Theory Versus Practice

Submitted to:
Mr. Mohammed Sawkat Hossain
Lecturer and course teacher of
Principles of Management (FNB109)

Submitted by:
Sadia Islam
MD. Jobair Bin Habib
M.A. Naim
MD. Shariar-Al-Arman
MD. Shuaib Shahriar Rusho
BBA Program
Batch 02

Savar, Dhaka
September 26, 2011

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Letter of Transmittal

Mr. Mohammed Sawkat Hossain

Lecturer
Department of Finance & Banking
Jahangirnagar University
Savar, Dhaka

Savar, Dhaka
September 27, 2011

Dear Sir:
We are submitting herewith our term-paper entitled as Theory Versus Practice

Sincerely yours,
MD. Shariar-Al-Arman (Coordinator)
On behalf of group 02

Methodology
The presented term-paper is one of descriptive type along with the practice of the theory in the
Grameen Bank.
All the data presented here are basically collected from the book and Internet and a brief
interview of the manager of Grameen Bank was taken to identify the real life practice is of
these theories are applied or not. Thats why the data and information are of both secondary
and primary type.
The theories inside the text and the practice inside the Grameen Bank are compared with
each other to find the result of the given term paper theory vs. practice

Introduction
Management is the process of managing the organization through different situations in
different environment and in management course; we study the process and different model to
understand how the managerial activities are done in real life.
The subject of the given term paper is Management: theory vs. practices in which the
objectives are to know how a manager of an organization manages the situations and duties he
is authorized and accountable for and the selected company was Grameen bank
The origin of Grameen Bank can be traced back to 1976 when Professor Muhammad Yunus,
Head of the Rural Economics Program at the University of Chittagong, launched an action
research project to examine the possibility of designing a credit delivery system to provide
banking services targeted at the rural poor. The Grameen Bank Project (Grameen means "rural"
or "village" in Bangla language) came into operation with the following objectives:
Extend banking facilities to poor men and women;
Eliminate the exploitation of the poor by money lenders;
Create opportunities for self-employment for the vast multitude of unemployed people
in rural Bangladesh;
Bring the disadvantaged, mostly the women from the poorest households, within the
fold of an organizational format which they can understand and manage by themselves;
and
Reverse the age-old vicious circle of "low income, low saving & low investment", into
virtuous circle of "low income, injection of credit, investment, more income, more
savings, more investment, more income".
The action research demonstrated its strength in Jobra (a village adjacent to Chittagong
University) and some of the neighboring villages during 1976-1979. With the sponsorship of the
central bank of the country and support of the nationalized commercial banks, the project was
extended to Tangail district (a district north of Dhaka, the capital city of Bangladesh) in 1979.
With the success in Tangail, the project was extended to several other districts in the country.
In October 1983, the Grameen Bank Project was transformed into an independent bank by
government legislation. Today Grameen Bank is owned by the rural poor whom it serves.
Borrowers of the Bank own 90% of its shares, while the remaining 10% is owned by the
government.
For identifying the practice version, the chosen branch was the main branch of Grameen Bank
situated near at Mirpur-2.
A direct interview was taken there to find the organizational theories and objectives of
management.

Abstract

Vs.

Introduction
Management is the process of managing the organization through different situations in
different environment and in management course; we study the process and different model to
understand how the managerial activities are done in real life.
The subject of the given term paper is Management: theory vs. practices in which the
objectives are to know how a manager of an organization manages the situations and duties he
is authorized and accountable for and the selected company was Grameen bank
The origin of Grameen Bank can be traced back to 1976 when Professor Muhammad Yunus,
Head of the Rural Economics Program at the University of Chittagong, launched an action
research project to examine the possibility of designing a credit delivery system to provide
banking services targeted at the rural poor. The Grameen Bank Project (Grameen means "rural"
or "village" in Bangla language) came into operation with the following objectives:
Extend banking facilities to poor men and women;
Eliminate the exploitation of the poor by money lenders;
Create opportunities for self-employment for the vast multitude of unemployed people
in rural Bangladesh;
Bring the disadvantaged, mostly the women from the poorest households, within the
fold of an organizational format which they can understand and manage by themselves;
and
Reverse the age-old vicious circle of "low income, low saving & low investment", into
virtuous circle of "low income, injection of credit, investment, more income, more
savings, more investment, more income".
The action research demonstrated its strength in Jobra (a village adjacent to Chittagong
University) and some of the neighboring villages during 1976-1979. With the sponsorship of the
central bank of the country and support of the nationalized commercial banks, the project was
extended to Tangail district (a district north of Dhaka, the capital city of Bangladesh) in 1979.
With the success in Tangail, the project was extended to several other districts in the country.
In October 1983, the Grameen Bank Project was transformed into an independent bank by
government legislation. Today Grameen Bank is owned by the rural poor whom it serves.
Borrowers of the Bank own 90% of its shares, while the remaining 10% is owned by the
government.
For identifying the practice version, the chosen branch was the main branch of Grameen Bank
situated near at Mirpur-2.
A direct interview was taken there to find the organizational theories and objectives of
management.
1. Management:

