1.

0 NATURE OF MANAGEMENT

Management is not new: Tracing the history of man to as early as man started existing

they started interacting by coming together to form groups so as to get things done, this

can be said to be a form of management e.g. forming of groups to clear farm lands,

making of roads etc. Though this is not only management it is also social, economic,

security etc.

It went beyond farming to formation of Enterprises, and this calls for so many things i.e.

then Management – Resources had to be procured, secured.

That is - Get resources

- Allocate the resources

- Monitor the use to achieve a goal.

Management: As society became larger and sophisticated, the need for management also

became more sophisticated. Prior to the present dispensation, nobody knew anything

about sports management, but now there is even the need for management in sports.

Management encompasses a lot of things.

Recently management become more and more important because

a. The workforce is better educated.

b. There is labour specialization – It would make management more

sophisticated e.g courses are been specialized in.

c. The changing age structure of the population/workforce: E.g. the young

people would not keep to rules given them unlike the olden days. There was

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 commitment in the olden days but now youths don’t stay long with

organizations.

d. Changing Technology: In terms of development, management becomes

difficult if you don’t have any support from technology. Since technology is

changing, we also have to change, especially in these days of computers.

With all this points we have to improve on our management so as to achieve our goal.

1.1 CONCEPT OF MANAGEMENT

a. Management is Universal: Everywhere that there is need for coordinated, co-

operative and collaborative effort – management must be there (wherever there is

no management there is chaos). We manage scarce resources. Resources are

scarce here, in our homes we need to manage our scarce resources. Management

is everywhere because activities, procurement, distribution, resources etc has to

be managed. Also, activities must be coordinated, monitored and controlled even

in the homes.

b. Management is a social necessity: This is because people as interdependent

become incapable of directly regulating, coordinating, integrating and controlling

their activity (management comes in spontaneously) needs management which

will spontaneously provide the solution. Management is one of the most important

of all human activities. It is the basic function of all managers and it is required in

solving all the problems in the world today.

c. Management is a technique: This means management is a tool, technique

we use or follow to solve problems.

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d. Culture: Why we manage and the way we manage is a reflection of our

culture.

- Way of life of a people

- Way we delegate willingness

- Way we make decisions

- Communication – values, handle subordinate.

e. Management is a Profession: It is concerned with taking actions, getting

things done, utilizing possibility. It is a body of knowledge.

1.2 OBJECTIVES OF MANAGEMENT

1. To improve the ways organizations are managed.

2. To equip those who will manage future organization with the necessary skills.

3. To give a great deal of insight the ways managers and people behave in

organizations and understand the internal activities of organization.

1.3 RESPONSIBILITIES OF MANAGERS

1. Motivating, activating and training subordinates.

2. Monitoring the environment for varieties of special information to enable you

to understand the organization and the environments.

3. Disseminating information to vital sectors.

4. Search the orgnaisation’s internal environment for opportunities – what are

the improvement project that could be brought about (product services etc) for

example, Equity Bank, National Bank, Omega Bank and Wema Bank are

organizations who searched for internal environment for opportunities.

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 5. Allocating organizational resources of all kinds – men, money, material and

time. If too many people are employed into a department, there would be

problem.

6. Taking corrective actions when organization faces important but unexpected

disturbance e.g when some body died at the stadium.

1.4 WHAT DOES IT TAKE TO BECOME A SUCCESSFUL MANAGER

The manager needs the following to be successful.

1. Ability: The manager needs ability. What is ability? Ability is a

demonstrated capacity to do something especially to achieve organisations goals which

may be technical, conceptual or administrative in nature. Among these abilities include

the following or those ingredients that formulate the overall ability are:

i. Leadership

ii. Oral communication

iii. Written communication

iv. Presentation skill (planning and organising)

v. Information gathering and problem Analysis

vi. Decision making

vii. Delegation and control

viii. Self objectivity-awareness of self weakness and strength

ix. Sense of responsibility in achieving organizational goals.

All these mentioned above was given by the American Association of Business Studies

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2. MOTIVATION TO MANAGE:

This entails favourable attitude to management, desire to assert one’s self to take charge,

and desire to behave in a distinctive way.

3. OPPORTUNITY TO MANAGE

This means that opportunity must be given before one could manage.

Hence, S = A * M * O

Successful management (S) is a function or product of ability to manage (A), Motivation

to manage (M), and Opportunity to manage (O).

1.5 HOW DO MANAGERS LEARN TO MANAGE

1. Making a “big” mistake

2. Being overstretched by a difficult assignment

3. Feeling threatened

4. Being stuck in a dilemma

5. Suffering an injustice at work

6. Loosing out to someone else

7. Being “personally” attacked – This happens when one’s integrity

(qualification in most cases is challenged).

1.6 WHAT MANAGERS DO

- Planning

- Organize

- Direct

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- Control

- Delegate

- Motivate

- Coordinate

- Lead

- Make decision

- Communicate

All these can be done theoretically. Managers spend 80% of their time communicating.

In 1989 and early 1990, Rosemary Steward carried out (Analysed) some studies on the

diaries of 160 managers; and came up with the following observation which she

classified as the:

Five Basic Job Profile

1. Emissaries: They spend much of their time outside their offices e.g. the

representatives, client services, customer relations…

2. Writers: They are those who did a great deal of writing, reading, dictating

and doing figure work. They are usually staff specialist i.e. personnel man (Training)

3. Discussers: They spend a lot of their time with other people, mostly with their

colleagues discussing. They can be found in different areas of the organisation e.g.

researchers, supervisors.

4. Troubleshooters: They spend a great deal of their time dealing with crises

e.g. inspectors, auditors.

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5. The Committee People: They spend a great deal of their time vertically and

horizontally in the organisation i.e. in committee meetings. They are from different areas.

They exist mainly in large organisations, at times some of them could be AD-HOC.

In 1973, Henry Mintzberg, postulates: A manager performs 3 basic activities and they are

divided into 10 functional areas, that is, 10 managerial roles.

1. Interpersonal Roles: This relates to interacting with people.

a. A figure head i.e. a manager is a figure head i.e. a symbolic that performs a

number of routine duties. He is a symbol. E.g. The manager signs documents and

receives visitors.

b. A manager is a leader:He motivates the subordinates to get their work done.

c. A manager is a liaison: Severs as a link both vertically and horizontally in the

organization.

2. Informational Roles:

d. A nerve centre or a monitor who seeks and receives a variety of information.

Some of this information would be current so as to use it to develop strategy for the

organisation.

e. It is a disseminator: The information would be sent to vital areas or sectors.

Some would be factual. Some would need interpreters because they are opinion.

f. Spokes person: The manager transmits information to outsiders about

organizational functioning. The information would be on organizational plans, programs,

actions, result.

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3. Decisional Roles: Managers play decisional roles

g. The manager is an entrepreneur (an entrepreneur makes things happen and he

looks for opportunities). He designs and initiates change, supervises the design of certain

project.

h. The manager is a disturbance handler i.e. a crisis manager., resource allocation is

also an example of crisis handling i.e. deciding who gets what

i. He is a resource allocator: Deciding exactly who should get what

j. Negotiator: He participates in negotiating with other parties. You negotiate

with vendor i.e. wanting to buy certain things you ask for quotations. You negotiate with

labour unions to make sure that the interest of the staff can be adequately represented.

You negotiate and handle disturbances.

1. 7 Peter Drucker’s Management Tasks.

What do managers do? One good answer to this question came from the late Peter
Drucker, whose name stands out above all others in the century-long history of
management studies.

A native of Vienna, Austria, Mr. Drucker was an intellectual who worked as a journalist
and studied economics. At some point in his studies he had an epiphany: economists, he
realized, “were interested in the behavior of commodities, while I was interested in the
behavior of people.” That led him to, in effect; create the modern study of management.

Mr. Drucker divided the job of the manager into five basic tasks. The manager, he wrote:

1) Sets objectives. The manager sets goals for the group, and decides what work needs to
be done to meet those goals.

2) Organizes. The manager divides the work into manageable activities, and selects
people to accomplish the tasks that need to be done.

3) Motivates and communicates. The manager creates a team out of his people, through
decisions on pay, placement, promotion, and through his communications with the team.
Drucker also referred to this as the “integrating” function of the manager.

4) Measures. The manager establishes appropriate targets and yardsticks, and analyzes,
appraises and interprets performance.

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5) Develops people. With the rise of the knowledge worker, this task has taken on added
importance. In a knowledge economy, people are the company’s most important asset,
and it is up to the manager to develop that asset.

While other management experts may use different words and focus on different aspects
of these responsibilities, Mr. Drucker’s basic description of the manager’s job still holds.

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 2.0 LEADERSHIP

2.1 Introduction.

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.

According to Keith Davis, “Leadership is the ability to persuade others to seek defined
objectives enthusiastically. It is the human factor which binds a group together and
motivates it towards goals.”

Characteristics of Leadership

1. It is a inter-personal process in which a manager is into influencing and guiding

workers towards attainment of goals.
2. It denotes a few qualities to be present in a person which includes intelligence,
maturity and personality.
3. It is a group process. It involves two or more people interacting with each other.
4. A leader is involved in shaping and moulding the behaviour of the group towards
accomplishment of organizational goals.
5. Leadership is situation bound. There is no best style of leadership. It all depends
upon tackling with the situations.

Importance of Leadership

Leadership is an important function of management which helps to maximize efficiency

and to achieve organizational goals. The following points justify the importance of
leadership in a concern.

1. Initiates action- Leader is a person who starts the work by communicating the
policies and plans to the subordinates from where the work actually starts.
2. Motivation- A leader proves to be playing an incentive role in the concern’s
working. He motivates the employees with economic and non-economic rewards
and thereby gets the work from the subordinates.
3. Providing guidance- A leader has to not only supervise but also play a guiding
role for the subordinates. Guidance here means instructing the subordinates the
way they have to perform their work effectively and efficiently.
4. Creating confidence- Confidence is an important factor which can be achieved
through expressing the work efforts to the subordinates, explaining them clearly
their role and giving them guidelines to achieve the goals effectively. It is also
important to hear the employees with regards to their complaints and problems.

