organizations.
Organizations exist when two or more people mutually cooperate to pursue common objectives. Thus people combine
their talents and resources to achieve more collectively than they could work independently. Formal organizations have
deliberately defined objectives that take into account their stakeholders interests; they also have specific purposes.
Informal organizations arise spontaneously and may have no formal purpose or objective, yet their members have mutual
interests and work together to satisfy them.
Explain the process of management, and discuss the concepts of planning, organizing, leading, and controlling.
The process of management includes four functions of management that are interrelated activities. Managers plan in
order to provide objectives. Organizing is concerned with gathering resources necessary to carry out plans. Leading is
the "influence" process through which managers in authority direct human behavior to achieve objectives. Controlling is
the management function of steering performance toward desired results.
Name the different sets of managerial roles, and give examples of each.
Interpersonal roles include figurehead, leader, and liaison. Informational roles include monitor, disseminator, and
spokesperson. Decisional roles include entrepreneur, disturbance handler, resource allocator, and negotiator.
Name the three basic levels of managers in the management hierarchy and briefly describe each.
Strategic managers are top operating executives and decision&-making boards who guide the company in fulfilling
long&-term objectives. They are concerned with the broad&-based mission and major objectives to be accomplished,
as well as with providing a philosophy of leadership to organizational members. Tactical managers are those just under
executive ranks and in several lower strata, including divisions and departments. They can be specialists, such as
auditors, or operational managers, such as sales directors, but they deal with near&-term objectives such as quarterly
or annual sales and budgets. First&-line managers are those who interact directly on a daily basis with operational no
management employees. They hold positions as supervisors, foremen, and office managers, and they are concerned with
immediate performance results, daily scheduling, and personal leadership and guidance of the work force.
Describe entrepreneurship as an important dimension of our free enterprise system.
Large and complex organizations began in humble surroundings as entrepreneurial ventures. Every major company
can trace its roots to innovative individuals. Entrepreneurship is the act of starting new ventures by combining resources
in unusual ways to create new commercial endeavors.
Discuss how global competition is changing our views about managing organizations.
American managers must cope with increased competition at home from foreign companies that have been able to
establish strong markets by offering high&-quality products at reasonable prices. One of the important challenges for
future American managers is to regain our competitive posture in the world economy.
Explain the connection between quality and productivity.
Productivity is achieved by reducing the total resources used to provide reliable products or services. Workmanship,
effective purchasing, proper sales forecasting, careful performance control, good inventory management and innovative
methods in production or services add to a companies’ quality profile and as these improve, so does productivity.
ÿ Early Management Thought in Perspective
Management is not a new concept. It has been employed for thousands of years, as seen in the practices of the
Sumerians, the Romans, and the Roman Catholic Church. However, the emergence of the factory system. presented
management with a new challenge. With industrialization it became necessary to develop rational, scientific principles
for handling workers, materials, money, and machinery. The scientific managers played a major role in helping attain this
The primary goal of these managers was that of achieving the highest productivity possible by devising efficient
work methods and encouraging employees to take advantage of these new techniques. In the United States, scientific
management was made famous by people such as Frederick W. Taylor. His experiments at Bethlehem Steel illustrated
the importance of time-and-motion study, and his differential piece-rate system provides students an insight into the
types of wage incentive payment plans used during this period. Another important scientific manager of the day was
Frank Gilbreth, renowned for his work in time-and-motion study and for a large body of work in management in which he
The success of the scientific managers brought about changes in the worker-manager ratio and moved the focus
of attention farther up the hierarchy. The result was two distinct levels of inquiry about management. The first sought
to identify generally the purview of management. The second sought to examine both individual and group behavior in
The most famous of the early management theorists was Henri Fayol. Fayol's outstanding contribution was the
conceptual framework he provided for analyzing the management process. In the behavioral area, Elton Mayo studied
group behavior in organizations. The Hawthorne studies, however, had an even greater impact on the field, and they
became the single most important foundation for the behavioral approach to management. Meanwhile, Chester Barnard,
whose acceptance theory of authority is still regarded as a major landmark in the development of management theory,
made the most memorable contribution to early behavioral knowledge.
In perspective all three groups-the scientific managers, the classical theorists, and the human relationaists-had
shortcomings. Yet it must also be realized that they complemented each other, helping to form the basis for modern
management theory and practice. The efficiency goals of the scientific managers and classical theorists led to the human
relations philosophy of treating people well, which in turn has been replaced, as seen in Figure 2-4, by a human resources
¸ Organizational mission statements
An organization's mission statement describes what the organization stands for and why it exists. It explains the overall
purpose of the organization and includes the attributes that distinguish it from other organizations of its type.
A mission statement should be more than words on a piece of paper; it should reveal a company's philosophy, as well
as its purpose. This declaration should be a living, breathing document that provides information and inspiration for the
members of the organization. A mission statement should answer the questions, “What are our values?” and “What do
we stand for?” This statement provides focus for an organization by rallying its members to work together to achieve its
But not all mission statements are effective in America's businesses. Effective mission statements lead to effective efforts.
In today's quality-conscious and highly competitive environments, an effective mission statement's purpose is centered on
serving the needs of customers. A good mission statement is precise in identifying the following intents of a company:
¸ Customers — who will be served
¸ Products/services — what will be produced
¸ Location — where the products/services will be produced
¸ Philosophy — what ideology will be followed
Company policies are guidelines that govern how certain organizational situations are addressed. Just as colleges
maintain policies about admittance, grade appeals, prerequisites, and waivers, companies establish policies to provide
guidance to managers who must make decisions about circumstances that occur frequently within their organization.
Company policies are an indication of an organization's personality and should coincide with its mission statement.
The formal structure of an organization is the hierarchical arrangement of tasks and people. This structure determines
how information flows within the organization, which departments are responsible for which activities, and where the
Some organizations use a chart to simplify the breakdown of its formal structure. This organizational chart is a pictorial
display of the official lines of authority and communication within an organization.
The organizational culture is an organization's personality. Just as each person has a distinct personality, so does each
organization. The culture of an organization distinguishes it from others and shapes the actions of its members.
Four main components make up an organization's culture:
Values are the basic beliefs that define employees' successes in an organization. For example, many universities place
high values on professors being published. If a faculty member is published in a professional journal, for example, his or
her chances of receiving tenure may be enhanced. The university wants to ensure that a published professor stays with
the university for the duration of his or her academic career — and this professor's ability to write for publications is a
The second component is heroes. A hero is an exemplary person who reflects the image, attitudes, or values of the
organization and serves as a role model to other employees. A hero is sometimes the founder of the organization (think
Sam Walton of Wal-Mart). However, the hero of a company doesn't have to be the founder; it can be an everyday worker,
such as hard-working paralegal Erin Brockovich, who had a tremendous impact on the organization.
Rites and rituals, the third component, are routines or ceremonies that the company uses to recognize high-performing
employees. Awards banquets, company gatherings, and quarterly meetings can acknowledge distinguished employees
for outstanding service. The honorees are meant to exemplify and inspire all employees of the company during the rest of
The final component, the social network, is the informal means of communication within an organization. This network,
sometimes referred to as the company grapevine, carries the stories of both heroes and those who have failed. It is
through this network that employees really learn about the organization's culture and values.
A byproduct of the company's culture is the organizational climate. The overall tone of the workplace and the morale of
its workers are elements of daily climate. Worker attitudes dictate the positive or negative “atmosphere” of the workplace.
The daily relationships and interactions of employees are indicative of an organization's climate.
Resources are the people, information, facilities, infrastructure, machinery, equipment, supplies, and finances at an
organization's disposal. People are the paramount resource of all organizations. Information, facilities, machinery
equipment, materials, supplies, and finances are supporting, nonhuman resources that complement workers in their
quests to accomplish the organization's mission statement. The availability of resources and the way that managers value
the human and nonhuman resources impact the organization's environment.
Philosophy of management is the manager's set of personal beliefs and values about people and work and as such,
is something that the manager can control. McGregor emphasized that a manager's philosophy creates a self-fulfilling
prophecy. Theory X managers treat employees almost as children who need constant direction, while Theory Y managers
treat employees as competent adults capable of participating in work-related decisions. These managerial philosophies
then have a subsequent effect on employee behavior, leading to the self-fulfilling prophecy. As a result, organizational
philosophies and managerial philosophies need to be in harmony.
The role of a manager is to monitor and shape the internal and external environments and to anticipate changes and react
Managers can monitor the environments through boundary spanning — a process of gathering information about
developments that could impact the future of the organization. Managers can access information through a variety of
sources: customer and supplier feedback; professional, trade, and government publications; industry associations; and
Managers can also actively work to influence their external environments through lobbying, voting, and using the media to
Internal elements comprise the organization itself. Internal change arises from activities and decisions within the
organization. Managers can gather information by conducting a thorough evaluation of the internal operations of the
organization. The purpose of this internal analysis is to identify the organizational assets, resources, skills, and processes
that represent either strengths or weaknesses. Strengths are aspects of the organization's operations that represent
potential competitive advantages (any aspect of an organization that distinguishes it from its competitors in a positive
way), while weaknesses are areas that are in need of improvement.
Several key areas of the organization's operations should be examined in an internal analysis. Key areas to be assessed
include the marketing, financial, research and development, production, and general management capabilities. These
areas are typically evaluated in terms of the extents to which they foster quality and support the competitive advantage
ÿ 4.4 The Management Process
Management is the process of coordinating the resources of an organization to achieve the primary goals of the
organization. Managers are concerned with four types of resources&-material, financial, human, and informational.
Managers perform four basic functions. The amount of time they devote to each depends on the situation of the
firm and of the manager within the firm. First, managers engage in goal setting and planning (determining where the
firm should be going and how to get there). Three types of plans, from the broadest to the most specific, are strategies,
tactical plans, and standing plans. Next, managers organize resources and activities to accomplish results in an efficient
and effective manner. Then, managers must lead and motivate others to inspire them to work in the best interest of the
organization. Finally, managers must control ongoing activities, through continual evaluation and regulation, to keep the
organization on course as it pursues its goals.
Managers&-or management positions&-may be classified from two different perspectives From the perspective of
level, there are top managers who control the fortunes of the organization&- middle managers, who implement strategies
and major policies; and first&-line managers, who supervise the activities of operating employees. From the viewpoint of
area of management, managers most often deal with the functions of finance, operations, marketing, human resources,
Effective managers tend to possess a specific set of skills and to fill ten basic managerial roles. Technical, conceptual,
interpersonal, diagnostic, and analytic skills are all important, though the relative importance of each varies with the level
of management. All the key managerial roles can be classified as decisional, interpersonal, or informational.
Managers function within a corporate culture&-a system consisting of a firm's inner rites, rituals, heroes, and values.
Managers may find it useful to assess that culture
(b) “Effective control depends on good observation” Explain.
(c) Distinguish between programmed decision and non-programmed decision.
(d) What are the requirements for effective control?
Q16. (a) What is meant by optimum span of supervision?
(b) What are the determinants of optimum span of supervision?
(c ) Mention the merits and demerits of centralization.
Q17. (a) What is E-commerce? Discuss its features.
(b) What is E-Banking? What are the merits and limitations of E-Banking?
(c ) What is the future of computer based information system for commercial banks?
Q18. (a) What is leadership? What are the leadership traits?
Let’s begin by clarifying who leaders are and what leadership is. Our definition of a leader is someone who can influence
others and who has managerial authority. Leadership is what leaders do. It’s a process of leading a group and influencing
that group to achieve its goals. Are all managers leaders? Because leading is one of the four management functions,
yes, ideally, all managers should be leaders. Thus, we’re going to study leaders and leadership from a managerial
perspective.3 However, even though we’re looking at these from a managerial perspective, we’re aware that groups
often have informal leaders who emerge. Although these informal leaders may be able to influence others, they have not
been the focus of most leadership research and are not the types of leaders we’re studying in this chapter. Leaders and
leadership, like motivation, are organizational behavior topics that have been researched a lot. Most of that research has
been aimed at answering the question: What is an effective leader? We’ll begin our study of leadership by looking at some
early leadership theories that attempted to answer that question.
I used to think that running an organization was equivalent to conducting a symphony orchestra. But I don't think that's quite it;
it's more like jazz. There is more improvisation. — Warren Bennis\
Good leaders are made not born. If you have the desire and willpower, you can become an effective leader. Good leaders develop
through a never ending process of self-study, education, training, and experience (Jago, 1982). This guide will help you through that
To inspire your workers into higher levels of teamwork, there are certain things you must be, know, and, do. These do not come
naturally, but are acquired through continual work and study. Good leaders are continually working and studying to improve their
leadership skills; they are NOT resting on their laurels.
The meaning of a message is the change which it produces in the image. — Kenneth Boulding in The Image: Knowledge in Life
Before we get started, lets define leadership. Leadership is a process by which a person influences others to accomplish an objective
and directs the organization in a way that makes it more cohesive and coherent. This definition is similar to Northouse's (2007, p3)
definition — Leadership is a process whereby an individual influences a group of individuals to achieve a common goal.
Leaders carry out this process by applying their leadership knowledge and skills. This is called Process Leadership (Jago, 1982).
However, we know that we have traits that can influence our actions. This is called Trait Leadership (Jago, 1982), in that it was once
common to believe that leaders were born rather than made. These two leadership types are shown in the chart below (Northouse,
While leadership is learned, the skills and knowledge processed by the leader can be influenced by his or hers attributes or traits, such
as beliefs, values, ethics, and character. Knowledge and skills contribute directly to the process of leadership, while the other attributes
give the leader certain characteristics that make him or her unique.
Skills, knowledge, and attributes make the Leader, which is one of the:
“Leadership is a combination of activities that lead to motivating a group or an individual to willingly contribute to the
common goals to their full ability and beyond”.
Year Author Definition of Leadership
1957 Hemphill & Coons Leadership is the individual behavior to guide a group to achieve the
1957 Stogdill Leadership is an influential activity to others or organization to achieve the
1969 Bowers Leadership is an activity process of interpersonal relationship; other’s
1977 Davis Leadership means persuasion on others to enthusiastically chase for
1982 Morphet, Johns & Reller Leadership means, in the social system, the individual action, behavior, faith
common target.
target set by the leader.
behavior is influenced through this process to achieve the set target.
certain target.
and target are influenced by the others under volunteer cooperation.
1986 Richards & Engle Leadership is about establishment of vision, value and creation of
1990 Sergiovanni Leadership means the leader satisfies the staff’s demand by use of
1990 Jacobs & Jaques Leadership helps others to strive and to enhance aspiration to achieve the
environment so that the objective can be accomplished.
consultation, negotiation and compromise so that the staff trades his work for
rewards.
target.
1993 Robbins Leadership is the ability to influence the group to achieve the target.
1994 Yukl Leadership is the process of influence on the subordinate, in which the
subordinate is inspired to achieve the target, the group is maintained in
cooperation, and the established mission is accomplished, and the support
from external group is obtained.
2001 Northouse Leadership is exchanged relationship between leader and subordinate.
2003 Fry Leadership means use of leading strategy to offer inspiring motive and to
enhance the staff’s potential for growth and development.
(b) “All managers are leaders but all leaders are not managers” Explain the statement.
(c) What are the three types of skills used by leaders?
After reviewing studies on leadership theory conducted in the past, it is generally divided into four periods:
(1). Traits theory in 1930s--- It focuses on the innate leadership qualities and competence. These innate qualities are not
found in others. The so-called quality can be divided into physiological and mental aspects. The physiological aspect
includes: height, weight, looks, and vigor while the mental aspect includes intelligence, confidence, and aggressiveness
etc. Stogdill (1948) proposed twelve leadership related studies and was considered as representative of this period.
(2). Behavioral theory from late 1940s to late 1960s--- It believes that a leader will be able to achieve ideal organizational
efficiency if he demonstrates effective leadership behaviors. These leadership behaviors may be trained or learned
through experience. Actual behavior or leadership styles are emphasized. Representative research is conducted in
Ohio State University. Ohio State University proposed “consideration“ and “initiating structure” of leadership behaviors.
Consideration is a behavior that focuses on strengthening relationship with subordinates based on their needs and
perceptions, while “initiating structure” is a behavior that focuses on subordinate performance in goal accomplishment.
(3). Contingency theory in late 1960s--- This theory states that there is no set of optimum leadership model in this world
and that it depends on the situation encountered. Situational leadership theory began its development subsequently. It
states that leaders need to adopt the most optimum leadership style based on different organizational situations. Among
which, Fiedler’s contingency theory (1967) is most well-known.
(4). Contemporary leadership theory since 1970s---The viewpoint of contemporary leadership theory states that leadership
is a type of interactive process with the environment. Bass & Avolio (1990) proposed transactional leadership and
transformation leadership :( 1) transactional leadership---encouraging subordinates through incentive establishment.
In other words, incentive elicits work performance. Transactional leadership is the basis for most leadership theories.
It focuses on the exchange relationship between the leader and the subordinate (Fry, 2003；Northouse, 2001); (2)
transformation leadership---to enhance staff’s trust and respect for leader by altering intrinsic work value and faith of staff
at the same time in order to elicit work capabilities. Because “charisma” is viewed as an essential element, transformation
leader provides incentives for subordinates, enhance subordinate potential and development. (Fry, 2003); and (3)
Charismatic leadership theory refers to the follower’s perception toward certain behaviors of the leader as being heroic or
Personality characteristic means one’s psychological and physical phenomenon. At different time and condition, it adapts
to different environment by unique behavioral mode and thinking method. Friedman & Rosenman (1959) categorize
personality characteristics into type A and B. Type A shows exuberant ambition and aggression. Type B has more
patience and pays less attention to competition and sense of achievement.
Definitions of personality characteristic were summarized as shown into table 2.
Table 2.2 Definitions of Personality Characteristic
Year Author Definition of Personality Characteristic
1959 Guilford Personality characteristic is a combination of individual trait and property, which
generates a lasting and special characteristic different from the others.
1961 Allport Personality means dynamic behavior from psychological and physical aspect to adapt to
the environment.
1970 Pervin Personality represents structure and dynamics from reaction to the environment.
1972 Scott & Mitchell Personality is formed from accumulation of psychological growth and development.
1998 Robbins Personality is one’s reaction to the others and consequence of interaction with others.
1985 Lee Personality characteristic means psychological attributes of affection and thought
among people; it’s also a specific and lasting behavioral pattern.
1997 Lu The formation of personality is affected by gene, culture, environment, and social factor.
(d) A Manager must be a leader of employee.
2.6 Barriers to Leadership Development:
Leadership is a complex skill—requiring as it does keen psychological insight into the mind, behaviors both rationale
and irrational, beliefs, attitudes, values, emotions, human motivation, communication skills, and so on. Leadership
development is surprisingly difficult. Reasons for this include organizational factors beyond our control, and individual
factors which we can control. Some of these factors are listed below.
Barrier 1: Lack of Leadership Development Programs
Unless you happen to belong to one of the best corporations in the world or are a member of the military, there just is not
that much organizational support for leadership development (see below).
Leadership Development Barrier 2: A Lack of University Leadership Courses
Leadership development, when is it studied at all in the university, is commonly included in the business school
curriculum, often included almost as an afterthought somewhere in a management or organizational development course.
Not only are business students short changed, but the vast majority of university students in the sciences and humanities
have no exposure to leadership theory.
Leadership Development Barrier 3: Faulty Training Methodologies
Even in organizations that offer seminars and courses to the employees, the leadership development methodology is
often wrong—one receives training without development. Performing an exercise once in a class-room or listening to a
speaker in a hotel conference room fails to address both the issue of knowledge retention and skill development.
Organizational and personal change management, process, plans, change management and business development tips
Here are some rules for effective management of change. Managing organizational change will
be more successful if you apply these simple principles. Achieving personal change will be more successful too if you
use the same approach where relevant. Change management entails thoughtful planning and sensitive implementation,
and above all, consultation with, and involvement of, the people affected by the changes. If you force change on people
normally problems arise. Change must be realistic, achievable and measurable. These aspects are especially relevant
to managing personal change. Before starting organizational change, ask yourself: What do we want to achieve with this
change, why, and how will we know that the change has been achieved? Who is affected by this change, and how will
they react to it? How much of this change can we achieve ourselves, and what parts of the change do we need help with?
These aspects also relate strongly to the management of personal as well as organizational change.
Do not 'sell' change to people as a way of accelerating 'agreement' and implementation. 'Selling' change to people is not
a sustainable strategy for success, unless your aim is to be bitten on the bum at some time in the future when you least
expect it. When people listen to a management high-up 'selling' them a change, decent diligent folk will generally smile
and appear to accede, but quietly to themselves, they're thinking, "No bloody chance mate, if you think I'm standing for
that load of old bollocks you've another think coming…" (And that's just the amenable types - the other more recalcitrant
types will be well on the way to making their own particular transition from gamekeepers to poachers.)
Instead, change needs to be understood and managed in a way that people can cope effectively with it. Change can be
unsettling, so the manager logically needs to be a settling influence.
Check that people affected by the change agree with, or at least understand, the need for change, and have a chance to
decide how the change will be managed, and to be involved in the planning and implementation of the change. Use face-
to-face communications to handle sensitive aspects of organizational change management (see Mehrabian's research on
conveying meaning and understanding). Encourage your managers to communicate face-to-face with their people too if
they are helping you manage an organizational change. Email and written notices are extremely weak at conveying and
If you think that you need to make a change quickly, probe the reasons - is the urgency real? Will the effects of agreeing
a more sensible time-frame really be more disastrous than presiding over a disastrous change? Quick change prevents
proper consultation and involvement, which leads to difficulties that take time to resolve.
For complex changes, refer to the process of project management, and ensure that you augment this with consultative
communications to agree and gain support for the reasons for the change. Involving and informing people also creates
opportunities for others to participate in planning and implementing the changes, which lightens your burden, spreads the
organizational load, and creates a sense of ownership and familiarity among the people affected.
See also the excellent free decision-making template, designed by Sharon Drew Morgen, with facilitative questions for
personal and organizational innovation and change.
To understand more about people's personalities, and how different people react differently to change.
For organizational change that entails new actions, objectives and processes for a group or team of people, use
workshops to achieve understanding, involvement, plans, measurable aims, actions and commitment. Encourage your
management team to use workshops with their people too if they are helping you to manage the change.
You should even apply these principles to very tough change like making people redundant, closures and integrating
merged or acquired organizations. Bad news needs even more careful management than routine change. Hiding behind
memos and middle managers will make matters worse. Consulting with people, and helping them to understand does not
weaken your position - it strengthens it. Leaders who fail to consult and involve their people in managing bad news are
perceived as weak and lacking in integrity. Treat people with humanity and respect and they will reciprocate.
Be mindful that the chief insecurity of most staff is change itself. See the process of personal change theory to see how
people react to change. Senior managers and directors responsible for managing organizational change do not, as a rule,
fear change - they generally thrive on it. So remember that your people do not relish change, they find it deeply disturbing
and threatening. Your people's fear of change is as great as your own fear of failure.
The employee does not have a responsibility to manage change - the employee's responsibility is no other than to do their
best, which is different for every person and depends on a wide variety of factors (health, maturity, stability, experience,
personality, motivation, etc). Responsibility for managing change is with management and executives of the organization
- they must manage the change in a way that employees can cope with it. The manager has a responsibility to facilitate
and enable change, and all that is implied within that statement, especially to understand the situation from an objective
standpoint (to 'step back', and be non-judgmental), and then to help people understand reasons, aims, and ways of
responding positively according to employees' own situations and capabilities. Increasingly the manager's role is to
interpret, communicate and enable - not to instruct and impose, which nobody really responds to well.
1. At all times involve and agree support from people within system (system = environment, processes, culture,
relationships, behaviors, etc., whether personal or organizational).
2. Understand where you/the organization is at the moment.
3. Understand where you want to be, when, why, and what the measures will be for having got there.
4. Plan development towards above No.3 in appropriate achievable measurable stages.
5. Communicate, involve, enable and facilitate involvement from people, as early and openly and as fully as is
John P Kotter's 'eight steps to successful change'
American John P Kotter (b 1947) is a Harvard Business School professor and leading thinker and author on
organizational change management. Kotter's highly regarded books 'Leading Change' (1995) and the follow-up 'The Heart
of Change' (2002) describe a helpful model for understanding and managing change. Each stage acknowledges a key
principle identified by Kotter relating to people's response and approach to change, in which people see, feel and then
Kotter's eight step change model can be summarized as:
1. Increase urgency - inspire people to move, make objectives real and relevant.
2. Build the guiding team - get the right people in place with the right emotional commitment, and the right mix of
3. Get the vision right - get the team to establish a simple vision and strategy, focus on emotional and creative
aspects necessary to drive service and efficiency.
4. Communicate for buy-in - Involve as many people as possible, communicate the essentials, simply, and to
appeal and respond to people's needs. De-clutter communications - make technology work for you rather than
5. Empower action - Remove obstacles, enable constructive feedback and lots of support from leaders - reward
and recognize progress and achievements.
6. Create short-term wins - Set aims that are easy to achieve - in bite-size chunks. Manageable numbers of
initiatives. Finish current stages before starting new ones.
7. Don't let up - Foster and encourage determination and persistence - ongoing change - encourage ongoing
progress reporting - highlight achieved and future milestones.
8. Make change stick - Reinforce the value of successful change via recruitment, promotion, new change leaders.
Kotter's eight step model is explained more fully on his website www.kotterinternational.com.
Related to Kotter's ideas, and particularly helpful in understanding the pressures of change on people, and people's
1. Define and agree the objective.
2. Brainstorm ideas and suggestions having agreed a time limit.
3. Categorize/condense/combine/refine.
4. Assess/analyze effects or results.
5. Prioritize options/rank list as appropriate.
6. Agree action and timescale.
7. Control and monitor follow-up.
Ensure everyone participating in the brainstorm session understands and agrees the aim of the session (e.g., to formulate
a new job description for a customer services clerk; to formulate a series of new promotional activities for the next trading
year; to suggest ways of improving cooperation between the sales and service departments; to identify costs saving
opportunities that will not reduce performance or morale, etc). Keep the brainstorming objective simple. Allocate a time
limit. This will enable you to keep the random brainstorming activity under control and on track.
Manage the actual brainstorming activity
Brainstorming enables people to suggest ideas at random. Your job as facilitator is to encourage everyone to participate,
to dismiss nothing, and to prevent others from pouring scorn on the wilder suggestions (some of the best ideas are
initially the daftest ones - added to which people won't participate if their suggestions are criticized). During the random
collection of ideas the facilitator must record every suggestion on the flip-chart. Use Blu-Tack or sticky tape to hang the
sheets around the walls. At the end of the time limit or when ideas have been exhausted, use different colored pens
to categorize, group, connect and link the random ideas. Condense and refine the ideas by making new headings or
lists. You can diplomatically combine or include the weaker ideas within other themes to avoid dismissing or rejecting
contributions (remember brainstorming is about team building and motivation too - you don't want it to have the reverse
effect on some people). With the group, assess, evaluate and analyze the effects and validity of the ideas or the list.
Develop and prioritize the ideas into a more finished list or set of actions or options.
Q19.(a) What is organizational Behavior Modification?
(b) What are the conditions for successful implementation of OB?
(c ) Distinguish between positive reinforcement and negative reinforcement.
Q20. (a) Define and give examples of concepts, principle and theory.
Three words that occur very regularly in research texts are concept, theory and model. It is often assumed that everyone
knows what these words mean and what the differences between them are. These are usually false premises. The terms
will be defined and briefly discussed. As in most situations there are a number of possible definitions for each word.
Simply, a concept is an abstract notion or idea, something that isn’t concrete.
"A word or set of words that expresses a general idea concerning the nature of something or the relations between things,
often providing a category for the classification of phenomena."
In other words a concept is an abstract summary of characteristics that we see as having something in common.
Concepts are created by people for the purpose of communication and efficiency.
A concept has no set meaning and it is up to us to define what we mean by the concept. But if concepts have no set
meaning then anyone can define a concept in any way that they wish. But if everyone can define the concept in any way
they like the concept becomes worthless; unless there is agreement on the meaning communication is impossible. A
concept therefore has to be defined, but in such a way that it has a degree of acceptance. Experts in the field usually
As a researcher you would be expected to:
• review this range of definitions, and
• decide on which you are going to use.
That part of the study of a subject which is not practical.
For example, teaching theory is often contrasted with teaching practice.
More substantial definitions of a theory are:
"A theory is a set of interrelated principles and definitions that present a systematic view of phenomena by specifying
relationships among variables with the purpose of explaining natural phenomena."
"Any set of hypotheses or principles linked by logical or mathematical arguments which is advanced to explain an area of
empirical reality of type of phenomenon."
In effect a theory includes a set of basic assumptions and axioms as the foundation and the body of the theory is
composed of logically interrelated, empirically verifiable propositions.
Let us look at one of these theories in more detail.
Motivation theories fall into two main groups – content theories and process theories. Content theories of motivation, such
as Maslow’s hierarchy of needs and Herzberg’s two factor theory of motivation, focus on what motivates people. Process
theories, such as Expectancy theory and Equity theory, place more emphasis on how people become motivated. If we
look at one of these theories, Maslow is based on a set of assumptions and links a number of variables (physiological,
security social, self-esteem and self-satisfaction) to explain motivation. (Torrington and Hall, 1995)
Concepts are generally regarded as being at a lower level of abstraction than a theory but a necessary part of any theory,
since theories are formed from concepts.
Lucey (1991) defines a model of "any simplified abstract of reality ".
For example we are all familiar with scale models of aircraft, cars, ships, housing estates, etc. These simplified versions of
the real thing are called physical or iconic models. They are based directly on the representation of the phenomenon being
An extension of the physical model is the analogue model. These models are physical in form but do not have the same
appearance as the object being investigated. The circular movement of the hands of a wristwatch is an analogue of the
However there are other types of models.
Symbolic models are based on logic, and inter-relationships between concepts are usually expressed mathematically or
algebraically. They are concerned with quantification.
Mathematical (algebraic) equations are symbolic models. For instance a simple mathematical model is:
There are many such symbolic models in the fields of economics, finance, statistics, science and engineering. One
approach to the analysis of such models is to represent the model on a spreadsheet and conduct sensitivity analysis.
A conceptual model is composed of a pattern of interrelated concepts but not expressed in mathematical form and
primarily not concerned with quantification. Diagrams, such as maps, graphs, charts, balance sheets, circuit diagrams,
and flowcharts, are often used to represent such models.
Models may be very simple or very complex. Since the world we observe cannot be observed in totality, each model
reflects only a limited aspect of the total world. No single model, or combination of models, reveals the truth of the
structure of reality. Each model reveals and orders reality from a particular perspective.
In practice concepts and especially theories are often referred to as models.
Other words associated with concepts theories and models are law, empirical and variable.
A law is a precise statement of a relationship among facts that has been repeatedly corroborated by scientific
investigation and is generally accepted as accurate by experts in the field. Laws are generally derived from a theory.
A law is frequently referred to as a universal and predictive statement. It is universal in the sense that the stated
relationship is held always to occur under the specified conditions, although the conditions may be predicted to follow.
Empirical means based on experience, observation or experimentation. Empiricism is the belief that all human knowledge
is derived from experience – as opposed to, for example, idealism, rationalism and naturalism.
A variable is a characteristic or attitude that changes or varies. More exactly, it is any measurable characteristic which can
assume varying or different values in successive individuals cases.
In the mathematical sense it is a quantity that may take any one of a specified set of values, for example, height.
A wider use of the term variable includes mathematically non-measurable characteristics such as gender and religion.
It is usual, when comparisons are made between two variables or there is a relationship between two variables, to term
one the dependent variable and the other the independent variable. The independent variable is the variabl
e that is changed or manipulated. As a consequence of this change there will be a resulting change in the other variable
– dependent variable. For example, research may be conducted into the intensity of lighting in a room in order to observe
the effect on productivity levels of workers. The independent variable is the intensity of lighting and the dependent variable
(b) What is model? Discuss various types of models.
(c ) How models can be useful for decision-making?
Q21.(a) Discuss the ethical issues in IT?
(b) What are the productivity measures that may be used in measuring productivity of a commercial bank?
(c ) Business and Government influence each other” Explain
(d) Distinguish between formal and Informal organization
Q22.(a) Discuss Fiedler’s leadership theory.
2.19 MAJOR LEADERSHIP THEORIES, MODELS AND TRAITS
People have been interested in leadership since they started coming together in groups to accomplish goals. However,
it wasn’t until the early part of the twentieth century that researchers actually began to study leadership. These early
leadership theories focused on the leader (leadership trait theories) and how the leader interacted with his or her group
members (leadership behavior theories).
Researchers at the University of Cambridge in England recently reported that men with longer ring fingers, compared to
their index fingers, tended to be more successful in the frantic high-frequency trading in the London financial district.4
What does a study of the finger lengths of financial traders have to do with trait theories of leadership? Well, that’s also
what leadership trait theories have attempted to do—identify certain traits that all leaders have. Leadership research in
the 1920s and 1930s focused on isolating leader traits—that is, characteristics—that would differentiate leaders from
non-leaders. Some of the traits studied included physical stature, appearance, social class, emotional stability, fluency of
speech, and sociability. Despite the best efforts of researchers, it proved impossible to identify a set of traits that would
always differentiate a leader (the person) from a non-leader. Maybe it was a bit optimistic to think that a set of consistent
and unique traits would apply universally to all effective leaders, no matter whether they were in charge of Kraft Foods,
the Moscow Ballet, the country of France, a local collegiate chapter of Alpha Chi Omega, Ted’s Malibu Surf Shop, or
Oxford University. However, later attempts to identify traits consistently associated with leadership (the process of leading,
not the person) were more successful. The seven traits shown to be associated with effective leadership. Researchers
eventually recognized that traits alone were not sufficient for identifying effective leaders since explanations based
solely on traits ignored the interactions of leaders and their group members as well as situational factors. Possessing
the appropriate traits only made it more likely that an individual would be an effective leader. Therefore, leadership
research from the late 1940s to the mid-1960s concentrated on the preferred behavioral styles that leaders demonstrated.
Researchers wondered whether something unique in what effective leaders did—in other words, in their behavior—was
Seven Traits Associated with Leadership:
1. Drive. Leaders exhibit a high effort level. They have a relatively high desire for achievement, they are ambitious, they
have a lot of energy, they are tirelessly persistent in their activities, and they show initiative.
2. Desire to lead. Leaders have a strong desire to influence and lead others. They demonstrate the willingness to take
3. Honesty and integrity. Leaders build trusting relationships with followers by being truthful or non deceitful and by showing
high consistency between word and deed.
4. Self-confidence. Followers look to leaders for an absence of self-doubt. Leaders, therefore, need to show self-confidence
in order to convince followers of the rightness of their goals and decisions.
5. Intelligence. Leaders need to be intelligent enough to gather, synthesize, and interpret large amounts of information, and
they need to be able to create visions, solve problems, and make correct decisions.
6. Job-relevant knowledge. Effective leaders have a high degree of knowledge about the company, industry, and technical
matters. In-depth knowledge allows leaders to make well-informed decisions and to understand the implications of those
7. Extraversion. Leaders are energetic, lively people. They are sociable, assertive, and rarely silent or withdrawn.
*** Sources: Based on S. A. Kirkpatrick and E. A. Locke, “Leadership: Do Traits Really Matter?” Academy of Management
Executive, May 1991, pp. 48–60; and T. A. Judge, J. E. Bono, R. Ilies, and M. W. Gerhardt, “Personality and Leadership: A
Qualitative and Quantitative Review,” Journal of Applied Psychology, August 2002, pp. 765–780.
Someone who can influence others and who has managerial authority
A process of influencing a group to achieve goals
Bill Watkins, former CEO of disk drive manufacturer Seagate Technology, once responded when asked how he handled
his board of directors, “You never ask board members what they think. You tell them what you’re going to do.” In contrast,
Joe Lee, CEO of Darden Restaurants during the aftermath of 9/11, was focused on only two things that morning: his
Darden people who were traveling and his company’s Muslim colleagues.6 These two leaders of successful companies,
as you can see, behaved in two very different ways. What do we know about leader behavior and how can it help us in
our understanding of what an effective leader is? Researchers hoped that the behavioral theories approach would provide
more definitive answers about the nature of leadership than did the trait theories.
The University of Iowa studies explored three leadership styles to find which was the most effective.7 The autocratic
style described a leader who dictated work methods, made unilateral decisions, and limited employee participation. The
democratic style described a leader who involved employees in decision making, delegated authority, and used feedback
as an opportunity for coaching employees. Finally, the laissez-faire style leader let the group make decisions and complete
the work in whatever way it saw fit. The researchers’ results seemed to indicate that the democratic style contributed
to both good quantity and quality of work. Had the answer to the question of the most effective leadership style been
found? Unfortunately, it wasn’t that simple. Later studies of the autocratic and democratic styles showed mixed results.
For instance, the democratic style sometimes produced higher performance levels than the autocratic style, but at other
times, it didn’t. However, more consistent results were found when a measure of employee satisfaction was used. Group
members were more satisfied under a democratic leader than under an autocratic one.
University of lowa Democratic style: involving
Behavioral Dimension Conclusion
subordinates,
delegating authority, and
encouraging
participation
Democratic style of
leadership was most
effective, although later
studies showed
mixed results.
Autocratic style: dictating
work methods,
centralizing decision
making, and limiting
participation
Laissez-faire style: giving
group freedom
to make decisions and
complete work
Consideration: being
considerate of
followers’ ideas and feelings
Initiating structure:
structuring work and
work relationships to meet
job goals
Employee oriented:
emphasized
interpersonal relationships
and taking
care of employees’ needs
Production oriented:
emphasized
technical or task aspects of
Concern for people:
measured leader’s
concern for subordinates on
a scale of
1 to 9 (low to high).
Concern for production:
measured
leader’s concern for getting
job done
on a scale 1 to 9 (low to
High–high leader (high in
consideration
and high in initiating
structure) achieved
high subordinate
performance and
satisfaction, but not in all
situations
Employee-oriented leaders
were
associated with high group
productivity
and higher job satisfaction.
Leaders performed best
with a 9,9 style
(high concern for production
and high concern for
people).
Now leaders had a dilemma! Should they focus on achieving higher performance or on achieving higher member
satisfaction? This recognition of the dual nature of a leader’s behavior—that is, focus on the task and focus on the
people—was also a key characteristic of the other behavioral studies.
THE OHIO STATE STUDIES: The Ohio State studies identified two important dimensions of leader behavior.9 Beginning
with a list of more than 1,000 behavioral dimensions, the researchers eventually narrowed it down to just two that
accounted for most of the leadership behavior described by group members. The first was called initiating structure,
which referred to the extent to which a leader defined his or her role and the roles of group members in attaining goals.
It included behaviors that involved attempts to organize work, work relationships, and goals. The second was called
consideration, which was defined as the extent to which a leader had work relationships characterized by mutual trust
and respect for group members’ ideas and feelings. A leader who was high in consideration helped group members with
personal problems, was friendly and approachable, and treated all group members as equals. He or she showed concern
for (was considerate of) his or her followers’ comfort, well-being, status, and satisfaction. Research found that a leader
who was high in both initiating structure and consideration (a high–high leader) sometimes achieved high group task
performance and high group member satisfaction, but not always.
UNIVERSITY OF MICHIGAN STUDIES: Leadership studies conducted at the University of Michigan at about the
same time as those being done at Ohio State also hoped to identify behavioral characteristics of leaders that were
related to performance effectiveness. The Michigan group also came up with two dimensions of leadership behavior,
which they labeled employee oriented and production oriented.10 Leaders who were employee oriented were described
as emphasizing interpersonal relationships. The production-oriented leaders, in contrast, tended to emphasize the task
aspects of the job. Unlike the other studies, the Michigan researchers concluded that leaders who were employee
oriented were able to get high group productivity and high group member satisfaction.
The behavioral dimensions from these early leadership studies provided the basis for the development of a two-
dimensional grid for appraising leadership styles. This managerial grid used the behavioral dimensions “concern for
people” (the vertical part of the grid) and “concern for production” (the horizontal part of the grid) and evaluated a leader’s
use of these behaviors, ranking them on a scale from 1 (low) to 9 (high).11 Although the grid had 81 potential categories
into which a leader’s behavioral style might fall, only five styles were named: impoverished management (1,1 or low
concern for production, low concern for people), task management (9,1 or high concern for production, low concern
for people), middle-of-the-road management (5,5 or medium concern for production, medium concern for people),
country club management (1,9 or low concern for production, high concern for people), and team management (9,9 or
high concern for production, high concern for people). Of these five styles, the researchers concluded that managers
performed best when using a 9,9 style. Unfortunately, the grid offered no answers to the question of what made a
manager an effective leader; it only provided a framework for conceptualizing leadership style. In fact, little substantive
evidence supports the conclusion that a 9,9 style is most effective in all situations.12 Leadership researchers were
discovering that predicting leadership success involved something more complex than isolating a few leader traits or
preferable behaviors. They began looking at situational influences. Specifically, which leadership styles might be suitable
in different situations and what were these different situations?
