Mba-I-Managing Organizations & Behavior (14mba11) - Notes

Management and Organizational Behavior 14MBA11
MANAGEMENT & ORGANIZATIONAL BEHAVIOR
Subject Code: 14MBA11 IA Marks: 50

No. of Lecture Hrs. /week: 04 Exam Hrs: 03
Total No. of Lecture Hrs: 56 Exam Marks: 100
Practical Component: 01 Hour/Week
Part A- Principles of Management
Module I: Introduction (6 Hours)
Introduction: Management: Introduction, definition of management, nature, purpose and functions,

levels and types of managers, managerial roles, skills for managers, evolution of management thought,
Fayols fourteen principles of management and recent trends in management.
Module II: Planning and Organizing (12 Hours)
Planning: Nature of planning, planning process, objectives, MBO, strategies, level of Strategies, policies,
methods and programs, planning premises, decision making, process of decision making, types of
decisions, techniques in decision making.
Organizing: Organization structure, formal and informal organizations, principles of Organizations -

chain of command, span of control, delegation, decentralization and empowerment. Functional,
divisional, geographical, customer based and matrix organizations, tram based structures, virtual
organizations, boundary less organizations.
Module III: Controlling (4 Hours)
Controlling, importance of controlling, controlling process, types of control, factors influencing control
effectiveness.
Part B- Organizational Behavior
Module IV: Introduction (4 hours)
Organizational Behavior: Introduction, definition, historical development, fundamental principles of

OB, contributing disciplines, challenges and opportunities.
Department of MBA, SJBIT Page 1

Module V: Foundations of Individual Behaviour (16 Hours)
Individual behavior-Foundations of individual behavior. Ability: Intellectual abilities- Physical

ability, the role of disabilities.
Personality - Meaning, formation, determinants, traits of personality, Big five and MBTI, Personality
attributes influencing OB.
Attitude: Formation, components of attitudes, relation between attitude and behavior.
Perception: Process of perception, factors influencing perception, link between perception and
individual decision making.
Emotions: Affect, mood and emotion and their significance, basic emotions, emotional
intelligence, self-awareness, self-management, social awareness, relationship management.
Module VI: Motivation and Leadership (10 Hours)
Motivation: Meaning, theories of motivation-needs theory, two factor theory, Theory X and Y,
application of motivational theories.
Leadership: Meaning, styles of leadership, leadership theories, trait theory, behavioral theories,
managerial grid, situational theories-Fiedlers model, SLT, transactional and transformation leadership.
Module VII: Group Behavior (4 Hours)
Group Behavior: Definition, types, formation of groups, building effective teams.

Conflict-Meaning, nature, types, process of conflict, conflict resolution.
Power and politics: Basis of power, effectiveness of power tactics. The ethics of behaving
politically.
Practical Component
1. Studying organizational structures of any 10 companies and classifying them into different types
of organizations which are studied in Module 2 and justifying why such structures are chosen by
those organizations.
2. Preparing the leadership profiles of any 5 business leaders and studying their leadership qualities
and behaviors with respects to the trait, behavioral and contingency theories studied.
3. Identifying any five job profiles and listing the various types abilities required for those jobs and
also the personality traits/attributes required for the jobs identified.
Table of Contents:
MODULE NO. TOPIC PAGE NO.
I Introduction 04-16
II Planning and organizing 17-39
III Controlling 40-45
IV Introduction-Organizational Behaviour 46-53
V Foundations of Individual Behavior 54-68
VI Motivation and Leadership 69-89
VII Group Behaviour, Power and Politics 90-101

MODULE - 1
INTRODUCTION
Management-An Introduction
Management is art of bringing the resources in an organized manner to achieve a predetermined
results or output. Management is also considered a process because it involves a series of
interrelated functions like Planning, Organizing, Staffing, Directing and Controlling. .
Management is a group activity where managers along with team members work to achieve the
objectives of the group.
The economists consider management as a resource like land, labour, capital and organization.
Management is also considered as a Team. It is because as a group of persons, management consists
of all those who have the responsibility of guiding and coordinating the efforts of other persons.
These persons are called as managers who operate at different levels of authority. Management has
also emerged as a specialized branch of knowledge. It comprises principles and practices for
effective management of organizations.
According to F.W Taylor Management is the art of knowing what you want to do and then seeing
that it is done in the best and cheapest way. Henry L. Sisk, a management book author defines
Management as the coordination of all resources through the process of planning, organizing,
directing and controlling in order to attain stated objectives.
Management-Definition.
Management is the process of designing and maintaining an environment in which individuals,
working together in groups, efficiently accomplish selected aims.
Some of the definitions of Management by leading management thinkers and practitioners are:
Management is the coordination of all resources through the process of planning, organizing,
directing and controlling in order to attain stated objectives.- Henry L. Sisk
Management is the art of knowing what you want to do and then seeing that it is done in the best
and cheapest way.- F.W Taylor
Management is guiding human and physical resources into dynamic organizational units which
attain their objectives to the satisfaction of those served and with a high degree of morale and sense
of attainment on the part of those rendering service.- American Management Association.
Management is a multipurpose organ that manages a business and manages managers and
manages workers and work. Peter Drucker.
Nature and Purpose of Management.

Management is both Art and Science.
Management as a Science
Science may be described as a body of knowledge based on proper findings and exact principles
and is capable of verification. In Management also we have scientifically verified principles which

are universal in nature. But management is not as exact science like physics, chemistry, biology,
astronomy etc. Management can be called more as a social science as it deals with the people and
it is very difficult to predict human behavior accurately.
Management as an Art
Art is bringing about of a desired result through the application of skill. Management is skillful
application of knowledge which entirely depends on the capability of a person which comes from
within a person and is learned from practice and experience. In this sense, management is certainly
an art as a manager uses his skill, knowledge and experience in solving various problems.
Management is a Combination of Art and Science

According to American Society of Mechanical Engineers. "Management is the art and science of
preparing, organizing and directing human efforts to control the forces and utilize the material of
nature for the benefit of men. It is because management knowledge exhibits characteristics of both
art and science.
Management as a Profession
A profession possesses the characteristics like: a body of principles, specialized body of knowledge,
code of conduct, charging of fees, formalized methods of acquiring training and experience and a
statutory association or institution which regulates the profession.
Some of the characteristics of Management are as follows:
Management is goal oriented. It is a means to achieve certain goals. The basic
goal of management is to ensure efficiency and economy in the utilization of
human, physical and financial resources.
Management is universal and is an essential element of every organized activity
irrespective of the size or type of activity.
Management is an integrative force which reconciles the individual goals with
organizational goals.
Management is a social process which is done by people, through people and for
people. It is a social process because it is concerned with interpersonal relations.
Management is multi-disciplinary. It depends upon wide knowledge derived
from several disciplines like- engineering, sociology, psychology, economics etc.
Management is a dynamic and continuous process.
Management is intangible as it cannot be seen but its presence can be felt
everywhere in the form of results.
Management is both an art as well as science. It contains a systematic body of
theoretical knowledge and it also involves the practical application of such
knowledge.
Functions of Management.

The five main managerial functions around which managerial knowledge is organized are:
Planning A management function that involves the process of defining goals,
establishing strategies for achieving those goals and developing plans to integrate
and co-ordinate activities
Organizing The process of presenting formal relationships among people and

resources to accomplish goals, or the process of grouping activities and resources
in a logical or systematic manner. The process of ensuring that the organization
has qualified employed available at all levels to meet its short and long term
objectives or goals
Staffing The process of hiring and developing the required personnel to fill in
various positions in the organizations. It involves estimating the number and
type of personnel required, recruiting and developing them and maintaining
and improving their competence and performance.
Leading Influencing the team members to work together to achieve the

organization goals or objectives. Coordination and division of the task to the
fellow members along blend with authority and delegation plays a vital role.
Controlling It involves the comparison of the actual results with the standard
results. The process of controlling involves, verifying whether the activities
performed are in conformity with the plans made, instructions given and results
expected. Thus, through controlling process, the manager ensures an efficient
execution of plans and successful accomplishment of organizational goals. The
process of management starts with planning and terminates in controlling.
Levels of Managers.
Top-level Managers
Middle-level managers
Lower- level or Supervisory Level
The top level management consists of Board of Directors, Managing Directors and General
Managers. It is the highest level in the managerial hierarchy and the ultimate source of

authority in the organization. The top level managers are accountable to the owners i.e. the
shareholders and responsible for overall management of the organization.
The major functions of the top level management are as follows:
To decide corporate goals for the entire organizations.
To make corporate plans.
To decide the structure of the organization.
To select key officials and executives for the Company.
To maintain liaison with outside stakeholders such as government, trade union
and trade associations.
To formulate basic policies and providing direction and leadership to the
organization as a whole.
The middle-level management consists of departmental managers, deputy managers,
Assistant managers etc. These executives are mainly concerned with the overall functioning of
their respective departments. They act as a link between top and lower level managers.
The major functions of the middle level management are as follows:
To prepare a departmental plan covering all activities of the department within the
basic framework of the corporate plan.
To establish departmental goals and decide upon various means and way to reach
upon those goals.
To issue detailed orders and instructions to the lower level managers and
coordinate the activities of various work units at the lower level.
Middle level managers explain and interpret policy decisions made at the top level
to lower level managers.
The lower level management also known as supervisory management consists of factory
supervisors, superintendents, foreman, sales supervisors, accounts officers etc. They issue orders
and instructions and supervise day- to- day activities of the workers.
The major functions of the lower level management are as follows:
Planning of day to day work.
Supervising and guiding workers.
Sending reports and statements to higher authorities.
Communicating the grievances and suggestions of workers to higher
authorities.
Maintaining close personal contacts with workers to ensure discipline and
team work.
Types of Managers.
The functions performed by managers can also be understood by describing different
types of management jobs. The management jobs discussed here are as follows:
Functional and General Managers

Functional managers supervise the work of employees engaged in specialized activities such as
accounting, engineering, information systems, food preparation, marketing, and sales. A functional
manager is a manager of specialists and of their support team,
such as office assistants.
General Managers are responsible for the work of several different groups that perform a variety of
functions. The job title plant general manager offers insight into the meaning of general
management. Reporting to the plant general manager are various departments engaged in both
specialized and generalized work such as manufacturing, engineering, labour relations, quality
control, safety, and information systems.
Administrators
An administrator is typically a manager who works in a public (government)or non-profit
organization, including educational institutions, rather than in a business firm. Among these
managerial positions are hospital administrator and housing administrator. An employee is not an
administrator in the managerial sense unless he or she supervises others.
Entrepreneurs and Small-Business Owners

An entrepreneur is a person who founds and operates an innovative business. After the entrepreneur
develops the business into something bigger than he or she can handle alone or with the help of
only a few people, that person becomes a general manager.
The owner and operator of a small business becomes a manager when the firm grows to include
several employees.
Team Leaders
Team leader is a manager who coordinates the work of a small group of people while acting as a
facilitator or catalyst. Team leaders are found at several organizational levels and are sometimes
referred to as project managers, program managers, process managers and task force leaders
Managerial Roles.
A manager is one, who contributes to the organizational goals indirectly, by directing the efforts of
others and not by performing the task himself .Role is defined as the pattern of behavior, which is,
defined for different position. It depends on formal authority. A role is a set of behavior; rights and
obligations conceptualized in a social situation or expected behavior that is associated with a
particular position or a status.
According to Mintzberg managerial roles can be classified as follows:
Interpersonal roles:
Figure head: Performs symbolic duties of a legal head or social nature.Represent his/her
Organization. Signs certain documents. Attends events to add dignity and status to the
organization.

Leader: Builds relationship with subordinates and communicate with, motivates and coach them.
Determines the atmosphere of the work environment. Acts as a role model. Gives the organization
direction and purpose. Makes strategic decisions.
Liaison: Maintains networks of contacts outside work unit that provide help and information.
Maintains information links both inside and outside the organization. Builds rapport and cultivates
contacts with external parties. Calls meetings to share information with other departments. Issues
memos to keep the communication links flowing.
Informational roles:
Monitor: Seeks internal and external information about issues that can affect organization. He
scans the environment and collects the information. Seeks new information. Deals with
information. Analyzes the information. Prepares the information to go to other departments
Disseminator: Transmits information internally, that is obtained from either internal or external
sources. Keeps communication flowing throughout the departments. Send memos and reports to
other departments. Passes information to the sub-ordinates.
Spokesperson: Transmits information about organization to outsiders. Transmits Information to

outside sources. Communicates verbally, nonverbally, and through writing.
Decisional roles:
Entrepreneur: Acts as an initiator, designer and encourager of change and innovation. Initiates
improvement projects. Identifies new ideas. Delegates responsibility to others.
Disturbance handlers: Takes corrective action when organization faces unexpected major
difficulties. Deals with involuntary changes. Reacts quickly in high-pressure situations.
Acts as a mediator between conflicting subordinates or departments. Also seeks solution to
various problems.
Resource allocation: Distributes resources of all types, including time, finding equipment and
human resources. Determines where to focus efforts. Allocates resources.
Negotiator: Represent the organization in major negotiations affecting the managers areas
of responsibility. Represents the organization during negotiations. Negotiates contracts with
new or existing employees and clients.
Skill for managers.

Technical Skills- These skills are of greatest importance at the supervisory level. These skills refer
to the ability and knowledge in using the equipment, technique and procedures involved in
performing specific tasks. These skills require specialized knowledge and proficiency in the
mechanics of particular job.
Human skills- These skills are helpful in the frequent interactions with subordinates. These skills
consist of the ability to work effectively with other people both as individuals and as members of a
group. These skills require a sense of feeling for others and capacity to look at things from others
point of view.
Conceptual and design skills: These skills comprise the ability to see the whole organization and
the inter relationships between its parts. Conceptual skills also include the competence to
understand problems in all its aspects .These skills are not critical for lower level supervisors. At
the middle management level, the need for technical skills decreases, human skills are still
essential, while conceptual skills gain in importance. At the top management, conceptual and design
abilities and human skills are especially valuable, but there is relatively little need for technical
abilities.
Evolution of the Management Thought.
The Classical approach - Scientific Management & Administrative management:

Scientific management implies the application of scientific methods of study and analysis to the
problems of management. It is a systematic and thoughtful approach to the job of management as
compared to the rule of thumb, or trial and error approach. Fredrick Winslow Tayloris known as
the father of scientific management. According to him, Scientific management means knowing
exactly what you want your men to do and seeing that they do it in the best and the cheapest way.
Scientific management is based upon the following principles-

Science not rule of Thumb.
The first principle of scientific management requires scientific study and analysis of each element
of a job in order to replace the old rule of thumb or trial & error approach.
Scientific selection, training and development of workers.

This principle requires that workers should be selected and trained in accordance with the
requirements of the job, to be entrusted to them. Instead of allowing workers to learn themselves,
systematic training and development programmes should be designed to improve their skills and
efficiency.
Close cooperation between workers and management.

Close cooperation should be developed between workers and management to ensure that work is
done in accordance with the developed scientific principles.
Equal division of work and responsibility.

Management should decide the methods of work, working conditions, time for completion of work
etc. instead of leaving them to the discretion of the workers. Work and responsibilities should also
be equally divided among the workers.
Maximum prosperity for both employers and employees.

Maximum output and optimum utilization of resources will bring higher profits to the employees
coupled with higher wages and salaries for employees.
Mental revolution.
It means a complete change in the outlook of both management and workers with respect to their
mutual relations and in relation to work effort.
Administrative management was concerned primarily with how organizations should be managed
and structured. The French businessman Henri Fayol and the German scholar Max Weber were the
main contributors to administrative management. Based on his practical experience, Fayol
developed14 management principles. Henry Fayol is referred as the father of modern management
theory. He recognized the need for teaching management as a discipline and formulated 14
principles of management. He in his book published in 1916 divided industrial activities into six
groups- technical, commercial, financial, security, accounting and managerial.
The Neo- Classical Approach -The Behavioural and Human Relations Approach:
The behavioural approach to management emphasizes improving management through the
psychological makeup of people. In contrast to the largely technical emphasis of scientific
management, a common theme of the behavioural approach focuses on the need to understand
people. The behavioural approach is sometimes referred to as the human resources approach
because of the focus on making optimum use of workers in a positive way, such as making jobs
motivational. Three cornerstones of the behavioural approach are the Hawthorne studies, Theory X
and Theory Y, and Maslows Need hierarchy.
Elton Mayo, F.J Roethlisberger and others undertook the famous experiments at the Hawthorne
plant. They found in the experiments that improvements in productivity was due to social factors
such as- morale, satisfactory inter - relationships between members of a work group (a sense of
belonging) and effective management- a kind of managing that takes into account human behavior,
especially group behavior and serves it through such inter personal skills as motivating, counseling,
leading and communicating.
The Quantitative Approaches to Management

The quantitative approach to management is a perspective on management that emphasizes the use of
a group of methods in managerial decision making, based on the scientific method. Today, the
quantitative approach is often referred to as management science or operations research (OR).
Frequently used quantitative tools and techniques include statistics, linear programming, network
analysis, decision trees, and computer simulations.
The Systems Perspective
The systems approach to management is a concept which views an organization as a set of different
independent parts working together in interrelated manner to accomplish a set of objectives. If you
adjust one part of the system, other parts will be affected automatically. For example, suppose you
offer low compensation to workers. According to the systems approach, this action will influence
product quality. The low quality workers who are willing to accept low wages will produce low
quality goods.
The entire system can be broken into three parts namely - Input, Process & Output.
Inputs consist of resources like raw materials, funds, technology, etc.
The process refers to activities related to management, technology, operations, etc.
Outputs are the outcome or results in the form of product & Services.
The response or feedback in a system help in correcting the errors found in the processes.
The Contingency Approach
The contingency approach to management emphasizes that there is no single best way to manage
people or work in every situation. A method that leads to high productivity or morale under one set
of circumstances may not achieve the same results in another. The strength of the contingency
approach is that it encourages managers to examine individual and situational differences before
deciding on a Course of action. The contingency approach is derived from the study of leadership
and organization structures. With respect to leadership, psychologists developed detailed
explanations of which style of leadership would work best in which situation. The main features of
Contingency approach are
Contingency approach is situation oriented urging upon the managers to study, analyse
and diagnose the situation.
After the analysis of the situation, the managers are expected to prepare inventories of
management theory, principles, techniques and concepts.
The validity and applicability of management tools and techniques is to be examined.
The environment of an organisation is ever changing and the organization continuously
interacts with the dynamic environment.
Management style and practise should match the requirements of the job.
Modern Management Thought:

Modern management gurus likePeter Drucker gave the concept of Management by Objectives
(MBO), W. Edwards Deming introduced quality control measures, William Ouchi gave the concept

of Theory Z and Thomas Peters & Robert Waterman identified characteristics of companies they
considered excellent.
Henri Fayols Fourteen Principles of management.

Henry Fayol is considered the father of modern management thought. He recognized a widespread
need for principles and management teaching. He identified 14 principles and believed that these
principles are flexible, not absolute, and must be usable regardless of changing conditions.
These principles are:
Division of Work Division of work among the employees helps to avoid waste of time and effort
caused by changes from one work process to another.
Authority and Responsibility Authority and responsibility are co-existent and they must go hand
in hand. Managers must have the rights to give orders, and authority gives them this right.
Discipline It implies compliance with organizational directives and rules, orders and instructions of
superior and to cooperation with fellow workers.
Unity of Command According to this principle, one subordinate should get orders and work
related instructions from only one superior. It helps in maintaining discipline among employees,
controlling their activities, fixing responsibility and not allowing them to side track responsibility.
Unity of direction All activities should be related towards common goals. All activities should also
be included in single plan to be implemented by particular manager. This principle implies that
there should be one head and one plan for a group of activities having the same objective.
Subordination of individual interest to general interest Organization is bigger than individuals.

The interest or goals of the organization must prevail upon the personal interest of individuals.
According to this in every work setting each employee should sacrifice and subordinate his personal
interest and goal for achieving the goals of the organization.
Remuneration The quantum and methods of remuneration paid to employees should be

satisfactory to both employers and employees. Employees should be paid fairly and reasonably in
accordance with their contributions.
Centralization The relationship between centralization and decentralization of authority is a matter

of proportion and optimum balance should be maintained according to the needs of the
organization.

