Subject Name Code Credit Hours

Business Organization
BBA1313 3

Lecture 1: Unit 6

Ms. Jyoti Kothari

Subject Name Code Credit Hours
Business Organization
BBA1313 3

Unit 6:
Part I
Organizational birth, growth, decline &
death
Organizational life cycle
A population ecology model of
organizational birth, decline & death
Part II
Managing employees: Motivating
employees
Theories on motivation, job
satisfaction & motivation
Subject Name Code Credit Hours
Business organization
BBA1313 3

Part III
Hiring, training & evaluating employees
Human resource planning
Compensation packages a firm offers
Developing skills of employees
Evaluation of employee performance
Part IV
Labor union: background
Negotiations b/w unions & management
Conflicts b/w unions & management
Subject Name Code Credit Hours
Business organization
BBA1313 3

Organizational Transformations:
Birth,Growth, Decline, and Death
Organizational life cycle
a predictable sequence of stages of growth and
change
The four principal stages of the organizational
life cycle:
Birth
Growth
Decline
Death
Subject Name Code Credit Hours
Business organization
BBA1313 3

Model of the Organizational Life

Cycle
Subject Name Code Credit Hours
Business organization
BBA1313 3

Organizational birth: the founding of

an organization
Occurs when entrepreneurs take advantage of
opportunities to use their skills and
competences to create value
A dangerous life cycle stage associated
with the greatest chance of failure
Liability of newness: the dangers associated with
being the first in a new environment
New organization is fragile because it lacks a formal
structure
Subject Name Code Credit Hours
Business organization
BBA1313 3

Developing a plan for a new

business
Begins when an entrepreneur notices
an opportunity to develop a new or
improved product or service
Tests the feasibility of the new product
idea
SWOT analysis
Examine the strengths and
weaknesses of the idea
Decide whether the new product idea
Subject Name Code Credit Hours
Business organization
BBA1313 3

Developing a plan for a new

business (cont.)
Plan should include:
Statement of the organizations mission,
goals, and financial objectives
Statement of the organizations strategic
objectives
List of all the functional and organizational
resources required to implement the idea
Timeline that contains specific milestones
used to measure the progress of the
venture
Subject Name Code Credit Hours
Business organization
BBA1313 3

Human behaviour is goal directed.

All behaviour is motivated.
The act of stimulating or energizing
employees for higher performance.
M is the set of forces that causes people
to behave in certain ways.- Ricky Griffin

The motivation of employees is influenced

by job satisfaction.
Subject Name Code Credit Hours
Business organization
BBA1313 3

You will see a greater focus on

employee satisfaction . . . which
will lead us to higher quality,
better growth, and improved
profitability.
Kodak
Subject Name Code Credit Hours
Business organization
BBA1313 3

Theories of motivation:
1. Hawthorne Studies
In the late 1920s, researchers studied workers in
a Western Electric Plant near Chicago to identify
how a variety of conditions affected their level of
production.
Illumination experiment: light effect
Relay assembly test room experiment: working
conditions
Interviewing programme: 20000 workers
interviewed for working conditions
Bank wiring observation room: informal groups
are formed & they protect weak workers.
Subject Name Code Credit Hours
Business organization
BBA1313 3

2. Maslows Hierarchy of Needs

In 1943, Abraham Maslow, a
psychologist, developed the
hierarchy of needs theory.
needs are ranked in five general
categories.
Once a given category of needs is
achieved, people become motivated
to reach the next category.
Subject Name Code Credit Hours
Business organization
BBA1313 3

Self- Actualization - Maximization

of potential
Esteem Needs - Respect, prestige,
recognition, power
Social Needs - Social interaction,
acceptance by others
Safety Needs - Job security, safe
working conditions
Physiological Needs -Food, shelter,
clothing
Subject Name Code Credit Hours
Business Organization
BBA1313 3

The hierarchy of needs theory can be useful for

motivating employees as it suggests that
different employees may be at different places in
the hierarchy.
Subject Name Code Credit Hours
Business organization
BBA1313 3

