Module 1

Introduction to Management
Management is the process of designing and maintaining an environment in which individuals, working
together in groups, efficiently and effectively accomplish selected aims. The definition needs to be expanded:
1. As managers, people carry out managerial functions of planning, organizing, staffing, directing and
controlling.
2. Management applies to any kind of organization.
3. It applies to managers at all levels of organization.
4. Management is concerned with productivity which implies effectiveness and efficiency.
5. The aim of all managers is the same, i.e creating surplus.
Nature of Management
1. Management as an activity
2. Management as a process
3. Management as an economic resource
4. Management as a team
5. Management as an academic discipline
6. Management as a group
7. Management as a profession
Characteristics of Management
1. Management is goal oriented
2. Management is universal
3. Management is a social process
4. Management is multidisciplinary
5. Management is a continuous process
6. Management is science as well as art
Role or Importance of Management
1. Achievement of organizational goals
2. Optimum utilization of resources
3. Minimization of cost
4. Survival and growth
5. Generation of employment
6. Development of the nation
Organizational Levels/ Levels of Management

Top Level: Top-level managers are empowered to make major decisions affecting the present and future of the
firm. Only a top-level manager, for example, would have the authority to purchase another company, initiate a
new product line, or hire hundreds of employees. Top-level managers are the people who give the organization
its general direction; they decide where it is going and how it will get there. The terms executive and top-level
manager can be used interchangeably.
Middle Level: Middle-level managers conduct most of the coordination activities within the firm, and they
disseminate information to upper and lower levels. The jobs of middle-level managers vary substantially in
terms of responsibility and income. A branch manager in a large firm might be responsible for over 100
workers. Other important tasks for many middle-level managers include helping the company undertake
profitable new ventures and finding creative ways to reach goals. Quite often the middle-level manager
conducts research on the Internet to gather ideas for new ventures.
First Level or Lower Level: Managers who supervise operatives are referred to as first-level managers, first-line
managers, or supervisors. Historically, first level managers were promoted from production or clerical positions
into supervisory positions. Rarely did they have formal education beyond high school. A dramatic shift has
taken place in recent years, however. Many of todays first level managers are career school graduates who are
familiar with modern management techniques. The current emphasis on productivity and quality has elevated
the status of many supervisors.
Managerial Skills

Technical Skills: Technical skills refer to the ability and knowledge in using the equipment, technique and
procedures involved in performing specific tasks. These skills require specialised knowledge and proficiency in
the mechanics of particular job. Ability in programming and operating computers is, for instance, a technical
skill. There are two things a manager should understand about technical skills. In the first place, he must know
which skills should be employed in his particular enterprise and be familiar enough with their potentiality to ask
discerning questions of his technical advisors. Secondly a manager must understand both the role of each skill
employed and interrelations between the skills.

Human Skills: Human skills consist of the ability to work effectively with other people both as individual and
as members of a group. These are required to win cooperation of others and to build effective work teams. Such
skills require a sense of feeling for others and capacity to look at things from others point of view. Human skills
are reflected in the way a manager perceives his superiors, subordinates and peers. An awareness of the
importance of human skills should be part of a managers orientation and such skills should be developed
throughout the career. While technical skills involve mastery of things human skills are concerned with
understanding of People.
Conceptual & Design Skills: Conceptual skills comprise the ability to see the whole organisation and the
interrelationships between its parts. These skills refer to the ability to visualise the entire picture or to consider a
situation in its totality. Such skills help the manager to conceptualise the environment, to analyse the forces
working in a situation and take a broad and farsighted view of the organisation. Conceptual skills also include
the competence to understand a problem in all its aspects and to use original thinking in solving the problem.
Such competence is necessary for rational decision-making. Thus technical skills deal with jobs, human skills
with persons and conceptual skills with ideas
Managerial Roles
1. Interpersonal Role
a. Figure head role
b. Leader role
c. Liaison role
2. Informational Role
a. Recipient role
b. Disseminator role
c. Spokesperson role
3. Decisional Role
a. Entrepreneur role
b. Disturbance Handler role
c. Resource Allocator role
d. Negotiator role
Functions of Management
1. Planning: It involves selecting missions and objectives and the actions to achieve them. Decision making is
usually a component of planning, because choosing future courses of action from the alternatives have to be
made in the process of finalizing plans.
2. Organizing: It is the process of making sure that necessary human and physical resources are available to
carry out a plan and achieve organizational goals. Organizing also involves assigning activities, dividing
work into specific jobs and tasks, and specifying who has the authority to accomplish certain tasks. Another
major aspect of organizing is grouping activities into departments or some other logical subdivision.
3. Staffing: It involves making sure there are the necessary human resources to achieve organizational goals.
Hiring people for jobs is a typical staffing activity. This is done by identifying work-force requirements,
inventorying the people available; and recruiting, selecting, placing, promoting, appraising, compensating,
training both candidate and current jobholders so that tasks are accomplished effectively and efficiently.
4. Directing: Leading or Directing is influencing others to achieve organizational objectives. As a
consequence, it involves energizing, directing, activating, and persuading others. Leadership involves
dozens of interpersonal processes: motivating, communicating, coaching, and showing group members how
they can reach their goals. Leadership is such a key component of managerial work that management is
sometimes seen as accomplishing results through people.
5. Controlling: It is ensuring that performance conforms to plans. It is comparing actual performance to a
predetermined standard. If there is a significant difference between actual and desired performance, the
manager must take corrective action. He or she might, for example, increase advertising to boost lowerthan-anticipated sales. A secondary aspect of controlling is determining whether the original plan needs

revision, given the realities of the day. The controlling function sometimes causes a manager to return to the
planning function temporarily to fine-tune the original plan.
Approaches to Management
1.
2.
3.
4.
5.
6.
7.
8.
9.

Empirical or Case Based Approach

Managerial Role Approach
Contingency or Situational Approach
Mathematical or Operational Approach
Decision Theory Approach
McKinsey Framework
Total Quality Management Approach
Reengineering Approach
Systems Approach

Systems Approach to Management

1. Input and Claimants: Inputs are manpower, money, materials, and machines. Claimants are employees,
investors, customers, suppliers, government etc.
2. Managerial Transformation Process: It includes planning, organizing, staffing, directing and controlling.
3. Outputs: Outputs could be profits, products, services, new skills and knowledge, satisfaction and others.
4. Communication System: There is couple of purposes of communication system. First is to integrate the
managerial functions. The second purpose is to link the enterprise with its external environment, where
many of the claimants are present.
5. Reenergizing the system: It is important that some of the outputs become inputs again. So profits, the
surplus of income over costs, are reinvested in cash and capital goods, such as machinery, equipment,
building, and inventory.
6. External Variables and Information: Effective managers will regularly scan the external environment for
opportunities and threats.

Social Responsibilities of Manager / Business

Every business operates within a society. It uses the resources of the society and depends on the society for its
functioning. This creates an obligation on the part of business to look after the welfare of society. So all the
activities of the business should be such that they will not harm, rather they will protect and contribute to the
interests of the society. Social responsibility of business refers to all such duties and obligations of business
directed towards the welfare of society. These duties can be a part of the routine functions of carrying on
business activity or they may be an additional function of carrying out welfare activity.
Social responsibility is a voluntary effort on the part of business to take various steps to satisfy the expectation
of the different interest groups. As you have already learnt, the interest groups may be owners, investors,
employees, consumers, government and society or community. But the question arises, why the business should
come forward and be responsible towards these interest groups. Let us consider the following points:
1. Goodwill and reputation for the business
2. Government Policies & Regulation
3. Survival and growth
4. Employee satisfaction
5. Consumer Awareness
6. Attracting and retaining employees
7. Gaining competitive advantage
After getting some idea about the concept and importance of social responsibility of business let us look into the
various responsibilities that a business has towards different groups with whom it interacts.
1. Responsibility towards owner
2. Responsibility towards investors
3. Responsibility towards employees
4. Responsibility towards suppliers
5. Responsibility towards customers
6. Responsibility towards competitors
7. Responsibility towards government
8. Responsibility towards society
Japanese Management
It deals with two common Japanese practices: lifetime employment and consensus decision making.
1. Lifetime Employment: It is a concept where the Japanese management focuses on lifelong employment for
permanent employees (relating to staffing function), great concern for the individual employee, and
emphasis on seniority. Typically, employees spend their working life with a single enterprise, which in turn
gives employee security and feeling of belonging. However, it also adds to business costs, because
employees are kept on the payroll even though there may be insufficient work or even if the worker is
inefficient. Closely related to lifelong employment is the seniority system, which has provided privileges for
older employees who have been with the enterprise for a long time.
2. Consensus Decision Making: Japanese management uses decision making by consensus to deal with
everyday problems; lower level employees initiate an idea and submit it to the next higher level, until it
reaches the desk of the top executive. If the proposal is approved, it is returned to the initiator for
implementation.
3. Seniority System: It provides privileges for older employees who have been with the enterprise for a long
time.

