INTRODUCTION

TO
MANAGEMENT

Rift Valley University College of Open & Distance Education 1

Introduction to Management (MGMT-211)
 CHAPTER ONE
INTRODUCTION

1.1 Chapter Introduction

Every human being has several needs and desires. But no individual can satisfy all
his wants. Therefore, people work together to meet their mutual needs which they
cannot fulfill individually. Moreover, man is a social being as he likes to live
together with other people. It is by working and living together in organized groups
and institutions that people satisfy their economic and social needs. As a result there
are several types of groups, e.g., family, school, government, army, a business firm,
and the like. Such formal groups can achieve their goals effectively only when the
efforts of the people working in these groups are properly coordinated and
controlled. The task of getting results through others by coordinating their efforts is
known as management. Just as the mind coordinates and regulates all the activities
of a person, management coordinates and regulates the activities of various
members of an organization.

1.2 Chapter Objectives

Dear Learner! After completing this chapter you will be able to:
 Define the term management from different perspectives;
 understand and explain the principles and features of management;
 know the main sources of modern management;
 Identify levels of management and types of managers;
 Identify managerial roles;
 Determine the challenges and solutions of management.

Dear learner, discuss with your colleagues about how Management concepts are
appliedRift Valley
in your University College
organization/near by of Open & Distance Education
companies? 2
Introduction to Management (MGMT-211)
__________________________________________________________________________
__________________________________________________________________________
_______________________________________________________________________
1.3 Meaning and Definition Of Management
It is very difficult to give a precise definition of the term 'management'. Different
scholars from different disciplines view and interpret management from their own
angles. The economists consider management as a resource like land, labor,
capital and organization. The bureaucrats look upon it as a system of authority to
achieve business goals. The sociologists consider managers as a part of the class
elite in the society. Some of the common definitions of management are the
following:
1. Management is the process of coordinating all resources through the five
functions of planning, organizing, staffing, directing (leading) and controlling
to achieve organizational goals /desired objectives.
2. Management is the art of getting things done through other people by making
the atmosphere conducive for others.
3. Management is the utilization of scientifically derived principles to examine
and improve collective efforts /production.
4. It is the process of setting and achieving organizational objectives (goal) by
using the five basic managerial functions by acquiring and utilizing human,
financial and other resources.
5. It is the process of attaining organizational goals in an effective and efficient
manner through the five basic managerial functions such as planning,
organizing, staffing, leading and controlling.
Efficiency - it is getting high output or the same amount of output at the same
amount of input or lower input, respectively.
 Maximizing the organization’s productivity by wise utilization of scarce
resources.
 It is spending less & acquiring more by minimizing cost

Rift Valley University College of Open & Distance Education 3

Introduction to Management (MGMT-211)
  it is concerned with cost reduction
 it is doing things right

Effectiveness -it is providing the right product for the right person or customer it
is doing the right things at reasonable cost (efficiently) determine the success of
the organization b/c it is doing the right things. Effectiveness-implies making the
right decisions and successfully implementing them “Doing the right thing”.
Whereas Efficiency means using resources wisely and in a cost effective way i.e.
“doing things right”
Management can be seen as:
1. As an activity
2. process
3. Economic resource
4. team
5. an academic discipline
6. a group
1. As an activity
Management is an activity just like playing, studying, teaching etc. As an activity
management has been defined as the art of getting things done through the efforts
of other people. Management is a group activity wherein managers do to achieve
the objectives of the group. The activities of management are:
Interpersonal activities
Decisional activities
Informative activities
2. Management as a Process
Management is considered a process because it involves a series of interrelated
functions. It consists of getting the objectives of an organization and taking steps
to achieve objectives. The management process includes planning, organizing,
staffing, directing and controlling functions.

Rift Valley University College of Open & Distance Education 4

Introduction to Management (MGMT-211)
Management as a process has the following implications:
(i) Social Process: Management involves interactions among people. Goals
can be achieved only when relations between people are productive. Human
factor is the most important part of the management.
(ii) Integrated Process: Management brings human, physical and financial
resources together to put into effort.
Management also integrates human efforts so as to maintain harmony
among them.
(iii) Continuous Process: Management involves continuous identifying and
solving problems. It is repeated every now and then till the goal is achieved.
(iv) Interactive process: Managerial functions are contained within each other.
For example, when a manager prepares plans, he is also laying down
standards for control.
3. Management as an Economic resource: Like land, labor and capital,
management is an important factor of production. Management occupies the
central place among productive factors as it combines and coordinates all other
resources. This is shown in Fig. 1.1.

4. Management as a team: As a group of persons, management consists of all

those who have the responsibility of guiding and coordinating the efforts of
other persons. These persons are called as managers who operate at different
levels of authority (top, middle, operating). Some of these managers have

Rift Valley University College of Open & Distance Education 5

Introduction to Management (MGMT-211)
 ownership stake in their firms while others have become managers by virtue of
their training and experience. Civil servants and defence personnel who
manage public sector undertakings are also part of the management team. As a
group managers have become an elite class in society occupying positions with
enormous power and prestige.
5. Management as an academic discipline; Management has emerged as a
specialized branch of knowledge. It comprises principles and practices for
effective management of organizations. Management has become as very
popular field of study as is evident from the great rush for admission into
institutes of management. Management offers a very rewarding and challenging
career.
6. Management as a group; Management means the group of persons occupying
managerial positions. It refers to all those individuals who perform managerial
functions. All the managers, e.g., chief executive (managing director),
departmental heads, supervisors and so on are collectively known as
management.

! So, the management process is generally concerned with:

 Identifying the aims and objectives of an organization.
 Implementing policies by setting procedures, programs and strategies to help in the
achievement of organizational aim and objectives.
 Bringing together all the various factors of production (People, money, materials,
machinery, methods, and activates).
 Making the best possible use of the factors of production.
 Exercising control over the performance of the factors of production.
 Providing conditions in which the persons associate with the organization-owners,
employees, customers, and the community at large-derive maximum satisfaction.

1.4 Nature and Characteristics of Management

Rift Valley University College of Open & Distance Education 6

Introduction to Management (MGMT-211)
The salient features which highlight the nature of management are as follows:
(i) Management is goal-oriented: Management is not an end in itself. It is a
means to achieve certain goals. Management has no justification to exist
without goals. Management goals are called group goals or organizational
goals. The basic goal of management is to ensure efficiency and economy in
the utilization of human, physical and financial resources. The success of
management is measured by the extent to which the established goals are
achieved. Thus, management is purposeful.
(ii) Management is universal: Management is an essential element of every
organized activity irrespective of the size or type of activity.
(iii) Management is a continuous process: The cycle of management continues
to operate so long as there is organized action for the achievement of group
goals. Management is an ongoing process and is also a never ending
process. Because every activity starts with planning and if any deviation
takes place on the on-going process, planning sought again. Management is
dynamic and the cycle continues.
(iv) Management is multi-disciplinary: Management techniques, principles and
theories are drawn from other disciplines such as engineering,
anthropology, sociology and psychology. it depends upon wide knowledge
and practices derived from various disciplines. Management as a field of
study has grown, taking the help of so many other disciplines.
(v) Management is intangible force: Management is evidenced by the results of
its efforts through others. Management is an unseen or invisible force. It
cannot be seen, but its presence can be felt in the form of results in every
type of organization. Managers arrange the human and other resources and
uses these resources according to the priority of objective through their
functions. The functions performed to achieve’ these objectives can be felt
and unseen. Thus, feeling of management is result oriented.
(vi) Management is situational: There is no best way of doing things. The
application of knowledge to realistic in order to attain results. A manager
must have taken into account conditions and situation to solve a particular

Rift Valley University College of Open & Distance Education 7

Introduction to Management (MGMT-211)
 problem. A problem could be solved by keeping an eye on the situation.
Management is situational or contingent.
(vii) .Management is goal oriented: Management co-ordination is the efforts of
human resource by employing other resources of the organization to
achieve the stated objective: Effort is directed towards the accomplishment
of pre-determined goals. So, all activities of management are goal oriented.
The success of every activity of management is measured by the extent to
which the organizational goals are achieved. Objectives or goals provide
justification for the existence of an organization
(viii) Management is an integrative force: The essence of management lies in the
integration of human and other resources to achieve the stated objectives.
Management integrates the efforts and coordinate efforts into a team.
Management is a unifying force and applies this integrative force to achieve
the desired objectives of the organization.
(ix) Management is a system of authority: Management provides the direction
of every activity of an organization. Management forms a system of
authority or a hierarchy of command to control the activities and give
smooth direction. Authority enables the managers to perform their functions
effectively. Management forms a chain of command and authority and is
delegated to perform the task effectively.
(x) Management is a science or an art: Management has a systematic body of
knowledge as well as practical application of such knowledge. Management
consists of well-defined concepts, principles and techniques which have
wide application. So, it is treated as a science. The application of these
concepts and practices requires a lot of skill and knowledge on the part of
the manager. So, this is viewed as an art. Management is both a science and
an art.
(xi) Management is an economic resource: Management is an important eco-
nomic resource with land, labour and capital. Efficient management is the
most critical input in the success of any organized group activity as it is the
force which assembles and integrates the resources of the organization

Rift Valley University College of Open & Distance Education 8

Introduction to Management (MGMT-211)
 properly. Thus, management is an organization.
(xii) Management is a group and social phenomena: Management involves the
use of group effort in the pursuit of common objectives. Group activity is
found in all areas of human activity, and it is the integrative efforts of
human being that make possible for the organization to achieve desired
objectives. Management is done by people through people and for the
people. It is a social process also because it is concerned with interpersonal
relationship. It is the pervasiveness of the human element which gives
management its special character as social phenomena.

! Who are managers?

- Managers are those who are responsible for achieving the organizational goals in
an effective and efficient manner through proper scarce resource utilization
- A good manager is the one who feel sense of responsibility, belongingness,
accountability…
- Who take initiative (innovator) for new things or discovery.
- Who effectively & efficiently brings factors of production together

1.5 Managerial Functions

Managers are persons who are responsible for supervising the use of organizational
resources to achieve its goals, to do this manager at all levels in any organization
perform five basic functions:
 planning
 organizing
 staffing
 Directing/Leading
 Controlling
1. planning
 Is the first function that all managers engage in because it lays the ground work for
all other functions.

Rift Valley University College of Open & Distance Education 9

Introduction to Management (MGMT-211)
 Is the process that managers use to identify and select appropriate goals and
alternative ways of attaining them.

2. Organizing
 Is the process of delegating and coordination tasks and recourses to achieve
objectives?
 Includes the process of identifying tasks to be accomplished.
 Includes grouping of similar tasks together to create departments.
 Is process of delegating authority to the job holder and making the workers
responsible and accountable for the results of their work.

3. Staffing
 Is initially the process of recruiting potential candidates for the job, reviewing the
applicant's documents and trying to match the job demand with candidates'
abilities.
 involves acquiring, developing and maintaining human resource which is needed
to attain objectives set in planning

4. Directing/leading
 Involves influencing and motivation employees in one or another ways to make
them implement their job assignments willingly.
 Aims at getting the members of the organization to move in the direction that will
achieve its objectives.

5. Controlling:- is one of managerial functions which involves:

 Setting of standard against which work progress is measured.
 Comparing actual performance against the standard.
 identifying and initially examining causes of deviations between the standard and
the actual performance
 Taking corrective actions to eliminate causes of unfavorable deviations.

Rift Valley University College of Open & Distance Education 10

Introduction to Management (MGMT-211)
Generally, these five functions of management are inseparable and often performed
continuously as an interactive process. However, the planning function is considered as
primary function and the base for other functions by setting objectives up on which
other functions depend all the above functions are performed by all types of managers
but with different degree of considerations.

 Activity

1. What is management?
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
2. What are the functions of management?
--------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------.

1.6 Significance of Management

Management is directly tied with Production. It is very crucial in setting up, proper
running and success of a collective enterprise. Management organizes the available
human and physical resources and directs them toward better performance and higher
productivity at the most minimum of costs. Accomplishment of group goals such as:
 Sound resource planning
 Adoption to business environment
 Day-to-Day direction and control of business activities
 Efficient running of business
 Effective leadership and motivation
 Integration of individual interest
 Producing with group interest sound organization structure
 Clear definition of authority and responsibility
 Integration of formal and informal group activities
Objectives, while in actuality the members might be working in opposite direction, to
prevent this from occurring and to ensure coordination of work to accomplish the

Rift Valley University College of Open & Distance Education 11

Introduction to Management (MGMT-211)
objectives, management is needed. As 'a brain' of an organization therefore,
management gives direction for all other parts of organization.
! Note: Management is important because:
 The coordination of resources is impossible without management
 It affects the establishment and re-establishment of many economic social and
political goals of the country
 The success or failure of the organization mostly depends on the management
system
 B/c it is the wise utilization of scarce resources for unlimited human wants.

 Activity
Dear learner, why Management is so important for an organization?
_____________________________________________________________
_____________________________________________________________
___________________________________.

1.7 Levels Of Management and Types of Managers

Managers are organizational members who are responsible for the work performance of
other organizational members. Managers have formal authority to use organizational
resources and to make decisions. In organizations, there are typically three levels of
management: top-level, middle-level, and first-level. These three main levels of
managers form a hierarchy, in which they are ranked in order of importance. In most
organizations, the number of managers at each level is such that the hierarchy resembles
a pyramid, with many more first-level managers, fewer middle managers, and the
fewest managers at the top level. Each of these management levels is described below
in terms of their possible job titles and their primary responsibilities and the paths taken
to hold these positions. Additionally, there are differences across the management levels
as to what types of management tasks each does and the roles that they take in their
jobs. Finally, there are a number of changes that are occurring in many organizations
that are changing the management hierarchies in them, such as the increasing use of
teams, the prevalence of outsourcing, and the flattening of organizational structures.

Rift Valley University College of Open & Distance Education 12

Introduction to Management (MGMT-211)
Every organization, irrespective of its size, has many managerial positions in its
structure. These positions are created through the process of delegation of authority
from top to lower levels. Each position is marked by authority, responsibility,
functions, roles and relationships. The contents and nature vary, depending in the
level at which the position lies. As one moves upward in the organization, the
managerial position plays an important role, larger the contribution, greater the
authority and higher the responsibility. These managerial positions lying in the chain of
command may be classified into various groups or levels of management. Broadly
speaking, an organization has two important levels of management, namely functional
and operative. The functional level is concerned with the process of determining
primary objectives, formulating basic policies, making vital decisions and controlling
and coordinating activities of personnel. The operative level of management is related
to implementation of plans and decisions, and pursuit of basic policies for achieving the
objectives of the organization.

Generally, the levels of management consisting of various managerial positions in the

structure of an organization differ from one organization to another, depending on the
size of business activity, philosophy of management, span of control and other related
factors. But, in a joint stock company, for conducting its business efficiently,
managerial personnel may be placed in three levels, that is, top, middle and lower or
supervisory level.

1. Top level Management

The top level management is generally occupied by the ownership group. In a joint
stock company, equity shareholders are the real owners of the company. Thus, they
elect their representatives as directors; form a board, known as board of directors,
which constitutes the top level of management. Besides the board, other functionaries
including managing director, general manager or Chief executive to help directors, are
included in this level. It is the highest level in the managerial hierarchy and the ultimate
source of authority in the organization. The top level managers are accountable to the
owners and responsible for overall management of the organization.

The major functions of the top level management are as under:

Rift Valley University College of Open & Distance Education 13

Introduction to Management (MGMT-211)
 (i) To make a corporate plan for the entire organization covering all areas of
operations.
(ii) To decide upon the matters which are vital for the survival, profitability and
growth of the organization such as introduction of new product, shifting to new
technology and opening new plant
(iii) To decide corporate goals.
(iv) To decide structure of organization, creating various positions there in.
(v) To exercise overall managerial control through the process of reviewing over
all financial and operating results.
(vi) To make decisions regarding disposal and distribution of profits.
(vii) To select key officials and executives for the company.
(viii) To coordinate various sub-systems of the organization.
(ix) To maintain liaison with outside parties having a stake in business such as
government, trade union and trade associations etc.
(x) To formulate basic policies and providing direction and leadership to the
organization as a whole.

2. Middle level Management

In order to fill up the gap which exists between functional and operative level, some
managerial positions are created at the middle level of management. Middle level
management consists of departmental managers, deputy managers, foreman and
administrative officers etc. These executives are mainly concerned with the overall
functioning of their respective departments. They act as a link between top and lower
level managers. The activities of middle level managers’ centers around determining
departmental goals and devising ways and means for accomplishing them.
The main functions performed by these managers are as under:
 To prepare departmental plan covering all activities of the department within the
basic framework of the corporate plan.
 To establish departmental goals and to decide upon various ways and means for
achieving these goals to contribute to organizational goals.
 To perform all other managerial functions with regard to departmental activities
for securing smooth functioning of the entire department.

Rift Valley University College of Open & Distance Education 14

Introduction to Management (MGMT-211)
  To issue detailed orders and instructions to lower level managers and coordinate
the activities of various work units at lower level.
 Middle level managers explain and interpret policy decisions made at the top
level to lower level managers.

3. Lower level or supervisory level management/First line managers

Lower-level management is known as supervisory management, because it is concerned
mainly with personal oversight and direction of operative employees. It consists of
factory supervisors, superintendents, foremen, sales supervisors, accounts officers etc.
They directly guide and control the performance of rank and file workers. They issue
orders and instructions and guide day to-day activities. They also represent the
grievances of the workers to the higher levels of management.
Supervisory management performs the following functions:
(i) Planning of day to day work
(ii) Assignment of jobs and issuing orders and instructions (iii) Supervising and
guiding workers
(iii) Maintaining close personal contacts with workers to ensure discipline and team-
work
(iv) Evaluating operating performance
(v) Sending reports and statements to higher authorities
(vi) Communicating the grievances and suggestions of workers to higher authorities.

Rift Valley University College of Open & Distance Education 15

Introduction to Management (MGMT-211)
 Fig 1.1: Management Levels in the Organizational Hierarchy
SOURCE: Adapted from Richard L. Daft

 Activity
 Activity
1. Can you list down the three levels in Management?

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

Rift Valley University College of Open & Distance Education 16

Introduction to Management (MGMT-211)
1.8 Managerial Roles and skills.
A) Managerial Roles
Role is an organized set of behaviors.
There are about 10 roles identified that managers undertake to accomplish management
functions (planning, Organizing, leading, and controlling). These ten roles are
classified in to three major categories:
I. Interpersonal role
II. Informational role
III. Decisional role
I) Interpersonal role
When managers play interpersonal roles, they use their human and communication
management skills as they perform the necessary management function.
It includes:
 Figure head role
 leader role
 liaison role
 Figure head role Managers represent the organization or department in
ceremonial and symbolic activities.
It is the most basic and the simplest of all managerial roles
 Leader role_ Managers are assumed as leaders when they influence, initiate and
motivate the subordinates so that the subordinates achieve organizational goals.
 Liaison role the liaison role refers to dealing with people outside the organization,
such as clients, government officials, customers, and suppliers, it also refers to
dealing with mangers in other departments, staff specialists, and other
departments' employees in liaison role manager seeks support from people who
can affect the department's and organization's success.

Rift Valley University College of Open & Distance Education 17

Introduction to Management (MGMT-211)
 II. Informational role
When managers play informational roles they build net works of contacts for
sharing information with others. It includes:
 Monitor role
 disseminator role
 spokesperson role
 Monitor role Managers play monitor role when they read and talk to others to
receive information. It involves seeking out, receiving and screening
information. It also involves scanning of the environment.
 Disseminator role: - in this role managers share information with
subordinates and other members of the organization that is managers play
disseminator role when they send information to others within the organization.
 Spokesperson role: - managers play spokesperson role when they provide
information to people outside the organization.

III. Decisional role

When managers play decisional role they use their conceptual and decision-making
management skills.
It consists:
 Entrepreneur role
 Disturbance handler role
 Resource allocator role
 Negotiator role.

 Entrepreneur Role:- Is the role of managers which focuses on innovation and

initiation of improvements by managers. It may include such activities as
initiating new projects, launch survey, test new markets etc...........
 Disturbance handler role:- managers play this role when dealing with problems
and changes beyond their immediate control and when they take corrective actions
during disputes or crisis situation.
 Resource allocator role:- managers play recourse allocator role when they
schedule, request authorization and perform budgeting and programming activities.

Rift Valley University College of Open & Distance Education 18

Introduction to Management (MGMT-211)
 A manager determines who in the work unit gets what recourses money, facilities,
equipment and access to manager.
 Negotiator role is role in which managers work with suppliers, distributor, and
labor unions to reach on agreements about the quality and price of inputs, technical
and human resource, work with other organizations to establish agreements to pool
recourses to work on joint projects.
N.B: Negotiations are an integral part of managers' job

Category Role Activity

Monitor
Informational Seek and receive information, scan periodicals and
reports, maintain personal contacts.
Disseminator
Forward information to other organization
members; send memos and reports, make phone
calls.
Spokesperson
Transmit information to outsiders through
speeches, reports, memos.
Figurehead
Interpersonal Perform ceremonial and symbolic duties such as
. greeting visitors, signing legal documents.
Leader Direct and motivate subordinates; train, counsel,
and communicate with subordinates.