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 5. Building morale- Morale denotes willing co-operation of the employees towards
their work and getting them into confidence and winning their trust. A leader can
be a morale booster by achieving full co-operation so that they perform with best
of their abilities as they work to achieve goals.
6. Builds work environment- Management is getting things done from people. An
efficient work environment helps in sound and stable growth. Therefore, human
relations should be kept into mind by a leader. He should have personal contacts
with employees and should listen to their problems and solve them. He should
treat employees on humanitarian terms.
7. Co-ordination- Co-ordination can be achieved through reconciling personal
interests with organizational goals. This synchronization can be achieved through
proper and effective co-ordination which should be primary motive of a leader.

2.2 Role of a Leader

Following are the main roles of a leader in an organization:

1. Required at all levels- Leadership is a function which is important at all levels of

management. In the top level, it is important for getting co-operation in
formulation of plans and policies. In the middle and lower level, it is required for
interpretation and execution of plans and programmes framed by the top
management. Leadership can be exercised through guidance and counseling of the
subordinates at the time of execution of plans.
2. Representative of the organization- A leader, i.e., a manager is said to be the
representative of the enterprise. He has to represent the concern at seminars,
conferences, general meetings, etc. His role is to communicate the rationale of the
enterprise to outside public. He is also representative of the own department
which he leads.
3. Integrates and reconciles the personal goals with organizational goals- A
leader through leadership traits helps in reconciling/ integrating the personal goals
of the employees with the organizational goals. He is trying to co-ordinate the
efforts of people towards a common purpose and thereby achieves objectives.
This can be done only if he can influence and get willing co-operation and urge to
accomplish the objectives.
4. He solicits support- A leader is a manager and besides that he is a person who
entertains and invites support and co- operation of subordinates. This he can do by
his personality, intelligence, maturity and experience which can provide him
positive result. In this regard, a leader has to invite suggestions and if possible
implement them into plans and programmes of enterprise. This way, he can solicit
full support of employees which results in willingness to work and thereby
effectiveness in running of a concern.
5. As a friend, philosopher and guide- A leader must possess the three
dimensional traits in him. He can be a friend by sharing the feelings, opinions and
desires with the employees. He can be a philosopher by utilizing his intelligence
and experience and thereby guiding the employees as and when time requires. He
can be a guide by supervising and communicating the employees the plans and
policies of top management and secure their co-operation to achieve the goals of a
concern. At times he can also play the role of a counselor by counseling and a

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 problem-solving approach. He can listen to the problems of the employees and try
to solve them.

2.3 Qualities of a Leader

A leader has got multidimensional traits in him which makes him appealing and effective
in behavior. The following are the requisites to be present in a good leader:

1. Physical appearance- A leader must have a pleasing appearance. Physique and

health are very important for a good leader.
2. Vision and foresight- A leader cannot maintain influence unless he exhibits that
he is forward looking. He has to visualize situations and thereby has to frame
logical programmes.
3. Intelligence- A leader should be intelligent enough to examine problems and
difficult situations. He should be analytical who weighs pros and cons and then
summarizes the situation. Therefore, a positive bent of mind and mature outlook
is very important.
4. Communicative skills- A leader must be able to communicate the policies and
procedures clearly, precisely and effectively. This can be helpful in persuasion
and stimulation.
5. Objective- A leader has to be having a fair outlook which is free from bias and
which does not reflects his willingness towards a particular individual. He should
develop his own opinion and should base his judgement on facts and logic.
6. Knowledge of work- A leader should be very precisely knowing the nature of
work of his subordinates because it is then he can win the trust and confidence of
his subordinates.
7. Sense of responsibility- Responsibility and accountability towards an
individual’s work is very important to bring a sense of influence. A leader must
have a sense of responsibility towards organizational goals because only then he
can get maximum of capabilities exploited in a real sense. For this, he has to
motivate himself and arouse and urge to give best of his abilities. Only then he
can motivate the subordinates to the best.
8. Self-confidence and will-power- Confidence in himself is important to earn the
confidence of the subordinates. He should be trustworthy and should handle the
situations with full will power.
9. Humanist-This trait to be present in a leader is essential because he deals with
human beings and is in personal contact with them. He has to handle the personal
problems of his subordinates with great care and attention. Therefore, treating the
human beings on humanitarian grounds is essential for building a congenial
environment.
10. Empathy- It is an old adage “Stepping into the shoes of others”. This is very
important because fair judgement and objectivity comes only then. A leader
should understand the problems and complaints of employees and should also
have a complete view of the needs and aspirations of the employees. This helps in
improving human relations and personal contacts with the employees.

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From the above qualities present in a leader, one can understand the scope of leadership
and it’s importance for scope of business. A leader cannot have all traits at one time. But
a few of them helps in achieving effective results.

2.4 Leadership and Management - Relationship & Differences

Leadership and management are the terms that are often considered synonymous. It is
essential to understand that leadership is an essential part of effective management. As a
crucial component of management, remarkable leadership behaviour stresses upon
building an environment in which each and every employee develops and excels.
Leadership is defined as the potential to influence and drive the group efforts towards the
accomplishment of goals. This influence may originate from formal sources, such as that
provided by acquisition of managerial position in an organization.

A manager must have traits of a leader, i.e., he must possess leadership qualities. Leaders
develop and begin strategies that build and sustain competitive advantage. Organizations
require robust leadership and robust management for optimal organizational efficiency.

Differences between Leadership and Management

Leadership differs from management in a sense that:

1. While managers lay down the structure and delegates authority and responsibility,
leaders provides direction by developing the organizational vision and
communicating it to the employees and inspiring them to achieve it.
2. While management includes focus on planning, organizing, staffing, directing and
controlling; leadership is mainly a part of directing function of management.
Leaders focus on listening, building relationships, teamwork, inspiring,
motivating and persuading the followers.
3. While a leader gets his authority from his followers, a manager gets his authority
by virtue of his position in the organization.
4. While managers follow the organization’s policies and procedure, the leaders
follow their own instinct.
5. Management is more of science as the managers are exact, planned, standard,
logical and more of mind. Leadership, on the other hand, is an art. In an
organization, if the managers are required, then leaders are a must/essential.
6. While management deals with the technical dimension in an organization or the
job content; leadership deals with the people aspect in an organization.
7. While management measures/evaluates people by their name, past records,
present performance; leadership sees and evaluates individuals as having potential
for things that can’t be measured, i.e., it deals with future and the performance of
people if their potential is fully extracted.
8. If management is reactive, leadership is proactive.
9. Management is based more on written communication, while leadership is based
more on verbal communication.

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2.5 Leadership Styles - Important Leadership Styles

All leaders do not possess same attitude or same perspective. As discussed earlier, few
leaders adopt the carrot approach and a few adopt the stick approach. Thus, all of the
leaders do not get the things done in the same manner. Their style varies. The leadership
style varies with the kind of people the leader interacts and deals with. A perfect/standard
leadership style is one which assists a leader in getting the best out of the people who
follow him.

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 team’s or organizational interests. They cannot criticize or question
the leader’s 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 leader’s 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.

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 3.0 MOTIVATION

Motivation is the word derived from the word ’motive’ which means needs, desires,
wants or drives within the individuals. It is the process of stimulating people to actions to
accomplish the goals. In the work goal context the psychological factors stimulating the
people’s behaviour can be -

• desire for money

• success
• recognition
• job-satisfaction
• team work, etc

One of the most important functions of management is to create willingness amongst the
employees to perform in the best of their abilities. Therefore the role of a leader is to
arouse interest in performance of employees in their jobs. The process of motivation
consists of three stages:-

1. A felt need or drive

2. A stimulus in which needs have to be aroused
3. When needs are satisfied, the satisfaction or accomplishment of goals.

Therefore, we can say that motivation is a psychological phenomenon which means

needs and wants of the individuals have to be tackled by framing an incentive plan.

3.1 Maslow’s Need Hierarchy Model

Human behavior is goal-directed. Motivation cause goal-directed behaviour. It is through

motivation that needs can be handled and tackled purposely. This can be understood by
understanding the hierarchy of needs by manager. The needs of individuals serve as
driving forces in human behaviour. Therefore, a manager must understand the “hierarchy
of needs”. Maslow has proposed “The Need Hierarchy Model”.

The needs have been classified into the following in order:

1. Physiological needs- These are the basic needs of an individual which includes
food, clothing, shelter, air, water, etc. These needs relate to the survival and
maintenance of human life.
2. Safety needs- These needs are also important for human beings. Everybody wants
job security, protection against danger, safety of property, etc.
3. Social needs- These needs emerge from society. Man is a social animal. These
needs become important. For example- love, affection, belongingness, friendship,
conversation, etc.

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 Self-
actualization
Needs

Esteem
Needs

Social
Needs

Security
Needs

Physiological
Needs

FIGURE - Maslow’s Need Hierarchy Model

4. Esteem needs- These needs relate to desire for self-respect, recognition and
respect from others.
5. Self-actualization needs- These are the needs of the highest order and these
needs are found in those person whose previous four needs are satisfied. This will
include need for social service, meditation.

3.2 Motivation Incentives - Incentives to motivate employees

Incentive is an act or promise for greater action. It is also called as a stimulus to greater
action. Incentives are something which is given in addition to wages. It means additional
remuneration or benefit to an employee in recognition of achievement or better work.
Incentives provide a spur or zeal in the employees for better performance. It is a natural
thing that nobody acts without a purpose behind. Therefore, a hope for a reward is a
powerful incentive to motivate employees. Besides monetary incentive, there are some
other stimuli which can drive a person to better. This will include job satisfaction, job
security, job promotion, and pride for accomplishment. Therefore, incentives really can
sometimes work to accomplish the goals of a concern. The need of incentives can be
many:-

1. To increase productivity,
2. To drive or arouse a stimulus work,
3. To enhance commitment in work performance,
4. To psychologically satisfy a person which leads to job satisfaction,
5. To shape the behavior or outlook of subordinate towards work,
6. To inculcate zeal and enthusiasm towards work,
7. To get the maximum of their capabilities so that they are exploited and utilized
maximally.

