Principles And Practice Of Management

Mr. Galagali
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PRINCIPLES AND PRACTICE OF

MANAGEMENT

STUDY PACK
DIP. PPM MODULE III

(Paper Codes 2906/303, 2903/303,

2426/303, 2427/303)

BY: GALAGALI SIKHULE

CHAPTER ONE

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Mr. Galagali
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INTRODUCTION TO MANAGEMENT

Management is a universal phenomenon. It is a very popular and widely used term.

All organizations - business, political, cultural or social are involved in management
because it is the management which helps and directs the various efforts towards a
definite purpose.
According to Harold Koontz, “Management is an art of getting things done through and
with the people in formally organized groups. It is an art of creating an environment in
which people can perform and individuals and can co-operate towards attainment of
group goals”.
According to F.W. Taylor, “Management is an art of knowing what to do, when to do
and see that it is done in the best and cheapest way”.
M.P Follet defines Management as an art of getting things done through other people.
In it, managers achieve organizational goals by enabling others to perform rather than
performing the tasks by themselves. This is done through delegation, communication
and empowerment
J.F. Stonner defines Management as the process of planning, organizing, staffing,
leading and controlling the efforts of workers and of using organizational resources.
Management is the process undertaken by one or more individuals to coordinate the
activities of others to achieve results not achievable by one individual acting alone.
Management is a process of designing and maintaining an environment in which
individuals working together in groups efficiently to accomplish the desired goals.
Importance of Management
1. Encourages Initiative
Management encourages initiative. Initiative means to do the right thing at the right
time without being told or influenced by the superior. The employees should be
encouraged to make their own plans and also to implement these plans. Initiative gives
satisfaction to employees and success to organization.
2. Encourages Innovation
Management also encourages innovation in the organization. Innovation brings new
ideas, new technology, new methods, new products, new services, etc. This makes the
organization more competitive and efficient.
3. Facilitates growth and expansion
Management makes optimum utilization of available resources. It reduces wastage and
increase efficiency. It encourages team work and motivates employees. It also reduces

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absenteeism and labour turnover. All this results in growth, expansion and
diversification of the organization.

4. Improves life of workers

Management shares some of its profits with the workers. It provides the workers with
good working environment and conditions. It also gives the workers many financial
and non-financial incentives. All this improves the quality of life of the workers.
5. Improves corporate image
If the management is good, then the organisation will produce good quality goods and
services. This will improve the goodwill and corporate image of the organisation. A
good corporate image brings many added benefits to the organisation.
6. Motivates employees
Management motivates employees by providing financial and non-financial incentives.
These incentives increase the willingness and efficiency of the employees. This results
in boosting productivity and profitability of the organisation.
7. Optimum use of resources
Management brings together the available resources. It makes optimum (best) use of
these resources. This brings best results to the organisation.
8. Reduces wastage
Management reduces the wastage of human, material and financial resources. Wastage
is reduced by proper production planning and control. If wastage is reduced then
productivity will increase.
9. Increases efficiency
Efficiency is the relationship between returns and cost. Management uses many
techniques to increase returns and to reduce costs. Higher efficiency brings many
benefits to the organisation.
10. Improves relations
Management improves relations between individuals, groups, departments and
between levels of management. Better relations lead to better team work. Better team
work brings success to the organisation.
11. Reduces absenteeism and labour turnover
Absenteeism means the employee is absent without permission. Labour Turnover
means the employee leaves the organisation.
Labour absenteeism and turnover increases the cost and causes many problems in the
smooth functioning of the organisation. Management uses different techniques to
reduce absenteeism and labour turnover in the organisation.
12. Encourages Team Work

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Management encourages employees to work as a team. It develops a team spirit in the

organisation. This unity brings success to the organisation.
Objectives of Management
The main objectives of management are:
1. Getting Maximum Results with Minimum Efforts - The main objective of
management is to secure maximum outputs with minimum efforts & resources.
Management is basically concerned with thinking & utilizing human, material &
financial resources in such a manner that would result in best combination. This
combination results in reduction of various costs.
2. Increasing the Efficiency of factors of Production - Through proper utilization of
various factors of production, their efficiency can be increased to a great extent which
can be obtained by reducing spoilage, wastages and breakage of all kinds, this in turn
leads to saving of time, effort and money which is essential for the growth & prosperity
of the enterprise.

3. Maximum Prosperity for Employer & Employees - Management ensures smooth

and coordinated functioning of the enterprise. This in turn helps in providing
maximum benefits to the employee in the shape of good working condition, suitable
wage system, incentive plans on the one hand and higher profits to the employer on
the other hand.
4. Human betterment & Social Justice - Management serves as a tool for the
upliftment as well as betterment of the society. Through increased productivity &
employment, management ensures better standards of living for the society. It
provides justice through its uniform policies.
Principles of Management
A principle refers to a fundamental truth. It establishes cause and effect relationship
between two or more variables under given situation. They serve as a guide to thought
& actions. Therefore, management principles are the statements of fundamental truth
based on logic which provides guidelines for managerial decision making and actions.
These principles are derived: -
a. On the basis of observation and analysis i.e. practical experience of managers.
b. By conducting experimental studies.
There are 14 Principles of Management described by Henri Fayol.
1. Division of Labor
a. Henri Fayol has stressed on the specialization of jobs.
b. He recommended that work of all kinds must be divided & subdivided and allotted
to various persons according to their expertise in a particular area.

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c. Subdivision of work makes it simpler and results in efficiency.

d. It also helps the individual in acquiring speed, accuracy in his performance.
e. Specialization leads to efficiency & economy in spheres of business.
2. Party of Authority & Responsibility
a. Authority & responsibility are co-existing.
b. If authority is given to a person, he should also be made responsible.
c. In a same way, if anyone is made responsible for any job, he should also have
concerned authority.
d. Authority refers to the right of superiors to get exactness from their subordinates
whereas responsibility means obligation for the performance of the job assigned.
e. There should be a balance between the two i.e. they must go hand in hand.
f. Authority without responsibility leads to irresponsible behavior whereas
responsibility without authority makes the person ineffective.
3. Principle of One Boss/unity of command
a. A sub-ordinate should receive orders and be accountable to one and only one boss at
a time.
b. In other words, a sub-ordinate should not receive instructions from more than one
person because -
- It undermines authority
- Weakens discipline
- Divides loyalty
- Creates confusion
- Delays and chaos
- Escaping responsibilities
- Duplication of work
- Overlapping of efforts
c. Therefore, dual sub-ordination should be avoided unless and until it is absolutely
essential.
d. Unity of command provides the enterprise a disciplined, stable & orderly existence.
e. It creates harmonious relationship between superiors and sub-ordinates.
4. Unity of Direction
a. Fayol advocates one head one plan which means that there should be one plan for a
group of activities having similar objectives.
b. Related activities should be grouped together. There should be one plan of action for
them and they should be under the charge of a particular manager.
c. According to this principle, efforts of all the members of the organization should be
directed towards common goal.

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d. Without unity of direction, unity of action cannot be achieved.

e. In fact, unity of command is not possible without unity of direction.
5. Equity
a. Equity means combination of fairness, kindness & justice.
b. The employees should be treated with kindness & equity if devotion is expected of
them.
c. It implies that managers should be fair and impartial while dealing with the
subordinates.
d. They should give similar treatment to people of similar position.
e. They should not discriminate with respect to age, caste, sex, religion, relation etc.
f. Equity is essential to create and maintain cordial relations between the managers
and sub-ordinate.
g. But equity does not mean total absence of harshness.
h. Fayol was of opinion that, “at times force and harshness might become necessary for
the sake of equity”.
6. Order
a. This principle is concerned with proper & systematic arrangement of things and
people.
b. Arrangement of things is called material order and placement of people is called
social order.
It states that orders and instructions should always come from the right places,
departments and persons.
7. The principle of Espirit de corps (teamwork).
According to this principle, unity is strength, and therefore managers should do away
with divide and rule policy. Fayor came up with qualities that a manager should have
to be able to practice the principles outlined e.g.
(i). Physical Qualities
- Should have good physique
- Should be of good health
- Should be smart – dressing not offensive.
(ii). Mental Qualities
- Should be intelligent and wise - desist from making emotional decisions.
- Should be quick to act
- Should be able to extract the hurting feelings of the group.
(iii). Moral Qualities
- Should be respectful
- Should be honest

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- Should have self determination and communication ability

(iv). General knowledge and experience
Should be well educated and experienced – should be able to understand what's going
on and what people are talking about.
8. The principle of chain of communication
It states that an organization should have open channels of communication for free
flow of information vertically and horizontally between the workers and workers,
workers and managers, managers and managers.
9. The principle of equal treatment.
It states that managers should treat everyone equally, to avoid conflicts and resistance.
10. The principle of stability of personnel.
It states that workers should be assured of their job security by formulating policies
that govern dismissals.
11. The principle of initiative
Initiative is the freedom to think, plan and to execute. Therefore, managers should
allow their subordinates limited autonomy to be creative but under their watchful eye,
for that helps to build their confidence.
12. The principle of discipline
It states that discipline is at the very core of administration and that managers should
be disciplined first before they can think of disciplining the subordinate
13. The principle of unity of management
It states that tasks that are similar should be placed under one manager for easy
control.
The principle of centralization
It states that power and authority should be put in the hands of few so that the image
and culture of the company can be maintained and also control the type of decisions to
be taken.
Characteristics of management
1. Goal oriented
2. Its purposeful
3. Its futuristic in nature
4. Management applies to any kind of organization
5. Management applies to managers at all organizational levels
6. Management is concerned with effectiveness and efficiency (to be effective is to do
right things and to be efficient is to do it correctly).
Roles of a manager

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Managers carry out the management functions of planning, organizing, staffing, leading
and controlling
Planning is defining the future state of the department or organization
Organizing is putting similar tasks together to form a department
Staffing – Identifying who should do the tasks that are already identified
Leading – Showing them how to do what they should do
Controlling – Setting targets and objectives that should be pursued by the staff
Other Roles
1. Leader role – a leader influence others into action.
2. Liaison –a leader negotiates on behalf of the workers and the department
4. Recipient role - receives information on behalf off.
5. Dissemination role – passes the information received to others
6. Spokesperson role – speaks on behalf off
7. Entrepreneur role -seeks opportunities for the company
8. Disturbance handling role-settles disputes and dispenses justice
9. Negotiator role-negotiates on behalf off
10. Resource allocator role- makes decisions on the use of the company’s resources
Difference between leader and a manager
Organizations provide its managers with legitimate authority to lead, but there is no
assurance that they will be able to lead effectively. Organizations need strong
leadership and strong management for optimal effectiveness. In today’s dynamic
workplace, we need leaders to challenge the status quo and to inspire and persuade
organization members. We also need managers to assist in developing and maintaining
a smoothly functioning workplace.
There is a continuing controversy about the difference between leadership and
management. Not all managers exercise leadership. Often it is assumed that anyone in
a management position is a leader. Not all leaders manage. Leadership is performed by
people who are not in management positions (e.g., an informal leader). Some scholars
argue that although management and leadership overlap, the two activities are not
synonymous (Bass, 2010). The degree of overlap is a point of disagreement (Yukl,
2010). Leadership and management entail a unique set of activities or functions.
The first scholar to take a stand on this issue was Abraham Zaleznik, with his landmark
article published in the Harvard Business Review in 1977. Zaleznik argues that both
leaders and managers make a valuable contribution to an organization and that each
one’s contribution is different. Whereas leaders advocate change and new approaches,
managers advocate stability and the status quo. Furthermore, whereas leaders are
concerned with understanding people’s beliefs and gaining their commitment,

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managers carry out responsibilities, exercise authority, and worry about how things
get accomplished.
More recently, John Kotter (1990a, 1990b) of the Harvard Business School argues that
leadership and management are two distinct, yet complementary systems of action in
organizations. Specifically, he states that leadership is about coping with change,
whereas management is about coping with complexity (Kotter, 1987). For Kotter, the
leadership process involves (a) developing a vision for the organization; (b) aligning
people with that vision through communication; and (c) motivating people to action
through empowerment and through basic need fulfillment. The leadership process
creates uncertainty and change in the organization.
Thinking Process Focuses on people Looks Focuses on things Looks
outward inward
Goal Setting Articulates a vision Executes plans Improves
Creates the future Sees the the present Sees the the
forest trees
Employee Relations Empowers Colleagues Controls
Trusts & develops Subordinates
Directs & coordinates
Operation Does the right things Does things right
Creates change Serves Manages change Serves
subordinates super ordinates
Governance Uses influence Uses authority
Uses conflict Avoids conflict
Acts decisively Acts decisively
Acts responsibly

As you examine Table 1, mark the point on each continuum item that reflects the
relative emphasis on leadership or management by a person for whom you have
worked. Business executives may lean more heavily toward either leadership or
management at various times depending on the situation. However, most tend to
operate primarily in terms of either the leadership or the management profile
(Lunenburg, 2007).
There are several conclusions that can be drawn from the information presented in
Table 1. First, good leaders are not necessarily good managers, and good managers are
not necessarily good leaders. Second, good management skills transform a leader’s
vision into action and successful implementation. Some scholars believe that effective
implementation is the driving force of organizational success, especially in relatively

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stable, “domesticated” organizations (Lunenburg, Thompson, & Pagani, 2010). Third,

organizational success requires a combination of effective leadership and
management. Furthermore, team-based organizational structures are extending
leadership functions to work groups and cross-department teams in most modern
organizations. Thus, there is greater opportunity for more input from group members
at all levels of the organization (Lunenburg, 1983).
Conclusion
Organizations provide its managers with legitimate authority to lead, but there is no
assurance that they will be able to lead effectively. Organizations need strong
leadership and strong management for optimal effectiveness. In today’s dynamic
workplace, we need leaders to challenge the status quo and to inspire and persuade
organization members. We also need managers to assist in developing and maintaining
a smoothly functioning workplace.
LEVELS OF MANAGEMENT
 Refers to a line of demarcation between various managerial positions in an
organization.
 The level of management determines a chain of command, the amount of
authority & status enjoyed by any managerial position.

CATEGORIES OF MANAGEMENT
1. Top level / Administrative level
2. Middle level / Executor
3. Low level / Supervisory / Operative/ First-line managers
 Managers at all these levels perform different functions.

Top management

middle management

Lower management

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Top Level of Management

 The ultimate source of authority.
 It manages goals and policies for an enterprise.
 It devotes more time on planning and coordinating functions.
 It consists of board of directors, chief executive or managing director.

The role of the top management

• Lays down the objectives and broad policies of the enterprise.
• It issues necessary instructions for preparation of department budgets, procedures,
schedules etc.
• It prepares strategic plans & policies for the enterprise.
• It appoints the executive for middle level i.e. departmental managers.
• It controls & coordinates the activities of all the departments.
• It is also responsible for maintaining a contact with the outside world
It provides guidance and direction.
• The top management is also responsible towards the shareholders for the
performance of the enterprise.
Middle Level of Management
 Responsible to the top management for the functioning of their department.
 Devote more time to organizational and directional functions.
 The branch managers and departmental managers constitute middle level.
 Execute the plans of the organization in accordance with the policies and
directives of the top management.
The role of Middle Level Management
• Make plans for the sub-units of the organization.
• Interpret and explain policies from top level management to lower level.
• Coordinates activities within the department.
• Sends important reports and other important data to top level management.
• Evaluate performance of junior managers.
• Inspires lower level managers towards better performance.
Lower Level of Management
 Also known as supervisory / operative level.
 They are concerned with direction and controlling function of management.
 It consists of supervisors, foreman, section officers, and superintendent
The Role of Lower Level Management
• Assigns jobs and tasks to various workers.
• Guide and instruct workers for day to day activities.

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• Responsible for the quality as well as quantity of production.

• Entrusted with the responsibility of maintaining good relation in the organization.
• Communicate workers’ problems, suggestions, and recommends to the higher level
and higher level goals and objectives to the workers.
• Solve the grievances of the workers.
• They supervise & guide the subordinates.
• Provide training to the workers.
• Arrange necessary materials, machines, tools for getting the things done.
• Prepare periodical reports about the performance of the workers
• Ensures discipline in the enterprise.
• Motivate workers.
• The image builders of the enterprise because they are in direct contact with the
workers.
Functions of management
1. PLANNING-It’s the basic process by which we use to see our goals and determine
the means to achieve them. It bridges between where we are and where we want to go.
It involves setting missions, objectives and actions to achieve them.
2. Organizing -is a process of identifying the overall tasks and responsibilities to be
performed in an organization and then put together those that are similar to form a
department. Therefore, an organizational structure refers to the forms of departments.
3. Controlling- It’s a manager sets targets and objectives and measures to find out
how far they have been achieved. It’s meant to find out whether there are deviations so
that a corrective action is taken to ensure everything is on course.
4. Directing leading function- Directing is an interesting and challenging managerial
function because basically, there is no one best way to lead, motivate or communicate.
Directing is also of critical importance to management because unless people are
motivated, lead and effectively communicated to, not much in the way of results can be
achieved even with very good plans and organization structures.
5. STAFFING-The managerial function of staffing involves manning the organization
structure through proper and effective selection, appraisal and development of the
personnel’s to fill the roles assigned to the employers/workforce.
According to Theo Haimann, “Staffing pertains to recruitment, selection, development
and compensation of subordinates.”
Difference between management and other disciplines
The study of management in a systematic way as a distinct body of knowledge, is only
of recent origin. It is therefore said that management is described as “oldest of the Arts
and youngest of the sciences”.

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MANAGEMENT AS A SCIENCE
For any branch of knowledge to be considered a science, it should fulfill the following:
a). Should have a systematic body of knowledge with its own principles (independent).
b). The principles have to be evolved on the basis of constant inquiry and examination
(research).
c). The principles must explain a phenomenon by establishing a cause-effect
relationship.
d). The principles should be available for verification to be universally acceptable.
Management as a discipline fulfills the above because:
i) It has emerged as a systematic body of knowledge with its own principles.
ii) The application of these principles helps any practicing manager to achieve the
desired goals.
iii) (Management is dynamic because it has borrowed heavily form other disciplines to
help solve management problems, disciplines e.g. Psychology, Sociology, Philosophy,
Religion, Economics.
NB: Management cannot be viewed as an exact science but rather inexact science
because of the following:-
i) By definition, management involves getting things done through other people who
are unique in respect of aspirations, attitudes, perceptions e.t.c.
Their differences are so obvious that standard results may not be achieved in
otherwise similar environment.
ii) The behavior of human beings cannot be predicted accurately and therefore
standards and readymade solutions cannot be prescribed.
iii) Management is concerned with the future which is complex and unpredictable so
that if there are changes in the environment, the management plans will be affected.
iv) Management plans are prone to change due to the changes in the external
environment e.g. technological changes, economic and socio-cultural changes.
MANAGEMENT AS AN ART
i) The word Art refers to know how or ways of doing to accomplish the desired results.
ii) The focus is on the skill with which the activities are performed.
iii) The constant practice of the theoretical concept (knowledge base) contributes to
the formation and sharpening of skills.
iv) Management as an art stresses the need for practice where in management
graduate from the best institute may not be very effective and therefore requires
creativity and practice.
APPROACHES TO MANAGEMENT
An approach is a school of thought where the members share in a common belief.