Scalar Chain It refers to the chain of superiors ranging from ultimate authority to the lowest rank.
It is an unbroken line of command from the top to the bottom of the organization. It creates a chain
of superior-subordinate relationship.
Order There must be order in an enterprise which facilitates smooth flow of work and efficient use
of resource materials, machine tools, equipments etc. as well as employees.
Equity Management should treat all employees with justice and kindness. Equity, Fairness and
impartiality should be assured to all employees working in the organizations
Stability of tenure of personnel A reasonable security of service should be provided to all

employees. Stability of tenure helps to develop loyalty and attachment on the part of employees.
Initiative Employees should be provided an opportunity to develop and use initiative for solving
work related problems.
Espirit-de-Crops It means to build team spirit among employees so that they work in harmonious
manner with proper mutual understanding so as to make their respective contributions for achieving
goals.
Recent trends in management
Globalization and Manager.

The recent spate of changes in the economies of the world by the creation of World Trade
Organization ( WTO ), economic liberalization and trend towards globalization have brought many
opportunities and threats for the modern organizations. The modern management professionals
cant ignore such changes, rather they have to design and execute innovative mechanisms of
developing skills and competencies of human resources to prepare them to accept the emerging
challenges.
Information Technology.
With the fast expansion of technologies supporting the implementation of Information Technology
(IT) in organizations, Knowledge Management (KM) has come assume greater significance. KM
can be defined as a systematic way of leveraging information and expertise to improve
organizational innovation, responsiveness, productivity and competency .It is continuous activity
involving acquiring, creating, packaging, distributing, applying and maintaining knowledge.
Corporate Social responsibility.

It is defined as the obligation of business executives as decision makers to take decisions and
actions which offer not only consumer satisfaction but also citizen satisfaction and welfare.
Business decisions and actions now promote to protect as well as improve the welfare of the society
as a whole rather than only the narrow business interests of economic performance and economic
profitability.

Need for Social Responsibility:

Pressure of Consumers.
Ever increasing pollution.
Pressure of organized and knowledge labour.
Recognition of human values in business.
Demand for better quality of life
Development of multinational business and world market.
Demand for reconciling diverse interests of many stakeholders in business.
Benchmarking.
Benchmarking is the process of determining who is the very best, who sets the standard, and
what that standard is.
Need for Bench Marking:
Know the best practices followed by the leading companies.
Compare ones own practices and find out weaknesses.
Improve substantially upon the existing practices.
Educate managers and workers about the best practices and motivate them to follow.
Implement the practices most suitable to improve competitive strength.
Business Process Reengineering (BPR).

The concept of BPR was founded and experienced by Michael Hammer and James Champy. BPR is
the fundamental rethinking and radical redesign of business processes to achieve dramatic
improvements in critical contemporary measures of performance, such as cost, quality, service, and
speed.
Business ethics and management.
Business Ethics refers to carrying business as per self-acknowledged moral standards. It is actually a
structure of moral principles and code of conduct applicable to a business. Business ethics are applicable
not only to the manner the business relates to a customer but also to the society at large. It is the worth of
right and wrong things from business point of view.
Business ethics not only talk about the code of conduct at workplace but also with the clients and
associates. Companies which present factual information, respect everyone and thoroughly adhere to the
rules and regulations are renowned for high ethical standards. Business ethics implies conducting
business in a manner beneficial to the societal as well as business interests.
Stress management.

Employees stress is a growing concern for organizations today. Stress can be defined as a lively
circumstance in which people face constraints, opportunities, or loss of something they desire and for
which the consequence is both unpredictable as well as crucial. Stress is the response of people to the
unreasonable/excessive pressure or demands placed on them.
Stress is not always negative. It may also bring out the best in individuals at times. It may induce an
individual to discover innovative and smarter way of doing things. This positive dimension of stress is
called as eustress.

MODULE 2
PLANNING AND ORGANIZING:
Planning- Meaning and Nature

A plan is a course of action to be taken in future. Planning is the process of deciding in advance
what is to be done, how it is to be done, where, when and whom. Planning involves selecting
missions and objectives as well as the actions to achieve them, which require decision making.
Planning is a mental exercise that requires imagination, foresight and sound judgments.
Features of Planning
Planning is goal-oriented.
Planning is future-oriented.
Planning is an intellectual process.
Planning is a primary function and precedes organizing, staffing, directing and controlling.
Planning is pervasive i.e. it is required in all types of organizations and at all levels of management.
Planning is a continuous process.
Plans are prepared to achieve the objectives in the most efficient and effective ways.
Importance of Planning
Planning makes the goals and objectives clear. Plans serve as guide for deciding what actions
should be taken.
Planning helps the organizations to keep on the right path.
Planning reduces risk and uncertainty. Planning enables business enterprises to predict future events
and prepare to face the unexpected events.
Planning improves efficiency of operations as it helps to eliminate all types of waste and to achieve
optimum utilization of all resources.
Planning provides the standard against which the actual performance can be measured and
evaluated.
Planning facilitates better decision making.
Planning ensures that activities of different individual, groups and departments are coordinated.
Planning process
Following are the steps in the planning process:
Being Aware of Opportunities

Establishing Objectives
Developing Planning Premises

Determining alternative courses

Evaluating Alternative Courses
Selecting a Course
Selecting the course of action we will pursue.
Derivative plans.
After the basic plan is decided, the detailed plans which include policies, procedures, rules,
programmes, schedules, budgets etc. are derived.
Communicating the plan. Plans should be communicated to the subordinates to earn their support in
the execution of plans.
Reviewing the Planning Process. Continuous evaluation of plans and the process of planning helps
to detect the drawbacks or short-comings of the plans. All the plans should be reviewed from time
to time in the light of current circumstances and necessary action should be taken to keep them up
to date.
Objective of Planning.
Objectives and Goals are desired outcomes or targets. They guide management decisions and form
the criterion against which work results are measured. Thats why theyre often described as the
essential elements of planning. We have to know the desired target or outcome before we can
establish plans for reaching it. Plans are documents that outline how goals are going to be met.
They usually include resource allocations, schedules, and other necessary actions to accomplish the
goals. As managers plan, they develop both goals and plans.
The main features of objectives are:

Objectives are the basis for all other plans.
Objectives are multiple in nature i.e. every organization has several objectives
rather than one goal.
Objectives should be arranged in hierarchy. Lower level objectives serve as a
means to the higher level objectives.
Objectives may be long term as well as short time.
Objectives may be specific or general.
The achievement of objectives is essential for the survival and growth of business. The benefits and
significance of objectives are as under:
Objectives provide direction to the individual task and efforts of the
organization.
Objectives unify the essence of planning such as policies, procedures,
programmes and budgets. Well defined objectives help in decision making.

Objectives make jobs worth-while and meaningful. The organizational objectives

motivate employees to accomplish their targets in terms of divisional, functional
and individual.
Well- designed objectives are helpful in effective delegation of authority and
also provide opportunity for decentralization.
Objectives are also tool for control as objectives create standards with the help of
which actual performance can be achieved. Performance can be judged in terms
of how the organization is moving together for achieving objectives.
Objectives enable people to coordinate their efforts voluntarily, while working
within their respective area of business.
Some of the essential features/principles of objectives are:

Objectives must be clear and specific
Objectives must be appraised and measured.
Objectives should be results and target oriented.
Objectives should be balanced in such a way that they should maintain a balance
in a variety of needs and goals.
The objectives must be realizable and acceptable.
The objectives must be flexible and constantly reviewed and revised as per
environment conditions.
Management By Objectives (MBO)

Management by Objectives (MBO) is a management concept which involves each member of the
organization. MBO harmonizes the goal of an individual with the Organizations goal. Management
Guru Peter F. Drucker first popularized this term in his 1954 book The Practice of Management.
Management by Objectives (MBO) is a systematic application of goal setting and planning to help
individuals and firms become more productive. A MBO program usually involves sequential steps,
which are cited in the following list.
Establishing organizational goals

Top-level managers set organizational goals to begin the entire MBO process. Quite often these
goals are strategic. After these broad goals are established, managers determine what the
organizational units must accomplish to meet these goals.
Establishing unit objectives

Unit heads then establish objectives for their units. A cascading of objectives takes place as the
process moves down the line. Objectives set at lower levels of the firm must be designed to meet
the general goals established by top management.
Reviewing group members proposals

At this point, group members make proposals about how they will contribute to unit
objectives.Each team member is given the opportunity to set objectives in addition to those that
meet the strategic goals.
Negotiating or agreeing
Managers and team members discuss together at this stage to either agree on the objectives set by
the team members or negotiate further.
Creating action plans to achieve objectives

After the manager and team members agree upon objectives, action plans must be defined.
Sometimes the action plan is self-evident. For example, if your objective as a call-center manager is
to hire three new customer service representatives this year, you would begin by consulting with the
human resources department.
Reviewing performance.
Performance reviews are conducted at agreed- upon intervals. (A semiannual or annual review is
typical.) Employees who attain most of the major objectives receive good performance reviews.
When objectives are not attained, the manager and group member mutually analyze what went
wrong. Equally important, they also discuss the corrective actions. New objectives are then set for
the next review period. Because establishing new objectives is part of an MBO program, the
process of management by objectives can continue for the life of an organization.
Strategies for Planning.
A strategy is an integrated overall concept and plan of how the organization will achieve its goals
and objectives. It includes the organizations plan or comprehensive program, for achieving its
vision, mission, and goals in its environment. Michael Porter, a leading authority, provides useful
guidelines for managers who need to develop strategy. According to Porter, true business strategy
has four components. These are:
Strategy Involves More Than Operational Effectiveness A starting point in understanding the nature
of business strategy is to understand that it involves more than operational effectiveness or being
efficient. Although improvements in operations may often be dramatic, they rarely lead to
sustainable improvements in profitability.
Strategy Rests on Unique Activities

A Sustainable Strategic Position Requires Trade-Offs
After a firm finds a strategic position (or place in the market), it can best sustain it by making trade-
offs with other positions. Trade-offs are necessary when activities are incompatible. A good
example is shopping through the Internet. If you want the convenience of shopping anytime from
your home or office, you sacrifice interacting with a sales associate who can answer your questions.
Another trade-off with e-commerce (and shopping by phone) is that defective or ill-fitting
merchandise must be repacked and shipped back to the merchant
Level of strategies.
The different levels of strategies are:
Corporate-level Strategies - Three examples of corporate-level strategies are strategic alliances,
diversification, and sticking to core competencies.
Strategic alliances-A widely used business strategy calls for forming alliances or sharing resources
with other companies to exploit a market opportunity.
Diversification of goods and services- Dont put all your eggs in one basket is a standard
business strategy. One of the many reasons that diversification is an effective strategy is that it
serves as a hedge in case the market for one group of products or services softens. Another
advantage of diversification is that it can lead to immediate growth at the same time.
Sticking to core competencies- It may be valuable not only to avoid putting all your eggs in one
basket, but also to guard against spreading yourself too thin. Many firms of all sizes believe they
will prosper if they confine their efforts to business activities they perform besttheir core
competencies. At one time Wal-Mart attempted to lure higher income shoppers with trendier
fashions; the experiment flopped, eroding profit. The company then returned to its low-price roots,
which helped it prosper during the Great Recession.
Business-Level Strategies -Three examples of business-level strategies are product differentiation,

focus, and cost leadership.
Product Differentiation - A differentiation strategy attempts to find a niche or offer a product or

service perceived by the customer as different from available alternatives.
Focus- In a focus strategy, the organization concentrates on a specific regional or buyer market. To gain
market share, the company uses either a differentiation or a low-cost approach in a targeted market.
Cost leadership- The cost leader provides a product or service at a low price in order to gain
market share.
Functional -Level Strategies -Two examples of functional-level strategy are finding and retaining
the best people and moving at high speed.
Find and retain the best people- A foundation strategy for becoming and remaining a successful
organization is to find and retain competent people. Such people will help the organization develop
products and services that are in demand, and they will find ways to reduce costs and behave
ethically. Concentrating on hiring talent can be considered a functional level strategy because
people are usually hired into specific departments.
a) High speed- High-speed managers focus on speed in all of their business activities,
including product development, sales response, and customer service. Knowing that
time is money, they use time as a competitive resource.
Policies, Methods and Programs for Planning.
Policies
Policies are general guidelines to follow when making decisions and taking action. Many policies
are written; some are unwritten, or implied. Policies, designed to be consistent with strategic plans,
must allow room for interpretation by the individual manager. An important managerial role is
interpreting policies for employees. Policies are developed to support strategic plans in every area
of the firm. Many firms have strict policies against employees accepting gifts and favours from
vendors or potential vendors.
Policies provide following advantages to the business-
Policies speed up decision making.

Proper policies are the base and main instrument for the delegation of authority
and also help in decentralisation.
Policies create unity of efforts and uniformity in action and it focuses attention
on organizational objectives.
Policies helps in control as it prevent unwarranted deviations from planned
course of action.
Policies help to accomplish desired objectives.
Methods.
Some of the Planning methods are :
Brainstorming. - Brainstorming is generally superior to conventional committee meetings for rapid

generation of creative ideas. In brainstorming, team members make rapid suggestions on how to
achieve this.
Problem Trees. - For complex issues, you systematically identify causes and effects with the help of
a problem tree. A problem tree is a diagram of boxes and arrows that show causes at a low level,
leading to effects at a higher level (Worksheet 9). The causes are the roots of the tree, and the
effects are the fruits. Your team lists different problems, and then connects them with arrows to

show linkages. You repeat this several times until your problem tree is complete and logical. The
problem tree directs your attention to fundamental, deep-rooted explanations.
Logical Framework. - The logical framework encourages planners to specify cause-and-effect
relationships, and to explicitly state all assumptions. At the top of the framework is a clearly
defined goal. Lower levels of the framework specify the why, what, and hew to achieve this goal.
Delphi and other techniques based on collective opinions. - Several forecasting techniques rely on
group interactions to arrive at a collective opinion. In the Delphi method, different persons respond
individually and confidentially to a sequence of questions. At each stage in the sequence, the results
from the preceding questions are revealed to everyone.
Programmes for Planning A programme involves planning for future events and establishing a
sequence of required actions. In other words, a programme is a complex of objectives, policies,
procedures, task assignments, steps to be taken, resources to be employed and other elements
necessary to carry out a given course of action.
Planning Premises.
Planning is undertaken under certain planning premises. Premises are the assumptions on which
plans are formulated. A major source of premises is forecasting which indicates what is to be
expected in the future & thus provides a frame work on which plans are developed. But not all
premises are forecasts.
Factors of planning premises:

A) External premises.
B) Internal premises.
External premises:
Premises external to the organization relate to external constraints & facilitators. These areevents in
the organizations environment such as changes in social values & norms, changes inthe economy,
changes in resource availability, and changes in market place so on.
External premises includes three types-
a) General business environment
b) Factor market
c) Product market.
Business environment: It includes:

o Political atmosphere.
o Government approach towards business
o Population trends
o National income & its distribution
o Price levels
o Monetary policy
o Technological innovations
Factor market: Organizations employ many factors of production-land, labour, capital,

management etc. Forecasting is necessary in respect of the availability of these factors of
production. It includes:
o Natural resources
o Infrastructure facilities
o Raw materials & Suppliers
o Plant & equipment
o Financial facilities.
Product market. The purpose of determining & developing premises in respect of product market is
the determination of the kind of market available for organizational products & services. It
includes:
o Industry demand
o Nature of competition
o Elasticity of demand
Internal premises:
These relate to events occurring within the organization. The basic nature of these factors is that
they can be changed by managerial actions depending on the time. It includes :
Basic policies & programmers
Organization structure
Sales forecast.
Decision making and its process.
Although decision making is typically described as choosing among alternatives, that view is too
simplistic. Why? Because decision making is (and should be) a process, not just a simple act of
choosing among alternatives. The following are the eight steps in the decision-making process. This
process is as relevant to personal decisions as it is to corporate decisions. Lets use an examplea
manager deciding what laptop computers to purchaseto illustrate the steps in the process.
Step 1: Identifying a Problem

Every decision starts with a problem, a discrepancy between an existing and a desired condition.
Amanda is a sales manager whose subordinates need new laptops because their old ones are
outdated and inadequate for doing their job. Now we have a problema disparity between the
subordinates current computers (existing condition) and their need to have more efficient ones

(desired condition). Amanda has a decision to make. How do managers identify problems? In the
real world, most problems dont come with neon signs flashing problem. When her subordinates
started complaining about their computers, it was pretty clear to Amanda that something needed to
be done, but few problems are that obvious. Managers also have to be cautious not to confuse
problems with symptoms of the problem. Is a 5 percent drop in sales a problem? Or are declining
sales merely a symptom of the real problem, such as poor-quality products, high prices, or bad
advertising? Also, keep in mind that problem identification is subjective. What one manager
considers a problem might not be considered a problem by another manager. In addition, a manager
who resolves the wrong problem perfectly is likely to perform just as poorly as the manager who
doesnt even recognize a problem and does nothing. As you can see, effectively identifying
problems is important, but not easy.
Step 2: Identifying Decision Criteria

Once a manager has identified a problem, he or she must identify the decision criteria that are
important or relevant to resolving the problem. Every decision maker has criteria guiding his or her
decisions even if theyre not explicitly stated. In our example, Amanda decides after careful
consideration that memory and storage capabilities, display quality, battery life, warranty, and
carrying weight are the relevant criteria in her decision.
Step 3: Allocating Weights to the Criteria

If the relevant criteria arent equally important, the decision maker must weigh the items in order to
give them the correct priority in the decision. How? A simple way is to give the most important
criterion a weight of 10 and then assign weights to the rest using that standard. Of course, you could
use any number as the highest weight. The weighted criteria for our example are shown in
following exhibit:
Step 4: Developing Alternatives

The fourth step in the decision-making process requires the decision maker to list viable alternatives
that could resolve the problem. In this step, a decision maker needs to be creative. And the
alternatives are only listed, not evaluated just yet. Our sales manager, Amanda, identifies eight
laptops as possible choices as shown in the exhibit:
Step 5: Analyzing Alternatives

Once alternatives have been identified, a decision maker must evaluate each one. How? By using
the criteria established in Step 2. The following exhibit shows the assessed values that Amanda
gave each alternative after doing some research on them. Keep in mind that these data represent an
assessment of the eight alternatives using the decision criteria, but not the weighting. When you
multiply each alternative by the assigned weight, you get the weighted alternatives as shown in the
exhibit. The total score for each alternative, then, is the sum of its weighted criteria. Sometimes a
decision maker might be able to skip this step. If one alternative scores highest on every criterion,
you wouldnt need to consider the weights because that alternative would already be the top choice.
Or if the weights were all equal, you could evaluate an alternative merely by summing up the
assessed values for each one. (For example, the score for the HP ProBook would be 36 and the
score for the Sony NW would be 35.
Step 6: Selecting an Alternative

The sixth step in the decision-making process is choosing the best alternative or the one that
generated the highest total in Step 5. In our example, Amanda would choose the Dell Inspiron
because it scored higher than all other alternatives (249 total).
Step 7: Implementing the Alternative

In step 7 in the decision-making process, you put the decision into action by conveying it to those
affected and getting their commitment to it. We know that if the people who must implement a
decision participate in the process, theyre more likely to support it than if you just tell them what to
do. Another thing managers may need to do during implementation is reassess the environment for
any changes, especially if its a long-term decision. Are the criteria, alternatives, and choice still the
best ones, or has the environment changed in such a way that we need to reevaluate?
Step 8: Evaluating Decision Effectiveness

The last step in the decision-making process involves evaluating the outcome or result of the
decision to see whether the problem was resolved. If the evaluation shows that the problem still
exists, then the manager needs to assess what went wrong. Was the problem incorrectly defined?
Were errors made when evaluating alternatives? Was the right alternative selected but poorly
implemented? The answers might lead you to redo an earlier step or might even require starting the
whole process over.
Types of decisions.
Decisions may be classified according to different basis which are discussed below:
Routine and strategic decisions: Tactical or routine decisions are made repetitively following
certain rules, procedures and policies. Such decisions are generally taken by the managers at the
middle and lower management level. These decisions neither require collection of new data nor too
much deliberation. Strategic decisions on the other hand are more important and so they are
generally taken by the top management. The higher the level of manager, the more strategic
decisions he is required to take. These type of decisions have long term implications. Decisions are
made on the problems which are important and critical for survival, growth and developments of
organization. These decisions need more managerial judgments and experience.
Policy and Operating Decision: Policy decisions are of vital importance and are taken by the top
management. They affect the entire enterprise. Operating decisions are taken by the lower
management in order to put into action the policy decisions.