Therefore, management has to offer the following two categories of incentives to

motivate employees:-

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 1. Monetary incentives- Those incentives which satisfy the subordinates by
providing them rewards in terms of rupees. Money has been recognized as a chief
source of satisfying the needs of people. Money is also helpful to satisfy the social
needs by possessing various material items. Therefore, money not only satisfies
psychological needs but also the security and social needs. Therefore, in many
factories, various wage plans and bonus schemes are introduced to motivate and
stimulate the people to work.
2. Non-monetary incentives- Besides the monetary incentives, there are certain
non-financial incentives which can satisfy the ego and self- actualization needs of
employees. The incentives which cannot be measured in terms of money are
under the category of “Non- monetary incentives”. Whenever a manager has to
satisfy the psychological needs of the subordinates, he makes use of non-financial
incentives. Non- financial incentives can be of the following types:-
a. Security of service- Job security is an incentive which provides great
motivation to employees. If his job is secured, he will put maximum
efforts to achieve the objectives of the enterprise. This also helps since he
is very far off from mental tension and he can give his best to the
enterprise.
b. Praise or recognition- The praise or recognition is another non- financial
incentive which satisfies the ego needs of the employees. Sometimes
praise becomes more effective than any other incentive. The employees
will respond more to praise and try to give the best of their abilities to a
concern.
c. Suggestion scheme- The organization should look forward to taking
suggestions and inviting suggestion schemes from the subordinates. This
inculcates a spirit of participation in the employees. This can be done by
publishing various articles written by employees to improve the work
environment which can be published in various magazines of the
company. This also is helpful to motivate the employees to feel important
and they can also be in search for innovative methods which can be
applied for better work methods. This ultimately helps in growing a
concern and adapting new methods of operations.
d. Job enrichment- Job enrichment is another non- monetary incentive in
which the job of a worker can be enriched. This can be done by increasing
his responsibilities, giving him an important designation, increasing the
content and nature of the work. This way efficient worker can get
challenging jobs in which they can prove their worth. This also helps in
the greatest motivation of the efficient employees.
e. Promotion opportunities- Promotion is an effective tool to increase the
spirit to work in a concern. If the employees are provided opportunities for
the advancement and growth, they feel satisfied and contented and they
become more committed to the organization.

The above non- financial tools can be framed effectively by giving due concentration to
the role of employees. A combination of financial and non- financial incentives help
together in bringing motivation and zeal to work in a concern.

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Positive Incentives

Positive incentives are those incentives which provide a positive assurance for fulfilling
the needs and wants. Positive incentives generally have an optimistic attitude behind and
they are generally given to satisfy the psychological requirements of employees. For
example-promotion, praise, recognition, perks and allowances, etc. It is positive by
nature.

Negative Incentives

Negative incentives are those whose purpose is to correct the mistakes or defaults of
employees. The purpose is to rectify mistakes in order to get effective results. Negative
incentive is generally resorted to when positive incentive does not work and a
psychological set back has to be given to employees. It is negative by nature. For
example- demotion, transfer, fines, penalties.

3.3 Importance of Motivation

Motivation is a very important for an organization because of the following benefits it

provides:-

1. Puts human resources into action

Every concern requires physical, financial and human resources to accomplish the
goals. It is through motivation that the human resources can be utilized by making
full use of it. This can be done by building willingness in employees to work. This
will help the enterprise in securing best possible utilization of resources.

2. Improves level of efficiency of employees

The level of a subordinate or a employee does not only depend upon his
qualifications and abilities. For getting best of his work performance, the gap
between ability and willingness has to be filled which helps in improving the level
of performance of subordinates. This will result into-

a. Increase in productivity,
b. Reducing cost of operations, and
c. Improving overall efficiency.
3. Leads to achievement of organizational goals

The goals of an enterprise can be achieved only when the following factors take place :-

a. There is best possible utilization of resources,

b. There is a co-operative work environment,
c. The employees are goal-directed and they act in a purposive manner,
d. Goals can be achieved if co-ordination and co-operation takes place
simultaneously which can be effectively done through motivation.

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 4. Builds friendly relationship

Motivation is an important factor which brings employees satisfaction. This can

be done by keeping into mind and framing an incentive plan for the benefit of the
employees. This could initiate the following things:

a. Monetary and non-monetary incentives,

b. Promotion opportunities for employees,
c. Disincentives for inefficient employees.

In order to build a cordial, friendly atmosphere in a concern, the above steps

should be taken by a manager. This would help in:

iv. Effective co-operation which brings stability,

v.Industrial dispute and unrest in employees will reduce,
vi.The employees will be adaptable to the changes and there will be no
resistance to the change,
vii. This will help in providing a smooth and sound concern in which
individual interests will coincide with the organizational interests,
viii. This will result in profit maximization through increased productivity.
5. Leads to stability of work force

Stability of workforce is very important from the point of view of reputation and
goodwill of a concern. The employees can remain loyal to the enterprise only
when they have a feeling of participation in the management. The skills and
efficiency of employees will always be of advantage to employees as well as
employees. This will lead to a good public image in the market which will attract
competent and qualified people into a concern. As it is said, “Old is gold” which
suffices with the role of motivation here, the older the people, more the
experience and their adjustment into a concern which can be of benefit to the
enterprise.

From the above discussion, we can say that motivation is an internal feeling which can be
understood only by manager since he is in close contact with the employees. Needs,
wants and desires are inter-related and they are the driving force to act. These needs can
be understood by the manager and he can frame motivation plans accordingly. We can
say that motivation therefore is a continuous process since motivation process is based on
needs which are unlimited. The process has to be continued throughout.

We can summarize by saying that motivation is important both to an individual and a

business. Motivation is important to an individual as:

1. Motivation will help him achieve his personal goals.

2. If an individual is motivated, he will have job satisfaction.
3. Motivation will help in self-development of individual.
4. An individual would always gain by working with a dynamic team.

19
Similarly, motivation is important to a business as:

1. The more motivated the employees are, the more empowered the team is.
2. The more is the team work and individual employee contribution, more profitable
and successful is the business.
3. During period of amendments, there will be more adaptability and creativity.
4. Motivation will lead to an optimistic and challenging attitude at work place.

3.4 Maslow’s Hierarchy of Needs Theory

Abraham Maslow is well renowned for proposing the Hierarchy of Needs Theory in
1943. This theory is a classical depiction of human motivation. This theory is based on
the assumption that there is a hierarchy of five needs within each individual. The urgency
of these needs varies. These five needs are as follows-

FIGURE: Maslow’s Need Hierarchy Model

1. 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.
2. 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.
3. Social needs- Social needs include the need for love, affection, care,
belongingness, and friendship.
4. Esteem needs- Esteem needs are of two types: internal esteem needs (self-
respect, confidence, competence, achievement and freedom) and external esteem
needs (recognition, power, status, attention and admiration).
5. Self-actualization need- 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.

20
According to Maslow, individuals are motivated by unsatisfied needs. As each of these
needs is significantly satisfied, it drives and forces the next need to emerge. Maslow
grouped the five needs into two categories - Higher-order needs and Lower-order
needs. The physiological and the safety needs constituted the lower-order needs. These
lower-order needs are mainly satisfied externally. The social, esteem, and self-
actualization needs constituted the higher-order needs. These higher-order needs are
generally satisfied internally, i.e., within an individual. Thus, we can conclude that during
boom period, the employees lower-order needs are significantly met.

Implications of Maslow’s Hierarchy of Needs Theory for Managers

As far as the physiological needs are concerned, the managers should give employees
appropriate salaries to purchase the basic necessities of life. Breaks and eating
opportunities should be given to employees.
As far as the safety needs are concerned, the managers should provide the employees
job security, safe and hygienic work environment, and retirement benefits so as to
retain them.
As far as social needs are concerned, the management should encourage teamwork
and organize social events.
As far as esteem needs are concerned, the managers can appreciate and reward
employees on accomplishing and exceeding their targets. The management can give
the deserved employee higher job rank / position in the organization.
As far as self-actualization needs are concerned, the managers can give the employees
challenging jobs in which the employees’ skills and competencies are fully utilized.
Moreover, growth opportunities can be given to them so that they can reach the peak.

The managers must identify the need level at which the employee is existing and then
those needs can be utilized as push for motivation.

Limitations of Maslow’s Theory

• It is essential to note that not all employees are governed by same set of needs.
Different individuals may be driven by different needs at same point of time. It is
always the most powerful unsatisfied need that motivates an individual.
• The theory is not empirically supported.
• The theory is not applicable in case of starving artist as even if the artist’s basic
needs are not satisfied, he will still strive for recognition and achievement.

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 4 .0 DELEGATION OF AUTHORITY

A manager alone cannot perform all the tasks assigned to him. In order to meet the
targets, the manager should delegate authority. Delegation of Authority means division of
authority and powers downwards to the subordinate. Delegation is about entrusting
someone else to do parts of your job. Delegation of authority can be defined as
subdivision and sub-allocation of powers to the subordinates in order to achieve effective
results.

Elements of Delegation

1. Authority - in context of a business organization, authority can be defined as the

power and right of a person to use and allocate the resources efficiently, to take
decisions and to give orders so as to achieve the organizational objectives.
Authority must be well- defined. All people who have the authority should know
what is the scope of their authority is and they shouldn’t misutilize it. Authority is
the right to give commands, orders and get the things done. The top level
management has greatest authority. Authority always flows from top to bottom. It
explains how a superior gets work done from his subordinate by clearly
explaining what is expected of him and how he should go about it. Authority
should be accompanied with an equal amount of responsibility. Delegating the
authority to someone else doesn’t imply escaping from accountability.
Accountability still rest with the person having the utmost authority.
2. Responsibility - is the duty of the person to complete the task assigned to him. A
person who is given the responsibility should ensure that he accomplishes the
tasks assigned to him. If the tasks for which he was held responsible are not
completed, then he should not give explanations or excuses. Responsibility
without adequate authority leads to discontent and dissatisfaction among the
person. Responsibility flows from bottom to top. The middle level and lower level
management holds more responsibility. The person held responsible for a job is
answerable for it. If he performs the tasks assigned as expected, he is bound for
praises. While if he doesn’t accomplish tasks assigned as expected, then also he is
answerable for that.
3. Accountability - means giving explanations for any variance in the actual
performance from the expectations set. Accountability can not be delegated. For
example, if ’A’ is given a task with sufficient authority, and ’A’ delegates this
task to B and asks him to ensure that task is done well, responsibility rest with
’B’, but accountability still rest with ’A’. The top level management is most
accountable. Being accountable means being innovative as the person will think
beyond his scope of job. Accountability, in short, means being answerable for the
end result. Accountability can’t be escaped. It arises from responsibility.