The term management is the process of working with and through others to achieve
organizational objectives in a changing environment. Central to this process is the
effective and efficient use of the limited resources.
Five components of this definition require closer examination:
1.1. Working with and through others
1.2. Achieving organizational
objectives,
1.3. Balancing effectiveness and
efficiency,
1.4. Making the most of limited
resources, and
1.5. Coping with the changing
environment.
Working with and through others:
Management is above all else, a social
process and managers are responsible
for getting things done by working with
and through others.
Achieving organizational objectives:
An objective is a target to be strived for and one hopes attained. Like individuals,
organizational are usually more successful when their activities are guided by
challenging yet achievable objectives. It requires collective actions and also serves later
as measuring sticks for performance. Without organizational objectives, the
management process would be aimless and wasteful.
Balancing effectiveness and efficiency:
Managers are responsible for balancing effectiveness and efficiency. Too much
emphasis in either direction leads to mismanagement. On the one hand, managers must
be effective by getting the job done. On the other hand, managers must be efficient by
reducing cost and not wasting resources.
Making the most of limited resources:
We live in a world of scarcity. Those who are concerned with such matters worry not
only about running out of non-renewable energy and material resources but also about
the lopsided use of those resources. Because of their common focus on resources,
economics and management are closely related. Economics is the study of how limited
resources are distributed alternative uses. In productive organizations managers are the
trustees of limited resources, and it is their job to see that the basic factors of
production- land, labor and capital- are used efficiently as well as effectively.
Management is called Applied Economics.

Now we will find out whether this theory is actually come up with the reality and
practiceTheory vs. Practice: Grameen Banks response to the five components of management
Theory

Practiced
Yes or no?

Working with and through others

Achieving organizational objectives

Balancing effectiveness and efficiency

Making the most of limited resources

Coping with the changing environment

Coping with a changing environment:

Successful managers are the ones who anticipate and adjust to changing circumstances
rather than being passively swept along or caught unprepared. Employers today are
hiring managers who can take unfamiliar situations in stride. Business with served up
this amusing but challenging profile of tomorrows manager: the next generation of
corporate leaders will need the charm of a debutante, the flexibility of a gymnast, and
the quickness of a panther. A dew foreign languages and a keen understanding of
technology will not hurt either. Also in the mix there are a sense of humor, passion and
the ability to make fast decisions. The list below shows five major changing issues and
sources that todays managers have to comply with

Globalization
Evolution of product quality
Environmentalism
An ethical reawakening
Internet and e-business revolution

Theory vs. Practice: Grameen banks response to the changing environment

Theory

Practiced
Yes or no?

Comment

Globalization

There are several foreign branches of

Grameen Bank in different countries

Evolution of product
quality

Grameen Bank is maintaining continuous

research with their credit-service quality

Environmentalism

They have plans for green planet

An ethical reawakening

Basically they dont have much practice

of ethics though they own an
organizational code of ethics
They are not oriented with e-business

Internet and e-business

revolution

Acts of Financial Managers:

Functions of Management:
Managerial functions are general administrative duties that need to be carried out by
virtually all productive organizations. Henri Fayol, a French industrialist turned writer,
became the father of the functional approach in 1916 when he identified five
managerial functions: planning, organizing, command, coordination and control. Over
the years Fayols original list of managerial functions has been updated and expanded
by management scholars. But now it is based on more than just Fayols approach, is
organized around 8 different managerial functions: planning, decision making,
organizing, staffing, communicating, motivating, leading and controlling.

Figure 1.1: 8 different managerial functions

Roles of a manager:
Roles of manager means the activities what a manager does according to his authority
and what he is bound to do.

Figure 1.2: Roles of a manager

Evolution of management thoughts:

There are several approaches to the theory and practice of management.

The universal process approach

The operational approach

The behavioral approach

The systems approach

The contingency approach

The attributes of excellence approach

Universal Process Approach

Assumes all organizations require the same rational management process.