Liaison Maintain information links both inside and outside

organization; use e-mail, phone calls, meetings

Entrepreneur Initiate improvement projects; identify new ideas,

Decisional Delegate idea responsibility to others.
Disturbance Take corrective action during disputes or crises;
handler resolve conflicts among subordinates; adapt to
environmental crises
Resource Decide who gets resources; schedule, budget, set
allocator priorities.
Negotiator Represent department during negotiation of union
contracts, sales, purchases, budgets; represent
departmental interests
Table 1.1: The 10 Managerial Roles

Rift Valley University College of Open & Distance Education 19

Introduction to Management (MGMT-211)
B. Managerial Skills.
Skill is ability to do something expertly and well. Managerial skills are acquired
through education and experience. There are a three principal skills that managers get
through experience an education.
These are:
 conceptual skills
 Human skills
 Technical skills.
1. Conceptual skills
 Conceptual skill involves the ability to view the organization as a whole
and recognize its relationships to large environment or business world.
 Are ability (or mental capacity) to conceive and manipulate ideas and
abstract relation-ships.
2. Human skills
 Human skills include the ability to understand, alter, lead, and control the
behavior of other individuals or/and groups. Human skills focus on
working with people.
3. Technical skills
 Involve the ability to apply specific skills of manager on manufacturing;
accounting and marketing are best examples of technical skills.
All managers need technical, human and conceptual skills. However, the need for these
skills varies with the level of management.
 conceptual skills are more needed by top-level managers
 Human skills are needed uniformly at three levels of management. That is
the need for human skills at three levels of management remains fairly
constant.
 Technical skills are needed greatly by first line managers.

Rift Valley University College of Open & Distance Education 20

Introduction to Management (MGMT-211)
 Fig 1.2 . Relationship of Conceptual, Human, and Technical Skills to
Management

 Activity
1. List down all managerial Roles and explain them?
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
----------------

2. List down all managerial Skills s and explain them?

--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
----------------.
1.9 Is Management Science or Art?
Management is both art and science. It is the art of making people more effective than
they would have been without you. It is also a science that indicates how you do that.
There are four basic pillars of management these are: planning, organizing, directing,
and monitoring
 Management as a science
Science is systematic in the sense that certain relationships between variables have been
ascertained; principles and their limitations have been discovered, tested and
established. Facts are determined through the use of scientific methods. Events or things
are observed first, facts are established and the accuracy of these facts is verified
through continuous observations. Thus mere knowledge is not science. The knowledge
obtained must be verifiable. In this regard management is a field of knowledge that
seeks to systematically understand why and how men work together to accomplish
objectives and to make these cooperative systems more useful to making.

Rift Valley University College of Open & Distance Education 21

Introduction to Management (MGMT-211)
 The scientific character of management is well supported by mathematical models of
these days, but management is not an exact science like natural science. It deals with
human beings; hence it is a social science. Similarly management is not a pure social
science; it is scientific because managers act as scientists.
 Management As an Art
Art is the process via which the desired results are realized through the application of
skills. Management is an art in the sense that management principles are not developed
for the sake of knowledge but for their application to specific situations. Decisions
based on knowledge may not always be successful. Art needs the existence of science
and science demands skillful application of knowledge. Therefore, Management is both
science and art.

 Activity
1. Is management an art of a science? And How?

The word management was derived originally from the Italian maneggiare, which
means to handle. Frenchman Henri Fayol considers management to consist of five
functions: planning, organizing, leading, co-coordinating, and controlling. Management
is also defined as the process of designing and maintaining an environment in which
individuals working together in groups and accomplishing efficiently selected
objectives.
Management is directly tied with Production. It is very crucial in setting up, proper
running and success of a collective enterprise.
Management is both art and science. It is the art of making people more effective than
they would have been without you. It is a science that indicates in how you do that.
There are four basic pillars: plan, organize, direct, and monitor.
There are three levels of management. Top-level managers, or top managers, are also
called senior management or executives. Middle-level managers, or middle managers,
are those in the levels below top managers. First-level managers are also called first-line
managers or supervisors. The management roles were categorized by researcher namely

Rift Valley University College of Open & Distance Education 22

Introduction to Management (MGMT-211)
Henry Mintzberg, and they can be grouped into three major types: decisional,
interpersonal, and informational.
All managers must have five critical skills: technical skill, interpersonal skill,
conceptual skill, diagnostic skill, and political skill.

 Checklist

You have now completed the first Chapter and you need to check whether you have
understood the basic concepts in this unit. If you have a “no” answer for any of the
following, you have to go back and read the appropriate section again until you grasp
the important points.
Now, are you able to:
Yes No
a. Understand the meaning of Management
b. Identify basic Managerial functions.
c. Understand Managerial Levels
d. Explain managerial Roles & skills
e. Understand Management as an Art & Science

 Review Questions

Part I Short answer and Discussion

1. Define Management?

Write at list three significance/Importance of management?

2. What are three types of managerial roles? Explain each with concrete examples.

Rift Valley University College of Open & Distance Education 23

Introduction to Management (MGMT-211)
 3. What are the three levels of managers?

4. Explain management as an Art and as a Science.

Part II: Matching

Column ‘A” Column ‘B”

1. Identify and select appropriate goals & Alternative
A. Staffing
ways of attaining them.
B. Directing
2. The process of identifying task to be accomplished.
3. Involves acquiring, developing and maintain human
C. Leading
resource D. Organizing
4. Involves influencing and motivation of employees E. Controlling
5. Setting of Standard against which work progress is F. Planning
measured.

Review questions answer Key

Part I; Short answer and Discussion
1. Management is the process of coordinating all resources through the five
functions of planning, organizing, staffing, directing (leading) and controlling
to achieve organizational goals /desired objectives.
a. Management is the art of getting things done through other people by
making the atmosphere conducive for others.
b. Management is the utilization of scientifically derived principles to
examine and improve collective efforts /production.
c. It is the process of setting and achieving organizational objectives (goal) by
using the five basic managerial functions by acquiring and utilizing human,
financial and other resources.

Rift Valley University College of Open & Distance Education 24

Introduction to Management (MGMT-211)
 d. It is the process of attaining organizational goals in an effective and
efficient manner through the five basic managerial functions such as
planning, organizing, staffing, leading and controlling.
2. Management is important because:
 The coordination of resources is impossible without management
 It affects the establishment and re-establishment of many economic social and
political goals of the country
 The success or failure of the organization mostly depends on the management
system
 B/c it is the wise utilization of scarce resources for unlimited human wants.
3. The three major managerial roles are :
1. Interpersonal role
2. Informational role
3. Decisional role
 Interpersonal role
When managers play interpersonal roles, they use their human and communication
management skills as they perform the necessary management function.
It includes: Figure head role, leader role & liaison role.
 Informational role
When managers play informational roles they build net works of contacts for sharing
information with others. It includes: Monitor role, disseminator role & spokesperson
role
 Decisional role
When managers play decisional role they use their conceptual and decision-making
management skills. It consists: Entrepreneur role, Disturbance handler role,
Resource allocator role & Negotiator role.
4. The three levels are : Top level, middle level & lower level
5. Management is Both an art & a Science
Part II: MATCHING
1) F 2. D 3. A 4. C 5. E

Rift Valley University College of Open & Distance Education 25

Introduction to Management (MGMT-211)
 CHAPTER TWO
DEVELOPMENT OF MANAGEMENT THOUGHT

2.1. Introduction
Application of management knowledge is as old as human civilization but
development of management thought and theory is relatively of recent origin. The
construction and completion of gigantic projects like Great Wall of China and
Pyramids of Egypt, shows the use of management abilities by the people of ancient
world. At that time probably, there was a jungle of management knowledge and
people used it in their own way. Mosis of Israel is advised by his father-in-law to
follow the principle of span of control. Socrates’ definition of management as a
skill separate from technical knowledge and experience is remarkably close to
current understanding of management. The concept of management has been
developed and practiced in early days in the Roman Catholic Church, Government
and military organization. The organizational hierarchy of authority, functional
specialization, staff specialists was operated by Roman Catholic Church in a
successful way. Management principles such as unity of command scalar
principles, effective communication had been plasticized in the administrative set
up of army. Public administrators of German and Austrian who are known as
cumeralists designed the principles of functional specialization, selection and
training of administrators, simplification of administrative procedures for effective
administration of the state.

2.2. Objectives
Dear Learner! By the time you complete this chapter you will be able to:
 Express the early conception of management;
 Indicate the contribution of industrial revolution to the development of
management theories;
 Identify the different pre-classical contributors to the development of
management thoughts;
 Explain the different classical management theories;
 Explain the behavioral approach to management ;

Rift Valley University College of Open & Distance Education 26

Introduction to Management (MGMT-211)
  Understand quantitative approach to management;
 Discuss the modern approach to management;
 Explain the future trends in management thinking.

2.3 Early contributors of management thought

(Pre-scientific management ERA)
The period prior to F.W. Taylor was considered as management which was
practices in terms of highly individualistic art based on personal qualities. They laid
down foundations for scientific utilization on management. The early contributors
to the management (Pre-scientific management era) are: (a) Robert Owen, (b)
Charles Babbage, (C) Henry Robinson Towne, (d) James Watt Jr. and Mathew
Robinson Boulton, and (e) Charles Dupin .
(a) Robert Owen (1771-1858); He has conducted experiments in the field of personnel
management in textile mills in Scotland during 1800-1828. He advocated that workers
should be treated as human beings. He has taken efforts to improve working conditions
in the factory reduce working hours, increase minimum wages, provide meal~ to
employees, allocate education provision, housing and other labour welfare facilities. His
main contribution is that the effective and good personnel management was essential
part of manager's job since it pays dividends to the employer. Even though he has
specialized in the field of personnel but he has not designed any formal theory of
management.
(b) Charles Babbage (1792-1871): He was a professor of Maths at Cambridge University
from 1828 to 1839. He has suggested aspects like division of labour, work
measurement, profit sharing and engineering to improve the efficiency of management.
He has invented mechanical calculator which was called as "differential machine". He
wrote a book titled "on the Economy of Machinery and Manufactures" (1832). He has
emphasised in improving efficiency through the application of maths and science in the
operation of factories.

Rift Valley University College of Open & Distance Education 27

Introduction to Management (MGMT-211)
2.4 Emergence (history) of management Thought
To get the balance perspective of theory of management, it may be easier to place these
concepts into three categories.
I. Classical or Traditional Approach
a) Scientific Management Approach;
b) Administrative Theory of Management
c) Bureaucratic Organization Approach
II. Behavioral/Neo-classical Approach
a) Human Relations Approach
b) Behavioral Science Approach
III. Modern Management Approach
a) Quantitative Approach
b) System Approach
c) Contingency Approach
These approaches can do little more than sketch some of the high spots in the
emergence of management thoughts.

2.4.1 Classical approach

The Classical Approach is one of the oldest approaches in management and is also
known by 'various names, i.e., Empirical, Functional and Management Process
Approach. The classical theory represents the traditional thoughts about organizations.
It is based on the prototype industrial and military organization. The theory
concentrates on organization structure and their management. The classical writers
include Taylor, Fayol, Weber, Gullick, Urwick, Mooney and Reiley and others. They
placed emphasis on work planning the technical requirements, principles of
management, formal structure, and the assumption of rational and logical behavior. This
theory incorporates three view points. (i) Taylor view point, (ii) Fayol Administrative
theory, (iii) Weber's Bureaucracy. All these writers concentrated on structure and that is
why their approach sometimes is characterized as 'structural framework of organization.
F. W. Taylor insisted on application of scientific methods to the problems of
management. Fayol suggested fourteen principles of management and their universal
application. Max Weber introduced rationality in organization.

Rift Valley University College of Open & Distance Education 28

Introduction to Management (MGMT-211)
It is characterized by division of labor, specialization, structure, personnel, competence,
etc.
Classical approach signifies from the following features:
(i) Organization through division of labor, specialization, structure, scalar,
functional processes and span of control.
(ii) Management is the study of managerial experiences. If the experiences are
studied and certain generalizations are deducted there from, these \ will
help the practicing managers.
(iii) Classical Approach treat organization as a closed systems.
(iv) Formal organization structure coordinate the activities .of the organization.
They ignored the element of human beings.
(v) Principles and functions of management have universal application.
(vi) Scientific management emphasized efficiency of lower levels of organizations.
(vii) Work force were supposed to be rational economic force, they could be
motivated through economic incentives.
(viii) Classical approach emphasized on 'centralization of authority'.
(ix) This school is based on the close study of past managerial experience and
cases, so formal education and training is needed for developing
managerial skills.

Limitations of Classical Theory

The classical approach suffers from several Limitations:
(i) The classical ignored the human relations aspects and undermines the role
of human factor.
(ii) Classical viewed organization as a closed system, i.e., having no interaction
with external environment.
(iii) Economic rewards assumed as the main motivator of work force. They have
ignored non-monetary factors.
(iv) The classical principles are based on managerial experiences and their
limited observations. These are not empirical.
(v) Classical approach is based on over-simplified assumptions. Its principles
are ambiguous and contradictory.

Rift Valley University College of Open & Distance Education 29

Introduction to Management (MGMT-211)
 (vi) This school emphasized on strict adherence to rules and regulations.
(vii) The scope for individual initiative is thus limited.
As discussed earlier, classical approach is based on three main pillows:

 Activity

1. List
Scientific some of the features of Classical
management,Administrative thoughts of Management?
and Bureaucratic theory.
A. Scientific Management
Frederick Winslow Taylor is acknowledged as the "father of scientific management".
Probably no other person has had a greater impact on the early development of
management. His experience as an apprentice, a common labour, a foreman, a mechanic
and then the chief Engineer gave opportunity to know firsthand problems and attitudes
of workers and to see the great possibilities for improving the quality of management.
Other contributors like Frank Gilbreth and Lilian Gilbreth Henry Gant, Emerson also
suggested the effective use of human beings in industrial organization. They studied the
use of human beings as adjuncts to machines in performance of routine tasks. It was
only Taylor who gave concrete shape to the theory of scientific management.

He started his career as a labor in Midvale steel company in 1874 after discontinuing
his study. After that he was promoted as a mechanic, then he was appointed as the chief
Engineer of the company within six years. After obtaining the graduation in physics and
mathematics and later on Master of Engineering, he was employed by the Bethlehem
steel company to increase output; which had been a serious problem. He invented high
speed steel cutting tools and spent most of his life as a consulting Engineer. However,
his major concern was to increase efficiency in production, not only to lower costs but
also to make possible increased pay for workers through their higher productivity.
Scientific management employs scientific methods to the problems of management. He
defined scientific management as the art of "Knowing exactly what you want men to do
and then seeing that how they do it in the best and the cheapest way' He advocated
scientific task setting based on time and motion study, standardization of materials,
tools and working conditions, scientific selection and training of workers and so on. But

Rift Valley University College of Open & Distance Education 30

Introduction to Management (MGMT-211)
he was confined to management' at the top level. Most of his experiments were carried
out in Midvale steel company and Bethlehem steel company. The process of initiation
of experiment carried on Midvale steel company was based on 'time and motion study',
and further at Bethlehem also. However, he conducted experiments mainly on three
functions to find out the best way of working:
He explained the basic philosophy of management in the following terms:
1. Replacing rule of thumb methods with science,
2. Scientific selection and training of workers,
3. Co-operation of labor and management to accomplish work,
4. Working for maximum output, rather than restricted output.
5. A more equal division of responsibility between managers and workers.
Taylor adopted” differential piece rate plan” to motivate the workers for higher
efficiency. According to this plan, high wages in the form of incentive was provided to
those workers who perform more than standard work published the following works on
the basis of experiments:
1.A Piece Rate System 1895
2.Shop Management 1903
3.On the Art of Cutting 1906.
4.Principles of Management 1911.
Later, he integrated his ideas into "The Principles of Scientific management," which
was published in 1911.
Mental revolution
Scientific management involves a complete mental revolution on the part of the
working men engaged in any particular establishment or industry, a complete mental
change on the part of these men as to their duties towards the work, towards their
fellowmen, and towards their employers. It involves equally: complete mental
change on the part of those on the managements' front - the foreman, the superiors,
the superintendent, the owners, the Board of Directors- a complete mental revolution
on their part as to their duties towards their fellow workers in management, Taylor
advocated that without complete mental change on both the sides, scientific
management does not exist. The basic theme behind scientific management is to

Rift Valley University College of Open & Distance Education 31

Introduction to Management (MGMT-211)
change the mental attitude of the workers and the management towards each other.
He advocated that:
(i) There is a change in the mental attitude of the workers, and
(ii) There is also a positive mental change in the attitude of management
He called the positive change in the attitude of workers and management as a revolution
in management. He called it 'Mental Revolution' which has three implications:
a) Effort to increase in production;
b) Creation of mutual trust and confidence; and
c) Developing scientific attitude towards problems.
He suggested management to find out the best methods of doing various jobs and
introduced standardized materials, tools and equipment to reduced wastages.
Management must create congenial environment for optimum efficiency. Congenial
environment should be created through the cooperation of workers and management;
and it is only the congenial atmosphere that brings out the .maximum productivity.

Principles of Scientific Management

To put the philosophy of scientific management into practice, Taylor and his associates
suggested the following techniques:
1. Scientific· task planning: Scientific planning suggests series of separate operations
and function which are already determined by the management. How the task is
performed? In what way? Who performs it? What's the procedure of performing the
task? It provides the answers to these questions.
2. Functional foremanship: Taylor evolved functional foremanship to supervise and
giving various directions. In this system, eight persons direct the activities of
workers, out of them four persons are related with planning functions and the
remaining four are concerned with operating level. Functional foremanship involves
the duties of: (i) Route clerk, (ii) Instruction and clerk, (iii) Time and cost clerk, (iv)
disciplinarian, (v) Speed boss, (vi) Inspector, (vii) Maintenance foreman, and (viii)
Gang boss.
3. Job Analysis: Work management has been suggested by Taylor. There is one best
way of doing a job which requires least movements, consequently less time and
cost. He advocated the analysis of work job with reference to:

Rift Valley University College of Open & Distance Education 32

Introduction to Management (MGMT-211)
 a) Time study: Every work/job requires standard time to carry out under
Specific conditions. Time study involves the determination of time a
Movement takes to complete. .
b) Motion Study: Motion study involves the study of movement of both the
workers and machines so as to identify wasteful movements and performing
only necessary movements.
c) Fatigue Study: The fatigue study shows the time and frequency of . rest. On
the basis of this, management should provide appropriate rest at appropriate
intervals to increase the efficiency of workers.
4. Differential piece rate system: He advocated that there is direct link between,
remuneration and productivity for motivating employees. Taylor applied differential
piece-rate system which is of highly motivating technique. Different piece rate
system adopted on workers :
a. Low rate for those who fail-to achieve the standard output; and
b. Higher rate for those achieving or exceeding the standard output.
The rate should be based on individual performance and on the position which he
occupies. He stressed for scientific determination of remuneration for workers.
5. Standardization: Standardization helps to simplify work, to ensure uniformity of
operations and to facilitate companions of efficiency. Standards are laid down
regarding work, materials, tools and techniques, time, working conditions, etc.
These things should be fixed in advance on the basis of observations.
6. Scientific selection and training: Workers should be selected on scientific basis,
and their education, experience; aptitude, strengths, etc.
7. Cooperation between management and workers: Scientific management succeeds
through the cooperation between management and workers. There should be a
mental change to cooperate with each other and to find out the way out of problem
through scientific methods. Scientific management depends upon the cooperation of
these two. Taylor termed this cooperation as a Mental Revolution.

Rift Valley University College of Open & Distance Education 33

Introduction to Management (MGMT-211)
  Activity
1. According to scientific Management theory, what do we mean by ‘Mental Revolution?