For achieving delegation, a manager has to work in a system and has to perform
following steps: -

1. Assignment of tasks and duties

2. Granting of authority
3. Creating responsibility and accountability

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Delegation of authority is the base of superior-subordinate relationship, it involves
following steps:-

1. Assignment of Duties – The delegator first tries to define the task and duties to
the subordinate. He also has to define the result expected from the subordinates.
Clarity of duty as well as result expected has to be the first step in delegation.
2. Granting of authority – Subdivision of authority takes place when a superior
divides and shares his authority with the subordinate. It is for this reason, every
subordinate should be given enough independence to carry the task given to him
by his superiors. The managers at all levels delegate authority and power which is
attached to their job positions. The subdivision of powers is very important to get
effective results.
3. Creating Responsibility and Accountability – The delegation process does not
end once powers are granted to the subordinates. They at the same time have to be
obligatory towards the duties assigned to them. Responsibility is said to be the
factor or obligation of an individual to carry out his duties in best of his ability as
per the directions of superior. Responsibility is very important. Therefore, it is
that which gives effectiveness to authority. At the same time, responsibility is
absolute and cannot be shifted. Accountability, on the others hand, is the
obligation of the individual to carry out his duties as per the standards of
performance. Therefore, it is said that authority is delegated, responsibility is
created and accountability is imposed. Accountability arises out of responsibility
and responsibility arises out of authority. Therefore, it becomes important that
with every authority position an equal and opposite responsibility should be
attached.

Therefore every manager,i.e.,the delegator has to follow a system to finish up the

delegation process. Equally important is the delegate’s role which means his
responsibility and accountability is attached with the authority given to him

Relationship between Authority and Responsibility

Authority is the legal right of person or superior to command his subordinates while
accountability is the obligation of individual to carry out his duties as per standards of
performance Authority flows from the superiors to subordinates,in which orders and
instructions are given to subordinates to complete the task. It is only through authority, a
manager exercises control. In a way through exercising the control the superior is
demanding accountability from subordinates. If the marketing manager directs the sales
supervisor for 50 units of sale to be undertaken in a month; and if the above standards are
not accomplished, it is the marketing manager who will be accountable to the chief
executive officer.

Therefore, we can say that authority flows from top to bottom and responsibility flows
from bottom to top. Accountability is a result of responsibility and responsibility is result
of authority. Therefore, for every authority an equal accountability is attached.

23
Differences between Authority and Responsibility

Authority Responsibility

It is the legal right of a It is the obligation of subordinate to

person or a superior to perform the work assigned to him.
command his subordinates.

Authority is attached to the Responsibility arises out of superior–

position of a superior in subordinate relationship in which
concern. subordinate agrees to carry out duty
given to him.

Authority can be delegated Responsibility cannot be shifted and is

by a superior to a absolute
subordinate

It flows from top to It flows from bottom to top.

bottom.

4.1 Importance of Delegation

Delegation of authority is a process in which the authority and powers are divided and
shared amongst the subordinates. When the work of a manager gets beyond his capacity,
there should be some system of sharing the work. This is how delegation of authority
becomes an important tool in organization function. Through delegation, a manager, in
fact, is multiplying himself by dividing/multiplying his work with the subordinates. The
importance of delegation can be justified by –

1. Through delegation, a manager is able to divide the work and allocate it to the
subordinates. This helps in reducing his work load so that he can work on
important areas such as - planning, business analysis etc.
2. With the reduction of load on superior, he can concentrate his energy on
important and critical issues of concern. This way he is able to bring effectiveness
in his work as well in the work unit. This effectivity helps a manager to prove his
ability and skills in the best manner.
3. Delegation of authority is the ground on which the superior-subordinate
relationship stands. An organization functions as the authority flows from top
level to bottom. This in fact shows that through delegation, the superior-
subordinate relationship become meaningful. The flow of authority is from top to
bottom which is a way of achieving results.
4. Delegation of authority in a way gives enough room and space to the subordinates
to flourish their abilities and skill. Through delegating powers, the subordinates
get a feeling of importance. They get motivated to work and this motivation

24
 provides appropriate results to a concern. Job satisfaction is an important criterion
to bring stability and soundness in the relationship between superior and
subordinates. Delegation also helps in breaking the monotony of the subordinates
so that they can be more creative and efficient. Delegation of authority is not only
helpful to the subordinates but it also helps the managers to develop their talents
and skills. Since the manager get enough time through delegation to concentrate
on important issues, their decision-making gets strong and in a way they can
flourish the talents which are required in a manager. Through granting powers and
getting the work done, helps the manager to attain communication skills,
supervision and guidance, effective motivation and the leadership traits are
flourished. Therefore it is only through delegation, a manager can be tested on his
traits.
5. Delegation of authority is help to both superior and subordinates. This, in a way,
gives stability to a concern’s working. With effective results, a concern can think
of creating more departments and divisions flow working. This will require
creation of more managers which can be fulfilled by shifting the experienced,
skilled managers to these positions. This helps in both virtual as well as horizontal
growth which is very important for a concern’s stability.

Therefore, from the above points, we can justify that delegation is not just a process but it
is a way by which manager multiples himself and is able to bring stability, ability and
soundness to a concern.

4.2 Principles of Delegation

There are a few guidelines in form of principles which can be of help to the manager in
the process of delegation. The principles of delegation are as follows: -

1. Principle of result excepted- suggests that every manager before delegating the
powers to the subordinate should be able to clearly define the goals as well as
results expected from them. The goals and targets should be completely and
clearly defined and the standards of performance should also be notified clearly.
For example, a marketing manager explains the salesmen regarding the units of
sale to take place in a particular day, say ten units a day have to be the target
sales. While a marketing manger provides these guidelines of sales, mentioning
the target sales is very important so that the salesman can perform his duty
efficiently with a clear set of mind.
2. Principle of Parity of Authority and Responsibility- According to this
principle, the manager should keep a balance between authority and
responsibility. Both of them should go hand in hand. According to this principle,
if a subordinate is given a responsibility to perform a task, then at the same time
he should be given enough independence and power to carry out that task
effectively. This principle also does not provide excessive authority to the
subordinate which at times can be misused by him. The authority should be given
in such a way which matches the task given to him. Therefore, there should be no
degree of disparity between the two.
3. Principle of absolute responsibility- This says that the authority can be
delegated but responsibility cannot be delegated by managers to his subordinates

25
 which means responsibility is fixed. The manager at every level, no matter what is
his authority, is always responsible to his superior for carrying out his task by
delegating the powers. It does not means that he can escape from his
responsibility. He will always remain responsible till the completion of task.
Every superior is responsible for the acts of their subordinates and are accountable
to their superior therefore the superiors cannot pass the blame to the subordinates
even if he has delegated certain powers to subordinates example if the production
manager has been given a work and the machine breaks down. If repairmen is not
able to get repair work done, production manager will be responsible to CEO if
their production is not completed.
4. Principle of Authority level- This principle suggests that a manager should
exercise his authority within the jurisdiction / framework given. The manager
should be forced to consult their superiors with those matters of which the
authority is not given that means before a manager takes any important decision,
he should make sure that he has the authority to do that on the other hand,
subordinate should also not frequently go with regards to their complaints as well
as suggestions to their superior if they are not asked to do. This principle
emphasizes on the degree of authority and the level up to which it has to be
maintained.

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 5.0 ORGANIZATIONAL THEORIES AND CONCEPTS

5.1 Introduction

An organisation is a group of individuals who have come together under the supervision
and conscious coordination of some sort of management, to form a type of system that
features a formal structure, is intended to function continuously and carries out a variety
of different tasks in order to achieve a common goal that has been pre-established as it’s
main reason for existence.

To be actually classified as an organisation, several prerequisites are required. Firstly the

identifiable goal is needed. This goal can take the form of a product or service and is
what the organisation is ultimately created to produce. The production must come about
consciously, in that everyone knows what they are aiming for and thus strive for it. In
turn, they will receive rewards of some sort for their productivity. These rewards usually
take the form of wages or salaries. To join, individuals must go through some sort of
procedures or ceremony such as selection or interviews to define their suitability for
membership.

More importantly, an organisation is a group that makes up a legal entity which has
boundaries, holds responsibilities to others, can be liable for all sorts of damages, and
thus can be taken to court if they conduct their business in an inappropriate manner which
goes against morals, has ill effects on individuals or other organisations. Even the
organisation’s employees and members can sue if they feel they are being treated
unfairly.

Organizational theories which explain the organization and its structure can be broadly
classified as classical or modern.

5.2.1 Classical organization theory:

Taylor's scientific management approach

Weber's bureaucratic approach
Administrative theory

Classical organization theories (Taylor, 1947; Weber, 1947; Fayol, 1949) deal with the
formal organization and concepts to increase management efficiency. Taylor presented
scientific management concepts, Weber gave the bureaucratic approach, and Fayol
developed the administrative theory of the organization. They all contributed
significantly to the development of classical organization theory.

5.2.1.1 Taylor's scientific management approach

The scientific management approach developed by Taylor is based on the concept of

planning of work to achieve efficiency, standardization, specialization and simplification.
27
Acknowledging that the approach to increased productivity was through mutual trust
between management and workers, Taylor suggested that, to increase this level of trust,

the advantages of productivity improvement should go to workers,

physical stress and anxiety should be eliminated as much as possible,
capabilities of workers should be developed through training, and
the traditional 'boss' concept should be eliminated.

Taylor developed the following four principles of scientific management for improving
productivity:

Science, not rule-of-thumb Old rules-of-thumb should be supplanted by a scientific

approach to each element of a person's work.

Scientific selection of the worker Organizational members should be selected based on

some analysis, and then trained, taught and developed.