Core management process remains the same regardless of the purpose

of the organization.

The management process can be reduced to a set of separate functions

and related principles.

Fayol published Administration Industrielle ET Gnrale in 1916.

Divided the managers job into five functions:
Planning, organizing, command, coordination, and control.
Developed 14 universal principles of management.
Division of work
Specialization of labor is necessary for organizational success.
Authority
The right to give orders must accompany responsibility.
Discipline
Obedience and respect help an organization run smoothly.
Unity of command
Each employee should receive orders from only one superior.
Unity of direction
The efforts of everyone in the organization should be coordinated and
focused in the same direction.

Subordination of individual interests to the general interest

Resolving the tug of war between personal and organizational interests in
favor of the organization is one of managements greatest difficulties.
Remuneration
Employees should be paid fairly in accordance with their contribution.
Centralization
The relationship between centralization and decentralization is a matter
of proportion; the optimum balance must be found for each organization.
Scalar chain
Subordinates should observe the formal chain of command unless
expressly authorized by their respective superiors to communicate with
each other.
Order
Both material things and people should be in their proper places.
Equity
Fairness that results from a combination of kindliness and justice will lead
to devoted and loyal service.
Stability and tenure of personnel
People need time to learn their jobs.
Initiative
One of the greatest satisfactions is formulating and carrying out a plan.
Esprit de corps
Harmonious effort among individuals is the key to organizational success.

Theory Vs Practice: Grameen banks response to Fayols 14 universal principles of management

theory
Division of work.

Authority.

Practice
Yes or No?

Comment
There are several divisions like- finance,
international relationship, administration,
audit, co-ordination, planning etc.
Managers give orders in accordance with
their authority

Discipline.

Strict rules and regulations, as well as

discipline prevail in this organization

Unity of command

Employees receive orders from only one

superior

Unity of direction

Everyone is totally oriented to the

organizations objectives and goals

Subordination of individual
interests to the general
interest
Remuneration

Every manager gives more priority to the

objectives of organization rather than
accomplishing his own interests
Employees are fairly paid in accordance with
their contribution

Centralization

The optimum balance between

centralization and decentralization is found
here
Organization follows a formal chain of
command to communicate each other

Scalar chain

Order

Material things as well as people are

oriented in their proper places.

Equity

A profound imposing of kindliness and

justice results equity and fairness

Stability and tenure of

personnel

Grameen Bank provides training facility to

make their personnel stable and tenure

Initiative

Employees are given initiatives

Esprit de corps

Continuous assessment and effort is a part

of organizational success

Operational Approach
Describes the production-oriented area of management dedicated to improving
efficiency, cutting waste, and improving quality and Covers the technical and
quantitative approaches ofmanagement:

Management science

Operations research

Production management

Operations management

Frederick W. Taylors Scientific Management:

It means
Developing performance standards on the basis of systematic
observations and experimentation,
Standardization of work practices and methods reduce waste and
increase productivity,
Time and task study of workers efforts to maximize productivity and
output
Systematic selection and training of workers to increase efficiency and
productivity and differential pay incentives based on established work
standards.
Theory Vs. Practice: Grameen Banks response to operational approach
Theory
Operational Approach

Practice
Yes or No?

Comment
Basically Grameen Bank does not
follow this approach

Organization Behavior:
It is a modern research-oriented approach seeking to discover the causes of work
behavior and to develop better management techniques.
Human relations movement: an effort
to make managers more sensitive to
their employees needs, supported by
three influences- treat of
unionization, philosophy of industrial
humanism, Hawthrone studies.

Douglas McGregor Developed Theory X and Theory Y

Theory X: managements traditionally negative view of employees as
unmotivated and unwilling workers.
Theory
Y: the
positive
view of

employees as energetic, creative, and willing workers

Theory Vs. Practice: Grameen Banks response to theory x and theory y
Theory

Practice
Yes or No?

Douglas McGregor Developed

Theory X and Theory Y

Comment
Grameen Bank follows X theory

Systems Approach

Posits that the performance of the whole is greater than the sum of the
performance of its parts.

Analytic versus synthetic thinking: outside-in thinking versus inside-out

thinking.

Seeks to identify all parts of an organized activity and how they interact.

General Systems Theory:

An area of study based on the assumptions that everything is part of a larger,
interdependent arrangement.
Levels of systems:

Each system is a subsystem of the system above it.

Identification of systems at various levels helps translate abstract

systems theory into more concrete terms.

Closed Versus Open Systems

Closed system means a self-sufficient entity.

