Chapter 1

Management: Science,
Theory, & Practice
 Definition of Management: Its Nature and
Purpose
• Management is the process of designing and maintaining an
environment in which individuals, working together in groups,
efficiently accomplish selected aims.
 Functions of Management
• Planning
• Organizing
• Staffing
• Leading
• Controlling
 Managerial Functions at Different
Organizational Levels
• All managers carry out managerial functions, but the time spent for
each function may differ.
Time Spent in Carrying Out
Managerial Functions
 Managerial Skills and the Organizational Hierarchy

The four skills required of administrators:

• Technical skills
• Human skills
• Conceptual And Design skills
Skills and Management Levels
 The Goals of All Managers and Organizations

• The aim of all managers should be to create a surplus. Thus,

managers must establish an environment in which people can
accomplish group goals with the least amount of time, money,
materials, and personal dissatisfaction.
 Characteristics of Excellent & Most Admired
Companies
• Oriented toward action
• Learned about the needs of their customers
• Promoted managerial autonomy and entrepreneurship
• Achieved productivity by paying close attention to the needs of their
people
• Driven by a company philosophy often based on the values of their
leaders
• Focused on the business they knew best
• Had a simple organization structure with a lean staff
• Centralized as well as decentralized, depending on appropriateness.
 Trends
• Technology
• Globalization
• Entrepreneurship
 Productivity
• Productivity implies effectiveness and efficiency in individual and
organizational performance.
• Productivity= Input
Output
• Increasing outputs with the same inputs
• Decreasing inputs but maintaining the same outputs
• Increasing the outputs and decreasing the inputs to change the ratio
favorably
 Definitions of Effectiveness
and Efficiency
• Effectiveness is the achievement of objectives.
• Efficiency is the achievement of the ends with the least amount of
resources (time, money, etc.).
 Managing: Science or Art
• Managing as practice is an art; the organized knowledge underlying
the practice is a science.
 Management & Administration
Administration
Traditional & bureaucratic
Refers to decision making &
determination of what is to be done &
how
Normative by nature
Stress on process, & elaborate rule
governed procedure
Focus on ideology
Importance of uniformity & standards
Priority is governance
Management
More modern & dynamic
Refers to execution & implementation of
agreed goals
Problem solving by nature
Stress on output by often not trying to
minimize something, but optimizing the
opposing forces.
Focus on skills
Importance of variance & context
Priority is performance
 The Evolution of Management Thought
• Scientific management
– Frederick Taylor, Henry Gantt, Frank & Lillian Gilbreth
• Modern operational management theory
– Henry Fayol
• Behavioural sciences
– Hugo Munsterberg, Walter Dill Scott, Max Weber, Vilfredo Pareto, Elton
Mayo & F J Roethilisberger
• Systems theory
– Chester Bernard
• Modern management thought
– Peter F Drucker, W Edwards Deming, Laurence Peter, William Ouchi,
Thomas Peters and Robert Waterman
 Frederick Taylor & Scientific Management

• Fundamental principles that Taylor saw underlying scientific

management:
– Replacing rules of thumb with science (organized knowledge)
– Obtaining harmony, rather than discord, in group action
– Achieving cooperation of human beings, rather than restricted output
– Developing all workers to the fullest extent possible for their own and
their company’s highest prosperity.
 Henri Fayol’s 14 Principles of Management
• Division of labour
• Authority
• Discipline
• Unity of Command
• Unity of Direction
• Subordination of Individual Interest to Common Good
• Remuneration
• Centralization
• The Hierarchy
• Order
• Equity
• Stability of staff
• Initiative
• Esprit de Corps
 Elton Mayo & F J Roethlisberger
• The Hawthorne studies
 Patterns of Management Analysis
• The Managerial Roles Approach
– Interpersonal roles
– Informational roles
– Decision roles
• The Management Process or Operational Approach
– Draws together the pertinent knowledge of management by relating it to
the managerial job.
 The Systems Approach to the Management
Process
• Inputs and claimants
• The managerial transformation process
• The communication system
• External variables
• Outputs
• Reenergizing the system
 The Functions of Managers
• Planning
– Selecting missions and objectives as well as the actions to achieve them,
which requires decision making
• Organizing
– Establishing an intentional structure of roles for people to fill in an organization
• Staffing
– Filling and keeping filled, the positions in the organization structure
• Leading
– Influencing people so that they will contribute to organizational and group roles
• Controlling
– Measuring and correcting individual and organizational performance to ensure
that events conform to plans
 Chapter 2

Management and Society: The

External Environment, Social
Responsibility, and Ethics
The Organization and Its External
Environment
 Operating in a Pluralistic Society
• Managers operate in a pluralistic society, in which many
organized groups represent various interests.
• Each group has an impact on other groups, but no one group
exerts an inordinate amount of power. Many groups exert
some power over business.
 The Technological Environment
• Technology is the sum total of the knowledge we have of ways
to do things.
 The Ecological Environment
• Ecology pertains to the relationship of people and other living
things with their environment, such as soil, water, and air.
• Land may be polluted by industrial waste such as packaging.
• Water pollution may be caused, for example, by hazardous
waste and sewage.
• Air pollution can be caused by acid rain, vehicle exhaust
fumes, carcinogens from manufacturing processes, and other
sources.
 The Social Responsibility of Managers
• Corporate social responsibility is “seriously considering the
impact of the company's actions on society”.
• Social responsiveness is "the ability of a corporation to relate
its operations and policies to the social environment in ways
that are mutually beneficial to the company and to society”.
 Arguments for Social Involvement
• Public expectations
• Long-run profits
• Ethical obligation
• Public image
• Better environment
• Discouragement of further governmental regulation
• Balance of responsibility & power
• Stockholder interests
• Possession of resources
• Superiority of prevention over cures
 Arguments against Social Involvement
• Violation of profit maximization
• Dilution of purpose
• Costs
• Too much power
• Lack of skills
• Lack of accountability
 Ethics in Managing
• Ethics is the discipline dealing with what is good and bad and
with moral duty and obligation.
• Business ethics is concerned with truth and justice.
 Four levels of ethical questions in
business
• Societal
• Stakeholder
• Internal policy
• Personal
 Ethical Theories
• The utilitarian theory suggests that plans and actions should
be evaluated by their consequences.
• The theory based on rights holds that all people have basic
rights.
• The theory of justice demands that decision makers be guided
by fairness and equity, as well as impartiality.
 The tools of ethics
• Values
• Rights & duties
• Moral rules
• Human relationships
• Common morality
– Promise keeping
– Non malevolence
– Mutual aid
– Respect for others
– Respect for persons
– Respect for property
• The morality of care
 Institutionalizing Ethics
• A code is a statement of policies, principles, or rules that
guide behavior.
 Factors that May Raise Ethical Standards (a
study)
• Public disclosure and publicity
• The increased concern of a well-informed public
• Government regulations
• Education to raise the professionalism of business managers
Guidelines for International Business Ethics –
Focus China
• International Business Ethics
• Labor Conditions
• Areas of Justice
• Toward Virtue Ethics
 Definition of Whistle-Blowing
• Whistle-blowing is making known to outside agencies what
are considered unethical company practices.
 Trust as the Basis for Change Management