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1 CLASSICAL APPROACH (managing work and organization)

It was the first attempt to study modern management when managers were seeking
answers to the basic and practical questions e.g. How to increase efficiency and
productivity. Their concern was not about workers, but work in terms of tools and
equipment. The second concern was about the organization which was to provide the
necessary guidelines including procedures, policies, plans, methods e.t.c
2 BEHAVIOURAL APPROACH (managing people)
It was developed because the classical approach could not achieve the total efficiency
and work place harmony.
The behavioral approach uses the concept of psychology, sociology, philosophy,
religion, economics e.t.c, to help managers understand the human behavior at work
place.
The emphasis in this approach is on the interrelationship workers, work and the
organization.
For work place harmony to be realized, the following was recommended:-
(a). Motivation – The workers performance will increase if they are motivated and
managers should give it a lot of concern.
(b). Communication – The organization should have open channels of communication
for free flow of information vertically and horizontally.
(c). Formation of groups – Workers should be allowed to form and join social groups to
advance their interest. The managers should not condemn them but reach out to the
perceived leaders of such groups for help.
3 MANAGERIAL ROLES APPROACH
It was developed by Prof. Henry Mintzberg after studying 5 Chief Executive Officers,
and came to conclusion that managers do not only perform the classical functions.
They engage in a variety of other activities like:-
(a). Figure head roles
Just the presence of the manager is enough. When the manager is around, everything is
okay.
Leader role – a leader influence others into action.
Liaison –a laeder negotiates on behalf of the workers and the departmant
(b) Information Roles
Recipient role - receives information on behalf off.
Dissemination role – passes the information received to others
Spokesperson role – speaks on behalf off
(c). Decision Roles
Entrepreneur role -seeks opportunities for the company

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Disturbance handling role-settles disputes and despences justice

Negotiator role-negotiates on behalf off
Resource allocator role- makes decisions on the use of the company’s resources
4 SYSTEMS APPROACH
This is a way of thinking about the management's problems because one part or
department influences the other and therefore managers should not deal with
individual parts but instead deal with the entire organization.
The organization being dynamic, the managers must anticipate the intended as well as
unintended impacts of their decisions.
Managers in this approach therefore, do not deal with individual departments, but the
entire company / organization.

CHAPTER TWO
EVOLUTION OF MANAGEMENT THOUGHT

Importance of Theory
This lesson mainly traces the history behind the development of management theory.
The theories and history of management are important to managers for various
reasons. History helps managers understand current development and avoid mistakes
of the past. History and theory together foster an understanding and appreciation of
current situations and developments and facilitate the prediction of future conditions.
Theory helps managers organize information and therefore approach problems
systematically. Without theories all managers would have are, intuition, hunches and
hopes which may not be useful in todays very complex and dynamic organizations.
However there is not yet any verified and generally accepted theory of management
that managers can apply in all situations. Therefore managers must familiarise
themselves with the major theories that exist.
Ancient Management
As a scientific discipline management is only a few decades old. However indications of
management in use go back thousands of years into ancient civilizations. For example
one of the earliest recorded uses of management is the Egyptians construction of the
pyramids.
It is also recorded that the Chinese used management in government from as early as
1500 B.C.

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The Greeks also used management in government from as early as 1000 B.C.
Babylonians have also been recorded to have used management in government from
as early as 2700 B.C.
The management of the Great-Roman Empire could not have succeeded without use of
management. It is recorded that from about 800 B.C the Romans were practicing
organizing principles. A lot of bureaucracy for instance was in practice in the ancient
Roman Army. The works of people like Socrates (400 B.C) and Plato (350B.C.) all
indicate some elements of management. However despite this widespread practice of
management there was little interest in management as a scientific discipline until a
century ago. It was not until the late nineteenth century that large businesses
requiring systematic administration started to emerge. Also before the late 19th
century governments and military organizations were not interested in the profits so
they paid little attention to efficiency and effectiveness. Our study of the theory of
management will focus on the three well established schools of management theory.
The Classical School
The Behavioral School
The Management Science School

THE CLASSICAL SCHOOL

This school of thought emerged around the turn of the twentieth century. It is divided
into two sub areas: Scientific management, which historically focused on the work of
individuals and classical organization theory (administrative management which was
concerned with how organizations should be put together).
1. SCIENTIFIC MANAGEMENT
The main objective of Scientific Management in the early days was to determine how
jobs could be designed in order to maximize output per employee (efficiency). The
main contributor to scientific management was Frederick W. Taylor until the Husband
Team of Frank and Lillian Gilbreth also added more light to scientific management
Frederick W. Taylor and Scientific Management
Taylor was an Industrial Engineer who worked in the United States at a time when
industries were facing shortage of skilled labour. For factories to expand productivity,
ways had to be looked for to increase the efficiency of employees. Management faced
questions such as, whether some elements of work could be combined or eliminated,
whether sequence of jobs could be improved or whether there was "one best way" of
doing a job. In trying to answer these questions Taylor slowly developed a body of
principles that constitute the essence of scientific management.

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Taylor's first job was at Midvale Steel Company in Philadelphia:While here Taylor
analyzed and timed steel workers movements on a series of jobs. With time he was
able to establish the best way to do a particular job. But he noticed the workers did not
appreciate the speed factor because they feared that work would finish and they would
be laid off. So Taylor encouraged employers to pay the more productive workers at a
higher rate based on the profits that would result this system is called the differential
rate system. Taylor was encouraged by the results of his work and decided to become
a private consultant. His most significant work was while he was consulting for two
companies: Simonds Rolling Machine Factory and Bethlehem Steel Corporation.
At Simonds he studied and redesigned jobs introduced rest breaks and adopted a piece
rate pay system. In one operation he studied 120 women employed in tedious work
with long working hours. The work involved inspecting bicycle ball bearings. Taylor
started by studying the movements of the best workers and timed them. Then he
trained the others in the methods of their more effective co-workers and either
transferred or laid off the inefficient ones. He introduced rest periods and the
differential rate system and the results were that accuracy of the work improved by
two-thirds, wages rose by eighty to hundred percent, worker morale increased and
thirty five inspectors were now able to do work previously done by 120.
At Bethlehem Steel Taylor and a co-worker studied and timed the operations involved
in unloading and loading railcars. At the time each worker earned $1.15 per day
unloaded an average of 12 1/2 tons. Taylor introduced rest periods in the day and
realized that each man could handle about 48 tons a day. He set a standard of 47 1/2
tons and a rate of $1.85 for those who met the standard. The results were increased
efficiency.
Objectives of the Theory
i) To use a lot of skills and knowledge in the production process.
ii) To revolutionize the whole process of production and marketing by having
professionals in charge.
iii) To standardize the plans, tools, materials and working conditions in order to
increase production.
iv) To reduce the possibility of slackness in production as a result of accidents.
v) To help the workers through proper guidance.
vi) To increase the level of wages, profits and customer service to the highest levels.
Principles of the Theory
(i). The principles of task idea
It states that favorable conditions at work will make the workers to perform miracles
and increase productivity.

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(ii). The principle of standardization

According to this principle, the work activities and method of production should be
uniform to avoid biasness so as to achieve the quality product/service.
(iii). The principle of selection and training
It states that proper policies and guidelines be formulated to ensure that only qualified
personnel are employed and those without the skills be trained.
(iv). The principle of division of work
It states that division of work should be undertaken because it leads to specialization
which further leads to increased production.
(v). The principle of proper use of plant
It states that the organization's resources both human as well as physical should be
put to proper use. The managers should minimize their misuse.
(vi). The principle of planning
- It states that planning should be the first function for any manager because it helps to
achieve the organizational goals with ease and without conflicts.
(vii). The principle of healthy working environment.
It states that the work environment should be worker friendly so as to achieve quality
output.
(viii) The principle of incentives
It states that the organization should their employee’s reasonable salaries.
Advantages of the theory
(i). Uniformity
It gave birth to standardization of tools, working methods e.t.c which led to uniformity.
(ii). Incentives
Because of incentives, the workers performance increased greatly.
(iii). Wastage
It reduced the level of wastage in production process through scientific selection and
training.
(iv). It puts emphasis on better utilization of available organization's resources.
(v). The system provides for the satisfaction of the needs of the customers by
providing high quality product/services at lower prices.
(vi). It puts emphasis on good harmonious relationships between workers and
management.
(vii). It puts emphasis on proper selection, training and promotion of employees.
(viii). It has led to specialization which in turn led to increased productivity and job
satisfaction.
Disadvantages of the theory

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1. It puts a lot of emphasis on employee incentives but less on compensation in an

event of an accident.
2. It has overlooked the human desire for job satisfaction.
3. It assumes the social needs of workers such as forming and joining a trade union,
welfare society e.t.c
4. The techniques of scientific management dehumanize the workers by making them
to work like mindless machines.
5. It rules out any bargaining about wages by emphasizing on the manager setting
salaries and wages.
6. It gives too much power to managers which cause conflict and resistance.
2 MODERN/ADMINISTRATIVE THEORY OF MANAGEMENT
It was formulated by H. Fayol, who said that managers who follow general principles of
management and good management practices achieve the highest productivity.
Principles of Management
1. Principle of division of labour
According to it, when division of labor is allowed, it leads to specialization of workers
which further leads to increased productivity and job satisfaction.
2. The principle of authority and responsibility
It states that for a manager to get work done in his/her development, she/he must
adequately be authorized to be able to control the activities of the development. The
manager is equally held responsible and answerable to the proper use of the authority.
3. The principle of discipline
It states that discipline is at the very core of administration and that managers should
be disciplined first before they can think of disciplining the subordinate.
4. The principle of unity of command
It states that commands should be well planned and thought out. Subordinate should
not take instructions from more than one because they will be confused and frustrated.
5. The principle of unity of management
It states that tasks that are similar should be placed under one manager for easy
control.
6. The principle of suitable and adequate payment of personnel
It states that workers should be paid a better salary at the market rate so as to
perpetuate their race. This boosts their morale and efficiency.
7. The principle of centralization
It states that power and authority should be put in the hands of few so that the image
and culture of the company can be maintained and also control the type of decisions to
be taken.

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8. The principle of subordination of individual interests

It states that workers of an organization should be able to sacrifice their interests and
goals for the sake of organizational goals and objectives.
9. The principle of chain of communication.
It states that an organization should have open channels of communication for free
flow of information vertically and horizontally between the workers and workers,
workers and managers, managers and managers.
10. The principle of execution of orders.
It states that orders and instructions should always come from the right places,
departments and persons.
11. The principle of equal treatment.
It states that managers should treat everyone equally, to avoid conflicts and resistance.
12. The principle of stability of personnel.
It states that workers should be assured of their job security by formulating policies
that govern dismissals.
13. The principle of initiative
Initiative is the freedom to think, plan and to execute. Therefore, managers should
allow their subordinates limited autonomy to be creative but under their watchful eye,
for that helps to build their confidence.
14. The principle of Espirit de corpse (teamwork).
According to this principle, unity is strength, and therefore managers should do away
with divide and rule policy. Fayor came up with qualities that a manager should have
to be able to practice the principles outlined e.g.
(i). Physical Qualities
- Should have good physique
- Should be of good health
- Should be smart – dressing not offensive.
(ii). Mental Qualities
- Should be intelligent and wise - desist from making emotional decisions.
- Should be quick to act
- Should be able to extract the hurting feelings of the group.
(iii). Moral Qualities
- Should be respectful
- Should be honest
- Should have self determination and communication ability
(iv). General knowledge and experience

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Should be well educated and experienced – should be able to understand what's going
on and what people are talking about.
3 BUREAUCRATIC THEORY OF MANAGEMENT
It was formulated by Marx Weber, who was reacting to the abuses of power by those in
managerial positions.
He had interest in better management practices, and stressed that there is need for a
strictly defined hierarchy of management, governed by clearly defined rules,
regulations and lines of authority.
He believed that an organization is that one that entails beaurocracy whose objectives
and activities are rationally thought out.
The theory puts emphasis on orders, rationality, uniformity and consistency.
Principles / elements of Bureaucracy
1. Hierarchy of authority
It states and shows the relationship between various managers, their areas of
jurisdictions and their relationship with the subordinates.
2. Division of work
It states that work is divided into sections workers are allowed to specialize and hence
increase their competence, efficiency and productivity.
3. The principle of rules
It states that rules and procedures should be followed if systematic control is to be
realized.
4, Standardization of methods
This implies a system of work procedures where similar tools, equipment and
materials are used irrespective of departments.
5. Selection and promotion of employees.
It states that selection and promotion of employees should be based upon managerial
and technical competence.
6. The principle of legal power and authority.
It states that beurocracy recognizes only legal powers and authority to each office and
position.
Authority therefore does not belong to an individual; it is part of the office.
Advantages of bureaucracy
1. It eases the top management's effort in controlling their organization.
2. It leads to consistency of employees’ behavior which may lead to quality.
3. It eliminates the conflicting job duties because activities and responsibilities are well
defined.
4. There is maximum utilization of resources, both physical as well as human.

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5. The worker becomes a specialist through the principle of division of labor.

6. It helps to ease the goal attainment.
Disadvantages of bureaucracy
1. It makes managers dictators because they have too much power.
2. There is too much paper work and therefore wastage of resources.
3. Employees end up thinking less and work like robots.
4. It may lead to high resistance to change because workers are not involved in
decision making.
5. It does not give room to participating managers.
6. The overall goal attainment is hampered due to many rules to be observed

CHAPTER THREE
BUSINESS AND ITS ENVIRONMENT
NATURE OF BUSINESS
Business may be understood as the organized efforts of enterprise to supply
consumers with goods and services for a profit.
Businesses vary in size, as measured by the number of employees or by sales volume.
But, all businesses share the same purpose: to earn profits.
The purpose of business goes beyond earning profit. There are:
1. It is an important institution in society.
2. Be it for the supply of goods and services
3. Creation of job opportunities
4. Offer of better quality of life
5. Contributing to the economic growth of the country.
Hence, it is understood that the role of business is crucial. Society cannot do without
business. It needs no emphasis that business needs society as much.
BUSINESS TODAY
Modern business is dynamic. If there is any single word that can best describe today’s
business, it is change. This change makes the companies spend substantially on
Research and development (R & D) to survive in the market.
Mass production and mass marketing are the norms followed by business enterprises.

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The number of companies with an annual turnover of Rs.100 crore each was only
three in 1969-70.The figure has gone up by hundreds these days.
Today’s business is characterized by diversification, which may be:
Concentric Diversification - It refers to the process of adding new, but relates
products or services.
Horizontal Diversification - Adding new, unrelated products or services for present
customers is called horizontal Diversification.
Conglomerate Diversification - It refers to adding new and unrelated products or
services.
Going international is yet another trend followed by modern business houses.
Business houses are exposed to global competition, which argues well for consumers.
Also occupying a major role is science in the global economic scenario.
BUSINESS IN 21ST CENTURY
Large organizations, with a large workforce will not exist. They will be ‘Mini’
organizations. Business during the 21st century will be knowledge-based, tomorrow’s
manager need not spend his time on file pushing and paper-shufling.
Information technology will take care of most of that work. Organizations will become
flat. Linear relationship between the boss and manger and authority flowing
downwards and obedience upward will disappear. Employees will have no definite
jobs. Most of the jobs will last for two to five years. Remuneration will depend on one’s
contribution to organization.
BUSINESS GOALS
Profit - Making profit is the primary goal of any business enterprise.
Growth - Business should grow in all directions over a period of time.
Power - Business houses have vast resources at its command. These resources confer
enormous economic and political power.
Employee satisfaction and development - Business is people. Caring for employee
satisfaction and providing for their development has been one of the objectives of
enlightened business enterprises.
Quality Products and Services - Persistent quality of products earns brand loyalty, a
vital ingredient of success.
Market Leadership - To earn a niche for oneself in the market, innovation is the key
factor.
Challenging - Business offers vast scope and poses formidable challenges.
Joy of creation - It is through business strategies new ideas and innovations are given
a shape and are converted into useful products and services.
Service to society - Business is a part of society and has several obligations towards it.

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BUSINESS ENVIRONMENT
Environment refers to all external forces, which have a bearing on the functioning of
business. Environment factors “are largely if not totally, external and beyond the
control of individual industrial enterprises and their managements. The business
environment poses threats to a firm or offers immense opportunities for potential
market exploitation.
TYPES OF ENVIRONMENT
Environment includes such factors as socio-economic, technological, supplier,
competitor and the government. There are two more factors, which exercise
considerable influence on business. They are physical or natural environment and
global environment.
1.Technological Environment
Technology is understood as the systematic application of scientific or other organized
knowledge to practical tasks. Technology changes fast and to keep pace with it,
businessmen should be ever alert to adopt changed technology in their businesses.
2.Economic Environment
There is close relationship between business and its economic environment.
Business obtains all its needed inputs from the economic environment and it absorbs
the output of business units.
3.Political Environment
It refers to the influence exerted by the three political institutions viz., legislature
executive and the judiciary in shaping, directing, developing and controlling business
activities. A stable and dynamic political environment is indispensable for business
growth.
4.Natural Environment
Business, an economic pursuit of man, continues to be dictated by nature. To what
extend business depends on nature and what is the relationship between the two
constitutes an interesting study.
5.Global or international Environment
Thanks to liberalization, kenyan companies are forces to view business issues from a
global perspective. Business responses and managerial practices must be fine-tuned to
survive in the global environment.
6.Social and culture Environment
It refers to people’s attitude to work and wealth; role of family, marriage,religion and
education; ethical issues and social responsiveness of business.
ENVIRONMENT – BUSINESS RELATIONS

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Business is the product of the technological, political-legal, economic, social –cultural,

global and natural factors amidst which it functions. Three features are common to this
web of relationship between business and its environment.
1. There is symbolic relationship between business and its environment and among
the environmental factors. In other words, business is influenced by its environment
and in turn, to certain degree, it will influence the external forces. Similarly, political-
legal environment influences economic environment and vice versa. The same
relationship between other environment factors too.
2. These environmental forces are dynamic. They keep on changing as years roll by, so
does business.
3. The third feature is that a particular business firm, by itself, may not be in a position
to change its environment. But along with other firms, business will be in a position to
mould the environment in its favor.
IMPORTANCE OF ENVIRONMENTAL STUDY
The benefits of environmental study are as follows;
1. Development of broad strategies and long-term policies of the firm.
2. Development of action plans to deal with technological advancements.
3. To foresee the impact of socio-economic changes at the national and international
levels on the firm’s stability.
4. Analysis of competitor’s strategies and formulation of effective countermeasures.
5. To keep oneself dynamic.
ENVIRONMENTAL ANALYSIS PROCESS
The analysis consists of four sequential steps:
1. Scanning
It involves general surveillance of all environmental factors and their interactions in
order to:
• Identify early signals of possible environmental change
• Detect environmental change already underway
2. Monitoring
It involves tracking the environmental trends, sequences of events, or streams of
activities. It frequently involves following signals or indicators unearthed during
environmental scanning.
3. Forecasting
Strategic decision-making requires a future orientation. Naturally, forecasting is an
essential element in environmental analysis. Forecasting is concerned with developing
plausible projections of the direction, scope, and intensity of environmental change.
4. Assessment

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In assessment, the frame of reference moves from understanding the environment- the
focus of scanning, monitoring and forecasting – to identify what the understanding
means for the organization. Assessment, tries to answer questions such as what are
the key issues presented by the environment, and what are the implications of such
issues for the organization.