“The corporate world is filled with stories of leaders who failed to achieve greatness because they failed to understand the
context they were working in.”13 In this section we examine three contingency theories—Fiedler, Hersey-Blanchard, and
path-goal. Each looks at defining leadership style and the situation, and attempts to answer the if-then contingencies (that
is, if this is the context or situation, then this is the best leadership style to use).
The first comprehensive contingency model for leadership was developed by Fred Fiedler.
The Fiedler contingency model proposed that effective group performance depended upon properly matching the leader’s
style and the amount of control and influence in the situation. The model was based on the premise that a certain
leadership style would be most effective in different types of situations. The keys were to (1) define those leadership
styles and the different types of situations, and then (2) identify the appropriate combinations of style and situation.
Fiedler proposed that a key factor in leadership success was an individual’s basic leadership style, either task oriented or
relationship oriented. To measure a leader’s style, Fiedler developed the least-preferred coworker (LPC) questionnaire.
This questionnaire contained 18 pairs of contrasting adjectives—for example, pleasant–unpleasant, cold–warm, boring–
interesting, or friendly–unfriendly. Respondents were asked to think of all the coworkers they had ever had and to
describe that one person they least enjoyed working with by rating him or her on a scale of 1 to 8 for each of the 18 sets
of adjectives (the 8 always described the positive adjective out of the pair and the 1 always described the negative
adjective out of the pair). If the leader described the least preferred coworker in relatively positive terms (in other words, a
“high” LPC score—a score of 64 or above), then the respondent was primarily interested in good personal relations with
coworkers and the style would be described as relationship oriented. In contrast, if you saw the least preferred coworker
in relatively unfavorable terms (a low LPC score—a score of 57 or below), you were primarily interested in productivity
and getting the job done; thus, your style would be labeled as task oriented. Fiedler did acknowledge that a small number
of people might fall in between these two extremes and not have a cut-and-dried leadership style. One other important
point is that Fiedler assumed a person’s leadership style was fixed regardless of the situation. In other words, if you were
a relationship- oriented leader, you’d always be one, and the same for task-oriented. After an individual’s leadership style
had been assessed through the LPC, it was time to evaluate the situation in order to be able to match the leader with the
situation. Fiedler’s research uncovered three contingency dimensions that defined the key situational factors in leader
_ Leader–member relations: the degree of confidence, trust, and respect employees had for their leader; rated as either
_ Task structure: the degree to which job assignments were formalized and structured; rated as either high or low.
_ Position power: the degree of influence a leader had over activities such as hiring, firing, discipline, promotions, and
salary increases; rated as either strong or weak.
Each leadership situation was evaluated in terms of these three contingency variables, which when combined produced
eight possible situations that were either favorable or unfavorable for the leader. (See the bottom of the chart in Exhibit
17-3.) Situations I, II, and III were classified as highly favorable for the leader. Situations IV, V, and VI were moderately
favorable for the leader. And situations VII and VIII were described as highly unfavorable for the leader. Once Fiedler
had described the leader variables and the situational variables, he had everything he needed to define the specific
contingencies for leadership effectiveness. To do so, he studied 1,200 groups where he compared relationship-oriented
versus task-oriented leadership styles in each of the eight situational categories. He concluded that task-oriented leaders
performed better in very favorable situations and in very unfavorable situations. (See the top of Exhibit 17-3 where
performance is shown on the vertical axis and situation favorableness is shown on the horizontal axis.) On the other
hand, relationship-oriented leaders performed better in moderately favorable situations. Because Fiedler treated an
individual’s leadership style as fixed, only two ways could improve leader effectiveness. First, you could bring in a new
leader whose style better fit the situation. For instance, if the group situation was highly unfavorable but was led by a
relationship-oriented leader, the group’s performance could be improved by replacing that person with a task-oriented
leader. The second alternative was to change the situation to fit the leader. This could be done by restructuring tasks; by
increasing or decreasing the power that the leader had over factors such as salary increases, promotions, and disciplinary
actions; or by improving the leader–member relations. Research testing the overall validity of Fiedler’s model has shown
considerable evidence to support the model.15 However, his theory wasn’t without criticisms. The major one is that it’s
probably unrealistic to assume that a person can’t change his or her leadership style to fit the situation. Effective leaders
can, and do, change their styles. Another is that the LPC wasn’t very practical. Finally, the situation variables were
difficult to assess.16 Despite its shortcomings, the Fiedler model showed that effective leadership style needed to reflect
Hersey and Blanchard’s Situational Leadership Theory
Paul Hersey and Ken Blanchard developed a leadership theory that has gained a strong following among management
development specialists.17 This model, called situational leadership theory (SLT), is a contingency theory that focuses on
followers’ readiness. Before we proceed, two points need clarification: Why a leadership theory focuses on the followers,
and what is meant by the term readiness.
The emphasis on the followers in leadership effectiveness reflects the reality that it is the followers who accept or reject
the leader. Regardless of what the leader does, the group’s effectiveness depends on the actions of the followers. This
important dimension has been overlooked or underemphasized in most leadership theories. And readiness, as defined by
Hersey and Blanchard, refers to the extent to which people have the ability and willingness to accomplish a specific task.
SLT uses the same two leadership dimensions that Fiedler identified: task and relationship behaviors. However, Hersey
and Blanchard go a step further by considering each as either high or low and then combining them into four specific
leadership styles described as follows:
_ Telling (high task–low relationship): The leader defines roles and tells people what, how, when, and where to do various
_ Selling (high task–high relationship): The leader provides both directive and supportive behavior.
_ Participating (low task–high relationship): The leader and followers share in decision making; the main role of the leader
_ Delegating (low task–low relationship): The leader provides little direction or support.
The final component in the model is the four stages of follower readiness:
_ R1: People are both unable and unwilling to take responsibility for doing something. Followers aren’t competent or
_ R2: People are unable but willing to do the necessary job tasks. Followers are motivated but lack the appropriate skills.
_ R3: People are able but unwilling to do what the leader wants. Followers are competent, but don’t want to do something.
_ R4: People are both able and willing to do what is asked of them. SLT essentially views the leader–follower relationship
as like that of a parent and a child. Just as a parent needs to relinquish control when a child becomes more mature
and responsible, so, too, should leaders. As followers reach higher levels of readiness, the leader responds not only
by decreasing control over their activities but also decreasing relationship behaviors. The SLT says if followers are at
R1 (unable and unwilling to do a task), the leader needs to use the telling style and give clear and specific directions;
if followers are at R2 (unable and willing), the leader needs to use the selling style and display high task orientation to
compensate for the followers’ lack of ability and high relationship orientation to get followers to “buy into” the leader’s
desires; if followers are at R3 (able and unwilling), the leader needs to use the participating style to gain their support;
and if employees are at R4 (both able and willing), the leader doesn’t need to do much and should use the delegating
style. SLT has intuitive appeal. It acknowledges the importance of followers and builds on the logic that leaders can
compensate for ability and motivational limitations in their followers. However, research efforts to test and support the
theory generally have been disappointing. Possible explanations include internal inconsistencies in the model as well
as problems with research methodology. Despite its appeal and wide popularity, we have to be cautious about any
Another approach to understanding leadership is path-goal theory, which states that the leader’s job is to assist followers
in attaining their goals and to provide direction or support needed to ensure that their goals are compatible with the goals
of the group or organization. Developed by Robert House, path-goal theory takes key elements from the expectancy
theory of motivation. The term path-goal is derived from the belief that effective leaders remove the roadblocks and pitfalls
so that followers have a clearer path to help them get from where they are to the achievement of their work goals.
House identified four leadership behaviors:
_ Directive leader: Lets subordinates know what’s expected of them, schedules work to be done, and gives specific
guidance on how to accomplish tasks.
_ Supportive leader: Shows concern for the needs of followers and is friendly.
_ Participative leader: Consults with group members and uses their suggestions before making a decision.
_ Achievement oriented leader: Sets challenging goals and expects followers to perform at their highest level. In contrast
to Fiedler’s view that a leader couldn’t change his or her behavior, House assumed that leaders are flexible and can
display any or all of these leadership styles depending on the situation. Path-goal theory proposes two situational or
contingency variables that moderate the leadership behavior–outcome relationship: those in the environment that are
outside the control of the follower (factors including task structure, formal authority system, and the work group) and those
that are part of the personal characteristics of the follower (including locus of control, experience, and perceived ability).
Environmental factors determine the type of leader behavior required if subordinate outcomes are to be maximized;
personal characteristics of the follower determine how the environment and leader behavior are interpreted. The theory
proposes that a leader’s behavior won’t be effective if it’s redundant with what the environmental structure is providing or
is incongruent with follower characteristics.
For example, some predictions from path-goal theory are:
_ Directive leadership leads to greater satisfaction when tasks are ambiguous or stressful than when they are highly
structured and well laid out. The followers aren’t sure what to do, so the leader needs to give them some direction.
_ Supportive leadership results in high employee performance and satisfaction when subordinates are performing
structured tasks. In this situation, the leader only needs to support followers, not tell them what to do.
_ Directive leadership is likely to be perceived as redundant among subordinates with high perceived ability or with
considerable experience. These followers are quite capable so they don’t need a leader to tell them what to do.
_ The clearer and more bureaucratic the formal authority relationships, the more leaders should exhibit supportive
behavior and deemphasize directive behavior. The organizational situation has provided the structure as far as what is
expected of followers, so the leader’s role is simply to support.
_ Directive leadership will lead to higher employee satisfaction when there is substantive conflict within a work group. In
this situation, the followers need a leader who will take charge.
_ Subordinates with an internal locus of control will be more satisfied with a participative style. Because these followers
believe that they control what happens to them, they prefer to participate in decisions.
_ Subordinates with an external locus of control will be more satisfied with a directive style. These followers believe that
what happens to them is a result of the external environment so they would prefer a leader that tells them what to do.
_ Achievement-oriented leadership will increase subordinates’ expectancies that effort will lead to high performance when
tasks are ambiguously structured. By setting challenging goals, followers know what the expectations are. Testing path-
goal theory has not been easy. A review of the research suggests mixed support. To summarize the model, however,
an employee’s performance and satisfaction are likely to be positively influenced when the leader chooses a leadership
style that compensates for shortcomings in either the employee or the work setting. However, if the leader spends time
explaining tasks that are already clear or when the employee has the ability and experience to handle them without
interference, the employee is likely to see such directive behavior as redundant or even insulting.
What are the latest views of leadership? We want to look at four of these views:
Leader–member exchange theory, transformational-transactional leadership, charismatic visionary leadership, and team
Leader–Member Exchange (LMX) Theory
Have you ever been in a group in which the leader had “favorites” who made up his or her in-group? If so, that’s the
premise behind leader–member exchange (LMX) theory.
Leader–member exchange theory (LMX) says that leaders create in-groups and out groups and those in the in-group will
have higher performance ratings, less turnover, and greater job satisfaction. LMX theory suggests that early on in the
relationship between a leader and a given follower, a leader will implicitly categorize a follower as an “in” or as an “out.”
That relationship tends to remain fairly stable over time. Leaders also encourage LMX by rewarding those employees with
whom they want a closer linkage and punishing those with whom they do not.22 For the LMX relationship to remain intact,
however, both the leader and the follower must “invest” in the relationship. It’s not exactly clear how a leader chooses who
falls into each category, but evidence shows that in-group members have demographic, attitude, personality, and even
gender similarities with the leader or they have a higher level of competence than out-group members.23 The leader does
the choosing, but the follower’s characteristics drive the decision.
Research on LMX has been generally supportive. It appears that leaders do differentiate among followers; that these
disparities are not random; and followers with in-group status will have higher performance ratings, engage in more
helping or “citizenship” behaviors at work, and report greater satisfaction with their boss.24 This probably shouldn’t be
surprising since leaders invest their time and other resources in those whom they expect to perform best.
Other Theories: There are also numerous theories about leadership, or about carrying out the role of leader, e.g., servant
leader, democratic leader, principle-centered leader, group-man theory, great-man theory, traits theory, visionary leader,
total leader, situational leader, etc. The following articles provide brief overview of key theories.
Douglas McGregor's XY Theory, managing an X Theory boss, and William Ouchi's Theory Z
Douglas McGregor, an American social psychologist, proposed his famous X-Y theory in his 1960 book 'The Human Side
Of Enterprise'. Theory x and theory y are still referred to commonly in the field of management and motivation, and whilst
more recent studies have questioned the rigidity of the model, Mcgregor's X-Y Theory remains a valid basic principle from
which to develop positive management style and techniques. McGregor's XY Theory remains central to organizational
development, and to improving organizational culture.
McGregor's X-Y theory is a salutary and simple reminder of the natural rules for managing people, which under the
pressure of day-to-day business are all too easily forgotten.
McGregor's ideas suggest that there are two fundamental approaches to managing people. Many managers tend towards
theory x, and generally get poor results. Enlightened managers use theory y, which produces better performance and
results, and allows people to grow and develop.
McGregor's ideas significantly relate to modern understanding of the Psychological Contract, which provides many ways
to appreciate the unhelpful nature of X-Theory leadership, and the useful constructive beneficial nature of Y-Theory
Theory x ('authoritarian management' style)
• The average person dislikes work and will avoid it he/she can.
• Therefore most people must be forced with the threat of punishment to work towards organizational objectives.
• The average person prefers to be directed; to avoid responsibility; is relatively unambitious, and wants security
theory y ('participative management' style)
• Effort in work is as natural as work and play.
• People will apply self-control and self-direction in the pursuit of organizational objectives, without external
• Commitment to objectives is a function of rewards associated with their achievement.
• People usually accept and often seek responsibility.
• The capacity to use a high degree of imagination, ingenuity and creativity in solving organizational problems is
widely, not narrowly, distributed in the population.
• In industry the intellectual potential of the average person is only partly utilized.
Tools for teaching, understanding and evaluating xy theory factors
The XY Theory diagram and measurement tool below (pdf and doc versions) are adaptations of McGregor's ideas
for modern organizations, management and work. They were not created by McGregor. I developed them to help
understanding and application of McGregor's XY Theory concept. The test is a simple reflective tool, not a scientifically
validated instrument; it's a learning aid and broad indicator. Please use it as such.
Perhaps the most noticeable aspects of McGregor's XY Theory - and the easiest to illustrate - are found in the behaviors
of autocratic managers and organizations which use autocratic management styles.
What are the characteristics of a Theory X manager? Typically some, most or all of these:
• results-driven and deadline-driven, to the exclusion of everything else
• issues deadlines and ultimatums
• issues instructions, directions, edicts
• issues threats to make people follow instructions
• unconcerned about staff welfare, or morale
• proud, sometimes to the point of self-destruction
• fundamentally insecure and possibly neurotic
• withholds rewards, and suppresses pay and remunerations levels
• scrutinizes expenditure to the point of false economy
• seeks culprits for failures or shortfalls
• seeks to apportion blame instead of focusing on learning from the experience and preventing recurrence
• does not invite or welcome suggestions
• takes criticism badly and likely to retaliate if from below or peer group
• poor at proper delegating - but believes they delegate well
• thinks giving orders is delegating
• holds on to responsibility but shifts accountability to subordinates
• relatively unconcerned with investing in anything to gain future improvements
How to manage upwards - managing your X theory boss
Working for an X theory boss isn't easy - some extreme X theory managers make extremely unpleasant managers, but
there are ways of managing these people upwards. Avoiding confrontation (unless you are genuinely being bullied, which
is a different matter) and delivering results are the key tactics.
• Theory X managers (or indeed theory Y managers displaying theory X behavior) are primarily results oriented -
so orientate your your own discussions and dealings with them around results – i.e., what you can deliver and when.
• Theory X managers are facts and figures oriented - so cut out the incidentals, be able to measure and
substantiate anything you say and do for them, especially reporting on results and activities.
• Theory X managers generally don't understand or have an interest in the human issues, so don't try to appeal
to their sense of humanity or morality. Set your own objectives to meet their organizational aims and agree these with
the managers; be seen to be self-starting, self-motivating, self-disciplined and well-organized - the more the X theory
manager sees you are managing yourself and producing results, the less they'll feel the need to do it for you.
• Always deliver your commitments and promises. If you are given an unrealistic task and/or deadline state the
reasons why it's not realistic, but be very sure of your ground, don't be negative; be constructive as to how the overall
aim can be achieved in a way that you know you can deliver.
• Stand up for yourself, but constructively - avoid confrontation. Never threaten or go over their heads if you are
dissatisfied or you'll be in big trouble afterwards and life will be a lot more difficult.
• If an X theory boss tells you how to do things in ways that are not comfortable or right for you, then don't
questioning the process, simply confirm the end-result that is required, and check that it's okay to 'streamline the
process' or 'get things done more efficiently' if the chance arises - they'll normally agree to this, which effectively gives
you control over the 'how', provided you deliver the 'what' and 'when'.
And this is really the essence of managing upwards X theory managers - focus and get agreement on the results and
deadlines - if you consistently deliver, you'll increasingly be given more leeway on how you go about the tasks, which
amounts to more freedom. Be aware also that many X theory managers are forced to be X theory by the short-term
demands of the organization and their own superiors - an X theory manager is usually someone with their own problems,
See also the article about building self-confidence, and assertiveness techniques.
First things first - Theory Z is not a Mcgregor idea and as such is not Mcgregor's extension of his XY theory.
Theory Z was developed by not by Mcgregor, but by William Ouchi, in his book 1981 'Theory Z: How American
management can meet the Japanese Challenge'. William Ouchi is professor of management at UCLA, Los Angeles, and a
board member of several large US organizations.
Theory Z is often referred to as the 'Japanese' management style, which is essentially what it is. It's interesting that Ouchi
chose to name his model 'Theory Z', which apart from anything else tends to give the impression that it's a Mcgregor idea.
One wonders if the idea was not considered strong enough to stand alone with a completely new name... Nevertheless,
Theory Z essentially advocates a combination of all that's best about theory Y and modern Japanese management, which
places a large amount of freedom and trusts with workers, and assumes that workers have a strong loyalty and interest in
Theory Z also places more reliance on the attitude and responsibilities of the workers, whereas Mcgregor's XY theory is
mainly focused on management and motivation from the manager's and organization’s perspective. There is no doubt that
Ouchi's Theory Z model offers excellent ideas, albeit it lacking the simple elegance of Mcgregor's model, which let's face
it, thousands of organizations and managers around the world have still yet to embrace. For this reason, Theory Z may for
some be like trying to manage the kitchen at the Ritz before mastering the ability to cook a decent fried breakfast.
To develop your understanding of McGregor's X-Y Theory, complete the free or doc version, which indicates whether your
organization is more Theory-X or Theory-Y, as well as indicating your own (or the particular individual's) preference to be
managed by X or Y style. The test is a simple reflective tool, not a scientifically validated instrument, designed to give a
broad indication of XY Theory tendencies and to aid understanding of the model.
The free XY Theory diagram )or doc version, is helpful for teaching and training, presentations and project work, and is
adapted from McGregor's ideas so as to convey simply and quickly the essence of the concept.
Assumptions: Leaders can be made, rather than are born.
Successful leadership is based in definable, learnable behavior
Behavioral theories of leadership do not seek inborn traits or capabilities. Rather, they look at what leaders actually do.
If success can be defined in terms of describable actions, then it should be relatively easy for other people to act in the
same way. This is easier to teach and learn then to adopt the more ephemeral 'traits' or 'capabilities'.
Behavioral is a big leap from Trait Theory, in that it assumes that leadership capability can be learned, rather than being
inherent. This opens the floodgates to leadership development, as opposed to simple psychometric assessment that sorts
those with leadership potential from those who will never have the chance.
A behavioral theory is relatively easy to develop, as you simply assess both leadership success and the actions of
leaders. With a large enough study, you can then correlate statistically significant behaviors with success. You can also
identify behaviors which contribute to failure, thus adding a second layer of understanding.
Assumptions: The leader's ability to lead is contingent upon various situational factors, including the leader's preferred
style, the capabilities and behaviors of followers and also various other situational factors.
Contingency theories are a class of behavioral theory that contend that there is no one best way of leading and that a
leadership style that is effective in some situations may not be successful in others.
An effect of this is that leaders who are very effective at one place and time may become unsuccessful either when
transplanted to another situation or when the factors around them change.
This helps to explain how some leaders who seem for a while to have the 'Midas touch' suddenly appear to go off the boil
and make very unsuccessful decisions.
Contingency theory is similar to situational theory in that there is an assumption of no simple one right way. The main
difference is that situational theory tends to focus more on the behaviors that the leader should adopt, given situational
factors (often about follower behavior), whereas contingency theory takes a broader view that includes contingent factors
about leader capability and other variables within the situation.
Assumptions: Leaders are born and not made.
Great leaders will arise when there is a great need.
Early research on leadership was based on the study of people who were already great leaders. These people were often
from the aristocracy, as few from lower classes had the opportunity to lead. This contributed to the notion that leadership
The idea of the Great Man also strayed into the mythic domain, with notions that in times of need, a Great Man would
arise, almost by magic. This was easy to verify, by pointing to people such as Eisenhower and Churchill, let alone those
further back along the timeline, even to Jesus, Moses, Mohammed and the Buddah.
The 'great man' theory was originally proposed by Thomas Carlyle.
Gender issues were not on the table when the 'Great Man' theory was proposed. Most leaders were male and the thought
of a Great Woman was generally in areas other than leadership. Most researchers were also male, and concerns about
androcentric bias were a long way from being realized.
It has been said that history is nothing but stories of great men. Certainly, much has this bias, although there is of course
also much about peoples and broader life.
Assumptions: The best action of the leader depends on a range of situational factors.
When a decision is needed, an effective leader does not just fall into a single preferred style, such as using transactional
or transformational methods. In practice, as they say, things are not that simple.
Factors that affect situational decisions include motivation and capability of followers. This, in turn, is affected by factors
within the particular situation. The relationship between followers and the leader may be another factor that affects leader
behavior as much as it does follower behavior.
The leaders' perception of the follower and the situation will affect what they do rather than the truth of the situation. The
leader's perception of themselves and other factors such as stress and mood will also modify the leaders' behavior.
Yukl (1989) seeks to combine other approaches and identifies six variables:
¸ Subordinate effort: the motivation and actual effort expended.
¸ Subordinate ability and role clarity: followers knowing what to do and how to do it.
¸ Organization of the work: the structure of the work and utilization of resources.
¸ Cooperation and cohesiveness: of the group in working together.
¸ Resources and support: the availability of tools, materials, people, etc.
¸ External coordination: the need to collaborate with other groups.
¸ Leaders here work on such factors as external relationships, acquisition of resources, managing demands on
the group and managing the structures and culture of the group.
Jeff Bezos, founder and CEO of Amazon.com, is a person who exudes energy, enthusiasm, and drive. He’s fun-loving
(his legendary laugh has been described as a flock of Canadian geese on nitrous oxide), but has pursued his vision for
Amazon with serious intensity and has demonstrated an ability to inspire his employees through the ups and downs of a
rapidly growing company. Bezos is what we call a charismatic leader—that is, an enthusiastic, self-confident leader whose
personality and actions influence people to behave in certain ways.
Several authors have attempted to identify personal characteristics of the charismatic leader. The most comprehensive
analysis identified five such characteristics: they have a vision, the ability to articulate that vision, a willingness to take
risks to achieve that vision, a sensitivity to both environmental constraints and follower needs, and behaviors that are
out of the ordinary. An increasing body of evidence shows impressive correlations between charismatic leadership and
high performance and satisfaction among followers.34 Although one study found that charismatic CEOs had no impact
on subsequent organizational performance, charisma is still believed to be a desirable leadership quality. If charisma is
desirable, can people learn to be charismatic leaders? Or are charismatic leaders born with their qualities? Although a
small number of experts still think that charisma can’t be learned, most believe that individuals can be trained to exhibit
charismatic behaviors. For example, researchers have succeeded in teaching undergraduate students to “be” charismatic.
How? They were taught to articulate a far-reaching goal, communicate high performance expectations, exhibit confidence
in the ability of subordinates to meet those expectations, and empathize with the needs of their subordinates; they
learned to project a powerful, confident, and dynamic presence; and they practiced using a captivating and engaging
voice tone. The researchers also trained the student leaders to use charismatic nonverbal behaviors, including leaning
toward the follower when communicating, maintaining direct eye contact, and having a relaxed posture and animated
facial expressions. In groups with these “trained” charismatic leaders, members had higher task performance, higher
task adjustment, and better adjustment to the leader and to the group than did group members who worked in groups
led by non-charismatic leaders. One last thing we should say about charismatic leadership is that it may not always be
necessary to achieve high levels of employee performance. It may be most appropriate when the follower’s task has an
ideological purpose or when the environment involves a high degree of stress and uncertainty.37 This distinction may
explain why, when charismatic leaders surface, it’s more likely to be in politics, religion, or wartime; or when a business
firm is starting up or facing a survival crisis. For example, Martin Luther King Jr. used his charisma to bring about social
equality through nonviolent means, and Steve Jobs achieved unwavering loyalty and commitment from Apple’s technical
staff in the early 1980s by articulating a vision of personal computers that would dramatically change the way people
lived. Although the term vision is often linked with charismatic leadership, visionary leadership is different; it’s the ability
to create and articulate a realistic, credible, and attractive vision of the future that improves upon the present situation.38
This vision, if properly selected and implemented, is so energizing that it “in effect jump-starts the future by calling forth
the skills, talents, and resources to make it happen.”39 An organization’s vision should offer clear and compelling imagery
that taps into people’s emotions and inspires enthusiasm to pursue the organization’s goals. It should be able to generate
possibilities that are inspirational and unique and offer new ways of doing things that are clearly better for the organization
and its members. Visions that are clearly articulated and have powerful imagery are easily grasped and accepted. For
Dell (Dell Computer) created a vision of a business that sells and delivers customized PCs directly to customers in less
than a week. The late Mary Kay Ash’s vision of women as entrepreneurs selling products that improved their self-image
gave impetus to her cosmetics company, Mary Kay Cosmetics.
Because leadership is increasingly taking place within a team context and more organizations are using work teams,
the role of the leader in guiding team members has become increasingly important. The role of team leader is different
from the traditional leadership role, as J. D. Bryant, a supervisor at Texas Instruments’ Forest Lane plant in Dallas,
discovered. One day he was contentedly overseeing a staff of 15 circuit board assemblers. The next day he was told that
the company was going to use employee teams and he was to become a “facilitator.” He said, “I’m supposed to teach
the teams everything I know and then let them make their own decisions.” Confused about his new role, he admitted,
“There was no clear plan on what I was supposed to do.” What is involved in being a team leader? Many leaders are not
equipped to handle the change to employee teams. As one consultant noted, “Even the most capable managers have
trouble making the transition because all the command-and-control type things they were encouraged to do before are no
longer appropriate. There’s no reason to have any skill or sense of this.”42 This same consultant estimated that “probably
15 percent of managers are natural team leaders; another 15 percent could never lead a team because it runs counter
to their personality—that is, they’re unable to sublimate their dominating style for the good of the team. Then there’s
that huge group in the middle: Team leadership doesn’t come naturally to them, but they can learn it.” The challenge for
many managers is learning how to become an effective team leader. They have to learn skills such as patiently sharing
information, being able to trust others and to give up authority, and understanding when to intervene. And effective team
leaders have mastered the difficult balancing act of knowing when to leave their teams alone and when to get involved.
New team leaders may try to retain too much control at a time when team members need more autonomy, or they may
abandon their teams at times when the teams need support and help.
Leadership Issues in the Twenty-First Century:
It’s not easy being a chief information officer (CIO) today. The person responsible for managing a company’s information
technology activities will find that the task comes with a lot of external and internal pressures. Technology continues to
change rapidly—almost daily, it sometimes seems. Business costs continue to rise. Rob Carter, CIO of FedEx, is on the
hot seat facing such challenges.47 He’s responsible for all the computer and communication systems that provide around-
the-clock and around-the-globe support for FedEx’s products and services. If anything goes wrong, you know who takes
the heat. However, Carter has been an effective leader in this seemingly chaotic environment. Leading effectively in
today’s environment is likely to involve such challenging circumstances for many leaders. In addition, twenty-first-century
leaders do face some important leadership issues. In this section, we look at these issues that include managing power,
developing trust, empowering employees, leading across cultures, and becoming an effective leader.
Where do leaders get their power—that is, their right and capacity to influence work actions or decisions? Five sources
of leader power have been identified: legitimate, coercive, reward, expert, and referent. Legitimate power and authority
are the same. Legitimate power represents the power a leader has as a result of his or her position in the organization.
Although people in positions of authority are also likely to have reward and coercive power, legitimate power is broader
Coercive power is the power a leader has to punish or control. Followers react to this power out of fear of the negative
results that might occur if they don’t comply. Managers typically have some coercive power, such as being able to
suspend or demote employees or to assign them work they find unpleasant or undesirable. Reward power is the power to
give positive rewards. A reward can be anything that a person values such as money, favorable performance appraisals,
promotions, interesting work assignments, friendly colleagues, and preferred work shifts or sales territories.
Expert power is power that’s based on expertise, special skills, or knowledge. If an employee has skills, knowledge, or
expertise that’s critical to a work group, that person’s expert power is enhanced.
Finally, referent power is the power that arises because of a person’s desirable resources or personal traits. If I admire
you and want to be associated with you, you can exercise power over me because I want to please you. Referent power
develops out of admiration of another and a desire to be like that person. Most effective leaders rely on several different
forms of power to affect the behavior and performance of their followers. For example, the commanding officer of one
of Australia’s state-of-the-art submarines, the HMAS Sheean, employs different types of power in managing his crew and
equipment. He gives orders to the crew (legitimate), praises them (reward), and disciplines those who commit infractions
(coercive). As an effective leader, he also strives to have expert power (based on his expertise and knowledge) and
referent power (based on his being admired) to influence his crew.
In today’s uncertain environment, an important consideration for leaders is building trust and credibility, both of which
can be extremely fragile. Before we can discuss ways leaders can build trust and credibility, we have to know what
trust and credibility are and why they’re so important. The main component of credibility is honesty. Surveys show that
honesty is consistently singled out as the number one characteristic of admired leaders. “Honesty is absolutely essential
to leadership. If people are going to follow someone willingly, whether it be into battle or into the boardroom, they first
want to assure themselves that the person is worthy of their trust.”49 In addition to being honest, credible leaders are
competent and inspiring. They are personally able to effectively communicate their confidence and enthusiasm. Thus,
followers judge a leader’s credibility in terms of his or her honesty, competence, and ability to inspire. Trust is closely
entwined with the concept of credibility, and, in fact, the terms are often
used interchangeably. Trust is defined as the belief in the integrity, character, and ability of a leader. Followers who trust a
leader are willing to be vulnerable to the leader’s actions because they are confident that their rights and interests will not
be abused.50 Research has identified five dimensions that make up the concept of trust:
_ Competence: technical and interpersonal knowledge and skills
_ Consistency: reliability, predictability, and good judgment in handling situations
_ Loyalty: willingness to protect a person, physically and emotionally
_ Openness: willingness to share ideas and information freely
What is Management Information Systems?
Management Information Systems (MIS) is the study of people, technology, organizations and the relationships among them. MIS
professionals help firms realize maximum benefit from investment in personnel, equipment, and business processes. MIS is a people-
oriented field with an emphasis on service through technology. If you have an interest in technology and have the desire to use
technology to improve people’s lives, a degree in MIS may be for you.
Businesses use information systems at all levels of operation to collect, process and store data. Management aggregates and
disseminates this data in the form of information needed to carry out the daily operations of business. Everyone who works in
business, from someone who pays the bills to the person who makes employment decisions, uses information systems. A car
dealership could use a computer database to keep track of which products sell best. A retail store might use a computer-based
information system to sell products over the Internet. In fact, many (if not most) businesses concentrate on the alignment of MIS with
business goals to achieve competitive advantage over other businesses.
MIS professionals create information systems for data management (i.e., storing, searching and analyzing data). In addition, they
manage various information systems to meet the needs of managers, staff and customers. By working collaboratively with various
members of their work group, as well as with their customers and clients, MIS professionals are able to play a key role in areas such
as information security, integration and exchange. As an MIS major, you will learn to design, implement and use business information
systems in innovative ways to increase the effectiveness and efficiency of your company.
A common misconception that MIS only concerns programming. However, programming is just a small part of the MIS curriculum.
While programming concepts represent some of the founding concepts and information systems development, implementation and
use, many jobs in MIS do not utilize programming at all. A large portion of the MIS degree focuses on data analysis, teamwork,
leadership, project management, customer service and underlying business theories. These aspects of the degree are what set the MIS
professional apart from a computer science specialist.
• Do you enjoy working with people?
• Would you enjoy the chance to work on global problems with people from all over the world?
• Do you enjoy analyzing and solving problems?
• Do you want to create innovative, cutting-edge technology solutions?
• Do you want to learn how to make businesses more efficient, effective and competitive?
(c ) Discuss various methods of online payment.
(d) What is organizing? Indentify the assets of a bank.
Q23. (a) Discuss various types of plans.
(b ) What are the qualities of a good plan?
Answer: Principle 1 - Iaterpretation of the Mandate
Principle 5 - Internal Consistency of Plans
Principle 6 - Integration with other Plan and Policy Instruments
(c ) What is training? What are the various types of training?
What is Training and Development?
Training is an educational process. People can learn new information, re-learn and reinforce existing knowledge and skills, and most
importantly have time to think and consider what new options can help them improve their effectiveness at work. Effective trainings
convey relevant and useful information that inform participants and develop skills and behaviors that can be transferred back to the
The goal of training is to create an impact that lasts beyond the end time of the training itself. The focus is on creating specific action
steps and commitments that focus people’s attention on incorporating their new skills and ideas back at work.
Training can be offered as skill development for individuals and groups. In general, trainings involve presentation and learning of
content as a means for enhancing skill development and improving workplace behaviors.
Organizational Development is a process that “strives to build the capacity to achieve and sustain a new desired state that benefits the
organization or community and the world around them.” (from the Organizational Development Network website) OD work implies
An OD perspective examines the current environment, the present state, and helps people on a team, in a department and as part
of an institution identify effective strategies for improving performance. In some situations, there may not be anything “wrong” at
the present time; the group or manager may simply be seeking ways to continue to develop and enhance existing relationships and
performance. In other situations, there may be an identifiable issue or problem that needs to be addressed; the OD process aims to find
ideas and solutions that can effectively return the group to a state of high performance.
These two processes, Training and Organizational Development, are often closely connected. Training can be used as a proactive
means for developing skills and expertise to prevent problems from arising and can also be an effective tool in addressing any skills or
performance gaps among staff. Organizational Development can be used to create solutions to workplace issues, before they become a
concern or after they become identifiable problem.
(d) Distinguish between training and development.
Training is the acquisition of knowledge, skills, and competencies as a result of the teaching of vocational or practical skills and
knowledge that relate to specific useful competencies. Training has specific goals of improving one's capability, capacity, and
performance. It forms the core of apprenticeships and provides the backbone of content at institutes of technology (also known as
technical colleges or polytechnics). In addition to the basic training required for a trade, occupation or profession, observers of the
skills throughout working life. People within many professions and occupations may refer to this sort of training as professional
NOTES 6 - DIFFERENCE BETWEEN TRAINING & DEVELOPMENT
Training is a process of learning a sequence of programmed behaviour. It improves the employee's performance on the
current job and prepares them for an intended job.
Development not only improves job performance but also brings about the growth of the personality. Individuals not only
mature regarding their potential capacities but also become better individuals.
recognize as of 2008 the need to continue training beyond initial qualifications: to maintain, upgrade and update
2.Refers to instruction in technical and mechanical problems
3.Targeted in most cases for non-managerial personnel
2.Refers to philosophical and theoretical educational concepts
1.To improve Productivity: Training leads to increased operational productivity and increased company profit.
2.To improve Quality: Better trained workers are less likely to make operational mistakes.
3.To improve Organizational Climate: Training leads to improved production and product quality which enhances financial
incentives. This in turn increases the overall morale of the organization.
4.To increase Health and Safety: Proper training prevents industrial accidents.
5.Personal Growth: Training gives employees a wider awareness, an enlarged skill base and that leads to enhanced personal
Management development attempts to improve managerial performance by imparting
The major objective of development is managerial effectiveness through a planned and a deliberate process of learning. This
provides for a planned growth of managers to meet the future organizational needs
Q24.(a) “ Management is getting things done by others” Explain
(b) “Management is the essential elements of economic development” Explain.
(c) “Management is the jungle of theories” Explain
(d) What is organizational conflict? What are the primary sources of conflict? How can you resolve conflict?
(e) “ Each manager is a decision-maker” Explain
(f) What are the functions of HR?
There are seven main functions of HR .
Function 2: Recruitment and selection of employees
Function 6: Provision of employee services
Function 7: Employee education, training and development
MAIN FUNCTIONS OF HUMAN RESOURCE MANAGEMENT.
EMPLOYEE AND LABOUR RELATIONS
(g) What are the steps of selection?
It is the discovering of potential of applicants for actual or anticipated organizational vacancies. It actually links together those
Flippo's definition: "It is a process of searching for prospective employees and stimulating and encouraging them to apply for
Thus the purpose of recruitment is to locate sources of manpower to meet job requirements and job specifications.
2. The employment conditions in the community where the organization is located.
3. The effects of past recruiting efforts which show the organization's ability to locate and retain the good performing people.
4. Working conditions, salary and benefit packages offered by the organization.
6. The future expansion and production programs.
7. Cultural, economic and legal factors.
However these factors may be divided specifically as Internal and External factors.
1. Recruitment policy of the organization
2. Human resource planning strategy of the company
3. Size of the organization and number of people employed
4. Cost involved in recruiting employees
5. Growth and expansion plans of the organization
1. Supply and demand of specific skills in the labour market.
2. Political and legal factors like reservations of jobs for specific sections of society etc
3. The job seekers image perception of the company.
Personnel recruitment process involves five elements:
4. The development of sources of recruitment
5. Different techniques used for utilizing these sources & a method of assessing the recruitment program
These five elements are further elaborated below:
1. Recruitment Policy: It defines the objective of the recruitment and also provides a framework for the implementation of the
recruitment program. The policy should be based upon corporate goals and needs. The criteria for selection and preferences
2. Recruitment organization: It is necessary to centralize the recruitment and selection function in a single office. This
will bring about maximum efficiency and success in hiring. This centralized office is known as the Employee Office or the
3. Forecast of Manpower: This usually specifies:
a. Jobs or Operations for which the person should be available.
c. Salary to be offered & terms of the employment
d. Necessary qualification and experience
4. Sources of Recruitment: There can be two kinds of sources for recruitment:
a. Internal – This includes personnel already on the payroll of an organization. Whenever there is a vacancy, somebody within
b. External – These sources lie outside the organization.
5. Methods of Recruitment: The possible recruiting methods can be divided into three categories:
a. Direct – In this method, recruiters visit colleges and technical schools, e.g. Infosys, the Tata Group, Accenture, IBM,
Siemens and several other companies maintain continuous relationship with institutions to hire students for responsible
b. Indirect – This involves advertising in newspaper, radio, T.V., journals etc. Advertising can be very effective if its media is
c. Third Party methods – This include use of commercial or private employment agencies, placement officials of schools,
recruitment firms etc. Friends and relatives of present employees are also a good source from which employees may be drawn
as part of the "Buddy Referral" programs.
Thus broadly the Personnel Recruitment Process can be mapped in a Flowchart as below:
Personnel/Human Resource Planning -> Locating needed Personnel -> Selecting Qualified Personnel -> Placing New
(h) “ Management means different things to different people” Explain.
(i) “ Planning looks at future and control focuses on past.” Explain.
NOTES 2 - HUMAN RESOURCE MANAGEMENT
What is Human Resource Management?
•Five basic functions (the Management Process)
•HRM: the policies and practices involved in carrying out the “people” or human resource aspects of a management position,
including recruiting, screening, training, rewarding, and appraising
oThe process of acquiring, training, appraising, and compensating employees and of attending to their labor relations, health
Why is Human Resource Management Important to all Managers?
•If you make mistakes you will pay in the effectiveness of your business, its reputation, how it does financially
•A business can be successful by hiring the right people for the right jobs and motivating, appraising, and developing them
•The bottom line is GETTING RESULTS
Line and Staff Aspects of Human Resource Management:
•Authority: the right to make decisions, direct others’ work, and give orders
•Line authority: the right to issue orders to other managers or employees
oLine manager: authorized to direct the work of subordinates
•Staff authority: give the manager the right to advise other managers or employees
oStaff manager: assists and advises line managers
•A coordinative function: coordinate personnel activities, “right arm of the top executive”
•Staff (assist and advice and innovate): also plays an employee advocacy role
Human Resource Management Specialties
•Equal employment opportunity coordinators
•Globalization: the tendency of firms to extend their sales, ownership and/pr manufacturing to new markets abroad.