Theory Z
In this theory, selected Japanese managerial practices are adapted to the environment of the United States. This
approach is practiced by companies like IBM, HP and other retail companies. Here the emphasis is on the
interpersonal skills needed for group interaction. Yet, despite the emphasis on group decision making,
responsibility remains with the individual (which is quite different from the Japanese practice, which
emphasizes on collective responsibility).
Evolution of Management Thoughts
1. Scientific Management
a. Fredrick W. Taylor is acknowledged as the father of scientific management. His primary concern
was to increase productivity through greater efficiency in production and increased pay for workers,
through application of scientific method. His principles emphasized using science, creating group
harmony and cooperation, achieving maximum output, and developing workers.
b. Henry L. Gantt (1901) called for scientific selection of workers and harmonious cooperation
between the labor and management.
c. Lillian Gilbreth (1900) was an industrial psychologist, focused on human aspects of work and the
understanding of workers personalities and needs.
2. Modern Operational Management Theory
a. Henri Fayol (1916) is referred to as the father of modern management theory. He formulated 14
principles of management such as authority and responsibility, utility of command, scalar chain, etc.
3. Behavioral Sciences
a. Elton Mayo, F J Roethlisberger, conducted experiments in Hawthrone plant of Western Electric
Company between 1927 and 1932, and found that improvement in productivity was due to social
factors such as morale, satisfactory relationships between members of a work group (sense of
belonging), and effective management- a kind of managing that would understand human behavior,
especially group behavior, and serve it through such interpersonal skills as motivating, counseling,
leading and communicating. This phenomenon arising basically from people being noticed, has
been known as the Hawthorne effect.
4. Systems Theory
a. Chester Barnard (1938) said that the task of managers is to maintain a system of cooperative effort in
a formal organization. He suggested a comprehensive social systems approach to managing.

Planning
Planning involves selecting missions and objectives and the actions to achieve them; it requires decision
making, which is, choosing from the alternatives available the future courses of action. Plans thus provide a
rational approach to achieve preselected objectives.
Types of Plans
1. Purposes or Missions: It identifies the basic function or task of an enterprise or agency or any part of it. Eg:
In 1960s, NASA mission was to get on moon before the Russians. The mission of oil companies like
ONGC, Cairn India is to search for oil and produce it. Walmarts mission is to become the worlds largest
retailer. The purpose of a university is teaching, research, and provides consultancy service. Amul mission to
become Indias largest producer of dairy products.

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2. Objectives or Goals: These are ends towards which activity is aimed. So for example, getting to a mission
may constitute a number of objectives or goals. A specific result that a person or an organization aims to
achieve with a time frame and with available resources. Eg: Minimizing expenses, providing good quality
products and services, setting up a quality IT network, customer satisfaction and loyalty etc.
3. Strategies: It is the adoption of courses of action and allocation of resources necessary to achieve these goals
or objectives. It is generally used in battle fields to counter enemies.
4. Policies: These are general statements or understanding for decision making. Policies define an area within
which a decision is to be made and ensure that the decision will be consistent with, and contribute to an
objective. Eg: Company policy is to recruit people through campus interview, policy of an organization says
that an employee can take vacation for 15 days in a year; the policy of the university is not to throw
someone out immediately.
5. Procedures: These are chronological sequences of required actions. They are guide to action, rather than to
thinking, and they detail the exact manner in which certain activities must be accomplished. Eg: a company
policy would be to give vacation, but the procedure is different; completing a sales order, procedure for
campus interview starts with written test, followed by group discussion and finally technical and personal
interview.
6. Rules: It spell out specific required actions or non-actions, allowing no discretion. They are usually the
simplest type of plan. The essence of rule is that it reflects a managerial decision that some certain action
must or must not be taken. No smoking is rule without deviation.
7. Programmes: These are a complex of goals, policies, procedures, rules, task assignments, steps to be taken,
resources to be employed, and other elements necessary to carry out a given course of action; they are
ordinarily supported by budgets.
8. Budgets: It is a statement of expected results expressed in numerical terms. A budget is a quantitative
expression of a plan for a defined period of time. It may include planned sales volumes and revenues,
resource quantities, costs and expenses, assets, liabilities and cash flows. It expresses strategic plans of
business units, organizations, activities or events in measurable terms. Eg: Marketing Budget, HR Budgets,
Union Budget, and Railway Budget.
Steps in Planning

1. Being Aware of Opportunities: All managers should take a preliminary look at possible future opportunities,
and see them clearly and completely, and know where they stand in light of their strength and weakness,

2.

3.

4.

5.

6.

7.
8.

understand what problems they wish to solve and why, and know what they expect to gain. It is essentially
doing a SWOT analysis of the organization.
Establishing Objectives: It establishes objectives for the entire enterprise and then for each subordinate work
unit. Objectives specify the expected results and indicate the end points of what is to be done, where the
primary emphasis is to be placed, and what is to be accomplished by the network of policies and procedures.
Developing Premises: The third logical step in planning is to establish, circulate, and obtain agreement to
utilize critical planning premises such as forecast and other company plans. The premises would include the
kind of market, target market, volume of sales, technical developments, wage rates, tax rates, and policies
with respect to dividend, socio-political environment, expansion plans, and long term trends.
Determining Alternative Courses: This step involves search for alternative courses of action, especially
those not immediately apparent. There is seldom a plan for which reasonable alternatives do not exist, and
quite often an alternative that is not obvious proves to be the best.
Evaluating Alternative Courses: The next step is to evaluate the alternatives by weighing them in the light of
premises and goals. There are so many alternatives courses in most situations and so many variables and
limitations to be considered that evaluation can be difficult. Because of the complexities, newer
methodologies and applications such as CPM, PERT etc are used for analysis.
Selecting a Course: Once all the alternatives are evaluated, decision is made to pick the best alternative for
implementation. Occasionally, an analysis and evaluation of alternative courses will disclose that two or
more courses are advisable, and the manager may decide to follow several courses rather than the best
course.
Formulating Derivative Plans: These plans are almost invariably required to support the basic plan.
Numberizing Plans by Budgeting: The overall budgets of an enterprise represent the sum total of income
and expenses, with resultant profits or surplus, and the budgets of major balance sheet items such as cash
and capital expenditures.