Critical Evolution of Scientific Management

Scientific Management was more concerned about the activities at operation level in the
organization, rather than total functions. Similarly, they emphasized physiological
variables affecting human behavior at work-place, both in terms at work efficiency and
methods of motivation. As such, the scientific management is more relevant to
mechanization and automation-technical aspect of efficiency. Even the mental change
of both management and workers could be sought to achieve maximum production. So,
scientific management has been criticized broadly on the following fronts:
1. Scientific management is a mechanic aspect as it ignores the human element in the
organization. Workers are treated as mere extensions of machines devoid of any
feeling and emotion. Taylor and his associates treated workers as factors of
production, as there is no value of their social and psychological needs.
2. Scientific management focused mainly on efficiency at the operation! shop level, as
a consequence organization or industry has the importance on the areas of
operational level. In this sense, it also denotes as a field of industrial engineering.
3. Scientific management emphasized that planning function should be Separated from
actual performance and should be given to specialists. This is impracticable.
Planning cannot be fully separated from doing, because you are doing on planned
basis; and if there is any change takes place, you also try to absorb these changes in
work. Planning and doing are two sides of the same job.
4. Scientific management advocated functional foremanship to bring specialization in
the organization. But this is not applicable in practice as the worker cannot carry out
instructions from eight foremen. This violates the principles of unity of command.
5. The approach of scientific management is criticized that it advocates close
Supervision and control as to get maximum contribution. But this practice has
limited use and only applicable in a limited way at shop floor.
6. This approach also advocates that standards are laid down regarding everything in

Rift Valley University College of Open & Distance Education 34

Introduction to Management (MGMT-211)
 the organization. However, standardization helps to simplify of every task/activity
brings out uniformity in operations -and helps to increase productivity. • .
7. Workers are forced to do the standard work, and they are motivated to pay more
if they achieve the Standard. So in the name of increasing efficiency, workers are
forced to speed up their functions, i.e., exploitation. And this also is not a type of
motivation. They perform the least standard, they have degraded and vice-versa.
They force the workers to work hard, and this is clearly exploitation.
Finally, Taylor made a long-lasting contribution in management. Taylor was the first
pioneer in introducing scientific management reasoning to the discipline of
management. Many of the contributions provide the basis of modern management.
Really, scientific management provides a basic input to enliven the theories,
approaches which give reasoning to management. Simply, Taylor laid the foundation
of modern management as a science.

(B) Administrative management Approach

It was Henry Fayol who, for the first time, studied the functions and principles of
management in a systematic manner. He defined management in terms of certain
functions and then laid down fourteen principles of management which are uni-
versally applicable.
Henry Fayol was a French mining engineer turned chief administrator in a large
French mining and metallurgical company. It is in four parts of which the first part
deals with classification of business activities as technical activities (manufacturing
or production), commercial activities (buying, selling and exchange), financial
activities (raising and optimum use of capital), accounting activities, security
services, and managerial activities. Henry Fayol was the first person who emphasized
managerial organization and process. Fayol tried to develop a theory of management.
He discussed the principles of management and recommended teaching in man-
agement.

Rift Valley University College of Open & Distance Education 35

Introduction to Management (MGMT-211)
 Organizational Activities
Henry Fayol found that industrial activities could be divided into six groups, or
classified all operations into four ways:
i. Technical (production),
ii. Commercial (buying, selling and exchanging),
iii. Financial
iv. Accounting (balance sheet, costing, records)
Principles of Management
Fayol listed fourteen principles, based on his experience. However, the list is not
exhaustive. They are summarized in the perspective. He noted that these principles are
flexible, and not absolute, and must be usable regardless of changing and special
conditions. These principles are as follows:
1. Division of labor: Fayol advocated division of work to take the advantage of
specialization. This is the specialization that managers consider necessary for efficiency
in the use of labor. Fayol applies this principle to all kinds of work.
2.Authority and responsibility: The authority and responsibility are related, with the
later arising from the former. He finds authority is being official and personal factor.
Authority is generally derived from manager's position and because of manager's
personal competency to solve problems in the organization. Responsibility arises out of
assigning the work.
3. Discipline: Discipline is the obedience, application, energy, behavior, and outward
mark of respect shown by employees. It also implies compliance with
organizational directives and rules, orders and instructions of superior and to co-
operation with fellow workers. Fayol observed that discipline is what leaders make
it. He declared that discipline requires good superiors at all levels.
4. Unity of command: Unity of command means that employees should receive
orders from one superior only. The principle is useful in the clarification of
authority-responsibility relationships. It helps in maintaining disciplines, controlling
their activities, fixing responsibility and not allows overriding their track.
5. Unity of direction: Unity of Direction means one unit and one plan.' Each group of
activities with same objective must have one head and one plan. It relates to the

Rift Valley University College of Open & Distance Education 36

Introduction to Management (MGMT-211)
 organization of the "body corporate" rather than to individual. All activities of the
organization should be directed towards a definite way.
6. Subordination of individual to general interest: Organization’s interest is above
the individual interest. And when there is conflict between the two, the common
interest must prevail or management must reconcile them.
7. Remuneration: Employees should be paid fairly and reasonably in accordance with
their contribution. Remuneration and method of payment should be fair and afford
the maximum possible satisfaction to employees and employer.
4. Centralization: Fayol refers to the extent to which authority is-centralized or
decentralized. This pattern is determined by individual circumstances and should be
based on optimum utilization of all faculties of the personnel. Centralization refers
to the reservation of authority at the top level. But he referred that how much
authority is dispersed or concentrated to achieve the objective effectively.
5. Scalar chain: These should be clear line of authority from the top level to the
lowest level, which, while not to be departed from needlessly, should be short-
circuited only in special circumstances when its rigid following would be
detrimental to the organization. It is known as scalar chain because all employees
are attached to it in the relationship of superior and subordinate.
10. Order: This is essentially a principle of organization in the arrangement of things
and people. Human as well as material resources should be in their prescribed
proper place and order.
11. Equity: Employees should be assured to be treated on the basis of principle of
equality, fairness and impartiality. Loyalty and devotion should be elicited from
personnel by a combination of kindness and justice on the part of managers when
dealing with subordinates.
12. Stability of Tenure: Stability should be provided to employees accustomed to new
work and succeeding in doing it will. Fayol finds that unnecessary tenure is both the
cause and effect of bad management.

Rift Valley University College of Open & Distance Education 37

Introduction to Management (MGMT-211)
13. Initiative: Employees should be provided an opportunity as to' develop and use
initiative for solving work-related problems. Initiative increases zeal and energy on
the part of human beings. Fayol exhorts managers to "sacrifice personal vanity" in
order to allow to do it.
14. Esprit-de-corps: It emphasizes the need for team work and the importance of
communication in obtaining it. It implies to build team spirit among the employees
so that they work with proper mutual understanding as to make their respective
contribution for achieving goals.

Fayol regarded the elements of management as its functions-planning, organizing,

commanding, coordinating and controlling. Fayol perceived that management should be
viewed as a process consisting of five elements:
(i) Planning; (ii) Organizing; (iii) Commanding; (iv) Coordinating (v) Controlling.
He observes that planning is the most important function and a failure to plan properly
leads to inefficiency in the organization. Creation of organizational structure and
commanding is necessary to execute the plan. Coordination integrates the activities,
controlling asks whether everything is proceeding according to plan. Fayol had
emphasized that these principle is applicable everywhere. Since all the organizations
require managing, it follows that formulation of a theory of management is necessary
for effective teaching of the subject.
C. Bureaucratic Organization
The next important form of classical approach is bureaucratic approach of organization.
This contribution has been given by a German sociologist Max Weber. This particular
form of organization is well known in government and military organizations. Every
type of organization possesses some features of bureaucracy in some form; that is
ranging between, 'Line organizations’ to 'free form organization'. It aims at high degree
of precision, efficiency, objectivity and rationality in the organization to make it more
efficient. Weber's theory recognizes rational-legal authority as the most important in the
organization. However, Weber's contention is that there are three types of legitimate
authority in the organization': (i) Rational legal authority; (ii) Traditional authority; (iii)
Charismatic authority.

Rift Valley University College of Open & Distance Education 38

Introduction to Management (MGMT-211)
•Weber's contention is based on the display of rational legal authority. The model of
bureaucracy suggested by Weber is based on the following features:
(i) Division of work: It implies to divide and assign activities to various employees on
the basis of their abilities, skills and aptitudes to' get the benefit of
specialization. Work should be divided and assigned to each employee
in the organization to achieve high degree of precision.
(ii) Hierarchy of authority: The bureaucratic structure is hierarchical in nature. All
employees in bureaucratic organization are attached to hierarchy of
authority which is rational and legal in nature.
(iii) Rigidity in rules and regulations: Management standardizes operations and
decisions. Management prescribes procedure and set rules and regu-
lations in bureaucratic organization to regulate and control working
behavior of employees. They must be in compliance with procedures and
framework of rules.
(iv) Impersonality: The decisions are entirely governed by rules and regulations and are
totally impersonal. The employees have very formal and functional in
relationship among them. They have the official relationship.
(v) Technical competence: Human resources in the organization are employed or
selected on the basis of technical competence, that is, what they know about
the job.
It is on the basis of job requirements; they are selected and placed in the organization.
Weber's ideal bureaucracy has been designed to bring rationality and predictability of
behavior in the organization. It reduces subjectivity, because people have impersonal
and formal relationship and they have to comply with rules and regulations. Hierarchy
of authority also helps to maintain discipline. Division of labor leads to specialization'
and rationality brings effectiveness in decision making. This form of organization helps
to gain the following advantages:
(i) Rationally efficient form of organization,
(ii) Reduces subjective judgment,
(iii) Specialization,
(iv) Effective decision-making,

Rift Valley University College of Open & Distance Education 39

Introduction to Management (MGMT-211)
 (v) Consistency of actions,
(vi) Allocation of task according to competency, and
(vii) Maintaining discipline in the organization.

However, this approach is not free from negative connotations. These are as follows:
i. Bureaucratic model does not consider informal organization and does not
prescribe personal relationship; so, this is insensitive to the needs of the
individual.
ii. That which is based on rationality perhaps finds very limited applicability in
practice and often it becomes the epitome of inefficiency.
iii. Bureaucratic organization encourages red-tapism; inordinate delay in decision-
making, goal displacement and finally lack of initiative and positive
motivation may result in inefficiency in such organizations.

2.4.2 Behavioral or Neo- classical approach

The Neo-classical approach was evolved over many years; because it was found that
classical approach did not achieve complete production efficiency and workplace
harmony. Managers still encountered difficulties and frustrations because people did
not always follow predicted or rational patterns of behavior. Thus, there was increased
interest in helping managers deal more effectively with the 'people side' of their
organization. The neo-classical theory reflects a modification over classical theories.
The neo-classical approach recognizes the primacy of psychological and social aspects
of the workers as an individual and his relations within and among groups and the
organization. It gained importance after the World War I, particularly in the wake of the
"Hawthorne experiments" at Western Electric Company by Elton Mayo during 1924 to
1932. So, Elton Mayo is generally recognized as the father of the Human Relations
Movement. The basic features of neo-classical approach are:
a. The business organization is a social system.
b. Human factor is the most important element in the social system.
c. It revealed the importance of social and psychological factors in determining
worker productivity and satisfaction.
d. The behavior of an individual is dominated by the informed group of which

Rift Valley University College of Open & Distance Education 40

Introduction to Management (MGMT-211)
 he is a member.
e. The aim of the management is to develop social and leadership skills in
addition to technical skills. It must be done for the welfare of the workers.
Hawthorne experiment
A famous series of studies of human behavior in work situations was conducted at the
Western Electric Company from 1924 to 1933. In 1927, a group of researchers led by
Elton Mayo and Fritz J. Roethlisberger9 at the Harvard Business School were invited to
join at Western Electric's Hawthorne plant near Chicago. The studies began as an
attempt to investigate the relationship between the level of lighting in the workplace
and the productivity of workers.
This initial experiment carried out over a period of three years sought to determine the
effects of different levels of illumination on worker's productivity. The results of the
experiments were ambiguous. When the test group's lighting conditions were improved,
productivity tended to increase just as expected, although the increase was erratic. But
there was a tendency for productivity to continue to increase when the lighting
conditions were made worse, besides lighting was influencing the worker's
performance, as the work group was not able to maintain relationship between
illumination and productivity.
In the second set of experiments, a smaller group of six female telephone operators
was put under close observation and control. Frequent changes were made in working
conditions such as hours of work, lunch break, rest periods, etc. Again the results were
ambiguous, as performance tended to increase even when the improvements in working
conditions were withdrawn. It was found that socio-psychological factor exercised a
greater influence on productivity and working conditions.
The third set of experiment attempted to understand how group norms affect group
effort and output. It was noted that the informal organisation of workers controlled the
norms established by the groups in respect of each member's output. The researcher
concluded that informal work groups have a great influence on productivity.
In the subsequent experiments, Mayo and his associates decided that financial
incentives, when these were offered, were not causing the productivity improvements.
The researchers concluded that employees would work hard if they believed

Rift Valley University College of Open & Distance Education 41

Introduction to Management (MGMT-211)
management was concerned about their welfare, and supervisors paid special attention
to them. This phenomenon was subsequently labeled as the Hawthorne Effect.
These findings concerning human behaviors at work focused on the worker as an
individual and considered the importance of caring for his feelings and understanding
the dynamics of informal organization of workers. The view point of Hawthorne Effect
thus gave birth to human relations movement and provided the thrust toward
democratization of organizational power structures and participative management. It
ushered in an era of organizational humanism.

a. Human Relation Movement

Hawthorne experiment led to the development of human. Relations approach.
It revealed the importance of social and psychological factors in determining workers,
productivity and satisfaction. This movement is marked by informal grouping, informal
relationship and leadership Pattern of communication and philosophy of industrial
humanism. The values of human relationists are exemplified in the work of Douglas
McGregor and Abraham Meslow.10 Human relation approach is a social psychological
approach and suggests business enterprise is a social system in which group norms play
a significant role. Financial incentive was less of a determining factor on a workers
output than were group pressure and acceptance and the concomitant security. It
ushered an era of organizational humanism: Managers would no longer consider the
issue of organization design without including effects on work groups,
employees' attitudes, and manager-employee relationships. Elton Mayo, Mary Parker
Follett and Douglas McGregor, Roethlisberger, Dickson, Dewey and Lewin, etc were
the main contributors that led to the development of Human Relations Movement. The
human relations movement marked by the following factors:
1. This movement viewed organization as a social system composed of nu-
merous interacting parts, in which groups norms exercise a significant
influence on the behavior and performance of individuals.
2. The movement emphasized that apart from economic needs, the employees
have other social and psychological needs such as recognition, affiliation,
appreciation, self-respect, etc.
3. The groups determine the norms of behaviour for the group member and thus

Rift Valley University College of Open & Distance Education 42

Introduction to Management (MGMT-211)
 exercise a great influence on the attitudes and performance of workers. Group
Dynamics at the workplace become a major force.
4. The human relations approach was focused on teaching people-management
skills, as opposed to technical skills.
5. This approach strongly believed that there should be no conflicts or
clashes in the organization; and if it arises, it must be removed through
improvement of human relations in the organization.
6. They consider that informal organization does also exist within the framework
of formal organization and it affects and is affected by the formal
Organization. ~
7. According to his approach, managers should understand human relations.
Managers began thinking in terms of group processes and group rewards to
supplement their former concentration on the individual worker. The study of
human behavior and human interactions has assumed much Significance as a
result of this approach. .

Criticism of Human Relations Approach

No doubt, this approach has provided many new ideas in managing the organization,
but this is not free from certain limitations:
1. Human relations approach cannot be treated as complete package to deal with
human being effectively, because no attempt had been made for studying and
analyzing human behavior systematically and scientifically.
2. The human relations approaches undermine the role of economic incentives in
motivation and give excessive stress on social and psychological factors. In
actual practice, financial incentive plays a crucial rule to motivate employers.
3. The human relations approach presented a negative view of conflict between
organizational and individual goals. It views these conflicts as destructive. The
positive aspects of conflicts such as overcoming weaknesses and generation of
innovative ideas are ignored.
4. The human relationists drew conclusions from Hawthorne experiments which
were clinical based, rather than scientific. The experiments focused on a
particular group chosen for study which did not represent the entire work force.

Rift Valley University College of Open & Distance Education 43

Introduction to Management (MGMT-211)
 5. The human relations approach did not give adequate focus on work. It puts all the
emphasis on interpersonal relations and on the informal group.
It tends to overemphasize the socio-psychological aspects at the cost of structural
and technical aspects.
6.The human relations approach over emphasized on group Dynamics. But in
actual practice, group and group norms, in formal process exercise a light influence
in organization functioning.

B. Behavioral Science Approach

Mayo and his colleagues pioneered the use of the scientific method in their studies of
people in the work environment. .Later researchers were more rigorously trained in the
social sciences (psychology, sociology, and anthropology) and used more sophisticated
research methods. Thus, these later researchers became known as 'behavioural
scientists'. Several sociologists and psychologists, e.g., A.H. Maslow, Douglas
McGregor, Argyris, F. Herzberg, Rensis Likert, Kurt Lewin, Keith Davis and others
have made significant contributions to the development of this approach.
Under Behavioral Science Approach, the knowledge was drawn from behavioral
sciences. It focuses on human behavior in organizations and seeks to promote verifiable
propositions for scientific understanding of human behavior in organisation behavior
and stresses the development of human beings for the benefit of both the individual and
the organization. It is broad based and consisted of multiple concepts such as
motivation, leadership, communication, group Dynamics, job redesign, organizational
change and development, impact of technology on jobs, etc. It highlights the group and
group relationships broadly which is the focus point of this theory to judge the group
behavior in the organization. The main propositions of this approach are as follows:
1. Behavioral Science Approach is an inter-disciplinary approach and integrates the
knowledge drawn from different disciplines for the study of human behavior.
2. This approach advocates that an organization is a socio-technical system which
consists of individuals and their interpersonal and social relationship with each
other, and another side it consists of various techniques, methods and procedures
used by them for performing jobs.
3. Behavioral Approach recognizes individual differences in terms of their

Rift Valley University College of Open & Distance Education 44

Introduction to Management (MGMT-211)
 personality, goals, beliefs, values and perception. Therefore, these matters are
important for the organisation in case of motivation.
4. Behavioral Approach -recognizes goal conflicts in the organisation and suggests
reconciliation of the goals of the individuals and the organization for the
effectiveness and efficiency of the organization.
5. This approach emphasized on informal group which exercise a significant
influence on the attitudes, behavior and performance of employees.
6. Behavioral Science approach stressed upon groups, group behavior and group
dynamics. Workers have their own informal groups and they have their own
norms, cultures and communication system.
7. This is broad based and consists of multiple concepts such as motivation,
leadership, communication, change and development, group dynamics,
jobs redesign; etc.
Behavioral approach provided a new insight to human behavior. It integrates the
different knowledge of different fields for the scientific study of human behavior for the
benefits of both the individual and the organization.

2.4.3 Modern approach

Recent development took place in management theories after 1930. It perhaps Chester I.
Bernard, who in 1938, provided a comprehensive explanation of the modem view of
management and organization. He considers the individual, organization suppliers and
customers as a part of the environment. Ten years later Weiner's pioneering work on
cybernetics developed concepts of systems controlled by information feedback. It is
important note that with the passage of time, the viewpoints have been changed or
modified. Each major contributor brought new knowledge, awareness, and tools and
techniques to understand the organization better. In Modern era, we are rich than even
before in terms of our knowledge about approaches to understand organizations better.

! Modern Approach

1. Quantitative Approach
2. Systems Approach
3. Contingency Approach

Rift Valley University College of Open & Distance Education 45

Introduction to Management (MGMT-211)
A. Quantitative Approach
The approach gained the prominence after the world war II, when British formed the
operational research team-group of mathematicians, physicists and other scientists who
were brought together to solve problems and operations. These groups were expected to
develop optimal decisions about deployment of military resources. This approach is
also known as 'Management Science Approach, Mathematical Approach, Decision
Theory approach, or Operations Research.
It is based on the approach of scientific management. It offers a systematic and
scientific analysis and solutions to the problems faced by managers. Today
management Science Approach to solving a problem begins when a mixed team of
specialists from relevant disciplines is called to analyses the problems and propose a
course of action to management. The team constructs a mathematical model to simulate
the problem. The model shows, in symbolic terms, all the relevant factors that bear on
the problem and how they are interrelated. Eventually, management science team
presents management with a rational basis for making a decision. The techniques
commonly used for solving mathematical problems in decision-making are Linear
programming, critical path method, PERT Games Theory, Queuing theory, Break Even
Analysis, etc. Simply, operation Research is regarded as the application of scientific
methods and mathematical models for solving problems. The basic postulates of
Operation Research Method are as:
i. Management is regarded as a problem-solving mechanism with the help of
mathematical tools and techniques.
ii. Management problems can be described in quantitative or mathematical
symbols, data and relationship.
iii. The different variables in management can be quantified and related to
equation which can be solved. .
iv. It covers decision making, system analysis, and some aspect of human behavior.
v. The team uses the basic mathematical models; operation research mathematical
tools, simulation, games theory, PERT, CPM to solve the problems.