•Companies expand for several reasons
oMore pressure to lower costs, to make employees more productive and to things better and less expensively
•For consumer’s globalizations means…
•Both companies and workers have to work harder and smarter than they did without globalization
oMore and more traditional factory jobs are going high tech
oWith global competition more manufacturing jobs are shifting to low-wage countries
oMore manufacturers are partnering with their suppliers to create integrated supply chains
oEffect is that manufactures have been squeezing slack and inefficiencies out of the entire production systems
oThe best jobs that remain require more education and more skills
oHuman Capital: the knowledge, education, training, skills, and expertise of a firms workers
oBecause it is the HR that traditionally recruits, selects, trains and compensates employees, changes like these make employers
•Labor forces growth is not expected to keep pace with job growth
•Employers are particularly focusing on the aging for the workforce
The Changing Role of Human Resource Management
oStrategic plan: the company’s plan for how it will match its internal strengths and weaknesses with external opportunities
and threats in order to maintain a competitive advantage
oWhere are we, where do we want to be, how are we going to get there?
oStrategic HRM: formulating and executing human resource policies and practices that produce the employee competencies
and behaviors the company needs to achieve its strategic aims
In partnering with their top managers in both designing and executing their companies strategies♣
Express their departmental plans an accomplishments in measureable terms♣
•Creating High-Performance Work Systems
oA focus on productivity and performance
Through effective HR practices (testing and training)♣
Instituting high-performance work systems♣
oImprove HR’s performance in four ways
•High-Performance Work Systems: An integrated set of human resource management policies and practices that together
produce superior employee performance
Self-managed teams and decentralized decision making♣
Reduce status distinction between managers and worker♣
Measurement of management practices♣
•Measuring the HRM Team’s performance
oEmployers expect their HRM to provide measureable evidence to their efficiency and effectiveness
The Human Resource Manager’s Proficiencies
•HR proficiencies: employee selection, training, and compensation
•Business proficiencies: HR professionals’ strategic role
•Leadership proficiencies: lead management groups and drive the changes required
•Learning proficiencies: staying abreast of and applying new technologies and practices affecting the profession
•Ethics: the standards someone uses to decide what his or her construct should be
(i) Functional Departmentation
(ii) Geographic Departmentation
(iii) Product Departmentation
(iv) Matrix Departmentation
(xiii) Consultative Management
(xiv) Job Description
(xv) Management Science
(xx) Feedback and Feed forward Control
(xxiii) Closed System
(xxiv) Scientific management and Behavioral Management
(xxix) 360 degree feedback
(xxxii) Mobile Banking
(xxxiii) Job description
(xxxix) Big Five model of Personality
(xliii) Delegation of authority
(xliv) Line and Staff position
(xlv) Situational Mgt
(xlvi) Bureaucratic Management
(xlvii) Theory X, Y & Z
(xlviii) Flexible Budget
(xlix) Zero-based budget
(l) Centralization and Decentralization
The research of Dweck et al. (1993) found that entity theorists tend to perceive a closer correspondence between
dispositional traits and behaviors than do incremental theorists. In subsequent research, Chiu, Hong, & Dweck
(1997) found that an entity theory was also associated with a halo effect type of phenomenon. Compared to the
responses of incremental theorists, when entity theorists were provided with information about a target individual's
dispositional-relevant behavior for one occasion, they were more likely to expect similar behavior to recur in
the future in very different situations. The researchers also found that entity theorists, compared to incremental
theorists, more strongly believed that even a single behavior of an individual is very indicative of that individual's
underlying moral character. Similar to the dual research methodology approach that Dweck has used in much of
her research, the researchers also conducted an experiment where they manipulated implicit theories by having the
participants read a “scientific article” that was written to espouse and document either an entity or an incremental
theory of human attributes. Parallel to the results found when the they assessed dispositional implicit theories,
Chiu et al., found that the participants who read the entity-theory article were more likely than participants who read
the incremental-theory article to predict that a single behavior could be used as a strong indicator of someone's
To summarize, entity theorists appear to perceive a closer relationship between dispositions and behaviors than
do incremental theorists. Entity theorists tend to use limited information to develop dispositional explanations for
behavior, and the inferred dispositions are then extrapolated to develop more global judgments about the target and
to predict behaviors in other domains. Incremental theorists are not as likely infer trait explanations for behavior, and
do not rely on such explanations as much to predict future behavior. Instead they are more likely to focus on the
larger context in which a behavior occurs when they seek to understand or explain an individual's behavior (Dweck et
Formal organization is a fixed set of rules of intra-organizationprocedures and structures. As such,it is usually set out
in writing, with a language of rulesthat ostensibly leave little discretion for interpretation. In some societies and in some
organization, such rules may be strictly followed; inothers, they may be little more than an empty formalism.
INSTITUTE OF BANKERS BANGLADESH, (IBB)
Banking Diploma Examination-November-2012
Organization and Management (OM)
JAIBB
Time -3 Hours
Full Marks-100
Pass Marks-50
(N.B.-All questions are of equal value. Answer any five questions)
Q1. (a) “An organization is a social system.” –Explain.
A social system is a complex set of human relationships interacting in many ways. Possible interactions are as limitless
as the stars in the universe. Each small group is a subsystem within larger groups that are subsystems of even larger
groups, and so on, until the entire world’s population is included. Within a single organization, the social system includes
all the people in it and their relationships to one another and to the outside world. Two points stand out in the complex
interactions among people in a social system. First, the behavior of any one member can have an impact, directly or
indirectly, on the behavior of any other. Although these impacts may be large or small, all parts of the system are mutually
interdependent. Simply stated, a change in one part of a system affects all other parts, even though its impact may be
slight. A second important point revolves around a system’s boundaries. Any social system engages in exchanges with its
environment, receiving input from it and providing output to it (which then becomes inputs for its adjacent systems). Social
systems are, therefore, open systems that interact with their surroundings.
(b) Distinguish between formal and informal organization.
(c) Informal organizations grow within formal organization.” –Elaborate the statement.
(d) How can managers use the informal organization?
Answer: Formal organization
Formal organization is a fixed set of rules of intra-organization procedures and structures. As such, it is usually set out
in writing, with a language of rules that ostensibly leave little discretion for interpretation. In some societies and in some
organization, such rules may be strictly followed; in others, they may be little more than an empty formalism.
• To facilitate the accomplishment of the goals of the organization: In a formal organization the work is delegated
to each individual of the organization. He/She works towards the attainment of definite goals, which are in
compliance with the goals of the organization.
• To facilitate the co-ordination of various activities: The authority, responsibility and accountability of individuals
in the organization is very well defined. Hence, facilitating the co-ordination of various activities of the
organization very effectively.
• To aid the establishment of logical authority relationship: The responsibilities of the individuals in the
organization are well defined. They have a definite place in the organization due to a well defined hierarchical
structure which is inherent in any formal organization.
• Permit the application of the concept of specialization and division of Labor, division of work amongst
individuals according to their capabilities helps in greater specializations and division of work.
• Create more group cohesiveness
• Well defined rules and regulation
• Determined objectives and policies
• Limitation on the activities of the individual
• Strict observance of the principle of co-ordination
• Messages are communicated through scalar chain
Formal rules are often adapted to subjective interests — social structures within an enterprise and the personal goals,
desires, sympathies and behaviors of the individual workers — so that the practical everyday life of an organization
becomes informal. Practical experience shows no organization is ever completely rule-bound: instead, all real
organizations represent some mix of formal and informal. Consequently, when attempting to legislate for an organization
and to create a formal structure, it is necessary to recognize informal organization in order to create workable structures.
However, informal organization can fail, or, if already set in order, can work against mismanagement.
Formal organizations are typically understood to be systems of coordinated and controlled activities that arise when work
is embedded in complex networks of technical relations and boundary-spanning exchanges. But in modern societies,
formal organizational structures arise in highly institutional contexts. Organizations are driven to incorporate the practices
and procedures defined by prevailing rationalized concepts of organizational work and institutionalized in society.
Organizations that do so increase their legitimacy and their survival prospects, independent of the immediate efficacy
of the acquired practices and procedures. There can develop a tension between on the one hand, the institutionalized
products, services, techniques, policies, and programs that function as myths (and may be ceremonially adopted), and
efficiency criteria on the other hand. To maintain ceremonial conformity, organizations that reflect institutional rules tend to
buffer their formal structures from the uncertainties of the technical activities by developing a loose coupling between their
formal structures and actual work activities. - (John Meyer and Brian Rowan, 1976)
There are many different reasons for informal organization:
• Informal standards: personal goals and interests of workers differ from official organizational goals.
• Informal communication: changes of communication routes within an enterprise due to personal relations
• Informal group: certain groups of coworkers have the same interests, or (for example) the same origin.
• Informal leaders: due to charisma and general popularity, certain members of the organization win more
influence than originally intended.
• Different interests and preferences of coworkers.
• Different status of coworkers.
• Unpleasant conditions of work.
Managerial organization theory often still regards informal organization as rather disturbing, but sometimes helpful. In the opinion
of systems theory and cybernetics, however, formal organization fades into the background and only serves, if necessary, to
supplement or to correct. Changes in structure always redevelop because of the conduct and differences among coworkers, and the
ability of self-organization is recognized as a natural characteristic of a social system.
Q2. (a) What is motivation? What are the primary and secondary needs?
Motivation is the psychological feature that arouses an organism to action toward a desired goal and elicits, controls,
and sustains certain goal directed behaviors. For instance: An individual has not eaten, he or she feels hungry, and as
a response he or she eats and diminishes feelings of hunger. There are many approaches to motivation: physiological,
Motivation may be rooted in a basic need to minimize physical pain and maximize pleasure, or it may include specific
needs such as eating and resting, or for a desired object. Conceptually, motivation is related to, but distinct from, emotion.
(b) State the assumptions of theory-X and theory –Y.
McGregor is the other major theorist associated with the Human Relations school of management. McGregor believes
there are two basic kinds of managers. One type of manager, Theory X, has a negative view of employees assuming
they are lazy, untrustworthy and incapable of assuming responsibility while the other type of manager, Theory Y, assumes
employees are trustworthy and capable of assuming responsibility having high levels of motivation. Table 1.1 illustrates
McGregor's main theoretical assumptions.
1. Employees normally do not like to work and will try to avoid it.
2. Since employees do not like working, they have to be coerced, controlled, directed and threatened with punishment to motivate
3. The average employee is lazy, shuns responsibility, is not ambitious, needs direction, and principally desires security.
1. Work is as natural as play and therefore people desire to work.
2. Employees are responsible for accomplishing their own work objectives.
3. Comparable personal rewards are important for employee commitment to achieving work goals.
4. Under favorable conditions, the average employee will seek and accept responsibility.
5. Employees can be innovative in solving organizational problems.
6. Most organizations utilize only a small proportion of their employees' abilities.1
Mcgregor's Theory X and Y is appealing to managers and dramatically demonstrates the divergence in management
viewpoints toward employees. As such, Theory X and Y has been extremely helpful in promoting management
understanding of supervisory styles and employee motivational assumptions.
### Abraham Maslow’s hierarchy of needs is the most well-known theory of motivation. He hypothesized that within
every human being there exists a hierarchy of five needs: (See Exhibit 6-1).
• Physiological: Includes hunger, thirst, shelter, sex, and other bodily needs
• Safety: Includes security and protection from physical and emotional harm
• Social: Includes affection, belongingness, acceptance, and friendship
• Esteem: Includes internal esteem factors such as self-respect, autonomy, and achievement; and external esteem
factors such as status, recognition, and attention
• Self-actualization: The drive to become what one is capable of becoming; includes growth, achieving one’s
potential, and self-fulfillment
2. As a need becomes substantially satisfied, the next need becomes dominant. No need is ever fully gratified; a
substantially satisfied need no longer motivates.
3. Maslow separated the five needs into higher and lower orders.
• Physiological and safety needs are described as lower-order.
• Social, esteem, and self-actualization are as higher-order needs
• Higher-order needs are satisfied internally.
• Lower-order needs are predominantly satisfied externally.
4. Maslow’s need theory has received wide recognition, particularly among practicing managers. Research does not
5. Maslow provided no empirical substantiation, and several studies that sought to validate the theory found no support
(c) “You can not motivate managers. They are self-pulled.” Comment on this statement.
(d) To what extent and how, is money an effective motivator?
1. Does motivation come from within a person, or is it a result of the situation? Explain.
Answer – Many people incorrectly view motivation as a personal trait—that is, some have it and others do not. Motivation is
the result of the interaction of the individual and the situation. The text defines motivation as the processes that account for an
individual’s intensity, direction, and persistence of effort toward attaining a goal. There are three key elements.
• Intensity is concerned with how hard a person tries. This is the element most of us focus on when we talk about
• Direction is the orientation that benefits the organization.
• Persistence is a measure of how long a person can maintain his/her effort. Motivated individuals stay with a
task long enough to achieve their goal.
2. What are the implications of Theories X and Y for motivation practices?
Answer – Douglas McGregor concluded that a manager’s view of the nature of human beings is based on a certain grouping
of assumptions. Theory X assumptions are basically negative. Theory Y assumptions are basically positive. There are several
implications. Theory X assumes that lower-order needs dominate individuals. Theory Y assumes that higher-order needs dominate
individuals. McGregor himself held to the belief that Theory Y assumptions were more valid than Theory X. Either Theory X or
Theory Y assumptions may be appropriate in a particular situation.
3. Compare and contrast Maslow’s hierarchy of needs theory with (a) Alderfer’s ERG theory and (b) Herzberg’s two-factor
Answer – Abraham Maslow’s hierarchy of needs.
• Physiological—Includes hunger, thirst, shelter, sex, and other bodily needs
• Safety—Includes security and protection from physical and emotional harm
• Social—Includes affection, belongingness, acceptance, and friendship
• Esteem—Includes internal esteem factors such as self-respect, autonomy, and achievement; and also external
esteem factors such as status, recognition, and attention
• Self-actualization—The drive to become what one is capable of becoming; includes growth, achieving one’s
potential, and self-fulfillment
No need is ever fully gratified; a substantially satisfied need no longer motivates. Maslow separated the five needs
• Physiological and safety needs were described as lower-order.
• Social, esteem, and self-actualization were described as higher-order needs.
Higher-order needs are satisfied internally.
Lower-order needs are predominantly satisfied externally.
Two-factor theory is sometimes also called motivation-hygiene theory. It was proposed by psychologist Frederick
Herzberg when he investigated the question, “What do people want from their jobs?” Herzberg concluded:
• Intrinsic factors, such as advancement, recognition, responsibility, and achievement seem to be related to job
• Dissatisfied respondents tended to cite extrinsic factors, such as supervision, pay, company policies, and
• The opposite of satisfaction is not dissatisfaction.
• Removing dissatisfying characteristics from a job does not necessarily make the job satisfying.
Job satisfaction factors are separate and distinct from job dissatisfaction factors. To motivate people, emphasize
factors that are intrinsically rewarding that are associated with the work itself or to outcomes directly derived from it.
ERG theory. Clayton Alderfer reworked Maslow’s need hierarchy to align it with the empirical research. His revised
need hierarchy is labeled ERG theory. Alderfer argues that there are three groups of core needs—existence,
Providing our basic material existence requirements. They include Maslow’s physiological and safety needs.
The desire we have for maintaining important interpersonal relationships. These social and status desires
require interaction with others. They align with Maslow’s social need and the external component.
An intrinsic desire for personal development. These include the intrinsic component from Maslow’s esteem category
and the characteristics included under self-actualization.
Alderfer’s ERG theory also differs from Maslow’s in that:
• More than one need may be operative at the same time.
• If the gratification of a higher-level need is stifled, the desire to satisfy a lower-level need increases.
• ERG theory does not assume that there exists a rigid hierarchy.
• A person can be working on growth even though existence or relatedness needs are unsatisfied, or all three
need categories could be operating at the same time.
• ERG theory also contains a frustration-regression dimension.
Maslow argued that an individual would stay at a certain need level until that need was satisfied.
ERG theory notes that when a higher-order need level is frustrated, the individual’s desire to increase a lower-
level need takes place. ERG theory is more consistent with our knowledge of individual differences among
4. Describe the three needs isolated by McClelland. How are they related to worker behavior?
Answer – Developed by David McClelland and his associates, the theory focuses on three needs: achievement, power, and affiliation.
• Need for achievement: The drive to excel, to achieve in relation to a set of standards, to strive to succeed
• Need for power: The need to make others behave in a way that they would not have behaved otherwise
• Need for affiliation: The desire for friendly and close interpersonal relationships
Some people have a compelling drive to succeed. They are striving for personal achievement rather than the
rewards of success, per se. This drive is the achievement need (nAch). McClelland found that high achievers
differentiate themselves from others by their desire to do things better.
The need for power (nPow) is the desire to have impact, to be influential, and to control others. Individuals high in
nPow enjoy being “in charge” and strive for influence over others. They prefer to be placed into competitive and
status-oriented situations, and tend to be more concerned with prestige and gaining influence over others than with
The third need isolated by McClelland is affiliation (nAfl). This need has received the least attention from
researchers. Individuals with a high affiliation motive strive for friendship. Prefer cooperative situations rather than
competitive ones, and desire relationships involving a high degree of mutual understanding.
5. Explain cognitive evaluation theory. How applicable is it to management practice?
Answer – Cognitive evaluation theory is well researched and supported. It suggests that when extrinsic rewards are
used by organizations as payoffs for superior performance, the intrinsic rewards, which are derived from individuals
doing what they like, are reduced. If the cognitive evaluation theory is valid, it should have major implications for
• If pay or other extrinsic rewards are to be effective motivators, they should be made contingent on an
• Cognitive evaluation theorists would argue that this will tend only to decrease the internal satisfaction that the
individual receives from doing the job.
• If correct, it would make sense to make an individual’s pay non-contingent on performance in order to avoid
decreasing intrinsic motivation.
6. What is the role of self-efficacy in goal setting?
Answer – If factors such as ability and acceptance of the goals are held constant, we can also state that the more
difficult the goal, the higher the level of performance. People will do better when they get feedback on how well they
are progressing toward their goals. Self-generated feedback is more powerful a motivator than externally generated
Self-efficacy refers to an individual’s belief that he or she is capable of performing a task. The higher one’s self-
efficacy, the more confidence one has in his or her ability to succeed in a task.
7. Contrast distributive and procedural justice. What implications might they have for designing pay systems in different
Answer – Historically, equity theory focused on distributive justice or “the perceived fairness of the amount and
allocation of rewards among individuals.” Equity should also consider procedural justice, “the perceived fairness of
the process used to determine the distribution of rewards.” The evidence indicates that distributive justice has a
greater influence on employee satisfaction than procedural justice. Procedural justice tends to affect an employee’s
organizational commitment, trust in his or her boss, and intention to quit. By increasing the perception of procedural
fairness, employees are likely to view their bosses and the organization as positive even if they are dissatisfied with
pay, promotions, and other personal outcomes.
8. Identify the variables in expectancy theory.
Answer – Expectancy theory is one of the most widely accepted explanations of motivation. It argues that the strength of a tendency
to act in a certain way depends on the strength of an expectation that the act will be followed by a given outcome and on the
attractiveness of that outcome to the individual. It says that an employee will be motivated to exert a high level of effort when he/she
• Effort will lead to a good performance appraisal.
• That a good appraisal will lead to organizational rewards.
• That the rewards will satisfy the employee’s personal goals.
Three key relationships (See Exhibit 6-7.)
• Effort-performance relationship: the probability perceived by the individual that exerting a given amount of effort
• Performance-reward relationship: the degree to which the individual believes that performing at a particular
level will lead to the attainment of a desired outcome
• Rewards-personal goals relationship: the degree to which organizational rewards satisfy an individual’s
personal goals or needs and the attractiveness of those potential rewards for the individual
9. Explain the formula: Performance = f(A × M × O), and give an example.
Answer – Success on a job is facilitated or hindered by the existence or absence of support resources. A popular
although arguably simplistic way of thinking about employee performance is as a function of the interaction of ability
and motivation; that is, performance = f(A × M). If either is inadequate, performance will be negatively affected. We
need to add opportunity to perform to our equation—performance = f(A × M × O). See Exhibit 6-8. When you attempt
to assess why an employee may not be performing to the level that you believe he or she is capable of, take a look
at the work environment to see if it is supportive.
10. What consistencies among motivation concepts, if any, apply cross-culturally?
Answer – Exhibit 6-9 presents a model that integrates much of what we know about motivation. There are cross-
• The desire for interesting work seems important to almost all workers.
• Growth, achievement, and responsibility were rated the top three and had identical rankings in another study of
QUESTIONS FOR CRITICAL THINKING
1. “The cognitive evaluation theory is contradictory to reinforcement and expectancy theories.” Do you agree or disagree?
Answer – As students make their arguments they should include the following facts from the text.
When extrinsic rewards are used by organizations as payoffs for superior performance, the intrinsic rewards, which
are derived from individuals doing what they like, are reduced. The elimination of extrinsic rewards can produce a
shift—from an external to an internal explanation—in an individual’s perception of causation of why he or she works
on a task. If the cognitive evaluation theory is valid, it should have major implications for managerial practices. The
theory may have limited applicability to work organizations because most low-level jobs are not inherently satisfying
enough to foster high intrinsic interest, and many managerial and professional positions offer intrinsic rewards.
Reinforcement theory is behavioristic in approach and is clearly in contradiction to cognitive evaluation theory. It
argues that reinforcement conditions behavior. Reinforcement theorists see behavior as being environmentally
caused. Reinforcement theory ignores the inner state of the individual and concentrates solely on what happens to a
person when he or she takes some action. Reinforcement is undoubtedly an important influence on behavior, but few
scholars are prepared to argue that it is the only influence.
Expectancy theory is one of the most widely accepted explanations of motivation. Expectancy theory argues that the
strength of a tendency to act in a certain way depends on the strength of an expectation that the act will be followed
by a given outcome and on the attractiveness of that outcome to the individual. It says that an employee will be
motivated to exert a high level of effort when he/she believes that:
• Effort will lead to a good performance appraisal.
• That a good appraisal will lead to organizational rewards.
• That the rewards will satisfy the employee’s personal goals.
Three key relationships (See Exhibit 6-7.)
• Effort-performance relationship: the probability perceived by the individual that exerting a given amount of
• Performance-reward relationship: the degree to which the individual believes that performing at a particular
• Rewards-personal goals relationship: the degree to which organizational rewards satisfy an individual’s
The key to expectancy theory is the understanding of an individual’s goals and the linkage between effort and
performance, between performance and rewards, and finally, between the rewards and individual goal satisfaction.
As a contingency model, expectancy theory recognizes that there is no universal principle for explaining everyone’s
effort will lead to performance
level will lead to the attainment of a desired outcome
personal goals or needs and the attractiveness of those potential rewards for the individual
2. “Managers should be able, through proper selection and job design, to have every employee experience flow in his or her
job.” Do you agree or disagree? Discuss.
Answer – That would be a lofty accomplishment, however studies done on this theory have been done on
management level employees and it remains to be seen whether or not it would apply to the rank and file worker.
However, managers can try to design jobs with the goal of increased job satisfaction using intrinsic factors as
motivators. Thomas suggests that the are four components to be considered. They are:
• Choice: the ability to select tasks activities that make sent to you and perform them as you deem appropriate.
• Competence: the accomplishment you feel in skillfully performing tasks activities you have chosen.
• Meaningfulness: the opportunity to pursue a worthy task purpose—that matters in the larger scheme of things.
• Progress: feeling you are making significant advancement in achieving the task’s purpose.
Jobs requiring high levels of education, training, and skill with a high degree of autonomy would be the most likely to
allow employees to experience the “flow.”
3. Analyze the application of Maslow’s and Herzberg’s theories to an African or Caribbean nation where more than a quarter
Answer – Students may lack sufficient knowledge of these cultures to fully answer the question. They should focus
on the issues of large scale unemployment. It should be relatively obvious to students that people in other cultures
world rank the need categories differently and that what is satisfaction or motivation will vary as well.
Abraham Maslow’s hierarchy of needs.
• Physiological—Includes hunger, thirst, shelter, sex, and other bodily needs
• Safety—Includes security and protection from physical and emotional harm
• Social—Includes affection, belongingness, acceptance, and friendship
• Esteem—Includes internal esteem factors such as self-respect, autonomy, and achievement; and external
esteem factors such as status, recognition, and attention
• Self-actualization—The drive to become what one is capable of becoming; includes growth, achieving one’s
potential, and self-fulfillment
Intrinsic factors, such as advancement, recognition, responsibility, and achievement seem to be related to job
satisfaction. Dissatisfied respondents tended to cite extrinsic factors, such as supervision, pay, company policies,
and working conditions. Job satisfaction factors are separate and distinct from job dissatisfaction factors.
4. Can an individual be too motivated, so that his or her performance declines as a result of excessive effort? Discuss.
Answer – Students’ responses may vary but should consider the following elements from the text. McClelland found
that high achievers differentiate themselves from others by their desire to do things better. If a high achiever sets too
high goals for him/herself, he/she could end up demotivating him/herself because of the failure to achieve the goals.
According to cognitive evaluation theory, when extrinsic rewards are used by organizations as payoffs for superior
performance, the intrinsic rewards, which are derived from individuals doing what they like, are reduced. The popular
explanation is that the individual experiences a loss of control over his/her own behavior so that the previous intrinsic
motivation diminishes. Furthermore, the elimination of extrinsic rewards can produce a shift—from an external to an
internal explanation—in an individual’s perception of causation of why he/she works on a task.
5. Identify three activities you really enjoy (for example, playing tennis, reading a novel, going shopping). Next, identify three
activities you really dislike (for example, going to the dentist, cleaning the house, staying on a restricted-calorie diet). Using
the expectancy model, analyze each of your answers to assess why some activities stimulate your effort while others do not.
Answer – Students’ responses will vary but should take into consideration the following elements of expectancy
theory. The strength of a tendency to act in a certain way depends on the strength of an expectation that the act will
be followed by a given outcome and on the attractiveness of that outcome to the individual. It says that an employee
will be motivated to exert a high level of effort when he/she believes that:
• Effort will lead to a good performance appraisal.
• That a good appraisal will lead to organizational rewards.
• That the rewards will satisfy the employee’s personal goals.
• Effort-performance relationship: the probability perceived by the individual that exerting a given amount of effort
• Performance-reward relationship: the degree to which the individual believes that performing at a particular
level will lead to the attainment of a desired outcome
• Rewards-personal goals relationship: the degree to which organizational rewards satisfy an individual’s
personal goals or needs and the attractiveness of those potential rewards for the individual
Q3. (a) Identify some factors that cause conflicts in domestic and multinational firms.
1. a struggle or clash between opposing forces; battle
2. a state of opposition between ideas, interests, etc; disagreement or controversy
3. a clash, as between two appointments made for the same time
4. (psychology) opposition between two simultaneous but incompatible wishes or drives, sometimes leading to a
state of emotional tension and thought to be responsible for neuroses
(b) Discuss the different ways of managing conflicts.
A. Causes of Conflict
C. Stages of Conflict
D. Reaction to Conflict
A. Approaches to Conflict Resolution
B. Conflict Management
C. Strategies for Conflict Resolution
OBJECTIVE: At the end of the lesson, students will be able to identify, classify, relate, apply and resolve concepts on:
• Types, Causes, Stages and Reactions to Conflict
• Approaches to Conflict Resolution
• Strategies for Conflict Resolution
• A state of disharmony between incompatible or antithetical persons, ideas, or interests; a clash.
• Opposition between characters or forces in a work of drama or fiction, especially opposition that motivates or
shapes the action of the plot.
• A psychic struggle between opposing or incompatible impulses, desires, or tendencies.
1. Intrasender – conflict originates in the sender who gives conflicting instructions
2. Intersender – arises when a person receives conflicting messages from one or more sources.
3. Interrole – occurs when a person belongs to more than one group.
4. Person-role – result of a discrepancies between internal and external role.
5. Interperson – between people whose positions require interaction with other persons who fill various roles in the same
6. Intragroup – occurs when a group faces new problem, when new values are imposed on the group from outside, or
when one’s extragroup role conflicts with one’s intragroup role.
7. Intergroup – common when two groups have different goals and can only achieve their goals at the other’s expense.
8. Role Ambiguity – condition where an individual do not know what is expected of them.
9. Role Overload – individuals cannot meet the expectations placed on them.
1. Latent conflict – phase of anticipation
It exists whenever individual, groups, organization or nations have differences that bother one or the other but those
differences are not great enough to cause one side to act to alter the situation. There is not yet an outright conflict present
but a number of factors exist that create the conditions that could result in a conflict.
2. Perceived conflict – indicates cognitive awareness of stressful situation
It exists when there is a cognitive awareness on the part of at least one party that
events have occurred or that conditions exist favorable to creating overt conflict.
Groups recognizes that a conflict is emerging and starts to look for possible
3. Felt conflict – presence of affective states such as stress, tensions, anxiety, anger, hostility.
Organization, groups or individual become more internally cohesive. Other group in the organization are
viewed with suspicion as outsider. Us versus them mentality begins to really take hold.
4. Manifest conflict – overt behavior resulting from the above three stages.
At this stage the conflicting parties are actively engaging in conflict behavior which is usually very apparent to non-
involved parties. Feelings of conflict are now translated into actions and words which could either be constructive
obstructive to problem solving process.
1. Sublimation- a defense mechanism by which the individual satisfies a socially prohibited instinctive drive through
the substitution of socially acceptable behavior.
4. Identification- a persons association with or assumption of the qualities, characteristics or views of another person
– attribution to yourself ( consciously or unconsciously) of the characteristic of another person.
6. Substitute goals – setting another goal
7. Rationalization- a defense mechanism by which your true motivation is concealed by explaining your actions and
feelings in a way that is not threatening.
9. Reaction formation- a defense mechanism by which an objectionable impulse is expressed in an opposite or
11. Projection- the attribution of one’s own attitudes, feelings or desires to someone or something as a naïve or
unconscious defense against anxiety or guilt.
12. Displacement- unconscious defense mechanism whereby the mind redirects emotion from a dangerous object to a
13. Fixation- a strong attachment to a person or thing especially such an attachment formed in childhood or infancy and
manifested in the immature or neurotic behavior that persists throughout life.
14. Withdrawal- detachment as from social or emotional involvement.
15. Repression- the classical defense mechanism that protects you from impulses or ideas that would causes anxiety
by preventing them from becoming conscious.
16. Conversion- repressed ideas conflicts or impulses are manifested by various bodily symptoms, such as paralysis or
sensory deficits that have no physical cause.
- a change in which one adopts a new religion, faith or beliefs.
Approaches to Conflict Resolution
1. ACCOMMODATING - the person neglects personal concerns to satisfy the concerns of others. It is cooperative
2. COMPROMISING – the individual attempts to find mutually acceptable solutions that partially satisfy both
parties in reflects assertiveness and cooperation
3. COLLABORATING – the individual attempts to work with others toward solutions that satisfy the work of both
parties it is both assertive and cooperative
4. COMPETING – the person pursues personal concerns at another’s expense. It is a power oriented mode that is
assertive but uncooperative. the competition is aggressive and pursues one’s own goals at another’s expense.
Negotiation – is a strategic process used to move conflicting parties toward an outcome.
PROCESS/PHASES OF NEGOTIATION:
PHASE 1 Establishing the issue and agenda
PHASE 2 Advancing demands and uncovering interests
PHASE 3 Bargaining and discovering new options – inflict resolution to both parties; options to resolve
PHASE 4 Working out an agreement
PHASE 5 Aftermath – is the period following an agreement in where parties are expending the consequences of their
Collaboration – is achieved through a developmental process. It is sequential yet reciprocal and characterized by
1. Awareness – makes a conscious entry into a group process, focus on goals of convening together, generate
definition of collaborative process and what it means to team members
2. Tentative exploration and mutual acknowledgement
a. Exploration – disclose professional skills for the desire process; disclose areas where contribution
cannot be mace, disclose values reflecting priorities; identify roles and disclose personal values,
including time, energy, interest and resources.
b. Mutual acknowledgements – clarify each members potential contributions; clarify member’s work style,
organizational supports and barriers to collaborative efforts.
3. Trust building – determines the degree to which reliance on others can achieved; examines congruence
between words and behaviors; set interdependent goals; develop tolerance for ambiguity.
4. Collegiality – defines the relations of the members with each other; define the responsibilities and tasks of each;
defines entrance and exit conditions.
5. Consensus – determine the issues for which consensus; determine the process for reevaluating consensus
6. Commitment – realize the physical; emotional and material actions directed toward the goal; clarify the
procedures for reevaluating commitment in light of goal depends and group for deviance.
7. Collaboration – initiate process of joint decision making reflecting the synergy that results from combining
b. Mental or Physical Power
1. Research – more powerful tool in generating knowledge.
2. Participation – democracy (people power)
- involves social trained researcher to guide to people
- involve stakeholders
3. Action – Stakeholders will initiate the action done by the people.
COPAR – community organizing participatory action researc
(c) Show a model of the organization development.
Answer: Beckhard lays out a sequential, five stage model for organization development (OD). OD involves (1) planned,
(2) organization-wide action (3) managed through its internal hierarchy which (4) increases organizational efficiency and
sustainability through (5) use of planned interventions into organizational processes that are informed by behavioral-science
knowledge. Beckhard asserts that successful OD has to address the entire “organization” of an organization, even if
it is looking to affect only tactical changes to parts of it. Seeing organizational health and possibilities for change and
development as connected and intricately interrelated, Beckhard—invoking both his own definition and those of Gardner
(1965), Schein (1965), Miles (1966), and Morse (1968)—writes that an organization is OD-primed when it is, above all,
goal-oriented, self-renewing, adaptable, well-regulated, and communicating effectively within its ranks. Once such a
dynamic is in place, Beckhard writes, OD’s processes can facilitate increased effectiveness, improved working conditions,
Austin and Bartunek analyze and discuss the perceived disconnect between OD idea-development (“scholarship”) and
its practical, real-world implementation. Additionally, practical OD approaches like action research are focusing less
and less on making scholarly contributions to the field. But academic-practitioner knowledge should be strongly linked,
contend Austin and Bartunek, for academic, economic, and pragmatic reasons. The two authors divide their chapter
into four parts. First, they explore the history of OD’s evolving humanistic emphases, including the field’s early focus on
individual and group development, as well as later models which attend more to the macro the business environment
and work to promote synergies between an organization and its relevant contexts. Next, Austin and Bartunek explore a
distinction between different academic and practitioner views of OD, first introduced by Bennis (1966) and later modified
by Porras and Robertson (1992). The distinction Bennis draws is between theories of change (or change process theory as
Porras and Robertson call it), which look to answer the question of how and why change occurs, and theories of changing
(“implementation theory”) which focus on how to create and guide change to reach a desired objective. Third, Austin and
Bartunek use Bennis’ distinction to locate OD within the larger contextual framework of organizational change, noting
OD’s evolution from the method of planned change to one potential “motor” for refashioning a social system. They
reference Van de Ven and Poole’s (1995) “four ideal types of change theories”:
• The “teleological” or goal-driven motor (ex: Strategic Change theory, theories of Cognitive Framing, Change
Momentum theory, and Theories of Innovation)
• The “life cycle” or sequential stage motor (ex: Punctuated Equilibrium theory)
• The “dialectic” or two-poles conflict motor (ex: Schematic Change models and Theories of Communicative Change)
• The “evolutionary” motor (ex: Internal Change Routines and Institutional Change theory)
Q4.(a) Define decision support system (DSS).
DSS as a bundle of hardware, data and knowledge, user interface and software application -change and evolve over
time. As a result, the purpose of this paper is to investigate the notion of DSS evolution and DSS characteristics and
component evolution. Previous literature has primarily been concerned about the notions that DSS evolve and that
methodologies of DSS development consider that evolution. In addition, there has been some concern as to why
DSS evolve. However, there has been limited research according to how DSS actually change and evolve over time.
Accordingly, we review the previous literature on DSS evolution, according to its individual components and provide
specificity for DSS evolution through those components changing over time.
(b) State the problems of not using the Management Information Systems in Banking.
(c) Analyze the costs and benefits of using MIS in your branch.
Q5. (a) What are the three levels of analysis in an OB model? Are they related? If so, how?
(c) What is an organization? Is the family unit an organization? –Explain.
• organizations are social systems, not just technical economic systems
• we are motivated by many needs
• we are interdependent; our behavior is often shaped by the social context
• informal work group is a major factor in determining attitudes and performance of individual workers
• management is only one factor affecting behavior; the informal group often has a stronger impact
• job roles are more complex than job descriptions would suggest; people act in many ways not covered by job
• there is no automatic correlation between individual and organizational needs
• communication channels cover both logical/economic aspects of an organization and feelings of people
• teamwork is essential for cooperation and sound technical decisions leadership should be modified to include
• people try to satisfy one class of need at work: economic need
• no conflict exists betwene individual and organizational objectives
• people act rationally to maximize rewards
• we act individually to satisfy individual needs
(d) What is contingency approach to OB?
Contingency approach, also known as situational approach, is a concept in management stating that there is no one universally
applicable set of management principles (rules) by which to manage organizations. Organizations are individually different, face
different situations (contingency variables), and require different ways of managing. Contingency approaches remain less common
Contingency approach evolved during the 1960s. Management theory and research began to adopt a new orientation,
one that embodied a simple concept and enabled significant advancements in the study of management and
organizations, now referred to as the contingency approach. It emphasised the importance of situational influences on
the management of organisations and questioned the existence of a single, best way to manage or organise. Today, the
contingency approach dominates theory and research in the management literature. Contingency approach challenged
the classic process and models designed by management theorists such as Taylor and Fayol. Various researchers
concentrated on different contextual factors. Joan Woodward (1958)[1]
into the economic environment, in particular market competition and technological change. A broader approach was
developed by a British team of researchers at the University of Aston, widely known as Aston Group by developing a
the size of the organizations, Burns and Stalker (1961)[3]
studied the production technology, Blau and
as well as Lawrence and Lorsch (1967)
conceptual scheme for the comparative analysis of organizational structure which took account of several contextual
factors at the same time (Pugh & Hickson et al., 1963).[5]
A conceptual model of the contingency approach was developed by Kieser and Kubicek.[6]
formal structure of an organization defines the roles of its members in a specific way and thereby directs their behaviour
to a certain degree. The performance of the organization depends on the degree to which these role definitions enable
members to cope with the requirements resulting from the context of the organization.
Bank Wiring Observation Room (1931-1932)
• choose 9 workers, three soldermen, two inspectors to assemble terminal banks
• group piecework used-guaranteed base rate; pay reflects both group and individual effort
• group placed in separate room to observe impact of group dynamics on prod.
• what happened-employees had notion of proper day's work; most work done in morning; when they felt they
had done what they considered enough, they slacked off so output constant
• wage incentive really didn't work; informal social organization evolved; controlled rate busters
• workers often traded jobs and helped each other; formal supervisor often looked other way
• why did workers restrict output-didn't want management to know they could do more
• complex social system evolved-common sentiments, relationships
• -what is critical is not what is but what is perceived
• -since worker couldn't affect management, group gave meaning and significance to work
• -workers resist formal changes in management to break up loyalties, routines industrial engineer
Q6.(a) State the merits and demerits of selection of personnel from within and also those of selection from outside the firm.
(b) What is your opinion about the policy of open competition?
(c) What are the skills and personal characteristics that a manager has to possess?
(d) What measures would you suggest to enhance the efficiency of bank managers?
Q7.(a) “Planning and control are Siamese twins.”-Explain and elaborate the statement.
(b) Make a comparison of feed forward feed back system of control.
(c ) What are the requirements for effective control?
(d) Explain the importance of flexibility of controlling.
Q8. (a) What is job satisfaction? State why it is considered as an important dependent variable in OB model?
Job satisfaction is how content an individual is with his or her job. Scholars and human resource professionals generally
make a distinction between affective job satisfaction
the extent of pleasurable emotional feelings individuals have about their jobs overall, and is different to cognitive job
satisfaction which is the extent of individuals’ satisfaction with particular facets of their jobs, such as pay, pension
arrangements, working hours, and numerous other aspects of their jobs.
[1]
and cognitive job satisfaction.
At its most general level of conceptualization, job satisfaction is simply how content an individual is with his or her job.
At the more specific levels of conceptualization used by academic researchers and human resources professionals,
job satisfaction has varying definitions. Affective job satisfaction is usually defined as an unidimensional subjective
construct representing an overall emotional feeling individuals have about their job as a whole.[1][2][3][4]
job satisfaction for individuals reflects the degree of pleasure or happiness their job in general induces. Cognitive job
satisfaction is usually defined as being a more objective and logical evaluation of various facets of a job. As such,
cognitive job satisfaction can be unidimensional if it comprises evaluation of just one aspect of a job, such as pay or
maternity leave, or multidimensional if two or more facets of a job are simultaneously evaluated. Cognitive job satisfaction
does not assess the degree of pleasure or happiness that arises from specific job facets, but rather gauges the extent to
which those job facets are judged by the job holder to be satisfactory in comparison with objectives they themselves set or
with other jobs. While cognitive job satisfaction might help to bring about affective job satisfaction, the two constructs are
distinct, not necessarily directly related, and have different antecedents and consequences.[2]
One of the biggest preludes to the study of job satisfaction was the Hawthorne studies. These studies (1924–1933),
primarily credited to Elton Mayo of the Harvard Business School, sought to find the effects of various conditions (most
notably illumination) on workers’ productivity. These studies ultimately showed that novel changes in work conditions
temporarily increase productivity (called the Hawthorne Effect). It was later found that this increase resulted, not from the
new conditions, but from the knowledge of being observed. This finding provided strong evidence that people work for
purposes other than pay, which paved the way for researchers to investigate other factors in job satisfaction.