Organizational and Personal decisions: Organizational decisions are those which a manager takes
in his official capacity. Such decisions can be delegated. Personal decisions relate to the manager as
an individual and not as a member of the organization, it cannot be delegated.
Programmed decisions and Non-Programmed decisions:

Programmed decisions are made for solving the problem of routine and repetitive
in nature. Here decisions are made using pre-determined procedure and rules. Such
decisions are made for solving both simple and complex problems .Non-Programmed decisions are
made for solving unique and non-repetitive problems. Here decisions are made using experience,
creativity and innovativeness. It requires more use of judgments and decisions are made for solving
complex problems.
Individual and group decisions:

When a decision is taken by an individual in the organization, it is known as individual decision.
Such decisions are generally taken in small organizations and in those organizations where
autocratic style of management prevails.
Group or Collective decisions refer to the decisions which are taken by a group
of organizational members, say a board of directors.
Techniques in decision making

Following techniques of decision making are generally employed:
Intuition
Decision making by intuition is characterized by inner feeling of the person. He thinks about a
problem and an answer is found in his mind. The past knowledge, training and experience of the
decision maker plays an important role in intuitive decisions. But if the intuition of the decision
maker is wrong, then decision will also be incorrect.
Facts
A decision based on facts has its roots in factual data. Such decisions will be sound and proper. The
increasing use of computer has helped in systematic analysis of data. The information had become a
major tool in managerial decision making.
Experience
Past experience of a person becomes a good basis for taking decisions. When a similar situation
arises the manager can rely on his past decisions and take similar decisions. Though past experience
is a good basis but present situations should be properly analyzed and assessed before taking a
decision.
Considered opinions

Some managers use considered opinions as a basis for decision making. Opinions given by experts
are also given due weightages.
Operations research
The operations research is one of the techniques used by modern management for deciding
important matters. It includes techniques like- Forecasting Techniques, Gantt Charts and Milestone
Charts, PERT Chart, Economic Order Quantity (EOQ), Just-in-Time (JIT), Inventory Management,
Pareto diagrams, Decision Trees etc.
Linear Programming
This technique is used to determine the best use of limited resources for achieving given objectives.
Linear Programming can be used for solving problems in areas like- production, transportation,
warehousing etc.
Organizing
Organizing is defined as arranging and structuring work to accomplish organizational goals. Its an
important process during which managers design an organizations structure. Organizational
structure is the formal arrangement of jobs within an organization. This structure, which can be
shown visually in an organizational chart, also serves many purposes. When managers create or
change the structure, theyre engaged in organizational design, a process that involves decisions
about six key elements: Work specialization, Departmentalization, Chain of command, Span of
Control, Centralization and Decentralization, and Formalization.
The main purposes of Organizing are:
Divides work to be done into specific jobs and departments.

o Assigns tasks and responsibilities associated with individual jobs.
o Coordinates diverse organizational tasks.
o Clusters jobs into units.
o Establishes relationships among individuals, groups, and departments.
o Establishes formal lines of authority.
o Allocates and deploys organizational resources.
The function of organizing is performed by all managers and it is a continuous process.

Organizing as a process is a dynamic concept. The Process of Organizing involves the following
steps:
Determining Activities:
The first step in organizing is to identify and define the activities to be performed, to achieve pre -
determined objectives.
Grouping Activities:
Once activities are defined, the next step is to classify them into manageable units so that these can
be assigned to individuals. Grouping of activities is called departmentation. Related or similar
activities are grouped in the same department or division. Each division or department can be sub
divided into sections.
Assigning duties:
The various group of activities are allotted to different individuals. While assigning activities, their
abilities and aptitudes should be duly considered. Each person should be given a specific job best
suited to him and he should be made responsible for its performance. There should be a proper
match between job requirements and capabilities of people. The duty and responsibility of every
individual should be clearly defined in order to avoid duplication of work and overlapping efforts.
Delegating authority: Mere assignment of duties is not enough unless each individual is given the
authority to perform the assigned task. An individual cannot perform his duty without getting the
rights and powers to do it.
Coordinating activities: The activities and efforts of different individuals should be properly
synchronized. Coordination in the working of different departments and individuals is necessary for
team work and efficient performance.
Organization structure According to Koontz and O Donnel Organization is a structural

relationship by which an enterprise is bound together and the framework in which individual effort
is coordinated. In other words, it is the arrangement of people and tasks to accomplish
organizational goals. It is the form of every human association for the attainment of a common
purpose. The Organization structure specifies who reports to whom and who does what, and it is
also a method for implementing a strategy or for accomplishing the purpose of the organization.
Organization is the frame work through which managers operate. Sound organization is the
backbone of effective management due to the following reasons:
A sound organization enables the top management to delegate responsibility to lower levels
for routine functions. It can avoid confusion and delays as well as duplication of work and
over lapping of efforts.
Organization provides a frame work within which an enterprise can expand and grow.
A properly designed organization structure is flexible. Therefore it permits prompt
adaptation of improvement in technology.
Sound Organizations ensures that every individual is placed on the job for which he is best
suited. Thus, it helps in the optimum use of human resources.
Organizations with well-defined jobs with clear cut authority and responsibility provide the
benefit of specialization.

A sound organization structure is source of security, support and satisfaction to employees.

It provides a definite status to every member of the organization.
Organization is an important means of creating coordination among different departments of
the enterprise.
Sound organization encouragesinitiative and creative thinking on the part of the employees.
It facilitates development of managerial talent at lower levels through adequate delegation
of authority.
1. Formal and Informal Organizations
BASIS OF DISTINCTION FORMAL ORGANIZATION INFORMAL

ORGANIZATION
1. Formation Deliberately planned and Emerges spontaneously as a
created by management result of social interaction
among people.
2. Purpose To achieve planned goals of the To provide social satisfaction

organizations. to members.
3. Structure A well-defined structure of No clear-cut structure. A

tasks and relationships. complex network of relations.
4. Flexibility Rigid, Stable and predictable. Flexible, unstable and

unpredictable.
5. Focus Jobs, functions and Technical Interest and other human

aspects. aspects.
6. Standards of behavior Standards of behavior and Standards of behavior are

performance are prescribed and evolved by mutual consent
enforced by management. among members.
7. Leadership Managers act as leaders by Members voluntarily choose

virtue of their superior position. their leaders.
Formally established or official

8. Communication lines of communication. Members communicate
according to convenience.

Official structure can be shown

9. Organization Chart in the form of a chart. Unofficial structure, not shown
on the charts of the Company.
Written and Fixed

10. Rules and Regulations Oral Norms
Principles of Organizations
Chain of Command
The chain of command is the line of authority extending from upper organizational levels to lower
levels, which clarifies who reports to whom. Managers need to consider it when organizing work
because it helps employees
AUTHORITY- Authority was a major concept discussed by the early management writers; they
viewed it as the glue that held an organization together. Authority refers to the rights inherent in a
managerial position to tell people what to do and to expect them to do it. Managers in the chain of
command had authority to do their job of coordinating and overseeing the work of others. Authority
could be delegated downward to lower-level managers, giving them certain rights while also
prescribing certain limits within which to operate. Another early management writer, Chester
Barnard, proposed another perspective on authority. This view, called the acceptance theory of
authority, says that authority comes from the willingness of subordinates to accept it. If an
employee didnt accept a managers order, there was no authority. Barnard contended that
subordinates will accept orders only if the following conditions are satisfied:
1. They understand the order.
2. They feel the order is consistent with the organizations purpose.
3. The order does not conflict with their personal beliefs.
4. They are able to perform the task as directed.
RESPONSIBILITY- When managers use their authority to assign work to employees, those
employees take on an obligation to perform those assigned duties. This obligation or expectation to
perform is known as responsibility. And employees should be held accountable for their
performance. Assigning work authority without responsibility and accountability can create
opportunities for abuse. Likewise, no one should be held responsible or accountable for work tasks
over which he or she has no authority to complete those tasks.

UNITY OF COMMAND- Finally, the unity of command principle (one of Fayols 14

management principles) states that a person should report to only one manager. Without unity of
command, conflicting demands from multiple bosses may create problems.
Span of Control
A span of control is the number of people who report to one manager in a hierarchy. More people
under the control of one manager means a wider span of control. Less means a narrower span of
control.
An example of a narrow span of control is shown in the diagram below:
The advantages of a narrow span of control are:
A narrow span of control allows a manager to communicate quickly with the

employees under them and control them more easily
Feedback of ideas from the workers will be more effective
It requires a higher level of management skill to control a greater number of

employees, so there is less management skill required
An example of a wide span of control is shown in the diagram below:

The advantages of wide span of control are:
There are less layers of management to pass a message through, so the message
reaches more employees faster
It costs less money to run a wider span of control because a business does not
need to employ as many managers
Delegation
Delegation means assigning of certain responsibilities along with the necessary authority by a
superior to his subordinate managers. Delegation does not mean surrender of authority by the
higher level manager. It only means transfer of certain responsibilities to subordinates and giving
them the necessary authority, which is necessary to discharge the responsibility properly.
Delegation is quite common in all aspects of life including business
Delegation involves the following three basic elements:

Assignment of duties to subordinates,
Granting of authority to enable the subordinates to perform the duties assigned,
and
Creation of obligation on the part of subordinate to perform duties in an orderly
manner.
Decentralization
Centralization is the degree to which decision making takes place at upper levels of the
organization. If top managers make key decisions with little input from below, then the organization
is more centralized. On the other hand, the more that lower-level employees provide input or
actually make decisions, the more decentralization there is.
Empowerment
Managers trust employees to make thoughtful and conscientious decisions. For instance, at
Southwest Airlines, employeesincluding flight attendants, baggage handlers, gate agents, and
customer service representativesare encouraged to take whatever action they deem necessary to
meet customer needs or help fellow workers, even if it means going against company policies.
The evidence for empowerment is often anecdotal in nature, but this is still valid, especially when
set alongside quantitative data. We have listed below some possible indicators that we consider
useful:
Different Types Of Organization Structure:

Functional structure
A functional structure is one of the most common organizational structures. Under this structure,
the organization groups employees according to a specialized or similar set of roles or tasks.
Functional Structure Examples-

Sales Department (sales function)
Customer Service Department (customer service function)
Engineering Department (engineering function)
Accounting Department (accounting function)
Administration Department (administration function)
Advantages
a) Creates highly skilled specialists
b) Lowers costs through reduced duplication
c) Communication and coordination problems are lessened
Disadvantages
a) Cross-department coordination can be difficult
b) May lead to slower decision making
c) Produces managers with narrow experiences
Divisional Structure
Managers in large companies may have difficulty keeping track of all their company's products and
activities, specialized departments may develop. These departments are divided according to their
organizational outputs. Examples include departments created to distinguish among production,
customer service, and geographical categories. This grouping of departments is called divisional
structure. These departments allow managers to better focus their resources and results. Divisional
structure also makes performance easier to monitor. As a result, this structure is flexible and
responsive to change.
The divisional structure is broken down into three areas: Product, Market, and Geographic.
Product Structure
Product structure groups employees together based upon specific products produced by the
company. An example of this would be a company that produces three distinct products, product
C", "product M", and "product I .This Company would have a separate division for each product.
Advantages:
a) Managers specialize but have broader experience
b) Easier to assess work-unit performance
c) Decision making is faster

Disadvantages:
a) Duplication often increases costs
b) Difficult to coordinate across departments
Market/ Customer based Structure

An organization may find it advantageous to organize according to the types of customers it serves.
For example, a distribution company that sells to consumers, government clients, large businesses, and
small businesses may decide to base its primary divisions on these different markets. Its personnel can
then become proficient in meeting the needs of these different customers. In the same way, an
organization that provides services such as accounting or consulting may group its personnel according
to these types of customers.
Advantages:
a) Encourages concentration on customer needs

b) Promotes strong public image
c) It adopts well to environmental changes
Disadvantages:
a) Managers and staff should have expertise and understanding of the customer problem.
b) Through duplication of efforts resources can be wasted
Geographical Structure
Geographic structure groups employees together based upon specific geographic location.
This is often used by large companies that operate in many areas National & Overseas.
Example:
GRD Cements North India
JRD Beverages South India
Advantages
a) Responsive to demand of different markets
b) Reduce costs by locating resources close to customers
c) Facilitates expansion of business
d) Managers experience autonomy at the region level
Disadvantages
a) Duplication of resources
b) Difficult to coordinate across departments
Matrix Organizations

Matrix structure groups employees by both function and product. This structure can combine the
best of both separate structures. The matrix structure combines functional specialization with the
focus of divisional structure. This structure uses permanent cross-functional teams to integrate
functions. Employees in a matrix structure belong to at least two formal groups at the same timea
functional group and a product, program, or project team. They also report to two bossesone
within the functional group and the other within the team. This structure not only increases
employee motivation, but it also allows technical and general management training across
functional areas as well. Matrix structure is the most complex of the different organizational
structures.
Advantages:
1. Sound Decisions: In a Matrix Organisation, all decisions are taken by experts. Therefore,
the decisions are very good.
2. Development of Skills: It helps the employees to widen their skills. Marketing people
can learn about finance, Finance people can learn about marketing, etc.
3. Top Management can concentrate on Strategic Planning: The Top Managers can
spend more time on strategic planning. They can delegate all the routine, repetitive and less
important work to the project managers.
4. Responds to Changes in Environment: Matrix Organisation responds to the negative
changes in the environment. This is because it takes quick decisions.
5. Specialization: In a matrix organisation, there is a specialization. The functional
managers concentrate on the technical matters while the Project Manager concentrates on
the administrative matters of the project.
6. Optimum Utilization of Resources: In the matrix organisation, many projects are run at
the same time. Therefore, it makes optimum use of the human and physical resources. There
is no wastage of resources in a matrix organisation.
7. Motivation: In a matrix organisation, the employees work as a team. So, they are
motivated to perform better.

8. Higher Efficiency: The Matrix organisation results in a higher efficiency. It gives high
returns at lower costs.
Disadvantages:
1. Increase in Work Load: In a matrix organisation, work load is very high. The managers
and employees not only have to do their regular work, but also have to manage other
additional works like attending numerous meetings, etc.
2. High Operational Cost: In a matrix organisation, the operational cost is very high. This
is because it involves a lot of paperwork, reports, meetings, etc.
3. Absence of Unity of Command: In a matrix organisation, there is no unity of command.
This is because each subordinate has two bosses, viz., Functional Manager and Project
Manager.
4. Difficulty of Balance: In a matrix organisation, it is not easy to balance the
administrative and technical matters. It is also difficult to balance the authority and
responsibilities of the project manager and functional manager.
5. Power Struggle: In a matrix organisation, there may be a power struggle between the
project manager and the functional manager. Each one looks after his own interest, which
causes conflicts.
6. Morale: In a matrix organisation, the morale of the employees is low. This is because
they work on different projects at different times.
7. Complexity: Matrix organisation is very complex and the most difficult type of
organisation.
8. Shifting of Responsibility: If the project fails, the project manager may shift the
responsibility on the functional manager. That is, he will blame the functional manager for
the failure.
Team based Structures

The team-based organizational structure emerged during the 1990s and was implemented by large
corporations such as Ford, Proctor and Gamble and General Motors due to its success, according to
allbusiness.com. The team-based organizational structure was able to address various issues within
larger organizations such as internal and interdepartmental communication. It is now a widely used
structure in large and small businesses.Team-based organizational structure is the use of various
employees from different departments who form a temporary team in order to achieve an objective
or solve an issue. The team members work together to find the best solution that works for each
department. Once a resolution is achieved, the team dissolves and each member returns to her
specific department.
Advantages:
The team-based organizational model allows different departments to communicate freely.
Having a representative from each department participate in the team decision-making

process, allows the departments to work together for a common goal. The amount of time it
takes to make a decision is much faster with a team-based approach. Employees feel like
they have a voice so they are more motivated to accomplish their tasks. The need for a
multi-level management tier is replaced by workers; therefore the company's administrative
costs are lowered.
Disadvantages:
The team-based organizational model presents certain disadvantages. Each representative from their
departments can be partial to their needs, resulting in more conflict among the team. Time is often
an issue because there is no manager overseeing the meetings. It can take longer before the team
makes a collaborative decision. This can prolong resolving the issue at hand.
Virtual Organizations
A virtual organization or company is one whose members are geographically apart, usually working
by computer e-mail and groupware while appearing to others to be a single, unified organization
with a real physical location. The difference between a traditional brick-and-mortar organization
and a virtual organization is simple. A land-based operation means that those working within the
company operate and do their daily activities together at the same physical location. A virtual
organization means that employees work from different locations, either in separate divisions,
offices or manufacturing plants, or perhaps employees work remotely from their homes. Virtual
organizations communicate and interact almost 100 percent electronically.
Advantages:
1. Swifter reaction times to new products emerging in global and local markets
2. The opportunity for switching suppliers and human resources in accordance with stated
objectives.
3. Reduction of expenses involved by the necessity of using working spaces rent,
maintenance, insurances etc.
4. More efficient usage of office space, in the case when some employees work according
to the traditional system, while others prefer a telecommuting system.
5. Diminishing utilities expenses gas, electricity, water etc.
6. Reduction of the consumption of consumable materials.
7. Decrease of salary expenses, as the virtual team members are paid for their task and not
for their time spent at work.
8. Possibility to have experts located in any part of the globe.
9. Possibility to hire low cost but qualified labour force (recruiting the personnel can be
done in geographic areas where the labour force is low cost and well trained).
10. Increase of productivity and performances due to the fact that virtual team members
can better focus on the results to be achieved.
11. Reduction of the number of absentees because the virtual team members work at
home.

12. Creation of jobs and employment opportunities in rural or disadvantaged areas.
Disadvantages:
1. Added complexity due to the participants being distributed to multiple geographical

locations and restricted from face-to-face interaction.
2. Increased risk of communication breakdowns due to cultural and organizational
differences inherent to participants from geographically diverse regions of the world
3. Reduced productivity due to a lack of shared meaning and cohesiveness that shared
meaning can produce between members of an organization.
4. For those who telecommute i.e. work at home, reduced productivity due to a lack self-
discipline and an overabundance of distractions around the home.
Boundary less organizations

A structure that is not defined by or limited to artificial horizontal, vertical, or external boundaries
and includes virtual and network types of organizations is termed as Boundary less organization.
Former GE chairman Jack Welch coined the term because he wanted to eliminate vertical and
horizontal boundaries within GE and break down external barriers between the company and its
customers and suppliers. Although the idea of eliminating boundaries may seem odd, many of
todays most successful organizations are finding that they can operate most effectively by
remaining flexible and unstructured: that the ideal structure for them is not having a rigid, bounded,
and predefined structure.
Advantages:
Highly flexible and responsive.
Utilizes talent wherever its found.
Disadvantages:
Lack of control.
Communication difficulties

MODULE 3
CONTROLLING
Controlling-Meaning
Controlling is measuring and correcting individual and organizational performance to ensure that
events conform to plans. It involves measuring performance against goals and plans, showing
where deviations from standards exist, and helping to correcting deviations from standards. In short,
controlling facilitates the accomplishment of plans.
Importance of controlling
1. Execution of plans- Control helps in ensuring the performance of plans through regular
examination and evaluation of performance of work that results the performance of activities for
accomplishment of goals.
2. Helps in supervision- Control helps in reducing deviation between standard performance and
actual performance through effective control system established by the supervisor.
3. Effective delegation and decentralization of authority Controlling is that mechanism which

monitor about authority issued that can help to delegate and decentralize the authority. Control
system helps the top management to extend the frontiers of decentralisation without the loss of
control. When proper procedures, policies, targets, etc, are clearly communicated to the
subordinates, they develop self-confidence and need not always refer to their supervisors with the
problems.
4. Reduction of cost- When control is effective employees will have better performance, proper
utilization of resources and prevention of leakage and wastage which helps in reduction of cost.
5. Psychological pressure controlling It affects the psychological pressure of employees. When

the employees know that their performance and activities done will be evaluated and just than they
naturally work hard and their performance will be increased.