Open system means something that depends on its surrounding
environment for survival.
Systems are classified open (closed) by how much (how little) they
Lecture Outlines, Appen
interact with their environments.

New Directions in Systems Thinking:

Organizational learning and knowledge management

Organizations are living and thinking open systems that learn from
experience and engage in complex mental processes.

Chaos theory

Every complex system has a life of its own, with its own rule book.

Complex adaptive systems

Complex systems are self-organizing

Theory Vs. Practice: Grameen Banks response to system approach

Theory

Practice
Yes or No?

Systems Approach

Comment
Grameen Bank strongly follows this
theory. They are running most of the
organizational works with groups

Contingency Approach

A research effort to determine which managerial practices and

techniques are appropriate in specific situations.

Different situations require different managerial responses.

Can deal with intercultural feelings in which custom and habits cannot be
taken for granted.

Contingency Characteristics
An open-system perspective

How subsystems combine to interact with outside systems.

A practical research orientation

Translating research findings into tools and situational

refinements for more effective management.

A multivariate approach

Many variables collectively account for variations in performance.

Lessons from the Contingency Approach

Approach emphasizes situational appropriateness rather than rigid adherence to

universal principles.

Approach creates the impression that an organization is captive to its

environment.

Theory Vs. Practice: Grameen Banks response to the contingency approach

Theory
The contingency
approach

Practice
Yes or No?

Comment
Managers are given a freedom to act in
accordance with the situations that are new and
challenging

A Critical Appraisal of the Excellence Approach

Raises more questions than it answers.

Ignores the contingency approach to management.

Relies heavily on unsupported generalizations.

Fails to position management effectiveness as important to sustaining corporate

excellence.

Lessons from the Excellence Approach

Reminded managers to pay close attention to the basics.

Reminded managers of the importance of on-the-job experimentation.

Theory Vs. Practice: Grameen Banks response to different approaches of management

Theory
The operational
approach
The behavioral
approach
Douglas McGregors
Theory X and Theory Y
The systems approach
The contingency
approach
The attributes of
excellence approach

Practice
Yes or No?

Comment

Planning
Planning means looking ahead and chalking out future courses of action those areto be
followed. It is a preparatory step. It is a systematic activity which determines when, how and
who is going to perform a specific job. Planning is a detailed program regarding future courses
of action. It is rightly said Well plan is half done. Therefore planning takes into consideration
available & prospective human and physical resources of the organization so as to get effective
co-ordination, contribution & perfect adjustment. It is the basic management function which
includes formulation of one or more detailed plans to achieve optimum balance of needs or
demands with the available resources.
According to Urwick, Planning is a mental predisposition to do things in orderly way, to think
before acting and to act in the light of facts rather than guesses. Planning is deciding best
alternative among others to perform different managerial functions in order to achieve
predetermined goals.
According to Koontz & ODonell, Planning is deciding in advance what to do, how to do and
who is to do it. Planning bridges the gap between where we are to, where we want to go. It
makes possible things to occur which would not otherwise occur.
Steps in Planning Function
Planning function of management involves following steps:1.
2.
3.
4.
5.
6.

Establishment of objectives
Establishment of Planning Premises
Choice of alternative course of action
Formulation of derivative plans
Securing Co-operation
Follow up/Appraisal of plans

Figure: Planning: The primary management functions

Purpose
Strategic
Planning

To bring the entire

community together working
toward the same future vision
of success in the context of its
core values

Time
Horizon
3-5 years

Distribution
As wide as
possible

A Strategic Plan is a
framework for strategic
thinking that helps a school
stay competitive, live into its
core values, ward off threats
and take advantage of
opportunities.

Hallmarks

Mission
Vision
Core Values Statements
Overarching Goals
Strategies
Initiatives
Evaluation System

Organic in areas of strategy and

initiatives; static for the duration
of the plan in areas of mission,
vision, values and goals.
Process hallmarks are:
Inclusivity, accountability,
shared responsibility, evaluation
and institutionalization.

Intermediate
Planning

To serve as a management
tool to create a system that
will help the school analyze,
plan and deliver products and
services that meet the needs
of its various target markets;
lead with its strengths; and
create an identity that
differentiates it from
competitors

3 months
1 year

Limited to
Project Team

Intermediate planning is a
framework for a way of
thinking that focuses on
creating desired exchanges
with target audiences order
to obtain for the school its
desired outcomes.

Operational
Planning

To operationalize the vision

and mission of the school
through specific work plans
that lead to shared
responsibility and
accountability and fulfillment
of specific planning goals.
Operational plans are the
teeth of strategic plans.