Management by Objective (MBO) Concept

MBO is a comprehensive managerial system that integrates many key managerial activities in a systematic
manner that is consciously directed towards the effective and efficient achievement of organisational and
individual objectives.
Management by objectives can be described as a process whereby the superior and subordinate managers of an
organisation jointly identify its common goals, define each individuals major area of responsibility in terms of
results and use these measures as guides for operating the unit and assessing the contribution of each of its
member.
Management by objectives (MBO) is a systematic and organized approach that allows management to focus on
achievable goals and to attain the best possible results from available resources. It aims to increase
organizational performance by aligning goals and subordinate objectives throughout the organization. Ideally,
employees get strong input to identify their objectives, time lines for completion, etc. MBO includes ongoing
tracking and feedback in the process to reach objectives.
MBO Process

Advantages of MBO
1. Better management of organizational activities.
2. Clarity in organizational actions.
3. Maximum personal satisfaction
Disadvantages of MBO
1. Lack of guidelines
2. Difficulty in setting objectives
3. Time consuming
Porters Industry Analysis & Generic Competitive Strategies
Professor Michael Porter suggested that strategy formulation requires an analysis of the industry and the
companys position within that industry. This analysis becomes the basis for generic strategies.
Industry Analysis: In analysis of the industry, Porter identified five forces:
1. The competition among the companies.
2. The threat of new companies entering the market.
3. The threat of substitute products or services entering the market.
4. Bargaining power of the suppliers.
5. Bargaining power the buyers or customers.
Cost Leadership Strategy: Cost Leadership Strategy is based on the concept that you can produce and market a
good quality product or service at a lower cost than your competitors. These low costs should translate to profit
margins that are higher than the industry average. Some of the conditions that should exist to support a cost
leadership strategy include an on-going availability of operating capital, good process engineering skills, and
close management of labor, products designed for ease of manufacturing and low cost distribution.
Differentiation Strategy: The strategy attempts to offer something unique in the industry in respect to products
and services. Products can be differentiated based on quality, specification, variety, design, durability,
reparability, reliability etc, and services can be differentiated based on ordering ease, installation, delivery on
time, customer service, customer training etc.
Focused Strategy: It is not a separate strategy per se, but describes the scope over which the company
should compete based on cost leadership or differentiation. The firm can choose to compete in the mass
market (like Wal-Mart) with a broad scope, or in a defined, focused market segment with a narrow scope.
Portfolio Matrix: Tool for Allocating Resources

There are four categories:

Dogs: These are units with low market share in a mature, slow-growing industry. These units typically "break
even", generating barely enough cash to maintain the business's market share. Though owning a break-even unit
provides the social benefit of providing jobs and possible synergies that assist other business units, from an
accounting point of view such a unit is worthless, not generating cash for the company. They depress a
profitable company's return on assets ratio, used by many investors to judge how well a company is being
managed. Dogs, it is thought, should be sold off.
Cash Cows: It is where a company has high market share in a slow-growing industry. These units typically
generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and
boring, in a "mature" market, yet corporations value owning them due to their cash generating qualities. They
are to be "milked" continuously with as little investment as possible, since such investment would be wasted in
an industry with low growth.
Stars: They are units with a high market share in a fast-growing industry. They are graduated question
marks with a market or niche leading trajectory. The hope is that stars become next cash cows. Stars require
high funding to fight competitions and maintain a growth rate. When industry growth slows, if they remain a
niche leader or are amongst market leaders its have been able to maintain their category leadership stars become
cash cows, else they become dogs due to low relative market share.
Question Marks: These (also known as problem children) are business operating in a high market growth, but
having a low market share. They are a starting point for most businesses. Question marks have a potential to
gain market share and become stars, and eventually cash cows when market growth slows. If question marks do
not succeed in becoming a market leader, then after perhaps years of cash consumption, they will degenerate
into dogs when market growth declines. Question marks must be analyzed carefully in order to determine
whether they are worth the investment required to grow market share.
Example of Tata Group

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Decision Making
It is defined as the selection of a course of action from amongst alternatives; it is the core of planning. A plan
cannot be said to exist unless a decision-a commitment of resources, direction, or reputation-has been made.

Evaluation of Alternatives
Quantitative & Qualitative Factors: Quantitative factors can be measured in numerical terms, such as time or
various fixed and operating costs. Qualitative or intangible factors are factors that are difficult to measure
numerically, such as quality of labour relations, the risk of technological change, or the international political
climate.
Marginal Analysis: It refers to an evaluation of the additional benefits of an activity contrasted to the additional
costs of that activity. Marginal analysis is used by companies as a decision making tool to provide help in
increasing the profits. Moreover, marginal analysis is used instinctively to make a host of everyday decisions.

Cost Effective Analysis: It is also know as cost benefit analysis. It seeks the best ratio of benefits and costs; for
example, finding the least costly way of reaching an objective or getting the greatest value for given
expenditures.
Selecting an Alternative: Three approaches

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Experience: Reliance on the past experience probably plays a larger part that it deserves in decision making.
Experienced managers usually believe, often without realizing it, that the things they have successfully
accomplished and the mistakes they have made furnish almost infallible guides to the future.
Experimentation: It is often used in scientific inquiry. It is likely to be the most expensive of all techniques,
especially if a program requires heavy expenditures of capital and personnel and if the firm cannot afford to
vigorously attempt several alternatives.
Research & Analysis: This approach solves a problem by comprehending it. It thus involves a search for
relationships among the more critical of the variables, constraints, and premises that bear upon the goal sought.
A major step in research and analysis approach is to develop a model simulating the problem.

Module 2
Organizing is one of the managerial functions which follow planning. It is a function in which the
synchronization and combination of human, physical, and financial resources takes place. The following
activities take place in organizing:
1. Identification and classification of required activities.
2. Grouping of activities necessary to attain objectives.
3. Assignment of each grouping to a manager with necessary authority to supervise it.
4. Provision for coordination among the employees horizontally and vertically.
5. Deciding on the organizational structure.
Formal Organization
Informal Organization
1. Formal Organisation is formed when two or more 1. Informal Organisation exists within the formal
persons come together. They have a common
organisation. An informal organisation is a
objective or goal. They are willing to work
network of personal and social relationships.
together to achieve this similar objective.
People working in a formal organisation meet and
interact regularly. They work, travel, and eat
together. Therefore, they become good friends and
companions. There are many groups of friends in a
formal organisation. These groups are called
informal organisation.
2. Formal Organisation has its own rules and 2. An informal organisation does not have its own

regulation. These rules must be followed by the

members (employees and managers). A formal
organisation has a system of co-ordination. It also
has a system of authority. It has a clear superiorsubordinate relationship. In a formal organisation,
the objectives are specific and well-defined. All
the members are given specific duties and
responsibilities. Examples of formal organisation
are: - a company, a school, a college, a bank, etc.

rules and regulation. It has no system of coordination and authority. It doesn't have any
superior-subordinate relationship or any specific
and well-defined objectives. Here in informal
organisation, communication is done through the
grapevine.

3. A formal organisation is formed by the top level 3. An informal organisation is formed by social
management.
forces within the formal organisation.
4. In
a
formal
organisation,
the
duties, 4. In an informal organisation, there are no fixed
responsibilities, authority and accountability of
duties, responsibilities, authority, accountability,
each member is well-defined.
etc. for the members.
5. In a formal organisation, the objectives or goals 5. In an informal organisation, the objectives are not
are specific and well-defined. The main objectives
specific and well-defined. The main objectives of
of a formal organisation are profitability,
an informal organisation are friendship, security,
productivity, growth, and expansion.
common interest, individual
and group
satisfaction, etc.
6. A formal organisation uses formal channels of 6. An informal organisation uses informal channels
communication such email, telephones etc.
of communication (i.e. grapevine)
7. A formal organisation is shown on the organisation 7. An informal organisation is not shown on the
chart.
organisation chart.
8. The members of the formal organisation get 8. The members of informal organisation get social
financial benefits and perks like wages or salaries,
and personal benefits like friend circle,
bonus, travelling allowances, health insurance, etc.
community, groups, etc.

Organizational Structure or Division

Functional Structure

Advantages:

1. It is a logical reflection of functions.

2. Maintains power and prestige of major functions.
3. Follows principle of occupational specialization.
4. Simplifies training.
5. Tight control at the top.
Disadvantages:
1. De-emphasis of overall company objectives.
2. Reduces coordination among the functions.
3. Responsibility of profit is at the top only.
4. Slow adaptation to changes in the environment.
5. Limits development of general managers.
Division by Territory or Geography

Advantages:
1. Places responsibility at the lower level.
2. Places emphasis on local market and problems.
3. Takes advantages of economies of local operations.
4. Better face-to-face interaction with local interests.
Disadvantages:
1. Requires more persons with general manager abilities.
2. Increases problem of top management control.
Division by Product

Advantages:
1. Places attention and effort on product line.
2. Facilitates use of specialized capital, facilities, skills, and knowledge.
3. Permits growth and diversity of products and services.
4. Places responsibility for profits at the division level.