• Traditionally, the concept of trust is equated with integrity,

loyalty, caring, and keeping promises in the relationships
between and among individuals.
• Belardo points out that trust should go beyond individual
relationships and extend to the organization by creating a
culture of trust that transcends individual leadership.
 Chapter 3

Essentials of Planning and Managing by

Objectives
 Definition of Planning
• Planning involves selecting missions and objectives and the actions to
achieve them; it requires decision making, that is, choosing from among
alternative future courses of action.
Close Relationship of Planning and
Controlling
 Types of Plans
Plans can be classified as:
1. Missions or purposes
2. Objectives or goals
3. Strategies
4. Policies
5. Procedures
6. Rules
7. Programs
8. Budgets
 Types of Plans
• The mission, or purpose, identifies the basic purpose or function or tasks
of an enterprise or agency or any part of it.
• Objectives, or goals, are the ends toward which activity is aimed.
• Strategy is the determination of the basic long-term objectives of an
enterprise and the adoption of courses of action and allocation of
resources necessary to achieve these goals.
• Policies are general statements or understandings that guide or channel
thinking in decision making.
 Types of Plans – cont.
• Procedures are plans that establish a required method of handling future
activities.
• Rules spell out specific required actions or nonactions, allowing no
discretion.
• Programs are a complex of goals, policies, procedures, rules, task
assignments, steps to be taken, resources to be employed, and other
elements necessary to carry out a given course of action.
• A budget is a statement of expected results expressed in numerical terms.
 Steps in Planning
1. Being aware of opportunities
2. Establishing objectives or goals
3. Developing premises
4: Determining alternative courses
5. Evaluating alternative courses
6. Selecting a course
7. Formulating derivative plans
8. Quantifying plans by budgeting
Steps in Planning
 Verifiable Objectives
• Objectives are the important ends toward which organizational and
individual activities are directed.
• An objective is verifiable when at the end of the period one can
determine whether or not the objective has been achieved.
 The Nature of Objectives
• Hierarchy of objectives
– Key Results Areas: Areas in which performance is essential for success
• Setting objectives and the organizational hierarchy
• Multiplicity of objectives
Relationship of Objectives and the
Organizational Hierarchy
 How to Set Objectives
• Compare nonverifiable with verifiable objectives
• Guidelines for setting objectives
 Evolving Concepts in MBO
• MBO as used in this book
• Management by objectives is a comprehensive managerial system that
integrates many key managerial activities in a systematic manner and is
consciously directed toward the effective and efficient achievement of
organizational and individual objectives.
Systems Approach to MBO
Benefits of Management by Objectives
Clear Goals:
• Motivate.
• Improve managing through results-oriented planning.
• Clarify organizational roles, structures, and the delegation of authority.
• Encourage commitment to their personal and organizational goals.
• Facilitate effective controlling, measuring of results, and
implementation of corrective actions.
Failures of Management by Objectives
• List some failures and limitations of MBO.
• What would you do to overcome the failures?
 Chapter 4

Strategies, Policies, and Planning Premises

 Definition of Strategy and Policies
• Strategy is the determination of the mission (or the fundamental purpose)
and the basic long-term objectives of an enterprise, and the adoption of
courses of action and allocation of resources necessary to achieve these
aims.
• Policies are general statements or understandings that guide managers'
thinking in decision making.
The Strategic Planning Process
The Strategic Planning Process
• Inputs to the organization
• Industry analysis
• Enterprise profile
• Orientation, values, and vision
• Mission (purpose), major objectives, and strategic intent
• Present and future external environment
• Internal environment
The Strategic Planning Process – cont.
• Development of alternative strategies
• Evaluation and choice of strategies
• Medium- and short-range planning
• Implementation through reengineering, staffing, leadership, and
control
• Consistency testing and contingency planning
 Mission, Objectives, and
Strategic Intent
• Mission relates to the kind of business.
• Objectives are the end points for activities.
• Strategic intent is the commitment to win in the competitive
environment.
Definition of the TOWS Matrix
The TOWS Matrix is a conceptual framework for a systematic
analysis that facilitates matching the external threats and
opportunities with the internal weaknesses and strengths of the
organization.
TOWS Matrix for Strategy Formulation
TOWS Matrix: 4 Alternative Strategies

• SO strategy: Maxi–Maxi
• WO strategy: Mini–Maxi
• ST strategy: Maxi–Mini
• WT strategy: Mini–Mini
Dynamics of the TOWS Matrix
Application of the TOWS Matrix for Mergers,
Acquisitions, Joint Ventures, and Alliances

• Develop a TOWS Matrix for both companies before the merger, etc.
• Develop a TOWS Matrix of the joint company after the merger, etc.
• See Illustration of DaimlerChrysler merger in the closing section of
Part 2
Blue Ocean Strategy by Kim & Mauborgne and
TOWS Matrix by Weihrich

• Explore opportunities in uncontested markets (Opportunities in the

TOWS Matrix) Example: Southwest Airline
• Be aware of competition in red ocean markets (bloody
competition). Example, today’s personal computers
• Value innovation: total company commitment to create value for
the customer
• Blue ocean strategy and the TOWS Matrix (SO or WO strategies in
uncontested markets)
Business Portfolio Matrix
 Business Portfolio Matrix
• Two dimensions
– Relative competitive position (market share)
– Business growth rate
• Four positions
– Question marks
– Stars
– Cash cows
– Dogs
Major Kinds of Strategies and Policies
• Products or Services
– What is our business?
– Who are our customers?
– What do our customers want?
– How much will our customers buy and at what price?
– Do we wish to be a product leader?
– What is our competitive advantage?
– Do we wish to develop our new products?
– What advantages do we have in serving customer needs?
– How should we respond to existing & potential competition?
– How far can we go in serving customer needs?
– What profits can we expect?
– What basic form should our strategy take?
 Major Kinds of Strategies and Policies
(contd..)
• Marketing
– Where are our customers & why do they buy?
– How do our customers buy?
– How is it best for us to sell?
– Do we have something to offer that competitors do not?
– Do we wish to take legal steps to discourage competition?
– Do we need, and can we supply, supporting services?
– What are the best pricing strategy & policy for our operation?
– How can we best serve our customers?
 Hierarchy of Company Strategies
• The corporate-level strategy. Executives craft the overall strategy for a
diversified company.
• Business strategies are developed usually by the general manager of a
business unit.
• Functional strategies. The aim is to support the business and corporate
strategies.
Five Forces in Industry Analysis (Michael
Porter)

Potential
entrants

Competitive
Suppliers Buyers
rivalry

Substitutes
Five Forces in Industry Analysis (Michael
Porter) contd..