6. Optimum utilization of resources- Controlling plays a vital role for proper utilization of human,
physical, and financial resources to ensure correct work performance with respect to cost, quality
and time or not.
7. Helps in fulfilment of goals- Control provide standard for approval of actual performance it helps
to accomplish the plan and achieve goals.
8. Helps in coordination- An organization grows in size and diversity. They become complex and
also have to develop various department and units. Therefore, controlling help to establish the
coordination in different department and units.
9. Reduces Risk- Control eliminates the risk of non-conformity of actual performance with the main
goals of the organisation. Control is the function which regulates the operation to ensure the
attainment of the set objectives.
Regular measurement of work in progress with proper adjustments in operations puts the
performance on the right track and helps in the achievement of goals.
10. Basis for future action-Control provides the information and facts to the management for
planning and organising when the work is completed and the result is evaluated. In fact, evaluation
of results helps the management replant for non-repetitive operations and rewarding, punishing and
discipline the workers.
It would be better to say that future long term planning is not possible unless and until control
information is available in time to the managers for the operation of work.
11. Size of the business-In large scale business in the modem times it is quite impossible to work
without proper policies, procedures and quality of different varieties of goods. That is why in a
large scale organisation there is always the need of a scientific system of control to solve the day to
day problems.
12.Indicator for managerial weakness-In the organisation there will be certain unforeseen and
unknown problems which cannot be traced out by mere planning, organising and staffing efforts. It
is the control process that can trace these out. That is why it is known as an indicator of the
managerial weakness. Control not only finds out the weakness of managers but also provides
solutions and remedial action to solve the problems.
13.Facility of coordination-Management and coordination of the business activities and workers is a

very important role. It binds all the workers and their activities and motivates them to move towards
the common objectives through coordination.
Control will play the role of a middleman between the workers and management to provide the
required information in time to the workers.
14. Simplifies supervision-A systematic system of control helps in finding out the deviation existing
in the organisation which also simplifies the task of the supervisor in managing his subordinates. So
through control its becomes simpler for the supervisor to supervise and guide the workers to follow
the right track and fulfil the required goals.
Controlling Process
The steps in the control process follow the logic of planning:

(1) Performance standards are set.
(2) Performance is measured.
(3) Performance is compared to standards.
(4) Corrective action is taken if needed.
The following discussion describes these steps and highlights the potential problems associated
with each one-
Step 1: Setting Appropriate Performance Standards
A control system begins with a set of performance standards that are realistic and acceptable to the
people involved. A standard is a unit of measurement used to evaluate results. Standards can be
quantitative, such as cost of sales,profits, or time to complete an activity. Standards can also be
qualitative, such as a viewers perception of the visual appeal of an advertisement.An effective
standard shares the same characteristics as an effective objective.
Step 2: Measuring Actual Performance
To implement the control system, performance must be measured. Performance evaluations are one
of the major ways of measuring performance. Supervisors often make direct observations of
performance to implement a control system.
Step 3: Comparing Actual Performance to Standards
After establishing standards and taking performance measurements, the next step is to actually
compare performance to standards. Key aspects of comparing performance to standards include
measuring the deviation and communicating information about it. Deviation in a control system
indicates the size of the discrepancy between performance standards and actual results. It is
important to agree beforehand how much deviation from the standard is a basis for corrective
action. When using quantitative measures, statistical analysis can determine how much of a

deviation is significant. Recall the 75 percent occupancy rate standard in the hotel example. A
deviation of plus or minus 3 percent may not be considered meaningful but rather caused by
random events. Deviations of 4 percent or more, however, would be considered significant. Taking
corrective action only in the case of significant deviations applies the exception principle.
Sometimes a deviation as small as 1 percent from the standard can have a big influence on company
welfare. If a business unit fails by 1 percent to reach $100 million in sales, the firm has $1 million
less money than anticipated. At other times, deviations as high as 10 percent might not be
significant. For the control system to work, the results of the comparison between actual
performance and standards must be communicated to the right people. These people include the
employees themselves and their immediate managers. At times, the results should also be
communicated to top-level managers and selected staff specialists. They need to know about events
such as exceptional deviations from safety and health standards. For example, nuclear power plants
are equipped with elaborate devices to measure radiation levels. When a specified radiation level is
reached or exceeded, key people are automatically notified.
Step 4: Taking Corrective Action
An evaluation of the discrepancy between actual performance and a standard presents a manager
with three courses of action: do nothing, solve the problem, or revise the standard. Each of these
alternatives may be appropriate, depending on the results of the evaluation.
The purpose of the control system is to determine whether plans are working. No corrective action
is required if the evaluation reveals that events are proceeding according to plan. Doing nothing,
however, does not mean abdicating, or giving up, responsibility. A manager might take the
opportunity to compliment employees for having achieved their objectives (thus increasing
employee motivation) but do nothing about their approach to reaching objectives because
performance measurements show it to be effective.
Types of Control
Controls can be classified according to the time at which the control is applied to the activity
before, during, or after. Another way of describing controls relates to the source of the control
external versus internal.
The Time Element in Controls
A preventive control takes place prior to the performance of an activity. A preventive control
prevents problems that result from deviation from performance standards. Preventive controls are
generally the most cost effective. A manufacturer that specifies quality standards for purchased
parts establishes a preventive control. By purchasing high-quality parts, the manufacturer prevents
many instances of machine failure. Preventive controls are also used in human-resource
management. Standards for hiring employees are preventive controls.

Concurrent controls monitor activities while they are carried out. A typical concurrent control
takes place when a supervisor observes performance, spots a deviation from standard, and
immediately makes a constructive suggestion. For example, suppose a telemarketing manager
overhears a telemarketing specialist fail to ask a customer for an order. On the spot, the manager
would coach the telemarketer about how to close an order.
Feedback controls evaluate an activity after it is performed. Feedback controls measure history by
pointing out what went wrong in the past. The process of applying the control may provide
guidelines for future corrective action. Financial statements are a form of feedback control. If a
financial report indicates that one company in a conglomerate lost money, top-level managers can
then confer with company (or division) managers to see how to improve the situation.
Factors influencing Control effectiveness
All alert managers want to have an adequate and effective system of controls to assist them in
making sure that events conform to plans. It is sometimes not realized that the controls used by
managers must be designed for the specific task and person they are intended to serve while the
basic process and the fundamentals of controls are universal the actual system requires special
design.
Instead, if controls are to work, they must be tailored to plans and positions, to the individual
managers and their personalities, and to the needs for efficiency and effectiveness.
Designing controls to point exceptions at critical points.

One of the most important part of tailoring controls to the needs of the efficiency and effectiveness
is to design them to point up exceptions. In other words controls that concentrate on exceptions
from planned performance allow managers to benefit from the time honoured exception principle
and detect areas that require their attention. But it is not enough merely to look at exceptions. Some
deviations from standards have some little meaning while others have a
great deal. Small deviations in certain areas may have greater significance than larger exceptional
other areas. A manager might be concerned if the cost of office labor deviated from the budget by 5
percent but might be unworried it the cost of postage stamps deviated from the budget by 20
percent.
Consequently, the exception principle should be accompanied in practice by the principle of critical
point control. It is not enough just to look for exceptions; one must look for them at critical points.
Certainly the more that managers concentrate their control efforts on exceptions the more efficient
their control will be. But effective control requires that managers pay primary attention to things
that are most important.
Seeking objectively of controls.

Management necessarily has many subjective elements, but whether a subordinate is doing a great
job should ideally not be a matter for subjective determination. If controls are subjective, a
managers or a subordinate personality may influence judgment of performance and make them less
accurate. However people would have difficulty dismissing control of their performance if the
standards an measurements are kept up to date through periodic review. Effective control requires
objective review. Effective control requires objective accurate and suitable standards.
McDonalds for example is very strict in applying and maintaining the same quality standards in
all its restaurants.
Ensuring Flexibility of controls.

Controls should remain workable in the face of changed plans, unforeseen circumstances or outright
failures. If controls are to remain effective despite failure or unexpected changes of plans they must
be flexible. The need for flexible control can readily be illustrated. A budget system may project a
certain level of expenses and grant authority to managers to hire labour and purchase materials and
services at this level. It as is usually the core, this budget is based on a forecast of a certain level of
sales. It may become meaningless as a system of control if the actual sales volume is considerably
above or below the forecast. Budget system has been brought into ill repute in some companies
because of inflexibility in such circumstances. What is needed of course is a system that will reflect
sales variations as well as other deviations from plans.
Fitting the control system to the organization culture.
To be most effective any control systems or techniques must fit the organization culture. If an
organization has given its employees considerable freedom and participation a tight control system
may go so strongly against the gain that it will be boomed to failure. On the other hand if
subordinates have been managed by superior who allows little participation in decision making a
generalized and permissive control system will hardly succeed people who have little desire to
participation who have not been accustomed to participating are likely to want clear standards and
measurements and specific directions.
economy of controls.
Controls must be worth their costs. Although this requirement is simple it is often difficult to
accomplish in practice. A manager may have difficulty ascertaining what a particular, control
system is worth or what if costs, economy is relative. Since the benefits of control vary with the
importance of the activity, the size of the operation, the expense that might be incurred in the
absence of control and contribution in the systems can make.
Establishing control that need to corrective action.
An adequate system will disclose where failure is occurring and who is responsible for them, and
it will ensure that corrective activities are taken. Control is justified only if deviations from plans
are corrected through appropriate planning, organizing, staffing and leading.

MODULE 4
INTRODUCTION:
Organization Behaviour-An Introduction
Organization Behaviour (OB) is the systematic study and careful application of knowledge about
how people-as individuals and as groups act within organizations. It strives to identify ways in
which people can act more effectively. OB is a scientific discipline in which a large number of
research studies are constantly adding to its knowledge base.
OB- Definition
Organizational behaviour is a field of study that investigates the impact that individuals, groups
and organizational structure have on behaviour within the organization, for the purpose of applying
such knowledge towards improving an organizational effectiveness. The above definition has three
main elements; first organizational behaviour is an investigative study of individuals and groups,
second, the impact of organizational structure on human behaviour and the third, the application of
knowledge to achieve organizational effectiveness.
Historical development of OB discipline.

A large number of people have contributed to the growth of OB as a discipline. The most important
ones have been described below:
Early Theorists
Adam Smiths discussions in the Wealth of nations published in 1776 stated that organizations and
society would reap from the division of labor. He concluded that division of labor increased
productivity by raising each workers skill and dexterity, by saving time otherwise lost in changing
tasks. The development of assembly line production process in the early 20th century was

obviously stimulated by the economic advantages of work specialization (arising out of division of
labor) as stated in the work of Smith.The other significant work which influenced this philosophy
was that of the work of Charles Babbage in 1832 titled On the Economy of Machinery and
Manufactures. He added the following to Smiths list of advantages that can be accrued from
division of labor:
1. It reduces the time needed to learn a job

2. Reduced wastage of material during the learning process
3. Allowed attainment of increased skill levels
4. Careful match of peoples skills and physical abilities with specific tasks
Thus in the writings of these writers the benefits of division of labor were being highlighted
where the maximum emphasis was on raising productivity and minimizing wastage
resources and time. Very little consideration was given towards the human elements in the
workplace.
The Classical Era
Frederick Taylors main emphasis was on finding one best way of doing each job. He stressed on
selecting the right people for the job, train them to do it precisely in one best way. He favored wage
plans to motivate the workers. His scientific principles of management stressed the following
principles:
Henri Fayol, a mining engineer and manager by profession, defined the nature and working patterns
of the twentieth-century organization in his book, General and Industrial Management, published in
1916. In it, he laid down what he called 14 principles of management. This theory is also called the
Administrative Theory. The principles of the theory are:
The Human Relations Movement
Elton Mayo is known as the founder of the Human Relations Movement, and is known for his
research including the Hawthorne Studies, and his book The Social Problems of an Industrialized
Civilization (1933). In the 1920s Elton Mayo, a professor of Industrial Management at Harvard
Business School, and his protg Fritz J. Roethlisberger led a landmark study of worker behavior at
Western Electric, the manufacturing arm of AT&T. Fritz Roethlisberger and W.J. Dickson were the
first to publish comprehensive findings of the Hawthorne experiments in 1937 and authored
Management and the Worker in 1939, a comprehensive statement of the research and findings.
Roethlisberger was a lead researcher in the Hawthorne project and a leader in the Human Relations
movement. Dickson was Chief of Employee Relations Research Department at the Hawthorne plant
and an instrumental contributor to the project the research he conducted under the Hawthorne
Studies of the 1930s showed the significance of groups in affecting the behavior of individuals at

work. He carried out a number of investigations to look at ways of improving productivity, for
example changing lighting conditions in the workplace.
Douglas McGregor was another contributor to the human relations movement. He formulated two
sets of assumptions Theory X and Theory Y about human nature. Theory X posited a negative
view of people stating that this category have little ambition, dislike work, want to avoid
responsibility and need to be closely directed at workplace. Theory Y category on the other hand
proposed a positive view of people stating that they can exercise self direction, assume
responsibility and considered work as a natural activity. McGregor personally believed that Theory
Y described best the nature of people at work and therefore form the basis of all management
practices in organizations. Managers should give freedom to their subordinates in order to unleash
their full creative and productive potential.
Behavioral Science Theorists
These theorists engaged in objective research of human behavior in organizations. Some of the
major theorists who contributed to the growth of OB as a discipline are briefly given below.
B. F. Skinner - His research on conditioning (classical and operant) and behavior modification
influenced the design of organization training programs and reward systems. Behavior is a function
of consequence according to Skinner and he stated that people engage in a desired behavior only if
they are rewarded for it and less likely to be repeated if an individual is not rewarded or punished
for it.
David McClelland - his work has helped organizations to match people with jobs and in
redesigning jobs for high achievers in order to maximize their motivation potential. For example,
people who have undergone achievement training in India, have been found to work longer hours,
initiate more new business ventures, made greater investments in productive assets than those who
did not undergo such training.
Fred Fiedler - work in the field of leadership has contributed immensely to the growth of OB as a
discipline. His work on the subject is important since it emphasized the situational aspects of
leadership and attempted to develop a comprehensive theory of leadership behavior.
Fredrick Herzberg- his primary interest was in finding out answer to the question: what do
individuals want from their jobs? He concluded from his study that people preferred jobs that
provided opportunities for recognition, achievement, responsibility and growth. Only providing the
hygiene factors were insufficient to motivate people in work places. This work is significant to OB
as it has helped in enriching jobs and the quality of work life in modern organizations.

Fundamental principles of OB.
The subject Organizational Behaviour is based on certain fundamental concepts, which revolve
around the nature of people and organizations. Every discipline, be it a social science or a physical
science, will flourish on definite assumptions.
The basic assumptions are:
1. Every individual is different from other individuals.
2. Whole person.
3. Behaviour of an individual is caused.
4. An individual has dignity.
5. Organizations are social system.
6. Mutuality of interest among Organizational members.
7. Holistic Organizational Behavior.
Individual differences:
Each person in the world is individually different. Each one is different from the other in several
ways whether it is intelligence, physique or any such trait. By birth each person is unique and
individual experiences after birth make them even more different. It is because of individual
differences that Organizational Behavior begins with the individual.
A whole person:
When an individual is appointed his/her skill alone is not hired, social background, likes and
dislikes, pride and prejudice are hired.
Caused behavior:
The Behavior of the individuals is not random, it is caused (i.e., he react to some situation). This
behavior is directed towards someone that the employees believe, rightly or wrongly, is in his/her
interest.
Human dignity:
This concept is more concerned with ethical philosophy than scientific. It confirms that people are
to be treated differently from other factors of production because they are of high order in the
universe. That is they are to be treated with respect and dignity.
Organizations are social systems:

People need psychological needs, as well as social needs also like social roles and status. Their
behavior is influenced by their group as well as by their individual drives. There are two types of
social systems. One is the formal and the others the informal.
Mutuality of interest:

Mutual interest is represented by the statement that organization needs people and people also need
organization. People see organizations as a basis to help them reach their goals , while at the same
time organizations need people to help them to attain their organizational objectives.
Holistic concept:
When the above six fundamental concepts of organizational behavior are placed together , holistic
concept emerges. This concept interprets people organization relationship in terms of the whole
person, whole group, whole organization and the whole social system.
Contributing Disciplines to OB.
Organizational behaviour is an applied behavioural science built on contributions from a number of

behavioral disciplines, mainly psychology and social psychology, sociology, and anthropology.
Psychologys contributions have been mainly at the individual or micro level of analysis, while the
other disciplines have contributed to our understanding of macro concepts such as group processes
and organization. The following exibit is an overview of the major contributions to the study of
Organizational behaviour:
Psychology
Psychology seeks to measure, explain, and sometimes change the behavior of humans and other
animals. Those who have contributed and continue to add to the knowledge of OB are learning
theorists, personality theorists, counseling psychologists, and, most important, industrial and
organizational psychologists. Early industrial/organizational psychologists studied the problems of
fatigue, boredom, and other working conditions that could impede efficient work performance.
More recently, their contributions have expanded to include learning, perception, personality,
emotions, training, leadership effectiveness, needs and motivational forces, job satisfaction,
decision-making processes, performance appraisals, attitude measurement, employee-selection
techniques, work design, and job stress.

Social Psychology
Social psychology, generally considered a branch of psychology, blends concepts from both
psychology and sociology to focus on peoples influence on one another. One major study area is
change how to implement it and how to reduce barriers to its acceptance. Social psychologists
also contribute to measuring, understanding, and changing attitudes; identifying communication
patterns; and building trust. Finally, they have made important contributions tour study of group
behavior, power, and conflict.
Sociology
While psychology focuses on the individual, sociology studies people in relation to their social
environment or culture. Sociologists have contributed to Through their study of group behavior in
organizations, particularly formal and complex organizations. Perhaps most important, sociologists
have studied organizational culture, formal organization theory and structure, organizational
technology, communications, power, and conflict.
Anthropology
Anthropology is the study of societies to learn about human beings and their activities.
Anthropologists work on cultures and environments has helped us understand differences in
fundamental values, attitudes, and behavior between people in different countries and within
different organizations. Much of our current understanding of organizational culture, organizational
environments, and differences among national cultures is a result of the work of anthropologists or
those using their methods.
Challenges and Opportunities faced in OB.

Some of the most critical issues confronting managers for which OB offers solutions are:
Responding to Economic Pressures

When the U.S. economy plunged into a deep and prolonged recession in 2008, virtually all other
large economies around the world followed suit. Layoffs and job losses were widespread, and those
who survived the axe were often asked to accept pay cuts. Managing employees well when times
are tough is just as hard as when times are goodif not more so. But the OB approaches sometimes
differ. In good times, understanding how to reward, satisfy, and retain employees is at a premium.
In bad times, issues like stress, decision making, and coping come to the fore.
Increased Foreign Assignments: managers, are increasingly likely to find yourself in a foreign
assignmenttransferred to your employers operating division or subsidiary in another country.
Once there, youll have to manage a workforce very different in needs, aspirations, and attitudes
from those you are used to back home.
Working with People from Different Cultures: Even in your own country, youll find yourself
working with bosses, peers, and other employees born and raised in different cultures. What
motivates you may not motivate them youre your communication style may be straightforward and
open, which others may find uncomfortable and threatening. To work effectively with people from
different cultures, you need to understand how their culture, geography, and religion have shaped
them and how to adapt your management style to their differences .Managers at global companies
such as McDonalds, Disney, and Coca-Cola have come to realize that economic values are not
universally transferable.
Overseeing Movement of Jobs to Countries with Low-Cost Labour: Its increasingly
difficult for managers in advanced nations, where minimum wages are typically $6 or more an
hour, to compete against firms that rely on workers from China and other developing nations where
labor is available for 30 cents an hour. Its not by chance that many in the United States wear
clothes made in China, work on computers whose microchips came from Taiwan, and watch
movies filmed in Canada. In a global economy, jobs tend to flow where lower costs give businesses
a comparative advantage, though labor groups, politicians, and local community leaders see the
exporting of jobs as undermining the job market at home. Managers face the difficult task of
balancing the interests of their organization with their responsibilities to the communities in which
they operate.
Managing Workforce Diversity Workforce diversity acknowledges a workforce of women and

men; many racial and ethnic groups; individuals with a variety of physical or psychological
abilities; and people who differ in age and sexual orientation. Managing this diversity is a global
concern. Most European countries have experienced dramatic growth in immigration from the
Middle East, Argentina and Venezuela host a significant number of migrants from other South
American countries, and nations from India to Iraq to Indonesia find great cultural diversity within
their borders.