Rift Valley University College of Open & Distance Education 46

Introduction to Management (MGMT-211)
 Uses and Limitations of Quantitative Approach
The techniques of management science are a well-established part of the problem
solving armory of most large organizations. Management Science techniques are used
in such activities as capital budgeting and cash flow management, production,
scheduling, development of product strategies, planning for human resource
development, optimum inventory levels, etc. The development of techniques has
contributed significantly in developing orderly thinking in management and the study
of various problems and talking optimum or best solutions to the problem. It provides
a rational basis of decision making. It has been used as a planning and controlling
tool in management.
Quantitative Approach suffers from the limitations in spite of widespread use of
many problems:
i. This approach is focused on decision-making and ignored other functions of
management. . .
ii. Management Science Approach are too complicated for ready understanding
the concept and language of the problem and implementation.
iii. Management Scientists feel that they have not achieved their full potential of
solving management problems because of their remoteness from and lack of
awareness of the problem and constraints actually faced, by managers.
iv. It does not consider the human element in the organization.
v. The approach is based on unrealistic assumptions, e.g., all related variables are
measurable and have a functional relationship.
On the whole, due to these constraints, the quantitative approach has very limited
application that only in respect of decision-making and problem-solving.

B. Systems Approach
In the nineteenth century, modem theories of organization and management have been
developed. The perspective here is to provide a systems view point
In 1951, Weiner's pioneering work on cybernetics developed concepts of systems
control by information feedback. He described on adaptive system mainly dependent
upon measurement and correctional through feedback.
The Systems Approach to management attempts to view the organization as a unified,

Rift Valley University College of Open & Distance Education 47

Introduction to Management (MGMT-211)
purposeful system composed of interrelated parts. The systems Approach gives
managers a way of looking at an organization as a whole and a part of the larger
environment. Systems Theory tells us that the activity any part of an organization
affects the activity of every other part. It is integrating approach which considers the
management in its totality. A system is defined as the assemblage of things connected
or interdependent, so as form a complex unity, a whole composed of parts in orderly
arrangement according to plan. This has been defined as 'an organized of complex
whole, an assemblage or combination of things or parts forming a complex unitary
whole. The world is considered to be a system in which various nation economy are
sub-systems. In turn, each national economy is composed of various industry, each
industries is composed of firms, and of course, each, firms is composed of various
components such as production, finance, marketing, etc. Thus, each system consists of
several such systems and, in turn, each sub system further is composed of various
components or sub-units; which are interrelated or interdependent each other. The
main elements of Systems Approach are as:
 An organization is a unified and integrative system consisting of several
interrelated and interdependent parts. It gives a manager a way looking at the
organization as a whole.
 A system is considered an open system because it interacts with environment.
All organizations interact with their environment. It gets various resources
from the environment and transforms them into out· puts desired by the
environment.
 The parts that make-up the whole of a system are called sub-systems. And
each system in turn may be a sub-system of a still larger whole. All these sub-
systems are functionally interacting and interdependent.
 Each system has a boundary that separates it from its environment. The
boundaries are more flexible in an open environment. It maintains the clear
and proper relationship between the system and its environment. The system
boundary is rigid in closed system. The boundary of a system classifies it into
two parts: (i) open system, (ii) closed system.
 Management as a system is dynamic which suggests that equilibrium in the

Rift Valley University College of Open & Distance Education 48

Introduction to Management (MGMT-211)
 organization is always changing. The survival arid growth in a dynamic
environment demands an adaptive system which can continuously adjust to
changing environment. Management tends to bring changes in the sub-
systems of the organization to cope up with the environmental challenges.
 Systems Approach follows the law of synergy. Synergy means that the whole
is greater than the sum of its parts. In organizational terms, it means that as
separate departments within an organization cooperate and interact, they
become more productive than if each had acted in isolation. The parts of a
system become more productive when they interact with each other.
 Feedback is the key to system controls. As operation of the system proceeds,
information is feedback to the appropriate people or perhaps to a computer so
that the work can be assessed and, if necessary, corrected.
Management as a discipline draws and integrates knowledge from various
disciplines and schools of thought like psychology, sociology, anthropology,
mathematics, operation research, and so on.
Evaluation: System theory calls attention to the dynamic and interrelated nature of
organizations and the management task. Thus, systems theory provides understand
unanticipated consequences as they may develop.
In spite these significant points, the systems approach are not free form limitations:
(i) The systems approach cannot be considered a unified theory of organization.
This is in no way a unified body of thought. Systems approach fails to take
a comprehensive study to analyze the organizations from different angles.
(ii) The systems approach has failed to specify the nature of interactions and
inter dependencies between an organisation and its external environment.
(iii) The systems approach has failed to spell out the precise relationship be-
tween various sub-systems.
(iv) The systems approach does not provide action framework applicable to all
types of organizations.
(v) The systems approach does not offer any tools or techniques for analysis
and synthesis of the system and environment.

Rift Valley University College of Open & Distance Education 49

Introduction to Management (MGMT-211)
C. Contingency Theory
Contingency Approach shares a common ancestry with socio-technical system theories.
The latest approach of management which integrates the various approaches is known
as 'contingency' or 'situational' approach. 'Charles Kindleberger specified upon what it
depends, and in what ways. "It depends' is an appropriate response to the important
questions in management. Management theory attempts to determine the predictable
relationships between situation, actions, and outcomes. It focuses on the
interdependence of the various factors involved in managerial situation. The early
beginnings can be found in the studies of Burns and Stalker in 1950 which examines
what happens to the behavior of organization members as a consequence of
technological changes. Joan Woodward analyzed the influence of technology on
organization structure. She found that span of control; interpersonal relationships,
participation and other structural aspects differed to technology used. Lawrence and
Lorsch (1967) attempted to explain the internal states and processes is an organization
according to their external environment. Jay Galbraith revealed that the amount of
information required by an organization depended on the level of uncertainties,
interdependence and adaptation mechanisms. Tom Bums, G.W. Stalker, Joan
Woodward, James Thompson, Paul Lawrance, Jay Galbraith and other pioneers made
significant contribution to the contingency theory.
The contingency approach was developed by managers, consultants, and researches
who tried to apply the concepts of the major schools to real-life situations. They found
that methods that were effective in one situation would not work in other situations.
According to contingency approach, then, the task of managers is to identify which
technique will, in a particular situation, under particular circumstances, and at a
particular time, best contribute to the attainment of management goals. The basic theme
of the contingency approach is that there is no single best way of managing application
in all situations. The application of management principles and practices should be
contingent upon the existing circumstances. Functional, behavioral, quantitative and
systems tool of management should be applied situationally. Management should deal
with different situations in different ways. There cannot be a particular management
action or design which will be appropriate for all situation .Contingency Approach is

Rift Valley University College of Open & Distance Education 50

Introduction to Management (MGMT-211)
based on generalizations of 'if and 'then'. 'If” represents environmental variables which
are interdependent. 'Then' represents management variables which are dependent on the
environment.

The main features of contingency approach are as:

(i) The contingency approach stresses that there is no one best style of leadership
which will suit every situation. The effectiveness of leadership style vary
from situation to situation. Therefore, according to this approach,
management is entirely situational.
(ii) Contingency Approach is action-oriented as it is directed towards the ap-
plication of systems concepts and the knowledge gained from other ap-
proaches. The contingency approach builds upon this perspective by fol-
lowing in detail on the nature of relationships existing between these parts.
(iii) Contingency theory attempts to determine the predictable relationships between
situations, actions and outcomes.
(iv) Management should match or 'fit' its approach to the requirements of the
particular situation. Management has to exercise the action subject to en-
vironmental changes.
(v) Contingency approach provides significant contribution in organizational
design. It suggests that no organizational design can be suitable for all
situations, rather, the suitable design is one determined, keeping in view the
requirements of environment, technology, risk and people.
Contingency approach is useful orientation in management. It emphasizes the
multivariate nature of organizations- and attempts to understand how organizations
operate under varying conditions in specific circumstances. This theory suggests
organization design and actions which are most appropriate for specific situation.

Critical evaluations
The primacy of contingency approach is challenged by several theorists. They argue,
for one thing, that the contingency approach does not incorporate all the aspects of
systems theory, and they hold that it has not yet developed to the point of which it can
be considered a true theory. Critics also argue that there is really not much that is new
about contingency approach. For example, even the classical theorists such as Fayol

Rift Valley University College of Open & Distance Education 51

Introduction to Management (MGMT-211)
cautioned that management principles must be flexible.
The contingency approach is also criticized on the ground that it is totally a practical
approach without being supported by required theoretical and conceptual framework.
The managers experience difficulty in analyzing situations in the absence of needed
research devices and generalizations for understanding behavior of the situation. Some
of the classical theorists forgot the pragmatic cautions of Fayol and others. Instead, they
tried to come up with "universal principles" that could be applied without the "it
depends" dimension. Managers applied the absolute principles by these theorists.
Lastly, the considerations of environmental factors are necessary to develop. An
organizational design and action. But, managers are certainly unaware of the
environmental changes and could not analyze the environmental factors properly. The
theme of contingency approach that management must be aware would work best in a
particular situation in the absence of certain methods, models and techniques that are
relevant to appraise situation.

Summary
Studying management is important for various reasons including the following facts:
 Theories guide management decisions
 Theories shape our view of organizations
 Theories make us aware of the business environment
 Theories are a source of new ideas
There are several theories of management these are the classical management theories
focus on efficiency and include bureaucratic, scientific and administrative management.
Bureaucracies are founded on legal or rational authority which is based on law,
procedures, rules, and so on. Scientific management focuses on worker and machine
relationships. Administrative management emphasizes the manager and the functions
of management.
Behavioral or human relations management emerged in the 1920s and dealt with the
human aspects of organizations. It has been referred to as the neoclassical school
because it was initially a reaction to the shortcomings of the classical approaches to
management.

Rift Valley University College of Open & Distance Education 52

Introduction to Management (MGMT-211)
The human resources school understands that employees are very creative and
competent, and that much of their talent is largely untapped by their employers.
The behavioral school focused on trying to understand the factors that affect human
behavior at work.
The quantitative school focuses on improving decision making via the application of
quantitative techniques.
Systems theory and a contingency view can help integrate the theories of management.
Appropriate managerial techniques can be applied as required by environmental
conditions.

 Checklist
You have now completed the first Chapter and you need to check whether you have
understood the basic concepts in this unit. If you have a “no” answer for any of the
following, you have to go back and read the appropriate section again until you grasp
the important points.
Now, are you able to describe:
Yes No
a. Scientific Management Approach
b. Administrative Theory of management
c. Bureaucratic Organizational Approach
d. Human relation Approach
e. Behavioral Science Approach
f. Quantitative Approach
g. System Approach
h. Contingency Approach

Rift Valley University College of Open & Distance Education 53

Introduction to Management (MGMT-211)
Review Questions
1. Describe the 14 Principles of Management?

2. List down some of the classical Approach ideas?

3. What is the focus of the Classical school of thought?

4. How do you characterize the:

a. Bureaucratic management? b. Scientific management?
c. Administrative management?
a.

b.

c.

Rift Valley University College of Open & Distance Education 54

Introduction to Management (MGMT-211)
 5. When did the Behavioral or human relations management emerge? What is its
main focus and concern?

6. What is the principle of the scientist Chester Barnard?

7. “Employees are very creative and competent, and that much of their talent is
largely untapped by their employers”. Which theory advocates this principle?

8. What is the main focus of behavioral school in terms of employees?

9. “Improving decision making via the application of quantitative techniques”.

Which school of thought focuses on this principle?

10. Define the following terms:

a. Chaos b. Reengineering c. System Approach D. contingency Approach

Rift Valley University College of Open & Distance Education 55

Introduction to Management (MGMT-211)
 CHAPTER THREE
PLANNING
FUNCTION
Objectives
Dear Learner! After completing this chapter you will be able to:
 Define Planning from different perspectives;
 understand and explain the Planning Process;
 know the main Classifications of a plan
 Basic Planning techniques

Introduction
In designing an environment for the effective performance of individuals working
together in groups, a manager's most important task is to see that everyone understands
the organization’s objective and its methods of attaining them. If an effort is to be
effective and well-explained, people must know what they are expected to accomplish.
This is the function of planning. It is the most basic to all the managerial activities.
Planning logically proceeds the execution of all other managerial functions. Planning is
the unique practice in the sense that it establishes the objectives for the organization and
lay down a specific pattern to achieve these objectives. Individuals and organizations
both need to plan. Whether we plan for a marriage, a vacation, the next step in a career,

Rift Valley University College of Open & Distance Education 56

Introduction to Management (MGMT-211)
or new sales programme, planning is the basic process of selection of goals and the
determination of their achievement.

3.1 Concepts and need for planning

 Planning - is the process of setting objectives and determining the steps needed
to attain them.
 Is systematic preparation for tomorrow, today
 Is an orderly process that allows managers to determine what they want
and how they get it.
 deals with ends (what is to be done)
 Planning answers six basic questions in regard to any intended activity
(objective). what ,when, where, who, how and how much
 In planning managers:
o Assess the future
o Determine objectives of the organization and develop the overall
strategies.
o Determine resources needed to achieve the objectives

3.3.1 Need for planning

Planning is important for every organization irrespective of its size, objectives, and
location. Because decisions without planning would become random this may lead to
failure of entire organization.
Planning is important for several reasons:
1. It provides direction for an organization by specifying objectives
2. It reduces risk and uncertain of the future
3. It allows organizational members to concentrate on common organization's
objective
4. It provides criteria for decision making
5. It provides basis for control or it facilitates control

3.2 Types of Plans

Rift Valley University College of Open & Distance Education 57

Introduction to Management (MGMT-211)
Plan can be classified in to different types based on various criteria (basis):
repetitiveness, time dimension and scope or breadth dimension
A. Classification of plans based on repetitiveness
On the basis of repetitiveness plans can be classified in to three:
i. single use plans
ii. standing plans

I. Single use plans

Single use plans are those plans which have no more use after objective is
accomplished. Once activity for which they have been made is over, single use plans
have little or no use at all. They include: programs, projects, and Budgets.
 Program _ is set of goals, policies, procedures, rules, job assignments, resources
to be employed, and other elements necessary to carry out a given course of
action.
_ is set of activities used to accomplish objectives or used to solve
some problem.
 Project _ Is specific action plan formulated to complete various aspects of a
program which can be distinctly identified as a clear-cut grouping of activities
with definite objectives and completion time.
 Budget _ is a statement of expected results expressed in numerical terms. Even if
budget is often thought as control technique, it is also a plan since it sets forth
objective to attain. Sometimes called as 'numerical plan' as they are quantitative
in nature.

II. Standing Plans

- Standing plans are type of plans which can be used again and again once they
made. They remain useful for long period in dealing with repetitive situations
- they include: policies, procedure, and rules.

 Policies

Rift Valley University College of Open & Distance Education 58

Introduction to Management (MGMT-211)
 - Are guidelines to decision making. Policies establish abroad framework
within which managers at different levels make decisions.
- are general guide to thinking and action
Policies are important for an organization as they:
 provide guidance to decision making
 Channels all decisions toward the attainment of objectives.
 Ensure consistency and uniformity in decision making.

 Procedures _ are sequences of steps or activities involved in making decisions or

performing other tasks. Procedures aim at laying down a mechanism for orderly
performance and coordination of various organizational activities so as to avoid
random actions and operations. Like policies, procedures also contribute in
consistency of organizational activities by providing steps.

 Rules are on-going specific plans influencing human behavior or conducts at

work place.
*are fixed plans and define what should and what should not be done. (Guide
to action).
* Unlike polices, rules don't allow for interpretation or decisions. Decisions
are needed only in making the rules.

 Activity

1. What is a Plan?
2. List down some of the Purposes of a Plan ?
3. Differentiate Single Use and Standing plans ?

B. Classification of plans based on time dimension

Taking time in consideration a plan can be categorized in to three. Basically
planning deals with future and the future is measured in time. Hence it is

Rift Valley University College of Open & Distance Education 59

Introduction to Management (MGMT-211)
 convenient and acceptable to think of different kinds of planning in terms of the
time periods for which the planning is intended.
(i) Long range plans
Long range plans are those plans which have longer time horizon; they are
concerned with distant future than immediate future. The time may range from 5to
10 years
(ii) Intermediate plans
Intermediate range plans are those plans with a time horizon between one and five
years. They range between long and short-term plans.
(III) short range plans
Short range plans are those plans with time dimension it is not possible to have
aright time horizon guide line. For a plan to be short range or long range, it depends
on the size of an organization and nature of business of an organization. So short
range plan for one organization may be an intermediate or long range plan for the
other organization.

C. Classification of plans based on scope (Breadth)

Based on their scope or breadth plans can be classified in to three types: strategic
plans, tactical plans, and operational plans.

(i) Strategic plans

Strategic plans _ Performed by top-level management
_ Mostly long range in its time frame
_ Expressed in relatively general terms
_ Type of planning that provides general future based
direction to organization

(ii) Tactical plans

_ Tactical planning is the process of developing action plans through which strategies
are executed.

Rift Valley University College of Open & Distance Education 60

Introduction to Management (MGMT-211)
_ Tactical plan- is a plan used to develop means needed to activate and implement
strategy.

Tactical plans:
_ performed by middle level managers
_ Have shorter time frame, more detail and narrower scope than strategic
plans
_ Guide submits of an organization

(iii) Operational plans

Operational planning is the process of setting short-range objectives and determining in
advance how they will be accomplished.

Operational plans:
_ are first line managers' tools for exciting daily, weekly, and monthly
activities.
_ performed by operational level managers.
_ are Specific and more detail than others.

3.3 Planning process

Planning is not something which is made all once at a time. A person involved in
planning pass through number of steps to make effective plans. Process of planning
indicates the major steps taken place in planning.

The steps generally involved in planning are:

Step 1. Environmental Analysis and forecasting

The real starting point for planning is an awareness of environment, both internally and
externally. Organization should maintain a continual assessment of the environment to

Rift Valley University College of Open & Distance Education 61

Introduction to Management (MGMT-211)
determine its own weaknesses and strengths internally and to be aware of opportunities
and threats in external environment. . Based on this analysis of internal and external
environment forecasting (predicting) of different environmental factors such as
economics, technological, political etc can be made to assist real planning.

Step-2. Establishing objectives

The next step in planning is to establish objectives for the enterprise and then for each
subordinate work unit. Objectives are established at all levels of the structure,
beginning at the top level and running down to first line

Step 3. determining alternative course of Action

Once objectives are set, the management must identify alternative ways for reaching
them. When developing alternatives. A manager should try to create as many roads to
each objective as possible. In fact, in most cases the challenging is not to find
alternative ways but to decide which ones are best. To decide on best ones it requires
evaluation.
Step 4. evaluating the alternatives
Each alternative needs to be evaluated to determine which one best achieves the
objectives. In evaluating managers should assess cost (disadvantages) and benefits
(advantages) of all alternatives. The assessment may include both financial and non
financial considerations.

Step 5. Select the best alternatives

After evaluating all possible alternatives, managers will select alternative that remains
better than others. It may be an alternative with least disadvantages and most
advantages.

Step 6. Implementing the plan

After the alternative course of action selected, it is important to develop an action plan
to execute the plan. In this step method for implementation will be suggested.

Rift Valley University College of Open & Distance Education 62

Introduction to Management (MGMT-211)
Step 7. Controlling and evaluating the results
Once the plan is implemented it needs monitoring. Managers should monitor the
progress being made, evaluate the reports made based on results, and make any
necessary modifications, because factors in environment are constantly changing,
plans must be modified to cope up with changes.

3.4 Mission ,goals, objectives, and targets

These words are often the most confusing words in management filed. They are
somewhat similar but not exactly the same in their meanings.

 Mission _ refers to the main reason why the organization is established. or it

indicates purpose for existence of an organization
- relates organization to external environment.

 Goal _ is expected (desired) performance to be accomplished but it is not set

specifically- is desired future outcome that an organization strives to achieve
generally.

 Objective
- is expected (desired) performance expressed in specific and
measurable terms (manner).

 Target _ is expected performance set for specific individual in an organization.

-is more specific in nature than objectives.

Characteristics of good (effective) objective

There are some characteristics of effective objectives, so effective objectives are
mostly:
1. Specific- Objectives should state the exact level of performance expected
specifically.

Rift Valley University College of Open & Distance Education 63

Introduction to Management (MGMT-211)
 2. Measurable- as much as possible objectives should be expressed quantitatively,
therefore, it is possible to easily determine whether or not goals have been
achieved.
3. Appropriate- objectives should be prepared in suitable, acceptable. and
achievable manner.
4. Realistic and challenging- objectives should be attainable or real rather than
fantasy. It also better to have challenging objectives as far as they could
motivate workers if attained.
5. Time bound _ objectives should be set with in specific time limits or target
dates for their attainment.

3.5 Planning Technique

Managers Can Improve the Quality of their planning by applying variety of Planning
tools and techniques .The important fanciful of planning is management by objectives
(MBO).

Management by objective (MBO)

MBO is the technique in which managers and their subordinates together set objectives
for subordinates periodically evaluate the performance and reward effective workers
etc.

Elements of MBO
1. Top level goal setting effective MBO begins with the objective being set by top
managers which is open for discussion by managers and subordinates to reach up
on the common objectives.
2. individual targets- in an effective MBO each manager and subordinate has
clearly defined responsibilities or expected results
3. Participation- both managers and subordinates are participating in objective
setting.