5. Furnishes measurable training ground for general managers.

Disadvantages:
1. Requires more persons with general manager abilities.
2. Presents increased problem of top management.
Division by Customer

Advantages:
1. Encourages concentration on customer needs.
2. Gives customers feeling that they have an understanding supplier (banker).
3. Develops expertness in customer area.
Disadvantages:
1. Requires managers and staffs expert in customers problems.
2. Customers groups may not be clearly defined.
Matrix Structure

Advantages:
1. It is oriented towards en results.
2. Professional identification is maintained.
3. Pinpoints product-profit responsibility.
Disadvantages:
1. Conflict in organizational authority exists.
2. Requires manager effective in human relations.
Strategic Business Units (SBUs)

In business, a strategic business unit (SBU) is a profit center which focuses on product offering and market
segment. SBUs typically have a discrete marketing plan, analysis of competition, and marketing campaign, even
though they may be part of a larger business entity.
An SBU may be a business unit within a larger corporation, or it may be a business unto itself or a branch.
Corporations may be composed of multiple SBUs, each of which is responsible for its own profitability. General
Electric is an example of a company with this sort of business organization. SBUs are able to affect most factors
which influence their performance. Managed as separate businesses, they are responsible to a parent
corporation. General Electric has 49 SBUs

Virtual Organization: It is a rather loose concept of a group of independent firms or people that are connected
often through information technology. These firms may be suppliers, customers, and even competing
companies. The aim of virtual organization is to gain access to another firms competence, to gain flexibility, to
reduce risks, or to respond to market needs. Virtual organizations may have neither an organizational chart nor a
centralized office building. Eg: e-library, open university etc.
Hybrid Structure

Organizational Levels & the Span of Management

Organization level exists because there is a limit to the number of persons a manager can supervise effectively,
even though this limit varies depending on situations. A wide span of management is associated with few
organizational levels; a narrow span of management is associated with many levels.
Narrow Span of Management

Wide Span of Management

Advantages
Superiors are forced to delegate.

Disadvantages
Tendency of overloaded superiors to become
decision bottlenecks.
Danger of superiors loss of control.
Requires exceptional quality of managers.

Clear policies must be made.

Subordinates must be carefully selected.

Factors Influencing Span of Management

1. Qualification & Quality of the employees: If the superiors and subordinates are well-qualified, trained,
experienced, and if they are experts in their jobs then the span of control will be wide and vice-versa.
2. Level of Management: If the superiors are working at the top-level of management, then they have more
responsibilities. Therefore, their span of control will be narrow and vice-versa.

3. Nature of work: If the work is difficult then the span of control is narrow and vice-versa.
4. Supervisor-Subordinate Relationship: If there are good relations between the superior and subordinates, then
the span of control will be wide and vice-versa.
5. Degree of Centralization: Under decentralisation, the superior has to take fewer decisions. Therefore, he can
have a wide span of control. However, under centralisation, the superior has to take many decisions.
Therefore, he should have a narrow span of control.
6. Use of Communication Technology: If face-to-face communication is used, then the span of control will be
narrow. However, if electronic devices are used for communication then the span of control will be wide.
7. Financial Position of the organization: If the organisation has a good financial position, then it can have a
narrow span of control. This is because a narrow span requires more managers. More managers will increase
the compensation or wage bill of the organisation. However, if the organisation has a bad financial position,
then it will be forced to have a wide span of control.
8. Clarity of plans and responsibilities: If the plans are clear and if the responsibilities are well-defined, then
the span of control will be wide. This is because the subordinates will not have to go and consult their
superior repeatedly for getting orders and guidance.
9. Faith and Trust in Subordinates: If the superior has good faith, trust and confidence in his subordinates then
the span of control can be wider.
Authority & Power
Power is a much broader concept than authority. It is the ability of individuals or groups to induce or influence
the beliefs or actions of other persons or groups. Authority in an organization is the right in a position to
exercise discretion in making decisions affecting others. It is of course one type of power, but power in
organizational setting.
Types of Power:
1. Expertness:
2. Referent Power
3. Reward Power
4. Coercive Power
Line & Staff Concept
Line authority gives a superior, a line of authority over a subordinate. Hence the scalar principle in organization
is: The clearer the line of authority from the ultimate management position in an enterprise to every subordinate
position, clearer will the responsibility for decision making and the more effective will be the organization
communication.
It therefore becomes apparent from the scalar principle that line authority is that relationship in which a superior
exercises direct supervision over a subordinate an authority relationship in direct line or steps.

Functional Authority
It is the right that is delegated to an individual or a department to control specified processes, practices, policies,
and other matters relating to activities undertaken by persons in other departments. One can better understand
functional authority by thinking of it as a small slice of the authority of a line superior.

Delegation of Authority
Authority is delegated when a superior gives a subordinate discretion to make decisions. Clearly, superior
cannot delegate authority they do not have, whether they are board members, presidents, or supervisors. The
process of delegation involves determining the results expected from a position, assigning tasks to the position,
delegating authority for accomplishing these tasks, and holding the person in that position responsible for the
accomplishment of the tasks.
Art of Delegation
Receptiveness
Willingness to let go
Willingness to let others make mistakes
Willingness to trust subordinates
Willingness to establish and use broad controls
Staffing
It is a managerial function in which filling of organizational positions take place. This is done by identifying
workforce requirements, inventorying the people available, recruiting, selecting, placing, promoting, appraising,
planning the career, compensating, training or otherwise developing both candidates and current job holders so
that they can accomplish their tasks effectively and efficiently.
Systems Approach to Staffing

Factors Affecting the Number and Kinds of Manager Required

1. Size of the organization.
2. Complexity of organizational structure.
3. Expansion plans of the company.

4. Rate of turnover of managerial personnel.

Determination of Available Managerial Resources: Management Inventory
Organizations now a days use that known as Inventory Chart. It is simply an organizational chart of a unit
with managerial positions indicated and keyed as to the promotability of each incumbent.
Analysis of the Need for Managers: External and Internal Information Sources
Supply of Managers
High

High
Low

Demand of Managers

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Situational Factors Affecting Staffing

1. External Factors
a. Level of education
b. Prevailing attitude in the society
c. Laws and regulations effecting staffing
d. Supply and demand for managers outside the enterprise
2. Internal Factors
a. Organizational goals, tasks, technology
b. Organizational structure
c. Kind of people employed in the enterprise
d. Demand and supply of managers within the organization
e. Reward systems and policies.
Position Requirements and Job Design
Job Requirement or Description: 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, but some may instead comprise a simple list of competencies; for instance, strategic human resource
planning methodologies may be used to develop competency architecture for an organization, from which job
descriptions are built as a shortlist of competencies. 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.
Job Design: Job design (also referred to as work design or task design) is the specification of contents, methods
and relationship of jobs in order to satisfy technological and organizational requirements as well as the social
and personal requirements of the job holder. Its principles are geared towards how the nature of a person's job
affects their attitudes and behavior at work, particularly relating to characteristics such as skill variety and
autonomy. The aim of a job design is to improve job satisfaction, to improve through-put, to improve quality
and to reduce employee problems (e.g., grievances, absenteeism).
Desired Skills and Personal Characteristics needed by Managers
1. Analytical and Problem Solving Abilities
2. Decision Making Abilities
3. Technical and Human Skills
4. Conceptual skills
5. Desire to Manage
6. Communication Skills and empathy
7. Integrity and honesty
Matching Job Requirement with Qualification: Recruitment & Selection
Recruitment: Recruitment is a process to discover the source of manpower to meet the requirements of staffing
schedule and to employ effective measures for attracting that manpower in adequate numbers to facilitate
effective selection of an efficient working force. It is also the process of locating, identifying, and attracting
capable applicants.
Factors Affecting Recruitment
1) Internal Factors
a) Size of the organization
b) Policy of recruitment
c) Image of the organization
d) Image of the jobs
2) External Factors
a) Demographic factors
b) Labour markets
c) Unemployment situations
d) Labour laws
Sources of Recruitment
1) Internal Sources
a) Present Employees
b) Employee Referrals
c) Former Employees
d) Previous Applicants
2) External Sources
a) Employment Exchanges
b) Advertisements
c) Employment Agencies
d) Professional Associations
e) Campus Recruitment
f) Deputation

g) Word-of-mouth
Recruitment Process

R e c r u it m S t r a t e g y S e a S c r E v a lu a t io
ent
d e v e lo p r c h i e e n n a n d
P la n n in g m e n t
n g in g c o n t r o l