Scientific management (aka Taylorism) also had a significant impact on the study of job satisfaction. Frederick Winslow
Taylor’s 1911 book, Principles of Scientific Management, argued that there was a single best way to perform any given
work task. This book contributed to a change in industrial production philosophies, causing a shift from skilled labor and
piecework towards the more modern of assembly lines and hourly wages. The initial use of scientific management by
industries greatly increased productivity because workers were forced to work at a faster pace. However, workers became
exhausted and dissatisfied, thus leaving researchers with new questions to answer regarding job satisfaction. It should
also be noted that the work of W.L. Bryan, Walter Dill Scott, and Hugo Munsterberg set the tone for Taylor’s work.
Some argue that Maslow’s hierarchy of needs theory, a motivation theory, laid the foundation for job satisfaction theory.
This theory explains that people seek to satisfy five specific needs in life – physiological needs, safety needs, social
needs, self-esteem needs, and self-actualization. This model served as a good basis from which early researchers could
Job satisfaction can also be seen within the broader context of the range of issues which affect an individual's experience
of work, or their quality of working life. Job satisfaction can be understood in terms of its relationships with other key
factors, such as general well-being, stress at work, control at work, home-work interface, and working conditions.
Edwin A. Locke’s Range of Affect Theory (1976) is arguably the most famous job satisfaction model. The main premise
of this theory is that satisfaction is determined by a discrepancy between what one wants in a job and what one has in a
job. Further, the theory states that how much one values a given facet of work (e.g. the degree of autonomy in a position)
moderates how satisfied/dissatisfied one becomes when expectations are/aren’t met. When a person values a particular
facet of a job, his satisfaction is more greatly impacted both positively (when expectations are met) and negatively (when
expectations are not met), compared to one who doesn’t value that facet. To illustrate, if Employee A values autonomy in
the workplace and Employee B is indifferent about autonomy, then Employee A would be more satisfied in a position that
offers a high degree of autonomy and less satisfied in a position with little or no autonomy compared to Employee B. This
theory also states that too much of a particular facet will produce stronger feelings of dissatisfaction the more a worker
Another well-known job satisfaction theory is the Dispositional Theory. It is a very general theory that suggests that people
have innate dispositions that cause them to have tendencies toward a certain level of satisfaction, regardless of one’s job.
This approach became a notable explanation of job satisfaction in light of evidence that job satisfaction tends to be stable
over time and across careers and jobs. Research also indicates that identical twins have similar levels of job satisfaction.
A significant model that narrowed the scope of the Dispositional Theory was the Core Self-evaluations Model, proposed
by Timothy A. Judge, Edwin A. Locke, and Cathy C. Durham in 1997.[5]
Self-evaluations that determine one’s disposition towards job satisfaction: self-esteem, general self-efficacy, locus of
control, and neuroticism. This model states that higher levels of self-esteem (the value one places on his/her self) and
general self-efficacy (the belief in one’s own competence) lead to higher work satisfaction. Having an internal locus of
control (believing one has control over her\his own life, as opposed to outside forces having control) leads to higher job
satisfaction. Finally, lower levels of neuroticism lead to higher job satisfaction.[5]
Judge et al. argued that there are four Core
According to opponent process theory,[6]
Primary processes give way to emotions that are steady with the event in question. Events that seem negative in manner
will give rise to the feelings of stress or anxiety. Events that are positive give rise to the feeling of content or relaxation.
The other process is the opponent process, which induces feelings that contradict the feelings in the primary processes.
Events that are negative give rise to feelings of relaxation while events that are positive give rise to feelings of anxiety. A
variety of explanations have been suggested to explain the uniformity of mood or satisfaction. This theory shows that if
you try to enhance the mood of individual it will more likely fail in doing so. The opponent process theory was formulated
to explain these patterns of observations.[7][8]
emotional events, such as criticisms or rewards, elicits two sets of processes.
Equity Theory shows how a person views fairness in regard to social relationships. During a social exchange, a person
identifies the amount of input gained from a relationship compared to the output, as well as how much effort another
individuals, the person is likely to be distressed because the ratio between the input and the output are not equal.[10]
For example, consider two employees who work the same job and receive the same benefits. If one individual gets a
pay raise for doing the same or less work than the other, then the less benefited individual will become distressed in his
workplace. If, on the other hand, one individual gets a pay raise and new responsibilities, then the feeling of inequality is
Equity Theory suggests that if an individual thinks there is an inequality between two social groups or
The concept of discrepancy theory explains the ultimate source of anxiety and dejection.[11]
fulfilled his responsibility feels the sense of anxiety and regret for not performing well, they will also feel dejection due
to not being able to achieve their hopes and aspirations. According to this theory, all individuals will learn what their
obligations and responsibilities for a particular function, over a time period, and if they fail to fulfill those obligations then
they are punished. Over time, these duties and obligations consolidate to form an abstracted set of principles, designated
approval, or love. These achievements and aspirations also form an abstracted set of principles, referred to as the ideal
When the individual fails to obtain these rewards, they begin to have feelings of dejection, disappointment,
Two-factor theory (motivator-hygiene theory)
Frederick Herzberg’s Two-factor theory (also known as Motivator Hygiene Theory) attempts to explain satisfaction and
motivation and hygiene factors, respectively. An employee’s motivation to work is continually related to job satisfaction of
a subordinate. Motivation can be seen as an inner force that drives individuals to attain personal and organizational goals
(Hoskinson, Porter, & Wrench, p. 133). Motivating factors are those aspects of the job that make people want to perform,
and provide people with satisfaction, for example achievement in work, recognition, promotion opportunities. These
motivating factors are considered to be intrinsic to the job, or the work carried out.[14]
the working environment such as pay, company policies, supervisory practices, and other working conditions.[14]
While Hertzberg's model has stimulated much research, researchers have been unable to reliably empirically prove
the model, with Hackman & Oldham suggesting that Hertzberg's original formulation of the model may have been a
employees will react in an identical manner to changes in motivating/hygiene factors.[14]
Agitation and anxiety are the main responses when an individual fails to achieve the obligation or
This theory also explains that if achievement of the obligations is obtained then the reward can be praise,
This theory states that satisfaction and dissatisfaction are driven by different factors –
Furthermore, the theory does not consider individual differences, conversely predicting all
criticised in that it does not specify how motivating/hygiene factors are to be measured.[14]
Hackman & Oldham proposed the Job Characteristics Model, which is widely used as a framework to study how
particular job characteristics impact on job outcomes, including job satisfaction. The model states that there are five
core job characteristics (skill variety, task identity, task significance, autonomy, and feedback) which impact three critical
psychological states (experienced meaningfulness, experienced responsibility for outcomes, and knowledge of the actual
results), in turn influencing work outcomes (job satisfaction, absenteeism, work motivation, etc.).[15]
characteristics can be combined to form a motivating potential score (MPS) for a job, which can be used as an index of
how likely a job is to affect an employee's attitudes and behaviors. A meta-analysis of studies that assess the framework
of the model provides some support for the validity of the JCM.[16]
The motivating potential score (MPS) can be calculated, using the core dimensions discussed above, as follows;
Jobs that are high in motivating potential must be also high on at least one of the three factors that lead to experienced
meaningfulness, and also must be high on both Autonomy and Feedback.[17]
characteristics model predicts that motivation, performance and job satisfaction will be positively affected and the
likelihood of negative outcomes, such as absenteeism and turnover, will be reduced.[17]
If a job has a high MPS, the job
Communication overload and communication underload
One of the most important aspects of an individual’s work in a modern organization concerns the management of
communication demands that he or she encounters on the job.[18]
load, which refers to “the rate and complexity of communication inputs an individual must process in a particular time
Individuals in an organization can experience communication over-load and communication under- load which
can affect their level of job satisfaction. Communication overload can occur when “an individual receives too many
messages in a short period of time which can result in unprocessed information or when an individual faces more complex
messages that are more difficult to process.[19]
complete a task, when more inputs exist than outputs, the individual perceives a condition of overload[18]
positively or negatively related to job satisfaction. In comparison, communication under load can occur when messages or
inputs are sent below the individual’s ability to process them.”[19]
under-load, if an individual does not receive enough input on the job or is unsuccessful in processing these inputs, the
individual is more likely to become dissatisfied, aggravated, and unhappy with their work which leads to a low level of job
Demands can be characterized as a communication
” Due to this process, “given an individual’s style of work and motivation to
According to the ideas of communication over-load and
Superior-subordinate communication is an important influence on job satisfaction in the workplace. The way in which
subordinates perceive a supervisor's behavior can positively or negatively influence job satisfaction. Communication
behavior such as facial expression, eye contact, vocal expression, and body movement is crucial to the superior-
subordinate relationship (Teven, p. 156). Nonverbal messages play a central role in interpersonal interactions with
respect to impression formation, deception, attraction, social influence, and emotional.[20]
supervisor helps to increase interpersonal involvement with their subordinates impacting job satisfaction. The manner
in which supervisors communicate with their subordinates non-verbally may be more important than the verbal content
(Teven, p. 156). Individuals who dislike and think negatively about their supervisor are less willing to communicate or have
motivation to work whereas individuals who like and think positively of their supervisor are more likely to communicate and
are satisfied with their job and work environment. A supervisor who uses nonverbal immediacy, friendliness, and open
communication lines is more likely to receive positive feedback and high job satisfaction from a subordinate. Conversely,
a supervisor who is antisocial, unfriendly, and unwilling to communicate will naturally receive negative feedback and
create low job satisfaction in their subordinates in the workplace.
Effective human resources practices lead to positive financial outcomes
A Watson Wyatt Worldwide study identified a positive outcome between a collegical and flexible work environment
and an increase in shareholder value. Suggesting that employee satisfaction is directly related to financial gain. Over
40 percent of the companies listed in the top 100 of Fortune magazine’s, “America’s Best Companies to Work For” also
appear on the Fortune 500. It is possible that successful workers enjoy working at successful companies, however, the
Watson Wyatt Worldwide Human Capital Index study claims that effective human resources practices lead to positive
financial outcomes more often than positive financial outcomes lead to good practices.
Mood and emotions form the affective element of job satisfaction. Moods tend to be longer lasting but often weaker states
of uncertain origin, while emotions are often more intense, short-lived and have a clear object or cause.[22]
Some research suggests moods are related to overall job satisfaction.[23][24]
found to be significantly related to overall job satisfaction.[25]
Frequency of experiencing net positive emotion will be a better predictor of overall job satisfaction than will intensity of
positive emotion when it is experienced.[25]
Emotion work (or emotion management) refers to various types of efforts to manage emotional states and displays.
Emotion management includes all of the conscious and unconscious efforts to increase, maintain, or decrease one or
more components of an emotion. Although early studies of the consequences of emotional work emphasized its harmful
effects on workers, studies of workers in a variety of occupations suggest that the consequences of emotional work are
It was found that suppression of unpleasant emotions decreases job satisfaction and the amplification of pleasant
emotions increases job satisfaction.[27]
The understanding of how emotion regulation relates to job satisfaction concerns two models:
Positive and negative emotions were also
1. Emotional dissonance. Emotional dissonance is a state of discrepancy between public displays of emotions
and internal experiences of emotions,[28][29]
dissonance is associated with high emotional exhaustion, low organizational commitment, and low job
2. Social interaction model. Taking the social interaction perspective, workers’ emotion regulation might beget
responses from others during interpersonal encounters that subsequently impact their own job satisfaction. For
example: The accumulation of favorable responses to displays of pleasant emotions might positively affect job
that often follows the process of emotion regulation. Emotional
It has been well documented that genetics influence a variety of individual differences.[32]
genetics also play a role in the intrinsic, direct experiences of job satisfaction like challenge or achievement (as opposed
to extrinsic, environmental factors like working conditions). One experiment used sets of monozygotic twins, reared apart,
to test for the existence of genetic influence on job satisfaction. While the results indicate the majority of the variance in
job satisfaction was due to environmental factors (70%), genetic influence is still a minor factor. Genetic heritability was
also suggested for several of the job characteristics measured in the experiment, such as complexity level, motor skill
requirements, and physical demands.[33]
Some research suggests an association between personality and job satisfaction. Specifically, this research describes
the role of negative affectivity and positive affectivity. Negative affectivity is related strongly to the personality trait of
neuroticism. Individuals high in negative affectivity are more prone to experience less job satisfaction. Positive affectivity
is related strongly to the personality trait of extraversion. Those high in positive affectivity are more prone to be satisfied
in most dimensions of their life, including their job. Differences in affectivity likely impact how individuals will perceive
objective job circumstances like pay and working conditions, thus affecting their satisfaction in that job.[34]
How job satisfaction is measured depends on whether affective or cognitive job satisfaction is of interest. The majority of
job satisfaction measures are self-reports and based on multi-item scales. Several measures have been developed over
the years, although they vary in terms of how carefully and distinctively they are conceptualized with respect to affective or
cognitive job satisfaction. They also vary in terms of the extent and rigour of their psychometric validation.
The Brief Index of Affective Job Satisfaction (BIAJS) is a 4-item, overtly affective as opposed to cognitive, measure
of overall affective job satisfaction. The BIAJS differs from other job satisfaction measures in being comprehensively
validated not just for internal consistency reliability, temporal stability, convergent and criterion-related validities, but also
for cross-population invariance by nationality, job level, and job type. Reported internal consistency reliabilities range
is a specifically cognitive job satisfaction measure. It measures one’s satisfaction in
five facets: pay, promotions and promotion opportunities, coworkers, supervision, and the work itself. The scale is simple,
participants answer either yes, no, or can’t decide (indicated by ‘?’) in response to whether given statements accurately
Other job satisfaction questionnaires include: the Minnesota Satisfaction Questionnaire (MSQ), the Job Satisfaction
Survey (JSS), and the Faces Scale. The MSQ measures job satisfaction in 20 facets and has a long form with 100
questions (five items from each facet) and a short form with 20 questions (one item from each facet). The JSS is a 36 item
questionnaire that measures nine facets of job satisfaction. Finally, the Faces Scale of job satisfaction, one of the first
scales used widely, measured overall job satisfaction with just one item which participants respond to by choosing a face..
Job Satisfaction can be indicative of work behaviors such as organizational citizenship,[36]
Further, job satisfaction can partially mediate the relationship of personality variables
One common research finding is that job satisfaction is correlated with life satisfaction.[40]
meaning people who are satisfied with life tend to be satisfied with their job and people who are satisfied with their job
tend to be satisfied with life. However, some research has found that job satisfaction is not significantly related to life
satisfaction when other variables such as nonwork satisfaction and core self-evaluations are taken into account.[41]
An important finding for organizations to note is that job satisfaction has a rather tenuous correlation to productivity on the
job. This is a vital piece of information to researchers and businesses, as the idea that satisfaction and job performance
are directly related to one another is often cited in the media and in some non-academic management literature. A recent
meta-analysis found surprisingly low correlations between job satisfaction and performance.[42]
found that the relationship between satisfaction and performance can be moderated by job complexity, such that for
high-complexity jobs the correlation between satisfaction and performance is higher than for jobs of low to moderate
complexity. Additionally, one longitudinal study indicated that among work attitudes, job satisfaction is a strong predictor
of absenteeism, suggesting that increasing job satisfaction and organizational commitment are potentially good strategies
for reducing absenteeism and turnover intentions.[43]
have negative effects on performance, organizational deviance, and organizational citizenship behaviours.[44]
the relationship of satisfaction to productivity is not as straightforward as often assumed and can be influenced by a
number of different work-related constructs, and the notion that "a happy worker is a productive worker" should not be the
foundation of organizational decision-making. For example, employee personality may even be more important than job
satisfaction in regards to performance.[45]
Recent research has also shown that intention to quit alone can
(b) “Organizational Behavior is generally predictable. So, there is no need to formally study OB.” Why is this comment
(c ) What are effectiveness and efficiency and how they are related to organizational behavior?
Efficiency in general describes the extent to which time, effort or cost is well used for the intended task or purpose. It
is often used with the specific purpose of relaying the capability of a specific application of effort to produce a specific
outcome effectively with a minimum amount or quantity of waste, expense, or unnecessary effort. "Efficiency" has widely
varying meanings in different disciplines.
The term "efficient" is very much confused and misused with the term "effective". In general, efficiency is a measurable
concept, quantitatively determined by the ratio of output to input. "Effectiveness", is a relatively vague, non-quantitative
concept, mainly concerned with achieving objectives. In several of these cases, efficiency can be expressed as a result as
percentage of what ideally could be expected, hence with 100% as ideal case. This does not always apply, not even in all
cases where efficiency can be assigned a numerical value, e.g. not for specific impulse.
A simple way of distinguishing between Efficiency and Effectiveness is the saying, "Efficiency is doing things right, while
Effectiveness is doing the right things." This is based on the premise that selection of objectives of a process are just as
important as the quality of that process.
A slightly broader mode of efficiency that nevertheless remains consistent with the "percentage" definition in many cases is to say that
efficiency corresponds to the ratio r=P/C of the amount P of some valuable resource produced, per amount C of valuable resources
consumed. This may correspond to a percentage if products and consumables are quantified in compatible units, and if consumables
are transformed into products via a conservative process. For example, in the analysis of the energy conversion efficiency of heat
engines in thermodynamics, the product P may be the amount of useful work output, while the consumable C is the amount of high-
temperature heat input. Due to the conservation of energy, P can never be greater than C, and so the efficiency r is never greater
than 100% (and in fact must be even less at finite temperatures).
(d) What are the individual level variables that influence organizational effectiveness?
Q9.(a) How do the required managerial skills differ in the organizational hierarchy?
(b) Distinguish between administration and a management.
(c ) Why has Fredrick Winslow Taylor been called the father of scientific management and Henri Fayol the father of
(d) What is meant by the term “Management by exception”?
Management by objectives (MBO) is a process of defining objectives within an organization so that management and
employees agree to the objectives and understand what they need to do in the organization in order to achieve them. The
term "management by objectives" was first popularized by Peter Drucker in his 1954 book The Practice of Management.
The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of
the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally,
when employees themselves have been involved with the goal setting and choosing the course of action to be followed by
them, they are more likely to fulfill their responsibilities.
According to George S. Odiorne, the system of management by objectives can be described as a process whereby the superior and
subordinate jointly identify its common goals, define each individual's major areas of responsibility in terms of the results expected of
him, and use these measures as guides for operating the unit and assessing the contribution of each of its members.[2]
Unique features and advantages of the MBO process
The principle behind Management by Objectives (MBO) is for employees to have a clear understanding of the roles
and responsibilities expected of them. They can then understand how their activities relate to the achievement of the
organization's goal. MBO also places importance on fulfilling the personal goals of each employee.
Some of the important features and advantages of MBO are:
1. Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment.
This increases employee job satisfaction and commitment.
2. Better communication and coordination – Frequent reviews and interactions between superiors and
subordinates helps to maintain harmonious relationships within the organization and also to solve many
4. Subordinates tend to have a higher commitment to objectives they set for themselves than those imposed on
5. Managers can ensure that objectives of the subordinates are linked to the organization's objectives.
Objectives can be set in all domains of activities (production, marketing, services, sales, R&D, human resources, finance,
Some objectives are collective, for a whole department or the whole company, others can be individualized.
Objectives need quantifying and monitoring. Reliable management information systems are needed to establish relevant
objectives and monitor their "reach ratio" in an objective way. Pay incentives (bonuses) are often linked to results in
There are several limitations to the assumptive base underlying the impact of managing by objectives,[citation needed]
1. It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes.
2. It underemphasizes the importance of the environment or context in which the goals are set. That context
includes everything from the availability and quality of resources, to relative buy-in by leadership and
stake-holders. As an example of the influence of management buy-in as a contextual influencer, in a 1991
comprehensive review of thirty years of research on the impact of Management by Objectives, Robert Rodgers
and John Hunter concluded that companies whose CEOs demonstrated high commitment to MBO showed, on
average, a 56% gain in productivity. Companies with CEOs who showed low commitment only saw a 6% gain in
3. Companies evaluated their employees by comparing them with the "ideal" employee. Trait appraisal only looks
at what employees should be, not at what they should do.
When this approach is not properly set, agreed and managed by organizations, self-centered employees might be prone
to distort results, falsely representing achievement of targets that were set in a short-term, narrow fashion. In this case,
managing by objectives would be counterproductive.
The use of MBO must be carefully aligned with the culture of the organization. While MBO is not as fashionable as
it was before, it still has its place in management today. The key difference is that rather than 'set' objectives from a
cascade process, objectives are discussed and agreed upon. Employees are often involved in this process, which can be
A saying around MBO – "What gets measured gets done", ‘Why measure performance? Different purposes require
different measures’ – is perhaps the most famous aphorism of performance measurement; therefore, to avoid potential
problems SMART and SMARTER objectives need to be agreed upon in the true sense rather than set.
Q10. Write short notes on any four of the following:-
Job analysis is the formal process of identifying the content of a job in terms activities involved and attributes needed
to perform the work and identifies major job requirements. Job analysis was conceptualized by two of the founders of
industrial/organizational psychology, Frederick Taylor and Lillian Moller Gilbreth in the early 20th century.[1]
provide information to organizations which helps to determine which employees are best fit for specific jobs.
/organizational psychologists are often the professionals who on the attributes need in a prospective employee to perform
the job successfully. The Occupational Information Network (O*NET) is an online website which provides analyses of a
One of the main purposes of conducting job analysis is to prepare job descriptions and job specifications which in turn
helps hire the right quality of workforce into an organization. The general purpose of job analysis is to document the
requirements of a job and the work performed. Job and task analysis is performed as a basis for later improvements,
including: definition of a job domain; description of a job; development of performance appraisals, personnel
selection, selection systems, promotion criteria, training needs assessment, legal defense of selection processes, and
In the fields of human resources (HR) and industrial psychology, job analysis is often used to gather information for use in
personnel selection, training, classification, and/or compensation.[3]
The field of vocational rehabilitation uses job analysis to determine the physical requirements of a job to determine
whether an individual who has suffered some diminished capacity is capable of performing the job with, or without, some
Professionals developing certification exams use job analysis (often called something slightly different, such as "task
analysis" or "work analysis") to determine the elements of the domain which must be sampled in order to create a
content valid exam. When a job analysis is conducted for the purpose of valuing the job (i.e., determining the appropriate
compensation for incumbents) this is called "job evaluation."
Job analysis aims to answer questions such as:
• What physical and mental activities does the worker undertake?
• When is the job to be performed?
• Where is the job to be performed?
• How does the worker do the job?
• What qualifications are needed to perform the job?
• What are the working conditions (such as levels of temperature, noise, offensive fumes, light)
• What machinery or equipment is used in the job?
• What constitutes successful performance?
Job analysts are typically industrial/organizational psychologists or human resource officers who have been trained by,
and are acting under the supervision of an industrial/organizational psychologist. There are several ways to conduct
a job analysis, including: interviews with incumbents and supervisors, work sampling,
questionnaires (structured, open-ended, or both), observation, critical incident investigations,
and gathering background information such as duty statements or classification specifications. In job analyses
conducted by HR professionals, it is common to use more than one of these methods.[3]
Generally, there are two perspectives in which job analyses are conducted: task-oriented or worker-oriented.
Task-oriented procedures focus on the actual activities involved in performing work.[2]
consideration work duties, responsibilities, and functions. The job analyst then develops task statements which clearly
state the tasks that are performed with great detail. After creating task statements, job analysts rate the tasks on
scales indicating importance, difficulty, frequency, and consequences of error. Based on these ratings, a greater sense
of understanding of a job can be attained.[1]
techniques used to describe job expertise.
For example, the job analysts may tour the job site and observe workers performing their jobs. During the tour the analyst
may collect materials that directly or indirectly indicate required skills (duty statements, instructions, safety manuals,
Task analysis, such as cognitively oriented task analysis (COTA), are
is a classic example of a task-oriented technique. Developed by Fine and Cronshaw in
1944, work elements are scored in terms of relatedness to data (0–6), people (0–8), and things (0–6), with lower scores
representing greater complexity. Incumbents, considered subject matter experts (SMEs), are relied upon, usually in a
panel, to report elements of their work to the job analyst. Using incumbent reports, the analyst uses Fine's terminology
to compile statements reflecting the work being performed in terms of data, people, and things. The Dictionary of
Occupational Titles uses elements of the FJA in defining jobs.[1]
Worker-oriented procedures aim to examine the human attributes needed to perform the job successfully.[2]
attributes have been commonly classified into four categories: knowledge, skills, abilities, and other characteristics (KSAO).
Knowledge is the information people need in order to perform the job. Skills are the proficiencies needed to perform each
task. Abilities are the attributes that are relatively stable over time. Other characteristics are all other attributes, usually
worker-oriented job analysis, the skills are inferred from tasks and the skills are rated directly in terms of importance of
frequency. This often results in data that immediately imply the important KSAOs. However, it can be hard for SMEs to
The Fleishman Job Analysis System (F-JAS) developed by Edwin A. Fleishman represents a worker-oriented approach.
Fleishman factor-analyzed large data sets to discover a common, minimum set of KSAOs across different jobs. His
system of 73 specific scales measure three broad areas: Cognitive (Verbal Abilities; Idea Generation & Reasoning
Abilities; Quantitative Abilities; Memory; Perceptual Abilities; Spatial Abilities; and Attentiveness), Psychomotor (Fine
Manipulative Abilities; Control Movement Abilities; and Reaction Time and Speed Abilities), and Physical (Physical
Strength Abilities; Endurance; Flexibility, Balance, and Coordination; Visual Abilities; and Auditory and Speech Abilities).
The KSAOs required for a job are inferred from the most frequently-occurring, important tasks. In a
JobScan is a measurement instrument which defines the personality dynamics within a specific type of job.[9]
collecting PDP ProScan Survey results of actual performers and results of job dynamics analysis surveys completed by
knowledgeable people related to a specific job, JobScan provides a suggested ideal job model for that position. Although
it does not evaluate the intellect or experience necessary to accomplish a task, it does deal with the personality of the type
One key difference between task-oriented and worker-oriented procedures lies in the extent that task oriented procedures
are directly observable. Ratings of ability statements could be more susceptible to inflation by job analysis respondents
because it is harder to verify that an ability is there than seeing a task being done. Ability ratings may also reflect a self-
rating compared to job-rating, suggesting that self-presentation will be more likely with ability statements.[10]
(an online resource which has replaced the Dictionary of Occupational Titles (DOT)) lists job requirements
for a variety of jobs and is often considered basic, generic, or initial job analysis data. Everyone can use this database
at no cost and is continually updated by observing workers from each occupation. O*net also has a Career Exploration
Tool which is an assessment to help workers and students who are searching for new careers. Data available from O*Net
includes physical requirements, educational level, and some mental requirements. Task-based statements describing the
work performed are derived from the functional job analysis technique. O*Net also provides links to salary data at the US
national, state and city level for each job.
The Position Analysis Questionnaire (PAQ) is a well-known job analysis instrument. Although it is labeled a questionnaire, the PAQ
is actually designed to be completed by a trained job analyst who interviews the SMEs (e.g., job incumbents and their supervisors).[2]
The PAQ was designed to measure job component validity of attributes presented in aptitude tests. Job component validity is the
relationship between test scores and skills required for good job performance. There are 195 behavior-related statements in the PAQ
divided into six major sections: information input, mental process, work output, relationships with others, job context, and other job
A job evaluation is a systematic way of determining the value/worth of a job in relation to other jobs in an organisation.
It tries to make a systematic comparison between jobs to assess their relative worth for the purpose of establishing a
Job evaluation needs to be differentiated from job analysis. Job analysis is a systematic way of gathering information
about a job. Every job evaluation method requires at least some basic job analysis in order to provide factual information
about the jobs concerned. Thus, job evaluation begins with job analysis and ends at that point where the worth of a job is
ascertained for achieving pay equity between jobs.
The purpose of job evaluation is to produce a defensive[clarification needed]
pay structure can be built. The important features of job evaluation may be summarised thus:
ranking of jobs on which a rational and acceptable
• It tries to assess jobs, not people.
• The standards of job evaluation are relative, not absolute.
• The basic information on which job evaluations are made is obtained from job analysis.
• Job evaluations are carried out by groups, not by individuals.
• Some degree of subjectivity is always present in job evaluation.
• Job evaluation does not fix pay scales, but merely provides a basis for evaluating a rational wage structure.
The process of job evaluation involves the following steps:
• Gaining acceptance: Before undertaking job evaluation, top management must explain the aims) and uses of
the programme to the employees and unions. To elaborate the programme further, oral presentations could be
made. Letters, booklets could be used to classify all relevant aspects of the job evaluation programme.
• Creating job evaluation committee: It is not possible for a single person to evaluate all the key jobs in an
organisation. Usually a job evaluation committee consisting of experienced employees, union representatives
and HR experts is created to set the ball rolling.
• Finding the jobs to be evaluated: Every job need not be evaluated. This may be too taxing and costly. Certain
key jobs in each department may be identified. While picking up the jobs, care must be taken to ensure that
they represent the type of work performed in that department.
• Analysing and preparing job description: This requires the preparation of a job description and also an analysis
of job needs for successful performance .
• Selecting the method of evaluation: The most important method of evaluating the jobs must be identified now,
keeping the job factors as well as organisational demands in mind.
• Classifying jobs: The relative worth of various jobs in an organisation may be found out after arranging jobs in
order of importance using criteria such as skill requirements, experience needed, under which conditions job
is performed, type of responsibilities to be shouldered, degree of supervision needed, the amount of stress
caused by the job, etc. Weights can be assigned to each such factor. When we finally add all the weights, the
worth of a job is determined. The points may then be converted into monetary values.
Once the evaluation process is over and a plan of action is ready, management must explain it to employees and put it
In the light of changes in environmental conditions (technology, products, services, etc.) jobs need to be examined
closely. For example, the traditional clerical functions have undergone a rapid change in sectors like banking, insurance
and railways, after computerisation. New job descriptions need to be written and the skill needs of new jobs need to be
duly incorporated in the evaluation process. Otherwise, employees may feel that all the relevant job factors - based on
which their pay has been determined - have not been evaluated properly.
For job evaluation to be practicable it is necessary:
• that jobs can be easily identified
• that there are sufficient differences between different jobs; and
• that agreements no the relative importance or worth of different jobs can be negotiated between the enterprise
and its employees and/or their representatives..
The pay offs from job evaluation may be stated thus:
• It tries to link pay with the requirements of the job.
• It offers a systematic procedure for determining the relative worth of jobs. Jobs are ranked on the basis of
rational criteria such as skill, education, experience, responsibilities, hazards, etc., and are priced accordingly.
• An equitable wage structure is a natural outcome of job evaluation. An unbiased job evaluation tends to
eliminate salary inequities by placing jobs having similar requirements in the same salary range.
• Employees as well as unions participate as members of job evaluation committee while determining rate grades
for different jobs. This helps in solving wage related grievances quickly.
• Job evaluation, when conducted properly and with care, helps in the evaluation of new jobs.
• It points out possibilities of more appropriate use of the plant's labour force by indicating jobs that need more or
less skilled workers than those who are manning these jobs currently.
There are three basic methods of job evaluation: (1) ranking, (2) classification, (3) factor comparison. While many
variations of these methods exist in practice, the three basic approaches are described here.
Perhaps the simplest method of job evaluation is the ranking method. According to this method, jobs are arranged from
highest to lowest, in order of their value or merit to the organization. Jobs can also be arranged according to the relative
difficulty in performing them. The jobs are examined as a whole rather than on the basis of important factors in the job;
the job at the top of the list has the highest value and obviously the job at the bottom of the list will have the lowest value.
Jobs are usually ranked in each department and then the department rankings are combined to develop an organizational
ranking. The following table is a hypothetical illustration of ranking of jobs. The variation in payment of salaries depends
on the variation of the nature of the job performed by the employees. The ranking method is simple to understand and
practice and it is best suited for a small organisation. Its simplicity however works to its disadvantage in big organisations
because rankings are difficult to develop in a large, complex organisation. Moreover, this kind of ranking is highly
subjective in nature and may offend many employees. Therefore, a more scientific and fruitful way of job evaluation is
According to this method, a predetermined number of job groups or job classes are established and jobs are assigned
to these classifications. This method places groups of jobs into job classes or job grades. Separate classes may include
office, clerical, managerial, personnel, etc. Following is a brief description of such a classification in an office.
• Class I - Executives: Further classification under this category may be Office Manager, Deputy office manager,
Office superintendent, Departmental supervisor, etc.
• Class II - Skilled workers: Under this category may come the Purchasing assistant, Cashier, Receipts clerk, etc.
• Class III - Semiskilled workers: Under this category may come Stenotypists, Machine-operators, Switchboard
• Class IV - Semiskilled workers: This category comprises Daftaris[clarification needed]
The job classification method is less subjective when compared to the earlier ranking method. The system is very easy
to understand and acceptable to almost all employees without hesitation. One strong point in favour of the method is that
it takes into account all the factors that a job comprises. This system can be effectively used for a variety of jobs. The
weaknesses of the job classification method are:
• Even when the requirements of different jobs differ, they may be combined into a single category, depending on
• It is difficult to write all-inclusive descriptions of a grade.
• The method oversimplifies sharp differences between different jobs and different grades.
• When individual job descriptions and grade descriptions do not match well, the evaluators have the tendency to
classify the job using their subjective judgements.
A more systematic and scientific method of job evaluation is the factor comparison method. Though it is the most
complex method of all, it is consistent and appreciable. Under this method, instead of ranking complete jobs, each job is
ranked according to a series of factors. These factors include mental effort, physical effort, skill needed, responsibility,
supervisory responsibility, working conditions and other such factors (for instance, know-how, problem solving abilities,
accountability, etc.). Pay will be assigned in this method by comparing the weights of the factors required for each job, i.e.,
the present wages paid for key jobs may be divided among the factors weighted by importance (the most important factor,
for instance, mental effort, receives the highest weight). In other words, wages are assigned to the job in comparison to its
The steps involved in factor comparison method may be briefly stated thus:
• Select key jobs (say 15 to 20), representing wage/salary levels across the organisation. The selected jobs must
represent as many departments as possible.
• Find the factors in terms of which the jobs are evaluated (such as skill, mental effort, responsibility, physical
effort, working conditions, etc.).
• Rank the selected jobs under each factor (by each and every member of the job evaluation committee)
• Assign money value to each level of each factor (example: consider problem solving is one of the factor, what
level of problem solving is required {basic, intermediate or advance}) and determine the wage rates for each
• The wage rate for a job is apportioned along the identified factors.
• All other jobs are compared with the list of key jobs and wage rates are determined. An example of how the
factor comparison method works is given below:
After the wage rate for a job is distributed along the identified and ranked factors, all other jobs in the department are
compared in terms of each factor. Suppose the job of a 'painter' is found to be similar electrician in skill (15), fitter in
mental effort (10), welder in physical effort (12) cleaner in responsibility! (6) and labourer in working conditions (4). The
wage rate for this job would be (15+10+12+6+4) is47.j
This method is widely used currently. Here, jobs are expressed in terms of key factors. Points are assigned to each factor
after prioritising each factor in order of importance. The points are summed up to determine the wage rate for the job.
Jobs with similar point totals are placed in similar pay grades. The procedure involved may be explained thus:
1. Select key jobs. Identify the factors common to all the identified jobs such as skill, effort, responsibility, etc.
2. Divide each major factor into a number of sub factors. Each sub factor is defined and expressed clearly in the order of
The most frequent factors employed in point systems are (i) Skill (key factor); Education and training required, Breadth/
depth of experience required, Social skills required, Problem-solving skills, Degree of discretion/use of judgement,
Creative thinking (ii) Responsibility/Accountability: Breadth of responsibility, Specialised responsibility, Complexity of the
work, Degree of freedom to act, Number and nature of subordinate staff, Extent of accountability for equipment/plant,
Extent of accountability for product/materials; (iii) Effort: Mental demands of a job, Physical demands of a job, Degree of
The educational requirements (sub factor) under the skill (key factor) may be expressed thus in the order of importance.
3. Find the maximum number of points assigned to each job (after adding up the point values of all sub-factors of such a
This would help in finding the relative worth of a job. For instance, the maximum points assigned to an officer's job in a
bank come to 540. The manager's job, after adding up key factors + sub factors points, may be getting a point value of
say 650 from the job evaluation committee. This job is now priced at a higher level.
4, Once the worth of a job in terms of total points is expressed, the points are converted into money values keeping in
view the hourly/daily wage rates. A wage survey is usually undertaken to collect wage rates of certain key jobs in the
The point method is a superior and widely used method of evaluating jobs. It forces raters to look into all key factors
and sub-factors of a job. Point values are assigned to all factors in a systematic way, eliminating bias at every stage. It
is reliable because raters using similar criteria would get more or less similar answers. The methodology underlying the
approach contributes to a minimum of rating error (Robbins p. 361). It accounts for differences in wage rates for various
jobs on the strength of job factors. Jobs may change over time, but the rating scales established under the point method
remain unaffected. On the negative side, the point method is complex. Preparing a manual for various jobs, fixing values
for key and sub-factors, establishing wage rates for different grades, etc., is a time consuming process, According to
Decenzo and Robbins, "the key criteria must be carefully and clearly identified, degrees of factors have to be agreed
upon in terms that mean the same to all rates, the weight of each criterion has to be established and point values must
be assigned to degrees". This may be too taxing, especially while evaluating managerial jobs where the nature of work
(varied, complex, novel) is such that it cannot be expressed in quantifiable numbers.
1. Job evaluation is not exactly scientific.
2. The modus operandi of most of the techniques is difficult to understand, even for the supervisors.
3. The factors taken by the programme are not exhaustive.
4. There may be wide fluctuations in compensable factors in view of changes in technology, values and
aspirations of employers, etc.
5. Employees, trade union leaders, management and the programme operators may assign different weight to
different factors, thus creating grounds for dispute.
A job description is a list that a person might use for general tasks, or functions, and responsibilities of a position. It
may often include to whom the position reports, specifications such as the qualifications or skills needed by the person
in the job, or a salary range. Job descriptions are usually narrative,[1]
competencies; for instance, strategic human resource planning methodologies may be used to develop a competency
architecture for an organization, from which job descriptions are built as a shortlist of competencies.
but some may instead comprise a simple list of
A job description is usually developed by conducting a job analysis, which includes examining the tasks and sequences
of tasks necessary to perform the job. The analysis considers the areas of knowledge and skills needed for the job. A job
usually includes several roles. The job description might be broadened to form a person specification or may be known as
A job description may include relationships with other people in the organization: Supervisory level, managerial
requirements, and relationships with other colleagues.
A job description need not be limited to explaining the current situation, or work that is currently expected; it may also set
out goals for what might be achieved in future.
Prescriptive job descriptions may be seen as a hindrance in certain circumstances:[2]
• Job descriptions may not be suitable for some senior managers as they should have the freedom to take the
initiative and find fruitful new directions;
• Job descriptions may be too inflexible in a rapidly-changing organization, for instance in an area subject to rapid
• Other changes in job content may lead to the job description being out of date;
• The process that an organization uses to create job descriptions may not be optimal.
(g) Consultative management.
Q11. (a) What is scientific management? What are the four principles of scientific management?
Another branch of the classical school of management is the scientific management approach. The scientific
management approach emphasized empirical research for developing a comprehensive management solution. Scientific
management principles are meant to be applied by managers in a very specific fashion. A fundamental implication of
scientific management is the manager is primarily responsible for increasing an organization's productivity. This has major
implications for the American economy in the face of a consistent lack of competitive productivity and GNP growth. The
major representatives of this school of thought are Frederick Winslow Taylor and Frank and Lillian Gilbreth.
Frederick Taylor is known as the "father of scientific management." Taylor began work at the age of 18 as an apprentice
to a pattern maker, and as a machinist. He later joined the Midvale Steel Company as a laborer rising in eight years to
chief engineer. During this period at the steel mill, he performed exhaustive experiments on worker productivity, and
tested what he called the "task system," later developing into the Taylor System, and eventually progressing into scientific
management. His experiments involved determining the best way of performing each work operation, the time it required,
materials needed, and the work sequence. He sought to establish a clear division of labor between management and
Taylor's task management methodology rests on a fundamental belief that management, the entrepreneurs in Taylor's
day, were not only superior intellectually to the average employee, but had a positive duty to supervise them and organize
their work activities to eliminate what Taylor called "the natural tendency of workers to soldier" on the job.
In 1911, a paper Taylor originally prepared for presentation to the American Society of Mechanical Engineers was
published as The Principles of Scientific Management. Taylor positioned scientific management as the best management
approach for achieving productivity increases. It rested on the manager's superior ability and responsibility to apply
systematic knowledge to the organizational work setting.