3. Herzbergs Job Satisfaction Study:

In the late 1950s, Frederick Herzberg surveyed
200 accountants and engineers about job
satisfaction.
Common Factors Identified
by Dissatisfied Workers by Satisfied
Workers
Working conditions Achievement
Supervision Responsibility
Salary Recognition
Job security Advancement
Status Growth
Subject Name Code Credit Hours
Business organization
BBA1313 3

hygiene factors
work-related factors that can fulfill
basic needs and prevent job
dissatisfaction
motivational factors
work-related factors that can lead to
job satisfaction and motivate
employees
Subject Name Code Credit Hours
Business organization
BBA1313 3

Herzbergs study correspond with the results of

Maslows hierarchy.
Herzbergs hygiene factors generally correspond
with Maslows basic needs (such as job security).
This suggests that if hygiene factors are
adequate, they fulfill some of workers more basic
needs.
Fulfillment of these needs can prevent
dissatisfaction as employees become motivated
to achieve a higher class of needs.
Herzbergs motivational factors (such as
recognition) generally correspond with Maslows
more ambitious hierarchy needs.
Subject Name Code Credit Hours
Business organization
BBA1313 3

4. McGregors Theory X and Theory Y:

Douglas Mc-Gregor
Theory X
Employees dislike work and job
responsibilities and will avoid work if
possible. Theory Y
Employees are willing to work and
prefer more responsibility.
Subject Name Code Credit Hours
Business organization
BBA1313 3

6. Expectancy theory
An employees efforts are influenced by
the expected outcome (reward) for those
efforts.
Employees will be more motivated to
achieve goals if they are achievable and
offer some reward.
7. Equity Theory
Compensation should be equitable, or in
proportion to each employees
contribution.
Subject Name Code Credit Hours
Business organization
BBA1313 3

8. Reinforcement theory
Reinforcement can influence
behavior.
positive reinforcement motivates
employees by providing rewards for
high performance.
negative reinforcement motivates
employees by encouraging them to
behave in a manner that avoids
unfavorable consequences.
Subject Name Code Credit Hours
Business organization
BBA1313 3

Motivating Disgruntled Employees:

A firm may not be able to motivate some
employees, regardless of its efforts or the
methods used to motivate them.
If no form of motivation is effective, the threat of
being fired may be used as a last resort to
motivate these employees.
If firms do not discipline disgruntled employees
who are performing poorly, other employees will
lose their enthusiasm, if they have to cover the
work assignments that the disgruntled employees
neglect.
Subject Name Code Credit Hours
Business organization
BBA1313 3

Job Satisfaction and Motivation:

the key characteristics that affect job satisfaction
are money, security, work schedule, and
involvement at work.
To motivate employees, firms provide job
enrichment programs, or programs designed to
increase the job satisfaction of employees.
Some of the more popular job enrichment
programs:
Adequate compensation program
Job security
Flexible work schedule
Employee involvement programs
Subject Name Code Credit Hours
Business organization
BBA1313 3

Adequate Compensation Program:

merit system is a compensation system
that allocates raises according to
performance.
across-the-board system is a
compensation system that allocates
similar raises to all employees.
incentive plans provide employees with
various
forms of compensation if they meet
specific performance goals.
Subject Name Code Credit Hours
Business organization
BBA1313 3

Job Security:
Employees who have job security may be more
motivated to perform well.
They are less likely to be distracted at work
because of concern about finding a more secure
job.
Flexible Work Schedule:
flextime programs allow for a more flexible
work schedule.
compressed workweek compresses the
workload into
fewer days per week.
Subject Name Code Credit Hours
Business organization
BBA1313 3

Employee Involvement Programs:

job sharing -two or more persons share a
particular work schedule.
job enlargement-a program to expand (enlarge)
the jobs assigned to employees.
job rotation-a program that allows a set of
employees to periodically rotate their job
assignments.
empowerment- allowing employees the power
to make more decisions.
participative management-employees are
allowed to participate in various decisions made
by their supervisors or others.
Subject Name Code Credit Hours
Business organization
BBA1313 3

management by objectives (MBO)

-allows employees to participate in setting
their goals and determining the manner in
which they complete their tasks.
teamwork-a group of employees with
varied job positions have the responsibility
to achieve a specific goal.
open-book management a form of
employee involvement that educates
employees on their contribution to the firm
and enables them to periodically assess
their own performance levels.
Subject Name Code Credit Hours
Business organization
BBA1313 3