1. Recruitment Planning: Planning involves drafting a comprehensive job specification for the vacant positions
outlining their major and minor responsibilities; the skills, experience and qualifications needed ; grade and
level of pay ; starting data ; whether temporary or permanent; and mention of special conditions, if any, to
the jobs to be filled.
2. Strategy Development: The next step involved is to devise a suitable strategy for recruiting the candidates in
the organization. The strategic consideration would include the type of recruitment method, the geographical
area to be considered for the search, source of recruitment and sequence of activities for recruitment.
3. Searching: It involves deciding internal or external sources. Sometimes both internal and external may be
decided.
4. Screening: Screening is the next step. Job specification is invaluable in this regard. Screening is done on the
basis of qualification, knowledge, skills, abilities, interest and experience mentioned in job specification.
5. Evaluation & Control: Evaluation and control in recruitment is needed as considerable cost is involved
in the process. This includes:
Salary of the recruiters
Cost of time spent for preparing job analysis, advertisement etc.,
Administrative expenses
Cost of outsourcing or overtime while vacancies remain unfilled and
Cost incurred in recruiting unsuitable candidates.
Selection
Selection starts where recruitment ends. Selection is hiring the best candidates from the pool of applications. It
refers to the process of offering jobs to one or more applicants from the applications received through
recruitment. Selection is the process of picking the suitable candidates from the pool of job applications to fill
various jobs in the organization.

Difference between Recruitment and Selection are:

RECRUITMENT
SELECTION
1. Technically precedes selection
1. Selection follows recruitment
2. The process of identifying and 2. Selection involves choosing the
encouraging potential candidates to best out of those recruited
apply for jobs in the organization

3. Recruitment is positive as it aims

at increasing the number of job
seekers (applications) for wider
choice or increasing the selection
ratio.

3. Selection on the other hand is

negative in its application, as it
rejects a large number of unqualified applicants in order to
identify those who are suitable for
the jobs.

4. Recruitment involves searching

4. Selection involves comparing

those already searched.

Selection Process

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Preliminary Interview
After screening the applications, preliminary interview will be conducted. The purpose of preliminary interview
is to eliminate unsuitable or unqualified candidates from the selection process. In screening unqualified
candidates are eliminated on the basis of information given in the application form, whereas preliminary
interview rejects misfits for reasons, which did not appear in the application forms.
Application Blank
This is a method for getting information from a prospective candidate. This serves as a personal record of the
candidate bearing personal history profile, detailed personal activities, skills and accomplishments. Almost all
organizations require job seekers to fill up the application. Usual contents are as follows:
I.
Biographical information Age, fathers name, sex, nationality, height, marital status.

II.
III.
IV.
V.
VI.

Educational information - Name of the institutions where the candidate studied marks Divisions
Distinctions.
Work Experience previous experience nature of job salary duration reason for quitting.
Salary last drawn salary minimum salary acceptable.
Extra-curricular information NSS NCC hobbies etc.
References Name and address.

Selection Tests
Individuals differ in many respects including job related abilities and skills. In order to select a right person for
the job, individual differences in abilities and skills are to be adequately and accurately measured for
comparison.
Types of Tests
1. Ability Test
Aptitude Test: Aptitude tests measure ability and skills of the candidate. These tests measure and indicate
how well a person would be able to perform after training. Thus aptitude tests are used to predict the future
ability.
Achievement Test: Achievement test measures the persons potential in a given area or job. In other words,
these tests measure what a person can do based on skill or knowledge already acquired.
Intelligence Test: Intelligence tests measure general ability for intellectual performance. The core concept
underlying the intelligence test is mental age. It is presumed that with physical age, intelligence also grows.
There may be exceptions to this rule. If a five year old child does the test for six years or above, his or her
mental age would be determined accordingly.
3. Personality Test: These are designed to reveal candidates personal characteristics and the way candidates
may interact with others, thereby giving a measure of leadership potential.
4. Vocational Test: These are designed to show a candidates most suitable occupation or the area in which the
candidates interests match the interests of people working in those areas.
Selection Interview
The next step in the selection process is employment interview. Interview is the widely used selection method.
It is a face-to-face interaction between interviewer and the interviewee. If handled properly, it can be a powerful
technique in having accurate information of the interview otherwise not available.
Objective of Interview:
1. Verifies the information obtained through application form and tests.
2. Helps to obtain additional information from the applicant otherwise not available.
3. Gives the candidate necessary facts and information about the job and the organization.
4. Helps to establish mutual understanding between the company and the candidate and build the companys
image.
Types of Interview: There are four types of interviews.
1. Preliminary Interview: This process would be initiated to screen the applicants to decide whether a further
detailed interview will be required. The candidate is given freedom by giving job details during the
interview to decide whether the job will suit him. This method saves time and money for the company.
2. Patterned or Structured Interview: In this type of interview, the pattern of the interview is decided in
advance. What kind of information is to be sought or given, how the interview is to be conducted and how
much time is to be allotted, all these are worked in advance. In case the interviewer drifts he or she is swiftly
guided back to structural questions. Such interviews are also called as standardized interviews.
3. Depth Interview: Under this method, the interviewer tries to portray the interviewee in depth and detail.
Accordingly the life history of the applicant along with his or her work experience, academic qualifications,
health, attitude, interest and hobbies are also analysed.
4. Stress Interview: Such interviews are conducted for the jobs which are to be performed under stressful
conditions. The objective of stress interview is to make deliberate attempts to create stressful or strained
conditions for the interviewee to observe how the applicant behaves under stressful conditions. The common

methods used to induce stress include frequency interruptions, keeping silent for an extended period of time,
asking too many questions at a time, making derogatory remarks about the candidate, accusing him that he
is lying and so on. The purpose is to observe how the candidate behaves under the successful conditions
whether he loses his temper, gets confused or frightened.
Reference Check
In the selection process, the next step is verifying information or obtaining additional information through
reference. The applicant is asked to give the names of one or two references who know him personally. Previous
employers, University Professors, neighbours and friends are usually references. However, references are
treated as a mere formality and are hardly used to influence the selection decisions.
Physical Examination
The last tool used in the selection process is physical examination. The main purpose of conducting physical or
medical examination is to have proper matching of job requirement with the physical ability of the candidate.
Among various objectives of physical test, the major ones are, to detect if the individual is carrying any
infectious diseases, to identify health defects of an individual undertaking certain works determined to his or her
health and to protect companies from employees filing compensation claim for injuries and accidents caused by
pre-existing ailments.
Final Selection
Final selection follows the above procedures outlined. Selected candidates would be sent with appointment
orders. Additional names than required vacancies may be kept in the waiting list.

Module 3
Leading is a managerial function which is defined as the process of influencing people so that they will
contribute to organization and group goals.
Motivation is a general term applying to the entire class of drives, desires, needs, wishes and similar forces.
Behavioural Model: McGregors Theory X and Theory Y

Theory X Assumptions
1. In this theory, management assumes employees is inherently lazy and will avoid work if they can and that
they inherently dislike work.
2. As a result of this, management believes that workers need to be closely supervised and comprehensive
systems of controls developed.
3. A hierarchical structure is needed with narrow span of control at each and every level. According to this
theory, employees will show little ambition without an enticing incentive program and will avoid
responsibility whenever they can.
4. If the organizational goals are to be met, Theory X managers rely heavily on threat and coercion to gain
their employees' compliance.
5. Beliefs of this theory lead to mistrust, highly restrictive supervision, and a punitive atmosphere.
6. The Theory X manager tends to believe that everything must end in blaming someone. He or she thinks all
prospective employees are only out for themselves.
7. Usually these managers feel the sole purpose of the employee's interest in the job is money. They will blame
the person first in most situations, without questioning whether it may be the system, policy, or lack of
training that deserves the blame.
8. A Theory X manager believes that his or her employees do not really want to work, that they would rather
avoid responsibility and that it is the manager's job to structure the work and energize the employee. One
major flaw of this management style is it is much more likely to cause diseconomies of scale in large
picture.