Taylor developed four principles of scientific management:
1. A scientific management methodology be developed.
2. Managers should assume the responsibility for selecting, training and developing the employee.
3. Managers should fully cooperate with employees to insure the proper application of the scientific management method.
4. Management should become involved with the work of their employees as much as possible.2
Scientific management consisted of a system for supervising employees, improving work methods, and providing
incentives to employees through the piece rate system. While Taylor assumed there was an unquestioned necessity
to supervise employees, he also sought the best way of performing a job as well as to provide financial incentives for
increased productivity by paying employees by the piece through the piece rate system.
Taylor's Principles became enormously popular in America, as well as in Europe, providing organizational theory an aura
of science. Scientific management led to time and motion studies, efficiency experts and others spreading the gospel.
Taylor's optimistic belief that study of the organization through his scientific method would provide the answers necessary
to resolve the most difficult productivity problems is extremely important to contemporary management. He is the first to
point out that it is management's primary responsibility to make an organization productive.
(b) Discuss the 14 principles of management by Henri Fayol.
As a result of his long management career, Fayol developed fourteen management principles:
1. Division of Work. Division of work, specialization, produces more and better work with the same effort. It focuses
effort while maximizing employee productivity. It is applicable to all work including technical applications. There are
limitations to specialization, which are determined by its application.
2. Authority and responsibility. Authority is the right to give orders and the power to exact obedience. Distinction must
be made between a manager's official authority deriving from office, and personal authority created through individual
personality, intelligence, and experience. Authority creates responsibility.
3. Discipline. Obedience and respect between a firm and its employees based on clear and fair agreements are
absolutely essential to the functioning of any organization. Good discipline requires managers to apply sanctions
whenever violations become apparent.
4. Unity of command. An employee should receive orders from only one superior. Employees cannot adapt to dual
5. Unity of direction. Organizational activities must have one central authority and one plan of action.
6. Subordination of Individual Interest to General Interest. The interests of one employee or group of employees are
subordinate to the interests and goals of the organization and cannot prevail over it.
7. Remuneration of Personnel. Salaries are the price of services rendered by employees. It should be fair and provide
satisfaction both to the employee and employer. The rate of remuneration is dependent on the value of the services
rendered as determined by the employment market.
8. Centralization. The optimum degree of centralization varies according to the dynamics of each organization. The
objective of centralization is the best utilization of personnel.
9. Scalar chain. A chain of authority exists from the highest organizational authority to the lowest ranks. While needless
departure from the chain of command should be discouraged, using the "gang plank" principle of direct communication
between employees can be extremely expeditious and increase the effectiveness of organizational communication.
10. Order. Organizational order for materials and personnel is essential. The right materials and the right employees are
necessary for each organizational function and activity.
11. Equity. In organizations, equity is a combination of kindliness and justice. The desire for equity and equality of
treatment are aspirations to be taken into account in dealing with employees.
12. Stability of Tenure of Personnel. In order to attain the maximum productivity of personnel, it is essential to maintain a
stable work force. Management insecurity produces undesirable consequences. Generally the managerial personnel of
prosperous concerns is stable, that of unsuccessful ones is unstable.
13. Initiative. Thinking out a plan and ensuring its success is an extremely strong motivator. At all levels of the
organizational ladder, zeal and energy on the part of employees are augmented by initiative.
14. Esprit de Corps. Teamwork is fundamentally important to an organization. Creating work teams and using extensive
face-to-face verbal communication encourages this.3
While subsequent organizational research has created controversy over many of Fayol's principles, they are still widely
(c ) What is the Hawthorne Experiments?
The Hawthorne Experiments consist of two studies conducted at the Hawthorne Works of the Western Electric Company
in Chicago from 1924 to 1932. The study's particular focus is on lighting and attempts to operationalize many of the
principles of scientific management. The initial study in 1924 was conducted by a group of engineers seeking to
determine the relationship of lighting levels to worker productivity. The study was done in connection with the National
Research Council of the National Academy of Sciences. The results of the study findings are extremely interesting since
worker productivity increases as the lighting levels decrease until the employees are unable to see what they are doing,
after which performance naturally declines.
Beginning in 1927, a second group of experiments commenced with a group of five women in the bank wiring room.
During the course of the experiment, the experimenters, conducting the study, supervise the women. Additionally, the
workers in the experimental group are given special privileges including: the right to leave their workstation without
permission, rest periods, free lunches, and variations in pay levels and workdays. As with the first set of experiments, the
second group of experiments resulted in significantly increased rates of productivity.
In the second experimental study in 1928 the Harvard researchers, F. J. Roethlisberger, Professor of Human Relations,
and Elton Mayo, a Professor of the Industrial Research Department, became associated with it. After extensive research,
the results were not published until 1939. They conclude the primary determinant of the increase in productivity is the
change in the supervisory arrangement, rather than the changes in lighting or other associated worker benefits. Since the
experimenters became the primary supervisors of the employees, the intense interest they displayed for the workers was
the basis for the increased motivation and resulting productivity.
Essentially the experimenters became a part of the study and influenced its outcome. This is the origin of the term
Hawthorne Effect describing the special attention researchers give to a study's subjects and the impact it has on its
findings. While the result of the Hawthorne studies failed to answer the specific question of the relation between
illumination and worker productivity, the study did create a strong theoretical foundation for the human relations view of
Q12. (a) Discuss Abraham H. Maslow’s Needs Hierarchy Theory.
Receiving his doctorate in psychology, Abraham Maslow was the first psychologist to develop a theory of motivation
based upon a consideration of human needs. Maslow's theory of human needs has three assumptions. First, human
needs are never completely satisfied. Second, human behavior is purposeful and is motivated by need satisfaction.
Third, needs can be classified according to a hierarchical structure of importance from the lowest to highest.
Maslow believes the needs hierarchy can be classified into five specific groups. To reach successive levels of the
hierarchy required the satisfaction of the lower level needs:
1. Physiological needs. Maslow groups all physical needs necessary for maintaining basic human wellbeing into this
category. These needs become acute and predominant if any or all of these needs are unsatisfied. However, consistent
with Maslow's theory of motivation, once a need is satisfied, such as thirst, it no longer is a motivator.
2. Safety needs. These needs include the need for basic security, stability, protection, and freedom from fear. A normal
state exists for an individual to have all of these needs generally satisfied. Otherwise, they become primary motivators.
3. The belongingness and love needs. Once the physical and safety are satisfied and no longer are motivators, then
the belongingness and love needs emerge as primary motivators. The individual will strive to establish meaningful
relationships with significant others. Deprivation of the belongingness and love need will result in significant personality
4. The esteem needs. An individual must develop self-confidence. In order to do this, it is essential to the individual to
have adequacy from achieving mastery and competence leading to the achievement of status, reputation, fame and glory.
This achieves satisfaction of the self-esteem needs.
5. The need for self-actualization. Assuming all of the previous needs in the hierarchy are satisfied, a "new discontent
and restlessness will soon develop... A musician must make music, an artist must paint, a poet must write ... What a man
Maslow's hierarchy of needs theory helps the manager to visualize employee motivation. It helps in understanding
the motivations and needs employees have and the requirement to satisfy basic needs in order to achieve higher-level
(b) Briefly discuss theory X and theory Y.
McGregor is the other major theorist associated with the Human Relations school of management. McGregor believes
there are two basic kinds of managers. One type of manager, Theory X, has a negative view of employees assuming
they are lazy, untrustworthy and incapable of assuming responsibility while the other type of manager, Theory Y, assumes
employees are trustworthy and capable of assuming responsibility having high levels of motivation. Table 1.1 illustrates
McGregor's main theoretical assumptions.
1. Employees normally do not like to work and will try to avoid it.
2. Since employees do not like working, they have to be coerced, controlled, directed and threatened with punishment to motivate
3. The average employee is lazy, shuns responsibility, is not ambitious, needs direction, and principally desires security.
1. Work is as natural as play and therefore people desire to work.
2. Employees are responsible for accomplishing their own work objectives.
3. Comparable personal rewards are important for employee commitment to achieving work goals.
4. Under favorable conditions, the average employee will seek and accept responsibility.
5. Employees can be innovative in solving organizational problems.
6. Most organizations utilize only a small proportion of their employees' abilities.5
Mcgregor's Theory X and Y is appealing to managers and dramatically demonstrates the divergence in management
viewpoints toward employees. As such, Theory X and Y has been extremely helpful in promoting management
understanding of supervisory styles and employee motivational assumptions.
(c ) What is MBO? Who has introduced it in Management?
Management by objectives (MBO) is a process of defining objectives within an organization so that management and
employees agree to the objectives and understand what they need to do in the organization in order to achieve them. The
term "management by objectives" was first popularized by Peter Drucker in his 1954 book The Practice of Management.
The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of
the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally,
when employees themselves have been involved with the goal setting and choosing the course of action to be followed by
them, they are more likely to fulfill their responsibilities.
According to George S. Odiorne, the system of management by objectives can be described as a process whereby the
superior and subordinate jointly identify its common goals, define each individual's major areas of responsibility in terms
of the results expected of him, and use these measures as guides for operating the unit and assessing the contribution of
Unique features and advantages of the MBO process
The principle behind Management by Objectives (MBO) is for employees to have a clear understanding of the roles
and responsibilities expected of them. They can then understand how their activities relate to the achievement of the
organization's goal. MBO also places importance on fulfilling the personal goals of each employee.
Some of the important features and advantages of MBO are:
6. Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment.
This increases employee job satisfaction and commitment.
7. Better communication and coordination – Frequent reviews and interactions between superiors and
subordinates helps to maintain harmonious relationships within the organization and also to solve many
9. Subordinates tend to have a higher commitment to objectives they set for themselves than those imposed on
10. Managers can ensure that objectives of the subordinates are linked to the organization's objectives.
Q13.(a) What is performance management?
1. Performance Management – The Myths…
• Performance Management is only about addressing poor performance
Sometimes the words ‘Performance Management’ (PM) creates a negative image in people’s minds. It is often thought of in
relation to ‘dealing with’ people who are not doing the job, not delivering on agreed objectives or behaving unprofessionally
and ‘performance managing’ them is to give them a ‘telling off’ or ‘disciplining them. This is particularly the case at the University
as our procedure for addressing serious and / or continuous underperformance is called the Performance Management Procedure. In
reality Performance Management is the overarching process that encompasses day to day management of people’s work and the way
in which they do it. It is about engaging everyone in understanding what their role and responsibilities are in supporting the University
• Performance Management is about “getting people out of the University”.
In reality, in any organisation there are probably no more than 1% of people who will be formally engaged in a process to terminate
their contract as a result of a Performance Management process and this is likely to be because they are in breach of their role
expectations and contract, or have behaved in a manner that threatens the University, themselves or others.
• People are threatened by managers being involved in what they do on a day to day basis.
On the contrary, they usually like it. It demonstrates that their manager is interested in them and allows them to show what they are
capable of. People like to be noticed and praised for what they do well. They are also motivated by learning new things and having
fresh challenges as this can make a working environment simulating and interesting.
This PM guide is for managers and leaders to help with understanding the purpose of PM here at the University and what are their
1.1 What is a Performance Management Process...
• Improves organisational, team and performance
• is based on the agreement of work objectives and development plans agreed in PDR.
• Involves the joint and continuing review of performance against these objectives;
• It can acknowledge successful contribution, identify improvements, development needs and potential.
• An integral part of the PM process is the need to monitor performance, reward staff that perform well, and challenge
those who do not on a day to day basis.
(b) What are the factors to be considered in performance management?
(c ) Discuss the role of performance management?
Day to Day Performance Management Activities that form part of the PM process:
• planning and agreeing work activity;
• monitoring activity regularly to ensure plans and agreements are reached;
• ensure work activity and behaviour is in line with agreed job expectations for the role;
• providing positive and constructive feedback on activity and behaviour;
• acknowledging successes and providing support and development to build knowledge and skills;
• communicating and keeping people informed;
• Support applications, where appropriate for promotion and recognition.
2. Concerned about Performance Issues?...
As a manager, it is your responsibility to deal with day to day performance and be concerned when someone is not managing to do
what you have agreed. Your own line manager and your Human Resource Manager are useful sources of support to discuss these
things with you. This aspect to managerial responsibilities is never a pleasant task, but the best approach is to try doing it “in
partnership” with the person. Sometimes there are hidden things that a manager sometimes doesn’t realise or personal issues that are
affecting people in work so it is important to talk about things as honestly, supportively, and as early as possible.
The concern usually starts at the point where a manager has a “hunch” there is something amiss or evidence that the member of staff is
not doing what was agreed. It is important to differentiate between what is a “hunch” and fact. What do you hear and see? These are
some of the likely behaviours you may see...
Missed
deadlines in
tasks usually
done well
Work
requires
greater
effort than
usual
Be Careful - if you look hard enough for evidence of poor performance you will probably find it, but there may be factors that
explain the situation. Keep an open mind and try to seek out the underlying reasons that exist. You will need to drill down into the
problem to find out the real cause, expect to find complexity and try not to rush to a hasty conclusion.
It’s helpful to be clear about your evidence of an individual’s performance, consider the questions in the pie chart below, be clear
about what the behaviour is, the number of times it’s happened, the effect on the individual, department or project. If you plot the
evidence using the pie chart you can identify if there are one or several issues, whether barriers and limitations have been placed on
them. Overall you can determine the important issues and be ready to deal with any questions or challenges you may receive.
Be honest with yourself too. Has your leadership and management style been part of the problem? Often an individual will use this to
defend any perceived criticism, however unfair or inaccurate!
3. Preparing to Discuss Someone’s Performance…
In most cases informal meetings take place before any formal process would start. It will depend on the situation, for example gross
misconduct would move into a formal process immediately and the advice of your HRM will help you to determine your strategy for
It is important to treat people with sensitivity and with dignity at all times and bear in mind that you may be dealing with someone
• Has no idea of the impact of their behaviour or the standard of work required;
• Is undertaking work they have not been adequately prepared for;
• Is experiencing stress or distress outside or inside work.
The main purpose of discussing someone’s performance is to:
• Investigate fully the reasons for performance issues;
• Discuss with people the gap between the expected performance and their actual performance;
• Agree how improvement can be made and provide coaching and development, if appropriate, providing a reasonable time
• Explain to them the consequences of not improving;
• Monitoring their performance during and at the end of the “trial" period and provide feedback during the process;
• Where the required standard is still not reached consider other options with your HR Manager.
4. The University of Liverpool’s Performance Management Procedure...
This quick guide should be seen in the context of the Performance Management Procedure http://www.liv.ac.uk/hr/policies/index.htm.
This is intended to provide a quick reference point for managers needing to start a process or involved in a process. It is important
however, that managers familiarise themselves with the principles articulated in the Procedure and good practice outlined in this how
1. Seek guidance from Area HRM to determine the correct
procedure to address the issue they face
Disciplinary Performance Management Other
• Call in writing
• Provide appropriate notice
• Clearly state matters to be discussed
• Have available facts relating to the issues eg dates, places etc
See Section 3 of Guide
• Have a thorough two way discussion
See Section 3 of Guide
Performance meets the required standards Performance has not met the required standards
• Agree a note of the meeting both parties keep.
• Expunge the note and any related correspondence after
• Agree & record actions to achieve an appropriate level of
performance and timescales.
• Agree a date for review – normally within 3 months of initial meeting.
• Agree a note of the meeting and retain.
• Monitor situation during the review period and maintain
communication with the member of staff offering assistance
& support as appropriate.
• Prepare for the meeting
• Call the meeting in writing and identify matters to be discussed
• Thorough two way discussion
Improvement has been made but
remains below the standard required
• Agree & record note of the meeting
and further remedial action
required to achieve appropriate
level of performance.
• Agree a date for review normally
within 3 months.
• Confirm the outcome and required
actions.
Performance had not met the required
standard
• Inform the member of staff that a
• Prepare for the meeting
• Call the meeting in writing and identify matters to be discussed
• Thorough two way discussion
Performance has met the required standard Performance had not met the required standard
• Agree a note of the meeting both parties keep.
• Continue to monitor the situation to ensure level of
required performance is being sustained.
• Expunge the note and related correspondence after 12
• At all stages of the procedure advice and guidance is available from HR.
• At all stages of the procedure a member of staff has the right to be represented by a member of staff who is a
colleague or a trade union representative.
• If there is any disagreement at the meeting about the factual basis of any alleged poor
performance, assistance from an appropriate agreed expert may be sought.
Q14. (a) What is strategic planning? What are the basic steps in strategic planning?
(b) Discuss the good features of strategic planning.
(c ) What is SWOT analysis? Conduct SWOT analysis of your chosen enterprise.
• Inform the member of staff that a formal disciplinary
meeting will be called in accordance with the University’s
Disciplinary Procedure.
David C. McClelland of Harvard University performed research on motivation patterns. Most notably this was done with
the Thematic Apperception Test (TAT) where an individual writes a descriptive analysis of their individual reactions from
unstructured pictures. McClelland determines the motivational state of the subjects from these descriptions.
Based upon this research, McClelland developed an achievement motivation theory consisting of four sets of needs:
achievement, affiliation, competence and power.6
Achievement motivation is a need people have to succeed through overcoming challenges. The affiliation motivation is
similar to Maslow's belongingness and love need where people relate to others on a social basis. The competence need
is the desire to accomplish a job well done, and the power motivation is the need to control others and make a difference
McClelland believes people have strong needs. His achievement motivation theory is important for managers seeking
understanding of employee motivational patterns.
Q15. (a) What is controlling? What are the steps in controlling?
What Is Controlling and Why Is It Important?
What is controlling? It’s the process of monitoring, comparing, and correcting work performance. All managers should
control even if their units are performing as planned because they can’t really know that unless they’ve evaluated what
activities have been done and compared actual performance against the desired standard.3 Effective controls ensure that
activities are completed in ways that lead to the attainment of goals. Whether controls are effective, then, is determined
by how well they help employees and managers achieve their goals. Why is control so important? Planning can be done,
an organizational structure created to facilitate efficient achievement of goals, and employees motivated through effective
leadership. But there’s no assurance that activities are going as planned and that the goals employees and managers are
working toward are, in fact, being attained. Control is important, therefore, because it’s the only way that managers know
whether organizational goals are being met and if not, the reasons why. The value of the control function can be seen in
three specific areas: planning, empowering employees, and protecting the workplace.
The second reason controlling is important is because of employee empowerment. Many managers are reluctant to
empower their employees because they fear something will go wrong for which they would be held responsible. But an
effective control system can provide information and feedback on employee performance and minimize the chance of
The final reason that managers control is to protect the organization and its assets.6 Today’s environment brings
heightened threats from natural disasters, financial scandals, workplace violence, supply chain disruptions, security
breaches, and even possible terrorist attacks. Managers must protect organizational assets in the event that any of these
things should happen. Comprehensive controls and backup plans will help assure minimal work disruptions.
The control process is a three-step process of measuring actual performance, comparing actual performance against a
standard, and taking managerial action to correct deviations or to address inadequate standards. The control process
assumes that performance standards already exist, and they do. They’re the specific goals created during the planning
Step -1. Measuring Actual Performance:
To determine what actual performance is, a manager must first get information about it. Thus, the first step in control is
HOW WE MEASURE. Four approaches used by managers to measure and report actual performance are personal
observations, statistical reports, oral reports, and written reports. Most managers use a combination of these approaches.
WHAT WE MEASURE. What is measured is probably more critical to the control process than how it’s measured. Why?
Because selecting the wrong criteria can create serious problems. Besides, what is measured often determines what
employees will do. What control criteria might managers use?
Some control criteria can be used for any management situation. For instance, all managers deal with people, so criteria
such as employee satisfaction or turnover and absenteeism rates can be measured. Keeping costs within budget is also
a fairly common control measure. Other control criteria should recognize the different activities that managers supervise.
For instance, a manager at a pizza delivery location might use measures such as number of pizzas delivered per day,
average delivery time, or number of coupons redeemed. A manager in a governmental agency might use applications
typed per day, client requests completed per hour, or average time to process paperwork.
Most work activities can be expressed in quantifiable terms. However, managers should use subjective measures when
they can’t. Although such measures may have limitations, they’re better than having no standards at all and doing no
Step- 2. Comparing Actual Performance against the Standard:
The comparing step determines the variation between actual performance and the standard. Although some variation in
performance can be expected in all activities, it’s critical to determine an acceptable range of variation (see Exhibit 18-4).
Deviations outside this range need attention. Let’s work through an example. Chris Tanner is a sales manager for Green
Earth Gardening Supply, a distributor of specialty plants and seeds in the Pacific Northwest. Chris prepares a report
during the first week of each month that describes sales for the previous month, classified by product line.
Products Actual Standard Over/under
Vegetable plants 1,075 913 (162)
Perennial flowers 630 634 4
Annual flowers 800 912 112
Herbs 160 140 (20)
Flowering bulbs 170 286 116
Flowering bushes 225 220 (5)
Heirloom seeds 540 672 132
Total 3,600 3,777 177
Product Standard Actual Over (Under)
Exhibit—F.1 displays both the sales goals (standard) and actual sales figures for the month of June. After looking at the
numbers, should Chris be concerned? Sales were a bit higher than originally targeted, but does that mean there were no
significant deviations? That depends on what Chris thinks is significant; that is, outside the acceptable range of variation.
Even though overall performance was generally quite favorable, some product lines need closer scrutiny. For instance,
if sales of heirloom seeds, flowering bulbs, and annual flowers continue to be over what was expected, Chris might need
to order more product from nurseries to meet customer demand. Because sales of vegetable plants were 15 percent
below goal, Chris may need to run a special on them. As this example shows, both over variance and under variance may
require managerial attention, which is the third step in the control process.
Managers can choose among three possible courses of action: do nothing, correct the actual performance, or revise the
standards. Because “do nothing” is self-explanatory, let’s look at the other two.
CORRECT ACTUAL PERFORMANCE. Sports coaches understand the importance of correcting actual performance.
During a game, they’ll often correct a player’s actions. But if the problem is recurring or encompasses more than one
player, they’ll devote time during practice before the next game to correcting the actions.9 That’s what managers need
to do as well. Depending on what the problem is, a manager could take different corrective actions. For instance, if
unsatisfactory work is the reason for performance variations, the manager could correct it by things such as training
programs, disciplinary action, changes in compensation practices, and so forth. One decision that a manager must make
is whether to take immediate corrective action, which corrects problems at once to get performance back on track, or to
use basic corrective action, which looks at how and why performance deviated before correcting the source of deviation.
It’s not unusual for managers to rationalize that they don’t have time to find the source of a problem (basic corrective
action) and continue to perpetually “put out fires” with immediate corrective action. Effective managers analyze deviations
and if the benefits justify it, take the time to pinpoint and correct the causes of variance.
REVISE THE STANDARD. It’s possible that the variance was a result of an unrealistic standard—too low or too high
a goal. In that situation, the standard needs the corrective action, not the performance. If performance consistently
exceeds the goal, then a manager should look at whether the goal is too easy and needs to be raised. On the other hand,
managers must be cautious about revising a standard downward. It’s natural to blame the goal when an employee or a
team falls short. For instance, students who get a low score on a test often attack the grade cutoff standards as too high.
Rather than accept the fact that their performance was inadequate, they will argue that the standards are unreasonable.
Likewise, salespeople who don’t meet their monthly quota often want to blame what they think is an unrealistic quota. The
point is that when performance isn’t up to par, don’t immediately blame the goal or standard. If you believe the standard
is realistic, fair, and achievable, tell employees that you expect future work to improve, and then take the necessary
corrective action to help make that happen.
Feed forward/Concurrent/Feedback Controls:
Managers can implement controls before an activity begins, during the time the activity is going on, and after the activity
has been completed. The first type is called feed-forward control; the second, concurrent control; and the last, feedback
FEED FORWARD CONTROL. The most desirable type of control—feed forward control—prevents problems because
it takes place before the actual activity.12 For instance, when McDonald’s opened its first restaurant in Moscow, it sent
company quality control experts to help Russian farmers learn techniques for growing high-quality potatoes and to help
bakers learn processes for baking high-quality breads. Why? McDonald’s demands consistent product quality no matter
the geographical location. They want a cheeseburger in Moscow to taste like one in Omaha. Still another example of feed
forward control is the scheduled preventive maintenance programs on aircraft done by the major airlines. These programs
are designed to detect and hopefully to prevent structural damage that might lead to an accident.
The key to feed forward controls is taking managerial action before a problem occurs. That way, problems can be
prevented rather than having to correct them after any damage (poor-quality products, lost customers, lost revenue, etc.)
has already been done. However, these controls require timely and accurate information that isn’t always easy to get.
Thus, managers frequently end up using the other two types of control.
CONCURRENT CONTROL: Concurrent control, as its name implies, takes place while a work activity is in progress.
For instance, Nicholas Fox is director of business product management at Google. He and his team keep a watchful eye
on one of Google’s most profitable businesses—online ads. They watch “the number of searches and clicks, the rate at
which users click on ads, the revenue this generates—everything is tracked hour by hour, compared with the data from a
week earlier and charted.”13 If they see something that’s not working particularly well, they fine-tune it. The best-known
form of concurrent control is direct supervision. Another term for it is management by walking around, which is when a
manager is in the work area interacting directly with employees. For example, Nvidia’s CEO Jen-Hsun Huang tore down
his cubicle and replaced it with a conference table so he’s available to employees at all times to discuss what’s going
on.14 Even GE’s CEO Jeff Immelt spends 60 percent of his workweek on the road talking to employees and visiting the
company’s numerous locations.15 All managers can benefit from using concurrent control because they can correct
problems before they become too costly.
FEEDBACK CONTROL: The most popular type of control relies on feedback. In feedback control, the control takes place
after the activity is done. For instance, the
Denver Mint discovered the flawed Wisconsin quarters using feedback control. The damage had already occurred even
though the organization corrected the problem once it was discovered. And that’s the major problem with this type of
control. By the time a manager has the information, the problems have already occurred, leading to waste or damage.
However, in many work areas, financial being one example, feedback is the only viable type of control. Feedback controls
do have two advantages.16 First, feedback gives managers meaningful information on how effective their planning efforts
were. Feedback that shows little variance between standard and actual performance indicates that the planning was
generally on target. If the deviation is significant, a manager can use that information to formulate new plans. Second,
feedback can enhance motivation. People want to know how well they’re doing and feedback provides that information.
Now, let’s look at some specific control tools that managers can use.
The balanced scorecard approach is a way to evaluate organizational performance from more than just the financial
perspective.17 A balanced scorecard typically looks at four areas that contribute to a company’s performance: financial,
customer, internal processes, and people/innovation/growth assets. According to this approach, managers should develop
goals in each of the four areas and then measure whether the goals are being met. Although a balanced scorecard makes
sense, managers will tend to focus on areas that drive their organization’s success and use scorecards that reflect those
strategies.18 For example, if strategies are customer-centered, then the customer area is likely to get more attention
than the other three areas. Yet, you can’t focus on measuring only one performance area because others are affected as
well. For instance, at IBM Global Services in Houston, managers developed a scorecard around an overriding strategy
of customer satisfaction. However, the other areas (financial, internal processes, and people/innovation/growth) support
that central strategy. The division manager described it as follows, “The internal processes part of our business is directly
related to responding to our customers in a timely manner, and the learning and innovation aspect is critical for us since
what we’re selling our customers above all is our expertise. Of course, how successful we are with those things will affect
Cyber-attackers from China targeted Google and 34 other companies in an attempt to steal information. The largest-
ever criminal stealing of credit-card data—account information belonging to millions of people—happened to Heartland
Payment Systems, a payments processor. An ex-worker at Goldman Sachs stole “black box” computer programs that
Goldman uses to make lucrative, rapid-fire trades in the financial markets.20 Talk about the need for information controls!
Managers deal with information controls in two ways: (1) as a tool to help them control other organizational activities, and
(2) as an organizational area they need to control.
Being able to effectively motivate employees is a challenge that managers face in all types and sizes of organizations.
“Everything that we give to our workers gets returned to us in terms of efficiency, quality, loyalty, and innovation.”
Motivation is the willingness to exert high levels of effort to reach organizational goals, conditioned by the effort’s ability to
A. Effort is a measure of intensity or drive. High levels of effort are unlikely to lead to favorable job performance unless the
effort is channeled in a direction that benefits the organization.
B. A need is an internal state that makes certain outcomes appear attractive. An unsatisfied need creates tension that
stimulates drives within an individual. These drives generate a search behavior to find particular goals that, if attained, will
satisfy the need and reduce the tension.
Hence motivation is the force that energizes behavior, gives direction to behavior, and underlies the tendency to persist.
1. A person’s motivation is not directly measurable, but must be inferred from behavior.
2. Performance is a function of ability, motivation and working conditions.
3. Besides hiring individual with ability to do the work, managers have the challenge to provide working conditions that
nurture and support individual motivation to work toward organization goals. The main elements of motivation have been
identified based on numerous studies. A simplified model of motivation has been developed.
MASLOW’S NEEDS THEORY AND ITS ANALYSIS
According to Abraham Maslow’s hierarchy of needs theory, one of the most widely known theories of motivation, individual
1. Maslow’s hierarchy of needs from the most basic to the highest.
a. Physiological needs are basic and include needs for food, water, and shelter.
b. Safety needs pertain to the desire to be safe, secure and free from threats to our existence.
c. Belongingness needs involve the desire to affiliate with and be accepted by others.
d. Esteem needs are related to the two-pronged desire to have a positive self-image and to have our contributions valued
e. Self-actualization needs pertain to the requirement of developing our capabilities and reaching our full potential.
2. Needs at one level do not have to be completely fulfilled before the next level becomes relevant.
3. As needs on one level are fulfilled, they cease to act as motivators and tension develops to fulfill needs at the next
4. Recent studies have raised questions as to whether the hierarchical aspect of Maslow’s theory is applicable to
everyone and whether there might be fewer than five levels of needs.
1. Five levels of need are not always present.
2. Order of needs and hierarchy may not be the same for all employees.
3. There are certainly cultural differences which the theory did not take care.
4. Analyzing the theory in country and cultural context, for example in China, the hierarchy of needs found was different
OTHER NEED AND COGNITIVE THEORIES OF MOTIVATION
McGregor’s Theory X and Theory Y were developed by Douglas McGregor and describe two distinct views of human
1. Theory X was the assumption that employees dislike work, are lazy, seek to avoid responsibility, and must be coerced
2. Theory Y was the assumption that employees are creative, seek responsibility, and can exercise self-direction.
3. Theory X assumed that lower-order needs (Maslow’s) dominated individuals, and Theory Y assumed that higher-order
Motivation-hygiene theory is the theory developed by Frederick Herzberg that suggests that intrinsic factors are related
to job satisfaction and motivation, and extrinsic factors are associated with job dissatisfaction. The basis of Herzberg’s
theory is that he believed that the opposite of satisfaction was not dissatisfaction. Removing dissatisfying characteristics
from a job would not necessarily make the job satisfying. Frederick Herzberg’s two-factor theory states that there are only
Hygiene factors are factors that eliminate dissatisfaction. They include things such as supervision, company policy, salary,
working conditions, security and so forth—extrinsic factors associated with job context, or those things surrounding a job.
Hygiene factors are necessary to keep workers away from feeling dissatisfied. There are several hygiene factors.
Motivators are factors that increase job satisfaction and hence motivation. They include things such as achievement,
recognition, responsibility, advancement and so forth—intrinsic factors associated with job content, or those things within
Motivator factor can only lead workers to feel satisfied and motivated.
Clayton Alderfer’s ERG theory combines Maslow’s five needs into three need levels: existence, relatedness and growth.
1. Existence needs include the various forms of material and physiological desires, such as food and water, as well as such
work-related forms as pay, fringe benefits and physical working conditions.
2. Relatedness needs address our relationships with significant others, such as families, friendship groups, work groups and
3. Growth needs impel creativity and innovation, along with the desire to have a productive impact on our surroundings.
4. ERG needs differ in concreteness, i.e. the degree to which their presence or absence can be verified.
5. The satisfaction-progression principle is a principle that states that satisfaction of one level of need encourages concern
6. Besides disagreeing as to the number of need levels that might exist, the ERG theory differs from Maslow’s hierarchy of
needs theory in three other significant ways:
a. Although the general notion of a hierarchy is retained, Alderfer’s theory argues that we can be concerned with more
than one need category at the same time.
b. ERG theory is more flexible in acknowledging that some individuals’ needs may occur in a somewhat different order
than the posited by the ERG framework.
c. ERG theory incorporates a frustration regression principle which states that if we are continually frustrated in our
attempts to satisfy a higherlevel need, we may cease to be concerned about that need. McClelland’s acquired-needs
theory argues that our needs are acquired or learned on the basis of our life experience.
1. The Thematic Apperception Test (TAT) measures the needs for achievement, affiliation, and power.
2. The need of achievement (nAch) is the desire to accomplish challenging tasks and achieve a standard of excellence in
3. The need for affiliation (nAff) is the desire to maintain warm, friendly relationships with others.
4. The need for power (nPow) is the desire to influence others and control one’s environment.
a. Personal power is the need for power in which individuals want to dominate others for the sake of demonstrating their
b. Institutional power is the need for power in which individuals focus on what they can do to solve problems and further
5. The need profile of successful managers in competitive environments appears to include:
a. A moderate-to-high need for institutional power.
b. A moderate need for achievement to facilitate individual contributions early in one’s career and a desire for the
organization to maintain a competitive edge as one moves to higher levels
c. At least a minimum need for affiliation to provide sufficient sensitivity for influencing others.
d. Need for achievement may actually be more important than need for power in running small or large, decentralized
6. It may be possible to foster the needs for achievement and for institutional power through training.
Many aspects of need theories are of value to managers.
1. Need theories are compatible in pointing out the importance of higher-level needs as a source of motivation.
2. Research indicates that it is more likely that individuals differ in the makeup of their need structures than that the need
structures of individuals are basically the same.
3. The frustration-regression aspect of ERG theory may have serious implications for organizations.
Equity Theory, developed by J. Stacey Adams, says that an employee perceives what he or she got from a job situation
(outcomes) in relation to what he or she put into it (inputs) and then compares the inputs outcomes ratio with the inputs-
outcomes ratios of relevant others and finally corrects any inequity.
1. The referents are the persons, systems, or selves against which individuals compare themselves to assess equity.
2. Equity theory recognizes that individuals are concerned with their absolute rewards as well as the relationship of those
3. What will employees do when they perceive an inequity?
a. Distort either their own or others’ inputs or outcomes.
b. Behave in some way to induce others to change their inputs or outcomes.
c. Behave in some way to change their inputs or outcomes.
d. Choose a different comparison person.
EXPECTANCY, GOAL SETTING AND RE-ENFORCEMENT THEORIES
Expectancy Theory is the theory that an individual tends to act in a certain way based on the expectation that the act will
be followed by a given outcome and on the attractiveness of that outcome to the individual.
Three relationships are important to this theory.
1. Effort-performance linkage (expectancy) is the probability perceived by the individual that exerting
a given amount of effort will lead to a certain level of performance.
2. Performance-reward linkage (instrumentality) is the degree to which an individual believes that performing at a
particular level is instrumental in, or will lead to, the attainment of a desired outcome.
3. Attractiveness of the reward (valence) is the importance that the individual places on the potential outcome or reward
4. There are four features inherent in the theory.
a. What perceived outcomes does the job offer the employee?
b. How attractive do employees consider these outcomes to be?
c. What kind of behavior must the employee exhibit to achieve these outcomes?
d. How does the employee view his or her chance of doing what is asked?
5. The key to understanding expectancy theory is understanding an individual’s goal and the linkage between effort and
performance, between performance and rewards, and between rewards and individual goal satisfaction.
Goal-Setting Theory says that specific goals increase performance, and difficult goals, when accepted, result in higher
performance than easy goals. What do we know about goals as motivators?
1. Intention to work toward a goal is a major source of job motivation. Specific and challenging goals are superior
motivating forces. Specific hard goals produce a higher level of output than do generalized goals.
2. Is there a contradiction between achievement motivation and goal setting? No, and here’s why.
a. Goal-setting theory deals with people in general; achievement theory is based only on people who have a high need for
achievement. Difficult goals are still recommended for the majority of employees.
b. The conclusions of goal-setting theory apply to those who accept and are committed to the goals.
Difficult goals will lead to higher performance only if they are accepted.
3. Will employees try harder if they participate in the setting of goals?
a. We can’t say that participation is always desirable.
b. However, participation is probably preferable to assigning goals when the manager expects resistance.
4. Will people do better when they get feedback on how well they’re progressing toward their goals?
b. Self-generated feedback has been shown to be a more powerful motivator than externally generated feedback.
5. What contingencies exist in goal-setting theory? There are four contingencies we need to know about.
a. Feedback influences the goal-performance relationship.
b. Goal commitment is another contingency. Commitment is most likely to occur when goals are made public, when the
individual has an internal locus of control, and when the goals are self-set rather than assigned.
c. Self-efficacy is another contingency and 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.
d. The last contingency that affects goal setting is national culture.
6. Our conclusion about motivation from goal-setting theory is that intentions, as defined by hard and specific goals, are a
a. In the proper conditions, they can lead to higher performance.
b. However, there’s no evidence that such goals are associated with increased job satisfaction.
Reinforcement Theory is counter to goal-setting theory. It proposes that behavior is a function of its consequences.
1. Reinforcement theory argues that behavior is externally caused.
2. What controls behavior are reinforcers, which are consequences immediately following a response that increase the
probability that the behavior will be repeated.
3. Reinforcement theory ignores factors such as goals, expectations, and needs.
4. It focuses solely on what happens when a person takes some action.
5. How can the concept of reinforcement be used to explain motivation?
a. People will most likely engage in a desired behavior if they are rewarded for doing so.
b. These rewards are most effective if they immediately follow a desired response.
c. Behavior that isn’t rewarded or is punished is less likely to be repeated.
6. Managers can influence employees’ behavior by reinforcing the work behaviors they desire.
Open-book management is a motivational approach in which an organization’s financial statements (the “books”) are
opened to and shared with all employees.
1. The goal of open-book management is to get employees to think like an owner by seeing the impact their decisions and
2. To be effective, employees have to be taught the fundamentals of financial statement analysis and what the numbers
3. The style of management demands for involvement of employees in all decision making for organization involving the
4. Employees may be treated as business partners so productivity and profitability is enhanced.
Pay-for-performance programs are compensation plans that pay employees on the basis of some performance measure.
1. Performance-based compensation is probably most compatible with expectancy theory.
2. The increasing popularity of pay-for-performance programs can be explained in terms of both motivation and cost
3. Do pay-for-performance programs work? Studies seem to indicate that they do.
Integrating Contemporary Theories of Motivation
1. The basic foundation is the simplified expectancy model.
2. The model also considers the achievement-need, reinforcement and equity theories.
3. Rewards also play an important role in the model.
The theories we look at in this section represent current explanations of employee motivation.
Although these theories may not be as well known as those we just discussed, they are supported by research.19 These
contemporary motivation approaches include goal-setting theory, reinforcement theory, job design theory, equity theory,
expectancy theory, and high-involvement work practices.
At Wyeth’s research division, executive vice president Robert Ruffolo established challenging new product quotas for the
company’s scientists in an attempt to bring more efficiency to the innovation process. And he made bonuses contingent
on meeting those goals. Before a big assignment or major class project presentation, has a teacher ever encouraged
you to “Just do your best”? What does that vague statement, “do your best,” mean? Would your performance on a
class project have been higher had that teacher said you needed to score a 93 percent to keep your A in the class?
Research on goal setting theory addresses these issues, and the findings, as you’ll see, are impressive in terms of the
effect that goal specificity, challenge, and feedback have on performance.22 Research provides substantial support for
goal-setting theory, which says that specific goals increase performance and that difficult goals, when accepted, result
in higher performance than do easy goals. What does goal-setting theory tell us? First, working toward a goal is a major
source of job motivation. Studies on goal setting have demonstrated that specific and challenging goals are superior
motivating forces. Such goals produce a higher output than does the generalized goal of “do your best.” The specificity
of the goal itself acts as an internal stimulus. For instance, when a sales rep commits to making eight sales calls daily,
this intention gives him a specific goal to try to attain. It’s not a contradiction that goal-setting theory says that motivation
is maximized by difficult goals, whereas achievement motivation (from three-needs theory) is stimulated by moderately
challenging goals.24 First, goal-setting theory deals with people in general, whereas the conclusions on achievement
motivation are based on people who have a high nAch. Given that no more than 10 to 20 percent of North Americans are
high achievers (a proportion that’s likely lower in underdeveloped countries), difficult goals are still recommended for the
majority of employees. Second, the conclusions of goal-setting theory apply to those who accept and are committed to the
goals. Difficult goals will lead to higher performance only if they are accepted. Next, will employees try harder if they have
the opportunity to participate in the setting of goals? Not always. In some cases, participatively set goals elicit superior
performance; in other cases, individuals performed best when their manager assigned goals. However, participation is
probably preferable to assigning goals when employees
might resist accepting difficult challenges.
Finally, we know that people will do better if they get feedback on how well they’re progressing toward their goals because
feedback helps identify discrepancies between what they have done and what they want to do. But all feedback isn’t
equally effective. Selfgenerated feedback—where an employee monitors his or her own progress—has been shown to
be a more powerful motivator than feedback coming from someone else.26 Three other contingencies besides feedback
influence the goal-performance relationship: goal commitment, adequate self-efficacy, and national culture.