• The competition among companies

• The threat of new companies entering the market
• The possibility of using substitute products or services
• The bargaining power of suppliers
• The bargaining power of the buyers or customers
Porter’s Generic Strategies
• Overall Cost Leadership Strategy
• Differentiation Strategy
• Focused Strategy (low cost or differentiation)
 Premising and Forecasting
• Planning premises are the anticipated environments in which plans are
expected to operate.
• Environmental Forecasting
– Values and areas of forecasting
– Forecasting with the Delphi technique
 Forecasting with Delphi Technique
• A panel of experts on a particular area are selected from both within & outside the
organization.
• The experts are asked to make a forecast (anonymously).
• Answers are compiled & composite results fed back to the panel members.
• Further estimates of future are made with this result.
• Process may be repeated several times.
• When convergence of opinion begins to evolve, the results are then used as an
acceptable forecast.
 Chapter 5

Decision Making
 Decision Making
• Decision making is the selection of a course of
action from among alternatives.
 Decision - Making Process
1. Premising
2. Identifying alternatives
3. Evaluating alternatives in terms of the goal
sought
4. Choosing an alternative, that is, making a
decision
Limited, or “Bounded,” Rationality
• Limitations of information, time, and certainty
limit rationality, even though a manager tries
earnestly to be completely rational.
• Satisficing is picking a course of action that is
satisfactory or good enough under the
circumstances.
 Development of Alternatives and the
Limiting Factor
• A limiting factor is something that stands in
the way of accomplishing a desired objective.
• The principle of the limiting factor: By
recognizing and overcoming those factors that
stand critically in the way of a goal, the best
alternative course of action can be selected.
 Quantitative and Qualitative Factors
• Quantitative factors are factors that can be
measured in numerical terms.
• Qualitative, or intangible, factors are those
that are difficult to measure numerically.
 Marginal Analysis
• Marginal analysis is to compare the additional
revenue and the additional cost arising from
increasing output.
 Cost-Effectiveness Analysis
• Cost-effectiveness analysis seeks the best
ratio of benefit and cost.
Selecting an Alternative: Three Approaches

When selecting from among alternatives,

managers can use:
1. Experience.
2. Experimentation.
3. Research and analysis.
Bases for Selecting From Among
Alternative Courses of Action
 Programmed and Non-programmed
Decisions
• Programmed decisions are used for
structured or routine work.
• Non-programmed decisions are used for
unstructured, novel, and ill-defined situations
of a nonrecurring nature.
Nature of Problems and Decision Making in
the Organization
 Creativity and Innovation
• Creativity refers to the ability and power to
develop new ideas.
• Innovation means the use of new ideas.
 The Creative Process
• The creative process is seldom simple and
linear.
• It generally consists of four overlapping and
interacting phases:
1. Unconscious scanning
2. Intuition
3. Insight
4. Logical formulation or verification
 Rules for Brainstorming
1. No ideas are criticized.
2. The more radical the ideas are, the better.
3. The quantity of idea production is stressed.
4. The improvement of ideas by others is
encouraged.
 Chapter 6

The Nature of Organizing,

Entrepreneuring,
and Reengineering
 Organizational Roles
For an organizational role to exist and be meaningful, it must
incorporate:
1. Verifiable objectives, which are a major part of planning.
2. A clear idea of the major duties or activities involved.
3. An understood area of discretion or authority so that the person filling
the role knows what he or she can do to accomplish goals.
 Organizing involves:
1. The identification and classification of required activities.
2. The grouping of activities necessary to attain objectives.
3. The assignment of each grouping to a manager with the authority
(delegation) necessary to supervise it.
4. The provision for coordination horizontally (on the same or a similar
organizational level) and vertically (for example, corporate
headquarters, division, and department) in the organization structure.
 Definition of Organization
• Organization implies a formalized intentional structure of roles or
positions.
Formal and Informal Organization
 Formal and Informal Organization

• Formal organization pertains to the intentional structure of roles in a

formally-organized enterprise.
• The informal organization is a network of interpersonal
relationships that arise when people associate with each other.
 Organization Chart
• A graphical representation of an organization.

• Conveys four kinds of information:

– Includes different units of organization
– Work performed by different personnel
– Reporting relationships indicated by connecting lines
– Number of hierarchy levels.
 What is a Department?
• The department designates a distinct area, division, or branch of an
organization over which a manager has authority for the performance
of specified activities.
Organization with Narrow Spans
Organization with Wide Spans
 What is the Principle of the Span of
Management?
• The principle of the span of management states that there is a
limit to the number of subordinates a manager can effectively
supervise, but the exact number will depend on the impact of
underlying factors.
What Determines an Effective Span of
management?
 Types of Business Organization
Criterion or basis Types of business organizations
Size SME, Large organizations
Ownership Sole proprietorship, partnership, Pvt. Ltd., Public Ltd., Co-
operatives, Trusts & associations
Purpose For-profit, not for profit
Activity Manufacturing, trading & services
Origin Domestic & Multinational, transnational or global, joint ventures
and alliances
Sector Public sector & Private sector
Style of management Traditionally managed, managed as per the western models,
using adapted or hybrid management models.
Reach of markets Local, regional, national, international or multi-national, global
 Types of Business Organization
(contd.)
Criterion or basis
Decision making
Product offering
Sources of finance
Listing on the stock exchange
Types of business organizations
Centralized, decentralized
Standard and coordinated product offering in
different markets or uncoordinated product
offering in different markets adapted to the
local conditions & preferences
Ownership capital or debt-financed, domestic
funds or financed through FDI
Listed or unlisted
 Difference between an Intrapreneur and an
Entrepreneur
• An intrapreneur is a person who focuses on innovation and
creativity and who transforms a dream or an idea into a profitable
venture by operating within the organizational environment.
• The entrepreneur is a person who does similar things as the
intrapreneur, but outside the organizational setting.
 Environment for Entrepreneurship

• Steve Wozniak and Steve Jobs at Apple Computers

• Entrepreneurship programs
 Situations for Innovations
• An unexpected event, failure, or success
• An incongruity between what is assumed and what really is
• A process or task that needs improvement
• Changes in the market or industry structure
• Changes in demographics
• Changes in meaning or in the way things are perceived
• Newly acquired knowledge
 Definition of Reengineering
• “The fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical contemporary
measures of performance, such as cost, quality, service, and speed.”
• The underlined words are considered key aspects of reengineering
by Hammer and Champy.
 Key Aspects of Reengineering
• Fundamental rethinking of what the organization is doing and why.
• Radical redesign of the business processes.
(Note: Downsizing or “rightsizing” is not the primary purpose of
reengineering, although in many cases it does result in a need for
fewer people.)
• Aim for dramatic results
• Careful analysis of business processes
Management by Processes
 The Steps in the Organizing Process:

1. Establishing enterprise objectives.

2. Formulating supporting objectives, policies, and plans.
3. Identifying, analyzing, and classifying the activities necessary to
accomplish these objectives.
4. Grouping these activities in light of the human and material resources
available and the best way, under the circumstances, of using them.
5. Delegating to the head of each group the authority necessary to
perform the activities.
6. Tying the groups together horizontally and vertically, through
authority relationships and information flows.
The Organizing Process
 Basic Questions for Effective Organizing