Theory Y Assumptions
1. In this theory, management assumes employees may be ambitious and self-motivated and exercise selfcontrol. It is believed that employees enjoy their mental and physical work duties.
2. According to them work is as natural as play. They possess the ability for creative problem solving, but their
talents are underused in most organizations.
3. Given the proper conditions, Theory Y managers believe that employees will learn to seek out and accept
responsibility and to exercise self-control and self-direction in accomplishing objectives to which they are
committed.
4. A Theory Y manager believes that, given the right conditions, most people will want to do well at work.
They believe that the satisfaction of doing a good job is a strong motivation.
5. Many people interpret Theory Y as a positive set of beliefs about workers. A close reading of The Human
Side of Enterprise reveals that McGregor simply argues for managers to be opened to a more positive view
of workers and the possibilities that this creates.
6. He thinks that Theory Y managers are more likely than Theory X managers to develop the climate of trust
with employees that are required for employee development.
7. It's employee development that is a crucial aspect of any organization. This would include managers
communicating openly with subordinates, minimizing the difference between superior-subordinate
relationships, creating a comfortable environment in which subordinates can develop and use their abilities.
8. This environment would include sharing of decision making so that subordinates have a say in decisions that
influence them.
Maslows Hierarchy of Needs Theory

Physiological Needs: Physiological needs or physical needs are the physical requirements for human survival. If
these requirements are not met, the human body cannot function properly and will ultimately fail. Physiological
needs are thought to be the most important; they should be met first. Air, water, and food
are metabolic requirements for survival in all animals, including humans. Clothing and shelter provide
necessary protection from the elements. While maintaining an adequate birth rate shapes the intensity of the
human sexual instinct, sexual competition may also shape said instinct.
Security and Safety Needs: With their physical needs relatively satisfied, the individual's safety needs take
precedence and dominate behavior. In the absence of physical safety due to war, natural disaster, family

violence, childhood abuse, etc. people may experience post-traumatic stress disorder or trauma. In the absence
of economic safety due to economic crisis and lack of work opportunities these safety needs manifest
themselves in ways such as a preference for job security, grievance procedures for protecting the individual
from unilateral authority, savings accounts, insurance policies, reasonable disability accommodations, etc. This
level is more likely to be found in children because they generally have a greater need to feel safe. Security and
safety needs include personal security, financial security, health and well being etc.
Affiliation or Acceptance Needs: After physiological and safety needs are fulfilled, the third level of human
needs is interpersonal and involves feelings of belongingness. This need is especially strong in childhood and
can override the need for safety as witnessed in children who cling to abusive parents. Deficiencies within this
level of Maslow's hierarchy due to neglect, shunning, ostracism, etc. can impact the individual's ability to
form and maintain emotionally significant relationships in general, such as: friendship, family, etc. According to
Maslow, humans need to feel a sense of belonging and acceptance among their social groups, regardless
whether these groups are large or small. For example, some large social groups may include clubs, co-workers,
religious groups, professional organizations, sports teams, and gangs. Some examples of small social
connections include family members, intimate partners, mentors, colleagues, and confidants.
Esteem Needs: All humans have a need to feel respected; this includes the need to have self-esteem and selfrespect. Esteem presents the typical human desire to be accepted and valued by others. People often engage in a
profession or hobby to gain recognition. These activities give the person a sense of contribution or value. Low
self-esteem or an inferiority complex may result from imbalances during this level in the hierarchy. People with
low self-esteem often need respect from others; they may feel the need to seek fame or glory. However, fame or
glory will not help the person to build their self-esteem until they accept who they are internally. Psychological
imbalances such as depression can hinder the person from obtaining a higher level of self-esteem or selfrespect.
Self-Actualization: "What a man can be, he must be.This quotation forms the basis of the perceived need for
self-actualization. This level of need refers to what a person's full potential is and the realization of that
potential. Maslow describes this level as the desire to accomplish everything that one can, to become the most
that one can be. Individuals may perceive or focus on this need very specifically. For example, one individual
may have the strong desire to become an ideal parent. In another, the desire may be expressed athletically. For
others, it may be expressed in paintings, pictures, or inventions. As previously mentioned, Maslow believed that
to understand this level of need, the person must not only achieve the previous needs, but master them.
Expectancy Theory of Motivation
Vroom's expectancy theory assumes that behavior results from conscious choices among alternatives whose
purpose it is to maximize pleasure and to minimize pain. Vroom realized that an employee's performance is
based on individual factors such as personality, skills, knowledge, experience and abilities. He stated that effort,
performance and motivation are linked in a person's motivation. He uses the variables Expectancy,
Instrumentality and Valence to account for this.
Expectancy is the belief that increased effort will lead to increased performance i.e. if I work harder then this
will be better. This is affected by such things as:
1.

Having the right resources available (e.g. raw materials, time)

2.

Having the right skills to do the job

3.

Having the necessary support to get the job done (e.g. supervisor support, or correct information on the job)
Instrumentality is the belief that if you perform well that a valued outcome will be received. The degree to
which a first level outcome will lead to the second level outcome i.e. if I do a good job, there is something in it
for me. This is affected by such things as:

1.

Clear understanding of the relationship between performance and outcomes e.g. the rules of the reward
'game'

2.

Trust in the people who will take the decisions on who gets what outcome

3.

Transparency of the process that decides who gets what outcome

Valence is the importance that the individual places upon the expected outcome. For the valence to be positive,
the person must prefer attaining the outcome to not attaining it. For example, if someone is mainly motivated by
money, he or she might not value offers of additional time off.
The three elements are important behind choosing one element over another because they are clearly defined:
effort-performance expectancy (E>P expectancy) and performance-outcome expectancy (P>O expectancy).
E>P expectancy: our assessment of the probability that our efforts will lead to the required performance level.
P>O expectancy: our assessment of the probability that our successful performance will lead to certain
outcomes.
Crucially, Vroom's expectancy theory works on perceptions so even if an employer thinks they have provided
everything appropriate for motivation, and even if this works with most people in that organization, it doesn't
mean that someone won't perceive that it doesn't work for them.
At first glance expectancy theory would seem most applicable to a traditional-attitude work situation where how
motivated the employee is depends on whether they want the reward on offer for doing a good job and whether
they believe more effort will lead to that reward.
However, it could equally apply to any situation where someone does something because they expect a certain
outcome. For example, I recycle paper because I think it's important to conserve resources and take a stand on
environmental issues (valence); I think that the more effort I put into recycling the more paper I will recycle
(expectancy); and I think that the more paper I recycle then less resources will be used (instrumentality)
Thus, Vroom's expectancy theory of motivation is not about self-interest in rewards but about the associations
people make towards expected outcomes and the contribution they feel they can make towards those outcomes.
McClelland's Needs Theory of Motivation
Need theory, also known as Three Needs Theory, proposed by psychologist David McClelland, is a motivational
model that attempts to explain how the needs for achievement, power, and affiliation affect the actions of people
from a managerial context.
Need for Achievement: People who are achievement-motivated typically prefer to master a task or situation.
They prefer working on tasks of moderate difficulty, prefer work in which the results are based on their effort
rather than on anything else, and prefer to receive feedback on their work. Achievement based individuals tend
to avoid both high risk and low risk situations. Low risk situations are seen as too easy to be valid and the high
risk situations are seen as based more upon the luck of the situation rather than the achievements that individual
made. This personality type is motivated by accomplishment in the workplace and an employment hierarchy
with promotional positions.
Need for Affiliation: People who have a need for affiliation prefer to spend time creating and maintaining social
relationships, enjoy being a part of groups, and have a desire to feel loved and accepted. People in this group
tend to adhere to the norms of the culture in that workplace and typically do not change the norms of the
workplace for fear of rejection. This person favors collaboration over competition and does not like situations
with high risk or high uncertainty. People who have a need for affiliation work well in areas based on social
interactions like customer service or client interaction positions.
Need for Power: This motivational need stems from a person's desire to influence, teach, or encourage others.
People in this category enjoy work and place a high value on discipline. The downside to this motivational type