CHAPTER FOUR
PLANING FUNCTION

PLANNING-It’s the basic process by which we use to see our goals and determine the
means to achieve them. It bridges between where we are and where we want to go. It
involves setting missions, objectives and actions to achieve them.
Whatever individuals or organizations do, they need to plan. Planning is the basic
process by which we select our goals and determine how to achieve them.
If order for managers to design an enabling climate for the effective performance of
individuals working together as groups in the organization, they must see to it that
purposes and objectives and procedures of attaining them are clearly understood. If
group effort is to be effective people must know what they are expected to accomplish.
This is the essence of planning.
Planning is the most basic of all managerial functions. In defining it Koontz says that
planning involves selection from among alternatives future courses of action for the
firm as a whole and for every department or section within it.
Deciding the organizational position to planning can be looked at, therefore, as the
process of developing plans. A plan is a blue print or framework used to describe how
the organization expects to achieve its goals. Planning then is simply the process of
determining which path among several the organization wishes to follow. When you
plan your map out a course of action in advance.
Any goal might be approached in several different ways. Planning is the process of
determining which the best way to approach a particular goal.
FACTORS TO CONSIDER WHEN PLANING
1. OBJECTIVES
This specifies the future conditions that a manager hopes to achieve.
2. ACTIONS
These are means or specific activities planned to achieve the objectives.

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3. FORECAST
A manager cannot plan without giving consideration to the future events and factors
that affect what will be possible to accomplish.
4. RESOURCES
These are constraints on the course of action.
A plan specifies all kinds and amounts of resources required, as well as the potential
sources and allocations of those resources to causes of action.
5. IMPLEMENTATION
A plan includes ways and means to implement the intended actions. It involves the
assignment and direction of workers to carry out the plan.

IMPORTANCE OF PLANNING
1. To co-ordinate the efforts
The work of individuals and groups must be co-ordinated and planning is an important
technique for achieving the co-ordinated effort.
2. Preparing for change
Effective plan allows room for change by preparing those to be affected by the change
and those to implement the changes
3. Developing performance standards / setting
As plans are implemented, specific set targets in the plans must be realized if
performance is to be rated as good.
4. Developing managers
Planning involves high levels of intellectual activities because those who plan must be
able to deal with abstract and uncertain ideas and information. Therefore, they must
think about the present and the future and show their relationships. That enhances
their analytical ability.
5. A source of funding
Plans are used by the donors and other financiers to determine the projects that they
are willing to finance. They are therefore used by organizations to source for funding.
Better plans easily attract the funding.
6. Budgeting
Individual department will normally prepare their departmental plan which has the
costing part, which ultimately can be taken by the organization in order to prepare the
master budget. This is realized by adding up the budgets of different departments
within the organization
PRINCIPLES OF PLANNING
1. Take time to plan don't be in a hurry;

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Enough time should be taken to carry out an accurate situation analysis so that all
factors are considered.
2. Planning can be top down or bottom up;
Managers can formulate plans and pass on to the workers to implement them (top
down).
3. Communication
Communication is done to those who are to implement the plans and those to be
affected by the plans.
Communication should be done at the earliest possible time.
4. Flexibility
Plans should be flexible so that changes in the environment can be considered to
ensure success of the plan.
5. Evaluation
A decision must be taken on how and when evaluation is to take place. If the plan is
faced with hitches then it should be revised.
TYPES OF PLANS
1. Strategic plans
These are long range plans made by top level managers and give a guideline to other
plans within the organization. They are the supreme plans within the company
2. Operational plans
These are plans made by departmental mangers and affects day to day running of
those departments.
They are derived from strategic plan. They are routine like plans which are made on
daily basis
Plans should be flexible so that changes in the environment can be considered to
ensure success of the plan.
3. Policies
These are general statements or understanding that guides the thinking in decision
making. They define an area within which a decision is to be made and that it must be
consistent to the objectives. They are the guidelines which are strictly followed for
uniformity and consistency of the decisions taken and the actions undertaken
4. Procedures
These are a plan that establishes a required method of handling future activities. They
are chronological sequence of required actions.
5. Budget

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It is a plan statement for a given period of time in future exposed in financial terms. It
shows revenue and expenditure to be undertaken. Budget are never violated easily
without the management’s intervention
STEPS IN PLANNING
1. Environmental analysis;
This is where an accurate examination of the organization strengths and weaknesses is
appreciated.
This assists in formulation plans that will be achievable.
2. Setting objectives
This specifies the expected results and indicates the end points. It shows where we
want to be and what we want to accomplish and when.
3. Consider the planning premise
This is where the environment or place where the plan is to be executed is prepared.
This helps to reduce implementation problems. This includes acquiring of extra space
and specialized equipments
4. Evaluate the alternative courses
This is where an evaluation to identify the most fruitful, applicable, cost effective and
less risky alternatives are taken.
5. Selecting a course of action
This involves making a choice on which course of action to take. Is where the plan is
adopted.
6. Formulate the supporting plans
This involves getting items and facilities to help in the implementation of the plan. It
includes buying of equipment materials, hiring and training of workers e.t.c.
7. Preparation of the badges
This shows the overall costs for the plan where the resources will be got and how they
will be allocated or used.
LIMITATIONS OF PLANNING
1. Planning is costly and time consuming process. Time is required when forecasting is
done but sometimes there is limited time and the outcome is hard to implement.
2. Its a future oriented activity based on forecast. There is unreliable and inadequate
data on the future thereby making planning difficult.
3. Planning becomes rigid due to internal inflexibility which in turn reduces personal
initiative and freedom and causes delay in decision making. Internal inflexibility
includes
- Rigid policies
- Procedures and limited resources.

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4. External factors beyond the control of an organization affect its planning process the
factor includes;
- Government control and legislation
- Technological changes
- Trade unions pressure e.t.c.
5. Planning fails due to incorrect plans being formulated because of lack of
commitment, delegation and excessive reliance on past experience.
HOW TO OVERCOME PLANNING PROBLEMS
1. Set realistic and achievable goals.
2. Communicate the assumption on which plans are formulated to all departments and
people.
3. Encourage participation of all stake-holders so as to ensure their right commitment.
4. Ensure there is proper co-ordination of the plans.
5. Reconcile both short term and long term plans.
6. Encourage creativity in planning. Creativity helps to identify the best alternatives.
7. Consider the company's financial position.
8. Reduce the level of internal flexibility so that changes in the environment can be
considered.

CHAPTER FIVE
ORGANIZING FUNCTION

MEANING OF ORGANIZING FUNCTION

The word organization has two common meanings. The first meaning signifies an
institution, for example we refer to a school as an organization. The second deals with
organization as a process i.e. the process of organizing which is the second basic
managerial function and which mainly refers to the way work is divided and allocated
among members of the organization with the aim of goal attainment.
The process of organizing involves balancing a company's needs for both stability and
change. It is the structure of an organization that gives stability to the actions of its
members. Change is adapted by altering an organizations structure. This lesson is
going to focus on the process of organizing with particular attention to the basic
elements of the process of organizing which include:

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Division of work, departmentation, co-ordination, span of management, authority and

power, line and staff relations and organizational design.
Definition of Organizing
Koontz defines organizing as "the grouping of activities necessary to attain objectives,
the assignment of each grouping of activities to a manager with authority necessary to
supervise it, the provision for coordination vertically and horizontally in the enterprise
structure.
Another definition refers to organizing as the process of identifying and grouping the
work to be performed, defining and delegating responsibility and authority and
establishing relationships for the purpose of ensuring people to work together
effectively.
Specifically organizing is the process of grouping activities and resources in a logical
and appropriate fashion.
Most organizations start in one form and then evolve into other forms as they grow,
shrink or otherwise change. Organization process involves shaping the organization as
it grows, shrinks or changes.
Any step or activity that is undertaken and which leads to changes in the organization
e.g creating new jobs is part of the process of organizing. One can never truly finish the
process of organizing. New opportunities, threats and challenges keep arising and
these cause the manager to modify or adjust his organization.
PRINCIPLES of ORGANIZING
1. Unity of objectives
Every part or department must contribute towards attaining the enterprise objectives
2. The principle of continuity
The departments created should be those that will be in existence for a long time, to
allow for long term planning.
3. The principle of flexibility
The structures created should be flexible to allow for restructuring where some
departments would be dissolved and merged with others.
4. The principle of simplicity
The structures chosen should have minimum number of levels for easy decision
making and to avoid confusion.
5. The principle of delegation
It states that authority and tasks can be shared with the subordinates. Delegation is
from top to bottom.
6. The principle of unity of command

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It states that subordinates should not take instructions and orders from more than one
person because that causes conflicts and frustrations
7. Scalar principle
It states that at least one manager should have ultimate authority to overrule decisions
taken by other managers and solve interdepartmental conflicts.
8. The principle of span of control
This is where an organization plans on how many people or workers can one manager
effectively manage.
Factors influencing the span of control or management
1. The manager's personality
If they have a strong need for power they will prefer a wider span but those who are
threatened because they can’t oversee the activities of many workers and therefore a
narrower span would be chosen.
2. Manager's capability
Experienced, well brained and knowledgeable managers are able to handle large
groups and therefore a wider span and vice-versa.
3. Subordinate's capability
Experienced and well brained subordinates will resolve difficulties by themselves and
there's no need for a manager and hence a wider span will be chosen.
4. Fatigue tolerance
Physical and mental fatigue may lead the managers’ capacity for control and therefore
a narrower span and vice-versa.
5. Non supervisory Activities
If managers spend more time on non-supervisory activities like long range planning
and outside assignments that make them have less time to supervise the workers, that
limits span hence a narrower span and vice-versa.
6. Similarity of Activities
If the tasks are routine-like then a manager can manage more subordinates and
therefore a wider span and vice-versa.
7. Location
If subordinates are widely dispersed and more time is required in traveling, a
narrower span will be chosen and vice-versa
TYPES OF ORGANISATIONAL STRUCTURES
1 FUNCTIONAL STRUCTURE
This is where a department is named from the function it executes e.g. Marketing, HR,
purchasing. Examination e.t.c
Advantages of functional structure

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i) It leads to specialization.
ii) It reduces conflicts within the organization.
iii) It leads to better utilization of resources.
iv) Career and promotion paths are created.
v) It reduces confusion to the clients who want to see and have their problems sorted
out by different departments.
Disadvantages of Functional Structure
i) Departments might deviate from organizational goals and act independently.
ii) Decision making takes a long time (if somebody is not there).
iii) There is lack of coordination.
iv) Specialization can lead to breakdown particularly if one department is not
functioning.
v) There are functional conflicts especially if departments are competing for scarce
resources.
2 PRODUCTS – LINE STRUCTURE
This is where a department is named after a particular product particularly in a
company where more than one product is produced e.g. Coca-Cola Company has many
departments:
- Fanta - Dept - Coke dept etc -Krest dept - Sprite dept
Advantages of product line structure
i) There is good coordination within a specific product group.
ii) It leads to innovation and creativity that they keep improving on the product.
iii) There are fewer communication problems.
iv) It enables product groups to concentrate on their products and improve on quality
and marketing.
v) It leads in specialization of men and machines.
Disadvantages of product line structure
i) If one product lets down a consumer, all other products will be rejected.
ii) Individuals division could be in conflict due to competition of scarce resources.
iii) Wastage levels are high due to duplication of resources, for instance, each section
having a marketing manager and advertise differently.
iv) Inefficiency by one division head may cause the whole production line to come
down.
v) It is difficult to maintain coordination among the product areas.
3 GEOGRAPHICAL – BASED STRUCTURES

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This is where goods and services are provided over a wide area and a communication
channel justifies this form of departmentation. It is where more branches are opened
within more geographical locations.
Advantages of geographical based structure
1. The company is able to cater for wide markets.
2. The customers get what they really want because the organization is involved in the
local environment.
3. The cost of operation is low.
4. It provides a good training ground for managers.
5. The knowledge of local conditions helps in decision making and therefore helps the
company to earn good will.
Disadvantages of geographical based structure
1. It is costly to implement.
2. It is difficult to coordinate.
3. Some branches may deviate from original goals and act independently
4. It is difficult to maintain the original culture of the head office.
4 MATRIXES OR ORGANIC STRUCTURE
This is where departments contribute few workers who are relocated far away from
the office to the site where the project is taking place until it is completed. It is
common in NGO's and project related organizations.
Advantages of matrix strucure
1. It reduces bureaucracy in the organization where procedures are not strictly
followed
2. It leads to proper utilization of human resources.
3. There is better control of the project – the project is controlled well.
4. It clarifies who is responsible for the success of the project.
5. There is short project development time.
6. It aids in the development of managers. A training ground for managers.
7. It develops employees' skills by allowing them to handle different projects with
different projects with different challenges. It acts like job rotation.
8. Workers are fully motivated because of the fringe benefits they derive.
9. Employees are able to identify with the end products.
10. The top echelons are left free to plan and strategize for they are not involved
directly in the running of the project.
11. It enhances teamwork and cooperation. A bonding develops.
Disadvantages of Matrix structure

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1. The functional managers may neglect their duties and let the project manager do
everything.
2. Too much shifting of staff from project to project may hinder training of new
employees. (You do not abandon or change a winning team).
3. There is conflict because the workers at the site are at loss on whom to pay their
allegiance between the project manager and their functional heads.
4. The staff morale is affected after completion of the project because they are socially
re-arranged e.g. they have to move far from the newly acquired friends at the end of
the project.
5. The structure only works only where interpersonal relationships are well
developed.
5 Customer based structures
This is a structure prepared with a particular client in mind. It is common in service
industry e.g. Hospitals, hotels and automobile firms
Disadvantages of customer based structure
1. If the customer rejects a product because of its quality, the entire organization is
threatened.
2. It is costly to implement because specilalised departments have to be set up
3. It requires only specialized and skilled workers
Advantages of customer based structure
1. It offers personalized services.
2. They satisfy the customer's needs.
3. It is easy to get feedback which enables an organization to make necessary changes
CENTRALIZATION AND DECENTRALIZATION
DECENTRALIZATION
It is the transferring of the authority from supervisors to the subordinates. It is where
power is dispersed and shared.
Advantages of decentralization
1. It speeds up the decision making.
2. The echelons (top management) are left free to plan and strategize.
3. It helps in development of professional managers.
4. It enables for multi-skilling and development of junior staff.
Disadvantages of decentralization
1. There is lack of consistency because more people are involved in decision making.
2. Customers are not subjected to the same treatment.
3. There is misallocation of resources especially if controls are not established.

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4. Senior managements must do a lot of coordination to avoid units working contrary

to the organizational goals.
CENTRALIZATION
It is the concentration of power and authority in the hands of few people. It takes place
in bureaucratic structure. (Authority is legal and given-comes with the position).
Authority - is bestowed on an individual and it's legal. It is a right in a position to give
orders and expect the orders to be obeyed.
Power – It's the ability to influence behavior of others and it's not given but rather it is
acquired
5.3 FORMS / BASIS OF POWER
(a) Coercion power
This is power that is exercised by causing fear and threatening e.g. A thug having a gun.
(b) Reward power
This is where people's behavior are influenced through reward and incentives.
(c) Legitimate power.
This is power that comes from one's position e.g. DO's, Managers e.t.c.
(d) Expert power
This is power that's exercised through one's knowledge, skills and expertise e.g.
Doctors, engineers e.t.c.
(e) Referent power
This is where one identifies with a person who has desirable resources, personal traits
that are good or feared.

CHAPTER SIX
DIRECTING FUNCTION

.
INTRODUCTION
Directing is a very essence of management. It is the important element of management
without which nothing in the managerial process can be successful.
Directing helps to create an appropriate work environment that facilitates efficient
discharge of duties to the employees.
Directing and leading comprise the managerial functions of guiding, overseeing and
leading people. The primary function of directing is to deal with human elements to
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Directing is concerned with directing human efforts towards organizational goal

achievements. The success of these directional efforts determines the satisfactory or
unsatisfactory performance within the organization. Thus, directing is the function the
will test the managerial capability in running the organization.
Definition:
According to Haimann:“Directing consists of the process and techniques utilized in
issuing instructions and making certain that operations are carried on as originally
planned.”
According to Koontz and O’Donnel: “Direction is the interpersonal aspect of managing
by which subordinates are led to understand and contribute effectively to the
attainment of enterprise objectives”
According to Urwick and Brech: “Directing is the guidance, the inspection, the
leadership of those men and women that constitute the real course of responsibility of
management.”
Direction focused on:
1. To ensures that sub-ordinates do their work.
2. The subordinates do it well not only according to plan but also as per the
expectation of management in order to achieve the goals.
3. To develop interpersonal relations n a group
NATURE OF DIRECTION
Directing is the heart & soul of management. Without directing management may come
to stand still.
1) Important function of management: -
Any amount of planning, organizing & staffing can be done with proper direction.
Responsibility for attaining the objectives must be guided and directed for truthful
result.
2) Performed by all levels of management: -
Direction function is performed by top level, middle level or low level. Every superior
is expected to provide guidance and direction to those who lose to him for such
direction.
3) Continuous process: -
It is an unending process. It goes with work. As long as work is there direction is there.
4) Result oriented: -
a) To get the work done.
b) To see the management work more responsibly.