Situation Analysis
Target Market
Segmentation with
exchanges identified
Strategy, including
(service/product, price,
place, promotion,
position)
Goals
SMART1 Objectives
Tactics
Budget

Organic, flexible, short planning

horizons; in schools, marketing
plans are best implemented by
the project and managed by
project teams
One year

Limited to
Project Team

SMART Objectives
Assigned
responsibilities
Outcome
Measurements

Theory Vs. Practice: Grameen Banks response to different planning theories

Theory
Steps in Planning Function

Practice
Yes or No?

Comment

Strategic Planning

Grameen Bank follows several steps in

planning which are some predefined, some
are newly added
Due to different types of services

Intermediate Planning

Due to different types of services

Operational Planning

Due to different types of services

The planning / control cycle

To put the planning in perspective it is important to show it is connected with the control
function. The figure shows the cyclical relationship between planning and control. Planning gets
things headed in the right direction, and control keeps them headed in the right direction.

Figure: planning control cycle

Theory Vs. Practice: Grameen Banks response to the planning/ control cycle
Theory

Practice
Yes or No?

The planning / control cycle

Comment
Grameen Bank has a division that control
the planning/control cycle. But they have a
different method

Decision Making
Definition: Decision making is the process of identifying and choosing among alternative
courses of action in a manner appropriate for the demand of the situation.
3 stages in this process:
i) Consideration of the expected alternative
ii) Do a comparative analysis, based on setup criteria
iii) Choose the best alternatives
The factors that affect the decision making process:
1.
2.
3.
4.
5.

Expansion
Diversification
Cost saving
Legal or safety issues
Lease or buy decisions

Types of complexity in decision making:

1. Multiple criteria: a decision today must satisfy a number of often-conflicting criteria
representing the interests of different groups. Identifying the stakeholders and
balancing their conflicting interests is a major challenge for todays decision makers.
2. Intangibles: Factors such as customer good-will, employee morale, increased
bureaucracy, and aesthetic appeal, although difficult to measure, often determine
decision alternatives.
3. Risk and uncertainty: along with every decision alternatives goes the chance that it will
fail in some way. Poor choices can prove costly.
4. Long term implications: major decisions generally have a ripple effect, with todays
decisions creating the need for later rounds of decisions.
5. Inter disciplinary input: decision complexity is greatly increased when technical
specialists such as lawyers, consumer advocates, tax advisers, accountants, engineers
and production and marketing experts are consulted before making a decision.
Types of decision making approach:
1. Programmed decision: Programmed decisions are those that are repetitive and
routine. Most decisions made by the typical managers on a day-basis are of the
programmed variety.
2. Non-programmed decision: Non-programmed decisions are those made in complex
important and non-routine situation, often under largely and new unfamiliar
circumstances. This kind of decision is made much less frequently than programmed
decisions.
Information flow in decision making approaches:
1. Thinking style > (Logical, built-in system)
2. Intuitive style > (Creative, innovative)
A general decision making model: Although different decision procedures are required for
different situations, it is possible to contrast a general decision making model.

Figure: General decision making model

Decision making process:
1.
2.
3.
4.

Identifying the problems

Selecting the decision making approach implementing monitor and follow up
Implementing
Monitor and follow-up

Figure: decision making process

Knowledge management: It is based on information and development. In case of knowledge
management there are two types of approaches: - Explicit information and Implicit
information
Efficient market hypothesis: If there is any shortage of linkage in the information flows, itll be
captured by the whole market within a short time.
Theory Vs. Practice: Grameen Banks response to decision making process
Theory
Decision Making process

Practice
Yes or No?

Comment
Grameen Bank has a very good
centralized decision makers who are
continuously taking creative and
extraordinary steps through decision
making process

Organizing, and Managing Human Resource

Organization: An organization is defined as a co-operative social system involving the coordinated efforts of two or more people pursuing a shared purpose.
Characteristics of an organization:

Co-ordination of effort
Common goal or purpose
Division of labor
Putting all the pieces together
Hierarchy of authority

Figure: Management Hierarchy

Organization charts: An organization chart is a diagram of an organizations official position

and formal lines of authority. In effect, an organization chart is a visual display of an
organizations structural skeleton.

Figure: Organogram of Grameen Bank

Human Resource Management/ Staffing: Human resource management involves the
acquisition, retention, and development human resources necessary for organizational success.
Selection process:

Figure: Selection process

Theory Vs. Practice: Grameen Banks response to the selection process
Theory
Selection process

Practice
Yes or No?