is that group goals can become zero-sum in nature, that is, for one person to win, another must lose. However,
this can be positively applied to help accomplish group goals and to help others in the group feel competent
about their work. A person motivated by this need enjoys status recognition, winning arguments, competition,
and influencing others. With this motivational type come a need for personal prestige, and a constant need for a
better personal status.
Special Motivational Techniques
Money: Money can never be overlooked as a motivator. Whether in the form of wages, salary, or any other
incentive pay, bonuses, stock options, company-paid insurance, or any of the other things that may be given to
people for performance, money is important.
Rewards Consideration: Implicit in most motivational theories are intrinsic and extrinsic rewards. Intrinsic
rewards may include a feeling of accomplishment, even self actualization. Extrinsic rewards include benefits
recognition, status symbols and money
Participation: It is a motivational technique which also means giving recognition to a person. It appeals to the
need for affiliation and acceptance. Above all it gives people sense of accomplishment.
Quality of Working Life (QWL): This would include job enlargement and job enrichment. Job enlargement
attempts to make a job more varied by removing the dullness associated with performing repetitive operations.
It means enlarging the scope of the job by adding similar tasks without enhancing the responsibility. In job
enrichment, the attempt is to build into jobs a higher sense of challenge and achievement.
Leadership is defined as influence, that is, the art or process of influencing people so that they will strive
willingly and enthusiastically toward the achievement of group goals.
Leadership Styles
Different types of leadership styles exist in work environments. Advantages and disadvantages exist within each
leadership style. The culture and goals of an organization determine which leadership style fits the firm best.
Some companies offer several leadership styles within the organization, dependent upon the necessary tasks to
complete and departmental needs.
A free-rein leader lacks direct supervision of employees and fails to provide regular feedback to those under his
supervision. Highly experienced and trained employees requiring little supervision fall under the free-rein
leadership style. However, not all employees possess those characteristics. This leadership style hinders the
production of employees needing supervision. The free-rein style produces no leadership or supervision efforts
from managers, which can lead to poor production, lack of control and increasing costs.
The autocratic leadership style allows managers to make decisions alone without the input of others. Managers
possess total authority and impose their will on employees. No one challenges the decisions of autocratic
leaders. Countries such as Cuba and North Korea operate under the autocratic leadership style. This leadership
style benefits employees who require close supervision. Creative employees who thrive in group functions
detest this leadership style.
Often called the democratic leadership style, participative leadership values the input of team members and
peers, but the responsibility of making the final decision rests with the participative leader. Participative
leadership boosts employee morale because employees make contributions to the decision-making process. It
causes them to feel as if their opinions matter. When a company needs to make changes within the organization,
the participative leadership style helps employees accept changes easily because they play a role in the process.
This style meets challenges when companies need to make a decision in a short period.

Managers using the transactional leadership style receive certain tasks to perform and provide rewards or
punishments to team members based on performance results. Managers and team members set predetermined
goals together, and employees agree to follow the direction and leadership of the manager to accomplish those
goals. The manager possesses power to review results and train or correct employees when team members fail
to meet goals. Employees receive rewards, such as bonuses, when they accomplish goals.
The transformational leadership style depends on high levels of communication from management to meet
goals. Leaders motivate employees and enhance productivity and efficiency through communication and high
visibility. This style of leadership requires the involvement of management to meet goals. Leaders focus on the
big picture within an organization and delegate smaller tasks to the team to accomplish goals.

Likerts Four Systems of Management

Likerts management systems are management styles developed by Rensis Likert in the 1960s. He outlined four
systems of management to describe the relationship, involvement, and roles of managers and subordinates in
industrial settings. He based the systems on studies of highly productive supervisors and their team members of
an American Insurance Company. Later, he and Jane G. Likert revised the systems to apply to educational
settings. They initially intended to spell out the roles of principals, students, and teachers; eventually others such
as superintendents, administrators, and parents were included.
Exploitative system: Exploitative authoritative is rooted in classical theory. In this system, managers tend to use
threats, fear, and punishment to motivate their workers. Managers at the top of the hierarchy make all of the
decisions and are usually unaware of the problems faced by those in the lower levels of the organization.
Decisions are imposed on subordinates, and motivation is characterized by threats. The orders issued from the
top make up the goals for the organization. As a result, workers tend to be hostile toward organizational goals
and may engage in behavior that is counter to those goals.
Benevolent system: Less controlling than the exploitative authoritative system, under this system motivation is
based on the potential for punishment and partially on rewards. The decision making area is expanded by
allowing lower-level employees to be involved in policy-making but is limited by the framework given to them
from upper-level management. Major policy decisions are still left to those at the top, who have some awareness
of the problems that occur at lower levels. This creates mainly downward communication from supervisors to
employees with little upward communication, causing subordinates to be somewhat suspicious of
communication coming from the top. The managers at the top feel more responsibility towards organizational
goals than those employees at the bottom, who feel very little responsibility. This contrast in feelings toward
responsibility can result in a conflict and negative attitudes with the organization's goals. Subordinates in this
system can become hostile towards each other because of the competition that is created between them.
Satisfaction among workers is low to moderately-low and productivity is measured at fair to good.
Consultative system: This theory is very closely related to the human-relations theory. Motivation of workers is
gained through rewards, occasional punishments, and very little involvement in making decisions and goals.
Lower-level employees, in this system, have the freedom to make specific decisions that will affect their work.
Upper-management still has control over policies and general decisions that affect an organization. Managers
will talk to their subordinates about problems and action plans before they set organizational goals.
Communication in this system flows both downward and upward, though upward is more limited. This
promotes a more positive effect on employee relationships and allows them to be more cooperative. Lower-level
employees are seen as consultants to decisions that were made and are more willing to accept them because of
their involvement. Satisfaction in this system improves from benevolent authoritative as does productivity.

Participative system: Likert argued that the participative system was the most effective form of management.
This system coincides with human-resources theory. This system promotes genuine participation in making
decisions and setting goals through free-flowing horizontal communication and tapping into the creativity and
skills of workers. Managers are fully aware of the problems that go on in the lower-levels of the organization.
All organizational goals are accepted by everyone because they were set through group participation. There is a
high level of responsibility and accountability of the organizational goals in all of the employees. Managers
motivate employees through a system that produces monetary awards and participation in goal setting.
Satisfaction among employees is the highest out of the four systems as is production.
Communication
Communication is the activity of conveying information through the exchange of ideas, feelings, intentions,
attitudes, expectations, perceptions or commands, as by speech, non-verbal gestures, writings, behavior and
possibly by other means such as electromagnetic, chemical or physical phenomena and smell. It is the
meaningful exchange of information between two or more participants (machines, organisms or their parts).
Communication Process Model

Following are the components of Communication Process model:

1. Sender of the message
2. Transmission Channel
3. Receiver of the message
4. Noise hindering communication
5. Feedback in communication
Communication Flow in the Organization / Types of Communication
1. Downward Communication: This type of communication flows from people at higher levels to those at
lower levels in the organization hierarchy. This kind of communication exists especially in organization
with authoritarian atmosphere.
a. Written Communication
b. Oral Communication
c. Non-verbal Communication
2. Upward Communication: The communication travels from subordinates to superiors and continues up
the organizational hierarchy. Unfortunately, this flow is often hindered by managers in the
communication chain who filter the messages and do not transmit all the information especially
unfavorable news to their bosses.
3. Crosswise Communication:
a. Horizontal Communication
b. Diagonal Communication