Management and labour cooperation rather than conflict Management should

collaborate with all organizational members so that all work can be done in conformity
with the scientific principles developed.

Scientific training of the worker Workers should be trained by experts, using scientific
methods.

5.2.1.2 Weber's bureaucratic approach

Considering the organization as a segment of broader society, Weber (1947) based the
concept of the formal organization on the following principles:

Structure In the organization, positions should be arranged in a hierarchy, each with a

particular, established amount of responsibility and authority.

Specialization Tasks should be distinguished on a functional basis, and then separated

according to specialization, each having a separate chain of command.

Predictability and stability The organization should operate according to a system of

procedures consisting of formal rules and regulations.

Rationality Recruitment and selection of personnel should be impartial.

Democracy Responsibility and authority should be recognized by designations and not

by persons.

Weber's theory is infirm on account of dysfunctions (Hicks and Gullett, 1975) such as
rigidity, impersonality, displacement of objectives, limitation of categorization, self-
perpetuation and empire building, cost of controls, and anxiety to improve status.

28
5.2.1.3 Administrative theory

The elements of administrative theory (Fayol, 1949) relate to accomplishment of tasks,

and include principles of management, the concept of line and staff, committees and
functions of management.

Division of work or specialization. This increases productivity in both technical and

managerial work.

Authority and responsibility. These are imperative for an organizational member to

accomplish the organizational objectives.

Discipline. Members of the organization should honour the objectives of the

organization. They should also comply with the rules and regulations of the organization.

Unity of command. This means taking orders from and being responsible to only one
superior.

Unity of direction. Members of the organization should jointly work toward the same
goals.

Subordination of individual interest to general interes.t The interest of the organization

should not become subservient to individual interests or the interest of a group of
employees.

Remuneration of personnel. This can be based on diverse factors such as time, job,
piece rates, bonuses, profit-sharing or non-financial rewards.

Centralization. Management should use an appropriate blend of both centralization and

de-centralization of authority and decision making.

Scalar chain. If two members who are on the same level of hierarchy have to work
together to accomplish a project, they need not follow the hierarchy level, but can interact
with each other on a 'gang plank' if acceptable to the higher officials.

Order. The organization has a place for everything and everyone who ought to be so
engaged.

Equity Fairness, justice and equity should prevail in the organization.

Stability of tenure of personnel. Job security improves performance. An employee

requires some time to get used to new work and do it well.

Initiative. This should be encouraged and stimulated.

Esprit de corps. Pride, allegiance and a sense of belonging are essential for good
performance. Union is strength.

29
 The concept of line and staff. The concept of line and staff is relevant in organizations
which are large and require specialization of skill to achieve organizational goals. Line
personnel are those who work directly to achieve organizational goals. Staff personnel
include those whose basic function is to support and help line personnel.

Committees. Committees are part of the organization. Members from the same or
different hierarchical levels from different departments can form committees around a
common goal. They can be given different functions, such as managerial, decision
making, recommending or policy formulation. Committees can take diverse forms, such
as boards, commissions, task groups or ad hoc committees. Committees can be further
divided according to their functions. In agricultural research organizations, committees
are formed for research, staff evaluation or even allocation of land for experiments.

Functions of management. Fayol (1949) considered management as a set of planning,

organizing, training, commanding and coordinating functions. Gulick and Urwick (1937)
also considered organization in terms of management functions such as planning,
organizing, staffing, directing, coordinating, reporting and budgeting.

5.2.2 Neoclassical theory

Principles of the neoclassical approach

Neoclassical theorists recognized the importance of individual or group behaviour and

emphasized human relations. Based on the Hawthorne experiments, the neoclassical
approach emphasized social or human relationships among the operators, researchers and
supervisors (Roethlisberger and Dickson, 1943). It was argued that these considerations
were more consequential in determining productivity than mere changes in working
conditions. Productivity increases were achieved as a result of high morale, which was
influenced by the amount of individual, personal and intimate attention workers received.

The classical approach stressed the formal organization. It was mechanistic and ignored
major aspects of human nature. In contrast, the neoclassical approach introduced an
informal organization structure and emphasized the following principles:

The individual. An individual is not a mechanical tool but a distinct social being, with
aspirations beyond mere fulfillment of a few economic and security works. Individuals
differ from each other in pursuing these desires. Thus, an individual should be recognized
as interacting with social and economic factors.

The work group. The neoclassical approach highlighted the social facets of work
groups or informal organizations that operate within a formal organization. The concept
of 'group' and its synergistic benefits were considered important.

Participative management. Participative management or decision making permits

workers to participate in the decision making process. This was a new form of
management to ensure increases in productivity.

30
Note the difference between Taylor's 'scientific management' - which focuses on work -
and the neoclassical approach - which focuses on workers.

5.3 Modern theories:

The systems approach.

Socio-technical approach.
The contingency or situational approach.

Modern theories tend to be based on the concept that the organization is a system which
has to adapt to changes in its environment. In modern theory, an organization is defined
as a designed and structured process in which individuals interact for objectives (Hicks
and Gullet, 1975). The contemporary approach to the organization is multidisciplinary, as
many scientists from different fields have contributed to its development, emphasizing
the dynamic nature of communication and importance of integration of individual and
organizational interests. These were subsequently re-emphasized by Bernard (1938) who
gave the first modern and comprehensive view of management. Subsequently,
conclusions on systems control gave insight into application of cybernetics. The
operation research approach was suggested in 1940. It utilized the contributions of
several disciplines in problem solving. Von Bertalanffy (1951) made a significant
contribution by suggesting a component of general systems theory which is accepted as a
basic premise of modern theory.

Some of the notable characteristics of the modern approaches to the organization are:

a systems viewpoint,
a dynamic process of interaction,
multilevelled and multidimensional,
multimotivated,
probabilistic,
multidisciplinary,
descriptive,
multivariable, and
adaptive.

Modern understandings of the organization can be broadly classified into:

The systems approach,

socio-technical theory, and
a contingency or situational approach.

5.3.1 The systems approach

The systems approach views organization as a system composed of interconnected - and

thus mutually dependent - sub-systems. These sub-systems can have their own sub-sub-
systems. A system can be perceived as composed of some components, functions and
processes (Albrecht, 1983). Thus, the organization consists of the following three basic
elements (Bakke, 1959):

31
(i) Components There are five basic, interdependent parts of the organizing system,
namely:
the individual,
the formal and informal organization,
patterns of behaviour emerging from role demands of the organization,
role comprehension of the individual, and
the physical environment in which individuals work.

(ii) Linking processes. The different components of an organization are required to

operate in an organized and correlated manner. The interaction between them is
contingent upon the linking processes, which consist of communication, balance and
decision making.

Communication is a means for eliciting action, exerting control and effecting

coordination to link decision centres in the system in a composite form.

Balance is the equilibrium between different parts of the system so that they keep a
harmoniously structured relationship with one another.

Decision analysis is also considered to be a linking process in the systems approach.

Decisions may be to produce or participate in the system. Decision to produce depends
upon the attitude of the individual and the demands of the organization. Decision to
participate refers to the individual's decisions to engross themselves in the organization
process. That depends on what they get and what they are expected to do in participative
decision making.

(iii) Goals of organization. The goals of an organization may be growth, stability and
interaction. Interaction implies how best the members of an organization can interact with
one another to their mutual advantage.

5.3.2 Socio-technical approach

It is not just job enlargement and enrichment which is important, but also transforming
technology into a meaningful tool in the hands of the users. The socio-technical systems
approach is based on the premise that every organization consists of the people, the
technical system and the environment (Pasmore, 1988). People (the social system) use
tools, techniques and knowledge (the technical system) to produce goods or services
valued by consumers or users (who are part of the organization's external environment).
Therefore, equilibrium among the social system, the technical system and the
environment is necessary to make the organization more effective.

5.3.3 The contingency or situational approach

The situational approach (Selznick, 1949; Burns and Stalker, 1961; Woodward, 1965;
Lawrence and Lorsch, 1967) is based on the belief that there cannot be universal
guidelines which are suitable for all situations. Organizational systems are inter-related
with the environment. The contingency approach (Hellriegel and Slocum, 1973) suggests
that different environments require different organizational relationships for optimum

32
effectiveness, taking into consideration various social, legal, political, technical and
economic factors.

5.4 The research organization as a social system

Goal setting
Integration and coordination

An organization is a continuing system, able to distinguish and integrate human activities.

The organization utilizes, transforms and joins together a set of human, material and
other resources for problem-solving (Bakke, 1959). The main function of an organization
is to satisfy specific human needs in interaction with other sub-systems of human
activities and resources in the given environment. In a research organization, individual
needs of researchers are more often in conflict with organizational needs than in any
other organization. Therefore, growth of the organization should concurrently also
promote growth of the individual.

Characteristics of the research organization

Social organizations are characterized by their complexity, degree of inter-dependence

between sub-systems, openness, balance, and multiplicity of purposes, functions and
objectives (Huse and Bowditch, 1973).

Complexity A research organization consists of a number of individuals, groups, or

departments, each of which is a sub-system within the total system. The prevalence of
these sub-systems makes the organization complex.

Degree of inter-dependence of sub-systems The various sub-systems of the research

organization are inter-dependent which makes it further complex, as each sub-system has
its way of working, requirements, behaviour, etc.

Openness of the social organization Research organizations operate in the wider

environment of a larger organization or system, and are therefore open. They have to
function in harmony with environmental requirements, goals and functions. This may
cause conflicts in the organization unless the sub-systems are appropriately balanced.

Balance and the social organization Social organizations are highly dynamic. Forces
such as researchers, managerial hierarchy and various inputs from within and outside the
organization have to be balanced for the smooth functioning of the organization.

Multiplicity of purpose, functions and objectives Most research organizations have a

multiplicity of sub-systems, each of which has dynamic interactions with others. In the
research organization, a researcher can be viewed as a sub-system with specific needs,
goals and functioning, although those needs, goals and functioning may sometimes not
match those of the organization.

33
5.4.1 Goal setting

In an organization, goal setting is one of the control systems, a component of the

appraisal process and an effective tool for human resource management (Locke, 1968;
Sherwin, 1976). The concept of goal setting is now used to increase the performance of
the organization as well as the individual through management by objectives. Drucker
(1954) suggested that management by objectives can be useful for managers for
effectively managing the future direction of the organization.