Comment
Grameen Bank follows the exact process
which is in the theories of selection

Motivation
Motivation: The internal or external factors that exchange the regular productivity of an
individual in a specific period to get the objectives done are called the motivation. By appealing
to this process, managers attempt to get individuals to pursue organizational objectives
willingly.
Maslows Hierarchy of Needs Theory:In 1943 psychologist Abraham Maslow proposed that
people are motivated by a predictable 5-step hierarchy of needs.

Physiological Needs: At the bottom of the hierarchy are needs based on physical drives,
including the needs for food, water, sleep and sex. The fulfillment of these lowest-level
needs enables the individual to survive and nothing else is important when these bodily
needs have not been satisfied. As Maslow observed, Its quite true that man lives by
bread alone-when there is no bread. But today the average employee experiences little
difficulty in satisfying the physiological needs. Figuratively speaking, the prospect of
eating more bread is not motivating when one has plenty bread to eat.
Safety Needs: After our basic physiological needs have been relatively well satisfied, we
next become concerned about our safety from the elements, enemies and other
threats. For reasons that are not entirely clear (terrorism? Work place violence?),
researchers have documented a recent jump in the need for (feeling safe at work).
Love Needs: Psychologically satisfied and secure person focuses next on satisfying needs
for love and affection. It is a powerful motivator of human behavior.
Esteem Needs: People who perceived themselves as worthwhile are set to possess high
self-esteem. Self-respect is the key to esteem needs. Much of our self-respect and
esteem comes from being accepted and respected by others.
Self-actualization Needs: At the very top of Maslows Hierarchy is the open ended
category self-actualization needs. One may satisfy this need being a better home maker
rock singer or manager.

Figure: Maslows hierarchy of needs theory.

Theory vs. Practice: Grameen Banks response to Maslows Hierarchy of needs theory
Theory

Practice
Yes or No?

Maslows Hierarchy of Needs

Theory

Comment
According to the employees needs
Grameen Bank can fulfill the demands
step by step like the theory

Herzbergs two factor theory: During the 1950s Frederick Herzberg proposed a theory of
employee motivation based on satisfaction. According to this theory there are 2 types of
employee in the organization. One is satisfied and the other is dissatisfied. The satisfied
employee is motivated from within to work harder and that a dissatisfied employee is not selfmotivated.
Theory Vs. Practice: Grameen Banks response to Herzbergs two factor theory
Theory
Herzbergs two factor theory

Practice
Yes or No?

Comment
We can also classify that there are two
types of employees, dissatisfies and
satisfiers in Grameen Bank.

Expectancy Theory: Expectancy theory based largely on Victor H. Vrooms 1964 classic Work
and Motivation. According to this theory motivational strength is determined by perceived
probabilities of success. Expectancy is ones belief or expectation that one thing will lead to
another.
Theory Vs. Practice: Grameen Banks response to Expectancy Theory
Theory

Practice
Yes or No?

Expectancy Theory

Comment
Grameen Bank does not follow this theory

Goal-setting Theory: It is a process of improving performance with objectives, deadlines or

quality standards. Accordingly goal-setting is acknowledged today as a respected and useful
motivational theory.
Theory Vs. Practice: Grameen Banks response to Goal-setting Theory
Theory
Goal-setting Theory

Practice
Yes or No?

Comment
Grameen Bank strongly follow this theory

Motivation through Job Design: Creating task, responsibilities best upon strategy, technology
and structure.
Strategy one: Fitting people to job
Strategy two: Fitting jobs to people
Three mechanisms are used to motivation through job design:Job rotation:Job rotation involves periodically moving people from one specialized job to
another. Such movement, prevents, stagnation other reasons for rotating personally include
compensating for a labor storage, enhancing safety, training and preventing fatigue.
Job enlargement: It is a process of combining two or more specialized task in a work flow
sequence into a single job.

Job enrichment: In general terms job enrichment is re-designing a job to increase its motivating
potential. Job enrichment increases the challenge of ones work by reversing the trend toward
greater specialization.

Figure: How job enrichment works

Theory Vs. Practice: Grameen Banks response to Motivation through Job Design
Theory

Practice
Yes or No?

Strategy one: Fitting people

to job
Strategy two: Fitting jobs to
people

Comment
Grameen Bank set their employees to
specific jobs and train them for that, rather
than setting jobs to people
Grameen Bank set their employees to
specific jobs and train them for that, rather
than setting jobs to people

Motivation through Rewards: Rewards can be defined broadly as the material and psychological payoffs
for their performing tasks in the workplace. Mangers have found that job performance and satisfaction
may be improved by properly administered rewards.