Improving Customer Service

Today, the majority of employees in developed countries work in service jobs, including 80 percent
in the United States. In Australia, 73 percent work in service industries. In the United Kingdom,
Germany, and Japan, the percentages are 69, 68 and 65, respectively. Service jobs include technical
support representatives, fast-food counter workers, sales clerks, waiters and waitresses, nurses,
automobile repair technicians, consultants, credit representatives, financial planners, and flight
attendants.
Stimulating Innovation and Change

Todays successful organizations must foster innovation and master the artof change, or theyll
become candidates for extinction. Victory will go to the organizations that maintain their flexibility,
continually improve their quality, and beat their competition to the marketplace with a constant
stream of innovative products and services. Dominos single-handedly brought on the demise of
small pizza parlors whose managers thought they could continue doing what they had been doing
for years. Amazon.com is putting a lot of independent bookstores out of business as it proves you
can successfully sell books (and most anything else) from a Web site. After years of lackluster
performance, Boeing realized it needed to change its business model. The result was its 787
Dreamliner and a return to being the worlds largest airplane manufacturer.
Coping with Temporariness

Globalization, expanded capacity, and advances in technology have required organizations to be
fast and flexible if they are to survive. The result is that most managers and employees today work
in a climate best characterized as temporary. Workers must continually update their knowledge
and skills to perform new job requirements. Production employees at companies such as Caterpillar,
Ford, and Alcoa now need to operate computerized production equipment.
Working in Networked Organizations

Networked organizations allow people to communicate and work together even though they may be
thousands of miles apart. Independent contractors can telecommute via computer to workplaces
around the globe and change employers as the demand for their services changes. Software
programmers, graphic designers, systems analysts, technical writers, photo researchers, book, and
media editors, and medical transcribers are just a few examples of people who can work from home
or other non-office locations.
Helping Employees Balance WorkLife Conflicts

The typical employee in the 1960s or 1970s showed up at a specified workplace Monday through
Friday and worked for clearly defined 8- or 9-hour chunks of time. find it increasingly difficult to
attract and retain the most capable and motivated employees.

Creating a Positive Work Environment Although competitive pressures on most organizations

are stronger than ever, some organizations are trying to realize a competitive advantage by fostering
a positive work environment.
MODULE 5
FOUNDATIONS OF INDIVIDUAL BEHAVIOUR:
Individual behaviour-Foundations.
According to Kurt Lewin, behavior is a function of the person and environment. Lewin expressed
this idea in an equation: B= f(P, E) where B= Behavior, P = Person and E= Environment. This idea
has been developed by the interactional psychology approach.
Intellectual abilities.
Number aptitude:It is an ability to do speedy and accurate arithmetic.
Verbal comprehension:It is the ability to understand what is read and heard and the relationship of
words to each other.
Perceptual speed: It is the ability to identify visual similarities and differences quickly and
accurately.
Inductive reasoning: It is the ability to identify a logical sequence in a problem and then solve the
problem.
Deductive reasoning: It is the ability to see logic and assesses the implication of an argument.
Spatial visualization: It is the ability to imagine how an object would look like it its position in
space was changed.

Memory:It is the ability to retain and recall past experience.
Physical abilities. physical abilities have been and will remain valuable. Research on hundreds of
jobs has identified nine basic abilities needed in the performance of physical tasks. These are
described in following exhibit. Individuals differ in the extent to which they have each of these
abilities. Not surprisingly, there is also little relationship among them: a high score on one is no
assurance of a high score on others. High employee performance is likely to be achieved when
management has ascertained the extent to which a job requires each of the nine abilities and then
ensures that employees in that job have those abilities.
Role of disabilities.
The importance of ability at work obviously creates problems when we attempt to formulate
workplace policies that recognize diversity in terms of disability status. As we have noted,
recognizing that individuals have different abilities that can be taken into account when making
hiring decisions is not problematic. However, it is discriminatory to make blanket assumptions
about people on the basis of a disability. It is also possible to make accommodations for disabilities.
Personality- Meaning.
Personality is the relatively stable set of characteristics that influence an Individuals behaviour. It
is the sum total of ways in which an individual reacts and interacts with others, measurable traits a
person exhibits.
Determinants of Personality
Determinants of Personality are:

Heredity refer to those factors that are determined at birth. Physical stature, facial attractiveness,
gender, temperament, muscle composition, energy level, etc are characters that are influenced by
heredity. According to heredity theory, the personality of an individual depends on the molecular
structure of the genes located in the chromosome. Traits such as shyness, fear, distress, are caused
by genetic characteristics.
Environment
Environment includes the culture in which we are raised, our early conditioning, rules among our
family, friends and social group. These factors play an important rule in sharing our personality.
Culture establishes rules, attitudes and values that are passed from one generation to the next. A
belief held in one culture may not be supported in other culture.
Traits of personality
Personality traits are enduring characteristics that describe an individuals behavior. Combing these
traits into a group forms an individuals personality. Personality traits such as introversion,
friendliness, conscientiousness, honesty, and helpfulness are important because they help explain
consistencies in behavior. The most popular way of measuring is by administering personality tests
on which people self-report about their own characteristics. Psychologists have investigated
hundreds of traits using the self-report approach, and this research has found many personality traits
that have important implications for behavior.
Big Five Model of Personality Traits.

In psychology, the Big Five personality traits are five broad domains or dimensions
of personality that are used to describe human personality. The Big Five factors
are openness to experience, conscientiousness, extraversion, agreeableness, and emotional
stability.
Extraversion.
The extraversion dimension captures our comfort level with relationships. Extraverts tend to
be gregarious, assertive, and sociable. Introverts tend to be reserved, timid, and quiet.
Agreeableness.
The agreeableness dimension refers to an individuals propensity to defer to others. Highly
agreeable people are cooperative, warm, and trusting. People who score low on
agreeableness are cold, disagreeable, and antagonistic.
Conscientiousness.
The conscientiousness dimension is a measure of reliability. A highly conscientious person
is responsible, organized, dependable, and persistent. Those who score low on this
dimension are easily distracted, disorganized, and unreliable.
Emotional stability.
The emotional stability dimensionoften labelled by its converse, neuroticismtaps a

persons ability to withstand stress. People with positive emotional stability tend to be calm,
self-confident, and secure. Those with high negative scores tend to be nervous, anxious,
depressed, and insecure.
Openness to experience. The openness to experience dimension addresses range of interests
and fascination with novelty. Extremely open people are creative, curious, and artistically
sensitive. Those at the other end of the category are conventional and find comfort in the
familiar.
1. MBTI
The Myers-Briggs Type Indicator (MBTI) assessment is a psychometric questionnaire designed
to measure psychological preferences in how people perceive the world and make decisions. These
preferences were extrapolated from the typological theories proposed by Carl Gustav Jung and first
published in his 1921 book Psychological Types. Carl Jung theorized that there are four principal
psychological functions by which we experience the world: sensation, intuition, feeling, and
thinking. One of these four functions is dominant most of the time.
The original developers of the MBTI were Katharine Cook Briggs and her daughter, Isabel Briggs
Myers. Both of them studied extensively the work of Jung, turned their interest of human behavior
into a devotion of turning the theory of psychological types to practical use. They began creating
the indicator during World War II, believing that knowledge of personality preferences would help
women who were entering the industrial workforce for the first time to identify the sort of war-time
jobs that would be "most comfortable and effective"
Today, the Myers-Briggs Type Indicator (MBTI) is the most widely used personality assessment
instrument in the world. It is a 100-question personality test that asks people how they usually feel
or act in particular situations. Respondents are classified as extraverted or introverted (E or I),
sensing or intuitive (S or N), thinking or feeling (T or F), and judging or perceiving (J or P). These
terms are defined as follows:

Extraverted (E) versus Introverted (I).Extraverted individuals are outgoing, sociable, and
assertive. Introverts are quiet and shy.
Sensing (S) versus Intuitive (N).Sensing types are practical and prefer routine and order.
They focus on details. Intuitives rely on unconscious processes and look at the big picture.
Thinking (T) versus Feeling (F).Thinking types use reason and logic to handle problems.
Feeling types rely on their personal values and emotions.
Judging (J) versus Perceiving (P).Judging types want control and prefer their world to be
ordered and structured. Perceiving types are flexible and spontaneous.
Extroverts (E) are energized by interaction with others. They are people of action. Es are pulled
into social life and find it difficult to settle down, read, or concentrate on homework. They may find
college tasks, such as reading, research, and writing challenging because they are solitary
endeavours. They learn best by talking and physically engaging in the environment. Extroverts
learn better in small classroom settings where students can actively engage in conversations with
peers and professors as opposed to large lecture style classrooms where listening is the primary
activity. Extroverts enjoy oral feedback from professors, as well as conversations before/after class
or during office hours. Additionally, extraverts benefit from study groups where they can learn
through speaking with others.
Introverts (I) are energized by the inner world of reflection, thought, and contemplation. They
need space and time alone. Introverts like reading, lectures, and written work. Therefore, they
generally do well in traditional classroom settings. Introverts may hesitate to speak up in class but
may benefit from one-on one conversations with a professor or written feedback. Online courses
may work well for introverts as many often engage more in chat rooms or via email than
contributing orally to a class discussion. Introverts may need time alone to reflect, process, and
reenergize before joining a group or study group.
Sensing (S) people rely heavily on their five senses to take in information. They may be good
listeners or visually oriented learners. They also enjoy hands-on learning experiences. They like
concrete facts, organization, and structure. They learn well from organized lectures or presentations.
They are good at memorization. Sensing people usually like outlines, clear guidelines, and
specifics. A syllabus is an important learning tool for Sensing types. As Sensing types often have
difficulty with theory, they may struggle in classes where theoretical concepts are commonplace
such as psychology or philosophy.
Intuitive (N) people see the world through intuition. They learn by hunches. Intuitive students may
not read a test question all the way through, sometimes missing a key part. Intuitive types want to
know the theory before deciding that facts are important and will always ask "why". They are
creative and innovative and may struggle following strict sets of instructions or on multiple choice
tests. Ns also work with bursts of energy. Ns will write their term paper and then finish the required
outline.
Thinking (T) people decide on the basis of logic, analysis, and reason. They may be great at
figuring out logical problems and analysing problems. They may voice their strong opinions in the
classroom. They expect fairness in grading, equal treatment of all students and adherence to fair
classroom policies.
Feeling (F) persons decide on the basis of their feelings, personal likes and dislikes. Feeling types
value harmony and are distressed by interpersonal friction. Harmony in the classroom, with
classmates and with the professor will be of ultimate importance for Feeling types.
Judging (J) types try to order and control their world. They are decisive, may be closed-minded,
and are usually well organized. They meet deadlines, like planning, and prefer to work on only one
thing at a time. Judging types will usually have very well organized notebooks, and will structure
their time to complete assignments promptly. Judging types will struggle if changes occur and they
need to adapt, or if they are required to work with a group that is not as well organized, or if they
need to cram for an exam.
Perceiving (P) types are spontaneous and don't like to be boxed in by deadlines or plans. They want
to gather more information before making a decision. They work at many things at once. Ps are
flexible and often good in emergencies when plans are disrupted. Their biggest problem is
procrastination. Ps may have trouble getting assignments in on time or budgeting their time. They
may, however, actually do well cramming for an exam or rushing to get a project finished as they
thrive on last-minute pressure.
The 16 personality types are:

Personality attributes influencing OB
Core Self-Evaluation:
People who have positive core self-evaluations like themselves and see themselves as effective,
capable, and in control of their environment. Those with negative core self-evaluations tend to
dislike themselves, question their capabilities, and view themselves as powerless over their
environment. People with positive core self-evaluations perform better than others because they set
more ambitious goals, are more committed to their goals, and persist longer in attempting to reach
these goals. Core self-evaluations has two main components: Self-Esteem and Locus of Control.
Self-Esteem means people differ in the degree to which they like or dislike themselves. This trait is
called self esteem. High self esteem believes that they process the ability they need to succeed at
work.
Locus of Control means the degree to which people believe they are masters of their own fate. A
persons perception of the source of his or her fate is called as locus of control. It is of two types:
a) Internals (Internal locus of control) -

Individuals who believe that they control what happens to them.
b) Externals (External locus of control)-

Individuals who believe that what happens to them is controlled by outside
forces such as luck or chance
Machiavellianism
The personality characteristic of Machiavellianism (often abbreviated Mach ) is named after

Niccolo Machiavelli, who wrote in the sixteenth century on how to gain and use power. An
individual high in Machiavellianism is pragmatic, maintains emotional distance, and believes ends
can justify means. If it works, use it is consistent with a high-Mach perspective.
Narcissism. In psychology, narcissism describes a person who has a grandiose sense of self-
importance, requires excessive admiration, has a sense of entitlement, and is arrogant. Evidence
suggests that narcissists are more charismatic and thus more likely to emerge as leaders, and they
may even display better psychological health (at least as they self-report).
Risk Taking
People differ in their willingness to take chances, a quality that affects how much time and
information they need to make a decision. Although previous studies have shown managers in large

organizations to be more risk averse than growth-oriented entrepreneurs who actively manage small
businesses, recent findings suggest managers in large organizations may actually be more willing to
take risks than entrepreneurs.
Type A vs. Type B Personality

Type A Personality people
Have competitiveness, time urgency, social status insecurity, aggression,
hostility and a quest for achievements.
Are always moving, walking, and eating rapidly.
Feel impatient with the rate at which most events take place.
Strive to think or do two or more things at once.
Cannot cope with leisure time.
Are obsessed with numbers, measuring their success in terms of how many
or how much of everything they acquire.
Are labelled as Coronary-prone behavior or prone to heart attacks.
Type B Personality people-

Are relatively free of the type A behaviours and characteristics.
Never suffer from a sense of time urgency with its accompanying impatience.
Feel no need to display or discuss either their achievements or
accomplishments.
Play for fun and relaxation, rather than to exhibit their superiority at any cost.
Can relax without guilt.
Are less prone to heart attacks.
Attitude- Meaning & Formation. An attitude is a psychological tendency expressed when we

evaluate a particular entity with some degree of favour or disfavor. In other words, Attitudes are
evaluative statementseither favorable or unfavorableabout objects, people, or events. They
reflect how we feel about something. When I say I like my job, I am expressing my attitude about
work.
Two major influences in the formation of attitude are:
Direct Experience
Direct experience with something strongly influences attitude towards it. How do you know that
you like biology or dislike math? You have probably formed these attitudes from experience in
studying the subjects. Research has shown that attitudes derived from direct experience are
stronger, held more confidently and more resistant to change than attitudes formed through indirect
experience.

Social Learning
In social learning the family, peer groups, religious organizations and culture shape an individuals
attitudes indirectly. Children adopt certain attitudes when their parents reinforce attitudes they
approve. Substantial social learning occurs through modeling in which individuals acquire attitudes
by observing others. According to social learning theory, people engage in crime because of their
association with others who engage in crime.
Components of Attitude
The three main components of attitude are:
o Affective component: this involves a persons feelings / emotions about the attitude object.
For example: I am scared of spiders.
o Behavioral component: the way the attitude we have influences how we act or behave. For
example: I will avoid spiders and scream if I see one.
o Cognitive component: this involves a persons belief / knowledge about an attitude object.
For example: I believe spiders are dangerous.
Perception- Meaning and Process.

Perception is a process by which individuals organize and interpret their sensory impressions in
order to give meaning to their environment. However, what we perceive can be substantially
different from objective reality. For example, all employees in a firm may view it as a great place to
workfavorable working conditions, interesting job assignments, good pay, excellent benefits,
understanding and responsible managementbut, as most of us know, its very unusual to find
such agreement.
The perception process has six different phrases i.e receiving, selecting, organizing, interpreting,
checking and reacting to the stimuli or data. The process is influenced by the perceiver as well as
the situation. The process is as follows-
Receiving: The perception process starts with the receipt of stimuli or data from various sources.
The datas are received through the sensory organs. The sensory organs are vision, hearing, smell,
touch and taste. Sensory organs not only receives physical object but also receives data regarding
non-physical objects
Selection: After receiving data, some of them are selected for further processing because it is not
possible to select all of them. There are two types of factors, which govern the selection of data:
o External Factors: These factors influencing the selection of data are location, intensity,
size, contrast, repetition, motion etc.
o Internal Factors: -These factors influencing the selection of data are learning, age
difference, psychological needs, interest etc.

Organizing: After selection of data they are organized systematically to make it meaningful. In
simple words, the aspect of forming bit of information into meaningful wholes is called organizing.
There are three dimensions of perceptual organizing
o Figure ground: It is a principle, which states that the relationship of a target to its
background influences perception. In other words, according to this principle, the object
stands out separately from their background.
o Perceptual Grouping: The principle of grouping includes the similarity, proximity, closure
and continuity.
Similarity means objects of similar shape, size and colour should be grouped together
Proximity means to perceive the factors together which are near to each other
Closure means to perceive the whole part when nothing exists. It means to close the
gap, which are unfilled by sensory organs.
o Perceptual Constancy: It refers to a persons ability to perceive certain characteristics of

an object as remaining constant, despite of variations in the stimuli (data) that provide us
conflicting / contradicting information.
Constancy gives a person the sense of stability in a changing world.
Interpreting: After the data is received and organized, the perceiver interprets or assigns meaning
to the information. Interpretation of stimuli (data) is affected by the characteristics of the situation,
perceiver and the target itself. It is an important phase of perception because only after
interpretation, perception is about to take place. There are several factors that affect the
interpretation of data like attribution, stereo typing, halo effect etc.
Checking: After the data is received and interpreted, the perceiver checks whether his
interpretations are right or wrong. To test the reliability of the interpretation, a person may put up a
series of questions to himself and also answers them to confirm whether his perception about an
individual or object is correct or not. This was one of the way to check the interpretation of
perception. The another way to check the result of interpretation may be done by putting up such
questions to other and confirm with their answers.
Reacting: The last phase in perception is reacting. The perceiver may take some action in relation
to his perception. The action of a perceiver depends upon the perception whether it is favorable or
unfavorable. The action will be positive if perception is favorable and the action will be negative if
perception is unfavourable.

Factors influencing perception.
Link between perception and individual decision making.

Individuals in organizations make decisions, choices from among two or more alternatives. Top
managers determine their organizations goals, what products or services to offer, how best to
finance operations, or where to locate a new manufacturing plant. Middle- and lower-level
managers set production schedules, select new employees, and decide how to allocate pay raises.
Non managerial employees decide how much effort to put forth at work and whether to comply
with a bosss request. Organizations have begun empowering their non-managerial employees with
decision-making authority historically reserved for managers alone. Individual decision making is
thus an important part of organizational behavior. But the way individuals make decisions and the
quality of their choices are largely influenced by their perceptions. Decision making occurs as a
reaction to a problem.
Rational Decision making model.

This model describes how individuals should behave in order to maximize some outcome.These
decisions follow a six-step rational decision-making model. The six steps are listed in the below.
The rational decision-making model relies on a number of assumptions, including that the decision
maker has complete information, is able to identify all the relevant options in an unbiased manner,
and chooses the option with the highest utility.
Steps in decision making:-

Define the problem.

Identifying the decision criteria.

Allocate weights to the criteria.
Develop the alternatives.
Evaluating alternatives in terms of the goal sought.
Select the best alternative i.e. making a decision.
Assumptions of the models:-

1. Problem clarity- Decision maker has complete information regarding the decision
situation.
2. Known options- Decision maker can identify all relevant criteria and alternatives.
3. Clear and constant preference.
4. No time or cost constraints.
5. Maximum pay off.
Intuition.
Perhaps the least rational way of making decisions is intuitive decision making , an unconscious
process created from distilled experience. It occurs outside conscious thought; it relies on holistic
associations, or links between disparate pieces of information; its fast; and its affectively charged,
meaning it usually engages the emotions. While intuition isnt rational, it isnt necessarily wrong.
Nor does it always contradict rational analysis; rather, the two can complement each other. But nor
is intuition superstition, or the product of some magical or paranormal sixth sense. As one recent
review noted, Intuition is a highly complex and highly developed form of reasoning that is based
on years of experience and learning. For most of the twentieth century, experts believed decision
makers use of intuition was irrational or ineffective. Thats no longer the case. We now recognize
that rational analysis has been overemphasized and, in certain instances, relying on intuition can
improve decision making. But we cant rely on it too much. Because it is so unquantifiable, its
hard to know when our hunches are right or wrong. The key is neither to abandon nor rely solely on
intuition, but to supplement it with evidence and good judgment.
Affect
Affect is a generic term that covers a broad range of feelings people experience, including both
emotions and moods. Emotions are intense feelings directed at someone or something. Moods are
less intense feelings than emotions and often (though not always) arise without a specific event
acting as a stimulus.
Mood
A mood is an emotional state. Moods differ from emotions in that they are less specific, less
intense, and less likely to be triggered by a particular stimulus or event. Moods generally have
either a positive or negative valence. In other words, people typically speak of being in a good
mood or a bad mood.