Rift Valley University College of Open & Distance Education 64

Introduction to Management (MGMT-211)
 4. Autonomous of individuals- Once the objective is set, subordinates have a right
to select methods of attaining the objectives.
5. performance review- managers and subordinates periodically meet to review
progress toward the objectives
6. Reward- those individuals who meet the objectives in performance review are
rewarded. The rewords may be recognition, praise, pay increase etc-------

Steps in MBO
Effective MBO passes through different steps:
1. Setting individual objectives and plans with each subordinate the manager jointly
set objectives the participation of subordinates in the objective setting process is a
way of strengthen their commitment to achieve their goals.
2. Giving feedback and evaluating performance
Employees must know how much they are progressing toward their objectives. Thus,
managers and subordinates should meet frequently to review progress and evaluate
performance communication is key factor in determining success of failure of MBO
3. Rewarding according to performance employees' performance should be measured
against their objectives. Employees who meet their objectives should be rewarded
through recognitions, praises. Pay rises and so on .

Benefits and limitations of MBO

Benefits
1. MBO uplifts workers motivation
2. MBO allows managers and subordinates share experience

Limitation
1. It consumes much time

Rift Valley University College of Open & Distance Education 65

Introduction to Management (MGMT-211)
3.6 Decision Making
People at all levels in an organization must constantly make decisions and solve
problems. For managers, the decision-making and problem solving tasks are particularly
important parts of their job. How should profits be invested? Which employee should be
assigned a particular task? Decision-making and problem-solving is the central job of a
manager; because they. must constantly choose what is to be done, who is to do it, and
when, where, and occasionally even how it will be done. Manager's decisions provide
the framework within which other organization members make their decisions and act.
Decision making is, however, only a step in planning, because planning involves the
most significant and far-reaching decisions a manager can make. The entire planning
process involves managers in a continual series of decision-making situations. How
good their decisions are, plays a large role in determining how effective their plans will
be.
Decision-making describes the process by which a course of action is selected as the
way to deal with a specific problem. A decision involves the act of choice and the
alternative chosen out of the available alternatives. Decision-making is defined as the
selection of a course of action from among alternatives. George R.Terry says
"Decision-making is the selection based on some criteria from two or more possible
alternatives."
Features of decision making are
1. Decision-making is a process of selection and the aim is to select the best
alternative. It aims at choosing a suitable course of action.
2. Decision-making is an intellectual process. It involves judgment, reasoning and
evaluation. It is a human process involving to a great extent the application of
intellectual abilities.
3. Decision-making involves commitment of the organization for adopting a specific
course of action and utilizing resources in a particular manner. It involves also
commitment of time, efforts and resources.
4. Decision is aimed at achieving the objectives of the organization if it is made in
organizational context. Decision making is a goal-oriented process. Decisions are

Rift Valley University College of Open & Distance Education 66

Introduction to Management (MGMT-211)
 made to achieve certain goals.
5. Decision-making involves the evaluation of available alternatives, because
thorough evaluation and analysis is necessary to come to conclusion. In analyses,
the available alternatives which take place before a final choice is made.
6. Decision-making is a dynamic process. It involves a time dimension and a time lag

3.6.1 Decision making process

Rational Decision making process involves the following phases:
1. Identify the problem
2. Diagnose the problem
3. Search for alternatives
4. Evaluate alternatives . .
5. Selection of best alternative"
6. Implementation and follow-up.

3.6.2 Types of decisions

As Managers make different types of decisions under different circumstances, managers
have to vary their approach to decision-making. When deciding whether or not to add a
new unit to administration or where to build a new plant extensive considerations and
investigation of alternatives are necessary
To come to final conclusion. Similarly, the amount of information available to a
manager when making a decision will vary. Managers have to be particularly careful in
making decisions when there is little past experience or information to guide them. The
significance and nature of decisions differ.

Decisions. may be classified on different bases:

1. Programmed and Non-Programmed Decisions °
Programmed Decisions are normally repetitive in nature and they are taken within the
broad policy structure. Every organization has written or unwritten policies that
simplify decision-making in recurrently situations by limiting or excluding

Rift Valley University College of Open & Distance Education 67

Introduction to Management (MGMT-211)
alternatives. For example, organizations have an established salary structure for all
positions; it is not to worry about newly hired employees. Managers tackle the routine
problem and situations which require pre-determined set .of procedures, techniques
and rules. Managers make the routine decisions quickly. It simply becomes a matter of
identifying the problem and applying decision rules for getting it solved.
Non-Programmed decisions are those that deal with unusual or exceptional problems.
If a problem has not come up often enough to be covered by a policy or is so important
that it deserves special treatment, it must be handled specifically. Problems such as
how to allocate an organization's resources, what to do about a falling product line,
how to make communication effective-most of the problems a manager face are
unique and on-repetitive and usually require non-programmed decisions. As one
moves up in the organizational hierarchy, the ability to make these decisions becomes
more important. These are handled by general problem-solving process.
2. Strategic and Routine Decisions
Strategic decisions relate to the policy matters and non-repetitive in nature. They have
a fundamental effect on the organization, since these affect organizational structures,
objectives, facilities and finance. These are critical for the survival, stability and
growth of the organization. These are taken by top management and middle
management. The higher the level of a manager, the more strategic decisions he is
required to take. For example, selection of product and location, adoption of new
technology, launching of a new product. These are those decisions which have a
strategic impact an organization. So, these are made by managers after thorough
analysis and fact findings.

Routine Decisions are concerned with routine matters arising out of the functioning of
the organization. These are taken on the basis of established guidelines, procedures and
rules., They can be taken without much deliberations. Such decisions are taken by the
lower or middle level managers. Managers have thorough knowledge of policy

Rift Valley University College of Open & Distance Education 68

Introduction to Management (MGMT-211)
matters, rules and regulations regarding this.
3. Policy and Operative Decisions
Policy Decisions are taken by the top management which determines the basic policies.
These decisions affect the functioning of the entire organization. These are important
and they have long-term impact. These decisions provide help in establishing the
business and taking decisions which have a major impact on organization's
functioning.
Operative Decisions are related with the day-to-day operation of the business. These
are taken generally by middle or lower level managers who are closely related to
supervision. They are concerned with maximizing the efforts of operations or
functioning of the organization. Top management lay down certain rules and
regulations for such decisions.
4. Organizational and Personal Decisions
When an individual, who has official sanction/authority, takes any decision because of
formal authority, it is called organizational decision. The authority for taking these
decisions can be delegated from superior to subordinates. Such decisions affect the
organizational functioning directly. But, when a manager, as an individual, can take
decisions about himself, which are personal or which are not related in any manner to
the organization, these are called personal decisions. These normally affect the
personal life of an individual. When a manager makes any decision about his child
education, it is his personal decision.
5. Individual and Group Decisions
When a decision is taken by an individual in the organization, it is known as an
individual decision. These are taken in the context of routine or programmed decisions
when the analysis of various variables is simple and for which broad policies are
already provided. Decisions are made by individual managers by using managerial
skill and judgment, pre-determined procedures, techniques, rules and regulations.
Individual decisions are taken by all managers from top executives to the first line
supervisors.
Group or collective decisions are taken by a group constituted for the specific purpose.
They are very important for the organization. Whenever the organization faces a unique

Rift Valley University College of Open & Distance Education 69

Introduction to Management (MGMT-211)
or unstructured problem, the organization constitutes a committee or form a group to
deal worth the particular problem. In joint stock Company, the Board of directors
makes decisions.' Whatever power or authority they have, they can exercise it through
meetings. They delegate authority and fix the responsibility and accountability of doing
a task. Generally, group decisions are those taken by a group of persons in an
organization constituted for a purpose.

Summary
Effective planning helps an organization adapt to change by identifying opportunities
and avoiding problems.
Planning may be important for the following purposes in an organization.
 To coordinate efforts
 To prepare for change / To offset uncertainty
 To develop performance standards.
 To develop managers
The tasks of the strategic planning process include: Define the mission; Conduct a
situation or SWOT analysis by assessing strengths and weaknesses and identifying
opportunities and threats; Set goals and objectives; Develop related strategies (tactical
and operational) and Monitor the plan.
A planning should consist of Objectives, course of Action, resources, and
implementation of Plans.
Organizations use two main types of plans. Strategic plans are designed by top and
middle managers to meet the organization’s broad goals, while operational plans show
how strategic plans will be implemented in day-to-day activities. Decision making is the
key activity in planning.

Rift Valley University College of Open & Distance Education 70

Introduction to Management (MGMT-211)
  Checklist
You have now completed the first Chapter and you need to check whether you have
understood the basic concepts in this unit. If you have a “no” answer for any of the
following, you have to go back and read the appropriate section again until you grasp
the important points.
Now, are you able to:
Yes No

a. Define Planning
b. Know the Purpose of Planning
c. Describe Different Classifications of Planning
d. Determine Planning techniques


Review Questions
Part I: Multiple choices
1. Planning
A. The Process of Setting Objectives B. A systematic preparation for
tomorrow
C. Helps to determine resources need to achieve the objectives D. All
2. Planning is so important ,because of the following reasons, except :
A. To provide a direction B. To increase risk & uncertainty
C. Provide criteria for decision making D. To facilitate
3. _________________is a specific action plan.
A. Program D. Budget
B. Budget E. None
C. Project

Rift Valley University College of Open & Distance Education 71

Introduction to Management (MGMT-211)
 4. A sequence of steps or activities involved in decision making or performing other
tasks are called ___________.
A. Procedure C. Rules
B. Policies D. Program
5. Which type of Plan have a time horizon between one and five years ?
A. Long range Plans D. Tactical plans
B. Intermediate Plans
C. Short range plans
6. A plan settled by firs line managers used for executing daily, weekly and monthly
activities are called ______________
A. Operational Plans C. Strategic Plans
B. Tactical Plans D. Long range plans
7. The first activity in Planning Process is ______________________
A. Evaluating the alternatives
B. Determining alternative course of actions
C. Establishing Objectives
D. Environmental Analysis and forecasting
Part II: Say True or False
1. Planning is very important for every organization irrespective of its size, objectives,
and location.
2. Standing plans are those which have no more use after objectives are achieved.
3. A guideline to a decision making process is called Rule.
Part III: Short answer and Discussion
1. What is planning?
2. Why Planning is necessary?
3. What if there is no plan for an organization? Can it operate efficiently? Why?
4. List all processes and elements involved in planning in detail.
5. What are the two types of planning?
6. What is the role of decision making in planning?
7. What is SWOT

Rift Valley University College of Open & Distance Education 72

Introduction to Management (MGMT-211)
8. Explain Management by Objectives (MBO)?
9. Compare and contrast the following terminologies.
a. Goal and Objective
b. Mission and vision
c. Policy and procedure
d. Rule and policy
10. Explain plan based on:
a. Formality/Status
b. Scope/Breadth Dimension
c. Use Dimensions
d. Time Dimension

Review questions answer Key

Part I : Multiple Choice
1. D PART II: True/False
2. B
3. B 1. True
4. A 2. False
5. B 3. False
6. A
7. D

Rift Valley University College of Open & Distance Education 73

Introduction to Management (MGMT-211)
 CHAPTER FOUR
ORGANIZING

Objectives
Dear Learner! This chapter is intended to acquaint the students organizing function of
management. It is believed that at the end of this chapter the students will grasp basic
concepts in organizing including:
 Defining and role of organizing function in organizations
 Understanding the use and types of organizational Structure
 Differentiating the types of organization
 Understanding the processes involved in organizing
 Conceptualizing how managing people in organization is handled
 Identifying basic steps of work group development in organizations

4.1 Introduction
Organizing is establishing the internal organizational structure of the business. The focus is
on division, coordination, and control of tasks and the flow of information within the
organization. Managers distribute responsibility and authority to job holders in this function
of management.
As stated by Harold Koontz and O’Donnell “Organizing involves the establishment of an
intentional structure of roles through determination and enumeration of the activities required
to achieve the goals of an enterprise and each part of it; the grouping of these activities, the
assignment of such groups of activities to the manager, the delegation of authority and
informational relationship horizontally and vertically in the organization structure” are
important aspects of the organizing function.

Rift Valley University College of Open & Distance Education 74

Introduction to Management (MGMT-211)
As we can see from the above definition and many other definitions given by other authors,
organizing is a process and it involves the following activities.
o Identification of key activities necessary to achieve objectives
o Grouping of these activities in a manageable manner
o Assignment of each group of activities to a manager who has the authority and
responsibility to manage
o Delegation of authority to managers so as to accomplish their duties efficiently
o Coordination of different groups of activities horizontally or vertically.

4.2 Importance Of Organizing

Organizing creates the relationship between top-level executives and lower level staff
members. The following are achieved through the process of organizing.
 Facilitate administration: -Duplication of work, wrong planning, inefficient
personnel, lack of motivation, improper allocation of duties and responsibilities,
absence of coordination, communication gap, and improper instructions are the
ingredients of ineffective administration. This ineffective administration can be
removed by having a sound organization.
 Facilitates growth and diversification: -The growth of business means an increase
in the scale of operation; diversification means starting of production of a new type of
product. For both growth and diversification, organization identifies the necessary
activities, raises the necessary resources and determines how and when to use it.
 Increases the efficiency of management: -Under good organization, there is division
of work and specialization, which are the tools:
a) for optimum utilization of workers’ ability, resources, materials, technology,
etc in full;
b) for placing proportionate importance on the various activities of the
enterprise. Money and efforts are spent in proportion to the contribution made
by each and every department. More money and time are given to a
department that contributes more than others.

Rift Valley University College of Open & Distance Education 75

Introduction to Management (MGMT-211)
 c) for avoiding confusion, delay and duplication of work through dividing and
regrouping of activities into a manageable whole.
 Improves the efficiency and quality of work through synergism
It facilitates co-ordination. Through coordination it helps parts to contribute their
roles more efficiently and effectively, as every part is a specialist for its duties. No
part is working alone. As the theory of synergism states, “A whole is greater than
the sum of the parts” all parts should be coordinated properly.
 Encourage creativity and initiative
A sound organizational structure will give an opportunity for the staff to show
their hidden talents, which will help the enterprise to achieve the business goals
and earn higher profits. It provides opportunities for training new staff members
and give refresher courses to existing employees.
The spirit of constructive and creative approach in management will be developed
through clear distribution of authority and responsibility incentives can be offered
for specialized work and freedom can be given to personal work. This will be
possible through a properly worked out organization.
 Establishes lines of authority /-vertical division of labor/
As it is already stated, organization is the arrangement of position of executives
by adopting rank system. This represents who in the organization reports to whom
and who has authority over whom. This creates order within the group. Its
absence almost always leads to chaotic situations where every one tends to tell
everyone else what to do.

 Improves communication
A good organization structure clearly defines channels of communication among the
members of the organization. This develops transparency among members and improves
flow of information. A good organization structure also develops morale, honesty, devotion
to duty and loyalty to the business firm. This will help remove corruption, secretiveness and
unjustified influence.

 Activity
Rift Valley University College of Open & Distance Education 76
What it meant by organizing?
Introduction to Management (MGMT-211)
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
4.3 Organizational Structure
Each organization has an organizational structure. By action and/or inaction, managers
structure businesses. Ideally, in developing an organizational structure and distributing
authority, managers' decisions reflect the mission, objectives, goals and tactics that grew out
of the planning function. Specifically, they decide:
1. Division of labor
2. Delegation of authority
3. Departmentation
4. Span of control
5. Coordination
Management must make these decisions in any organization that has more than two people.
Small may not be simple. Note Dan and Nancy's organizational alternatives in the third
transparency for this section. Dan and Nancy have three organizational chart alternatives for
their two person business. As shown on the page following Dan and Nancy's organization
charts, who reports to whom and why may not be apparent in a slightly more complex
business with three employees and five family members involved.
Organizational structure is particularly important in family businesses where each family
member has three hats (multiple roles): family, business and personal. Confusion among
these hats complicates organizational structure decisions.

4.4 Division of labor

Division of labor is captured in an organization chart, a pictorial representation of an
organization's formal structure. An organization chart is concerned with relationships among
tasks and the authority to do the tasks. Eight kinds of relationships can be captured in an
organization chart:
 The division/specialization of labor

Rift Valley University College of Open & Distance Education 77

Introduction to Management (MGMT-211)
 - It eliminates waste of time, energy and resources. Efficient utilization of resources
is made possible.
- It increases quality of output, and
- It increases quantity of product without any additional capital. It increases
productivity.
 Relative authority
 Departmentation
 Span of control
 The levels of management
 Coordination centers
 Formal communication channels
 Decision responsibility
Organization charts have important weaknesses that should be of concern to managers
developing and using them:
They may imply a formality that doesn't exist.
 They may be inconsistent with reality.
 Their usual top down perspective often minimizes the role of customers,
front-line managers and employees without management responsibilities.
 They fail to capture the informal structure and informal communication.
 They often imply that a pyramidal structure is the best or only way to
organize.
 They fail to address the potential power and authority of staff positions
compared with line positions.
4.5 Delegation of authority
Authority is legitimized power. Power is the ability to influence others. Delegation is
distribution of authority. Delegation frees the manager from the tyranny of urgency.
Delegation frees the manager to use his or her time on high priority activities. Note that
delegation of authority does not free the manager from accountability for the actions and
decisions of subordinates.

Delegation of authority is guided by several key principles and concepts:

Rift Valley University College of Open & Distance Education 78

Introduction to Management (MGMT-211)
Exception principle - Someone must be in charge. A person higher in the organization
handles exceptions to the usual. The most exceptional, rare, or unusual decisions end up at
the top management level because no one lower in the organization has the authority to
handle them.

Scalar chain of command - The exception principle functions in concert with the concept of
scalar chain of command - formal distribution of organizational authority is in a hierarchical
fashion. The higher one is in an organization, the more authority one has.

Decentralization - Decisions are to be pushed down to the lowest feasible level in the
organization. The goal of organizational structure is to have working managers rather than
managed workers.

Parity principle - Delegated authority must have equal responsibility. The authority must
accomplish the job with the responsibility for a job.

Span of control - The span of control is the number of people a manager supervises. The
organizational structure decision to be made is the number of subordinates a manager can
effectively lead. The typical guideline is a span of control of no more than 5-6 people.
However, a larger span of control is possible depending on the complexity, variety and
proximity of jobs.

Unity principle - Ideally, no one in an organization reports to more than one supervisor.
Employees should not have to decide which of their supervisors to make unhappy because of
the impossibility of following all the instructions given them.
Forms of Authority
Three forms of authority are line authority, staff authority, and team authority.
Line authority is direct supervisory authority from superior to subordinate. Authority flows
in a direct chain of command from the top of the company to the bottom.

Rift Valley University College of Open & Distance Education 79

Introduction to Management (MGMT-211)
- Chain of command is an unbroken line of reporting relationships that extends through
the entire organization that defines the formal decision-making structure. It helps
employees know to whom they are accountable, and whom to go to with a problem.
- Line departments are directly linked to the production and sales of specific products.
Supervisors -- in line departments, such as marketing and production -- give direct orders,
evaluate performance, and reward or punish those employees who work for them.
- Unity of command within the chain states that each person in an organization should
take orders from and reports to only one person. This helps prevent conflicting demands
being placed on employees by more than one boss. However, the trend toward employee
empowerment, fueled by advances in technology and changes in design from downsizing
and reengineering have tempered the importance of being accountable to only one
superior.
- Span of control refers to the number of employees that should be placed under the
direction of one manager. Spans within effective organizations vary greatly. The actual
number depends on the amount of complexity and the level of specialization. In general,
a wide span of control is possible with better-trained, more experienced, and committed
employees.

Staff authority is more limited authority to advice. It is authority that is based on expertise
and which usually involves advising line managers. Staff members are advisers and
counselors who aid line departments in making decisions but do not have the authority to
make final decisions. Staff supervisors help line departments decide what to do and how to
do it. They coordinate and provide technical assistance or advice to all advisors, such as
accounting, human resources, information technology, research, advertising, public relations,
and legal services.
Team authority is granted to committees or work teams involved in an organization's daily
operations. Work teams are groups of operating employees empowered to plan and organize
their own work and to perform that work with a minimum of supervision. Team-Based
structures organize separate functions into a group based on one overall objective.
Empowered employees create their own schedules, design their own processes, and are held
responsible for outcomes. This facilitates efficiencies in work process, and the ability to

Rift Valley University College of Open & Distance Education 80

Introduction to Management (MGMT-211)
detect and react to changes in the environment. Employees with the skills and knowledge to
manage more than one specialized task are able to promptly provide customers with quality
products and services. Cross-functionally training team members allows any member to
perform a variety of problem-solving tasks.

3. Departmentation
Departmentation is the grouping of jobs under the authority of a single manager, according to
some rational basis, for the purposes of planning, coordination and control. The number of
departments in an organization depends on the number of different jobs, i.e., the size and
complexity of the business.
Farm businesses are most likely to have departments reflecting commodities and services.
For example, a large dairy farm might be organized into dairy, crop, equipment and office
departments. The dairy department might be further divided into milking, mature animal and
young stock departments.