There are 2 different categories of rewards.

Extrinsic Rewards:Extrinsic rewards are payoffs granted to the individual by other

people. Examples include money, employee benefits, promotions, recognition, status
symbols and praise.
Intrinsic Rewards: The rewards that are self-granted and internally experienced payoffs,
such as a feeling of accomplishment, are called intrinsic rewards.

Theory Vs. Practice: Grameen Banks response to Motivation through Rewards

Theory

Practice
Yes or No?

Comment

Extrinsic Rewards

Grameen Bank and its managers

motivate their employees by offering
Extrinsic Rewards

Intrinsic Rewards

Grameen Bank does not practice this

Intrinsic Rewards system much.

Employee Compensation: Compensation deserves special attention at this point because

money is the universal extrinsic reward. Moreover since labor costs are about two-thirds of
total business expenses, compensation practices need to be effective and efficient. Employee
compensations are complex areas fraught with legal and tax implications.

Motivation through employee participation:

Participative management means empowering employees to assume greater control of the
workplace. Employees may participate in goal stings, making decisions, solving problems and
resigning and implementing organizational changes. There are three approaches to employee
participation.
Quality control process:
Quality control circles, commonly referred to as QC circles, are voluntary problem solving
groups of 5-10 employees of same work area who meet regularly to discuss quality
improvement and ways to reduce costs.

Theory Vs. Practice: Grameen Banks response to Quality control process

Theory

Practice
Yes or No?

Quality control process

Comment
This process most often happens when
situations trigger to be done so

Open-book management:
It involves opening a companys financial statements to all employees and providing the
education that will enable them to understand how the company makes money and how their
actions affect its success and bottom line.

Figure: the four S.T.E.P approach to open-book management

Flexible work schedule: Its a work scheduling plan that allows employees to determine their
own arrival and departure times within specific limits.

Theory Vs. Practice: Grameen Banks response to Flexible work schedule

Theory

Practice
Yes or No?

Flexible work schedule

Comment
Grameen Bank follows Governments
rule for work schedule, which is not
flexible

Family support services: Family friendly companies recognize that employees have lives and
priorities outside the workplace and make appropriate accommodations. They strive to help
their employees achieve a productive and satisfying work/life balance with supportive policies,
programs and culture.
Wellness programs: Progressive companies are coming to the rescue with wellness programs
featuring a wild range of offerings. Among them are stress reduction, healthy eating and leaving
clinics, quit-smoking and weight loss programs, exercise facilities, message breaks, behavioral
health counseling, health screening etc. The ultimate objective is to help employees achieve a
sustainable balance between their personal lives and work lives, with win-win benefits all
around.
Theory Vs. Practice: Grameen Banks response to family support services and wellness programs
Theory

Practice
Yes or No?

Comment

Family support services

Grameen Bank provides these services

Wellness programs

Grameen Bank provides these services

Controlling
Control is the process of taking the necessary preventive or collective actions to ensure that the
organizations missions and objectives those are accomplished as effectively and efficiently as
possible.
Controlling process: Controlling is the key factor of evaluating the performance.

Figure: Performance Management

Theory Vs. Practice: Grameen Banks response to controlling process
Theory
Controlling process

Practice
Yes or No?

Comment
Grameen Bank measure the
performance of the employees through
the controlling model, and takes
necessary steps if required.

Influence:
The conduct, courses of action taken by specific person, entity or organization to alter
behavioral level of other person is called influence.
Motives of influence
-selfish interest
-to get any objectives done
-to establish effectiveness and efficiency
-to manipulate the behavioral level of other

Power: Its the ability to marshal the human, informational and material resources to get
something done.
Five Bases of Power

Reward power: having the ability to grant rewards.

Coercive power: gaining compliance through threats or punishment.

Legitimate power: gaining compliance based on the power associated with holding a
superior position.

Referent power: gaining compliance based on charisma or personal identification.