It is useful to analyze the managerial function of organizing by raising

and answering the following questions:
1. What determines the span of management and hence the levels of
organization?
2. What determines the basic framework of departmentation, and what
are the strengths and weaknesses of the basic forms?
3. What kinds of authority relationships exist in organizations?
4. How should authority be dispersed throughout the organization
structure, and what determines the extent of this dispersion?
5. How should the manager make organization theory work in practice?
 Chapter 7

Organization Structure:
Departmentation
 Departmentation by Enterprise
Function
• Most widely employed basis for organizing
activities and is present in almost every
enterprise at some level in the organization
structure.
• No generally accepted terminology for
functional departments: A manufacturing
enterprise employs the terms “production,”
“sales,” and “finance;” a wholesaler is
concerned with such activities as “buying,”
“selling,” and “finance;” and a railroad is
involved with “operations,” “traffic,” and
“finance.”
Departmentation by Enterprise Function
 Departmentation by Territory or
Geography
• Rather common in enterprises that operate
over wide geographic areas.
Departmentation by Territory or
Geography
Departmentation by Customers
Departmentation by Product
 Matrix Organization
• The combining of functional and project or
product patterns of departmentation in the
same organization structure.
Matrix Organization (in engineering)
 Guidelines for Making Matrix
Management Effective
1. Define the objectives of the project or task.
2. Clarify the roles, authority, and responsibilities of
managers and team members.
3. Ensure that influence is based on knowledge and
information, rather than on rank.
4. Balance the power of functional and project managers.
5. Select an experienced manager for the project who can
provide leadership.
6. Undertake organization and team development.
7. Install appropriate cost, time, and quality controls that
report deviations from standards in a timely manner.
8. Reward project managers and team members fairly.
Strategic Business Units (SBUs)
• Distinct little businesses set up as units in a
larger company to ensure that a certain
product or product line is promoted and
handled as though it were an independent
business.
Strategic Business Units
Organization Structures for the Global
Environment
• Organization structures differ greatly for
enterprises operating in the global
environment.
• The kind of structure depends on a variety
of factors, such as the degree of
international orientation and commitment.
 The Virtual Organization
• A rather loose concept of a group of
independent firms or people that are
connected often through information
technology.
• These firms may be suppliers, customers,
and even competing companies.
 Boundaryless Organization
• Jack Welch, former CEO at GE (General
Electric), stated his vision for the company as a
boundaryless company, an “open, anti-
parochial environment, friendly toward the
seeking and sharing of new ideas, regardless
of their origin.”
• The purpose was to remove barriers between
the various departments as well as between
domestic and international operations.
Choosing the Pattern of Departmentation

• There is no one best way of departmentation that is

applicable to all organizations and all situations.
• Managers must determine what is best by looking at the
situation they face.
– The jobs to be done and the way they should
be done
– The people involved and their personalities
– The technology employed in the department
– The users being served
– Other internal and external environmental
factors in the situation
 Chapter 8

Line/Staff Authority, Empowerment, and

Decentralization
 Authority and Power
• Power is the ability of individuals or
groups to induce or influence the beliefs
or actions of other persons or groups.
• Authority is the right in a position to
exercise discretion in making decisions
affecting others.
 Different Bases of Power
• Legitimate power normally arises from
position and derives from our cultural
system of rights, obligations, and duties
whereby a “position” is accepted by
people as being “legitimate.”
• Expert power is the power of knowledge.
• Referent power is influence that people
or groups may exercise because people
believe in them and their ideas.
 Different Bases of Power – cont
• Reward power is the power to grant or
withhold rewards, such as high grades
given by a university professor.
• Coercive power is closely related to
reward power and normally arises from
legitimate power; it is the power to
punish.
 What is Empowerment?
• Employees, managers, or teams at all levels
in the organization have the power to make
decisions without asking their superiors for
permission.
• Power should be equal to responsibility
(P=R)
• If power is greater than responsibility (P>R),
then this could result in autocratic behaviour
of the supervisor
• If responsibility is greater than power (P<R),
then this could result in frustration
 THE BASIS OF FORMAL AUTHORITY: TWO VIEWS

• A Classical View: Authority originates at some

very high level, and then is lawfully passed down
form level to level. At the top of this hierarchy
may be God, King, Elected President, or the
collective will of the people.
• According to the classical view of formal authority
in organizations, management has a right to give
lawful orders and employees have an obligation
to obey.
• This obligation is, in effect, self-imposed.
 THE BASIS OF FORMAL AUTHORITY: TWO VIEWS
(CONT.)

• The Acceptance View: The basis of authority

lies with the influencee rather than the
influencer.
• This view starts with the observation that not
all legitimate laws or commands are obeyed in
all circumstances.
• The key point is that the receiver decides
whether or not to comply.
 ACCEPTANCE VIEW
• Chester Barnard, a strong proponent of the
acceptance view, has defined the conditions
under which a person will comply with higher
authority:
1.He can understand the communication
2.At the time of decision he believes that it is
consistent with the purpose of the organization
3. At the time of decision he believes it to be
compatible with his personal interest as a whole
4.He is able mentally and physically to comply with
it
 Scalar Principle in Organization
• The clearer the line of authority from the
ultimate management position in an
enterprise to every subordinate position,
the clearer will be the responsibility for
decision making and the more effective
will be organizational communication.
 Line, Staff, and Functional Authority
• Line authority is the relationship in which a
superior exercises direct supervision over a
subordinate.
– Line authority is based primarily on legitimate
power.
– The activities classified in line will differ in each
organization as it is identified in terms of
company’s goals.
• Staff relationship is advisory.
– Staff authority is primarily based on expert
power.
 LINE, STAFF, AND FUNCTIONAL
AUTHORITY
• Functional authority is the right delegated to
an individual or a department to control
specified processes, practices, policies, or
other matters relating to activities undertaken
by persons in other departments.
– In reality, staff departments especially those
responsible for audit functions, may have formal
authority over line managers within the limit of
their functions
– Thus it is based on both legitimate power and
expert power.
 LINE & STAFF AUTHORITY
Line Authority
Advantages:
 Everything kept Simple
 Authority relationship
graphically illustrated by
hierarchy
 Close to employees so decisions
can be made quickly
Disadvantages:
 Neglects advisers
 Too many decisions to make in
short time period
 Requires very skilled managers
Staff Authority
Advantages:
 Uses the best experts
 Frees line managers for day-to-
day activities
 Can be used as screening and
training for future line managers
Disadvantages:
 Confusing to some employees
 Creates line-staff conflicts
 Places staff in submissive role
 Decentralization of Authority
• Decentralization is the tendency to
disperse decision-making authority in an
organized structure.
 Centralization & decentralization as
tendencies
Complete centralization Complete decentralization
(no organization structure) (no organization structure)