Importance of goal setting

Well specified and clear goals improve performance in an organization by:

making clear what people have to do;

solving specific problems related to the work as they emerge during the process of goal
setting;

reducing ambivalence in the assigned work and thus encouraging increasing efforts;

supporting people to find a connection between their work and the achievements of the
organization;

assisting individuals in allocating their time, efforts and personal resources to

important areas;

giving a feeling of accomplishment and contentment when specified goals are

achieved; and

providing some control over the people and their work in an organization. Goals are an
objective way of assessing performance in the organization.

There is a definite linkage between goal setting and performance. Latham (1981) reported
that

specified goals are better than vague or general goals,

difficult and challenging but attainable goals are better than relatively easy goals,

goals evolved through participation and accepted by workers are preferred to assigned
goals, and

objective and timely feedback about progress toward goals is better than no feedback.

The process of goal setting

Peter Drucker suggested thirty years ago that a systematic approach to goal setting and
appraising by results leads to improved organizational performance and employee

34
satisfaction. This concept of goal setting is now widely used in most organizations. The
process of goal setting (or management by objectives as it is often called) involves
several steps (Luthans, 1985):

(i) The first step in the process is setting general organizational objectives and preparing
an action plan. Goal setting is based on a top-down approach, and involves:
identifying key result areas in the organization,

identifying measures of performance,

stating objectives, and

evolving agreement between members of top management on the objectives and goals
set.

(ii) Once goals are formulated, the second step is to activate the system for
implementation. For successful implementation of such a system, it is essential to prepare
the members in the organization.

(iii) The third step is to set individual goals. Individual goals are decided jointly by
superiors and subordinates. Once goals are finalized, an action plan is developed for
implementation.

(iv) The fourth step involves:

ensuring that work is carried out in the right direction,

identifying obstacles, and
making adjustments to eliminate obstacles.

(v) Finally comes appraisal of performance of the individual against the set targets. An
appraisal and feedback system is an important part of goal setting. The individual is given
feedback on his or her performance, and provided with suitable rewards and motivation.

5.4.2 Integration and coordination

Integration and coordination refer to integration of the objectives and activities of

specialized units or sub-systems in order to achieve the organization's overall strategic
objectives. Coordination and integration are necessary controlling mechanisms to ensure
placid functioning, particularly when organizations become large and complex.
Integration aims at ensuring that different sub-systems work towards common goals.

Integration of the organizational sub-systems relates to differentiation and division of

labour in the organization. Organizational differentiation means un-bundling and re-
arranging of activities. Re-grouping and re-linking them is organizational integration
(Lawrence and Lorsch, 1967). When different units are assigned different tasks and
functions, they set independent goals for performing the assigned tasks and function
accordingly. In such situations, integration of the activities of different sub-systems is
necessary to facilitate smooth working and to bridge communication gaps.

35
In research organizations, integration of research units and administrative units is very
important for the smooth functioning of research activities.

Need for integration

Integration and coordination is necessary for several reasons (Anderson, 1988):

As the organization encounters environmental complexity, diversity and change, it

requires more and more differentiation of its units. Need for integration also increases
with increase in structural dimensions.

Different specialized units are required to achieve broad strategic objectives rather than
only individual objectives. For the purpose of achieving these strategic objectives, a
research manager has to coordinate different units.

A research manager has to settle conflicts and disputes between different specialized
units. When different units are assigned different goals and tasks, conflicts are inevitable.
A manager needs to integrate and coordinate the work of different sub-units to effectively
resolve conflicts.

Managers also need to coordinate and integrate independent units or research stations
to ensure that their objectives and functioning are in consonance with overall
organizational goals and strategies.

The necessity for coordination increases with increased specialization, because

increases in specialized functions leads to decision making in specialized units or sub-
units. This may cause conflict.

Methods of integration

Within any large organization it is important to have proper communication systems to

enable different sub-systems to coordinate various activities and avoid obstacles in the
work environment. Lack of proper coordination often causes conflicts in an organization.
To ensure proper coordination in research organizations, the research manager has to take
care of behavioural dimensions (such as motivation and conflicts) while ensuring an
efficient overall structure.

Achieving integration

The structure of a research institution needs to be suitably designed to facilitate proper

coordination and integration of different specialized units. A poorly designed structure
may:

hinder coordination and integration,

cause conflicts, and
lead to poor performance.

36
Coordinating vertically through hierarchy

Work is assigned to specialized units and coordinated by a manager. A hierarchy

(vertical) of authority evolves from lower to higher levels. A manager can use the
following principles of hierarchy of authority for integrating specialized units:

The unity of command principle. Every worker should report to only one manager.

The scalar principle. Decision making authority (and a chain of command) should be
from the top to lower levels.

Responsibility principle. A manager is accountable for the performance of his or her

subordinates. In turn, subordinates are responsible to their manager for their performance.

Determining the decision making level

A manager has to decide about the levels at which decisions are to be taken, and this
would depend upon the type, impact and values of decisions.

Deciding the span of control

Span of control refers to the number of specialized activities or personnel supervised by

one manager. There is no optimal number for a span of control and number of levels in
the hierarchy. In fact, span of control and hierarchy levels are inter-related and depend on
situational factors (Barkdull, 1963). Some of the important situational factors are:

Similarity of functions.
Complexity of supervised functions.
Direction and control needed by subordinates.
Coordination required by the manager.
Planning required by the manager.
Organizational help received by the manager.

Methods to improve integration

There are several ways to improve integration, the most common being through a
hierarchy of authority. For this, specialized units whose activities are inter-related could
be put under one manager.

Coordination can also be improved through

developing rules and procedures wherever possible,

providing professional training,
liaison roles, and
use of professional committees involving managers from different specialized units.

Using committees to improve coordination is more difficult than other methods, as it

requires considerable skills in group dynamics and technical knowledge on the part of the

37
chairperson of the committee. The person who takes this role must not be involved
directly in the work, but tries to assist managers in improving integration.

5.5 Processes in the organization

Power in the organization

Communication in the organization

Norms for proper functioning of the organization are evolved through organizational
processes. These relate to power, decision making, communication, motivation and
leadership. Socialization also plays a significant role.

5.5. 1 Power in the organization

Power refers to the ability to get an individual or group to do something or to change in

some way. Politics is a process to achieve power. Power is inter-related with authority
and influence. Bernard (1938) defined authority in terms of 'legitimate power.' Power is
considered as an essential element in any human organization so as to engender order and
coordinate various activities. Power provides one of the strongest motivations (Galbraith,
1952). It also affects the setting of objectives and the distribution of resources in an
organization. The source of power can be positional, economic, knowledge, performance,
personality, physical or ideological (Hicks, 1975). Organization-based power refers to the
power beyond the range of legitimate authority because of the position which a person
has in the organization (Milgram, 1974). This power can be controlled and transferred by
the organization.

Four categories of organizational power can identified, according to source (French and
Raven, 1959):

Reward power This refers to the control over rewards desired by others. This is given
by persons at a higher level or by decision-makers.

Coercive power. This is the power to give punishment. This too is given by persons at
a higher level or by decision-makers.

Expert power. This is based on personal skills, knowledge, training, experience, etc. It
cannot be transferred by the organization since it is person-specific.

Charismatic power This derives from the sensitivity of the owner. This facilitates
association with others.

In research organizations, as in other organizations, power plays a significant role. It

influences the organization's strategies, recruitment of competent scientists, behavioural
control system and changes in the organizational structure.

38
5.5.2 Communication in the organization

Communication is a basic element in organizational structure and functioning. It is the

key mechanism for achieving integration and coordination of the activities of specialized
units at different levels in the organization.

The communication process consists of seven steps (Shannon and Weaver, 1949):
message, encoding, transmitting, receiving, decoding, understanding and feedback.

Organizational communication can be horizontal, upward, and downward:

Horizontal (lateral) communication aims at linking related tasks, work units and
divisions in the organization. The importance of horizontal communication increases with
task specialization and diversity in organizational structure. The need for lateral or
horizontal communication was first stressed by Fayol (1949), when he suggested a 'gang
plank' between similar hierarchical positions.

Downward communication provides information from higher levels to lower levels.

Being superior-subordinate communication, it follows the chain of command through the
line of authority. Downward communication can be of four types (Katz and Kahn, 1966):

- communication designed to provide job rationale to produce understanding of the task

and its relation to other organizational tasks;

- communication about organizational procedures and practices;

- feedback to the subordinate about his or her performance; and

- communication to foster inculcation of organizational goals.

Upward communication serves as a control system for the organization.

In an agricultural research organization, a suitable blending of lateral, downward and

upward communication is required to effectively coordinate and integrate activities of
individual subsystems. The effectiveness of research results greatly depends upon proper
communication links among scientists, between scientists and agricultural extension
workers, and between extension workers and farmers.

In an agricultural research organization, there are several specialized sub-systems which

need to be integrated through horizontal communication. Downward communication
facilitates transmission of research results to actual users. Upward communication
enables flow of information from lowers level to the top level:

farmers extension workers scientists research manager DG and policy-makers

39
5.6 Organizational decision making

Decision making is choosing among alternatives. It starts with goal setting in the
organization, and entails searching for alternatives, analysing alternatives and choosing
criteria. Decisions may pertain to

broad policies or plans for the organization,

programmes and projects to achieve goals, or
operations of programmes and management systems.

The process of decision making involves nine steps (Hicks and Gullet, 1975; Anderson
1988):

(i) Setting organizational goals.

(ii) Establishing performance criteria.
(iii) Classifying and defining the problem.
(iv) Developing criteria for a successful solution.
(v) Generating alternatives.
(vi) Comparing alternatives to criteria.
(vii) Choosing an alternative.
(viii) Implementing the decision.
(ix) Monitoring the decision and getting feedback.

Models of decision making

There are five major models for decision making in an organization (Gortner, Mahler and
Nicholson, 1987). They are:

The economic or rational choice model, as used in bureaucratic organizations. It is

based on rational choice among well reasoned and logical alternatives.

Incremental bargaining, commonly used in resolving conflicts through negotiation.