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The manager’s job is not only to see that the work is completed according to him and
proper direction is provided but he has to ensure that the problems faced by men are
solved without delay.
5) Provides link between different management functions: -
It provides effective link in planning, organizing, staffing in the organization with
proper control.
6) Involvement of human relationship: -
Directing creates co-operation & harmony among the members of the group.
IMPORTANCE OF DIRECTION
Direction is described as the heart of the management process. It is the life spark of an
organisation which sets the organizational machine into motion. Thus direction is an
important function of management on account of following reasons.
1) Direction initiates action : Management through direction conveys and motivates
individuals in the organisation to function in the desired way to achieve organisational
objectives in the absence of direction.
2) Direction integrates an effort of employees in order to achieve organizational
objectives interrelated activities of all the employees need to by systematically
integrated which is done through direction.
3) Direction attempts to get maximum from individuals : Individuals in the
organisation have enough potentialities and capabilities, which can be used through
proper motivation leadership and communication which are the elements of direction.
4) Direction facilities changes in the organisation : Organisation is described as a
subsystem of a social system, hence any change in the social system, has to be
accommodated by the organisation by changing itself. In order to accept and
implement these changes management has to motivate the employees affected by
these changes, which is the essential part of direction.
5) Direction provides stability and balance in the organisation : Direction through
effective motivation communication and leadership provides stability in the
organisation and helps in maintaining balances between different departments in the
organisation. Hence the organisation can function efficiently and effectively over a long
period of time.
Thus direction stands out as an important function of management. It has also been
observed that there is a high correlation between direction and work performance.
2.4 PRINCIPLES OF DIRECTON
1) Principle of Harmony of objectives: -

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The direction is effective only when the individual objectives are harmonized with
group activities. Directing is regarded as essential in personnel management directing
helps all the members to satisfy their personal goals as well as organizational goals.
2) Principle of efficiency: -
The executive should try to motivate sub-ordinates to increase performance & attain
objectives at minimum cost; other wise direction will be ineffective.
3) Principle of unity of command: -
Command must be come from only one executive or one superior. Workers come to
know from one of the executives what to achieve & how to achieve. If there is no unity
of command there will be a duplication of work.
4) Principle of direct supervision: -
Direct supervision and advice by the executive will boost the Morale of the workers.
This makes the atmosphere trustworthy in the organization.
5) Principle of communication: -
A good system of communication between executives & sub-ordinates ensures the
success. Effective communication serves as an instrument of direction, supervision &
advice.
6) Principle of leadership:
Everyone wants a good executive who is interested in the work & who is interested in
solving problems faced by workers. Good leadership will lead to cooperation, co-
ordination & confidence in the working force.
ELEMENTS OF DIRECTION
1) Motivation: -
Employees come forward to work in any organization to satisfy their needs.
Motivation relates to continuous attempt made by executives to influence on the
behavior without any force.
2) Leadership: -
Leadership is essential aspect of directing. Inspiring leadership act as a spark plug for
lightening the efforts and a desire to work in sub-ordinates. The success depends upon
good quality leaders.
3) Communication: -
It creates mutual understanding between management & other members of the
organization. The manager should explain in simple and clear terms what to do, how to
do & whom to do to the workers. Modern management needs effective communication
as well as active participation by all the members.
4) Co-ordination: -

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It is the essence of management. It is the duty of manager to co-ordinate all the

activities within the organization. Co-ordination will lead to unity of direction.
5) Supervision: -
The supervision means a job of sub-ordinate is supervised by the superior. It is
essential part in directing. It is to be done at all levels of management from top to
bottom. He gives instructions and guide to the people for attaining the objectives.
The supervisory management supervises the workers for solving their problems.

CHAPTER SEVEN
STAFFING FUNCTION

.
INTRODUCTION
Staffing is the managerial function of recruitment, selection, training, developing,
promotion and compensation of personnel. Staffing may be defined as the process of
hiring and developing the required personnel to fill in the various positions in the
organization. It involves estimating the number and type of personnel required. It
involves estimating the number and type of personnel required, recruiting and
developing them, maintaining and Improving their competence and performance.
Staffing is the process of identifying, assessing, placing, developing and evaluating
individuals at work.
Definition:
According to Koontz and O’Donnell:
“The managerial function of staffing involves manuring the organizational structure
through proper and effective selection, appraisal and development of personnel to fill
the roles designed into the structure.”
Staffing is defined as, “Filling and keeping filled, positions in the organizational
structure. This is done by identifying work-force requirements , inventorying the
people available, recruiting, selecting, placing, promotion, appraising, planning the
careers, compensating, training, developing existing staff or new recruits, so that they
can accomplish their tasks effectively and efficiently.”
IMPORTANCE OF STAFFING
1. Staffing helps in discovering and obtaining competent and personnel for various
jobs.

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2. It helps to improve the quantity and quality of the output by putting the right person
on the right job.
3. It helps to improve job satisfaction of employees.
4. It facilitates higher productive performance by appointing right man for right job.
5. It reduces the cost of personnel by avoiding wastage of human resources.
6. It facilitates growth and diversification of business.
7. It provides continuous survival and growth of the business through development of
employees.

STEPE IN STAFFING PROCESS

1. JOB ANALYSIS
Definition: It is that process of identifying the overall tasks, activities and
responsibilities within an organization.
This helps to picture out the type of persons to perform those tasks.
USES OF JOB ANALYSIS
1. It’s used in employment.
2. It’s used in fixing salaries.
3. It’s used to identify those to undergo training.
4. It’s used to identify those to be promoted.
5. It’s used in identifying the workers who have no respect to the policies, procedures
and methods.
6. It’s a basis for merging departments.
THE BARRIERS LIMITATIONS OF JOB ANALYSIS
1. When the workers give conflicting information about their tasks, a job analyst is
forced to use guess work.
2. It requires a lot of time to cover all jobs which is always lacking.
3. If there is change in management the job analysis results may be rejected and
therefore a waste to an organization.
4. When workers do not co-operate with the job analyst then information will be given
rendering the result ineffective.
2. RECRUITMENT AND SELECTION
Recruiting involves attracting candidate to fill the positions in the organization
structure. Before recruiting, the requirement of positions must be cleared identified. It
makes easier to recruit the candidates from the outside. Enterprises with a favorable
public image find it easier to attract qualified candidates.

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Definitions –
1. Mc Fariand, “The term recruitment applies to the process of attracting potential
employees of the company.”
2. Flippo, “Recruitment is the process of searching prospective employees and
stimulating them to apply for the jobs in the organization.”
Thus recruitment may be considered as a positive action as it involves attracting the
people towards organization.
Need of recruitment
The need of recruitment may arise due to following situations:
1. Vacancies due to transfer, promotion, retirement, permanent disability or death of
worker.
2. Creation of vacancies due to expansion, diversification or growth.
Methods and sources of recruitment:
According to ‘Dunn and Stephens’ recruitment methods can be classified into
three categories :
1) Direct Methods
2) Indirect Methods
3) Third Party Methods
1) Direct Methods include travelling visitors to educational and professional
institutions, employee’s contacts with public and manned exhibits and waiting lists.

2) Indirect Methods include advertising in newspaper radio, in trade and professional

journals, technical journals, brochures etc.
3) Third Party Methods includes the use of commercial and private employment
agencies, state agencies, placement offices of the colleges and universities, and
professional association recruiting firms.
Sources of Recruitment
The various sources of recruitment may be classified as
A. Internal sources or from within the organisation
B. External sources or recruitment from outside.
A. Internal sources – Many organisations in India give preference to people within
the company because the best employees can be found from within the
organisation itself. Under this policy, if there is any vacancy the persons already
working in the organisation are appointed to fill it. This method is followed mostly in
Government organisations.
WHY COMPANIES PREFER INTERNAL RECRUITMENT.
1. It motivates the workers.

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2. It is a policy of an organization (rule)

3. To please the trade unions.
4. To reduce the costs in recruitments i.e advertisements.
5. If the organization wants to maintain their organizational culture.
B. External sources or recruitment from outside – Internal sources may not always
fulfill the needs of an organisation. Naturally, most of the concerns have to look for the
external sources for recruitment the required number of employees with the requisite
qualifications.
The external sources of recruitment include.
1. Direct Recruitment – Many organizations having one separate department called
personnel department to select right employees. For that organisaton may receive
direct applications from the candidate. The technical and clerical staff is appointed in
this way.
2. Recruitment through the jobbers or Intermediaries – In India mostly unskilled
or illiterate workers are recruited through this method. Under this system the
intermediary keeps a vital link between workers and employers. They are always
willing to supply the required number of workers.
3. Recruitment at the factory gate – Mostly unskilled workers are appointed through
this method. Under this system, large numbers of unemployed workers assemble at
the factory gate for employment. The factory manager, or labour superintendent or
some other official may select the necessary workers.
4. Recruitment through advertisement – This is most common method for
recruiting skilled workers, clerical staff, managerial personnel, technical personnel.
The vacancies are advertised in the popular daily newspapers and applications are
invited from the persons having required qualifications.
5. Recruitment through the recommendation of the existing employees – The
existing employees recommend the suitable names for the employment.
6. Recruitment from colleges or universities or educational institutions – This
method is used in some enterprises or Government department, when the recruitment
of persons required for administration and technical personnel.
7. Recruitment through employment exchange – The workers who want help in
finding jobs make their registration in the nearest employment office where details are
recorded. Employment exchanges are the special offices for bringing together those
workers who are in need of employment.
8. Head-hunting-This is where an organization goes for a particular person to fill a
vacancy.
It’s always used to fill top level positions.

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9. Data banks-This is information about an unsuccessfully applicants that is kept by

firms and can be reverted to when a vacancy arises or the information can be shared
by another firm.
WHY COMPANIES PREFER EXTERNAL RECRUITMENT
1. If they want to change their organizational culture
2. If they want to earn the society of goodwill.
3. It’s a large pool with trained and experienced people.
4. If the organization desires to get a person associated with success in other places to
their organization.
5. If an organization has a desire of getting competitor workers to inject the secrets of
their former employee to the organization.
6. If it’s the requirement of the state to help in alleviating unemployment and
discrimination.

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2. SELECTION:
Selection is the process of choosing the most suitable person for the current position
or for future position from within the organization or from outside the organization.
The selection of managers is one of the most critical steps in the entire process of
managing.
PROCESS OF SELECTION
Selection means the taking up the different workers by various acts from the
application forms invited through different sources of internal and externals.
According to Dale Yoder, “Selection is the process in which candidates by employment
are divided into two classes those who are to be offered employment and those who
are not.” Selection Procedure:
Selection of workers is regarded as a policy matter. Every enterprise has its own policy
for recruitment. The following procedure is adopted.

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1) Receiving and screening the application: After receiving the applications have to
be screened. In this process the applications of candidates without the requisite
qualification are rejected.
2) Sending the Blank application form: After preparing the list of candidates
suitable for job, blank application forms will be sent to the candidates. In this
application form information should be given about the name and address of the
candidate, educational qualification, experience, salary expected etc.
3) Preliminary Interview: The interviewer has to decide whether the applicant is fit
for job or not. By this interview the appearance, attitudes, behaviour of the candidate
can be known easily.
4) Administering Tests : Different types of test may be undertaken. Tests are
conducted for the knowledge of personal behaviour, efficiency of work and interest.
Generally, following types of tests are conducted.
i) Achievement Test
ii) Aptitude test
iii) Trade Test
iv) Interest Test
v) Intelligence Test etc.
5) Checking References on Investigation of Previous History : Applicants are
generally asked to give names of at least two persons to whom the firm may make a
reference.
6) Interviewing: Interview is the most important step in the selection procedure.
In interview, the intimation given in the application form is checked. Interview helps in
finding out the physical appearance and mental alertness of the candidate and whether
he possesses the required qualities.
Interviews may be of various kinds these are
1) Direct Interview
2) Indirect Interview
3) Patterned Interview
4) Stress interview
5) Systematic in – depth interview
6) Board of panel interview
7) Group interview
7) Final Selection: On the basic of results of previous interview the candidate is
informed whether he/she is selected for the said post or not.
3.TRAINING AND DEVELOPMENT
Meaning:

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Training is an instrument of developing the employees by increasing their skills and

improving their behavior. Technical, managerial skills are needed by the employees for
performing the jobs assigned to the. Training is required to be given to new employees
as well as existing employees. The methods to be used for training and the duration for
which training should be given is decided by the management according to the
objectives of the training, the number of persons to be trained and the amount of
training needed by the employees.
Training leads to overall personal development. The major outcome of training is
learning. Trainees learn new habits, new skills, useful information that helps to
improve their performance.
Definition:
According to Flippo:“Training is an act of increasing the knowledge and skill of an
employee for doing a particular job.”
Importance of training and development:
1. Reduction in learning time
2. Better performance
3. Reduced supervision
4. Increases Morale of the employees
5. Facilitates organizational stability and flexibility
6. Develops employees skills, talents, competency
7. Decreased accidents
8. Better use of raw material and other resources
9. Increase in production

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Development
Development is a continuous process. It is fox for refreshing information knowledge
and skills of the executives. In the case of development, off the job methods are used. It
provides wider them capable to face organizational problems and challenges is a bold
manner.
Management development is a planned systematic process of learning. It is designed to
induce behavioural change in individuals by cultivating the mental abilities and
inherent qualities through the acquisition and Understanding of use of new knowledge
4.PERFORMANCE APPRAISAL
Performance appraisal is one of the oldest and most accepted universal principles of
management. It refers to all the formal procedures used in working organizations to
evaluate the personalities, contributions and potentials of group members. It is used as
a guide by formulating a suitable training and development programme to improve the
quality of performance in his present work.
Performance appraisal is the judgment of an employee’s performance in a job.
It is also called as merit rating. All managers’ are constantly forming judgment of their
subordinates and are continuously making appraisals.
It is the systematic evaluations of the individuals with respect to his performance on
the job and his potential for development. The immediate superior is in-charge of such
appraisal. The managerial appraisal should measure both performances in achieving

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goals and plans as well as all managerial function such as planning, organizing, leading
and controlling.
Objectives of performance appraisal:
1. To help a manager to decide the increase in pay on ground of merits.
2. To determine the future use of an employee
3. To indicate training needs.
4. To motivate the employees to do better in his or her present job.
5. To contribute the growth and development of an employee.
6. To identify employees for deputation to other organizations
7. To help in creating a desirable culture and tradition in the organization.
8. To nominate employees for training programmes.
5.RETENTION
Definition: This is the process of ensuring that the workers are highly motivated so
that they work with he firm for a long time without wishing to leave for other places.
The following factors contribute to retention:-
1. If the organization provides opportunities for training and development of its work
force.
2. Rewards, if workers are given a better salary comparable to other organizations.
3. Job security; if workers are assured of a security of their jobs they will not be willing
to more away but will want to grow with the organization.
4. Filling of vacancies; if vacancies are filled internally then labor turn-over will be
reduced.
5. Rules and policies; the rules and policies must be worker friendly to ensure for their
continual existence.
6. Management practices; if managers use better management practices that are
worker friendly to ensure then the workers will see no reason to want to leave.
7. Better working conditions.
8. Provision of welfare services e.g. house allowance, medical allowance, transport
allowances e.t.c.

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CHAPTER EIGHT
CONTROLLING FUNCTION

It’s a manager sets targets and objectives and measures to find out how far they have
been achieved. Its meant to find out whether there are deviations so that a corrective
action is taken to ensure everything is on course.
OBJECTIVES OF CONTROLLING
The following are the objectives that any controlling effort is meant to achieve:
_ To keep checks on the expenses both direct and indirect expenses
_ To find out whether the objectives set are achievable
_ To ensure the company moves to the highest level possible
_ To find out what is happening, why and by whom it happens
_ To ensure all activities are carried out according to plan

CHARACTERISTICS OF CONTROLLING
1 It is forward looking
It seeks to correct the future actions happening in an organisation. It is based
experience of control which guides the future actions of a manager
2 It is a continuous process
It’s where the organisation continually evaluates its systems in terms of targets,
objectives, goals and so forth to find out if everything is fine
3 It is a management function
It is only carried out only by managers because it involves taking corrective action
which includes, mobilising for additional resources, employment of new staff, changes
in the company’s operations. These are issues that cannot be delegated
4 It is carried out at all level
Manager’s irrespective of their level carry out controlling. This is so because they have
targets and objectives that they are pursuing. They often ensure operations in their
areas of jurisdiction is smoothly running according to plan
STEPS TO BE FOLLOWED IN CONTROLLING
1 ESTABLISHMENT OF THE STANDARDS
This is a basis of measurement of performance which can be in quantitative and non
quantitative terms. A standard is a benchmark on which the results are measured.
There are many standards that can be made including:
Cost standards-this ensures that costs anticipated are not surpassed

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Revenue standards-this ensures that the expected revenue from an activity is indeed
realized if performance is to be rated as good Physical standards-these are
countables like the number of working hours, units of production per machine etc
Capital standards-this includes, rate of return on capital invested
Intangible standards-such as competency of workers and customer care success
2 MEASUREMANT OF PERFORMANCE
It is the measurement of the actual performance in order to know what has happened
or what is likely to happen. The measurement can be done through observation of the
workers performance. It can also be in terms of reports, charts and any management
summaries. Its purpose is find out if there is anything amiss at the earliest time
possible
3 COMPARISON OF THE ACTUAL PERFORMANCE WITH THE STANDARD
This is finding out what was set out at the beginning of the controlling period in terms
of targets and objectives and what has been realized at the end of the period.
4 FINDING OUT FOR DEVIATIONS
While comparing the actual and the standard performance, any deviations are
identified.
A positive deviation means the targets were surpassed and the management requires
identifying the contributing factors so that everything can be maintained. A negative
deviation means that the targets set out were not realized and therefore a corrective
action must be under taken in order to put everything back on course. This could
include transfers of workers to other departments, re-doing the plans and increasing
the funding of the projects.
IMPORTANCE OF CONTROLLING
1. It is a basis for the future action because the planning is based on what has
happened in the past
2. It helps in facilitating of coordination because everything is set out clearly in the
procedures
3. It helps to reduce the possibility of the results not conforming to the set standards
4. It simplifies the supervision for the managers
5. It is a form of delegation within the orgainisation

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CHAPTER NINE
COMMUNICATION

INTRODUCTION
The word communication is derived from the Latin word “Communis” which means
common i.e. sharing of information. Communication is transferring some information
and understanding of that information from one person to another.
Communication is the sum of all things one person does when he wants to create
understanding in the mind of others. Not only the human beings but also animals,
plants communicate between themselves. The main purpose of communication is to
convey ideas, thoughts, and opinions from one person to others.
Definition:
According to Keith Devis:
“Communication is the process of passing information and understanding from one
person to other. It is essentially a bridge of meaning between people by using this
bridge of meaning a person can safely cross the ruin of misunderstanding that
separates all people.
According to Leland Brown:
“Communication is the transmission and interchange of facts, ideas, feelings or course
of action.
According to George Terry:
“Communication is a continuous and thinking process dealing with the transmission
and interchange with understanding of ideas, facts and course of action.
FEATURES OF COMMUNICATION
1. Necessity of receiver and sender:
Communication cannot place at least there are 2 persons. One is the receiver and other
is the sender.
2. Medias of communication:
There are numerous media of communication, e.g. TV, telephone, newspaper, symbols,
etc.
3. Continuous process:
Communication is continuous and ongoing process.
4. Facts and feelings:
Communication deals with exchange and transmission of facts and feelings.
5. Understandable information:

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Understandable information should be exchanged in proper communication. If the

information is not understood communication cannot take place.
ELEMENTS OF COMMUNICATION
1. Sender: The person who speaks out or sends a written message or ideas to other
person.
2. Receiver: The receiver is the person to whom the message is communicated.
3. Message of communication: The information order, instruction i.e. to be
communicated that exists in the mind of communicator.
4. Encoding: It is the actual content of communication. The communicator organizes
his ideas into a series of symbols such as words, signs, actions, pictures, etc. which will
be communicated to receiver.
5. Decoding: The receiver converts the symbols received from the sender to give him
the meaning of the message.
6. Ideas: It refers to the subject of communication which may include opinion
suggestion, ideas, orders, etc.
7. Channel: These symbols are transmitted to the receiver through certain media, for
e.g.TV, telephone, radio, etc.
8. Feedback: Feedback refers to the reply or response of the receiver. It is always
directed towards sender.