First, goal-setting theory assumes that an individual is committed to the goal. Commitment is most likely when goals are
made public, when the individual has an internal locus of control, and when the goals are self-set rather than assigned.27
Next, self-efficacy refers to an individual’s belief that he or she is capable of performing a task.28 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 likely to reduce their effort or give up altogether, whereas those with high self-efficacy will try
harder to master the challenge.29 In addition, individuals with high self-efficacy seem to respond to negative feedback
with increased effort and motivation, whereas those with low self-efficacy are likely to reduce their effort when given
Finally, the value of goal-setting theory depends on the national culture. It’s well adapted to North American countries
because its main ideas align reasonably well with those cultures. It assumes that subordinates will be reasonably
independent (not a high score on power distance), that people will seek challenging goals (low in uncertainty avoidance),
and that performance is considered important by both managers and subordinates (high in assertiveness). Don’t expect
goal setting to lead to higher employee performance in countries where the cultural characteristics aren’t like this.
The relationships among goals, motivation, and performance. Our overall conclusion is that the intention to work toward
hard and specific goals is a powerful motivating force. Under the proper conditions, it can lead to higher performance.
However, no evidence indicates that such goals are associated with increased job satisfaction.31
Reinforcement theory says that behavior is a function of its consequences. Those consequences that immediately follow
a behavior and increase the probability that the behavior will be repeated are called reinforcers. Reinforcement theory
ignores factors such as goals, expectations, and needs. Instead, it focuses solely on what happens to a person when he
or she does something. For instance, Walmart improved its bonus program for hourly employees. Employees who provide
outstanding customer service get a cash bonus. And all Walmart hourly full- and part-time store employees are eligible
for annual “My$hare” bonuses, which are allocated on store performance and distributed quarterly so that workers are
rewarded more frequently.32 The company’s intent: keep the workforce motivated to meet goals by rewarding them when
they did, thus reinforcing the behaviors. We showed how managers use reinforcers to shape behavior, but the concept is
also widely believed to explain motivation. According to B. F. Skinner, people will most likely engage in desired behaviors
if they are rewarded for doing so. These rewards are most effective if they immediately follow a desired behavior; and
behavior that isn’t rewarded, or is punished, is less likely to be repeated.33 Using reinforcement theory, managers can
influence employees’ behavior by using positive reinforcers for actions that help the organization achieve its goals. And
managers should ignore, not punish, undesirable behavior. Although punishment eliminates undesired behavior faster
than non reinforcement does, its effect is often temporary and may have unpleasant side effects including dysfunctional
behavior such as workplace conflicts, absenteeism, and turnover. Although reinforcement is an important influence on
work behavior, it isn’t the only explanation for differences in employee motivation.
It’s not unusual to find shop-floor workers at Cordis LLC’s San German, Puerto Rico, facility interacting directly with
customers, especially if that employee has special skills or knowledge that could help come up with a solution to a
customer’s problem.35 One company executive said, “Our sales guys often encourage this in specific situations because
they don’t always have all the answers. If by doing this, we can better serve the customers, then we do it.” As this
example shows, the tasks an employee performs in his or her job are often determined by different factors, such as
providing customers what they need when they need it. Because managers want to motivate individuals on the job, we
need to look at ways to design motivating jobs. If you look closely at what an organization is and how it works, you’ll find
that it’s composed of thousands of tasks. These tasks are, in turn, aggregated into jobs. We use the term job design to
refer to the way tasks are combined to form complete jobs. The jobs that people perform in an organization should not
evolve by chance. Managers should design jobs deliberately and thoughtfully to reflect the demands of the changing
environment, the organization’s technology, and employees’ skills, abilities, and preferences.36 When jobs are designed
like that, employees are motivated to work hard. Let’s look at some ways that managers can design motivating jobs.
As we saw in the Management History Module job design historically has been to make jobs smaller and more
specialized. It’s difficult to motivate employees when jobs are like this. An early effort at overcoming the drawbacks of job
specialization involved horizontally expanding a job through increasing job scope— the number of different tasks required
in a job and the frequency with which these tasks are repeated. For instance, a dental hygienist’s job could be enlarged
so that in addition to cleaning teeth, he or she is pulling patients’ files, refiling them when finished, and sanitizing and
storing instruments. This type of job design option is called job enlargement. Most job enlargement efforts that focused
solely on increasing the number of tasks don’t seem to work. As one employee who experienced such a job redesign said,
“Before, I had one lousy job. Now, thanks to job enlargement, I have three lousy jobs!” However, research has shown
that knowledge enlargement activities (expanding the scope of knowledge used in a job) lead to more job satisfaction,
enhanced customer service, and fewer errors.
JOB ENRICHMENT. Another approach to job design is the vertical expansion of a job by adding planning and evaluating
responsibilities—job enrichment. Job enrichment increases job depth, which is the degree of control employees have over
their work. In other words, employees are empowered to assume some of the tasks typically done by their managers.
Thus, an enriched job allows workers to do an entire activity with increased freedom, independence, and responsibility. In
addition, workers get feedback so they can assess and correct their own performance. For instance, if our dental hygienist
had an enriched job, he or she could, in addition to cleaning teeth, schedule appointments (planning) and follow up with
clients (evaluating). Although job enrichment may improve the quality of work, employee motivation, and satisfaction,
research evidence has been inconclusive as to its usefulness.
JOB CHARACTERISTICS MODEL. Even though many organizations implemented job enlargement and job
enrichment programs and experienced mixed results, neither approach provided an effective framework for managers
to design motivating jobs. But the job characteristics model (JCM) does.40 It identifies five core job dimensions, their
interrelationships, and their impact on employee productivity, motivation, and satisfaction.
1. Skill variety, the degree to which a job requires a variety of activities so that an employee can use a number of different
2. Task identity, the degree to which a job requires completion of a whole and identifiable piece of work.
3. Task significance, the degree to which a job has a substantial impact on the lives or work of other people.
4. Autonomy, the degree to which a job provides substantial freedom, independence, and discretion to the individual in
scheduling the work and determining the procedures to be used in carrying it out.
5. Feedback, the degree to which doing work activities required by a job results in an individual obtaining direct and clear
information about the effectiveness of his or her performance.
Notice how the first three dimensions—skill variety, task identity, and task significance—combine to create meaningful
work. In other words, if these three characteristics exist in a job, we can predict that the person will view his or her job as
being important, valuable, and worthwhile. Notice, too, that jobs that possess autonomy give the jobholder a feeling of
personal responsibility for the results and that if a job provides feedback, the employee will know how effectively he or she
The JCM suggests that employees are likely to be motivated when they learn (knowledge of results through feedback)
that they personally (experienced responsibility through autonomy of work) performed well on tasks that they care about
(experienced meaningfulness through skill variety, task identity, or task significance).41 The more a job is designed
around these three elements, the greater the employee’s motivation, performance, and satisfaction and the lower his or
her absenteeism and likelihood of resigning. As the model shows, the links between the job dimensions and the outcomes
are moderated by the strength of the individual’s growth need (the person’s desire for self-esteem and self-actualization).
Individuals with a high growth need are more likely to experience the critical psychological states.
1. Combine tasks. Put fragmented tasks back together to form a new, larger work module (job enlargement) to increase skill
2. Create natural work units. Design tasks that form an identifiable and meaningful whole to increase employee “ownership”
of the work. Encourage employees to view their work as meaningful and important rather than as irrelevant and boring.
3. Establish client (external or internal) relationships. Whenever possible, establish direct relationships between workers and
their clients to increase skill variety, autonomy, and feedback.
4. Expand jobs vertically. Vertical expansion gives employees responsibilities and controls that were formerly reserved for
managers, which can increase employee autonomy.
5. Open feedback channels. Direct feedback lets employees know how well they’re performing their jobs and whether their
performance is improving or not. Research into the JCM continues. For instance, one recent study looked at using job
redesign efforts to change job characteristics and improve employee well-being.42 Another study examined psychological
ownership—that is, a personal feeling of “mine-ness” or “our-ness”
Do you ever wonder what kind of grade the person sitting next to you in class makes on a test or on a major class
assignment? Most of us do! Being human, we tend to compare ourselves with others. If someone offered you $50,000 a
year on your first job after graduating from college, you’d probably jump at the offer and report to work enthusiastic, ready
to tackle whatever needed to be done, and certainly satisfied with your pay. How would you react, though, if you found
out a month into the job that a coworker—another recent graduate, your age, with comparable grades from a comparable
school, and with comparable work experience—was getting $55,000 a year? You’d probably be upset! Even though in
absolute terms, $50,000 is a lot of money for a new graduate to make (and you know it!), that suddenly isn’t the issue.
Now you see the issue as what you believe is fair—what is equitable. The term equity is related to the concept of fairness
and equitable treatment compared with others who behave in similar ways. Evidence indicates that employees compare
themselves to others and that inequities influence how much effort employees exert.
Equity theory, developed by J. Stacey Adams, proposes that employees compare what they get from a job (outcomes)
in relation to what they put into it (inputs), and then they compare their inputs–outcomes ratio with the inputs–outcomes
ratios of relevant others (Exhibit 16-8). If an employee perceives her ratio to be equitable in comparison to those of
relevant others, there’s no problem. However, if the ratio is inequitable, she views herself as under rewarded or over
rewarded. When inequities occur, employees attempt to do something about it. The result might be lower or higher
productivity, improved or reduced quality of output, increased absenteeism, or voluntary resignation.
Employee’s Assessment
Inequity (Under rewarded)
Outcome-A/Inputs A> Outcomes A/Inputs A
Outcome-A/Inputs A = Outcomes A/Inputs A Equity
Outcome-A/Inputs A < Outcomes A/Inputs A
Inequity (Over rewarded)
The referent—the other persons, systems, or selves individuals compare themselves against in order to assess equity—
is an important variable in equity theory.48 Each of the three referent categories is important. The “persons” category
includes other individuals with similar jobs in the same organization but also includes friends, neighbors, or professional
associates. Based on what they hear at work or read about in newspapers or trade journals, employees compare their
pay with that of others. The “system” category includes organizational pay policies, procedures, and allocation. The “self”
category refers to inputs–outcomes ratios that are unique to the individual. It reflects past personal experiences and
contacts and is influenced by criteria such as past jobs or family commitments.
Originally, equity theory focused on distributive justice, which is the perceived fairness of the amount and allocation of
rewards among individuals. More recent research has focused on looking at issues of procedural justice, which is the
perceived fairness of the process used to determine the distribution of rewards. This research shows that distributive
justice has a greater influence on employee satisfaction than procedural justice, while procedural justice tends to affect
an employee’s organizational commitment, trust in his or her boss, and intention to quit. What are the implications for
managers? They should consider openly sharing information on how allocation decisions are made, follow consistent and
unbiased procedures, and engage in similar practices to increase the perception of procedural justice. By increasing the
perception of procedural justice, employees are likely to view their bosses and the organization as positive even if they’re
dissatisfied with pay, promotions, and other personal outcomes.
The most comprehensive explanation of how employees are motivated is Victor Vroom’s expectancy theory.50 Although
the theory has its critics, most research evidence supports it. Expectancy theory states that an individual tends to act in
a certain way based on the expectation that the act will be followed by a given outcome and on the attractiveness of that
outcome to the individual. It includes three variables or relationships.
1. Expectancy or effort–performance linkage is the probability perceived by the individual that exerting a given amount of
effort will lead to a certain level of performance
2. Instrumentality or performance–reward linkage is the degree to which the individual believes that performing at a particular
level is instrumental in attaining the desired outcome.
3. Valence or attractiveness of reward is the importance that the individual places on the potential outcome or reward that
can be achieved on the job. Valence considers both the goals and needs of the individual. This explanation of motivation
might sound complicated, but it really isn’t. It can be summed up in the questions: How hard do I have to work to
achieve a certain level of performance, and can I actually achieve that level? What reward will performing at that level of
performance get me? How attractive is the reward to me, and does it help me achieve my own personal goals? Whether
you are motivated to put forth effort (that is, to work hard) at any given time depends on your goals and your perception of
whether a certain level of performance is necessary to attain those goals. Let’s look at an example. Your second author
had a student many years ago who went to work for IBM as a sales rep. Her favorite work “reward” was having an IBM
corporate jet fly into Springfield, Missouri, to pick up her best customers and her and take them for a weekend of golfing at
some fun location. But to get that particular “reward,” she had to achieve at a certain level of performance, which involved
exceeding her sales goals by a specified percentage. How hard she was willing to work (that is, how motivated she was
to put forth effort) was dependent on the level of performance that had to be met and the likelihood that if she achieved
at that level of performance she would receive that reward. Because she “valued” that reward, she always worked hard
to exceed her sales goals. And the performance–reward linkage was clear because her hard work and performance
achievements were always rewarded by the company with the reward she valued (access to the corporate jet).
The key to expectancy theory is understanding an individual’s goal and the linkage between effort and performance,
between performance and rewards, and finally, between rewards and individual goal satisfaction. It emphasizes payoffs,
or rewards. As a result, we have to believe that the rewards an organization is offering align with what the individual
wants. Expectancy theory recognizes that no universal principle explains what motivates individuals and thus stresses
that managers understand why employees view certain outcomes as attractive or unattractive. After all, we want to
reward individuals with those things they value positively. Also, expectancy theory emphasizes expected behaviors.
Do employees know what is expected of them and how they’ll be evaluated? Finally, the theory is concerned with
perceptions. Reality is irrelevant. An individual’s own perceptions of performance, reward, and goal outcomes, not the
outcomes themselves, will determine his or her motivation (level of effort).
Integrating Contemporary Theories of Motivation
Many of the ideas underlying the contemporary motivation theories are complementary, and you’ll understand better
how to motivate people if you see how the theories fit together. It presents a model that integrates much of what we
know about motivation. Its basic foundation is the expectancy model. Let’s work through the model, starting on the left.
The individual effort box has an arrow leading into it. This arrow flows from the individual’s goals. Consistent with goal-
setting theory, this goals–effort link is meant to illustrate that goals direct behavior. Expectancy theory predicts that an
employee will exert a high level of effort if he or she perceives a strong relationship between effort and performance,
performance and rewards, and rewards and satisfaction of personal goals. Each of these relationships is, in turn,
influenced by certain factors. You can see from the model that the level of individual performance is determined not only
by the level of individual effort but also by the individual’s ability to perform and by whether the organization has a fair and
objective performance evaluation system. The performance–reward relationship will be strong if the individual perceives
that performance (rather than seniority, personal favorites, or some other criterion) is what is rewarded. The final link in
expectancy theory is the rewards–goal relationship.
The traditional need theories come into play at this point. Motivation would be high to the degree that the rewards an
individual received for his or her high performance satisfied the dominant needs consistent with his or her individual goals.
A closer look at the model also shows that it considers the achievement–need, reinforcement, equity, and JCM theories.
The high achiever isn’t motivated by the organization’s assessment of his or her performance or organizational rewards;
hence the jump from effort to individual goals for those with a high nAch. Remember that high achievers are internally
driven as long as the jobs they’re doing provide them with personal responsibility, feedback, and moderate risks. They’re
not concerned with the effort–performance, performance–reward, or rewards–goals linkages. Reinforcement theory is
seen in the model by recognizing that the organization’s rewards reinforce the individual’s performance. If managers have
designed a reward system that is seen by employees as “paying off ” for good performance, the rewards will reinforce
and encourage continued good performance. Rewards also play a key part in equity theory. Individuals will compare the
rewards (outcomes) they have received from the inputs or efforts they made with the inputs–outcomes ratio of relevant
others. If inequities exist, the effort expended may be influenced.
Finally, the JCM is seen in this integrative model. Task characteristics (job design) influence job motivation at two places.
First, jobs that are designed around the five job dimensions are likely to lead to higher actual job performance because
the individual’s motivation will be stimulated by the job itself—that is, they will increase the linkage between effort and
performance. Second, jobs that are designed around the five job dimensions also increase an employee’s control over
key elements in his or her work. Therefore, jobs that offer autonomy, feedback, and similar task characteristics help to
satisfy the individual goals of employees who desire greater control over their work.
After Vincent Stevens’s church ran an experiment in which 10 members were each given $100 to help their communities,
some used it as seed capital to raise thousands more. As a partner in a Bellevue, Washington, accounting firm, he
wondered what would happen if he tried the same thing with his employees. To find out, his company launched Caring,
Serving, and Giving, a program that lets employees apply for grants of up to $500 to fund community service projects. By
empowering employees to use the seed money as they saw fit, they were motivated to make the best use of it. Another
benefit that was realized was a boost in employee morale. Understanding and predicting employee motivation is one of
the most popular areas in management research. We’ve introduced you to several motivation theories. However, even
the contemporary theories of employee motivation are influenced by some significant workplace issues—motivating in
tough economic circumstances, managing cross-cultural challenges, motivating unique groups of workers, and designing
At Deloitte, employees are allowed to “dial up” or “dial down” their job responsibilities to fit their personal and professional
goals.67 The company’s program called Mass Career Customization has been a huge hit with its employees! In the first
12 months after it was rolled out, employee satisfaction with “overall career/life fit” rose by 25 percent. Also, the number
of high-performing employees staying with Deloitte increased. Motivating employees has never been easy! Employees
come into organizations with different needs, personalities, skills, abilities, interests, and aptitudes. They have different
expectations of their employers and different views of what they think their employer has a right to expect of them. And
they vary widely in what they want from their jobs. For instance, some employees get more satisfaction out of their
personal interests and pursuits and only want a weekly paycheck—nothing more. They’re not interested in making their
work more challenging or interesting or in “winning” performance contests. Others derive a great deal of satisfaction in
their jobs and are motivated to exert high levels of effort. Given these differences, how can managers do an effective job
of motivating the unique groups of employees found in today’s workforce? One thing is to understand the motivational
requirements of these groups including diverse employees, professionals, contingent workers, and low-skilled minimum-
Organizations have historically assumed that “one size fits all” when it comes to allocating rewards. Managers typically
assumed that everyone wants more money and more vacation time. But as organizations become less bureaucratic and
more capable of differentiating rewards, managers will be encouraged to differentiate rewards among employees as well
as for individual employees over time. Organizations control a vast number of potential rewards that employees might
find appealing. A partial list would include increased base pay, bonuses, shortened workweeks, extended vacations,
paid sabbaticals, flexible work hours, part-time employment, guaranteed job security, increased pension contributions,
college tuition reimbursement, personal days off, help in purchasing a home, recognition awards, paid club memberships,
and workfrom- home options. In the future, most organizations will structure individual reward packages in ways that will
MOTIVATING A DIVERSE WORKFORCE.
To maximize motivation among today’s workforce, managers need to think in terms of flexibility. For instance, studies
tell us that men place more importance on having autonomy in their jobs than do women. In contrast, the opportunity
to learn, convenient and flexible work hours, and good interpersonal relations are more important to women.68 Having
the opportunity to be independent and to be exposed to different experiences is important to Gen Y employees whereas
older workers may be more interested in highly structured work opportunities.69 Managers need to recognize that
what motivates a single mother with two dependent children who’s working full time to support her family may be very
different from the needs of a single part-time employee or an older employee who is working only to supplement his or
her retirement income. A diverse array of rewards is needed to motivate employees with such diverse needs. Many of the
work–life balance programs (see Chapter 12) that organizations have implemented are a response to the varied needs of
a diverse workforce. In addition, many organizations have developed flexible work arrangements—such as compressed
workweeks, flextime, and job sharing, which we discussed in Chapter 11—that recognize different needs. Another job
alternative that we also discussed earlier is telecommuting. However, keep in mind that not all employees embrace the
idea of telecommuting. Some workers relish the informal interactions at work that satisfy their social needs as well as
Do flexible work arrangements motivate employees? Although such arrangements might seem highly motivational,
both positive and negative relationships have been found. For instance, a recent study that looked at the impact of
telecommuting on job satisfaction found that job satisfaction initially increased as the extent of telecommuting increased,
but as the number of hours spent telecommuting increased, job satisfaction started to level off, decreased slightly, and
In contrast to a generation ago, the typical employee today is more likely to be a professional with a college degree
than a blue-collar factory worker. What special concerns should managers be aware of when trying to motivate a team
of engineers at Intel’s India Development Center, software designers at SAS Institute in North Carolina, or a group
of consultants at Accenture in Singapore? Professionals are different from nonprofessionals.71 They have a strong
and long-term commitment to their field of expertise. To keep current in their field, they need to regularly update their
knowledge, and because of their commitment to their profession they rarely define their workweek as 8 A.M. to 5 P.M.
five days a week. What motivates professionals? Money and promotions typically are low on their priority list. Why?
They tend to be well paid and enjoy what they do. In contrast, job challenge tends to be ranked high. They like to tackle
problems and find solutions. Their chief reward is the work itself. Professionals also value support. They want others to
think that what they are working on is important. That may be true for all employees, but professionals tend to be focused
on their work as their central life interest, whereas nonprofessionals typically have other interests outside of work that can
compensate for needs not met on the job.
MOTIVATING CONTINGENT WORKERS. We discussed the increased number of contingent workers employed by
organizations. There’s no simple solution for motivating these employees. For that small set of individuals who prefer the
freedom of their temporary status, the lack of stability may not be an issue. In addition, temporariness might be preferred
by highly compensated physicians, engineers, accountants, or financial planners who don’t want the demands of a full-
time job. But these individuals are the exceptions. For the most part, temporary employees are not temporary by choice.
What will motivate involuntarily temporary employees? An obvious answer is the opportunity to become a permanent
employee. In cases in which permanent employees are selected from a pool of temps, the temps will often work hard
in hopes of becoming permanent. A less obvious answer is the opportunity for training. The ability of a temporary
employee to find a new job is largely dependent on his or her skills. If an employee sees that the job he or she is doing
can help develop marketable skills, then motivation is increased. From an equity standpoint, when temps work alongside
permanent employees who earn more and get benefits too for doing the same job, the performance of temps is likely
to suffer. Separating such employees or perhaps minimizing interdependence between them might help managers
Management is a universal phenomenon. It is a very popular and widely used term. All organizations - business, political,
cultural or social are involved in management because it is the management which helps and directs the various efforts
towards a definite purpose. According to Harold Koontz, “Management is an art of getting things done through and
with the people in formally organized groups. It is an art of creating an environment in which people can perform and
individuals and can co-operate towards attainment of group goals”. According to F.W. Taylor, “Management is an art of
knowing what to do, when to do and see that it is done in the best and cheapest way”.
Management is a purposive activity. It is something that directs group efforts towards the attainment of certain pre -
determined goals. It is the process of working with and through others to effectively achieve the goals of the organization,
by efficiently using limited resources in the changing world. Of course, these goals may vary from one enterprise to
another. E.g.: For one enterprise it may be launching of new products by conducting market surveys and for other it may
be profit maximization by minimizing cost.
Management involves creating an internal environment: - It is the management which puts into use the various factors of
production. Therefore, it is the responsibility of management to create such conditions which are conducive to maximum
efforts so that people are able to perform their task efficiently and effectively. It includes ensuring availability of raw
materials, determination of wages and salaries, formulation of rules & regulations etc.
Therefore, we can say that good management includes both being effective and efficient. Being effective means doing the
appropriate task i.e., fitting the square pegs in square holes and round pegs in round holes. Being efficient means doing
the task correctly at least possible cost with minimum wastage of resources.
Management can be defined in detail in following categories:
As a process, management refers to a series of inter - related functions. It is the process by which management creates,
operates and directs purposive organization through systematic, coordinated and co-operated human efforts, according
to George R. Terry, “Management is a distinct process consisting of planning, organizing, actuating and controlling,
performed to determine and accomplish stated objective by the use of human beings and other resources”. As a process,
management consists of three aspects:
1. Management is a social process - Since human factor is most important among the other factors, therefore
management is concerned with developing relationship among people. It is the duty of management to make
interaction between people - productive and useful for obtaining organizational goals.
2. Management is an integrating process - Management undertakes the job of bringing together human physical
and financial resources so as to achieve organizational purpose. Therefore, is an important function to bring
harmony between various factors.
3. Management is a continuous process - It is a never ending process. It is concerned with constantly identifying the
problem and solving them by taking adequate steps. It is an on-going process.
Like various other activities performed by human beings such as writing, playing, eating, cooking etc, management is also
an activity because a manager is one who accomplishes the objectives by directing the efforts of others. According to
Koontz, “Management is what a manager does”. Management as an activity includes -
1. Informational activities - In the functioning of business enterprise, the manager constantly has to receive and
give information orally or in written. A communication link has to be maintained with subordinates as well as
superiors for effective functioning of an enterprise.
2. Decisional activities - Practically all types of managerial activities are based on one or the other types of
decisions. Therefore, managers are continuously involved in decisions of different kinds since the decision
made by one manager becomes the basis of action to be taken by other managers. (E.g. Sales Manager is
deciding the media & content of advertising).
3. Inter-personal activities - Management involves achieving goals through people. Therefore, managers have to
interact with superiors as well as the sub-ordinates. They must maintain good relations with them. The inter-
personal activities include with the sub-ordinates and taking care of the problem. (E.g. Bonuses to be given to
Management as a discipline refers to that branch of knowledge which is connected to study of principles & practices
of basic administration. It specifies certain code of conduct to be followed by the manager & also various methods for
Management as a discipline specifies certain code of conduct for managers & indicates various methods of managing
an enterprise. Management is a course of study which is now formally being taught in the institutes and universities after
completing a prescribed course or by obtaining degree or diploma in management, a person can get employment as a
Any branch of knowledge that fulfils following two requirements is known as discipline:
1. There must be scholars & thinkers who communicate relevant knowledge through research and publications.
2. The knowledge should be formally imparted by education and training programmers.
Since management satisfies both these problems, therefore it qualifies to be a discipline. Though it is comparatively a new
discipline but it is growing at a faster pace.
Management as a group refers to all those persons who perform the task of managing an enterprise. When we say that
management of ABC & Co. is good, we are referring to a group of people those who are managing. Thus as a group
technically speaking, management will include all managers from chief executive to the first - line managers (lower-level
managers). But in common practice management includes only top management i.e. Chief Executive, Chairman, General
Manager, Board of Directors etc. In other words, those who are concerned with making important decisions, these persons
enjoy the authorities to use resources to accomplish organizational objectives & also responsibility to for their efficient
Management as a group may be looked upon in 2 different ways:
1. All managers taken together.
The interpretation depends upon the context in which these terms are used. Broadly speaking, there are 3 types of
1. Patrimonial / Family Manager: Those who have become managers by virtue of their being owners or relatives of
2. Professional Managers: Those who have been appointed on account of their specialized knowledge and degree.
3. Political Managers / Civil Servants: Those who manage public sector undertakings.
Managers have become a part of elite group of society as they enjoy higher standard of living in the society.
Science is a systematic body of knowledge pertaining to a specific field of study that contains general facts which explains
a phenomenon. It establishes cause and effect relationship between two or more variables and underlines the principles
governing their relationship. These principles are developed through scientific method of observation and verification
Science is characterized by following main features:
1. Universally acceptance principles - Scientific principles represents basic truth about a particular field of enquiry.
These principles may be applied in all situations, at all time & at all places. E.g. - law of gravitation which can be
applied in all countries irrespective of the time.
Management also contains some fundamental principles which can be applied universally like the Principle of
Unity of Command i.e. one man, one boss. This principle is applicable to all type of organization - business or
2. Experimentation & Observation - Scientific principles are derived through scientific investigation & researching
i.e. they are based on logic. E.g. the principle that earth goes round the sun has been scientifically proved.
Management principles are also based on scientific enquiry & observation and not only on the opinion of Henry
Fayol. They have been developed through experiments & practical experiences of large no. of managers. E.g. it
is observed that fair remuneration to personal helps in creating a satisfied work force.
3. Cause & Effect Relationship - Principles of science lay down cause and effect relationship between various
variables. E.g. when metals are heated, they are expanded. The cause is heating & result is expansion.
The same is true for management, therefore it also establishes cause and effect relationship. E.g. lack of
parity (balance) between authority & responsibility will lead to ineffectiveness. If you know the cause i.e. lack
of balance, the effect can be ascertained easily i.e. in effectiveness. Similarly if workers are given bonuses, fair
wages they will work hard but when not treated in fair and just manner, reduces productivity of organization.
4. Test of Validity & Predictability - Validity of scientific principles can be tested at any time or any number of
times i.e. they stand the test of time. Each time these tests will give same result. Moreover future events can be
predicted with reasonable accuracy by using scientific principles. E.g. H2 & O2 will always give H2O.
Principles of management can also be tested for validity. E.g. principle of unity of command can be tested by
comparing two persons - one having single boss and one having 2 bosses. The performance of 1st person will
It cannot be denied that management has a systematic body of knowledge but it is not as exact as that of other physical
sciences like biology, physics, and chemistry etc. The main reason for the inexactness of science of management is that
it deals with human beings and it is very difficult to predict their behavior accurately. Since it is a social process, therefore
it falls in the area of social sciences. It is a flexible science & that is why its theories and principles may produce different
results at different times and therefore it is a behavior science. Ernest Dale has called it as a Soft Science.
Art implies application of knowledge & skill to trying about desired results. An art may be defined as personalized
application of general theoretical principles for achieving best possible results. Art has the following characters -
1. Practical Knowledge: Every art requires practical knowledge therefore learning of theory is not sufficient. It is
very important to know practical application of theoretical principles. E.g. to become a good painter, the person
may not only be knowing different colour and brushes but different designs, dimensions, situations etc to use
them appropriately. A manager can never be successful just by obtaining degree or diploma in management; he
must have also know how to apply various principles in real situations by functioning in capacity of manager.
2. Personal Skill: Although theoretical base may be same for every artist, but each one has his own style and
approach towards his job. That is why the level of success and quality of performance differs from one person
to another. E.g. there are several qualified painters but M.F. Hussain is recognized for his style. Similarly
management as an art is also personalized. Every manager has his own way of managing things based on his
knowledge, experience and personality, that is why some managers are known as good managers (like Aditya
Birla, Rahul Bajaj) whereas others as bad.
3. Creativity: Every artist has an element of creativity in line. That is why he aims at producing something that has
never existed before which requires combination of intelligence & imagination. Management is also creative in
nature like any other art. It combines human and non-human resources in useful way so as to achieve desired
results. It tries to produce sweet music by combining chords in an efficient manner.
4. Perfection through practice: Practice makes a man perfect. Every artist becomes more and more proficient
through constant practice. Similarly managers learn through an art of trial and error initially but application of
management principles over the years makes them perfect in the job of managing.
5. Goal-Oriented: Every art is result oriented as it seeks to achieve concrete results. In the same manner,
management is also directed towards accomplishment of pre-determined goals. Managers use various
resources like men, money, material, machinery & methods to promote growth of an organization.
Thus, we can say that management is an art therefore it requires application of certain principles rather it is an art of
highest order because it deals with moulding the attitude and behavior of people at work towards desired goals.
Management is both an art and a science. The above mentioned points clearly reveals that management combines
features of both science as well as art. It is considered as a science because it has an organized body of knowledge
which contains certain universal truth. It is called an art because managing requires certain skills which are personal
possessions of managers. Science provides the knowledge & art deals with the application of knowledge and skills.
A manager to be successful in his profession must acquire the knowledge of science & the art of applying it. Therefore
management is a judicious blend of science as well as an art because it proves the principles and the way these
principles are applied is a matter of art. Science teaches to ’know’ and art teaches to ’do’. E.g. a person cannot become a
good singer unless he has knowledge about various ragas & he also applies his personal skill in the art of singing. Same
way it is not sufficient for manager to first know the principles but he must also apply them in solving various managerial
problems that is why, science and art are not mutually exclusive but they are complementary to each other (like tea and
The old saying that “Manager are Born” has been rejected in favor of “Managers are Made”. It has been aptly remarked
that management is the oldest of art and youngest of science. To conclude, we can say that science is the root and art is
Over a large few decades, factors such as growing size of business unit, separation of ownership from management,
growing competition etc have led to an increased demand for professionally qualified managers. The task of manager has
been quite specialized. As a result of these developments the management has reached a stage where everything is to
A profession may be defined as an occupation that requires specialized knowledge and intensive academic preparations
to which entry is regulated by a representative body. The essentials of a profession are:
1. Specialized Knowledge - A profession must have a systematic body of knowledge that can be used for
development of professionals. Every professional must make deliberate efforts to acquire expertise in the
principles and techniques. Similarly a manager must have devotion and involvement to acquire expertise in the
2. Formal Education & Training - There are no. of institutes and universities to impart education & training for
a profession. No one can practice a profession without going through a prescribed course. Many institutes of
management have been set up for imparting education and training. For example, a CA cannot audit the A/C’s
unless he has acquired a degree or diploma for the same but no minimum qualifications and a course of study
has been prescribed for managers by law. For example, MBA may be preferred but not necessary.
3. Social Obligations - Profession is a source of livelihood but professionals are primarily motivated by the desire to
serve the society. Their actions are influenced by social norms and values. Similarly a manager is responsible
not only to its owners but also to the society and therefore he is expected to provide quality goods at reasonable
4. Code of Conduct - Members of a profession have to abide by a code of conduct which contains certain rules and
regulations, norms of honesty, integrity and special ethics. A code of conduct is enforced by a representative
association to ensure self discipline among its members. Any member violating the code of conduct can be
punished and his membership can be withdrawn. The AIMA has prescribed a code of conduct for managers but
it has no right to take legal action against any manager who violates it.
5. Representative Association - For the regulation of profession, existance of a representative body is a must. For
example, an institute of Charted Accountants of India establishes and administers standards of competence for
the auditors but the AIMA however does not have any statuary powers to regulate the activities of managers.
From above discussion, it is quite clear that management fulfills several essentials of a profession, even then it is not a full
a. It does not restrict the entry in managerial jobs for account of one standard or other.
b. No minimum qualifications have been prescribed for managers.
c. No management association has the authority to grant a certificate of practice to various managers.
d. All managers are supposed to abide by the code formulated by AIMA,
e. Competent education and training facilities do not exist.
f. Managers are responsible to many groups such as shareholders, employees and society. A regulatory code
g. Managers are known by their performance and not mere degrees.
h. The ultimate goal of business is to maximize profit and not social welfare. That is why Haymes has rightly
remarked, “The slogan for management is becoming - ’He who serves best, also profits most’.”
ÿ 4.2 Evolution of Management Theory and Practices
Describe the historical foundations of management practice, and understand the three major approaches to management
theory. Though management owes much to ancient cultures, management theory only came of age with the industrial
revolution. Scientific management evolved during the unprecedented economic growth of the nineteenth century. The
accepted view today recognizes three approaches to management: classical, human relations, and quantitative. Systems
theory and contingency management are also important approaches to management theory.
¸ Discuss the concepts of scientific, bureaucratic, and administrative management.
Scientific management holds that there is "one best way to accomplish any task which can be determined through
scientific research. This "optimal" method can be used to define jobs, refine processes, and organize systems of work.
Administrative management holds that there are certain principles of management that have universal application. Max
Weber used the term rational bureaucracy to describe an ideal system in which positions are well defined, the division
of labor is clear, objectives are explicit, and a clear chain of authority exists. Standardized systems provide a consistent
approach to decision making. Perhaps the most influential approach to modern management administrative management
proposed fourteen important management functions that pertain to every manager in an organization. From these original
fourteen functions, modern theory has distilled four: planning, organizing, leading, and controlling.
¸ Explain the focus of the behavioral approach and the human relations movement.
Behavioral studies have focused on leadership roles for managers who must motivate employees to accomplish
work in the most productive ways. Theorists within the human relations movement have studied situational variables the
complex interactions of individuals within work environments and the nature of work itself.
¸ Define systems theory and contingency management concepts.
Systems theory requires managers to define their role within the entire system which is made up of individual but
interrelated parts that must be coordinated. Contingency management stresses that managers should adjust their
leadership behavior to meet different situations or be assigned to positions more appropriate to their leadership styles.
¸ Describe quantitative approaches to management and the role of information systems.
Quantitative approaches are based on the concepts of management science, of theoretical field on the cutting edge
of high&-powered mathematical molding that provides managers with information for making decisions. A specific
management area called operations management is an applied discipline of system control and decision making
encompassing operational activities such as inventory control, scheduling, forecasting, budgeting, and materials
management. Most of the models used are grounded in, statistics and relay on computer technology increase in
microelectronic and microelectronic computer innovations has resulted in a comparable growth in information systems.
Information is a resource that managers require for daily decisions; with advanced systems, information is changing the
way manager interact and how their organizations function.
Define management, and discuss future perspectives for management careers.
Management is the process of getting things done through others. Managers major responsibilities are defining
what is to be done, organizing resources, guiding others toward accomplishing their tasks, and controlling performance.
Planning, organizing, leading, and controlling form the outline of this text. Future managers will find exceptional
opportunities in global affairs, and they will find equally rewarding challenges in small, high&-growth ventures.
Explain what constitutes an organization, and discuss the differences between formal and informal organizations.
Organizations exist when two or more people mutually cooperate to pursue common objectives. Thus people combine
their talents and resources to achieve more collectively than they could work independently. Formal organizations have
deliberately defined objectives that take into account their stakeholders interests; they also have specific purposes.
Informal organizations arise spontaneously and may have no formal purpose or objective, yet their members have mutual
interests and work together to satisfy them.
Explain the process of management, and discuss the concepts of planning, organizing, leading, and controlling.
The process of management includes four functions of management that are interrelated activities. Managers plan in
order to provide objectives. Organizing is concerned with gathering resources necessary to carry out plans. Leading is
the "influence" process through which managers in authority direct human behavior to achieve objectives. Controlling is
the management function of steering performance toward desired results.
Name the different sets of managerial roles, and give examples of each.
Interpersonal roles include figurehead, leader, and liaison. Informational roles include monitor, disseminator, and
spokesperson. Decisional roles include entrepreneur, disturbance handler, resource allocator, and negotiator.
Name the three basic levels of managers in the management hierarchy and briefly describe each.
Strategic managers are top operating executives and decision&-making boards who guide the company in fulfilling
long&-term objectives. They are concerned with the broad&-based mission and major objectives to be accomplished,
as well as with providing a philosophy of leadership to organizational members. Tactical managers are those just under
executive ranks and in several lower strata, including divisions and departments. They can be specialists, such as
auditors, or operational managers, such as sales directors, but they deal with near&-term objectives such as quarterly
or annual sales and budgets. First&-line managers are those who interact directly on a daily basis with operational no
management employees. They hold positions as supervisors, foremen, and office managers, and they are concerned with
immediate performance results, daily scheduling, and personal leadership and guidance of the work force.
Describe entrepreneurship as an important dimension of our free enterprise system.
Large and complex organizations began in humble surroundings as entrepreneurial ventures. Every major company
can trace its roots to innovative individuals. Entrepreneurship is the act of starting new ventures by combining resources
in unusual ways to create new commercial endeavors.
Discuss how global competition is changing our views about managing organizations.
American managers must cope with increased competition at home from foreign companies that have been able to
establish strong markets by offering high&-quality products at reasonable prices. One of the important challenges for
future American managers is to regain our competitive posture in the world economy.
Explain the connection between quality and productivity.
Productivity is achieved by reducing the total resources used to provide reliable products or services. Workmanship,
effective purchasing, proper sales forecasting, careful performance control, good inventory management and innovative
methods in production or services add to a companies’ quality profile and as these improve, so does productivity.
ÿ Early Management Thought in Perspective
Management is not a new concept. It has been employed for thousands of years, as seen in the practices of the
Sumerians, the Romans, and the Roman Catholic Church. However, the emergence of the factory system. presented
management with a new challenge. With industrialization it became necessary to develop rational, scientific principles
for handling workers, materials, money, and machinery. The scientific managers played a major role in helping attain this
The primary goal of these managers was that of achieving the highest productivity possible by devising efficient
work methods and encouraging employees to take advantage of these new techniques. In the United States, scientific
management was made famous by people such as Frederick W. Taylor. His experiments at Bethlehem Steel illustrated
the importance of time-and-motion study, and his differential piece-rate system provides students an insight into the
types of wage incentive payment plans used during this period. Another important scientific manager of the day was
Frank Gilbreth, renowned for his work in time-and-motion study and for a large body of work in management in which he
The success of the scientific managers brought about changes in the worker-manager ratio and moved the focus
of attention farther up the hierarchy. The result was two distinct levels of inquiry about management. The first sought
to identify generally the purview of management. The second sought to examine both individual and group behavior in
The most famous of the early management theorists was Henri Fayol. Fayol's outstanding contribution was the
conceptual framework he provided for analyzing the management process. In the behavioral area, Elton Mayo studied
group behavior in organizations. The Hawthorne studies, however, had an even greater impact on the field, and they
became the single most important foundation for the behavioral approach to management. Meanwhile, Chester Barnard,
whose acceptance theory of authority is still regarded as a major landmark in the development of management theory,
made the most memorable contribution to early behavioral knowledge.