4. Informal Structure
The formal structure in each organization that has been put in place by management has an
accompanying informal structure. Management does not and cannot control the informal
structure.
The informal structure has no written rules, is fluid in form and scope, is not easy to identify,
and has vague or unknown membership guidelines.
For management, the informal structure may be positive or negative. Positive qualities
include the ability to quickly spread information and provide feedback to the information.
The informal structure gives people a sense of being in the know. Management can feed
information into the informal structure at very low cost. The informal structure can also help
satisfy employees' social needs.

The negative qualities of the informal structure mirror the positive qualities in several ways.
The more juicy a rumor, the more likely is the informal structure to repeat it, expand it and
make it into the "truth." Management may not know what information is flowing through the

Rift Valley University College of Open & Distance Education 81

Introduction to Management (MGMT-211)
informal structure. Employees can waste a great deal of time nurturing and participating in
the informal structure. Finally, the informal structure can fence out new employees, "rate
breakers," and change agents no matter the extent to which the formal structure makes them a
part of the organization.

4.6 Types Of Organizations

Organizations can be classified on the basis of legal authority delegated and responsibility
assigned to the personnel and their relationship with each other. On the basis of this, an
organization can be either formal or informal.

Formal Organization
It is the intentional structure of roles in a formally and legally organized enterprise. It is
flexible enough in structure as to furnish an environment in which individual performance,
both present and future, contributes most effectively to group goals; it allows for discretion,
for taking advantage of creative talents and for recognition of individual likes and capacities
in the most formal organizations. The establishment of effective formal organization must be
based on the principles that pertain to the unity of objectives and organizational efficiency.
Developing a responsive organizational structure committed to quality is another important
task in the establishment of formal organization.
Organizational structure is the framework of jobs and departments that directs the behavior
of individuals and groups toward achieving the objectives of the organization.
a) Characteristics of Formal Organization
 It is properly planned.
 It is based on delegated authority.
 It is deliberately impersonal.
 The responsibility and accountability at all levels of organization are clearly
defined.
 Unity of command is normally maintained.
 It provides for division of labor.
b) Advantages of Formal Organization

Rift Valley University College of Open & Distance Education 82

Introduction to Management (MGMT-211)
  The definite boundaries of each worker are clearly fixed and this avoids
conflict among the workers.
 Overlapping of responsibility is easily avoided.
 Shifting responsibility is very difficult.
 A sense of security arises from classification of the task
 There is no chance for favoritism in evaluation and placement of the
employee.
 It makes the organization less dependent on one man.
c) Disadvantages of Formal Organization
 In certain cases, the formal organization may reduce the initiatives of
employees.
 Sometimes authority is used for the sake of convenience of the employee
without considering the need for using the authority.
 It does not consider the sentiments and values of the employees in the social
organization.
 It may reduce the speed of information communication.

Informal Organization
The informal organization is the network, unrelated to the firm's formal authority structure,
of social interactions among its employees. It is the personal and social relationships that
arise spontaneously as people associate with one another in the work environment. The
supervisor must realize that the informal organization affects the formal organization. The
informal organizations can pressure group members to conform to the expectations of the
informal group that conflict with those of the formal organization. This can result in the
generation of false information or rumors and resistance to change desired by management.
The supervisor should recognize the existence of information groups, identify the roles
member play within these groups, and use knowledge of the groups to work effectively with
them. The informal organization can make the formal organization more effective by
providing support to management, stability to the environment, and useful communication
channels.

Rift Valley University College of Open & Distance Education 83

Introduction to Management (MGMT-211)
4.7 Process Of Organizing
A key issue in accomplishing the goals identified in the planning process is structuring the
work of the organization. Organizations are groups of people, with ideas and resources,
working toward common goals. The purpose of the organizing function is to make the best
use of the organization's resources to achieve organizational goals. Organizational structure is
the formal decision-making framework by which job tasks are divided, grouped, and
coordinated. Formalization is an important aspect of structure. It is the extent to which the
units of the organization are explicitly defined and its policies, procedures, and goals are
clearly stated. It is the official organizational structure conceived and built by top
management. The formal organization can be seen and represented in chart form. An
organization chart displays the organizational structure and shows job titles, lines of
authority, and relationships between departments.

4.8 Departmentalization
After reviewing the plans, usually the first step in the organizing process is
departmentalization. Once jobs have been classified through work specialization, they are
grouped so those common tasks can be coordinated. Departmentalization is the basis on
which work or individuals are grouped into manageable units. There are five traditional
methods for grouping work activities.

Rift Valley University College of Open & Distance Education 84

Introduction to Management (MGMT-211)
 Departmentalization by function organizes by the functions to be performed. The
functions reflect the nature of the business. The advantage of this type of grouping is
obtaining efficiencies from consolidating similar specialties and people with common
skills, knowledge and orientations together in common units.
 Departmentalization by product assembles all functions needed to make and
market a particular product are placed under one executive. For instance, major
department stores are structured around product groups such as home accessories,
appliances, women's clothing, men's clothing, and children's clothing.
 Departmentalization by geographical regions groups jobs on the basis of territory
or geography. For example, Merck, a major pharmaceutical company, has its
domestic sales departmentalized by regions such as Northeast, Southeast, Midwest,
Southwest, and Northwest.
 Departmentalization by process groups jobs on the basis of product or customer
flow. Each process requires particular skills and offers a basis for homogeneous
categorizing of work activities. A patient preparing for an operation would first
engage in preliminary diagnostic tests, then go through the admitting process,
undergo a procedure in surgery, receive post operative care, be discharged and
perhaps receive out-patient attention. These services are each administered by
different departments.
 Departmentalization by customer groups jobs on the basis of a common set of
needs or problems of specific customers. For instance, a plumbing firm may group its
work according to whether it is serving private sector, public sector, government, or
not-for-profit organizations. A current departmentalization trend is to structure work
according to customer, using cross-functional teams. This group is chosen from
different functions to work together across various departments to interdependently
create new products or services. For example, a cross-functional team consisting of
managers from accounting, finance, and marketing is created to prepare a technology
plan.

 Activity
1. Describe Formal and Informal Organizations?
Rift Valley University College of Open & Distance Education 85
Introduction to Management (MGMT-211)
4.9 Principles of Organizing
You should understand, though, that these four broad principles have many variations, that
they sometimes overlap with patterns of development or exposition, and that good writing
sometimes combines different methods.

Rift Valley University College of Open & Distance Education 86

Introduction to Management (MGMT-211)
Chronological Order (order of Time)
In chronological order or time order, items, events, or even ideas are arranged in the order in
which they occur. This pattern is marked by such transitions :as next, then, the following
morning, a few hours later, still later, that Wednesday, by noon, when she was seventeen,
before the sun rose, that April, and so on.

Chronological order can suit different rhetorical modes or patterns of exposition. It naturally
fits in narration, because when we tell a story, we usually follow the order in which events
occur. Chronological order applies to process in the same way, because when we describe or
explain how something happens or works, we usually follow the order in which the events
occur. But chronological order may also apply to example, description, or parts of any other
pattern of exposition.

Spatial Order
Another principle of organization is spatial order. In this pattern, items are arranged
according to their physical position or relationships. In describing a shelf or desk, I might
describe items on the left first, and then move gradually toward the right. Describing a room,
I might start with what I see as I enter the door, then what I see as I step to the middle of the
room, and finally the far side. In explaining some political or social problem, I might discuss
first the concerns of the East Coast, then those of the Midwest, then those of the West Coast.
Describing a person, I might start at the feet and move up to the head, or just the other way
around. This pattern might use such transitions as just to the right, a little further on, to the
south of Memphis, a few feet behind, in New Mexico, turning left on the pathway, and so on.
Spatial order is pretty common in description, but can also apply to examples, to some
comparisons, some classifications [the southern species of this bird . . . ; rhinos in Southeast
Asia . . .], some narrations [meanwhile, out on the prairie], and other forms of exposition as
well.

Rift Valley University College of Open & Distance Education 87

Introduction to Management (MGMT-211)
Climactic Order (Order of Importance)
A third common principle of organization is climactic order or order of importance. In this
pattern, items are arranged from least important to most important. Typical transitions would
include more important, most difficult, still harder, by far the most expensive, even more
damaging, worse yet, and so on. This is a flexible principle of organization, and may guide
the organization of all or part of example, comparison & contrast, cause & effect, and
description.

A variation of climactic order is called psychological order. This pattern or organization

grows from our learning that readers or listeners usually give most attention to what comes at
the beginning and the end, and least attention to what is in the middle. In this pattern, then,
you decide what is most important and put it at the beginning or the end; next you choose
what is second most important and put it at the end or the beginning (whichever remains); the
less important or powerful items are then arranged in the middle. If the order of importance
followed 1, 2, 3, 4, 5, with 5 being most important, psychological order might follow the
order 4, 3, 1, 2, 5.

Still other principles of organization based on emphasis include:

 general-to-specific order,
 specific-to general order,
 most-familiar-to-least-familiar,
 simplest-to-most-complex,
 order of frequency,
 order of familiarity, and so on.

Topical Order
A fourth broad principle of organization is called topical order and this is sort of a catchall
pattern. It refers to organization that emerges from the topic itself. For example, a description
of a computer might naturally involve the separate components of the central processing unit,
the monitor, and the keyboard, while a discussion of a computer purchase might discuss

Rift Valley University College of Open & Distance Education 88

Introduction to Management (MGMT-211)
needs, products, vendors, and service. A discussion of a business might explore product,
customer, and location, and so on. Topical order, then, simply means an order that arises
from the nature of the topic itself. Transitions in this pattern will be a little vague—things
like another factor, the second component, in addition, and so on.

I'm not sure any single list can identify all of the different logical ways of organizing
information. You may have forms in your workplace that impose a certain order on how an
event or action is reported. Many people trying to persuade others to change policy or
behavior often examine the issue in the order of need or problem first, then the benefits of the
change, then the mechanics or ease of implementing the change. You may see a question-
answer pattern, a problem-solution pattern, or sometimes a solution-problem pattern. You
will also see (and use) combinations of patterns as your ideas and purposes become more
complex.

You do need to see, though, that imposing order on information makes the information easier
to talk about, easier to understand, and easier to remember. If you choose a clear,
recognizable pattern (on the level of the single paragraph, and also on the level of the whole
essay body), you guide yourself in selecting details and choosing transitions, and you also
guide your reader in discovering relationships that connect things, that make things seem
more coherent.

Associated
Principle of Patterns of
Sample Transitions
Organization Development
or Rhetorical Modes

narration, process, next; later; the following Tuesday;

examples and afterwards; by noon; when she had
chronological order
illustrations, cause & finally digested the giant burrito; as
effect soon as; in 1998

spatial order description, examples just to the right; a little further on; to

Rift Valley University College of Open & Distance Education 89

Introduction to Management (MGMT-211)
 & illustrations the south of Memphis; a few feet
behind; directly on the bridge of his
nose and a centimeter above his
gaping, hairy nostrils; turning left
on the pathway

more importantly; best of all; still

examples & worse; a more effective approach;
illustrations, even more expensive; even more
climactic order
description, comparison painful than passing a kidney stone;
& contrast, analogy the least wasteful; occasionally,
frequently, regularly

classification &
the first element; another key part; a
division, comparison &
third common principle of
Topical order contrast, analogy,
organization; Brent also objected to
definition, examples &
Stella's breath
illustrations

Formation of Work Groups

One way to think about how to structure and develop your work group is to look at the
various stages that every team will go through. Each team will have predictable needs,
depending upon how long it has been in existence or how effective it has been in working
through problems that have arisen. Understanding these stages and what to do to move
through them can be extremely helpful to a supervisor.

Forming: The First Stage of Group Development

In this stage, there is lot of exploration as group members get to know one another. Issues
that arise are questions of whether each person feels like they belong to the group, whether
members can be trusted and who is in charge. Orientation is an important task in the forming
stage. This is also a good time to look at how the group is organized.

Rift Valley University College of Open & Distance Education 90

Introduction to Management (MGMT-211)
It takes time for any new team to get its act together. In this stage, there's lots of exploration
as group members get to know one another. There's a focus on similarities and differences
and first impressions are key as people try to figure out the similarities and differences.
Because everything is new there is a fair amount of confusion and anxiety as people try to
put their best foot forward. As a result, productivity will be lower. Issues that arise are
questions of whether each person feels like they belong to the group, whether members can
be trusted and who is in charge.
The individual tends to wonder whether he or she will be accepted and is careful and polite in
order to make that happen. The leader's task is directing, so that the group can get
coordinated in their efforts. Orientation is an important task in the forming stage.
This is also a good time to look at how the group is organized. Because the group has not yet
molded into a strong, effective unit, it's still relatively easy to reorganize, get people trained
in new skills and look at how the processes in the group work. It's also helpful to set group
ground rules, which are expectations about how work will be done, decisions will be made,
and how people will treat each other. In short, the supervisor has a wonderful opportunity to
be sure that the right people are in the right place using the right process.
Characteristics of the Forming Stage
 Exploration
 Focus on similarities and differences
 First impressions are key
 Confusion/anxiety
 Lower productivity
 Issues of inclusion, leadership, developing trust
 Open communication is a must

Storming: The Second Stage of Group Development

When group members get to know each other better, the storming stage begins. This stage is
characterized by a bid for power. This is an excellent time to focus on team building to
ensure that people can get to know one another and not get stuck in seeing each other as
competitors.

Rift Valley University College of Open & Distance Education 91

Introduction to Management (MGMT-211)
When group members get to know each other better, the storming stage begins. This stage is
characterized by a bid for power. Each group member is wondering whether or not he or she
will be respected and this plays out in competition, tension and disunity. Relationships
become strained and differences become uncomfortable. The leader is challenged for control.
Some issues that must be resolved in order to move on to the next stage are those of
autonomy vs control, support vs communication and the amount of influence and decision-
making that any group member might have. Left unaddressed, the work group can become
angry, hostile, and unproductive.

The leader's main task at this stage is to coach group members to get them on board and
organize work so that it can become effective. This is an excellent time to focus on team
building to ensure that people can get to know one another and not get stuck in seeing each
other as competitors. This can make it possible for group members to move beyond the "I"
issues to the "we" issues that will be worked on in the next stage. Directly addressing
problems such as conflict within the group, poor communication styles, and appreciating
differences can be helpful as well.
Characteristics of the Storming Stage
 Competition
 Strained relationships
 Leader is challenged
 Tension and disunity
 Differences are uncomfortable
 Issues of autonomy vs. control, support vs. competition, influence, decision-making

Norming: The Third Stage of Group Development

In the norming stage, the group has begun to be effective. Trust begins to emerge and
differences are appreciated. The issues become how to strengthen relationships, open
communication and provide positive and constructive feedback.

Rift Valley University College of Open & Distance Education 92

Introduction to Management (MGMT-211)
In the norming stage, the group has begun to be effective. The focus of each individual is on
"how can I help the group?" Because of this, there is increased cohesion and more
collaboration. Trust begins to emerge and differences are appreciated. The issues become
how to strengthen relationships, open communication and provide positive and constructive
feedback. The team is now focusing on cooperation. The leader's task is to support the group
and its members and the group's task is to communicate and ensure the flow of data.
Characteristics of the Norming Stage
 Increased cohesion
 More collaboration
 Emerging trust
 Appreciation of differences
 Issues of strengthening relationships, open communication, positive/constructive
feedback

Performing: The Fourth Stage of Group Development

At this point, the group is asking "How can we do our best?" and is filled with enthusiasm
and focused on creative problem solving. Characteristics include harmony, productivity,
effective problem-solving and full development of the potential of the group and the
individuals in the group. This is the stage where customer service will be excellent.

Many groups never reach the performing stage. At this point, the group is asking "How can
we do our best?" and is filled with enthusiasm and focused on creative problem solving.
Characteristics include harmony, productivity, effective problem-solving and full
development of the potential of the group and the individuals in the group.

Leadership is shared and participative and the leader's role is delegation. This is the stage
where customer service will be excellent. While customer service is important in all stages,
the productivity and harmony of this stage creates impressive examples.
Characteristics of the Performing Stage
 You have to go through the other stages to get here
 Harmony

Rift Valley University College of Open & Distance Education 93

Introduction to Management (MGMT-211)
  Productivity
 Problem-solving
 Shared and participative leadership
 Full development of potential

Group Dynamics and Committees

Managers deal with groups of people. They give direction to groups of people in the
organization. Therefore they need to understand group dynamics (the interaction of people in-
group setting). This understanding is made possible by studying psychology.

Behaviors Manifested by Groups

Groups show behaviors such as conformity, aggression, competition and cooperation.
Conformity is compliance with existing rules or customs. Groups require members to conform
by obeying group norms, accepting group sanctions, and giving up certain rights. Individuals
conform because of fear, insecurity, and good judgment. The extent of conformity desired
depends on the type of organization, the person’s position within the organization, and the kind
of task being performed. Aggression is offensive action that is caused by frustration, annoyance
or attack. Aggression may be either socially acceptable or unacceptable.

Competition is a struggle between two or more individuals or groups to obtain encouragement.

Completion may be internal or external.
Cooperation is a joint effort by two or more people to attain a common goal and requires an
individual to subordinate his or her self-interest.

Committees and Their Characteristics

A committee is a group of persons assigned or asked to investigate or act on some matter.
Committees can be permanent or temporary.
a. Standing Committees are permanent committees. They can be given authority to make
key decisions on matters such as guilt or innocence of someone accused of a crime,

Rift Valley University College of Open & Distance Education 94

Introduction to Management (MGMT-211)
 whether to go ahead with a major project and size of next year’s budget. Other
committees may have only advisory power by which they recommend what particular
action may be taken to solve a problem.
b. Ad Hoc Committees are temporary committees formed for specific purposes. An ad hoc
committee is usually dissolved after its recommendations have been submitted.
Committees are widely used to provide more information for decision-making. They
facilitate coordination. They foster support for decision. They can broaden the knowledge of
the people who participate in them.
Limitations of Committees
 They are expensive.
 They often act slowly.
 They may come up with compromise solutions.
 They do not fix responsibility. Whatever decision is made, no individual takes the
responsibility.

The Plural Executive

Most committees are purely advisory. But some have more power. A committee that has been
assigned authority to make decisions and to perform management functions is referred to as a
plural executive. Example; corporate board of directors is a plural executive, since it has the
power to plan, organize, staff, direct and control.
Some organizations establish an “executive committee” or a “management committee” or a
finance committee” or a “policy committee” that serves as a plural committee. These types of
actions oriented committees may formulate basic strategy, decide on key policies, allocate
money and other resources to various projects, settle disagreements between divisions of the
enterprise or make other high-level decision.

Guidelines for Maximizing the Effectiveness of Committees

Committees usually spend a lot of time and money either attending committee meetings or
preparing for them. So committee effectiveness can be achieved if the following principles for
successful committee operations are observed.
i) Establish the right size of committee.

Rift Valley University College of Open & Distance Education 95

Introduction to Management (MGMT-211)
 Deciding how large a committee should be is always judgmental, unless the size is
specified by law. Large committees are designed when:
 the main purpose is to inform the members who comprise it;
 widely differing talents and experiences are needed to make the recommendation
or decision;
 the scope of the committee’s activity is very broad; if small committees are
desired, it
 is wise to divide the work among subcommittees;
 speedy action is needed;
 the matter assigned to the committee must not be kept confidential; the more
persons serving on a committee, the greater the chance of information leaks.

ii) Select the right members. The following are criteria for selecting the right members:
 interest in the purpose of the committee;
 knowledge and experience related to the committee’s purpose;
 psychological compatibility (ability to compromise);
 sufficient time to prepare for and attend meetings.
iii) Select the right chairperson. An effective chairperson should have the qualities of
planning ability, objectivity, diplomacy, experience and efficiency.
iv) Define instructions clearly. The following must be made clear:
 the committee’s purpose;
 its authority;
 a deadline for completion of the committee’s work;
 money, staff and other resources assigned to the committee;
 the name of the chairperson or how one is to be selected;
 whether the report will be oral or written; and
 to whom the final report will be made.
v) Define operating procedures clearly:
 where, and for how long the meeting will be held;
 what voting procedures will be followed;

Rift Valley University College of Open & Distance Education 96

Introduction to Management (MGMT-211)
  whether a non-committee member will be eligible to attend; and
 plans for reimbursement should be established.
vi) Provide needed information and staff assistance.

vii) Expedite the committee’s work. Check frequently on the committee’s progress to ensure
that the deadline will be met.
viii) Require a final report read and signed by the members.
ix) Take action on the committee’s report.