1. Source :
When an idea or information is generated in the sender’s mind the communication
cycle begins. If this information is to be communicated to the other person it must have

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some purpose. The sender should have some important information guidelines which
are essential for the receiver.
2. Encoding :
The first step of this process is encoding. The sender puts the ideas and thoughts into
some form of message which may be oral or written. It may be telegraph, a letter or in
a verbal talks.
When the sender sends the information he should be aware that receiver has some
knowledge regarding the same. The success of the person in the communication
depends upon his writing skills, his reading and speaking abilities, facial expressions,
sound words are all signals. The choice of the signals should be made carefully so that
they can be properly understandable and suitable for the receiver. Encoding means
reducing ideas and transferring them into signals. The most common form of encoding
is using words.
3. Dispatch and reception :
A message is the actual physical product from encoding .When we speak, speech is the
message and when we write, writing is the message. The message is depended upon
the symbols and contents used. For sending the message some medium has to be
related. It may be face to face communication or written communication. The encoded
message is dispatched to its destination depending upon the efficiency of the medium
used. There may sometime interval between dispatch and reception. For e.g. face to
face communication reach immediately. But a letter takes 2 to 3 days to reach to its
proper destination.
4. Decoding :
Receiver takes the message and tries to discuss the meaning of it. He translates the
symbols, ideas that can be understood by him. The process of retranslation is called as
decoding. For that the receiver must be skillful in reading .So if the message is properly
encoded by the sender and decoded by the receiver then it is a fair communication.
5. Receiver’s response :
When message has been decoded by the receiver he immediately gives the response.
This response is present in his mind in the form of ideas and emotions.
6. Feedback :
Feedback is the response which is communicated back to the sender. Feedback again
includes the process of encoding, dispatch, reception and decoding. So the receiver of
the message becomes sender and original sender becomes the receiver. Feedback can
be given by using same signals or different signals. One cycle of the communication is
completed by decoding of feedback. In face to face communication both the sender and
receiver continuously give feedback.

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The responses likely to be as rewards are called as positive feedback and the
responses likely to be as punishment are called as negative feedback.
3.5 IMPORTANCE OF COMMUNICATION
1. Communication must be for each and every business. A good business can be
done with effective communication only.
2. For maintaining proper co-ordinance in various department of business, up to date
communication system has to be established.
3. Effective communication reduces the gap between management and employees.
4. Communication plays an important role in negotiation.
5. Acquiring excellent communication skill is an important qualification.
6. It is a tool of collecting information.
7. Communication helps in exchanging ideas and information.
PRINCIPLES FOR EFFECTIVE COMMUNICATION
1. Principle of clarity :
Whenever an idea or message is ready for the communication the sender should give
the attention towards the clarity of message. Because of the clarity the message can be
understood by all people at various levels. If it is not understood by the receiver it can
be said that there is no effective communication.
2. Principle of consistency :
Any person who wants to communicate should have the idea and thought of the
message. There should not be any difference between the statements and action of
sender.
3. Principle of completeness :
The messages, ideas, thoughts which are to be communicated should be adequate and
complete in all respects. Inadequate statement may lead to unnecessary confusion.
4. Principle of time element :
While conveying the message the sender has to take into consideration the time factor.
If the message is not conveyed in proper timing it may result in failure of expected
results.
5. Principle of flexibility :
Any type of organization should have a perfect system of communication. It should be
flexible to suit the changing requirements of the business. The organization should be
able to adjust according to needed techniques.
6. Principle of integration :
For achieving the goals of the organization it is necessary to prepare the Integrated
System of communication.
7. Principle of information :

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Sender of the message must have perfect clarity in his mind about what is to be
communicated. There should be sufficient information with the senders so that he can
communicate effectively Information plays an important role in communication
.
8. Principle of feedback :
Communication requires good management to operate effectively and efficiently.
When the communicators are responded by proper feedback system it enhances the
speedy growth or progress of the organization

A. On the basis of expressions:

1. Oral Communication:

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This is the important category of communication. Oral communication helps to built up

human relationship. Words are the symbols that express our thoughts about what we
see or think about.
Purposes:
1. Sharing information
2. Directing employees
3. Decision making
4. Training and development
5. Reporting progress and performance
Advantages:
1. Saves time and money :
It saves time and money so it is very economically. There is no other device which is so
short and simple.
2. Personal touch :
Verbal communication needs a personal touch. It is more effective because of facial
expression tones, which make communication effective and efficient.
3. Easy understanding :
In verbal communication relations and responses can be quickly and easily accepted
doubts are easily cleared. Queries can be easily simplified so communication becomes
easy and simple.
4. More flexibility :
Oral communication is more flexible. No record of this is kept. One is free to modify his
comments.
5. Verbal communication is the only way during the period of emergency.
Disadvantages
1. Unsuitable for lengthy matter :
If the matter to be expressed is lengthy or to be communicated to a large number of
persons then verbal communication becomes unsuitable
2. Absence of any permanent record :
Verbal communication cannot be produced again and again. If it is to be repeated at
intervals it will have to be in writing as proof.
3. Temporary impact :
In most of the cases the impact of oral communication is temporary.
4. Misunderstanding :
Oral communications are likely to be misunderstood and misinterpreted because it
depends upon the nature of the sender and the receiver.
5. Methods of records :

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When subject matter of communication has to be maintained as record, verbal

communication will fail to serve the purpose. For e.g. policy statements, letters,
purchase orders should be in writing.
6. Time consuming:
Sometime verbal communication becomes time consuming in meeting and conferences
when subject matter has to be repeated after certain intervals.
Medias of oral communication
1. Face to face communication
2. Telephonic talk
3. Social gatherings
4. Conferences or meetings
5. Demonstrations
6. Interviews, lectures, etc.
2. Written communication:
When information is conveyed by writing, typing, painting or any other mechanical
means it is called as written communication. Speech comes to us naturally
and spontaneously but writing comes after practice and careful organization of
thoughts.
Purpose:
1. Clarity of message
2. Completeness
3. Sequence
4. Consistency
5. Accuracy
Advantages:
1. It is convenient for distantly placed people :
The written communication is the only means of communication where the
communicator and recipient are at distant place and even telephonic conversation is
not very much possible.
2. Suitability :
Where the communication is lengthy and needs a clarification and is meant for large
number of persons, written communication is useful.
3. Future reference :
When the subject matter is to be preserved for the future such as policy matters,
instructions, secret orders, etc. can only be effectively communicated through written
communication.
4. Helpful in remaining disputes :

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Written communication provides a permanent record and is helpful in reducing

disputes as it can be referred as evidence.
Disadvantages:
1. Time consuming and expensive :
In the case of written communication everything is in writing which takes more time
and money. Face to face contact may be short and quick but written communication
must be long and meaningful.
2. Additions are difficult:
It is not always possible to reduce anything in writing and if any point is left out
additional written communication may become a necessity which is expensive and
takes more time.
3. Chances of leakage:
Oral talks may remain secret but there are greater chances of leakage in the case of
written communication.
4. No flexibility:
These types of communications are very formal and there is no personal touch.
Once it is transmitted it cannot be withdrawn.
Medias of written communication:
1. Letters
2. Handbill
3. Pamphlets and leaflets
4. Memorandum, articles, reports
5. Written speech
6. Telegrams
7. Books, periodicals, magazines, etc.
B. On the basis of organizational structure:
1. Formal Communication:
It is mostly in writing. These are generally associated with the particular position of
the receiver in that structure. For e.g. when the general manager instructs his
subordinates as a superior authority it is a formal communication.

2. Informal Communication:
These communications are free from all the formalities they are based on informal
relationships between the parties. It may be conveyed by simple smile, glance or
silence.
C. On the basis of direction
1. Upward communication:

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Communication is termed as upward if it flows from subordinates to their superior

levels such communication includes reaction and suggestions from employees. This
type of communication is considered as a main source of motivation for employer.

2. Downward communication:
Communication is termed as downward if it flows from the uppermost level of
management towards the operating level. It includes rules, order, regulations,
installations, etc. They are directive in nature.

3. Horizontal communication:
It takes place between two subordinates working at the same level i.e. between two or
more persons who are on equal level. All these communication may be verbal or
written.
Non-verbal communication:

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Communicating a message without using words or sequences of words is termed as

non-verbal communication. It is a wordless communication. In simple terms non-
verbal communication includes all messages other than those expressed in oral or
written words. Non-verbal message express true feelings in more accurate manner
than the spoken or written language. Both kinds of data can be transmitted
intentionally or unintentionally. Simple symbols or friendliness just expressed in
words.
Media of Non-verbal communication:
1. Sign language:
Marks or symbols used to mean something is termed as sign language. For e.g.
different traffic symbols, neon signs, etc.
2. Action language:
It is a language of movement. By action one may knowingly or unknowingly be
communicate to others. Actions speak louder than words. The language system of deaf
people is the example of action language.
3. Objective language:
This medium of non-verbal communication indicates display and arrangement of
material things like clothing, ornaments, books, buildings, etc. Dress of political
leaders, religious heads, lawyers, doctors, nurses; sportsmen differ from one to
another. Objective language is a non verbal message communicated through
appearance of objects.
4. Silence:
Silence is an effective way of communication. In the number of situations, no response
or no reply is recorded within a specific period then it is a silence.
Silence is considered as equivalent to speech.
5. Demonstration:
It is a process of showing how something works. It indicates a display of exhibition of
how something works. Demonstration is made as a mean of emphasis on a subject
matter under consideration. Demonstration provides a clear and better understanding
of a product.
6. Time:
Time also conveys the message. It is an important factor which is precise and valuable.
In group activities in any organization in certain situation like arriving at an
appointment late or before time communicates something. A telephone call at too early
or late night conveys significant message.
Examples of non-verbal communication: traffic signals, pictures, slide show,
various

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Advantages:
1. Easily visible aspect of communication:
Body language is the most easily understandable and visible aspects of
communication. It therefore helps the receiver of the message in decoding it.
2. Improves the overall atmosphere:
People care for body language so it takes a long time to improve the overall
atmosphere and looks of the organization. An efficient manager can make very
efficient use of it.
3. Adds intensity to communication process:
Body language adds intensity to the process of communication. In the absence of any
gestures, poor eye contact, any face to face communication will not be effective.
Limitations:
1. Possibility of misinterpretation:
People belonging to different cultural background sent out different body signals, so
there can be misunderstood. One has to be very careful in the use and understanding
of body language.
2. Requires extra care in getting the right message:
Facial expressions gestures become in effective if the listener is inattentive. It
therefore requires extra care in getting the right message.
3. Ineffective in large gatherings:
Use of body language is not very effective in large gathering. It is effective in face to
face situations that means there are only 2 or small no. of participants required in the
communication situation.
4. It can’t be fully relied on:
Relying on facial expression is not totally possible. Words written or spoken can be
taken seriously, but body language can’t always be taken seriously.

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CHAPTER TEN
LEADERSHIPAND LEADERSHIP STYLES

Definitions:
According to Chester Barnard, “Leadership is the quality of the individual whereby he
guides the people on their activities in organized efforts.”
According to Koontz & Donnell, “Leadership is influencing people to follow you & work
willingly for the advancement of common goal.”
Leadership is the process of influencing group activities toward achievement of goals
in a given situation
This is the ability to influence people's behavior. It is the ability to influence people to
willingly follow one's guidance and adhere to one's decisions. A leader is the one who
obtains followers and influences in setting and achieving of objectives.
FEATURES OF LEADERSHIP
1. Co-existence:
Leadership cannot function in isolation and it cannot be conferred or ordered but it
must be learned.
2. Functional relationship:
The relationship between a leader and the followers is functional. It is not a mere
passive status but provides the basis for some definite activity.
3. Situational:
Leadership is the interpersonal influence relationship exercised in a situation and in
the abstract. Leadership cannot be same in every situation, but is bound to change
according to need of situation.
4. Communication of interests:
There must be a proper communication between a leader and his followers. He should
try to reconcile differences and bring out a workable compromise between the goals of
the organization which he presents.
NATURE/CHARACTERISTICS OF LEADERSHIP
1. Leadership is a personal quality. It is ability to induce subordinates of followers to
work with confidence and zeal towards the achievement of organizational goals.
Leadership is the ability to form a group of followers voluntarily, without the use of
coercion.

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2. The essence of leadership is followers. It is the willingness of people to follow that

makes a person a leader. People accept a person as their leader when they feel that he
can satisfy their needs and goals.
3. Leadership is a process of interpersonal influence by which one person influences
others in a situation to strive willingly towards the realization of common goals.
4. Leadership involves a community of interests between the leader and his followers.
The objectives of both are one and the same.
5. Leadership is a continuous process of influencing behaviour of his followers. An
individual is a leader when he is accepted as a leader by a group of persons and there
is communication between the leader and the group.
6. Leadership is exercised in a particular situation at a given point of time and under a
specific set of circumstances. The effectiveness of leadership depends upon the
situational variables. Different leadership styles will be appropriate under different
circumstances. The leadership is an dynamic art.
7 Leadership is a reciprocal relationship. A leader not only influences his group but at
the same time is influenced by it
Thus leadership is a psychological process of influencing followers and providing
guidance to them. Leadership is essential to influence people to achieve mutually
compatible objectives. Hence all organizational success can be attributed to leadership.
PRINCIPLES OF LEADERSHIP
Principles are given by Koontz & Donnell: -
1. Principle of Harmony: -
The harmony of the objectives must be be followed by proper leader. They must see
that they have understood their personal goals in the organization, to maintain
harmony of objectives in the enterprise.
2. The principle of motivation: -
Motivation is not a simple task. The manager is responsible for this, should make
motivational program by:
A) Carefully giving proper reward structure.
B) Looking it from a situational point of view.
3. The principle of supplemental use of informal organization: -
The manager should make proper communication with his sub-ordinates. The
informal organization works as an effective tool in the organization.
4. Principle of maximum clarity in the communication: -
When there is no proper communication then organization can not achieved its goals.
Communication must be clear so that each individual will understood what they want
to achieve & he will give proper co-operation.

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5. The principle of leadership: -

Manager will act as a effecting leader when he knows correctly the motivating factor &
application of it.
5.5 IMPORTANCE OF LEADERSHIP
1. Leadership serves as a motive to group efforts. Management has to provide
leadership in the organization in order to get work done by others. Leadership
becomes important for teamwork & co-operation. Manager as a leader can influence
any group for achieving goals & high level of performance.
2. Leadership is an important authority. A manager can exercise authority in managing
the members. Authority helps him for effective leadership.
Leadership contains proper direction, inspiration in people & accomplishment of goals.
3. Leadership provides a basis for co-operation in several ways. Two way
communications, man to man personal relationship, use of participation & creation of
opportunity for needed satisfaction are important. It will lead to increase
understanding.
4. In leadership there is emphasis on human performance. Leadership is needed at all
levels of management from top to bottom. Management is transformed as a social
process with leadership action. It is a social scheme of leadership that to achieve
objective with proper utilization of people.
LEADERSHIP ROLES
1. Educator role
- A leader will teach employees job skills, acceptable behavior and organizational
values.
- Managers work habits, attitudes and behaviors serve as a role model.
- A leader is also responsible for formal training.
2. Counselor role
- This role involves listening, giving advice, preventing and helping employees to
develop solutions to their problems.
- A leader is expected to show an awareness and concern for the employees.
3. Judge role
It involves
- Appraising subordinates' performance.
- Enforcing policies, procedures and regulations.
- Setting disputes and dispensing of justice.
4. Spokesperson role
- A leader speaks on behalf of the subordinates, the department and the organization.
QUALITIES OF A LEADER

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1. Physical and mental vigour:

A leader should be ready to work hard. His physical stamina and mental vigour to
sustain long and irregular hour of work is the most required to be successful.
Leadership / 55
2. Ability to understand others:
A leader should possess emotional feelings such as confidence, respect, love and faith.
He should be able to analyze the problems rationally and logically .the leader must
share with his followers and at the same time must influence them.
3. Quick grasping:
A leader should understand human psychology. His grasping of situation should be
quick and decision should also be communicated at the earliest. He should possess
understanding of human behavior, emotions, sentiments, needs, motives etc. This
needs maturity of mind and scientific way of approach.
4. Initiative:
The leader must possess certain creative abilities, quality of imagination, invention
and courage to face realities of life boldly.
5. Ability to inspire:
The leader must have the knowledge of men working under him. He must be skillful in
handling human relations that helps to inspire subordinates.
6. Ability to communicate:
A leader should be good at communication ideas, feelings, decisions, orders etc.
He should be a good and effective speaker, writer so that he will be able to inform,
stimulate and direct his subordinates.
7. Acceptance of responsibility:
A reliable leader is one who is prepared to shoulder the responsibility for the
consequences of any steps he takes. He has to be aware of the duties and obligations
associated with the position he holds.
8. Intelligence and technical competence:
A leader should possess a thorough knowledge of the theory and practice of his job.
With this quality, he can perform the functions of planning, organizing, directing and
controlling.
9. Motivation:
In order to motivate others, one must be well motivated. The desire to lead should
come from within. If a person is forced to do his job under the fear, he would behave
like a follower than a leader.
10. Flexibility:

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A leader should be ready to absorb and adopt new ideas and views of others as per
demanded by the situation. He should not be critical of others. He should be ready to
accept others’ views and alter his decisions. Open-mindedness of a leader makes the
leader more identified with the group.
11. Impressive personality:
A leader should have an impressive and pleasing personality. He must possess cheerful
and an optimistic outlook. He must have physical mad mental health in order to
influence others and induce them to work with energy, vigour, energy and creativity
12. Emotional appeal
- A manager should be a rational decision maker, problem solver and is expected to use
his/her analytical skills in the process of decision making.
- S/he should have a great vision which can alter the mood of the followers.
13. Needs of followers
A leader should meet the needs and fulfillment of his/her followers. This helps in
securing voluntary compliance.
14. Leadership matches
- A leader should match his/her personal traits and the situational demands e.g.
dancing when they are dancing.
15. Leadership effectiveness
- A leader aims at realizing and achieving the goals of the department and to satisfy the
employees' needs.
CHARACTERISTICS OF SUCCESSFUL LEADERS
They should have the following:
- A strong desire for task accomplishment; want to perform.
- Persistent pursuit of the organizational goals.
- Creativity and intelligence to solve problems.
- Willingness to accept to their behavioral consequences i.e. accepting their mistakes.
- High tolerance for other people.
- Ability to influence other people.
- Ability to structure social interactions.
- Devote more time to supervisory activities than in doing the work itself.
- Willingness to permit employees to participate in decision making.
- High intelligence than the subordinates.
- Gives recognition for good work by subordinates
THEORIES OF LEADERSHIP
1 Great man theory of leadership:

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One of the early notions of leadership, which is still popular in certain circle, is that
leadership is an inborn quality. This is the great man theory of leadership that asserts
that leaders are born and not made. According to this theory, leadership calls for
certain qualities/characteristics like charm, persuasiveness, commanding personality ,
high degree of intuition, judgment, courage, intelligence, aggressiveness and action
orientation are such nature that they cannot be taught or learnt in a formal sense.
In other words, leaders are born or sometimes inherited in family from
generation to generation.
It is said that history is nothing but the biographies of great men and women.
They were great leaders of their time because they were inherently endowed with
leadership traits and skills. They were not trained in leadership nor did they acquire
any leadership skills in their lives, such skills were natural to them. They had an
instinctive urge to assume leadership and had an inborn will to achieve greatness and
success.
The further implications of the theory that leaders are born and not made are:
1. Leaders are gifts of god to mankind. A measure of divinity is attributed to leaders
and their actions.
2. Everyone cannot aspire to become a leader and to attain greatness.
3. The inborn leadership qualities alone are necessary and sufficient for a leader to
exercise influence over his followers and to become successful.
4. Leadership qualities and effectiveness are independent variables. Situational factors
like the nature and needs of followers, the demand of task and the general socio-
economic environment have little or no influence on a leader’s effectiveness.
5. The theory believes that individual can’t be trained for assuming leadership
positions and roles. Leadership qualities cannot be transmitted through education and
exposure.
Great Man theory of leadership carries some credibility to the extent that leaders in
general and great leaders in particular have certain mystique about them and are
viewed with respect by their followers.
Criticism:
The theory has no scientific base and empirical validity. It is mere a speculative piece
of notion.
A moderate view point is that one may not totally rule out the genetic or inborn nature
of some leadership attributes. Just as there are some “precious”and almost born
singers, artists and geniuses in various spheres of activities.
2 Trait theory: (leader oriented approach):

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This is the traditional theory of leadership. According to this theory a leader is a

person having leader’s special characteristics & traits. It is accepted that a leader is a
successful leader because he has certain qualities. Following qualities must be
possessed by leader: -
1. Physical factor such as height, weight, energy, good personality etc.
2. Intelligence
3. Self confidence.
4. Will.
5. Dominance.
6. Cheerfulness.
7. Enthusiasm
8. Alertness
The psychologist has grouped the various traits of the leadership into 4 categories: -
1. Physical
2. Psychological
3. Intellectual
4. Qualities of character
Trait theory mentions the qualities of leaders. These qualities can be developed by
experience and training. Traits are not only inborn but acquired also, but it suffers
from following limitations:
1. No room for developing future leaders: - The theory stresses the inborn qualities of
an individual which cannot be developed or acquired.
2. No common or universal trait: - Leadership traits are not common as well as
universal like other principles. It is difficult to mix the traits.
3. Trait of individual cannot be known: -
Unless the situation arises and individual faces problem then only presence or absence
of trait is required, otherwise trait remains unknown.
4. Different role require different traits: -
Even in the same organization at lower level, a manager has to maintain contacts with
workers so he must possess technical knowledge. Middle level manager must possess
policy making & human relation approaches. Top level manager must possess decision
making skills
3. Situational theory: (situational approach): -
Leadership is the product of a situation in a particular group. It is assumed that the
trait & skills are the characteristics of a good leader. These skills will change from
group to group and from situation to situation. A leader in one situation is not
necessary a leader in another situation in the same group so that situation oriented

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approach displays that leadership is the product of situation in particular group. The
approach does not believe that the leaders are developed only by trait theory but
proper training & development programs are necessary for the development of future
leaders. An effective leader according to the situational theory is one who understands
the fact of situation & deals with them effectively.
Limitations:-
1. Emphasis on situational aspect: -The situational theory gives much emphasis on
situational aspect & overlooks the qualities needed in a successful leader.
2. Qualities of leader are overlooked: -Leadership becomes effective when leaders have
certain qualities. But this
Theory has overlooked it.
4.THEORY X and Y
It states that leadership style is influenced by the type of subordinates in the
organization.
Theory X
It stipulates the following:
i). The average worker dislikes work and must therefore be coerced into making
maximum efforts with inducements, sanctions and threat.
ii). Workers are naturally reluctant to take responsibility preferring the security of
being controlled..
iii). Workers are happy with clearly defined tasks than broadly defined objectives.
iv). Employees are normally resistance to change (they always want to maintain status
quo) so that change must be imposed on them by those in authority e.t.c.
NB: The leader to manage workers in this category, s/he must take on board
dictatorial tendencies.
Theory Y
It stipulates the following:
i). Workers will usually work hard without being coerced.
ii). Employees can be relied upon to exercise self direction and control.
iii). Workers like work and are always seeking responsibilities.
iv). Most employees possess substantial potential for creative work.
They can sort out any technical issues no matter how technical the tasks are.
NOTE: A manager to influence the above workers will embrace democratic and
laissez-faire (free reign) type of leadership.
5. Behavioral theory: -
This approach is based on simple philosophy. It states that the best way to study
leadership is not to study the trait or qualities he possesses, but to study his behavior.

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According to this approach it is important to study the behavior of a leader in a

particular situation. This approach concerns with behavior of a person rather than
qualities of leadership. The people by nature are lazy, uncreative, irresponsible etc.
Therefore the leaders must be directive. This approach is based on the assumption
that good leadership is the result of effective role behavior.
In Michigan studies it is found that more time is spent in planning, greater degree of
delegation, employee oriented rather than production oriented. This will help for
effective leadership means leadership characteristics are based on behavioral,
situational & group leader interaction.
The main limitation of this approach is that it does not consider time factor which is
very important in leadership. A particular behavior may be effective in one situation &
may not be effective in other. Scientific test cannot be applied for the study of
behavioral approach. However questionnaires, observations, interviews are
universally accepted techniques of this approach.
6. CONTIGENCY THEORY
It stipulates that leaders should be able to adapt to specific situations as they arise.
Therefore, a leader must be prepared to change his/her behavior as circumstances
change.
Advantages of contingency theory
- A leader is allowed to make his/her decisions appropriate to the situation at hand.
- A leader is encouraged to analyze logically the characteristics of the situations to deal
with.
Disadvantages of contingency theory
- A leader may appear to his/her subordinates as inconsistent and insincere because of
frequently changing.
- Individual managers may not be sufficiently skilled to change decision and
7 The Followers Theory:
The Followers theory is also known as “Acceptance Theory.”
The followers must accept their leader and his leadership. This theory believes that
leadership is developed on the basis of acceptance form followers. A study of the
characteristics of followers group is also necessary to understand the nature of
leadership. If a leader is successful in leading his group, satisfying them he is regarded
as a good leader.
In India, “Followers Theory “has dominated the Indian political science and its impact
on the business and industrial relationship”.
8.Managerial grid theory:

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Managerial Grid as developed by Robert Blake and Jane Mouton, is a graphic model of
alternative combinations of managerial styles or orientations or behaviors on a two
dimensional space.
The dimensions are:
 Concern for production
 Concern for people
Thus, in a matrix of nine rows and nine columns, five combinations of styles are as
follows:
 1,1 - low concern for production and people born
 1,9 - low concern for production and high concern for people
 9,1 - high concern for production and low concern for people
 9,9 - high concern for people and high concern for production
 5,5 - moderate concern for production and people

1. Impoverished leadership (1, 1)

In this combination, leaders are irresponsible. Their attitude towards getting
things done from and maintaining relationships with people are careless and confused.
Such leaders are little concerned with work and with people.
2. Country club leadership (1,9)

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In this combination, the leader takes interest in keeping his relationship with people
friendly and respectable. Such a leader gives importance to people more than
production. Such persons are more human oriented.
The group, not the individual is the key unit in the organization and friendliness and
harmony among its members are desired.
3. Task leadership(9,1)
In this combination, leaders takes a dictator’s style and gets the things done and does
not care for maintaining relations with people. His focus is on task performance by
planning and controlling the production environment.
Heavy importance is placed on task and task and job requirements. Human
relationships and interactions are minimum. This leader has a very high degree of
production concern and a very low degree of people concern.
Leadership / 51
4. Middle of the road leader (5,5):
In this combination, leader is well balanced. He does not push too much in either
direction, but achieves a satisfactory balance between the requirements of production
and people. i.e. concern for people and concern for production. This style is labeled as
“firm but fair”. It is based on the assumptions that people work willingly and do as they
are told if the reasons for doing so are explained to them.
5. Team management leader (9, 9):
This is regarded as the most effective leadership. An attempt is made to bring about an
integration and harmony between the needs of people and of production. A highly
encouraging organizational climate of commitment, cooperation trust and hope are
created by the leader.
It integrates a maximum degree of production concern with maximum degree of
people concern. This approach considers these two approaches as complimentary.
Conclusion:
Managerial grid is very useful in identifying and classifying managerial styles.
This theory considers various alternative combinations to suit the situation, task and
subordinates. The five styles have been stated in the graph. In actual practice , a
manager has to use combination of these as demanded by the situation.
9 Path goal theory:
This theory was originally developed by Martin Evans and subsequently refined by
Robert House. The theory is related to the situation/expectancy theories of motivation.
According to this theory, there is a clear relationship between the behavior of the
leader and motivation – performance-satisfaction of the group whom he leads.

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Members of the group have certain expectations in regard to the behavior of their
leaders. But of course, different groups have different expectations.
Four types of leader behavior based on member expectation may be
conceptualized:
1. Directive leadership:
The leader is expected to define the tasks and responsibility of his group members, set
performance and reward norms, clarify the rules and regulations as applicable,
provide guidance advice and instruct as necessary and monitor their performance.
2. Supportive leadership:
The leader establishes warm interpersonal relationships with the group, understands
and shares their aspirations and feelings showing concern for their welfare and
promotes group cohesiveness.
3. Participative leadership:
The members expect the leader to keep them informed on relevant tasks, goals and
situations, involve them in decision making, solicit their ideas and consult with them
frequently.
According to this approach the specific style that works best in determined by two
types of situational variables.
1) Personal characteristics of the sub – ordinates.
2) Environmental pressure and demands.
1) Personal characteristics of employees: Internally oriented employees who
believe that, they can control their own behavior prefer leaders having supportive
style, while externally oriented employees who believe that fate controls their
behaviour prefer directive type leadership.
2) Work environment: Environmental factors include subordinates task, formal
authority system of the organisation and the primary workgroup. Any of these
environmental factors can motivate or constrain the employees. When the task is
unstructured worker feels that his path to satisfaction is difficult and hence he likes to
be directed. But if workers are working on structured and well defined tasks,
supportive style of leadership is preferred.
Evaluation
The path goal theory is criticised as follows –
1. It is complicated and hence empirical testing becomes difficult due to
methodological complexities.
2. Further research studies do not support it.
3. It is a post Hoc theory is the sense that some of the research evidence supporting the
theory was also used to construct it.

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4. It gives incomplete picture as it provides tentative explanation of leadership styles.

5. The models neglect effects of personal traits that may constrain the selection of
leader behaviour.
In-spite of these limitation, it is appreciated, because it not only suggests what type of
leader may be effective in a given situation but also explain why is he effective. This
theory also provides a necessary frame work for new research in field.
DIFFERENT STYLES OF LEADERSHIP
1) Autocratic style: -
Under this style of leadership, all decisions are taken by the leader. The authority &
power is vested in the hands of leader. There is no participation by subordinates in
decision making process. Leader never allows his sub-ordinates to think or participate
in the decision making. He gives order & assign task without taking subordinate into
confidence. Normally sub-ordinates dislike this type of leadership.
Advantages: -
1. It provides strong motivation & reward for the leader.
2. No delay in the process of decision making.
3. Responsibility can be easily fixed.
Disadvantages: -
1. It creates low Morale & less confidence in subordinates.
2. Ideas and capabilities of subordinates are not fully utilized.
3. Subordinates will never get an opportunity for development.
Autocratic leadership may be appropriate when subordinates are uneducated,
unskilled, lack of knowledge & experience in modern competitive world. This type of
leadership becomes less desirable for the employees.
2. AUTOCRATIC – It involves close supervision and a leader issues precise and
detailed instructions to cover every task.
a) Dictatorial leadership style
- A leader tells workers what to do without comment or discussion.
- There are rewards and penalties for success or failure.
- There is strict control and no respect is shown by the leader to the subordinates.
- Descent is not tolerated.
b) Paternalistic leadership style
- There is presence of close supervision, detailed instructions and a highly structured
leader / subordinate relationship.
- A leader attempts to gain respect and allegiance of the workers.
- Limited decent is tolerated and rewards are given to those who follow the
instructions.

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Advantages of Autocracy
i) Managers adequately coordinate work thereby facility its completion.
ii). Decision making is faster.
iii). It assists the subordinates to achieve their goals at work.
Demerits of Autocracy
i). Employee’ skills and knowledge is not fully utilized.
ii). It suppresses the workers’ initiative and therefore they cannot develop to their full
potential.
iii). Workers may not be capable of working without close supervision.
iv). Resentment by subordinates may occur if they are only involved in minor issues
and excluded from major ones.
3. Democratic style or participative style: -
The participative leadership allows an active participation of the subordinates in the
process of decision making. The leaders adopting this style of leadership always allow
participation of his sub-ordinates in the process of decision making. The leaders follow
majority of opinions which are expressed in a group & his decision is always depend
upon these. The relationship between leaders & sub-ordinate is friendly. It creates
positive impact on subordinates. This style of leadership is preferred by the
subordinates & managers.
Advantages: -
1. It creates job satisfaction & increases the moral of subordinates.
2. It develops positive attitude & reduces resistance to change.
3. It helps to think over creative ideas of all sub-ordinates.
Disadvantages: -
1. Participative style is time consuming & delays in decision making.
2. These types do not yield positive results.
3. It requires more communication between subordinates & superiors.
4. When leader is incompetent it will create problems.
This type of leadership is considered to be more effective than autocratic style. It is
more useful in this competitive world as it helps to increase productivity.
4. FREE REIGN (Laissez-faire)
Unlike autocratic style free-rein style falls on other extremes. It includes complete
surrender of decision making power to a group leader. A leader leaves all the control &
decisions with subordinates. Leader leaves all responsibility & most of the work of him
to the group, interference of a leader is very less. It is known as lazy fair & permissive
style. In this style a leader gives complete freedom to his group & sub-ordinate in their
work.

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- A leader allows workers to work as they choose with minimum interference.

- Employees make decision and structure their own activities.
- They consult with the leader but s/he is not directly involved in decision making.
- A leader tells them what to do and when it should be accomplished and the workers
decide on how to accomplish it as they wish. Communication flows horizontally among
the group members
Advantages: -
1. Maximum development of sub-ordinate.
2. Full utilization of the capacity of sub-ordinate.
3. It creates job satisfaction & increase Morale of sub-ordinate.
4. This style produces good & quick results when sub-ordinates are highly educated &
brilliant.
Disadvantages: -
1. Sub-ordinate does not get guidance to leader.
2. It ignores the contribution of leader just as autocratic style where contribution sub-
ordinate is totally ignored.

CHAPTER ELEVEN
MOTIVATION

INTRODUCTION
Motivation is a general term that is applicable to the entire class drives, desires, needs
wishes and similar forces. Motivation is productivity factor in industry. It is the same
total managerial science. Motivating workers is to create desire in the mind of workers
for better performance.
One can buy employee’s physical presence at work place for a certain time but cannot
buy his willingness to work. The capacity to work and willingness to work is important
to get better results. Hence, motivation is the function of a manger to induce the
employees to work willingly, efficiently, effectively and contribute their best to the
achievement of the goals of the organization.
Definition:
Motive:“An inner state that energizes, activates or moves and that directs or channels
behavior towards goals”
According to W.A. Scott:

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“Motivation means process of stimulating people to action to accomplishment of

desired goals.”
Motivation can be defined as: ‘willingness to expand energy to achieve goals and
getting rewards.’
Motivation is the process of causing a drive in the individual to give the best
performance. It’s the psychological process that gives behavior, purpose and direction.
It’s a decision making process through which individuals chooses outcomes and sets in
motion the behavior
OBJECTIVES OF MOTIVATION
Motivation is one of the primary functions of a manager. He has to motivate his sub-
ordinates to perform their activities at high level & to make positive contribution
towards the efficient & effective achievement of organizational objectives. The work
performance of an individual depends upon motivation as well as his ability and
environmental conditions.
To perform his job must be provided with proper material equipment & process. It is
the responsibility of the manager to ensure that all these 3 parts are essential i.e.
Motivation, ability & environment.
Motivation aims at creating an environment which will make the personnel of an
organisaton.
1. To take initiative
2. To show dynamism and curiosity
3. To work willingly and co – operatively
4. To work in a disciplined manner
5. To take interest in their work
6. To be dynamic and enthusiastic
7. To be responsible and loyal
8. To take pride in their job
9. To have job satisfaction
10. To have personal and group morale satisfaction and
11. To contribute their best to achieve their personal and organizational objectives.
HOW TO MOTIVATE
_ Recognition, workers be appreciated for any achievement realized
_ Involvement in decision making. This makes workers to own and defend the
decisions taken
_ Recommend for promotion, when workers know that there are chances for
promotion, they will remain loyal, committed and motivated

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_ Challenging tasks, tasks that are challenging are those that reduce boredom and
monotony. They include job enlargement
_ Delegation, it communicates trust and confidence in the skills possessed. It from the
top to the bottom and it starts with communication
_ Good working environment, a conducive working conditions if provided enhances
performance and love for work _ Security. The need for economic security i.e the
desire to be free for fear of such things like job loss, demotion and loss of income.
Physical security may also be important
_ Status, naturally people want their status to be recognized. Status symbols include
cars, big titles, corner offices, club membership, reserved parking places, carpeting etc
_ Responsibility and power. Many people want more responsibility and may be
motivated by the prospect of getting it.
_ Opportunity for personal growth. This includes training and development
opportunities
_ Communication. There should be open channels of communication for free flow of
information vertically and horizontally
_ Teamwork. An organization is a system consisting of many parts which are
interdependent. Managers should recognize all workers as being important in making
contribution as members of the team. People are likely to work harder if they regard
themselves as members of a team
_ Informal group.
_ Management styles. The styles that are used either motivates or demotivates and
therefore the right styles be chosen.
TYPES OF MOTIVATION
1) Motivation may be positive or negative: -
Positive motivation is the process which influences the employee through rewards. E.g.
Bonus, promotion, permanent settlement, increase in working condition, etc. Negative
motivation is based on fear. i.e. fine, discharge, lay-off etc.
2) Motivation may be financial or non-financial: -
Financial motivations are those which are associated with money. It includes wages,
salaries, bonus and retirement benefit. Non-financial motivations are not associated
with monetary rewards. It includes ego satisfaction, participation in the process of
decision making, providing good working conditions and providing more
responsibility to them.
3) Primary & secondary motivation: -
Primary motivation relates to satisfying basic human needs & secondary motivation
relates to social needs & self acquisition.