Emotion and their significance

The word emotion includes a wide range of observable behaviors, expressed feelings, and changes
in the body state. This diversity in intended meanings of the word emotion make it hard to study.
For many of us emotions are very personal states, difficult to define or to identify except in the
most obvious instances. Moreover, many aspects of emotion seem unconscious to us. Even simple
emotional states appear to be much more complicated than states as hunger and thirst.
:
Emotion is a feeling that is private and subjective. Humans can report an extraordinary
range of states, which they can feel or experience. Some reports are accompanied by
obvious signs of enjoyment or distress, but often these reports have no overt indicators.
In many cases, the emotions we note in ourselves seem to be blends of different states.
Emotion is a state of psychological arousal an expression or display of distinctive

somatic and autonomic responses. This emphasis suggests that emotional states can be
defined by particular constellations of bodily responses. Specifically, these responses
involve autonomously innervated visceral organs, like the heart or stomach. This second
aspect of emotion allows us to examine emotions in both animals and human beings.
Emotions are actions commonly "deemed", such as defending or attacking in response

to a threat. This aspect of emotion is especially relevant to Darwin's point of view of the
functional roles of emotion. He said that emotions had an important survival role
because they generated actions to dangerous situations
Basic Emotions
There are dozens, including anger, contempt, enthusiasm, envy, fear, frustration, disappointment,
embarrassment, disgust, happiness, hate, hope, jealousy, joy, love, pride, surprise, and sadness.
Numerous researchers have tried to limit them to a fundamental set. But some argue that it makes
no sense to think in terms of basic emotions because even emotions we rarely experience, such as
shock, can have a powerful effect on us.
Emotional Intelligence.
Emotional Intelligence is a term that Daniel Goleman coined to describe a bundle of psychological
attributes that many strong and effective leaders exhibit.Emotional intelligence (EQ) is the ability to
identify, use, understand, and manage emotions in positive ways to relieve stress, communicate

effectively, empathize with others, overcome challenges, and defuse conflict. Emotional
intelligence impacts many different aspects of our daily life, such as the way we behave and the
way we interact with others.
Self- Awareness: The ability to understand ones own moods, emotions and drives, as well as their
effect on others.
Self- Regulation: The ability to control or redirect disruptive impulses or moods, that is, to think
before acting.
Motivation: A passion for work that goes beyond money or status and a propensity to pursue goals
with energy and persistence.
Empathy: The ability to understand the feelings and viewpoints of subordinates and to take those
into account when making decisions.
Social Skills: It is friendliness with a purpose.
Relationship management.
Relationship management refers to managing the relation between the various employees in an
organization. The relationship can be between employee and the employer as well as between
employees at the same level.Employee relationship management is an art which effectively
monitors and manages the relation between individuals either of the same team or from different
teams. Employee relationship management activity helps in strengthening the bond among the
employees and ensures that each one is contented and enjoys a healthy relation with each other.
Employee relationship management includes various activities undertaken by the superiors or the
management to develop a healthy relation among the employees and extract the best out of each
team member.
Transparency in communication is of utmost importance for a healthy employee relationship

management. A single point of contact must be assigned who should be made responsible for
handling queries of all the team members and escalating it to the seniors. Confusions are bound to
arise if all of them would walk up to their superiors with their problems. Let the team members
decide their SPOC. In such cases employees actually know who to get in touch with in case of a
query and in the absence of their superiors. The hierarchy should not be too complicated and every
employee should be accessible to each other.
Encourage group activities at the workplace. Motivate individuals to work together probably in a
group so that the comfort level increases. The more they talk, the more they get to know each other.
Give them a target, a deadline and ask them to take each others help and reach to a conclusion.
They would definitely come closer this way and start trusting each other more. An individual
spends the maximum time at his workplace and one should treat his team members as a part of
ones extended family. It is important to celebrate festivals at organization, the same way we do at
our homes.
Assign challenging work to your team members so that they feel motivated to deliver their
level best. Do not assign something which they do not find interesting. The responsibilities must be
divided equally among the team members and no employee should be overburdened. Every
employee should be aware of his key responsibility areas to avoid confusions. No way should the
work get monotonous.
The concept of workstations and cubicles must be promoted rather than closed cabins. People
sitting in closed cabins tend to get cut off from rest of the employees in the organization and are
generally lost in their own sweet world. They would enter their cabins in the morning and come out
in the evening and thus sometimes even dont get the opportunity to exchange greetings with their
fellow workers.
The employees must be motivated to avoid politics and blame games at work. Such activities
are considered highly unproductive and spoil the relationship among the employees. Backbiting is a
strict no at the workplace. Avoid getting into unnecessary controversies and useless criticism at
work. Respect your team members as well as your superiors. It is important that one trusts his
management rather than unnecessarily cribbing and finding faults. Avoid conflicts and try to adjust
with each other. It is okay to be friends with your colleagues but dont have unrealistic expectations
from anyone.
Partialities must be avoided for a better employee relationship. Treat everyone as one and every
individual must respect each others privacy. There is a limit to everything and thus over indulgence
in each others work, too much of a friendly nature should be avoided. For a better employee
relationship management, it is important that employees have a positive frame of mind and dont
always consider their colleagues as their enemies. Dont always assume that your fellow team
member would say something against you in front of your boss. Avoid disputes, misunderstandings,
instead work together, enjoy together and make the organization a better place to work.

MODULE 6
MOTIVATION AND LEADERSHIP
Motivation.
The processes that account for an individuals intensity, direction, and persistence of effort toward
attaining a goal.
Its key elements are:
Intensity: how hard a person tries
Direction: toward beneficial goal
Persistence: how long a person tries or how long a person can maintain effort.
Motivated individuals stay with a task long enough to achieve their goal.
Theories of motivation.
Needs theory.
Maslow hypothesized that within every human being, there exists a hierarchy of five needs:
I. Physiological needs- These are the basic needs of air, water, food, clothing and
shelter. In other words, physiological needs are the needs for
basic amenities of life.
and external Esteem needs (recognition, power, status, attention and admiration).
II. Safety needs- Safety needs include physical, environmental and emotional safety and
protection. For instance- Job security, financial security, protection
from animals, family security, health security, etc.
III. Social needs- Social needs include the need for love, affection, care, belongingness,
and friendship.
IV. Esteem needs- Esteem needs are of two types: internal esteem needs (self- respect,
confidence, competence, achievement and freedom)
V. Self-actualization needs- This include the urge to become what you are capable of
becoming / what you have the potential to become. It includes the need for growth

and self-contentment. It also includes desire for gaining more knowledge, social-
service, creativity and being aesthetic. The self- actualization needs are never fully
satiable. As an individual grows psychologically, opportunities keep cropping up to
continue growing. Although no need is ever fully gratified, a substantially satisfied need
no longer motivates. Thus as each becomes substantially satisfied, the next one becomes
dominant. So if you want to motivate someone, according to Maslow, you need to
understand what level of the hierarchy that person is currently on and focus on
satisfying needs at or above that level, moving up the steps in the below figure . Maslow
separated the five needs into higher and lower orders. Physiological and safety needs,
where the theory says people start, were lower-order needs, and social, esteem, and self-
actualization were higher-order needs . Higher-order needs are satisfied internally
(within the person), whereas lower-order needs are predominantly satisfied externally
(by things such as pay, union contracts, and tenure).
Maslows theory has received wide recognition, particularly among practicing

managers. It is intuitively logical and easy to understand. When introduced, it provided
a compelling alternative to behaviorist theories that posited only physiological and
safety needs as important.
Twofactor theory.
In 1959, Frederick Herzberg, a behavioural scientist proposed a two-factor theory or the motivator-
hygiene theory. According to Herzberg, there are some job factors that result in satisfaction while

there are other job factors that prevent dissatisfaction. According to Herzberg, the opposite of
Satisfaction is No satisfaction and the opposite of Dissatisfaction is No Dissatisfaction.
Herzberg classified these job factors into two categories-
Hygiene factors- Hygiene factors are those job factors which are essential for existence of
motivation at workplace. These do not lead to positive satisfaction for long-term. But if these
factors are absent / if these factors are non-existent at workplace, then they lead to dissatisfaction.
In other words, hygiene factors are those factors which when adequate/reasonable in a job, pacify
the employees and do not make them dissatisfied. These factors are extrinsic to work. Hygiene
factors are also called as dissatisfies or maintenance factors as they are required to avoid
dissatisfaction. These factors describe the job environment/scenario. The hygiene factors
symbolized the physiological needs which the individuals wanted and expected to be fulfilled.
Hygiene factors include:
Pay - The pay or salary structure should be appropriate and reasonable. It must be
equal and competitive to those in the same industry in the same domain.
Company Policies and administrative policies - The company policies should not be
too rigid. They should be fair and clear. It should include flexible working hours, dress
code, breaks, vacation, etc.
Fringe benefits - The employees should be offered health care plans (mediclaim),
benefits for the family members, employee help programmes, etc.
Physical Working conditions - The working conditions should be safe, clean and
hygienic. The work equipment should be updated and well-maintained.
Status - The employees status within the organization should be familiar and retained.
Interpersonal relations - The relationship of the employees with his peers, superiors
and subordinates should be appropriate and acceptable. There should be no conflict or
humiliation element present.
Job Security - The organization must provide job security to the employees.
Motivational factors- According to Herzberg, the hygiene factors cannot be regarded as

motivators. The motivational factors yield positive satisfaction. These factors are inherent to work.
These factors motivate the employees for a superior performance. These factors are called satisfiers.
These are factors involved in performing the job. Employees find these factors intrinsically
rewarding. The motivators symbolized the psychological needs that were perceived as an additional
benefit. Motivational factors include:
Recognition - The employees should be praised and recognized for their

accomplishments by the managers.
Sense of achievement - The employees must have a sense of achievement. This
depends on the job. There must be a fruit of some sort in the job.
Growth and promotional opportunities - There must be growth and advancement

opportunities in an organization to motivate the employees to perform well.
Responsibility - The employees must hold themselves responsible for the work. The
managers should give them ownership of the work. They should minimize control but
retain accountability.
Meaningfulness of the work - The work itself should be meaningful, interesting and
challenging for the employee to perform and to get motivated.
Theory X and Y.
Douglas McGregor proposed two distinct views of human beings: one basically negative, labeled
Theory X, and the other basically positive, labeled Theory Y. After studying managers dealings
with employees, McGregor concluded that their views of the nature of human beings are based on
certain assumptions that mold their behavior. Under Theory X, managers believe employees
inherently dislike work and must therefore be directed or even coerced into performing it. Under
Theory Y, in contrast, managers assume employees can view work as being as natural as rest or
play, and therefore the average person can learn to accept, and even seek, responsibility.
Theory X assumptions, management's role is to coerce and control employees.
People have an inherent dislike for work and will avoid it whenever possible.
People must be coerced, controlled, directed, or threatened with punishment in
order to get them to achieve the organizational objectives.
People prefer to be directed, do not want responsibility, and have little or no
ambition.
People seek security above all else.
Theory Y
With Theory Y assumptions, management's role is to develop the potential in employees
and help them to release that potential towards common goals.
Work is as natural as play and rest.

People will exercise self-direction if they are committed to the objectives (they are
not lazy).
Commitment to objectives is a function of the rewards associated with their
achievement.
People learn to accept and seek responsibility.
Creativity, ingenuity, and imagination are widely distributed among the population.
People are capable of using these abilities to solve an organizational problem.
People have potential.
McClellands Theory of Needs

McClellands theory of needs was developed by David McClelland and his

associates. It looks at three needs:
Need for achievement (nAch) is the drive to excel, to achieve in relationship to a set
of standards.
Need for power (nPow) is the need to make others behave in a way they would not
have otherwise.
Need for affiliation (nAff) is the desire for friendly and close interpersonal
relationships.
ERG Theory of Motivation.

To bring Maslows need hierarchy theory of motivation in synchronization with empirical research,
Clayton Alderfer redefined it in his own terms. His rework is called as ERG theory of motivation.
He categorized Maslows hierarchy of needs into three simpler and broader classes of needs:
Existence needs- These include need for basic material necessities. In short, it includes
an individuals physiological and physical safety needs.
Relatedness needs- These include the aspiration individuals have for maintaining
significant interpersonal relationships (be it with family, peers or
superiors), getting public fame and recognition. Maslows social
needs and external component of esteem needs fall under this
class of need.
Growth needs- These include need for self-development and personal growth and
advancement. Maslows self-actualization needs and intrinsic
component of esteem needs fall under this category of need.
Reinforcement Theory of Motivation

Reinforcement theory of motivation was proposed by BF Skinner and his associates. It states that
individuals behaviour is a function of its consequences. It is based on law of effect, i.e,
individuals behaviour with positive consequences tends to be repeated, but individuals behaviour
with negative consequences tends not to be repeated.
Reinforcement theory of motivation overlooks the internal state of individual, i.e., the inner feelings
and drives of individuals are ignored by Skinner. This theory focuses totally on what happens to an
individual when he takes some action. Thus, according to Skinner, the external environment of the
organization must be designed effectively and positively so as to motivate the employee. This
theory is a strong tool for analyzing controlling mechanism for individuals behaviour. However, it
does not focus on the causes of individuals behaviour.

The managers use the following methods for controlling the behaviour of the
employees:
Positive Reinforcement- This implies giving a positive response when an individual
shows positive and required behaviour. For example - Immediately praising an
employee for coming early for job. This will increase probability of outstanding
behaviour occurring again. Reward is a positive reinforce, but not necessarily. If and
only if the employees behaviour improves, reward can said to be a positive reinforcer.
Positive reinforcement stimulates occurrence of a behaviour. It must be noted that more
spontaneous is the giving of reward, the greater reinforcement value it has.
Negative Reinforcement- This implies rewarding an employee by removing negative /

undesirable consequences. Both positive and negative reinforcement can be used for
increasing desirable / required behaviour.
Punishment- It implies removing positive consequences so as to lower the probability

of repeating undesirable behaviour in future. In other words, punishment means
applying undesirable consequence for showing undesirable behaviour. For instance -
Suspending an employee for breaking the organizational rules. Punishment can be
equalized by positive reinforcement from alternative source.
Extinction- It implies absence of reinforcements. In other words, extinction implies

lowering the probability of undesired behaviour by removing reward for that kind of
behaviour. For instance - if an employee no longer receives praise and admiration for
his good work, he may feel that his behaviour is generating no fruitful consequence.
Extinction may unintentionally lower desirable behaviour.
Expectancy Theory (Victor Vroom)

The Expectancy theory states that employees motivation is an outcome of how much an individual
wants a reward (Valence), the assessment that the likelihood that the effort will lead to expected
performance (Expectancy) and the belief that the performance will lead to reward (Instrumentality).
In short, Valence is the significance associated by an individual about the expected outcome. It is an
expected and not the actual satisfaction that an employee expects to receive after achieving the
goals. Expectancy is the faith that better efforts will result in better performance. Expectancy is
influenced by factors such as possession of appropriate skills for performing the job, availability of
right resources, availability of crucial information and getting the required support for completing
the job.

Equity Theory
The core of the equity theory is the principle of balance or equity. As per this motivation theory, an
individuals motivation level is correlated to his perception of equity, fairness and justice practiced
by the management. Higher is individuals perception of fairness, greater is the motivation level and
vice versa. While evaluating fairness, employee compares the job input (in terms of contribution) to
outcome (in terms of compensation) and also compares the same with that of another peer of equal
cadre/category. D/I ratio (output-input ratio) is used to make such a comparison. According to this
theory, Individuals compare their job inputs and outcomes with those of others and then respond to
eliminate any inequities.
Goal Setting Theory
This theory states that goal setting is essentially linked to task performance. It states that specific
and challenging goals along with appropriate feedback contribute to higher and better task
performance. In simple words, goals indicate and give direction to an employee about what needs to
be done and how much efforts are required to be put in. The important features of goal-setting
theory are as follows:
The willingness to work towards attainment of goal is main source of job
motivation. Clear, particular and difficult goals are greater motivating factors
than easy, general and vague goals.
Specific and clear goals lead to greater output and better performance.
Unambiguous, measurable and clear goals accompanied by a deadline for
completion avoids misunderstanding.
Goals should be realistic and challenging. This gives an individual a feeling of
pride and triumph when he attains them, and sets him up for attainment of next
goal. The more challenging the goal, the greater is the reward generally and the
more is the passion for achieving it.
Better and appropriate feedback of results directs the employee behaviour and
contributes to higher performance than absence of feedback. Feedback is a
means of gaining reputation, making clarifications and regulating goal
difficulties. It helps employees to work with more involvement and leads to
greater job satisfaction.
Employees participation in goal is not always desirable.
Participation of setting goal, however, makes goal more acceptable and leads to
more involvement.
Goal setting theory has certain eventualities such as:
Self-efficacy- Self-efficacy is the individuals self-confidence and faith that he/she has potential of
performing the task. Higher the level of self-efficacy, greater will be the efforts put in by the
individual when they face challenging tasks. While, lower the level of self-efficacy, less will be the
efforts put in by the individual or he might even quit while meeting challenges.
Goal commitment- Goal setting theory assumes that the individual is

committed to the goal and will not leave the goal. The goal commitment is
dependent on the following factors:
Goals are made open, known and broadcasted.
Goals should be set-self by individual rather than designated.
Individuals set goals should be consistent with the organizational goals and
vision.
Leadership- Meaning.
Leadership is a process by which an executive can direct, guide and influence the behavior and
work of others towards accomplishment of specific goals in a given situation. Leadership is the
ability of a manager to induce the subordinates to work with confidence and zeal.
Leadership is the potential to influence behaviour of others. It is also defined as the capacity to
influence a group towards the realization of a goal. Leaders are required to develop future visions,
and to motivate the organizational members to want to achieve the visions.
Styles of leadership.
Some of the important leadership styles are as follows:
Autocratic leadership style: In this style of leadership, a leader has complete command and hold
over their employees/team. The team cannot put forward their views even if they are best for the
teams or organizational interests. They cannot criticize or question the leaders way of getting
things done. The leader himself gets the things done. The advantage of this style is that it leads to
speedy decision-making and greater productivity under leaders supervision. Drawbacks of this
leadership style are that it leads to greater employee absenteeism and turnover. This leadership style
works only when the leader is the best in performing or when the job is monotonous, unskilled and
routine in nature or where the project is short-term and risky.
The Laissez Faire Leadership Style: Here, the leader totally trusts their employees/team to
perform the job themselves. He just concentrates on the intellectual/rational aspect of his work and
does not focus on the management aspect of his work. The team/employees are welcomed to share
their views and provide suggestions which are best for organizational interests. This leadership style
works only when the employees are skilled, loyal, experienced and intellectual.