Authority delegated

Authority not delegated

 Different Kinds of Centralization
1. Centralization of performance pertains to
geographic concentration; it characterizes, for
example, a company operating in a single
location.
2 Departmental centralization refers to
concentration of specialized activities, generally
in one department. For example, maintenance for
a whole plant may be carried out by a single
department.
3. Centralization of management is the tendency to
restrict delegation of decision making. A high
degree of authority is held at or near the top.
 DELEGATION
• Delegation: The act of assigning formal
authority and responsibility for completion of
specific activities to a subordinate.
The process of delegation involves:
• Determining the results expected from a
position.
• Assigning tasks to the position.
• Delegating authority for accomplishing
these tasks.
• Holding the person in that position
responsible for the accomplishment of
the tasks.
Personal Attitudes Toward Delegation
• Receptiveness
• Willingness to let go
• Willingness to allow mistakes by
subordinates
• Willingness to trust subordinates
• Willingness to establish and use broad
controls
 Overcoming Weak Delegation
1. Define assignments and delegate
authority in light of results expected.
2. Select the person in light of the job to
be done.
3. Maintain open lines of communication.
4. Establish proper controls.
5. Reward effective delegation and
successful assumption of authority.
 RECENTRALIZATION OF AUTHORITY AND BALANCE AS THE KEY
TO DECENTRALIZATION

Recentralization
• Centralization of authority that was once
decentralized; normally not a complete
reversal of decentralization, as the
authority delegated is not wholly
withdrawn.
 ADVANTAGES & LIMITATIONS OF DECENTRALIZATION

• Advantages
– Relieves top management of some burden of decision making.
– Encourages decision making & assumption of authority.
– Gives manager more freedom in decision making.
– Promotes establishment & use of broad controls.
– Makes comparison of performance of different organizational units
possible.
– Facilitates setting up profit centers.
– Facilitates product diversification.
– Promotes development of general managers.
– Aids in adaptation to fast-changing environment.
 ADVANTAGES & LIMITATIONS OF DECENTRALIZATION (CONT)

• Disadvantages
– Makes it more difficult to have a uniform policy
– Increases complexity of co-ordination of decentralized organizational
units.
– May result in loss of some control by upper –level managers.
– May be limited by inadequate control techniques.
– May be constrained by inadequate planning & control systems.
– Can be limited by the lack of qualified managers.
– Involves considerable expenses for training managers.
– May be limited by external forces.
– May not be favoured by economies of scale of some operations.
 centralization
• The extent to which important decisions
that can affect the performance and
decisions of others are retained in the
hands of one or a few persons indicated
centralization of authority in an
organization.
 Advantages: appropriate delegation
The task/job goes to the right person.
Speeding up of decision, task performance &
response to the demands of the changing
business environment.
The skill and competence of the staff to whom the
responsibility is delegated improves.
When the person to whom tasks are delegated
are supported & rewarded appropriately, it
enhances their motivation and confidence,
commitment & involvement.
The manager who delegated the task to some one
else is freed up for more important or serious
jobs.
 Limitations: inadequate /
inappropriate delegation
The person accepting responsibility needs to have the
required ability & willingness to perform.
Success of delegation also requires co-ordination among
other performing staff & other organizational
arrangements.
Even if the staff is skilled, if the trust between the superior
and the subordinate is missing, then there may be too little
delegation and its acceptance.
Too much of the delegation is same as the superior
abdicating his or her responsibility and making the junior
do what actually needs the superior's involvement, too
little delegation slowed down decision.
Managers doing other tasks still need to be available when
the juniors need their support.
 Chapter 9

Human Resource Management

& Selection
 Definition of Staffing
• Staffing is filling, and keeping filled, positions
in the organization structure.
 The Systems Approach to Human Resource
Management: An Overview of the Staffing Function
 Manager Inventory Chart
Satisfactory, but not promotable = oo
Personnel Actions
 Situational Factors Affecting Staffing

• External factors include the level of education,

the prevailing attitudes in society (such as the
attitude toward work), the many laws and
regulations that directly affect staffing, the
economic conditions, and the supply of and
demand for managers outside the enterprise.
Situational Factors Affecting Staffing –
cont.

• Internal factors include, for example,

organizational goals, tasks, technology,
organization structure, the kinds of people
employed by the enterprise, the demand for
and the supply of managers within the
enterprise, the reward system, and various
kinds of policies.
Definition of Managerial Selection

• Selection is the process of choosing from

among candidates, from within the
organization or from the outside, the most
suitable person for the current or future
positions.
Systems Approach to Selection
Position Requirements and Job Design

 Selecting a manager effectively requires a clear

understanding of the nature and purpose of the
position that is to be filled.
 An objective analysis of position requirements must be
made, and the job must be designed to meet
organizational and individual needs.
 Positions must be evaluated and compared so that the
incumbents can be treated equitably.
 Among other factors to consider are the skills
required—technical, human, conceptual, and design—
since these vary with the level in the organizational
hierarchy and the personal characteristics desired in
managers.
 Skills & Personal Characteristics
needed in managers
• Analytical & problem solving abilitites
• Personal Characteristics
– Desire to manage
– Communication skills & empathy
– Integrity & honesty
– Past performance as mangers
 Intragroup and Intergroup
Communication

• Intragroup communication is communication

with people in the same organizational unit.
• Intergroup communication is communication
not only with other departments but also with
groups outside the enterprise.
 Selection, Placement, and Promotion

• In the selection approach, applicants are sought

to fill a position with rather specific
requirements.
• In the placement approach, the strengths and
weaknesses of the individual are evaluated, and a
suitable position is found or even designed.
• Promotion is a move within the organization to a
higher position that has greater responsibilities
and requires more advanced skills.
 The Peter Principle

• Managers tend to be promoted to the level of

their incompetence.
• Specifically, if a manager succeeds in a
position, this very success may lead to a
promotion to a higher position, often one
requiring skills that the person does not
possess.
 Selection process, techniques &
instruments

• Validity is the degree to which the data

predicts the candidate's success as a manager.
• Reliability refers to the accuracy and
consistency of the measurement.
 Steps in Selection Process
1. Completed Job Application: Requests only information that predicts
the success in the job
2. Initial screening Interview: Provides quick evaluation of applicant's
suitability. Asks Questions on experience, background, salary
expectation, willingness to relocate, etc.
3. Testing: Measures applicant’s job skills and the ability to learn on the
job. May include computer testing software, handwriting analysis,
listening skills test, Team skills test, Sales ability test, etc.
 Steps in Selection Process (contd.)
4. Background Investigation: Checks truthfulness of the applicant’s resume
or application form. Calls the applicant’s previous supervisor (with
permission) and confirms information from applicant.
5. In-Depth Interview: Finds out more about the applicant as an individual.
Conducted by manager to whom the applicant will report.
6. Physical Examinations: Ensures effective performance by applicant;
protects other employees against diseases; establishes health record;
protects the firm against unjust worker’s compensation claims.
7. Job Offer: Fills a job vacancy or position. Offers a salary plus benefit
package.
 Interviews
• Every manger hired is interviewed by one or more people.
• Every interviewer should be trained so that they know what they
are looking for.
• Interviewers should be prepared to ask right questions
• To improve selection, conduct multiple interviews using different
interviewers
• It should be supplemented by data from application form, results of
tests & information obtained from references.
 Commonly-used Tests on Managerial
Candidates

• Intelligence tests
– Test mental capacity & memory, speed of thought, ability to see relationships in complex
situations.
• Proficiency and aptitude tests
– Discover interests, existing skills, potential for acquiring skills.
• Vocational tests
– Indicate a candidate’s most suitable occupation or the areas in which the candidate’s
interests match
• Personality tests
– Reveal candidate’s personal characteristics and the way he/she might interact with
people.
 What is an Assessment Center?