Simon's bounded rationality model, which is used as an aggregative model in

administrative practices. This model is suitable as a consultant-assisted method for policy
making.

Peters and Waterman's well managed model (also called the garbage can or non-
decision making model) aims at formulating a descriptive model of choice which focuses
on the expressive character of decision making in the organization. It does not consider
rationality and incrementation. This method is based on an empirical perception of how
successful organizations are being run.

Quantitative techniques of decision making. Decisions have to be made under varying

conditions of certainty or uncertainty, with different degrees of risk (Luthans, 1985).

Certainty decisions are largely made by managers at lower levels under known conditions
with known outcomes. For such decisions, nearly complete information is available.

40
Quantitative techniques are not usually required to make certainty decisions. However,
calculus and a few mathematical programming techniques can be useful.

Risk decisions are more difficult to make than certainty decisions because of limited
information and the possibility of several outcomes for each alternative. Most risk
decisions are taken at higher levels. For risk decisions, probability techniques (objective
and subjective probability) are widely used.

Decisions under uncertainty are the most intricate. For such decisions, probability
techniques are of limited help. However, minimax analysis and Bayes's procedure can be
used in refining the decision making process under conditions of uncertainty. Minimax
analysis attempts to calculate the worst outcome that can occur for each alternative,
whereas Bayes's procedure is based on the concept of expected value and assumes that
each possible outcome has an equal chance of occurring.

41
 6.0 INDUSTRIAL RELATIONS
6.1 Introduction
Industrial relations has become one of the most delicate and complex problems of
modern industrial society. Industrial progress is impossible without cooperation of labors
and harmonious relationships. Therefore, it is in the interest of all to create and maintain
good relations between employees (labor) and employers (management).

6.2 Concept of Industrial Relations:

The term ‘Industrial Relations’ comprises of two terms: ‘Industry’ and ‘Relations’.
“Industry” refers to “any productive activity in which an individual (or a group of
individuals) is (are) engaged”. By “relations” we mean “the relationships that exist within
the industry between the employer and his workmen.”

The term industrial relations explain the relationship between employees and
management which stem directly or indirectly from union-employer relationship.

Industrial relations are the relationships between employees and employers within the
organizational settings. The field of industrial relations looks at the relationship between
management and workers, particularly groups of workers represented by a union.
Industrial relations are basically the interactions between employers, employees and the
government, and the institutions and associations through which such interactions are
mediated.

The term industrial relations has a broad as well as a narrow outlook. Originally,
industrial relations were broadly defined to include the relationships and interactions
between employers and employees. From this perspective, industrial relations cover all
aspects of the employment relationship, including human resource management,
employee relations, and union-management (or labor) relations. Now its meaning has
become more specific and restricted. Accordingly, industrial relations pertains to the
study and practice of collective bargaining, trade unionism, and labor-management
relations, while human resource management is a separate, largely distinct field that deals
with nonunion employment relationships and the personnel practices and policies of
employers.

The relationships which arise at and out of the workplace generally include the
relationships between individual workers, the relationships between workers and their
employer, the relationships between employers, the relationships employers and workers
have with the organizations formed to promote their respective interests, and the relations
between those organizations, at all levels. Industrial relations also includes the processes
through which these relationships are expressed (such as, collective bargaining, workers’
participation in decision-making, and grievance and dispute settlement), and the
management of conflict between employers, workers and trade unions, when it arises.

42
6.3 Glossary of Industrial Relation Terms
For better understanding of industrial relations various terms need to be defined here:
Industry: Industrial Disputes Act 1976 defines an industry as any systematic activity
carried on by co-operation between an employer and his workmen for the production,
supply or distribution of goods or services with a view to satisfy human wants or wishes
whether or not any capital has been invested for the purpose of carrying on such activity;
or such activity is carried on with a motive to make any gain or profit. Thus, an industry
is a whole gamut of activities that are carried on by an employer with the help of his
employees and labors for production and distribution of goods to earn profits

Employer: An employer can be defined from different perspectives as:-

• a person or business that pays a wage or fixed payment to other person(s) in

exchange for the services of such persons.
• a person who directly engages a worker/employee in employment.
• any person who employs, whether directly or through another person or agency,
one or more employees in any scheduled employment in respect of which
minimum rates of wages have been fixed.

As per Industrial Disputes Act 1976 an employer means:-

• in relation to an industry carried on by or under the authority of any department of

[the Federal Government or a State Government], the authority prescribed in his
behalf, or where no authority is prescribed, the head of the department;
• in relation to an industry carried on by or on behalf of a local authority, the chief
executive officer of that authority;

Employee: -

• Employee is a person who is hired by another person or business for a wage or

fixed payment in exchange for personal services and who does not provide the
services as part of an independent business.
• An employee is any individual employed by an employer.
• A person who works for a public or private employer and receives remuneration
in wages or salary by his employer while working on a commission basis, piece-
rates or time rate.
• Employee is any person employed for wages in or in connection with work of a
factory or establishment to which the act applies.

In order to qualify to be an employee, under the Act, a person should belong to any of the
categories:

o those who are directly employed for wages by the principal employer within the
premises or outside in connection with work of the factory or establishment.
43
 o those employed for wages by or through an immediate employer in the premises
of the factory or establishment in connection with the work thereof
o those employed for wages by or through an immediate employer in connection
with the factory or establishment outside the premises of such factory or
establishment under the supervision and control of the principal employer or his
agent.
o employees whose services are temporarily lent or let on hire to the principal
employer by an immediate employer under a contract of service (employees of
security contractors, labor contractors, house keeping contractors etc. come under
this category).

Employment: The state of being employed or having a job.

Labor market: The market in which workers compete for jobs and employers compete
for workers. It acts as the external source from which organizations attract employees.
These markets occur because different conditions characterize different geographical
areas, industries, occupations, and professions at any given time.

Industrial Relation System: An industrial relations system consists of the whole gamut
of relationships between employees and employees and employers which are managed by
the means of conflict and cooperation.

A sound industrial relations system is one in which relationships between management

and employees (and their representatives) on the one hand, and between them and the
State on the other, are more harmonious and cooperative than conflictual and creates an
environment conducive to economic efficiency and the motivation, productivity and
development of the employee and generates employee loyalty and mutual trust.

Actors in the IR system:

Three main parties are directly involved in industrial relations:

Employers: Employers possess certain rights vis-à-vis labors. They have the right to hire
and fire them. Management can also affect workers’ interests by exercising their right to
relocate, close or merge the factory or to introduce technological changes.

Employees: Workers seek to improve the terms and conditions of their employment.
They exchange views with management and voice their grievances. They also want to
share decision making powers of management. Workers generally unite to form unions
against the management and get support from these unions.

Government: The central and state government influences and regulates industrial
relations through laws, rules, agreements, awards of court ad the like. It also includes
third parties and labor and tribunal courts

44
6.4 SCOPE:

The concept of industrial relations has a very wide meaning and connotation. In the
narrow sense, it means that the employer, employee relationship confines itself to the
relationship that emerges out of the day to day association of the management and the
labor. In its wider sense, industrial relations include the relationship between an
employee and an employer in the course of the running of an industry and may project it
to spheres, which may transgress to the areas of quality control, marketing, price fixation
and disposition of profits among others. The scope of industrial relation is quite vast. The
main issues involved here include the following:

1. Collective bargaining
2. Machinery for settlement of industrial disputes
3. Standing orders
4. Workers participation in management
5. Unfair labor practices

6.4.1 Importance of Industrial Relations:

The healthy industrial relations are key to the progress and success. Their significance
may be discussed as under –

Uninterrupted production – The most important benefit of industrial relations is that

this ensures continuity of production. This means, continuous employment for all from
manager to workers. The resources are fully utilized, resulting in the maximum possible
production. There is uninterrupted flow of income for all. Smooth running of an industry
is of vital importance for several other industries; to other industries if the products are
intermediaries or inputs; to exporters if these are export goods; to consumers and
workers, if these are goods of mass consumption.

Reduction in Industrial Disputes – Good industrial relations reduce the industrial

disputes. Disputes are reflections of the failure of basic human urges or motivations to
secure adequate satisfaction or expression which are fully cured by good industrial
relations. Strikes, lockouts, go-slow tactics, and grievances are some of the reflections of

45
industrial unrest which do not spring up in an atmosphere of industrial peace. It helps in
promoting co-operation and increasing production.

High morale – Good industrial relations improve the morale of the employees.
Employees work with great zeal with the feeling in mind that the interest of employer and
employees is one and the same, i.e. to increase production. Every worker feels that he is a
co-owner of the gains of industry. The employer in his turn must realize that the gains of
industry are not for him along but they should be shared equally and generously with his
workers. In other words, complete unity of thought and action is the main achievement of
industrial peace. It increases the place of workers in the society and their ego is satisfied.
It naturally affects production because mighty co-operative efforts alone can produce
great results.

Mental Revolution – The main object of industrial relation is a complete mental

revolution of workers and employees. The industrial peace lies ultimately in a
transformed outlook on the part of both. It is the business of leadership in the ranks of
workers, employees and Government to work out a new relationship in consonance with
a spirit of true democracy. Both should think themselves as partners of the industry and
the role of workers in such a partnership should be recognized. On the other hand,
workers must recognize employer’s authority. It will naturally have impact on production
because they recognize the interest of each other.

Reduced Wastage – Good industrial relations are maintained on the basis of

cooperation and recognition of each other. It will help increase production. Wastages of
man, material and machines are reduced to the minimum and thus national interest is
protected.

Thus, it is evident that good industrial relations is the basis of higher production with
minimum cost and higher profits. It also results in increased efficiency of workers. New
and new projects may be introduced for the welfare of the workers and to promote the
morale of the people at work. An economy organized for planned production and
distribution, aiming at the realization of social justice and welfare of the massage can
function effectively only in an atmosphere of industrial peace. If the twin objectives of
rapid national development and increased social justice are to be achieved, there must be
harmonious relationship between management and labor.