Democrative/Participative leadership style: The leaders invite and encourage the team members
to play an important role in decision-making process, though the ultimate decision-making power
rests with the leader. The leader guides the employees on what to perform and how to perform,
while the employees communicate to the leader their experience and the suggestions if any. The
advantages of this leadership style are that it leads to satisfied, motivated and more skilled
employees. It leads to an optimistic work environment and also encourages creativity. This
leadership style has the only drawback that it is time-consuming.
Bureaucratic leadership: Here the leaders strictly adhere to the organizational rules and policies.
Also, they make sure that the employees/team also strictly follows the rules and procedures.
Promotions take place on the basis of employees ability to adhere to organizational rules. This
leadership style gradually develops over time. This leadership style is more suitable when safe work
conditions and quality are required. But this leadership style discourages creativity and does not
make employees self-contented.
Leadership Theories.
Some of the important leadership theories are as follows:
"Great Man" Theories:

Great man theories assume that the capacity for leadership is inherent that great leaders are born,
not made. These theories often portray great leaders as heroic, mythic and destined to rise to
leadership when needed. The term "Great Man" was used because, at the time, leadership was
thought of primarily as a male quality, especially in terms of military leadership.
Trait Theories:
Trait theories often identify particular personality or behavioral characteristics shared by leaders.
For example, traits like extraversion, self-confidence, and courage are all traits that could
potentially be linked to great 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. There are plenty of people who possess the personality traits associated with leadership,
yet many of these people never seek out positions of leadership.
Contingency Theories:
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.
Situational Theories:

Situational theories propose that leaders choose the best course of action based upon situational
variables. Different styles of leadership may be more appropriate for certain types of decision-
making. For example, in a situation where the leader is the most knowledgeable and experienced
member of a group, an authoritarian style might be most appropriate. In other instances where
group members are skilled experts, a democratic style would be more effective.
Behavioral Theories:
Behavioral theories of leadership are based upon the belief that great leaders are made, not born.
Consider it the flip-side of the Great Man theories. 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.
Participative Theories:
Participative leadership theories suggest that the ideal leadership style is one that takes the input of
others into account. These leaders encourage participation and contributions from group members
and help group members feel more relevant and committed to the decision-making process. In
participative theories, however, the leader retains the right to allow the input of others.
Management Theories:
Management theories, also known as transactional theories, focus on the role of supervision,
organization and group performance. These theories base leadership on a system of rewards and
punishments. Managerial theories are often used in business; when employees are successful, they
are rewarded; when they fail, they are reprimanded or punished. Learn more about theories of
transactional leadership.
Relationship Theories:
Relationship theories, also known as transformational theories, focus upon the connections formed
between leaders and followers. Transformational leaders motivate and inspire people by helping
group members see the importance and higher good of the task. These leaders are focused on the
performance of group members, but also want each person to fulfill his or her potential. Leaders
with this style often have high ethical and moral standards.
Trait theory.
The trait model of leadership is based on the characteristics of many leaders - both successful and
unsuccessful - and is used to predict leadership effectiveness. The resulting lists of traits are then
compared to those of potential leaders to assess their likelihood of success or failure.
Successful leaders definitely have interests, abilities, and personality traits that are different from
those of the less effective leaders. Through many researchers conducted in the last three decades of
the 20th century, a set of core traits of successful leaders have been identified. These traits are not

responsible solely to identify whether a person will be a successful leader or not, but they are
essentially seen as preconditions that endow people with leadership potential.
Among the core traits identified are:
Achievement drive: High level of effort, high levels of ambition, energy and
initiative
Leadership motivation: an intense desire to lead others to reach shared goals
Honesty and integrity: trustworthy, reliable, and open
Self-confidence: Belief in ones self, ideas, and ability
Cognitive ability: Capable of exercising good judgment, strong analytical abilities,
and conceptually skilled
Knowledge of business: Knowledge of industry and other technical matters
Emotional Maturity: well adjusted, does not suffer from severe psychological
disorders.
Others: charisma, creativity and flexibility
Strengths/Advantages of Trait Theory

It is naturally pleasing theory.
It is valid as lot of research has validated the foundation and basis of the theory.
It serves as a yardstick against which the leadership traits of an individual can be
assessed.
It gives a detailed knowledge and understanding of the leader element in the
leadership process.
Limitations of the Trait Theory

There is bound to be some subjective judgment in determining who is regarded as a
good or successful leader.
The list of possible traits tends to be very long. More than 100 different traits of
successful leaders in various leadership positions have been identified. These
descriptions are simply generalities.
There is also a disagreement over which traits are the most important for an effective
leader.
The model attempts to relate physical traits such as, height and weight, to effective
leadership. Most of these factors relate to situational factors. For example, a
minimum weight and height might be necessary to perform the tasks efficiently in a
military leadership position. In business organizations, these are not the requirements
to be an effective leader.
The theory is very complex.

Behavioural 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.
There are two important Behavioral studies:-
Ohio State University (1940s)
As leadership studies that were aimed at identifying the appropriate traits didn't yield any
conclusive results, a group of people from Ohio State University developed a list of 150 statements
from their generated responses that included 1,800 hundred statements. The list was designed to
measure nine different behavioral leadership dimensions. The resulting questionnaire is now well-
known as the LBDQ or the Leaders Behavior Description Questionnaire. These were defined as
Consideration (People Oriented behavioral Leaders) and Initiating Structure (Task Oriented
Leaders).
Consideration is the extent to which a persons job relationships are characterized by mutual trust,
respect for employees ideas, and regard for their feelings. A leader high in consideration helps
employees with personal problems, is friendly and approachable, treats all employees as equals, and
expresses appreciation and support. In a recent survey, when asked to indicate what most motivated
them at work, 66 percent of employees mentioned appreciation.
Initiating structure is the extent to which a leader is likely to define and structure his or her role
and those of employees in the search for goal attainment. It includes behavior that attempts to
organize work, work relationships, and goals. A leader high in initiating structure is someone who
assigns group members to particular tasks, expects workers to maintain definite standards of
performance, and emphasizes the meeting of deadlines.
People oriented leaders

The people oriented leaders are focusing their behaviors on ensuring that the inner needs of the
people are satisfied. Thus they will seek to motivate their staff through emphasizing the human
relation. People oriented leaders still focus on the task and the results; they just achieve them
through different means. Leaders with a people focus will have behaviors that are in line with:
Encouraging
Observing
Listening
Coaching and Mentoring.
Task oriented leaders

The task concerned leaders are focusing their behaviors on the organizational structure, the
operating procedures (S.O.P.) and they like to keep control. Task-oriented leaders are still concern
with their staff motivation; however it's not their main concern. They will favor behaviors that are
in line with:
Initiating
Organizing
Clarifying
Information Gathering
University of Michigan (1950s)
Lead by the famous organizational psychologist, Dr. RensisLikert, the leadership studies at the
University of Michigan identified three characteristics of effective leadership; two of which were
previously observed in studies that had been conducted at Ohio State University. The study showed
that task and relationship-oriented behaviors weren't of major significance within the world of
organizational psychology. However it was the third observation that introduced a new concept, one
of participative leadership.
The Michigan group also came up with two behavioral dimensions: the employee-oriented leader
emphasized interpersonal relationships by taking a personal interest in the needs of employees and
accepting individual differences among them, and the production oriented leader emphasized the
technical or task aspects of the job, focusing on accomplishing the groups tasks. These dimensions
are closely related to the Ohio State dimensions. Employee-oriented leadership is similar to
consideration, and production-oriented leadership is similar to initiating structure. In fact, most
leadership researchers use the terms synonymously.
Managerial Grid.
Robert Blake and Jane Mouton (1960s) proposed a graphic portrayal of leadership styles through a
managerial grid (sometimes called leadership grid). The grid depicted two dimensions of leader
behavior, concern for people (accommodating peoples needs and giving them priority) on y-axis
and concern for production (keeping tight schedules) on x-axis, with each dimension ranging from
low (1) to high (9), thus creating 81 different positions in which the leaders style may fall.

The five resulting leadership styles are as follows:
Impoverished Management (1, 1): Managers with this approach are low on both the
dimensions and exercise minimum effort to get the work done from subordinates. The
leader has low concern for employee satisfaction and work deadlines and as a result
disharmony and disorganization prevail within the organization. The leaders are termed
ineffective wherein their action is merely aimed at preserving job and seniority.
Task management (9, 1): Also called dictatorial or perish style. Here leaders are more
concerned about production and have less concern for people. The style is based on
theory X of McGregor. The employees needs are not taken care of and they are simply
a means to an end. The leader believes that efficiency can result only through proper
organization of work systems and through elimination of people wherever possible.
Such a style can definitely increase the output of organization in short run but due to the
strict policies and procedures, high labour turnover is inevitable.
Middle-of-the-Road (5, 5): This is basically a compromising style wherein the leader
tries to maintain a balance between goals of company and the needs of people. The
leader does not push the boundaries of achievement resulting in average performance for
organization. Here neither employee nor production needs are fully met.
Country Club (1, 9): This is a collegial style characterized by low task and high people
orientation where the leader gives thoughtful attention to the needs of people thus

providing them with a friendly and comfortable environment. The leader feels that such
a treatment with employees will lead to self-motivation and will find people working
hard on their own. However, a low focus on tasks can hamper production and lead to
questionable results.
Team Management (9, 9): Characterized by high people and task focus, the style is
based on the theory Y of McGregor and has been termed as most effective style
according to Blake and Mouton. The leader feels that empowerment, commitment, trust,
and respect are the key elements in creating a team atmosphere which will automatically
result in high employee satisfaction and production.
Advantages of Blake and Moutons Managerial Grid:
The Managerial or Leadership Grid is used to help managers analyze their own
leadership styles through a technique known as grid training. This is done by
administering a questionnaire that helps managers identify how they stand with respect
to their concern for production and people. The training is aimed at basically helping
leaders reach to the ideal state of 9, 9.
Limitations of Blake and Moutons Managerial Grid:
The model ignores the importance of internal and external limits, matter and scenario.
Also, there are some more aspects of leadership that can be covered but are not.
Situational theories-Fiedlers Contingency Model.
Fred E. Fiedlers contingency theory of leadership effectiveness was based on studies of a wide
range of group effectiveness, and concentrated on the relationship between leadership and
organizational performance. This is one of the earliest situation-contingent leadership theories given
by Fiedler. According to him, if an organization attempts to achieve group effectiveness through
leadership, then there is a need to assess the leader according to an underlying trait, assess the
situation faced by the leader, and construct a proper match between the two.
Leaders trait
In order to assess the attitudes of the leader, Fiedler developed the least preferred co-worker
(LPC) scale in which the leaders are asked about the person with whom they least like to work. The
scale is a questionnaire consisting of 16 items used to reflect a leaders underlying disposition
toward others. The items in the LPC scale are pleasant / unpleasant, friendly / unfriendly, rejecting /
accepting, unenthusiastic / enthusiastic, tense / relaxed, cold / warm,helpful / frustrating,
cooperative / uncooperative, supportive / hostile, quarrelsome / harmonious, efficient / inefficient,
gloomy / cheerful, distant / close, boring / interesting, self-assured / hesitant, open / guarded. Each

item in the scale is given a single ranking of between one and eight points, with eight points
indicating the most favorable rating.
Friendly 8 7 6 5 4 3 2 1 Unfriendly
_ _ _ _ _ _ _ _
Fiedler states that leaders with high LPC scores are relationship-oriented and the ones with low
scores are task-oriented. The high LPC score leaders derived most satisfaction from interpersonal
relationships and therefore evaluate their least preferred co-workers in fairly favorable terms. These
leaders think about the task accomplishment only after the relationship need is well satisfied. On the
other hand, the low LPC score leaders derived satisfaction from performance of the task and
attainment of objectives and only after tasks have been accomplished, these leaders work on
establishing good social and interpersonal relationships.
Situational factor
According to Fiedler, a leaders behavior is dependent upon the favorability of the
leadership situation. Three factors work together to determine how favorable a situation is to
a leader. These are:
o Leader-member relations - The degree to which the leaders is trusted and liked by the
group members, and the willingness of the group members to follow the leaders
guidance.
o Task structure - The degree to which the groups task has been described as structured or
unstructured, has been clearly defined and the extent to which it can be carried out by
detailed instructions
o Position power - The power of the leader by virtue of the organizational position and the
degree to which the leader can exercise authority on group members in order to comply
with and accept his direction and leadership
With the help of these three variables, eight combinations of group-task situations were
constructed by Fiedler. These combinations were used to identify the style of the leader.
Leadership Effectiveness
The leaders effectiveness is determined by the interaction of the leaders style of behavior and the
favorableness of the situational characteristics. The most favorable situation is when leader-member
relations are good, the task is highly structured, and the leader has a strong position power.
Research on the contingency model has shown that task-oriented leaders are more effective in
highly favorable (1, 2, 3) and highly unfavorable situation (7, 8), whereas relationship-oriented
leaders are more effective in situations of intermediate favorableness (4, 5, 6).

Fiedler also suggested that leaders may act differently in different situations. Relationship-oriented
leaders generally display task-oriented behaviors under highly favorable situations and display
relationship-oriented behaviors under unfavorable intermediate favorable situations. Similarly, task-
oriented leaders frequently display task-oriented in unfavorable or intermediate favorable situations
but display relationship-oriented behaviors in favorable situations.
Situational Leadership Theory (SLT).
The Hersey-Blanchard Situational Leadership Theory was created by Dr Paul Hersey, a professor
and author of "The Situational Leader," and Ken Blanchard, author of the best selling "One-Minute
Manager," among others.
The theory states that instead of using just one style, successful leaders should change their
leadership styles based on the maturity of the people they're leading and the details of the task.
Using this theory, leaders should be able to place more or less emphasis on the task, and more or
less emphasis on the relationships with the people they're leading, depending on what's needed to
get the job done successfully.
According to this model, the leader has to match the leadership style according to the readiness of
subordinates which moves in stage and has a cycle. Therefore, this theory is also known as the life-
cycle theory of leadership.
The theory, developed by Paul Hersey and Kenneth Blanchard, is based on the readiness level of
the people the leader is attempting to influence. Readiness is the extent to which followers have the
ability and willingness to accomplish a specific task. Ability is the knowledge, experience, and skill
that an individual possesses to do the job and is called job readiness. Willingness is the motivation
and commitment required to accomplish a given task. The style of leadership depends on the level
of readiness of the followers.
The readiness(R) is divided into a continuum of four levels which are:
R1 - low follower readiness - refers to low ability and low willingness of followers i.e. those
who are unable and insecure.
R2 - low to moderate follower readiness - refers to low ability and high willingness of
followers i.e. those who are unable but confident
R3 - moderate to high follower readiness - refers to high ability and low willingness of
followers i.e. those who are able but insecure
R4 - high follower readiness - refers to high ability and high willingness of followers i.e.
those who are both able and confident

The direction is provided by the leader at the lower levels of readiness. Therefore, the decisions are
leader directed. On the other hand, the direction is provided by the followers at the higher levels of
readiness. Therefore, the decisions in this case are follower directed. When the followers move
from low levels to high levels of readiness, the combinations of task and relationship behaviors
appropriate to the situation begin to change.
For each of the four levels of readiness, the leadership style used may be a combination of task and
relationship behavior.
Task behavior: Extent to which the leader spells out the duties and responsibilities of a
follower which includes providing them direction, setting goals, and defining roles for them.
Usually a one-way communication exists which is meant to provide the direction to the
followers.
Relationship behavior: Extent to which the leader listens to the followers, and provides
encouragement to them. Here, a two-way communication exists between the leader and the
follower.
By combining the task and the relationship behavior, we arrive at the following four different
styles of leadership which correspond with the different levels of readiness
S1 - Telling: This style is most appropriate for low follower readiness (R1). It emphasizes
high task behavior and limited relationship behavior.
S2 - Selling: This style is most appropriate for low to moderate follower readiness (R2). It
emphasizes high amounts of both task and relationship behavior.
S3 - Participating: This style is most appropriate for moderate to high follower readiness
(R3). It emphasizes high amount of relationship behavior but low
amount of task behavior.
S4 -Delegating: This style is most appropriate for high follower readiness (R4). It
emphasizes low levels of both task and relationship behavior.
Maturity Levels
According to Hersey and Blanchard, knowing when to use each style is largely dependent on the
maturity of the person or group you're leading. They break maturity down into four different levels:
M1 People at this level of maturity are at the bottom level of the scale. They lack the
knowledge, skills, or confidence to work on their own, and they often need to be
pushed to take the task on.
M2 At this level, followers might be willing to work on the task, but they still don't have
the skills to complete it successfully.
M3 Here, followers are ready and willing to help with the task. They have more skills than
the M2 group, but they're still not confident in their abilities.
M4 These followers are able to work on their own. They have high confidence and strong

skills, and they're committed to the task.
The Hersey-Blanchard model maps each leadership style to each maturity level, as shown below.
Maturity Level Most Appropriate Leadership Style
M1: Low maturity S1: Telling/directing
M2: Medium maturity, limited skills S2: Selling/coaching
M3: Medium maturity, higher skills but lacking confidence S3: Participating/supporting
M4: High maturity S4: Delegating
1. Transactional and Transformation leadership.
Transactional Leadership
The transactional style of leadership was first described by Max Weber in 1947 and then by
Bernard Bass in 1981. This style is most often used by the managers. It focuses on the basic
management process of controlling, organizing, and short-term planning. The famous examples
of leaders who have used transactional technique include McCarthy and de Gaulle.
Transactional leadership involves motivating and directing followers primarily through

appealing to their own self-interest. The power of transactional leaders comes from their formal
authority and responsibility in the organization. The main goal of the follower is to obey the
instructions of the leader. The style can also be mentioned as a telling style.
The leader believes in motivating through a system of rewards and punishment. If a subordinate
does what is desired, a reward will follow, and if he does not go as per the wishes of the leader, a
punishment will follow. Here, the exchange between leader and follower takes place to achieve
routine performance goals.
These exchanges involve four dimensions:

Contingent Rewards: Transactional leaders link the goal to rewards, clarify expectations,
provide necessary resources, set mutually agreed upon goals, and provide various kinds
of rewards for successful performance. They set SMART (specific, measurable,
attainable, realistic, and timely) goals for their subordinates.

Active Management by Exception: Transactional leaders actively monitor the work of

their subordinates, watch for deviations from rules and standards and taking corrective
action to prevent mistakes.
Passive Management by Exception: Transactional leaders intervene only when standards
are not met or when the performance is not as per the expectations. They may even use
punishment as a response to unacceptable performance.
Laissez-faire: The leader provides an environment where the subordinates get many
opportunities to make decisions. The leader himself abdicates responsibilities and avoids
making decisions and therefore the group often lacks direction.
Assumptions of Transactional Theory

Employees are motivated by reward and punishment.
The subordinates have to obey the orders of the superior.
The subordinates are not self-motivated. They have to be closely monitored and
controlled to get the work done from them.
Implications of Transactional Theory
The transactional leaders overemphasize detailed and short-term goals, and standard rules and
procedures. They do not make an effort to enhance followers creativity and generation of new
ideas. This kind of a leadership style may work well where the organizational problems are simple
and clearly defined. Such leaders tend to not reward or ignore ideas that do not fit with existing
plans and goals.
The transactional leaders are found to be quite effective in guiding efficiency decisions which are
aimed at cutting costs and improving productivity. The transactional leaders tend to be highly
directive and action oriented and their relationship with the followers tends to be transitory and not
based on emotional bonds.
The theory assumes that subordinates can be motivated by simple rewards. The only transaction
between the leader and the followers is the money which the followers receive for their compliance
and effort.
Transformation Leadership
Creating high-performance workforce has become increasingly important and to do so business

leaders must be able to inspire organizational members to go beyond their task requirements. As a
result, new concepts of leadership have emerged - transformational leadership being one of
them.Transformational leadership may be found at all levels of the organization: teams,
departments, divisions, and organization as a whole. Such leaders are visionary, inspiring, daring,
risk-takers, and thoughtful thinkers. They have a charismatic appeal. But charisma alone is

insufficient for changing the way an organization operates. For bringing major changes,
transformational leaders must exhibit the following four factors:
Figure: Model of Transformational Leadership
Inspirational Motivation: The foundation of transformational leadership is the promotion of

consistent vision, mission, and a set of values to the members. Their vision is so compelling
that they know what they want from every interaction. Transformational leaders guide
followers by providing them with a sense of meaning and challenge. They work
enthusiastically and optimistically to foster the spirit of teamwork and commitment.
Intellectual Stimulation: Such leaders encourage their followers to be innovative and

creative. They encourage new ideas from their followers and never criticize them publicly for
the mistakes committed by them. The leaders focus on the what in problems and do not
focus on the blaming part of it. They have no hesitation in discarding an old practice set by
them if it is found ineffective.
Idealized Influence: They believe in the philosophy that a leader can influence followers only
when he practices what he preaches. The leaders act as role models that followers seek to
emulate. Such leaders always win the trust and respect of their followers through their action.
They typically place their followers needs over their own, sacrifice their personal gains for
them, ad demonstrate high standards of ethical conduct. The use of power by such leaders is
aimed at influencing them to strive for the common goals of the organization.
Individualized Consideration: Leaders act as mentors to their followers and reward them for
creativity and innovation. The followers are treated differently according to their talents and
knowledge. They are empowered to make decisions and are always provided with the needed
support to implement their decisions.
MODULE 7
GROUP BEHAVIOUR:
Group Behaviour-Definition &Types

Group is defined as two or more individuals, interacting and interdependent, who have come
together to achieve particular objectives. Groups can be either formal or informal. By a formal
group, we mean one defined by the organizations structure, with designated work assignments
establishing tasks. In formal groups, the behaviors team members should engage in are stipulated by
and directed toward organizational goals. The six members of an airline flight crew are a formal
group. In contrast, an informal group is neither formally structured nor organizationally determined.
Informal groups are natural formations in the work environment that appear in response to the need
for social contact.
Three employees from different departments who regularly have lunch or coffee together are an
informal group.
Research identifies a few common requirements that contribute to recognition of individuals

that work in a collaborative environment considered a "group". These requirements are-