• The assessment center is a technique for

selecting and promoting managers.
• Intended to measure how a potential manger
will act in a typical managerial situations.
• Candidates take part in a series of exercises.
 Orientation of New Employees

• Orientation involves the introduction of new

employees to the enterprise—its functions,
tasks, and people.
– Organization
– Benefits
– Requirements of confidentiality & secrecy
 Organizational Socialization

• A global view includes three aspects:

– Acquisition of work skills and abilities
– Adoption of appropriate role behaviors
– Adjustment to the norms and values of the work
group
 Managing Human Resources While
Moving Toward 2020

• The Economist Intelligence Unit Survey

– Managing knowledge
– Providing services & support for customers
– Improving operation & production processes
– Developing businesses & strategies
– Managing marketing & sales
– Managing human resources & training
– Other areas
• The contribution of the knowledge workers critical
for gaining a competitive advantage
 Chapter 10

Human Resource Development

 The Importance of Human Resource
Management (HRM)

• As a significant source of competitive advantage

– People-oriented HR creates superior shareholder value.
• As an important strategic tool
– Achieve competitive success through people by treating employees as
partners.
• To improve organizational performance
– High performance work practices lead to both high individual and high
organizational performance.
 The HRM Process
• The HRM process is an ongoing procedure that tries to
keep the organization supplied with the right people in
the right positions, when they are needed.
 The HRM Process: Traditional View

• Includes seven basic activities

– Human resource planning
– Recruitment
– Selection
– Socialization
– Training and development
– Performance appraisal
– Promotions, transfers, demotions and separations
The HRM Process: Traditional View

Human Resource Selection

Recruitment
Planning

Training & Socialization

Development

Performance Promotions, Transfers,

Appraisal Demotions & Separations
 Managing Human
Resources
• Human Resource (HR) Planning
– Planning for the future personnel needs of an organization, taking into account both internal activities and
factors in external environment.
– Basic aspects in HR planning:
• Planning for future needs
• Planning for future balance
• Planning for recruiting or laying off employees
• Planning for the development of employees
• Recruitment
• Selection
• Socialization
 Training and Development
• Training programs are directed toward maintaining and improving current
job performance while development programs seek to develop skills for
future jobs.
• Employee Training
– Types of training
– Training Method
 Training Methods
• On-the-job Training • Off-the-job Training
Methods Methods
Coaching Vestibule training
Job rotation Behaviorally experienced training
Training positions Role play
Planned work activities Computer assisted instruction
Management development
programmes
Employee Performance Management

• Performance Management System

– A process of establishing performance standards and appraising
employee performance.
 Advantages and Disadvantages of
Performance Appraisal Methods
Method Advantage Disadvantage
Written Simple to use More a measure of evaluator’s writing
essays ability than of employee’s actual
performance
Critical Rich examples; behaviorally Time-consuming; lack quantification
incidents based
Graphic Provide quantitative data; Do not provide depth of job behavior
rating scales less time-consuming than assessed
others
BARS Focus on specific and Time-consuming; difficult to develop
measurable job behaviors
Multiperson Compares employees with Unwieldy with large number of
comparisons one another employees; legal concerns
MBO Focuses on end goals; Time-consuming
results oriented
360-degree Thorough Time-consuming
appraisals
 Promotions, transfers, demotions, &
separation
• Reflect an employee’s value to the organization.
• High performers may be promoted or transferred to help
them develop their skills.
• Low performers may be demoted, transferred to less
important positions or even separated.
 Compensation and Benefits
• Benefits of a Fair, Effective and Appropriate
Compensation System
 Helps attract and retain high-performance employees.
 Impacts the strategic performance of the firm.
• Types of Compensation
 Base wage or salary
 Wage and salary add-ons
 Incentive payments
 Skill-based pay
 Variable pay
Factors That Influence Compensation and
Benefits
Contemporary Issues in Managing Human
Resources

• Managing Downsizing
• The planned elimination of jobs in an organization
• Provide open and honest communication.
• Provide assistance to employees being downsized.
• Reassure and counseling to surviving employees.
• Managing Workforce Diversity
• Widen the recruitment net for diversity.
• Ensure selection without discrimination.
• Provide orientation and training that is effective.
 Tips for Managing Downsizing
• Communicate openly and honestly:
 Inform those being let go as soon as possible.
 Tell surviving employees the new goals and expectations.
 Explain impact of layoffs.
• Follow any laws regulating severance pay or benefits.
• Provide support/counseling for surviving employees.
• Reassign roles according to individuals’ talents and backgrounds.
• Focus on boosting morale:
– Offer individualized reassurance.
– Continue to communicate, especially one-on-one.
– Remain involved and available.
Current Issues in HRM (cont.)
• Work-Life Balance
– Employees have personal lives that they don’t leave behind when they
come to work.
– Organizations have become more attuned to their employees by
offering family-friendly benefits:
• On-site child care
• Summer day camps
• Flextime
• Job sharing
• Leave for personal matters
• Flexible job hours
 Chapter 11

Human Factors & Motivation

 Leading and Managing

• Leading is the process of influencing people so that they will

contribute to organizational and group goals.
• Managing requires the creation and maintenance of an
environment in which individuals work together in groups
toward the accomplishment of common objectives.
• Harmonizing Objectives: Individuals have personal goals
that may be distinct from the goals of an organization. One
of the important duties of the modern manager is to get
things done through others in such a manner that the
objectives of both groups are achieved.
 Human Factors:
• Multiplicity of Roles
• No average person
• Importance of Personal Dignity
• Consideration of the Whole Person
 What is Motivation?
• Motivation is a general term applying to the
entire class of drives, desires, needs, wishes,
and similar forces.
 Motivational Theories
• McGregor’s Theory X & Theory Y
Need Theories
• Maslow’s Hierarchy of Needs Theory
• Alderfer’s ERG Theory
• McClelland’s Needs Theory of Motivation
• Herzberg’s Motivation-Hygiene Theory: Two Factor
Theory
Expectancy Theory of Motivation
Equity Theory
Goal Setting Theory
Skinner’s Reinforcement Theory
 McGregor’s Theory X and Theory Y