Summary
Organizing is establishing the internal organizational structure of the business. It focus is on
division, coordination, and control of tasks and the flow of information within the
organization.
Organizing is very important in which it facilitates administration, growth and
diversification. It increases the efficiency of management, improves the efficiency and
quality of work through synergism, encourage creativity and initiative, establishes lines of
authority /-vertical division of labor/ and improves communication.
An organizational structure indicates the division of labor, delegation of authority,
departmentation, span of control, and coordination.
Organizations can be classified as formal and informal. Formal organization is the intentional
structure of roles in a formally and legally organized enterprise. The informal organization is
the network, unrelated to the firm's formal authority structure, of social interactions among
its employees.
Formation of work groups in an organization involves the four major stages namely- the
forming stage, the storming stage, the norming stage and the performing stage.
 Checklist
You have now completed the first Chapter and you need to check whether you have
understood the basic concepts in this unit. If you have a “no” answer for any of the
following, you have to go back and read the appropriate section again until you grasp the
important points.
Now, are you able to:
Yes No

Rift Valley University College of Open & Distance Education 97

Introduction to Management (MGMT-211)
 a. Define Organizing & organization
b. Know Bases of Departmentations
c. Describe Delegation of Authority
d. Differentiate Formal Vss Informal organizations

Review Questions
1. What is the organizing function of management? What is its concern?

2. Explain Organizational Structure

3. What are the different types of organizations?

4. Outline and elaborate the Processes involved in organizing.

5. One importance of organizing is to facilitate growth and diversification of business. What

does this statement entails?

6. What does an organizational structure reflects? Clarify each.

7. Elucidate all guides to delegate authority.

8. Work group development is vital in an organization. What are the tasks to be

accomplished during the following stages of group formation?
b. forming stage
c. storming stage
d. Norming stage and
e. performing stage

9. What are group dynamics and the purpose of committees?

Rift Valley University College of Open & Distance Education 98

Introduction to Management (MGMT-211)
 CHAPTER FIVE
STAFFING

5.1 Objectives
Dear Learner! This chapter is intended to acquaint the students staffing function of
management. It is believed that at the end of this chapter the students will grasp basic
concepts in organizing including:
 Defining and role of Staffing function in organizations
 Understanding the use and types of Staffing
 Understanding the processes involved in Staffing
 Identifying Source of Recruitment and Selection
 Identifying major activities in Staffing

5.2 Introduction

Rift Valley University College of Open & Distance Education 99

Introduction to Management (MGMT-211)
Staffing is the executive .function of recruiting, selecting, training, developing, promoting,
and retiring subordinates. It is the responsibility of every manager. The benefits of staffing
are:
 Staffing helps in discovering and obtaining competent personnel for various jobs
 Staffing makes for higher performance by putting the right man on the right job.
 Staffing ensures the continuous survival and growth of the enterprise through the
development of successive managers.
 Staffing helps to ensure optimum utilization of human resources
o Avoids over manning
o Avoids shortage of manpower in advance
 Staffing improves job satisfaction and morale of employees through objective
assessment and fair rewarding of their contributions.
Generally, the purpose of staffing function is to ensure that the right number and the right
type of people are working on the right jobs at the right time and right place.

5.3 Activities In Staffing Function

The major activities in the staffing function include:
1. Manpower planning
2. Recruitment
3. Selection
4. Placement
5. Induction/ orientation
6. Training and development
7. Performance appraisal
1. Manpower planning /human resource planning/
Manpower refers to the quantity and quality of workforce. Manpower planning is the process
of forecasting the number and type of personnel whom the organization will have to hire,
train, and promote in a particular period in order to achieve its objectives. It involves
determining objectives, policies, programs, and procedures in relation to human resources. It
refers to planning for the future personnel needs of the organization.
Manpower planning process

Rift Valley University College of Open & Distance Education 100

Introduction to Management (MGMT-211)
The process of manpower planning consists of the following steps:
1. Forecasting manpower requirements: This refers to anticipation of the
requirements of manpower for a particular future period of time in terms of the
number, type and quality of people. Three stages are involved in projecting future
manpower needs.
A. Determine replacement of lost manpower. Based on past experience, the human
resource manager should calculate the rate of loss of manpower due to leave,
retirements, quits, transfers, deaths, discharges etc.
B. Determine the need for new manpower. Based on workload analysis,' the manager
needs to determine the new manpower required.
C. Determine the abilities/ skills required for the efficient performance. Job
specifications and job descriptions are prepared to determine job requirements and
the quality of needed personnel. Job description is an organized, written and factual
statement of job contents in the form of duties and responsibilities of a particular job.
Job specification is a formal statement of minimum acceptable human qualities
required for the successful performance of a job.
2. Preparing manpower inventory/manpower audit. It refers to the analysis and
assessment of the current human resources in terms of the size and quality of
personnel available.
3. Identifying man power gaps: In order to identify the manpower gap, the existing
number of personnel and their skills are compared with the forecasted manpower
requirement
4. Formulate manpower Plans: This involves developing appropriate and detailed
policies, programs and strategies for recruitment, selection, training, promotion,
retirement, and replacement.
2. Recruitment
It is the process of searching for prospective employees and stimulates them to apply for jobs
in the organization. The purpose of recruitment is to attract potential employees with the
necessary characteristics and in the proper quantity for the jobs available. It is generally
viewed as a positive process. The sources of recruitment include:
1. Internal sources

Rift Valley University College of Open & Distance Education 101

Introduction to Management (MGMT-211)
These consist of transfers and promotions of present employees. A transfer refers to the
shifting of an employee from one job to another without a drastic change in the
responsibilities and status of the employee. On the other hand, promotion involves shifting an
employee to a higher position carrying higher responsibilities, higher status and more pay.
Transfer is a horizontal shifting while promotion is a vertical shifting.
Advantages
o Improve employees' motivation, loyalty and security and morale
o Less expensive (no induction training)
o Simplifies the process of selection and placement
o Lower level employees are encouraged to look forward to higher ranks.
o Develops better employee-employer relationships

Disadvantages
o Involves danger of in breeding by stopping infusion of new blood into the
organization
o Reduces the area of choice
o Limits the pool of talents
o Does not provide an equal opportunity to all people to compete for jobs
o Encourages favoritism and nepotism
o Encourages complacency

2. External sources
Where all vacancies cannot be filled from within, external sources are used to fill the
positions. The advantage of extern sources is that it provides wide choice and brings new
blood to the organization. However, it is not without limitation. The major limitation is that it
is expensive and time consuming.
The various external sources of recruitment are:
a) Advertisements
b) Employment agencies

Rift Valley University College of Open & Distance Education 102

Introduction to Management (MGMT-211)
 c) Educational institutions
d) Recommendations by other people
e) Causal callers
f) Direct recruitment

 Activity
1. Differentiate Internal & External Source of recruitment, Give examples?

3. Selection
Selection involves screening or evaluation of applicants to identify those who are best suited
to perform the jobs. It divides the candidates in to two categories.
1. Those who will be employed
2. Those who will not be employed
Selection is described as a negative process. The proper selection of employees will go a long
way towards building a stable work force and eventually reducing labor costs. When selected
personnel are suitable to the job requirements, their efficiency and productivity will be high.
Such personnel will have job satisfaction and high morale. Rates of absenteeism and labor
turnover will be low.
Steps in selection procedure
In order to achieve the purpose of selection, a well-planned and suitable selection procedure
is required. This procedure involves the following steps:
1. Application Blank: It is a brief written resume of the name, age, address, education,
occupation, interests, experiences etc of the candidates. It provides basic information about
the prospective employee, which is helpful at the time of interview. It reflects the candidate's
personality and his/her desire for the job. First inference about the candidate can be made.
2. Employment test: It is designed to measure selected aspects of the candidate's
personality and to predict how well the applicant is likely to perform the job (the fitness of a
person to a job)
Some of the employment tests include:

Rift Valley University College of Open & Distance Education 103

Introduction to Management (MGMT-211)
 a) Intelligence test: It is used to measure the mental capacity of an applicant in terms
of his memory, reasoning ability, power of understanding, verbal comprehension,
word fluency etc.
b) Aptitude test: Aptitude refers to the latent ability or the capacity of individuals for
learning the skills required performing the job. Aptitude test is used to measure an
individual potential for development.
c) Personality test: It measures the temperament, maturity, initiative, judgment,
emotional balance and other personality traits of an individual. It helps in weeding
out candidates who may not be able to go along with other people.
d) Proficiency test: It is designed to measure the level of knowledge, proficiency or skill
already acquired by an individual in a particular job. It is also called performance,
ability, achievement, or trade test.
e) Interest test: It is designed to identify the likes and dislikes of the applicant for
different jobs.

3. Employment interview
4. Physical / medical examination
5. Checking references
6. Final approval

4. Placement
Placement is the process which involves putting or posting the selected candidates on
appropriate jobs. It involves assigning specific jobs and work places to the selected
candidates. In placement, employees are assigned to jobs that are most suitable to them. New
employee is given a particular job to perform on the basis of his/her abilities, aptitude, skills
etc. The purpose of placement is to match the worker and the job, or to place right man on
the right job. The advantages of correct placement are:
o Placement improves job satisfaction and productivity
o Placement reduces labor turnover
o Placement reduces absenteeism
5. Induction/ orientation

Rift Valley University College of Open & Distance Education 104

Introduction to Management (MGMT-211)
When an employee is hired, two processes are started. These are induction and orientation.
Although the terms "induction" and "orientation" are used interchangeably, in some cases,
there is a difference between the two.
Induction: - is a socializing process by which the organization seeks to make an individual
its agent for the achievement of its objectives and the individuals seeks to make the
organization an agency for the achievement of his personal goals. The purpose of induction is
to provide the new employee with the necessary information about the company i.e
 The duties and benefits of employment
 Company history
 Company products/services
 Organization structure
 General company policies
 Location of departments and employee facilities
 Personnel policies and practices

Orientation
Orientation is a socializing process by which new employee is provided with information
about work environment and operating realities. Specifically, orientation involves:
 Rules, regulations and daily routines
 Grievance procedures
 Safety, measures
 Standing orders
 Employee activities, benefits and services
Generally, if induction and orientation programs are not undertaken formally, the new
employee may form wrong impression. Thus, first impression is the last impression.
Who orients new employees?
Different persons may be involved in orientation of new employees. The most common are:
1. Human resource manager
2. Operating manager
3. Union officials
4. Public relation officer

Rift Valley University College of Open & Distance Education 105

Introduction to Management (MGMT-211)
 5. Experienced co-worker
In medium sized and large organizations, both operating manager and human resource
manger run the orientation. However, in small organization, operating manger performs all
orientations.

Means of orientation and induction

 Lectures
 Discussions
 Handbooks
 Manuals
 Pamphlets

Advantages of orientation and induction

1. To reduce the start-up costs for new employees: Recruiting new employee involves
additional costs because new employee is not as efficient as the experienced employee.
This inefficiency is considered to be start-up cost. An effective orientation program can
reduce this inefficiency, and in turn, reduces start up costs.
2. To reduce the amount of anxiety and hosing a new employee experiences: Anxiety refers
to fear of failure on the job. The new employee may develop the fear that he/she will not
perform the job properly. This fear could be aggravated when old employees hose the
new employee. Effective orientation can alert the new employee to hosing and reduces
anxiety.
3. To reduce employee turnover: An employee who developed fear about his/her
inefficiency may decide to quit his/her job. In the absence of orientation this problem
may recur. In order to avoid such problem, the organization needs to have a good
orientation program.

Rift Valley University College of Open & Distance Education 106

Introduction to Management (MGMT-211)
4. To develop realistic job expectations: The job expectation of new employee may be too
high or too low. The two extremes are very dangerous. Orientation enables the new
employee to incorporate the job and its work values in to his/ her self-image.
5. To develop positive attitudes toward the employer: The new employee may have
negative attitude toward his/her employer before joining the organization. This negative
attitude can be changed to positive attitude through effective orientation.
6. To develop job satisfaction: A new employee is satisfied if he/she knows very well what
is expected of him/her, how to perform it, and what reward is available for good
performance. Without orientation a new employee may not have the chance to know
these things. Thus, orientation can play a great role of this regard.

6. Training and development

Very often the terms "training" and "development" are considered as synonymous. Really
speaking, there is a difference between the two.
Training: It is the process of increasing the knowledge and skills of an employee for doing a
particular job. It implies imparting technical knowledge, manipulative skills, problem solving
ability and positive attitude. The purpose of training is to enable the employees to get
acquainted with their present/prospective jobs and also to increase their knowledge and skills
and to modify their attitude. Training is not a one-stop process, but continues throughout the
career of an individual. TraL.1'1ing is job-oriented (job-centered).
Development: It refers to the growth of an individual in all respects - physically,
intellectually, and socially. Development is career bound. Development of individuals is the
consequence of training. In other words, training is the cause whereas development is the
consequence.
Types of training
Training may of several types. Some of them are:
1. Orientation training. It seeks to adjust newly appointed employees to the work
environment
2. Job training. It refers to the training provided with a view to increase the knowledge
and skills of an employee for improving performance on the job.

Rift Valley University College of Open & Distance Education 107

Introduction to Management (MGMT-211)
 3. Safety training. It is intended to provide training to minimize accidents and damages
to machinery. It involves instruction in the use of safety devices and in safety
consciousness
4. Promotional training. It involves training of existing employees to enable them to
perform higher level jobs (Positions)
5. Refresher training - It involves training given to employees in the use of new methods
and techniques. This type of training is given when existing techniques become
obsolete due to development of better techniques
6. Remedial training. It is designed to correct the mistakes and shortcomings in the
behavior and performance of employees.
Methods of training
1. On-the-job Training (OJT)
Under this method, the worker is trained by his immediate supervisor or by an experienced
employee in a real work situation. The trainee is told (explained) the method of handling
tools, operating the machines etc.
Some of the advantages of OJT are:
 The trainee learns in the actual job environment
 Supervisor takes an active part in the training program
 The training is relatively cheaper and convenient
The disadvantages of OJT are:
o Training involves some interference in the normal work routine
o No uniformity in training because every supervisory is a different training unit
o Very time-consuming
o Tendency to ignore principles and theory in favor of immediate results
o Inappropriate for a large number of people at the same time
On the job training is considered to be the most effective and the oldest method of training
the operative personnel. One best example of OJT is job rotation.

2. Apprenticeship Training
It refers to giving instruction, both on and off the job, in the practical and theoretical aspects
of the work required in a highly skilled occupation. Its weakness is that the trade union fails

Rift Valley University College of Open & Distance Education 108

Introduction to Management (MGMT-211)
to take into consideration individual differences in learning time because of the trade union
that determines the time that the person serves as apprentice. Apprenticeship program
contains both on-the-job and classroom training. The theoretical aspect of the job is learnt in
the classroom, but its skills will be learnt on the job. Wages of apprentices are less than
experienced q. employees.
3. Vestibule Training
Vestibule Training is a training in which the trainee learns the job in an environment that
simulates the real working environment as closely as possible. The limitations of vestibule
training are:
 It is expensive
 Trainee may face adjustment problem.
4. off- the -Job Training
Off- the -job training includes all over training other than apprenticeship, vestibule training,
and on-the job training. It can be done in organizational classrooms, vocational schools or
elsewhere. Off- the job training may be conducted using confidence/Discussion, programmed
instruction, case method & simulation. Programmed instruction is used if the objective of
training is knowledge acquisition. On the other hand, case method of training is used if the
intention is to improve the problem-solving skills. Conference approach requires the trainer
to give a lecture and involve the trainee in a discussion of materials to be learned.
Programmed instruction is a technique for instructing without the intervention (presence) of
human instructors.

Summary
Staffing refers to recruiting, selecting, hiring and training of employees. Staffing includes all
personnel categories: managers, working managers and laborers; family and non-family; paid
and unpaid; and full-time and part-time. Principles of staffing refer to the need to ensure that
organizational roles are filled by qualified personnel who are able and willing to occupy
them.

Rift Valley University College of Open & Distance Education 109

Introduction to Management (MGMT-211)
The human resource management is one aspect of staffing and it assesses areas such as
determining the numbers to be employed at a new location, retaining your highly skilled
staff, managing an effective downsizing program, etc.
To select and higher an employee in an organization, the following procedures worth a great.
 Determine the business' labor and management needs
 Develop a current job description
 Build a pool of applicants
 Review applications and select those to be interviewed
 Interview
 Check references
 Make a selection
 Hire
Career planning is a systematic process by which an individual selects career goals and the
path to these goals. From the organization’s point of view, career planning means helping the
employees to plan their career in terms of their capacities within the context of the
organization’s requirement.

 Checklist

You have now completed the fifth Chapter and you need to check whether you have
understood the basic concepts in this unit. If you have a “no” answer for any of the
following, you have to go back and read the appropriate section again until you grasp the
important points.
Now, are you able to:
Yes No

a. Define Staffing
b. Know Basic activities in Staffing processs

Rift Valley University College of Open & Distance Education 110

Introduction to Management (MGMT-211)
 c. Diferentiate Internal Vs extenal source of recruitment

Review Questions
1. List and explain all jobs involved in staffing.

2. What is Human Resource Planning?

3. What are the steps involved in selection and recruitment of staff?

4. What is training? Identify at least seven methods of training and define each.

5. What are some of the characteristics of a good training program?

6. Elaborate all the guides to interview a staff.

7. What is the use of induction or orientation in staffing?

8. What are the benefits of career planning?

CHAPTER SIX
LEADERSHIP

Objective
Dear learner! Upon completing this chapter, you should be able to:
 Define leadership and explain how it is similar to and different from
management;
 Explain the key ideas of the trait approach to leadership;

Rift Valley University College of Open & Distance Education 111

Introduction to Management (MGMT-211)
  Discuss and evaluate the behavior approach to leadership;
 List and explain the major contingency approaches to leadership;
 Discuss some recent challenges to leadership theory;
 Explore factors affecting the effectiveness of leadership.

Introduction
Dear Learner! Before you read this part, discuss what leadership means and its importance
.An organization has the greatest chance of being successful when all of the employees work
toward achieving its goals. Since leadership involves the exercise of influence by one person
over others, the quality of leadership exhibited by supervisors is a critical determinant of
organizational success. Thus, supervisors study leadership in order to influence the actions of
employees toward the achievement of the goals of the organization.

Supervisors can learn about leadership through research. Leadership studies can be classified
as trait, behavioral, contingency, and transformational. Earliest theories assumed that the
primary source of leadership effectiveness lay in the personal traits of the leaders themselves.
Yet, traits alone cannot explain leadership effectiveness. Thus, later research focused on what
the leader actually did when dealing with employees. These behavioral theories of leadership
sought to explain the relationship between what the leader did and how the employees
reacted, both emotionally and behaviorally. Yet, behavior can't always account for leadership
in different situations. Thus, contingency theories of leadership studied leadership style in
different environments. Transactional leaders, such as those identified in contingency
theories, clarify role and task requirements for employees. Yet, contingency can't account for
the inspiration and innovation that leaders need to compete in today's global marketplace.
Newer transformational leadership studies have shown that leaders, who are charismatic and
visionary, can inspire followers to transcend their own self-interest for the good of the
organization.
Leadership-is the process of influencing employees to work toward the achievements of
organizational objectives.
 Is the process by which a person exerts influence over other people; and inspires,
motivates, and directs their activities to help achieve group or organizational goals.

Rift Valley University College of Open & Distance Education 112

Introduction to Management (MGMT-211)
  Is the process of influencing individuals to set and achieve goals.

6.1 The need for leadership

Leading is needed in an organization to influence, direct and guide activities of individuals
and groups so as to help the organization achieve its objectives.

6.2 Management and leadership

Management and leadership are not the same. Managers plan, organize, staff, lead, and
control. They may or may not be effective in influencing their subordinates or team
members to set and achieve goals. Leaders, on the other hand are involved in single function
of management that is leading they are individuals who are able to exert influence over other
people to achieve organizational objectives. Leadership involves creating and sharing of
visions, generating strategies to bring visions to realize. Therefore, leaders and managers are
not necessarily the same; it is mainly because leading perform only one aspect of
management functions. Managers can be leader because they can perform leading function.
But may not be effective leaders since they may not have enough ability to influence others.

6.3 Leadership Theories

A. Trait theory
The trait theory or leadership focused on identifying the personal characteristics that are
responsible for effective leadership. It is based on the assumption that leaders are born not
made. That is good leaders are born naturally, not made.
According to this theory effective leaders must have the following traits
 intelligence-helps managers understand complex issues and solve problem

Rift Valley University College of Open & Distance Education 113

Introduction to Management (MGMT-211)
  Self confidence-contributes to managers effectively influencing subordinates and
persisting when faced with difficulties.
 Integrity and honesty-helps managers behave ethically and earn their subordinates
trust and confidence.
 Physical traits-such as height, appearances etc.
 Social traits such as cooperativeness skill etc.
Traits alone however, are not the key to understand leader effectiveness. Some effective
leaders do not possess all of these traits, are some leaders who do possess them but not
effective in their leadership roles.

B. The behavioral theory

 Behavioral studies had their roots in the Ohio Sate University and university of Michigan
by careful study of the behaviors of specific leaders.
 This theory tried to identify the behaviors shown by leaders in the work environment and
they were generally able to identify two sets of leaders.