Interdependence: For an individual of the collective to accomplish their part in the

assigned task, they depend, to some degree, on outputs of other collective members.
Social interaction: To accomplish the goal requires some form of verbal or nonverbal
communication amongst members of the collective.
Perception of a group: All members of the collective must agree they are, in fact,
part of a group.
Commonality of purpose: All the members of the collective come together to serve
or attain a common goal.
Favoritism: Members of the same group tend to be favor other members and tend to
discriminate in their favor.
Types of Groups
Group types are routinely distinguished by the work that the groups do:
Production groups consist of front line employees who produce some tangible output.
Autonomous production groups are self-directed or self-managing while semi-autonomous
production groups typically have a dedicated supervisor who oversees all operations.
Service groups consist of employees that work with customers on a repeated basis, such as
airline teams, maintenance groups, sales groups, call centers, etc.
Management groups consist of an executive or senior manager along with managers that
report directly to him/her. Management groups are often able to organize themselves
towards goals such as policy making, budgeting, staffing, and planning.
Project groups are generally cross-function groups of individuals brought together for the
duration of a specific, time-limited project. Project groups are usually disbanded once the
project is complete.
Action and performing groups are groups that typically consist of expert specialists who
conduct complex, time-limited performance events. Examples include musical bands,
military crews, surgery teams, rescue units or professional music groups.
Advisory groups consist of employees that work outside of, but parallel with, production
processes. Examples include quality circles, selection committees, or other advisory groups
pulled together to make recommendations to an organization.
Formation of Groups.
The model of group development was first proposed by Bruce Tuckman in 1965, who maintained
that different phases of group development are all necessary and inevitable in order for the team to

grow, to face up to challenges, to tackle problems, to find solutions, to plan work, and to deliver
results.
The different stages of group formation are:
Stage 1: Forming
During this stage, group members may be anxious and adopt wait-and-see attitude. They will be
formal towards each other. There would be no clear idea of goals or expectations. Besides, they
may not be sure why they are there. This is the stage where the team needs to write its own charter
or mission statement as well as clarify goals. The most important thing here is that goals must have
a personal buy-in.
Stage 2: Storming
During this stage, team members are eager to get going. Conflict can arise as people tend to bring
different ideas of how to accomplish goals. At this time, they notice differences rather than
similarities. This leads to some members dropping out mentally or physically.
At this stage, communication is important. Tensions will increase. So recognizing and publicly
acknowledging accomplishments also become important. It becomes important to participate in
meetings and diversity needs to be valued.
Thus, during the storming stage, the team members begin showing their actual styles. They start
getting impatient. They try to probe into each others area, leading to irritation and frustration.
Control becomes the key concern during this stage.
Stage 3: Norming
This stage is when people begin to recognize ways in which they are alike. They realize that they
are in this together. Hence, they tend to get more social and may forget their focus in favour of
having a good time. This is the time to help with training if applicable. It becomes important to
encourage them in order to feel comfortable with each other and with systems. Also, the group
needs to stay focused on goal.
Thus, during the norming stage, there is conflict resolution. There is greater involvement of team
members. There is a greater we feeling rather than I feeling.
Stage 4: Performing
This stage is when team members are trained, competent, as well as able to do their own problem-
solving. At this time, ways need to be looked at in order to challenge them as well as develop them.
The team is mature now. The members understand their roles and responsibilities. They would
require more input in processes. The members would be self-motivated as well as self-trained.
Thus, their efforts need to be recognized. Growth has to be encouraged. This is done by giving new
challenges to the team.
Thus, teams at the stage of performing are self-controlling, practical, loyal as well as productive.
Focus is there on both performance as well as production.
Stage 5: Adjourning

This stage involves completing the task and breaking up the team. Adjourning stage is for wrapping
up activities and preparing to disband. Some group members are upbeat, basking in the groups
accomplishments. Others may be depressed over the loss of camaraderie
and friendships gained during the work groups life.
Building Effective teams.

Having goals or a clear purpose is important to each of us. In fact, people who set goals are always
more successful than the others.
For leaders who are serious about setting goals, some things are to be kept in mind. These goals
need to be Specific, Measurable, Attainable, Realistic, and with Timelines (SMART). Besides,
for any organization, goals should also be expressed positively. And for a team, goals need to be
personalized for each member of the team.
The four contextual factors most significantly related to team performance are: adequate
resources, effective leadership, a climate of trust, and a performance evaluation and reward
system that reflects team contributions.
Adequate Resources: Teams are part of a larger organization system; every work team relies on
resources outside the group to sustain it. A scarcity of resources directly reduces the ability of a
team to perform its job effectively and achieve its goals. As one study concluded, after looking at
13 factors related to group performance, perhaps one of the most important characteristics of an
effective work group is the support the group receives from the organization. This support includes
timely information, proper equipment, adequate staffing, encouragement, and administrative
assistance.
Leadership and Structure Teams cant function if they cant agree on who is to do what and
ensure all members share the workload. Agreeing on the specifics of work and how they fit together
to integrate individual skills requires leadership and structure, either from management or from the

team members themselves. Its true in self-managed teams that team members absorb many of the
duties typically assumed by managers. However, a managers job then becomes managing outside
(rather than inside) the team.
Leadership is especially important in multi- team systems, in which different teams coordinate their
efforts to produce a desired outcome. Here, leaders need to empower teams by delegating
responsibility to them, and they play the role of facilitator, making sure the teams work together
rather than against one another. Teams that establish shared leadership by effectively delegating it
are more effective than teams with a traditional single-leader structure.
Climate of Trust Members of effective teams trust each other. They also exhibit trust in their
leaders. Interpersonal trust among team members facilitates cooperation, reduces the need to
monitor each others behavior, and bonds members around the belief that others on the team wont
take advantage of them. Team members are more likely to take risks and expose vulnerabilities
when they believe they can trust others on their team. Trust is the foundation of leadership. It
allows a team to accept and commit to its leaders goals and decisions.
Performance Evaluation and Reward Systems How do you get team members to be both
individually and jointly accountable? Individual performance evaluations and incentives may
interfere with the development of high-performance teams. So, in addition to evaluating and
rewarding employees for their individual contributions, management should modify the traditional,
individually oriented evaluation and reward system to reflect team performance and focus on hybrid
systems that recognize individual members for their exceptional contributions and reward the entire
group for positive outcomes. Group based appraisals, profit sharing, gain sharing, small-group
incentives, and other system modifications can reinforce team effort and commitment.
Team Composition
The team composition category includes variables that relate to how teams should be staffedthe
ability and personality of team members, allocation of roles and diversity, size of the team,
and members preference for teamwork.
Abilities of Members Part of a teams performance depend on the knowledge, skills, and abilities
of its individual members. Its true we occasionally read about an athletic team of mediocre players
who, because of excellent coaching, determination, and precision teamwork, beat a far more
talented group. But such cases make the news precisely because they are unusual. A teams
performance is not merely the summation of its individual members abilities. However, these
abilities set limits on what members can do and how effectively they will perform on a team.
Research reveals some insights into team composition and performance. First, when the task entails
considerable thought (solving a complex problem such as reengineering an assembly line), high-
ability teamscomposed of mostly intelligent membersdo better than lower-ability teams,
especially when the workload is distributed evenly. That way, team performance does not depend
on the weakest link. High-ability teams are also more adaptable to changing situations; they can
more effectively apply existing knowledge to new problems.
Finally, the ability of the teams leader also matters. Smart team leaders help less-intelligent team
members when they struggle with a task. But a less intelligent leader can neutralize the effect of a
high-ability team.
Personality of Members We know that personality significantly influences individual employee

behavior. Many of the dimensions identified in the Big Five personality model are also relevant to
team effectiveness; a review of the literature identified three. Specifically, teams that rate higher on
mean levels of conscientiousness and openness to experience tend to perform better, and the
minimum level of team member agreeableness also matters: teams did worse when they had one or
more highly disagreeable members.
Conflict-Meaning.
Disagreements among individuals lead to conflicts and fights. Conflict arises whenever individuals
have different values, opinions, needs, interests and are unable to find a middle way. Conflict is
defined as a clash between individuals arising out of a difference in thought process, attitudes,
understanding, interests, requirements and even sometimes perceptions. A conflict results in heated
arguments, physical abuses and definitely loss of peace and harmony. A Conflict not only can arise
between individuals but also among countries, political parties and states as well. A small conflict
not controlled at the correct time may lead to a large war and rifts among countries leading to major
unrest and disharmony.
Misunderstandings as well as ego clashes also lead to conflicts. Every individual has a different
way to look at things and react to various situations.
Nature of Conflict.
Differences in interest, thought process, perception as well as need lead to a conflict. When
individuals do not agree to each others opinions, a conflict arises. Conflict can occur at any place
be it organizations, groups and even at our homes.
Employees tend to lose their concentration and focus in work if they are engaged in conflicts.
Individuals lose interest in their jobs leading to zero output. They invest all their energies in
fighting with each other and as a result the goals of the organization are never met. No organization
can survive if the targets are not achieved. Never shout at your workplace, always lower your voice
and try to adopt a middle path approach rather than arguing.
Conflicts also lead to disrespect and unnecessary tensions in organizations. Individuals talk ill about
others and spoil the environment; You might be an excellent performer, a diligent worker, but if

you keep on fighting with your fellow workers, you would definitely earn a bad name. You will be
in the limelight but for all the wrong reasons. It is always wise to do your work sincerely, pack your
bags, go home and come fresh the next day. Nobody loves to carry unnecessary tensions, thus it is
always advised not to fight at workplaces. It is not always that you will agree to what the other
person has to say, but fighting will not provide you any solution, instead it would add on to your
tensions. Learn to compromise and discuss with your team. Listen carefully what the other person
has to say and do correct him in a polite way, if he is wrong. Avoid finding faults unnecessarily and
criticizing your colleague. Remember everyone at the office is a part of one big family working
together towards a common goal.
Conflicts at workplace must be avoided and employees must concentrate on achieving their goals.
Give your best in each and every thing you do. Enter your office with a calm and composed mind
and never be hyper or react to anyones statements. Always think before you speak. Adopt a
professional approach at workplace and try to sort out your differences with your fellow workers.
Respect everyone at office and remember fighting is not the only solution.
Types of Conflict.
Task Conflict
Conflicts over content and goals of the work.
Relationship Conflict
Conflict based on interpersonal relationships.
Process Conflict
Conflict over how work gets done.
Process of Conflict.
Stage I: Potential Opposition or Incompatibility
Communication

Semantic difficulties, misunderstandings, and noise
Structure
Size and specialization of jobs
Jurisdictional clarity/ambiguity
Member/goal incompatibility
Leadership styles (close or participative)
Reward systems (win-lose)
Dependence/interdependence of groups
Personal Variables
Differing individual value systems
Personality types
Stage II: Cognition and Personalization
Perceived Conflict
Awareness by one or more parties of the existence of conditions that create opportunities for
conflict to arise.
Felt Conflict
Emotional involvement in a conflict creating anxiety, tenseness, frustration, or hostility.
Stage III: Conflict-Handling Intentions
Competing When one person seeks to satisfy his or her own interests regardless of the
impact on the other parties to the conflict, that person is competing. You compete when you
place a bet that only one person can win, for example.
Collaborating When parties in conflict each desire to fully satisfy the concerns of all
parties, there is cooperation and a search for a mutually beneficial outcome. In
collaborating, the parties intend to solve a problem by clarifying differences rather than by
accommodating various points of view. If you attempt to find a winwin solution that
allows both parties goals to be completely achieved, thats collaborating.
Compromising In compromising, there is no clear winner or loser. Rather, there is a

willingness to ration the object of the conflict and accept a solution that provides incomplete
satisfaction of both parties concerns. The distinguishing characteristic of compromising,
therefore, is that each party intends to give up something. Intentions are not always fixed.
During the course of a conflict, they might change if the parties are able to see the others
point of view or respond emotionally to the others behavior. However, research indicates

people have preferences among the five conflict-handling intentions we just described. We
can predict a persons intentions rather well from a combination of intellectual and
personality characteristics.
Avoiding A person may recognize a conflict exists and want to withdraw from or suppress
it. Examples of avoiding include trying to ignore a conflict and avoiding others with whom
you disagree.
Accommodating A party who seeks to appease an opponent may be willing to place the
opponents interests above his or her own, sacrificing to maintain the relationship. We refer
to this intention as accommodating. Supporting someone elses opinion despite your
reservations about it, for example, is accommodating.
Stage IV: Behavior
When most people think of

conflict situations, they tend to focus on Stage IV because this is where conflicts become
visible. The behavior stage includes the statements, actions, and reactions made by the
conflicting parties, usually as overt attempts to implement their own intentions. As a result of
miscalculations or unskilled enactments, overt behaviors sometimes deviate from these
original intentions. It helps to think of Stage IV as a dynamic process of interaction. For
example, you make a demand on me, I respond by arguing, you threaten me, I threaten you
back, and so on.
If a conflict is dysfunctional, what can the parties do to de-escalate it? Or, conversely, what
options exist if conflict is too low and needs to be increased? This brings us to techniques of
conflict management. The following exhibit lists the major resolution and stimulation
techniques that allow managers to control conflict levels.
Stage V: Outcomes
Functional Outcomes from Conflict

Increased group performance
Improved quality of decisions

Stimulation of creativity and innovation
Encouragement of interest and curiosity
Provision of a medium for problem-solving
Creation of an environment for self-evaluation and change
Creating Functional Conflict

Reward dissent and punish conflict avoiders.
Dysfunctional Outcomes from Conflict

Development of discontent
Reduced group effectiveness
Retarded communication
Reduced group cohesiveness
Infighting among group members overcomes group goals
Conflict Resolution.
Some of the Conflict resolution techniques are:
Problem solving
Face to face meeting of conflicting parties for the purpose of identifying the problem and
resolving it through open discussion.
Super ordinate goals

Creating a shared goal that cannot be attained without the cooperation of each of the
conflicting parties.
Expansion of resources
When a conflict is caused by scarcity of a resource say. Money, promotion,
opportunities, office space- expansion of resources can create a win-win solution.
Avoidance
Withdrawal from, or suppression of, the conflict.
Smoothing
Playing down differences while emphasizing common interest between the conflicting
parties.
Compromise

Each party to the conflict give up something of value.
Authoritive command
Management uses its formal authority to resolve the conflict and then communicate its
desires to the parties involved
Altering human variable

Using behavioral change techniques such as human relations training to alter attitudes and
behaviors that cause conflict.
Altering structural variable

Changing the formal organization structure and the interaction pattern of conflicting
parties through job redesign, transfer, creation of coordinating positions, and the like.
Power and politics

Basis of Power.
Formal Power
Formal power is based on an individuals position in an organization. It can come from the ability
to coerce or reward, or from formal authority.
Coercive Power The coercive power base depends on fear of the negative results from failing to
comply. It rests on the application, or the threat of application, of physical sanctions such as the
infliction of pain, frustration through restriction of movement, or the controlling by force of basic
physiological or safety needs. Reward Power The opposite of coercive power is reward power ,
with which people comply because it produces positive benefits; someone who can distribute
rewards others view as valuable will have power over them. These rewards can be either
financialsuch as controlling pay rates, raises, and bonusesor Non-financial, including
recognition, promotions, interesting work assignments, friendly colleagues, and preferred work
shifts or sales territories.
Legitimate Power In formal groups and organizations, probably the most common access to one or
more of the power bases is through legitimate power. It represents the formal authority to control
and use organizational resources based on structural position in the organization. Legitimate power
is broader than the power to coerce and reward. Specifically, it includes members acceptance of
the authority of a position. We associate power so closely with the concept of hierarchy that just
drawing longer lines in an organization chart leads people to infer the leaders are especially
powerful, and when a powerful executive is described, people tend to put the person at a higher
position when drawing an organization chart.
Personal Power
Many of the most competent and productive chip designers at Intel have power, but they arent
managers and have no formal power. What they have is personal power, which comes from an
individuals unique characteristics. There are two bases of personal power: expertise and the respect
and admiration of others.
Expert Power Expert power is influence wielded as a result of expertise, special skill, or knowledge.
As jobs become more specialized, we become increasingly dependent on experts to achieve goals. It
is generally acknowledged that physicians have expertise and hence expert power: Most of us
follow our doctors advice. Computer specialists, tax accountants, economists, industrial
psychologists, and other specialists wield power as a result of their expertise.
Referent Power Referent power is based on identification with a person who has desirable resources
or personal traits. If I like, respect, and admire you, you can exercise power over me because I want
to please you. Referent power develops out of admiration of another and a desire to be like that
person. It helps explain, for instance, why celebrities are paid millions of dollars to endorse
products in commercials.
Effectiveness of Power tactics.

Legitimacy. Relying on your authority position or saying a request accords with
organizational policies or rules.
Rational persuasion. Presenting logical arguments and factual evidence to
demonstrate a request is reasonable.
Inspirational appeals. Developing emotional commitment by appealing to a targets
values, needs, hopes, and aspirations.
Consultation. Increasing the targets support by involving him or her in deciding how
you will accomplish your plan.
Exchange. Rewarding the target with benefits or favours in exchange for following a
request.
Personal appeals. Asking for compliance based on friendship or loyalty.
Ingratiation. Using flattery, praise, or friendly behaviour prior to making a request.
Pressure. Using warnings, repeated demands, and threats.
Coalitions. Enlisting the aid or support of others to persuade the target to agree.
The ethics of behaving politically.

Sometimes it is difficult to weigh the costs and benefits of a political action, but its ethicality is
clear. The department head who inflates the performance evaluation of a favored employee and
deflates the evaluation of a disfavored employeeand then uses these evaluations to justify giving
the former a big raise and nothing to the latterhas treated the disfavored employee unfairly.
powerful people can become very good at explaining self-serving behaviors in terms of the
organizations best interests. They can persuasively argue that unfair actions are really fair and just.

Our point is that immoral people can justify almost any behavior. Those who are powerful,
articulate, and persuasive are most vulnerable to ethical lapses because they are likely to be able to
get away with unethical practices successfully. When faced with an ethical dilemma regarding
organizational politics, try to consider whether playing politics is worth the risk and whether others
might be harmed in the process. If you have a strong power base, recognize the ability of power to
corrupt.

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Management and Organizational Behavior 14MBA11

MANAGEMENT & ORGANIZATIONAL BEHAVIOR

Subject Code: 14MBA11 IA Marks: 50

Part A- Principles of Management

Module I: Introduction (6 Hours)

Introduction: Management: Introduction, definition of management, nature, purpose and functions,

Module II: Planning and Organizing (12 Hours)

Organizing: Organization structure, formal and informal organizations, principles of Organizations -

Module III: Controlling (4 Hours)

Module IV: Introduction (4 hours)

Organizational Behavior: Introduction, definition, historical development, fundamental principles of

Department of MBA, SJBIT Page 1

Module V: Foundations of Individual Behaviour (16 Hours)

Individual behavior-Foundations of individual behavior. Ability: Intellectual abilities- Physical

Module VI: Motivation and Leadership (10 Hours)

Module VII: Group Behavior (4 Hours)

Group Behavior: Definition, types, formation of groups, building effective teams.

MODULE NO. TOPIC PAGE NO.

II Planning and organizing 17-39

III Controlling 40-45

IV Introduction-Organizational Behaviour 46-53

V Foundations of Individual Behavior 54-68

VI Motivation and Leadership 69-89

VII Group Behaviour, Power and Politics 90-101

Department of MBA, SJBIT Page 3

Nature and Purpose of Management.

Department of MBA, SJBIT Page 4

Management is a Combination of Art and Science

Department of MBA, SJBIT Page 5

Organizing The process of presenting formal relationships among people and

Leading Influencing the team members to work together to achieve the

Lower- level or Supervisory Level

Department of MBA, SJBIT Page 6

Functional and General Managers

Department of MBA, SJBIT Page 7

Entrepreneurs and Small-Business Owners

Department of MBA, SJBIT Page 8

Spokesperson: Transmits information about organization to outsiders. Transmits Information to

Skill for managers.

Department of MBA, SJBIT Page 9

Evolution of the Management Thought.

The Classical approach - Scientific Management & Administrative management:

Scientific management is based upon the following principles-

Scientific selection, training and development of workers.

Close cooperation between workers and management.

Department of MBA, SJBIT Page 10

Equal division of work and responsibility.

Maximum prosperity for both employers and employees.

Department of MBA, SJBIT Page 11

The Contingency Approach

Modern Management Thought:

Department of MBA, SJBIT Page 12

Henri Fayols Fourteen Principles of management.

These principles are:

Subordination of individual interest to general interest Organization is bigger than individuals.

Remuneration The quantum and methods of remuneration paid to employees should be

Centralization The relationship between centralization and decentralization of authority is a matter

Department of MBA, SJBIT Page 13

Stability of tenure of personnel A reasonable security of service should be provided to all

Recent trends in management

Globalization and Manager.

Corporate Social responsibility.

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