• Theory X and Theory Y are two sets of assumptions

about the nature of people.
• Example of Theory X
– Average human beings have an inherent dislike of
work and will avoid it if they can.
• Example of Theory Y
– The expenditure of physical and mental effort in
work is as natural as play or rest.
 Clarification of Theory X and Y
• They are assumptions that need to be tested against
reality
• They are intuitive deductions
• They are not on a continuous scale, not a matter of
degree
• Theory Y is not consensus management nor an
argument against use of authority
• Variety of tasks & situations require different
approaches
 Maslow’s Hierarchy of Needs Theory
• Maslow saw human needs in a form of a hierarchy,
ascending from the lowest to the highest
• He concluded that when one set of needs is satisfied,
this kind of need ceases to be a motivator.
Maslow’s Hierarchy of Needs
 Alderfer's ERG Theory

• ERG theory has three categories: existence needs,

relatedness needs, and growth needs.
• Alderfer stressed that when people experience
frustration on one level, they may focus on the needs
at a lower level need category.
 McClelland's Needs Theory of
Motivation
• McClelland’s types of motivating needs are:
• Need for power (nPow): Degree of Control a person desires
over his situation. This need can be related to how people deal
with the fear of failure or losing success
 Need for affiliation (nAff): The desire for friendly and close

interpersonal relationships. Reason why “telecommuting” has not

become as popular as predicted
 Need for achievement (nAch): The drive to excel, to achieve in

relation to a set of standards, to strive to succeed. High

Achievement, sets more difficult goals, take calculated risks and
value feedback
Herzberg’s Motivation-Hygiene Theory
• Dissatisfiers are not motivators. They are also called
maintenance, hygiene factors. This includes salary,
company policy and working conditions.
• Satisfiers are motivators and are related to job
content. This includes achievement, recognition,
responsibility, and advancement.
Comparison of Maslow’s and Herzberg’s
Theories of Motivation
 The Expectancy Theory of Motivation
• Vroom holds that people will be motivated to do
things to reach a goal if they believe in the worth of
that goal and if they can see that what they do will
help them in achieving it.
• Force = Valence x Expectancy
Components of Expectancy Theory:
• Force is the strength of a person’s motivation
• Valence is the strength of an individual’s preference for
an outcome
• Expectancy is the probability that a particular action
will lead to a desired outcome
• The force exerted to do something will depend on both
valence and expectancy.
 Expectancy Theory – Cont…
• Think of these three components as three questions:
1. If I do this, what will be the outcome?
2. Is the outcome worth the effort to me?
3. What are my chances of achieving an outcome that
will be worthwhile for me?
 Expectancy Theory – Cont…
• Expectancy theory is more complicated as performance-
outcome, valence and effort-performance expectancy are
linked in a multiplicative chain.
• E.g. You are working on a project for which the outcome of
your performance is clear, you know from experience the
amount of effort required, but the outcome isn’t worth very
much to you. The valence is low.
• In such a situation, your behaviour might be to procrastinate
until the last minute. E.g. Filing your Tax Returns, Submission
of Assignments
 Porter and Lawler’s Expectancy Theory

• An employee must want to perform; the desire of the

employee to do the assigned jobs
• A person must have the necessary abilities and skills
• A person must have an accurate knowledge of the
requirements of the job if he is expected to devote his
energies fully on the assigned tasks
Porter and Lawler’s Motivation Model

1
1

4
8

7a 9

3 6
7b

2
 Equity Theory

• Equity theory refers to an individual’s subjective

judgment about the fairness of the reward he or she
gets, relative to the inputs, in comparison with the
rewards of others.

• Outcomes by a person Outcomes by another person

---------------------------- = ----------------------------
Inputs by a person Inputs by another person
Equity Theory
 Equity Theory – Cont…
• Studies have shown that an individual’s reaction to an
inequity is dependent on that person’s history of inequity
• Richard Cosier & Dan Dalton point out that work
relationships are not static and that inequities are not usually
isolated or one-time events
• They suggest that there is a threshold up to which an
individual will tolerate a series of unfair events, but that too
many incidents can push him or her over the edge
• People use different methods to reduce inequity.
• Eg. Sour Grapes
 Locke’s Goal Setting Theory

• According to Edwin Locke, the natural human inclination to set

and strive for goals is useful only if the individual both
understands and accepts a particular goal
• For objectives to be meaningful, they must be clear, attainable
and verifiable.
• Furthermore, workers will not be motivated if they do not
possess and know they do not possess-the skills needed to
achieve a goal
• Research show that when goals are specific and challenging,
they function more effectively as motivating factors in both
individual and group efforts. Also motivation and commitment
are higher when employees participate in setting of goals
Objective Setting for Motivation
 Skinner’s Reinforcement Theory
• Positive reinforcement or behaviour modification:
– Individuals can be motivated by proper design of their work
environment and by praise for their performance and that punishment
for poor performance produces negative results.
 Skinner’s Reinforcement Theory
• This theory shows how the consequences of past behaviour
affect future actions in a cyclical learning process.
• This process may be expressed as follows:
Stimulus Response Consequences Future
Response
• The individual’s own voluntary behaviour (response) to a
situation or event (stimulus) is the cause of specific
consequences.
• If these consequences are unpleasant, the individual will tend
to change his or her behaviour in order to avoid them
 Skinner’s Reinforcement Theory
• Behaviour Modification: Uses Reinforcement theory change
human behaviour.
• Thus, a manager who wishes to change employee behaviour
must change the consequences of that behaviour
• There are four common methods of behaviour modification:
1. Positive Reinforcement: Desirable behaviour is encouraged
2. Avoidance Learning: Employees change behaviour to avoid
unpleasant consequences like criticism or poor evaluation
3. Extinction: Absence of reinforcement for undesirable behaviour
so that the behaviour eventually stops recurring
4. Punishment: Application of Negative consequences
 Special Motivational Techniques

• Money whether in form of wages, bonus, stock

options or any other form, is often the most
important factor. Money is often more than
monetary value. It can also mean status or power,
or other things.
• Intrinsic rewards may include a feeling of
accomplishment, or even self-actualization.
• Extrinsic rewards include benefits, recognition,
status symbols, and, money.
Special Motivational Techniques – cont.
• Pay may be based on individual, group, and organizational
performance.
• Participation is a form of recognition and gives people a sense
of accomplishment.
• Quality of working life (QWL) usually involves a labour
committee and QWL specialist or staff, which is charged with
finding ways of enhancing dignity, attractiveness, and
productivity of jobs through job enrichment and redesign.
 Job Enrichment
• Job enrichment is an attempt to motivate employees by
giving them the opportunity to use the range of their
abilities. It is an idea that was developed by Frederick
Herzberg in the 1950s.
• It can be contrasted to job enlargement which simply
increases the number of tasks by adding similar tasks
without enhancing the responsibility.
 Ways to Job enrichment

• Giving more freedom in deciding work methods,

sequence, etc.
• Encouraging participation of subordinates
• Giving workers a feeling of personal responsibility
• Make sure that workers can see how their tasks
contribute to the finished product
• Feedback on their job performance
• Involving workers in the analysis and change of physical
aspects of the work environment
 Limitations of Job enrichment
• Technology: With specialized machinery and assembly
line techniques it may not be possible to make all the
jobs meaningful
• There is also a question as to whether or not workers
really want job enrichment
• Limitations mainly apply to low-skill jobs
 Making Job Enrichment Effective
• Better understanding of people want
• If productivity is the main goal of enrichment, the
program must show how workers will benefit
• People like to be involved, to be consulted, and to be
given an opportunity to offer suggestions
• People like to feel their managers are truly concerned
with their welfare
 Chapter 12

Leadership
 Defining Leadership
• Leadership is the art or process of influencing
people so that they will strive willingly and
enthusiastically toward the achievement of
group goals.