Firm Methods Used to Achieve High Job

Satisfaction
Southwest Airlines
Treats employees with respect.
Empowers employees to solve problems.
Gives awards and recognition to employees.
MBNA
Focuses on hiring employees who get along with
other people.
Provides on-site child care.
Microsoft
Casual work environment.
Subject Name Code Credit Hours
Business organization
BBA1313

Human Resource Planning

3

Human resource planning involves

planning to satisfy a firms needs for
employees.
It consists of three tasks:
Forecasting staffing needs
Job analysis
Recruiting
Subject Name Code Credit Hours
Business organization
BBA1313 3
job analysis
the analysis used to determine the tasks and the necessary
credentials for a particular position.
job specification
states the credentials necessary to qualify for a job position.
job description
states the tasks and responsibilities of a job position.
human resource manager
helps each specific department recruit candidates for its open
positions.
internal recruiting
an effort to fill open positions with persons already employed by
the firm.
promotion
the assignment of an employee to a higher-level job with more
responsibility and compensation.
external recruiting
an effort to fill positions with applicants from outside the firm.
Subject Name Code Credit Hours
Business organization
BBA1313
Wal-Mart typically attempts
3

to promote employees
within its business as a way
of retaining its best employees
and reducing turnover.
Subject Name Code Credit Hours
Business organization
BBA1313 3

Tasks Involved in Human Resource Planning

Forecast Job Needs
Forecast employee replacement
Forecast employee expansion

Job Analysis
Develop job specification
Develop job description

Recruiting
Inform potential candidates
Interview qualified candidates
Make hiring decision
Subject Name Code Credit Hours
Business organization
BBA1313 3

Compensation Packages That Firms Offer:

the total monetary compensation and benefits
offered to employees.
salary (or wages)
the dollars paid for a job over a specific period.
stock options
a form of compensation that allows employees to
purchase shares of their employers stock at a
specific price.
commissions
compensation for meeting specific sales
objectives.
Subject Name Code Credit Hours
Business organization
BBA1313 3

bonus
an extra onetime payment at the end of a period
in which performance was measured.
profit sharing
a portion of the firms profits is paid to
employees.
employee benefits
additional privileges beyond compensation
payments, such as paid vacation time; health,
life, or
dental insurance; and pension programs.
perquisites
additional privileges beyond compensation
payments and employee benefits
Subject Name Code Credit Hours
Business organization
BBA1313 3

Developing Skills of Employees:

Technical Skills
Decision-Making Skills
Customer Service Skills
Safety Skills
Human Relations Skills
Subject Name Code Credit Hours
Business organization
BBA1313 3
Subject Name Code Credit Hours
Business organization
BBA1313 3

Evaluation of Employee Performance:

1) Segmenting the Evaluation into
Different Criteria
Objective versus Subjective Criteria
2)Using a Performance Evaluation
Form
3) Assigning Weights to the Criteria
Subject Name Code Credit Hours
Business organization
BBA1313 3
Employee Name __________________________________ Date __________________
Position _____________________________________________
Behavior Ratings: Check the one characteristic that best applies.
Quality of Work (refers to accuracy and margin of error):
_____ 1. Makes errors frequently and repeatedly
_____ 2. Often makes errors
_____ 3. Is accurate; makes occasional errors
_____ 4. Is accurate; rarely makes errors
_____ 5. Is exacting and precise
Quantity of Work (refers to amount of production or results):
_____ 1. Usually does not complete workload as assigned
_____ 2. Often accomplishes part of a task
_____ 3. Handles workload as assigned
_____ 4. Turns out more work than requested
_____ 5. Handles an unusually large volume of work
Timeliness (refers to completion of task, within time allowed):
_____ 1. Does not complete duties on time
_____ 2. Is often late in completing tasks
_____ 3. Completes tasks on time
_____ 4. Usually completes tasks in advance of deadlines
_____ 5. Always completes all tasks in advance of deadlines
Subject Name Code Credit Hours
Business organization
BBA1313 3
Attendance and Punctuality (refers to adhering to work schedule assigned):
_____ 1. Is usually tardy or absent
_____ 2. Is often tardy or absent
_____ 3. Normally is not tardy or absent
_____ 4. Makes a point of being on the job and on time
_____ 5. Is extremely conscientious about attendance
Responsibility (refers to completing assignments and projects):
_____ 1. Usually does not assume responsibility for completing assignments
_____ 2. Is at times reluctant to accept delegated responsibility
_____ 3. Accepts and discharges delegated duties willingly
_____ 4. Accepts additional responsibility
_____ 5. Is a self-starter who seeks out more effective ways to achieve results or seeks additional
responsibilities
Cooperation with Others (refers to working and communicating with supervisors and co-
workers):
_____ 1. Has difficulty working with others and often complains when given assignments
_____ 2. Sometimes has difficulty working with others and often complains when given assignments
_____ 3. Usually is agreeable and obliging; generally helps out when requested
_____ 4. Works well with others; welcomes assignments and is quick to offer assistance
_____ 5. Is an outstanding team worker; always assists others and continually encourages
cooperation by setting
an excellent example
Performance Summary (include strong areas and areas for future emphasis in improving
performance or developing
additional job skills):
Employee Comments or Concerns:
Signatures:
Human Resource Manager ____________________________________________________ Date
__________________
Employee ___________________________________________________________________Date
__________________
Subject Name Code Credit Hours
Business organization
BBA1313 3