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THE ROLE OF NON FINANCIAL INCENTIVES

1 OPPORTUNITY FOR GROWTH
If the workers of an organization are given chances for upward growth and advances,
they will feel much satisfied and the feeling will cause in them the right commitment
2 PRAISES
They work on ones ego. The individual becomes satisfied. Praising should only apply to
competent employees in order to encourage the incompetent employees
3 FEEDBACKS
The knowledge of the results leads workers into satisfaction. Naturally workers will
like to know about their performance from their managers
4 THE WORKERS PARTICIPATION IN MANAGEMENT
Their participation in the management assures them and builds trust and satisfaction
is ultimately achieved. It is also a show that their voice is also heard and considered
5 COMPETITIONS
It’s a non financial incentive which allows a healthy competition among the workers as
individuals and as groups. The i8ncentive makes them to realize the goals as
individuals and as groups
6 SUGGESTIONS SCHEMES
It’s where the workers are appreciated for their good performance by for instance
publishing their names in the company’s new letters and magazines. This boost the
workers morale when they discover that names are been read by the new letter
readers and ultimately boost their image and their personal commitment and
performance
THEORIES OF MOTIVATION
1 Maslow’s Need of Hierarchy Theory: -
Abraham Maslow was the Pioneer in contributing to a system of hierarchy of needs.
Maslow’s concluded that there are certain needs of employee when he joins an
organization. They have certain expectations from the organization where they are
motivated to satisfy their own needs.
The following are important positions advocated by Maslow about human behavior.
1) Man is a wanting being. Man is a continuously working more & more. What he
wants or will want depend upon what he has. As soon as man’s one need is satisfied
another immediately takes place. It keeps a man to work continuously, demanding
more & more.
2) A satisfied need is not a motivator where as an unsatisfied needs work as motivator.
Hence a man works to satisfy his needs.
3) The need of man has hierarchy: -

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Maslow thinks that a man’s needs are arranged in a series of level. As soon as the need
at lower level is satisfied, a worker is motivated to satisfy another need in hierarchy.
Different types of needs: -
1) Physiological needs: -
It is the lowest level in hierarchy. These needs which are most the important in the
human life must be satisfied by him. It includes food, clothing, housing, air, water, etc.
Physiological needs arise for the survival of human being.
Physiological needs are important for every human being.
2) Safety needs: -
Safety needs are known as ‘security needs’. These needs are concerned with protection
i.e. financial security, job security, emotional harm, etc. As soon as physiological needs
are satisfied these needs emerge. It acts as motivating factor.
3) Social needs: -
Social needs relates to love, affection & belonging & social security. Every individual is
associated with group members or group of society. He gets affection from his group
members. A man is motivated to satisfy his social needs in following ways by :
1. Establishing a team work, team culture & team spirit.
2. Providing proper training facilities.
3. Conducting frequent meetings with team members.
4. Providing extra activities like social, cultural, sports to encourage the people.
5. Arranging periodical get together & participation with managers.
4) Esteem needs: -
It includes two parts i.e. internal esteem & external esteem needs, such as achievement
of respect & status. It can be done in following ways by:
1. Providing higher level of training & better educational facility.
2. Assigning challenging task, high responsibility & position.
3. Delegating some powers to subordinates.
4. Involving sub-ordinates in goal setting & decision making.
5) Self actualization: -
This includes self fulfillment of job growth & achieving once potential.
Some methods to satisfy self actualization needs are: -
1. Involvement of capable people in policy making.
2. Realizing a sense of fulfillment & development.
3. Providing opportunity for involvement.
4. Providing training facility according to capacity.
Limitations / Disadvantages of Maslow’s Theory : -
1) It is general expression not specific.

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2) The level in the hierarchy are not fixed, the boundaries are overlapping.
3) This approach is related to personal inner action needs. But person does not have
any single need at a time. He has many needs.
These limitations should be kept in the mind by the management while preparing any
plan for motivation. The people are different in their expectation. The same need can
not act as a motivating factor to many people in the same manner.
2 Fredrick Herzberg’s two factor theory: -
Maslow Hierarchy of need point out about the behavior of the people. Using this as a
base, Herzberg & his associates interviewed 200 engineers & accountants.
The engineer & accountant describe the factors about the feelings. He asked them what
are the good times & the bad times on their jobs. Engineer & accountants brought up
the things [bad]. Unfair co policies, poor relationship with boss, low payment etc. They
did not mention about good job experience. They talked about the opportunities they
got for personal growth & development.
Then they took interview with the workers with different industries. The results were
same. So he developed 2 factors theory. As per him a man has two sets of needs:
1. Lower level needs: It denotes hygiene, maintenance or environmental factors
which do not motivate satisfaction, but their absence causes dissatisfaction.
2. Higher level needs: these needs are termed as motivators because they area the
real cause of job satisfaction and they lead to better performance.
3 McGregor’s Theory of X & Theory of Y: -
According to McGregor’s theory of X & Theory of Y explains the relationship of man &
his behavior. He has explained his theory in 2 terms. They are theory of X & theory of
Y.
Theory X has traditional approach where as theory of Y has modern approach. This is
traditional theory of human behavior. The management has to motivate human beings
in the organization.

Theory X:
It involved certain assumptions are follows: -
1. The average human being has an inherent dislike of work & will avoid it.
2. The average human beings are lazy & avoid responsibility.
3. The average human being is not aware about the goals of the organization.
4. The average human being prefers to be directed.
5. Management is responsible for organization. The elements of production are money,
machine, material, people etc.

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6. It is the process of directing the people, motivating them & controlling their action
by management.
7. Without any intervention by management people would be passive they must be
punished, controlled or rewarded.
8. He lacks ambitions; avoids responsibility & prefer to be led.
Some assumptions deal with human behavior, human nature. Some assumptions deal
with managerial actions. These all assumptions are negative in their approach. The
manager feels that control is the most appropriate for dealing with subordinates.
McGregor believes that these assumptions about human nature cannot drastically
change. There is considerable change.
Theory Y: -
According to McGregor theory of Y has the following assumptions: -
1. The average human being does not inherently dislike work, depending upon
controllable condition work may be a source of satisfaction or punishment.
2. The average human being will excuse self direction, self control.
3. Commitment to objective is the function of reward associated with their
achievement the human being is directed for self actualization.
4. The average human being likes to accept the responsibility. Avoidance of
responsibility is lack of ambition for them.
5. Under the modernization & competitive world potential of the workers should be
utilized.
Theory Y produces better results because there is no domination. There is no harsh
leadership. It is not optimistic. It is a participative. Theory Y is more realistic so it gives
better results than Theory X. So Theory Y should be used frequently in the
organization.
Difference between Theory X & Theory Y: -

Theory X Theory Y
1. Assumption regarding work Theory Y assumes that human being work
& human being: as natural as play
Theory X assumes human being to
be inherently dislikes the work.
2. Motivating factor: In Theory Y high order needs are more
In the Theory X motivating factors are the important for motivation. Though
lower needs. unsatisfied lower needs are important.
3. Need for supervision: In Theory Y people are self directed &
In Theory X people lack self prefer self control & are creative

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Motivation & required to be control

extremely. After strict control large
output can be achieved.
4. Emphasis: Theory Y emphasizes decentralization of
Theory X emphasizes scale authority & greater participation in the
system & centralization of authority decision making process
in the organization
5. Extent of capacity for According to Theory Y there is capacity as
creativity: - well as creativity in the individual. Many
According to Theory X most people have problems can be solved with the capacity
little capacity for creativity. of individual.
6. Ambition & responsibility in Theory Y states that the average human
the job: - being learns under proper conditions and
Theory X states that people do not have they take responsibility.
ambitions & they avoid responsibility in
job.

4 David McClelland’s theory of motivation : -

McClelland has made an important contribution in the motivation theory. The need
for power is more important according to him his theory is based on following
assumption:
1. Divide needs for power, need for achievement & need for affiliation.
2. Only higher needs are highlighted.
3. Higher needs are classified into 3 types: -
1) Power 2) Achievement 3) Affiliation
4. Taken for granted that lower needs are generally satisfied.
5. Higher level needs are always act as motivating factors.
6. Management must take care of power, achievement & affiliation.
According to McClelland, needs motivate every individual. It acts as high motivators.
McClelland contributes his need aspect into 3 types of needs:-
The need for power: -
The need for power is inherent in every individual. This is the need to dominate
influence or control people. Power means authority but authority is not always related
to power. Power can be expert power, reward power, legitimate & coercive power. A
person acts as a dominated when he act as a leader even in small group. The need for
power is drive for superiority over others. Thus need for power is inherent.
The need for affiliation: -

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The need for affiliation is a social need. It is a motivating factor. It is a social motive.
The sense of affiliation is essential for every individual who is a high performer.
Every human being has social entity, social contact and he involves in social activities.
There is similarity between McClelland affiliation motive & Maslow affiliation needs.
Because according to both, people dominated by affiliation needs are attracted
towards job. They must establish a bridge between such people.
The need for achievement: -
He has highlighted the needs for achievement. This is the need for challenge, success &
accomplishment. Higher achievers are motivated for achievement and can be placed
between Maslow esteem needs & self actualization needs. According to McClelland
achievement motive is a desire to make the best performer in the term of standard of
excellent. So that success can be achieved. He has made study on achievement motives
& given following characteristics:
1) Higher achievers want feed back on their performance. They want to know how will
they are doing.
2) High achiever likes to take personal responsibility for finding a solution to problem.
3) High achievers like to take risk for achieving the goals. They want to win in the
competition.
Limitation: -
1) Achievement motivation cannot be taught.
2) The evidence supported to this theory is doubtful.
3) The use of projective technique is objection.
4) Achievement training is time consuming & expensive.
5) The theory does not explain the process of motivation & the result of motivation.
5 The Expectancy Theory of Motivation:
This is a modern expression of what Martin Luther observed centuries ago when he
said, “Everything that is done in the world is done in hope.”
The famous psychologist Victor Vroom says that the people’s motivation towards
doing anything will be determined by the value they place on the outcome of their
efforts, multiplied by the confidence they have that their efforts will materially aid in
achieving a goal.
The theory is expressed in mathematical terms as:
Force = valence X expectancy
Where
Force = the strength of a person’s motivation
Valence = the strength of an individual’s preference for an outcome
Expectancy = the probability that a particular action will lead to a desired outcome.

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One of the great attractions of the Vroom theory is that it recognizes the importance of
various individual needs and motivation. But it is difficult to apply in practice. Despite
it’s difficulty in application, the logical accuracy of Vroom’s theory indicates that
motivation is much more complex than the approaches of Maslow and Herzberg.
6 Equity theory:
An important factor in motivation is whether individual perceives the reward
structure as being fair. One way of addressing this issue is through Equity theory,
which refers to an individual’s subjective judgments about the fairness of the reward
he gets, relative to the inputs in form of efforts he puts in, experience and education he
makes use of.
J.Stacy Adams has formulated the above concept as under:

Outcome by person outcomes by another person

--------------------------- = ---------------------------------
Inputs by a person inputs by another person
There should be a balance of the outcomes/inputs relationship for one person in
comparison with that for another person.
If people feel that they are inequitable rewarded, they may be dissatisfied, reduce the
quantity or quality of output or leave the organization. If people perceive the rewards
as equitable, they probably will continue at the same level of output. If people think
that rewards are greater than what is considered equitable, they may work harder. It is
also possible that some may discount the rewards.
One of the problems is that people may overestimate their own contributions and the
rewards are received by others. Employees may tolerate certain inequities for some
time. But prolonged feelings of inequity may result in strong reactions to an apparently
minor occurrence.
7 Reinforcement Theory:
The psychologist B.F.Skinner of Harvard developed an interesting but controversial
technique for motivation. This approach is called as positive reinforcement or
behavioral modification, states that individuals can be motivated by proper design of
their work environment and praise for their performance. However, the punishment
for poor performance produces negative results.
Skinner and his followers analyze the work situation to determine what caused
workers to act the way they do, and then they initiate changes to eliminate
troublesome areas and obstructions to performance. Specific goals are set with
worker’s participation and assistance. Prompt and regular feedback of results is made
available and performance improvements are rewarded with recognition and praise.

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Even when performance does not equal goals, ways are found to help people and
praise them for the good things they do. It has also been found that it is highly useful
and motivating to give people full information on a company’s problems, especially
those in which they are involved.
This technique sounds almost too simple to work and many behavioral scientists and
managers are skeptical about its effectiveness.
However, a number of prominent companies have found this approach beneficial.
Perhaps, the strength of this approach is that it is concerned to the requirements of
good management.
TECHNIQUES OF MOTIVATION
1) Money: -
Money is a good technique of motivation in any form. Money is important. Money is an
urgent means of achieving a good standard of living. Money as a motivator trends to be
less by offering similar salaries to various managers. It is a monetary revote leads to
increase in the performance. It is the most affecting motivator.
2) Participation: -
The right kind of participation yield motivation. It gives people a sense of
accomplishment. Workers participation in decision making act as a good motivator.
3) Quality of working life: -
QWC This program is a system approach to job decision. It promises development in
the job enrichment. It is a broad approach. It convinces industrial engineering,
organizational theory, sociology, development, motivation & leadership.
4) Job enrichment: -
As job enrichment aims to build a higher sense of challenges & achievement in the
existing job, it can be done by giving workers more freedom in deciding about the
methods of working on their own. The participation of sub-ordinates & interaction
between workers make them aware about how they lead to welfare of the
organization, by giving feedback to the employees about their job performance. While
using motivational techniques, a manager should note that job enrichment is mainly
applied to which skill level. Workers may not like to have changes in the basic contents
of their job, and also technical consideration put serious limitations to any attempt job
enrichment.
4.6 MORALE
Morale is a state of mind. Employees’ morale refers to an attitude of satisfaction with a
desire to continue and strive for attaining the objectives of a unit.

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Employee’s enthusiasm, desire to obey orders, willingness to co-operate with co-

workers shows good morale. Dissatisfaction, discouragement or dislike of job reflects
low morale.
Morale is an intangible factor which is related to individual & group. It is known as
discipline & confidence in relation to job. Morale & morale building is very important
term. Main functions of supervisor are to develop people & create co-operation. High
morale is essential for effectiveness in office, factory, education etc.
Definition:
According to Haimann:
“A state of mind and emotions affecting the attitude and willingness to work which in
turn affect individual and organizational objectives.”
Importance of Morale: -
1. High morale helps management to overcome many labor problems such as labor
turnover, absenteeism & indiscipline.
2. Morale can help to create good industrial relationship.
3. High productivity & good production are direct results of high morale. Higher
production can be attained at minimum cost by reducing wastage of machine, material,
time.
4.7 BUILDING HIGH MORALE
1. Building effective two way communication: -
There should be two way communications between management & workers.
The workers should be kept fully informed about policies of the organization &
effective suggestion should be accepted from the workers. There should be informal
relationship.
2. Human Relation Approach: -
It suggests that individual should be treated as human being. No individual or group is
more important than others. Truthful & co-operative relationship should be created
among employees.
3. Management’s attitude: -
Morale is contagious in the sense that people learn from each other. However, the
attitude of the management influences the sub-ordinates. Hence manager should
cultivate favorable attitude among the sub-ordinate.
4. Proper Incentive Scheme: -
There should be provision for proper incentive scheme including financial &
nonfinancial as well as good working condition factors: The following factors
regarding the work condition help to increase Morale of employees:
a)Fare wage

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b)Work environment [conditions of work, medical care, location of factory, condition

at work place, etc.]
c) Security & opportunity to rise [safety, promotion facility, etc]
5. Suitable & appropriate welfare measures: -
Employees’ welfare schemes such as housing, medical benefit, educational facility for
children, canteen, sports club, credit facility are helpful in developing positive attitude
among employees.
6. Necessary training: -
Workers should be given challenging task to perform job enrichment. It helps to avoid
monetary, disinterest, fatigue etc. There attitude towards work become more positive.
The worker should be given proper training so that they may perform these jobs
without translation.
7. Worker participation in management: -
Management should allow workers in the process of decision making. They should
consult management in this process. This will help to build Morale.
Morale improvement program should follow the following basic rules: -
1. Respect individual
2. Fare compensation
3. Give financial & non-financial incentives
4. Adopt open door policy
5. Job security
6. Good working condition
4.8 MORALE & PRODUCTIVITY
Morale means satisfaction that a person derives from his job. Satisfaction & happiness
is reflected in Morale. If the employee is happy then there is high productivity. Morale
is a degree of willingness to work in the organization. If they feel disappointed then
there will be low Morale.
Where Morale is high & productivity is high then organization can achieve goals. High
Morale & high productivity are co-related. Generally it is assumed that
Morale & productivity always go hand in hand. But it is not always so. These are
negative relationship also. There are 4 possible ways:
High productivity High Morale
High productivity Low Morale
Low productivity High Morale
Low productivity Low Morale
1) High productivity & High Morale: -

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This situation is due to well experienced leader when workers are motivated in a right
spirit with right supervision. Proper motivation is essential factor.
2) High Morale & low productivity: -
It is found that men are fully trained at supervisor are not competent to get work done.
In this case workers are happy but productivity is low.
3) Low Morale & low productivity: -
In absence of proper motivation Morale & productivity both are low.
4) Low Morale & high productivity: -
This situation happens when management is not co-operating the workers &
management is using punishment technique for getting high productivity means
management is product oriented.
There is certain co-relation between Morale & productivity.
It is correct to say high Morale lead to high productivity.