230
 Ingredients of Leadership

1. Power
2. A fundamental understanding of people
3. The ability to inspire followers to apply
their full capabilities
4. The leader’s style and the development of
a conducive organizational climate

231
Fundamental Principle of Leadership

• Since people tend to follow those who, in their

view, offer them a means of satisfying their
personal goals, the more managers understand
what motivates their subordinates and how these
motivators operate, and the more they reflect this
understanding in carrying out their managerial
actions, the more effective they are likely to be as
leaders.

232
Trait and Charismatic Approaches to
Leadership
• Attempt to identify leadership traits
• “Great Man” theory assumes that leaders are
born and not made
• Lost much of its acceptability – has limitations
• Robert House suggests that charismatic leaders
have certain characteristics, such as self
confidence, strong conviction, articulating a
vision, being able to initiate change,
communicating high expectations etc.

233
 Leadership Styles Based on Use of
Authority
• The autocratic leader commands and expects
compliance, is dogmatic and positive, and leads by
the ability to withhold or give rewards and
punishment.
• The democratic, or participative, leader consults
with subordinates and encourages their
participation.
• The free-rein leader uses power very little, if at all,
giving subordinates a high degree of independence.

234
Flow of Influence with Three
Leadership Styles

235
 The Managerial Grid
• The grid has two
dimensions:

1. concern for people

2. concern for
production.

236
 Leadership as a Continuum
• Leadership continuum conceptualizes
leadership as involving a variety of styles,
ranging from one that is highly boss-centered
to one that is highly subordinate-centered.

237
Continuum of Manager-Nonmanager Behavior

238
 Fiedler's Contingency Approach to
Leadership
• People become leaders not only because of
their personality attributes but also because
of various situational factors and the
interactions between leaders and group
members.

239
Fiedler’s Model of Leadership

240
Critical Dimensions of the Leadership
Situation (Fiedler)

• Position power
• Task structure
– Leader-member relations

241
The Path-Goal Approach to Leadership
Effectiveness

• The main function of the leader is to clarify

and set goals with subordinates, help them
find the best path for achieving the goals,
and remove obstacles.

242
Approach to Leadership Effectiveness

243
 Transactional and Transformational
Leadership
• Transactional leaders identify what subordinates
need to do to achieve objectives, clarify
organizational roles and tasks, set up an
organization structure, reward performance, and
provide for the social needs of their followers.
• Transformational leaders articulate a vision and
inspire followers. They have the capacity to
motivate, shape the organization culture, and
create a climate favorable for organizational
change.

244
 Chapter 13

Communication
 What is Communication?
• Communication is the transfer of information
from a sender to a receiver, with the
information being understood by the receiver.
The Purpose of Communication
 Communication Process Model

• The communication model provides an overview of the

communication process, identifies the critical variables,
and shows their relationships.
 The Communication Process
• Sender of the message
– His/her thought gets encoded
• Use of a channel to transmit the message
• Receiver of the message
– Reception, decoding, understanding
• Noise hindering Communication
– Anything that hinders communication
• Feedback in communication
• Situational & organizational factors
 Noise Hindering Communication

Noise is anything—whether in the sender, the

transmission, or the receiver—that hinders
communication
For example:
• Encoding may be faulty because of the use of ambiguous
symbols.
• Transmission may be interrupted by static in the channel,
such as may be experienced in a poor telephone
connection.
• Inaccurate reception may be caused by inattention.
• A noise or a confined environment may hinder the
development of a clear thought.
 Feedback in communication
• To check the effectiveness of communication,
a person must have feedback.
 Situational & organizational factors in
communication
Factors in the external environment affecting the
communication process may be educational,
sociological, legal-political, and economic.
Geographic distance is another situational factor.
The communication model provides an overview
of the communication process, identifies the
critical variables and shows their relationships.
 The Communication Flow in the
Organization
• Downward communication
• Upward communication
• Horizontal communication (between people
on the same or similar organizational levels)
• Diagonal communication (between persons
from different levels who are not in direct
reporting relationships with one another)
Information Flow in an Organization
 What is the Function of an
Ombudsperson?
• An ombudsperson investigates employees'
concerns and provides a valuable upward
communication link to enhance effective
upward communication
Communication in the Organization
• Written communication
• Oral communication
• Nonverbal communication
 Communication methods
• Oral, written, using IT
• Face-to-face communication
• Group meetings
• Video-conferencing
• Wireless, telephone, fax, voicemail, e-mail etc.
 Barriers and Breakdowns in
Communication

• Lack of planning
• Unclarified assumptions
• Semantic distortion
• Poorly expressed messages
• Communication barriers in the international environment
• Loss by transmission and poor retention
• Poor listening and premature evaluation
• Impersonal communication
• Distrust, threat, and fear
• Insufficient period for adjustment to change
• Information overload
 Other Communication Barriers

• Selective perception—people tend to perceive

what they expect to perceive.
• The influence of attitude—the predisposition to
act or not to act in a certain way.
• Differences in status and power between the
sender and the receiver of information.
• Information passing through several
organizational levels tends to be distorted.
 Guidelines for Improving
Communication?
• See the eight guidelines in the textbook
that can help overcome the barriers to
communication. Analyze a situation using
the guidelines
• Listening: A Key to Understanding
• How have you solved communication
problems in your life?
 How to Improve Written
Communication?
Use simple words and phrases.
Use short and familiar words.
Use personal pronouns (such as “you”) whenever
appropriate.
Give illustrations and examples; use charts.
Use short sentences and paragraphs.
Use active verbs, such as “The manager plans…”.
Avoid unnecessary words.
Electronic Media in Communication

• Telecommunication
• Teleconferencing
– A group of people interacting with each other by
means of audio and video media with moving or still
pictures.
• Use of Computers for Information Handling and
Networking
– E.g. instant messaging shows whether a friend or
colleague is connected to the Internet; if connected,
messages can be exchanged instantly.
 ESSENTIALS OF EFFECTIVE COMMUNICATION

• If the sender is using multiple media & channels, the receiver needs
to pick up and understand both verbal & non-verbal parts of the
message.
• Issues of communication should be clearly separated from other
problems.
• If the communication involves speech, effective communication
requires active listening where the listener reflects on what the
other person has said, interprets it without bias and is able to
summarize it.
• Effective communication includes raising of appropriate questions
and probing by the receiver.
• Effective communication provides for giving as well as receiving
feedback in the interest of accurate exchange of meaning.