1. Work centered (concerned for task) leaders

 This approach is also referred to as initiating structure, job centeredness and task
orientation.
 This consider leaders who are authoritarian, autocratic, production oriented and activity
focused.

 A leader with such behavior mostly tends to

- plan and define work
- Assign task responsibilities
- set clear work standards
- Urges for tasks completion
- Monitors performance results persistently, etc...
2. Employee centered( people centered) leaders

Rift Valley University College of Open & Distance Education 114

Introduction to Management (MGMT-211)
 Such leaders are also known as democratic, considerate, consultative and participative
leaders.
 They tend to share decisions with subordinates, encourage participation, and support
the team work needed for high levels of task accomplishment.
 A leader with such behavior tends to

- Act warmly and supportive to followers

- Develops social rapport with followers
- Respects the feeling of followers
- Is highly sensitive to the needs of followers
- Shows trust and confidence in followers.

C. Situational theory
Situational leadership theory attempts to determine the appropriate leadership style for
various situations.
Fiddler’s contingency model suggests that managers should choose task or employee
focus depending on the interaction of three situation variables: leader member relation,
task structure, and leader position power.

Leader-member relations:- the extent to which followers like, trust, and are loyal to
their leader is determinant of how favorable a situation for leading. If leader-member
relations are good situations are good for leading. If relation is poor, the manager may
have to resort to negotiation or to promising favors to get performance.
Task structure: - The extent to which the work to be performed is clear-cut. When task
structure is high, situations are favorable for leading. When task structure are low, goals
may be vague, subordinates may be unsure of what they should be doing or how they
should do it, and the situation is unfavorable for leading.

Theory X and Theory Y-assumptions

Are assumptions about human nature developed by Douglas Mc Gregor. He developed
the assumptions based on the attitude that managers have about workers.

Rift Valley University College of Open & Distance Education 115

Introduction to Management (MGMT-211)
 Theory - X assumes the following
 The average worker is lazy, dislikes job, and will avoid work whenever possible
 Because most people dislike work, they have to be closely supervised and
threatened with punishment to reach objectives.
 Above all people want security
 Average people prefer to be directed, wish to avoid responsibilities and they have
little ambition.

Theory- Y assumes the following

 Most people find work as natural as play or rest and develop an attitude toward work
based on their experience with it.
 People do not need to be threatened with punishment; they will work voluntarily
toward organizational objectives to which they are committed.
 The average person working under proper condition not only to accept but also to
seek responsibility.
 Managers should decentralize authority to employees and make sure employees have
the resources necessary to achieve organizational goals

 Activity
1. Dear learner , Can u mention some of the assumptions of theory “X” and theory “Y”

6.4 Leadership styles

Based on the degree to which managers share decision making authority with subordinates
leadership styles can be classified in to three: Autocratic, democratic , and laissez-faire .
Autocratic style- a leadership style in which a manager does not share decision-making
authority with subordinates.

- Managers, who tend to be heavily work – centered, placing most of their emphasis on
task accomplishment and little on the human elements.

Rift Valley University College of Open & Distance Education 116

Introduction to Management (MGMT-211)
 Autocratic leadership style is characterized by:

 Managers’ emphasis on close control

 Managers’ willingness to delegate a very little decision-making authority.
 No flow of information from subordinates (Leader- subordinate relationship is
characterized by order giving on the leader’s part)
 Sensitivity of managers about their authority.
 Leader’s assumption that payment is a just reward for working

Democratic Leadership style- is a leadership approach in which a manager shares

decision –making authority with subordinates. Managers who have high concern for both
people and work practice it.
In democratic leadership managers:
 are not much sensitive about their authority
 participate employees in decision making
 Appreciate suggestions from subordinates
 Exercise broad supervision
 Motivate subordinates with rewards

Laissez-Faire(Free-Rein Style) - is leadership approach in which a manager develops a

frame work for subordinates in which they can act and leave decision making authority to
the subordinates and remain for consultation. It is employed by managers who are
basically uninvolved in the operations of the unit. This type of leadership is mostly
applied in organizations with highly skilled and well-trained professional.

Situational Leadership style-is leadership approach in which managers utilize the

combination of the above style depending on the situation in external environment.

 Activity
3. Dear learner, Can Differentiate Democratic, Autocratic & laissez-faire leadership
styles?
Rift Valley University College of Open & Distance Education 117
Introduction to Management (MGMT-211)
6.5 Motivation (Concepts and Theories)

Motivation- is an inner desire to satisfy an unsatisfied need.

- Is the result of the interaction of a person’s internal needs and external influences that
determine behavior.
- Is willingness to achieve organizational objectives.
- Is psychological force that determines the direction of a person’s behavior in an
organization, a person’s level of effort and a person’s level of persistence.

Theories of Motivation
A) Carrot and Stick approach- This theory of motivation is based on the tradition which
says that” give carrot for donkey to make go quick and bit with stick if it refuses to
move fast having eaten the carrot”. In an organization, it means that pay adequate
money to your employees to motivate them or to make them work; if they fail to
perform fairly, punish them to work in front of the worker are place job security and
other financial rewards-carrot. If the worker does not move forward, the stick (the
loose of pay raises, demotions, outright, fringe benefits is used.)

B) Maslow’s Hierarchy of Needs- Abraham Maslow, a psychologist, proposed that all

people seek to satisfy five basic kinds of needs; physiological needs, safety needs,
social needs, esteem needs and self actualization needs.
- A physiological need includes basic needs such as need for food, cloth, shelter, sex etc.
- Safety needs- are needs to avoid financial and physical problems
- Social needs- are needs for friendship, affiliation, attraction etc.
- Esteem needs- are needs for self respect, recognitions etc
- Self- actualization needs – I s needs for maximizing ones skill, abilities, and other
potentials. It is a need for attaining the maximum possible development.
Maslow’s theory is based on four premises (assumptions)
1. Only unsatisfied need can influence behavior: satisfied need is not a motivator

Rift Valley University College of Open & Distance Education 118

Introduction to Management (MGMT-211)
2. A persons needs are arranged in a priority order of importance in hierarchical forms
3. A person will at least minimally satisfy each level of need before filling the need at
the next level
4. If need satisfaction is not maintained at any level the unsatisfied need will become
priority ones again.
How managers fulfill needs to the employees?
Types of Needs Ways of Fulfilling Needs

Physiological needs Paying adequate wage and salaries So that employee can
buy basic necessities
Safety Needs Providing quality work life
–making work environment smart, keeping pension plans,
purchasing protection clothes (gloves)
Allowing employees to strengthen informal groups and to
Social Needs communicate each other at work place

Esteem Needs Increasing responsibilities to workers and appreciating

them on their performances
Self Actualization Training employees whose challenging duties and making
environment smooth for employees

Rift Valley University College of Open & Distance Education 119

Introduction to Management (MGMT-211)
 Self Actualization

Esteem Needs
Social Needs

Safety Needs

Physiological
Needs

Fig. 6.1 Abraham Maslow’s hierarchy of needs.

D. Hertzberg’s two-factor theory

Psychologist F. Hertzberg developed needs theory called two-factor or hygiene-motivator
theory. According to this theory there are two sets of factors where one set of factors lead to
job dissatisfaction; these are called hygiene factors. The other set of factors that produce job
satisfaction and motivations; these are called motivators.
Hygiene factors are extrinsic to the job i.e., they don’t relate directly to a person’s actual
work activity. Hygiene factors are part of a job’s environment; they are part of context of the
job, not its content. According to Hertzberg, when hygiene factors that an employee
provides are not sufficient, workers will be dissatisfied. When the factors are of sufficient
finally they don’t necessarily act as motivators. Hygiene factors include: salary, job security,
working condition, company policies, quality of interpersonal relationship among peers,
supervisors, subordinates, etc.
Motivations Factors- are the primary cause of job satisfaction according to Hertzberg. They
are intrinsic to a job and relate directly to the real nature of the work people perform. In
other words, motivation factors relate to the job content. When an employer fails to provide
motivation factors, employees will be dissatisfied. With quality motivation factors,
employees enjoy job satisfaction and provide high performance. Different people require

Rift Valley University College of Open & Distance Education 120

Introduction to Management (MGMT-211)
different kinds and degree of motivation factors – what stimulates one worker may not affect
another.
Generally, managers can use their knowledge to ensure that hygiene factors are there in the
environment as foundation on which to build motivation. Once top management has
provided satisfactory hygiene factors, they can focus on motivation factors.
Moreover, according to Hertzberg, hygiene factors will not motivate workers but their
absence de motivates them.

Summary
Leadership involves the exercise of influence by one person over others; the quality of
leadership exhibited by supervisors is a critical determinant of organizational success. It is
the process of directing and influencing the task-related activities of group members.

The trait approach to understanding leadership assumes that certain physical, social, and
personal characteristics are inherent in leaders. The behavioral theorists identified
determinants of leadership so that people could be trained to be leaders. The Hersey-
Blanchard Situational Leadership theory is based on the amount of direction (task behavior)
and amount of socio-emotional support (relationship behavior) a leader must provide given
the situation and the "level of maturity" of the followers. Transformational leadership
blends the behavioral theories with a little dab of trait theories. Contingency theory
postulates that there is no best way for managers to lead. Situations will create different
leadership style requirements for a manager.

Rift Valley University College of Open & Distance Education 121

Introduction to Management (MGMT-211)
  Checklist
You have now completed the sixth Chapter and you need to check whether you have
understood the basic concepts in this unit. If you have a “no” answer for any of the
following, you have to go back and read the appropriate section again until you grasp the
important points.
Now, are you able to:
Yes No

a. DefineLeadership
b. Describe different types of leadership therories
c. Know types of Leadership styles
d. Elaborate Theroy of Motivation

Review Questions
1. Define Leadership.

2. Explain the trait approach to leadership

3. What is the difference between Management and Leadership

4. Explain Theory X and Theory Y principles.

5. What is the concern of Situational theories of Leadership?

6. What is theory of Transformational Leadership?

7. Elaborate the Contingency to Leadership.

8. Explain the Factors Affecting the Effectiveness of Leadership.

Rift Valley University College of Open & Distance Education 122

Introduction to Management (MGMT-211)
 CHAPTER SEVEN
CONTROLLING

7.1 Chapter Objectives

Dear earner! After completing this chapter you will be able to:
 Define what controlling is;
 Explain the importance and nature of controlling;
 Understand the types of Control Methods;
 Conceptualize the work Performance Control methods.

Dear Learner, Do you know the controlling process? I think you have encountered in
your work place while your organization's manager controlling the entire activity of the
organization.

7.2 The Meaning Of Control

Controlling is directly related to planning. The controlling process ensures that plans are
being implemented properly. In the functions of management cycle - planning, organizing,
directing, and controlling - planning moves forward into all the other functions, and
controlling reaches back. Controlling is the final link in the functional chain of management
activities and brings the functions of management cycle full circle. Control is the process
through which standards for performance of people and processes are set, communicated, and
applied. Effective control systems use mechanisms to monitor activities and take corrective
action, if necessary. The supervisor observes what happens and compares that with what was
supposed to happen. He or she must correct below-standard conditions and bring results up to
expectations. Effective control systems allow supervisors to know how well implementation
is going. Control facilitates delegating activities to employees. Since supervisors are

Rift Valley University College of Open & Distance Education 123

Introduction to Management (MGMT-211)
ultimately held accountable for their employees' performance, timely feedback on employee
activity is necessary.
Control Process
The control process is a continuous flow between measuring, comparing and action. There
are four steps in the control process: establishing performance standards, measuring actual
performance, comparing measured performance against established standards, and taking
corrective action.

Step: 1. Establish Performance Standards. Standards are created when objectives are set
during the planning process. A standard is any guideline established as the basis for
measurement. It is a precise, explicit statement of expected results from a product, service,
machine, individual, or organizational unit. It is usually expressed numerically and is set for
quality, quantity, and time. Tolerance is permissible deviation from the standard. What is
expected? How much deviation can be tolerated?

Time controls relate to deadlines and time constraints. Material controls relate to inventory
and material-yield controls. Equipment controls are built into the machinery, imposed on
the operator to protect the equipment or the process. Cost controls help ensure cost standards
are met. Employee performance controls focus on actions and behaviors of individuals and
groups of employees. Examples include absences, tardiness, accidents, quality and quantity
of work. Budgets control cost or expense related standards. They identify quantity of
materials used and units to be produced.

Financial controls facilitate achieving the organization's profit motive. One method of
financial controls is budgets. Budgets allocate resources to important activities and provide
supervisors with quantitative standards against which to compare resource consumption.
They become control tools by pointing out deviations between the standard and actual
consumption.
Operations control methods assess how efficiently and effectively an organization's
transformation processes create goods and services. Methods of transformation controls
include Total Quality Management (TQM) statistical process control and the inventory

Rift Valley University College of Open & Distance Education 124

Introduction to Management (MGMT-211)
management control. Statistical process control is the use of statistical methods and
procedures to determine whether production operations are being performed correctly, to
detect any deviations, and to find and eliminate their causes. A control chart displays the
results of measurements over time and provides a visual means of determining whether a
specific process is staying within predefined limits. As long as the process variables fall
within the acceptable range, the system is in control. Measurements outside the limits are
unacceptable or out of control. Improvements in quality eliminate common causes of
variation by adjusting the system or redesigning the system.

Inventory is a large cost for many organizations. The appropriate amount to order and how
often to order impact the firm's bottom line. The economic order quantity model (EOQ) is a
mathematical model for deriving the optimal purchase quantity. The EOQ model seeks to
minimize total carrying and ordering costs by balancing purchase costs, ordering costs,
carrying costs and stockout costs. In order to compute the economic order quantity, the
supervisor needs the following information: forecasted demand during a period cost of
placing the order, that value of the purchase price, and the carrying cost for maintaining the
total inventory.

The just-in-time (JIT) system is the delivery of finished goods just in time to be sold,
subassemblies just in time to be assembled into finished goods, parts just in time to go into
subassemblies, and purchased materials just in time to be transformed into parts.
Communication, coordination, and cooperation are required from supervisors and employees
to deliver the smallest possible quantities at the latest possible date at all stages of the
transformation process in order to minimize inventory costs.
Step 2. Measure Actual Performance. Supervisors collect data to measure actual
performance to determine variation from standard. Written data might include time cards,
production tallies, inspection reports, and sales tickets. Personal observation, statistical
reports, oral reports and written reports can be used to measure performance. Management
by walking around, or observation of employees working, provides unfiltered information,
extensive coverage, and the ability to read between the lines. While providing insight, this

Rift Valley University College of Open & Distance Education 125

Introduction to Management (MGMT-211)
method might be misinterpreted by employees as mistrust. Oral reports allow for fast and
extensive feedback.
Computers give supervisors direct access to real time, unaltered data, and information. On
line systems enable supervisors to identify problems as they occur. Database programs allow
supervisors to query, spend less time gathering facts, and be less dependent on other people.
Supervisors have access to information at their fingertips. Employees can supply progress
reports through the use of networks and electronic mail. Statistical reports are easy to
visualize and effective at demonstrating relationships. Written reports provide comprehensive
feedback that can be easily filed and referenced. Computers are important tools for
measuring performance. In fact, many operating processes depend on automatic or computer-
driven control systems. Impersonal measurements can count, time, and record employee
performance.
Step 3. Compare Measured Performance Against Established Standards. Comparing
results with standards determines variation. Some variation can be expected in all activities
and the range of variation - the acceptable variance - has to be established. Management by
exception lets operations continue as long as they fall within the prescribed control limits.
Deviations or differences that exceed this range would alert the supervisor to a problem.
Step 4. Take Corrective Action. The supervisor must find the cause of deviation from
standard. Then, he or she takes action to remove or minimize the cause. If the source of
variation in work performance is from a deficit in activity, then a supervisor can take
immediate corrective action and get performance back on track. Also, the supervisors can opt
to take basic corrective action, which would determine how and why performance has
deviated and correct the source of the deviation. Immediate corrective action is more
efficient; however basic corrective action is the more effective.
An example of the control process is a thermostat.
Standard: The room thermostat is set at 68 degrees.
Measurement: The temperature is measured.
Corrective Action: If the room is too cold, the heat comes on. If the
room is too hot, the heat goes off.

Rift Valley University College of Open & Distance Education 126

Introduction to Management (MGMT-211)
7.3 Importance and Nature of Controlling
Control systems must be designed properly to be effective. When control standards are
inflexible or unrealistic, employees cannot focus on the organization's goals. Control systems
must prevent, not cause, the problems they were designed to detect.
Performance variance can also be the result of an unrealistic standard. The natural response
for employees whose performance falls short is to blame the standard or the supervisor. If the
standard is appropriate, then it is up to the supervisor to stand his or her ground and take the
necessary corrective action.

An example of effective controls is the dashboard on a car. There are many things that can
go wrong with a car. Only the most critical items to the car's operation are the focus on the
dashboard (oil level, engine heat, fuel gauge, etc.). Variations in these items are most likely
to inflict the most damage to the car. The critical items on the dashboard are easily
understood and used by drivers. They point out a problem and specify a solution. They are
accurate and timely. They call the driver's attention to variations in time to prevent serious
damage. Yet, there is not so much information on the dashboard that the driver is
overwhelmed.
Good controlling is characterized by the following.
 Suitability- good controlling is obviously appropriate to the nature, needs and
circumstances of a firm and each level of activity inside it.
 Pragmatic- good controlling is flexible enough that it can be adjusted to fit the needs
of any modification or change in a plan. Its usefulness or use value is observable and
clear.
 Quick Reporting- Since time is an important element in enforcing a control system,
man ideal control system enables any supervisor to report quickly.
 Objective- A good control is not arbitral and subjective. It aims at reaching tangible
results.
 Economical- An ideas control must not be expensive.
 Simple- A good Control is easy to understand and operate.

Rift Valley University College of Open & Distance Education 127

Introduction to Management (MGMT-211)
  Internal Corrective Mechanism- An ideal control provider for solutions to the
problems that cause deviations.
 Activity
What is controlling, and what do we control?
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------

7.4 Types Of Control Methods

Controls are most effective when they are applied at key places. Supervisors can implement
controls before the process begins (feed forward), during the process (concurrent), or after it
ceases (feedback).

Feed forward controls focus on operations before they begin. Their goal is to prevent
anticipated problems. An example of feed forward control is scheduled maintenance on
automobiles and machinery. Regular maintenance feeds forward to prevent problems. Other
examples include safety systems, training programs, and budgets.

Concurrent controls apply to processes as they are happening. Concurrent controls enacted
while work is being performed include any type of steering or guiding mechanism such as
direct supervision, automated systems (such as computers programmed to inform the user
when they have issued the wrong command), and organizational quality programs.

Feedback controls focus on the results of operations. They guide future planning, inputs,
and process designs. Examples of feedback controls include timely (weekly, monthly,
quarterly, annual) reports so that almost instantaneous adjustments can be made.

Summary
Control is the process through which standards for performance of people and processes are
set, communicated, and applied. Effective control systems use mechanisms to monitor
activities and take corrective action, if necessary.

Rift Valley University College of Open & Distance Education 128

Introduction to Management (MGMT-211)
There are several methods of control methods. Feed forward controls focus on operations
before they begin. Concurrent controls apply to processes as they are happening. Feedback
controls focus on the results of operations.

 Checklist
You have now completed the Seventh Chapter and you need to check whether you have
understood the basic concepts in this unit. If you have a “no” answer for any of the
following, you have to go back and read the appropriate section again until you grasp the
important points.
Now, are you able to:
Yes No

a. DefineControlling
b. Describe different techniques of control
c. Know why controllong is so important

Review Questions
1. Define controlling

2. What is the relevance of controlling to management?

3. What are the three basic steps of the controlling process?

4. What is the difference between quantitative and qualitative standards?

5. Identify the characteristics of a good control system

6. Can an organization use MBO as a managerial control method? Explain.

Rift Valley University College of Open & Distance Education 129

Introduction to Management (MGMT-211)
7. What are the three types of control methods? Explain each.

Rift Valley University College of Open & Distance Education 130

Introduction to Management (MGMT-211)
References
1. Richard L. Daft, Management, Eighth Edition, Thomson ,USA,2006
2. Harold Koontz, (1995) Management, 9th ed., New York: McGraw
3. John M. Ivancevich et al., (1994). Management: Quality and Competitiveness,
Massachusetts: R.D.Irwin Inc.
4. James A. F. Stoner. (1992) Management, 5th ed. New Jersey, Printice Hall inc.
5. Jr. Donnely, (1992) Foundamentals of management, 8th ed. . Botson, Homewood,
IL.
6. Tery, G.R. (1994). Principles of Management. New Delhi: All India Traveller
Booksellers.
7. Wright, P.M.(1996). Management of Organizations. Chicago:IRWIN.

Rift Valley University College of Open & Distance Education 131

Introduction to Management (MGMT-211)