6.4.2 Objectives of Industrial Relations:

The main objectives of industrial relations system are:-

To safeguard the interest of labor and management by securing the highest level of
mutual understanding and good-will among all those sections in the industry which
participate in the process of production.
To avoid industrial conflict or strife and develop harmonious relations, which are an
essential factor in the productivity of workers and the industrial progress of a country.
To raise productivity to a higher level in an era of full employment by lessening the
tendency to high turnover and frequency absenteeism.

46
 • To establish and promote the growth of an industrial democracy based on labor
partnership in the sharing of profits and of managerial decisions, so that ban
individuals personality may grow its full stature for the benefit of the industry and
of the country as well.
• To eliminate or minimize the number of strikes, lockouts and gheraos by
providing reasonable wages, improved living and working conditions, said fringe
benefits.
• To improve the economic conditions of workers in the existing state of industrial
managements and political government.
• Socialization of industries by making the state itself a major employer
• Vesting of a proprietary interest of the workers in the industries in which they are
employed.

6.5 Dunlop's Contribution to Industrial Relations

Dunlop's Model

One of the significant theories of industrial labor relations was put forth by John Dunlop
in the 1950s. According to Dunlop, industrial relations system consists of three agents –
management organizations, workers and formal/informal ways they are organized and
government agencies. These actors and their organizations are located within an
environment – defined in terms of technology, labor and product markets, and the
distribution of power in wider society as it impacts upon individuals and workplace.
Within this environment, actors interact with each other, negotiate and use
economic/political power in process of determining rules that constitute the output of the
industrial relations system. He proposed that three parties—employers, labor unions, and
government-- are the key actors in a modern industrial relations system. He also argued
that none of these institutions could act in an autonomous or independent fashion. Instead
they were shaped, at least to some extent, by their market, technological and political
contexts.

Thus it can be said that industrial relations is a social sub system subject to three
environmental constraints- the markets, distribution of power in society and technology.

Dunlop's model identifies three key factors to be considered in conducting an analysis of

the management-labor relationship:

1. Environmental or external economic, technological, political, legal and social

forces that impact employment relationships.
2. Characteristics and interaction of the key actors in the employment relationship:
labor, management, and government.
3. Rules that are derived from these interactions that govern the employment
relationship.

Dunlop emphasizes the core idea of systems by saying that the arrangements in the field
of industrial relations may be regarded as a system in the sense that each of them more or
less intimately affects each of the others so that they constitute a group of arrangements
for dealing with certain matters and are collectively responsible for certain results”.

47
In effect - Industrial relations is the system which produces the rules of the workplace.
Such rules are the product of interaction between three key “actors” – workers/unions,
employers and associated organizations and government

The Dunlop’s model gives great significance to external or environmental forces. In other
words, management, labor, and the government possess a shared ideology that defines
their roles within the relationship and provides stability to the system.

6.6 Collective Bargaining

Collective bargaining is process of joint decision making and basically represents a

democratic way of life in industry. It is the process of negotiation between firm’s and
workers’ representatives for the purpose of establishing mutually agreeable conditions of
employment. It is a technique adopted by two parties to reach an understanding
acceptable to both through the process of discussion and negotiation.

The International Labour Organisation (ILO) has defined collective bargaining as,
negotiation about working conditions and terms of employment between an employer and
a group of employees or one or more employee, organization with a view to reaching an
agreement, wherein the terms serve as a code of defining the rights and obligations of
each party in their employment/industrial relations with one another.

Collective bargaining involves discussions and negotiations between two groups as to the
terms and conditions of employment. It is called ‘collective’ because both the employer
and the employee act as a group rather than as individuals. It is known as ‘bargaining’
because the method of reaching an agreement involves proposals and counter proposals,
offers and counter offers and other negotiations.

Thus collective bargaining:

• is a collective process in which representatives of both the management and

employees participate.
• is a continuous process which aims at establishing stable relationships between
the parties involved.
• not only involves the bargaining agreement, but also involves the implementation
of such an agreement.
• attempts in achieving discipline in the industry
• is a flexible approach, as the parties involved have to adopt a flexible attitude
towards negotiations.

6.7 Introduction of Trade-Unions

A trade union is an organization of employees formed on a continuous basis for the

purpose of securing diverse range of benefits. It is a continuous association of wage
earners for the purpose of maintaining and improving the conditions of their working
lives.

48
The Trade Union Ordinance of 1938 defines a trade union as a combination, whether
temporary or permanent, formed primarily for the purpose of regulating the relations
between workmen and employers or between workmen and workmen, or between
employers and employers, or for imposing restrictive condition on the conduct of any
trade or business, and includes any federation of two or more trade unions

This definition is very exhaustive as it includes associations of both the workers and
employers and the federations of their associations. Here, the relationships that have been
talked about are both temporary and permanent. This means it applies to temporary
workers (or contractual employees) as well. Then this definition, primarily, talks about
three relationships. They are the relationships between the:

• workmen and workmen,

• workmen and employers, and
• Employers and employers.

Thus, a trade union can be seen as a group of employees in a particular sector, whose aim
is to negotiate with employers over pay, job security, working hours, etc, using the
collective power of its members. In general, a union is there to represent the interests of
its members, and may even engage in political activity where legislation affects their
members. Trade unions are voluntary associations formed for the pursuit of protecting the
common interests of its members and also promote welfare. They protect the economic,
political and social interests of their members.

Features of trade unions:

1. It is an association either of employers or employees or of independent workers.

They may consist of :-

o Employers’ association (e.g., Nigeria Employer’s Consultative

Association (NECA), Food, Beverages and Tobacco Association, etc.)
o General labor unions
o Friendly societies
o Unions of intellectual labor (e.g., Nigerian Union of Teachers (NUT),
Academic Staff Union of Universities (ASUU),etc).
2. It is formed on a continuous basis. It is a permanent body and not a casual or
temporary one. They persist throughout the year.
3. It is formed to protect and promote all kinds of interests –economic, political and
social-of its members. The dominant interest with which a union is concerned is,
however, economic.
4. It achieves its objectives through collective action and group effort. Negotiations
and collective bargaining are the tools for accomplishing objectives.
5. Trade unions have shown remarkable progress since their inception; moreover,
the character of trade unions has also been changing. In spite of only focusing on
the economic benefits of workers, the trade unions are also working towards
raising the status of labors as a part of industry.

49
6.8 Causes of Industrial Disputes

The causes of industrial disputes can be broadly classified into two categories: economic
and non-economic causes. The economic causes will include issues relating to
compensation like wages, bonus, allowances, and conditions for work, working hours,
leave and holidays without pay, unjust layoffs and retrenchments. The non economic
factors will include victimization of workers, ill treatment by staff members, sympathetic
strikes, political factors, indiscipline etc.

Wages and allowances: Since the cost of living index is increasing, workers
generally bargain for higher wages to meet the rising cost of living index and to increase
their standards of living. In 2002, 21.4% of disputes were caused by demand of higher
wages and allowances. This percentage was 20.4% during 2003 and during 2004
increased up to 26.2%. In 2005, wages and allowances accounted for 21.8% of disputes.

Personnel and retrenchment: The personnel and retrenchment have also been an
important factor which accounted for disputes. During the year 2002, disputes caused by
personnel were 14.1% while those caused by retrenchment and layoffs were 2.2% and
0.4% respectively. In 2003, a similar trend could be seen, wherein 11.2% of the disputes
were caused by personnel, while 2.4% and 0.6% of disputes were caused by retrenchment
and layoffs. In year 2005, only 9.6% of the disputes were caused by personnel, and only
0.4% was caused by retrenchment.

Indiscipline and violence: From the given table, it is evident that the number of
disputes caused by indiscipline has shown an increasing trend. In 2002, 29.9% of disputes
were caused because of indiscipline, which rose up to 36.9% in 2003. Similarly in 2004
and 2005, 40.4% and 41.6% of disputes were caused due to indiscipline respectively.
During the year 2003, indiscipline accounted for the highest percentage (36.9%) of the
total time-loss of all disputes, followed by cause-groups wage and allowance and
personnel with 20.4% and11.2% respectively. A similar trend was observed in 2004
where indiscipline accounted for 40.4% of disputes.

Bonus: Bonus has always been an important factor in industrial disputes. 6.7% of the
disputes were because of bonus in 2002 and 2003 as compared to 3.5% and 3.6% in 2004
and 2005 respectively.

Leave and working hours: Leaves and working hours have not been so important
causes of industrial disputes. During 2002, 0.5% of the disputes were because of leave
and hours of work while this percentage increased to 1% in 2003. During 2004, only
0.4% of the disputes were because of leaves and working hours.

Miscellaneous: The miscellaneous factors include

- Inter/Intra Union Rivalry

- Charter of Demands
- Work Load
- Standing orders/rules/service conditions/safety measures
- Non-implementation of agreements and awards etc.

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6.9 Strikes

A strike is a very powerful weapon used by trade unions and other labor associations to
get their demands accepted. It generally involves quitting of work by a group of workers
for the purpose of bringing the pressure on their employer so that their demands get
accepted. When workers collectively cease to work in a particular industry, they are said
to be on strike.

According to Industrial Disputes Act 1976, a strike is “a cessation of work by a body of

persons employed in an industry acting in combination; or a concerted refusal of any
number of persons who are or have been so employed to continue to work or to accept
employment; or a refusal under a common understanding of any number of such persons
to continue to work or to accept employment”. This definition throws light on a few
aspects of a strike. Firstly, a strike is a referred to as stoppage of work by a group of
workers employed in a particular industry. Secondly, it also includes the refusal of a
number of employees to continue work under their employer.

In a strike, a group of workers agree to stop working to protest against something they
think is unfair where they work. Labors withhold their services in order to pressurize
their employment or government to meet their demands. Demands made by strikers can
range from asking for higher wages or better benefits to seeking changes in the workplace
environment. Strikes sometimes occur so that employers listen more carefully to the
workers and address their problems.

Causes of strikes:
Strikes can occur because of the following reasons:

• Dissatisfaction with company policy

• Salary and incentive problems
• Increment not up to the mark
• Wrongful discharge or dismissal of workmen
• Withdrawal of any concession or privilege
• Hours of work and rest intervals
• Leaves with wages and holidays
• Bonus, profit sharing, Provident fund and gratuity
• Retrenchment of workmen and closure of establishment
• Dispute connected with minimum wages

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