In perspective all three groups-the scientific managers, the classical theorists, and the human relationaists-had
shortcomings. Yet it must also be realized that they complemented each other, helping to form the basis for modern
management theory and practice. The efficiency goals of the scientific managers and classical theorists led to the human
relations philosophy of treating people well, which in turn has been replaced, as seen in Figure 2-4, by a human resources
¸ Organizational mission statements
An organization's mission statement describes what the organization stands for and why it exists. It explains the overall
purpose of the organization and includes the attributes that distinguish it from other organizations of its type.
A mission statement should be more than words on a piece of paper; it should reveal a company's philosophy, as well
as its purpose. This declaration should be a living, breathing document that provides information and inspiration for the
members of the organization. A mission statement should answer the questions, “What are our values?” and “What do
we stand for?” This statement provides focus for an organization by rallying its members to work together to achieve its
But not all mission statements are effective in America's businesses. Effective mission statements lead to effective efforts.
In today's quality-conscious and highly competitive environments, an effective mission statement's purpose is centered on
serving the needs of customers. A good mission statement is precise in identifying the following intents of a company:
¸ Customers — who will be served
¸ Products/services — what will be produced
¸ Location — where the products/services will be produced
¸ Philosophy — what ideology will be followed
Company policies are guidelines that govern how certain organizational situations are addressed. Just as colleges
maintain policies about admittance, grade appeals, prerequisites, and waivers, companies establish policies to provide
guidance to managers who must make decisions about circumstances that occur frequently within their organization.
Company policies are an indication of an organization's personality and should coincide with its mission statement.
The formal structure of an organization is the hierarchical arrangement of tasks and people. This structure determines
how information flows within the organization, which departments are responsible for which activities, and where the
Some organizations use a chart to simplify the breakdown of its formal structure. This organizational chart is a pictorial
display of the official lines of authority and communication within an organization.
The organizational culture is an organization's personality. Just as each person has a distinct personality, so does each
organization. The culture of an organization distinguishes it from others and shapes the actions of its members.
Four main components make up an organization's culture:
Values are the basic beliefs that define employees' successes in an organization. For example, many universities place
high values on professors being published. If a faculty member is published in a professional journal, for example, his or
her chances of receiving tenure may be enhanced. The university wants to ensure that a published professor stays with
the university for the duration of his or her academic career — and this professor's ability to write for publications is a
The second component is heroes. A hero is an exemplary person who reflects the image, attitudes, or values of the
organization and serves as a role model to other employees. A hero is sometimes the founder of the organization (think
Sam Walton of Wal-Mart). However, the hero of a company doesn't have to be the founder; it can be an everyday worker,
such as hard-working paralegal Erin Brockovich, who had a tremendous impact on the organization.
Rites and rituals, the third component, are routines or ceremonies that the company uses to recognize high-performing
employees. Awards banquets, company gatherings, and quarterly meetings can acknowledge distinguished employees
for outstanding service. The honorees are meant to exemplify and inspire all employees of the company during the rest of
The final component, the social network, is the informal means of communication within an organization. This network,
sometimes referred to as the company grapevine, carries the stories of both heroes and those who have failed. It is
through this network that employees really learn about the organization's culture and values.
A byproduct of the company's culture is the organizational climate. The overall tone of the workplace and the morale of
its workers are elements of daily climate. Worker attitudes dictate the positive or negative “atmosphere” of the workplace.
The daily relationships and interactions of employees are indicative of an organization's climate.
Resources are the people, information, facilities, infrastructure, machinery, equipment, supplies, and finances at an
organization's disposal. People are the paramount resource of all organizations. Information, facilities, machinery
equipment, materials, supplies, and finances are supporting, nonhuman resources that complement workers in their
quests to accomplish the organization's mission statement. The availability of resources and the way that managers value
the human and nonhuman resources impact the organization's environment.
Philosophy of management is the manager's set of personal beliefs and values about people and work and as such,
is something that the manager can control. McGregor emphasized that a manager's philosophy creates a self-fulfilling
prophecy. Theory X managers treat employees almost as children who need constant direction, while Theory Y managers
treat employees as competent adults capable of participating in work-related decisions. These managerial philosophies
then have a subsequent effect on employee behavior, leading to the self-fulfilling prophecy. As a result, organizational
philosophies and managerial philosophies need to be in harmony.
The role of a manager is to monitor and shape the internal and external environments and to anticipate changes and react
Managers can monitor the environments through boundary spanning — a process of gathering information about
developments that could impact the future of the organization. Managers can access information through a variety of
sources: customer and supplier feedback; professional, trade, and government publications; industry associations; and
Managers can also actively work to influence their external environments through lobbying, voting, and using the media to
Internal elements comprise the organization itself. Internal change arises from activities and decisions within the
organization. Managers can gather information by conducting a thorough evaluation of the internal operations of the
organization. The purpose of this internal analysis is to identify the organizational assets, resources, skills, and processes
that represent either strengths or weaknesses. Strengths are aspects of the organization's operations that represent
potential competitive advantages (any aspect of an organization that distinguishes it from its competitors in a positive
way), while weaknesses are areas that are in need of improvement.
Several key areas of the organization's operations should be examined in an internal analysis. Key areas to be assessed
include the marketing, financial, research and development, production, and general management capabilities. These
areas are typically evaluated in terms of the extents to which they foster quality and support the competitive advantage
ÿ 4.4 The Management Process
Management is the process of coordinating the resources of an organization to achieve the primary goals of the
organization. Managers are concerned with four types of resources&-material, financial, human, and informational.
Managers perform four basic functions. The amount of time they devote to each depends on the situation of the
firm and of the manager within the firm. First, managers engage in goal setting and planning (determining where the
firm should be going and how to get there). Three types of plans, from the broadest to the most specific, are strategies,
tactical plans, and standing plans. Next, managers organize resources and activities to accomplish results in an efficient
and effective manner. Then, managers must lead and motivate others to inspire them to work in the best interest of the
organization. Finally, managers must control ongoing activities, through continual evaluation and regulation, to keep the
organization on course as it pursues its goals.
Managers&-or management positions&-may be classified from two different perspectives From the perspective of
level, there are top managers who control the fortunes of the organization&- middle managers, who implement strategies
and major policies; and first&-line managers, who supervise the activities of operating employees. From the viewpoint of
area of management, managers most often deal with the functions of finance, operations, marketing, human resources,
Effective managers tend to possess a specific set of skills and to fill ten basic managerial roles. Technical, conceptual,
interpersonal, diagnostic, and analytic skills are all important, though the relative importance of each varies with the level
of management. All the key managerial roles can be classified as decisional, interpersonal, or informational.
Managers function within a corporate culture&-a system consisting of a firm's inner rites, rituals, heroes, and values.
Managers may find it useful to assess that culture
(b) “Effective control depends on good observation” Explain.
(c) Distinguish between programmed decision and non-programmed decision.
(d) What are the requirements for effective control?
Q16. (a) What is meant by optimum span of supervision?
(b) What are the determinants of optimum span of supervision?
(c ) Mention the merits and demerits of centralization.
Q17. (a) What is E-commerce? Discuss its features.
(b) What is E-Banking? What are the merits and limitations of E-Banking?
(c ) What is the future of computer based information system for commercial banks?
Q18. (a) What is leadership? What are the leadership traits?
Let’s begin by clarifying who leaders are and what leadership is. Our definition of a leader is someone who can influence
others and who has managerial authority. Leadership is what leaders do. It’s a process of leading a group and influencing
that group to achieve its goals. Are all managers leaders? Because leading is one of the four management functions,
yes, ideally, all managers should be leaders. Thus, we’re going to study leaders and leadership from a managerial
perspective.3 However, even though we’re looking at these from a managerial perspective, we’re aware that groups
often have informal leaders who emerge. Although these informal leaders may be able to influence others, they have not
been the focus of most leadership research and are not the types of leaders we’re studying in this chapter. Leaders and
leadership, like motivation, are organizational behavior topics that have been researched a lot. Most of that research has
been aimed at answering the question: What is an effective leader? We’ll begin our study of leadership by looking at some
early leadership theories that attempted to answer that question.
I used to think that running an organization was equivalent to conducting a symphony orchestra. But I don't think that's quite it;
it's more like jazz. There is more improvisation. — Warren Bennis\
Good leaders are made not born. If you have the desire and willpower, you can become an effective leader. Good leaders develop
through a never ending process of self-study, education, training, and experience (Jago, 1982). This guide will help you through that
To inspire your workers into higher levels of teamwork, there are certain things you must be, know, and, do. These do not come
naturally, but are acquired through continual work and study. Good leaders are continually working and studying to improve their
leadership skills; they are NOT resting on their laurels.
The meaning of a message is the change which it produces in the image. — Kenneth Boulding in The Image: Knowledge in Life
Before we get started, lets define leadership. Leadership is a process by which a person influences others to accomplish an objective
and directs the organization in a way that makes it more cohesive and coherent. This definition is similar to Northouse's (2007, p3)
definition — Leadership is a process whereby an individual influences a group of individuals to achieve a common goal.
Leaders carry out this process by applying their leadership knowledge and skills. This is called Process Leadership (Jago, 1982).
However, we know that we have traits that can influence our actions. This is called Trait Leadership (Jago, 1982), in that it was once
common to believe that leaders were born rather than made. These two leadership types are shown in the chart below (Northouse,
While leadership is learned, the skills and knowledge processed by the leader can be influenced by his or hers attributes or traits, such
as beliefs, values, ethics, and character. Knowledge and skills contribute directly to the process of leadership, while the other attributes
give the leader certain characteristics that make him or her unique.
Skills, knowledge, and attributes make the Leader, which is one of the:
“Leadership is a combination of activities that lead to motivating a group or an individual to willingly contribute to the
common goals to their full ability and beyond”.
Year Author Definition of Leadership
1957 Hemphill & Coons Leadership is the individual behavior to guide a group to achieve the
1957 Stogdill Leadership is an influential activity to others or organization to achieve the
1969 Bowers Leadership is an activity process of interpersonal relationship; other’s
1977 Davis Leadership means persuasion on others to enthusiastically chase for
1982 Morphet, Johns & Reller Leadership means, in the social system, the individual action, behavior, faith
common target.
target set by the leader.
behavior is influenced through this process to achieve the set target.
certain target.
and target are influenced by the others under volunteer cooperation.
1986 Richards & Engle Leadership is about establishment of vision, value and creation of
1990 Sergiovanni Leadership means the leader satisfies the staff’s demand by use of
1990 Jacobs & Jaques Leadership helps others to strive and to enhance aspiration to achieve the
environment so that the objective can be accomplished.
consultation, negotiation and compromise so that the staff trades his work for
rewards.
target.
1993 Robbins Leadership is the ability to influence the group to achieve the target.
1994 Yukl Leadership is the process of influence on the subordinate, in which the
subordinate is inspired to achieve the target, the group is maintained in
cooperation, and the established mission is accomplished, and the support
from external group is obtained.
2001 Northouse Leadership is exchanged relationship between leader and subordinate.
2003 Fry Leadership means use of leading strategy to offer inspiring motive and to
enhance the staff’s potential for growth and development.
(b) “All managers are leaders but all leaders are not managers” Explain the statement.
(c) What are the three types of skills used by leaders?
After reviewing studies on leadership theory conducted in the past, it is generally divided into four periods:
(1). Traits theory in 1930s--- It focuses on the innate leadership qualities and competence. These innate qualities are not
found in others. The so-called quality can be divided into physiological and mental aspects. The physiological aspect
includes: height, weight, looks, and vigor while the mental aspect includes intelligence, confidence, and aggressiveness
etc. Stogdill (1948) proposed twelve leadership related studies and was considered as representative of this period.
(2). Behavioral theory from late 1940s to late 1960s--- It believes that a leader will be able to achieve ideal organizational
efficiency if he demonstrates effective leadership behaviors. These leadership behaviors may be trained or learned
through experience. Actual behavior or leadership styles are emphasized. Representative research is conducted in
Ohio State University. Ohio State University proposed “consideration“ and “initiating structure” of leadership behaviors.
Consideration is a behavior that focuses on strengthening relationship with subordinates based on their needs and
perceptions, while “initiating structure” is a behavior that focuses on subordinate performance in goal accomplishment.
(3). Contingency theory in late 1960s--- This theory states that there is no set of optimum leadership model in this world
and that it depends on the situation encountered. Situational leadership theory began its development subsequently. It
states that leaders need to adopt the most optimum leadership style based on different organizational situations. Among
which, Fiedler’s contingency theory (1967) is most well-known.
(4). Contemporary leadership theory since 1970s---The viewpoint of contemporary leadership theory states that leadership
is a type of interactive process with the environment. Bass & Avolio (1990) proposed transactional leadership and
transformation leadership :( 1) transactional leadership---encouraging subordinates through incentive establishment.
In other words, incentive elicits work performance. Transactional leadership is the basis for most leadership theories.
It focuses on the exchange relationship between the leader and the subordinate (Fry, 2003；Northouse, 2001); (2)
transformation leadership---to enhance staff’s trust and respect for leader by altering intrinsic work value and faith of staff
at the same time in order to elicit work capabilities. Because “charisma” is viewed as an essential element, transformation
leader provides incentives for subordinates, enhance subordinate potential and development. (Fry, 2003); and (3)
Charismatic leadership theory refers to the follower’s perception toward certain behaviors of the leader as being heroic or
Personality characteristic means one’s psychological and physical phenomenon. At different time and condition, it adapts
to different environment by unique behavioral mode and thinking method. Friedman & Rosenman (1959) categorize
personality characteristics into type A and B. Type A shows exuberant ambition and aggression. Type B has more
patience and pays less attention to competition and sense of achievement.
Definitions of personality characteristic were summarized as shown into table 2.
Table 2.2 Definitions of Personality Characteristic
Year Author Definition of Personality Characteristic
1959 Guilford Personality characteristic is a combination of individual trait and property, which
generates a lasting and special characteristic different from the others.
1961 Allport Personality means dynamic behavior from psychological and physical aspect to adapt to
the environment.
1970 Pervin Personality represents structure and dynamics from reaction to the environment.
1972 Scott & Mitchell Personality is formed from accumulation of psychological growth and development.
1998 Robbins Personality is one’s reaction to the others and consequence of interaction with others.
1985 Lee Personality characteristic means psychological attributes of affection and thought
among people; it’s also a specific and lasting behavioral pattern.
1997 Lu The formation of personality is affected by gene, culture, environment, and social factor.
(d) A Manager must be a leader of employee.
2.6 Barriers to Leadership Development:
Leadership is a complex skill—requiring as it does keen psychological insight into the mind, behaviors both rationale
and irrational, beliefs, attitudes, values, emotions, human motivation, communication skills, and so on. Leadership
development is surprisingly difficult. Reasons for this include organizational factors beyond our control, and individual
factors which we can control. Some of these factors are listed below.
Barrier 1: Lack of Leadership Development Programs
Unless you happen to belong to one of the best corporations in the world or are a member of the military, there just is not
that much organizational support for leadership development (see below).
Leadership Development Barrier 2: A Lack of University Leadership Courses
Leadership development, when is it studied at all in the university, is commonly included in the business school
curriculum, often included almost as an afterthought somewhere in a management or organizational development course.
Not only are business students short changed, but the vast majority of university students in the sciences and humanities
have no exposure to leadership theory.
Leadership Development Barrier 3: Faulty Training Methodologies
Even in organizations that offer seminars and courses to the employees, the leadership development methodology is
often wrong—one receives training without development. Performing an exercise once in a class-room or listening to a
speaker in a hotel conference room fails to address both the issue of knowledge retention and skill development.
Organizational and personal change management, process, plans, change management and business development tips
Here are some rules for effective management of change. Managing organizational change will
be more successful if you apply these simple principles. Achieving personal change will be more successful too if you
use the same approach where relevant. Change management entails thoughtful planning and sensitive implementation,
and above all, consultation with, and involvement of, the people affected by the changes. If you force change on people
normally problems arise. Change must be realistic, achievable and measurable. These aspects are especially relevant
to managing personal change. Before starting organizational change, ask yourself: What do we want to achieve with this
change, why, and how will we know that the change has been achieved? Who is affected by this change, and how will
they react to it? How much of this change can we achieve ourselves, and what parts of the change do we need help with?
These aspects also relate strongly to the management of personal as well as organizational change.
Do not 'sell' change to people as a way of accelerating 'agreement' and implementation. 'Selling' change to people is not
a sustainable strategy for success, unless your aim is to be bitten on the bum at some time in the future when you least
expect it. When people listen to a management high-up 'selling' them a change, decent diligent folk will generally smile
and appear to accede, but quietly to themselves, they're thinking, "No bloody chance mate, if you think I'm standing for
that load of old bollocks you've another think coming…" (And that's just the amenable types - the other more recalcitrant
types will be well on the way to making their own particular transition from gamekeepers to poachers.)
Instead, change needs to be understood and managed in a way that people can cope effectively with it. Change can be
unsettling, so the manager logically needs to be a settling influence.
Check that people affected by the change agree with, or at least understand, the need for change, and have a chance to
decide how the change will be managed, and to be involved in the planning and implementation of the change. Use face-
to-face communications to handle sensitive aspects of organizational change management (see Mehrabian's research on
conveying meaning and understanding). Encourage your managers to communicate face-to-face with their people too if
they are helping you manage an organizational change. Email and written notices are extremely weak at conveying and
If you think that you need to make a change quickly, probe the reasons - is the urgency real? Will the effects of agreeing
a more sensible time-frame really be more disastrous than presiding over a disastrous change? Quick change prevents
proper consultation and involvement, which leads to difficulties that take time to resolve.
For complex changes, refer to the process of project management, and ensure that you augment this with consultative
communications to agree and gain support for the reasons for the change. Involving and informing people also creates
opportunities for others to participate in planning and implementing the changes, which lightens your burden, spreads the
organizational load, and creates a sense of ownership and familiarity among the people affected.
See also the excellent free decision-making template, designed by Sharon Drew Morgen, with facilitative questions for
personal and organizational innovation and change.
To understand more about people's personalities, and how different people react differently to change.
For organizational change that entails new actions, objectives and processes for a group or team of people, use
workshops to achieve understanding, involvement, plans, measurable aims, actions and commitment. Encourage your
management team to use workshops with their people too if they are helping you to manage the change.
You should even apply these principles to very tough change like making people redundant, closures and integrating
merged or acquired organizations. Bad news needs even more careful management than routine change. Hiding behind
memos and middle managers will make matters worse. Consulting with people, and helping them to understand does not
weaken your position - it strengthens it. Leaders who fail to consult and involve their people in managing bad news are
perceived as weak and lacking in integrity. Treat people with humanity and respect and they will reciprocate.
Be mindful that the chief insecurity of most staff is change itself. See the process of personal change theory to see how
people react to change. Senior managers and directors responsible for managing organizational change do not, as a rule,
fear change - they generally thrive on it. So remember that your people do not relish change, they find it deeply disturbing
and threatening. Your people's fear of change is as great as your own fear of failure.
The employee does not have a responsibility to manage change - the employee's responsibility is no other than to do their
best, which is different for every person and depends on a wide variety of factors (health, maturity, stability, experience,
personality, motivation, etc). Responsibility for managing change is with management and executives of the organization
- they must manage the change in a way that employees can cope with it. The manager has a responsibility to facilitate
and enable change, and all that is implied within that statement, especially to understand the situation from an objective
standpoint (to 'step back', and be non-judgmental), and then to help people understand reasons, aims, and ways of
responding positively according to employees' own situations and capabilities. Increasingly the manager's role is to
interpret, communicate and enable - not to instruct and impose, which nobody really responds to well.
1. At all times involve and agree support from people within system (system = environment, processes, culture,
relationships, behaviors, etc., whether personal or organizational).
2. Understand where you/the organization is at the moment.
3. Understand where you want to be, when, why, and what the measures will be for having got there.
4. Plan development towards above No.3 in appropriate achievable measurable stages.
5. Communicate, involve, enable and facilitate involvement from people, as early and openly and as fully as is
John P Kotter's 'eight steps to successful change'
American John P Kotter (b 1947) is a Harvard Business School professor and leading thinker and author on
organizational change management. Kotter's highly regarded books 'Leading Change' (1995) and the follow-up 'The Heart
of Change' (2002) describe a helpful model for understanding and managing change. Each stage acknowledges a key
principle identified by Kotter relating to people's response and approach to change, in which people see, feel and then
Kotter's eight step change model can be summarized as:
1. Increase urgency - inspire people to move, make objectives real and relevant.
2. Build the guiding team - get the right people in place with the right emotional commitment, and the right mix of
3. Get the vision right - get the team to establish a simple vision and strategy, focus on emotional and creative
aspects necessary to drive service and efficiency.
4. Communicate for buy-in - Involve as many people as possible, communicate the essentials, simply, and to
appeal and respond to people's needs. De-clutter communications - make technology work for you rather than
5. Empower action - Remove obstacles, enable constructive feedback and lots of support from leaders - reward
and recognize progress and achievements.
6. Create short-term wins - Set aims that are easy to achieve - in bite-size chunks. Manageable numbers of
initiatives. Finish current stages before starting new ones.
7. Don't let up - Foster and encourage determination and persistence - ongoing change - encourage ongoing
progress reporting - highlight achieved and future milestones.
8. Make change stick - Reinforce the value of successful change via recruitment, promotion, new change leaders.
Kotter's eight step model is explained more fully on his website www.kotterinternational.com.
Related to Kotter's ideas, and particularly helpful in understanding the pressures of change on people, and people's
1. Define and agree the objective.
2. Brainstorm ideas and suggestions having agreed a time limit.
3. Categorize/condense/combine/refine.
4. Assess/analyze effects or results.
5. Prioritize options/rank list as appropriate.
6. Agree action and timescale.
7. Control and monitor follow-up.
Ensure everyone participating in the brainstorm session understands and agrees the aim of the session (e.g., to formulate
a new job description for a customer services clerk; to formulate a series of new promotional activities for the next trading
year; to suggest ways of improving cooperation between the sales and service departments; to identify costs saving
opportunities that will not reduce performance or morale, etc). Keep the brainstorming objective simple. Allocate a time
limit. This will enable you to keep the random brainstorming activity under control and on track.
Manage the actual brainstorming activity
Brainstorming enables people to suggest ideas at random. Your job as facilitator is to encourage everyone to participate,
to dismiss nothing, and to prevent others from pouring scorn on the wilder suggestions (some of the best ideas are
initially the daftest ones - added to which people won't participate if their suggestions are criticized). During the random
collection of ideas the facilitator must record every suggestion on the flip-chart. Use Blu-Tack or sticky tape to hang the
sheets around the walls. At the end of the time limit or when ideas have been exhausted, use different colored pens
to categorize, group, connect and link the random ideas. Condense and refine the ideas by making new headings or
lists. You can diplomatically combine or include the weaker ideas within other themes to avoid dismissing or rejecting
contributions (remember brainstorming is about team building and motivation too - you don't want it to have the reverse
effect on some people). With the group, assess, evaluate and analyze the effects and validity of the ideas or the list.
Develop and prioritize the ideas into a more finished list or set of actions or options.
Q19.(a) What is organizational Behavior Modification?
(b) What are the conditions for successful implementation of OB?
(c ) Distinguish between positive reinforcement and negative reinforcement.
Q20. (a) Define and give examples of concepts, principle and theory.
Three words that occur very regularly in research texts are concept, theory and model. It is often assumed that everyone
knows what these words mean and what the differences between them are. These are usually false premises. The terms
will be defined and briefly discussed. As in most situations there are a number of possible definitions for each word.
Simply, a concept is an abstract notion or idea, something that isn’t concrete.
"A word or set of words that expresses a general idea concerning the nature of something or the relations between things,
often providing a category for the classification of phenomena."
In other words a concept is an abstract summary of characteristics that we see as having something in common.
Concepts are created by people for the purpose of communication and efficiency.
A concept has no set meaning and it is up to us to define what we mean by the concept. But if concepts have no set
meaning then anyone can define a concept in any way that they wish. But if everyone can define the concept in any way
they like the concept becomes worthless; unless there is agreement on the meaning communication is impossible. A
concept therefore has to be defined, but in such a way that it has a degree of acceptance. Experts in the field usually
As a researcher you would be expected to:
• review this range of definitions, and
• decide on which you are going to use.
That part of the study of a subject which is not practical.
For example, teaching theory is often contrasted with teaching practice.
More substantial definitions of a theory are:
"A theory is a set of interrelated principles and definitions that present a systematic view of phenomena by specifying
relationships among variables with the purpose of explaining natural phenomena."
"Any set of hypotheses or principles linked by logical or mathematical arguments which is advanced to explain an area of
empirical reality of type of phenomenon."
In effect a theory includes a set of basic assumptions and axioms as the foundation and the body of the theory is
composed of logically interrelated, empirically verifiable propositions.
Let us look at one of these theories in more detail.
Motivation theories fall into two main groups – content theories and process theories. Content theories of motivation, such
as Maslow’s hierarchy of needs and Herzberg’s two factor theory of motivation, focus on what motivates people. Process
theories, such as Expectancy theory and Equity theory, place more emphasis on how people become motivated. If we
look at one of these theories, Maslow is based on a set of assumptions and links a number of variables (physiological,
security social, self-esteem and self-satisfaction) to explain motivation. (Torrington and Hall, 1995)
Concepts are generally regarded as being at a lower level of abstraction than a theory but a necessary part of any theory,
since theories are formed from concepts.
Lucey (1991) defines a model of "any simplified abstract of reality ".
For example we are all familiar with scale models of aircraft, cars, ships, housing estates, etc. These simplified versions of
the real thing are called physical or iconic models. They are based directly on the representation of the phenomenon being
An extension of the physical model is the analogue model. These models are physical in form but do not have the same
appearance as the object being investigated. The circular movement of the hands of a wristwatch is an analogue of the
However there are other types of models.
Symbolic models are based on logic, and inter-relationships between concepts are usually expressed mathematically or
algebraically. They are concerned with quantification.
Mathematical (algebraic) equations are symbolic models. For instance a simple mathematical model is:
There are many such symbolic models in the fields of economics, finance, statistics, science and engineering. One
approach to the analysis of such models is to represent the model on a spreadsheet and conduct sensitivity analysis.
A conceptual model is composed of a pattern of interrelated concepts but not expressed in mathematical form and
primarily not concerned with quantification. Diagrams, such as maps, graphs, charts, balance sheets, circuit diagrams,
and flowcharts, are often used to represent such models.
Models may be very simple or very complex. Since the world we observe cannot be observed in totality, each model
reflects only a limited aspect of the total world. No single model, or combination of models, reveals the truth of the
structure of reality. Each model reveals and orders reality from a particular perspective.
In practice concepts and especially theories are often referred to as models.
Other words associated with concepts theories and models are law, empirical and variable.
A law is a precise statement of a relationship among facts that has been repeatedly corroborated by scientific
investigation and is generally accepted as accurate by experts in the field. Laws are generally derived from a theory.
A law is frequently referred to as a universal and predictive statement. It is universal in the sense that the stated
relationship is held always to occur under the specified conditions, although the conditions may be predicted to follow.
Empirical means based on experience, observation or experimentation. Empiricism is the belief that all human knowledge
is derived from experience – as opposed to, for example, idealism, rationalism and naturalism.
A variable is a characteristic or attitude that changes or varies. More exactly, it is any measurable characteristic which can
assume varying or different values in successive individuals cases.
In the mathematical sense it is a quantity that may take any one of a specified set of values, for example, height.
A wider use of the term variable includes mathematically non-measurable characteristics such as gender and religion.
It is usual, when comparisons are made between two variables or there is a relationship between two variables, to term
one the dependent variable and the other the independent variable. The independent variable is the variabl
e that is changed or manipulated. As a consequence of this change there will be a resulting change in the other variable
– dependent variable. For example, research may be conducted into the intensity of lighting in a room in order to observe
the effect on productivity levels of workers. The independent variable is the intensity of lighting and the dependent variable
(b) What is model? Discuss various types of models.
(c ) How models can be useful for decision-making?
Q21.(a) Discuss the ethical issues in IT?
(b) What are the productivity measures that may be used in measuring productivity of a commercial bank?
(c ) Business and Government influence each other” Explain
(d) Distinguish between formal and Informal organization
Q22.(a) Discuss Fiedler’s leadership theory.
2.19 MAJOR LEADERSHIP THEORIES, MODELS AND TRAITS
People have been interested in leadership since they started coming together in groups to accomplish goals. However,
it wasn’t until the early part of the twentieth century that researchers actually began to study leadership. These early
leadership theories focused on the leader (leadership trait theories) and how the leader interacted with his or her group
members (leadership behavior theories).
Researchers at the University of Cambridge in England recently reported that men with longer ring fingers, compared to
their index fingers, tended to be more successful in the frantic high-frequency trading in the London financial district.4
What does a study of the finger lengths of financial traders have to do with trait theories of leadership? Well, that’s also
what leadership trait theories have attempted to do—identify certain traits that all leaders have. Leadership research in
the 1920s and 1930s focused on isolating leader traits—that is, characteristics—that would differentiate leaders from
non-leaders. Some of the traits studied included physical stature, appearance, social class, emotional stability, fluency of
speech, and sociability. Despite the best efforts of researchers, it proved impossible to identify a set of traits that would
always differentiate a leader (the person) from a non-leader. Maybe it was a bit optimistic to think that a set of consistent
and unique traits would apply universally to all effective leaders, no matter whether they were in charge of Kraft Foods,
the Moscow Ballet, the country of France, a local collegiate chapter of Alpha Chi Omega, Ted’s Malibu Surf Shop, or
Oxford University. However, later attempts to identify traits consistently associated with leadership (the process of leading,
not the person) were more successful. The seven traits shown to be associated with effective leadership. Researchers
eventually recognized that traits alone were not sufficient for identifying effective leaders since explanations based
solely on traits ignored the interactions of leaders and their group members as well as situational factors. Possessing
the appropriate traits only made it more likely that an individual would be an effective leader. Therefore, leadership
research from the late 1940s to the mid-1960s concentrated on the preferred behavioral styles that leaders demonstrated.
Researchers wondered whether something unique in what effective leaders did—in other words, in their behavior—was
Seven Traits Associated with Leadership:
1. Drive. Leaders exhibit a high effort level. They have a relatively high desire for achievement, they are ambitious, they
have a lot of energy, they are tirelessly persistent in their activities, and they show initiative.
2. Desire to lead. Leaders have a strong desire to influence and lead others. They demonstrate the willingness to take
3. Honesty and integrity. Leaders build trusting relationships with followers by being truthful or non deceitful and by showing
high consistency between word and deed.
4. Self-confidence. Followers look to leaders for an absence of self-doubt. Leaders, therefore, need to show self-confidence
in order to convince followers of the rightness of their goals and decisions.
5. Intelligence. Leaders need to be intelligent enough to gather, synthesize, and interpret large amounts of information, and
they need to be able to create visions, solve problems, and make correct decisions.
6. Job-relevant knowledge. Effective leaders have a high degree of knowledge about the company, industry, and technical
matters. In-depth knowledge allows leaders to make well-informed decisions and to understand the implications of those
7. Extraversion. Leaders are energetic, lively people. They are sociable, assertive, and rarely silent or withdrawn.
*** Sources: Based on S. A. Kirkpatrick and E. A. Locke, “Leadership: Do Traits Really Matter?” Academy of Management
Executive, May 1991, pp. 48–60; and T. A. Judge, J. E. Bono, R. Ilies, and M. W. Gerhardt, “Personality and Leadership: A
Qualitative and Quantitative Review,” Journal of Applied Psychology, August 2002, pp. 765–780.
Someone who can influence others and who has managerial authority
A process of influencing a group to achieve goals
Bill Watkins, former CEO of disk drive manufacturer Seagate Technology, once responded when asked how he handled
his board of directors, “You never ask board members what they think. You tell them what you’re going to do.” In contrast,
Joe Lee, CEO of Darden Restaurants during the aftermath of 9/11, was focused on only two things that morning: his
Darden people who were traveling and his company’s Muslim colleagues.6 These two leaders of successful companies,
as you can see, behaved in two very different ways. What do we know about leader behavior and how can it help us in
our understanding of what an effective leader is? Researchers hoped that the behavioral theories approach would provide
more definitive answers about the nature of leadership than did the trait theories.
The University of Iowa studies explored three leadership styles to find which was the most effective.7 The autocratic
style described a leader who dictated work methods, made unilateral decisions, and limited employee participation. The
democratic style described a leader who involved employees in decision making, delegated authority, and used feedback
as an opportunity for coaching employees. Finally, the laissez-faire style leader let the group make decisions and complete
the work in whatever way it saw fit. The researchers’ results seemed to indicate that the democratic style contributed
to both good quantity and quality of work. Had the answer to the question of the most effective leadership style been
found? Unfortunately, it wasn’t that simple. Later studies of the autocratic and democratic styles showed mixed results.
For instance, the democratic style sometimes produced higher performance levels than the autocratic style, but at other
times, it didn’t. However, more consistent results were found when a measure of employee satisfaction was used. Group
members were more satisfied under a democratic leader than under an autocratic one.
University of lowa Democratic style: involving
Behavioral Dimension Conclusion
subordinates,
delegating authority, and
encouraging
participation
Democratic style of
leadership was most
effective, although later
studies showed
mixed results.
Autocratic style: dictating
work methods,
centralizing decision
making, and limiting
participation
Laissez-faire style: giving
group freedom
to make decisions and
complete work
Consideration: being
considerate of
followers’ ideas and feelings
Initiating structure:
structuring work and
work relationships to meet
job goals
Employee oriented:
emphasized
interpersonal relationships
and taking
care of employees’ needs
Production oriented:
emphasized
technical or task aspects of
Concern for people:
measured leader’s
concern for subordinates on
a scale of
1 to 9 (low to high).
Concern for production:
measured
leader’s concern for getting
job done
on a scale 1 to 9 (low to
High–high leader (high in
consideration
and high in initiating
structure) achieved
high subordinate
performance and
satisfaction, but not in all
situations
Employee-oriented leaders
were
associated with high group
productivity
and higher job satisfaction.
Leaders performed best
with a 9,9 style
(high concern for production
and high concern for
people).
Now leaders had a dilemma! Should they focus on achieving higher performance or on achieving higher member
satisfaction? This recognition of the dual nature of a leader’s behavior—that is, focus on the task and focus on the
people—was also a key characteristic of the other behavioral studies.
THE OHIO STATE STUDIES: The Ohio State studies identified two important dimensions of leader behavior.9 Beginning
with a list of more than 1,000 behavioral dimensions, the researchers eventually narrowed it down to just two that
accounted for most of the leadership behavior described by group members. The first was called initiating structure,
which referred to the extent to which a leader defined his or her role and the roles of group members in attaining goals.
It included behaviors that involved attempts to organize work, work relationships, and goals. The second was called
consideration, which was defined as the extent to which a leader had work relationships characterized by mutual trust
and respect for group members’ ideas and feelings. A leader who was high in consideration helped group members with
personal problems, was friendly and approachable, and treated all group members as equals. He or she showed concern
for (was considerate of) his or her followers’ comfort, well-being, status, and satisfaction. Research found that a leader
who was high in both initiating structure and consideration (a high–high leader) sometimes achieved high group task
performance and high group member satisfaction, but not always.
UNIVERSITY OF MICHIGAN STUDIES: Leadership studies conducted at the University of Michigan at about the
same time as those being done at Ohio State also hoped to identify behavioral characteristics of leaders that were
related to performance effectiveness. The Michigan group also came up with two dimensions of leadership behavior,
which they labeled employee oriented and production oriented.10 Leaders who were employee oriented were described
as emphasizing interpersonal relationships. The production-oriented leaders, in contrast, tended to emphasize the task
aspects of the job. Unlike the other studies, the Michigan researchers concluded that leaders who were employee
oriented were able to get high group productivity and high group member satisfaction.
The behavioral dimensions from these early leadership studies provided the basis for the development of a two-
dimensional grid for appraising leadership styles. This managerial grid used the behavioral dimensions “concern for
people” (the vertical part of the grid) and “concern for production” (the horizontal part of the grid) and evaluated a leader’s
use of these behaviors, ranking them on a scale from 1 (low) to 9 (high).11 Although the grid had 81 potential categories
into which a leader’s behavioral style might fall, only five styles were named: impoverished management (1,1 or low
concern for production, low concern for people), task management (9,1 or high concern for production, low concern
for people), middle-of-the-road management (5,5 or medium concern for production, medium concern for people),
country club management (1,9 or low concern for production, high concern for people), and team management (9,9 or
high concern for production, high concern for people). Of these five styles, the researchers concluded that managers
performed best when using a 9,9 style. Unfortunately, the grid offered no answers to the question of what made a
manager an effective leader; it only provided a framework for conceptualizing leadership style. In fact, little substantive
evidence supports the conclusion that a 9,9 style is most effective in all situations.12 Leadership researchers were
discovering that predicting leadership success involved something more complex than isolating a few leader traits or
preferable behaviors. They began looking at situational influences. Specifically, which leadership styles might be suitable
in different situations and what were these different situations?
“The corporate world is filled with stories of leaders who failed to achieve greatness because they failed to understand the
context they were working in.”13 In this section we examine three contingency theories—Fiedler, Hersey-Blanchard, and
path-goal. Each looks at defining leadership style and the situation, and attempts to answer the if-then contingencies (that
is, if this is the context or situation, then this is the best leadership style to use).
The first comprehensive contingency model for leadership was developed by Fred Fiedler.
The Fiedler contingency model proposed that effective group performance depended upon properly matching the leader’s
style and the amount of control and influence in the situation. The model was based on the premise that a certain
leadership style would be most effective in different types of situations. The keys were to (1) define those leadership
styles and the different types of situations, and then (2) identify the appropriate combinations of style and situation.
Fiedler proposed that a key factor in leadership success was an individual’s basic leadership style, either task oriented or
relationship oriented. To measure a leader’s style, Fiedler developed the least-preferred coworker (LPC) questionnaire.
This questionnaire contained 18 pairs of contrasting adjectives—for example, pleasant–unpleasant, cold–warm, boring–
interesting, or friendly–unfriendly. Respondents were asked to think of all the coworkers they had ever had and to
describe that one person they least enjoyed working with by rating him or her on a scale of 1 to 8 for each of the 18 sets
of adjectives (the 8 always described the positive adjective out of the pair and the 1 always described the negative
adjective out of the pair). If the leader described the least preferred coworker in relatively positive terms (in other words, a
“high” LPC score—a score of 64 or above), then the respondent was primarily interested in good personal relations with
coworkers and the style would be described as relationship oriented. In contrast, if you saw the least preferred coworker
in relatively unfavorable terms (a low LPC score—a score of 57 or below), you were primarily interested in productivity
and getting the job done; thus, your style would be labeled as task oriented. Fiedler did acknowledge that a small number
of people might fall in between these two extremes and not have a cut-and-dried leadership style. One other important
point is that Fiedler assumed a person’s leadership style was fixed regardless of the situation. In other words, if you were
a relationship- oriented leader, you’d always be one, and the same for task-oriented. After an individual’s leadership style
had been assessed through the LPC, it was time to evaluate the situation in order to be able to match the leader with the
situation. Fiedler’s research uncovered three contingency dimensions that defined the key situational factors in leader
_ Leader–member relations: the degree of confidence, trust, and respect employees had for their leader; rated as either
_ Task structure: the degree to which job assignments were formalized and structured; rated as either high or low.
_ Position power: the degree of influence a leader had over activities such as hiring, firing, discipline, promotions, and
salary increases; rated as either strong or weak.
Each leadership situation was evaluated in terms of these three contingency variables, which when combined produced
eight possible situations that were either favorable or unfavorable for the leader. (See the bottom of the chart in Exhibit
17-3.) Situations I, II, and III were classified as highly favorable for the leader. Situations IV, V, and VI were moderately
favorable for the leader. And situations VII and VIII were described as highly unfavorable for the leader. Once Fiedler
had described the leader variables and the situational variables, he had everything he needed to define the specific
contingencies for leadership effectiveness. To do so, he studied 1,200 groups where he compared relationship-oriented
versus task-oriented leadership styles in each of the eight situational categories. He concluded that task-oriented leaders
performed better in very favorable situations and in very unfavorable situations. (See the top of Exhibit 17-3 where
performance is shown on the vertical axis and situation favorableness is shown on the horizontal axis.) On the other
hand, relationship-oriented leaders performed better in moderately favorable situations. Because Fiedler treated an
individual’s leadership style as fixed, only two ways could improve leader effectiveness. First, you could bring in a new
leader whose style better fit the situation. For instance, if the group situation was highly unfavorable but was led by a
relationship-oriented leader, the group’s performance could be improved by replacing that person with a task-oriented
leader. The second alternative was to change the situation to fit the leader. This could be done by restructuring tasks; by
increasing or decreasing the power that the leader had over factors such as salary increases, promotions, and disciplinary
actions; or by improving the leader–member relations. Research testing the overall validity of Fiedler’s model has shown
considerable evidence to support the model.15 However, his theory wasn’t without criticisms. The major one is that it’s
probably unrealistic to assume that a person can’t change his or her leadership style to fit the situation. Effective leaders
can, and do, change their styles. Another is that the LPC wasn’t very practical. Finally, the situation variables were
difficult to assess.16 Despite its shortcomings, the Fiedler model showed that effective leadership style needed to reflect
Hersey and Blanchard’s Situational Leadership Theory
Paul Hersey and Ken Blanchard developed a leadership theory that has gained a strong following among management
development specialists.17 This model, called situational leadership theory (SLT), is a contingency theory that focuses on
followers’ readiness. Before we proceed, two points need clarification: Why a leadership theory focuses on the followers,
and what is meant by the term readiness.