Expert power: gaining compliance based on the ability to dispense valued

information.
Theory Vs. Practice: Grameen Banks response to power and influence
Grameen Bank

Practice of influence

Practice of power

Empowerment: Empowerment occurs when employees are adequately trained, provided with
all relevant information and the best possible tools, fully involved in key decisions, and fairly
rewarded for results.
Leadership:it is a systematic approach by which the planners influence or authorizing some
power to control the targeted group to achieve the organizational goal.
Classification of leadership:
Formal leadership: it is the process of influencing relevant others to pursue official
organizational objectives.
Informal leadership: it is the process of influencing others to pursue unofficial
objectives that may or may not serve the organizations interest.
Theory Vs. Practice: Grameen Banks response to formal and informal leadership
Formal leadership

Informal leadership

Grameen Bank

Evolution of leadership theory:

Figure: Evolution of leadership approaches

1. Trait Theories:
Similar in some ways to "Great Man" theories assume that people inherit certain qualities and
traits that make them better suited to leadership. Trait theories often identify particular
personality or behavioral characteristics shared by leaders. If particular traits are key features
of leadership, then how do we explain people who possess those qualities but are not leaders?
This question is one of the difficulties in using trait theories to explain leadership.

Basic concepts of Trait theory

Emotional Intelligence (EI)
Dependence and reliability
Adjustment between short term and long term goals
Transparent and viable system
2. Behavioral Theories:
Behavioral theories of leadership are based upon the belief that great leaders are made, not
born. Rooted in behaviorism, this leadership theory focuses on the actions of leaders not on
mental qualities or internal states. According to this theory, people can learn to become leaders
through teaching and observation.
Behavioral Styles Theories of Leadership
The Ohio State Model: leaders efforts to get things organized and get things
done considering the degree of trust, friendship, respect, and warmth that the leader extended
to subordinates.

Figure: the Ohio state model

The Leadership Grid: The belief that there is one best style of leadership. The Concern for
production is the desire to achieve greater output, cost-effectiveness, and profits and the
concern for people in this theory is promoting friendships, helping coworkers get the job done,
and attending to things that matter to people.

The Leadership Grid Styles

Figure: Blake and McCanses leadership Grid

9, 1 style: primary concern for production; people secondary.

1, 9 style: primary concern for people; production secondary.

1, 1 style: minimal concern for production or people

5, 5 style: moderate concern for both production and people to maintain the status
quo.
9, 9 style: high concern for both production and people (commitment, trust, and
teamwork)

Situational Theories of Leadership:

It is convinced that no one best style of leadership exists; some management scholars have
advocated situational or contingency thinking.
Fiedlers Contingency Theory:
Contingency theories of leadership focus on particular variables related to the
environment that might determine which particular style of leadership is best suited for
the situation. According to this theory, no leadership style is best in all situations.
Success depends upon a number of variables, including the leadership style, qualities of
the followers and aspects of the situation.
Performance of the leader depends on
The degree to which the situation gives the leader control and influence
(favorableness of the situation).
The leaders basic motivation to either accomplish the task or having
supportive relationships with others (task or relationship motivation).
The challenge is to match the leader with a suitable situation: easier to move
the leader than to change the leaders style.

Transformational Leadership Theory:

Transformational leaders are capable of charting new courses for their organization.
Are visionaries who challenge people to do exceptional things, above and beyond the plan?
Monitor people to so they do the expected, according to plan in order to maintain the status
quo.
Get people to do things by offering a reward or threatening them with a punishment.
Theory Vs. Practice: Grameen Banks response to leadership theories
Grameen
Bank

Trait Theories

Behavioral
Theories

Situational Theories
of Leadership

Transformational
Leadership Theory

Group Dynamics & Team Work

Group: In order to achieve the predetermined or pre-specified target or goal, if two or more
individuals intend to interact with others with one another with the same norms and
approaches depending on same purpose.
Types of groups:
1. Formal group
2. Informal group
Formal group:If two or more individuals intend to interact with others with one another with
the same norms and approaches depending on business purpose, this type of group is called
formal group.
Informal group:If two or more individuals intend to interact with others with one another with
the same norms and approaches depending on non-business purpose, this type of group is
called formal group.

Figure: Stages of group development

Theory Vs. Practice: Grameen Banks response to group development
Theory
Group development

Practice
Yes or No?

Comment
Grameen bank forms different types of
group based on the situation. And these
groups are developed throughout
several stages gradually

Merger: When two or more companies combine with each other to start a new business in
order to diversify risk and to maximize profit, then this type of business is called merger.
Types of Merger:
1. Horizontal integration
2. Vertical integration
3. Conglomerate merger

Significance of merger:

Risk diversification
Existence in the market
Managerial motives
Organizational commitment
Productivity and growth rate

Theory Vs. Practice: Grameen Banks response to merger

Types of group
Merger

Practice
Yes or No?

Comment
Grameen Bank has not merged with any
other organization, rather it has some
partners as well as some subordinate
organizations