Steps for Proper Performance Evaluation:

1. Supervisors should communicate job
responsibilities to employees when they
are hired.
2. When supervisors notice that
employees have deficiencies, they should
inform the employees of those
deficiencies.
This communication may occur in the
form of a standard periodic review.
3. Supervisors should be consistent when
Subject Name Code Credit Hours
Business organization
BBA1313 3

Employee Evaluation of Supervisors:

upward appraisals
used to measure the managerial
abilities of supervisors.
Subject Name Code Credit Hours
Business organization
BBA1313

Labor Union
3

labor union
an association established to
represent the views, needs, and
concerns of labor.
The needs may include job security,
safer working conditions, and higher
salaries.
Subject Name Code Credit Hours
Business organization
BBA1313 3

Background on Unions:
Unions can be classified as either craft or
industrial.
Craft unions are organized according to a specific
craft (or trade), such as plumbing.
Industrial unions are organized for a specific
industry. Unions can also be classified as either
local or national.
Local unions are composed of members in a
specified local area.
National unions are composed of members
throughout the country.
Some local unions are part of a national union.
International unions have members in several
countries.
Subject Name Code Credit Hours
Business organization
BBA1313 3

Norris-LaGuardia Act 1932

restricted the use of injunctions against
unions and allowed unions to publicize a
labor dispute
yellow-dog contract 1959
a contract requiring employees to refrain
from joining a union as a condition of
employment
Wagner Act
prohibited firms from interfering with
workers efforts to organize or join unions
Subject Name Code Credit Hours
Business organization
BBA1313 3

Taft-Hartley Act
an amendment to the Wagner Act that
prohibited unions from pressuring
employees to join
right-to-work
allows states to prohibit union shops
Landrum-Griffin Act
required labor unions to specify in their
bylaws the membership eligibility
requirements, dues, and collective
bargaining procedures
Subject Name Code Credit Hours
Business organization
BBA1313 3

Negotiations between Unions and

Management:
The union and management meet to
negotiate a contract on the more critical
issues -
Salaries
Job security
Management rights
Grievance procedures
Subject Name Code Credit Hours
Business organization
BBA1313 3

Conflicts between Unions and

Management:
Unions use various methods to bargain for
better working conditions or higher
compensation.
Employees may attempt to pressure
management by picketing, or walking
around near the employers building with
signs complaining of poor working
conditions.
Employees can also boycott the products
Subject Name Code Credit Hours
Business organization
BBA1313 3

Labor Strikes- a discontinuation of

employee services
Managements Response to Strikes
Management may respond to union
pressure by obtaining an injunction, which
is a court order to prevent the union from
a particular activity such as picketing.
Alternatively, it could use a lockout, which
prevents employees from working until an
agreement between management and
labor is reached.
Subject Name Code Credit Hours
Business organization
BBA1313 3

injunction
a court order to prevent a union from a particular activity such as picketing.
lockout
prevents employees from working until an agreement between management
and labor is reached.
Subject Name Code Credit Hours
Business organization
BBA1313 3

How Firms Reduce Employees Desire for a Union:

1. Management should promote employees from
within so that employees are satisfied with their
career paths.
2. Management should attempt to avoid layoffs
so that employees do not feel threatened
whenever business slows down.
This may be achieved by reassigning job positions
to some employees who are no longer needed in
their original positions.
3. Management should allow employees
responsibility and input into some decisions.