The emphasis on the followers in leadership effectiveness reflects the reality that it is the followers who accept or reject
the leader. Regardless of what the leader does, the group’s effectiveness depends on the actions of the followers. This
important dimension has been overlooked or underemphasized in most leadership theories. And readiness, as defined by
Hersey and Blanchard, refers to the extent to which people have the ability and willingness to accomplish a specific task.
SLT uses the same two leadership dimensions that Fiedler identified: task and relationship behaviors. However, Hersey
and Blanchard go a step further by considering each as either high or low and then combining them into four specific
leadership styles described as follows:
_ Telling (high task–low relationship): The leader defines roles and tells people what, how, when, and where to do various
_ Selling (high task–high relationship): The leader provides both directive and supportive behavior.
_ Participating (low task–high relationship): The leader and followers share in decision making; the main role of the leader
_ Delegating (low task–low relationship): The leader provides little direction or support.
The final component in the model is the four stages of follower readiness:
_ R1: People are both unable and unwilling to take responsibility for doing something. Followers aren’t competent or
_ R2: People are unable but willing to do the necessary job tasks. Followers are motivated but lack the appropriate skills.
_ R3: People are able but unwilling to do what the leader wants. Followers are competent, but don’t want to do something.
_ R4: People are both able and willing to do what is asked of them. SLT essentially views the leader–follower relationship
as like that of a parent and a child. Just as a parent needs to relinquish control when a child becomes more mature
and responsible, so, too, should leaders. As followers reach higher levels of readiness, the leader responds not only
by decreasing control over their activities but also decreasing relationship behaviors. The SLT says if followers are at
R1 (unable and unwilling to do a task), the leader needs to use the telling style and give clear and specific directions;
if followers are at R2 (unable and willing), the leader needs to use the selling style and display high task orientation to
compensate for the followers’ lack of ability and high relationship orientation to get followers to “buy into” the leader’s
desires; if followers are at R3 (able and unwilling), the leader needs to use the participating style to gain their support;
and if employees are at R4 (both able and willing), the leader doesn’t need to do much and should use the delegating
style. SLT has intuitive appeal. It acknowledges the importance of followers and builds on the logic that leaders can
compensate for ability and motivational limitations in their followers. However, research efforts to test and support the
theory generally have been disappointing. Possible explanations include internal inconsistencies in the model as well
as problems with research methodology. Despite its appeal and wide popularity, we have to be cautious about any
Another approach to understanding leadership is path-goal theory, which states that the leader’s job is to assist followers
in attaining their goals and to provide direction or support needed to ensure that their goals are compatible with the goals
of the group or organization. Developed by Robert House, path-goal theory takes key elements from the expectancy
theory of motivation. The term path-goal is derived from the belief that effective leaders remove the roadblocks and pitfalls
so that followers have a clearer path to help them get from where they are to the achievement of their work goals.
House identified four leadership behaviors:
_ Directive leader: Lets subordinates know what’s expected of them, schedules work to be done, and gives specific
guidance on how to accomplish tasks.
_ Supportive leader: Shows concern for the needs of followers and is friendly.
_ Participative leader: Consults with group members and uses their suggestions before making a decision.
_ Achievement oriented leader: Sets challenging goals and expects followers to perform at their highest level. In contrast
to Fiedler’s view that a leader couldn’t change his or her behavior, House assumed that leaders are flexible and can
display any or all of these leadership styles depending on the situation. Path-goal theory proposes two situational or
contingency variables that moderate the leadership behavior–outcome relationship: those in the environment that are
outside the control of the follower (factors including task structure, formal authority system, and the work group) and those
that are part of the personal characteristics of the follower (including locus of control, experience, and perceived ability).
Environmental factors determine the type of leader behavior required if subordinate outcomes are to be maximized;
personal characteristics of the follower determine how the environment and leader behavior are interpreted. The theory
proposes that a leader’s behavior won’t be effective if it’s redundant with what the environmental structure is providing or
is incongruent with follower characteristics.
For example, some predictions from path-goal theory are:
_ Directive leadership leads to greater satisfaction when tasks are ambiguous or stressful than when they are highly
structured and well laid out. The followers aren’t sure what to do, so the leader needs to give them some direction.
_ Supportive leadership results in high employee performance and satisfaction when subordinates are performing
structured tasks. In this situation, the leader only needs to support followers, not tell them what to do.
_ Directive leadership is likely to be perceived as redundant among subordinates with high perceived ability or with
considerable experience. These followers are quite capable so they don’t need a leader to tell them what to do.
_ The clearer and more bureaucratic the formal authority relationships, the more leaders should exhibit supportive
behavior and deemphasize directive behavior. The organizational situation has provided the structure as far as what is
expected of followers, so the leader’s role is simply to support.
_ Directive leadership will lead to higher employee satisfaction when there is substantive conflict within a work group. In
this situation, the followers need a leader who will take charge.
_ Subordinates with an internal locus of control will be more satisfied with a participative style. Because these followers
believe that they control what happens to them, they prefer to participate in decisions.
_ Subordinates with an external locus of control will be more satisfied with a directive style. These followers believe that
what happens to them is a result of the external environment so they would prefer a leader that tells them what to do.
_ Achievement-oriented leadership will increase subordinates’ expectancies that effort will lead to high performance when
tasks are ambiguously structured. By setting challenging goals, followers know what the expectations are. Testing path-
goal theory has not been easy. A review of the research suggests mixed support. To summarize the model, however,
an employee’s performance and satisfaction are likely to be positively influenced when the leader chooses a leadership
style that compensates for shortcomings in either the employee or the work setting. However, if the leader spends time
explaining tasks that are already clear or when the employee has the ability and experience to handle them without
interference, the employee is likely to see such directive behavior as redundant or even insulting.
What are the latest views of leadership? We want to look at four of these views:
Leader–member exchange theory, transformational-transactional leadership, charismatic visionary leadership, and team
Leader–Member Exchange (LMX) Theory
Have you ever been in a group in which the leader had “favorites” who made up his or her in-group? If so, that’s the
premise behind leader–member exchange (LMX) theory.
Leader–member exchange theory (LMX) says that leaders create in-groups and out groups and those in the in-group will
have higher performance ratings, less turnover, and greater job satisfaction. LMX theory suggests that early on in the
relationship between a leader and a given follower, a leader will implicitly categorize a follower as an “in” or as an “out.”
That relationship tends to remain fairly stable over time. Leaders also encourage LMX by rewarding those employees with
whom they want a closer linkage and punishing those with whom they do not.22 For the LMX relationship to remain intact,
however, both the leader and the follower must “invest” in the relationship. It’s not exactly clear how a leader chooses who
falls into each category, but evidence shows that in-group members have demographic, attitude, personality, and even
gender similarities with the leader or they have a higher level of competence than out-group members.23 The leader does
the choosing, but the follower’s characteristics drive the decision.
Research on LMX has been generally supportive. It appears that leaders do differentiate among followers; that these
disparities are not random; and followers with in-group status will have higher performance ratings, engage in more
helping or “citizenship” behaviors at work, and report greater satisfaction with their boss.24 This probably shouldn’t be
surprising since leaders invest their time and other resources in those whom they expect to perform best.
Other Theories: There are also numerous theories about leadership, or about carrying out the role of leader, e.g., servant
leader, democratic leader, principle-centered leader, group-man theory, great-man theory, traits theory, visionary leader,
total leader, situational leader, etc. The following articles provide brief overview of key theories.
Douglas McGregor's XY Theory, managing an X Theory boss, and William Ouchi's Theory Z
Douglas McGregor, an American social psychologist, proposed his famous X-Y theory in his 1960 book 'The Human Side
Of Enterprise'. Theory x and theory y are still referred to commonly in the field of management and motivation, and whilst
more recent studies have questioned the rigidity of the model, Mcgregor's X-Y Theory remains a valid basic principle from
which to develop positive management style and techniques. McGregor's XY Theory remains central to organizational
development, and to improving organizational culture.
McGregor's X-Y theory is a salutary and simple reminder of the natural rules for managing people, which under the
pressure of day-to-day business are all too easily forgotten.
McGregor's ideas suggest that there are two fundamental approaches to managing people. Many managers tend towards
theory x, and generally get poor results. Enlightened managers use theory y, which produces better performance and
results, and allows people to grow and develop.
McGregor's ideas significantly relate to modern understanding of the Psychological Contract, which provides many ways
to appreciate the unhelpful nature of X-Theory leadership, and the useful constructive beneficial nature of Y-Theory
Theory x ('authoritarian management' style)
• The average person dislikes work and will avoid it he/she can.
• Therefore most people must be forced with the threat of punishment to work towards organizational objectives.
• The average person prefers to be directed; to avoid responsibility; is relatively unambitious, and wants security
theory y ('participative management' style)
• Effort in work is as natural as work and play.
• People will apply self-control and self-direction in the pursuit of organizational objectives, without external
• Commitment to objectives is a function of rewards associated with their achievement.
• People usually accept and often seek responsibility.
• The capacity to use a high degree of imagination, ingenuity and creativity in solving organizational problems is
widely, not narrowly, distributed in the population.
• In industry the intellectual potential of the average person is only partly utilized.
Tools for teaching, understanding and evaluating xy theory factors
The XY Theory diagram and measurement tool below (pdf and doc versions) are adaptations of McGregor's ideas
for modern organizations, management and work. They were not created by McGregor. I developed them to help
understanding and application of McGregor's XY Theory concept. The test is a simple reflective tool, not a scientifically
validated instrument; it's a learning aid and broad indicator. Please use it as such.
Perhaps the most noticeable aspects of McGregor's XY Theory - and the easiest to illustrate - are found in the behaviors
of autocratic managers and organizations which use autocratic management styles.
What are the characteristics of a Theory X manager? Typically some, most or all of these:
• results-driven and deadline-driven, to the exclusion of everything else
• issues deadlines and ultimatums
• issues instructions, directions, edicts
• issues threats to make people follow instructions
• unconcerned about staff welfare, or morale
• proud, sometimes to the point of self-destruction
• fundamentally insecure and possibly neurotic
• withholds rewards, and suppresses pay and remunerations levels
• scrutinizes expenditure to the point of false economy
• seeks culprits for failures or shortfalls
• seeks to apportion blame instead of focusing on learning from the experience and preventing recurrence
• does not invite or welcome suggestions
• takes criticism badly and likely to retaliate if from below or peer group
• poor at proper delegating - but believes they delegate well
• thinks giving orders is delegating
• holds on to responsibility but shifts accountability to subordinates
• relatively unconcerned with investing in anything to gain future improvements
How to manage upwards - managing your X theory boss
Working for an X theory boss isn't easy - some extreme X theory managers make extremely unpleasant managers, but
there are ways of managing these people upwards. Avoiding confrontation (unless you are genuinely being bullied, which
is a different matter) and delivering results are the key tactics.
• Theory X managers (or indeed theory Y managers displaying theory X behavior) are primarily results oriented -
so orientate your your own discussions and dealings with them around results – i.e., what you can deliver and when.
• Theory X managers are facts and figures oriented - so cut out the incidentals, be able to measure and
substantiate anything you say and do for them, especially reporting on results and activities.
• Theory X managers generally don't understand or have an interest in the human issues, so don't try to appeal
to their sense of humanity or morality. Set your own objectives to meet their organizational aims and agree these with
the managers; be seen to be self-starting, self-motivating, self-disciplined and well-organized - the more the X theory
manager sees you are managing yourself and producing results, the less they'll feel the need to do it for you.
• Always deliver your commitments and promises. If you are given an unrealistic task and/or deadline state the
reasons why it's not realistic, but be very sure of your ground, don't be negative; be constructive as to how the overall
aim can be achieved in a way that you know you can deliver.
• Stand up for yourself, but constructively - avoid confrontation. Never threaten or go over their heads if you are
dissatisfied or you'll be in big trouble afterwards and life will be a lot more difficult.
• If an X theory boss tells you how to do things in ways that are not comfortable or right for you, then don't
questioning the process, simply confirm the end-result that is required, and check that it's okay to 'streamline the
process' or 'get things done more efficiently' if the chance arises - they'll normally agree to this, which effectively gives
you control over the 'how', provided you deliver the 'what' and 'when'.
And this is really the essence of managing upwards X theory managers - focus and get agreement on the results and
deadlines - if you consistently deliver, you'll increasingly be given more leeway on how you go about the tasks, which
amounts to more freedom. Be aware also that many X theory managers are forced to be X theory by the short-term
demands of the organization and their own superiors - an X theory manager is usually someone with their own problems,
See also the article about building self-confidence, and assertiveness techniques.
First things first - Theory Z is not a Mcgregor idea and as such is not Mcgregor's extension of his XY theory.
Theory Z was developed by not by Mcgregor, but by William Ouchi, in his book 1981 'Theory Z: How American
management can meet the Japanese Challenge'. William Ouchi is professor of management at UCLA, Los Angeles, and a
board member of several large US organizations.
Theory Z is often referred to as the 'Japanese' management style, which is essentially what it is. It's interesting that Ouchi
chose to name his model 'Theory Z', which apart from anything else tends to give the impression that it's a Mcgregor idea.
One wonders if the idea was not considered strong enough to stand alone with a completely new name... Nevertheless,
Theory Z essentially advocates a combination of all that's best about theory Y and modern Japanese management, which
places a large amount of freedom and trusts with workers, and assumes that workers have a strong loyalty and interest in
Theory Z also places more reliance on the attitude and responsibilities of the workers, whereas Mcgregor's XY theory is
mainly focused on management and motivation from the manager's and organization’s perspective. There is no doubt that
Ouchi's Theory Z model offers excellent ideas, albeit it lacking the simple elegance of Mcgregor's model, which let's face
it, thousands of organizations and managers around the world have still yet to embrace. For this reason, Theory Z may for
some be like trying to manage the kitchen at the Ritz before mastering the ability to cook a decent fried breakfast.
To develop your understanding of McGregor's X-Y Theory, complete the free or doc version, which indicates whether your
organization is more Theory-X or Theory-Y, as well as indicating your own (or the particular individual's) preference to be
managed by X or Y style. The test is a simple reflective tool, not a scientifically validated instrument, designed to give a
broad indication of XY Theory tendencies and to aid understanding of the model.
The free XY Theory diagram )or doc version, is helpful for teaching and training, presentations and project work, and is
adapted from McGregor's ideas so as to convey simply and quickly the essence of the concept.
Assumptions: Leaders can be made, rather than are born.
Successful leadership is based in definable, learnable behavior
Behavioral theories of leadership do not seek inborn traits or capabilities. Rather, they look at what leaders actually do.
If success can be defined in terms of describable actions, then it should be relatively easy for other people to act in the
same way. This is easier to teach and learn then to adopt the more ephemeral 'traits' or 'capabilities'.
Behavioral is a big leap from Trait Theory, in that it assumes that leadership capability can be learned, rather than being
inherent. This opens the floodgates to leadership development, as opposed to simple psychometric assessment that sorts
those with leadership potential from those who will never have the chance.
A behavioral theory is relatively easy to develop, as you simply assess both leadership success and the actions of
leaders. With a large enough study, you can then correlate statistically significant behaviors with success. You can also
identify behaviors which contribute to failure, thus adding a second layer of understanding.
Assumptions: The leader's ability to lead is contingent upon various situational factors, including the leader's preferred
style, the capabilities and behaviors of followers and also various other situational factors.
Contingency theories are a class of behavioral theory that contend that there is no one best way of leading and that a
leadership style that is effective in some situations may not be successful in others.
An effect of this is that leaders who are very effective at one place and time may become unsuccessful either when
transplanted to another situation or when the factors around them change.
This helps to explain how some leaders who seem for a while to have the 'Midas touch' suddenly appear to go off the boil
and make very unsuccessful decisions.
Contingency theory is similar to situational theory in that there is an assumption of no simple one right way. The main
difference is that situational theory tends to focus more on the behaviors that the leader should adopt, given situational
factors (often about follower behavior), whereas contingency theory takes a broader view that includes contingent factors
about leader capability and other variables within the situation.
Assumptions: Leaders are born and not made.
Great leaders will arise when there is a great need.
Early research on leadership was based on the study of people who were already great leaders. These people were often
from the aristocracy, as few from lower classes had the opportunity to lead. This contributed to the notion that leadership
The idea of the Great Man also strayed into the mythic domain, with notions that in times of need, a Great Man would
arise, almost by magic. This was easy to verify, by pointing to people such as Eisenhower and Churchill, let alone those
further back along the timeline, even to Jesus, Moses, Mohammed and the Buddah.
The 'great man' theory was originally proposed by Thomas Carlyle.
Gender issues were not on the table when the 'Great Man' theory was proposed. Most leaders were male and the thought
of a Great Woman was generally in areas other than leadership. Most researchers were also male, and concerns about
androcentric bias were a long way from being realized.
It has been said that history is nothing but stories of great men. Certainly, much has this bias, although there is of course
also much about peoples and broader life.
Assumptions: The best action of the leader depends on a range of situational factors.
When a decision is needed, an effective leader does not just fall into a single preferred style, such as using transactional
or transformational methods. In practice, as they say, things are not that simple.
Factors that affect situational decisions include motivation and capability of followers. This, in turn, is affected by factors
within the particular situation. The relationship between followers and the leader may be another factor that affects leader
behavior as much as it does follower behavior.
The leaders' perception of the follower and the situation will affect what they do rather than the truth of the situation. The
leader's perception of themselves and other factors such as stress and mood will also modify the leaders' behavior.
Yukl (1989) seeks to combine other approaches and identifies six variables:
¸ Subordinate effort: the motivation and actual effort expended.
¸ Subordinate ability and role clarity: followers knowing what to do and how to do it.
¸ Organization of the work: the structure of the work and utilization of resources.
¸ Cooperation and cohesiveness: of the group in working together.
¸ Resources and support: the availability of tools, materials, people, etc.
¸ External coordination: the need to collaborate with other groups.
¸ Leaders here work on such factors as external relationships, acquisition of resources, managing demands on
the group and managing the structures and culture of the group.
Jeff Bezos, founder and CEO of Amazon.com, is a person who exudes energy, enthusiasm, and drive. He’s fun-loving
(his legendary laugh has been described as a flock of Canadian geese on nitrous oxide), but has pursued his vision for
Amazon with serious intensity and has demonstrated an ability to inspire his employees through the ups and downs of a
rapidly growing company. Bezos is what we call a charismatic leader—that is, an enthusiastic, self-confident leader whose
personality and actions influence people to behave in certain ways.
Several authors have attempted to identify personal characteristics of the charismatic leader. The most comprehensive
analysis identified five such characteristics: they have a vision, the ability to articulate that vision, a willingness to take
risks to achieve that vision, a sensitivity to both environmental constraints and follower needs, and behaviors that are
out of the ordinary. An increasing body of evidence shows impressive correlations between charismatic leadership and
high performance and satisfaction among followers.34 Although one study found that charismatic CEOs had no impact
on subsequent organizational performance, charisma is still believed to be a desirable leadership quality. If charisma is
desirable, can people learn to be charismatic leaders? Or are charismatic leaders born with their qualities? Although a
small number of experts still think that charisma can’t be learned, most believe that individuals can be trained to exhibit
charismatic behaviors. For example, researchers have succeeded in teaching undergraduate students to “be” charismatic.
How? They were taught to articulate a far-reaching goal, communicate high performance expectations, exhibit confidence
in the ability of subordinates to meet those expectations, and empathize with the needs of their subordinates; they
learned to project a powerful, confident, and dynamic presence; and they practiced using a captivating and engaging
voice tone. The researchers also trained the student leaders to use charismatic nonverbal behaviors, including leaning
toward the follower when communicating, maintaining direct eye contact, and having a relaxed posture and animated
facial expressions. In groups with these “trained” charismatic leaders, members had higher task performance, higher
task adjustment, and better adjustment to the leader and to the group than did group members who worked in groups
led by non-charismatic leaders. One last thing we should say about charismatic leadership is that it may not always be
necessary to achieve high levels of employee performance. It may be most appropriate when the follower’s task has an
ideological purpose or when the environment involves a high degree of stress and uncertainty.37 This distinction may
explain why, when charismatic leaders surface, it’s more likely to be in politics, religion, or wartime; or when a business
firm is starting up or facing a survival crisis. For example, Martin Luther King Jr. used his charisma to bring about social
equality through nonviolent means, and Steve Jobs achieved unwavering loyalty and commitment from Apple’s technical
staff in the early 1980s by articulating a vision of personal computers that would dramatically change the way people
lived. Although the term vision is often linked with charismatic leadership, visionary leadership is different; it’s the ability
to create and articulate a realistic, credible, and attractive vision of the future that improves upon the present situation.38
This vision, if properly selected and implemented, is so energizing that it “in effect jump-starts the future by calling forth
the skills, talents, and resources to make it happen.”39 An organization’s vision should offer clear and compelling imagery
that taps into people’s emotions and inspires enthusiasm to pursue the organization’s goals. It should be able to generate
possibilities that are inspirational and unique and offer new ways of doing things that are clearly better for the organization
and its members. Visions that are clearly articulated and have powerful imagery are easily grasped and accepted. For
Dell (Dell Computer) created a vision of a business that sells and delivers customized PCs directly to customers in less
than a week. The late Mary Kay Ash’s vision of women as entrepreneurs selling products that improved their self-image
gave impetus to her cosmetics company, Mary Kay Cosmetics.
Because leadership is increasingly taking place within a team context and more organizations are using work teams,
the role of the leader in guiding team members has become increasingly important. The role of team leader is different
from the traditional leadership role, as J. D. Bryant, a supervisor at Texas Instruments’ Forest Lane plant in Dallas,
discovered. One day he was contentedly overseeing a staff of 15 circuit board assemblers. The next day he was told that
the company was going to use employee teams and he was to become a “facilitator.” He said, “I’m supposed to teach
the teams everything I know and then let them make their own decisions.” Confused about his new role, he admitted,
“There was no clear plan on what I was supposed to do.” What is involved in being a team leader? Many leaders are not
equipped to handle the change to employee teams. As one consultant noted, “Even the most capable managers have
trouble making the transition because all the command-and-control type things they were encouraged to do before are no
longer appropriate. There’s no reason to have any skill or sense of this.”42 This same consultant estimated that “probably
15 percent of managers are natural team leaders; another 15 percent could never lead a team because it runs counter
to their personality—that is, they’re unable to sublimate their dominating style for the good of the team. Then there’s
that huge group in the middle: Team leadership doesn’t come naturally to them, but they can learn it.” The challenge for
many managers is learning how to become an effective team leader. They have to learn skills such as patiently sharing
information, being able to trust others and to give up authority, and understanding when to intervene. And effective team
leaders have mastered the difficult balancing act of knowing when to leave their teams alone and when to get involved.
New team leaders may try to retain too much control at a time when team members need more autonomy, or they may
abandon their teams at times when the teams need support and help.
Leadership Issues in the Twenty-First Century:
It’s not easy being a chief information officer (CIO) today. The person responsible for managing a company’s information
technology activities will find that the task comes with a lot of external and internal pressures. Technology continues to
change rapidly—almost daily, it sometimes seems. Business costs continue to rise. Rob Carter, CIO of FedEx, is on the
hot seat facing such challenges.47 He’s responsible for all the computer and communication systems that provide around-
the-clock and around-the-globe support for FedEx’s products and services. If anything goes wrong, you know who takes
the heat. However, Carter has been an effective leader in this seemingly chaotic environment. Leading effectively in
today’s environment is likely to involve such challenging circumstances for many leaders. In addition, twenty-first-century
leaders do face some important leadership issues. In this section, we look at these issues that include managing power,
developing trust, empowering employees, leading across cultures, and becoming an effective leader.
Where do leaders get their power—that is, their right and capacity to influence work actions or decisions? Five sources
of leader power have been identified: legitimate, coercive, reward, expert, and referent. Legitimate power and authority
are the same. Legitimate power represents the power a leader has as a result of his or her position in the organization.
Although people in positions of authority are also likely to have reward and coercive power, legitimate power is broader
Coercive power is the power a leader has to punish or control. Followers react to this power out of fear of the negative
results that might occur if they don’t comply. Managers typically have some coercive power, such as being able to
suspend or demote employees or to assign them work they find unpleasant or undesirable. Reward power is the power to
give positive rewards. A reward can be anything that a person values such as money, favorable performance appraisals,
promotions, interesting work assignments, friendly colleagues, and preferred work shifts or sales territories.
Expert power is power that’s based on expertise, special skills, or knowledge. If an employee has skills, knowledge, or
expertise that’s critical to a work group, that person’s expert power is enhanced.
Finally, referent power is the power that arises because of a person’s desirable resources or personal traits. If I admire
you and want to be associated with you, you can exercise power over me because I want to please you. Referent power
develops out of admiration of another and a desire to be like that person. Most effective leaders rely on several different
forms of power to affect the behavior and performance of their followers. For example, the commanding officer of one
of Australia’s state-of-the-art submarines, the HMAS Sheean, employs different types of power in managing his crew and
equipment. He gives orders to the crew (legitimate), praises them (reward), and disciplines those who commit infractions
(coercive). As an effective leader, he also strives to have expert power (based on his expertise and knowledge) and
referent power (based on his being admired) to influence his crew.
In today’s uncertain environment, an important consideration for leaders is building trust and credibility, both of which
can be extremely fragile. Before we can discuss ways leaders can build trust and credibility, we have to know what
trust and credibility are and why they’re so important. The main component of credibility is honesty. Surveys show that
honesty is consistently singled out as the number one characteristic of admired leaders. “Honesty is absolutely essential
to leadership. If people are going to follow someone willingly, whether it be into battle or into the boardroom, they first
want to assure themselves that the person is worthy of their trust.”49 In addition to being honest, credible leaders are
competent and inspiring. They are personally able to effectively communicate their confidence and enthusiasm. Thus,
followers judge a leader’s credibility in terms of his or her honesty, competence, and ability to inspire. Trust is closely
entwined with the concept of credibility, and, in fact, the terms are often
used interchangeably. Trust is defined as the belief in the integrity, character, and ability of a leader. Followers who trust a
leader are willing to be vulnerable to the leader’s actions because they are confident that their rights and interests will not
be abused.50 Research has identified five dimensions that make up the concept of trust:
_ Competence: technical and interpersonal knowledge and skills
_ Consistency: reliability, predictability, and good judgment in handling situations
_ Loyalty: willingness to protect a person, physically and emotionally
_ Openness: willingness to share ideas and information freely
What is Management Information Systems?
Management Information Systems (MIS) is the study of people, technology, organizations and the relationships among them. MIS
professionals help firms realize maximum benefit from investment in personnel, equipment, and business processes. MIS is a people-
oriented field with an emphasis on service through technology. If you have an interest in technology and have the desire to use
technology to improve people’s lives, a degree in MIS may be for you.
Businesses use information systems at all levels of operation to collect, process and store data. Management aggregates and
disseminates this data in the form of information needed to carry out the daily operations of business. Everyone who works in
business, from someone who pays the bills to the person who makes employment decisions, uses information systems. A car
dealership could use a computer database to keep track of which products sell best. A retail store might use a computer-based
information system to sell products over the Internet. In fact, many (if not most) businesses concentrate on the alignment of MIS with
business goals to achieve competitive advantage over other businesses.
MIS professionals create information systems for data management (i.e., storing, searching and analyzing data). In addition, they
manage various information systems to meet the needs of managers, staff and customers. By working collaboratively with various
members of their work group, as well as with their customers and clients, MIS professionals are able to play a key role in areas such
as information security, integration and exchange. As an MIS major, you will learn to design, implement and use business information
systems in innovative ways to increase the effectiveness and efficiency of your company.
A common misconception that MIS only concerns programming. However, programming is just a small part of the MIS curriculum.
While programming concepts represent some of the founding concepts and information systems development, implementation and
use, many jobs in MIS do not utilize programming at all. A large portion of the MIS degree focuses on data analysis, teamwork,
leadership, project management, customer service and underlying business theories. These aspects of the degree are what set the MIS
professional apart from a computer science specialist.
• Do you enjoy working with people?
• Would you enjoy the chance to work on global problems with people from all over the world?
• Do you enjoy analyzing and solving problems?
• Do you want to create innovative, cutting-edge technology solutions?
• Do you want to learn how to make businesses more efficient, effective and competitive?
(c ) Discuss various methods of online payment.
(d) What is organizing? Indentify the assets of a bank.
Q23. (a) Discuss various types of plans.
(b ) What are the qualities of a good plan?
Answer: Principle 1 - Iaterpretation of the Mandate
Principle 5 - Internal Consistency of Plans
Principle 6 - Integration with other Plan and Policy Instruments
(c ) What is training? What are the various types of training?
What is Training and Development?
Training is an educational process. People can learn new information, re-learn and reinforce existing knowledge and skills, and most
importantly have time to think and consider what new options can help them improve their effectiveness at work. Effective trainings
convey relevant and useful information that inform participants and develop skills and behaviors that can be transferred back to the
The goal of training is to create an impact that lasts beyond the end time of the training itself. The focus is on creating specific action
steps and commitments that focus people’s attention on incorporating their new skills and ideas back at work.
Training can be offered as skill development for individuals and groups. In general, trainings involve presentation and learning of
content as a means for enhancing skill development and improving workplace behaviors.
Organizational Development is a process that “strives to build the capacity to achieve and sustain a new desired state that benefits the
organization or community and the world around them.” (from the Organizational Development Network website) OD work implies
An OD perspective examines the current environment, the present state, and helps people on a team, in a department and as part
of an institution identify effective strategies for improving performance. In some situations, there may not be anything “wrong” at
the present time; the group or manager may simply be seeking ways to continue to develop and enhance existing relationships and
performance. In other situations, there may be an identifiable issue or problem that needs to be addressed; the OD process aims to find
ideas and solutions that can effectively return the group to a state of high performance.
These two processes, Training and Organizational Development, are often closely connected. Training can be used as a proactive
means for developing skills and expertise to prevent problems from arising and can also be an effective tool in addressing any skills or
performance gaps among staff. Organizational Development can be used to create solutions to workplace issues, before they become a
concern or after they become identifiable problem.
(d) Distinguish between training and development.
Training is the acquisition of knowledge, skills, and competencies as a result of the teaching of vocational or practical skills and
knowledge that relate to specific useful competencies. Training has specific goals of improving one's capability, capacity, and
performance. It forms the core of apprenticeships and provides the backbone of content at institutes of technology (also known as
technical colleges or polytechnics). In addition to the basic training required for a trade, occupation or profession, observers of the
skills throughout working life. People within many professions and occupations may refer to this sort of training as professional
NOTES 6 - DIFFERENCE BETWEEN TRAINING & DEVELOPMENT
Training is a process of learning a sequence of programmed behaviour. It improves the employee's performance on the
current job and prepares them for an intended job.
Development not only improves job performance but also brings about the growth of the personality. Individuals not only
mature regarding their potential capacities but also become better individuals.
recognize as of 2008 the need to continue training beyond initial qualifications: to maintain, upgrade and update
2.Refers to instruction in technical and mechanical problems
3.Targeted in most cases for non-managerial personnel
2.Refers to philosophical and theoretical educational concepts
1.To improve Productivity: Training leads to increased operational productivity and increased company profit.
2.To improve Quality: Better trained workers are less likely to make operational mistakes.
3.To improve Organizational Climate: Training leads to improved production and product quality which enhances financial
incentives. This in turn increases the overall morale of the organization.
4.To increase Health and Safety: Proper training prevents industrial accidents.
5.Personal Growth: Training gives employees a wider awareness, an enlarged skill base and that leads to enhanced personal
Management development attempts to improve managerial performance by imparting
The major objective of development is managerial effectiveness through a planned and a deliberate process of learning. This
provides for a planned growth of managers to meet the future organizational needs
Q24.(a) “ Management is getting things done by others” Explain
(b) “Management is the essential elements of economic development” Explain.
(c) “Management is the jungle of theories” Explain
(d) What is organizational conflict? What are the primary sources of conflict? How can you resolve conflict?
(e) “ Each manager is a decision-maker” Explain
(f) What are the functions of HR?
There are seven main functions of HR .
Function 2: Recruitment and selection of employees
Function 6: Provision of employee services
Function 7: Employee education, training and development
MAIN FUNCTIONS OF HUMAN RESOURCE MANAGEMENT.
EMPLOYEE AND LABOUR RELATIONS
(g) What are the steps of selection?
It is the discovering of potential of applicants for actual or anticipated organizational vacancies. It actually links together those
Flippo's definition: "It is a process of searching for prospective employees and stimulating and encouraging them to apply for
Thus the purpose of recruitment is to locate sources of manpower to meet job requirements and job specifications.
2. The employment conditions in the community where the organization is located.
3. The effects of past recruiting efforts which show the organization's ability to locate and retain the good performing people.
4. Working conditions, salary and benefit packages offered by the organization.
6. The future expansion and production programs.
7. Cultural, economic and legal factors.
However these factors may be divided specifically as Internal and External factors.
1. Recruitment policy of the organization
2. Human resource planning strategy of the company
3. Size of the organization and number of people employed
4. Cost involved in recruiting employees
5. Growth and expansion plans of the organization
1. Supply and demand of specific skills in the labour market.
2. Political and legal factors like reservations of jobs for specific sections of society etc
3. The job seekers image perception of the company.
Personnel recruitment process involves five elements:
4. The development of sources of recruitment
5. Different techniques used for utilizing these sources & a method of assessing the recruitment program
These five elements are further elaborated below:
1. Recruitment Policy: It defines the objective of the recruitment and also provides a framework for the implementation of the
recruitment program. The policy should be based upon corporate goals and needs. The criteria for selection and preferences
2. Recruitment organization: It is necessary to centralize the recruitment and selection function in a single office. This
will bring about maximum efficiency and success in hiring. This centralized office is known as the Employee Office or the
3. Forecast of Manpower: This usually specifies:
a. Jobs or Operations for which the person should be available.
c. Salary to be offered & terms of the employment
d. Necessary qualification and experience
4. Sources of Recruitment: There can be two kinds of sources for recruitment:
a. Internal – This includes personnel already on the payroll of an organization. Whenever there is a vacancy, somebody within
b. External – These sources lie outside the organization.
5. Methods of Recruitment: The possible recruiting methods can be divided into three categories:
a. Direct – In this method, recruiters visit colleges and technical schools, e.g. Infosys, the Tata Group, Accenture, IBM,
Siemens and several other companies maintain continuous relationship with institutions to hire students for responsible
b. Indirect – This involves advertising in newspaper, radio, T.V., journals etc. Advertising can be very effective if its media is
c. Third Party methods – This include use of commercial or private employment agencies, placement officials of schools,
recruitment firms etc. Friends and relatives of present employees are also a good source from which employees may be drawn
as part of the "Buddy Referral" programs.
Thus broadly the Personnel Recruitment Process can be mapped in a Flowchart as below:
Personnel/Human Resource Planning -> Locating needed Personnel -> Selecting Qualified Personnel -> Placing New
(h) “ Management means different things to different people” Explain.
(i) “ Planning looks at future and control focuses on past.” Explain.
NOTES 2 - HUMAN RESOURCE MANAGEMENT
What is Human Resource Management?
•Five basic functions (the Management Process)
•HRM: the policies and practices involved in carrying out the “people” or human resource aspects of a management position,
including recruiting, screening, training, rewarding, and appraising
oThe process of acquiring, training, appraising, and compensating employees and of attending to their labor relations, health
Why is Human Resource Management Important to all Managers?
•If you make mistakes you will pay in the effectiveness of your business, its reputation, how it does financially
•A business can be successful by hiring the right people for the right jobs and motivating, appraising, and developing them
•The bottom line is GETTING RESULTS
Line and Staff Aspects of Human Resource Management:
•Authority: the right to make decisions, direct others’ work, and give orders
•Line authority: the right to issue orders to other managers or employees
oLine manager: authorized to direct the work of subordinates
•Staff authority: give the manager the right to advise other managers or employees
oStaff manager: assists and advises line managers
•A coordinative function: coordinate personnel activities, “right arm of the top executive”
•Staff (assist and advice and innovate): also plays an employee advocacy role
Human Resource Management Specialties
•Equal employment opportunity coordinators
•Globalization: the tendency of firms to extend their sales, ownership and/pr manufacturing to new markets abroad.
•Companies expand for several reasons
oMore pressure to lower costs, to make employees more productive and to things better and less expensively
•For consumer’s globalizations means…
•Both companies and workers have to work harder and smarter than they did without globalization
oMore and more traditional factory jobs are going high tech
oWith global competition more manufacturing jobs are shifting to low-wage countries
oMore manufacturers are partnering with their suppliers to create integrated supply chains
oEffect is that manufactures have been squeezing slack and inefficiencies out of the entire production systems
oThe best jobs that remain require more education and more skills
oHuman Capital: the knowledge, education, training, skills, and expertise of a firms workers
oBecause it is the HR that traditionally recruits, selects, trains and compensates employees, changes like these make employers
•Labor forces growth is not expected to keep pace with job growth
•Employers are particularly focusing on the aging for the workforce
The Changing Role of Human Resource Management
oStrategic plan: the company’s plan for how it will match its internal strengths and weaknesses with external opportunities
and threats in order to maintain a competitive advantage
oWhere are we, where do we want to be, how are we going to get there?
oStrategic HRM: formulating and executing human resource policies and practices that produce the employee competencies
and behaviors the company needs to achieve its strategic aims
In partnering with their top managers in both designing and executing their companies strategies♣
Express their departmental plans an accomplishments in measureable terms♣
•Creating High-Performance Work Systems
oA focus on productivity and performance
Through effective HR practices (testing and training)♣
Instituting high-performance work systems♣
oImprove HR’s performance in four ways
•High-Performance Work Systems: An integrated set of human resource management policies and practices that together
produce superior employee performance
Self-managed teams and decentralized decision making♣
Reduce status distinction between managers and worker♣
Measurement of management practices♣
•Measuring the HRM Team’s performance
oEmployers expect their HRM to provide measureable evidence to their efficiency and effectiveness
The Human Resource Manager’s Proficiencies
•HR proficiencies: employee selection, training, and compensation
•Business proficiencies: HR professionals’ strategic role
•Leadership proficiencies: lead management groups and drive the changes required
•Learning proficiencies: staying abreast of and applying new technologies and practices affecting the profession
•Ethics: the standards someone uses to decide what his or her construct should be
(i) Functional Departmentation
(ii) Geographic Departmentation
(iii) Product Departmentation
(iv) Matrix Departmentation
(xiii) Consultative Management
(xiv) Job Description
(xv) Management Science
(xx) Feedback and Feed forward Control
(xxiii) Closed System
(xxiv) Scientific management and Behavioral Management
(xxix) 360 degree feedback
(xxxii) Mobile Banking
(xxxiii) Job description
(xxxix) Big Five model of Personality
(xliii) Delegation of authority
(xliv) Line and Staff position
(xlv) Situational Mgt
(xlvi) Bureaucratic Management
(xlvii) Theory X, Y & Z
(xlviii) Flexible Budget
(xlix) Zero-based budget
(l) Centralization and Decentralization
The research of Dweck et al. (1993) found that entity theorists tend to perceive a closer correspondence between
dispositional traits and behaviors than do incremental theorists. In subsequent research, Chiu, Hong, & Dweck
(1997) found that an entity theory was also associated with a halo effect type of phenomenon. Compared to the
responses of incremental theorists, when entity theorists were provided with information about a target individual's
dispositional-relevant behavior for one occasion, they were more likely to expect similar behavior to recur in
the future in very different situations. The researchers also found that entity theorists, compared to incremental
theorists, more strongly believed that even a single behavior of an individual is very indicative of that individual's
underlying moral character. Similar to the dual research methodology approach that Dweck has used in much of
her research, the researchers also conducted an experiment where they manipulated implicit theories by having the
participants read a “scientific article” that was written to espouse and document either an entity or an incremental
theory of human attributes. Parallel to the results found when the they assessed dispositional implicit theories,
Chiu et al., found that the participants who read the entity-theory article were more likely than participants who read
the incremental-theory article to predict that a single behavior could be used as a strong indicator of someone's
To summarize, entity theorists appear to perceive a closer relationship between dispositions and behaviors than
do incremental theorists. Entity theorists tend to use limited information to develop dispositional explanations for
behavior, and the inferred dispositions are then extrapolated to develop more global judgments about the target and
to predict behaviors in other domains. Incremental theorists are not as likely infer trait explanations for behavior, and
do not rely on such explanations as much to predict future behavior. Instead they are more likely to focus on the
larger context in which a behavior occurs when they seek to understand or explain an individual's behavior (Dweck et
Formal organization is a fixed set of rules of intra-organizationprocedures and structures. As such,it is usually set out
in writing, with a language of rulesthat ostensibly leave little discretion for interpretation. In some societies and in some
organization, such rules may be strictly followed; inothers, they may be little more than an empty formalism.
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