CHAPTER TWELVE
RECENT TRENDS IN MANAGEMENT

INTRODUCTION
Changes were required to be made in the approaches and techniques of management
due to increasing size of the business organization and the increasing complexities
involved in conducting the business operations.
There is a team of experts in different fields of management who also posses the
necessary experience of managing a large scale organization. This type of management
is known as ‘professional management’. E.g. Disaster management is an organized and
systematic effort to tackle the situation / condition effectively after the happening of
any disaster.
Event Management is the arrangement made to entrust the responsibility of managing
a particular event or a function to an outside professional manager.
Total Quality Management (T.Q.M.) is a cost effective system for integrating the
continuous quality improvement efforts of people at all levels in the organization to
deliver products and services which ensure customer satisfaction.
1. EVENT MANAGEMENT

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Meaning:
Special events are the phenomenon arising from those non-routine occasions which
have leisure, cultural, personal organizational objectives set apart from the normal
activity of daily life, whose purpose is to enlighten, celebrate, entertain or change the
experience of a group of people.
Definitions:
According to Goldbklatt:
“A special event recognizes a unique moment in time with ceremony and ritual to
satisfy specific needs.”
According to Getz:
“To the customer ……… a special event is an opportunity for leisure, social and cultural
experience outside the normal range of choices or beyond every day experience”
The examples of events are weddings, inaugurations, sports, competitions, product
launches, exhibitions, seminars and conferences, festivals, traditional ceremonies, etc.
These events can be categorized as shown in figure:

Features:
1. Event management is used majority for arranging certain cultural, social and
entertainment programmes.
2. Event management is newly developed management approach.

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3. The host may be an individual, a group of persons or an institution, or a company.

4. The Event Manager is also professional with requisite experience of managing the
events.
5. Event management is always associated with such programmes, events which
should be conducted on a large scale.
Importance:
1 As the host is required to supervise the work of the event manager, he gets more
time for other work and he can participate in the programme to a greater extent.
2 Event management has become a necessity in the present times. It saves the time
and labour of the host.
3 Event management creates a lot of self employment opportunities for person who
has ability and skill to work as the event managers
2. DISASTER MANAGEMENT
Meaning:
Disaster Management is an organized and systematic effort to tackle the situation or
condition effectively after any disaster has happened.
At the organizational level, the management of the unit is responsible for creating
arrangements for the disaster management while at state or National level, the State
Government, and Central Government respectively have to undertake this
responsibility. In India, the Disaster Management Act has been passed in the year
2005.
In India, the concept of Disaster Management is very recent and it has still not fully
developed unlike the western countries.
Disaster management can be implemented at two different levels,
(i) Organizational levels and (ii) State or Central Level.
The Organizational Level disasters include accidents such as fire, leakage of some
harmful gas, explosion of a boiler or some machinery etc.
The state or central level disasters include natural calamities such as storm, floods,
earthquakes, landslides, eruption of lava, tsunami waves, etc.
It also includes man made disasters such as terrorist activities or error committed by
human begins resulting in major train or airplane accident.
All these disaster have made it necessary to create disaster management arrangements
/ provisions at the unit and state and national levels necessary.
Effects of Disaster:
(i) It causes loss of human lives,
(ii) It causes destruction of buildings, roads, bridges, communication lines, water and
electricity supply arrangement and health services.

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(iii) It causes destruction of the industries causing loss of production.

Disaster can strike at any time and in any form and due to this, it has become
important to prepare the people to face the disaster and to reduce loss of human life as
well as economic loss by making effective arrangements for disaster management.
People at large should be trained to play their role in properly and orderly manner so
that confusion and chaos can be avoided when the disaster occurs.
Features:
(i) Disaster may be caused by natural causes or it may be caused by man made efforts.
(ii) Disaster Management can be at unit, state or National Level.
(iii) In disaster management, plans are prepared to prevent the disaster, and if it is not
possible to prevent the disaster, then plans are prepared to minimize its adverse
effects.
(iv) Disaster management also includes preparing the people mentally to face the
disaster, and to train them in facing the disaster when it occurs and thereby to
minimize the human and properly loss.
Importance:
(i) To prevent the loss of precious human lives, implementations of effective disaster
management plan are very essential.
(ii) To prevent the destruction of buildings, factories, roads, bridges, communication
lines, water and electric supply services, health services from the harmful effects of
disaster.
(iii) To reduce the extent of damages and / or losses caused by disaster.
(iv) To prepare the country’s organizational and administrative machinery for facing
the disaster, disaster management is very important.
3. CORPORATE GOVERNANCE, SOCIAL RESPONSIBILITY AND BUSINESS ETHICS
1. CORPORATE GOVERNANCE
Corporate failures and widespread dissatisfaction with the way many corporate
functions have led to the realization, globally, of the need to put in place a proper
system for corporate governance.
Corporate governance is concerned with holding the balance between economic and
social goals and between individual and communal goals.
The governance framework is there to encourage the efficient use of resources and
equally to require accountability for the stewardship of those resources.
The aim is to align as nearly as possible the interest of individuals, corporations, and
society. The incentive to corporations and to those who own and manage them to
adopt internationally accepted governance standards is that these standards will help
them to achieve their corporate aims and to attract investment.

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The incentive for their adoption by states is that these standards will strengthen the
economy and discourage fraud and mismanagement.
RELEVANCE
At least three reasons have triggered off concern in corporate governance in our
country.
• Since 1991, the country has moved into liberalized economy and one of the victims of
the market-based economy is transparent fair business practice. Several instances of
mismanagement have been alleged, with some well-known and senior executive being
hauled up for non-performance and /or non-compliance with legal requirements.
• Both domestic as well as foreign investors are becoming more demanding in their
approach towards the companies in which they have invested their funds. They seek
information and want to influence decisions.
• Interests of non-promoter shareholder and those of small investors are increasingly
being undermined. Several MNCs have sought to set up 100 percent subsidiaries and
transfer their businesses to them .In many cases, there was no thought of consultation
with non-promoter shareholders.
In this context, some norms of behavior to ensure responsive behavior are of great
help. Hence, corporate governance.

FOCUS
Corporate governance is concerned with the values, vision and visibility. It is about the
value orientation of the organization, ethical norms for its performance, the direction
of development and social accomplishment of the organization and the visibility of its
performance and practices.
Corporate management is concerned with the efficiency of the resources use, value
addition and wealth creation within the broad parameters of the corporate philosophy
established by corporate governance.
IMPORTANCE
• Studies of firms in India and abroad have shown that markets and investors take
notice of well-managed companies, respond positively to them, and reward such
companies, with higher valuations. In other words they have a system of good
corporate governance.
• Strong corporate governance is indispensable to resilient and vibrant capital markets
and is an important instrument of investor protection.
• Corporate governance prevents insider trading.
• Under corporate governance, corporates are expected to disseminate the material
price sensitive information in a timely and proper manner and also ensures that till

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such information is made public, insiders abstain from transacting in the securities of
the company.
• The principle should be ‘disclose or desist’. Good corporate governance, besides
protecting the interests of shareholders and all other stakeholders, contributes to the
efficiency of a business enterprise, to the creation of wealth and to the country’s
economy.
• Good corporate governance is considered vital from medium and longterm
perspectives to enable firms to compete internationally in sustained way and make
them, not only to improve standard of living materially but also to enhance social
cohesion.
PRE-REQUISITES
A system of good corporate governance requires the following:
• A proper system consisting of clearly defined and adequate structure of roles,
authority and responsibility.
• Vision, principles and norms, which indicate development path, normative
considerations, and guidelines and norms for performance.
• A proper system for guiding, monitoring, reporting and control.
2. SOCIAL RESPONSIBILTY
Social responsibility is the obligation of decision-makers to take actions, which protect
and improve the welfare of society as a whole along with their own interests. Every
decision the businessman takes and every action he contemplates have social
implications.Be it deciding on diversification, expansion, opening of a new branch, and
closure of an existing branch or replacement of men by machines, the society is
affected in one way or the other. Whether the issue is significant or not, the
businessman should keep his social obligation in mind before contemplating any
action.
ARGUMENTS FOR SOCIAL RESPONSIBILITY
• Business has to respond to the needs and expectations of society.
• Improvement of the social environment benefits both society and business.
• Social responsibility discourages additional governmental regulation and
intervention.
• Business has a great deal of power, which should be accompanied by an equal
amount of responsibility.
• Internal activities of the enterprise have an impact on the external environment.
• The concept of social responsibility protects interests of stockholders.
• Social responsibility creates a favorable public image.
• Business has the resources to solve some of society’s problems.

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• It is better to prevent social problems through business involvement than to cure

them.
ARGUMENTS AGAINST SOCIAL RESPONBILITY
• Social responsibilities could reduce economic efficiency.
• Social responsibility would create excessive costs for business.
• Weakened international balance of payments
• Business has enough power, and social involvement would further increase its power
and influence.
• Business people lack the social skills necessary to deal with the problems of society.
• Business is not really accountable to society.
SOCIAL STAKEHOLDERS
Managers, who are concerned about corporate social responsibility, need to identify
various interest groups which may affect the functioning of a business organization
and may be affected by its functioning. Business enterprises are primarily responsible
to six major groups:
• Shareholders
• Employees
• Customers
• Creditors, suppliers and others
• Society and
• Government.
These groups are called interest groups or social stakeholders. They can be affected for
better or worse by the business activities of corporations.
SOCIAL RESPONSIVENESS
Social responsiveness (SR) is “the ability of a corporation to relate it operations and
policies to the social environment in ways that are mutually beneficial to the company
and to society”.
In other words, it refers to the development of organizational decision processes
whereby managers anticipate, respond to, and manage areas of social responsibility.
The need to measure the social responsiveness of an organization led to the concept of
social audit.
The social responsiveness of an organization can be measured on the basis of the
following criteria:
• Contributions to charitable and civic projects
• Assisting voluntary social organizations in fund-raising
• Employee involvement in civic activities
• Proper reuse of material

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• Equal employment opportunity

• Promotion of minorities
• Direct corporate social responsiveness investment
• Fair treatment of employees
• Fair pay and safe working conditions
• Safe and quality products to consumers
• Pollution avoidance and control
3. BUSINESS EHTICS
The two issues - an organization’s social responsibility and responsiveness- ultimately
depend on the ethical standards of mangers. The term ethics commonly refers to the
rules or principles that define right and wrong conduct. Ethics is defined as the
“Discipline dealing with what is good and bad and with moral duty and obligation”.
Business ethics is concerned with truth and justice and has a variety of aspects such as
expectations of society, fair competition, advertising, public relations, social
responsibilities, consumer autonomy, and corporate behavior in the home country as
well as abroad.
TYPES OF BUSINESS ETHICS
Moral management
Moral management strives to follow ethical principles and precepts, moral mangers
strive for success, but never violate the parameters of ethical standards.
They seek to succeed only within the ideas of fairness, and justice.
Moral managers follow the law not only in letter but also in spirit. The moral
management approach is likely to be in the best interests of the organization, long run.
Amoral management
This approach is neither immoral nor moral. It ignores ethical considerations.
Amoral management is broadly categorized into two types – intentional and
unintentional.
• Intentional amoral managers exclude ethical issues because they think that general
ethical standards are not appropriate to business.
• Unintentional amoral managers do not include ethical concerns because they are
inattentive or insensitive to the moral implications.
Immoral management
Immoral management is synonymous with “unethical” practices in business. This kind
of management not only ignores concerns, it is actively opposed to ethical behavior.
NEED FOR BUSINESS ETHICS
• Ethics corresponds to basic human needs. It is human trait that man desires to be
ethical, not only in his private life but also in his business.

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These basic ethical need compel the organizations to be ethically oriented.

• Values create credibility with public. A company perceived by the public to be
ethically and socially responsive will be honored and respected.
The management has credibility with its employees precisely because it has credibility
with the public.
• An ethical attitude helps the management make better decisions, because ethics will
force a management to take various aspects- economic, social, and ethical in making
decisions.
• Value driven companies are sure to be successful in the long run, though in the short
run, they may lose money.
• Ethics is important because the government, law and lawyers cannot do everything
to protect society.
ETHICAL GUIDELINES
• Obeying the law: Obedience to the law, preferably both the letter and spirit of the
law.
• Tell the Truth: To build and maintain long-term, trusting and win-win relationships
with relevant stockholders.
• Uphold human dignity: Giving due importance to the element of human dignity and
treating people with respect.
• Adhere to the golden rule: “Do unto others as you would have others do unto you”
• Premium Non-Nocere: (Above all, do no harm)
• Allow Room for participation: Soliciting the participation of stakeholders rather
than paternalism. It emphasizes the significance of learning about the needs of
stakeholders.
• Always Act When You Have Responsibility: Managers have the responsibility of
taking action whenever they have the capacity or adequate resources to do so.
TOOLS FOR ETHICAL MANAGEMENT
• Top management commitment: Managers can prove their commitment and
dedication for work and by acting as role models through their own behaviors.
• Codes of Ethics: A formal document that states an organization’s primary values and
the ethical rules it expects employees to follow. The code is helpful in maintaining
ethical behavior among employees.
• Ethics committees: Appointment of an ethics committee, consisting of internal and
external directors is essential for institutionalizing ethical behavior.
• Ethics Audits: Systematic assessment of conformance to organizational ethical
policies, understanding of those policies, and identification of serious deviations
requiring remedial action.

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• Ethics training: Ethical training enables managers to integrate employee behavior in

ethical arena with major organizational goals.
• Ethics Hotline: A special telephone line that enables employees to bypass the
normal chain of command in reporting their experiences, expectations and problem.
The line is usually handled by an executive appointed to help resolve the issues that
are reported.
4. MANAGEMENT BY OBJECTIVES (MBO)
Objectives are the end towards which the activities of an organization are directed.
According to Robert Appley:
“Objectives are goals, they are aims which management which organization to
achieve.”
Objectives lay down guidelines for various activities of the enterprises and decide the
direction, nature and quantum of efforts needed for these activities.
Modern approach to goal setting and performance evaluation is MBO has also been
called “may by result.”
The concept of MBO was introduced by Peter Drucker in the year 1954 and it was later
developed by various management experts.
Now, it has become a philosophy of managing in many enterprises and it has come to
be recognized as the most dynamic and exciting thinking in the area of management.
MBO is a technique and philosophy of management that is based on converting
organization objectives into personal objectives on the presumption that establishing
personal objectives makes an employee committed which leads to better performance.
The objective setting process of MBO crates an integrated hierarchy of objectives
throughout the entire organization. In the process of setting of objectives, superiors
and subordinates jointly identify common objectives. Thus, the process involves
participation and collaboration among the various levels of organization with the
intention of achieving organizational objectives.
Process of MBO
MBO includes the following steps
1) Defining objectives
2) Determining goal of each department
3) Fixing key result areas
4) Setting subordinates objectives or targets
5) Balancing resources with objectives
6) Periodical review of performance
7) Appraisal of activities
8) Reappraisal of objectives

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1) Defining objectives – Organisational long term objectives are framed by the top
level management and are passed down.
2) Determining goal of each department or section on the basis of organisational
objectives, the departmental objectives and time period required to achieved them is
fixed.
3) Fixing key result areas – Taking into consideration organisational objectives key
result areas are fixed and arranged on the priority basis. These include profitability
market standing, innovation etc.
4) Setting subordinates objectives or targets – This step involves setting up
objectives for individuals and set standards for evaluating them.
5) Balancing resources with objectives – Objectives are framed on the basis of
resources, unless adequate resources are available, objectives cannot be accomplished.
Thus available resources are properly allocated for achieving goals.
6) Periodical review of performance – The superior subordinates hold meeting
periodically for discussing the progress of achievement of objectives. If any problems
are noticed then they are discussed and their solutions are found out. If necessary the
standards of performance may be modified.
7) Appraisal of activities – At the end of the fixed period there is discussion with
superior regarding subordinate’s performance against special standards. A supervisor
takes action whenever necessary.
8) Reappraisal of objectives – Organization has to function under dynamic
environment and its survival and growth depends on its flexibility to adjust according
to the changes in the environment. Hence top management has to see that
organizational goals are set according to the changing situation.
Advantages:
1. Improvement in productivity
2. Greater sense of identification
3. Helps in locating weak and problematic areas
4. Better device for organizational control
5. Identifies problems of management including structure, strategies and practices
6. Focuses attention and effort on priority areas
7. Planning becomes more precise
8. Provides clear standards of control and facilitates self control
9. Sharpens accountability for performance
10. Emphasizes development and utilization of HR.
Limitations:
1. Time consuming

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2. Leads to discomfort
3. More paper work
4. Leads to frustration
5. Lack of proper training
6. No follow up by the superiors
MBO approach is necessary for organizational development. It is proved to be a
powerful tool for the management of complex organizations in a changing world. It has
a high potential for many positive results. Commitment is considered important for the
success of MBO.
5. STRESS MANAGEMEN
Meaning:
Stress has become an inevitable part of our life. Individuals are constantly trying to
reduce or eliminate stress but are unable to succeed.
Stress is a feeling experienced by an individual at the home to work or during work or
on completion of a particular task assigned to him by his superior from time to time.
Stress is harmful to an individual. Following are the reasons of stress:
1. Environmental causes:
a. economic uncertainty: e.g. changes in business cycles
b. new innovations : e.g. use of advanced technology like computers ,robotics
2. Organizational causes:
a. heavy responsibilities
b. conflicting roles in groups
c. excessive rules and regulations in organizations
3. Personal causes:
a. stress prone nature
b. changes in one’s life such as death of spouse , divorce etc.
But stress should be curtailed due to following reasons:
1. It reduces the capacity of the individual to work hard
2. It is not possible to concentrate on the task due to stress which forces the individual
to quit even before he had started.
3. It causes anxiety due to which an individual losses confidence.
4. It can create damaging physiological and psychological effects on a person.
5. It increases employee turnover and results in absenteeism.
6. It may affect individual’s health.
Thus proper care should be taken to tackle with stress

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