Barriers in Communication
1. Physical barriers are easy to spot doors that are closed, walls that are erected, and distance between people
all work against the goal of effective communication. While most agree that people need their own personal
areas in the workplace, setting up an office to remove physical barriers is the first step towards opening
communication. Many professionals who work in industries that thrive on collaborative communication, such as
architecture, purposefully design their workspaces around an open office plan. This layout eschews cubicles
in favour of desks grouped around a central meeting space. While each individual has their own dedicated work
space, there are no visible barriers to prevent collaboration with their co-workers. This encourages greater
openness and frequently creates closer working bonds.
2. Perceptual barriers, in contrast, are internal. If you go into a situation thinking that the person you are
talking to isnt going to understand or be interested in what you have to say, you may end up subconsciously
sabotaging your effort to make your point. You will employ language that is sarcastic, dismissive, or even
obtuse, thereby alienating your conversational partner. Think of movie scenarios in which someone yells
clipped phrases at a person they believe is deaf. The person yelling ends up looking ridiculous while failing to
communicate anything of substance.
3. Emotional barriers can be tough to overcome, but are important to put aside to engage in conversations. We
are often taught to fear the words coming out of our own mouths, as in the phrase anything you say can and
will be used against you. Overcoming this fear is difficult, but necessary. The trick is to have full confidence in
what you are saying and your qualifications in saying it. People often pick up on insecurity. By believing in
yourself and what you have to say, you will be able to communicate clearly without becoming overly involved
in your emotions.
4. Cultural barriers are a result of living in an ever shrinking world. Different cultures, whether they be a
societal culture of a race or simply the work culture of a company, can hinder developed communication if two
different cultures clash. In these cases, it is important to find a common ground to work from. In work
situations, identifying a problem and coming up with a highly efficient way to solve it can quickly topple any
cultural or institutional barriers. Quite simply, people like results.
5. Language barriers seem pretty self-inherent, but there are often hidden language barriers that we arent
always aware of. If you work in an industry that is heavy in jargon or technical language, care should be taken
to avoid these words when speaking with someone from outside the industry. Without being patronizing,
imagine explaining a situation in your industry to a child. How would you convey these concepts without
relying on jargon? A clear, direct narrative is preferable to an incomprehensible slew of specialty terms.
6. Gender barriers have become less of an issue in recent years, but there is still the possibility for a man to
misconstrue the words of a woman, or vice versa. Men and women tend to form their thoughts differently, and
this must be taken into account when communicating. This difference has to do with how the brain of each sex
is formed during gestation. In general, men are better at spatial visualization and abstract concepts such as math,
while women excel at language-based thinking and emotional identification. However, successful professionals
in highly competitive fields tend to have similar thought processes regardless of their gender.
7. Interpersonal barriers are what ultimately keep us from reaching out to each other and opening ourselves
up, not just to be heard, but to hear others. Oddly enough, this can be the most difficult area to change. Some
people spend their entire lives attempting to overcome a poor self-image or a series of deeply rooted prejudices
about their place in the world. They are unable to form genuine connections with people because they have too
many false perceptions blocking the way. Luckily, the cure for this is more communication. By engaging with
others, we learn what our actual strengths and weaknesses are. This allows us to put forth our ideas in a clear,
straightforward manner.
Guidelines for Improving Communication

1.
2.
3.
4.

5.

6.
7.
8.
9.

Begin with the assumption that all human beings are natural communicators, and that we all desire
warm, close relationships with each other.
Assume that biological/cultural/ethnic/sexual/religious/age differences between human beings are never
the real cause of difficulties in communication.
Assume that the real cause of such difficulties is the division and separation resulting from
institutionalized imbalances in social and economic power, i.e. social oppression. The conditioning which
perpetuates the divisions between us separates us into target and non-target groups.
People who are the target group of a particular form of mistreatment are socialized to become victims;
people who are the non-target group of a particular form of mistreatment are socialized to become
perpetrators- either in a direct, active form or in an indirect, passive form. Neither of these roles serves our
best interests as human beings.
Assume that no one wanted these roles; no one wanted these divisions. Everyone resisted the social
conditioning to take on these roles as best they could. But the hurts from this conditioning cling to us and
make it difficult to see and hear each other clearly. We make unaware assumptions about what other people
are thinking and feeling. We forget to check in with each other and to really listen.
Assume that issues of oppression always have some connection to difficulties in communication.
Assume that racism, sexism, job status, etc. always figure in somewhere.
Assume that target group people are always the experts on their own experience and that they have
perspectives and information which non-target people need to hear.
Assume that when everything is taken into account, every human being has always communicated as
clearly as they could, and in general has always done the best that they could in every single situation.
Assume that in spite of the ways we have been divided, it is possible to reach through those divisions, to
listen to each other well and to change habitual ways of acting which have kept us separated.

Module 4
Controlling is the last of the managerial functions in which measurement and correction of performance takes
place in order to make sure that enterprise objectives and the plans devised to attain them are being
accomplished.
Basic Control Process

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Establishment of Standards: The first logical step in the control process is to establish plans. However, since
plans vary in detail and complexity, and since managers cannot usually watch everything, special standards are
established. Standards are simply criteria of performance. They are the selected points in an entire planning
program at which measures of performance are made so that managers can receive signals about how things are
going and thus do not have to watch every step in the execution of plans.
Measurement of Performance: Although such measurement is not always practicable, the measurement of
performance against standards should ideally be done on a forward looking basis so that deviations may be
detected in advance of their occurrence and avoided by appropriate actions. The alert, forward-looking manager
can sometimes predict probable departures from standards. In the absence of such ability, however, deviations
should be disclosed as early as possible.
Corrections of Deviations: Correction of deviations is the point at which control can be seen as a part of the
whole system of management and can be related to the other managerial functions. Managers may correct
deviations by redrawing their plans or by modifying their goals. Or they may correct deviations by exercising
their organizing functions through reassignment or clarification of duties. They may correct, also, by additional
staffing, by better selection and training of subordinates, or by that ultimate re-staffing measure firing. Or,
again, they may correct through better leading fuller explanation of the job or more effective leadership
techniques.

Types of Critical Point Standards

Physical Standards: Physical standards are nonmonetary measurements and are common at the operating level,
where materials are used, labor is employee, services are rendered, and goods are produced. They may reflect
quantities, such as labor-hours per unit of output, sounds of fuel per horsepower per hour, ton-miles of freight
traffic carried, units of production per machine-hour, or feet of wise per ton of copper, closeness of tolerances,
rate
of
climb
of
an
airplane,
durability
of
a
fabric,
or
fastness
of
color.
Cost Standards: Cost standards are monetary measurements and like physical standards, are common at the
operating level. They attach monetary values to specific aspects of operations. Illustrative of cost standards are
such widely used measures as direct and indirect costs per unit or per hour, material cost per unit, machine-hour
costs, cost per seat-mile, selling cost per dollar unit of sales, and cost per foot of oil well drilled.
Capital Standards: There are a variety of capital standards, all arising from the application of monetary
measurements to physical items. They have to do with the capital invested in the firm rather than with operating
costs and are therefore primarily related to the balance sheet rather than to the income statement. Perhaps the
most widely used standard for new investment, as well as for overall control, is return on investment. The
typical balance sheet will disclose other capital standards, such as the ratios of current assets to current
liabilities, debt to het worth, fixed investment to total investment, cash and receivables to payables, and bonds
to
stocks,
as
well
as
the
size
and
turnover
of
inventories.
Revenue Standards: Revenue standards arise from attaching monetary values to sales. They may include such as
revenue per bus passenger-mile, average sales per customer, and sales per capital in a given market area.
Program Standards: A manager may be assigned to install a variable budget program, a program for formally
following the development of new products, or a program for improving the quality of a sales force. Although
some subjective judgment may have to be applied in appraising program performance, timing and other factors
can
be
used
as
objective
standards.
Intangible Standards: More difficult to set are standards not expressed in either physical or monetary
measurements. What standard can a manager use for determining the competence of the divisional purchasing
agent or the personnel director? What can one use for determining whether the advertising program is
successful? Are supervisors loyal to the company's objectives? Are the office staff alert? Such questions show
the difficulty of establishing standards or goals for clear quantitative or qualitative measurement.
Control as a Feedback System

Des ired Pe rf orma nce

I mp l em ent ati on of correc tion

Act ual Perf orma nce

Pr og ra m o f co rrect ive action

M easu re men t of actu al p erfo rman ce

Anal ys is of cau se s o f devia ti on s

Com pa ri sio n o f ac tual per forma nce ag ain st s tan dar d s

Ide nti ficati on of de vi at ion s

Managerial control is essentially the same basic control process as that found in physical, biological, and social
systems. Many systems control themselves through information feedback, which shows deviations from
standards and initiate change.